How Misleading Economic Analysis Is Corrupting Our Democracy

Yves here. This post provides some live examples from campaigning in the UK elections to show how think tanks cook their findings to push their political agenda. One way these economic studies fall short of the low standard of business analysis is the use of single point estimates. The public is treated as too stupid to understand uncertainty and is therefore shielded from ranges and sensitivity analyses.

Another way the political discourse gets warped is by clever positioning. A well-demonstrated cognitive bias is that the same economic proposition will elicit very different responses depending on how it is framed. Whoever decided to give universal government-backed medical care the colorless and uninformative name “single payer” was an evil genius. The right wing for decades has invested small fortunes in clever packaging, like denigrating social programs as “entitlements” and depicting the unnecessary and costly privatization as “public-private partnerships”

By Laurie Macfarlane. Originally published at openDemocracy

Today the front page of The Times reports that the Labour Party’s plans to introduce a four day working week will cost taxpayers £17 billion.

The figure is based on a report from the Centre for Policy Studies, which attempts to quantify the impact of reducing average full time hours to 32 hours with no loss of pay on the public sector wage bill.

On the face of it, this sounds plausible. After all, if everyone works less, surely more people will need to be employed to maintain services, which will push the wage bill up?

Perhaps, but this is only part of the story.


Keep reading this article on Naked Capitalism (Yves Smith) - Blog.

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