Austerity: is Ed Balls being outflanked on the left by the IMF? 14 10 2012 Austerity has become the default mode of European -- more especially British economic policy; in his speech to the Conservative Party conference last week David Cameron reiterated that there is no "Plan B" and mocked the Labour Party for its alleged tax and spend profligacy -- even though the statements of shadow Chancellor Ed Balls appear to lock Labour into an endorsement of austerity that is in many respects more rigorous than that of the Coalition, raising the prospect of deep cuts after 2015 on top of those that the Tories have already made. Against this background, it has been fascinating to read the assessment of Jonathan Portes, director of the National Institute of Economic and Social Research (NIESR), on his blog Not the Treasury View. In my view his analysis is desperately important. Portes' assessment matters because it goes right to the heart of the theoretical justification for austerity economics.  Portes examines the multiplier -- the key theoretical construct that underpins Keynsian economic analysis and explains the effect that changes in Government expenditure have on the economy as a whole.  The fundamental principle is that government and individuals behave in different ways.  Individuals consume and save (and, increasingly in the boom years before the 2008 crash) borrow.  Governments spending goes on procurement, projects, transfer payments (benefits and subsidies), and of course paying public workers.  They also borrow, and repay debt; but at different levels