Austerity or growth: a politician's dilemma

With Karolos Papoulias emerging as the new Prime Minister of Greece, the nations of the Eurozone hold their collective breaths to see what approach to the crisis the new government will take. In some ways, Merkel and friends must be breathing a deep sigh of relief at having dodged the bullet of a coalition involving the ΚΚΕ (the Communist Party of Greece) who wish to renounce austerity and and leave the Euro. After the election dust has settled, a coalition has emerged between the parliament's largest party, New Democracy, Pasok (the Socialist party) and the Democratic Left. All three parties are broadly in favor of remaining in the Euro and desiring a less radical renegotiation of the bailout. However, the new government does seek some changes to the demands placed on Greece, and this must worry Merkel and co.

Across Europe, austerity is looking less attractive to politicians, as voters turn towards parties which favor growth. In France, François Hollande defeated Nicolas Sarkozy on a platform of taxing and spending. This is a sign of how much things have changed in the two years since the last UK general election, where austerity was taken as common sense. Since then, European economies have seen little growth, and the prosperity that has been created has not helped where it is needed most. As government budget cuts force roll-backs across the services which are available, most people feel worse off under austerity. Now the Tory-led government talks about efficiency and promoting growth, realising that if the situation does not improve then re-election looks unlikely. As well as watching Greece, keen eyes are also focused on France to see if Hollande's policies of tax-spend will boost the economy faster than Merkel's austerity.

In the UK, boosting growth has support on both side of the political divide not the least because GDP must rise if tax revenue is to increase enough to meet the government's deficit reduction targets. Further stagnation in the economy will hinder growth in the long term and cause lasting structural damage. Aside from the much talked about 'lost generation' of young people locked out of jobs and the housing market through increased scarcity, social problems are becoming exacerbated through a lack of prosperity – see last summer's London riots for evidence of this. Faced with the prospect of the economy tanking, the government's austerity programme now looks a lot less like common sense and a lot more like an ideological commitment to privatization and rolling back the state. I have blogged before about the roots of the government's philosophical commitment to austerity.

If austerity is ever going to work, it will have to deliver some growth soon. In the meantime, the people of Greece are facing a fifth consecutive year of recession and world greatly appreciate some growth. The austerity conditions imposed on Greece are very harsh and surely smothering the green shoots of recovery. However, the new government has little room to maneuver, as they are reliant on the support of the rest of the Eurozone to manage the country’s enormous debt. Papoulias needs growth and austerity, but it is becoming evident that the two are mutually exclusive. Greece will be watching both France and Germany to see which economy grows the fastest. The divisions across Europe are summed up last Friday's Euro 2012 match between Germany and Greece, a contest of the prosperous against the impoverished. Germany's victory does not silence the doubts about the merits of austerity.

The leaders of Europe are in need of some answers to the question of austerity verses a bold dash for growth, and are keen to see what happens in the countries which have most openly embraced either stance. The new Greek government will have to make some difficult economic choices and the continuing existence of the Euro maybe rest on these decisions. One thing that is certain – politicians will need to embrace either harsh austerity or a strong push for growth soon, as the current stagnation is unsustainable.

The end of the high street: not with a bang but a whimper

It's easy to live in a left-wing bubble: between organic toiletries, pubs with locally-sourced food and shopping on the internet, sometimes it is easy to forget there are High Streets where a large number of people do the majority of their consuming. A few days ago, my delicate shield of ethical consumption was smashed when I spent a few hours inside the Westfield Shopping Centre near Shepherd's Bush, west London.

The phrase 'fish out of water' does not cover the experience that I went through. I assumed that Westfield employed people specifically to keep dirty lefties like me out of their palace of consumption. Much to my surprise, I was welcomed in and dazzled with the bright lights and the range of shiny baubles available for me to purchase. I had some time to waste, and decided to find a music shop to pass the time in. I briefly considered unraveling a thread from my shirt and attaching it to the door so that I could find my way back later, but then I noticed the handy maps available from an information stand. Armed with a plan of the place, and mentally comparing myself to Livingstone, I set out to explore this strange and unfamiliar land of retail.

As I walked past the juice stands and Sky TV sign up booths, two things become almost immediately apparent to me: firstly, that there were no music, DVD, books or games shops anywhere to be seen, and secondly that the shops which did make up the Westfield were almost exclusively either clothing or jewelry shops. This confused me, for surely the main point behind a large-scale retail development is to get as much diversity of shops into as small a place as possible, thus allowing consumers to satisfy all their needs at once. Apparently not, as the Westfield caters to a very small section of consumption, mainly high-end up-market deeply personal. For those who shop in the Westfield, the particular boutique they frequent is a statement about their individuality made through mass consumption, the triumph of late-stage capitalism. In short, I discovered that the Westfield is the last bastion of the high-end High Street retailers against the advancing tide of internet shopping.

Later in a gastro-pub serving organic, locally-sourced pies, I was firmly back in my element and discussing my afternoon with a friend. I said that clothes and jewelry were one of the few areas where internet shopping and has had little impact. My friend informed me that he purchases T-shirts and shoes online, to which I agreed. The internet's particular brand of culture is very suited to the T-shirt business and allows the consumer to seek out designs which speak to them. Here the internet has had success in breaking the High Street's stranglehold on fashion. I asked my friend, however, if he would consider buying trousers online and we both agreed the idea seemed somewhat perverse.

The internet has taken over from the High Street in areas where it does best: bulk selling of goods, mainly entrainment goods, where the major factors are price and range. The last time I went into HMV to purchase a DVD, a friend told me not to bother and that it would be 'cheaper online'. He did not specify a website or have any data to justify his claim, which was built on a cultural understanding that this variety of shopping is simply better on the internet.

So where does this leave the High Street, other than with pound shops and clothing outlets? Some things have to be brought in the flesh, and the time delay involved in internet shopping means some goods will always be purchased in meat-space. However, with the rise in smart phones, tablets and app stores, immediate entertainment purchases online are a reality. All that is needed is a shift in social conventions, to make the giving of online content an acceptable present, and there will be no need at all for High Street entertainment retailers.

The High Street is certainly in a bad state, and a simple Google search for 'the end of the high street' returns thousands of blog posts and broadsheet articles bemoaning the end of face-to-face retail and making lazy observations comparing the closure of Game to the rise of Angry Birds. The truth is that this is hardly a recent phenomenon. It was nearly two decades ago that Amazon's diversification into VHS selling meant that Saturday afternoons were no longer spent wandering into the city centre to buy the latest Simpsons collection. One article I read claimed that 2012 was the year the High Street would end, as if most people had only just discovered the internet. In fact, most High Street retailers discovered the internet a long time ago and have also moved into online shopping.

Most likely the current process will simply continue. Places like the Westfield will hold their own in certain sectors for a while, but eventually changes in technology and social conventions will move our lives and consumption almost entirely online. If the High Street does end, it will be slowly over many decades, and not because everyone turned exclusively to online shopping over one Christmas period. If the High Street does end, it will not be with a bang but with a whimper, and one which is already well underway.