It is, however, the main point troubling Professor Simon Wren-Lewis in his latest Mainly Macro blog article. He states that Tory chancellor George Osborne started out in a similar position and with a relatively similar policy to Labour’s Gordon Brown, but caused huge damage to household finances, whereas Brown did not.
“The answer, of course, is that the … contexts were different,” writes the learned professor. “Osborne’s austerity happened when the economy was just starting a recovery from a deep recession, and interest rates were at their then Zero Lower Bound (ZLB) of 0.5%… When interest rates are at the ZLB, monetary policy cannot counteract the negative impact of fiscal austerity on output.”
In other words, with austerity shrinking the economy, nothing else Osborne did would have stopped your wages from shrinking too. It is entirely possible that Osborne was perfectly aware of this.Yet he is planning an even bigger austerity squeeze on your incomes if the Conservatives form a government after this year’s election.
Professor Wren-Lewis dismisses the possibility that Osborne does not understand what he has been doing: “A much more plausible explanation for his actions were that the macroeconomic risks were understood, but were put to one side for political and ideological reasons.
“First the possibility of hitting Labour with a populist concern about the deficit was too great a temptation to resist for a Chancellor for whom political tactics are everything. Second, austerity was a means of implementing an unpopular policy of reducing the size of the state by the back door.”
He adds: “Now you may cynically say that in a contest between economics and politics/ideology, politicians will always choose the latter. However much that is true or false, when that choice costs each household at least £4,000, it would be very strange if that politician survived the judgement of the electorate.”
Perhaps so – but he and his party are banking on the electorate being too ignorant of the facts to realise this. That’s why I put it in the headline.
Campaigning in the centre of a small Mid Wales town yesterday, This Writer asked one group of young people (in their twenties or thereabouts), who quite clearly had limited means, which way they were going to vote. They ignored the question and walked on for several paces, then one turned around and, raising his fist to the air, yelled, “Conservative all the way!”
George Osborne is relying on people like this for his party’s survival.
We have to foil him by educating them.
It is a task that won’t end after the election; in fact, it is a task that may not end in our lifetimes.
But it is the only way to protect ourselves from continual exploitation by an entitled class of layabouts who expect us to do all the work while they have all the privileges handed to them on a plate.
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