Sunday, 19 July 2015

An Avoidable Disaster

The unfortunate coincidence of the G20 Conference falling to London in 2008 during the even more unfortunate Brown premiership just as the world went to hell in a handcart (the last two being perhaps more than coincidence) continues to cascade down the years.  Germany and France, unable to stomach the style in which perfectly sensible policy choices were made (and claimed) held separate press conferences in which they asserted not just the rejection of the manner  of presentation  but its content.

Saving the world required very basic economic understanding; it was accompanied by policy rough edges and inadequacies equally well known, understood and correctable.  The prime-ministerial bombast displayed in the inevitable recovery of those economies practising keynesian responses became insufferable, driven by political need to hide responsibility for the disaster that had been wrought on the UK economy by  poor grasp of powerful economic understandings; thus more primitive economic policies from which flowed different political necessities were adopted and reinforced in Europe.

It is a banal observation that economic policies interact with political objectives in their implementation.  It is erroneous to associate economic policy schools of thought with particular political outcomes.  The use of keynesian growth/demand management policies should never have been associated with brownian political virtue or that of social democratic progressivism.  The use of Hayek-Friedman employment/wage-level policies should never have been associated with Merkozy commonsense centre-rightism.  Without  political exhibitionism growth and recovery could have been achieved by now.

When the President of the European Central Bank responded to questions about the German Finance Minister's aims during the latest round of the Greek crisis he remarked that his job was to secure the euro not to respond to politicians' current objectives.  Quite right.  The sooner politicians learn what is their area of expertise (we hope) and that they cannot allocate to themselves the achievements of distinguished academics and technicians the sooner inappropriate over-reactions to events might stop causing unnecessary havoc.       

2 comments:

cuffleyburgers said...

"when the President of the European Central Bank responded to questions about the German Finance Minister's aims during the latest round of the Greek crisis he remarked that his job was to secure the euro not to respond to politicians' current objectives."

Somebody might have added that his job was also to act as lender of last resort to the Greek banking system and not withold ELA as part of the general blackmail and armtwisting being used against the Greek government.

So it seems his principles are let us say at the very least, contingent.

Shawn Deny said...

The use of keynesian growth/demand management policies should never have been associated with brownian political virtue or that of social democratic progressivism.
Marble