Keynes was one of the great economists of the twentieth century. Even his critics would have to admit he had a certain turn of phrase and wit. These are some of his more memorable quotes

The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.

A Tract on Monetary Reform (1923) Ch. 3.

“In truth, the gold standard is already a barbarous relic.”

– Monetary Reform (1924), p. 172

“If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”

– “The Future” Ch. 5, Essays in Persuasion (1931)

” There is no harm in being sometimes wrong — especially if one is promptly found out.”

– Essays in Biography (1933)

“The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behaviour and religion.”

– First Annual Report of the Arts Council (1945-1946)

“The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45 [Hayek provided historical background up to page 45; after that came his theoretical model], and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.”

– On Friedrich Hayek’s Prices and Production, in Collected Works, vol. XII, p. 252

” Education: the inculcation of the incomprehensible into the indifferent by the incompetent.”

As quoted in Infinite Riches: Gems from a Lifetime of Reading (1979) by Leo Calvin Rosten, p. 165

“When the facts change, I change my mind. What do you do, sir?”

– Reply to a criticism during the Great Depression of having changed his position on monetary policy, as quoted in Lost Prophets: An Insider’s History of the Modern Eonomists (1994) by Alfred L. Malabre, p. 220

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Readers Question: Whose is to blame for the continued UK recession?

With the banking crisis and economic recession, politics seems to be currently dominated by a ‘blame’ game – trying to work out whose fault it is. Unsurprisingly, the coalition have tried to shift blame on to Euro crisis and banks. Others have blamed the governments own spending cuts.

Possible Suspects for continued recession

1. Euro-crisis – uncertainty and recession in Eurozone affecting UK exports and investment levels in UK
2. Bank Lending – Banks reluctance to lend to firms is stifling investment and economic recovery.
3. Government spending cuts – Cuts in government spending have led to a fall in demand and also a subsequent fall in consumer spending.
4. Global downturn. The UK is being affected by global economic slowdown. (though other parts of the world are still posting positive economic growth)
5. Reduced real wages. Combination of real wage cuts and higher commodity inflation has squeezed disposable incomes in past few years.
6. Weakness of housing market
7. low levels of UK consumer spending
8. Government spending under Labour

Euro Crisis.

The chancellor, George Osborne has sought to put considerable blame on the Euro crisis for holding back UK recovery. Osborne recenlty said:

“Our recovery – already facing powerful headwinds from high oil prices and the debt burden left behind by the boom years – is being killed off by the crisis on our doorstep,” Eurozone crisis killing off recovery

Source: ONS

If we look at exports to the Eurzone, there is some evidence of a recent decline in 2012. Though there has always been an element of volatility in the past two years, there is no clear downward pattern. The economic slowdown is most pronounced in peripheral countries, such as Spain and Italy. Others like Germany and France have been able to post positive economic growth.

The Eurozone is definitely important for exports and wider UK economic confidence. However, looking at the trend in exports to Europe, there is no clear pattern that falling exports to our main trading partner is leading factor in causing a recession.

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A report by the Institute of Fiscal Studies suggests the NHS will need an extra £20 billion of funding by 2020.

The NHS already accounts for 23% of government funding, and is one of the few departments to be protected from budget cuts. But, in the age of austerity, spending commitments imply flat real spending increases for the next 5 years at around £110m.

The increased cost of the NHS is due to several factors:

• An Ageing population. Older people tend to need more health care treatment. Around 50% of health care costs are in the last year of a person’s life. An ageing population places a greater burden on NHS treatment.
• Increased availability of expensive medicines.
• Increased expectations from patients.
• Increased number of ‘lifestyle’ health problems, such as obesity related heart disease.

UK health care spending in real terms and as % of GDP

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