The Next “Crisis of Capitalism”

Déjà vu! Gordon Brown shifted responsibility for delivering a stable economy onto nine hapless economists within days of being appointed Britain’s Chancellor of the Exchequer in 1997. We know how unsuccessful they were in fulfilling their mandate as the Monetary Policy Committee of the Bank of England. Among the first of those unwise men was Sir Alan Budd.

Now George Osborne has pulled the same trick. The Office for Budget Responsibility (OBR) is charged with offering the Treasury independent forecasts of growth. Interim Chairman: Sir Alan Budd.

Sir Alan says their forecasts will be independent of political influence. That claim should be assessed in terms of his confession that, as an advisor to the Thatcher government, the Treasury engineered a “crisis of capitalism”.

How to Raise Unemployment

I review Sir Alan’s professional record in 2010: The Inquest (pp. 163-167). I record how the Thatcher government engaged in a covert plan to destroy jobs. This is how Sir Alan summarised the impact:

Raising unemployment was a very desirable way of reducing the strength of the working classes. What was engineered – in Marxist terms – was a crisis in capitalism, which re-created a reserve army of labour, and has allowed the capitalists to make high profits ever since.

Following the Thatcher era, millions remain unemployed, classed as too sick to work.

More of the Same?

If Sir Alan’s OBR had been created in 1997, would it have had the competence to persuade Gordon Brown that my forecast – the boom/bust cycle would peak at the end of 2007 – was correct? Not likely!

George Osborne, like Gordon Brown, washes his hands of responsibility for forecasting the future. Here are my predictions: The mid-cycle asset price bubble will burst in 2009. The land-led boom/bust cycle will peak in 2026.

What’s the bet that these forecasts are beyond the competence of Sir Alan, who says his task is to “increase the transparency of the forecasting process”?

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