William Keegan (2014) Mr Osborne’s Economic Experiment. Austerity 1945-51 and 2010 –

In response to The Daily Post's writing prompt: "We Can Be Taught!."

William Keegan (2014) Mr Osborne’s Economic Experiment. Austerity 1945-51 and 2010 –

The first question when purchasing a book about economics is it worth the money? Let’s look at the evidence. The book costs £10 or thereabouts. This includes delivery. Not bad. But it is very short—or concise—depending on your definition. Large borders on the page. Empty spaces. Empty pages to seem more value for your buck, or pound sterling. Notes. Index. I’d guess less than 50 000 words. You can read it in one sitting. And there is a tendency to repeat the same story or telling phrase twice or thrice in different parts. ‘Pushing on a piece of string’ to describe monetary policy or ‘sadomonetarism’ for the government’s reliance on this as a tool to adjust consumer activity is a favourite.

William Keegan writes for the Observer. Anyone familiar with his work knows that he is an advocate of Keynesian expansion during times of economic contraction in the economy. He does not shirk from using words like Depression.   In the aftermath of the banking crisis of 2007-8 and its aftermath when our then Prime Minister Gordon Brown ‘saved the world’ by galvanising world-wide support for government intervention and injecting government money into banks to keep them afloat and save economies going into free-fall, as they did in the 1930s, there was little or no talk of austerity—not even from the Conservative frontbenches.

That came with Osborne and his crony crew of Cameron and Boris Johnson that run government for the rich. Post-second-world- war London like the rest of the nation suffered from shortages of just about everything. ‘Economists calculated that, in order to balance the books, exports would need to rise not only to pre-war levels, but to 75% above those levels.' In addition to this the flow of cash that supported the British economy, the Land Lease agreement, running at ‘£2 billion a year’ (multiply that by 100 for nowadays) was, with the war ended, abruptly terminated.  The winter of 1946-7 was one of the coldest on record. Nationwide power cuts. A debt ratio of around 148% more than can be produced by all the goods and service that Britain could produce in any one year.

Osborne’s great con trick was a debt ratio inherited from Gordon Brown and Labour of around 7% and making most observers believe that this was insufferable and like Greece, the road to bankruptcy. As Keegan shows John Major’s government ran a greater debt to GDP ratio. And it’s worth noting if the Greek government went to the troika that issued their loans and were asked to pay it back in fourteen years, bond renewal, as the current government has, and not six months then most governments, of whatever political persuasion, would hardly constitute it as a crisis.    

Lots can happen in that time. Even a rudderless ship eventually hits shore. With a growing population and expansion from a low starting point in the economy grass roots of economic expansion have begun to appear. Osborne claims credit for this. Austerity works, even when it doesn’t. His failure to use fiscal policy, build a nation for the future when money literally costs virtually nothing is short-sighted and stupid. By measuring Britain’s progress prior to the shock of 2008 Osborne by IMF projection has set back the county by several years.  

Listen, who cares? The problem with Keegan’s polemic is those reading it are already aware of this. Just as they are aware of Tory government’s attack on welfare abuse as a Trojan horse to dismantle the welfare state and increase the flow of money to crony capitalists like themselves.

Those who believe all is light in the world of Tory finance and the government is doing a grand job would not pay for Keegan’s book. The problem isn’t preaching to the converted. The problem comes when the Conservatives win the next election and begin in earnest to dismantle the welfare state. What is to be done