Slaves of Defunct Economists: Why Politicians Pursue Austerity Policies That Never Work

On January 25, the British statistics office announced that the United Kingdom’s economy had shrunk by 0.3 percent in the last quarter of 2012. After enduring two recessions in the last four years, Britain is now well on its way into a third. The pain has been compounded by a succession of austerity budgets, in which Britain’s Conservative-led government has tried to hack away at spending. Repeated rounds of cuts have battered the British economy. However, Britain’s chief economic policymaker, Chancellor of the Exchequer George Osborne, wants still more pain. He is pushing the government to identify £10 billion more in cuts this year. This makes no economic sense. Olivier Blanchard, chief economist at the International Monetary Fund, has pleaded for Britain to start focusing on growth rather than fiscal virtue, claiming that “we’ve never been passionate about austerity.” It doesn’t make any political sense, either. Voters like vague proposals for “reducing government waste” in the abstract, but hate cuts to programs that they care about. Why do so many members of the political elite disagree with Blanchard in their visceral passion for austerity? Why do they keep on pushing for pain when it threatens economic ruin and hurts their election chances?

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