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Occupational hazards: Laurie Penny on the practicalities of protest

As eviction looms at St Paul’s, the protesters are struggling with the hardship of months spent sleeping rough.

They call it the Citadel of Hope because right now they haven't got a lot else to put in it. It is late January and the third national conference of the Occupy movement is being at a Salvation Army citadel in central Sheffield which has stood empty for 12 years. Before the Occupiers moved in, the floor was thick in pigeon droppings; now the bare brickwork is clean, and people from all over the world huddle in coats and blankets, crouched around a space heater under makeshift strip lights, sharing strategies for resisting police eviction and trying to work out what the hell to do next.

Four months after the start of the Occupy movement, which began in Manhattan's financial district and spread like a fever to hundreds of cities across the world, the press has begun to lose interest. There are no other journalists at the conference. No matter how many fluffy, media-friendly new actions the tireless Occupy organisers dream up, from melting Arctic ice on the steps of St Paul's Cathedral to staging mock-trials of former prime ministers at an occupied magistrate's court, they can no longer make editors hold the front page. The political establishment is making its message clear, in the manner of a hostess trying gently to expel the last unwelcome guests at the end of a party: stretching, ostentatiously tidying up and talking loudly about how cold it is outside.

On 18 January, the City of London Corporation won its high court action to evict the main London protest camp from the courtyard of St Paul's. The Occupiers have lodged an appeal, but believe that the tents, the kitchen, the large library and "Tent City University", which has run hundreds of free lectures and full-time courses in economics, could be cleared within days. The Bank of Ideas, the sister occupation near Liverpool Street housed in a building owned by the Swiss banking giant UBS, was evicted last week. As protest camps across the world, including the unaffiliated Democracy Village at Parliament Square in London, are turfed out by local police, even the BBC News website has published an article asking, "Protests: when's it time to go home?"

No going back

For many of the Occupiers, going home is not an option. After braving the past four months, during which the nature of this global resistance movement changed profoundly, many of those who have remained at the camps and squats over the winter cannot or will not return home. Some have been living on the streets for years; others have lost their jobs and homes only recently because of rent hikes and austerity measures. Many are among the million unemployed young adults in Britain, such as 19-year-old Tilly, who moved into the camps after finding she was unable to afford a place at university and who faces a court case for participating in a peaceful sit-in protest last year.

The idea that committed political operatives could be homeless is almost as disconcerting as the notion that homeless people could be committed political operatives. At the beginning of the actions, much of the press mocked the protesters for not being tough enough even to stay in their tents overnight, a slur later shown to be false. No one now could accuse these Occupiers of being faint-hearted: living in a protest camp is a short course in how to manage life outside mainstream society. It's a position that many more of us across Europe and America will find ourselves in as austerity programmes bite. It can feel like an adventure at first, but by the time you get to the hundredth day of sleeping on the ground or in an abandoned building, the process of taking and holding space has become plain old hard work.

At St Paul's, after tea and conversation in the canteen, I am invited into the art tent by Rob, who is 32. He has been living on the streets of London for 12 years. Being part of the occupations has given him back some confidence and a feeling of community. His drawings, complex abstract scratches in primary colours, are pinned to a paint board in a cosy sitting-room space inhabited by several smoking teenagers.

“It's the street people who are keeping the occupation going," he says. "They - I mean, the organisers - need to respect the street people more." When I tell Rob that I am here as a journalist, he asks if I was investigating anything. "I'd like to investigate you with my tongue," he says, putting an arm around me. "Let's make some occupation babies on the floor right here." I grip my cup of tea a little harder.

It would be unfair to note that sexual harassment has become a feature of life in the camps without mentioning that the Occupiers are taking the problem rather more seriously than most public institutions. One group session at the Occupy conference in Sheffield requires local occupations to report back on how they were maintaining "safer spaces" and protecting women and minorities while avoiding blanket exclusion of people whose social skills have atrophied from years of living on the edge of society. This "safer spaces" meeting descends into angry bellowing as young men shout over each other. Over lunch, a more enlightened male activist lamented that this often happens. "We had a simple solution to that at Greenham Common," says an older woman. "We just used to ban you all."

Lunch at the conference consists of tea, casserole and conversations about how the internet will alter the democratic process. You can tell a lot about any conference by the food. The last two Labour party conferences, for instance, offered bland, flabby quiche that managed to be both stomach-turning and insufficient. Occupy food is hot and plentiful even though it comes largely from skips at the back of local supermarkets. The groaning shelves in the kitchens at Sheffield and St Paul's give the lie to the myth of scarcity: at their peak, they were feeding thousands for free.

In Britain, the Occupy movements have become an economy of care, a network of mutual aid for those ground down by the job market, by the housing market, by the free market and all its intricate cruelties. During two weeks of hanging around occupied buildings in glossy, deserted business parks and at windswept tent cities in public squares; of sharing hot, sweet tea and vegetable soup cooked on gas heaters; of being shown around tenderly maintained propaganda installations, what almost nobody I spoke to talked about was the wider economy. Unlike three months ago, I heard few complaints about fractional reserve banking, wage repression or benefit cuts.

There are several possible reasons for this. The first is that the Occupiers may have assumed that, as a young person with straggly dyed hair and a selection of agitational badges on my backpack, I already knew the drill. That is a dangerous assumption. In the past three months, the Occupy movement has grown more insular, dealing with internal difficulties that divert energy from keeping the public message strong. The politics of this movement has also become more ingrained: its anti-capitalist discourse has not disappeared so much as soaked in, like a stain into a carpet.

When I visited St Paul's one recent morning, I found people making artwork and videos, or planning their latest fundraising project - a record label to promote political music and support the neediest Occupiers. For better or worse, Occupy is as much a cultural movement as it ever was a political campaign.

“This particular project was always going to be temporary," says James, 25, an anarchist organiser who was involved at the start of the occupations but who has now "critically disengaged". "To my mind, the eviction notice is an opportunity to consider who the people are who are left," he tells me. "On the one hand, it's the people who have nowhere else to go, and that's politically important. On the other, it's people who become zealots about this movement - those who've left their jobs, their flats, maybe even relationships . . . My fear is that, for those people, when the eviction happens there will be a profound level of trauma."

Designs for life

Traumatic as they will be, the evictions need not signal the end of Occupy. As the last few camps are forcibly broken up, Occupiers all over the world are moving into indoor spaces and squats, with a particular focus on "dead" real estate owned by big banking firms. In the US, the Occupy Our Homes project has been taking over foreclosed houses since early December; in the UK, it is larger spaces that can be converted into social centres.

A ragged-looking banner urging "Occupy Everywhere" hangs from the window of London's newest occupation in Frome Street, Islington, an enormous nine-storey corporate unspace recently abandoned by several City companies. Inside the building, shy, serious people in hoodies are clearing up mounds of rubbish, but outside not everyone is pleased. "They invited me in for a cup of tea but I won't be taking them up on it," says Amanda, who has lived in the area for over 14 years. "They've tried to make a point, which is a point that needs making, but it's been made."

Like most of the mainstream press, Amanda makes the mistake of thinking that Occupy was ever about concrete demands. Rather, it is about retaking psychic and physical space amid the self-satisfied centres of capital. It is about using that space to build tentative prototypes of a new social system, created by and for people failed by the present one. "Occupy was never going to be an agent of change," James says. "It is a portent of change."

The so-called 1 per cent can dismiss as many petitions as they like, but sweeping cultural transformation is the one thing that may yet have them running scared.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

This article first appeared in the 30 January 2012 issue of the New Statesman, President Newt

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

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In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt