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That's from this analysis of the UK's austerity programme:
http://benjaminstudebaker.com/2015/05/0 ... d-cameron/ It's a decent piece, with plenty of solid citations from bipartisan sources like the OECD (where that graph came from.)
Cavey, of course, will hand wave this away because — well, I don't know why he's always so dismissive when I post statistics and graphs. Perhaps he prefers to make economic policy on feelings rather than facts? I do not understand it.
The British people have been told a lie about austerity. Simple minded analogies to household finances have been accepted as truths when they are anything but. If any media or politician compares the deficit to a credit card bill, they are selling you bullshit and you should not buy into it. Equally, any piece that conflates the deficit and the debt – avoid. You are being manipulated.
The simplest way to think of the difference is this: if I spend less on going out so I can spend more repaying my credit card debt, then nothing else changes. But when a government does that, when a government spends less on the things governments do, then it also takes (in the analogy) a pay cut. Because a government cutting back on services will be putting people out of work, who will then contribute less to the tax man, will spend less on goods, will receive more in welfare. And maybe the private sector has plum jobs waiting for every one of those people – but that graph up there says otherwise. So maybe austerity saves more than the drop in tax income loses – but maybe it doesn't, too.
Now I'm not a raving Keynesian either. Spending more isn't a panacea, and I don't want everything nationalised. The fallacy of the broken window has some truth to it, and I even suspect Thatcher might have been right to close the coal mines (although I think it was utterly shameful more wasn't done to help the communities that were shattered.) But to pretend that in macroeconomics everything isn't interconnected, that small-state austerity cannot possibly lead to reduced economic activity, that of course austerity is the politics of common sense — that's bullshit, and it's a line of bullshit that has now become political fact trotted out by all the parties. (Except the Greens, but they're economically illiterate.)