Photo

Still at SXSW, which accounts for lack of blog posts — I mean, seize the day and all that. Not much action this morning, except a discussion with Snoop Dogg, which I’m not going to; but whenever I think about Mr. Dogg, I think about Alan Simpson. Which brings me to the subject of this post.

BowlesSimpsonism — obsession with the deficit as the key economic problem, despite incredibly low borrowing costs by historical standards (and the inability of the Eek! Greece! crowd to come up with any plausible story about how a Greek-style crisis can happen to a country with debts in its own currency) — has been fading fast from the U.S. political scene. I wouldn’t go so far as to say that we have a rational macroeconomic discourse, with charlatans and cranks completely dominating half the political spectrum, but our Very Serious People have moved on, and may even feel a bit chastened.

As Simon Wren-Lewis has been documenting, however, British discourse seems stuck where ours was in 2011. Britain’s VSPs, very much including the news media, take it as axiomatic that the deficit is the dominant issue; terrible growth over the past 5 years (only slightly redeemed by an acceleration at the end of the period) and low productivity don’t seem to rate at all.

Yet objectively the deficit should have faded even more as an issue in Britain than it has in the US. Here are IMF estimates of the two countries’ structural (i.e., full employment) budget balances:

Photo

You can see a couple of things here. One is that the acceleration of British growth, far from vindicating austerity, came just when there was a pause in austerity, a slowdown in the pace of tightening. As I’ve said in the past, if you have been repeatedly hitting yourself in the head with a baseball bat, you’ll feel much better when you stop; this doesn’t mean that hitting yourself in the head was a good idea.

The other thing you can see is that Britain has even less reason than the US to worry about deficits right now. So why the difference in VSP beliefs?

I’m actually not sure. One possibility is that the very harshness of US partisanship makes the ulterior motives of austerians harder to ignore. Another is that greater involvement of US academics in public debate has given the broadly Keynesian consensus of the profession — and yes, it is a consensus — greater traction.

Anyway, the sad result is that Britain is going into an election with bad, foolish economics not simply getting a hearing, but being presented by the news media as obvious, unchallengeable truth.