When failure is success

Here's a glorious example of the media's bubblethink: the Guardian's political reporters describe Osborne's stewardship of the economy as the Tories "strongest card."

Let's just remind ourselves of the facts. Back in June 2010 the OBR forecast (pdf) that real GDP would grow by a cumulative 8.2% in between 2010 and 2013. In fact, it grew by only 3.1%. Partly because of this, the deficit is much larger now than expected. In 2010, the OBR forecast that PSNB in 2014-15 would be £37bn, or 2.1% of GDP. It now expects it to be £83.9bn, or 5.5% of GDP.

This poses the question: how can such failure be regarded by the Bubble as success? Here are five possibilities:

1. The peak-end rule. Daniel Kahneman has shown (pdf) that our memory of events is distorted by how they end, so that great pain followed by discomfort is regarded more favourably than pain alone, even if the former episode goes on for longer. The fact that the economy is now growing therefore leads us to under-estimate the pain of the stagnation of 2011-12 - just as our relief at finally getting home causes us to overlook the fact that the cab-driver took us on a two-hour detour.

2. Luck. The collapse of productivity growth means that the modest growth we've seen has translated into surprisingly strong jobs growth, for which Osborne is (wrongly) getting credit. In fact, if productivity had grown at a normalish rate in recent years, unemployment would have hit a record high. I doubt if Osborne would be regarded as a success in that case.

3. Risk aversion and status quo bias. People prefer the devil they know - and Osborne's stewardship is better known than Labour's policies.

4. False excuses. The coalition has tried to blame the euro area's weakness for our weak growth. This, though, won't wash; a policy that works only if everything goes OK is no policy at all, given that surprises are inevitable.

5. Managerialist machismo. If you use the language of "tough choices" and "prudence", some people will take you at your word. As Cameron Anderson and Sebastien Brion have shown, overconfident people who give off competence cues are wrongly seen by others as having genuine competence.      

Whatever the reason, the fact is that it is only within the groupthink bubble that Osborne's macroeconomic policies can possibly be regarded as a success.

Comments

[gastro george]

Unfortunately the Guardian's political reporters have mainly followed the same route as the Observer's.

[Luis Enrique]

think you're being a bit unfair on Groan reporters, who are (being more generous) merely reporting what the Cons strongest card is, as far as voters seem to be concerned. And they are right, aren't they? The cons lead on economic stewardship in the polls? They are not saying they agree with voters.

[gastro george]

@Luis - I think you're being a bit generous wrt the Graun. As Chris notes, they show no sign of being outside of the the same politico-media bubble. Journalists like Wintour have no hesitation in writing the same old echo chamber "concerns about Ed" articles several times a week. Yet where were the headlines about the latest "deficit" figures last week? Which should have been a real problem for Osborne right before their conference if they were doing their job.

[leslie48]

Of course we long ago gave up on the BBC to be analytical or questioning of the the govt's economic claims as the BBC have become part the Tory tabloid hacks bubble. The BBC hacks seemingly read the Mail and then reach for the microphone. Appalling coverage day in day out even in their flagship programmes.

[Magnus Carlsen]

You missed out #6: complete economic illiteracy across the journalism 'profession' plus a degree of herding (standard practice when one is trying to hide one's incompetence.)

[Stevenclarkesblog.wordpress.com]

Unfortunately, the vast majority of British society (including those in the Westminster Bubble) suffer from a collective Dunning-Kruger effect: we don't know enough economics to realise we don't know enough economics.

Keep chipping away at the ignorance, Chris!

[ByrneToff]

"Back in June 2010 the OBR forecast (pdf) that real GDP would grow by a cumulative 8.2% in between 2010 and 2013. In fact, it grew by only 3.1%."

But as you're so keen on pointing out Chris, what if there are actual new limits to growth because of a lack of investment opportunities? I don't have the expertise to say whether Osborne has been a failure or not, but using this as criteria assumes the OBR forecasting to be sound. And you've been heavily critical of forecasting in the past.

[Peter Wrigley]

Last week I worte as follows to the Guardian
Dear Sir,

I cannot understand why a newspaper that claims to be on the left does the Tories' work for them. You allow Larry Elliott to repeat George Osborne's gibe: "Why hand the car keys back to those who drove it into the ditch in the first place?" (A speech aimed away from its audience, 23 September) and John Grace to write: "Not the media Ed [Balls] who . . .helped run the economy into the ditch, ( Sensitive Ed goes looking for love,23 September) without the slightest hint that both these statements are gross distortions if not downright lies generated by the Tory PR machine.

The truth is that it was the irresponsible behaviour of the banks and financial sectors, deregulated by the Tories, which "drove the economy into the ditch"; that Gordon Brown's prompt action through the G8 in 2008/9 did save, if not the world, then the developed countries' banking systems; and that as a result of Alistair Darling's mildly Keynesian final budgets, which Balls may or may not have influenced, the economy was growing and the deficit reducing.

These are the facts which Elliott well knows and if Grace doesn't then Elliott should tell him.
Instead you help to perpetuate Tory propaganda. This drip drip drip of distortion has managed to put the Labour leadership so much on the back foot that for the sake of "credibility" (credibility for whom?) they dare not campaign for the policies which were working before they left office and would work again.

Five more years of misguided and unnecessary austerity will not, I suspect, do much serious damage to the quality of life of most Guardian readers. But it will cause unnecessary further suffering to the bottom 20% of our fellow citizens who are not benefiting much from the present alleged recovery and need the help of the state.

Please, for their sake, leave unvarnished Tory distortions to your predominantly right wing fellows, and give us more of the balanced truth.

Yours faithfully,

Peter Wrigley

They didn't print it.