This article by Oxford economist, Simon Wren-Lewis and its embedded hyperlinks worried me much more than news of the financial crash in 2008. It’s published on Simon Wren-Lewis’ blog entitled Mainly Macro.
Regular readers of this blog will know that I have been consistently anti-austerity. Whilst I accept the German case for prudent national housekeeping, I believe that Southern Europe, France and the UK need to apply the principles of austerity over the medium term. Short-term, there is a compelling case to get economies moving and people back to work. As highlighted by Simon Wren-Lewis this is broadly the position of the World’s community of macro economists. [For a detailed history of the anti-austerity measures in the UK open this link]
However, I have to confess that until I read Simon Wren-Lewis’s article, I had not appreciated the parallel political crisis in Europe. Broadly, the extreme left and extreme right are united in being anti-austerity, whereas the middle ground of politics, both left and right of center, are impaling themselves on austerity policies.
This is a deeply worrying situation. Simon Wren-Lewis embelishes his argument with hyper-linked references focusing on parallels in Greece to the Collapsing Weimer Republic in Germany in the 1930s. He looks in depth at the emerging political crises in both the Netherlands and the UK. Let me cite directly his recap on the UK:
The UK has also seen the emergence of a politically successful far-right party: UKIP. This is also unusual from a historical perspective: since Oswald Mosley the UK has a proud tradition of resisting parties of the far right. UKIP’s popularity is not normally linked directly to austerity, but instead to widespread hostility to both immigration and the European Union. As a result, the Conservative Party has taken economically damaging positions on both issues in an attempt to reduce UKIP’s appeal. Chris Bertram at Crooked Timber recounts in detail the sorry state of the UK ‘debate’ on immigration. Yet the link between concernsabout immigration on the one hand and unemployment and low wages on the other is fairly obvious. Despite all the valiant attempts by Jonathan Portes and others to focus on the evidence, this is one of those cases where the combination of tabloid media hype, partisan political advantage and ‘common sense’ normally wins, and as a result the UK Labour Party seems to spend much of its time trying to ape the Conservatives.
Although I am normally an optimist, I must conclude that I am as depressed as Simon Wren-Lewis about these conclusions.