LETTERS Straining for paradox
Sir: Lord Bruce-Gardyne's waspish ascrip- tion of the present credit-boom to the effects of Sir Alan Walter's advice in 1981 (The Economy, 30 July) is not only quite untrue but knowingly unfair, since he was always close to events as a middle-ranking Treasury minister.
On his arrival in January 1981 — Jock Bruce-Gardyne's term 'parachuted' sug- gests proprietary jealousy — Prof. Walters did not say that the squeeze had been too severe, but that it had been imposed too quickly, thereby causing overshoot. This was the nub of Prof. Niehands's findings based on research which we had commis- sioned several months previously. 'The policy was correct but its implementation was at fault.'
Prof. Walters, and the officials who attended our two seminars at the Admiral- ty Flat, accepted the findings which in- cluded the corollary that some immediate relaxation should be undertaken followed by a slower re-imposition which was then to be held for some time. Jock Bruce- Gardyne was au fait with all this.
This — and not 'let credit rip' — was at the heart of the 1981 Budget, which the 364 economists predicted would bring defla- tionary horrors, and then, like ephemeri- dae, expired professionally, till they were resurrected in praise of Nigel, whom they found equally horrifying at the time. Sir Alan left after the 1983 election, though keeping his room and a foothold in No. 10. His policy-influence was commensurately affected. The credit-boom, whose origins are hard to trace back further than the turn of 1986/7 at the earliest, cannot logically be ascribed to his 1982/3 squeeze.
In light of this, I think that Jock could do with a seminary after all, if only to help him find real paradoxes instead of straining after them.
Alfred Sherman
10 Gerald Road, London SW1
Jock Bruce-Gardyne writes: Sir Alfred, like the economy, has been overheating. I did not accuse Prof. Walters — or, for that matter, the 1981 Budget — of 'letting credit rip'. I did suggest that Professor Walter's critique of the stringency of monetary policy in 1981 encouraged the Treasury to relax: and that this relaxation — pursued over the ensuing five years eventually contributed to the credit boom.
Sir Alfred should check his figures be- fore he asserts that the boom did not begin until the end of 1986. And, since I was a humble backbencher when Prof. Walters arrived in Downing Street, my refer- ence to his parachute was neither jealous nor proprietorial: descriptive, perhaps, or fanciful, according to taste.
Previous page
