The safest place in economics is wherever Niall Ferguson isn't

The historian isn't so hot when he's looking forwards in time.

Last week, historian Niall Ferguson made some bizarre remarks about John Maynard Keynes, alleging that the economist was gay, and that because of that and the fact that he didn't have children, he did not care about the future.

Ferguson has since apologised, but Business Insider's Joe Weisenthal puts the comments into the context of the professor's war on Keynesian economics:

Then in May 2011 he wrote for The Daily Beast about "The Great Inflation Of The 2010s."

He actually said in the piece: "Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right."

This was totally incorrect. Double-digit inflation is not back. Hopefully by this point you don't need a chart to show you that.

In February 2010 he predicted a Greek crisis was coming to America. Verdict: Wrong.

And in June 2009, he predicted a painful conflict (imminently) between monetary and fiscal policy. Verdict: wrong.

Meanwhile in more timely silliness, here's a video (via Mike Konczal) in which Niall Ferguson calls it a "law of finance" that when debt passed 90% of GDP, growth slows precipitously. Ferguson is at 1:18 mark. Of course that study has since been debunked after an Excel coding error was found by a grad student.

Weisenthal had the scorecard ready to go after he examined Ferguson's record the last time the historian hit the news, when he penned an attack on Barack Obama which fell apart on examination. As he concludes:

While none of this speaks to his skills as a historian, the crisis and post-crisis period has been characterized by him railing against the Keynesian establishment, and impaling himself at every turn.

Meanwhile, while the Keynesian consensus has utterly failed to collapse, the justification for austerity has. Paul Krugman writes:

Expansionary austerity has been refuted and even the IMF sayis that short-run multipliers are big. The 90 percent red line on debt was an artifact of fuzzy math. The bond vigilantes remain invisible, and the confidence fairy refuses to make an appearance. Clearly, austerian economics has imploded (and some prominent austerians seem to be personally imploding too).

One of the safest bets to make in the last three years is that whatever Niall Ferguson says will happen, won't. If only he would come out and predict the unending dominance of austerity politics, things might even get better.

Keynes in the Mount Washington hotel in 1944. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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