As inept as macroeconomic policy so often is, in the case of Britain avoiding the Euro we have a case of someone doing it right as Simon Wren-Lewis chronicles.
No doubt Britain has had its share of inept policy and WL has been one who has pointed this out time and again. However, this is a case where it was done right and it's to the credit of a man who gets way too little credit, former British Prime Minister Gordon Brown.
He has been knocked a lot in recent years-of course losing re-election to David Cameron in 2010-yet when I hear criticism of him I ask what's the real knock on him. Usually the main thing anyone seems to remember is that time when he-just a few weeks from the election in 2010-was caught on tape speaking dismissively of a woman he had met with-she had bee virulently anti immigration and Brown was heard in the car speaking of her as the 'bigoted woman.'
For me, I took it the other way. At the time everyone felt that would cost him votes-maybe it did. If anything though it made me e him more. It even got me to wondering if-as I was born in Britain and still a dual citizen-I shouldn't have taken a trip back over there myself just to vote for him. LOL.
However, I wasn't aware of his importance in preventing Britain from joining the euro. With this now coming to light, I'd say that this alone is enough to celebrate his term as a success, though this was prior to his term as Prime Minister-in 2003 he was Tony Blair's Chancellor.
While Britain had originally opted out of the euro it was always held as a real possibility that it would join later. Brown in 2003 insisted that before this could happen 5 tests would have to be passed. What impresses WL is the respect that Brown showed for economic analysis and the integrity of the academic process in reaching its conclusions.
"So why was this process close to what I consider an ideal of how academic knowledge should be used, when I have just written a post which is far more pessimistic about how these things are generally done? I should think about this some more, but here are three ideas. The first is that the decision, although it generated strong opinions on either side, was not fundamentally ideological. There was no existing political apparatus that was clearly aligned with potential winners and losers. The second is that you had a Chancellor who had a very strong respect for economic ideas, whatever else you may think of him as a politician. Third, the Chancellor had to convince the Prime Minister Tony Blair, and so whatever decision he came to needed to be backed up as strongly as possible."
No doubt Britain has had its share of inept policy and WL has been one who has pointed this out time and again. However, this is a case where it was done right and it's to the credit of a man who gets way too little credit, former British Prime Minister Gordon Brown.
He has been knocked a lot in recent years-of course losing re-election to David Cameron in 2010-yet when I hear criticism of him I ask what's the real knock on him. Usually the main thing anyone seems to remember is that time when he-just a few weeks from the election in 2010-was caught on tape speaking dismissively of a woman he had met with-she had bee virulently anti immigration and Brown was heard in the car speaking of her as the 'bigoted woman.'
For me, I took it the other way. At the time everyone felt that would cost him votes-maybe it did. If anything though it made me e him more. It even got me to wondering if-as I was born in Britain and still a dual citizen-I shouldn't have taken a trip back over there myself just to vote for him. LOL.
However, I wasn't aware of his importance in preventing Britain from joining the euro. With this now coming to light, I'd say that this alone is enough to celebrate his term as a success, though this was prior to his term as Prime Minister-in 2003 he was Tony Blair's Chancellor.
While Britain had originally opted out of the euro it was always held as a real possibility that it would join later. Brown in 2003 insisted that before this could happen 5 tests would have to be passed. What impresses WL is the respect that Brown showed for economic analysis and the integrity of the academic process in reaching its conclusions.
"So why was this process close to what I consider an ideal of how academic knowledge should be used, when I have just written a post which is far more pessimistic about how these things are generally done? I should think about this some more, but here are three ideas. The first is that the decision, although it generated strong opinions on either side, was not fundamentally ideological. There was no existing political apparatus that was clearly aligned with potential winners and losers. The second is that you had a Chancellor who had a very strong respect for economic ideas, whatever else you may think of him as a politician. Third, the Chancellor had to convince the Prime Minister Tony Blair, and so whatever decision he came to needed to be backed up as strongly as possible."
"Most people would now agree that the 2003 decision (only one the five tests were passed) was the correct one. [2] While the analysis, and particularly the work by Westaway, contained some of the elements that came to the fore in the Eurozone crisis, I think Ramsden in his 10 year retrospective is clear that the 18 studies also failed to foresee other elements of the crisis, perhaps not surprisingly as most macroeconomists missed these too. Yet the deeper point is this. The decision was based on the best analysis that macroeconomics at the time could provide. It is a shame that this way of making economic decisions now looks like the exception rather than the rule."u
No doubt what's really important is that it was the correct one. One shudders to think of Britain's condition had it joined-as tough as it's been without the euro it would have been several orders of magnitude worse with it.
The flaw in the euro remains: you can't be a little bit pregnant. However, this was how the euro was structured-just a little bit of union. Each member country gives up its monetary independence yet nothing in exchange to make up for the loss. What would be required would be higher political or fiscal union-which Germany, of course,would consider a nonstarter. What the euro does then is give a country the worse of both worlds. They gain no benefits yet the have to make a huge sacrifice.
The flaw in the euro remains: you can't be a little bit pregnant. However, this was how the euro was structured-just a little bit of union. Each member country gives up its monetary independence yet nothing in exchange to make up for the loss. What would be required would be higher political or fiscal union-which Germany, of course,would consider a nonstarter. What the euro does then is give a country the worse of both worlds. They gain no benefits yet the have to make a huge sacrifice.
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