Ireland is heading back for recession.
Just a week after Danny Alexander said British cuts were essential to tackle the sorts of problem Ireland had the crippling impact of the cuts he wants to emulate on the only economy that has been subject to such savagery in recent times has becomeeven more apparent as any sign of growth collapses.
The real lessons are clear. First slashing public sector spending depresses the economy. Second it escalates unemployment. Third it induces private sector decline, a fall in profitability and private sector unemployment. Fourth, the private sector does not flood in to fill the void left by government, it flees. Fifth, the deficit does not fall as a consequence. Sixth you go into recession. Seventh, you can see no way out of the decline.
That’s what's happening in Ireland.
That’s what could happen here.
It needn’t. It needn’t because this is the excuse Osborne et al need to change track, to say they got it wrong, that the solution they’ve been following does not work. I doubt they will take that opportunity. Deficit hawks don’t want to,. Indeed, as Ireland’s Central Bank Governor said earlier this week, he thinks the answer is more cuts. Which is close to madness.
But someone has noticed: Ed Balls has noticed. He’s said:
These figures are a stark warning to governments across Europe including our own. That is not a credible economic strategy because lower growth and fewer people in work and paying taxes ultimately leads to a bigger deficit, not a smaller one.
It’s an argument made here whilst Ed was still in office. But what the heck? This is an opportunity to say the facts have changed, and their mind has changed with it: to push Darling’s deficit reduction plan into the long grass and to rebuild a new economic policy whoever is party leader this weekend.
it’s an opportunity they have to take.
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[…] to serve their own purpose — a crux for their own beliefs. The sort of belief that we’re seeing acted out in Ireland. The sort of mythical belief that underpins neoclassical economics. The sort of myth that is […]
It’s only a pity that the Labour policy going into the election was not only to cut public spending by 20% but to enshrine the duty to cut the deficit in half by 2015 in law.
It is astonishing how quickly a party can go from thinking something should be made a legal responsibility to arguing that it is actually a bad idea. I know people have a right to change their mind: what was so offensive about the labour project was how they marginalised and criminalised those who disagreed with them.
[…] to serve their own purpose — a crux for their own beliefs. The sort of belief that we’re seeing acted out in Ireland. The sort of mythical belief that underpins neoclassical economics. The sort of myth that is […]
The idea that you can spend your way out of bankruptcy is like believing you can drink your way to sobriety. Ireland has 2 problems (1) that they are tied into the Euro so that they cant’ cut all costs by 20% as we have by having the pound drop & (2) that they have some of the world’s most expensive electricity, matching ours, which limits their competitivity. Nonetheless they have achieved an average 7% growth through free marketism over the last 20 years going from being 1/3rd poorer than us to 1/3rd richer.
Anybody holding any part of that apart from their windmillery up as a bad example is hardly in a position to claim to be against economic decline.
Anybody hol
@Neil
We’re not talking alcoholism
Try reading some Keynes
We are talking addiction.
If you actually try Keynes you will find he was not half as profligate as most “Keynsians”.
I think you demonstrate perfectly why economics is not a science….20k academics economists in the west and only three dozen saw it coming, thats some return for our faculty funding taxes, even straight luck should have produces more than 36.
Engineering is an interesting science at its heart is “system safety philosophy”if you applied it to economics you would quickly realise that the UKs problems are of a different nature to Irelands and thus the solutions too are not the same, but you dont cause you dont do science.
Here is a tip, Step one, scrap the Euro.
Scrapping the Euro would inded be a help as I suggested.
However just asserting that Ireland is different from Britain & so we can learn nothing from them is unscientific. The similarities far outweigh the diferences.
My suspicion is that the reason economists so often err is precisely because we, our at least our governments, employ so many.
As with “climate scientists” promotion comes not from achieving engineering accuracy but from telling politicians what they want to hear & politicians like to hear & like us to hear that them printing & spending as much as they like is beneficial. Who wouldn’t?
Statistical surveys of nations across the world unmistakably show that economic freedom, including a free market in energy, is a necessary & sufficient condition for success
@Neil
Of dear, you’re another believer in the bond gods and the fairies who bring rewards for all who truly believe, aren’t you?
Either that or you’ll know how absurd what you’ve just written is