Saturday, July 04, 2009

You really don't need a weatherman

An economist on the Today programme just apologised in case he and his fellow professionals are confusing us with the latest round of figures about public spending. How could we possibly be confused? We don't know the numbers. We don't need to know the numbers. It's quite sweet that politicians of all sides think it's about the numbers, as if we can be dazzled by a little book cooking, or "re-prioritising" as some government spokesman had it the other day. If you want to know how it's going you don't look at the figures. You look at their eyes.

My grandmother was no economist but even she could have told you that when the government has borrowed as much as ours has, unemployment and its attendant costs are rising steeply, the pound is in bad enough shape to frighten anyone who buys a bottle of Chianti, let alone goes on a holiday abroad, almost a million young people are not in work, education or full-time training, the one source of taxation income, financial services, is on the bones of its arse and according to the World Bank and the ratings agencies Britain is getting a reputation among the lenders of money of a particularly bad-risk sink estate, then the fantasy that public spending won't have to be reduced and taxation won't have to rise is one that you couldn't get past Pollyanna, let alone the supposedly sensible British public.

When every business or household in the UK is planning for no-growth, decline or armageddon, the idea that the present government is going to have a leetle bit of a look-ette at the figures after the election gives you an idea of what an empty charade that's going to be. Either they think somebody else will be looking at the books after the election (which is certainly what the polls believe) or their research has told them that we'd prefer not to have our pretty little heads clouded with the awful truth. I find this kind of collective delusion a lot more frightening than the truth could ever be.


  1. Well said.

    Someone famous once said "Bring me an economist with only one hand".

  2. 2010
    Exit (stage left): Kevin & Perry
    Enter (stage right): Kevin’s mum and dad

    Shouldn’t take much to get stuff sorted. Just ignore the “s’not fair” wailing from the teenagers bedroom.

  3. You know you're in trouble when your prime minister can talk about '0 per cent growth' and keep a straight face.

    By the way, I'm sure there are economists who have only on hand.

    After all, you only need one hand to be a wanker.

  4. I still find it difficult to get a handle on what's really going on as it depends very much on who you listen to. A few weeks back Will Hutton did a programme which was absolutely apocalyptic in tone, but if you read someone like The Times economics writer Anatole Kaletsky (probably not a government stooge), he strongly believes the worst is over.

    I may be proved horribly wrong, but I just don't believe in the comparisons with the Great Depression. Certainly in terms of pure statistics there is a comparison, but the vastly changed overall standard of living now compared to then makes any more meaningful parallels misleading.

  5. God knows I'm no expert but I think you have to distinguish between the end of the worst of the initial wounding - house prices, business closures, exchange rates - and the length of time it will take for those wounds to heal. You only have to look at the FTSE to see that there's some irrational optimism around but the great big ticking time bombs are all to do with government spending and pensions, neither of which really *existed* in the Great Depression.

  6. I'm greatly diverted by the talk of what kind of curve we might be enjoying. I'm torn between the 'W' curve (according to this theory we're currently teetering on the point in the middle) and the bathtub curve. I tend towards the latter but still feel there's another crash down to come and then we're in for a long bath.

    It all feels a bit phony war at the moment. I don't sense the terrible grimness of previous slumps and depressions but I'm not sure why. Maybe we think we've fallen into the bath but actually we've just landed on the sponge and the real hard landing has yet to come. It's not a very tidy model, I'll grant you...