What's this from please? I've never really paused to think about New Labour's economics. This is mostly because they had the NICE decade which didn't require intellectual feats on macro. As someone concerned with regional growth, the claim they fixed the micro foundations is... interesting.
Though for all his many flaws, Osborne certainly did have a strong take on macro. I think he once said he was a fiscal conservative but a monetary radical. Which of course led to cheap money that Osborne then refused to use.
Lots of us r sceptical abt the usefulness of macro, but when its moment arrived, nobody who mattered in policy terms seemed to have bothered to keep an understanding of it in their back pocket.
Osborne just saw opportunity to do exactly the wrong thing at the wrong time, & Lab scrambled to join in.
We all pick the evidence and approaches that support our priors, but don't forget that Reinhart and Rogoff had - very influentially - appeared to show that high levels of national debt slowed growth. They were wrong, but Osborne didn't know that at the start of austerity.
New keynesian models literally have the central bank keeping inflation under control by threatening to send inflation to infinity if anyone misbehaves. Not including banking does not matter at all in comparison.
hope you enjoy it more than I did; I hate giving up. But it felt to me like it was written in a tone of shocked-horror that Treasury Officials met bankers or studied economics or something, that I eventually found unbearable
Some interesting source material but I agree that the narration would be improved with a more neutral tone. I saw you got a mention in the Osborne bio btw.
I’ve just ordered it. I have some wonderful quotes from Bernard Donoghue while working for Callaghan about how the Treasury was screwing them over and forcing them to follow Conservative policies.
I like the idea of the Treasury screwing over Healey, but Callaghan’s ‘76 Conference Speech certainly foreshadowed Thatcher in its repudiation of traditional Keynesian demand management.
It is a much misunderstood speech. It only ‘foreshadowed’ Thatcher because Callaghan lost in 1979. Her victory was by no means inevitable and the 1976 speech was part of his attempt to prevent it.
It foreshadowed Thatcher in the repudiation of traditional Keynesian demand management and recognising the need for supply side reforms, although those reforms were very different from those proposed by Thatcher. You can argue that Wilson also understood the importance of supply side reforms ....
Great quote from a great book. But I think Davis takes this and similar quotes too much at face value. This leads him to argue that UK economic policy abandoned 'any notion of macroeconomic policymaking more generally' (p. 25), which is a very odd thing to say...
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Osborne just saw opportunity to do exactly the wrong thing at the wrong time, & Lab scrambled to join in.