The 79 economists are thinking too narrowly | Letters
Ha-Joon Chang, Thomas Piketty and 77 others argue (Letters, 12 June) that there is "no basis in economics" for George Osborne's plans to legislate for budget surpluses. This is reminiscent of the phrase used by the 364 economists who wrote to the Times arguing that there was "no basis in economic theory or supporting evidence" for Geoffrey Howe's policies. The credibility of that group was not helped when growth returned the next month. Though I have reservations about Osborne's proposal, to argue that "there is no basis in economics" for constitutional or legislative rules that constrain government borrowing, especially given the ageing of the population, is simply wrong. Furthermore, the specific complaints of the correspondents are based on the shakiest of assumptions, not least that there is no foreign sector in the economy that can absorb the impact of changes in government borrowing.
Continue reading...