The Distributional Impact of Austerity and the Recession in Southern Europe

Southern European welfare states are under stress. On the one hand, the recession has been causing unemployment to rise and incomes to fall. On the other hand, austerity has affected the capacity of welfare states to protect those affected. This paper assesses the distributional implications of the crisis in Greece, Spain, Italy and Portugal from 2009 to 2013. Using a microsimulation model, we disentangle the first-order effects of tax–benefit policies from the broader effects of the crisis, and estimate how its burden has been shared across income groups. We conclude by discussing the methodological pitfalls and policy implications of our research.     

Italian Politics in an Era of Recession: The End of Bipolarism?

Abstract

Italian politics have undergone momentous change in the 2007–2017 decade under the impact of the eurozone crisis, whose peak in 2011–2013 could be equated to the earlier watershed years of 1992–1994. The lasting impact of the upheaval in Italian politics in the early 1990s could still be felt in the decade of economic recession, but there were also new challenges prompted by a crisis that had its roots in international financial contagion and which unravelled under the shadow of both recession and austerity. The changes were of an economic, social, cultural, institutional, policy-oriented and political nature. If one central quintessentially political theme stands out by the end of this decade it is the apparent exhaustion of the quest for bipolarisation that was initiated in the early 1990s.     

20世纪90年代以来日本财政政策失效成因

二战后,日本通过实施凯恩斯的积极财政政策,实现了经济的高速增长。然而,伴随着20世纪90年代经济的长期萧条,传统的财政政策失效。本文通过巴罗模型检验了日本各项财政支出对经济增长的影响。实证分析结果表明：公共投资效果不佳成为日本财政政策失效的主要原因,而优化公共投资结构、提高公共投资乘数、调整财政支出结构,防范财政风险可以提高日本财政政策效应。     

The Problem of Macroeconomic Policy Crossroads:Explaining the Economic Policy Paradox of Switzerland and Japan in the 1990s

The 1990s, which can be characterized as a decade of disinflationary growth and austerity policies for most developed market democracies, was the decade of stagnant growth and policy complacency for Switzerland and Japan. Based on a framework that emphasizes the structure of policy choices available to governments at economic crossroads (or crisis), I show Switzerland and Japan are unique in that (a) disinflationary fundamentals spared the countries from speculative or inflationary pressure that required drastic responses and (b) the governments paradoxically maintained conservative economic policies despite room for expansion in order to continue policies based on the compromise between export and domestic sectors. The policy crossroads perspective stresses the importance of endogenous coalitions even in a world of economic globalization to explain concerted politics and conservative policies, and to assess the true impact of international finance on domestic changes.     

Embracing austerity? An ethnographic perspective on the Latvian public’s acceptance of austerity politics

ABSTRACT

Latvian austerity policy following the 2008 economic crisis has been touted as a success story by some and critiqued as a socially costly experiment by others. It has remained a puzzle, however, how such harsh socio-economy policies were possible without causing sustained popular protests. Drawing on ethnographic research at an unemployment office in Riga in the aftermath of the crisis, this article considers austerity as a political and moral phenomenon. I argue that welfare policies played an important role in disciplining the parts of the population most adversely affected by the crisis by framing post-crisis precarity as a matter of individual responsibility. Furthermore, this disciplining worked because it was underpinned by a particular moral discourse that I call ‘a discourse of freedom.’ Thus, this historically and culturally-shaped moral economy helped not only secure the implementation of post-crisis austerity in a way that yielded little sustained public resistance but also helped legitimate it.     

Representation and Austerity Politics: Attitudes of Greek Voters and Elites Compared

Drawing on surveys of voters and MPs in Greece, this article analyses elite–mass interaction on key policy (austerity, European integration, immigration) and ideological issues after the 2012 elections. We find that while for the government parties, New Democracy and PASOK, the level of congruence is quite high, MPs from opposition parties (SYRIZA, Golden Dawn) place themselves in more exposed positions in comparison with their voters. The observed substantial variation in the intensity and direction of congruence, across parties and issue preferences in Greece, reinforces the view that the dimensionality of political contestation is not reducible to a single ideological dimension.     

The Italian Welfare State in the Crisis: Learning to Adjust?

Abstract

After a decade of inertia, that left it unprepared to withstand the blow of the great recession, the Italian welfare state has witnessed significant changes since 2012. Externally driven consolidation in the wake of the sovereign debt crisis spurred yet another wave of social policy reforms after that of the 1990s. These reforms did not however invariably entail retrenchment. Both the Monti and the Renzi governments combined liberalisation with expansion of social rights, particularly in income support. As a result, the Italian welfare state looks more comprehensive than it was before the crisis. At the same time, there was no overall strategy of welfare modernisation based on coordinated social investment measures. The changes in Italian social policy since the outburst of the great recession highlight the importance of domestic politics interacting with external drivers of change. They also facilitate an assessment of the opportunity structures for further reforms in a political system that appears to be veering again towards consensus democracy.     

Awakening the Sleeping Giant in Greece and Portugal? Elites' and Voters' Attitudes towards EU Integration in Difficult Economic Times

This article explores the extent to which the economic crisis and political responses of the European Union (EU) to austerity policies have contributed to Euroscepticism in Greece and Portugal. We analyse attitudes towards the EU at both voter and elite levels using fresh and innovative data, and by comparing them with data from surveys conducted before the crisis we show assessments of austerity and the bailouts are feeding elite and voter Euroscepticism. In both countries there are signs of a crisis of representation with greater voter–elite incongruence in the representation of EU issues than before the bailout.     

Political Representation in Bailed-out Southern Europe: Greece and Portugal Compared

The emergence of the economic and financial crisis has already shown important electoral and political consequences in southern Europe. Drawing on the experience of two bailed-out countries, Greece and Portugal, we use original data collected before and after 2008 to examine how patterns of political representation have changed during this period. We argue that austerity measures have significantly affected the way MPs represent their electorates, namely in terms of policy congruence. In addition, the economic crisis has also deepened the legitimacy crisis in both countries. Finally, we find that the short-term impact of the crisis has had a greater impact on voters' attitudes than on those of their representatives.     

‘SAUDI VISION 2030’: A VIABLE RESPONSE TO YOUTH ASPIRATIONS AND CONCERNS?

Since Deputy Crown Prince Mohammed bin Salman Al Saud unveiled Saudi Vision 2030 (The National Transformation Programme, 25 April 2016) a great deal of analysis has focused on the potential impact of Vision 2030 at the national level. Significantly, Saudi Vision 2030, which promises a better future and better governance, is raising hopes and expectations amongst young well-educated Saudis. Nevertheless, how has Saudi Vision 2030 been interpreted by young educated male Saudis many of whom are struggling to enter the labour market at a time of austerity and economic uncertainty? This paper discusses young male perceptions of Saudi Vision 2030 including their expectations and hopes for the Vision. In fact, an understanding of how young Saudis perceive Vision 2030 is not only pertinent in the Saudi national context (or indeed multiple Saudi domestic contexts), but also has wider regional relevance considering oil-market developments and economic policy.     

Austerity versus pragmatism: a comparison of Latvian and Polish economic policies during the great recession and their consequences ten years later

ABSTRACT

Despite many initial similarities, Latvia and Poland represent two opposite extremes in terms of practical and theoretical approaches to the economic crisis. The Polish government applied a ‘pragmatic’ approach to fight the recession, based on expansionary fiscal policies and currency devaluation. Conversely, the Latvian administration opted for the Austerity and internal devaluation strategy. Consequently, the objective of this paper is to analyze, from the perspective of political economy, the strategies chosen for the economic crisis management and their effects in Latvia and Poland, in light of the main EU narratives about its causes and responses. The research contends that the economic performance of both countries during the crisis was due to their respective economic structures. On the one hand, Poland is a bigger, more diversified and industrialized economy, with fewer channels of vulnerability and could apply expansionary policies effectively. On the contrary, the economic model established in Latvia generated a high exposure to external shocks, in particular, with a double vulnerability in the banking sector. In this context, due to internal and external motives, the Latvian government decided to apply the austerity and internal devaluation strategy, worsening the economic decline and the subsequent recovery.     

The Socioeconomic Implications of Dollarization in El Salvador

This study argues that the costs associated with El Salvador's dollarization clearly outweigh the benefits and that the decision to dollarize was prompted not only by the need to promote economic growth, but also by the impluse to serve the interests of the financial sector and the large entrepreneurs who control the ruling ARENA party. Although the policy facilitates investment and international financial transactions, it has a negative effect on the poor by increasing inequality. To develop this argument, the authors discuss the socioeconomic and political situation in El Salvador at the time of dollarization, examine the Law of Monetary Integration, and analyze die effect of the dollarization policy on the poor.     

Elites' and Voters' Attitudes towards Austerity Policies and their Consequences in Greece and Portugal

This article analyses the attitudes of the political elite and voters in Greece and Portugal vis-à-vis the Troika bailouts, austerity policies and the attribution of responsibilities for the crisis. Using both elite and mass surveys with similar questions, the article explores to what extent the elites and voters share similar attitudes, what might explain possible differences between these two groups and between the two countries and what this information can tell us about the quality of political representation in Greece and Portugal. The differences between the countries are explained mainly by the severity of the crisis and austerity policies in each country, but also by the diversity of political conditions.     

‘Social Investment’ or Back to ‘Familism’: The Impact of the Economic Crisis on Family and Care Policies in Italy and Spain

Family policies have traditionally been weak in Southern Europe. In the last two decades, however, and following a ‘catching up’ course, Spain has created new family programmes and expanded existing ones. Meanwhile, the picture for Italy during the years preceding the crisis is more of a ‘frozen landscape’. However, the diverging paths of the two countries in terms of policy reform in the years preceding the crisis do not place them in substantially different positions. The economic crisis and the austerity measures that followed have aggravated the weaknesses of family and care policies in both countries.     

Where in the world is South Africa? Lecture by Ambassador Tony Leon 14 February 2013

Most of the current constructs which theoretically underpin foreign policy for this country are either overblown or incoherent; they do not appropriately define or advance or prioritise South Africa's national interests abroad, nor do they acknowledge the tensions embedded in the clash between normative policies and realpolitik. Drawing from ‘real time’ experiences in international diplomacy, this lecture explores some of the dilemmas that South Africa, as a middle-range power in the world, confronts in its international engagements. The cost-effectiveness of South Africa's global projection is also examined, and some practical reforms to achieve better results in the current age of austerity suggested.     

Japan's fiscal policy and the East Asian financial crisis

Japanese economic policy has been identified as one possible cause of the East Asian financial crisis that began in July 1997. In this article, Yoichi Okita, Professor of Economics at the National Graduate Institute for Policy Studies, Tokyo, discusses Japan's role in the recovery of East Asian economies. Can and should Japan contribute to that recovery? To what extent is the recession in Japan an important cause of slow recovery in the region? Okita explores and develops the concept of economic policy coordination. Although changes in the Japanese economy were not the origin of the East Asian crisis, he says, prolonged stagnation in Japan is, nevertheless, a drag on the economies that are in trouble. However, one country's fiscal actions alone cannot solve the crisis; rather, all countries in the region should work together to redress the problem.     

Elective affinity or comprehensive contradiction? Reflections on capitalism and democracy in the time of finance-dominated accumulation and austerity states

The often-asserted relation of formal adequacy or elective affinity between capitalism and democracy is historically contingent on both sides of the relation. First, it holds for what Weber called “formally rational capitalism” – which is the form that Marx had previously investigated in Das Kapital – rather than others, such as traditional commercial capitalism or politically oriented capitalism. Second, it holds only to the extent that “the comprehensive contradiction” identified by Marx at the heart of the democratic constitution can be resolved: the contradiction between a universal franchise that potentially gives subaltern classes control over legislative and executive powers and a constitution that protects property rights favourable to capital. Building upon Poulantzas, it is then argued that these conditions are being undermined by the rise of new forms of political capitalism, especially finance-dominated accumulation, that are facilitated in turn by the consolidation of both neoliberalism and “authoritarian statism”. This involves the intensification of “exceptional” elements in a formally democratic shell, and the emergence of a permanent state of austerity. The article concludes with comments on the limits of finance-dominated accumulation and the austerity state.     

Singapore's cultural policy and its consequences

Abstract

This article explores the effects of Singapore's Global City for the Arts project on the local theater industry. It begins by describing the character of the Singapore state and its ability to meet the challenges of globalization. It then shows that while historically global in orientation, the city-state's early cultural policies were resolutely local and insular prior to the economic recession in 1985. From that year on, local arts and culture was driven by an economic rationale — eventually culminating in the birth of a globally oriented national cultural policy: the Global City for the Arts project. The author contends that the Global City for the Arts project has pressured the Singapore state into shedding some of its authoritarian practices in order to conform to international norms. However, the author also illustrates how certain theater companies with the requisite cultural capital for the Global City for the Arts project have benefited from the country's cultural policies while others that do not possess such cultural capital are marginalized. The article concludes by arguing that the Singapore state, in going global, exacerbates the economic disparity by accentuating preexisting inequalities and divisions in the local.     

Prosperity and Fairness? Can New Labour Bring Fairness to the 21st Century by Following the Dictates of Endogenous Growth?

By the late 1980s changes in the British and global political, social and economic situation necessitated a major rethink of the Labour party's policy approach. This rethink began with the 1987 Policy Reviews and continues to develop under the leadership of Tony Blair and Gordon Brown. In contrast to many critics of New Labour's economic and social reforms this article argues that the party is not acting on simple pragmatic grounds, nor are they simply a 'kinder' neo-liberal party. Rather, it is argued that there is a clear coherence to New Labour's governing approach and that this is itself guided by the leadership's understanding of endogenous growth theory. The long-term goal is that by adopting an endogenous growth strategy the government will be able to re-institute an activist policy regime capable of promoting the party's traditional values of equality, justice and fairness within a socioeconomic policy designed to ensure long-term growth and prosperity.     

Using grid-group theory to explain distinctive Japanese political institutions

Particularly for Americans, Japanese political institutions present a paradox. On one hand, in comparison to other advanced industrial societies the size of Japan's public sector (as a proportion of GDP) is extremely small. On the other hand, Japan's small but expert state is highly interventionary, leaving far less to the vagaries of markets than the United States or even the more statist societies of Europe (Johnson 1982). This contrast leaves many American analysts, particularly economists but others (Esping-Andersen 1997) as well, in a quandary as to whether Japan is a liberal individualistic society. I draw on Douglas-Wildavsky “grid-group” theory to explain these seemingly contradictory institutional characteristics as the result, not of liberal individualistic influence, but of conflict between and the alternation in dominance of two factions of Japanese hierarchy. My primary focus of attention rests on showing how these two hierarchical factions produce a public policy orientation with a predisposition toward state social intervention but periodic restraint with respect to public social programs that accounts for the modest fiscal size of the active Japanese state. I also examine Japanese public policy responses to recent difficulties in overcoming recession and confronting increasing immigration to clinch the case that Japan is a society in which various factions of hierarchy, rather than liberal individualism, dominate.