As Torsten Bell notes, those in Whitehall failed to see the crash coming (We let the financial crisis go to waste, 9 August), but a significant number of non-neoclassical economists did – it’s just that they weren’t listened to. It’s possible that Bell is also steeped in neoclassical economic beliefs, but in the hope that his good work at the Resolution Foundation might have loosened those chains, he could do enormous further service by speaking up to debunk a few economic myths.
When he writes “there is not some magic bullet”, it resonates with the now discredited “myth” that “there is no magic money tree”, employed by Thatcher, Cameron and May. After all, from his time in the department he must surely have been aware that in 2013, tucked away in the bundle of Treasury documents tabled by the then chancellor, George Osborne, on budget day, was one with this paragraph: “For example, it is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money. In theory, this could allow governments to increase spending or reduce taxation without raising corresponding financing from the private sector. Adair Turner, Chairman of the Financial Services Authority, has suggested this could be a tool to use in extreme circumstances.” Clearly such money could be used to increase spending to build houses and improve the lot of workers, both of which Bell recommends.