Friday, 22 January 2016

Simon Wren-Lewis keeps quiet about pro-austerity academics.

This article by SW-L (Oxford economics prof) portrays the austerity versus anti-austerity argument rather too much as a left versus right argument for my liking. The baddies are the political right, while the goodies are the political left who have been allegedly trapped into buying the pro-austerity argument by devious righties.

SW-L is quite right to say that devious righties have forced many leading lefties to buy the pro-austerity agenda by repeatedly asking the question “What about the deficit?” every time the left proposes any sort of anti-austerity measure. And if the right has to enlarge on that deficit question, it just trots out the old nonsense about a government being like a household in that households have to balance their books.

Of course some righties (perhaps the majority) actually believe that governments can be compared to households. So the truth is that it’s a case of clever righties tricking dumb righties AND well meaning lefties.

Another possibility is that George Osborn and his pals seriously believe that households can be compared to governments, in which case the WHOLE OF the political right is dumb!

However, that’s not the whole story. The unfortunate truth is that there are plenty of so called “professional” economists who (like dumb righties) also don’t understand the differences between micro and macro economics: i.e. who don’t get the distinction between households and governments. SW-L as an academic understandably wants to keep quite about those individuals.

Two so called professional economists who quite obviously don’t understand the difference between macro and micro, and who have devoted a large amount of effort to opposing deficit increases are Kenneth Rogoff and Carmen Reinhart of Harvard. But so called professional economists working for the IMF and OECD are equally guilty.

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