A Final Word With Ferguson

LONDON – Like any skilful controversialist, Niall Ferguson knows that when you have lost the main battle, it is time for diversionary tactics.

His latest charge against me is that I “changed my predictions after the fact.” He quotes me as saying in November 2010 that Chancellor of the Exchequer George Osborne’s policies doomed the United Kingdom to “years of interminable recession.” He claims that the pickup in UK GDP growth in 2013 – nearly three years after Osborne’s austerity budget of June 2010 – refutes my prediction.

But this is nonsense, and Ferguson must know it. Has he never heard of ceteris paribus? Every prediction in economics is conditional on some things staying the same. If he took the trouble to read what I said in November 2010, he would see that my prediction was conditional on existing policies.

In fact, the policies changed. The second bout of quantitative easing, from October 2011 to July 2012, injected £175 billion ($272 billion) into the economy. And the austerity measures were sufficiently relaxed after two years for Osborne to be called a “closet Keynesian.” But Osborne’s about-face did not come – and this is the point – before his original policies had done considerable harm.