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

Getty
Show Hide image

A father’s murderous rage, the first victims of mass killers and Trump’s phantom campaign

From the family courts to the US election campaigns.

On 21 June, Ben Butler was found guilty of murdering his six-year-old daughter, Ellie. She had head injuries that looked like she’d been in a car crash, according to the pathologist, possibly the result of being thrown against a wall. Her mother, Jennie Gray, 36, was found guilty of perverting the course of justice, placing a fake 999 call after the girl was already dead.

When the trial first started, I clicked on a link and saw a picture of Ben and Ellie. My heart started pounding. I recognised them: as a baby, Ellie had been taken away from Butler and Gray (who were separated) after social services suggested he had been shaking her. He had been convicted of abuse but the conviction was overturned on appeal. So then he wanted his daughter back.

That’s when I spoke to him. He had approached the Daily Mail, where I then worked, to tell his story: a father unjustly separated from his beloved child by uncaring bureaucracy. I sent a writer to interview him and he gave her the full works, painting himself as a father victimised by a court system that despises men and casually breaks up families on the say-so of faceless council apparatchiks.

The Mail didn’t run the story; I suspect that Butler and Gray, being separated, didn’t seem sufficiently sympathetic. I had to tell him. He raged down the phone at me with a vigour I can remember half a decade later. Yet here’s the rub. I went away thinking: “Well, I’d be pretty angry if I was falsely ­accused and my child was taken away from me.” How can you distinguish the legitimate anger of a man who suffered a miscarriage of justice from the hair-trigger rage of a violent, controlling abuser?

In 2012, a family court judge believed in the first version of Ben Butler. Eleven months after her father regained custody of her, Ellie Butler was dead.

 

Red flags

Social workers and judges will never get it right 100 per cent of the time, but there does seem to be one “red flag” that was downplayed in Ben Butler’s history. In 2005, he pleaded guilty to assaulting his ex-girlfriend Hannah Hillman after throttling her outside a nightclub. He also accepted a caution for beating her up outside a pub in Croydon. (He had other convictions for violence.) The family judge knew this.

Butler also battered Jennie Gray. As an accessory to his crime, she will attract little sympathy – her parents disowned her after Ellie’s death – and it is hard to see how any mother could choose a violent brute over her own child. However, even if we cannot excuse her behaviour, we need to understand why she didn’t leave: what “coercive control” means in practice. We also need to fight the perception that domestic violence is somehow different from “real” violence. It’s not; it’s just easier to get away with.

 

Shooter stats

On the same theme, it was no surprise to learn that the Orlando gunman who killed 49 people at a gay club had beaten up his ex-wife. Everytown for Gun Safety, a gun control group, looked at FBI data on mass killings and found that 16 per cent of attackers had previously been charged with domestic violence, and 57 per cent of the killings included a family member. The Sandy Hook gunman’s first victim was his mother.

 

Paper candidate

Does Donald Trump’s presidential campaign exist if he is not on television saying something appalling about minorities? On 20 June, his campaign manager Corey Lew­andowski quit (or was pushed out). The news was broken to the media by Trump’s 27-year-old chief press officer, Hope Hicks. She was talent-spotted by The Donald after working for his daughter Ivanka, and had never even volunteered on a campaign before, never mind orchestrated national media coverage for a presidential candidate.

At least there aren’t that many staffers for her to keep in line. The online magazine Slate’s Jamelle Bouie reported that Trump currently has 30 staffers nationwide. Three-zero. By contrast, Bouie writes, “Team Clinton has hired 50 people in Ohio alone.” Trump has also spent a big fat zero on advertising in swing states – though he would argue his appearances on 24-hour news channels and Twitter are all the advertising he needs. And he has only $1.3m in his campaign war chest (Clinton has $42.5m).

It feels as though Trump’s big orange visage is the facial equivalent of a Potemkin village: there’s nothing behind the façade.

 

Divided Johnsons

Oh, to be a fly on the wall at the Johnson family Christmas celebrations. As Boris made much of his late conversion to Leave, the rest of the clan – his sister Rachel, father Stanley and brothers, Leo and Jo – all declared for Remain. Truly, another great British institution torn apart by the referendum.

 

Grrr-eat revelations

The highlight of my week has been a friend’s Facebook thread where she asked everyone to share a surprising true fact about themselves. They were universally amazing, from suffering a cardiac arrest during a job interview to being bitten by a tiger. I highly recommend repeating the experience with your own friends. Who knows what you’ll find out? (PS: If it’s juicy, let me know.)

Peter Wilby is away

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 23 June 2016 issue of the New Statesman, Divided Britain