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November 27, 2014



Osborne seems to have the least interest in economics of any Chancellor I can remember. Is that fair? Howe and Brown always seemed to favour it over politics. Lawson seemed to like it. Osborne doesn't appear to give a shit about it.

Ed Balls's education and career suggests he's interested, so I'm not sure what's going on there. Maybe if he becomes Chancellor he'll stop with the politics and start getting into economics more. It is perhaps harsh to judge him until he wins power?

So to answer your question - Osborne is entirely to blame, and I'm hoping you'll be pleasantly surprised by Balls next year.


I think there is often also a dichotomy between good economic policy and what feels emotionally right for most people.

On tax, many economists would think property and inheritance taxes are less of a disincentive to work than income taxes. But emotionally, people hate paying them (PAYE is less intrusive).

Immigration is good economically, but threatens people's sense of cultural continuity.

I'm sure you could pick many other examples, but economic reasoning and human psychology often conflict.

Luis Enrique

You mention new policy relevant ideas from economist, there has been a lot around variants of direct monetary financing and debt restructuring in the EU, quite a lot of innovative ideas about how (sorry no cites now but browse of vox eu will find) perhaps basic concept not strictly new but more than simply applying new Keynsian models to the problem (and let's not forget merely doing would be a marked improvement on where we are)

Ben Cobley

I would suggest a different explanation - democracy, something that politicians and the media both have to pay court to. It defies rationalist consensus, and thank god for that - otherwise we'd be justified in getting rid of it and appointing a bunch of economists to rule the country/world. And that would not end well...



The media is partially to blame - but economists have to shoulder some of the burden - in being unable to police their profession they've allowed strong and well-known schools of thought to develop who will cheerfully back Osborne's stance.

And it's not just the Chicago boys, Rogoff is an egregious example in this regard...

Roy Lonergan


I'm sure that EB wrote the Mansion House speech, but wasn't it GB that was mocked for speaking of "post-neoclassical endogenous growth theory"? For example, in poetry, here: http://www.theguardian.com/culture/charlottehigginsblog/2010/may/10/economics-gordon-brown


Dave Timoney

Your humour becomes ever more recherché. George Osborne's fawning biographer suggests that the leader who can provide the UK with a vision-thing "should be" the PM, which is a pretty obvious implication that it will not be, and that Ganesh is very relaxed about that.

What is notable about Osborne is that he views economics in purely instrumental terms, hence he will make "imbecilic" and "silly" statements that he obviously doesn't believe, purely for political gain. To the extent that the media are culpable, it is because they are a willing (and consciously cynical) conduit for his nonsense.

The Labour front bench may be wrongheaded about many things, such as the deficit, but you do get the impression that they actually believe the orthodoxy. What frustrates Ed Balls is that he simply can't carry off the chutzpah of the Chancellor.

Ultimately, Osborne is a more dangerous adventurer than Johnson (B minor). It is never an appealing sight when journalists start talking about the need for a "galvanising leader" who can "transcend our small-time politics" and the "frivolity" of the public.

The media are an ideological means to a hegemonic end. So, to a large extent, is economics. The gap between politics and economics is ultimately the responsibility of politicians.

An Alien Visitor

"Many are in fact waiting for a leader to arrest it."

And therein lies the problem.


"Osborne seems to have the least interest in economics of any Chancellor I can remember. Is that fair? Howe and Brown always seemed to favour it over politics. Lawson seemed to like it. Osborne doesn't appear to give a shit about it."

Yes nailed it. But it is easy to see through if you look. The Labour party should get the blame as well for refusing to call this out.


"At least some of the discipline was discredited by the crisis, and I get the feeling that there aren't so many good new policy-relevant ideas now". Therein lies the answer - economists have nothing politically useful to say. All that is on offer is 'chuck money and hope' or 'we're all right, keep turning the screw'. Neither is a great vote winner. So avoid economics and hire someone who will tell you something electable.

"There is...an unsatisfied demand for seriousness and leadership". People probably would buy into some sort of paternalism but be wary, the old certitudes have gone (or are hiding), economics is a backward-looking science and what worked last year will probably not work this year.


If economists' conclusions can be biased by their own political prejudices (and we know that they can), how do we know whether if economists of different persuasions agree on something that means that they're all collectively right or all collectively wrong? Why should we believe that economic orthodoxy is correct?



Only slight O/T but I wondered what you thought of the "do nothing" option which appears to have happened in the 1921 depression? Outline here:


and a discussion with the author here:


I haven't read the book and at that price won't be, but it strikes me that it is the one approach that we haven't heard from modern Economists. Not that I expect politicians of left or right to be able to live with it or even attempt to sell it to the general public.


@ SimonF that reminds me of an old paper by Brad De Long on Liquidation Cycles.
He suggested that many pre-30s recessions did cure themselves and that the "do nothing" policy was OK. The problem, he says, is that the 31 recession did not fit this pattern, and so "do nothing" was discredited.
I suspect the last recession was closer to 31 than its predecessors. But I can believe that there might be circumstances where "do nothing" (or do little) might be OK.
@ Luis - I agree. There have been many proposed cures for the euro crisis. But they have been blocked by political/moralistic reasons.

gastro george

@SimonF The Cato Institute is a libertarian free-market organisation that has its own political agenda to push.


Italy tried to do just that by imposing the non elected Monti government leading to a severe taxation regime to pay off "the deficit" as quickly as possible in order to please Germany leaving no oxygen for economic growth. Result? The present day mess

Icarus Green

The problem lies with economics. Theres the canard that you can't get economists to agree on anything, but the truth is that you can, if you separate out ideological and conservative rentboys subconciously scared of communism from the sample. The EU commission and Osborne and the like must see the same polls of economists that I and others do - wall to wall consensus on borrowing for infrastructure spending, stimulus etc - but prefer to hold up partisan and minority views to suit their political agenda. Because neoclassical/neoliberal and Austrian economics on the right has elevated theory and assumption over empirics we have a false split in the discipline allowing odious servants of capital to pretend that what Robert Lucas says about Ricardian equivalence isn't nonsense and justify their lapdog policies. We need to elevate empirics and economic history into economics programmes and shelve the mathematical theoretical masturbation about utopia without government.


"@SimonF The Cato Institute is a libertarian free-market organisation that has its own political agenda to push."

As do the left leaning blogs and websites I read. Your point is?

I try to have my prejudices challenged and don't want to live in an echo chamber. What do you do?

I thought it raised an interesting question and as I'm not an Economist and don't have time to read all the literature I thought I'd ask Chris as I respect his judgement as being fair minded.

How else are us untutored general public to learn?

PS And a big thanks to Chris for taking time to answer so promptly.

gastro george

@SimonF Well this post is actually about economists and politicians. By economists, I would presume that, in order to find those people who my be arguing in the best possible faith, that we're talking about academic economists. The Cato Institute is a "think-tank". It was set up the Koch brothers, notorious "philanthropists" who fund a substantial portion of right-wing think-tankery in the US (including climate-change deniers, etc.) and Murray Rothbard, a high-priest of the Austrian movement. Rather extremely right-wing IMHO. If you think that anything that comes out of Cato is going to be anything other than libertarian dogma, then you're a more credulous person than I am.


"It might be that the voters are to blame. Maybe they don't want serious politicians who are interested in good ideas but rather, in our narcissistic age, they simply expect their demands to be met, however unreasonable."

To my mind it the lions share of the blame is undoubtedly with the voters, but the reason why the voters are to blame is even more depressing than the above. It is not just their unreasonable demands or even their economic illiteracy - its more their sheer unbridled ignorance of basic facts.

To illustrate my point: according to recent Yougov polls most UKIP voters believe the rich should pay more tax and also believe rail should be nationalised. SO WHY THE F"£$ ARE THEY VOTING UKIP???? BECAUSE THEIR LEADER LIKES A FAG AND A BEER????!!! TOTAL AND UTTER IGNORANCE.....

Also according to other polling the majority of voters do not believe more austerity is needed after the next election despite many reports including the official OBR analysis spelling it out........


"Osborne seems to have the least interest in economics of any Chancellor I can remember. Is that fair? Howe and Brown always seemed to favour it over politics. Lawson seemed to like it. Osborne doesn't appear to give a shit about it."

Brown certainly used macro theory to guide his policy decisions. And unlike many of this predecessors he also commissioned the work of respected economists to make major decisions - in particular in his correct decision to keep us from joining the Euro:


Perhaps Osborne could learn something from this?

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