The Cassandra of the Cabinet

(Two blogs this week. Lucky people)

It can’t be easy being Vince Cable. Since the early 2000s he has been making predictions about the state and the future of the British economy. He predicted the possibility of the 2008 financial crisis long before anyone else saw it coming. But like the Cassandra of myth, who was cursed by the gods to have her predictions ignored, Cable’s prophecies have been slapped down at every turn.

He was put down by the Prime Minister again this week, when in response to the suggestion by Mr Cable that it might be a good idea to raise spending on housing, school building, road and rail projects, Mr Cameron argued that there was “no magic money tree” and there would be no change or shift in the government economic strategy. He argued that despite what Labour and the more vocal Lib Dems might say, the government’s austerity measures were not to blame for the lack of economic growth, a claim he said was backed by the Office for Budget Responsibility.

This was wrong for two reasons.

Firstly, the OBR has called out the PM for “misrepresenting its position” with regard to the economy, stating that actually they do believe that the government’s cuts have had some effect on the lack of economic growth over the last few years. Secondly, while it is true that rates of unemployment fell by some 37,000, the number of people having to use some form of food bank has increased. The Trussell Trust, who run 172 food banks across the country, have said that between 2011 and 2012 they fed over 128,687 people nationwide, and they expect that number to increase to over 230,000 during 2013. It’s clear that while austerity maybe working in some areas, it’s also hurting people badly in others. And despite all of Cameron’s talks about how we are all in it together, he’s not the one having to feed his family via a charity.

I have never claimed to be any sort of economic genius, but it seems fairly obvious to me that reducing the amount of money people have in their pockets is no way to grow the economy. The people at the credit rating company Moody’s have already spotted this. If people are worried they aren’t going to have money enough to pay their bills, they aren’t going to spend it either in the high street or online and therefore the private sector will not grow and the government will be unable to raise the money it needs through taxes on spending and profits. Austerity on its own will never work. It has to be combined with a certain amount of investment by government to kick start economic activity. However, it appears that the government have either not picked up on this idea, or are totally ignoring it. At the end of the day, it won’t be them who will be harmed by that course of action.

Meanwhile, Cable – the Man Who Should be Chancellor – will continue to be ignored and the rest of us, will look on, wondering exactly when the government will realise that they are going the wrong way, and will engage in yet another – but this time necessary – U turn.