The joy of Paul Mason's economics

We've pointed to the glee with which we welcome Paul Mason's contributions to economic understanding before. Not, as you know, considering him as a guide to reality, but rather as if he were the poster child in one of those "before and after" ads. Mason's views forming the before picture, before any study of any real actual economics has taken place.

A glorious example is this piece of his. Where he's wondering whether the current events are a re-run of the 1930s. Well, where people use the bad policies of the 1930s, say Venezuela, then yes, perhaps it is. Where people use policies that worked from the 1930's then again, it's a replay, but not in a bad manner.

We are, for example, reminded by the consistent cries for more infrastructure spending of Hitler's reaction to the problems of the early 1930s. Which was to splash out on that infrastructure like the autobahns. Which most certainly boosted employment and so on, but it's also true that the Nazi state would have been bankrupt by 1941 (Goetz Aly's "Hitler's Beneficiarie" is very clear on this) and thus war and plunder as a solution.

But that is only an example of 30s policy, Mason mentions another one:

On the face of it, the similarities are real. Britain’s vote to leave the EU parallels its panicked decision to quit the gold standard in September 1931 – the first major country to quit the global economic system.

The joy there is that quitting the gold standard worked. Worked very well in fact. For it led to a 25% decline in the exchange rate, a very large stimulus to the domestic economy. This was combined with a cut in government spending - that is, with fiscal contraction. The combination of the two (the exchange rate stimulus being larger than the fiscal contraction for those keeping Keynesian score at home) was overall expansionary and Britain's Depression troubles were largely over in 18 months. To be followed by rather a boom as an unconstrained housing industry, untrammeled by limitations on planning permissions, went onto produce 300,000 houses a year in places that people actually wanted to live - and which they could also afford.

We're really not sure about everyone else but we think that's a pretty good outcome. Why, we might even recommend it today. The pounds was indeed allowed to crop by that 25%, we've had loose monetary policy and Osborne was promising fiscal austerity. That is, Britain's 1930s experience was that fiscally expansionary austerity was not only possible it actually worked. And if we blow up the Town and Country Planning Act 1947 and successors would work even better.

But that's rather more about out ideas than Mason's. The point we want to make about his ideas is that he seems unaware that the actions he is worrying about actually worked. And it would be useful if, as an economic prognosticator, one knew which ideas did actually work and which didn't. Expansionary fiscal austerity does, socialism does not perhaps?