The consensus is turning against austerity

The global organisations who supported Osborne are now warning against excessive austerity.

In making the case for his deficit reduction programme, George Osborne has often leaned heavily on arguments from authority. Here, from his speech to the 2010 Conservative conference, is a typical example:

On one side there is the IMF, the OECD, the credit rating agencies, the bond markets, the European Commission, the Confederation of British Industry, the Institute of Directors, the British Chambers of Commerce, the Governor of the Bank of England, most of British business, two of our great historic political parties, one of the Miliband brothers, Tony Blair, and the British people.

On the other side is Ed Miliband and the trade union leaders who put him where he is.

But even in October 2010, when the austerity consensus was at its height, this was to understate the opposition. As Mehdi pointed out at the time, those on the other side also included Barack Obama, US Federal Reserve Chairman Ben Bernanke, Nobel Prize-winning economists Paul Krugman and Joseph Stiglitz, FT columnists Martin Wolf and Samuel Brittan, Keynes's biographer Robert Skidelsky. One could add that 53 per cent of the "the British people" voted for parties opposed to the Conservatives' economic programme.

Still, Osborne could comfort himself with the thought that much of the political and economic establishment was on his side. What he forgot was that throughout history the economic consensus has often proved disastrously wrong. Now, after austerity has comprehensively failed in Britain and Europe, the intellectual tide is beginning to turn.

In a statement ahead of the World Economic Forum's annual meeting in Davos next week, the heads of the IMF, the OECD, the World Trade Organisation and the World Bank have all warned against too fast a pace of deficit reduction. They declare that fiscal consolidation should be used "to promote rather than reduce prospects for growth and employment" and should be applied "in a socially responsible manner."

Of course, none of these institutions is calling for deficit reduction to be abandoned. They're merely recognising the need for a more balanced approach of the kind that Labour has consistently argued for. Even the credit rating agenices now recognise the risks of too great a pace of austerity. Explaining its decision to downgrade the credit ratings of nine eurozone countries including France, Standard & Poor's - hitherto an advocate of extreme fiscal tightening - cited concerns over growth, not borrowing. "A reform process based on a pillar of fiscal austerity alone risks becoming self-defeating," it warned, "as domestic demand falls in line with consumers' rising concerns about job security."

That the consensus has begun to shift is unsurprising. In Europe, austerity has increased, rather than diminished, the threat of a Greek default and the collapse of the single currency. In Britain, Osborne's programme has entirely failed to deliver the growth and jobs that he promised. The Chancellor told the House of Commons in November 2010 that private sector job creation would "far outweigh" the job losses in the public sector. But the number of public sector jobs lost in the last year (276,000) now exceeds the number of private sector jobs created (262,000). In the last quarter, 67,000 public sector jobs were lost but just 5,000 private sector jobs were created. Moreover, if we reclassify RBS and Lloyds as private sector institutions, there were 3,000 job losses in the private sector.

Delivering his emergency Budget in June 2010, Osborne told the Commons: "Some have suggested that there is a choice between dealing with our debts and going for growth. That is a false choice. The crisis in the Eurozone shows that unless we deal with our debts there will be no growth."But rather than stimulating growth, Osborne's policies have strangled it. Over the last year, Britain has grown at a slower rate than ever EU country except Greece, Cyprus, Portugal, Slovenia and Denmark (see the final column on this Eurostat chart).

For all this, it is the Tories, not Labour, who enjoy a three-point lead in the latest YouGov poll. At the very moment that Ed Balls has been vindicated on the economy, it is his party that is losing the political battle. Labour is learning, to its horror, that you can combine austerity and popularity.

George Eaton is political editor of the New Statesman.

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The economics of outrage: Why you haven't seen the end of Katie Hopkins

Her distasteful tweet may have cost her a job at LBC, but this isn't the last we've seen of Britain's biggest troll. 

Another atrocity, other surge of grief and fear, and there like clockwork was the UK’s biggest troll. Hours after the explosion at the Manchester Arena that killed 22 mostly young and female concert goers, Katie Hopkins weighed in with a very on-brand tweet calling for a “final solution” to the complex issue of terrorism.

She quickly deleted it, replacing the offending phrase with the words “true solution”, but did not tone down the essentially fascist message. Few thought it had been an innocent mistake on the part of someone unaware of the historical connotations of those two words.  And no matter how many urged their fellow web users not to give Hopkins the attention she craved, it still sparked angry tweets, condemnatory news articles and even reports to the police.

Hopkins has lost her presenting job at LBC radio, but she is yet to lose her column at Mail Online, and it’s quite likely she won’t.

Mail Online and its print counterpart The Daily Mail have regularly shown they are prepared to go down the deliberately divisive path Hopkins was signposting. But even if the site's managing editor Martin Clarke was secretly a liberal sandal-wearer, there are also very good economic reasons for Mail Online to stick with her. The extreme and outrageous is great at gaining attention, and attention is what makes money for Mail Online.

It is ironic that Hopkins’s career was initially helped by TV’s attempts to provide balance. Producers could rely on her to provide a counterweight to even the most committed and rational bleeding-heart liberal.

As Patrick Smith, a former media specialist who is currently a senior reporter at BuzzFeed News points out: “It’s very difficult for producers who are legally bound to be balanced, they will sometimes literally have lawyers in the room.”

“That in a way is why some people who are skirting very close or beyond the bounds of taste and decency get on air.”

But while TV may have made Hopkins, it is online where her extreme views perform best.  As digital publishers have learned, the best way to get the shares, clicks and page views that make them money is to provoke an emotional response. And there are few things as good at provoking an emotional response as extreme and outrageous political views.

And in many ways it doesn’t matter whether that response is negative or positive. Those who complain about what Hopkins says are also the ones who draw attention to it – many will read what she writes in order to know exactly why they should hate her.

Of course using outrageous views as a sales tactic is not confined to the web – The Daily Mail prints columns by Sarah Vine for a reason - but the risks of pushing the boundaries of taste and decency are greater in a linear, analogue world. Cancelling a newspaper subscription or changing radio station is a simpler and often longer-lasting act than pledging to never click on a tempting link on Twitter or Facebook. LBC may have had far more to lose from sticking with Hopkins than Mail Online does, and much less to gain. Someone prepared to say what Hopkins says will not be out of work for long. 

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