[Closed] austerity measures found to be eminent economist's miscalculation...?

Admittedly, it's quite easy to get excel formulas wrong. In economics, no-one actually checks anyone's workings, it seems.

I hope your thread gets more response than mine 😉

[url= http://singletrackmag.com/forum/topic/excel-error-caused-world-move-to-austerity-budgets ]http://singletrackmag.com/forum/topic/excel-error-caused-world-move-to-austerity-budgets[/url]

Many a time I've seen Excel sheets where folk had added numbers to formula's and then later no one could remember why...

Or when I found out that a certain oilpipe was actually shorter than it had been stated in the accounts, consequently they didn't have quite so much oil (in store) as they thought. It was miles, as in many thousands of yards out.

oh... 😳

you'd think with some of the experts on here they'd be falling over themselves to argue for a week* about it

*or until one side loses the will to live

that's what I thought.

I think as there was no overtaking or deaths of controversial politicians involved it rather got overlooked.

Thing is, it doesn't matter. Austerity isn't an economic policy, it's a political one - the Tories want to destroy the welfare state, full stop.

As Will Hutton said: 'ask 3 economists for projections and you'll get 4 different opinions'

but they wanted an economic theory to dress it up in ben?

but they wanted an economic theory to dress it up in ben?

Yes, but now the laddie's not for turning.

Nobody who's not an economist understood the original calculations. Nobody who's not an economist will understand why they were wrong. the government can just ignore or spin it away - they won't change policy at all.

If stw has taught us anything it's that any **** can have a go at Excel but only 3 people in the world know how to use it properly

Austerity isn't an economic policy, it's a political one - the Tories want to destroy the welfare state, full stop

Not sure how on earth anyone would think that was possible.

Not sure how on earth anyone would think that was possible.

Systematically demonising those on welfare. Reducing welfare payments. Attacking teachers. Privatising the NHS by stealth. Etcetera...

The NHS bit I can see but there's always going to be people out of work. Throwing them to the dogs is bound to be a vote loser imo.

but only 3 people in the world know how to use it properly

And I can confidently say I am one of those three.

As will every other Excel user.

Well, yes. I think the theory is they can slash and burn as much as they can while in power, and hope it's not reversible. And those policies will always be popular with a certain part of the population anyway.

What is happening at the moment has nothing to do with economics. It is entirely politically and ideologically driven. This is the blueprint...

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Economic crisis are used as an 'opportunity' to roll back the state and impose extreme Milton Friedman penned, Chicago School economic policies. They did it all through South America in the 70's and 80's, and its now happening throughout Europe. Concentrating money and power in the hands of an elite, while the living standards of the majority are constantly eroded

It is a political project. It is not economics

read about that. Can't believe the excel cock-up!

Thing is, it doesn't matter. Austerity isn't an economic policy, it's a political one

Neoliberals have always accepted they would always lose the moral argument for their policies, so instead, they have come up with the "sound economic sense" and "there is no alternative" arguments to justify their brutal policies. Anything which challenges their alleged truths undermines them and is a setback.

Although none is likely to cause them any serious political problems as inconvenient truths are simply ignored and the "there is no alternative" mantra is chanted even louder to deflect attention.

For me the biggest argument against a small welfare state and right wing ideals is the USA.

So you don't agree that large parts of the UK population have become over reliant on welfare then?

Of course they are. But getting people to earn a living wage isn't a right-wing solution.

http://www.guardian.co.uk/politics/2013/apr/18/george-osborne-imf-austerity

Girlfriend and old friend who studied politics at Oxford guessed this would happen a few years ago.

Duplicate thread.

http://singletrackmag.com/forum/topic/excel-error-caused-world-move-to-austerity-budgets

I'll close the old one as it's got fewer posts.

So you don't agree that large parts of the UK population have become over reliant on welfare then?

Was that aimed at me?

I don't argue with that. I don't know for sure how widespread this is, not wishing to trust the newspapers.

But getting people to work isn't the same as dismantling the welfare state.

It wasn't aimed at anyone in particular.

But getting people to work isn't the same as dismantling the welfare state.

And making the rules for claiming welfare more stringent isn't the same thing as dismantling the welfare state.

I'm not arguing with you in principal as I am also in the belief that the way the gov are going about things doesn't appear to be working. However, there are some elements of it I do agree with, and limiting welfare to those who genuinely need it is one of them.

Oh, and I am not including the NHS in this as that must remain.

I'm not arguing with you in principal as I am also in the belief that the way the gov are going about things doesn't appear to be working. However, there are some elements of it I do agree with, and limiting welfare to those who genuinely need it is one of them.

Unfortunately, those that have genuine need out strip those that are "benefit Scroungers". By agreeing with what they are doing in this particular economic climate by limiting welfare, you are forcing more people further into hardship.

Oh, and I am not including the NHS in this as that must remain.

Of course it must remain. You use it.

funny some of the right wing zealots haven't suggested food stamps, and other degrading ideas to castigate the poor,and warn all others what awaits them if they do not adhere to the wishes of the regime-- work for less, for longer and do not complaineth ---- Davros stylee-

As bencooper said, it doesn't matter, Gideon, in common with other Tory ministers, will simply ignore it and plough on regardless.

This has happened before with a different Tory Chancellor.

When Geoffrey howe was chancellor he was determined to control the money supply as he"d read in a book by that Friedman bloke that it would make everything better and was the One True Way.

After many years of laying waste to the economy of this country some economists in the treasury published a paper showing that his policies were a nonsense. After a while he was replaced by Nigel Lawson who was a lot more sensible.

If the same path is followed then we have no choice but to suck it up and wait until the current chancellor is replaced and we can then have less dogmatic policy.

So you don't agree that large parts of the UK population have become over reliant on welfare then?

It was 100% definaitly the policy of Margaret Thatcher to get people onto benefits. To deal with the heat of high unemployment benefit she had huge numbers of people moved from unemployment benefit to incapacity benefit to keep the unemployment figures lower

No one is arguing for loads of people hanging around on benefit anyway. Well now Mrs T is out the way. Its about the best way of stimulating economic growth.

To deal with the heat of high unemployment benefit she had huge numbers of people moved from unemployment benefit to incapacity benefit to keep the unemployment figures lower

Haven't Labour done a similar thing? I suspect most governments have.

Haven't Labour done a similar thing? I suspect most governments have.

The point ampthill was making is that it was Thatcher's idea. No one would deny that John Major and New Labour did little to reverse her policies.

binners - Member

As Will Hutton said: 'ask 3 economists for projections and you'll get 4 different opinions'

Mate of mine proposed a simple rule- when dealing with an economist who says they know how to get out of the recession, ask them for proof that they predicted it. If they can't, throw them out of a window.

[i]Economics is extremely useful as a form of employment for economists.[/i]
[u]John Kenneth Galbraith[/u]

[i]So you don't agree that large parts of the UK population have become over reliant on welfare then?[/i]

What, like the City?

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8262037/Bank-bail-out-adds-1.5-trillion-to-debt.html

I am afraid anyone thinking that the new Amerhurst research marks the end of the austerity debate and policy push will be sadly disappointed. The latest research and the controversy around it do not falsify the argument of those who support austerity. In fact they support its overall conclusion while disputing the maginitude of the link between certain levels of debt and economic growth.

The original Rogoff and Reinhurt research was (originally) noteworthy for its conclusion and timing and most importantly the benchmark of debt at 90% of GDP which they argued was the point at which growth dropped off markedly. This was used by the pro-austerity lobby to promote the policies that have been adopted [u]by parties of all political persuasion across Europe[/u]. It is noteworthy now because the error that has been discovered relates not to the overall message (which the new research actually confirms albeit less forcefully) but the specific impact of debt passing throught the 90% benchmark. Once the data is cleaned, the fall off in growth is no where near as severe as predicted by R&R, but it does still fall off.

So the wide lobby supporting the current measures will continue their policies pointing out the research still supports the underlying thesis. In doing so, they will continue to gloss over the fact that their current frameworks cannot deal with the crisis in front of us and the relationship between key economic variables is currently very different from those that they predict/use in their models. Given that the political and economic elite continue to favour a tight fiscal/loose monetary policy mix they will have to gloss over the fact that their and others research is currently highlighting that the negative impact of tight monetary policy is greater than they predict (the fiscal multiplier) and the positive impact of loose monetary policy is less than they predict (the money multiplier/broken banking system). Hmmm....

In the meantime, we shall all suffer the consequences of the wrong diagnosis and consequently the wrong solutions. No wonder the IMF is now on version 3 of what Osborne should be doing!

If only it was a simple as an ideological thing rather than economics, or should we say dodgy economics? Then it would be easy - just vote the Tories out. But then you look across Europe and see that the hypothesis that this is an ideological drive rather than an economic one is quickly falsified.

But then you look across Europe and see that the hypothesis that this is an ideological drive rather than an economic one is quickly falsified.

You haven't noticed that the neoliberal model has been adopted right across Europe ? How did you miss that ?

And in case you think the measures being taken by the UK government are purely to do with the present economic situation and not ideologically motivated :

[url= http://www.guardian.co.uk/politics/2010/aug/03/david-cameron-public-sector-cuts-permanent ]David Cameron warns public sector cuts will be permanent[/url]

[b][i].....funding will not be restored once budget deficit is under control[/i][/b]

Not at all Ernie, that is exactly my point. There has been generally widespread acceptance of the same policy mix in Europe and parties across the political mix have executed similar policies. So very hard to push this as a single party or ideological push. The IMF is pushing austerity light finally only after they recognised that the fiscal multiplier is much higher than previously thought. Let's see what they now say about the peripherary.

There has been generally widespread acceptance of the same policy mix in Europe and parties across the political mix have executed similar policies.

You haven't heard of the rise of the anti-austerity parties in Europe ?

And there is certainly not universal political consensuses concerning the severity and speed of the implementation of the austerity measures. Nor of its long term application.

Of course I have. But those in power are generally doing the same thing once you strip out the rhetoric. And the troika who control the purse strings keeping the periphery afloat are still forcing the same policy mix ignoring the democratic process in the meantime.

Did you notice just how forcefully Liam Byrne attacked Tory welfare cuts. With the venom of a wet fish!

Well if you have then you'll see that your claim concerning [i]"parties across the political mix"[/i] is far from accurate.

Did you notice just how forcefully Liam Byrne attacked Tory welfare cuts. With the venom of a wet fish!

No I didn't. If you claiming that because New Labour are piss-poor at offering a credible alternative to the Tories, this somehow means that the Tories can't be ideologically motivated, then that's quite frankly rather silly.

On the contrary we have parties of different political persuasions (and differing rhetoric) implementing the same policies. Hence completely accurate. That is not the same as saying that everyone agrees with them. But noteworthy how they change once they come into power.

I think politicising what is going on is a red herring. The point about Byrne was an example of why.

The global elite are impotent right now. The two major blocks in trouble with excess debt have tried diametrically opposed economic policy mixes - Japan v the west (broadly speaking). They have both failed to deliver growth. Hmm.....and now Abeeconomics had become the latest convert to ultra loose monetary policy. I am sure you have noticed the rapid bounce that has resulted in Japan's equity market. (but) Have they noticed what is happening in Europe?

The ruling classes are in fright, they are not in control of economic forces , global capitalists are worried that their system of enrichment is lurching from crisis to crisis, they know that it depends on people believing they have more to lose from revolutionary change, but that belief is always under threat. In 'good' times it is relatively safe, but in times of crises, it has to divide and rule with ever more draconian measures, leading to more unrest....the illusion of stable capitalism is exposed-- its an exploitative system whose mask slips when the heat is on..

I think politicising what is going on is a red herring.

Hardly a red herring, it is the very reason why Osborne will not consider any deviation from the course he has set. Ideological commitment is what makes Osborne so doggedly determined, in face of overwhelming evidence that austerity is not the solution.

the parties in politics are virtually all offering different versions of the same thing-- how do you like your pain---they are all bankrupt of ideas-- they all live in a pampered world, with salaries, fringe benefits,rewards when leaving office, and pensions that ordinary people never see. Its no wonder they all sing from the same sheet, but in different tones.....

It may well not be the solution but that is not to say that people in power will abandon the idea that it is required. It is the whole chicken and egg aspect that makes life so difficult for policy makers (in their defence). Determining the level of interest rate that makes current debt levels unsustainable is easier and more formulaic. The challenge is that different things can cause them to rise rapidly. And that is where the debate lies.

they all live in a pampered world, with salaries, fringe benefits,rewards when leaving office, and pensions that ordinary people never see. Its no wonder they all sing from the same sheet, but in different tones.....

I like the way that, as usual, it's all just the fault of politicians.

[i]One[/i] of the reasons why there is so little difference between Labour and the Tories is because Labour are aware that it is far easier to adopt Tory policies which the electorate has by and large already bought, and which continues to be sold to them on a daily basis by the right-wing press, than go through the difficult and arduous task of attempting to win an alternative argument, in face of a very unsympathetic press/media, and which is far from guaranteed to succeed.

If the electorate were demanding that Labour provides a serious alternative to the Tories then they probably would. But until then Labour will continue to play it safe by not offering anything radically different to the Tories. And the "just like the Tories but nicer" strategy will very probably be enough to win them the next general election.

the idea that you can make capitalism more palatable with some reforms and controls is laughable--given that the first thing to go in a crisis is all those reforms and controls-- reformist politics can only appeal in a time of economic growth not decline-- hence all parties adherence to austerity, they do not have any control over global capitalism-- they all seek to appease the business class--at the expense of everyone else.

i agree that people expect more form a Labour govt, but it doesn't take long for normal service to be resumed--i do however remain optimistic that events may pass them all by and consign them to the dustbin of history....

the idea that you can make capitalism more palatable with some reforms and controls is laughable--given that the first thing to go in a crisis is all those reforms and controls

It's not laughable at all - you [i]can[/i] make capitalism much more palatable.

And which "reforms and controls" were removed by the last government when it found itself faced with the worst global capitalist crises since the 1930s ?

One way of making capitalism more palatable is to avoid running up budget deficits during the good times. The powder keg needs to be dry not essentially empty when the time to use it (ie,recessions)comes. As a self_confesses Keynesian economist the one bloke out of the current Uk political elite who "should" understand this is Ed Balls. At least his lot didnt tie us to a fixed currency at the same time. Imagine the mess we would be in then - then we would be facing "real" austerity not the type that was described in one broadsheet yesterday as moving from Income of £40 and expenditure of £50 to income of £40 and expenditure of £47. Some austerity package that?

FWIW - at least some (!?!) honesty from the "great and good" of the world's economic and political elites this weekend at the IMF meetings...

Reflecting the lack of consensus, Mr Tharman (Chairman of IMF's governing body) added: “There is no single bullet that will get us to normal growth and some normality in jobs”.

...which I guess can be translated as, "help, anyone got any new ideas?". At least we are only on version 3 of what the IMF says the UK should do!! And after the attempt at consensus, then we get the interesting bickering as to whose fault it is:

http://www.ft.com/cms/s/0/acb7a84a-a9fc-11e2-9c7b-00144feabdc0.html#axzz2R5mMF6Ru

...and further comments on the risks of QE from the worlds biggest bond investor

The idea is simple: [b]manipulate[/b] key financial markets in order to "push" investors to [b]take more risk[/b], thus also stimulating spending and investing. With time, improving fundamentals would validate the artificial prices, thus also allowing central banks to exit.

Most investors have responded to QE as very few wished to take on institutions with a printing press in the basement. Yet, despite the [b]manipulation of financial markets, growth and jobs have consistently fallen short of expectations.[/b]

Facing insufficient demand, structural impediments and policy uncertainty, [b]the real economy has not responded as envisaged by central bankers.[/b] In response, officials have widened the scope and scale of QE.....

....So, what exactly are these collateral damages and unintended circumstances?

[b]Modern market-based economies are not wired to function well at artificial prices for any prolonged period of time. [/b]The pricing system loses its critical signaling role. Markets operate less well. And, critically, resources are misallocated – both in the financial sector and also in certain parts of the real economy.

So, less than five years after a global crisis triggered by irresponsible risk-taking, concerns are again surfacing about bubbles. [b]The worry is heightened by the fact that both governments and central banks now have fewer weapons to counter the detrimental effects of another financial crisis.[/b]

http://www.businessinsider.com/el-erian-g-20-warns-of-qe-collateral-damage-2013-4

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