There is the small matter of identifying “normal” times. It implies something important about how one is thinking about the macreconomy. What does “normal” look like? In the thirty years that I’ve been paying attention to the macroeconomy there always seems to have been some argument or other floating around as to why things weren’t quite normal just at the moment.
This could drive us to the conclusion that the whole thing is a charade. It’s a policy that will never be implemented because there is so much wriggle room built in.
A contrary conclusion might be that whatever macroeconomic behaviour we’re observing is normal, given an appropriate understanding of the macroeconomy. So it’s surpluses all the way.
And then there is the small matter of who gets to define “normal”. It would appear that George Osborne would quite like to pass the responsibility to the OBR, who clearly aren’t all that keen to take it.
A more significant reason to find the Osborne proposals troubling is the sense that they are all politics, no economics. They owe everything to Osborne’s desire to drive home the Conservatives’ political advantage on the economy. It is the next stage in the strategy of boxing Labour even further into a corner. It is clearly working, if Chuka Umunna’s comments in yesterday at the Independent are anything to go by. [Read more…]