måndag 14 april 2008

Faith in Gordon Brown

Faith in Gordon Brown, on the other hand, has slumped, according to the figures. Why the man wanted to become Prime Minister after ten years living next door as Chancellor of the Exchequer is a mystery. Now he has got the coveted fruit it has turned bitter for him.

It is strange that as Chancellor, he did not see the storm clouds brewing and make a dash for the House of Lords. That at least would have been a way of ducking the opprobrium which he has deserved and is now heaped upon him.

For most of his term as Chancellor he was in the lucky phase of the economic cycle and could quite unjustly take the credit. Now he is being made to take the blame. But at this stage of the cycle there is bound to be pain and no Chancellor could do better - the only question is how to manage the pain - a task which they look as if they will do in a way so as to spread it around as much as possible.

The boom and bust were indeed avoidable but the time to have taken action would have been within a couple of years of taking office, no later. The action would have been to reconstruct the tax system so that it fell primarily on the rental value of land. If correctly implemented this would have prevented the land price bubble which was the precursor to the bust.

However, Brown's bright young advisor, Ed Balls, having learnt economics at Oxford, would not have known the theory that underpins this measure. From the perspective of economics as currently taught within academia, there is no rationale for such a reconstruction of the tax system.

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