Douglas Carswell's Blog

It's not just Ed Miliband who needs to re-think his position on the economy

Political pundits have been focused on the Labour leadership.  Some, like Andrew Rawnsley, have pointed out that if he wishes to be credible, Ed Miliband needs to ditch his deficit-denying position on the economy.

But it isn't just Ed who needs a fundamental re-think about the economy.  

Liam Halligan's article in yesterday's Telegraph brilliantly sums up what is wrong with current economic policy.  "All we're essentially doing, amidst all the posturing and technical gobbledegook," he writes "is printing money and hoping for the best".  This is of much greater consequence than which MP happens to lead which party. 

Even when politicians do talk bravely about cutting the deficit, the Bank of England has meanwhile run a £200 Billion quantitative easing (QE) operation, giving taxpayers mind-boggling new liabilities.    

The "Keynesian boost" in Britain and America is starting to look like it has merely postponed painful retrenchment.  The so-called "double dip" will happen when attempts to defy the laws of economic gravity can no longer be sustained.  When that moment arrives, we will discover how our print-money-and-hope attempts to make 2 plus 2 equal 5 have massively racked up Western debt - and make a catastrophic fall in the worth of our currency more likely (see gold prices). 

But who in Westminster has ideas to fix the economy beyond yet another round of ruinous QE?  Who on either front bench questions the "wisdom" of solving a credit shortage with negative interest rates?  Many would scoff at the notion there might be an alternative to either. 

Treasury ministers need to look beyond the policy scripts their top mandarins feed them.  Like in the 1970s, a new generation of Conservative thinkers needs to come forward with new ideas now that the conventional economic wisdom begins to fail us. 

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