Wednesday, 6 March 2013

As the UK economy stagnates, a few people that can say "I told you so"

It is worth revisiting, in the wake of an abysmal set of figures for manufacturing and - yet again - dire data on UK construction, the views of the minority of economists that rejected the economic plans of Osborne in 2010.

The Chancellor's plans, backed by the Tory press, the Mayor of London, the Prime Minister and, shamefully, the Liberal Democrats, have brought the UK to the brink of a triple-dip recession. Even if the services sector saves him from the humiliation of another recession, by April, Osborne will still have presided over an economy that will have barely grown since he came to power.

Coupled with this, wages are now a real concern, with the average Briton's standard of living continuing to fall. It is entirely possible that, come 2015, any return to growth will mean little to millions of ordinary people.

As a result of this situation, opinion polls now demonstrate that voters are finally rejecting the Tory approach of cutting public spending in the midst of a stagnating economic climate, where private spending is lacking. 

In light of all of this, let's consider this set of experts, writing in 2010. They were dismissed at the time by the majority of 'mainstream' economists and yet, well, they have every right to feel vindicated. Take David Blanchflower:
"A Harvard economist said to me recently that the coalition government's fiscal deficit reduction programme is the biggest macroeconomic experiment in an advanced country in any of our lifetimes.... He argued that no government, unless forced to, would be dumb enough to take such unnecessary risks with the well-being of the nation".

Or Nobel prize-winning economist Paul Krugman, who has written on numerous occasions about Osborne's folly. After joining a minority of economists opposing the Tories' 1930's style economics in 2010, he wrote this around a year later:
"Slashing spending in the face of high unemployment is a mistake. Austerity advocates predicted that spending cuts would bring quick dividends in the form of rising confidence, and that there would be few, if any, adverse effects on growth and jobs; but they were wrong".

Well, now, as Tory cheerleaders in the press desperately call for more of the same medicine, this small group of commentators can justifiably say: "I told you so". Sad, though, that millions of people will suffer anyway as a result the triumph of right-wing ideology over pragmatism or common sense.

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