Saturday 25 April 2009

The Budget - or how not to solve a crisis

That was really exciting wasn't it? Even by the (very low) standards of previous budgets this one was pretty pathetic. Faced with an unprecedented global crisis all we get is a bit of tinkering here and there and an enormous amount of borrowing. The borrowing is actually OK. It makes no sense to cut back on public spending during a recession, especially one as serious as this one. What is most depressing about the budget is the complete lack of thinking and questioning that has gone into the budget.

It was very revealing that all three of our major UK parties are essentially singing from the same hymn sheet. One after another they parrot the same line – we cannot afford to pay for public services or pensions and there just has to be significant cut backs in provision. The only real difference is in degree. Labour says not just now, but the cuts will come in a couple of years, while the Tories say we need to cut back now! The Lib Dems as usual are somewhere in the middle.

Now who exactly is this We that can't afford to pay for decent public services? Why the good old United Kingdom. And is this very same United Kingdom not the sixth largest economy in the world and about the 16th richest country in the world? So, just to get this right, we are asked to believe that the 16th richest country in the world can't afford to pay for good public services and can't afford to pay for decent public pensions? Not only can the 16th richest country in the world apparently not afford this so-called extravagance, in fact we need to cut back on services and on the paltry pensions most of us currently get.

It is very interesting to note that the people who are saying this – the politicians in charge of our main UK parties, the Institute of Directors, the CBI, the leader writers of the right wing press etc, are all themselves pretty generously paid, to put it mildly. And they represent and speak for the well paid. Who in all of this is speaking out on behalf of the low paid, the poor and the majority of middle income families? Certainly not the Labour Party or New Labour as now is. Something would seem to be wrong with our democracy when none of the main UK parties is able to articulate an alternative vision of how to get out of this mess without punishing the less well off.

Without getting into to too many details here are two alternatives to the current prognosis. The first is to have a fairer and more equitable taxation system. Over the last three decades income and wealth inequality has risen dramatically in the UK, while at the same time the tax burden on the better off has declined. Labour's proposal to introduce a 50% rate for those earning over £150,000 per year is a welcome step, but is more about appeasing those residual Old Labourites still in the party, than a serious attempt to rebalance the tax system. Much more needs to be done.

From the perspective of reducing public spending, one major way to do so would be to revisit the Defence budget. Something that seems to be off limits for all three main parties for some reason. The very name itself – Defence - is absurd, when you consider how little defending we do and how much attacking, invading and occupying the UK does. And in addition to the vast sums currently spent, the government wants to spend even more on upgrading Trident and building two new aircraft carriers, at a cost of £25 billions or more. None of which have been or could have been of any use in Iraq or Afghanistan. If we as a country decided to just have a Defence force – based on fisheries protection and coastal security – we wouldn't need even a half of our current Armed Forces, let alone nuclear weapons and aircraft carriers. This proposal would also I contend make the country safer. Invading and occupying Muslim countries is not an obvious way to reduce hostility to the UK. Nor for that matter is our carte blanche support for Israel's continuing occupation and ethnic cleansing of Palestinians.

I would suggest that a combination of a fairer taxation system and scrapping our Armed Forces in favour of a realistic Defence Force would allow the UK to get through this crisis without the need for cuts in socially useful public spending. Why is it then that both these options are apparently off limits for our political leadership? Why is there no real debate in Parliament and in the mainstream media? We seem to have descended into a situation in which all our political elites, irrespective of party, are in such close cahoots with the main business and financial elites that alternative options are hardly ever raised. There seems to be something rotten in the state of our United Kingdom.

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