The New York Times has a mostly insightful article on the effect of almost a decade of austerity on economic and social conditions in England. It focuses on Liverpool and provides example after example of savage cuts to the programs and institutions people have depended on all their lives: the National Health Service, income support, libraries, parks and recreation, police and fire departments. It’s an important story, well told.Except that it flubs the single most important piece, why austerity was imposed in the first place. Not willing to take a side, the article quotes some Labour-identified people as saying austerity was a political choice and a bad one, while Conservative politicians get to argue that it was a simple matter of arithmetic. “It’s the ideology of two plus two equals
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Except that it flubs the single most important piece, why austerity was imposed in the first place. Not willing to take a side, the article quotes some Labour-identified people as saying austerity was a political choice and a bad one, while Conservative politicians get to argue that it was a simple matter of arithmetic.
“It’s the ideology of two plus two equals four,” says Daniel Finkelstein, a Conservative member of the upper chamber of Parliament, the House of Lords, and a columnist for The Times of London. “It wasn’t driven by a desire to reduce spending on public services. It was driven by the fact that we had a vast deficit problem, and the debt was going to keep growing.”These are presented as equally valid perspectives, and the matter is set aside as an unresolved dispute.
But the economics of the situation is one-sided: governments facing a slump always have the option to borrow, at least if they can borrow in their own currency and have a central bank to support their bond issuance. Both of these boxes are checked for England, so there is no validity at all to the Conservative position: it’s a pseudo-argument, good enough only for those who lack an introductory comprehension of economics. Granted, that’s a large mob and obviously includes quite a few journalists, but we’ll never make progress unless we hold journalists accountable for a higher standard of performance.
Of course, just because a government can borrow doesn’t mean it should. There are judgments to be made about the benefits of public programs, how much national income can be sustained through deficit spending (fiscal multipliers), and how large government debts can be before their sustainability is threatened (fiscal space), so I’m not saying economics mandates only one set of policies. But not every argument is sound, and the argument that denies the very possibility of debt finance in the face of a recession doesn’t make the cut. False equivalence is just bad journalism.