{"id":29338,"date":"2015-06-12T21:06:21","date_gmt":"2015-06-12T20:06:21","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=29338"},"modified":"2015-06-12T21:08:17","modified_gmt":"2015-06-12T20:08:17","slug":"80-economists-say-osbornes-economics-make-no-sense-in-the-guardian","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2015\/06\/12\/80-economists-say-osbornes-economics-make-no-sense-in-the-guardian\/","title":{"rendered":"77 economists say Osborne’s economics make no sense in the Guardian"},"content":{"rendered":"

A letter has been published in the Guardian tonight<\/a> signed by 77 economists that says George Osborne's plan to legislate for budget surpluses makes no sense. I reproduce it below as I'm one of the signatories.<\/p>\n

There's also a Guardian comment article.<\/a><\/p>\n

And if you see some overlap between the letter and this blog <\/a>that's not chance: one is based on the other.<\/p>\n

____________<\/p>\n

\n

The chancellor\u2019s plans, announced in his Mansion House speech, for \u201cpermanent budget surpluses\u201d are nothing more than an attempt to outmanoeuvre his opponents (Report, 10 June<\/a>). They have no basis in economics. Osborne\u2019s proposals are not fit for the complexity of a modern 21st-century economy and, as such, they risk a liquidity crisis that could also trigger banking problems, a fall in GDP, a crash, or all three.<\/em><\/p>\n

Economies rely on the principle of sectoral balancing, which states that sectors of the economy borrow and lend from and to each other, and their surpluses and debts must arithmetically balance out in monetary terms, because every debit has a corresponding credit. In other words, if one sector of the economy lends to another, it must be in debt by the same amount as the borrower is in credit. The economy is always in balance as a result, if just not at the right place. The government\u2019s budget position is not independent of the rest of the economy, and if it chooses to try to inflexibly run surpluses, and therefore no longer borrow, the knock-on effect to the rest of the economy will be significant. Households, consumers and businesses may have to borrow more overall, and the risk of a personal debt crisis to rival 2008 could be very real indeed.<\/em><\/p>\n

These plans tie the government\u2019s hands, meaning it won\u2019t be able to respond appropriately to constantly evolving economic circumstances, good or bad. The plan actually takes away one of the central purposes of modern government: to deliver a stable economy in which all can prosper. It is irresponsible for the chancellor to take such risky experiments with the economy to score political points. This policy requires an urgent rethink.<\/em><\/p>\n

Dr Ha-Joon Chang <\/strong>University of Cambridge<\/em>
\nThomas Piketty <\/strong>Paris School of Economics<\/em>
\nDavid Blanchflower <\/strong>Bruce V Rauner professor of economics at Dartmouth College and ex-monetary policy committee<\/em>
\nProf Mariana Mazzucato <\/strong>RM Phillips professor in the economics of innovation, University of Sussex<\/em>
\nJared Bernstein <\/strong>Former chief economist and economic adviser to vice-president Joe Biden<\/em>
\nProf Simon Wren-Lewis <\/strong>University of Oxford <\/em>
\nProf Victoria Chick <\/strong>University College London<\/em>
\nProf Ozlem Onaran <\/strong>Department of international business and economics, University of Greenwich<\/em>
\nProf Engelbert Stockhammer <\/strong>Professor of economics, University of Kingston<\/em>
\nHoward Reed <\/strong>Director, Landman Economics<\/em>
\nRichard Murphy <\/strong>Tax Research UK<\/em>
\nStewart Lansley <\/strong>Visiting fellow, Bristol University Townsend Centre for International Poverty Research<\/em>
\nProf Andrew Cumbers <\/strong>Professor of political economy, Adam Smith Business School, University of Glasgow<\/em>
\nProf Malcolm Sawyer, <\/strong>Emeritus professor of economics, Leeds University Business School <\/em>
\nProf George Irvin <\/strong>Professorial research fellow, Soas, University of London<\/em>
\nProf John Weeks <\/strong>Emeritus professor, Soas, University of London<\/em>
\nProf Prem Sikka, <\/strong>Professor of accounting, University of Essex<\/em>
\nProf Christine Cooper <\/strong>Accounting and finance, Strathclyde Business School<\/em>
\nProf Diane Elson, <\/strong>Emeritus professor, University of Essex and chair of UK Women\u2019s Budget Group<\/em>
\nProfessor Jonathan Michie <\/strong>University of Oxford<\/em>
\nProf Robert McMaster <\/strong>Professor of political economy, Adam Smith Business School, University of Glasgow<\/em>
\nDr Jo Michell <\/strong>Senior lecturer in economics, University of the West of England, Bristol<\/em>
\nProf Sheila Dow <\/strong>Emeritus professor of economics, University of Stirling<\/em>
\nProf John Grahl <\/strong>Professor of European integration, University of Middlesex<\/em>
\nProf Jan Toporowski <\/strong>Professor of economics, Soas, University of London<\/em>
\nProf Philip Arestis <\/strong>University of Cambridge <\/em>
\nProf Giuseppe Fontana <\/strong>Professor of monetary economics, Leeds University Business School<\/em>
\nProf David Spencer <\/strong>Professor of economics and political economy, Leeds University Business School<\/em>
\nProf Alfredo Saad Filho <\/strong>Professor of political economy, Soas, University of London<\/em>
\nProf Mary Mellor <\/strong>Professor emeritus, Northumbria University<\/em>
\nDr Craig Berry <\/strong>Deputy director, Sheffield Political Economy Research Institute (speri)<\/em>
\nProf David Newbery <\/strong>Emeritus professor of Economics, Cambridge University<\/em>
\nProf Hugh Willmott <\/strong>Cass Business School<\/em>
\nProf Steve Keen <\/strong>Professor of economics, Kingston University<\/em>
\nDr Henning Meyer <\/strong>Research associate, Public Policy Group, London School of Economics<\/em>
\nProf John Van Reenen <\/strong>Professor of economics, London School of Economics<\/em>
\nProf Ismail Ert\u00c3\u00bcrk<\/strong> Senior lecturer in banking, University of Manchester<\/em>
\nProf Susan Himmelweit <\/strong>Emeritus professor of economics, Open University<\/em>
\nProf Valpy FitzGerald <\/strong>Emeritus professor of international development finance, University of Oxford <\/em>
\nProf Simon Mohun, <\/strong>Emeritus professor of political economy, Queen Mary, University of London<\/em>
\nStewart Wallis, <\/strong>Executive director, New Economics Foundation<\/em>
\nProf Klaus Nielsen, <\/strong>Professor of institutional economics, Birkbeck, University of London<\/em>
\nProf Pritam Singh <\/strong>Professor of economics, Oxford Brookes University<\/em>
\nDr Andrew Mearman <\/strong>Associate professor in economics, UWE Bristol<\/em>
\nProf Matthew Watson <\/strong>Professor of political economy, University of Warwick<\/em>
\nProf Grazia Ietto-Gillies <\/strong>Emeritus professor of applied economics, London South Bank University<\/em>
\nDr Mary V Wrenn <\/strong>Joan Robinson research fellow in heterodox economics, Girton College, University of Cambridge<\/em>
\nGeoffrey Hodgson <\/strong>Research professor, University of Hertfordshire <\/em>
\nDr Daniela Gabor <\/strong>Associate professor, UWE Bristol<\/em>
\nProf Bruce Cronin <\/strong>Director, Centre for Business Network Analysis, University of Greenwich<\/em>
\nDr Annina Kaltenbrunner <\/strong>Lecturer in the economics of globalisation & the international economy, Leeds University Business School<\/em>
\nProf Gary Dymski <\/strong>Professor of applied economics, Leeds University Business School <\/em>
\nMichael Burke<\/strong> Economist<\/em>
\nDr Russell Smith <\/strong>Senior lecturer in economics, Cardiff School of Management<\/strong><\/em>
\nProf Philip B. Whyman <\/strong>Professor of economics, University of Central Lancashire<\/em>
\nProf Tony Thirlwall <\/strong>Professor of applied economics, University of Kent <\/em>
\nMichael Kitson <\/strong>Cambridge Judge Business School, University of Cambridge<\/em>
\nDr Abigail McKnight <\/strong>Senior research fellow, Centre for Analysis of Social Exclusion, London School of Economics <\/em>
\nDr Ken Coutts <\/strong>Assistant director of Research, faculty of economics, University of Cambridge <\/em>
\nProf Robert H Wade <\/strong>London School of Economics<\/em>
\nDr Kalim Siddiqui <\/strong>Department of strategy, marketing and economics, University of Huddersfield<\/em>
\nProf Stuart Holland <\/strong>University of Coimbra <\/em>
\nDr Alberto Paloni <\/strong>Adam Smith Business School, University of Glasgow<\/em>
\nEwa Karwowski <\/strong>Lecturer in economics, Kingston University<\/em>
\nProfessor Marcus Miller <\/strong>University of Warwick<\/em>
\nDr Gary Slater <\/strong>Leeds University Business School<\/em>
\nProfessor David Bailey <\/strong>Aston Business School<\/em>
\nDr David Harvie <\/strong>Senior lecturer in finance and political economy, University of Leicester<\/em>
\nBarbara Harriss-White <\/strong>Emeritus professor and senior research fellow, area studies, Oxford University<\/em>
\nDr Bruce Philp <\/strong>Head of department, strategy, marketing and economics, Birmingham City Business School<\/em>
\nRoberto Veneziani <\/strong>School of economics and finance, Queen Mary, University of London<\/em>
\nDr Julian Wells <\/strong>Principal lecturer in economics, Kingston University, London<\/em>
\nDr Neil Lancastle <\/strong>Department of accounting and finance, De Montfort University<\/em>
\nMimoza Shabani <\/strong>Lecturer in financial economics, University of East London<\/em>
\nDr Ashley L Carreras <\/strong>Principal lecturer in economics and decision analysis, faculty of business and law, De Montfort University <\/em>
\nProf Michael Lipton <\/strong>Research professor of economics, Sussex University<\/em>
\nDr Graham Gudgin <\/strong>Research associate, Centre for Business Research, University of Cambridge and senior economic advisor, Oxford Economics<\/em>
\nProf Geraint Johnes <\/strong>Professor of economics, Lancaster University Management School<\/em>
\nAndrew Simms <\/strong>Fellow, New Economics<\/a> Foundation<\/em><\/p>\n<\/div>\n

__________<\/i><\/div>\n
<\/div>\n
Thanks to all involved.<\/div>\n","protected":false},"excerpt":{"rendered":"

A letter has been published in the Guardian tonight signed by 77 economists that says George Osborne’s plan to legislate for budget surpluses makes no
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