From Krugman's column:
So I guess we shouldn’t be too harsh on Ed Miliband, the leader of Britain’s Labour Party, for failing to challenge the economic nonsense peddled by the Conservatives. Like Mr. Obama and company, Labour’s leaders probably know better, but have decided that it’s too hard to overcome the easy appeal of bad economics, especially when most of the British news media report this bad economics as truth. But it has still been deeply disheartening to watch.
What nonsense am I talking about? Simon Wren-Lewis of the University of Oxford, who has been a tireless but lonely crusader for economic sense, calls it “mediamacro.” It’s a story about Britain that runs like this: First, the Labour government that ruled Britain until 2010 was wildly irresponsible, spending far beyond its means. Second, this fiscal profligacy caused the economic crisis of 2008-2009. Third, this in turn left the coalition that took power in 2010 with no choice except to impose austerity policies despite the depressed state of the economy. Finally, Britain’s return to economic growth in 2013 vindicated austerity and proved its critics wrong.
Now, every piece of this story is demonstrably, ludicrously wrong. Pre-crisis Britain wasn’t fiscally profligate. Debt and deficits were low, and at the time everyone expected them to stay that way; big deficits only arose as a result of the crisis. The crisis, which was a global phenomenon, was driven by runaway banks and private debt, not government deficits. There was no urgency about austerity: financial markets never showed any concern about British solvency. And Britain, which returned to growth only after a pause in the austerity drive, has made up none of the ground it lost during the coalition’s first two years.
Yet this nonsense narrative completely dominates news reporting, where it is treated as a fact rather than a hypothesis. And Labour hasn’t tried to push back, probably because they considered this a political fight they couldn’t win. But why?
http://www.nytimes.com/2015/05/08/opinion/paul-krugman-triumph-of-the-unthinking.html?_r=0One party that wasn't saying 'moar austerity!' was the SNP, which took 56 of the 59 Scottish seats. They haven't exactly been spending extravagantly in Scotland, but it's not as bad as in England.
On the whole, the discussion of why most economists don't think austerity helped economies has been appalling; both the voters and politicians are ignorant about it, and resort to the incorrect "we must tighten our belts like a household" argument.
= new reply since forum marked as read