Monday, October 20, 2008

Economics, schnomics?

Far too many years ago I took Economics at A-Level. I can't pretend to remember too much from it now, other than the details of the Hogg Cycle, reasons why we should never adopt the Euro, a vague outline of the Keynesian and Monetarist theories and a sense that all economic theories were considered bust and that "muddling along" was about as good a method of economic management as any other. (Oh and that Keynes is pronounced "canes" not "keens", but that was only really useful at the University of Kent where the name one of the colleges is frequently mispronounced.) Ah the 1990s was such an innocent era.

Flash forward many years and we're almost now at the point where arguments about what economic theory of management should be followed are about to become a live political issue again. Alastair Darling, the Minister for Invisibility who is apparently also Chancellor of the Exchequer, has recently praised John Maynard Keynes. So too has the Daily Mail. (ConservativeHome: CentreRight: Daily Mail now calling for Keynesian borrowing-funded tax cuts) And it's even been suggested that "The debate is now between two forms of Keynesianism" so we even see the debate skipped altogether!

It's partially because my business knowledge has rusted that I haven't commented much on the current economic troubles. At times some of the figures quoted have seemed fantastic, whilst the markets all appear to be yo-yoing, changing direction with every government announcement. The main role for government has to be to create the conditions for the markets to strengthen and protect the ordinary public from problems beyond their control. If we had back into too much control and planning in the economy then long term prospects for growth will be stifled, to the detriment of us all.

Debates on economic theory will often go over the heads of many - I still have problems understanding what the US Presidential election of 1896 was about with a battle over the Republicans advocating Gold vs the Democrats advocating Silver (now there's an interesting thought about how to change political colours in the US!) - but can ultimately determine whether there are jobs, whether one can get an essential loan, if one is able to invest and so forth. I hope that the next such debate will come in terms people can understand.

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