IMF: Blanchflower joins campaign for Brown
Coalition’s block on Gordon Brown is ‘tawdry’ - he was not responsible for shattering UK economy
David Blanchflower, the British economist who predicted the 2008 financial crisis and also suggested a cure for it months before many of his peers cottoned on, today told The First Post that the coalition government's blacklisting of Gordon Brown - and support instead for French finance minister Christine Lagarde - in the appointment of a new IMF boss, was "tawdry" and "cheap nastiness" that would rebound on David Cameron and George Osborne.
Referring to the "ethical issues" which continue to bedevil Lagarde, Blanchflower maintained that the former British prime minister was head and shoulders above the other candidates for the IMF position, which was vacated by Dominique Strauss-Kahn last week.
Blanchflower, a former member of the Bank of England's monetary policy committee who recommended interest rate cuts months before the beginning of the last recession which would have cushioned the blow for millions of Britons, also gave succour to Gordon Brown's campaign by saying that David Cameron does not have an ultimate veto over his predecessor's chances of acceding to the top job in world finance. It would be "very embarrassing for the coalition" if Brown succeeded in getting the job with the backing of the United States.
He also poured scorn on the ideology of Lagarde, whom he dubbed alongside George Osborne as being part of the "Chicago austerity" group of economists - a reference to the guiding principals of Milton Friedman, the economist who taught at that city's university and spawned the laissez-faire monetarist philosophy so beloved of Ronald Reagan and Margaret Thatcher in the 1980s.
"This ideology has failed everywhere it's been implemented - look at Portugal," Blanchflower said, pointing to the Eurozone member whose government recently agreed a €78bn bailout with the European Union. And he noted that the European Central Bank line (endorsed by Osborne and Lagarde) of demanding that countries cut their spending has "hardly come through with shining light".
Blanchflower agreed with the view of British political figures that the coalition decision to oppose Brown's candidature was political more than anything else. "They have to maintain the line that the British economy was bankrupt and had been shattered by Gordon Brown. Not true," argued Blanchflower. He also said that the key role the IMF plays in developing nations would be far better served by the former British PM, who talks for the "global coalition".
Now professor of economics at Dartmouth University in New Hampshire, Blanchflower also noted that his erstwhile boss, Mervyn King, governor of the Bank of England, had criticised the approach to economics of the coalition's triumvirate of Cameron, Osborne and Nick Clegg, the Lib Dem deputy prime minister. "All they care about is politics," he said.
That point was also made today by the economic historian Lord (Robert) Skidelsky. In a letter to the Financial Times, he said: "The UK coalition government's public opposition to appointing Gordon Brown as the new managing director of the International Monetary Fund is a woeful example of putting domestic politics ahead of the world good."
Critically, it is not just British economists backing Brown. The US Nobel winners Joseph Stiglitz and Paul Krugman have also said the former Labour prime minister should take on the role which many feel he would excel in. And US president Barack Obama is also known to admire Brown. He told Andrew Marr on Sunday that Brown helped "yank an economy out of a potential Great Depression. Great Britain [played a large role] in making sure that the world financial system didn't collapse."
Will he say the same thing in private when he meets David Cameron for talks tomorrow? ·
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