Osborne will struggle to debate the IMF head-on

Without being able to turn to now-slain canards, the chancellor's arguments fall apart.

George Osborne is to make one of the most direct responses yet to the IMF's interventions into UK politics this week, according to the Guardian's economics editor Larry Elliot:

The Treasury intends to reject the IMF's call for an easing in the pace of deficit reduction and will insist that any change in the strategy is both unnecessary and counterproductive. Alarmed at the flatlining of the British economy in 2011 and 2012, the IMF said last month it was time for Osborne to do more to boost economic growth and urged that he should rethink plans to cut the government's structural budget deficit by 1% of national income in 2013-14.

The chancellor was stung by the criticism, which was seized upon by shadow chancellor Ed Balls as evidence the government had damaged the economy with an over-aggressive austerity approach.

It's an argument which the chancellor is ill-equipped to take public, since the IMF is pushing the one policy which Osborne has no real response to: apolitically arguing for a modest increase in deficit-funded investment.

Elliot reports that Treasury officials will be relying on the time-worn "credibility with the financial markets" response. That's one which might play well with the public, but has little-to-no relation to the real world. In fact, Britain's Bond yields are depressed, just like the rest of the non-Eurozone developed world's, by the financial climate. Investors, scared of the prospect that they might lose everything in another bank run or stock market collapse, buy up bonds in countries which control their own currency just to have a safe place to store money. The situation has even been called a "reverse sovereign debt crisis", to reflect that fact that, in many cases, yields are so low that governments are being effectively payed to look after money.

(The rush to safe assets is also likely what prompted Apple to issue its own $17bn worth of bonds; multinational companies are safe enough that investors are happy to park their cash there, too.)

The Chancellor and Treasury are more at easy arguing within the British political context, where the mantra "more debt is bad" is so ingrained into the debate that they don't have to try to justify it. That's why the Conservative party feels they can torpedo any of Labour's plans just by pointing out that they are aiming to "borrow more to borrow less" (despite the fact that that's an entirely reasonable suggestion, as anyone who has consolidated debts, installed double glazing, or taken a season ticket loan will tell you): the opposition flounders in the face of such an attack, unsure whether to argue that they aren't really borrowing; that they are borrowing, but it will result in less future debt; or that they are borrowing and that's better than the alternative.

The IMF has no such qualms. It is telling the UK that borrowing more is good, and challenging the government to actually go back to first principles and explain why its debt reduction program must take eight years, compared to the initial plan of five. Why not nine? Or ten? Or 12?

Faced with having to justify his most basic beliefs, the chancellor is forced to retreat to canards long since slain. The "financial markets" are not rewarding the UK for austerity, nor will they punish it for slowing the pace of fiscal consolidation. In the meantime, the UK economy is very definitely feeling the hit of the lack of any coherent plan for growth over the last three years; and it feels like that pain will last a lot longer.

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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Donald Trump's cartoon nuclear rhetoric draws on a culture of American jingoism

Senior Republicans avoided condemning Trump's incendiary speech, and some endorsed it. 

From recent headlines, it seems as though Donald Trump isn't content with his Emmy-by-proxy. The US president told the United Nations General Assembly this week: “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.” Trump’s speech raised eyebrows for its bellicose tone, especially when contrasted with his predecessor’s endorsement of a war-averse approach. 

A widely circulated image of Trump's chief of staff John Kelly with his head in his hand might suggest that most listeners loathed the speech. But Trump said many outrageous things on the campaign trail and voters - at least a critical number of them - agreed. So how did his words go down at home? 

My contacts in international security were unwilling to go on the record condemning it. They were mainly Americans in their twenties, hoping for a government job one day, and fearful of saying anything that could be interpreted as "un-American".

The one person who would speak to me asked for their name to withheld. A former military analyst in the US Department of Defence, they told me that “the US has the military capability and legal responsibility to address threats to itself or allies". What Trump said, they suggested, should be seen in the context of the wider US institutions. "While Trump may have advocated for isolation in the past, the political and military forces he leads are built to enforce the adherence to international law and regional security," the former analyst said. "They provide a real counterweight to the bombast in Pyongyang.”

Trump's speech may have been colourful - his nickname for the North Korean leader Kim Jong-un, "Rocket Man", is a reference to Elton John’s mid-Cold War musical hit – but the speech should be seen as yet another reassertion of US military dominance. North Korea may boast of its Inter-Continental Ballistic Missile (ICBM) development,  but its arsenal is simply not well-equipped enough to present the same existential threat to the US that the USSR did at its peak. 

Rather than lacking comprehension, the analyst said of the speech: “Trump's rhetoric is intended to galvanise recognition that the current rules based order is threatened by North Korea's actions”.

Trump’s jingoism is not unique amongst the current American elite. Back in 1983, in his book, The Wizards of Armageddon, the liberal journalist Fred Kaplan characterised the hawkish US military strategy as simply ejaculating combative statements without a long-term plan. Kaplan quoted Herman Kahn, one of the early nuclear strategists, who called one proposal targeting the USSR a “war orgasm”. 

The US Senate recently passed a defence policy bill to increase military spending to $700bn, which includes $8.5bn for missile defence purposes. Overtly catastrophic language, meanwhile, has long been a staple of US foreign policy debates. In 2015, Trump's rival for the Republican presidential nomination, Ted Cruz, made headlines when he vowed to carpet-bomb Isis until he found out "if sand can glow in the dark". While most leading Republicans chose to stay silent after Trump's speech, a few, such as Paul Ryan and Rand Paul, publicly endorsed the message. Cruz, despite the rivalry, was among them. 

On social media, the American public are vocally divided. Some called for Trump to be denounced for his inflammatory speech, but others tweeted #MakeAmericaGreatAgain. Even some Trump sceptics agreed that the North Korea “nuclear summer” needed to be kept in check.

By contrast, overseas listeners have perceived the speech, and this administration’s foreign policy, as unnecessarily incendiary. Matt Korda, a Canadian research assistant on strategic stability at the UK-based Centre for Science and Security Studies,  told me: “Kim Jong-un perceives his nuclear weapons to be the only thing guaranteeing his regime's survival”.

“He will never give them up, no matter how much Trump threatens him," Korda added. “On the contrary: Trump's threat to ‘totally destroy’ the entire country (including millions of innocent and oppressed civilians) will only tighten Kim's grip on his nuclear weapons”.

The effects of Trump’s speech are yet to fully play out, but it is clear that his words have rallied at least a section of American society, and rankled everyone else. The Donald may seem to be mirroring the culture of nuclear recklessness his North Korean opponent helped to create, but this is also the kind of hostile and hyperbolic rhetoric which fuelled his rise to power. In reality, once Trump’s unpleasant vernacular is decoded, he can be seen to be echoing the same global view that has long pervaded the collective American consciousness. Trump's speech was not addressed at his UN doubters, but rather at his domestic fan base and his allies in the South Pacific. This is not a shift in US foreign policy - it is tradition with a spray-tan.

 

 

Anjuli R. K. Shere is a 2016/17 Wellcome Scholar and science intern at the New Statesman