Osborne and the Deflation of the British Media

by George_East on January 16, 2015

225px-George_Osborne_0437Earlier this week there were two inter-related news stories which told us a lot about the failure of George Osborne’s economic policy and more importantly the world beating uselessness of the British press in holding him to account.

As we have written on this blog on numerous occasions, Osborne’s stint as Chancellor has been the most disastrous the country has endured in living memory, perhaps since Winston Churchill took Britain back on to the gold standard in 1925.  Osborne has failed both on any objective measure and on his own (nonsensical) subjective measure of eliminating the structural deficit over the course of one parliamentary term.

Osborne inherited an economy that was bouncing back from the 2008/9 financial crisis in the light of Labour’s stimulus measures.  On assuming office he promptly brought that to a grinding halt, both through his rhetoric of national bankruptcy (we are going to be like Greece, I tell you) and his emergency budget of June 2010 which introduced austerity.   The consequence was an economy which flatlined for three years leaving it way behind trend and causing untold misery in its wake.

There has been over the course of the last year or so modest growth.  There is nothing particularly impressive about that.  If you bring an economy to a grinding halt, you should not be given credit for it growing again when you ease up on the very austerity measures that caused the slow down in the first place.  As Paul Krugman has it: if you keep beating yourself around the head with a baseball bat, you shouldn’t be given praise for the fact that your head hurting once you stop doing so.  Even more so when your chosen method of easing up is by artificially stoking the housing market (which caused many of the problems in the first place). Economies have a natural propensity to grow, unless you strangle them. And in the long run, of course, we are all dead.

Osborne also likes to brag about the ‘jobs miracle’, yet real wages are still massively below the levels they were before the financial crisis (unless you are a banker or a CEO of a FTSE 100 company of course) and much of the explanation of the additional numbers of people in the workplace can be explained by the increased population in the UK in recent years (and yes for you UKIPpers out there additional population does mean ought to be more jobs as there will be more economic activity). The most revealing statistic is that there has been a huge increase in the numbers of self-employed.  This is not, of course, because the UK has suddenly turned into the Thatcherite wet dream of a nation of entrepreneurs, but rather reflects the casualisation of the job market and the low wage insecurity of many of those now technically self-employed.

The media reaction though to the modest growth and the increase in the jobs numbers that has been seen over the last year has been to treat Osborne as vindicated and as something of an economic miracle maker.  This is, I suspect, partly because of the ideological bent of much of the press but also because, as Bobby West likes to remind us, journalists are mostly fucking lazy and useless. Print the press release.

This week has seen the British media excel itself in its fawning idiocy over Osborne’s performance as Chancellor.  On Tuesday it was announced that inflation in December was at 0.5%, the lowest figure since May 2000.  This was immediately hailed in the press as more proof that Osborne was some kind of economic messiah.   The Bank of England, of course, has a target of 2% inflation.  That is 2% not ‘2% or less’.  Thus in economic terms an inflation figure of 0.5% is too low not something to be hailing from the roof tops (there  is a strong argument that the 2% target itself is too low given the experience of Japan in the lost two decades and counting, but that is a discussion for another day).  There is good reason to be concerned about inflation which is this low and that is that it may turn into deflation (with all of the negative effects on that for already stretched debtors), as it already has in parts of the Eurozone and Switzerland (witness the panicked reaction of the Swiss Central Bank over the last 24 hours, which has already put paid to, amongst other things, the West Ham shirt sponsor).  Now deflation may not immediately be on the horizon in the UK and much of the explanation for the very low inflation figure is down to the collapse in oil prices.  But still inflation at this level is a cause for concern not a cause for celebration.  Unless you read the specialist economic press you would have no idea that this was the case.

And then to top it all, George Osborne announced on Wednesday that within 30 years Britain may be the richest country in the world.  Stop laughing at the back.  This is despite the UK not (given recent revisions to figures) even being close to being the fastest growing country in the G8 – US growth is at 5%, compared to the UK’s 2.5%.  That is, of course, before we even get on to comparing the UK with the likes of Norway.   If the media was any good this would have been a claim so absurd that it would have been pretty much the end of Osborne’s career – he would have been revealed as the deluded fantasist peddling snake oil that he is.   Yet, it was reported as if it was something in serious prospect.

The election message that the Tories have chosen to run on:  ‘stick with us and we will finish the job’, ought to be terrifying (indeed it ought to be impossible).  As the economic job they have done so far has been dreadful by any yardstick.  Truly gob-smackingly terrible.   There is even some evidence that the public are beginning to see through this – the most recent yougov polls having the highest numbers yet blaming the government for cuts rather than the Brown/Darling years (albeit still a long way behind the Labour team).  Yet for Nick Robinson and the rest it is presented as fact: a successful economic team seeing the fruits of the earlier necessary pain against the untried and untested economic recklessness of Labour.  Indeed it is fear of being on the losing side of this discourse which has led Labour right into Osborne’s trap, by themselves embracing austerity.  If Balls and Miliband support it, it must have always been right. Sigh.

 

{ 2 comments… read them below or add one }

Mike Killingworth January 16, 2015 at 2:58 pm

As you imply, Labour haven’t got any answers either.

None of the Parties want to see beyond the election, and there may be a reason for this.

As for the election, it won’t be decided on policies or even on personalities (you can hardly assess the personality of someone you’ve never met nor has met anyone you know.)

It will be decided by how the leaders look on our TV (and other) screens. And it will, as ever, be decided by the voters who have the least interest in politics. Perhaps the electoral registration form ought to ask a couple of questions (with tick-box answers, natch) to see if the voter can tell shit from turd…

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Andy March 5, 2015 at 6:30 pm

The MSM have had rampant house price inflation, to effectively buy their silence. Thats it. Switch off. Go home.

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