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.