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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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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