Loss, Cost, and Effort Involved in These Episodes

Following our analysis in the previous chapter, Table 4.1 sketches out our assessment of 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 exerted from the state machine in handling fiscal squeeze.

The 1931/32 to 1932/33 episode is notable for the high political cost incurred by the governing politicians in the minority Labour Government, as they coped with serious party splits and faced the abandonment of cherished policy goals and election promises. Arguably, those high political costs continued for those Labour politicians (such as Philip Snowden) who joined the National Government in August 1931, and that is why we show political costs separately for different parties in that coalition in Table 4.1. The losses

Table 4.1. A qualitative classification of imposed loss, political cost, and state effort associated with 1930s fiscal squeezes

Low

Moderate

High

Overall classification

1931-32. Squeeze type: Hard Revenue

Labour 5/1929-8/1931 Loss

[3]

[1]

High

Cost

[1]

High

Effort

[1], [4]

High

National government (non-elected) 8/1931-10/1931

Loss

[1]

High

Cost (Cons and Lib)

[1], [3]

Moderate

Cost (Labour rump)

[1]

High

Effort

[1], [2], [3]

Moderate

National government 10/1931- end of episode

Loss

[1], [2], [3]

High

Cost [1], [2], [4]

Low

Effort

[1]

High

1933-35 Squeeze Type: Hard Expenditure National government (elected 10/1931)

Loss [3]

[2]

[1]

Mod/High

Cost [1], [2], [4]

Low

Effort [1], [2], [3]

Low

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

imposed in the tax squeeze were relatively high too, but much of the extra burden fell on the top 25 per cent of income earners, as we saw. The state machine was exposed both to high effort from managing the financial crisis and preparing new policy machinery (for example, for Snowden's plans for a land values tax) and indeed over the role of the monarch in helping to engineer a change of government without a general election (seriously splitting the Labour Party in the process), which exposed the state machine to constitutional crisis and not just administrative effort.

For the 1933/34 to 1935/36 spending squeeze episode, losses imposed on citizens and voters seem to have been relatively high as well on the criteria set out in Table 1.2 in Chapter One, for example, with the cut in unemployment benefits, pay cuts across the public sector, and the heavy cuts in education spending. And there was certainly non-fiscal austerity in the form of mass unemployment. But as we have seen, the spending cuts were presented and planned as temporary emergency measures, and in contrast to the earlier 1930s episode, they were accompanied by relatively loose monetary policy that to some extent offset the fiscal austerity and has been argued by scholars such as Nicholas Crafts to have been very important in mitigating the effects of recession (see Crafts and Fearon (2010); Middleton (2010): 414-41). The political costs incurred by governing politicians over this period were variable (higher in the emergency period of the autumn of 1931 than after the general election, higher for the rump of ex-Labour ministers than for those from other parties), but for the period and the governing group as a whole seem to have been relatively low, in the sense that election promises did not have to be broken and there was a ready-made political scapegoat in the blame game. Nor does this episode seem to have produced notable effort on the part of the state machine, a point on which we comment in section 4.5.3.

 
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