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Economic History Lesson

John Rentoul

Main Photo 220x165 Economic History LessonNigel Lawson, Financial Secretary to the Treasury 1979-81 (second from left in picture), told Treasury civil servants at a seminar organised by the Mile End Group two weeks ago (but online only today):

There’s a reason why you today can feel confident … Based on the example of what we did in the 1980s, squeezing public expenditure will produce the result you would like it to produce, and you don’t have to worry about the Krugmans, or our English equivalents sitting in the front row here.

(He was referring to Paul Krugman and William Keegan of The Observer, who is also a visiting professor at Queen Mary, University of London.)

We should set this as an exam question for new recruits to the Treasury: List the ways in which the situation in 1981 and 2013 is different, and why Lord Lawson’s reassurance might not be justified.

A higher level question for a possible distinction: If the economy does grow faster than expected, 2013-15, would that be because of or despite the fiscal tightening of 2010-13?

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  • http://twitter.com/eoselim Dr Omar Selim

    Total and utter NONSENSE- Aren’t the Tories who started the DEMISE of Britain in 1979? The paragraph is not a ‘higher level question’ but a highly hypothetical one the assumptions it offers will NEVER materialise. On the contrary, since Britain now is actually in depression, matters will get worse and worse with a possible Chinese or/and Russian acquirement of major chunks of Britain’s assets as happened in Cyprus. It’s a matter of WHEN not IF.

  • porkfright

    Quite right, good Doctor. But as these people appear never to have read an Economics Textbook in their lives-let alone obtained a degree in said subject-the disorganised chaos will no doubt continue.

  • Pacificweather

    I remember the obsession with the PSBR. That obsession threatened to and probably did damage the economy more than any other economic obsession. Now it is never mentioned. Lawson was the second worst Chancellor of the Exchequer since the war.


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