Anyone remember the business cycle? Much of the past decade has seen the world economy seemingly trapped in low growth. The threat of deflation led to zero interest rates and a growing belief that nothing could be done. The list of things to worry about just kept on growing.
Then, just when it was least expected, things started to pick up again. A global economic upturn looks to be well under way. It is exactly as two experts told us: in the immediate wake of the financial crisis, professors Carmen Reinhart and Kenneth Rogoff said that it would take a while, maybe a decade, before things got back to normal. But they also said things would get back to normal.
That’s the funny thing about expert opinion: sometimes it can be right.
The experts have begun to fight back, and eventually they will win; science, data and facts have a habit of coming through in the end. But history teaches us that we can experience both a renaissance or a temporary but uncomfortably elongated dark age. Or perhaps one followed by the other. But we shouldn’t exaggerate the forces of darkness – their idiocies are becoming embarrassing, even to their supporters.
Michael Gove, the prominent Brexiteer who famously told us that the world has had enough of experts, has, to his credit, engaged with his critics. In something of a one-sided contest, Gove was brilliantly skewered this week in a public debate by Jonathan Portes, an economics professor at King's College, London. Borrowing a phrase coined by Berkeley's Brad de Long, Portes described his many years of work in public service in terms of "intellectual garbage disposal".
The list of waste items produced by Gove and his allies is, alas, a long one. For example, new trade deals for the UK will, apparently, create 400,000 jobs. According to Portes, it takes about 30 seconds and the intellect of an average 12-year-old to show why this is garbage. Trade deals boost exports, which leads to more jobs. They also boost imports, which leads to less jobs. Guess which side of the ledger the Brexiteers choose exclusively to focus on?
Utterly wrong
Gove and
Boris Johnson
jointly claimed that for every 10 per cent increase in immigration, wages for working people fall 2 per cent . The original study underlying this claim was produced by experts at the Bank of England. So Gove and Johnson used the
Daily Express’
interpretation of the bank’s research. Which was utterly wrong: the experts who wrote the report said so.
The list of bogus claims made by Brexiteers is a long one. Portes attacks not just the veracity of the numbers but also the ironic attempt by the Brexiteers to invoke expert witnesses to back up their beliefs. You can have faith: nothing wrong with that. Brexit is, at the end of the day, an act of faith. But don't make claims about facts that are just wrong – and then attack the experts for saying so.
Of course, it is all too easy to have a go at the experts. They failed to forecast the financial crisis, and said that Brexit would be an economic disaster. The moral of that story is: never suggest a forecast is a fact. But for as long as we can cheerfully deride experts, we can ignore them. That, perhaps, explains why, yet again, we have witnessed a shambolic UK budget.
The speed with which the British government ditched a sensible, small, progressive tax hike was, I think, a record. If they can’t put a coherent budget together, what hope is there that they can successfully manage the Brexit process?
Fiscal crunch
The next Conservative manifesto has already been written: it must include, again, the promise not to raise taxes. Sooner or later that will end with a fiscal crunch. It is self-evident that UK policy is designed neither in cabinet or Whitehall. It is put together by the
Mail,
Telegraph
and
Express
. Experts not needed. We will see how well that turns out.
Across the Atlantic, the US economy and much of the rest of the Americas is also picking up steam. That’s why we got another interest rate rise this week and more are in the pipeline. As with Brexit, US policymaking is a disaster zone.
President Donald Trump’s first budget and House speaker Paul Ryan’s tax cuts for the rich (masquerading as healthcare reform) are unlikely to get past even a Republican congress. Indeed, Republicans look like they have utterly forgotten how to exercise power.
No matter: the UK and US governments might be in the hands of hardline nut cases who know how to generate a headline but, so far, they have done little harm. That might change, but history is littered with prime ministers and presidents who, in the end, didn’t make much difference to anything.
No doubt Trump and May will claim credit for the economic upturn. Their policies could yet do plenty of damage. But so far the only thing on display is utter incompetence. The world, and its economy, keeps turning.
