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Home arrow Political science arrow A Century of Fiscal Squeeze Politics : 100 Years of Austerity, Politics, and Bureaucracy in Britain

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Loss, Cost, and Effort Involved in these Episodes

In Chapter One (Table 1.2), we sketched out a way of qualitatively assessing the intensity of fiscal squeezes on three dimensions, namely the extent of loss imposed on citizens and voters, the extent of reputational cost and stress incurred by governing politicians, and the degree of effort required from the state machine, for example, in devising new taxes or expenditure cuts requiring radical changes in organization or modes of service delivery.

Our grading of the various episodes discussed in this chapter is shown in Table 3.1, and the numbers given in square brackets relate back to the categories we introduced in the opening chapter in Table 1.2. For example, the degree of loss imposed on citizens and voters by the World War I revenue squeeze (plus the non-fiscal austerity that accompanied it) appears to have been high,

Table 3.1. A qualitative classification of imposed loss, political cost, and state effort associated with World War 1 and 1920s fiscal squeezes

Low

Moderate

High

Overall classification

1916-18. Squeeze type: Hard Revenue; Wartime Coalition government

Loss

[1]

High

Cost [2], [3], [4]

Low

Effort

[1],[2],[3]

High

1919-21. Squeeze type: Hard Revenue/Hard Spending; Coalition 12/1918-11/1922

Loss [1]

[1]

Low/Mod

Cost

[2], [3]

[1]

Moderate

Effort [1], [2]

Low

1923-25. Squeeze type: Hard Expenditure

Coalition 12/1918-11/1922 (incumbents who announced and enacted the squeeze)

Loss

[1], [2], [3]

High

Cost [2],[5]

[1]

[2],[3]

Moderate

Effort

[3]

Moderate

Conservative 11/1922-12/1923

Loss [1]

[1], [2], [3]

High

Cost [4]

Low

Effort [1]

[4]

Moderate

Minority Labour 12/1923-10/1924

Loss

[3]

Moderate

Cost [1], [4]

Low

Effort

[1]

Moderate

Conservative 10/1924 onwards

Loss [1]

Low

Cost [1]

Low

Effort [1]

Low

Note: Numbers in square brackets refer to categories in Table 1.2, ChapterOne.

and the state machine had to exert significant effort in managing the war finances and developing taxes such as the Excess Profits Duty, but the political costs of the fiscal measures experienced by governing politicians was significantly muted by the combination of coalition government and the absence of electoral competition during the war.

Similarly, the post-war 'double hard squeeze' arguably involved a lower degree of loss to voters and citizens (since the spending cuts applied exclusively to defence, and all other major categories of spending saw increases), and governing politicians ran rather more reputational risk, for example, as they broke promises to abolish Excess Profits Duty after the war and as electoral competition resumed.

For the various governments involved in the 'Geddes Axe' squeezes, the losses imposed on voters certainly seem to have been significant (especially at first), but the effort required of the state machine could only be counted as the top of the scale if we include items such as handling strikes or insurgency in Ireland that arguably were not directly related to fiscal policy. As for the political losses incurred by governing politicians, there is unavoidable ambiguity over who is to count as 'incumbents' for that episode, in several ways. The squeeze begun by the 'Geddes Axe' shows up in the financial outcome numbers we set out in Chapter Two as starting in 1923, by which time the Liberal-Conservative coalition had collapsed. But that squeeze was clearly announced and enacted by the coalition government well before it fell, with spending cuts under way by November 1922, so we have analysed the political costs to the coalition as incumbents for that case in Table 3.1. The coalition parties had campaigned on a joint platform in the 1918 'Khaki' election, so we do not count the costs of the various parties in the coalition separately in this analysis (though as it happened, the Liberals seem to have incurred stronger voter punishment than the Conservatives, consistent with the 'asymmetrical punishment' idea considered in Chapter Two).

Of course such a scoring exercise is necessarily limited, and some of these judgement calls are debatable. But it underlines the value of combining qualitative analysis with the sort of quantitative analysis we pursued in Chapter Two, because it shows how squeezes that look severe from aggregate analysis can be judged differently on other criteria (for instance, if we strip out military spending, or take account of grand coalitions or suspension of party competition). We will show in the concluding chapter how those distinctions can matter when it comes to analysing the consequences of fiscal squeeze.

 
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