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George Osborne famously shed tears at the funeral of Margaret Thatcher – but were they really for the Blue Baroness, a woman he is understood to have met only once (twice if you count Wednesday), or was it because he’d just heard that the entire theory forming the basis for his economic policy had just disappeared from under him?
The government’s principal justification for pursuing austerity lay in tatters today, after it was revealed that the economic theory behind it is based on a mistake.
The Chancellor’s entire austerity policy is based on a paper by economists Carmen Reinhart and Ken Rogoff, which is itself based on a spreadsheet concluding that public debt of more than 90 per cent of a country’s gross domestic product (GDP) slows down growth by 0.1 per cent – which is wrong.
It should have found that countries with such levels of debt see their economies grow by 2.2 per cent – but the false conclusion was used by the UK Treasury to justify the horrific austerity programme that has already caused terrible harm to many British citizens, and is expected to cause much worse harm in the future.
It means that the slaughter of innocents down at the DWP – the deaths of many thousands of people claiming Employment and Support Allowance, due to changes in the assessment regime that were based on a false theory dreamed up by an American insurance company when it needed an excuse not to pay out – have been in vain.
It means that the huge cuts to social security benefits for those who are out of work and those in work but poorly paid are totally unjustified. Here in Mid Wales, they average out at £433 per year, for everyone of working age. That’s roughly one week’s wages here – and of course much more than that in terms of benefits because, let’s remember, this government wants to make sure that work pays more than worklessness.
And it means that the Income Tax cut for the very rich, and the cuts that have reduced Corporation Tax by a quarter, were also unjustified. Let’s not forget that the Coalition government has been giving our money back to its influential friends.
Gideon George Osborne’s ridiculous plan was known as “expansionary fiscal contraction”. Just looking at those words together, anyone with an ounce of common sense knows it’s ridiculous. It implied that the economy would grow if it was starved of investment. What rubbish. How on earth can anything grow if it is being starved?
Now that plan has been exposed as “total nonsense” – which is exactly the way Ed Balls described it after hearing of the mistake.
Osborne, of course, is sticking to it. An aide said it was “absurd” that only one paper supports the Chancellor’s case for austerity – but put forward no examples of other justifications.
The aide said “the majority of economists still back the government’s strategy”.
But the International Monetary Fund doesn’t. The IMF was the main supporter of Osborne, using the same Reinhart-Rogoff paper to justify austerity schemes three years ago.
Now, both IMF chief economist Olivier Blanchard and its head, Christine LaGarde, have suggested that he should be “slowing the pace” of his cutbacks.
In fact, we all know why Osborne will continue to push austerity down our throats, and it has nothing to do with balancing the budget.
He knows it is extremely unlikely that the Conservative Party will win an election in 2015 – the damage he has already done to all our lives means that is a statistical probability on which he can rely.
But he has more ideologically-motivated changes to foist upon us, whether we want them or not. His buddy David Cameron once said he wanted to see all public services except justice and the security services privatised, and we can expect Osborne to push this agenda forward with vigour.
This government is all about taking public services and putting them into private hands, for profit and to spite the poor.
That is the real truth that was revealed by a statistical error in a spreadsheet this week.
Mike Sivier's blog 
Reblogged this on WorldWright's … and commented:
What a cretin the man is
This may be a good place to urge readers to sign my e-petition on the government’s website, calling for MPs to be banned from speaking or voting on matters in which they have a financial interest – to take the corruption out of Parliament, in essence. A correspondent on Facebook suggested that they should wear the corporate logos of their sponsors or lobbyists on their suit jackets, but I just think they should be stopped from discussing issues altogether, if they stand to profit from the debate going either way.
Here’s the link: http://epetitions.direct.gov.uk/petitions/44971
Please sign!
Done and shared.
Thank you!
just signed & will also share
Signed and shared. Great petition. Very important.
Signed x 2
Done and SHARED!
Shared and signed
Two World class economists f*ck up and consequently we get f*cked – time to sue them for manslaughter?
The best part about this is that the guy who spotted the mistake was an economics student! So two of the world’s most eminent economists have been made to look foolish by a simple grad student.
That’s absolutely right – I couldn’t think of a clever way to write it into the article (in fact, I couldn’t really think of a clever way to write the article at all) so I left it for readers to discover elsewhere. Thanks for making it public here!
Yeh, but they were yanks, look whats come from there before, open classrooms etc. All failed in USA but still put into practice here.
GEORGE OSBORNE should be sacked!!
By “eminent economists” you surely just mean the those sociopathic economists that strove to facilitate the enrichment of the few at the expence of the many. And were therefore raised above others of greater ability and understanding to preach a dogma of greed.
Meanwhile, in Japan, everyone is talking about Abenomics, and not Osbornomics http://en.wikipedia.org/wiki/Abenomics
However, their mistake isn’t going to change their overall view on austerity http://business.financialpost.com/2013/04/18/reinhart-rogoff-austerity-study/
No, because – as I state in the article – it was never about balancing the books in the first place. It was about taking public services and giving them to the rich, for profit, and for spite against the poor.
So the Government’s entire economic policy is based on what amounts to an administrative cock-up. It seems the old GIGO (Garbage In Garbage Out) has never been more apt.
What surprises me most is why hasn’t the “opposition” made more of this.
The opposition have made nothing of this or all the welfare cuts because it was something they had planned for themselves.
Labour are as good as dead as the “workers” party and have been for the last 20 years.
All Labour principles were abolished in the search for power AND NOW THERE IS NO GOING BACK.
Anyone who thinks that if Labour get into power they will reverse any of the cuts or changes is living in cloud cuckoo land. (But please don’t vote UKIP, see their policies on welfare and austerity)
Green Party???
Paula, if your looking for a left party, you could try Left Unity, the only thing is they have only just sprung up and will not effect the vote, if your looking for decent policies for the country and to get out of the EU, best vote UKIP. The Greens will have us paying through the nose for ALL our fuel, they even quoted at last GE that petrol should be £10 a gallon? Have a look at my post further up. Also have a look here as to were the 3 main parties want us! http://youtu.be/TzEEgtOFFlM Tory Blair signed us up to this in 1997.
UKIP? Decent policies?
That debate will run and run…
However Osborne is trying to be the iron man, he will not turn!!
Thank you Mike well written and so pleased to hear it! This Government is Incompetent and we should all vote them as unfit to rule. We the People need to take back control,
Sadly, I actually did ‘ LOL ‘ about this and the continued ineptitude of slug Osbourne. But then I remembered what has been done to this country and the weakest and most vulnerable in it and all I feel is shame. My poor Grandad who fought at Normandy and my Nan who drove ambulances on bomber command airfields gave all for nothing but to have all they fought against perpetrated on their own people by a sociopathic, unelected government. My poor Grandad is dead now, but even my 93 year old Nan is apalled at what is being done in this country right now. Shameful.
My only criticism is that this assessment seems to work on the assumption that, up until now, ‘we’ had thought that the economic programme, both in its specific application and in its grounding FME mindset, was ever focused on providing a ‘better’ economy (‘better’ in the sense of stable, equitable and providing greater good for the greater number). Economics grown in the roots of Friedman and Hayek has been shown to be damaging, misguided and primarily to the benefit of the wealthy since at least the 80s. The assault on the welfare state has been and is an opportunistic ideological act of selfishness, heartlessness and financial gain.
If that’s the impression it gives, then I apologise because that would be a fault in the way I wrote it. The attitude I have put forward consistently is that the austerity programme is based on the lie that it is being imposed in order to balance the books, whereas in fact it is based on the ‘starve the beast’ model of state-shrinkage most recently used by George W Bush in the USA. I’m sure you’re familiar with it.
The aim of this article was to publicise the fact that the basis on which the government actually said it was taking austerity forward was mistaken.
Fair enough; I never doubted we had a shared hymnsheet, as it were.
Let’s hope this is the start of a proper U-turn. I doubt it but I can hope.
I wonder if they’ll now pay the stolen pensions to the hundreds of thousands who were affected by the changes to the State Pension Law. I would urge everyone to sign and share this petition. We can effect change if we stand together and express our disapproval. http://you.38degrees.org.uk/p/statepensionlaw
I am all in favour of the article, and I agree with its sentiments, but I worry that a phrase like:
“the deaths of many thousands of people claiming Employment and Support Allowance, due to changes in the assessment regime that were based on a false theory dreamed up by an American insurance company when it needed an excuse not to pay out – have been in vain”
will easily discredit you, unless you can justify it. It appears to be something of a flight of melodramatic fancy. Have “many thousands of people claiming Employment and Support Allowance” really died because of it?
Yes. Where have you been? I refer you to Facebook pages such as ‘National Remembrance for the DWP/Atos dead’ ‘Disabled People Against Cuts’ ‘Black Triangle Anti-Defamation Campaign’ and ‘Atos Miracles’. Those should get you started.
I’ll certainly check them out, thank you for the pointers.
No problem!
Callums list would be my starting point, if your tough enough to take it, not just names, but links to the back story and press clippings.
Yeah, I did cry my eyes out reading some of the stories
http://calumslist.org
This is a list of 30 deaths directly attributed to benefit cuts.
Dpac , black triangle etc also includes deaths by secondary effects, the destitution, poverty, stress, or advancement of the original condition, that came after benefit re assessment and seriously Ill people being found fit for work and/ or stripped of elements of benefit entitlement – off the top of my head, 17 per week?
73 per week, last count.
Excellent suggestion.
Reblogged this on The Greater Fool.
(“Note: due to a lack of credible scientific evidence, global warming is now referred to as “climate change”).
And the above is evidence of another cock-up they still insist on charging us for!
…. of the 20 economists who publicly backed the Osborne Austerity plan in 2010, only 1 was willing to publicly back him in August last year… 9 publicly disavowed him, the other 10 had no comment or went on holiday… http://www.newstatesman.com/blogs/politics/2012/08/exclusive-osbornes-supporters-turn-him
I too have reblogged this (link directing readers to here) adding you to blogroll now!
Thank you very much!
As one who evidently understand the importance of getting things right, could I just point out that you actually need to amend the emboldened paragraph near the top of your article. I’m sure you wouldn’t want to give the impression that you’re talking about a “principled justification”! It should, of course, read “The government’s principAL justification…” (Principal = primary; principle = fundamental truth)
Do you know, you’re absolutely right. The thing is, I was looking at that – as I wrote it – thinking I was using the wrong spelling for what I meant, and let it go because I thought I was imagining errors where there weren’t any!
The Jam should remake their song, but change the words to “Eton Cretins, Eton Cretins”
I agree.
Nothing will change as those in power simply have the inability to see anything past the lining of their pockets and how much they can squeeze out of us before 2015. What I find hilarious, and not in the funny ha ha sort of way, is how this government hands over the ability to protect others from their own self-serving powers, when they are doing it themselves. Everyone discusses the end of the world coming from various forms and forces, yet no-one seems to be getting the fact that starvation, hypothermia, and the like is already taking a hold, what with people having to choose been heat and food. And this is coming from those who have sworn to act in the best interests of people. This government need a major dose of what Good Ol England does to those who kill its people. Sharing this article wherever I can 🙂
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