Thought mrs me was too soft on the new deal taking from the table we can top position. To introduce some ideas history and says who would lead a government to succeed johnson could i make a comparison and 948 arland an election give a majority over devil era finagle was the Biggest Party but their leader Richard Mccarthy was unacceptable so he stood aside and join a castello became tea ship just giving an example and finally from p. L. R. Who says in the middle of the beck sick super interesting analysis today on al examine 2 excellent well thank you peter. Now the banks of the base have sold as much of the bond with of british politics theres been many forecast on the economic consequences of waiting degrees or breaks it some of them from the u. K. Treasury or bank of england all of them negative however there has been much less discussion on why the background of the International Call me feeds into the politics of brics that this week we begin a 3 part of c. D. s on how and why these fiscal storm clouds are gathering we ask International Economist their take on the financial environment and we asked political economist in the u. K. That background worship the brics to beat most importantly we ask the question what is to be done we start this week with alex in discussion with the International Economists who can justifiably see that t. Forecast the full extent of the Great Recession of just over 10 years ago for 3 years between 2006 and 2009 professor David Blanchflower of Dartmouth College New Hampshire was a lone voice on the Monetary Policy committee of the bank of england voting for radical action on Interest Rates to combat the c. D. s that term his latest book not working consolidates his reputation as one of the worlds leading kenson economists today he speaks to alex about his forecast that the economic storm clouds are gathering once again before this even been a full recovery from the last Great Recession. Welcome to the average saddam show so im starving me. In your new book not walking you argue that unemployment is as big an issue today as it was 70 years ago or how do you justify that in an age of high employment levels and partly low unemployment levels well turns out that before 2008 the Unemployment Rate gave you everything you need is a know about the labor market unfortunately thats not true since 2008 and the big deal now is that under employment is what matters people in work cant get enough hours they cant get enough income and thats why theyre hurting and the elem pliant rate doesnt really pick that up. If you say it in the book the 5 great evils identified by William Beveridge that is one disease squalor and idleness theyll still stop the law and how do you justify that well i think the evidence is that. Unemployment rate we just talked about has been low but around the world theres lots of despair theres lots of helplessness theres lots of poverty people feeling alone feeling as if nobody is listening to them in america we talk about fly over america so the exam taking classes and everybody else and essentially what weve seen are the people who are hurting the people left behind voted for right wing populism its as if theres 2 worlds the world of the elites and everybody else and everybody else has said enough but despite the law wage growth over the last decade in particular arent people really better off because of the the cost of key consumer goods is falling and people are more cars they have i pads theyre better clause isnt a real measure of affluence that the stars are missing while the some of the but i think job insecurity is a really big deal but a particular i suppose apart from scotland where you were very successful in this debt finance from going from education is a really big deal people are struggling they are in dead so yes youre right there are i phones and other things but people are stroke and we shouldnt underestimate that in the u. K. Real wages thats what youll pay packet combat i today is 5 percent less than it was in 2008 so people are struggling yes consumer goods are better than they were but people have debts and theres no sense in which the people are feeling really good theyre not feeling really good. So you argue in the book and else were that theres an economic storm coming in of major proportions in july in terms of your analysis more than your walking about technique of speaking to people rather than relying on invented yield curves if we look back at 2008 we didnt really know that wed gone into recession in the u. K. In april or wait until july oh no i mean and what we had to do was look at the good the housing sector look at Consumer Confidence and that seems the right thing to do now in the u. S. You saw a big drop in Consumer Confidence this month the Housing Markets not doing terribly well and so you have to look for timely measures to tell you where you are an economic a walking about seems the right thing to do and it suggests that the Global Economy is slowing manufacturers are struggling the trade war in america is hitting farmers although we havent seen it come through in the data yet and it suggests that perhaps who are the turning point that we were in 2000 and remember that the economists and the big sets of data really didnt spot the biggest recession in a century so we have to look at other things and its not really very good at the moment that the p. M. I. Is around the world that purchasing manager indices suggests that the Global Economy is really struggling and probably the u. K. And germany are already in recession now famously 10 years ago as a member of the bank of england Monetary Policy committee you were alone voice calling for a vigorous Interest Rate cuts to forestall what you saw as a living recession how did so very clever people and you and your colleagues miss what was happening when you were able to identify the dangers well i think of this the obviously you have to ask them but it seems blindingly obvious to me by around october 2007 that. That the Housing Market in america had slowed that economy was really slowing and we know now it went into recession by december 2007 and the u. K. Went in by april so i started vote of a rate cut at the end of 2007 the rest of the people in my committee probably didnt notice that for another year i dont know maybe they relied on economic models they probably didnt practice the economics of walking about i guess the benefit of being a person who looks at data who looks at how the world actually is rather than what models say was kind of helpful and i think the worry is that the same people are making the same kind of mistakes i mean the fed raised rates 9 times from 20152080 based on models no real data or talk and now we know that was a huge mistake so i think the answer is youve got to look at what people are saying what business is the same thats what we did in 2007 and they seem to give a good steer and if you look at that now its very worrying and the same people have missed it again and how well prepared the policy because no i mean have they shot most of the balls in the locker through quoted the visa through a lot Interest Rates is there anything left to deflate that or eliminate recession great question i mean the worry is that there really isnt very much ammunition one of the big things in 2008 which we we cut taxes very quickly the 80 was cut by 5 percent the worry in the u. K. Is could Boris Johnsons government if it had to at short notice actually do anything and the concern is that they probably cant theyre going to have to appoint a new governor of the bank of england and you would have thought they should have appointed one pretty much by now and the question is can they do stuff so thats a worry and in the United States could actually trumps government pass something through the congress through the house and the senate doesnt look that likely so i think the worry is that policy. Makers look to have not learnt much and when and if this thing hits hard were going to be limited by their by their failure to do things to get them in a position to to lessen the shock on people so thats not a great message that i hope 5 could we identify the slaughter policy response to the Great Recession of 10 years ago the inability to raise peoples Living Standards to to identify under employment as a serious problem and so far how can we identify that as the political cause of President Trump and the america of blacks in the United Kingdom of the rise of right wing populism in many countries in europe will only a great a great question and i think what we would look back and say ok once this thing hit i mean i remember talking to you and you were you set this website up with all the Shovel Ready Projects that you could get out there and if you could get funding for i mean what happened was we got into a period of recovery where we basically threw monetary stimulus fiscal stimulus tax cuts everything at the world but then what happened in 2010 was that territory was imposed if you like they from the the world found keynes for a wee while and then they imposed austerity which was pretty disastrous and generated the slowest recovery in the u. K. For 300 years so thats the background to this and now all of a sudden what weve seen is that governments say how far were at full employment and the people say no were not and how its come through is lots of people 0 hours contracts people start not knowing how many hours a week theyre going to work stuck in a job where yeah maybe they have a decent pay it per hour many of them people dont but then they cant get enough hours and that means that people are hurting but governments around the world have been slow to recognize this and heres the contradiction that the policy makers say were at full employment. And the people say no we all that so i think thats the dilemma that were adds but you know we had 10 years to sort this out and it doesnt look like anythings been sorted out and the people who missed the Great Recession havent apologized for it havent got themselves ready for the next one and people are going to be hurting and in a sense breaks votes and trump all response is still. Professor david blogs for a leg on some of the key arguments and his new book no walking joins us after the break were going to be talking about the political economy. I. Ready ready ready am sure to stop it from continuing to grow. I just never felt very good about the idea of bringing children into the world because i didnt feel like things were in very good shape that a life was just going to be a lot of software programs. Theres no reason the more. You take things that are to me the theres no use on the move Something Else that. Everybodys scared to talk that is certifiable is truly to can then harness addressing this issue and if we can even talk about it if we cant even have a conversation of that it then. Were in trouble ready. Thats geysers financial such a statement is. Well it. Only applies to these if this is a central plank support diagram is the problem right now so you start to. This is a sticker from the water bottle found in the stomach of the fish the brand is part of the Cocacola Company which sells millions of bottles of soda every day the idea was that lets tell consumers theyre the bad ones theyre the litter bugs are trying this way industry should be blamed for all this waste the company has long promised to reuse the plastic. Cap soon as its. Been mainly it seems nonsense for some their plans to continue on my end i need. A special kind of just funding me. On i knew that that is the end of it for the plan now the mountains of least only grow higher. Welcome before the break professor David Blanchflower out of college was laying out some of the key arguments in this new book not walking were going to come up to the new arguments suffer sitting around the economics of bricks that he once thought what do you have you are likely to be the economic consequences of brecks in the short term and the medium term i dont think you could have picked a worse time to pick out and do breaks it its unclear exactly what the short i mean the end long term consequence of breaks it all and separate them from the fact that theres a global trade war going on its the end of a 10 year long recovery and all of those things happening together breaks it itself for the Global Economy says the i. M. F. Is a Downside Risk entirely to the world so obviously these look to be major questions its really very hard for economists to see anything. But the any economic benefits from this i call it selfinflicted wounds maybe theyre cultural maybe its about sovereignty and i would say it carries sovereignty so i think the answer is that a huge increase in uncertainty no idea what trade deals are going to look like investment slowing to a halt and a hugely long transition period which may well create all kinds of troubles in ireland and the likelihood would be if theres no deal brace it comes through scotland and perhaps even wales will will want to go and become independent so it looks to me like selfinflicted chaos and the question is you know what what what benefits will there be in the long run hard to see many it just looks to me an Economic Disaster and thats where centrally what were seeing it looks that the u. K. Is probably in recession now to what extent is just about breaks it and its about this global trade war and so on its hard to separate but it just looks like a disastrous thing to do right now thinking about the g. 7 summit a couple of weeks ago. Do you think the leaders there realize that theres an argument that many of these looming economic problems are almost entirely self induced that the European Countries for allowing a painfully slow to cover the new european economies president some for for his trade war practice of rhetoric and of course blacks as far as Boris Johnson much realisation among the political elite and leadership is that these economic problems can be argued to be largely selfinduced well i think the candidates i think thats absolutely right and weve heard sed people even in germany saying oh maybe what we need is some room on the fiscal front hearing that from druggy and the governor of the European Central bank and also hearing it from australia too but i think theres another one you havent actually talked about i. With all of those selfinflicted wounds slow recovery didnt need to impose austerity didnt need to impose a trade war at the time when the recovery was ending but i think theres another one which is that the fed raised rates 9 times and what we know from the past is that recoveries in because the fed makes an error they raise rates 9 times there now that clearly looks like an error theyve cut rates once but the markets are actually saying they think in the next 6 months theres probably going to be 4 more rate cuts reversing everything so this looks like policy in juiced error by policymakers at the Central Banks raising rates when they shouldnt have bringing in breaks it at a time that was pretty bad trump bring in a trade war and then the europeans the europeans just generating very slow recovery just think say in france perhaps a recession comes on employment in france is still now close to 10 percent so obviously the the the recovery has not been a good one i would certainly agree with you say that its been selfinduced event and in the u. K. We breaks it or no deal breaks it which in is sitting as a as i do in america it just looks absolutely astonishing and inept and lets just say in the imaginary world that the the prayers that had invaded you David Blanchflower do a quick seminar to these World Leaders and how to get out of this mess what would have been the key policy coordination that you would have advised across the Key Countries in the western world well what weve got to see is i guess the answer is youve got to put pedal to the metal and understand that Global Global coordination was actually had a really big effect in 2009 gordon brown pulled the world together Global Action worked well what we saw him in the french meeting of the g. 7 trump didnt want to coordinate anything essentially what you need to see are countries called. In together getting stimulus going trying to get economies moving again and removing the threat of a global trade war i mean this is not that if theres any time for it you couldnt think of a worse time at the end of a recovery so i would be saying coordinate together think about ways of getting fiscal authorities to start reading keynes again keynes warned in 1930 its not about the crash its about the long dragging conditions of semi slump thats where we are with the Global Economy set to turn down i thought was the famous soccer of the famous soccer line get your retaliation in 1st they certainly didnt do that in 2 1078. 00 and suspicion is that theyre not going to do it now and thats going to be a big problem that youve sat in the key Decision Making committees in the Monetary Policy committee of the bank of england what is a boat Economic Policy making it such a premium on the conservative for people who are looking for a cautious approach ive always seen the some who are more respectable than the more responsible what is the pressure of the surgeon making that leads people into and to a less than optimum decisions well its a really good question and i remember recall when i went on the committee it turned out that i was the only person on that committee who didnt live in london or in the south east and hadnt been oxbridge so that that in a way was the 1st thing a group of people perhaps who havent we havent walked around havent been to wakefield havent been to the gorbals in glasgow and in america havent been outside the big cities so i think theres a theres a sort of conflict now between what goes on on the streets of San Francisco new york and washington than it does elsewhere i mean the story in a way is that theres more similarity between new york edinburgh and london than there is between new york and the heartland of america or. All the oil in yorkshire or in poorer parts of scotland so i think theres this separation of understanding rising inequality i mean i dont know i mean i was as you as you have been sort of shocked that people that these policy makers of worried about inflation and worried about we have to control inflation when basically we have nonexistent Inflation Inflation was something for the seventys our concern now is Living Standards people being essentially hurt by the economy and the policymakers dealing with things from 40 years ago so there is this gap and in a sense i think the political sigs of bricks it and and trump and so on responses to that responses of the fact that what you folks are doing doesnt help me i would actually 2 final questions professor blanchflower if you heard which economic quart from any of the great economists would you advise one of leaders to read. Before they go to bed at night well i mean i go back ive said this many times the book talks about i think actually it talks about keynes but especially i like beverage a churchill said to beverage in 143 the people are coming back from war whats the world going to look like and he wrote a thing called full employment in a free society and he talked about how important employment was and was full employ he talked about was where basically people are sitting there waiting for jobs office to kamin theres a degree of security so i think we could think about that what happened when people came back from war to a period of full employment in contrast to the great risk of the Great Depression where there was massive unemployment and it appears weve learned nothing much from that so i think beverage is pretty important and he and i and the thing are very taken by he said unemployment surprised on the low side on employment between 195160 in the u. K. Average one and a half percent we need to start to think about that worry about getting getting lots of employment decent wages and stop wasting our time on this ridiculous nonsense about inflation which is apparently going to take off but never does 1st one for students in New Hampshire its an economic quote that you point to them and say look at the 11 nothing else in my classes then remember this well i think its the i think its the 1931 quote from keynes where he says its not about the great crash remember now about the great financial crash its about what follows it about the long dragging conditions of semi slump that followed that surprise us and essentially thats where weve been weve been in a decade of very slow growth and the expectation is that were going to see a 2nd decade because of the utter incompetence to go and read the great masters go and think about how the world works but i would say go back and read keynes and beverage professor david large for thank you so much for joining us on the alex. Alex always a pleasure great talking to you again. There is a reason why the brakes drama has diverted attention from many other areas of politics 2 prime ministers have already fallen on breaks it and the latest one could follow them huge headlines have followed the biggest personalities in the plea even though a socialist as merely supporting members of the cast some who are coming like dynasty spinmeister in chief Dominic Cummings and those now leaving the stage like former scottish tory leader the davidson insofar as the economy has been debated to talk its been in terms of the economic consequences of brics it to one degree or another for the u. K. These range from medium term catastrophic to short term turbulence to cite the cabinet breaks at supremos or in favor description however although crucial for the u. K. And for ireland the economic consequences of brics it are but one small factor impacting on the worlds economy at present it is far more likely that the direction on the World Economy will dictate the outcome or at least the timing of breaks it rather than vice versa for example if dining she believed that the World Economy is heading sense at a rapid rate of knots but a very early election becomes fundamentally more politically attractive than one next year when becks its short term turbulence is set against the backdrop of a general economic downturn is that the unspoken reason for the prime ministers back could be a face a ballot box ultimatum to rebels this week. Professor David Blanchflower calls pretty intriguing and branch assault on under employment in the economy and indeed a recognition that the slow recovery of the last few years is the chances of the politics of breakfast in the u. K. Trump in the usa im device of right to populism across the liberal democracies in other words to understand the underlying politics and the timing of brecks it it is a question of its economy stupid over the next 2 weeks we will explore the seams for the quantum us internationally i political economist to mystically we asked professor carlist voice of Princeton University whether governments around the world now have the financial firepower to effectively combat recession i do ask former m. P. George cabin which type of policies could arrest the march of right wing populism but until then from alex and me and all the shield its good bye for now and well see you next thanks to. Thank you. During the Great Depression which im old enough to remember there was most of my family were unemployed working class and it wasnt it was bed you know much worse objectively than today but there was an expectation of the things were going to get better. Of there was a real sense of hopefulness there isnt today todays america was shaped by the turn principles of concentration of wealth and power. Reduced democracy at tax a loadout engineer elections manufacture consent and other principles according to no im chomsky one set of rules for the rich opposite set of rules for. Thats what happens when you put her into the hands of a narrow sector of will switch will is dedicated to increasing power for itself just as youd expect one of the most influential intellectuals of our time speaks about the modern civilization of america. What politicians do something. They put themselves on the line and they get accepted or rejected. So when you want to be president. Or someone want to press. Thats why the press is like the 43 of them all cant be good. Im interested always in the water as in the house. I sit. United states could potentially be smuggling tons of weapons and ammunition to militants in syria according to leaked documents obtained by a journalist. But they may pretend i was key leaders of the 2nd day of the Eastern Economic forum in front of all starting with the Iran Nuclear Deal and arms race high on the agenda. And the un report highlights the role of the us britain and france and that someone violates and committed in them that. There are certain states who are well known to be supplying weapons but includes the United States that includes United Kingdom or the troops
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