I'm just coming to the end of a fabulous week in the USA and vote Washington DC the most friendly city I have ever been to. London would be transformed if we could be as polite and helpful and spontaneous as our Washingtonian cousins. Now in New York I got the Wall Street Journal this morning and came across the full page spread advert paid for by the Cato Institute which has over 260 economists including Nobel laureates [though not Jed Bartlett] disagreeing with Obama's quote from Jan 9th when he said that "economists from across the political spectrum agree" on the need for massive government spending.
It's worth reproducing their succinct argument here:
"Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930's. More government spending did not solve Japan's 'lost decade' in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the US today. To improve the economy, policymakers should focus on reforms that remove the impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth."
So Cameron-Osborne are not so lonely now, but the grim reality is that they will have to become salvage experts between now and the next election.
