Friday, 3 September 2010

Don't take our word for it

Today I've read three short but excellent pieces criticising various aspects of the conventional economic wisdom: that deficit reduction must be the priority of government at the present time. The authors are a Nobel economics laureate, the FT's chief economic commentator and a world renowned macroeconomist from Berkeley. All three basically support the position the STUC has adopted from the start of the crisis (yes I know, they do it more elegantly and with considerably more academic authority!). That is, arbitrary timescales for deficit reduction are madness; fiscal consolidation should not begin until robust growth has resumed; with interest rates at the zero bound, unemployment high and the proximate risk deflation not inflation - stimulus policies are essential if we are to avoid a prolonged period of stagnation and a major proportion of current unemployment becoming structural.

And yet, in Scotland, 'deficit deniers' are regularly ridiculed. We are told that we cannot get out the crisis by piling more debt on to our debt'. Certain members of the commentariat, who by their own admission only became interested in economics during the banking crisis, earnestly dismiss anyone proposing further demand side intervention.

As Brad DeLong regularly asks...why oh why can we not have a better press corps?

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