The Voice of a Siren

Do you remember Going for Gold with Henry Kelly? No? Come on, did you never have a school-day off sick in the early 90’s? In case you haven’t watched it, someone has helpfully posted a whole episode on YouTube:

If you don’t want to watch all of it (and I recommend you don’t) – at least watch the opening titles. Probably the worst TV theme song that’s ever been made.

So now we’ve reminisced, we’re going to have a quick quiz now, in the format of Going for Gold. Fingers on buzzers.

WHAT AM I? I am a chronic condition of subnormal activity for a considerable period without any marked tendency either towards recovery or towards collapse.”

; Only Fools and Horses Christmas Specials?

Incorrect. Knut, you’re out of the rest of the round.

; Steve Martin?

Incorrect. Bjorn, you’re out of the rest of the round.

; An economic depression?

Correct! RedEaredRabbit, you’re through to today’s final!


The definition wasn’t really Henry Kelly’s. It was that of John Maynard Keynes and he wrote it in 1936. Although written 72 years ago, you could easily mistake it for something written yesterday describing the current state of the UK economy. We haven’t imploded but there’s no growth and the economy continues to operate below potential, with lots of workers available to work but a lack of demand for their services.

A common misconception is that a depression is just a long recession – i.e. the economy has to shrink quarter on quarter for a long time. A much better way of thinking about it is that, following a recession, the economy operates below potential for a long time. So what do I mean by ‘below potential’?

I mean that at the moment our economy:

  • Is much smaller than it used to be
  • Has the potential to a produce a lot more goods and services than it does
  • Does not produce more goods and services because we choose not to produce them

That sounds crazy. If we can produce them then we should, right?

The economy is largely based on supply and demand. At the moment we are all good to go on the supply side but we are have a major problem on the demand side and this is very important in understanding why we are in depression and also important in understanding what we should do about it.

I can explain this a bit better with some examples.

The car manufacturer is producing fewer cars because fewer people want to buy cars. She could easily employ more people and produce more cars but as long as the demand for them is low she won’t do it. Her costs would go up and her revenue would stay the same. She is waiting for the economy to recover before producing more cars.

The garden centre owner is growing fewer plants because fewer people want to buy plants. She could easily employ more people and grow more plants but as long as the demand for them is low she won’t do it. Her costs would go up and her revenue would stay the same. She is waiting for the economy to recover before growing more plants.

The car manufacturer and the garden centre owner can easily ramp up their operations because taking on new employees is easy – their are lots of people who need jobs. They don’t though because demand for their products is low.

The people who don’t get jobs because the car manufacturer isn’t taking on staff don’t buy new plants from the garden centre. The people who don’t get jobs because the garden centre isn’t taking on new staff don’t buy cars from the car manufacturer.

You can see how the whole thing is self-perpetuating. Remember, my spending is your income and your spending is my income. At the moment I am awaiting for you to spend before I can spend and you are waiting for me to spend before you can spend.

We just looked at two examples but this is the case across the whole economy. The demand for goods and services is low, therefore spending is low, therefore income is low, therefore the demand for goods and services is low.

While everyone waits for everyone else we have economic deadlock and the economy is depressed. We need to appreciate this problem in order to know what to do about it.

Suppose that the government took a look at our school buildings and admitted that they probably need investment. Workers are easy to come by when unemployment is high, so they have no trouble in finding available resources to work for the next few years repairing, rebuilding and redecorating old classrooms, school halls and gymnasiums. The newly employed workers have cash in their pockets and so they start to buy other things like plants for their gardens. The garden centre take on more staff and now there are even more people with cash in their pockets. They start to buy cars and so on.

That’s how government spending solves the problem. The government could spend on pretty much anything to solve the problem with demand but it makes a lot of sense to spend it on things like schools and renewable energy because that is money we need to spend soon anyway. We can wait another five years to do it or do it now but we spend pretty much the same amount of money either way.

Not everyone agrees with this solution though. The UK government for example, believes that if they cut spending, rather than increase it, everyone will become more ‘confident’ and they’ll then start spending. How this works is a bit of a mystery but we are continually assured that it does work. Somehow.

So how’s that policy going? The latest figures are out so without further ado… let’s update The Depression Tracker!

(The blue line is the Great Depression of the 1930s and the red line is the current depression.)

Depression tracker

Damn, that doesn’t look very good. Here’s George Osborne’s reaction:

You will hear those arguing that we should abandon our plan and spend and borrow our way out of debt…these are the siren voices luring Britain onto the rock. We won’t go there.

George had clearly been working on that metaphor. Probably for most of the three months since he had to explain the last set of figures.

Here’s David Cameron’s reaction:

My message today is clear and unequivocal. Be in no doubt: we will go on and finish the job.

Finish it? Starting it would be nice. The economy is smaller now than when he took office.

The confidence argument is great for soundbites but do any of its proponents actually bother to look at the data? Do they actually look at figures like those in the graph above and think, “Hold on a moment, if my argument was a good one, that graph would not look like that.”

Not only is it not backed up by evidence, the logic of the theory seems extremely shaky. From where exactly is the car manufacturer suddenly going to gain the confidence to start employing people and building more cars? I can understand a person gaining confidence from seeing sustained economic growth but no one is going to look at that graph, see what the government has done to the economy, get all confident and then go on a massive manufacturing bender.

Referring to people as “sirens” for making a logical, evidence-based argument as opposed to an illogical, fantasy-based one demonstrates the heart of the problem. A problem that started as an economical one is now purely political, and it is two-fold.

  • We have a government whose base political beliefs are centred around a small public sector, so they will try to bring this in irrespective of the economic situation.
  • We have a government who have so publicly trumpeted the economic growth that austerity would bring that they simply cannot go back on it now without committing political suicide.

Remember, the depression definition though. Despite the 0.7% contraction in Q2 we are not falling off a cliff. We will almost certainly do better in Q3 – it is virtually impossible for us to repeat a quarter that bad. And when we get a recovery in Q3, the government will be saying it is advocation of their policy.

It won’t be though. The underlying problems will remain and while we wait around for those problems to be solved by ‘confidence’, our economy will continue to flat-line, and millions of people who want to work will be forced, because of those two political problems, to sit at home, waiting for the demand to return to our economy.

And how long will that take? Well, we know from our economics textbooks that long-term output is determined by the supply side. That is, as long as the depression isn’t so bad that we lose our ability to make things, we will eventually recover anyway but we also know that we have all of the tools available to fix the problem with demand right now, so why not do it? After all, as John Maynard Keynes said, in the long run we are all dead.

With this government though, sitting around waiting for the long-run to sort things out is all the help our unemployed are going to get.

Where’s Going for Gold when you need it?


Taking it on the Chin

…when the facts change, the responsible thing to do is to examine the decisions you have made and to be willing to change your mind, however inconvenient that may be…not burying your head in the sand and ploughing on regardless…

So said Defence Secretary, Philip Hammond this week.

What was he changing his mind about? I don’t know, something about ordering the wrong type of aeroplane; the details are not material to my point. My point is that whether or not he made a bad decision previously, no matter how terrible his judgment at the time was, it is still a good thing to be able to adapt his policy now based on how things are going. The alternative would be, as he said, ploughing on regardless with a strategy that he knew wasn’t working. He may have made a bad decision in the past but this week he made the right choice.

Shadow Defence Secretary, Jim Murphy was not impressed though, gleefully calling it a U-turn and finding another occasion to use Labour’s new favourite word, omnishambles.

Omnishambles was very funny when Malcolm Tucker used it and still a bit funny when Labour used it the first time but (shambolic as the government is) it won’t be funny if we have to hear it every week until the next general election. Perhaps they should steal another Malcolm Tucker quote to keep things fresh. For example when David Cameron and George Osborne next take their seats in the House of Commons, Ed Miliband could shout:

Laurel and fucking Hardy! Glad you could join us. Did you manage to get that piano up the stairs ok, yeah?

Or they could just think of their own jokes.

Where was I? Oh yes. It is an unreasonable expectation that the government should get every policy perfect in the very beginning and never have to change it. If they implement a policy that later turns out not to be delivering the benefits that they predicted and they change it, not only should they not be ridiculed, I would say that they should be praised.

A more reasonable expectation would be that the government should continually monitor their policies, keep them if they are working and adapt them if they aren’t.

I wrote a whole post on this subject last year, Creationist Economics and in it I was fairly scathing of politicians’ ability to admit when they were pursuing a bad strategy and adapt it into a better one.

So could it be that politicians have learned their lesson and have abandoned Creationist Economics in favour of Evolutionary Economics? Let’s recap on what Philip said:

…when the facts change, the responsible thing to do is to examine the decisions you have made and to be willing to change your mind, however inconvenient that may be…not burying your head in the sand and ploughing on regardless…

And let’s have a look at how the government has applied these words of wisdom to their economic policy.

Last week, the government got a fairly massive kicking at the local elections and therefore had the perfect opportunity to review the policies that weren’t working and adapt them. The early signs were good:

George Osborne:

The government understands your message. We take it on the chin and we have got to learn from what you are saying.

David Cameron:

The message people are sending is this: focus on what matters, deliver what you promise – and prove yourself in the process. I get it.

But does he really “get it”? David Cameron a couple of days later:

…we can’t let up on the difficult decisions we have made to cut public spending…

David and George say they understand exactly why they lost loads of votes and it was because, although their economic policy was really popular, they lost votes because they were focusing on other things too – people were worried they would reform the House of Lords or legalise gay marriage rather than purely focusing on their excellent work on the economy. In other words, this seems to be the government’s interpretation of the message the electorate were sending:

Dear David and George,

We love what you are doing with the economy, high five! Absolutely love this economic depression and always thought that having a job was overrated.

But, (and this is a big but) we have to let you know that we are voting for someone else because of your evil attempts to have a discussion about whether all of your unelected posh mates should be responsible for deciding the laws of the land. Additionally we are all intrinsically homophobic and hate the fact that you might consider treating homosexuals as equal citizens.

And in any case, it’s not like the government can possibly do more than one thing at once.

Kind regards,

The Electorate

P.S. In addition to the above, this vote is definitely in no way influenced by your NHS reform, which was also really popular.

David and George say they “get it” and want to “take it on the chin” but in reality all they are doing is trying to market a disastrous election result as support of a failed economic strategy, and opportunistically trying to bin some other proposals that don’t fit in with their own idealism.

Since I don’t think they did “get it” I’ll offer an alternative interpretation of the message from the electorate:

Dear David and George,

You said that you could revive the economy through spending cuts. You said that in 2011 we would have 2.6% economic growth but we had none and now we are in a recession again. You said that your spending cuts in a depressed economy would bring growth through “confidence” but two years later there is still no growth. We are in the worst depression in recent history, worse than The Great Depression of the 1930s – and your continual refusal to change course has put us here. Your policy is not working and while the opposition’s is at best vague, we need to send you a message to let you know that we think you have no idea what you are doing.

Kind Regards,

The Electorate

P.S. Don’t try to get out of this by saying something pathetic like we want you to put House of Lords reform or gay marriage on the back burner – you should be able to do more than one thing at once.

David and George’s public interpretation of the electorate’s message is so ridiculous that it’s funny. What is less funny though is that two years after promising growth and prosperity through spending cuts all we have is economic depression. But what exactly should they do about it? Let’s ask Philip Hammond:

…when the facts change, the responsible thing to do is to examine the decisions you have made and to be willing to change your mind, however inconvenient that may be…not burying your head in the sand and ploughing on regardless…

Well said, Philip. I couldn’t have put it better myself.


Blessed are the Rich

Excessive travelling for work has meant little blogging of late. The coalition’s cutting of the highest level of income tax has not failed to catch my eye though.

The main arguments for these type of tax cuts always seem to be that we are unfairly penalising the wealthy, that we are making the UK a terrible place for the rich who will all leave and (even more bizzarely) that tax cuts on rich people will mean higher tax revenues overall.

The OECD recently published a report on income inequality. You can read the whole thing here but this is a graph from the report showing how the share of the income received by the richest 1% has changed between 1990 and 2007 (data for the UK is to 2005, see footnote).

Income inequality 1990 - 2007

Income inequality 1990 – 2007

So, of the countries featured, the UK has the second highest level of inequality between the top 1% and the bottom 99% after the US and has seen that measure of inequality rise from 9.8% of total income in 1990 to 14.3% in 2005.

The income of the rich has been diverging from the income of everyone else for a long time and cutting their income tax is not really a brilliant idea in these circumstances. The Osborne fans will tell me it will boost the economy and help sort out the economic mess they inherited from the last government. I’ll respond pre-emptively – the current economic problems were really not caused by the rich not being rich enough.

If you want to believe that tax cuts for the rich is a good thing then fine, we’ll agree to disagree but can you honestly look at the graph and say that the richest 1% have been getting a raw deal or that the UK is a bad place for rich people?

If you answered “Yes” to those two questions then you probably also think we are all in this together.


The Greatest Democracy on Earth

The United States is often marketed as the Greatest Democracy on Earth. I’m not sure I agree.

A couple of months ago there was a lot of worry in the global markets that the US was about to default on its debt. As I wrote about here, this was a very different situation to that of Greece who is very much in danger of default at the moment.

So, why is it different? After all, both of them need money. Let’s take a look.


Investors are banging on the door to lend the US more money.


Finding someone who wants to lend to Greece at the moment is harder than finding a dodo who can simultaneously breakdance, juggle six elephants and recite its seven times table in Welsh.

While both countries need money, investors believe that the US will be able to pay it back and Greece won’t. It is probably not a bad judgment.

So if the US isn’t a risk to lend to, if people are queuing up to lend it money – why was there ever talk of a default?

To understand this we need to look at US politicians. In the US (to all intents and purposes) there are just two parties, the Democrats and the Republicans and things are always very close between the two. With nothing to back this up, I am going to lazily say that 45% of the US public always vote Republican and 45% always vote Democrat. The remaining 10% decide who is in government and even they are often fairly evenly split.

Because of this the US always has a fairly evenly split Senate, which in turn leads to both parties needing to agree in order to pass changes to US policy. There’s nothing wrong with this in theory; in some ways it is quite good but it does require that to get anything done the two parties need to work together in a reasonably constructive manner.

That’s where the problem lies – they can’t. Or at least they don’t.

The President of the United States, is often referred to as the most powerful person in the world. Evidence clearly shows this is far from true. Take that “almost default” example. Without the Senate agreeing, Obama couldn’t even make the decision to take the money that the US needed and not default on their debt repayments.

Instead the decision went to the Senate.

Defaulting on your debt when people want to lend you money very cheaply would be more than a bit daft. In fact it would be so daft that even the Republicans knew it would be much worse for the US than just borrowing the money that people wanted to lend it.

The Republicans also know though, that their votes are needed for the decision to pass so instead of just saying “Fine borrow the money, let’s move on to something important.” They instead said, “You can borrow the money only if you do something totally unrelated that we want.”

(For more on that read my charming, metaphorical story about Obama flying an aeroplane. Or should that be an “airplane”?)

Had the bill not passed, the people who would have lost out would firstly have been the US citizens as their economy went down the pan. Then everyone else in the world would have been in trouble (as the health of the US economy affects us all).

Although there was a lot of posturing and political bravdo thrown around by both sides, that situation can be neatly summarised like this:

The Republican Party held the US government to ransom with the American people as the hostages.

I’m not being theatrical, this is simply what happened. The Republicans wanted some spending cuts and held the country ransome to get them and it was truly shameful. A far better way of doing things (without causing global economic chaos) would have been to say:

“We all agree that we need to borrow some more and while we would like to discuss other fiscal measures we will do so once this is sorted out. After all whatever we agree on those items, paying our bills is essential.”

Unfortunately this isn’t a one off. Obama has recently announced a new bill aimed at boosting the US economy through closing tax loopholes for the wealthy and increasing government spending. It is actually a very sensible bill but it doesn’t matter – it will be shot down by the Republicans and it won’t pass.

Is that stupid? No, it is ludicrous. Republicans, hate taxes on rich people and hate government spending. Their political campaigns are funded by the rich and that is of more interest to them than doing something sensible to actually help sort out the problem.

The US government needs to act decisively but can’t because of their politicians and sadly, their economy will experience far lower growth than it should do and we’ll all be worse off because of it.

Have you ever wondered why the US can’t bring in public health care or cut greenhouse gas emissions? Same reason – any sensible policy can be easily blocked by a few right-wing half-wits with their own agenda.

In light of this, is the US the greatest democracy on Earth or a bit of a fucking mess?

It’s not just the US though. Europe is in a big mess too. Do you see any sign of some decisive action from European politicians to put forward a clear plan to sort their mess out? If you’ve spotted one then let me know, it must have passed me by.

Politicians just don’t seem to realise that part of the remit we gave them when we elected them was to be able to sort this stuff out. In the US, Obama is trying but he’s ultimately powerless in achieving anything. In Europe they’re doing nothing and hoping it blows over. (It won’t.)

So what of the UK? The UK government has favoured spending cuts and austerity over any attempt to boost the economy. With interest rates at the zero lower bound and unable to be cut further to offset the cuts, this is at best a dangerous game. Basic economics shows that spending cuts in such a situation will harm growth but the government crossed their fingers and hoped that the economy would somehow sort itself out on its own. In the long run it probably will but that’s hardly a reason to dismiss opportunities to sort things out now.

The IMF has said that if the UK is not going to meet the government’s 2011 economic growth targets (it doesn’t have a chance by the way) that it should reconsider its policy of spending cuts and look instead at a policy of stimulating the economy.

After the election in 2010 it would have been very difficult for any political party to forsee the future and build the perfect fiscal policy to cope with such unknowns. In such circumstances, the elected government should:

– Have used macroeconomic theory as the foundation for their policies. (They didn’t)

– Absolutely be prepared to adapt their policies to match the continually changing and unpredictable economic climate. (They aren’t.)

The government based their policy of spending cuts on the hope that economic growth would happen anyway. It hasn’t and now is the time for them to understand that blindly pursuing this will only cause further harm to the economy.

When looked at objectively, the ability to assess and adapt seems like common sense but asking a politician to consider changing policy is not so simple. A lot of that is our own fault. When a government changes its policy we all say, “It’s a U-turn! You got it wrong! You’re rubbish!”

That really is missing the point. An effective government will not be made up of fortune tellers. Therefore an effective govrnment needs to be able to continually adapt their policies to fit with a volatile and unpredictable world. If, next week, George Osborne says that he is going to scrap some cuts and instead focus on some policies to stimulate the economy, we should not all be criticising him as a weak policitian for changing his mind. If he does this we should be commending him as a strong politician – someone who is able to adapt their policies to fit the situation in which they find themselves.

Of course this is all wishful thinking. In reality what will happen next week is that:

  • Obama will bang his head against a wall because the Republicans will block his sensible policies
  • Angela Merkel will keep her head in the sand and hope it all goes away
  • George Osborne will fly in the face of logic and stick with spending cuts

The really sad thing is that now, more than any time in the last three years, it is easier to know what a good fiscal policy is.

It just seems harder than ever for a politican to spot one.


When the History Grad took on the IFS…..

It was interesting to read today’s publication from the Institute for Fiscal Studies regarding their analysis of George Osborne’s emergency budget. At the budget, you may remember, George Osborne presented his policies and stated that they would proportionally impact the poor less than the rich.

I like the IFS because it is independent of any political party but is extremely well equipped to analyse their economic policies and give us a viewpoint unbiased by any political persuasions.

The IFS have spent lots of time looking at George Osborne’s policies and doing their own sums. They have included lots of things that George Osborne didn’t include in his model. Things like the cost of mortgage payments do actually affect poor people, as do cuts in housing benefits and tax credits. They have also included the years 2013 and 2014 in their analysis which were missing from George Osborne’s.

At this point, I would have liked the government to thank the IFS for their analysis, review it in detail and decide, based on this review, whether or not they should change their policies. This wasn’t what happened. Within hours, the government had given a press release stating that the IFS had missed some important things from their analysis, such as economic growth and if they had included these they would have come to a different conclusion. This is a bit odd, because the IFS have included more things in their analysis than the government did in theirs. They haven’t as far as I can see missed out anything which they government included in their model, they have just added things the government forgot to include. To my mind, this doesn’t make it a worse analysis, it makes it a better analysis.

If George is going to get into a verbal ruck with the IFS about economics, I worry his modern history degree won’t help him out much but there is a bigger concern that I have. For the government to have so quickly found a the flaw in the data presented by the IFS they would have had to take the IFS model, incorporate the things they felt had been missed and then recalculate everything on that basis. i.e. they would have to have an even better analysis already prepared and ready to go. If they have this analysis then they should publish it so the IFS, you, me and everyone else can read it and respond. I suspect this analysis has not been done and their reaction is purely a defensive one.

In an ideal world a government would form policies by gathering the available evidence, analysing it and then determining the best policy based on that analysis. Before they implemented it they would determine the way in which they would measure its success or failure and if it were not behaving as expected they’d adjust the policy accordingly. This might seem an unattainable idealism but actually we are all doing such an exercise in our every day lives all of the time.

Supposing you live in Wimbledon and you get a new job in Canary Wharf. You now have to decide how you will get all the way across town and back every day. There is nothing direct so you have lots of combinations of options. You could take buses, tubes, mainline trains or even river boats.

You start off by typing your journey into your iPhone app. It suggests that the quickest route is taking the District Line through Earl’s Court, changing at Monument and taking the DLR. You try this for a while but realise that every morning you get stuck outside Earl’s Court for 20 minutes because the people who manage the arrivals and departures there are half-witted. The model on your iPhone app didn’t take this into account so in this situation you would try a couple of the other suggested journeys a few times and after a while, based on your experience, you’d settle on the route which worked the best for you.

The government equivalent is to decide that on the first day of work, they need an emergency iPhone app journey plan. After this, no matter how inconvenient it becomes they will stick to the route they took on the first day and claim it is the best.
When newer better apps become available they accuse them of not including something their original model had never included anyway like “leaves on the line” and stick to sitting outside Earl’s Court for 20 minutes every morning, pretending they meant to do it.

No one would go in for this nonsense with their journey to work so why do politicians insist on it for something as important as the economy? The difference is this:

How much would it cost you to admit you were wrong?

Sadly we live with a political system which overly punishes this natural human trait. When the apple fell on Newton’s head his reasoning didn’t go like this:

I need an emergency gravity law. It is very important to get this out asap. Thinking it through would be an unnecessary waste of time.

…and then…

My emergency gravity law is that apples are attracted to heads, through a strange new force.

And then refuse to change his law when someone pointed out it was a bit more generic than that and in fact everything was attracted to everything else.

Of course he didn’t. Science would hardly be where it is if all scientists were to all insist that the first thing they ever thought of were the absolute truth. Politics a bit different though. For one there is the opposition. Imagine there were someone employed for the sole purpose of taking your job off you. If there were, would you want to admit you’d got something wrong? Also there is the press. Every newspaper has a political agenda, and while I think being able to learn from experience and adjust accordingly is a good trait, the press seem to call it a “U-Turn” and think it makes you a weak politician, not fit to do the job. All this gives an incentive for governing politicians to refuse to admit their mistakes and pretend the policy they first thought of was the best one.

I admit though, the comparison with Newton was harsh because politicians are under a lot more time pressure than Newton was. As important as Newton’s theory of gravity turned out to be, it wasn’t as though anyone at the time was having a terrible time directly because they didn’t have an equation to explain why they were sticking to the Earth. The new government didn’t have that luxury. When they came to power they were under immense pressure to put in place some policies to start addressing their finances – after all they had promised to do so and been elected on that basis. I don’t have a problem with them doing this, as long as they could have a process to continually review what they were doing, take on board other people’s opinions where necessary and adjust their strategy accordingly when they were wrong.

The reality is a long way from this though and the best model available to us today, from the IFS, suggests that our current economic policies are punishing the poor more than the rich. The government deny this but haven’t produced a better model to show how they can be so sure.

Would it be so bad to have a political system where a government could take constructive criticism of their policies into account and improve upon them because of it?

Wouldn’t that benefit to the country as a whole?

Would it really be so terrible of them to at least read the IFS publication with an open mind before responding?

I don’t think it would be terrible. In fact, I think they should read it. It is rather good.


Could I See the Job Description, Please?

For the last two years, George Osborne must have been odds on favourite to be the next Chancellor of the Exchequer and this week it finally happened. Strangely he doesn’t come across as having been particularly prepared for this event, and has spent much of this week wandering Downing Street with a look of utter bewilderment plastered across his eminently slappable face.

On Twitter, I recently parodied Osborne’s meeting notes from the first cabinet meeting:

Osborne Meeting Notes

However, joking aside there is surely a big concern here. The UK’s economy is in a bad way – The Office for National Statistics’ figures showed, as of the end of 2009, that the UK national debt stood at £950.4bn – equivalent to 68.1% of GDP. In such dire times, what skills and qualifications should the person in charge of the economy have?

Let’s do a a little quiz and compare the appointment with what would happen in the private sector when a bank is interviewing to appoint their most senior economist:

We have two candidates – let’s call them Gideon and Vince.

  • Gideon studied Modern History at university. He got a 2:1, so we can safely say he is quite good at Modern History.
  • Vince studied Natural Sciences and Economics as an undergrad before completing a PhD in Economics. Vince has also lectured in Economics at LSE and been Chief Economist for Shell – one of the largest companies in the world.

Q: You are on the board of the bank. What is your response?

Those of you who answered “Give Vince the job!” are in fact wrong. The correct answer is, “How the fuck did a history grad, with no experience of economics, get this far in our selection process?

You may think this a harsh assessment, but I stress again the financial mire in which we find ourselves and ask you to bear in mind the importance of the position of Chancellor of the Exchequer in addressing this. My cynical side can’t help thinking the selection process was more along the lines of: “He may know fuck all about numbers, but he is my mate.”

Now you may think I’m singling out George Osborne unfairly. “After all”, you may say, “Teresa May knows fuck all about anything useful at all, and she’s in the cabinet.” This is entirely correct and I do not want to single Osborne out – more to use him as an extreme case of a general concern I have. Cabinet posts, while hugely important, rarely seem to be filled with the best person for the job. Should we not insist that our Education Secretaries have extensive experience of working in schools? That our Health Secretaries have extensive experience of working in the NHS, and that our Chancellors have extensive experience of finance and economics?

We will never know exactly what the decision making process was and perhaps there was a lot more to it than this but can anyone, hand on heart, say that George Osborne is the best possible person to take on such a crucial role at such a crucial time?