One of the important features of austerity introduced into the UK from 2010 onwards, at a point when the economy had not shown any significant signs of recovery, is that it was popular. Indeed, as many people appeared to blame the previous Labour government for the need for austerity as the Coalition government actually implementing it, because the deficit had increased while Labour had been in power.
If we acknowledge, as we should, that austerity was the wrong policy to pursue, and that it had harmful effects on everyone (an average loss of around £10,000 per household according to my most recent estimate), why was this policy popular? Many people would argue that the macroeconomic case for fiscal stimulus was complex, while simple analogies between governments and households were easier to grasp. However I have also argued that the media played a large role in focusing on the latter and largely ignoring the former.
This is the issue addressed in a new paper by Lucy Barnes and Timothy Hicks in the American Journal of Political Science. (For those that cannot access this, here is a slightly earlier version.) They measure attitudes towards austerity on a simple scale, and then relate that attitude to party support and newspaper readership jointly.
The lower bars show that, for people with no party affiliation, attitudes to austerity were very different for Guardian readers compared to, say, Telegraph readers. In other words, a LibDem voter who read the Telegraph would be more hawkish about the deficit than one that read the Times. There are two explanations for this finding. The first is that how the newspaper was reporting issues around the deficit influenced readers. The paper verifies that the Guardian and Telegraph did report these issues in very different ways. The second is that readers choose their newspapers based on their attitudes to the deficit. This seems unlikely (remember these effects are over and above party affiliation), as austerity was a relatively new issue.
Nevertheless, the authors tried an experiment where it showed different groups a short text about the deficit, which differed in only one paragraph. A control group did not see the paragraph, a ‘Guardian’ group saw text which suggested that austerity might not be necessary, and a ‘Telegraph’ group saw text suggesting it was. Immediately after reading the text, each group was asked about their views about the importance of reducing the deficit.
The Guardian group (those that had read the Guardian type text) did indeed think austerity was less urgent than the control group. However those that had read the Telegraph style piece, which drew parallels with Greece, were no more pro-austerity than the control group. The paper notes that “a generally anti deficit discourse would result in little difference between control and ‘Telegraph’ groups, as indeed we find.” In other words the pervasive media discourse was pro-austerity, and so reading a pro-austerity text made no difference to people’s attitudes. Being exposed to Keynesian ideas, in contrast, did influence people.
So this research suggests two things. First, how the media presents issues like austerity matters because it influences public attitudes. Second, it suggests the general media climate in the UK was pro-austerity, and exposing people to Keynesian arguments could change their attitudes. The general media climate goes beyond newspapers, and includes broadcasters like the BBC. This suggests broadcasters were giving voice to an austerity agenda and deliberately excluding a Keynesian perspective. Which might be excusable if Keynesian economics and consequent anti-austerity views had been a fringe preoccupation, but in reality it was the view of the majority of academic economists. It seems broadcasters had become tired of experts long before Brexit.
Papers like the DM regularly feature items on "benefit scroungers" or "she has 10 kids and is getting £x000's on benefits!". What happens is that criminal conduct elides into what is perceived as over entitlement. In this way the climate has already been created for austerity as a reaction to what is perceived as abuse, although much of what is reported is actually criminal. On this basis austerity is simply an issue that fits into the meme; but the meme is ongoing and part of the DM view of the World.ReplyDelete
Unfortunately, many will not understand the "Keynesian" argument; it is far to intellectual, and I am not being patronising here but simply, and regrettably, recognising a fact.
That's why the solution is a Job Gty as part of a Full Employment Fiscal Policy. Or, in order to get cruel Conservatives on board: "Put the Lazy-Ass, Teat-Sucking, Mooching, 47%, Takers to Work" policy. No hand outs allowed! http://mmt-inbulletpoints.blogspot.com/2017/09/im-just-responding-to-various-economic.html Its incumbent that our economists get on board.Delete
I do not remember the Guardian supporting Keynesian economics.ReplyDelete
In fact I don't think I can name a journalist supporting the Keynesian consensus.
This was also my thought as I was reading your text. I can imagine that the Guardian was less 'pro-austerity' than the DT, or the DM, though since I don't read either of those newspapers, I can't say from personal experience. However I do remember being surprised at how little support anti-austerity arguments got, even in the Guardian (and I was following the debate consciously at the time).Delete
The whole thing seems baffling in hindsight. "Worried about all the debt handed on to my children" even though they seemed to have no such misgivings about climate change.ReplyDelete
We shouldn't lose sight of how pervasive this stuff was. The *entire basis* of the Coalition government, and of Cameron's re-election in 2015, was this austerity delusion. It was the ideological bedrock of almost every spending policy during those years.
In a way they had channeled the post-truth climate of Trump before Trump. It was a government born of lies and made of lies. The role of Nick Clegg and the Lib Dems in imbuing them with undeserved credibility also should not be glossed over.
Folks need to be educated that The central government debt is not a problem in any way shape or form. In fact, it can be repaid tomorrow without a negative repercussion. That would simply involve replacing government bonds with deposits at the Central Bank with similar interest and maturities. The similar or even better risk/reward terms assure no change in investor savings/spending preference or desire to hold dollars. Not recommending this course of action, just pointing out that it is possible.Delete
"Which might be excusable if Keynesian economics and consequent anti-austerity views had been a fringe preoccupation, but in reality it was the view of the majority of academic economists. It seems broadcasters had become tired of experts long before Brexit."ReplyDelete
If economists had kept to Keynes, maybe things would have been OK. Many people have long suspected that much of economics has been ideology masked as science. During the New Labour years, economists got pretty much what they wanted. We have seen the consequences. Now people want something different - but I don't think we have the intellectual leadership we need yet.
So my understanding of economics was not as well developed 9 years ago as now (thanks to Prof Wren-Lewis and others) but do I get kudos for predicting this all 9 years ago?ReplyDelete
The important point here is that the Conservative strategy was only possible because of the compliant media. I don't mind that media outlets have different political perspectives to me but the complete misinforming of the public is a real problem.
One factor is that it's always easy to sell the idea that we must make sacrifices so as to placate the Gods. Human beings have been doing that for thousands of years. E.g. persuading Muslims they must walk to Karbala once a year and whip themselves with chains while doing so till the blood runs is not difficult.ReplyDelete
One minor thing: is it right that the displayed graph shows differences in austerity attitude over and above party affiliation? The caption, and a quick skim of the paper, suggest to me that it's just displaying the difference between a Guardian reader and someone not reading any paper - but it's quite possible I'm misreading things! (In any event, it's a minor thing because the paper does find a newspaper effect even controlling for party identification, whether or not that's what Figure 1 in particular is displaying.)ReplyDelete
Looking back at some of the discourse held on programmes like Newsnight, it seems to me that the editors of this period acted as though they had in-house expertise of economic matters, this was reflected by statements given by some programme presenters as "having a background in economics". This is very unfortunate for the public at large as we are still getting reports, commentaries, etc from journalists at large who have or could make the same claim.ReplyDelete
Being scared of giving the poor cash, because they might spend it - when this would be in effect a great business subsidy + get the economy moving, just seems crazy :/ReplyDelete
Here we go, a chance to show your knowledge:-ReplyDelete
The public's attitudes towards austerity are understandably convoluted due to the confusion of our economic professionals as to what matters and what doesn't matter. The populus would show a better understanding if our economists pounded home the fact that:ReplyDelete
A sovereign (Treasury combined with the Central Bank), like the US and UK, that:
b. borrows in, and
its own currency, can NEVER run out of cash; and the central government debt is not a problem in any way shape or form. In fact, it can be repaid tomorrow without a negative repercussion. That would simply involve replacing government bonds with deposits at the Central Bank with similar interest and maturities. The similar or even better risk/reward terms assure no change in investor savings/spending preference or desire to hold currency. Not recommending this course of action, just pointing out that it is possible.
In terms of intergenerational equity, bonds or reserve deposits are a stake in the wealth of the society. The economic elites of the society will own most of the wealth/bonds/reserve deposits, directly and indirectly in any event.
I have learnt that taxes do not fund government spending. The proof I need must be available so I can show others in a simple way. Surely the TAX must go into an account which is NOT used for government spending. And government spending on government employees, infrastructure, defense, police, etc. must come from another account(s) into which money is simply created. If we knew the arrangement of these accounts it would be a simple task to show people that TAX is not spent or used to fund public spending. Is it possible to get this exact information then everyone will know? Yours RonReplyDelete
What is most interesting in my opinion is the findings relating to the FT. Its often said that the Tories were supposed to be in the pocket of financial interests (i.e people who read the FT), therefore the paper should provide a strong pro-austerity line. Expect the data shows otherwise. What explain's the FT's stance.ReplyDelete