I blogged earlier about how disappointed I was to listen to Nassim Nicholas Taleb — someone I like and admire — heap praise on David Cameron.
I also like Chris Huhne, the Energy Secretary and former Lib Dem home affairs spokesman, and have long regarded him as one of the brightest and ablest politicians in Westminster. He is a former economist who worked for the Fitch Ratings agency and as business editor for the Independent and the Independent on Sunday. He is also a former member of the Labour Party.
So you can imagine how disappointed I was to see him join the coalition cabinet in May and then appear on BBC1’s Question Time last night to defend the Con-Dem coalition’s growing number of spending cuts.
The Lib Dems, remember, spent the election campaign opposing the Tories’ plans for early spending cuts, which Vince Cable described in April as a “smokescreen for job cuts“.
Huhne’s fellow panellists were quick to pounce on his party’s abrupt and embarrassing fiscal U-turn. “You are providing the sheep’s clothing for a very rapacious government that is going to cut spending,” said the Labour peer Helena Kennedy, to audience applause.
Depressingly, however, Huhne chose to rehearse Tory talking points, claiming:
You cannot spend public money you don’t have.
Um. Er. Yes you can. It’s called borrowing. It’s what governments have always done in crises. As the FT’s Samuel Brittan wrote last year:
Of one thing I am sure. If we had the misfortune to engage in a major war, we would have far higher deficits and debts than anything now in prospect and few except some pacifists would worry. The Second World War was financed in the UK with a 0.5 per cent bank rate. Why should it be more alarming for governments to get into debt to put people into useful work satisfying human needs than to borrow for guns and tanks whose only aim is to kill other human beings?
Huhne even pushed the Greece analogy — an analogy so ludicrous and discredited that even David Cameron has backtracked on deploying it.
But not Huhne:
If we go on like that, we’ll end up like Greece.
As his fellow panellist and former Labour cabinet minister Peter Hain responded, in perhaps the best line of the night:
No serious economic commentator, and you used to be one before you got into government, believes our economy is anything like Greece.
Hain is right. For a detailed and incisive critique of the “UK is like Greece” non-argument, check out this Comment Is Free piece from the new Labour MP (and former Bank of England economist) Rachel Reeves, who writes:
The UK has less debt than Greece, has a stronger economy and as a result is not regarded by financial markets in the way Greece is. With the right economic policies, Britain’s economy could grow strongly in the next few years. We are different from Greece in three key areas: the sustainability of our fiscal position, our policy flexibility and the origins of the debt crisis.
UPDATE: Chris Huhne used to be, as Helena Kennedy pointed out last night, an admirer of Keynes and Keynesian economics. He should, therefore, remember how Keynes described the deficit hawks of his own era:
Every person in this country of super-asinine propensities, everyone who hates social progress and loves deflation, feels that his hour has come and triumphantly announces how, by refraining from every form of economic activity, we can all become prosperous again.
(Via Robert Skidelsy in yesterday’s FT)
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