In the Olympics, we were told last week, honour is determined not by whether you win, but by how you compete. In politics, the rule is reversed. UK chancellor George Osborne looks decidedly like a loser after a dreadful batch of economic statistics. And Mr Osborne’s critics, eager for glory, are taking shortcuts as they try to claim victory in the economic policy competence contest.
Some, to their credit, have been consistent in their criticism of Mr Osborne’s economic strategy. (No credit to the opposition, whose job it is, right or wrong, to criticise what the government does.) Many more, including corporate chiefs descending on London for the Olympics, only started to prance about with their superior economic judgment when data laid bare the horror show of the government’s economic record.
The statistics are incontrovertibly awful. In the second quarter, the UK economy shrank by 0.7 per cent. In July, manufacturing activity fell at the fastest pace since March 2009. This is enough to turn the practical men and women who run the world’s biggest companies into the slaves of a defunct economist. The Keynesian story that business leaders have been telling the government goes like this. Everyone knows that spending cuts and tax rises reduce demand. The UK suffers from too little demand. So the recession was a foreseeable, avoidable, self-inflicted wound; and the deficit cuts must be slowed before it is too late.