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Posts Tagged ‘George Osborne’

New British Slasher Film, Starring You.

26/10/2010 1 comment

slasher1Didn’t we sack you two days ago…? 

So we’ve seen the vision George Osborne and the rest of the Tory party have for this country (the full version can be found here – it isn’t pleasant). We were never in any doubt of the severity of the cuts, but that doesn’t make it any less worse as they go deep into the fabric of our society.

I want to mention three things which our coalition government are adamant about, ignoring, or intentionally following through with. There is the constant reiteration that these particular cuts are “necessary”, contrary advice from world renowned economists, and the consequences these cuts will have for the majority of the public, respectively.

 

“Necessity”

OK, lets break this down. Osborne has said these cuts are “necessary” to correct a deficit the previous government created. Policies are never necessary. There is always a choice. The Tories and Liberal Democrats are pushing an agenda of having no choice to firstly try to mute other solutions, and secondly to relinquish any responsibility they will have for bad outcomes.

By saying there is no choice, they are in the right if the economy magically recovers through random innovation. If it slumps and we enter a double-dip recession, they can argue that, at the time, this was the only option and thus inevitable whatever course of action undertaken. It smacks of irresponsibility and, to put it bluntly, lies.

Basic economic theory suggests that in hard times, one should invest and not cut savagely. To give a simple picture: there are assets, which are profitable entities and contribute to society, taxation, and business. Then there are liabilities, which is the jargon for irretrievable costs paid by the spending entity.

In a recession, heavy investment is needed to drive an economy and fund the very things which will ensure economic growth. Sure, debt will be accumulated, but governments have an incredibly good rate of return for their loans as interest rates for developed nations are low, while the benefits associated with spending the money is relatively high.

The assets acquired by a government which chooses to maintain funding include keeping unemployment low to ensure a decent quality of life and greater tax revenues. The liabilities of cutting deep are horrendous and would entail massive swathes of unemployment, an increased welfare bill for those who are unemployed, and a likely rise in crime levels.

These things are costs which have no return other than “satisfying bond markets” or tentative investors who will be attracted to prices being lowered. The investment relied upon will be mostly foreign, as local investment depends on reluctant banks who aren’t willing to lend to small business due to the risks, and would rather deal with already wealthy clients.

 

slasher2Danny Trejo is set to star as George Osborne in the upcoming sequel to Hollywood blockbuster, Machete 2: Cutting Deep in Croxteth

I think George Osborne and his team must be relatively intelligent and thus I am unable to call them incompetent. Additionally, I do not think he now believes himself mistaken about the legislation. This can only mean one thing: this is an ideological position, and one which only presents itself as pure necessity. It is a choice, a policy, and a traditional one of the Tory Party.

 

“Don’t do it!”

We’re all sitting here and wondering how its going to pan out – it is a gamble after all. We’re not experts, and nor is George Osborne for that matter. However, two experts, who also happen to be Nobel Prize winners – Paul Krugman and Joseph Stiglitz – have both voiced their concerns over proposed austerity plans.

Paul Krugman states:

In short: the demand for immediate austerity is based on the assertion that markets will demand such austerity in the future, even though they shouldn’t, and show no sign of making any such demand now; and that if markets do lose faith in us, self-flagellation would restore that faith, even though that hasn’t actually worked anywhere else.

The Bad Logic of Fiscal Austerity, New York Times, June 14th 2010

And it hasn’t, as Joseph Stiglitz here recalls:

Thanks to the IMF [International Monetary Fund], multiple experiments have been conducted – for instance, in east Asia in 1997-98 and a little later in Argentina – and almost all come to the same conclusion: the Keynesian prescription works. Austerity converts downturns into recessions, recessions into depressions. The confidence fairy that the austerity advocates claim will appear never does, partly perhaps because the downturns mean that the deficit reductions are always smaller than was hoped.

To Choose Austerity is to Bet it All on the Confidence Fairy, CiF, October 19th 2010

Austerity and methods suggested by organisations such as the IMF have proven to be detrimental to the recovery of an economy in dire straits. In East Asia, countries such as Malaysia, who greatly ignored the economic advice the IMF gave them, proved far more successful at maintaining its market integrity and ensuring recovery after the crisis.

Other countries like Thailand, who followed and implemented IMF programs almost perfectly, had the most disastrous time. More than three years after the East Asian crisis began, it was still in recession with a GDP roughly 2.3% below the pre-crisis level. This makes logical sense if you rightly consider a recovery meaning a good employment rate and fairer wages.

Of course, the IMF doesn’t care about employment or quality of life. Its interests are dictated by the Washington Consensus, which among other questionable policies, promotes free market fundamentalism and intensive (and immediate) trade liberalisation to suit the business interests of Western corporations who want the best possible return for their investments.

Our government has done its best to weave this false web of necessity regarding austerity while ignoring not only contrary advice from economists who have dedicated their career to mapping economic activity and analysing consequences, but hard evidence which makes a strong case against fiscal austerity as a response to economic crises and a high deficit.

 

slasher3Caroline Lucas does not approve. 

“We’re all in this together.”

This is the mantra of our current government. It is however nothing more than a vacuous soundbite repeated over and over in a rather Orwellian way. The key to this statement is recognising that it is trying to project fairness onto the policy rather than actually letting it emanate from the policy itself. I shouldn’t have to be persuaded it is fair.

Lets look at the details. Who suffers the most? George Osborne states that within this “progressive” spending review, the richest will suffer the most. However, the Institute of Fiscal Studies (you know, the group the Tories love quoting when it suits them, and don’t when it doesn’t), specifically state that it is the poorest who will suffer the most.

Students too will have to endure market forces as young as 18 when it comes determining their life choices with the imminent removal of the tuition fee cap. The government continue to say they are doing this so the next generation does not have to suffer because of the errors of this generation, but their policies are much to the contrary.

The whole spending review was undertaken already with the intention of making wholesale cuts to public services and investment. This effectively rebrands the “review” as merely a dossier expounding an ideology which has time and time again failed the majority of people wherever it is put into effect.

What really happens? Why do it if its destined to bring about mass unemployment, poorer wages and regional impoverishment? Again, it is to serve the elites in the long run. Business can be even more selective about their workforce, and will have an excuse to pay less, offer fewer benefits, and finally, try and shape education to suit their needs.

The very value of having a job increases as they become scarce. By ensuring this, more people will be open to exploitation by companies invoking the “bad times” card we’re being dealt by irresponsible media, political cronies and the very businesses themselves.  More people will not speak up about dissatisfaction, slave hours, poor pay and poor conditions.

Austerity is a mechanism for private interests to engineer our society by making it more desperate for what they offer us, more receptive of a particular political agenda, and more understanding of their greed by “looking at the bigger picture” – you know, the picture they draw for us too, not the actual one.

It maintains the status quo, further destroys social mobility, concentrates investment to low-risk already affluent areas, shapes education, and maintains the influence of business interests in public life. We can afford to maintain investment to facilitate growth. What we cannot afford are the austerity measures we will be made to feel in the years to come.

I’ll end with another quote from Krugman: The Myths of Fiscal Austerity:

So the next time you hear serious-sounding people explaining the need for fiscal austerity, try to parse their argument. Almost surely, you’ll discover that what sounds like hardheaded realism actually rests on a foundation of fantasy, on the belief that invisible vigilantes will punish us if we’re bad and the confidence fairy will reward us if we’re good. And real-world policy, policy that will blight the lives of millions of working families, is being built on that foundation.

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