Austerity's definitely happened. The question is how much damage it's done

The fact that austerity has failed does not mean no-one tried to implement it.

The Atlantic's Matthew O'Brien writes:

Britain's economy is a riddle wrapped in a mystery inside an enigma, but this much is clear: it's a disaster. After its Olympics-fueled growth, such as it was, lifted it out of recession in the third quarter of 2012, Britain might be headed back after its economy fell 0.3 percent at the end of the year the fourth time in five quarters its GDP has contracted. Britain's now verging on a triple-dip recession, which is just another way of saying a depression…

It's no accident this era of zero growth has coincided with an era of austerity. Despite entering office with borrowing costs at 50-year lows, the Cameron coalition decided the government deficit, and not the growth deficit, was the chief threat to future prosperity. It raised taxes and cut the growth of spending, but did so with little regard for what constituted smart cuts and what did not… It's the economic equivalent of shooting yourself in both feet, just in case shooting yourself in one doesn't completely cripple you.

O'Brien goes on to argue that austerity can't be the only cause of Britain's slump. For him, the real puzzle is the collapse in productivity which has lead to a recovery in the labour market (of sorts) without a commensurate recovery in GDP. (That disconnect may partially be the result of some statistical fiddling on the part of the Government).

There's a number of possibilities for such an "enigma", from zombie firms which are only kept alive by the low cost of credit, through measurement error (both that mentioned above and something gone awry with the seasonal adjustments), to genuine slumps — temporary or otherwise — in productivity.

But one group of people think they have the answer to O'Brien's puzzle, albeit by discounting one of his premises. These are the "cut further, cut faster" Tories, for whom a failure to reduce the deficit as quickly as they desire is the same as a failure to implement austerity.

NIESR's director Jonathan Portes has taken on this tendency, in the form of a detailed response to two of its biggest proponents, Tory MP John Redwood and the Spectator's editor Fraser Nelson.

Nelson writes:

We’re witnessing the difficulty the left has in reconciling its official narrative with what’s actually happening. Yes, George Osborne’s policy is not working – but for reasons that the Guardian can’t quite bring itself to accept. It’s not that his evil cuts are retarding the recovery. It’s that he’s slowly abandoning his deficit plan. The figures show that core government spending is going up, along with the debt and (last month) the deficit.

Portes responds that yes, core government spending "is roughly flat in real terms, with cuts in some areas offset by the operation of the automatic stabilisers". But defining austerity in terms of core government spending is arguing at cross-purposes with those who argue that austerity has harmed the British economy.

The simple analysis of the government's austerity program is that the reduction of the deficit is equivalent to austerity. That was the initial definition the government went with, which is why the failure to reduce the deficit to any great degree is seen as failing on its own terms.

But deficit reduction can't be directly equivalent to austerity, since it can also be achieved by growth. (Which is the argument the anti-cuts left has been making consistently for the last three years.) And so we get to the circular argument in Nelson's claim that Osborne has failed at austerity. Because what he is describing as the failure to achieve austerity — slow paced deficit reduction and flat spending — is actually a symptom of the failure of austerity. As Portes writes, the causal inference is wrong. It's not that the Chancellor is abandoning austerity and so the debt continues to rise; it's that debt continues to rise because austerity doesn't work to reduce it, and so the Chancellor is trying to quietly change tack:

The government did not adopt policy changes which led to slower deficit reduction. Instead, the front-loaded fiscal consolidation illustrated above (along with other factors, such as the similar, and similarly misguided, policies pursued by our eurozone partners) derailed the recovery, which in turn led to the slowing of deficit reduction, which in turn has forced the government to abandon its fiscal framework. Again, the IMF sets all this out quite clearly.

For Portes, the important failure of austerity is in the resulting reduction in capital investment, because austerity stands opposed to fiscal stimulus (which he defines as "Government measures, normally involving increased public spending and lower taxation, aimed at giving a positive jolt to economic activity").

The Government, in its desire to cut the deficit primarily through spending cuts with a top-up of tax rises, thus failed to achieve one of its goals. Spending was not cut significantly, but between tax rises and initial moderate growth, the deficit has been reduced. This is the austerity which is decried. The fact that one of the measures through which this was intended to be achieved is not proof that there has been no austerity, but merely further proof that austerity is self-defeating.

And by focusing on attempts to reduce spending and achieve "fiscal consolidation", the government failed to implement fiscal stimulus (even going so far as to reduce public investment by 1.7 per cent of GDP).

The failure of austerity to greatly reduce the deficit, and the fact that automatic stabilisers mean that spending stubbornly refuses to fall — as we swap a pound spent on EMA for a teenager in school with a pound spent on JSA for an unemployed civil servant — are not the same as a failure to implement austerity. It has been implemented, and it has damaged the nation: the question now under discussion is just how much.

George Osborne looking at wheels. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Building peace in a dangerous world needs resources, not just goodwill

Conflict resolution is only the first step.

Thursday 21 September is the UN-designated International Day of Peace. At noon on this day, which has been celebrated for the last 25 years, the UN general secretary will ring the Peace Bell on the UN headquarters in New York and people of good will around the world will take part in events to mark the occasion. At the same time, spending on every conceivable type of weaponry will continue at record levels.

The first couple of decades after the end of the Cold War saw a steady reduction in conflict, but lately that trend seems to have been reversed. There are currently around 40 active armed conflicts around the world with violence and suffering at record levels. According to the 2017 Global Peace Index worldwide military spending last year amounted to a staggering $1.7 trillion and a further trillion dollars worth of economic growth was lost as a result. This compares with around 10 billion dollars spent on long term peace building.

To mark World Peace Day, International Alert, a London-based non-government agency which specialises in peace building, is this week publishing Redressing the Balance, a report contrasting the trivial amounts spent on reconciliation and the avoidance of war with the enormous and ever growing global military expenditure.  Using data from the Institute for Economics and Peace, the report’s author, Phil Vernon, argues that money spent on avoiding and mitigating the consequences of conflict is not only morally right, but cost-effective – "every dollar invested in peace building reduces the cost of conflict".

According to Vernon, "the international community has a tendency to focus on peacemaking and peacekeeping at the expense of long term peace building."  There are currently 100,000 soldiers, police and other observers serving 16 UN operations on four continents. He says what’s needed instead of just peace keeping is a much greater sustained investment, involving individuals and agencies at all levels, to address the causes of violence and to give all parties a stake in the future. Above all, although funding and expertise can come from outside, constructing a durable peace will only work if there is local ownership of the process.

The picture is not wholly depressing. Even in the direst conflicts there are examples where the international community has help to fund and train local agencies with the result that local disputes can often be settled without escalating into full blown conflicts. In countries as diverse as East Timor, Sierra Leone, Rwanda and Nepal long term commitment by the international community working with local people has helped build durable institutions in the wake of vicious civil wars. Nearer to home, there has long been recognition that peace in Ireland can only be sustained by addressing long-standing grievances, building resilient institutions and ensuring that all communities have a stake in the outcome.

At a micro level, too, there is evidence that funding and training local agencies can contribute to longer term stability. In the eastern Congo, for example, various non-government organisations have worked with local leaders, men and women from different ethnic groups to settle disputes over land ownership which have helped fuel 40 years of mayhem. In the Central African Republic training and support to local Muslim and Christian leaders has helped reduce tensions. In north east Nigeria several agencies are helping to reintegrate the hundreds of traumatised girls and young women who have escaped the clutches of Boko Haram only to find themselves rejected by their communities.

Peace building, says Vernon, is the poor cousin of other approaches to conflict resolution. In future, he concludes, it must become a core component of future international interventions. "This means a major re-think by donor governments and multilateral organisations of how they measure success… with a greater focus placed on anticipation, prevention and the long term." Or, to quote the young Pakistani winner of the Nobel Peace Prize, Malala Yousufzai: "If you want to avoid war, then instead of sending guns, send books. Instead of tanks, send pens. Instead of soldiers, send teachers."

Redressing the Balance by Phil Vernon is published on September 21.   Chris Mullin is the chairman of International Alert.