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Night at the Museum

As the guardians of the souls of our communities, local cultural institutions must fight and adapt i

Remember the turn of the millennium? An era associated with shiny new buildings and the launch of major gallery projects across the country, when culture was used as an engine for regeneration. Alongside the big-money projects, there was a demand from government and funders that cultural institutions demonstrate an impact on "real people". No longer could high art be ghettoised, now that it was financed through the Lottery. Culture had to provide lessons on how to be good citizens. Diversity and accessibility became all the rage, with museum and gallery managers filling in byzantine funding applications on the benefit to society of the arts, and launching project after project that had only a passing connection to collections or core business.

The vogue for "citizenship" now appears to have passed. How committed most institutions were anyway to working with communities is questionable. Community work became an exercise in ticking boxes, when we had to take on board that not everyone believed in the intrinsic value of the arts, and funding was dependent on our ability to demonstrate instrumental value.

The initial wave of such work came broadly in two forms. First, there was a swath of initiatives connected with people's entitlement to culture. At their core was the message that mere association with great art could open the smallest mind. Wheel in a group of young people from disadvantaged backgrounds, sit them in front of the right painting and their lives would be enhanced. Never mind the irrelevance to their lives; never mind that they doubtless had a number of cultures in which they already participated - this was all about ticking the right boxes while not actually doing anything very different.

Second, there were the press-worthy projects; those usually launched from the marketing department. These were often petitions or campaigns, designed to have broad social impact, built on (often literally) flashy websites. After the money had disappeared into the wallets of web developers, they usually failed to have much impact on anyone at all. But they looked good in the annual report.

Return to elitism

With a return of the notion of excellence, the changing atmosphere seems to have been met with a sense of relief that we can go back to doing what we've always done. Community projects and outreach work can be safely abandoned. Funding is no longer reliant on such things, and the prospect of a public school-­educated Tory government suggests elitism will be the new Stygian hue. In financial terms, things haven't changed, however. The funding for major museum works is still there and is seemingly unconnected to the needs of much of the population, if the recent work on the Ashmolean Museum in Oxford is anything to go by. Over £60m spent and an aim for only 500,000 visitors a year? The cash might have been mostly provided by private trusts and funds, but it demonstrates the irrelevance of such work to the majority of ordinary people.

In the likely event of a new government taking power next year that is committed to public spending cuts, the major national museums will be fine. The money, whether from charitable trusts or from government departments, will continue to flow to them. The funding - though lessening - for major work will also still be there. Rich men will still want to have gardens named after them; exhibitions of treasures stolen during imperial conquest will still need the imprimatur of the social elite. But for regional museums, for the locally funded and supported, even for university museums, the only likely impact is straitened circumstances.

Yet there's a trick being missed here. When funding cuts come, they will come first to the arts - unless the sector deploys a counter argument. In the world outside, the recession is already biting hard. And, over and above the debate about instrumental value, galleries and museums have a vital contribution to make in helping improve the lives of their neighbours, their funders (through taxation and Lottery tickets) and their audience.
This is especially true in times of recession. The impact on jobs and on the future levels of aspiration among young people is beginning to register. But the impact on the health and well-being of the average man, woman and child has barely begun to take effect. Recessions are about illness, depression and the ending of hopes, as much as they are about the economy.

Museums and galleries have a duty and an opportunity in all this. Publicly funded neutral spaces, guardians of the long-term souls of their communities - there are no better institutions to tackle the loss of hope implied by recession. And this contribution is immensely valuable in terms of dealing with the long-term impacts of recession on individuals, communities and the economy as a whole.

Arguing the case

It's time, then, to declare a wider purpose for the museum and gallery sector. At first sight, this may seem unlikely to catch the eye of the incoming government, which will be aiming for cuts first and a review of their long-term impact later. But the worst thing that culture could do now would be to withdraw into its shell, worry about its future funding and ignore the wider issues affecting society. That would achieve nothing. Worse, it would reinforce the arguments of those who see the sector as first in line when cuts to public spending are mooted. But the museum and gallery sector could offer an impressive bang for its buck if it presents its ­arguments correctly.

Projects that are to make a real difference need to learn from the mistakes of the box-­ticking era. There needs to be real, long-term engagement with communities. These cannot be one-week, one-month or six-month-long projects, where the participants are waved goodbye to at the door and never thought of again. They need to be co-created with the people involved, rather than made in a marketing office and thrown out in the general direction of a specific target "problem". And they need to be entered into with honesty and passion.

At the heart of museum community work, when done well, is actually a very Conservative philosophy - self-help. It's about giving people back control of their lives, allowing them to ­explore the issues facing them and their communities and to make the sometimes difficult choices only people on the ground can really make. Offering this sort of space, this sort of ­independent and committed involvement in developing solutions for individuals and communities, could and should be the focus of ­museum community engagement. This is about ensuring that an audience for galleries and museums survives. More than that, it's about ensuring that our cities, our economy and our cultures survive. But it's also a way of ensuring that the sector has a real role to play in helping the country to get back on its feet.

Vaughan Allen is the chief executive of Urbis

Making an entrance

According to Mark Taylor, director of the Museums Association, 1979 was a disastrous year: "There was an attempt by the Thatcher government to follow the American model - more freedom for museums, less control from above . . . it was every man for himself."

The genesis of New Labour precipitated a sea change: "They had a greater understanding of the role culture plays in all aspects of life. There was a push for museums to be part of government agendas, and it meant they could carry out a wider range of activities."

Labour also abolished entrance fees to 20 major national institutions. Visitor numbers skyrocketed and free museums have become cemented in the public's mind as an inalienable right, something an incoming Conservative government would be loath to dismantle.

Similarly, since 2003 the "Renaissance in the Regions" programme has provided almost £300m in funding for local museums, but its continuation beyond 2010 is far less certain. Taylor, however, sees the new generation of Tories as far less doctrinaire about public funding of the arts: "All indications are that the Conservatives understand the multifaceted nature of museums better than the Thatcher government."

Another good sign is that, in line with the recession, visitor numbers are booming: "As life seems more depressing, people turn to cultural pursuits, which is good news for us," says Taylor.

Stephen Morris

 

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This article first appeared in the 23 November 2009 issue of the New Statesman, Green Heroes and Villains

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

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The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

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In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt