BRITAIN’S economic debate is “dominated” by a “bogus narrative”, according to Nobel Prize-winning economist Paul Krugman.
Writing in the New York Times, the leading economist attacked mainstream media outlets in Britain, claiming they “routinely present as fact propositions that are contentious if not just plain wrong”.
“Unfortunately, economic discourse in Britain is dominated by a misleading fixation on budget deficits,” the 2008 Nobel Prize winner said.
“Worse, this bogus narrative has infected supposedly objective reporting. Very few British academics (as opposed to economists employed by the financial industry) accept the proposition that austerity has been vindicated.
“This media orthodoxy has become entrenched despite, not because of, what serious economists had to say.”
As well as attacking the media coverage, Krugman attacked the UK Government itself, claiming that the Government’s insistence to commit to austerity measures is harming the growth of the economy.
“When the current British Government came to power in 2010, it imposed harsh austerity and the British economy, which had been recovering from the 2008 slump, soon began slumping again,” Krugman added.
“In response, Prime Minister David Cameron’s government backed off, putting plans for further austerity on hold, but without admitting that it was doing any such thing, and growth resumed.
“If this counts as a policy success, why not try repeatedly hitting yourself in the face for a few minutes?
“After all, it will feel great when you stop.”
Brian Ashcroft, Professor of Economics at the University of Strathclyde, said he “agrees with Krugman’s analysis 100 per cent” claiming that the media coverage of the economy has been “simply wrong”.
He said: “I, along with Simon Wren-Lewis at Oxford, Jonathan Portes, director of the National Economic Institute in London, Martin Wolf at the FT [Financial Times], have long agreed with Krugman that the general narrative peddled by the mainstream media on the recent performance of, and policy problems facing, the British economy is simply wrong.”
Krugman explained that Wren-Lewis has dubbed this kind of reporting “mediamacro”.
“As his coinage suggests, this is what you hear all the time on TV and read in British newspapers, presented not as the view of one side of the political debate but as simple fact. Yet none of it is true,” he said.
Despite frequent comparisons to countries such as Greece and Spain when the economic downturn in this country is mentioned, Krugman denied a close link between these countries’ situations and that of the UK.
He said: “Unlike Greece, Britain has retained its own currency and borrows in that currency – and no country fitting this description has ever experienced that kind of crisis.”
“In 2007, Government debt as an a percentage of GDP was close to its lowest level in a century, while the budget deficit was quite small. The only way to make the numbers look bad is to claim that the British economy in 2007 was operating far above capacity, inflating tax receipts.
“But if that had been true, Britain should have been experiencing high inflation, which it wasn’t,” Krugman said.
Peter McColl, Green Party candidate for Edinburgh East, said the UK Government has “exploited” the financial crisis.
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