The 79 economists are thinking too narrowly

http://www.theguardian.com/politics/2015/jun/15/seventy-nine-economists-thinking-too-narrowly

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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.

Related: Osborne plan has no basis in economics | Letter from Ha-Joon Chang, Thomas Piketty, David Blanchflower and others

It is the view of many economists associated with the Institute of Economic Affairs that university economics teaching has become too narrow, with conceptual discussions between alternative paradigms almost nonexistent in undergraduate courses. As such, we have often participated in the events of the Post-Crash Economics Society at Manchester University. In the letter from the 79, we see the problem: so many of the people teaching our brightest young minds are hardly aware that alternative viewpoints exist.Professor Philip BoothEditorial and programme director, Institute of Economic Affairs

• George Osborne’s promise to “fix the roof while the sun is shining” does not show that he is economically illiterate. Rather it shows that he is reading at the level of Enid Blyton. In Noddy Builds a House, Noddy says: “Let’s put the roof on first, then if it rains we won’t get wet!”Tim GrollmanLondon

• The “eminent economics professors” who rail against Osborne’s plan to legislate for budget surpluses are right to point out that it ignores “basic economics” (Osborne guilty of gimmickry – top economists, 13 June). But Osborne’s disdain for sound macroeconomic principles goes back a long way.

The problem, as Amartya Sen said recently, is that there has been a failure of public discourse. Why this failure?

That is more difficult than questioning Osborne. One problem is that “heterodoxy” has posed pluralism as an alternative so placing economic theories on a par without distinction of good and bad; this may as well include austerity economics. As Keynes pointed out, orthodoxy at the macro level is not just wrong but is dangerous for the polarisation it provokes.

Today, rightly or wrongly, Keynesianism is tarnished. Furthermore, the British economy does not suffer the macro problem addressed by Keynes. London is effectively at full employment. The rest of the country is not so lucky. One answer would be an industrial policy, taking advantage of low interest rates to support infrastructure rebalancing including education, research and regional involvement. This could have been the positive election vision for the Labour party, using, say, a catchy slogan like “Northern powerhouse”.

Just as Osborne 2011-12 surreptitiously adopted plan B, we now find alongside talk of austerity a policy, once associated with the left, addressing the geography of accumulation. One of the problems of public discourse is the mess that the left have got themselves into; they can no longer advocate what might be proper to their cause.William Dixon and David WilsonLondon Metropolitan University

• Like your 79 eminent economists, Phillip Inman seeks to counter George Osborne’s policy of budget surpluses by justifying deficit spending (Sowing seeds of next crash will not help young people, 15 June). Inman may be right about Osborne’s bias toward today’s older taxpayers but he misses Osborne’s deeper purpose: to blame the banking crash on budget deficits (wrongly linked to New Labour). Despite the manifest failure of austerity, the new policy offers more austerity – a second half, as it were. And the new justification is concern for grandchildren.

Securing the future from debt requires much less saving globally, not bigger or smaller budget deficits or surpluses. Could the Guardian list the main sources of saving that are not properly invested and who is borrowing them?

I urge phasing out usury starting with trade finance. Remember Keynes allowed current account surpluses to be taxed in his Clearing Union.George Talbot Watford, Hertfordshire

• We practise Osbornomics in our house: no food or heating until the mortgage is paid off.Alasdair McKeeLancaster