What David Cameron can learn from the Charge of the Light Brigade
Why would anyone stubbornly stick to the same course – when it’s obviously the wrong one?
I wrote a series of columns last week suggesting that austerity around the world isn't working. This generated an outburst from people who didn't seem to share my view, to say the least. Many resorted to name-calling. One claimed that "Keynesians caused the problem, so it's time to let the adults take over". Another said: "You couldn't be more wrong on every point, using a bunch of half-truths that you spun into lies."
One writer advised me to change my name: "You really sound like a nerdy kind of social butterfly." And there was more: "Why is it that you liberals can't be honest when you discuss anything. Even economics turns you folks into the lying little weasels you strive to become."
It seems that youth unemployment is also my fault: "If you are an educator, it is no wonder our kids are screwed up." And I was advised, not very helpfully, that my "policies can only affect the height from which we fall and they can only make it higher". Another was more succinct: "Proof by assertion. Let me guess, you are a freshman at Dartmouth." I certainly appear to have grabbed their attention.
The prizewinner was this short but sweet email: "Uh, that's the best you got? You're a sub-mongoloid idiot masquerading as a cret-in. A communist cretin." I assume that a sub-mongoloid idiot is a pretty bad thing to be, and that a communist cretin is worse than your run-of-the-mill capitalist cretin. What I'm not sure about is if that's worse than being a lying little weasel.
Weather or not
Talking of weasels, some people have responded to the claim that austerity isn't working by saying that it's down to the bad weather. Both David Cameron and George Osborne tried this in their speeches at the World Economic Forum in Davos. "This week, we had disappointing growth estimates back home," Cameron said. "Yes, they were partly driven by the terrible weather which shut down airports, factories and schools - but let's be frank. They also brought home something we have said for months: given the traumas of recent years, the recovery was always going to be choppy."
Osborne echoed the claim that the ride ahead will not be smooth: "As Mervyn King and I have both said, the recovery is likely to be 'choppy'." You bet it is.
That set me thinking further about the weather. I left New York late last month just ahead of another snowstorm, and arrived in Fort Myers, Florida, in a tropical storm that threw the plane all over the place as we came in to land. It was beyond choppy. But we avoided the worst of the thunder and lightning because the pilot took evasive action. Plan A failed, so he sensibly turned to plan B and flew around the worst of the storm.
A general in a battle frequently has to change his plans as circumstances change. Presumably Lord Cardigan had only a plan A at the Charge of the Light Brigade. In his poem of that name, Alfred Tennyson explained why Cardigan needed a plan B: "Some one had blunder'd". The latest economic data in the UK suggests that the coalition has blundered badly.
In his speech at Davos, Cameron confirmed the "same old Tories" claim made by Jacob Rees-Mogg MP at Prime Minister's Questions - that "there is no alternative". Osborne's speech also made that clear. Apparently, he will include measures to deal with growth in the Budget in March, but they will be too little too late. The damage has already been done and new policies will take time to have any effect.
Given that the Tories had 13 years to prepare for office, and the Liberal Democrats had their whole lifetime, you might expect them to have had a plan for growth ready in May 2010. All they had was a plan to kill growth and jobs.
I read the speeches that Cameron and Osborne gave at Davos carefully, and was struck by how little either of them had to offer. It was spin over substance.
Cameron: "In many ways, we in Europe have been our own worst enemy . . . To get there isn't easy . . . It's going to be tough but we must see it through . . . there are no short cuts to a better future . . . The possibility of progress is there - we've just got to seize it . . . The world doesn't owe us a living."
Osborne: "The challenge may be formidable but the future will favour the bold . . . And if we are bold enough, the prize will be worth the effort . . . Right now the right long-term choices for the economy are the difficult choices . . . Adjustment will not be without struggle . . . Our competitiveness has suffered a lost decade" (whatever that means).
And these people are running our economy?
Recent developments in the US make it clear that there is a realistic alternative to destroying growth and confidence. The American economy is now picking up steam nicely. The Obama administration is continuing to add stimulus, and the extension of the tax cuts introduced under George W Bush, along with new payroll tax incentives, has given the economy a welcome boost. In the fourth quarter of 2010, GDP grew by an annual rate of 3.2 per cent in the US, compared to an annual rate of -2 per cent (four quarters of -0.5 per cent) in the UK (see graph below). The expansion was driven in large part by a jump in consumer spending of 4.4 per cent in the fourth quarter, following a 2.4 per cent rise in the previous quarter. Rising US exports and falling imports also added to the growth. Quite a contrast to Britain.
Interestingly, the US has suffered from bad weather this winter, as has much of Europe, but no other country seems to have been so unprepared or hard-hit as the UK. Bristol Water has warned of a drought this year, which may give Osborne and Cameron another excuse for why their policies aren't working. But I bet that if we have a warm summer they won't be saying that the good weather has boosted output temporarily and so things are really much worse than they seem.
Britain needs more than excuses.
David Blanchflower is NS economics editor and a professor at Dartmouth College, New Hampshire, and the University of Stirling