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Summary
Summary
An analysis of the enduring social costs of the post-2008 economic crisis
2008 was a watershed year for global finance. The banking system was eventually pulled back from the brink, but the world was saddled with the worst slump since the 1930s Depression, and millions were left unemployed. While numerous books have addressed the financial crisis, very little has been written about its social consequences.
Journalist Tom Clark draws on the research of a transatlantic team led by Professors Anthony Heath and Robert D. Putnam to determine the great recession's toll on individuals, families, and community bonds in the United States and the United Kingdom. The ubiquitous metaphor of the crisis has been an all-encompassing "financial storm," but Clark argues that the data tracks the narrow path of a tornado--destroying some neighborhoods while leaving others largely untouched. In our vastly unequal societies, disproportionate suffering is being meted out to the poor--and the book's new analysis suggests that the scars left by unemployment and poverty will linger long after the economy recovers.
Politicians on both sides of the Atlantic have shown more interest in exploiting the divisions of opinion ushered in by the slump than in grappling with these problems. But this hard-hitting analysis provides a wake-up call that all should heed.
Author Notes
Tom Clark writes daily editorials on politics, economics, and social affairs for The Guardian in London. Anthony Heath is professor of sociology, University of Manchester, and emeritus professor at the University of Oxford.
Reviews (3)
Guardian Review
The politics of the crash and most people's economic reality finally parted company on 27 June 2013. That was when the Office for National Statistics published data showing that the country had not, as previously declared, been through a "double-dip" recession. Growth at the start of 2012 had been only flat, not negative. For Conservatives, this was the final whistle signalling victory in their ideological grudge match against Labour. Ed Balls, they said, was intellectually routed; George Osborne's vindication was total. The chancellor's plan had worked. The truth is more complex. Balls had not quite predicted a "double dip", only warned that it was a risk generated by Osborne's premature assault on public spending. And he was right to the extent that a discernible recovery in 2010 stalled. But the crucial point is that the experience of a broken economy is unconnected to Westminster squabbles. Dismal growth or technical recession - it hardly matters to individuals whose lives are blighted either way. Narrating their version of what has happened is the purpose of Hard Times. Its power comes not from anecdote but from data. The authors, Tom Clark, a Guardian journalist, and Anthony Heath, professor of sociology at Manchester University, have combined academic rigour with a reporter's eye for the real story to expose what the Great Recession is doing to the fabric of British society, and why politics has failed to respond. The starting point is candour about what has not happened. This was no depression to match the 1930s, though the ferocity of the financial storm and subsequent collapse in output pointed to an equivalent cataclysm. The bounce back has been slower and weaker than any comparable postwar recovery. The numbers point to an epoch-defining crisis, which makes it surprising how much business has carried on as normal. Crucially, joblessness has not become the overarching social catastrophe that it was in Roosevelt's America, in the early period of Thatcher's Britain, or even the John Major-era recession of 1991-92. The national mood has been less combustible than forecast. There have been protests, strikes and riots. But the prevalent mood is resignation to austerity laced with sullen resentment of the political class. As Clark and Heath point out, the big reason why the UK and the US did not repeat the experience of the depression is that policymakers had its lessons to study. Immediately after the crash, there was a burst of co-ordinated cash stimulus to prevent global capitalism grinding to a halt. Although the fiscal brakes were then slammed on in Britain when Osborne took over the Treasury, they were loosened again within two years. Interest rates were kept low and the Bank of England "quantitively eased" the economy, spraying out cash like oil on a rusty hinge. The chief beneficiaries of this have been those who can afford to borrow, or already own assets whose value has been stoked by hot new money. A banker with a big house in London felt the recovery faster than anyone. His cleaner, on miserable wages, with no pension, holiday pay or sickness benefits, feels no recovery at all. It is on this question - who was most exposed to the storm and who was shielded from its ravages - that Clark and Heath's analysis becomes obligatory reading. Even during the long boom, the proceeds of rising prosperity were unevenly distributed in ways that channelled ever greater rewards to a small number of high-earners at the top of the scale. Average wages grew steadily until around 2000, at which point stagnation set in for the majority. The effect this might have had on living standards was temporarily numbed by tax credits - the Treasury topping up wages - and private borrowing. The rising economic tide had stopped lifting all ships, but many households used debt as a buoyancy aid. Salaries and bonuses for top executives have been spared this squeeze. In parallel, the protections that give ordinary workers confidence in a regular income and a legal defence against exploitation have been chipped away. The justification, enshrined as ideological orthodoxy for the right since the 1980s, is that labour regulation suffocates enterprise and holds back prosperity for all. The relative merits of a "flexible" labour market seemed to be confirmed by the relative rosiness of jobs data in the aftermath of the crash. Conservatives are quick to point at rising employment rates as evidence that deregulation works. Clark and Heath are unpersuaded. Alongside more technical statistical quibbles, they raise the objection that happy headlines conceal the way a minimum-wage job in a casualised labour force has ceased to protect against poverty. Many of those now showing up in the data as employed will be trapped in "zero-hours" contracts, part-time work and on pay that barely covers the rent. Before the credit crunch, Britain's economy skewed the allocation of wealth and opportunity to those who already had both. It maximised insecurity and anxiety among the low-paid and insulated the richest from risk. Clark and Heath's data show how that trend has accelerated. The recession was disproportionately brutal for people without qualifications in regions that have experienced long-term economic decline. Coalition policy has compounded their misery, especially in the case of young benefit claimants. The darkest feature of the landscape is not the material deprivation - although there is plenty of that. It is the corrosion of optimism. Clark and Heath quote from interviews with jobseekers who are endlessly rebuffed without interview, young single parents who isolate themselves for fear of being a burden on helpful neighbours or family, older workers with no savings for whom retirement looms as a time of certain penury. The aspiration to move up in the world or to see one's children advance is being overtaken by fear of sliding backwards and shame at failure to provide for the next generation. At the same time, there is clear evidence of a decline in civic association. People volunteer less and spend more time alone. Communities facing hard times become depressed, which then makes them less resilient in the face of economic adversity. There is a self-reinforcing aspect to this misery. It unfolds behind closed doors, in conditions alien to most people who make policy or comment on politics. That segregation allows politicians to offer idleness as an explanation for poverty and to sell withdrawal of help as the remedy: a purgative incentive for the feckless to raise their game. When shared experiences between different classes are so few, solidarity is depleted and the appetite for spending public money on a safety net shrivels. That is when it becomes possible for a government to preside over systematic social division while declaring that "we're all in it together". Hard Times contains the most rigorous accumulation of evidence to date proving beyond question that we are not. To order Hard Times for pounds 14.99 with free UK p&p call Guardian book service on 0330 333 6846 or go to guardianbookshop.co.uk. - Raphael Behr For Conservatives, this was the final whistle signalling victory in their ideological grudge match against Labour. Ed Balls, they said, was intellectually routed; George Osborne's vindication was total. The chancellor's plan had worked. The truth is more complex. Balls had not quite predicted a "double dip", only warned that it was a risk generated by Osborne's premature assault on public spending. And he was right to the extent that a discernible recovery in 2010 stalled. The starting point is candour about what has not happened. This was no depression to match the 1930s, though the ferocity of the financial storm and subsequent collapse in output pointed to an equivalent cataclysm. The bounce back has been slower and weaker than any comparable postwar recovery. The numbers point to an epoch-defining crisis, which makes it surprising how much business has carried on as normal. Crucially, joblessness has not become the overarching social catastrophe that it was in Roosevelt's America, in the early period of Thatcher's Britain, or even the John Major-era recession of 1991-92. The national mood has been less combustible than forecast. There have been protests, strikes and riots. But the prevalent mood is resignation to austerity laced with sullen resentment of the political class. The relative merits of a "flexible" labour market seemed to be confirmed by the relative rosiness of jobs data in the aftermath of the crash. Conservatives are quick to point at rising employment rates as evidence that deregulation works. [Tom Clark] and [Anthony Heath] are unpersuaded. Alongside more technical statistical quibbles, they raise the objection that happy headlines conceal the way a minimum-wage job in a casualised labour force has ceased to protect against poverty. Many of those now showing up in the data as employed will be trapped in "zero-hours" contracts, part-time work and on pay that barely covers the rent. - Raphael Behr.
Kirkus Review
Guardiancontributor Clark and Heath (Sociology/Univ. of Manchester) seek to identify the distinctive social maladies that flow from economic stagnationin Britain and the United States.The authors debunk the opinions of experts who assert the supremacy of the Anglo-Saxon societies and their liberal, free marketbased economics over capitalist alternatives from continental Europe and Japan. Clark and Heath probe deeply into the 2008 financial crisis and its aftermath by evaluating the quality of the unemployment numbers, which are often the preferred metrics for assessing the impact of the crisis, especially against the members of the Euro zone. Their basis is a five-year (2007-2012) international investigation known asSocial Change: A Harvard-Manchester Initiative, which Heath co-directed with Robert D. Putnam, a professor of public policy at Harvard. The directors received assistance from a number of Anglo-American universities and institutes, as well as a variety of organizations, including Save the Children and the Resolution Foundation. The authors argue that the growth of inequality in both countries since the 1970s provides the key to deconstructing the significance of unemployment statistics. They consider social consequencese.g., the increase in working women and unmarried females and the decline in household formationand they draw on the latest research to show that the reach of the recessionary damage can also be identified by tracing the jobs that have replaced those lost. In both the U.S. and the U.K., this has produced a hollowing-out of the middle of the workforce, as job quality, skills, pay and security have been downgraded, especially since the 1970s; in continental Europe, this shrinking middle is not nearly as widespread. Furthermore, the proceeds of economic growth have been allocated almost exclusively to the top percentiles of the income pyramidagain, this is not the case in continental Europe. The authors also go on to indict malign passivity towards the lowliest living standards.A sharply written rebuttal of prevailing orthodoxies about the realities of global economics after 2008. Copyright Kirkus Reviews, used with permission.
Choice Review
The financial crisis of 2008 has left its dark shadow on many generations of Americans. While numerous books have addressed the financial crisis itself, very little has been written about its social consequences. The focus of this timely book by journalist Clark (The Guardian) and Heath (sociology, Univ. of Manchester) is the differential impact of the crisis by class, race, and gender. Perhaps the most original contribution of the book is its discussion on the increasing gap between the rich and poor stemming from the financial crisis. Drawing upon interviews with people who were directly affected, the book highlights real problems faced by real people whose employment, savings, income, and wealth were affected--most likely for decades to come--by the unscrupulous practices of the financial industry. In their summary, the authors warn readers that although the financial crisis has officially ended, the real crises are still out there, and will continue to be so for a long time: the health, education, and employment prospects of future generations have already being adversely affected. This is an excellent book for students and faculty of economics, politics, and sociology, and for anyone interested in the topic of financial crisis. --Sanjukta Chaudhuri, University of Wisconsin, Eau Claire
Table of Contents
Preface and acknowledgements | p. viii |
Authorial note | p. xii |
Introduction | p. 1 |
1 Not quite 1933 | p. 13 |
2 All in it together? | p. 27 |
3 Mapping the black stuff | p. 48 |
4 Toil and trouble | p. 68 |
5 Anxious individuals, unhappy homes | p. 92 |
6 The small society | p. 117 |
7 The long shadow | p. 135 |
8 A tale of two tragedies | p. 170 |
9 The veil of complacency | p. 194 |
10 Shelter from the storm | p. 216 |
Notes | p. 238 |
Select bibliography | p. 283 |
Index | p. 290 |