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December 30, 2013


Steve M

Is it not possible that the models used by Osborne correctly predicted the productivity stagnation, even if not publicly expresded, while those used by the anti Austerians did not? Why assume it is just luck?


@ Steve M - if Osborne did predict the productivity stagnation, he didn't tell anyone, not even the OBR. In its June 2010 forecast, it predicted productivity growth (GDP/employment) of 2% in 2011 and 1.8% in each of 2012 and 2013. See table C2 here:


Whilst not wishing to diminish the point about the importance of luch, isn't it a bit weird to use a counterfactual where you hold output constant but move productivity growth and allow unemployment to vary?

If productivity growth per worker had been better, I would have though a natural all-other-things-being-equal counterfactual would have yielded a stunning boom!

After all, output comes from each worker. Worker productivity is not caused by their aggregate output, it is merely estimated from it.


Why is this good? Low wage growth will surely lose the Tories votes.

Thatcher threw millions out of work but the employed enjoyed wage growth. The failure to increase living standards is a recipe for discontent.

The approval of a tame tory loving paper is no recommendation it is to be expected; the usual rich men back scratching each other. Covering up the lies.

Deviation From The Mean

Osbourne isn't the Briton of the Year because he reduced the unemployment figure!

He is Briton of the Year because he attacked the public sector and those at the very bottom of the luck ladder, which has been the goal of the Tory boys for nigh on a decade or more now. Note well, long before the 2007 crisis.

All this without any mandate whatsoever, so he also gets brownie points for sticking 2 fingers up to democracy.

The Anti Austerians claim that Obsourne actually delayed any recovery, made it weaker than it should have been and what he has created are the conditions for the next big crisis! But I couldn't possibly comment!

The next election will be interesting, the business world (CBI) are claiming that everything is hunky dory and soon wages will rise, so don't worry people that the wealth at the top has increased relatively because soon, very soon, you will be joining us!

Meanwhile, as I look along the high street and at the TV ads all I see is cash converters and discount stores. Welcome to the new normal.

Oh and what will become of interest rates I wonder?


The Times could hardly be accused of being ahead of the curve. Osborne's true success in setting the terms of political debate came in 2009/2010, when he crafted the Tory strategy of claiming that Labour negligence was to blame for the banking collapse, and that the clear and present danger was government debt.

While he could point to the Austerian consensus in the EU for backing, his real luck was in having a supportive press that relished the opportunity to attack the public sector and the poor. Plus ca change. They are now willing to tub-thump that happy days are here again.

The over-use of the term luck implies arbitrary fate. The reality is more often structural bias (e.g. the "luck of birth"). While there is no single smoking gun to explain the collapse in productivity, it is pretty clear that productive capital investment remains too low, which is more likely to be cause than effect.

Ultimately, this stems from the privileged position of the City, which is a deliberate political strategy, clearly evinced in the decisions taken by Osborne & co and the adulatory response of the conservative media.

gastro george

The Times naming George Osborne as its Briton of the year says more about the Times than anything else.

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