Austerity Watch

I have decided to start an occasional Austerity Watch column to monitor the trend towards increasingly open support for austerity. First, to recap my general views on the subject:

* Austerity is implicit in growth scepticism.

* However, only a minority of growth sceptics are currently openly demanding austerity. It tends to be more implicit.

* The dominant trend at present is wary of austerity because it sees bolstering demand as a way out of the economic downturn. For example, through public spending, tax cuts or interest rate cuts.

* But when conventional demand-led measures fail the trend to austerity is likely to become the majority one.

Yesterday’s reported statement by Nick Clegg, the leader of Britain’s Liberal Democrats, started me thinking about this. He was quoted in London’s Evening Standard as saying that:

“We’re entering into an age of austerity when all the political parties are going to have to have a rethink on public spending. All the old assumptions have evaporated because of the economic crisis and the knock-on effect it’s going to have on several lean years of public spending”.

I have not been able to find a full draft of his speech.

The current fad for bashing bankers for their huge bonuses is also worrying. It opens the way for an even tighter culture of restraint than already exists. The argument will be that everyone, including bankers, need to behave responsibility.

Any more suggestions for Austerity Watch columns are welcome.