Probably a simple question but with the SNP and now Labor claiming they're anti austerity parties I thought now would be a good time to ask it. Is austerity a political agenda or an economic policy?
It's nothing. It's a buzzword that's flung around because it sounds all doom and gloom and sells papers.
And there was me hoping this topic would stimulate some interesting discussions. Based on this rather long Wiki topic that I haven't read it's more than just a buzzword.
Generally because it is rarely coupled with the appropriate legislature to back it up. Iceland is a good example of where it has worked very well. Similarly, spending your way out of a problem has never worked too as the legislation to stop entities going over board never exists either. Therefore one falls back to the default position of saving being a generally healthy thing to do, aka austerity.
At the moment 'Austerity' seems to work out as - Take away all the nice things. Point at random thing and declare 'this is why you can't have nice things'.
Austerity means increasing tax and reducing government spending so the government can pay unsecured bond holders.
Isn't it a little more in-depth than most people seem to have suggested so far? By cutting government spending don't you effect the poorest the most as they typically rely on those service the most and are least able to pay for private alternatives, while at the same time you reduce investment in infrastructure and thereby reduce the possibility of that investment generating jobs. On the other hand if you owe money you should be tightening your belt and paying off those debts, you can't carry on spending more than you bring in so you need to increase the money coming in (taxes) and/or reduce spending (cutting service).
The problem is that the overspend is like holes in a boat. But the boat already has a load of water in because of the debt. Austerity is like plugging the holes whilst also bailing out the water. If you just plug the holes, you're still going to sink. If you just bail the water, you're still going to sink. Only with a healthy boat can you get to where you are going quicker.
I think the conservatives are using austerity (an economic strategy) as a political policy as too many of them feel those who are getting hit hard by austerity measures were/are taking too much from everyone else. As (generally speaking) the conservatives are a bunch of well educated, privileges, politically motivated right wingers, they don't understand what it's really like to be different from that. As they don't understand fully, they lack empathy. And that's the sum of the problem. Austerity without empathy becomes ideological.
Austerity seems like the right way to go save then spend rather than blow it all on credit. I think this is the way most people understand it and probably why the Conservatives are in power. Saying you can spend your way out of debt just seems to good to be true for most folks.
I think that austerity as an economic strategy happens to intersect nicely with Conservative ideology that people should essentially fend for themselves. Austerity is a credible rationale for lowering government spending and increasing taxes --but not those that are disadvantageous to business. If the middle-classes object to that, reproachful fingers are pointed at people on benefits rather than the banks which created all this mess. The general public understands that debt is a bad thing and that they all need to tighten their belts. What it doesn't understand is that they are the ones doing all the tightening while the higher incomes enjoy the business tax breaks and experience no penalties from public service cuts as they don't access them as much in any case. Instead they are told to blame the most disadvantaged who need those services most. It's a nice slight of hand technique.
Any thing a politician does is part of a political agenda. It doesn't matter if its austerity or tax breaks. Edit: In other words, a political agenda and austerity are not mutually exclusive concepts, nor are they interdependent.
That realisation first really hit me back in the late 90's. I was working in a mental health team covering two sink estates in Hull, one of the most deprived cities in the UK at the time. My wife and I went to stay with the brother of her best friend in London. He was the head of a department in a big London museum and his partner a genetic scientist of an upper class millionaire family. They lived in Islington, in a house straight out of Interiors magazine. For a week we lived in the world of upper class luxury in London. I saw all the power brokers and hedge fund managers and politicians in their sharp suits and mobiles clamped to their ears as they power-walked through the Selfridges food halls for breakfast, and met at boutique restaurants for lunch; as they shuttled through the City in black cabs or luxury saloons, as they trod the marble staircases of buildings you or I would never get to see the inside of. And I realised that even if politicians really, truly wanted to (and some really, truly do want to), they would never, ever, ever remotely be able to even barely grasp what life is like on a sink estate in Hull. David Cameron might as well want to understand what it is like to be an African village woman living in Somalia. It's not even whether they want to. They just can't. It is too remote from their very basic frame of reference.
Banks that created all this mess? What? That's a grave misunderstanding of economic policy and the purpose of credit. Banks facilitated the mess, they did not create it. Legislation was provisioned to allow banks to openly borrow with lesser demands on the borrower. Banks said "okay, if you promise you can pay this back, we'll give it to you". Those promises were insured, the insurance was ratified through rating agencies. Those latter two items were allowed to happen through legislation. That may have been lobbied for or whatever, but at the end of the day, the enforcement and capability within legislature is down to government. That could certainly be corrupt. But banks did not cause the issue. There is no more direct responsibility than rating agencies providing incorrect/delayed assessments, and people borrowing more than they can technically afford. That's just known as being dumb. If we look at public service cuts and how that is hurting the lower income population - the blame falls squarely on parliament as a whole. I have some anecdotal evidence here - one of my very best friends whilst working at the Centre of Social Justice crafted the Universal Benefit policy and put it forward as a proposition to the Coalition. That universal benefit had the intention of cutting down all the bureaucracy of measuring various entitlements, and passing the savings on to the claimant. The theoretical savings in their (not public) report were something like 40% and in return that is what would have been given to the claimant. People were supposed to be better off with it. The tit for tat arguments from the LDs and Labour to discredit the policies meant it got slaughtered going through parliament. Watch BBC Parliament, if you can be bothered, and it's all there. The intention was good, it was an IDS policy, who is pretty socially aware as far as Tories go, and it came down to squabbling for reputation. In that sense Nexxo, you are right. They live in a different world. Similarly, Corbyn lives in a world that is deadlocked in post Communist reign; and is utterly poisonous. His theory on equality in the shadow cabinet is a farce, as no woman has a senior post, and, just like every other leader, it's filled with his old school mates.
Lobbying will happen for as long as it is allowed to. If there is an avenue to pay for an opinion to be represented, every aspect of industry will take advantage of it. The specific fault is down to the mechanism that facilitates that, not the entity that says "hey, everyone else is paying Mr X in Parliament to shout for their cause, I think we should get the same boons!". I am not glossing over anything, in fact I think I'm being realistic. I'm merely pointing out that fault does not lie with someone taking advantage of a broken system, the fault lies (unsurprisingly) with the broken system itself. When you talk about things like LIBOR, the ratings agencies, the insurance companies which as far as I can tell are entirely disconnected, there's a point here where it is just an implosion of idiotic legislature rather than anything else. I seriously oppose the repeal of things like Glass Steagle and the gold standard - tangible laws make for more gentle financial market response. If you want to crack on about this topic, I highly recommend some of Peter Schiff's books.
Fault does lie with someone taking advantage of a broken system as much as those who allow it to happen. By your rational the politicians should also be excused because they are also part of a broken system which allows business to buy influence in government.
In that case, people who took 105% mortgages and so on are just as disgustingly irresponsible - moaning about banks won't get them anywhere: they still made a decision. And I don't think my rationale suggests that at all, my suggestion is more than they are some of the few people capable of changing it pretty directly; and as such bear more responsibility than anyone.
