Blair

Blair's Legacy by Chris Dillow

Escaping liquidity traps: Lessons from the UK’s 1930s escape by Nicholas Crafts

Nevillenomics by Krugman

Nicholas Crafts has a really interesting piece about UK economic policy in the 1930s. The gist is that monetary policy drove recovery through the expectations channel; the Bank of England managed to credibly promise to be irresponsible, that is, to generate inflation. 

But how did they do that? Crafts argues that it was two things: the BoE was not independent, it was just an arm of the Treasury, and the Treasury had a known need to generate some inflation to bring down high debt levels. 

This is very closely related to Gauti Eggertsson’s analysis of Japanese policy(pdf) over the same period: there too the lack of central bank independence combined with a fiscal imperative made it possible to change monetary expectations in an unorthodox way, which was exactly what was needed (although they should have skipped the invading Manchuria part). 

All of this reinforces the important point that, as I put it early in this crisis, we’ve entered a looking-glass world in which virtue is vice and prudence is folly, and in which doing the responsible thing is a recipe for economic failure. 

And it also bodes surprisingly well for Abenomics, which might work in part precisely because of what everyone imagines to be Japan’s biggest problem, its huge public debt.

New Stone Roses documentary Made of Stone.

It's Official: Austerity Economics Doesn't Work by John Cassidy

(via Thoma)

Why Does a Q&A on the "National Debt Crisis" Appear in the Washington Post? by Dean Baker

(via Krugman)

John Burns and Alan Cowell on the UK riots.

Mr. Cameron had hesitated for two days to abandon his summer break at a villa in Tuscany as the looting and arson spread across London, and then to other cities, from its start in the Tottenham area in northeast London after Mark Duggan, 29, who was said by the police to have been a local gang member, was shot and killed by an officer last week.

On Tuesday, a police oversight body said that forensic tests had shown that both shots fired at the scene had come from a police officer’s Heckler and Koch submachine gun, and that the tests had so far shown no evidence that the loaded Italian-made BBM pistol carried by Mr. Duggan had been fired in the confrontation.

...

For the moment, though, the circumstances of Mr. Duggan’s death appeared to be remote from the forces driving the riots, at least in the assessment of many of those who are most familiar with the neighborhoods affected. Community organizers, neighborhood residents and members of Parliament who represent the districts, including several who, like Mr. Duggan, were of Afro-Caribbean descent, have said, overwhelmingly, that his death, while providing the original trigger for the violence, has had little or nothing to do with the looting and arson. 

Brothers Compete to Lead Labour Party in Britain by John Burns

With the winner to be announced Saturday, it seems a virtual certainty that the new leader will be one of two brothers who were running neck and neck: David and Ed Miliband, Oxford graduates in their 40s, former ministers in the Brown government and sons of a Marxist intellectual, Ralph Miliband, who reached Britain in 1940 on the last ship to leave Belgium ahead of advancing Nazi forces.

...

To the extent that popular interest has been stirred, it has been by the spectacle of two brothers competing with each other. David Miliband, at 45 the older brother, seemed surprised and, though he denied it publicly, somewhat resentful when Ed Miliband, 40, announced his candidacy for a job that had been widely considered to be David Miliband’s for the asking.
...
The brothers’ different political paths reflected the wider differences within the party. Both men have embraced a form of parliamentary politics that would have sat uneasily with their father. Their mother, Marion Kozak, a Polish-born migrant to Britain in the early 1950s, remains, at 76, politically active in Labour. Ralph Miliband, who died in 1994, is buried beside Karl Marx in London’s Highgate cemetery.