Nobel Prize-winning economist attacks Tory spending plans

Joseph Stiglitz tells the NS that Cameron and Osborne are "scaremongering".

In a forthcoming interview with Jonathan Derbyshire and Mehdi Hasan of the New Statesman, the Nobel Prize-winning US economist Joseph Stiglitz says that he is "incredulous" at the Conservatives' plans to cut spending. He describes Tory economic policy as "Hooverite" and dismisses as "crazy" and "fear-mongering" the claim that Britain is at risk of defaulting on its debts.

His response to David Cameron's and George Osborne's plans to cut spending: "Incredulous . . . We [Keynesians] had a victory for a year and then back come the Hooverites."

On Conservative claims that Britain is in danger of a Greek-style debt crisis and risks losing its AAA credit rating: "I think it's fear-mongering and I think the notion that the rating agencies, which did such a terrible job over rating all these products -- that we should show deference to their judgement of good economic policy seems outrageous."

On the suggestion, put about by George Osborne, among others, that Britain is at risk of default: "I say you're crazy -- economically you clearly have the capacity to pay. The debt situation has been worse in other countries at other times. This is all scaremongering, perhaps linked to politics, perhaps rigged to an economic agenda, but it's out of touch with reality. One of the advantages that you have is that you have your own central bank that can buy some of these bonds to stabilise their price."

On what will happen to unemployment if the Tories expand monetary policy: "I don't think there is much scope for monetary expansion . . . without engaging in new risks for the economy . . . So under the current framework it would almost certainly lead to higher unemployment."

On Gordon Brown: "I think he is . . . genuinely committed to broad social goals -- climate change, developing countries, fixing globalisation."

On whether Brown would make a good future head of the IMF or World Bank once he leaves Downing Street: "Yes. These are issues that he cares about passionately and that he understands and is very engaged in. He really did play a big role in reshaping the G20."

(Read Paul Mason's review for the NS of Stiglitz's new book, Freefall, here.)

Jonathan Derbyshire is Managing Editor of Prospect. He was formerly Culture Editor of the New Statesman.

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Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for International Trade.

Only Nixon, it is said, could have gone to China. Only a politician with the impeccable Commie-bashing credentials of the 37th President had the political capital necessary to strike a deal with the People’s Republic of China.

Theresa May’s great hope is that only Liam Fox, the newly-installed Secretary of State for International Trade, has the Euro-bashing credentials to break the news to the Brexiteers that a deal between a post-Leave United Kingdom and China might be somewhat harder to negotiate than Vote Leave suggested.

The biggest item on the agenda: striking a deal that allows Britain to stay in the single market. Elsewhere, Fox should use his political capital with the Conservative right to wait longer to sign deals than a Remainer would have to, to avoid the United Kingdom being caught in a series of bad deals. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.