Tuesday, 9 June 2009

Krugman on Brown

Gordon Brown - World Economic Forum Annual Meeting Davos 2008
As is often my want, I thought that I would point in the opposite direction to much of the blogesphere. Paul Krugman, receiver of the Nobel Prize in Economics, has this to say about Gordon Brown:
Do Mr. Brown and his party really deserve blame for the crisis here? Yes and no.

Mr. Brown bought fully into the dogma that the market knows best, that less regulation is more. In 2005 he called for “trust in the responsible company, the engaged employee and the educated consumer” and insisted that regulation should have “not just a light touch but a limited touch.” It might as well have been Alan Greenspan speaking.

There’s no question that this zeal for deregulation set Britain up for a fall. […] But here’s the thing. While Mr. Brown and his party may deserve to be punished, their political opponents don’t deserve to be rewarded.

After all, would a Conservative government have been any less in the thrall of free-market fundamentalism, any more willing to rein in runaway finance, over the past decade? Of course not.

And Mr. Brown’s response to the crisis — a burst of activism to make up for his past passivity — makes sense, whereas that of his opponents does not.

The Brown government has moved aggressively to shore up troubled banks. This has potentially put taxpayers on the hook for large future bills, but the financial situation has stabilized. Mr. Brown has backed the Bank of England, which, like the Federal Reserve, has engaged in unconventional moves to free up credit. And he has shown himself willing to run large budget deficits now, even while scheduling substantial tax increases for the future.

All of this seems to be working. Leading indicators have turned (slightly) positive, suggesting that Britain, whose competitiveness has benefited from the devaluation of the pound, will begin an economic recovery well before the rest of Europe.

Whilst the victories of hateful fascists across Europe are a grotesque articulation of anti-political feeling, resentment & bigotry, the victories of this hateful ensemble is largely symbolic. A loathsome symbol to be despised by all the right-minded and politically aware. They serve as warning to future voters. Yet, for now, they have little power.

In terms of the legislature, the gentle shift of the Europe further rightwards is more potent. The centre-left coalition shrank– the right is even more powerful.

As we reject New Labour we reject the ‘third way’ economics. The even more laissez-fair economics of the right awaits us.

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