Smugness & Fatalism in One Chart
Richard Murphy has spotted a chart that can only be described as terrifying. It comes from a new paper from Sheffield University’s Political Economy Research Institute and, for me at least, pretty much sums up all that is wrong with the government’s new found triumphalism on the economy.
It shows GDP per head from 1948 and the latest OBR forecast on its likely path.
Now those OBR forecasts are likely to be revised up somewhat at the coming Autumn Statement but not in a way that will fundamentally alter this picture. And this picture understates the real crisis in living standards facing the majority of the population, GDP per capita is a useful measure but not an exact proxy for median living standards. Whilst GDP per capita is currently growing at a reasonable clip, living standards for the majority remain squeezed.
This is a chart that shows a lost decade and that clearly demonstrates that the recent pickup in growth is far less impressive when put into its proper context. I look at this chart and I am reminded of a Paul Krugman quote that I’ve used more than once on this blog before.
The slowness with which Japan’s economy deteriorated was in itself a source of much confusion. Because the depression crept up on the country, there was never a moment at which the public clamoured for the government to do something dramatic. Because Japan’s economic engine gradually lost power rather than coming to a screeching halt, the government itself consistently defined success down, regarding the economy’s continuing growth as a vindication of its policies even though that growth was well short of what could and should have been achieved. And at the same time, both Japanese and foreign analysts tended to assume that because the economy grew so slowly for so long, it couldn’t grow any faster.
So Japan’s economic policies were marked by an odd combination of smugness and fatalism – and by a noticeable unwillingness to think hard about how things could have gone so wrong. (My emphasis)
This feels very apt.