Friday 4 October 2013

George Osborne's economic blunders

There has been a lot of debate over George Osborne's ideological austerity experiment. Some people claim that he is economically illiterate and incompetent, hence the appalling failure of his economic plans (after over three years of "Osbornomics" the UK economy is still smaller than it was before the global financial crisis hit).

Others have pointed to evidence that the rich are getting wealthier at a faster rate than ever, whilst the poor and ordinary are bearing the full burden of "austerity" (through cuts and wage repression) as evidence that Osborne isn't as incompetent as he looks, and that if his plans are viewed as a deliberate strategy to redistribute wealth from the majority to the tiny super-rich establishment minority, then his plans are succeeding quite spectacularly well.

I'll leave it up to you to decide which interpretation is closest to the truth, however there are some things that can't be disputed. One of which is the fact that George Osborne has utterly failed to meet the economic predictions he made in 2010 (back when the UK still had AAA Credit Ratings).

Osborne's most hubristic prediction was that his plan would eliminate the budget deficit over the course of a single parliament. He claimed that the government would need to borrow £322 billion between 2010 and 2015, and that after that, the government would be able to run a surplus and begin paying back the debt.

In March 2013 the borrowing figure for the 2010-2015 period was revised upwards to £564 billion, and George Osborne's pet quango the Office For Budget Responsibility Recklessness were admitting that the budget deficit couldn't be eliminated until well into the next parliament. That's a £242 billion accounting error!
The government's own financial watchdog have admitted that George Osborne's 2010 financial predictions were out by a whopping 75%. I have explained in another blog post how these vast budgetary miscalculations came about so I won't clutter up this article with a lengthy explanation of faulty fiscal multiplication assumptions (if you're interested, the article is here).

Given that his 2010 financial predictions were so extraordinarily inaccurate, we've got to wonder how on earth he's still in his job. I mean, if he was employed by a private sector organisation (which, apart from a brief stint as a towel floder, he never has been), there is absolutely no way such huge errors would be tolerated, he'd be out on his ear and rightly so.

What is it that is keeping him in his job?

In my view it is a combination of factors, which include the following:
The rich are getting richer: The people that pull the strings don't actually have a problem with the soaring national debt or the impoverishment of the masses, as long as they're still getting richer, they'll pat Gideon Osborne on the head and tell him what a remarkably good job he's doing.

Tory Tribalism: The Tories are not a political party, they are a tribe. It doesn't seem to matter how inept, dishonest or unpopular any member of their tribe becomes, they will support them. If the odious and incompetent Iain Duncan Smith can hang onto his job at the DWP (despite his appalling track record of failure), it is hardly surprising that a bloke that made a £242 billion accounting error is allowed to keep his job as Chancellor.

Inherited privilege: They say that "scum always floats to the top" and nowhere is this more true than the British establishment. The British establishment, and especially Westminster politics are absolutely riddled with air-headed toffs that only made it to the top through inherited privilege. Meritocricy is an alien word to these people, and they have worked tirelessly to undo the social progress of the post-war mixed economy. Nowhere is this inherited entitlement culture more obvious than the Tory party, which is riddled with millionaires from establishment families.

Media complicity: The corporate media is almost completely dominated by right-wing apologists that are disinclined to criticise one of their own, and the BBC is simply a mouthpiece of the establishment. Whichever party is in power are their paymasters, so they've always toed the line, but since they were castrated over the "sexed up" Iraq dossier, they've been even more compliant than before. The lack of mainstream media criticism of George Osborne's catastrophic economic miscalculations is a clear demonstration that the majority of them support his agenda, despite the fact that it has already added more to the national debt in just 3 years than Neo-Labour added during their 13 years in office.

Lack of alternatives: If Winston Churchill were alive today he'd be absolutely appalled at the intellectual paucity of the Tory party. It has gone from a party that produced great statesmen and orators like Benjamin Disraeli and Winston Churchill, to a party of self-serving careerists with an unhealthy obsession with a particularly egregious bunch of pseudo-scientific theories known variously as "Thatcherism", "Neoliberalism" or "Neoclassical Economics", where talentless nobodies like David Cameron and George Osborne have effortlessly risen to the top of the party. The modern Conservative party (aside from one or two very rare exceptions) has become a moral and intellectual vacuum. An echo-chamber for absurd "greed-is-a-virtue" pseudo economics, stuffed full of members of the inherited wealth entitlement classes. There's virtually nobody in the Tory party that is actually capable of doing anything differently.
Even if it wasn't then, It is absolutely clear now, how much of an absurdly over-optimistic fantasy George Osborne's 2010 economic forecasts were. 

It is also clear that his Office for Budgetary Responsibility Recklessness is just a rubber stamping organisation, designed to use neoliberal economic dogma to add a veneer of economic legitimacy to barkingly mad economic plans. Their failure to spot the £242 billion hole in George Osborne's figures was bad enough, but their insultingly feeble post hoc excuses are perhaps even worse. 

This £242 billion miscalculation also demonstrates how gullible Osborne's fellow Tories, the right-wing press and the UK business lobby were to lap up his extraordinarily over-optimistic financial predictions back in 2010. They wanted desperately to believe that a good bout of neoliberal dogma would sort everything out, but instead it crushed the life out of the economic recovery that had started in 2009, gave us three long years of economic stagnation, and as a consequence, millions of working people have seen their wages eroded away by inflation month after month after month to pay for Gideon Osborne's reckless economic experiment.

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More articles from
An entirely "Osbornomic" recession 
What is ... Wage Repression?
 What is ... Neoliberalism?  
Mixed Economy vs Neoliberalism
Margaret Thatcher's toxic legacies
The Office for Budget Recklessness 
The Great Neoliberal Lie


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