Work on the glossary is advancing: it has now grown to 36,000 words and there are still more than 100 entries to add (and maybe more). Many of these entries are short. Others are of essay length. I write this on austerity yesterday. Comments on length, suitability and anything else are welcome:
Austerity is a narrative largely attributable in the UK at least to David Cameron and George Osborne, who were, respectively, prime minister and the chancellor of the exchequers of the United Kingdom from 2010, until 2016.
The austerity narrative was created as a reaction to the financial situation inherited by the incoming Conservative government in 2010 from the Labour government that was voted out of office in that year, which party had been in government during the global financial crisis of 2008.
Cameron and Osborne claimed that the record-breaking government deficits (exceeding £150 billion in 2009) that it had inherited had a number of consequences that they had to address. These included:
- The risk that the UK government could not service its debt obligations.
- The risk that the UK government could no longer be able to borrow on international financial markets, because of the threat that deficits posed to its solvency.
- The likelihood that the UK government could no longer afford to spend at the level it had under the previous Labour administration because the UK economy had been irreparably harmed by the UK financial crisis, which they blamed upon the Labour government.
As a consequence, Cameron Osborne claimed that:
- UK government expenditure must be cut under an austerity program that they would put in place.
- It was essential that UK government debt as a proportion of its gross domestic product (see separate entry) be reduced to restore the U.K.'s international financial credibility.
These claims by Cameron and Osborne and their associates in the coalition partners, the Liberal Democrats, were not justified, because:
- There was no risk to the UK's ability to service its debt or to pay the interest due upon it. This was because as a sovereign nation with its own central bank and its own currency with debts that were at the time entirely denominated in that currency the UK could always create any money owing by it as liabilities fell due by simply asking the Bank of England to create the money in question. This put it in complete contrast with the situation in Greece, which used the euro, but with which Osborne made frequent and entirely incorrect comparison.
- Almost all economists agree that in the event of a recession, or threat of it, a government should increase its spending to counter the downturn in private sector spending and so prevent too large a fall in the income of a country, but what Osborne proposed was to reduce government spending, so increasing the likelihood of a significant reduction in overall national income.
- In practice, very little additional debt was taken on by the UK government between 2010 and 2013, precisely because most of government expenditure in excess of taxation revenues, during the course of this period was funded by a quantitative easing program, with which factor Osborne would have been very familiar. Osborne denied that this programme reduce the real level of government debt even though this was continually demonstrated, be the case by the Whole of Government Accounts (see separate entry).
The austerity narrative was supported by a number of claims, most of which were easy to communicate, but all of which were wrong. These narratives included:
- The claim that the Labour Party was entirely responsible for the 2008 financial crisis, which had, in fact, originated in US housing markets and which was global rather than peculiar to the United Kingdom.
- That the UK, like a household, was broke and unable to pay its debts (see separate entry on the household analogy).
- That because the UK was broke it must, like a household, cut its costs (again see separate entry on the household analogy).
- That government was too big under Labour and could not be afforded, for which there was no evidence before the global financial crisis.
- Much of the overspending by the Labour government had been because of excess benefit payments to persons whom Cameron and Osborne described as skivers even though there was little or no evidence to support this claim.
The austerity program put in place since 2010 has been a disaster for the UK:
- The incomes of most people have not risen in real terms since 2010.
- In contrast, the income of those in higher earning echelons have increased, significantly, meaning that inequality has grown as a consequence (see separate entry).
- Wealth inequality grew substantially during the course of this period, primarily because the quantitative easing program whose primary consequence was the release of additional funding to banks to restore their solvency following the global financial crisis, which funding they then used to make loans that inflated the price of assets (most especially domestic housing), which programme then restored commercial bank solvency, enabled banks to restore the payment of bonuses remarkably soon after the crisis had ended, and resulted in further inequality within the UK society.
- The reduction in many benefit payments and the introduction of new charges on those on benefits, including the so-called bedroom tax, reduced the income of the lowest-earning groups in society, again, increasing inequality.
- The substantial reduction in funding to local authorities, most, especially in England, resulted in significant reductions in the expenditure on social care, reducing the amount of support available to the most vulnerable in society.
- The reduction in the budgets of many public services, including education and health, resulted in substantial under-investment in the services, which left the UK, subject to significant risk when the Covid crisis hit. This has now in turn resulted in the chronic under capacity within the NHS being witnessed in 2022/23.
- The reduction in real pay for public sector workers, including teachers, healthcare workers, university lecturers, civil servants, social care professionals and others, led to an exodus of experienced and qualified staff from these services that has reduced their capacity to meet public demand for such services.
- The reduction in expenditure on defence has led to the U.K.'s loss of international status as a military power.
The austerity program also failed because, using the government's own preferred definition of national debt (see separate entry) debt increased from £1 trillion in 2010 to almost £2.5 trillion in 2023, meaning that 60% of all UK national debt in 2023 had been incurred since 2010, when the supposed objective of the austerity program was to reduce that debt as a proportion of GDP, when it had in fact increased to record levels. In its own terms, the austerity programme failed as a result.
None of this was necessary: the inappropriate application of the household analogy to the management of the finances of the UK's macroeconomy led to destruction of economic power within the country that firstly led to Brexit, because of the disenchantment of many with the government that imposed this programme and secondly has led to a persistent poor economic performance in the UK when compared to all other countries of similar size and economic development meaning that by 2023 it had uniquely failed to recover from the economic downturn caused by the Covid crisis
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Hmm. That is rather long for a “glossary”. I’d expect something more along the lines of “austerity is a set of policies said to be motivated by a desire to reduce public spending deficits, by cutting public spending and/or increasing taxation”. If you prefer a longer entry, perhaps you could have a very short introductory sentence like this for those who just want an outline?
We’ve had austerity before 2010, but perhaps your readers won’t want to hear about the Geddes axe in the 1920s, or post-1945.
Thanks
The question here is whether this is a dictionary of economics or a glossary of political economy
I think your suggestion is more the former and mine the latter
What does anyone else think?
I like it.
This is not to decry your admirable endeavour in any way, but to make a suggestion addressing Andrew’s opening comment.
A glossary is an explanation of a word or phrase presumed to be unfamiliar in some way to the reader. When a gloss appears it must, therefore, have an anchor in usage.
I would suggest neither Andrew nor you is setting the word itself in an actual context before the exposition.
Whether you want a dictionary definition (readily available on the internet) is debatable, but perhaps a crowd-sourcing of quotes including your glossed words and phrases would be beneficial to justify the inclusion of your explanations? (If you don’t have such a collection add me to a list of volunteer seekers!)
Some entries, of course, would be Andrew’s dictionary entries, where economics or politics give unusual twists to common words with context-specific meanings.
Something like this, although Hansard would be best:
<> [headline 8 June 2011 Global Justice dot org dot UK] >>
Many entries are reasonably dictionary like, or start that way
I should have added one in this case – also highlighting the historical element which Andrew pointed out
Bit this will not be a dictionary. And maybe it’s not a glossary either. Let me post another comment on this to highlight what I am trying to do.
This is an excellent entry for ‘Cameron-Osborne Austerity’, but perhaps it could be briefly indicated as distinct from, or derived from, austerity ‘in principle’ as neo-liberal doctrine.
That may be beyond the scope of what you’re doing here.
I think the longer length is justified for something so impactful in the present day.
Thanks
Point noted
I do think you should add the short definition after the description! Effectively, ‘Austerity’ is a euphemism for ‘class warfare’.
Noted
But that would not be how I would define it
The description does reveal that
I think Andrew is right. I take your point that this is more than a dictionary… but I think it needs to start with a ‘dictionary definition ‘… then a general definition that gets across that it is a policy driven by the (false) idea that government spending is constrained by tax revenues and debt levels.
I would then leave the bulk of your (good and accurate) description as an appendix.
I fear that leading straight off with such a long description that will mean huge numbers of cross references to other entries will put off many readers.
If this is to be a dictionary I would just provide a link to a dictionary….so it is definitely not that.
Precisely because dictionary definitions a) support the status quo and b) add little value to those wishing to critique an idea I am doing something very different
There will be lots of cross references reuiqired (I am highlighting when drafting when I think they occur)
But if this was a dictionary I would not bother to do it: that would be a complete waste of my time, I think
Personally I love this analysis – it is spot on as far as I am concerned and seems consistent with what has been discussed here in the past and more recently.
However, the use of the word ‘debt’ jars with me. And here is where I reveal also maybe my lack of understanding.
Is what you mean by ‘debt’ just what the government has spent or is it money really owed? Is it really just a line of expenditure on a ledger that is being abused/misrepresented as debt to justify austerity?
‘Debt’ is now such an emotionally charged word in these discussions/expositions that it needs to be handled like a hand grenade. When using the word ‘debt’ you can actually be reinforcing it in a negative sense and falling into a trap.
Should it be ‘supposed debt’ or ‘pretend debt’? When using the word ‘debt’ you should qualify every time that as used by the Tories, it is a false definition – just like the republicans in the US are doing. It’s false because what is being said is that spending should be cut, because the supposed ‘debt’ is acting as a false barrier or limit to further spending when in fact it is just spending to meet needs which have just for some reason got greater (because of Covid, the 2008 crash, Ukraine, out of control utility markets etc).
And are savings stored with the government ‘debt’ (I think not, I think you think not too if I am correct?).
I only say this because I’m thinking about the wider readership and how they might find the whole thing confusing.
Or, is it me that has this wrong?
And, if you are being ‘pragmatic’, then of course ignore my comments.
But this business of there being too much ‘debt’ or too many obligations for a sovereign currency producing nation to cope with monetarily is the bullshit of all bullshits IMHO and I’m sick of it. The only thing that constrains money production is the means to make use of it – the capacity to put it to work usefully.
To be clear, there is an entry on debt to discuss all these issues
I am not seeking to discuss issues twice, but to cross refer
There is also an entry on national savings and the government as borrower of last resort to explore these issues
They’re just not published to link to as yet
Fair enough and understood thank you.
I didn’t know how to respond to this article until I read your piece about AI. It seems to me that what you have done is write an essay which shows that you have mastered “the ability to write a coherent argument that sets out to achieve an objective”. I am not sure, however, that the objective achieved is best defined as a ‘glossary’. In my opinion you have invested too much of your own take on the political economy in which we find ourselves. I invariably agree with your posts, and I agree with all the points in this piece, because I think I share your values. But a glossary, to succeed, surely has to be aimed at a much wider audience and, as such, needs to be couched in less contentious (for want of a better word) terms. At various points you have obviously anticipated disagreement and strengthened your argument accordingly which is what has made the piece too long for a glossary; that and the absence (at the moment) of the ability to link to other parts of the glossary to explain terms. I think each entry could have a clear, value free, (would that such a thing were possible!) definition at the start followed by a brief exposition of the supposed justifications and counter-arguments for the political decisions that are relevant to the definition. I hope my opinions are helpful – that was my motivation.
I will post a more general reply to this comment soon – and to others as well. You have made me think
What I will say here is that I do not believe there is ever a value-free definition and I do not want to promote the idea that there is in anything I do. ‘Value free statements’ always support the status quo in my opinion
I must admit I was expecting something along the lines of
austerity is a political choice to cut public spending to a level at which hardship is caused to all public services.
Your proposal is excellent, but longer than I would expect in a glossary.
I will post a more general reply to this comment soon – and to others as well. You have made me think
Based on this entry Richard I think you are writing an encyclopaedia of the real History of politics, economics and finance in the UK.
Much though such a thing might be needed, have you got the time?
Maybe I am
But it will be selective – and there is nothing wrong in that.
It can also develop over time.
People asked for definitive articles on issues – and this is what this is also about
Have I got time? Always ask a busy person if you want something done. I am enjoying this, a lot.
I peronally like what you’ve written as it puts into perspective the whole austerity con we have had rammed down our throats for far too long. You’ve mentioned a number of things I feel can be quoted with confidence in order to show just how much we have been lied to in order to promote an agenda designed to promote the movement of wealth upwards and also designed to decimate public services in favour of ‘outsourcing’ (also designed to promote the movement of wealth upwards).
I wonder if (or even hope) eventually, your glossary will become essential reading for accounting students?
PS… Have you considered including ‘creative accounting’ in your glossary or would that involve too many extra pages?
The last will be in
The rest – thanks
I asked for comment when posting this item, and I am grateful to those who have supplied them.
That said, it is clear that there is some confusion with regard to the glossary that I am writing, and some of that must, of course, be my fault.
I should have made clear that it was never my intention to produce a dictionary-style definition of commonly used terms in economics, political economy, accounting, or taxation, all of which will appear from time to time on this blog. To do so would be rather pointless. There are already good dictionaries that cover all such routine definitions.
Instead, my intention has been threefold. The first is to provide definitions of more obscure terms and phrases where dictionaries are likely to struggle.
The second is to assemble all these in a way that is relatively easily accessed by users of the blog to increase the chance that people will understand what I’m trying to say when posting here without necessarily having to repeat myself too often.
Thirdly, most importantly, the aim was always to critique the standard definitions of the terms, phrases, techniques, and other issues to which I will refer because most of standard definitions are constructed to support the existing political economic status quo, with much of which I disagree. This objective will necessarily involve discussion of many of the items on which I make entries, and some of these will be lengthy, but with the intention of enhancing understanding of the problems inherent in existing economics, with indication giving us to how an improved approach could be adopted. In doing this, I am, again, seeking to avoid the need to make such comments repetitively on the blog itself and to provide a stable reference point where people can find my opinion on such issues. This is how I hope the glossary will add value.
I am, however, aware that to describe the resulting product as a glossary may be misleading. Would it be more useful to describe it as a description of keywords in political economy, accounting and taxation?
Well, the OED defines a glossary as “A collection of glosses; a list with explanations of abstruse, antiquated, dialectal, or technical terms; a partial dictionary.” which seems to be more-or-less what you are trying to do.
I’d expect a dictionary to have a very short bare-bones definition, whereas I’d expect a glossary to have a longer and more cursive explanation, putting each term in greater context and giving more nuance.
To pick an example: https://en.wikipedia.org/wiki/Glossary_of_cricket_terms This is not just simple definitions (“X means Y or Z”) but also explanations and examples.
Whatever you call it, I’d suggest you need at least one introductory sentence – eg “BLOB usually means [blah blah blah] [standard definition]. But [criticism] and [better way of looking at it] and [pros and cons].”
Your point is accepted!
I cannot know the practicality of this suggestion, but having read what you are trying to achieve, I think there is an option to mix a glossary / definition with a critique of it. I am certainly no expert here but as an example:
“Austerity is normally defined as (insert standard definition). In greater depth, (insert your post as above)”.
You probably want better words than ‘in greater depth’ though! For myself, I would find whatever you do useful if it allowed me to both understand the meaning of a particular economic term and any comment you had on it, while remaining within your blog environment. Hyperlinking (or whatever) to the meaning and using my browser ‘back’ button. But that’s just me.
However you do it, good luck – it’s obviously quite an endeavour.
Noted
Thanks
I really like it. Succinct whilst substantive.
And you are right austerity failed on its own terms —>
Budget 2010 – George Osborne’s speech
“Thanks to my action today, the structural current balance will be minus 4.8 per cent of GDP this year. That deficit will then be eliminated to plus 0.3 per cent in 2014-15 and plus 0.8 per cent in 2015-16. In other words, it will be in surplus.”
What a dangerous man to be in charge of the countries well-being.
I’m tempted to suggest you’re creating in part a modern day accounting ‘Myth Buster’ or ‘Jargon Buster’, as such your explanations can be as long or short as your discretion allows. What you name it doesn’t really matter, its value and content will speak for itself.
Thanks
Appreciated
Following on the perceptive comments above, and without repeating points already made, I hope; I was struck by the context you extablished for ‘Austerity’; Cameron and Osborne.
They offer a relevant example for Britain today, but while they applied austerity to Britain, they did not invent the idea. We have earlier examples in history of its application, which demonstrate its failure. Cameron and Osborne should have known better, because austerity is a proven failure as a solution to the problem they were trying to solve.
Florian Schui in his book ‘Austerity: the Great Failure’ (2014), starts with Aristotle, in a book length treatment of the subject, but from Ch.4, on the post-Great War period on (to Hayek), he describes the application of austerity and its failures in concrete, resonant terms intended to demonstrate the problems it creates; an approach that invites us to compare its value with our current predicament. It is the fact of Austerity’s historic failure that makes the Cameron-Osborne experiment so inexplicably inexcusable an exercise in folly.
Accepted
But to discuss the history would have made it even longer
Surely austerity was a resounding success for Osborne/Cameron assuming their real aim was to shrink the state thus disadvantaging the poor and granting even more advantage to themselves? I doubt they ever had any intention of actually helping the economy along. Both creatures of privilege rather than any demonstrable ability, they were, IMV, trying to usher in the age of oligarchy with themselves as leaders in the new order before any genuine democracy did away with them. But we digress…
I was thinking not of extensive discussion of the history, but of very briefly stating austerity’s plain objective, to cut public expenditure; then showing the real effects from perhaps two or three examples; from Cameron-Osborne, and at least one earlier 20th century example, and our present predicament. Followed by a conclusion that it is therefore a proven policy failure as a solution to the major financial crises that typically besets the modern world (cross linked to related issues); maybe all in around four praragraphs?
I have added two introductory paragraphs now but kept the rest because I like it and I think it will help
When the aim of this blog is to reframe debate showing how debate is framed is vital
On the basis of the ‘austerity’ entry I think you may be composing a primer. Websters defines a primer as an introductory textbook. So, define the words but also show how they sit together and in context.
My next thought is how to describe the subject you are introducing? It seems to me that you are pushing back against the assertion that the present dispensation is inevitable. And as I understand it one of the tenets of MMT is that currency issuers can act with much greater freedom than present orthodoxy would recognise. So, given the contemporary resonance of the word, how about ‘A study in economic sovereignty’?
Let’s see if it becomes a book
How about ‘Vade Mecum’ (or will it be too big to slip into a reasonably sized pocket?) However, wouldn’t want to lose the detail, especially around such subjects as ‘Austerity’, inflation etc.
Really pleased to have found your site.
Thanks
I notice the word ‘covid’ is mentioned three times in here. Is there going to be an entry for ‘covid’ itself?
The government has stopped giving booster vaccinations from today except for those who need them next autumn for medical or age requirements.
I had not thought of it
But now you mention it….