The Short, then the Long Reads – Austeri-who?

Dull, dismal economics stuff. Especially macroeconomics. Useful to cure insomnia.

As elections approach in the UK, it is worth a spare moment to look at some of the economics and ‘economics’. Chris Dillow at his mumbling and stumbling blog has had a heavy slog at trying to explain that ‘austerity’ is not really the economics discipline, and there ain’t no such animal as ‘expansionary austerity’, all to no avail. His most recent post, “SERIOUS” POLITICS, he states his choice of a party other than the two – in ally, the US, such a luxury is non-existent with an entrenched duopoly of corporate parties of cosmetic differences (‘culture wars’, ‘hot button issues’).

From my perspective, the main parties are just daft. They are promising to cut the deficit although this risks exacerbating any future slowdown and ignores the fact that negative real rates make this a great time to invest in infrastructure.

In another post, he assumes that the politicians of the two major parties, most of whom had done their PPE, had dropped the E off their PP, so he offers, ECONOMICS FOR POLITICIANS.  And there is where we wished him the best of luck. For quite some time, Dillow had also been battling mightily to explain to the UK public and the media that economics does not mean ‘austerity’ – a truly Sisyphean task, given the deafening echo chamber in which the political reporters and editors work.

However, Simon Wren-Lewis is the Gran Don Quijote in tilting at such windmills, and for quite some time. In his jousts Wren-Lewis created a manoeuvre named mediamacro, and as he explains in his post, On mediamacro,

…A formal definition could be a set of ideas about macroeconomics promulgated by the media that seem very different to the macro taught to economic students. A clear example would be the idea that the 2013 UK recovery vindicated 2010 austerity, which was my mediamacro myth number six. I wrote a post in the form of a tutorial to illustrate this some time back.

Although the term mediamacro might have been new, the idea was not. Paul Krugman has for some time talked about VSPs, or Very Serious People, and I think we are talking about much the same thing. In particular, a common feature is to argue in the immediate aftermath of a large recession that reducing the deficit should be the top priority. Why did I use a different term? I think part of the reason was that I felt this was not a problem about individuals, but about a system.


In any case I think mediamacro has much more to do with how political commentators rather than economic journalists interpret macro issues. This is one reason why the mediamacro problem is different from well known issues about the reporting of scientific questions. Political commentators rarely talk about science, but they are talking about economics all the time, because so much of politics is about economics

[bold added for emphasis]

Perhaps missing in all this is that it is the ‘preference’ of the politicians and the political writers to ‘guide’, mislead voters on economic issues? After all, who pays for austerity?

Not to be daunted in striving to win the day and scatter the imps of misinformation to the wind Paul Krugman joins the fray with his posting at The Guardian. And here we have that illuminating read, The Long Read, The austerity delusion. Cogent analysis. Sparkling prose.

And if there is trepidation about reading, here is a teaser. Abandon hope, all who read further,

in May 2010, as Britain headed into its last general election, elites all across the western world were gripped by austerity fever, a strange malady that combined extravagant fear with blithe optimism. Every country running significant budget deficits – as nearly all were in the aftermath of the financial crisis – was deemed at imminent risk of becoming another Greece unless it immediately began cutting spending and raising taxes. Concerns that imposing such austerity in already depressed economies would deepen their depression and delay recovery were airily dismissed; fiscal probity, we were assured, would inspire business-boosting confidence, and all would be well.

People holding these beliefs came to be widely known in economic circles as “austerians” – a term coined by the economist Rob Parenteau – and for a while the austerian ideology swept all before it.


It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.

Then, again, there are those who cannot be persuaded that the world was not created in just seven days – the overly religious. And there are those who cannot be persuaded on any issue, and will not be dissuaded, because of the rewards that await after success – “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” (Upton Sinclair).

And tomorrow? Mediamacro arises, rejuvenated?


Tags: , , , ,