There is a rather excellent posting on the Coffee House by Fraser Nelson noting that not only has Brown finally admitted he was mistaken to say "boom and bust" wa sover, but that the commentariat, in which he includes himself largely failed to spot the trouble coming either and bought into the myths that things were great.
He notes that there were lone voice that were treated like Lear howling at the winds who did spot it coming, Jeff Randell, John Redwood etc, but that they were considered "ideologically-driven mavericks". He is right on that point I think, and whilst I myself would never claim to be an economist, I have to say that I did often say in discussions online with my American friends long before this blog was started that things were going to end in tears.
I can remember as far back as 2001 arguing online on bulletin boards that the line "historically low interest rates" both here and in the US was a dangerous and pointless line to be taking. Low interest rates, the availability of easy credit, coupled with a seemingly insane boom in house prices, was a recipe for disaster at some time in the future. Low interest rates meant no one was saving and everyone was racking up personal debt instead.
Of course, whilst I was arguing this point with people like the guys at The Crossed Pond I was also going along with the ride and doing what everyone else was. Go me! Still, we're now in a situation where the economy is built on debt, and it does seem rather insane to say that the only way out of that is for the Government to borrow even more money in order to inject stimulus into the economy.
The real problem we have though is much more political I think though. The truth is we shouldn't, I think, be borrowing even more to pay for tax cuts today that will have to be repaid back with tax rises tomorrow. What should be happening is cuts in public spending but this is where the political problems comes in.
The last ten years have seen politics framed completely disingenuously by Brown and Blair. Thus a proposal to cut spending by £20bn ends up being portrayed as a "hospitals closing". It's complete bollocks of course. Take ID Cards, a £12bn project that is unnecessary, that could be cut and would pay for a massive rise in the tax-free threshold at the bottom of the income ladder, something which is much needed.
Will it happen though? Of course it won't. Every single penny of public spending is, sadly, considered to be essential for public services. No one really believes it when you take a look at the crappy non-jobs that get advertised in the Society section of the Guardian, but still it goes on. If the Government were to genuinely give people some of their money back people would start to spend it and repay off some of the personal debt they have accumulated in the bubble we've all just been in.
Keynes may be seen as a wonderful soothsayer and master of economics, but we all know where his views led in the UK. Slow economic decline that was managed by the Tories and Labour, both culpable until Thatcher came along and shook it all up. The worst thing is that now we're in this situation there are those saying it shows the failure of Thatcherism, which is simple not true. Britain's problems now are not because of an "ism" but because of failure in economic management by Brown.
Had Brown done as he said with borrowing and made it fall year on year, rather than rise we would not be having a PBR on Monday that proposed jam tomorrow that would be taken away from us the week after.