Hutton & Polly v Mises & Milton

Listening to Will Hutton and Polly Toynbee you would think they were actually monetary economists when in reality they are just soundbite savvy talking heads spouting the latest fashions of the metropolitan media elite. Both property millionaires in their own right, three-houses-Polly and Hutton have substantial family stakes in the property market. If they had such great economic foresight would they have got so badly caught out? Rumours circulate as to the viability of Mrs Hutton’s extensive property portfolio.

Toynbee has now realised that Gordon is staying and that her flirtation with David Miliband was just a passing fancy. Her tune has changed, now saying (once again) that Brown is the man for our times when only weeks ago she was telling the cabinet they were spineless not to get rid of him. Laughable.

Polly’s advice and economic genius is as suspect and as reliable as her loyalty to whichever politician she is championing this month. At the beginning of the year she was still loyal to Gordon and chiding Cameron for his new year message which she claimed

smacks of callow point-scoring, with his five repetitions of “Labour’s hopeless” – and it will look even thinner in retrospect in a year’s time if Brown has steered through economic rapids without most voters feeling any adverse effect.

She was confidently predicting

A minor slowdown with neither inflation* nor unemployment rising will see Brown’s old “no boom or bust” boasts triumph this time next year.

Guido suggests we leave Polly and Will to their studio soundbites and ignore their siren voices – they have been advocating their brand of redistributive social democracy as the solution to everything for decades. If policy makers are looking for guidance on avoiding a depression (alas a recession is upon us already) they should dust off the works of Ludwig von Mises and Milton Friedman – Mises wrote the seminalThe Theory of Money and Credit. If this book had been read by more central bankers outside the Bundesbank we would not be in this mess. Guido once listened to an LSE lecture by a Bundesbank board member speaking in reverential tones about Mises’ thinking. He is the high priest of monetary theory.

If history is not to repeat itself then reading Friedman’sThe Great Contraction, 1929-1933should be a priority. If you think this is irrelevant to the state we are in you should note that the current Federal Reserve chairman, Ben Bernanke, pays tribute to this work and is quoted in the introduction to the current edition. Whereas Mises is heavy going, Friedman and Schwartz are essential reading.

Guido can summarise the primary policy response to the situation we are in succintly : cut interest rates, to lessen the pain of the inevitable reckoning.




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Quote of the Day

Jeremy Corbyn in the Evening Standard

“… we must also face the uncomfortable fact that a small number of our members and supporters hold anti-Semitic views and attitudes, which need to be confronted and dealt with more rapidly and effectively.

The evidence is clear enough. Labour staff have seen examples of Holocaust denial, crude stereotypes of Jewish bankers, conspiracy theories blaming 9/11 on Israel, and even one member who appeared to believe that Hitler had been misunderstood.

So let me be clear. People holding those views have no place in the Labour Party.

… we have not done enough to get to grips with the problem, and the Jewish community and our Jewish members deserve an apology. My party and I are sorry for the hurt and distress caused. … We must strive to understand why anti-Semitism has surfaced in our party…

… when criticism of or opposition to the Israeli government uses anti-Semitic ideas — attributing its injustices to Jewish identity, demanding that Jews in Britain or elsewhere answer for its conduct, or comparing Israel to the Nazis — then a line must be drawn.  Anti-Zionism is not in itself anti-Semitic and many Jews themselves are not Zionists. But there are also a very few who are drawn to the Palestinian question precisely because it affords an opportunity to express hostility to Jewish people in a “respectable” setting. Our movement must not be a home for such individuals.

Second, there are people who have come to see capitalism and imperialism as the product of conspiracy by a small shadowy elite rather than a political, economic, legal and social system. That is only a step from hoary myths about “Jewish bankers” and “sinister global forces”.

These views do no service to the struggle for a just society.”

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