Wednesday, October 18, 2017

Bill Mitchell — British productivity slump – all down to George Osborne’s austerity obsession

Apparently, whenever some poor economic news is published about the United Kingdom, journalists have to weave in their on-going gripe about the outpouring of democracy in June last year that saw the Brexit vote to leave successful. Its hysterical really. The most recent example is from the otherwise sensible Aditya Chakrabortty from the UK Guardian (October 17, 2017) – Who’s to blame for Brexit’s fantasy politics? The experts, of course. The story has nothing much to do with the June 2016 Referendum but more about massive forecasting failures of the Office of Budget Responsibility. But somehow the story opines about the lies told about Brexit and a fiscal “bloodbath” – the latter being the description for the fact that the fiscal deficit is likely to increase a little as a result of a slower than expected economic growth outcome.
The UK Guardian continually writes about these two obsessions – the first that Brexit will be a disaster and the second that the fiscal position of the British government is in jeopardy and will undermine the capacity of the government to defend the economy if a major downturn comes along (as a result of the ‘Brexit disaster’). The narratives are interlinked – Brexit is bad, it will cause deficits to rise which are bad, and the government will be powerless as a result of the rising deficits to stop the bad consequences of Brexit – which is a big bad. All propositions are largely nonsense.
Brexit will be bad if the British government continues to implement neoliberal policy. Rising deficits do not alter the spending capacity of government. And as a currency-issuing government, Britain can always arrest a recession, if there is political will. The fact is that the OBR forecast errors are just part of the neoliberal lie. And the productivity growth slump the OBR has now ‘discovered’ predates the Brexit referendum by years and is all down to the misplaced austerity imposed by George Osborne in June 2010. But it is disappointing to read this sort of stuff being repeated by so-called progressive commentator. There is clearly more work to be done via education.
Paragraphing added.

Bill Mitchell – billy blog
British productivity slump – all down to George Osborne’s austerity obsession
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

4 comments:

Matt Franko said...

BOE asset purchases at 500b in U.K. Economy doing about 2T annual so their QE and ZIRP just as punitive as the US policy maybe a bit more... so this is the basic problem over there too over the time period of interest here...

Without looking at a Cash Basis HM Treasury Statement to see what the Fiscal policy is really doing you can't say there is "austerity"...

Where is the statement of HM Treasury account withdrawals over this period? It's probably showing small increases over this time period...

Matt Franko said...

"Why would a so-called progressive journalist use the language of the “officials” – to wit, “bloodbath” when describing the cyclical impacts on the tax take by government."

Why would we expect a journo to understand what is going on they aren't trained in any relevant technical discipline... they ARE trained in employing figures of speech like this ...

Matt Franko said...

The journalists have to be directly challenged on their qualifications... i.e. They are not qualified ....

Tom Hickey said...

Well they hire grads of journey schools rather than tech people, but does the country have enough qualified tech people to assign tech people to all roles in which technically qualified people are needed?

Plus how many so-called technically qualified people are actually technically qualified?

Looks like the issue may be hitting the limits of available resources.