27 Aug 2012

Delusional economics and the economic consequences of Mr Osborne

New Talk From Ann Pettifor

This is a very good summary of what's going wrong from a Keynesian point of view. AP has in common with other commentators who warned of crisis the idea that the problem is private debt, which in turn is a consequence of deregulation.

AP kind of skips over things, and I'd like to see the same talk but with more time.


  1. Agree with her that private debt is the issue that is hobbling the UK ecomonomy.

    But the error is that she claims that Osbourne is implementing a terribly harsh austerity programme.

    The UK government is NOT let me repeat again NOT cutting spending. It is NOT even cutting spending in real terms.

    There is NO government austerity programme in the UK. There wasn't under the previous government and there isn't under this government. Lets look past the boring political rhetoric and look at the data.

    Using this as my source of data http://www.ukpublicspending.co.uk/spending_chart_1900_2012UKp_12c1li011mcn_F1tE0tG0t

    In the last year we have real figures for (e.g. 2011), govt spending as a % of GDP fell from 45.31 to 45.13. That is it it basically stayed the same. And we know that for 2012 this figure will hardly fall as well (given the data we've seen so far).

    The private debt needs to be written off and destroyed. That is how we will get out of this mess.

    The Monetarists and Keynesians are both wrong.

  2. According to your source from 45.3% to 44.1%. Which is a fall of 1.2%. Plus inflation of about 8% over the last 2 years.

    And this government has cut spending in particular areas.

    However I agree about private debt - it's what this blog is all about. And it's what Ann Pettifor's talk is all about.

  3. The 2012 figure is estimated (the UK treasuries estimate see footnote ot table). We all know the UK government won't get anywhere near this.

    Inflation is not relevant to the figures. We are talking about the government spending as a percentage of GDP. Both the numerator (government spending) and demoninator (GDP) are increasing all the time due to inflation.

    The reality is that there is no austerity programme in the UK.

  4. I suggest you look through the sectors. And inflation is relevant because it changes the value of the £


Keep is seemly & on-topic. Thanks.