The economy - and easy credit

From the AK archive: MOST of what little knowledge I have about economics has been gleaned from colleagues and contacts down the years, together with a bit of reading. The result is a strange brew in which the chief ingredient is confusion. I take comfort from the fact that I do not seem to be alone; our policy-makers often seem just as muddled.

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Drinking with the Scottish Lords

The House of Lords remains an amiably dotty place. We are at dinner with the Scottish peers, an annual affair to which I am from time to time lucky enough to be invited. It is a very enjoyable evening, especially because they don't allow speeches. Instead civilised conversation is the rule.

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On inflation

THE barber paused in mid-snip when the radio interrupted its nonstop pop to announce that interest rates had gone to 15%. That's a pound on the price of the haircut, he said. By the following lunchtime the proprietor of a local restaurant was expressing great relief at the news that the 10% rate had been restored. We're all working for the banks now; and many people are running to stand still.

That evening I was sitting at dinner with a leading member of the financial and business community, a pillar of the London Stock Exchange. He startled me by saying that what this country needed was a little inflation.

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The fragmentation o the labour market

...Since the war we have, of course, lived through changes which were retarded by various conservative forces, such as managerial inertia and trade union immunities, but not ultimately denied. Our heavy industries have been in decline for a very long time (in Glasgow since before the First World War).

More recently, the drive for profitability in newly competitive arenas which have been privatised or liberalised, together with increased exposure to international competition and the introduction of new technologies, has been squeezing labour out of the system.

This process was masked by the boom in the service industries in the eighties which, as it turned out, was insecurely based on a credit binge. Had the IRA succeeded in blowing up the tower at Canary Wharf, there would have been gratitude in surprising places.

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