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Home Publications Blogs Beat the Press U.K. Conservatives Redefine Success Downward

U.K. Conservatives Redefine Success Downward

Friday, 11 April 2014 15:58

The folks on the right don't seem to think that they should have to be evaluated by the same standards as everyone else. Hence we find George Osborne, the U.K. finance minister, boasting in the WSJ about his country's economic performance now that its economy is finally beginning to grow again.

For people who missed it, the conservative coalition in the U.K. thought it was smart to cut spending and raise taxes in 2010 even though its economy was very far from full employment. These measures had the effect that fans of economics everywhere predicted, they threw the economy back into recession.

After two and a half years of austerity, the government is reversing course and lo and behold the sun rose this morning the economy is growing again. (Yes, economies do generally grow.) In the wild and wacky world of right-wing economics, this somehow vindicates the conservative policies of the prior two and half years.

The piece makes many boasts that properly deserve ridicule, but I will just pick my favorite. Here's Osborne on investment in the U.K.:

"Investment spending has grown by 8.8% over the past year, compared with 2.2% in the U.S. That bodes well for U.K. productivity."

That's impressive, in 2013 investment growth in the U.K. was far higher than in the U.S. But suppose we don't look at one year in isolation but instead look at the whole period since the downturn began. Here's the story.

 UK-US-investment 8490 image001

                            Source: OECD.

The figure shows us that when investment was growing at a a near double digit pace in the United States in 2011 and 2012, it was just inching upward under Osborne's austerity policies in the U.K. It picks up slightly in 2013, but even including the OECD's growth forecast for 2014, investment in the U.K. is still projected to be below its pre-recession level. By contrast, it will be almost 10 percent above its pre-recession level in the United States. 

The U.K. performance would not be the sort of thing that you would generally boast about, but given the affirmative action policies for conservatives at the WSJ and elsewhere in the media, apparently Osborne expects to get away with it. 


Note -- typos correctd, thanks to Robert Salzberg and CE.

Comments (5)Add Comment
written by medgeek, April 11, 2014 5:52
Completely agree. Krugman and Portes have made similar points. Cherry picking data is not a good idea, unless your intent is to obfuscate. I thought Chancellor of the Exchequer was a serious position, but the current incumbent has made a mockery of it.

Dean, the sentence under the chart has the redundant phrase "...when investment while investment..."
Why Did the Chicken Cross the Road?
written by Last Mover, April 11, 2014 8:46

Why did the chicken cross the road? To get to the other side?

No. The chicken crossed the road so it could cross back again to the same side it was already on.

Why didn't the chicken just stay on the same side of the road it was already on?

Because it was an Austerity Chicken who knew if crossing the road back and forth didn't get it killed by a car, it would just make it stronger, so it could cross more roads ...
Has Osborne heard of QE?
written by Ralph Musgrave, April 12, 2014 1:59

Osborne also trotted out the old claim that a higher deficit necessarily leads to a higher national debt. Of course, as Keynes pointed out, a deficit can be funded EITHER by debt or by new money. In fact the UK and US deficits have actually been funded to a significant extent by new money in that a big portion of the extra debt over recent years has been QE’d.

But I wouldn’t expect Osborne to have heard of Keynes or QE.
51st State
written by Larry Signor, April 12, 2014 6:39
Not much more to GB than being another tail feather for US colonialism. They emulate our mistakes like a little brother.
Austerity worked for the 1%
written by Anon, April 12, 2014 8:35
Martin Rowson has a cartoon in the UK Guardian stating that Austerity worked for the 1% and this is the economic argument that Dean Baker has to make because there are few other people who are willing to make that argument. The 1% benefited from QE more than the 99%, they were able to buy assets at discounted prices like Royal Mail and the austerity talk distracted people from the financial crisis.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.