PRESENT-DAY economic thinking says that in order to pull economies out of recession, it is necessary to slash interest rates to zero, keep them depressed indefinitely and then pump inordinate sums of money into bailouts that gain the approval of financial markets, in the hope that a happy and rising market will take the economy with it. This could then be augmented by tax cuts and various other handouts to ensure consumers have more to spend, such expenditure being seen as key to economic recovery.
This was broadly the approach in 1990s recessionary Japan and is now the preferred method in the United States and Europe, where most of the above has been set in motion and where over-indebtedness is addressed by the simple expedient of raising the debt ceiling to incur even more debt.
Meanwhile, in the US, more 'quantitative easing' or money printing is viewed as being a good thing, this despite only minimal positive impact from the two previous rounds (apart from vastly enriching the banks).
However, even though supporters of easy money acknowledge that it smacks of 'kicking the can down the road' or short-termism, its wisdom is hardly ever questioned because of the sheer number of economists and analysts that favour it.
Here's the thing though: Does sheer weight of numbers necessarily guarantee correctness? Or is it possible that because there's safety in numbers, a sort of economic groupthink is in force that may be obstructing application of real reform?
The history of economics is littered with spectacular failures that were born of groupthink, none more spectacular than the curious incident of the 364 economists who 30 years ago lent their names to a letter to the press slamming then-UK prime minister Margaret Thatcher's 1981 budget. Included in that group of distinguished signatories were several top academics (many from Cambridge University), a Nobel prize winner, another who would go on to win a Nobel prize and the present governor of the Bank of England.
The bone of contention was the government's plan to raise taxes and cut spending at a time when unemployment and inflation were running at double digits and the public debt was spiralling - a plan which the 364 economists said would be disastrous and would only deepen the recession.
'There is no basis in economic theory or supporting evidence for the government belief that by deflating demand they will bring inflation permanently under control and thereby induce an automatic recovery in output and employment,' wrote the 364, who also claimed there were hundreds more who would have signed the petition had it not been sent over the Easter holidays.
(In heated debate in the House of Commons, Mrs Thatcher was asked to name two economists who supported her plan. She did so and the budget was passed. Legend has it she later confided in an aide: 'Good job they didn't ask me to name three.')
As it turned out, the 364 were spectacularly wrong - in less than two years, Britain was out of a recession and inflation was down from 18 per cent to 5 per cent. Such was the scale of the humiliation that a book was even published to celebrate the 25th anniversary (Were 364 Economists All Wrong?, Phillip Booth ed., Institute of Economic Affairs, 2006).
There have been many analyses over the years of how such a large group of top minds could have been so wrong but the consensus is (apart from an over-reliance on Keynesian economics) that in demonstrating a resolve to pay its debts and properly manage its deficit, the Thatcher government gradually gained the market's confidence and that this was something the group failed to consider.
This is not to say that the same policy prescriptions should apply today. For one thing, inflation is not a problem (yet) and the causes of the current collapse - crooked US investment bank lending, lax regulation and an overblown US property market - are also probably unique in the annals of history.
But it is apparent that sometimes, thinking outside of the box may be beneficial even if it flies in the face of received wisdom. It could be that higher interest rates and a stronger US dollar are what is needed. Or perhaps a rethink of the seemingly never-ending strategy of inflating bubbles as cures for collapsed bubbles and less of an emphasis on giving Wall Street what it demands and instead more on what it needs - stronger regulation, greater penalties and a dismantling of the 'too big to fail' ideology.
The point is that there is a danger in placing too much confidence in economics to solve problems, especially when it is prone to groupthink which may well prove damaging over time.
As one writer has since noted, there's little doubt that the unfortunate 364 were sincere in their views; however, sincerity did not prevent them from being wrong.
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