Wednesday, May 6, 2015

Clever fellows on the one side, damned fools on the other

I heard a piece on NPR's "Marketplace" about the upcoming British election.  They started by talking to two authorities who said that the economy was doing very well under under the Conservatives and had done much worse under the previous Labour government (according to one, Labour had "virtually destroyed the country").  Then they talked to some ordinary voters who said that things didn't seem so great to them.  So the story left the impression was that "all the clever fellows were on the one side, and all the damned fools were on the other," to quote the Duke of Wellington.

Here is a figure showing the unemployment rate in the US and Britain from 2007 until the beginning of 2015 (data from the Conference Board).  The vertical line at May 2010 shows when the current Conservative government took office.

British unemployment started out higher than American.  It rose as the recession got worse, but not as fast as in the United States.  By the time the Conservatives took office, it had stabilized at a bit under 8%, about 1.5% lower than the American rate.  For about eighteen months after that, unemployment declined in the United States, but actually rose in Britain.  Overall, Labour's record looks good considering the circumstances--8% unemployment is not where you want to be, but it's a lot better than 10%--while the Conservative record is fair or poor.  "By God, the damned fools were right," to finish the quotation.

Actually, the experts aren't as united as the Marketplace story suggested--a lot of economists think that the Conservative focus on reducing the budget deficit has been misguided.  In fact, I called the two people who were quoted "authorities," because "experts" would be misleading.  One was described as a "financial analyst"; the other was called an economist, but his biography says he is "a Fellow in Management Practice at the Saïd Business School, University of Oxford. . . . He is also Chairman and Chief Executive Officer of The Roosevelt Group, a leading strategic management and thought leadership company."  That is, they were both financial/business people--who usually have an ideological disposition, and maybe a financial stake, in supporting the Conservatives.  Paul Krugman regularly complains about journalists uncritically accepting "tough choices/structural reform/tighten our belts" analyses, and this seems to be a case in point.

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