Chaps, it’s worse than we thought…

My knowledge of economics could be written on the back of a 5p coin (that’s the smallest one, right?), so I always find it difficult to follow the substance of the debate about the financial crisis. One thing I have noticed though, is that those economists and pundits on the extremes of the debate both use the same rhetorical gambit. They both wearily impart to their naïve public, you just don’t know how bad it is.

On one side are the right-wing libertarians, who bewail our mounting levels of debt, believing that if only we realised the scale of the problem, we would adopt the policy prescriptions they desire. Take, for instance, the Telegraph columnist Janet Daley, who loftily dismisses the flim-flam that occupies most public debate, and instead asks what she calls the “truly fundamental” question: “is it possible for a free market economy to support a democratic socialist society?” Or the Ayn Rand admiring Tory MEP Daniel Hannan, who doesn’t bother with such fripperies as asking questions, cutting straight to the quick: we are doomed – doomed! – he tells us. But leaving the EU would, one must assume, help.

Such capsizals of conventional wisdom are not confined to the right. The Guardian’s economics leader writer, Aditya Chakraborty, is forever reminding his readers that our troubles are even more fundamental than we thought. The level of debate is farcical, he lamented in a recent Guardian podcast, neither George Osbourne nor Ed Balls gets it. The left is forever saying that unless we do something about structural inequality, we fail to grasp the true problem.

Perhaps they are correct, and perhaps the right are too, or maybe they are both exaggerating the problem so that their radical solutions are adopted. Maybe we’ll just bumble through the crisis, experiencing a lost decade like Japan, but as with Japan the basic structure of society will remain the same. That’s what I’d put my money on, but, as I said, I know nothing.


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