Friday, 11 April 2014

George Osborne does a bit of Indian Bicycle Marketing, Ed Balls goes off-script

He's really gone round the clock of DoubleThink this time, from The Daily Mail:

Economic doom-mongers who insisted cuts in public spending would stifle economic growth have been ‘proven wrong’, Chancellor George Osborne will say today.

In a speech in the US, the Chancellor will point out that Britain’s economy has grown faster than that of any other major country over the last year - and is now forecast by the International Monetary Fund to do the same in 2014.

Mr Osborne’s remarks are a swipe at Labour, which [sic] predicted his austerity measures would push unemployment up by a million, and the IMF itself, which was warning him to change course as late as last year.

Firstly, is the UK economy really recovering? The agreed script is that the Tories will say "Oh yes it is!" and Labour will say "Oh no it's not!"

So people who are doing reasonably well will vote Tory next time and those who aren't doing so well will vote Labour.

But they can't both be right, either the economy is recovering or it isn't (and if you ask me, Labour are right but for the wrong reasons, it's just another debt-fuelled pre-election binge).

Secondly, the script also has the Tories promising to "rein in public spending and eliminate the deficit" and Labour wailing on about "Savage Tory cuts."

So people who'd prefer smaller government will vote Tory and those who'd prefer a bit more government spending will vote Labour.

But on the facts, the Tories have not reined in overall public spending one little bit and they are running larger deficits than the previous Labour government (whether Labour would be spending even more, were they in government is open to debate).

Only Labour can't point that out because it's not in the script. To say this out loud would completely give the game away and mean that there is little point in voting either Tory or Labour.

Ed Balls is desperately trying to square this circle:

Labour’s shadow Chancellor Ed Balls conceded that wages would start to rise faster than prices this year - ending the squeeze on incomes. But he insisted changes in tax and benefits meant a family with children was ‘well over £2,000 or £3,000 a year worse off’.

"The economy is finally getting stronger and thank goodness. My argument with George Osborne was that he inherited an economy in 2010 that was growing. I think he made big mistakes in 2010, it knocked confidence," he added.

"He said he would balance the budget in this Parliament and he’s not going to do to do that at all, and it’ll take us in the next Parliament to do that."

Which is a pretty nuanced argument, subtext: the economy is growing - but not fast enough and the government isn't spending enough - but its deficits are too large. Wouldn't spending more not increase the deficit?


paulc156 said...

A dead cat bounced. That's the economy. That it only bounced a bit [the sub standard nature of the bounce after being dropped from such a great height is a worry] is because of two features in the main.
Firstly, 'austerity'/departmental cuts were effectively put on hold in 2012/13. So we were hitting the economy over the head a bit prior to that and stopped for a break in the last financial year. Economy responded in mildly positive fashion to said break in punishment.
Secondly, obviously the 'right to buy/sell' has delivered the headline growth and optimism the government sought.
Now they hope and pray that wages really do start increasing faster than prices at least 6 months before the election since the electorate traditionally only has a 6 month memory capacity[empirically supported in the US at any rate] where the economy is concerned and will vote according to the perceived improvement or worsening of the their circumstances as appropriate in that time frame, regardless of whether they are worse off or not than when they voted for the tossers in the first place :)

Mark Wadsworth said...

P, I like your concept of the 6-month time frame.

In other words, a UK government could make people worse off for four years, then make them better off for one year and win the next election.

So over five years, people are still worse off than five years ago but still vote the same f-ers back in.

It worked for the Tories for 18 years, it worked for Labour for 13 years...

paulc156 said...

@MW. was ever thus.

FWIW Bartels writes:
"We find, however, that the voters cannot manage the task of competent retrospection. They forget all about most previous experience with the incumbents and vote solely on how they feel about the most recent months.
Knowing that, governments pander to the voters near election time, showering them with one-time benefits atypical of their performance in office. Governments are retained or removed, then, not because they drift away from the voters ideologically or because they have performed poorly on average during their term, but most often because of last minute pork or unexpected misfortunes unrelated to their performance in office—a high-stakes game of musical chairs." [abstract]

So having come up with nothing that's going to improve things by the time of the 2015 election in their first two years the strategy should logically be to get the economy off the statistical floor again no matter how, [ease off on public investment cuts and to get traction by 2015, get house prices moving] and hope that the inevitable rise in interest rates that has to follow on is delayed at least until after the election. Effectively doing an end run around the electorate [aka suckers].

Bayard said...

"In other words, a UK government could make people worse off for four years, then make them better off for one year and win the next election."

Does that mean there could be a land price crash in year three or four and the party of government still win the election in year five or is a fall in land prices the unforgivable sin that is never forgotten?

Mark Wadsworth said...

B, you have to read Paul's link.

I think quite possibly a UK government would get away with a price crash when it first takes over, because it can blame that on the previous government, a long as they start ticking up a year or so before the next election.