Ed Balls on the 1930s.

I do wonder sometimes you know? Is there some alternative reality out there that I\’m not plugged into?

John Maynard Keynes described Snowden\’s 1931 \”emergency budget\” as \”replete with folly and injustice\”. He wrote to an American correspondent: \”Every person … who hates social progress and loves deflation … feels that his hour has come and triumphantly announces how, by refraining from every form of economic activity, we can all become prosperous again.\”

And the result? The promised private sector recovery failed to materialise as companies themselves sought to retrench.

So what did actually happen in the UK in the 30s?

Play around here.

Hmm, so, nominal GDP bottomed out in 1932 and then started rising and by 1935 was above the previous, 1929 peak. Real GDP bottomed out in 1931 and then started rising again, reaching the former peak by 1934. Real GDP per capita (the truly important number) bottomed out in 1932 and had surpassed the previous, 1929, peak by 1934.

We can call all of that many things but markedly unsuccessful at ending a recession isn\’t one of them.

We also left the gold standard in 1931.

Now, no, I\’m not about to claim that depreciation of the currency and fiscal retrenchment is the solution to every economic woe. Not even going to try and claim that it\’s the solution to our current woes.

Rather, that if you do look at 1930s Britain, you really cannot come up with the answer that such is a bad way to come out of such economic woes. It did actually work: which is why having Ed Balls referring to it as if it\’s obviously stupid seems like there\’s some alternative reality, some other set of facts out there, which only Labour politicians are privy to.

3 thoughts on “Ed Balls on the 1930s.”

  1. The 1930s are totemic in Labour myth making.

    They ended in war and Labour was in opposition for almost all the decade. Ergo it was a terrible time and nobody in their right mind would wish to repeat the experience.

    Of course, Labour want you to forget that the ’30s were, in general, an economic success story for Britain. They want you to remember Hitler and rise in Fascism leading to war.

    They want you to forget that they opposed every step along the way including rearmament that would have allowed a more robust foreign policy, more robust handling to Hitler etc, etc.

    They want you to forget their total support for Stalin. Their support for the Peace Pledge Union.

    In fact their total complicity in the circumstances that necessitated appeasement and the drift to war.

    Snivelling b*st*rds all of ’em. And Ed Balls is the biggest sniveller of the lot.

  2. Tim, you have this so ass-backwards it’s a wonder you’ve managed to type it all out.

    The 1931 budget was not implemented in full, though the govt did cut expenditure by approx. 10%. The results: Nominal and real GDP contracted. Public debt rose. Prices fell. Unemployment increased.

    Monetary easing following our exit from the gold standard surely prevented a worse crisis.

    By 1934 the government started expanding expenditure again, with the following results: lower public debt, higher NGDP, higher real GDP, less unemployment, an end to deflation.

    What a snivelling bastard Ed Balls is–If only he read Tim Worstall, he’d understand macroeconomics a lot better, eh wot!

  3. In their alternative universe it can never be admitted that cutting spending improves an economy, can it? That would turn over the entire cart, and we can’t have that. Why do you think Obama is trying to drink the US sober?

Leave a Reply

Your email address will not be published. Required fields are marked *