Last week, the UK Department of Work and Pensions released a swathe of new – statistics – on poverty rates in Britain. While the Department tried as hard as it could to present the data in a misleading way and lied the facts, once analysed properly, are chilling indeed for a nation that pretends to be advanced and lectures Europe on its own misanthropic policy positions. I am sometimes asked when making public presentations how I judge the success or otherwise of public policy. I respond with a simple rule of thumb. The benchmark is not how rich the policy framework makes society in general but how rich it makes the poor! The conduct of governments in many nations over the last 20 years has not typified what a sophisticated and rich society should be doing to enhance the prospects of the weakest among us. The policies of the British government in recent years are the antithesis of sound public policy. In that sense, I judge Britain to be a failed state.

The angst in Britain about the form of the funeral for the Witch goes on. I liked the suggestion of filmmaker Ken Loach who suggested the whole affair be privatised and outsourced with competitive tenders determining the outcome. Hypocrisy rules though and the Conservative government will spend a pretty penny on the effort as a means of presenting her legacy in some good light. They won’t succeed because people know! With the latest British labour force data due out tomorrow, I was interested to read an interesting forensic study of recent labour market trends in Britain. The official line from the Government is that things are improving and “see, our policies are allowing those who want to work hard to achieve their aspirations”. The paper, which I discuss in this blog, tells us that those narratives are not even remotely true. Despite the official summary labour force statistics, once one digs more deeply into the data the trends are bad and getting worse.

I have noted before that the longer the economic crisis continues and the more data that comes out from national statistical agencies the easier it is to see how crazy the political elites who are driving austerity in their lands are. A few years ago it was a contest of ideas – austerity or not – and so anti-austerity arguments could be dismissed as “old fashioned”, “worn out”, Keynesian ideas. As the years pass the contest of ideas is being clarified by the relentless data releases from the agencies. Then those who advocate austerity have to not only explain at a conceptual level how a government can cut spending when non-government spending growth is weak and still forecast rapid growth but also have to somehow come to terms with the data that tells them their bets were wrong.

The Olympics have come and gone. No doubt the event gave some macroeconomic respite to the British economy because major events bring immediate spending and spending drives output and national income. But the fourth-quarter 2012 real GDP data showed that the British economy had contracted by -0.3 per cent. Household final consumption expenditure slowed throughout 2012 as private investment growth contracted over the second-half of 2012. Further, despite the hope that the fiscal austerity would be painless as a result of a boost in net exports, especially given the depreciation in the British currency, the data showed the the current account deficit increased as a result of a fall in exports over 2012. It was in this context that the British government brought down the – 2013 Budget – which provides no path out of this malaise. At a time when the correct economic strategy would have included a political admission that the previous 3 budgets were detrimental interventions for the British economy and a commitment to some discretionary stimulus, the British government chose to adopt a neutral position in the coming financial year, which when taken in perspective just maintains the contractionary bias of fiscal policy. The mismanagement of the British economy thus continues.

Companies that sell shonky products under false pretenses are typically prosecuted by the authorities. Those that sell shonky products generally are typically run out of business. But there is one class of such products that seem to escape the scrutiny of both the authorities and the market. Indeed, they seem to have bluffed many governments into believing that shonky is good. Last week, the patently irrelevant Moody’s rating agency downgraded Britain’s sovereign debt ratings from Aaa to Aa1. The fact it was headline news indicates how stupid we all are. The fact that George Osborne then had to lie about what it meant showed how stupid he is. The fact that the Opposition leader described it as a humiliating blow showed how stupid (and opportunistic) he is. How a company that was complicit in the financial crisis can command so much free advertising is beyond me. I must be stupid! The fact is that the latest ratings are without meaning or import.