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Is the world finally ready to move on from austerity?
If you’re looking for an all-you-need-to-know about austerity and why it isn’t the way to go after a financial crisis, the Cambridge Journal of Economics special issue on ‘assessing austerity’ is a pretty great place to start. It brings together articles from after the 2007-08 ‘great recession’ of Europe and North America, explaining why specific policies that were implemented were doomed to fail, an analysis of what happened after they were implemented, the uneven impact of austerity and what could and should have been done differently both pre- and post-crisis.
In their introduction to the volume, Sue Konzelmann, Mia Gray and Betsy Donald say something I’ve always wondered about: “The history of contemporary austerity is remarkable for how quickly policy consensus was established between global economic institutions, central banks and national policy makers”. The crisis began with the US’s subprime mortgage chaos – where poor quality debt was repackaged and rebranded in global financial markets as high yield and low risk. (Side note: if you haven’t already, I recommend you watch The Big Short, it breaks things down, and while of course it’s just one of many angles, it’s funny even while it’s incredibly depressing and definitely worth the watch.)
But what happened then? In the words of the authors, “By saving the global financial system (recapitalizing the banks and adding liquidity to the banking system), the private banking crisis was rebranded as a public sovereign-debt crisis and blamed on profligate government spending of peripheral European countries”. From a private debt crisis, the world was suddenly seeing a public debt crisis. How did this happen and how was it sold? Political economist Mark Blyth has called it the “greatest bait and switch in modern history”.
The reach of this volume is immense so it wouldn’t make sense to address it all here – but it really is worth the read if you’re interested.
So who said austerity was ever a good idea to begin with? Harvard economists Carmen Reinhart and Kenneth Rogoff, for one. They conducted study that looked at the historical relationship between public debt and economic growth, finding that output and employment recover very slowly after a financial crisis, with an average “hangover” period of 23 years. That means big, long-term consequences of high public debt.
“From this, they (Reinhart and Rogoff) conclude that in the current context, since growth is slower when public debt is high, austerity is required to reduce public debt-to- GDP ratios to growth-permitting levels. Their 2010 study goes further, identifying a public debt “threshold” – 90 percent of GDP – at which economic growth contracts. Economic analysts, the international financial elite and, most importantly, politicians, embraced these findings as the academic justification for austerity policies.”
The duo faced increasing criticism for their work, which was ultimately discredited altogether. In a searing critique by Thoman Herndon, Michael Ash and Robert Pollin included in this volume, the authors state that Reinhart and Rogoff’s conclusions that global powers had so freely bought into were found to be based on omitted data, methodological problems and Excel coding errors. (Reinhart and Rogoff later dismissed these and other criticisms as “academic kerfuffle”, insisting that austerity is the right policy.)
Theirs isn’t the only logic used to justify austerity that is fundamentally flawed, the collection brings out. One of the ideas behind pro-austerity arguments is often that government budgets are comparable to household budgets – and need to be balanced. So if there is too much public debt, the nation must “pay” for it via austerity. The authors disagree, citing two reasons. For one, a government can control the value of its deficit, given that it issues its own currency and control the exchange rate. Also, during a recession governments are already facing falling tax revenue and costs related to unemployment. This will mean that the deficit will rise while the economy continues to slow, they argue, even adding to public debt.
This is only a sub-section of the issues addressed in the collection. But what makes it worth the read and even more interesting is that austerity has now received criticism from even some of its staunchest supporters – including the IMF. IMF economists Jonathan D. Ostry, Prakash Loungani and Davide Furceri wrote in their interestingly titled ‘Neoliberalism: Oversold?’:
“…in the case of fiscal consolidation, the short-run costs in terms of lower output and welfare and higher unemployment have been underplayed, and the desirability for countries with ample fiscal space of simply living with high debt and allowing debt ratios to decline organically through growth is underappreciated.”
National leaders are also slowly pulling back in different places, expressing their disagreement. In a space where debates around austerity are being revisited, this collection is much-needed summary of all that was wrong, and could go wrong again.
Volunteer-based border surveillance
What is going on here?
That’s not really the research question of the article I’m talking about, but it’s all I can think after reading it. Spanish artist and researcher Joanna Moll and French anthropologist Cédric Parizot have done a fascinating graphic study of a very strange phenomenon I knew nothing about – people in the US volunteering to watch live feeds of the US-Mexico border and report them to the local police.
With Trump in the picture, hearing about the US-Mexico border has become a norm. But obviously people have been concerned with it even before, a concern and suspicious that was encouraged by the state.
In her article in Exposing the Invisible, Moll explains how the project came to be.
An online platform she calls RedServant (name changed to protect the anonymity of the users) is part of a public-private partnership initiative started in 2008 to crowdsource border control. Volunteers were given access to 200 camera feeds and a ‘report’ button for whenever they say suspicious activity. According to Moll, “Since its launch in 2008, RedServant had 203,633 volunteer users which resulted in 5331 interdictions, and overall ‘represents almost one million hours of free labour for the Sheriff’.” The platform closed in 2013, apparently due to the lack of funds.
“The contract between RedServant and the Texas State allocated the company $625,000 annually plus expenses,” results from a Freedom of Information Act request said. Yet Moll found very little information about the company available publically.
“RedServant’s site gathered all sort of information related to illegal crossings and drug smuggling. The platform also included a publicly accessible archive, made out of 64 videos, that showed some of the detentions executed on the border thanks to the anonymous reports carried out by the users of the platform. This surveillance interface consisted of two live video feeds and a menu from which the user could select between the 25 available online streams. Under each screen there were three buttons: Make a Comment, in green, Ask a Question, in blue, and Report Suspicious Activity, in red. Below the buttons, there was a detailed set of instructions on how to carry out the surveillance depending on the selected camera. For instance, indications for camera five were: ‘This area is known of illegal drug activity. If you see people crossing the river via foot or raft in this area please report activity’.”
Moll signed up as a volunteer, watching the US-Mexico border while sitting in Spain, and experienced first-hand how watching the border through a screen felt almost completely like a video game.
“The users of RedServant were a very good example of gamification, and I was no exception. Even though I was morally against the purposes of the site, when something would move, or human activity would appear, I felt compelled to press the red button. Once immersed in the logic – and by extension – the rules of the site, it felt like the right thing to do. To reflect did not seem to be an option, at least before taking an action. The interface, along with the camera feeds, allowed to physically decontextualize the border and bring it to the user’s private sphere in the shape of a game, moreover, the site resembled a video game, where any action taken would be without consequence.”
Moll also found a Facebook group of RedServant users – an unofficial channel for volunteers to exchange notes. She joined, under a fake name, and observed the conversations as well as the profiles of those involved. When she had copied all interactions on the group between 2009 and 2013, when the group closed, she had hundreds of pages of text and images. And that’s what gave rise to her and Parizot’s project – The Virtual Watchers.
Moll calls the entire system the anti-panopticon: given the accessibility of most of the group members’ Facebook profile, you could easily find out who was doing the surveillance. The group had various different professions, 10% were even outside of the US. On the Virtual Watcher website is the range of conversations that took place on the group – from reports to doubts and random conversations.
It took me a while to come to terms with the fact that this is a thing at all, a thing that people would want to spend their time and energy on, actively and openly be a part of. But once I got over that initial shock, Moll’s conclusion was the next thought: “the silent militarisation of the civil society by means of gamification and free labour” against another country and community is alarming, to say the least.
Did communal politics ‘win’ after the Muzaffarnagar riots?
An article in Economic and Political Weekly, Harsh Mander, Akram Akhtar Chaudhary, Zafar Eqbal and Rajanya Bose of the NGO Aman Biradri have a depressing if unexpected answer – yes. What the riots and the state’s actions around them have managed to achieve, they argue, is segregating two communities that had lived in harmony for a long, long time to come.
And the victims of the riots, they have brought out in their study, have continued to suffer even in the aftermath of the 2013 riots, faced with state apathy and continued hatred.
The riot victims’ faith in the state’s forces was destroyed almost immediately – many have talked about the inaction of the police as they watched the riots and violence occur but did not intervene. Even relief camps were organised by the persecuted community themselves in Muslim-majority villages, and had little to no state presence in terms of providing amenities, the authors say.
And if that were not enough to destroy a community’s faith in the system, there is the report of the judicial commission appointed to look into the riots. Though this report was submitted within two years (a relatively short amount of time for such reports, that are often delayed on purpose) the Justice Vishnu Sahai report “legitimises the majoritarian Hindutva communal version about the events and causes, and completely frees the political leadership from any culpability for the violence and displacement,” the authors write.
The report confirmed that the narrative of harassment of a Hindu woman by a Muslim man that reportedly triggered the riots was incorrect and that the video of two men being lynched that was circulated (including by BJP MLA Sangeet Som) to create anger was not from the area at all, but from Pakistan. It also stated that a mahapanchayat held after in the area propagated rumours against the Muslim community.
But after establishing this, the report does not find any Hindutva organisations or leaders culpable. It says, without citing evidence, that Muslim men in the area often harassed Hindu women. The role of the political leadership in mishandling the riots is not mentioned at all. The local administration is also let off lightly.
“(The administration,) at every stage, it tried to appease and accommodate the BJP and Hindutva activists, and after the violence also to appease Muslim political and religious leaders.
If judicial commissions will not tell the truth about who and what was responsible for communal massacres, who will?”
And that was not the end of the state’s role, the authors add. The lack of relief efforts for riot victims was perhaps the most striking example of what should have been done very differently. Three months after the riots that killed close to 100 and displaced 75,000, the state decided to close all relief camps, though people were still afraid to go back to their homes. Unofficial camps, sometimes aided by NGOs or religious organisations, continued but support dwindled and living conditions were extremely poor, the authors write. People were forced to work for low wages and in harsh conditions, children dropped out of school.
When it was finally clear that some people did not want to return to their villages, those directly affected by the violence were given Rs 5 lakh per household. But no efforts were made by the state to rebuild the harmony that existed before, to create relationships of trust. This meant that not only did victims of the riots have to build themselves new lives without state support (except a one time transfer of money for some), communities that were used to living together have now been segregated, perhaps forever. Even those who have a basic standard of living, own the title deeds to the land they paid for and are taking control of their lives again, with the help of innovative projects from NGOs like the Sadbhavna Trust and Hunnarshala Foundation (like this rehabilitation colony I had the opportunity to visit earlier this year), are now living on physically segregated lines.
This, the authors say, is the victory of communal politics: “These divided populations represent the triumph of communal politics, successfully undoing histories of shared living between Hindus and Muslims in the region over centuries.”
That’s it for this week! If you liked what you read, please consider subscribing to this weekly newsletter.
If you have any comments or suggestions on what could be carried in this column, write to me at [email protected]