An amazing thing has happened since the onset of the financial crisis in 2008. The UK has apparently become a nation of sure-footed, confident economists. Politicians, union leaders, that guy sitting at the bar in the pub; from all you can now hear apparently convincing and certain remedies for sorting out the economic situation. And why is this amazing? Well because the majority of people, politicians included, have no true understanding or meaningful experience of economics of course.
Despite this, it’s a familiar sight now to see our politicians argue with great fervour and certainty the merits of their own economic plans. Those against the high level of cuts will tell you about Keynes and the 1930s and how we need to spend our way out of recession, while supporters of the government will talk of Canada in the 1990s, and how we risked going the way of Greece and Ireland. Both sides largely miss the point that every recession is different, and that each throws up a huge number of variables that simply can’t be compared to those of the past.
This general tone of certainty is undoubtedly led by the government, and it appears everyone else feels they’re forced to follow suit. For if David Cameron doesn’t feel the need to have a plan B, then why should anyone else? The irony is that to hear an air of caution on the matter, you need to listen to those people who actually do know what they’re talking about.
A cautious assessment of the situation appears to be that both partys’ economic arguments and plans are plausible in many respects, that there is no certainty to be had, and that there is no single fundamental ‘right’ answer to the economic problem. Moreover, even if the current coalition plans ‘succeed’, so many factors are involved that in the future (despite the inevitable claims to the contrary) it won’t be possible to say who was right or whether the right action was taken. After all, you can only accurately judge those plans that were implemented, not those that were merely proposed.
The question remains as to whether this ‘false certainty’ that politicians project is actually helpful. Political leaders, especially those holding the reins of power, have an obvious excuse for the confidence they manifest on economic issues. There is, of course, the argument that it’s better to pretend to be certain than to allow for any doubt, with the existence of doubt itself having a possible negative impact on an economy, affecting as it does the spending and saving decisions of the general public.
However I would argue that without the existence of a more nuanced and rational debate, we are just creating further problems for ourselves. It’s noticeable that the behaviour of party politics often mirrors the same ‘herd behaviour’ that leads to financial bubbles. People become over-confident that they’re following the right course, and independent thought is weakened as people follow the majority and become less likely to dissent. Let’s not forget also that misplaced certainty can exacerbate a situation. It wasn’t too long ago after all that politicians in Greece and Ireland were absolutely confident that their respective countries didn’t need outside financial help, until ultimately the ‘bond vigilantes’ forced their hand.
One thing that’s clearly needed is strong, independently minded politicians, confident enough to throw off party shackles when necessary and bring a little realism to the debate. However we all know that the current political system isn’t particularly kind to those who don’t tow the party line. Despite this, politicians of all parties should take heed of a rapidly changing information-flow in society. Never has it been easier for people to form a counterview, and if politicians want to remain relevant and retain our confidence, then on this issue at least, they need to be a little less political, and a little more economic.
In the end, when the world’s economies eventually emerge from this turmoil, perhaps only one thing will be certain; that the very nature of human behaviour will lead to more bubbles and more recessions. So those from all sides of the spectrum should think carefully before claiming to have solved the problem. It wasn’t so long ago that Gordon Brown declared the end of boom and bust, and if we need anything now it’s for our leaders to avoid falling into that same very human trap.
However, ultimately I fear it won’t be too long until we hear yet again that well-worn mantra, ‘this time it’s different’.
SR Gardner is the editor of The Daily Organ, a new politics and current affairs web magazine
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