How’s that austerity thing working out?

Remarkable chart from the National Institute for Economic and Social Research showing what has happened to GDP in each recession, compared to the cyclical peak.

3 thoughts on “How’s that austerity thing working out?”

  1. Amazed that no one has commented on this horrible graph.  As one of the unemployed in spite of qualifications and experience, here & abroad, it concerns me greatly, as it seems to imply that whatever is being done economically by our dear leaders is having no effect whatsoever.  Maybe there are ways to interpret it that it is not as bad as it looks.  Being an economist, and especially a development economist ( I mean this as a compliment as I think you would have seen more of the real world than some economists stuck in financial institutions) how would you interpret it?

    1. @Mark

      There is no question: this is horrible, and an indictment of current policies.

      The only glimmer of good news is that, your own experience notwithstanding, there has been less unemployment, on average, than you would expect with this kind of drop in output. That suggests firms are doing a better job of hanging on to people in this recession (or perhaps that people are finding other things to do, such as returning to education). That suggests that the recovery may happen a bit more quickly.

      I hope things go well for you.

      Owen

  2. Taking complex adaptive systems and looking at this graph, along with lots of else, suggests that the use of universal panaceas such as Keynesian thinking or supplyside thinking is critically limited as far as dealing with the totality of a economic complex adaptive system.  Any positive things that results from economic interventions (keynsian or supplyside) are probably just serendipitous with no actual knowledge of why they work, just an absolute irrational belief that they do in spite of all the evidence, and the negative things tend to get ignored/dismissed as irrelavent.  However, until a cohesive thinking about the breadth & depth of economics, and how it can be viewed through the perceptual lens of complex adaptive system penetrates and removes the belief in absolute power of such limited panaceas of neoclassical economic, then I am afraid that such graphs are liable to be repeated.  My fear is that this may be new stable equilibrium for Britain, and the tools of economic policy currently adopted by the government (captured by the neoclassically-trained economist elite)  are totally inadequate to the task before them.   If people like you and others can work out the problem for countries in Africa, and elsewhere, the solutions may also help to deal with Britain’s problems ( and help me – not too many jobs for botanists/ecologists – although that is why I find the arguments about complex adaptive systems easy to understand). 
    Keep working on creating economic understanding of complex adaptive system, it will benefit all us little people.

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