Anarchy in the UK

Some interesting news from Great Britain.  Britain, like the US, follows some basic neo-liberal economic policies, though Britain has always maintained a more vigorous welfare state.  Not, perhaps as vigorous as other countries in Western Europe, but certainly vigorous.

Britain also has a Parliamentary government, which - after watching the Senate perform as the Abattoir of Change - seems appealing to polite opinion makes at the NY Times.  And indeed there are some nice advantages of having the legislative branch and executive branch on the same page - as we are seeing this week.

But Britain also tends to steer towards the center even more than the US does.  They are not a lot of Jim DeMints in British politics.

The recent move to prominence of the Liberal Democrats kind of upended that and left the UK with a coalition government for the first time in a very long time.

And now it looks to be falling apart.

Rioting in London today followed a vote in Commons where student fees were tripled.  It's still less than the US (I think, if I understand fees properly), but the British, unlike most Americans, give a damn enough to take to the streets and hurl rocks at Prince Charles.

This is particularly embarrassing for the Lib Dems who said that they wouldn't support such a fee hike.  Oops.

First of all, the Lib Dems have been comfortably ensconced on the back row of British politics for so long that this was supposed to be their big break.  Things were finally turning around for them.  But if they get branded as just another bunch of political hypocrites... Finis.

Second, this could conceivably bring down the Cameron government.  If rioting continues, Cameron can't count on the support of the Lib Dems all the way down the line.  At some point we could see a vote of no confidence.

Third, this goes to show the problem with austerity.  The austerity acolytes will tell you that a country in a recession must get its fiscal house in order.  In other words, they are anti-Keynesian.  In this country, we call them deficit hawks.  This "austerity" is what the IMF has forced on numerous developing world countries in the past.

Here's the thing: it sucks.  It sucked for the Argentineans and the Thais, and it sucks for the British.  If the tax cut deal falls through and unemployment insurance runs out, it will suck for the Americans, too.

And frankly, there's not much evidence at all that austerity really helps create an economic recovery.  It just makes economists and central bankers feel more secure.

Britain has done better than most of Europe because they have a currency that can float and they have monetary remedies that Ireland, Greece and Spain don't.  But the austerity kick is a curious one.

It's worth noting that during the Great Depression, we had the austerity school at play, too. They caused the Roosevelt Recession of 1937-8 by forcing austerity onto a recovering economy before it was ready.

I can't help but notice that those who call for economic pain under austerity are those who are fairly comfortable.  They have nothing to fear from austerity.

Get some skin in the game, and then tell me why austerity is the way to go.