Blanchflower versus Osborne

Our new economics columnist takes on the Tories

I never thought a column on economics could make me smile so much. Professor David "Danny" Blanchflower, former independent member of the Bank of England's Monetary Policy Committee (MPC), and our new economics columnist, writes in this week's relaunched New Statesman:

Unemployment is going to continue to rise this year and may keep on rising. If spending cuts are made too early and the monetary and fiscal stimuli are withdrawn, unemployment could easily reach four million. If large numbers of public sector workers, perhaps as many as a million, are made redundant and there are substantial cuts in public spending in 2010, as proposed by some in the Conservative Party, five million unemployed or more is not inconceivable.

Five million unemployed under the Tories? If it is to have any chance of stopping Cameron's Conservatives in the general election next year, the Labour Party should be plastering this damning quote across every available advertising hoarding in the country. (I note that the shrewd Business Secretary -- and First Secretary of State -- Lord Mandelson, managed to work it into his speech to the British Retail Consortium last night, referring hilariously to "Bullingdon Club economics".)

Professor Blanchflower warns against the current economic complacency and the misplaced focus on paying down the debt -- and aims his criticisms squarely at the shadow chancellor, George Osborne:

We must not repeat the mistakes of the 1930s by assuming a recovery is taking place and then cutting spending and raising interest rates too early. Such action could push the economy into a decade-long depression . . . The time for cutting public spending is not now, not next year and not the year after.

It is not hard to work out that, with unemployment rising fast, it isn't the right time to cut public-sector jobs, wages or public spending, for that matter. These are automatic stabilisers. Mr Osborne, I really don't know which economists are advising you on this brilliant strategy to increase unemployment, but feel free to give me a call.

The Telegraph has the (rather lame) Tory response:

A Conservative Party spokesman said: "When David Blanchflower says Britain shouldn't even start reducing the deficit until 2012, he is disagreeing not just with the Conservative Party, but with the governor of the Bank of England, the IMF and even the government's own current plans.

Hold on. Blanchflower's claim to fame is that he called the crash correctly, voting consistently for interest-rate cuts and warning of a recession throughout 2008, while the governor of the Bank of England ("old iron fist", as Blanchflower calls him) joined the hawks on the MPC and opposed any cuts in rates until it was far too late and the economy was already in free fall. To cite Mervyn King's views on economics in response to David Blanchflower is akin to citing Neville Chamberlain's views on diplomacy in response to Winston Churchill. It is a mad, silly and self-defeating strategy.

So, the fundamental question remains: whose views do you trust on how to get the British economy back up on its feet? Gideon George Osborne or David "Danny" Blanchflower? It's a no-brainer, isn't it?

 

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.