mainly macro: The path from deficit concern to deficit deceit

George Osborne is lying to us about his motives. Why is nobody pointing this out to the population at large?

George Osborne is lying to us about his motives. Why is nobody pointing this out to the population at large?

Excellent observations from Professor Simon Wren-Lewis. It should be big news that George Osborne is trying to deceive every UK citizen – and, for the most part, succeeding – about his reasons for cutting spending. Why isn’t it?

A few days ago Lord Turnbull had the opportunity to question the Chancellor on his drive for further austerity. This is a part of what he said.

“I think what you are doing actually, is, the real argument is you want a smaller state and there are good arguments for that and some people don’t agree but you don’t tell people you are doing that. What you tell people is this story about the impoverishment of debt which is a smokescreen. The urgency of reducing debt, the extent, I just can’t see the justification for it.”

A former head of the civil service, who had initially supported Osborne on the deficit, was now accusing him of deliberate deceit. Big news you might have thought. And quite a turnaround in just 5 years.
Yet it is not surprising. Osborne’s fiscal plans really have no basis in economics. That leaves two alternatives. Either Osborne is just stupid and cannot take advice, or he has other motives. George Osborne is clearly not stupid, which leaves only the second possibility. It is therefore entirely logical that Lord Turnbull should come to agree with what some of us were saying some time ago.
 
What a strange world we are now in. The government goes for rapid deficit reduction as a smokescreen for reducing the size of the state. No less than a former cabinet secretary accuses the Chancellor of this deceit. Yet when a Labour leadership contender adopts an anti-austerity policy he is told it is extreme and committing electoral suicide. Is it any wonder that a quarter of a million Labour party members voted for change.

Source: mainly macro: The path from deficit concern to deficit deceit

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5 thoughts on “mainly macro: The path from deficit concern to deficit deceit

  1. AndyH

    One of the easiest ways of getting people to vote against their own interests, is to convince them we have choice. This is a classic example.

  2. mohandeer

    Not sure I agree with you on how clever Osborne is. He read a book by Rogoff and another economist and both were advocating the opposite of macro-Keynesian, but their whole theme was based on a faulty premise. When it was exposed and the two chaps found out they began back peddling rapidly. I just don’t think Osborne knows what he is doing, he thought he did, but each time he makes things worse he just drives down the same road each time, repeating the same stupid mistakes. Yes he was and is trying to ravage the state to minimise the government responsibility, but all reason says that you cannot keep reducing infinitely without the consequences we are now facing. Still he keeps going like a hamster in a treadmill, I honestly don’t think he knows how to get out of the rut he has dug himself into and can’t bare to lose face in front of everyone and admit he was wrong and change tack. (That would require a complete reversal, which had it been adopted 5 years ago would have seen us forging ahead, receipts shortening the debts/deficit and growth within and beyond. He has made £38 billion in cuts which could easily have been covered by tackling the Corporate Tax Bill and Corporate Tax Evasion, investing the helicopter drops he has squandered into the growth areas of our economy. Of all the times we have had such low BoE rates and he heads off into the wild blue yonder? It was always going to end in tears with stalled growth and no where to go to.

    1. Mike Sivier Post author

      I’ve said Reinhart and Rogoff’s ideas were based on a spreadsheet mistake – in fact, I had an argument with the Treasury about it, back in 2013. So Osborne isn’t clever at all and I don’t think the article suggested that he is. He simply isn’t stupid enough to have no plan at all. Conservative economic policy since 2010 has always been about shrinking the state and ensuring that the government never has enough money to ensure a decent standard of living for the poor. He knew the consequences. He just doesn’t seem to have expected many of us to know what they would be as well. It’s not about knowing how to get out of the cycle – he knows exactly what it is and intends to perpetuate it. If you accept that Reinhart/Rogoff was just a front, it all becomes much clearer.

  3. Pension Sixty

    Osborne has risen national debt to be around 80 per cent of wealth of the nation since 2010. At this rate Tory austerity will have the UK in 110 per cent debt by 2020.

    Nothing is being saved by killing the poor with austerity.

    Tory austerity back in the 1920s trashed a booming economy and rose national debt the the same amount as today.

    Neither did Labour overspend til 2010. It is the Tories that have doubled national debt since 2010.

  4. mrmarcpc

    Osborne is one of the worst chancellors we’ve ever had, he is an incompetent liar who has made a balls up of our economy and everything else he touches, how he, much like IDS, still has his job baffles me, he must have dirt on his fellow tories or wields a lot more power behind the scenes than we really know and people should also know that he has eyes on the top job so Cameron better watch his back!

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