I wouldn\’t use this argument myself:

It’s also worth remembering that a statistically significant result does not mean that there is no fiscal multiplier. Dr Ilzetzki was keen to stress today that the error range was from -1 to +1 so that means there’s as much statistical chance of it being zero as being 1.

To give you the background: I pointed to a new paper that tried to give empirical (rather then theoretical) results for the size of the fiscal multiplier. The results were that that mutliplier is higher in advanced economies, lower in open ones, lower in highly indebted ones (the definition of \”highly indebted\” seeming to be about 3 months of borrowing away from where we are) and statistically the same as zero in countries with a flexible exchange rate regime.

I then said that the £ is flexible therefore the fiscal multiplier in the UK will be, to a level of statistical significance, zero and thus not really all that helpful. Thus, for the UK, into the dustbin of history with Keynesianism.

Yes, of course I was being provocative, no, one paper does not prove such to the nth degree but it\’s not an odd or biased reading of the results of the paper. It\’s a simple logical conclusion from what they said.

A reasonable reaction would be to go away and point to all these other papers, here and there, which give different results for the size of the fiscal multiplier in flexible exchange rate economies. You know, similarly empirical results, calculated from the real world, not the assumptions that people are putting into models from theory. These papers do of course exist, don\’t they?

That isn\’t what our young Will Straw does. Rather, he takes that line given above:

It’s also worth remembering that a statistically significant result does not mean that there is no fiscal multiplier. Dr Ilzetzki was keen to stress today that the error range was from -1 to +1 so that means there’s as much statistical chance of it being zero as being 1.

So, the defence of Keynesian fiscal expansion, of the fiscal multiplier being positive, is actually that there\’s an equal chance that\’s it\’s negative as it is positive. No, don\’t look at whether that statement is true for a moment, just look at what is actually being quoted as a defence.

Spending hundreds of billions of £s has, according to the defence that Will is putting forward, has an equal chance of reducing the size of our economy by hundreds of billions of £s as it does of increasing the size of our economy by hundreds of billions of £s.

Recall, this is his defence! A 50/50 break on doing some good or entirely fucking us over.

Therefore we must do it.

Will certainly knows more about politics than I do, (he\’s been a SpAd you know), has better contacts in the union movement (his blog is paid for by such) but perhaps a remedial course in logic might be made available to him?

I dimly recall a response of Will\’s to a critique of a Guardian piece of his. A CiF commenter asked what his experience of the real world of business was like, to which the response was that he did run his own business you know. That whole intern and a union cheque that is Left Foot Forward.

Oh well, only another 4 years of this to go and a safe Labour seat will open up for young Mr. Straw. It\’s this social mobility thing that everyone\’s so keen on these days. Sons of former Cabinet Ministers do get to go to Parliament just like they do get to be SpAds. Just as with the Benns, where we\’re on the fourth generation of MPs and the third of Cabinet Ministers.

Social mobility, a selection of the talented wherever they come from, so important, don\’t you think?

There isn’t any multiplier. It’s a mathemetical impossiblity. It’s just bad arithmetic. A pound is a pound. That’s it.

A Nerd writes:

Straw seems to argue that the probabilities are identical over the range -1 to +1.

This seems most improbable. While I can’t prove it, I’d expect the range of probabilities to follow a normal distribution… (falls asleep boring himself…)

I just came in to agree with A Nerd. If the error range is [-1, 1] then 0 is more probable than 1 (or -1) (assuming you interpret things sensibly).

Kinda makes a mockery of the climate change precautionary principle – even if AGW isn’t very likely, we had better do all the things to reduce carbon output anyway, just to be on the safe side.

Is Will Straw a climate sceptic? If not why not? If he’s prepared to take a 50/50 chance on reducing everyone’s wealth tomorrow, why should he worry about a small chance of higher temperatures in a century’s time?

I’m not sure Will Straw was a SpAd, although he was a civil service fast-streamer at the Treasury for a while.

There is of course an advantage in having a hereditary political caste. If we fail to hang the worst of the evil-doers, we can at least hang their spawn. Eugenics, you say? Whatever.