The big focus of the week is the economy. Which is a shame as there’s loads to write about and loads of discussion points (maximum wage, anyone?). But instead, I’ll focus on the method of the government’s cuts and a worrying habit that has emerged; denial.
The UK economy shrunk by 0.5% and unlike the global recession of yesteryear ,this is unique to Britain. Surely this is a sign that the government is going the wrong way; the focus of their economic policy is growth (misguided, the focus of economic policy should be employment – perhaps a subject for another blog) and they have failed in their aim. So, what’s their response? To ignore it, pretend it did not happen. From the BBC; George Osborne says the UK must move from "securing financial stability" to "securing consistent growth". But, we recorded a drop, surely a sign we have yet to secure financial stability, and any talk of consistent growth is premature. And yet Osborne shrugs it all off to the weather. No comment necessary. Let's just remember what Brian Cowen's denial in November did to Ireland...
It’s curious how every time a Conservative is on air they say the exact same phrase; “the mess Labour got us into”. This is a much overused phrase of suspicious proportions. Alright, let’s admit, the economy was not in the best of shapes when the Conservatives inherited it, but they have built up a Sorelian myth surrounding the economic situation as if it’s the worst thing this country has ever faced and it is ‘all Labour’s fault’. In reality, the ‘crisis’ is not Labour’s fault, and Labour were doing a pretty decent job of recovery. So let’s play mythbusters and clear things up.
The ‘economic crisis’ is really two crises; a recession and a deficit. In 2008 the UK went into recession. Now, I’m no economist, but good non-partisan sources have informed me that to get out of recession one has to spend one’s way out. That is precisely what Labour did and as a consequence, the UK left recession under Labour. Brown even won an international economic award for his decisive actions. Nationalising Northern Rock was the right decision in hindsight. One can compare the situation to the US who did not save Lehman Brothers and suffered the consequences of its collapse longer and harder. In short, Labour got the UK out of recession. Furthermore, this recession was not Labour’s fault. Look at Ireland, Greece, Portugal, the USA, they all suffered recession, yet to blame Labour or Gordon Brown for them would be ludicrous. The recession was caused by something which transcends nations, namely the markets. An unfortunate truth that the government must accept is that the recession was a crisis in the private sector, the very private sector which is getting corporate tax reductions and extortionate bonuses. The recession was a global phenomenon and Labour dealt with it pretty well.
Spending one’s way out of recession naturally puts one in a deficit. This dreaded deficit which is the bane of society and has wreaked havoc on us and will be the end of civilisation, this deficit prevented the UK going into depression; this deficit saved the UK. The deficit is historically not big anyway – 1945 had a greater deficit and yet the NHS was created and the UK rebuilt. No matter how many times they say it, and how many vague words are used by the media which no one understands, it won’t come true; their slashing of public services is not the solution.
Labour are not perfect and mistakes were made; they should have been more cautious and frugal, they should have changed the system and implemented more limits. But to pin the blame squarely on Labour is mistaken and delusional. The worry is, many conservatives probably believe it simply on petty party political grounds.
The ‘economic crisis’ is really two crises; a recession and a deficit. In 2008 the UK went into recession. Now, I’m no economist, but good non-partisan sources have informed me that to get out of recession one has to spend one’s way out. That is precisely what Labour did and as a consequence, the UK left recession under Labour. Brown even won an international economic award for his decisive actions. Nationalising Northern Rock was the right decision in hindsight. One can compare the situation to the US who did not save Lehman Brothers and suffered the consequences of its collapse longer and harder. In short, Labour got the UK out of recession. Furthermore, this recession was not Labour’s fault. Look at Ireland, Greece, Portugal, the USA, they all suffered recession, yet to blame Labour or Gordon Brown for them would be ludicrous. The recession was caused by something which transcends nations, namely the markets. An unfortunate truth that the government must accept is that the recession was a crisis in the private sector, the very private sector which is getting corporate tax reductions and extortionate bonuses. The recession was a global phenomenon and Labour dealt with it pretty well.
Spending one’s way out of recession naturally puts one in a deficit. This dreaded deficit which is the bane of society and has wreaked havoc on us and will be the end of civilisation, this deficit prevented the UK going into depression; this deficit saved the UK. The deficit is historically not big anyway – 1945 had a greater deficit and yet the NHS was created and the UK rebuilt. No matter how many times they say it, and how many vague words are used by the media which no one understands, it won’t come true; their slashing of public services is not the solution.
Labour are not perfect and mistakes were made; they should have been more cautious and frugal, they should have changed the system and implemented more limits. But to pin the blame squarely on Labour is mistaken and delusional. The worry is, many conservatives probably believe it simply on petty party political grounds.
We may have gone through an economic recession and financial deficit, but that is no excuse for social recession or moral deficit. There is no justification for cutting EMA, Sure Start or disability allowance to name just three. Cutting these is a major step back for the country. Even the USA is investing in education and future jobs. There are three core responsibilities of government; education, health and security, we are seeing cuts and poorly thought out reforms in all three. Privatisation can be beneficial in some sectors (hold on), but these three are best left to government or else we are left with American health, education and prison models. We don’t want that. Trust me. Though the number one task of government is the elimination of poverty; Labour cut poverty by 49%, very admirable. These reforms and cuts look set to reverse that work (and I don’t like predicting doom and gloom).
What’s more, these neo-liberal steps will make Britain more unequal and that will increase poverty, crime, illness, anxiety, prison population, obesity, teenage births and decrease trust, community, social mobility and educational performance. An exhaustive and possibly obscure list to some, but justified by the findings in Richard Wilkinson and Kate Pickett’s book ‘The Spirit Level’, an important book (though some parts are strangely written or concluded). An increase in inequality, even if (big if) we see an increase in ‘growth’, will increase health and social problems. This is why the focus of economic policy should be society rather than statistics and "growth".
Here’s a laugh from Chris Grayling saying that youth unemployment was a direct consequence of the failings of Labour. What failing? The now cut EMA, the now cut building schools for the future fund, the hike in tuition fees giving less opportunity to young people or the now cut guaranteed employment for 18-25 year olds? Again, sheer unproductive denial. The Conservatives are suffering a moral deficit that will lead to social recession. The path they are taking us on will undo all the progress Labour has done, seemingly only because ‘Labour did it’. It sounds pessimistic, and I despise unfair accusation, but their denial of progress is harmful and will further harm society.
What’s more, these neo-liberal steps will make Britain more unequal and that will increase poverty, crime, illness, anxiety, prison population, obesity, teenage births and decrease trust, community, social mobility and educational performance. An exhaustive and possibly obscure list to some, but justified by the findings in Richard Wilkinson and Kate Pickett’s book ‘The Spirit Level’, an important book (though some parts are strangely written or concluded). An increase in inequality, even if (big if) we see an increase in ‘growth’, will increase health and social problems. This is why the focus of economic policy should be society rather than statistics and "growth".
Here’s a laugh from Chris Grayling saying that youth unemployment was a direct consequence of the failings of Labour. What failing? The now cut EMA, the now cut building schools for the future fund, the hike in tuition fees giving less opportunity to young people or the now cut guaranteed employment for 18-25 year olds? Again, sheer unproductive denial. The Conservatives are suffering a moral deficit that will lead to social recession. The path they are taking us on will undo all the progress Labour has done, seemingly only because ‘Labour did it’. It sounds pessimistic, and I despise unfair accusation, but their denial of progress is harmful and will further harm society.
I don’t want to come here and start bashing the rich, but coming down hard on tax evaders (avoiders?), tightening tax loopholes and a small, even temporary increase in tax to those earning over £100,000 would all make a massive difference to reducing the deficit and help protect services. Or cutting the pay of politicians by at least 5%; people don’t get into politics for fortune but to make a difference, and politicians should lead by example. If any cuts are to be made, the honourable thing to do would be to cut the pay at Westminster. And the lesson to be learnt, lest we forget; control the boom, manage the bust. Except, of course, the Conservatives aren’t fond of that. Unless they learn that most basic of lessons of the very capitalist economics they are supposed to espouse, the economy won’t be the only thing to go bust.
Or how about this; one in four charities in the North East of England are closing down due to lack of funding, I don’t know what the rate is in Merseyside. The Conservatives are the party that favour the ‘Big Society’, which is essentially volunteering, much like what charities (who are currently chronically short of volunteers) do, and they are the party that favours private investment. There are several millionaires in the government and Conservative backbench. See what I’m getting at? Maybe they should put their money where their mouth is and invest it in North East charities. I’m not accusing anyone of hypocrisy, but... well I am.
Britain is alone in slashing the deficit so much; “We directed it to investments in research and development, in a ‘put work first’ principle. And also combined with very active labour policy, on-the-job training and measures like that. I think that has given us a position where we were trying to increase mobility, and to give resources to what was to come, not so much give money to what has been.” Fredrick Reinfeldt, the Conservative PM of Sweden, who somewhat unfairly has been labelled the “Swedish Cameron”. He has the right idea, ‘put work first’ principle, so why have we in the UK, both Conservatives (fairly obviously) and Labour (fairly shamefully), not done likewise?
Or what about Merkel, whose priorities are also in job investment or Sarkozy, who directed, possibly in the speech of his presidency, a need to curb market volatility and tax market transactions, or Berlusconi who has hidden the economic woes with news of his affairs (genius). All of them conservatives, all of them facing difficult cuts, yet all of them investing and reforming in the right area. And yet the British Conservatives are cutting vital investment in education and are refusing the obvious; the financial system needs reform, not reversal.
Britain is unique in the way we are tackling the deficit, is there any surprise we are the only country to record a downturn? The plans of other nations show that there are other ways of dealing with the deficit, even methods that suit the Conservative ideology of minimising the state. Perhaps our lot are so blinded by ideology that they cannot see through their fanaticism at the social damage being done and will be done by their plans. What we have in government are not Conservatives, but fanatic Thatcherites.
Or what about Merkel, whose priorities are also in job investment or Sarkozy, who directed, possibly in the speech of his presidency, a need to curb market volatility and tax market transactions, or Berlusconi who has hidden the economic woes with news of his affairs (genius). All of them conservatives, all of them facing difficult cuts, yet all of them investing and reforming in the right area. And yet the British Conservatives are cutting vital investment in education and are refusing the obvious; the financial system needs reform, not reversal.
Britain is unique in the way we are tackling the deficit, is there any surprise we are the only country to record a downturn? The plans of other nations show that there are other ways of dealing with the deficit, even methods that suit the Conservative ideology of minimising the state. Perhaps our lot are so blinded by ideology that they cannot see through their fanaticism at the social damage being done and will be done by their plans. What we have in government are not Conservatives, but fanatic Thatcherites.
The report for the next financial quarter will make or break the government, especially if other nations report growth. There is no place to hide – it cannot be “Labour’s fault” and not even fully the fault of the private sector. If the UK suffers another loss, what then? Will they admit to being wrong or will they carry on slashing away? May is, once again, judgement day for the Conservatives, but this time there is more on the line.
[In case you're wondering about the title, anyone remember "Dave the Chameleon?". It was either than or a "Curious George" reference, or simply "Economics".]
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