Is it me or is there a high degree of hypocrisy in the way politicians and economists are reacting on a country-by-country basis to the dire fiscal positions of various European Union states?
Not a day goes by without another pious "core" country European politician lining up to slap Greece on the wrist for its "off the rails" economic position. What a wonderful opportunity to detract from domestic criticisms over the handling of their own economies it is to be able to beat up on the Greeks. This would be fine if everyone else wasn’t in the same, or near enough, position.
Greece is facing imminent deadlines to prove it is serious about budget deficit reduction. So why should the Greeks act now when countries such as the UK are being given a lengthy period of grace before facing austerity pressures?
To recap, while Greece has to sit in the corner for its 12-percent-plus budget deficit, other serial offenders such as France, with an 8 percent deficit, and the UK, with its own horrific near-13-percent number, seem to be getting away with it scot free.
In Friday's Financial Times, UK Chancellor of the Exchequer Alistair Darling is being backed by 60 of the world’s top economists — including Joseph Stiglitz and Lord Skidelsky — for refusing to bow to demands for an accelerated program of fiscal consolidation.
The economist signatories in the FT letter are fighting a battle with more hawkish peers who made their case in an earlier Sunday Times piece. They argue that — while there is no disagreement that fiscal measures are necessary at some stage — the time is not now. They point to the frightening loss of UK output, increase in employment and the lack of clarity over the UK’s recovery.
At the crux of the argument appears to be how international markets will react to the UK either moving swiftly or biding its time over deficit reduction.
Stiglitz and Co. believe the views of the financial markets are less important bearing in mind it was the same markets whose mistakes precipitated the crisis in the first place.
That may well be the case, but the Government still needs those markets to lend it money regardless of their fault in creating the crisis.
I don’t want to get into the argument over timing of austerity. All I want to know is why the UK and other offenders are allowed to use Keynesian economics and have a longer time window to pull in deficits than countries such as Greece?
It could be that beating up on Greece is easy because it is deemed to be "peripheral" and doing the same to the UK risks upsetting the whole global recovery apple cart.