As you might have heard, one of the key academic papers (Reinhart & Rogoff, 2010) on which the case for austerity stood has been widely debunked after the revelation that it's main conclusion (debt to GDP ratios over 90% spell doom) was the product of a simple spreadsheet error. And when I say simple, I mean a failure to include all the rows in the sum total of a column, not a syntax error in a complex array formula. We're talking dipshit simple here. Imagine if the first book to be lodged in the new George W Bush Presidential Library was Pippa Middleton's party planning opus. That sort of simple. The FT made the astute point that if you want to blame software you should point the finger at Powerpoint rather than Excel, on the grounds that this was a classic case of a dubious assertion being seized upon and over-hyped by policy-makers looking to justify a prejudice. There was only one spreadsheet but the dodgy claim will have been replicated in countless presentations.
Of course, this epic-fail has not led to Austerian politicians the world over slapping their foreheads and saying "My God! How could we have been so stupid!" You might even have spotted a smirk playing around the corner of George Osborne's mouth at the mere thought of this. Since 2010, the increasingly evidence-free campaign against stimulus has simply been resistance to any backsliding on the neoliberal project, with government debt taking on the bogey role played by inflation in years gone by. The macroeconomic policy dichotomy boils down to the preservation and enhancement of existing concentrations of wealth versus the diffusion of wealth as a means to increase aggregate demand. Thus we have QE and bank bailouts, which support property and equity values, rather than "helicopter money" or cuts in VAT. Together with the indulgence of tax-dodging and rent-seeking, this has led to advanced countries starting to resemble the polities of "resource curse" nations. As Steve Randy Waldman puts it "There’s a sense in which we are all Nigerians now", or more fully:
The global economy is succumbing to a technologically-driven resource curse, coalescing into groups of insiders and outsiders and people fighting at the margins not to be left behind. Our governments are transforming themselves from mediators among widely dispersed and interdependent interests to organizations that maintain and police the boundaries between the civilized and the marginal, who put down the insurgencies and manage the pathologies of the latter so that they do not very much impinge upon the lives of the former.
As wealth becomes more concentrated it becomes more rigid. This rigidity is manifested in an increase in privilege, which means both the ability to use wealth to buy status and advantage and the tendency of that advantage to secure more wealth. Though the recent Thatchgasm saw some commentators harp on about her rise from kinda-humble origins, as if she were an example of social mobility, the post-premiership award of a hereditary baronetcy (now passed on to "Sir" Mark) and the improbably generous speaking fees (now passed on to Tony Blair) were a perfect example of privilege in both old and new clothing. But privilege isn't usually so overt or personalised. More insidious is the casual acceptance of prejudice, which is the normative basis of privilege: I deserve it because I'm better than you. While racism and homophobia are in decline, largely because there are increasing numbers of rich non-whites and gays who expect the privilege that their wealth entails, the new "classism" is rampant, from the popular chav trope to the generalised assumption that the disadvantaged have only themselves to blame.
Another instance of prejudice is the belief that developing nations are made up of money-driven drones only too happy to make our commodities and share in the rising tide of global prosperity. An example of this can be seen in some of the commentary around the Bangladesh factory building collapse that killed at least 350 people. Matt Yglesias on Slate.com argued that it was fine for Bangladesh to have weaker health and safety laws than the US as this represented a trade-off against better wages: "in a free society it's good that different people are able to make different choices on the risk–reward spectrum". His assumption that there was a "collective calculus" by Bangladeshis is absurd, and wholly undermined by the reality that poor health and safety is usually the result of a failure to apply the law, often due to corruption or negligence, not the absence of law. The evidence of prejudice in this case is the unwillingness to apply the same logic to the coincidental explosion at the Texas fertliser plant that killed 14. Clearly, Texans did not make a "collective choice" to ignore risks in favour of rewards. Yglesias even fails to spot the obvious parallel with US history, namely New York's Triangle Shirtwaist Factory fire of 1911.
Other neoliberals have attempted to re-word Yglesias's faux-pas, emphasising that jobs in shitty factories are better than shitty jobs in the countryside, and thus peasants are making a rational choice when they head off to the city. Of course, this ignores a couple of facts that evaporate the figment of choice. The first is that increases in agricultural productivity inevitably lead to fewer agricultural jobs, obliging surplus rural workers to head for the towns. Productivity gains are partly more-from-the-same (higher yields) and partly the-same-from-less (fewer workers). As the amount of land (i.e. base productive capacity) cannot increase, agriculture always reduces employment in the long run. The second fact is historical coercion. The enclosure of vestigial common land prevents agricultural labourers from being self-supporting and therefore choosy. You either accept low rural wages or you move to the city. This process has been going on for centuries - it's a trickle not a flood - though there are peak periods (e.g. Britain in the early 19th century and developing nations over the last 20 years).
The common thread here is prejudice and self-delusion. Bangaldeshi factory workers are assumed to be willing participants in globalisation because the alternative thought is unpalatable. Similarly, the revelation that high debt ratios do not necessarily impede growth will not cause a change in policy, because that policy was never about securing growth. It's about protecting privilege.