So our masters in the Coalition government have finally revealed the extent of the damage they intend to inflict on the rest of us. On the whole it is pretty much as expected. Here are my initial thoughts on some of the key issues about the proposals. One thing that stands out is that not only is the Coalition nasty, but they also tell lies and lots of them. Let’s have a look.
- The first lie is the claim that the cuts are “fair” and that the poorest in society have been somehow protected. It only took the Institute of Fiscal Studies (IFS) four hours to burst that claim. Further research shows beyond doubt that the Coalition were lying and presumably knowingly lying when they made that claim. It is quite incredible when you think that the biggest cuts are to come in the benefits budget - so clearly the poorest are going to suffer the most.
- Linked to the lie about fairness is the claim that “we are all in this together”. This is a particularly galling lie coming from a government stuffed with multi- millionaires from a highly privileged background. It would be fascinating to know just exactly what the likes of Cameron, Osborne, Clegg and co. are going to have to give up to help reduce the deficit. At the same time we hear that the government’s friends in the City are to share bonuses of £7 billion this year. So just who is in this together? Certainly not the government or the very rich or the City financiers.
- Talking of banks and their willingness to share the pain of the mess. A mess that they - the financial companies created. The government announces that they will introduce a levy on the banks, but it is only expected to raise £2.5 billion a year. Why only £2.5 billion? Well, we can’t raise more or otherwise the banks would leave the UK and set up shop elsewhere. So much for solidarity. And in fact due to the progressive reduction in corporation tax, most banks will end up paying nothing at all in additional tax. Now, where is the outrage against these threats by the banks to up and leave. If Trade Unions make any kind of threat to take industrial action the government and their friends in the media immediately accuse workers of holding the country to ransom. Is this not exactly what the City is doing? Their threats, if true are a form of treachery. So why are these banks and financial companies not named and shamed? And just where would they go? This is all another example of lies from the government. They won’t increase tax on the banks because they don’t want to - too many friends in the business as it were.
- Of course there is no need to worry about any of this. The Free Market is going to step in solve all our woes. If you believe this then you do believe in fairies. Most economist look for a bit in the way of evidence. As Danny Blanchflower, former member of the Bank of England’s Monetary Policy Committee wrote for the Guardian, “The Chancellor’s economic strategy is to cross his fingers and hope that the private sector will create 2.5m jobs within five years, despite the fact that between 2000 and 2008 only 1.6m private sector jobs were created. Recovery is going to be a long slog. Contrary to claims made by various members of the government, there is no believable evidence that fiscal tightening on the scale that is being proposed has ever worked. When Canada implemented its fiscal tightening its neighbour was experiencing the Clinton boom, plus it was able to cut interest rates.” You can read the whole article here. And remember that letter signed by 35 so-called leading businessmen urging on the cuts and assuring everyone that the private sector will be able to make up the job losses in the public sector? Well it turns out that most of the signatories were also lying. Most of the companies involved have been shedding jobs over the past two years and some have privately informed their boards that they are most unlikely to take in new staff any time soon. All because of the austerity measures imposed by the government. Seems it is not only the government we can’t trust. We can’t trust business leaders either. So nothing new there! Osama Saeed has some details here.
- Finally we come to the grandaddy of all the lies. The one about we had to do it guv. Things were in such a mess and the country was on the brink of bankruptcy that we had to take drastic action or the whole world would have punished us. Or at least the markets would have punished us with higher interest rates on our debt. This is all a pack of lies and well documented lies at that. The key points to bear in mind are the following. 1. the current level of government debt is not that high historically. Between 1920 and 1960 government never fell below 100% of GDP. Yet we all managed to survive. 2. current government debt is not high in comparison with other countries. In fact the UK has the lowest level of government debt as a proportion of GDP among the G7 countries. 3. the government debt is overwhelmingly owed to UK institutions and is also long term and not due to be repaid for another 10 - 12 years. This means there is no threat to our credit rating by the foreign money markets. You can read more about these particular lies here, here and here.
What is most depressing about all this is not simply that our Coalition government is both nasty and lying, but that the level of coverage in our mainstream media is so pathetic. The odd critic is allowed to raise his or her objections but the overwhelming attitude of both the print and TV media is to accept at face value the government’s line that there is no alternative to cuts - it’s just a matter of how much and how fast. This of course makes Labour’s opposition so difficult. They also are thirled to the basic (false) premise. We are trapped in a situation in which virtually all our MPs, with one or two honourable exceptions, all agree with the conventional wisdom. So much for our much lauded democracy.
For the future we need to not just oppose the cuts, but to begin to develop an alternative economic vision. Can Labour provide us with this? Now, now, you don’t believe in magic fairies do you? As a starter for ten here is a good introduction to just how stupid the conventional wisdom is.