A few years ago climate change was a hot topic for political discussion between the left and right. Now, the topic is the economy – austerity, growth etc… The two debates share many similarities, one of which struck me when I remembered this quote regarding the stages climate change deniers go through in the arguments they make. (Where this quote came from I now forget…) The stages were thus:
1. Climate Change isn’t happening.
2. Climate Change is happening, but human activity isn’t to blame.
3. Climate Change is happening, human activity is to blame, but it’s too late to do anything about it…
Well, Austerity Economics is going through a similar trial, as evidence stacks up against austerity being a valid policy to pursue in our current predicament. The stages are thus:
1. Austerity is working.
2. Austerity isn’t working, but it’s not Austerity’s fault.
3. Austerity isn’t working, it is Austerity’s fault but it’s too late to do anything about it…
You can almost see this transition over the past few years. From the initial stages when country after country and person after person jumped on the austerity bandwagon – European nation after European nation decided deficits were public enemy number one, for fear of becoming the next Greece. Morality Economics came to play as we were told it was time to feel the pain for our years of having it so good.
But then it began to unravel. Senior figures came out saying austerity wasn’t having the desired effects. But it wasn’t austerity’s fault of course… In Britain, the Tories would blame Labour for the ‘mess’ that was left, or blame the Eurozone, or say we weren’t actually enduring any cuts at all and that we needed more austerity for it to work.
Others called for infrastructure investment to grow the economy. This wasn’t a reversal of austerity per se – the cuts had to stay, but we needed to utilise our low borrowing costs to get the economy moving in the right direction – at which point austerity would do the rest…
But political leaders couldn’t enact such policies, as they would appear like an admission that austerity was failing. And this is the final stage of the anti-Austerity denialism that many political figures are now in. George Osborne is an intelligent man (at least, given the cost of his education he better be), and as Britain’s AAA credit rating bites the dust he must recognise this as a sign austerity has failed. But he cannot do anything about it.
Not because there is nothing to be done, but because it’s too late for him personally, politically, to change tack. He staked – along with the Tories, numerous economists, journalists and others – his reputation on austerity working. Although he could wake up tomorrow, end the cuts, and stimulate economic growth with some cheap borrowing, he won’t because it will be an admission of the abject failure of his policy and therefore of him.
Paul Krugman sums this up in his article; Little Statesman and Philosophers. Too many careers, he says, are built on their advocacy of austerity. To turn around and admit their failure would destroy those careers, and their personal credibility. All George Osborne and the Tory party can do is hold the line, maintain austerity, hope that eventually the economy will dig itself out of the mess and try and sell their horse-meat burger policy as the real deal in 2015.
The capability of the British public to discern between good economic policy is all that stops these people winning another five years… If I were the Tories, I’d much rather gamble on the British public’s stupidity than change tack now and lose face, credibility and, potentially, my job.