Tuesday, 26 July 2011

Paying the price for George Osborne

You would have thought that there might be contrition.  Cameron and Osborne, when finding time to break off from their preferred pastime of brown-nosing News International, are presiding over an economy that is at best anaemic and most likely dangling over a precipice.  Instead, in a feeble imitation of Thatcher, the troglodytic "Chancellor" says that there is no "Plan B".

In the best tradition of Billy Bunter, to whom our cherubic Prime Minister bears an increasing resemblance each day, they are waiting for something to turn up.

In the meantime, the world is collapsing around their ears.  In the short-term we can be grateful that Gordon Brown did not permit Blair to follow his political instincts and take us into the Eurozone, given its inability to accommodate two-speed economies without a central fiscal policy.  The possibility of a collapse, hyper-inflation and social and political upheaval in what would have been regarded as second-tier economies (Spain, Portugal, Greece, Ireland etc) is now looking a strong possibility with Italy fast approaching the basket-case status.

The US fiasco is depressing, if only because it tells us that free-market, right-wing nutters are the same the world over.  If the US credit rating is downgraded, this has major ramifications for the whole world economy, not least because of the symbiotic relationship with the Chinese trade surplus.  The consequences are unpredictable, but dire.

Gorgeous George increasingly resembles a rabbit in the headlights, incapable of grasping the fact that Britain is not in a good place.  He is right, as is Ed Balls and especially Vince Cable, that the structural deficit needs to be plugged and government expenditure contained.  However, we are wasting billions on the cargo-cult that is marketisation of essential services such as health and education, not to mention Trident replacement.  A creative response to the current crisis would be to prioritise investment in public infrastructure that will provide employment, support the private sector in growth and take advantage of the surplus capacity in the economy.

However, since university economics is now purely a matter of theoretical burnishing and showing off how much longer and more complex your equations are, before going on to a career in the parastic activities at the fringes of financial legality and morality, it is very unlikely that anyone will remind the Chancellor that his Coalition partners have the moral and historical legitimacy of Keynes, whose prescriptions for the Great Depression seem totally relevant in 2011.

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