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1. Welfare losses, preferences for redistribution, and political participation: Evidence from the United Kingdom’s age of austerity

Author:
Patricia Justino, Bruno Martorano, and Laura Metzger
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper studies the effect of austerity on forms of political participation—including voting, appealing for reform, and peaceful protesting—and the role of preferences for redistribution in shaping the relationship between individual exposure to austerity and political participation. The paper focuses on the case of the United Kingdom (UK) where, between 2011 and 2019, wide-ranging austerity policies were introduced to deal with high public debt in the aftermath of the 2007–08 financial crisis. Cuts to government spending on public investment, services, and social protection, especially during the initial fiscal consolidation phase of 2011–15, led to significant welfare losses for the population. We provide evidence from observational microeconomic data and a large-scale online experiment in the UK showing that individual exposure to welfare losses from austerity increases political participation and strengthens preferences for government redistribution. The experimental data suggests that changes in individual preferences for redistribution significantly shape the effect of austerity on political participation.
Topic:
Austerity, Welfare, Redistribution, and Political Participation
Political Geography:
United Kingdom and Europe

2. Local David Versus Global Goliath: Populist Parties and the Decline of Progressive Politics in Italy

Author:
Matteo Cavallaro
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper analyzes the role of local spending, particularly on social welfare, and local inequality as factors in the Italian political crisis following the adoption in 2011 of more radical national austerity measures. We employ two different methods. First, we develop an original database of municipal budgets. There we show that even the lowest level of social welfare spending, that offered by Italian municipalities, though also hit by austerity, was still able to moderate this national shock. We test three operationalizations of local spending: aggregate current expenditures, aggregate current expenditures on social services, and current expenditures disaggregated by function. We show that municipal current expenditures, particularly on social spending, significantly affected the post-2011 share of votes for the progressive coalition. The results also show that social spending, especially on education, significantly moderated the combined effect of national austerity and the economic crisis on voting for populist radical right parties, while no significant results appeared for populist parties in general. Local inequality appears to significantly enhance vote shares of populist radical right parties and populist parties in general. We caution that, although significant, the effect is not strong: that local policy and economic conditions can moderate national shocks but cannot reverse them. The second analysis relies on survey data to ascertain the individual-level mechanisms behind the role of local welfare. The paper argues that local economic inputs influence voters’ position on non-economic issues. Our results, however, do not identify any significant individual-level channel of transmission, be it cultural or economic.
Topic:
Politics, Elections, Inequality, Populism, and Austerity
Political Geography:
Europe and Italy

3. Emigration and Fiscal Austerity in the Greek Depression

Author:
Eugenia Vella
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
What is the role of emigration in a deep recession when the government implements fiscal consolidation? Our macroeconomic model simulations show that fiscal austerity accounts for 1/3 of the output drop in the Greek Depression and more than 10% of migration outflows. In a no-emigration counterfactual scenario, the model predicts a smaller output fall by 20%. We also uncover a novel bi-directional link between emigration and austerity. On the one hand, labour income tax hikes induce prolonged migration outflows, while spending cuts exert a smaller effect. On the other hand, emigration increases the required tax hike and time to meet a given debt target due to endogenous revenue leakage. In terms of unemployment, temporary gains from emigration are reversed over time.
Topic:
Austerity, Fiscal Policy, Emigration, and Economic Crisis
Political Geography:
Europe and Greece

4. An Obituary for Austerity Narratives? An Experimental Analysis of Public Opinion Shifts and Class Dynamics during the Covid-19 Crisis

Author:
Emanuele Ferragina and Andrew Zola
Publication Date:
06-2020
Content Type:
Research Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The Covid-19 pandemic is disrupting the international political economy context unlike any event since World War II. As a consequence, the French government has, at least momentarily, reversed decades of fiscal consolidation policies sedimented around austerity narratives by instating a costly emergency furlough scheme for a third of the workforce. This crisis provides a natural setting to investigate the relations among an emerging “critical juncture” in political economy, public preferences, and the salience of austerity narratives. We collected panel data and administered two experiments to test if citizens’ viewpoints are sensitive to the trade-off between health and economics, still receptive to austerity narratives, and conditioned by socioeconomic status in supporting them. We find public viewpoints were highly swayable between health and economic concerns at the first peak of the epidemic outbreak in April 2020, but they were not influenced by the austerity narratives during the phase-out of the lockdown in June, with the exception of the upper class. Overall, public support is shifting in favor of increased social spending, and austerity might no longer inhabit the majority’s “common sense.” We conclude with further implications for the study of class and conflict in a post-pandemic world.
Topic:
Economics, Political Economy, Public Opinion, Class, Macroeconomics, and Austerity
Political Geography:
Europe and France

5. When the Greek Political System Clashed with Europe: Why the Greek Sovereign-Debt Crisis is Taking so Long to End

Author:
Constantine A. Papadopoulos
Publication Date:
10-2018
Content Type:
Journal Article
Journal:
Uluslararasi Iliskiler
Institution:
International Relations Council of Turkey (UİK-IRCT)
Abstract:
The central argument of this essay is that, in order to understand the reasons behind the Greek economy’s inability to recover sooner from its 8-year recession, analysis must focus on the institutional, political and cultural traits of the country rather than take a primarily “economistic” approach and simply blame “excessive austerity” and/or the euro. In fact, it will be argued that Greece’s positive performance under the euro (until government actions derailed the economy) is generally underappreciated, suggesting that if the country’s institutional weaknesses are addressed, the economy will grow. If they are not, the country’s long-term economic potential will almost certainly remain unfulfilled.
Topic:
Debt, Economics, Financial Crisis, Reform, Global Financial Crisis, and Austerity
Political Geography:
Europe and Greece

6. The Professional Politics of the Austerity Debate: Comparing the European Central Bank and the International Monetary Fund

Author:
Cornel Ban
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
Through a focused comparison of how the largest international lenders of last resort (the European Central Bank and the International Monetary Fund) argued over the specifics of austerity, the paper tackles an underexplored facet of international public administration: How did the IMF and the ECB build networks of transnational sympathetic interlocutors to assert cognitive authority and gain scientific legitimacy for their policy positions. Rather than focus on a specific profession, the paper systematically evaluates the impact of more than one metric of socialization via a new analytical framework: comparative professional fields analysis (CPFA). Its departure point is that there is a dearth of scholarship on how technical ideas such as “fiscal consolidation” are argued over in professional fields as diverse as economics departments, central banks, think tanks, corporations, or public sector bodies where competition between professionals produces “nested jurisdictions” (Seabrooke and Henriksen 2017). In contrast, CFPA generates testable propositions about what professional field is most likely to lean towards doctrinal and policy change in complex public bodies such as the IMF and the ECB.
Topic:
Politics, International Monetary Fund, Central Bank, and Austerity
Political Geography:
Europe

7. Austeritarianism in Europe: What Options for Resistance?

Author:
Richard Hyman
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In much of Europe, the social rights and social protections won in the first post-war decades, by labour movements in particular, have subsequently been seriously eroded, and are further threatened by neoliberal austerity. Efforts to resist have been largely unsuccessful; but is an effective fight-back possible? In this paper I first outline the role of the European Union (EU) as a key driver of the recommodification of labour, through its growing emphasis on market ‘freedoms’ as an overriding priority, and on ‘competitiveness’ as the central policy objective for national governments. I discuss how this orientation has been reinforced by the economic crisis, and the ensuing pursuit of austerity and the imposition of ‘new economic governance’. I then survey a range of forms of protest and opposition: trade union action, ‘new’ social movements and engagement in the formal political arena. I suggest that a nuanced evaluation of success and failure is necessary. In conclusion I propose that the articulation of different forms of resistance – cross-nationally and between different actors – is essential in order to stem the neoliberal hegemony.
Topic:
Race, Science and Technology, History, Culture, Inequality, Finance, Ethics, Philosophy, Macroeconomics, and Austerity
Political Geography:
Europe

8. International Security – One Paradigm Change after the Other

Author:
Willem F. van Eekelen
Publication Date:
01-2012
Content Type:
Journal Article
Journal:
All Azimuth: A Journal of Foreign Policy and Peace
Institution:
Center for Foreign Policy and Peace Research
Abstract:
During the past two decades our basic notions of security underwent repeated changes. To account for these changes, this piece deals with the most important historical events that shaped our understanding of security as well as the new challenges ahead such as the systemic changes, regional security initiatives from the EU, changing roles of militaries in advanced democracies and recent austerity measures’ effects on the security sector.
Topic:
International Relations, International Security, European Union, Democracy, Regional Integration, and Austerity
Political Geography:
Europe