Boom and Bust - the definitive explanation

At the Press Gallery Lunch earlier The Guardian’s Michael White and Ed Balls had a conversation about the claim that Labour had abolished Boom and Bust, and it led to the most, shall we say, meticulous explanation of it that I have heard. It follows here…

Michael White: Whenever Gordon Brown said, as he so often did, ‘no more boom and bust’, some of us GCSE economists flinched because we knew that couldn’t possibly be true. We thought it couldn’t be right. What did you think?

Ed Balls: I think, economist or not, the power of retrospection is a great power.

MW: No. That’s the chairman’s cheap joke, come on, what did you think at the time?

EB: Since 2008 there have been many people who have written columns that said in retrospect that phrase about ‘boom and bust’ shouldn’t have been used. But I certainly used the boom and bust phrase as did other politicians in the previous 15 years. Go back to the first time it was used, was in the Labour party economic policy submission to Labour party conference of 1993. I wrote the words, and it was basically pointing out how Conservative politicians of the previous ten years, particularly Nigel Lawson, in their attempt to play politics with interest rates and the currency had ended up with self-inflicted boom and bust ups and downs, and the solution to that boom and bust political interference was an independent central bank, which was our argument. It was never an argument which was, ‘we could abolish the economic cycle’. It was an argument that we could through bank independence prevent the self inflicted political mistakes of the political era.
Did, as the years go on and Gordon Brown made more and more budget speeches, did he sometimes give the impression that stability might have been cemented into the British economic reality and psyche….perhaps. And perhaps in retrospect that was a rhetorical error.

It is only a “rhetorical error” rather than an “error”, Balls explained, because the fact that Labour used the phrase was not a reflection of an irresponsible fiscal policy executed by the party, as claimed by the Tories. The country’s economic situation going into 2008 was sound, said Balls.

So summed up, the boom and bust thing was just a phrase that Gordon Brown got a bit carried away with. I’ll say he did.