Monday, 26 January 2015

There ought to be a Godwin's Axiom on state finance

Alex's Archives takes Nick Clegg to task for using Greece as a comparator for our the coalition government's fiscal rescue. Just as a resort to a comparison with the Nazis is a last desperate throw in an Internet chat-room argument (Godwin's Axiom) so Greece is usually trotted out as a DIRE WARNING. I must admit to resorting to this tactic myself: when commentators suggest that having ones own currency and being able to let it lose its value is a great advantage, I am wont to cite Argentina or Zimbabwe.

Of course, Greece, Spain and Portugal are extreme cases and very unlike the UK. These examples did not convince me of the need for a coalition. Italy did. It is similar to us in so many ways, with a highish debt to GDP ratio which is manageable in normal times. When even Italy struggled to finance its sovereign debt after the credit drought struck, that's when I was frightened and convinced me that the coalition agreement had after all been a good thing in restoring international confidence in Britain. Italy is still struggling.

No comments: