Can austerity boost economic growth?
With government spending cuts in Europe threatening to produce a global recession, what can an 18th century philosopher, bees and modern economists tell us?
- Robert Shiller
- guardian.co.uk, Thursday 19 January 2012 11.22 GMT
Bernard Mandeville’s 18th century fable imagined how a sudden austerity drive could bring down a colony of bees. Photograph: RESO/Rex Features
In his classic Fable of the Bees: or Private Vices, Public Benefits (1723), Bernard Mandeville, the Dutch-born British philosopher and satirist, described – in verse – a prosperous society (of bees) that suddenly chose to make a virtue of austerity, dropping all excess expenditure and extravagant consumption. What then happened?
The Price of Land and Houses falls;
Mirac’lous Palaces, whose Walls,
Like those of Thebes, were rais’d by Play
Are to be let; …
The building Trade is quite destroy’d
Artificers are not employ’d; …
Those, that remain’d, grown temp’rate strive
Not how to spend, but how to live …
That sounds a lot like what many advanced countries have been going through, after financial-crisis-induced austerity plans were launched, doesn’t it? Is Mandeville a genuine prophet for our times?
Fable of the Bees developed a wide following, and generated substantial controversy, which continues to this day. The austerity plans being adopted by governments in much of Europe and elsewhere around the world, and the curtailment of consumption expenditure by individuals as well, threaten to produce a global recession.
But how do we know if Mandeville is right about austerity? His research method – a long poem about his theory – is hardly convincing to modern ears.
Harvard economist Alberto Alesina recently summarised evidence concerning whether government deficit reduction – that is, expenditure cuts and/or tax increases – always induces such negative effects: “The answer to this question is a loud no.” Sometimes, even often, economies prosper nicely after the government’s deficit is sharply reduced. Sometimes, just maybe, the austerity programme boosts confidence in such a way as to ignite a recovery.
We have to examine the issue with some care, understanding that the issue that Mandeville raised is really a statistical one: the outcome of government deficit reduction is never entirely predictable, so we can ask only how likely such a plan is to succeed in restoring economic prosperity. And the biggest problem here is accounting for possible reverse causality.
For example, if evidence of future economic strength makes a government worry about economic overheating and inflation, it might try to cool domestic demand by raising taxes and lowering government spending. If the government is only partly successful in preventing economic overheating, it might nonetheless appear to casual observers that austerity actually strengthened the economy.
Likewise, the government’s deficit might fall not because of austerity, but because the stock market’s anticipation of economic growth fuels higher revenues from capital-gains tax. Once again, we would see what might appear, from looking at the government deficit, to be an austerity-to-prosperity scenario.
Jaime Guajardo, Daniel Leigh, and Andrea Pescatori of the International Monetary Fund recently studied austerity plans implemented by governments in 17 countries in the last 30 years. But their approach differed from that of previous researchers. They focused on the government’s intent, and looked at what officials actually said, not just at the pattern of public debt. They read budget speeches, reviewed stability programmes, and even watched news interviews with government figures. They identified as austerity plans only those cases in which governments imposed tax hikes or spending cuts because they viewed it as a prudent policy with potential long-term benefits, not because they were responding to the short-term economic outlook and sought to reduce the risk of overheating.
Their analysis found a clear tendency for austerity programmes to reduce consumption expenditure and weaken the economy. That conclusion, if valid, stands as a stern warning to policymakers today.
But critics, such as Valerie Ramey of the University of California at San Diego, think that Guajardo, Leigh, and Pescatori have not completely proven their case. It is possible, Ramey argues, that their results could reflect a different sort of reverse causality if governments are more likely to respond to high public-debt levels with austerity programmes when they have reason to believe that economic conditions could make the debt burden especially worrisome.
That may seem unlikely – one would think that a bad economic outlook would incline governments to postpone, rather than accelerate, austerity measures. And, in response to her comments, the authors did try to account for the severity of the government’s debt problem as perceived by the markets at the time that the plans were implemented, finding very similar results. But Ramey could be right. One would then find that government spending cuts or tax hikes tend to be followed by bad economic times, even if the causality runs the other way.
Ultimately, the problem of judging austerity programmes is that economists cannot run fully controlled experiments. When researchers tested Prozac on depressed patients, they divided their subjects randomly into control and experimental groups, and conducted many trials. We cannot do that with national debt.
So do we have to conclude that historical analysis teaches us no useful lessons? Do we have to return to the abstract reasoning of Mandeville and some of his successors, including John Maynard Keynes, who thought that there were reasons to expect that austerity would produce depressions?
There is no abstract theory that can predict how people will react to an austerity programme. We have no alternative but to look at the historical evidence. And the evidence of Guajardo and his co-authors does show that deliberate government decisions to adopt austerity programmes have tended to be followed by hard times.
Policymakers cannot afford to wait decades for economists to figure out a definitive answer, which may never be found at all. But, judging by the evidence that we have, austerity programmes in Europe and elsewhere appear likely to yield disappointing results.
Copyright: Project Syndicate, 2012.
BBC News 25 October 2011
No life threatening injuries were reported after the bees escaped
A highway in the US state of Utah was temporary closed after a lorry carrying at least 20m bees overturned, freeing the insects.
The bees were being transported to California, ready to pollinate an almond crop next spring.
Interstate 15 was closed down for several hours while local beekeepers worked overnight to recapture the bees.
The trip was among the last of 160 truckloads of bees being sent south from Adee Honey Farms in South Dakota.
Authorities closed the southbound lanes of the highway, near the Arizona border, for several hours on Sunday night. The road reopened early on Monday morning, but officials have warned drivers to keep their windows closed.
“The driver lost control, hit the concrete barrier and rolled over,” said Corporal Todd Johnson of the Utah Highway Patrol. “Of course, we then had bees everywhere.”
Driver Louis Holst and his wife Tammie were dragged out of the overturned trailer by first responders, but were swarmed by the escape bees on the highway.
“We just started swinging our clothes,” Mr Holst told the Associated Press news agency. “They stung her all up and down her neck.”
Mr Holst said he was stung about a dozen times and suffered a gash on his forehead. His wife also was both stung and bruised.
Two police officers were also stung.
Richard Adee, owner of Adee Honey Farms, said this truckload, worth approximately $116,000 (£72,500) was “pretty much a complete loss”.
Local beekeepers worked overnight to capture the bees, but on Monday most of the inhabitants of the 460 hives were gone or dead.
“We tried to move them [the bees] as far out of the metropolitan area as we could,” beekeeper Melvin Taylor told the Reuters news agency. “Because when those bees come alive today, they are going to be mad that their house is all [broken] apart.”
Earlier this summer, an estimated 14m bees escaped from an overturned truck on a Idaho highway.
Aggressive Asian hornets can wipe out a bee colony in hours
British beekeepers have been placed on red alert by a government warning that the UK is about to be invaded by the Asian hornet – a species whose favourite food is the honey bee. The aggressive hornet – Vespa velutina nigrithorax – hunts bees to deadly effect. Just a handful of the dark-bodied, yellow-legged hornets can destroy a bee colony in two hours.
They have already spread across France and into Spain, and are “highly likely” to reach Britain, according to the Non-Native Species Secretariat.
The Asian hornet, which can grow to 3cm long, was introduced to France in 2004, in a shipment of pots imported from China. It has swiftly adapted to the European climate. A single colony can produce more than 15,000 hornets. Earlier this month there were sightings in Belgium.
While the secretariat does not put a figure on the impact the marauding hornets could have on crops, it states: “If the UK were to suffer a total loss of pollinators (not just honey bees) the cost is estimated to be £440m per year.”
The invading hornets are “very likely to survive eradication attempts” and will be a serious problem for beekeepers. The British Beekeeping Association has alerted members to prepare for the worst. It is calling on them to make beehive entrances smaller to deter the large hornets, use wasp traps, and report any sightings immediately.
And Stuart Roberts, chairman of UK Bees, Wasps and Ants Recording Society, said: “We’re on red alert for any sightings … There’s not a beekeeper in this country who isn’t aware that this thing is just on the other side of the Channel. We are all on the lookout.”
Invasive species cost the British economy £1.7bn a year, according to the Department for Environment, Food and Rural Affairs. And the Government is now drawing up plans to deal with the Asian hornet. A Defra spokesperson said: “The Asian hornet could spread across the UK in just a few years.”
Norman Rabone, 66, a beekeeper from Gillingham, Kent, said: “Hornets are terrible killers of bees. They have a killer instinct.”
Asian hornets usually build large nests in trees. As well as hunting honey bees, they eat other insects and feed on fruit and flowers.
People are also at risk. In France, at least seven people were taken to hospital in 2009 after being attacked.
Bee sting vaccine on the NHS
A ‘vaccine’ that protects people vulnerable to severe reactions from bee and wasps stings is to be made available on the NHS.
People who have already suffered a serious reaction to a bee or wasp sting will be able to ask their GP for the ‘vaccine’ Photo: GETTY IMAGES
About one in 200 people suffer from anaphylaxis when stung by a wasp or bee.
Every year between two and nine people die after going into anaphylatic shock – the most extreme form of anaphylaxis – as a result of being stung.
Contrary to popular belief, wasp stings actually cause twice as many deaths due to anaphylaxis as bee stings.
Now the National Institute for Health and Clinical Excellence (Nice), which decides on whether treatments can be prescribed on the NHS in England and Wales, has indicated it will approve a product calledPharmalgen.
Given in a series of injections, this works by gradually introducing higher doses of the allergens in bee and wasp venom. Over time, this desensitises a person by gently stimulating their immune system.
Treatment is carried out in two phases: the initial phase and the maintenance phase, which lasts three years.
Anaphylactic reactions are when the immune system responds inappropriately to an allergen, releasing large quantities of chemicals called histamines, that cause blood capillaries to dilate and blood pressure to drop. In extreme cases airways can collapse and the heart can fail.
In draft guidance that is highly likely to be confirmed early next year, Nice announced it was recommending Pharmalgen for people who had experienced “a severe systemic reaction to bee or wasp venom”.
Nice also recommended it for those who had experienced a “moderate systemic reaction” and were also at “a high risk of future stings”, had a raised level of a blood serum known to indicate anaphylaxis, or were “anxious about future stings”.
Professor Peter Littlejohns, clinical and public health director at Nice said: “The reactions that some people experience to stings from bees and wasps can be distressing, frightening and sometimes life-threatening.
“People who have had a serious reaction to a sting can often experience extreme anxiety about possible future stings, and this can affect their daily lives.
“So we are pleased to be able to recommend Pharmalgen as an effective, preventative treatment in preliminary recommendations issued today.”
Pharmalgen is the first preventative medicine for bee and wasp stings that Nice has recommended for approval.
Anaphylaxis can be effectively controlled by quickly administering adrenaline by injection. This constricts blood vessels, relaxes muscles in the lungs to aid breathing, stimlulates the heart to beat properly and stops facial swelling.
However, sometimes it cannot be given quickly enough. Last October farmer John Croall, 52, died after being stung while herding sheep in a remote field near Balkeerie, Angus. Ambulance crews were unable to reach him soon enough and the father-of-three died after suffering anaphylactic shock.
Moira Austin, of the Anaphylaxis Campaign, welcomed Nice’s decision to approve it.
She said: “The Anaphylaxis Campaign has been participating as a patient/carer consultee in the Pharmalgen appraisal, representing those living with severe allergy to bee or wasp venom.
“We have spoken with many individuals who have been successfully treated with Pharmalgen and who have, as a result, experienced a significant improvement in their quality of life.
“We are delighted with the appraisal committee’s preliminary recommendations and look forward to their final recommendations.“
There could be some eyebrows raised about the cost of providing the treatment. Nice usually sets a ceiling of £30,000 per ‘quality adjusted life year’ (QALY) that a medication brings.
Its appraisal committee modelled the cost at £13,800 per QALY, but this was based on a course of Pharmalgen remaining effective for 20 years, for which members admitted there was no evidence.
The committee also said the cost assumption was highly sensitive to the number of stings a person might receive: the fewer, the less cost-effective it was.
Telegraph 27th August 2011
Man survives being stung 400 times by bees
A 95-year-old California was stung more than 400 times by a massive swarm of bees and survived.
Exterminators had made several attempts to remove the enormous hive from the roof of the apartment building Photo: GETTY IMAGES
The attack came as the man was walking past an apartment building in the Los Angeles suburb of Redondo Beach on Wednesday where an exterminator was pumping poison into a giant hive of bees, Redondo Beach Police Sgt. Phil Keenan said.
“The bees became highly agitated and came after the fumigator, who was dressed appropriately and only got stung a few times,” Keenan said.
Sgt Keenan said the exterminator quickly retreated but the 95-year-old man was attacked by thousands of bees, which were possibly Africanized.
“He tries to walk or run as fast as he can for being 95 years old and, according to his daughter, there was a Fed Ex truck there so he jumped in the Fed Ex truck,” Keenan said. “The Fed Ex driver gets attacked by the bees also.”
At that point firefighters wearing protective gear arrived and scraped the bees from the man before rushing him to the hospital for treatment of hundreds of bee stings.
“The hospital gave up counting at 400,” Sft Keenan said. “He was probably stung between 500 and 600 times. Obviously he’s not allergic but he was stung everywhere – the mouth, eyes, nose, ears.”
He said the man’s daughter told police that her father was in good shape and joking at the hospital, where doctors were expected to release him later on Thursday.
Sgt Keenan said exterminators had made several attempts to remove the enormous hive from the roof of the apartment building, at one point removing part of the roof and carrying off more than 100 pounds of hive and honey.
Crews were expected to return on Thursday evening for another attempt, he said, during which police will likely cordon off the street.
According to the US Department of Agriculture, Africanized or “killer” bees swarm more frequently than their European counterparts and can become highly defensive in protecting their hive.
Telegraph 26th Aug 2011
French Asian hornet invasion claims first victims
The death of a man stung by an Asian hornet has exacerbated fears over the invasive species that has taken France by storm and could reach Britain within three years.
Patrice Verry, 38, was stung by one of the predators on Saturday after trying to wave it away with a kitchen towel at a barbecue in Lherm, in the Haute-Garonne region of southwestern France.
He collapsed minutes later and never regained consciousness, police said. In June another man died in the Médoc region after receiving several stings.
The local mayor said the number of hornet nests had “exploded” in the area. “Our villages are powerless,” said Jean Aycaguer.
The species Vespa velutina is thought to have arrived in southwestern France from the Far East in a consignment of Chinese pottery in late 2004.
The bee-eating invaders, unmistakable due to their dark hue and yellow feet, first settled in the forests of Aquitaine, but quickly spread to surrounding areas along waterways, thriving due to a total lack of indigenous predators.
There are now thought to be 2,000 nests and the voracious insects’ battlefront has reached the shores of northern Brittany. Two nests were recently found in Spain.
According to Franck Muller of the Museum of National History in Paris, given their current rate of progress – roughly one French department per year – they will cross into Britain within “three to four years”.
“We have modelled its potential spread by cross-checking data from France and Asia, and concluded it is capable of living anywhere in Europe and certainly in Britain,” said Mr Muller.
However, experts said the hornets should not be cause for panic.
“Vespa velutina is not aggressive, at least not alone, but can potentially become dangerous and attack as a group if it feels threatened,” said Denis Thiery, from the national agricultural research institute, INRA, in Bordeaux.
Besides, its widespread presence means it is now impossible to eradicate. “This species is now part of French fauna. We’ll just have to get used to living with it,” said Claire Villemant of the Museum of National History.
Telegraph 25 August 2011
Beekeeping Diary: The honey harvest to come
Ian Douglas makes the final checks and looks for a honey surplus
t’s raining and I’m going to get a parking ticket if I don’t get a move on, so I’m not even going to smoke the bees before I open the hives.
It’s been a good season so far, and at least one of my two hives has had a lot of activity in the supers, the boxes that sit above the body of the hive, excluded from breeding activity with a grid so they only store honey. The end of August is approaching and the time to take any surplus honey is approaching fast. The bees will still be active during September but I want to make sure I can treat them for varroa, the horrible little mite that has been such a problem for British bees, before the cold weather starts to bite.
I’ve struggled down the muddy path to the hives at the allotments a couple of miles from my house laden down with spare supers in case they’re running out of room, and now I’m having a good look at my little apiary before I begin.
There are no bees flying in the cool, steady drizzle but I can see some gathered at the entrance of hive number two, a wooden Dartington, milling around and regulating the temperature inside. No signs of life at first in number one, a bright purple Beehaus, until I see a single worker tracing a sluggish line towards the entrance, making its way around the remains of a dead wasp on the landing board.
I open the Beehaus first. This docile colony, secure in its thoroughly modern plastic home, have been a bit short of stores in the last few weeks and today the supers are still empty save for a few exploratory workers. The brood nest below is a little short of activity too, with six of the eleven frames full of life but a slightly worryingly large amount of space unused. The smell of nectar and honey is unmistakable though, so with a little feeding they should be fine. I close up and move on.
I have higher hopes for the Dartington. A couple of weeks ago one of the supers was full of nectar and bees, so I’ve brought along the equipment to begin the extraction process. To avoid dealing with a box full of protective bees when you take the honey it’s best to isolate it from the rest of the hive some time before harvesting time so you can come along and remove it at your leisure. To do this you place a solid board underneath and something called a Porter bee escape above.
This ingenious little device sits in a hole in the middle of a board above the frames and acts as a bee valve, letting them out but preventing them from coming back in. It consists of a pair of strips of flexible steel that taper to a gap slightly narrower than the body of a bee, so they can push their way out easily enough but lack the strength to go the other way.
The theory says that after a few days all of the bees in a super will have made their way out and it can be safely removed. Beekeeping theory often meets a knowing sneer from beekeepers used to bee escapes becoming gummed up, trapping the bees inside so you’re met with a slightly peeved crowd of them when you finally take the lid off, but I’m keen to try it out for myself.
Unfortunately even this colony isn’t able to oblige my urge to experiment as the nectar of two weeks ago hasn’t been transformed into honey up here. Probably a lack of stores below meant that it’s been transferred to one of the frames in the brood box, but the supers are largely empty of honey. There’s a little dotted about here and there along with some more nectar, shining in tiny sweet pools, and I might be able to cut out some honeycomb when I come back with the winter food and vorroa treatments but I put my bee escapes back in my bag, unused.
It’s a little disappointing, after a hopeful year, to conclude that only a tiny amount of honey is going to be making its way home with me. The bees, however, are healthy and look very likely to make it through the winter. Beekeeping might have honey production as its ostensible goal but often the main thing, the thing most beekeepers actually spend their time working towards, is the preservation of the bee colony. As I close up the hive and hurry back through the rain to the car, I know that’s gone pretty well.
Telegraph 24th August 2011
Bees on a plane panic as two hives swarm business class cabin
The bees – sneaked on board in cardboard boxes – are understood to have become agitated in the pressurised cabin during the 10-hour Yakutia Airline flight to Moscow from Blagoveshchensk near Russia’s border with China.
The trafficker – who has not been named by the airline – claims an airport official at Blagoveshchensk had asked him to carry the boxes to Moscow where he would be met at the airport.
Official airport documents quoted a passenger as saying that the trafficker was “slightly drunk.”
Air hostesses eventually managed to seal the bees inside the wardrobe in the flight’s business section by sealing it with sticky tape.
But when the plane arrived at its next destination, Barcelona, a new crew discovered that the fumigation had not been completely successful with five bees still on the plane, Russian newspapers reported.
Now the carrier could be stung with a massive £100,000 bill for having the fumigate the Boeing 757 jet and to compensate for the delays caused to the plane’s ongoing journey to Spain.
The incident raises concerns about flight safety on Russian internal flights as well as the impunity of airport officials.
Baggage handlers in Blagoveshchensk told a Russian newspaper that a senior airport official could “carry on board anything he likes.”
A famous Russian circus act, the Zapashny brothers, asked if they could bring a caged white tiger cub into the cabin with them. The airport management did not immediately turn down the request and was still considering, Rossiskaya Gazeta reported last week.
In the 1990s, it was not unheard of for passengers to bring animals, in particular farm animals, into the cabin on internal flights when regulation was more lax than today. A famous Soviet film “Mimino” shows a helicopter pilot delivering sheep and a cow.
BBC News 19 August 2011
London offices offered bee hives to ‘boost work morale’
Businesses in central London are being offered free bee hives to see if they will enhance office morale.
InMidtown, a group representing firms in Holborn, Bloomsbury and St Giles, said it has offered hives to 560 businesses in a pilot scheme.
The scheme hopes hosting apiaries will aid team building in firms and add to the urban food production.
Five businesses who have signed up are hosting 40,000 bees in eight hives on their roofs and terraces.
Employees of the host businesses will be trained to assist professional beekeepers to care for the hives and harvest honey.
Dr Susan Parham, head of urbanism at the University of Hertfordshire, will monitor the impact of hosting hives in a working environment.
Law firm Olswang has signed up to the project and has a bee hive on its roof and another on a terrace in Holborn. It said the bees were a “very docile” variety.
“It just seemed like a great project and staff absolutely love it,” said Sam Hudson, corporate responsibility executive at the firm.
Up to 560 firms are being offered free bee hives
Once a week 20 staff members don bee suits to check on the hives with a professional, and the firm hopes to harvest its first batch of honey this autumn.
“We are going to sell it off to our staff and raise money for our charity partner Coram. Hopefully give some to our clients as well,” Ms Hudson said.
Tass Mavrogordato, chief executive of InMidtown, said the pilot scheme aimed to tap into the business benefits of hosting apiaries.
She said: “To ensure there is enough food from the off we’ve been filling five bike-lock planters with bee-friendly flowers since last autumn, with a further 20 planters installed along with the new hives.”