Sunday, 5 June 2016

Thatcher was wrong, badly wrong

Simon Wren-Lewis had a very good article on the-politicisation-of-truth.

He starts on how austerity was bad for the UK. He goes on however to discuss Thatcher's famous budget of 1981. It was this that brought forth the famous letter from the 363 economists.
It has  now gone down in folklore they were wrong and Thatcher was right. however as Wren-Lewis shows she was wrong ,badly wrong.

The budget delayed recovery by around a year and allowed unemployment to rise.Indeed unemployment only started to fall THREE years after the budget. That is some lag in fiscal policy. ( irony button off.)

There is no question that the deflationary budget held back recovery just as the 364 economists said it would.

I might add in ending those whom support the discredited classical economic theory often  use similar claims to support their cause. Often after a severe recession/depression a recovery comes as it must and the supports say see we have a recovery.

Some people just never understand!

Whoopsy. I forgot to add this occurred when Ireland was in one of its austerity drives. It failed because of Thatcher's budget!  how ironic. Indeed Ireland had only one successful austerity drive in policy. When the UK was in its Lawson boom.