The Economist: austerity in 2010 "threatened recovery"

The coalition against austerity is overwhelming.

It feels as though a rubicon has been somewhat crossed: it is now, undoubtedly, mainstream opinion that fiscal consolidation – austerity, to you or me – in the immediate aftermath of the greatest financial crisis in 80 years was a terrible idea.

The Economist's Free Exchange column was never particularly supportive of austerity, occasionally going against the grain of the magazine's main editorial line to do so. But this week is a particularly strong attack on the idea.

In the print column, Ryan Avent focuses on the IMF's declaration that, in times of crisis, the fiscal multiplier could be several times higher than previously thought, and takes a look at wider research in the area:

What that means is that austerity may hurt much more at some times than others. In a 2010 paper Alan Auerbach and Yuriy Gorodnichenko of the University of California, Berkeley argued that the fiscal multiplier may be negative during booms, meaning that spending cuts actually raise growth. In recessions, by contrast, it could be as high as 2.5. A study by Lawrence Christiano, Martin Eichenbaum and Sergio Rebelo of Northwestern University suggested that although the multiplier may hover at around 1 normally, it could rise to more than 3 when interest rates fall to near zero, leaving the central bank with less room to act.

We called the IMF's realisation that it had severely underestimated the multiplier the most important 68 words in its world economic outlook, and it appears Avent agrees.

In the blog which accompanies the column, he doubles down on the claimtwitter):

Policymakers suffered from a striking lack of perspective in opting to pursue broad austerity beginning in 2010. It was clear at the time that some economies needed to begin cutting debts immediately and that lots of economies would need to bring debt down eventually. But a look at global conditions should have indicated that the normal cushions against fiscal cuts were weaker than normal or absent. And so the decision by countries not facing immediate market pressure to start cutting alongside those that were seriously undermined the consolidation efforts of economies in truly dire straits and threatened recovery.

Avent has much more to say, particularly on the failure of central banks to play their role correctly, and both columns are well worth reading in full.

It's always hard to argue about what ought to have happened. Politically, everyone will point out that it holds little weight: no party can win an election based on the claim that they would have been better if they had won the last one; instead, they have to present forward-looking visions, and explain why the country will be better in five years time under them.

And economically, whether or not austerity was right is now meaningless; it happened, and failed, but the circumstances are changing daily. We are (far too slowly) climbing out of depression, and at some point the arguments for fiscal consolidation will get stronger, and a new discussion will need to be had.

Nonetheless, it is worth repeating: George Osborne was wrong, emphatically, obviously and inarguably. His decisions hurt the economy and the nation entirely unnecessarily, and he refused every possible opportunity to ameliorate that damage. Plan A isn't just failing, it has failed. Yet there has been no contrition, no apology, and not even a hint of understanding. All there is is a lesson for future Chancellors: Don't Do This.

Sad Osborne is sad, but not about austerity. 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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Sacked Hilary Benn rules out standing for leadership but tells others "do the right thing"

Hilary Benn was sacked from Jeremy Corbyn's Shadow Cabinet overnight.

Hours after being sacked from Labour's Shadow Cabinet, Hilary Benn popped up again to issue a not-so-coded call for revolution. 

Despite being tipped as a potential rival to Jeremy Corbyn in the past, Benn downplayed his own ambitions and ruled himself out of standing for leader.

But while he described his decision to speak out as a personal one, he made it clear others who felt similarly should speak out.

Benn told Andrew Marr: "I have been a member of the lab party for 45 years. I've devoted my personal and political life to it, and if things are not working I think we have a wider responsiboility to the party that we love to speak out.

"Lots of people will say this isn't an ideal time. There's never an ideal time. I thought it was important to speak out."

Describing Corbyn as a "good and decent man", Benn said he was not a leader and agreed he should consider resigning: "I no longer have confidence in him and I think the right thing to do would be for him to take that decision."

He added: "I am not going to be a candidate for the leader of the Labour party. I haven't taken this decision because I want to. I have taken the decision becauuse I think it's the right thing to do for the Labour party."

As Benn was speaking, rumours of a Shadow Cabinet revolt was mounting, with Labour's last Scottish MP Ian Murray among those expected to resign.

But while there's no doubt Benn has the support of many of his fellow MPs, more than 169,000 ordinary members of the public have signed a petition urging support for Corbyn after Brexit. If there is a parliamentary coup, it's going to be bloody.