Politically Impossible

An article inwards the Financial Times lately said of me: “He has opposed deficit reduction when the economic scheme was weak as well as when it was strong.” Ah yes, this would endure the same economist who has suggested the left aims to bring down the electrical flow deficit (all electrical flow spending less revenue) to zero, that pre-crisis financial policy inwards the Euro periphery should bring been much to a greater extent than contractionary, as well as has championed financial councils every bit a agency of eliminating deficit bias.

Should I bring demanded a retraction? I didn’t: life is short, maybe it was a form of joke, or fifty-fifty a misprint, as well as if non mayhap it said to a greater extent than close the author than it did close me.

But I was reminded of it final calendar week when I was discussing pre-crisis financial policy. As I noted inwards ane of those before posts, I am repeatedly told that pre-crisis financial policy inwards Kingdom of Spain could non bring been tighter. It was ‘politically impossible’, given the budget surpluses at the time. I heard a similar signal made close Republic of Ireland final week. (While a large exercise of Ireland’s post-crisis financial problems were downward to socialising its financial sector’s debts, a meaning exercise was also due to relying likewise much before the crisis from receipts based on an unsustainable housing boom, every bit was the illustration inwards Spain.)

It occurred to me (and yes, I know it is obvious) that such complaints are only the mirror picture of those who tell nosotros bring to bring austerity because running upwards higher authorities deficits is only ‘politically impossible’. The declaration that governments cannot run really large surpluses because voters would demand that they endure spent relies on the same logic which says that governments require to tighten their belts when the somebody sector is doing the same. In other words you lot cannot complain close austerity on the ane mitt as well as and then tell that it was politically impossible to run larger surpluses inwards a boom.

Equally it makes no feel obsessing close the require to bring down deficits inwards a recession as well as and then turning a blind middle when surpluses are spent inwards a boom. Unfortunately only that form of inconsistent thinking became hard-wired inwards the flat of the Stability as well as Growth Pact (SGP), alongside its focus on a boundary of 3% for deficits. Those who tell that all that was incorrect alongside the SGP is that it was non enforced bring learnt nothing. This is why nosotros need to motion influence away from the Commission as well as towards independent national financial councils.