"Department of Exaggeration"
Alex Massie writes:
The one certainty in this election is that it will deliver few spoils. Whereas Tony Blair inherited a growing economy in 1997, this year’s prime minister will be charged with tackling a grave fiscal crisis at a time when the British public has little more faith in the political process than the average Californian.
Britain’s deficit will reach 13% of GDP this year, and economic growth in the last quarter of 2009 was an anemic 0.3%. It’s only a slight exaggeration to say that the difference between Britain and Greece is that Britain at least has possession of the Elgin Marbles.
I think both of these analogies are pretty flawed. For one thing, while it may be true that the British public has a California-esque level of faith in the political process, the fact is that the British political process is very different from California’s. Realistically, the next UK government’s fate will hinge on its ability to deliver economic growth. And while the next UK government may be in hock to bad ideas and fail to deliver such growth, it will face few structural impediments to implementing its ideas about what needs to be done. This is very different from California (or, indeed, the US in general) where mere possession of a sound policy agenda doesn’t get you very far.
As for Britain and Greece, there’s really quite a bit of difference in the situations, including the fact that Greece seems to have engaged in a lot of accounting fraud and not just a cyclical deficit. But probably most importantly, the Bank of England tries to set monetary policy that will help the UK achieve growth and low inflation. The European Central Bank, by contrast, tries to set monetary policy that will help Germany achieve growth and low inflation. It’s a funny joke, and obviously the UK faces a not-so-fun fiscal challenge, but Greece is really in much worse shape and likely to be plagued by super-high unemployment for years to come.