The chill wind of austerity

Gosh, it’s been a depressing week in British politics. Austerity is such a grey, foggy, Victorian sort of word. They’ll be talking about retrenchment next.

And you don’t have to be an expert in the fine details of the budget to realise that there’s no way the government can cut total spending by 20% without making the country a harder, nastier place in a whole lot of ways, some obvious and some subtle.

I was at a party the other day where parents were swapping tips about places to take young children, and they were commenting that London’s parks all seem rather nice these days. They’re well-maintained, and clean, they have nice facilities, and they’re making an effort to be better for wildlife. Well, with a 30% cut in local government funding, I think it’s a safe bet that those parks are going to become grottier, grimmer, a little bit less of an escape from the city around them. Which seems like a good symbol for what’s going to happen to the whole country.

And since 85% of the debt was run up bailing out the banks, most of this pain is being inflicted in the name of saving the bankers from the consequences of their own incompetence.

But that’s not the really depressing part. It might be possible to take a deep breath and face the cuts as stoically as possible, if I was actually sure that they were going to have the desired effect. If I believed that they were the only thing keeping Britain from becoming the next Greece, if I was sure that the cuts were going to lay the foundation for a more stable and more prosperous economy in the longer term… but meanwhile there are Nobel prize winning economists like Krugman and Stigliz saying that, on the contrary, this is the worst thing the government could possibly be doing. The killer quote from the most recent Stigliz article:

Austerity converts downturns into recessions, recessions into depressions.

Now I don’t know whether they’re right. I suppose I have to hope not. But it really would be the vomit garnish on a shit sandwich if the effect of all these cuts was to take a weak economy and give it a good kicking.

Meanwhile Cameron, Clegg and Osborne seem to be rather enjoying themselves. Partially perhaps because of a pre-existing ideological commitment to the idea of small government, but I think mainly because they’re rather enjoying the vision of themselves as dynamic men of action, men with the leadership qualities to make the hard decisions.  Of course the British economy is where it is because a group of decisive, dynamic go-getters in very expensive suits decisively and dynamically cocked up on a catastrophic scale. The politicians have obviously been watching and learning.

Gee, Officer Krupke

Since the world’s financial system went into meltdown, there has been a certain amount of tooth-gnashing and mouth-frothing about the dreadful greed and recklessness of bankers — a lot of it from politicians who frankly aren’t in a position to lecture anyone about short-termism. I find it difficult to work up much righteous anger.

Firstly because complaining that bankers get too excited about money seems like complaining that gannets get too excited about fish. But also because we’re not talking about one or two individuals doing a Nick Leeson job on the world’s banks: as far as I can gather, most of the world’s bankers were making the same bad decisions at the same time. So I tend to think: there but for the grace of God go I. Of course it’s possible that I would have been one of the few bright sparks who spotted what was going on and tried to avoid it, but the odds are against it.

I suspect, ironically, that some of the very people who are most full of outrage at the excesses of global capitalism would be the first to excuse bad behaviour and reckless short-termism in the case of, say, the urban poor. It’s not that merchant bankers are bad people; they’ve been failed by the system.

» the video is of course from West Side Story; the actual song starts at about 1:50.

In a wailful choir the small gnats mourn

Is it just me, or do these market crashes always seem to happen in the autumn?

Maybe the current crisis isn’t the result of years of cheap credit and over-leveraged banks. Maybe it’s actually an atavistic response to the nights getting longer. Too many bankers go for a few days in a row without seeing daylight, and their deeply-buried lizard brain starts whispering to them that the world is ending.

» The photo, days get darker… by Mathias Erhart is from Flickr and used under a CC by-sa licence.

Links

  • 'The concept of “too big to fail” is under siege at the moment. The fact that a company, product or service is so clearly dominant and relied upon is no guarantee of its survival.
    In particular, I make this point in regards to Web applications, cloud computing, putting your data online — whatever you want to call it. Over the past decade, consumers have been relying on Web-hosted services to house their information more and more, and on independent stores of data on their personal computers less and less.' Interesting observations from Khoi Vinh.
    (del.icio.us tags: economy internet )
Close Menu