I am spending much of the day in meetings and seminars, the first being on the subject of austerity.
That made me ask the obvious question, of what is austerity? Looking at dictionary definitions definitions I think it fair to conclude that austerity means:
- Sternness or severity of manner or attitude
- Plainness and simplicity in appearance
- A feature of an austere way of life
- Difficult economic conditions created by government measures to reduce public expenditure
In practical terms I interpret that as meaning:
- A lack
- With severe consequences
- Adopted as a matter of choice.
Thoughts?
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No. 4 incorporates a political assumption. That reducing expenditure creates difficult economic conditions. That’s perfectly fine. But it means austerity is a loaded term, and as such should be used with care when factually describing things, as it presumes something of a conclusion. Thus, if you are writing polemic it may be a useful word. If you are trying to argue a case from first principles it should be avoided.
First I am a political economist
I know of no politician who says that cuts do not ivolve difficult decisions
Second, on this occassion I believe them: I have done cuts and they are hard
Third, OK, let’s be objective and let’s ignore the process of change which always involves jettisoning past behaviour. Then suggest where difficult economic conditions hacve not reuslted from austerity, please, because I think you will have some difficulty. And GDP growth is not evidence of benefit because by itself it ignores lost opprtunity
You can argue whatever you like about austerity, but you can’t use (3) and (4) in answer to ‘what is austerity’: that is a perfect example of begging the question.
In fact, in English ‘austere’ has two subtly different meanings: one is non-frivolous, unadorned, functional; the other is the same thing with an added dose of hair shirt. It’s pretty obvious that each definition is used by whoever finds it most convenient at the time.
Incidentally, ‘austere’ actually means ‘tannic’ or ‘very dry’, literally. One might say that austerity leaves a nasty taste in the mouth.
However, all of this is a distraction from your real work, Richard. Discussion of etymology can’t be allowed to get in the way of finally solving the YKW problem.
I have no idea what the YKW problem is….
‘Austerity’ is an excuse, a word taken from the postwar years, when the country was in terrible financial trouble and everything was either bombed or worn out by years of overuse in wartime.
Nevertheless, the citizens of postwar Britain were provided for: the ration coupons did buy clothes and food, the refugees and the bombed-out were rehoused, the infrastructure was rebuilt, Industry retooled and restarted a civilian economy, and a National Health Service was created in a renewed nation-state with a new aspiration: Social Security.
All of these things were done with very little money. Plain, functional, efficient, the necessary minimum: Austere.
The word has better uses than this unnecessary transfer of wealth from the poor to the rich by rising rents and wage suppression, deindustrialisation, overt support for tax evasion, the sale of services to rent-seekers, and the withdrawal of the necessary minimum from the most vulnerable in society.
There are other, better words for this: dark anarchy, greed, neofeudalism, Mugabe economics, class warfare, social Darwinism, and Grind-The-Poor.
Or perhaps we need no word: we have a distinctive sound, familiar to all who hear the House of Commons when there is a mention of the disabled, or the food bank users, or the homeless, or the dying.
THAT sound – you know the one I mean – the sneering, braying, jeering laughter of the victors.
“Nevertheless, the citizens of postwar Britain were provided for: the ration coupons did buy clothes and food, the refugees and the bombed-out were rehoused, the infrastructure was rebuilt, Industry retooled and restarted a civilian economy, and a National Health Service was created in a renewed nation-state with a new aspiration: Social Security. All of these things were done with very little money. Plain, functional, efficient, the necessary minimum: Austere.”
Well, not really. Labour retained the borrowing of world war II. For quite a number of years, our borrowing was an astonishing 250% of GDP. Certainly, rationing was maintained until the early 50s, but the government was borrowing
was borrowing two-and-a-half times more than the country earned in GDP.
“Nevertheless, the citizens of postwar Britain were provided for: the ration coupons did buy clothes and food”
Rubbish. Everyone had to pay. The ration cards merely entitled one to buy.
Richard,
Part of the “austerity” canon (in older minds at least) will be something much more tangible. During the Second World War, when the country was short of resources, standards were implemented that strictly limited what could be used in producing specific goods, cutting out ornaments and producing something that functioned. This lasted up until the early 1950s.
The idea of austerity being about “necessities not luxuries” is a seductive one, and it plays into a lot of the current debate: the sort of person who advocates payment cards that limit spending to food is, I suggest, unconsciously echoing this idea of austerity.
I think you are right
This austerity is something a person may choose
It is not something that should be imposed if unnecessary
As you imply, Richard, dictionary definitions often don’t satisfy the interpretation of political USAGES. The political usages are clear.
The primacy of finance over production
The enhancement of the rentier
The systematic wreckage of the ‘real’ economy
The creation of socially divisive fear through artificial scarcity
The pretence that Governance does not matter in the economy
The belief in the voluntary nature of unemployment
The begrudging use of automatic stabilisers because the market always tends towards equilibrium
In Greece it means:
3 million without health care
In Ireland and Portugal it meant:
emigration and a bloated real estate obsession and bail outs.
Agreed
If you’ve had such a busy day, Richard, you may have missed this by David Graeber in The Guardian. It comes complete with a short video. Nothing that you haven’t discussed on your blog on many an occasion, but I thought David put it very concisely.
If he’s right, and I’d bet he is (he’s echoing a point you’ve consistently argued), then at some point in the not too distant future our current government are going to have to launch “austerity 2” as I see no evidence whatsoever that they intend to increase the tax “burden” of the wealthy.
http://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus
Ivan
He is right
And we are going to have another crisis soon
Richard
Simon,
Although you did not specifically list the issue that, as has been previously spelt out, all of the above are a matter of choice, it is reasonable to assume that choosing austerity on the basis of the contextual definitions you have put forward is an implied term of your contribution.
A further implied term of the general point that the austerity being talked about is a matter of choice is that such a choice is a bad one. Not just for those most adversely affected but also for the economy as a whole. Those two specific points, along with similar very real negative impacts of that choice, have been advanced very clearly on numerous occasions.
Following on from that the question arises as to just who it is doing the choosing?
The current Government for certain. But are they alone in making that choice?
From recent evidence it would appear not.
What is austerity?
http://news.sky.com/story/1576077/sugar-babies-students-selling-sex
I think to the layman it means poverty. Poverty amidst some private affluence and growing public squalor.
In the post war era we had austerity. That was a shortage of almost everything and a rationing system to ensure a fair distribution of what we did have. Very different to a world where the aspirations of the many are sacrificed to the ideology or the privileges of the few.
Even then there was a large amount of people who never had any problem obtaining whatever they wanted.
That was certainly the case JohnM.
However, one (of a number) of key differences between that period and now is the fact that, unlike today, during that period those who never had any problem obtaining anything they wanted did not enjoy the luxury of vast numbers of those who could not obtain anything they wanted queuing up to die in a ditch in order to defend the right of those who could get anything they wanted to be able to do so, to the detriment of themselves and everyone else who did have a problem obtaining anything.
Austerity’s why we in the UK think double-glazing’s a good thing. In Germany, I find, they only used it on the old places, the modern ones have treble or quadruple glazing. Wowsers… I never even *heard* of quadruple glazing. We’re scammed in this country, and austerity’s a big part of how this is done. There’s another sensible item for the PQE to-do list, Richard, multiple glazing for all suitable dwellings.
What is austerity?
In the terms of economics, totally unnecessary economic illiteracy. Of course, at the moment, austerity is being used as a cloak to try and hide the continuing transfer of wealth from the productive side of the economy to the rentier side.
I go back to a summary of what I interpret Mark Blyth as saying about austerity:
STEP ONE – IMMEDIATE POST CRASH:
It is a deliberate measure to the detriment of working people
that ensures that the investor and banking class get their money out first when the financial system causes self-inflicted harm.
STEP TWO – PRE-NEXT CRASH:
It enables governments to save money in anticipation of the next baling out exercise for banks deemed too big to fail when self inflicted harm happens again and has the same effects on the groups of people identified in STEP 1
In short it is an income support/insurance programme for the rich investor class.
Another definition?:
‘An opportunistic neo-liberal policy that uses financial crisis as an excuse to destroy social protection systems in democracies used by the 3 main parties in the UK (Tory/Labour/Lib-Dems).
The only austerity I’ve ever liked is that described in (2) in your list above. The Riddles 2-8-0 and 2-10-0 WD loco’s were unsung heroes (although the humble LMS Fowler 2-8-0 was an amazing machine). Mind you – the SR Q1 0-6-0 took austerity design into unchartered territory – strange looking machines those!
Another steam enthusiast here?
Join Demetrius and yours truly
Yes – I may as well ‘come out’ as it were – as well as being an avid fan of social justice and an explorer of in the field of political economy I AM A RAILWAY ENTHUSIAST!!
(Cue huge fanfare and sobs of relief from me on a podium clutching notebook, pen and my late Father’s last Ian Allan ABC Combined Volume, circa 1961).
That feels better! Anyone up for a trip to the Bluebell railway this weekend? Or a spot of shed bashing in the East Midlands?
I’m in Canada this weekend….
I once counted a Fowler 2-8-0 pulling 54 of the 5 ton coal trucks. Although a freight loco because of its smaller wheels it had excellent acceleration. So it was quite serviceable for a long stopping train.
Pilgrim, talking of shed bashing in the East Midlands, I spent three of my much younger years working for BR as a guard out of Derby 4 Shed. No steam by then of course, but some mighty diesels – though I know admiring a diesel engine is anathema to you steamers 🙂 I did however, get to see the APT up close and personal, as it were, as well as the then very new and impressive InterCity 125s – as they were once known. And of course, there were plenty of drivers and second men who’d driven steam trains, though I have to admit, from the stories I heard it seemed a pretty hard and dirty job.
Ivan
I confess that I am actually too young to remember steam and grew up with diesels, relying on my Fathers books and memories instead.
We always used to make the pilgrimage to Derby Works open day – also the odd RTC open day too. I’m ashamed to say that I even ended up going to Litchurch Lane C & W works too once or twice which is very sad indeed.
I can still remember a fine day at Derby Loco one year where there were demonstrating the bogie casting process and seeing this red hot Brush 4 bogie being made right before our eyes. I often wondered what happened to that equipment and the men who worked on it.
I’m very fond of steam though and one of my best memories was being with my Dad when we visited the Severn Valley railway. After sampling some lovely local beer at the station buffet we literally fell into a train hauled by a preserved Fowler 2-8-0. Within minutes of setting off, the gentle rocking motion of the those eight rigid wheels driven by their connecting rods rocked our beer addled selves to sleep. Wonderful!
Believe you me I miss those big diesels a lot Ivan. Even the diesel loco’s had a personality back then.
And today we import them from America of all places!!
Should I confess here I have a library of over 800 railway books?
And I just remember steam?
But I was very young
There are also one or two model railways around….
I like Yanis Varoufakis’s definition of the UK’s mild version of austerity (compared to Greece) as class war. It is a conscious decision by one class (in this case the British establishment/state) to impose hardship on another class (in this case the British working/middle class) for its own purpose/gain in terms of power, control and money.
In the Greek case it was a conscious decision by one class (the unelected Eurozone finance group/ECB) to impose impossible hardship and untenable economic conditions on the Greek state/people for its own purpose/gain in terms of power, control and money (eg. returning money to the northern European banks regardless of the pain suffered by the Greek people)
Either way its about those who have the most power, control and money trying to hang onto it and deny others any access to it, no matter what the cost.
It has nothing to do with the supposed economic necessity or common sense rationale that is presented by the political spin doctors of its proponents
I once had a 1934 Austin 7. I called it my Austerity car.
Austerity is used by the politicians because of their need to indicate to their electorate that, for them, times are hard. But times are not austere for the bankers. If you were selling it to the bankers you’d just call it the good times will never stop, or something similar. The policy would be the same.
So I suggest it’s called austerity because the electorate – the target audience – needs to be persuaded to reduce their expectations.
Would you like Bill Mitchell’s word on it Richard? 😀
“Austerity occurs when the government runs deficits that are too small relative to the spending and saving decisions of the non-government sector. In this context, it is moot where the revenue comes from. The impacts of running insufficient fiscal deficits usually does impact on the poor and disadvantaged, most notably, because it causes mass unemployment and/or underemployment. And I don’t diminish the concern we should have for those distributional consequences. But from a macroeconomics perspective that is not the point. Austerity is about the sufficiency of the deficit contribution to total spending and national income generation.”
AUSTERITY: the elevation of fiscal deficit reduction as the primary goal or target of macroeconomic policy usually through a systematic programme of significant reductions in government expenditure at a time of cyclical economic weakness.
That’s my definition, – did a talk to permanent secretaries recently – will send on.
Point is austerity stopped in 2013 in UK. We can show this with data. Still 2010-2012 resulted in 5-15% in total lost output (needlessly) and that’s being generous.
Given Osborne presided over a clear U-turn in 2013 – three questions should be posed.
1. Why did this happen, what motivated the U-turn? 2. What does this tell us about the nature of so-called austerity and its necessity in the UK? 3. Most interesting of all, – from my perspective, – why is nobody talking about this?
All of this was a surprise, nobody had any idea of the U-turn, nobody seemed aware just how out of step Mr Osborne is with economic opinion of every stripe on fiscal policy, especially academic economists. This is very true. And the comments on this blog need to get on to this. What needs to happen now is for politics to catch up with economics, not the other way round. There signs are there, this is happening, but more is needed.
APB
Talking about this is important
Looking at data I can’t now see a change in 2013
I think the policy did continue
But that’s the only point where we differ
I am collecting a lot of data on this : not sure if you want to discuss?
Richard
Will send on my slides. I think there was a U turn. Back in 2010 I argued austerity was a political ruse. There is some ideology there no doubt, but the main driver was discrediting Labour and cheap point scoring. That is the Cameron/ Osborne MO. I think the evidence and the data bears me out and that my analysis back then was correct. All of this has been done by creating a completely misleading public and media narrative about public debt and the deficit. The U Turn was an admission of a mistake (very clear when you look at breakdowns on capital spending) and of course electoral strategy, while denying that there was any change of course and that the initial strategy was working and good for the economy – ‘vindication’. The conclusions to draw from this: 1) austerity is a political con trick and is all about political strategy and has little to with sensible economics. Opposition on the economics is greater than ever and the gulf between economic expertise and political strategy is the widest its been – right now. And that is both interesting and an opportunity. 2) This was a choice, there was an alternative – the U turn (albeit – a small one) indicates this. None of this has been a necessity and it was bad for the economy, 10-12, -leading to permanently lost output and therefore avoidable, – all tantamount to an act of needless vandalism, artificially depressing living standards. Reputation for economic credibility is vastly distorted. An act of manipulation and deception that become very clear when you look at the data. 3) A pliant media has allowed this to happen and failed in its reporting duty to expose this, and economists have probably been too polite and reserved in calling this out to date. Austerity’s dirty little secret – the U turn is being covered up,by media and politicians, but once it is revealed it will expose austerity for the political sham it is….
You probably have much better and more sophisticated data, but the pattern mine shows is very important and interesting. I will send on…
Thanks
Am assembling data so yours will be useful
What I have suggests the 2012 change was smaller than I thought in key areas
APB
A very compelling account which chimes with my own feelings on the matter from experience at the sharper end of the cuts and from wider reading.
Osbourne seems to have done exactly what Thatcher did in the early 1980’s where even the CBI were big critics of her economic policies (based on Milton F) and which were subsequently abandoned (a U turn) on the quiet when industrial output sunk and social unrest made itself known.
The behaviour you describe in Osbourne and Cameron reminds me of another observation that I have made of the modern Tories over the years; that they are essentially reactionaries, spurned on by their own sense of entitlement to rule, all too willing to blame the decline of the UK on anyone but their own previous policies.
And like all reactionaries they lack coherence and method (although identifying what is done on purpose and what just isn’t thought through can be difficult).
An additional problem is that the Financial sector/markets love the chaos and destruction they cause because it gives them the opportunity to hoover up assets at fire sale prices.
I can’t wait to see the data to be honest.
As Anthony Zappia quotes from Bill Mitchell above:
“Austerity occurs when the government runs deficits that are too small relative to the spending and saving decisions of the non-government sector…..”
Bill has it spot-on.
So how does this work with the present bout of austerity in the UK?
John Redwood recently made the following claim on his blog:
“The most recent figures show the UK deficit gradually reducing, with tax revenues growing more quickly than the growth in public spending, as planned.”
There’s two problems here: Firstly he thinks that reduction is a good thing. Secondly that he thinks the UK’s deficit is the same as the Govt’s budget deficit which it clearly isn’t. A better description of the UK’s deficit is the net loss of ££ to pay for the net import bill and which is currently some 5% of GDP.
So, it must follow that if Government reduces its own deficit to below 5%, as it has recently done, that it is simply pushing the economy into recession. That’s austerity. Everyone will run increasingly short of money. Gross aggregate demand can then only be maintained by increased private sector borrowing which of course just inflates the bubble economy.
London property is rated as the most overvalued in the world with a bubble index of 1.88 and the rest of SE England can’t be far behind.
http://www.theguardian.com/money/2015/oct/29/london-house-prices-most-overvalued-world-ubs
So if the Government wants to run a a 5% deficit in trade it has to run something like a 7-8% deficit in its budget to allow those in the economy who wish to save (rather than borrow) some capacity to do so.
Pushing it down to only 4% is a recipe for disaster. The economy is now hanging by a thread. The bubble will burst sooner rather than later and we all know what happens to real economies when bubble economies burst.
So even looking at this kind of economics from a right wing perspective, I can’t see it makes any sense. Firstly it will reduce the electoral chances of the Tory Party. Voters who become economically disadvantaged and become reliant on State support will vote for parties offering better rather than worse support. Secondly, it will hinder their desire for a smaller state. That is only going to be possible when workers have sufficient spending power to afford private sector alternatives to those services the State now provides.
I doubt very much the Tories care about getting re-elected. I gather they were amazed to get elected this time round as it is. They’re con-nmen and asset-strippers who masquerade as politicians, and thanks to the overwhelming stupidity of the electorate they’ve been granted not only one but now a second bite of the cherry. The worse things get, the more of the UK’s family silver they’ll get away with selling off. Their damaged little brains can’t see beyond the nearest pound signs, so apart from Osborne seemingly fancying himself as PM for a time, I don’t believe they care or even have much idea about anything else.