Home > Economics - General > Austerity in the UK* — Crooked Timber

Austerity in the UK* — Crooked Timber

November 29th, 2010

Visiting London briefly, I’m struck by both the drastic nature of the cuts being proposed by the Coalition government, and the bitterness of the response. By comparison, the austerity measures being proposed by most eurozone governments seem both less regressive and more sustainable in the long run, and the demonstrations in response to be much more in the nature of normal politics, with an element of street theatre.

I haven’t had time for a detailed analysis, but a quick comparison of the eurozone cuts listed here, and the measures proposed by the Coalition seems to me to bear this impression out. Maybe it’s just lack of detail in the eurozone list, but (except maybe in Ireland) there seems to be nothing like the mass withdrawal of public services and the focus on punishing the poor for the crimes of the rich that is the hallmark of the Cameron-Clegg regime.

This, again, seems to me to cast doubt on analyses that focus on the role of the EU and the euro. As far as I can see, UK policy is essentially unconstrained by the EU and is driven by the demands of ratings agencies and the financial sector generally. On the plus side, the Bank of England has been more expansionary in monetary policy than the ECB, but it’s been equally supportive of fiscal austerity which is the main problem.

  • My intended allusion doesn’t jump off the page as I’d hoped, but UK political and social discussion has, to this visitor at least, a distinct late-70s air at present.

Posted via email from John’s posterous

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  1. Chris Warren
    November 29th, 2010 at 10:54 | #1

    The UK is worse than London, but more to the point, Ireland is even worse and accelerating down.

    So were are all the economists’ models and matricies now. Why is there no regression for economc collapse? Where is the literature on reality economics?

    A quick check of the content of recent acadeic journals shows the discipline is contributing little to the needs of society, despite the tax dollars universites chew-up.

    See; September 2010 – Aust. Ec. Papers, and Economic Record.

    If the Productivity Commission wants to increase producivity – it should start with it self

  2. Ikonoclast
    November 29th, 2010 at 13:27 | #2

    At this rate, the UK and Ireland will lead Europe into the next Depression.

  3. Alice
    November 29th, 2010 at 21:10 | #3

    Austerity here there and everywhere across Europe….nothing much has changed since the great depression. Nothing at all Keynesian about these cures. Ugly ugly. Bets anyone that at least one country or more will default as even with these austerity measures…the deficits are huge and the private sector is loaded up in debt in many countries with falling house prices. Seems only the banker bosses still have their money rolling in.

    How can these nations and their people cope unless they all flee the home country?. Some country somewhere must default. Im placing bets. It might not be now but within a few years…?

  4. Alice
    November 29th, 2010 at 21:14 | #4

    Irelands new graffiti – for absolutely decades it was “Brits out”.
    Now its “IMF out”

  5. paul walter
    November 30th, 2010 at 06:52 | #5

    Am not sure what he (Prof Quiggin) means when he says he is “struck” both by the “drastic nature” of the cuts and the “bitter”response to them.
    Surely the one would follow from the other, given his own understanding of what drives this reactionary policy making and what the consequences are to be for many, many people. Cameron and his bunch of thugs know this, Quiggin knows Cameron and co know this, why the surprise at the bitterness toward it?
    Doesn’t he share it himself, given what he knows, eg effects on education, sustainable economic growth and social infrastructure let alone unnecessary and unjust punishment based on blame the victim, to help the City of London escape its share of responsibiity?

  6. Henry
    December 1st, 2010 at 18:15 | #6

    “The focus on punishing the poor for the crimes of the rich that is the hallmark of the Cameron-Clegg regime.” rings out like a left leaning political history revisionism from an academic, decoupled from the real world.
    In the real world the Blair – Brown regime like all labour governments before them in the history of the UK left the country destitute, which was all the more laughable as Brown had been so consumed by his own hubris that he had actuallyt boasted on many earlier occasions to have eliminated boom and bust. How amusing and fitting therefore that he should oversee the biggest ever boom and biggest bust in UK history. But my real point is this:
    My understanding is that the credit crunch came about as large amounts of credit was extended to poor (subprime borrowers) in the US to buy homes, a policy initiated by the clinton regime to apply pressure to the state owned mortgage lenders to lend to sub prime class borrowers. Homes that these poor could nof afford to buy. Whose responsibilitiy is it when the poor borrow money to buy an asset that they cannot possibly afford and then blame the lender for getting them into financial difficulty?http://www.sundriesshack.com/2008/09/21/the-roots-of-the-subprime-mortgage-mess-have-clinton-all-over-them/
    I therefore think it appropriate that socialist poor regulating governments take a very substantial share of the blame for faciliting and fueling the boom and bust. And I also blame ignorant borrowers, who like most fools believe in fairy tales and are soon parted from their money.

  7. Alice
    December 1st, 2010 at 19:33 | #7

    @Henry
    says “In the real world the Blair – Brown regime like all labour governments before them in the history of the UK left the country destitute.”

    It wasnt the GFC by any chance? Gee Clintons presidency finished in 2001…a long time before the GFC. Lehman and its subsidiaries and Goldmans and its associates and subsidiaries and other unchained banks were paying poor people fair sums of money to take up loans so they could box the mortgages up in cute exploding packages and resell them for commissions as fast as the porsches they drive, taking none of the risk themselves ( like nasty goblins sending expensively gift wrapped with a safe rating sticker exploding bombs around the globe).

    The republican government under Bush didnt see this happening right under their noses. The lending didnt even go crazy until under the republicans watch. Bush and co were so busy hunting for nonexistent WMDs in Iraq, they didnt notice their own house was burning down. They didnt see the GFC coming. There is a lot of things the republicans deliberately dont see (cant call them conservatives anymore because they are not conservative).

    Guess you fly by night too Henry.

  8. Alice
    December 2nd, 2010 at 19:10 | #8

    Oh dear – it just gets worse ib Ireland. The republic of Ireland president has agreed to a cut in pay “in solidarity”….

    So he will take 100 K Irish pounds less pay as a solidarity gesture….from….1.8 million irish to 1.7 million

    Bejeezus – I think he is taking the mickey out of the Irish…He also seems to be Italian. Maybe he is related to the Cosa Nostra?

    http://www.telegraph.co.uk/sport/football/teams/republic-of-ireland/8174727/Republic-of-Ireland-manager-Giovanni-Trapattoni-accepts-pay-cut-as-solidarity-gesture.html

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