A Surprising Comparison of U.S. and U.K. Economic Growth

The United States and the United Kingdom responded to the Great Recession in different ways. The U.S. passed an $800 billion stimulus bill whereas the U.K. in contrast kept government spending roughly flat in real terms. Some devotees of Keynesianism forecast that the U.S. would soar economically and the U.K. would descend into depression. Some supporters of austerity claimed that the reverse would happen, with the freespending U.S. going under the waves as Britain righted herself and steamed ahead.

The latest issue of The Economist provides recent economic growth data and 2014/2015 projections for both countries. Before you look at the table, make a guess as to which country has a booming economy and which one is mired in recession.


Surprising isn’t it? But don’t expect the similar levels of growth in the two countries to shake many people’s faith in their economic views. Most of the “slim government” crowd will argue that Britain didn’t cut enough (or that the U.S. growth isn’t real) and that’s why the U.K. hasn’t left the U.S. in the dust. Most increased government spending supporters will see proof that the stimulus wasn’t big enough (or that the U.K. growth isn’t real) because if it had been U.S. growth would be dwarfing that of the sceptred isle.

Many people seem to have stable preferences about whether they want government bigger or smaller. They will point to current economic conditions as the reason for why their preferences should prevail, but their preferences do not change when those putatively justifying economic conditions fade away. Neither are most people fazed when the government spending policies they support (as well as those that they oppose) deliver different results than they expected. Motivated reason is such a force in this particular policy area that rather than arguing over what current economic conditions particularly require, debaters are probably better off cutting to the chase and arguing directly about the real issue: Disagreement about how big or small we want the government to be.

[Cross-posted at The Reality-Based Community]

Keith Humphreys

Keith Humphreys is a professor of psychiatry at Stanford University. He served as a senior policy advisor at the White House Office of National Drug Control Policy from 2009 to 2010.