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Edward Ashbee - The Right and the Recession

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Edward Ashbee The Right and the Recession
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The Right and the recession
The Right and the Recession - image 1
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Series editor
Richard Hayton
The study of conservative politics, broadly defined, is of enduring scholarly interest and importance, and is also of great significance beyond the academy. In spite of this, for a variety of reasons the study of conservatism and conservative politics was traditionally regarded as something of a poor relation in comparison to the intellectual interest in the Left. In the British context this changed with the emergence of Thatcherism, which prompted a greater critical focus on the Conservative Party and its ideology, and a revitalization of Conservative historiography. New Perspectives on the Right aims to build on this legacy by establishing a series identity for work in this field. It will publish the best and most innovative titles drawn from the fields of sociology, history, cultural studies and political science and hopes to stimulate debate and interest across disciplinary boundaries. New Perspectives is not limited in its historical coverage or geographical scope, but is united by its concern to critically interrogate and better understand the history, development, intellectual basis and impact of the Right. Nor is the series restricted by its methodological approach: it will encourage original research from a plurality of perspectives. Consequently, the series will act as a voice and forum for work by scholars engaging with the politics of the Right in new and imaginative ways.
Reconstructing conservatism? The Conservative party in opposition, 19972010
Richard Hayton
Conservative orators from Baldwin to Cameron
Edited by Richard Hayton and Andrew S. Crines
The Right and the recession
Edward Ashbee
Manchester University Press
Copyright Edward Ashbee 2015
The right of Edward Ashbee to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.
Published by Manchester University Press
Altrincham Street, Manchester M1 7JA
www.manchesteruniversitypress.co.uk
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data applied for
ISBN 978 0 7190 90820 hardback
First published 2015
The publisher has no responsibility for the persistence or accuracy of URLs for any external or third-party internet websites referred to in this book, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.
Typeset by Out of House Publishing
Contents
Acknowledgements
I am very grateful to Richard Hayton (University of Leeds), the series editor, for both his backing and the invariably astute comments that he made as the project proceeded. I should also extend my thanks to Tony Mason, commissioning editor at Manchester University Press, and my appreciation to friends and colleagues in the Department of Business and Politics at Copenhagen Business School. Their justly acerbic observations (which usually began with the words this is very interesting but ) at the Departments weekly work-in-progress seminars helped my thinking enormously.
Introduction: Charting the Right
The phrase Great Recession and references to crisis conditions eventually gave way to talk of recovery. In the United States (US), Gross Domestic Product (GDP) had, when adjusted for inflation, at least recovered sufficiently to surpass its 2007 total by 2011. British national output took longer to recover but finally matched its pre-recession figure in mid-2014.
Nonetheless, despite this and rising prices in some property markets, most of the references to recovery remained cautious and tentative. The financial crisis that erupted in 2008 and the recession that followed in 2009 had been the prelude to a prolonged period of fitful growth and were followed by persistent anxieties about the possibility of a double-dip or even a triple-dip recession. Earlier hopes of a more full-blooded recovery during the first few months of each year had to be abandoned as growth stalled just a few months later (BBC News, ).
Although recovery was redefined downwards so even the most modest signs of economic activity were hailed as evidence of such, few were reckless enough to talk in unqualified terms about future economic prospects. Even in mid-2014, despite talk of interest rate rises and the Federal Reserves limited and experimental tapering as the rate at which quantitative easing (that had, as the crisis continued, become the primary form of macroeconomic management) was taking place was gradually reduced, forecasters were asserting that there would not be a return to monetary policy normality for a very long period to come.
At the same time, although unemployment never reached the peak that some had predicted when the crisis first struck, and there were encouraging signs in both the US and the United Kingdom (UK) (where by mid-2014 the rate was at 6.6 per cent the lowest rate since the crisis broke out), the joblessness figures took a long time to fall. Indeed, despite large numbers abandoning the labour market altogether, the long-term unemployed numbered four million in the US at the beginning of 2014 (Thompson, : 1).
Yet, despite the painfully slow character of the economic recovery (which led some commentators to talk of a lost decade or long-run stagnation), the primary focus of attention had long shifted away from growth and employment and instead towards deficits and debt. What had initially been defined and represented as a crisis created by the banking sector had become, within a relatively short period, defined and represented as a crisis of excessive government expenditure. Both the UK and the US turned to fiscal retrenchment policies. For much of the Left as well as the Right the debate quickly became structured around the intensity and pace of retrenchment rather than the principle of retrenchment itself. The call went out for budget cuts and they became the defining policy of the Conservative-led coalition government that took office after the May 2010 general election. In the US, amidst intense partisan conflict, expenditure cuts were enacted through budget agreements and the federal government budget sequester, which took effect in March 2013.
Some on the free market Right have argued that the expenditure cuts that have been imposed in both the US and UK are not that significant or far-reaching. Daniel Mitchell of the Cato Institute, a libertarian think tank in Washington, DC, has referred to the United Kingdoms faux austerity (Mitchell, ).
Nonetheless, this line of argument should be treated with a degree of caution. The cuts were differentially applied and some sectors were ring-fenced so that retrenchment was felt much more severely in other sectors. Just as importantly, if projected population growth, shifts in the demographic structure of the country, probable economic growth (however limited) and inflation are factored in, this reduces projected government expenditure as a share of GDP significantly. In October 2012, the International Monetary Fund forecast a drop from 45.5 per cent in 2012 to 39.2 per cent in 2017 (International Monetary Fund, ). This relative form of measurement provides much more of a guide to the size and scale of government spending than do the raw numbers.
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