BoM March 2019

Our March 2019 book of the month is The Lies We Were Told: Politics, Economics, Austerity and Brexit by Prof Simon Wren-Lewis.

I have been increasingly worried about media bias over the past few decades. This seemed to start  with anti-EU propaganda – at best highly distorted and at worst completely fictional stories in the right wing press. This started when Boris Johnson was the Telegraph’s Brussels correspondent and is well documented in the New Statesman: Boris Johnson peddled absurd EU myths – and our disgraceful press followed his lead.

When the Tory/Lib Dem coalition formed in 2010, two major lies were that the GFC was caused by Labour government overspending and that austerity was necessary to put the UK on a sound financial footing. My suspicion has always been that this was simply an excuse to reduce the size of the state – a long held libertarian dream – and in any event doomed to fail, as detailed in this paper by Profs Palan and Murphy. It certainly very much seemed the public was being lied to.

The Eurozone crisis had a major impact on my home country of Ireland, of course, where there was massive banking debt which the Government and Irish taxpayer had to clear, rather than the ECB acting as a lender of last resort. Because Ireland does not have a sovereign currency it was unable to use a variety of mechanisms such as QE. The crisis ended when the Eurozone changed this policy and became a lender of last resort to most countries, with the exception of Greece. The crisis was again misrepresented in the press.

From this side of the Atlantic I was completely horrified by Trump. He seems to lie with total immunity. From the Washington post:

Powered by his two-hour stemwinder at the Conservative Political Action Conference on March 2 — which featured more than 100 false or misleading claims — President Trump is on pace to exceed his daily quota set during his first two years in office.
The president averaged nearly 5.9 false or misleading claims a day in his first year in office. He hit nearly 16.5 a day in his second year. So far in 2019, he’s averaging nearly 22 claims a day.
As of the end of March 3, the 773rd day of his term in office, Trump accumulated 9,014 fishy claims, according to The Fact Checker’s database that analyzes, categorizes and tracks every suspect statement uttered by the president.

Then there is Brexit. A campaign riddled with – in Prof Michael Dougan’s words – “Dishonesty on an Industrial scale.” What is horrifying is that the Brexiters are doubling down on their lies, largely unchallenged by the BBC and amplified by the right wing press such as the Sun, Mail, Express and Telegraph.

These themes have regularly featured in Prof Simon Wren-Lewis’s excellent blog mainly macro and now he has combined the content into this interesting book. This book presents some of his most important work, telling the story of how the damaging political and economic events of recent years became inevitable.

“This is a book you should read, for understanding what went wrong in the past is our only hope of doing better in the future?”

Paul Krugman, Nobel prize-winner

“Simon Wren-Lewis is the rare economist of both the science and the craft of his field. In this exemplary collection of his blog-writings, Wren-Lewis shows how economic theory, evidence, and sound judgement can be combined to produce good economic policy. Unfortunately, austerity policies, which Wren-Lewis opposed from the beginning, shared none of those features. This is an admirable and accessible guide to where macroeconomic policy in Britain (and elsewhere) has gone wrong in the last decade.”

Dani Rodrik, Harvard University

Comments

  1. Samuel Johnson -

    I have a shelfload of books on the financial crash (Shredded, Too Big To Fail, 13 Bankers, Anglo-Republic, Ship of Fools etc.), a couple of dozen, and have read many more. That was bearable because, as they Queen famously asked, “Why did nobody see it coming?” and there were some interesting stories of a few people who did and some unexpected entertainment (Greg Zuckerberg’s Greatest Trade Ever was hard to put down; Nicholas Nassim Taleb’s views on economists, in The Black Swan and others, are still).

    What makes the prospect of a similar Brexit collection, which is well underway, sadly, is the utter foreseeability of the unfolding disaster. I have more than once thought of taking a long holiday in NZ (a place I almost migrated to and have sometimes regretted not doing; I have traveled all over it and will again) in the vague hope that the UK would right itself without my white-knuckled concern. Then I wake up to the news that the right wing ethnonationalist madness has reached even there.

    I am not sure how these people can be faced down peacefully. They, and the people mobilising them for their own end (only one: greed), will overreach and the consequences will be bloody. Presently, I think Snowden-type disclosures from the UK’s network of tax havens could effect peaceful change, but the chances of it happening are presumably low (Oliver Bullough’s book Moneyland is a must read btw). Therefore we must expect conflict. I expect riots and disorder in the UK if there’s a disorderly Brexit.

    If I hadn’t already left I’d be making contingency plans as fast as possible now.

    1. Sean Danaher -

      Difficult to know how it is going to go. Mat presumably will try MV3 next week and is trying to win over the DUP at this very moment. It depends I think on how coherent the ERG actually is – opinions are divided as to whether May can get the deal over the line.

      There may well be riots if there is a disorderly Brexit, far more likely than with no Brexit I think. Living in rural Northumberland unlikely here but very possible in some of the towns and cities.

  2. Chris Bergin -

    Yet another book for consideration by yet another economist…Michael Hudson, and forgive them there debts. Published last year. I think you might have to be a history nerd to appreciate the sheer density of facts about Debt Jubilees. Tracing from 3000 BC and embracing many cultures and civilizations.Very illuminating, the parallels to see with modern financial miseries is quite astonishing. Be warned Not for speed reading.
    Definitely one that demonstrates how we got here from there.

    1. Sean Danaher -

      Chris
      thanks. Sounds very interesting. If you are happy to write a brief review we could feature it next month. It sounds that it covers similar ground to David Graber’s Debt: the first 5000 years.

      1. Andrew Dickie -

        Sean, I haven’t read either of Michael Hudson’s books – on the list – but have read a monograph on “The Lost Tradition of Debt Jubilees” out of which his latest book will have grown, and his point is that in ancient Mesopotamia a new ruler usually issued a Debt Jubilee on ascending the throne, cancelling debts, in recognition that the debt was basically unpayable, and that leaving it outstanding actually worked against good economics.

        The same idea lies behind the reforms of Solon and his “seisaxtheia” (see https://en.wikipedia.org/wiki/Seisachtheia), because the enserfment of previously free landowners had effectively clogged up the Athenian economy, producing a “credit crunch”, but in land, rather than money.

        Picking up on what Chris Bergin says, Hudson’s latest book “Forgive them Their Debts” advances, as far as I know from early comments on it, the radical idea that Jesus was crucified not to “save us from our sins” but to “release us from our debts”, because his real message was for the indebted poor – it’s notable that Luke does speak of “forgive them their debts, as we forgive our debtors” in one translation of the Lord’s Prayer.

        In this reading, Jesus was crucified by the 1st century equivalent of “The City” – the coalition of occupying Romans and Temple authorities, who had an interest in the smooth running of their financial cartel. And, of course, that’s the reading of Jesus driving the moneylenders from the Temple, who will have been asking exorbitant prices, at variance from the normal exchange rate between the Roman coinage, and the “holy” Temple shekel used to buy the animal sacrifices.

        As such, Hudson’s books will be a special examples of David Graber’s “Debt: the first 5,000 Years” -yet ANOTHER book, along with those referred to in this post, none of which I have read, except for Nicholas Nassim Taleb’s first rate “The Black Swan”.

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