Six reasons why Cameron is wrong on the economy

It is increasingly clear that the PM is out of his depth and out of touch. This is "nothing for noth

In a speech on the economy yesterday that was 2,235 words long, an out-of-touch David Cameron only mentioned jobs and unemployment once each. He didn't mention the young at all in a week when youth unemployment hit the million mark. It is becoming increasingly apparent that Cameron is a) totally out of his depth when it comes to the economy; b) has no clue what to do to fix the problem; c) has little sympathy for those who are less fortunate than he is. He just doesn't care. Cameron has failed to recognise that his government's economic policies are in complete disarray, and all he can do is resort to spin and obfuscation. Austerity in the UK has failed.

The part of the speech that really struck me was this:

[T]here are some who seriously try to argue that additional spending and borrowing will actually lead to less debt in the end ... despite the fact that no evidence supports this assertion. These arguments are just a way of avoiding difficult decisions ... the kind of something for nothing economics that got us into this mess ... which is why no indebted European country is taking that path. Nor are there any major European opposition parties in high deficit countries arguing for additional borrowing -­ except here in Britain.

It is about time we put this joker straight.

1) Actually, additional spending would stimulate growth and that would increase tax revenues, as it did in the US under the Clinton boom. In case you haven't noticed, Dave, your pal Osborne slashed spending and raised taxes, which increased borrowing. That is why you are in such a mess. What if the government borrowed £100bn that was funded by the MPC through QE, and used the money to say, build ten nuclear power stations. That would lower the cost of fuel, employ people and help masses of small and large firms. It would raise productivity and in the long-run lower our debts, wouldn't it? If not, why not, Prime Minister?

2) There is an enormous amount of evidence to suggest that fiscal and monetary stimulus can increase growth. There is actually no evidence from anywhere in the world to support the ideology you have been following of an expansionary fiscal contraction, especially when it is not possible to lower interest rates. Such a view is "oxymoronic", as Larry Summers has said.

3) These arguments are not a way of avoiding making difficult decisions. They are what has to happen, because your government made the wrong decisions by imposing austerity before the recovery was fully established. You can't blame the eurozone, as it was clear when you formed your government that there were major downside risks to UK recovery from the European periphery and European banks. You just chose to look the other way and go forward with your mistaken policies, wilfully disregarding the potential dangers for the British people.

4) "Something for nothing economics" is a nice phrase but is totally meaningless. If I recall, Dave, you matched Labour's spending plans, supported deregulation and opposed rescuing the banks. It looked like you may have to do the latter if things continue the way they are. Lloyds and RBS are in trouble again. What you did was slash and burn hoping for growth, but you killed off the tender shoots of recovery. The policies you have undertaken without a growth plan is "nothing for nothing economics".

5) "No indebted European country is taking this path." Well, actually, most other European countries grew faster than the UK did over the last twelve months. GDP growth was as follows. Belgium 1.8 per cent; Germany 2.6 per cent; France 1.6 per cent; Netherlands 1.1 per cent; Austria 2.8 per cent; Finland 2.8 per cent; and the UK 0.5 per cent. The eurozone is headed into recession because they are stuck in monetary union. Portugal this week went to the IMF and asked for more stimulus as austerity has failed there too. Austerity doesn't work when banks aren't lending and your major export market is heading into depression. The German central bank, the Bundesbank, today cut its 2012 growth forecast to between 0.5 per cent and 1 per cent, from a June prediction of 1.8 percent. It said a "pronounced" period of economic weakness can't be ruled out if the crisis worsens.

6) "Nor are there any major European opposition parties in high deficit countries arguing for additional borrowing -­ except here in Britain". Denmark has lower bond yields than the UK and lower unemployment, and its new government is introducing more fiscal stimulus. These other countries would do this if they could, but they are stuck in a fiscal and monetary straightjacket. That is why there is talk of the eurozone breaking up.

Dave, you are in a big mess on the economy. What are you going to do if the crisis worsens, as it looks like it might? Panic, I guess.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Euston has to be the most horrible station in London, especially before ten in the morning

So off I go to Birmingham, the city where J G Ballard meets Captain Kirk.

A friend posts an ad for the John Lewis Soft Touch Washable Mattress Topper on a social medium. She doesn’t usually post adverts. “This actually will change your life,” she writes, “in the sense that you will not get out of bed and your muscles will atrophy and you will be penniless.”

I am tempted, I must say. Lately I have simply not been getting out of bed. The trick is to wake up at, say, eight in the morning, and then utilise that early-morning grogginess to go back to sleep. That way you wake up again around noon feeling deranged from the extra-weird dreams you’ve been having. The one where I stole my ex-girlfriend Debbie Milton from Prince Charles, whom she had unwisely married, and escaped with her in a white Rolls-Royce while an enraged Greg Chappell chased after us was quite something. (All details true, promise.)

But Saturday comes and I have to get out of bed because I am off to Birmingham. Why Birmingham? Because I’m being paid to. I am also chairing a talk between Diego Marani, whose most excellent novel New Finnish Grammar I am proud of having introduced to a wider audience than it might have received, and Frank Witzel, a German author of whom I know nothing, but the title of whose prize-winning (untranslated) novel, The Invention of the Red Army Faction By a Manic Depressive Teenager in the Summer of 1969, is suggestive of greatness to follow.

My train is at quarter to ten in the morning. That is horribly early, and it’s from Euston. Euston has to be the most horrible station in London. Crammed with fast-food outlets and shops selling tat, it is a wholly commercialised space, beneath which the trains hulk in confinement on their platforms like trapped beasts. They are also mostly Virgin trains, and bitter experience has taught me that these are unreliable and that one should never, under any circumstances, use their toilets. It’s best to Go before or, at a pinch, to soil oneself. After all, using one more or less amounts to the same thing.

I don’t have much experience of Birmingham, bitter or otherwise. I once gave a talk at Birmingham City University and was distracted by the Ballardian architecture of the place and by an audience member’s beauty, so much so, in the latter case, that I could not speak for a couple of minutes. But my attention is drawn to the fact that the Star Trek convention is taking place at the National Exhibition Centre in the city at the same time, and I think that as my event ends at around three I’ll skip over to the convention and, for a mere £15, have myself photographed on the set of the original Enterprise, sitting in the Captain’s chair.

I would have done anything for Captain James T Kirk when I was a child, and to this day you can catch me, from time to time, punching light switches with the fleshy part of my fist, the way he answers the internal comm-system in the TV series.

But it turns out, I learn from a friend who has had the same idea but actually committed himself to it, that there is a huge entry fee and the queues for the Captain’s chair are “apocalyptic”. So I decide not to go, and ask the hotel staff instead where the nearest decent old man pub is. They steer me in the direction of the Shakespeare round the corner.

This splendid pub huddles amid another Ballardian cityscape of car parks and stunted skyscrapers. The barman is nice, but does not know how to pronounce “Laphroaig”. “I wouldn’t even try,” he says. I teach him. It occurs to me that the whisky in the bottle is probably older than most of the buildings around it.

Why do we do this to cities? The view from my hotel is of a vast building site, behind which the few survivors of Birmingham’s Victorian heritage cluster like exhibits in a freak show: “See the Amazing Buildings Built More Than Twenty Years Ago!!” Still, at least Birmingham Library is, as modern buildings go, rather cool: and then I realise this is because the outside is modelled on the Sam Browne belt worn by Lieutenant Worf in Star Trek: the Next Generation.

I sigh at my nerdiness and take my place on stage. The chair, I decide, is suitably captainesque, and in front of us lies the flag, blue with yellow stars, of another federation, different from the one Gene Roddenberry dreamt of. I remember being excited, as a child, about the future, thinking of the progress we would make as it happened. The desire to go home, and dream, returns.

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood