Over at our Daily Comment blog, I’ve put up a longer post on the latest failure of austerity economics: the admission by George Osborne, the British Chancellor of the Exchequer, that, after two and half years of furious budget-cutting, he’s still failing to meet his own fiscal targets.

One thing I didn’t mention in that piece is that Osborne isn’t merely reaffirming his commitment to the deflationary economics of the early nineteen-thirties. He’s coupling it with an embrace of Reaganite trickle-down economics of the nineteen-eighties and the even harsher Benthamite economics of the eighteen-thirties. Earlier this year, he cut the top tax rate from fifty per cent to forty-five per cent, claiming that Britain’s highest earners needed incentivizing. Now, with roughly one in twelve working-age Britons out of a job, he’s cutting the value of unemployment benefits—a move that harkens back to the infamous Poor Law of 1834, which was designed to stigmatize paupers and vagrants.

Cutting the value of unemployment benefits won’t make much of an impact on the deficit. The savings will amount to about four billion pounds in a total budget of about seven hundred billion pounds. But the cut will be felt by the jobless and their families, many of whom already live in poverty or near poverty. In the United Kingdom, unlike in the United States, the level of unemployment benefits isn’t linked to the recipient’s wages in his or her last job. Single people get a maximum of seventy-one pounds (about $115) a week, and couples get up to a hundred and twelve pounds (about $180). For decades, governments of both parties have raised the payments in line with inflation, so that their purchasing power remains steady. But with inflation currently running at more than 2.5 per cent, Osborne has ruled that over the next three years increases in benefits will be limited to one per cent. That might not sound like a big difference, but over three years it could well add up to a five per cent drop in purchasing power.

Moreover, the squeeze won’t just fall on the unemployed. The one-per-cent cap will also apply to housing and income-support benefits, which are used to top up the income of many poor and near-poor working families. Taken together, the tax and spending changes that Osborne announced on Wednesday will reduce the incomes of the poorest tenth of U.K. households by 2.7 per cent, according to the Resolution Foundation, an independent research organization.

About the only economic justification for these sorts of benefit cuts is that they render the labor market more “flexible,” a codeword for making the poor and the unemployed more eager to seek work and accept low wages. But the British labor market is already pretty flexible, and one of the few bright spots over the past couple of years has been a steady rise in total employment.

Osborne’s primary motivation wasn’t economics; it was politics. With Britain’s “lost decade” about to enter its sixth year, and the Conservatives trailing Labour in the polls, he deemed it necessary to do a bit of rabble rousing, appealing to the base instincts of middle-class voters who resent paying taxes to support the unemployed, while also throwing some meat to the Fleet Street jackals who are forever banging on about “scroungers” on the dole. The cut in benefits was “about being fair to the person who leaves home every morning to go out to work and sees their neighbor still asleep, living a life on benefits,” Osborne declared. “As well as a tax system where the richest pay their fair share, we have to have a welfare system that is fair to the working people who pay for it.”

For a time, Osborne, who hails from the Anglo-Irish Ascendancy, appeared to be an ill-informed aristocratic dilettante posing as an economic authority. Now, he has revealed himself as a cynical and cruel politician, who, in order to distract attention from the failure of his policies, is heaping more financial misery on the poor. Good going, fella!

Read more about Britain’s failed austerity policies at Daily Comment.

Photograph: Wikimedia Commons.