Tag: Economy

This unsnookered isle

1395990_559940054075527_258446375_nWriting in the New York Times, Paul Krugman said Britain’s performance since 2010, after the global financial crisis struck, has been “startlingly bad,” with a tentative recovery that began in 2009, which was stalled in the last quarter of 2010. In his article entitled This Snookered Isle, Krugman provides an indictment of the Coalition’s claims and their methods of managing the UK economy. Mr Krugman echoes many leading economists in Britain.

Krugman says: “Unfortunately, economic discourse in Britain is dominated by a misleading fixation on budget deficits. Worse, this bogus narrative has infected supposedly objective reporting; media organizations routinely present as fact propositions that are contentious if not just plain wrong.”

Simon Wren-Lewis of Oxford University has dubbed this narrative “mediamacro.” As his coinage suggests, this is what you hear all the time on TV and read in British newspapers, presented not as the view of one side of the political debate, but as simple fact.

Yet none of it is true.

Krugman goes on to ask: “Was the Labour government that ruled Britain before the crisis profligate? [As so often claimed by the Conservatives.] Nobody thought so at the time.”

In 2007, government debt as a percentage of G.D.P. was close to its lowest level in a century (and well below the level in the United States), while the budget deficit was quite small. The only way to make those numbers look bad is to claim that the British economy in 2007 was operating far above capacity, inflating tax receipts. But if that had been true, Britain should have been experiencing high inflation, which it wasn’t.

What about growth? When the current British government came to power in 2010, it imposed harsh austerity — and the British economy, which had been recovering from the 2008 global slump, soon began slumping again. In response, Prime Minister David Cameron’s government backed off, putting plans for further austerity on hold (but without admitting that it was doing any such thing). And growth resumed.” (See also: The Return of Expansionary Austerity.)

He adds: “If this counts as a policy success, why not try repeatedly hitting yourself in the face for a few minutes? After all, it will feel great when you stop.

Given all this, you might wonder how mediamacro gained such a hold on British discourse. Don’t blame economists. As Mr. Wren-Lewis points out, very few British academics (as opposed to economists employed by the financial industry) accept the proposition that austerity has been vindicated. This media orthodoxy has become entrenched despite, not because of, what serious economists had to say.”

Cameron has misled the public by making Government debt analogous with personal debt. It isn’t. If a person misses a mortgage payment, for example, they may risk damaging their credit rating, and possibly even losing their home. So if we owe money, we need to find a way to pay it back as soon as possible. But government debt does not need to be paid back overnight – in fact, it’s widely recognised to be potentially damaging to do so.

In an economy, one person’s spending is another person’s income. So when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy.

Osborne’s austerity measures have achieved nothing, except deepening poverty, widening economic inequality, and suffering for the poorest and most vulnerable communities – and Osborne announced in his Autumn statement that we face at least four more years of it, should the Tories gain office again.

Austerity is not an economic necessity, nor is it temporary measure to balance the books, but rather, it reflects the Conservative’s long-standing ideological commitment to dismantle the gains and achievements of the post war settlement: public services, the welfare state and the National Health Service. This is where most of the cuts have been aimed.

With a shortfall in tax receipts set to increase the size of the deficit by at least £25 billion during the next parliament, the Office for Budget Responsibility have said the only way Osborne could balance the books would be through shrinking the state to a level not seen since before the Second World War: “Total public spending is now projected to fall to 35.2 percent of GDP by 2019-20, taking it below the previous post-war lows reached in 1957-8 and 1999-2000 to what would probably be its lowest level in 80 years”. Robert Chote.

Despite facing a global recession, the Labour Government invested in our public services, and borrowed substantially less in thirteen years than the Coalition have in just five years. UK citizens were sheltered very well from the worst consequences of the global bank-induced crash.

Gordon Brown got it right in his championing of the G20 fiscal stimulus, agreed at the London summit of early April 2010, which was a continuation of his policies that had served to steer the UK economy out of the consequences of a global recession, and to protect citizens from those consequences.

Osborne’s policy of imposing austerity and budget cuts on an economy that was actually recovering was a catastrophic error. The austerity cuts propelled the economy backwards and into depression; and, far from using public spending as a countervailing force against the cutbacks in private sector investment, the Coalition’s budget cuts served to aggravate the crisis. Many people are suffering terribly as a consequence, many have been reduced to a struggle for basic survival.

The Conservatives have been engaged in a significant transfer of income from the least well-off half of the population to the more affluent in the past five years. Those with the lowest incomes have been hit hardest by austerity. Deliberately so.

It’s inconceivable that Coalition policies were formulated for anything other than profiting the wealthy at the expense of the poorest.

The following cuts came into force in April 2013:

  • 1 April – Housing benefit cut, including the introduction of the bedroom tax
  • 1 April – Council tax benefit cut
  • 1 April – Legal Aid savagely cut
  • 6 April – Tax credit and child benefit cut
  • 7 April – Maternity and paternity pay cut
  • 8 April – 1% cap on the rise of in working-age benefits (for the next three years)
  • 8 April – Disability living allowance replaced by personal independence payment (PIP)
  • 15 April – Cap on the total amount of benefit working-age people can receive.

Here are some of the Tory “incentives” and consquences for the wealthy:

In November last year, my proposition was also verified in a study of the cumulative impact of tax and welfare changes, from in-work benefits to council tax support, to the cut in the top rate of income tax and an increase in tax-free personal allowances, the report concluded that Coalition policy has been regressive across the income spectrum.

Its authors, Paola De Agostini and Professor Holly Sutherland at the university of Essex, and Professor John Hills at the LSE, wrote: “Whether we have all been ‘in it together’, making equivalent sacrifices through the period of austerity, is a central question in understanding the record of the coalition government … It is clear that the changes did not lead to uniform changes in people’s incomes. The reforms had the effect of making an income transfer from the poorer half of households (and some of the very richest) to most of the richer half, with no net effect on the public finances.

“In effect, the reductions in benefits and tax credits financed the cuts in taxes. Some groups were clear losers on average – including lone-parent families, large families, children, and middle-aged people (at the age when many are parents).”

Last year, the scale of Britain’s growing inequality was revealed by a report from the leading charity, Oxfam, showing that the country’s five richest families now own more wealth than the poorest 20% of the population.

Oxfam urged the chancellor to use the 2014 spring budget to make an assault on tax avoidance and introduce a living wage, in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.

In the report,  A Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.

And:

Increasing inequality is a sign of economic failure rather than success. It’s far from inevitable – a result of political choices that can be reversed.

The Labour Party have announced this week that tackling tax avoidance and evasion is a priority, and they plan to push emergency laws through parliament designed to impose far higher fines and close  tax loopholes. This move alone will raise more than £7.5bn a year in revenue for the Treasury. It’s a measure that sends out a clear message: the poorest people should not have to pay more to compensate for tax abuses by the rich.

Also announced this week was Labour’s intention to abolish archaic rules that allow wealthy “non-domiciles”, who live in the UK but claim to be domiciled overseas, to avoid paying tax in this country on what they earn outside of Britain.

Labour’s careful, costed and evidence-based policies also include: a Bankers’ Bonus Tax; a Mansion Tax; repeal of the Bedroom Tax; a reversal of the Pension Tax relief that the Tories gifted to millionaires; a reversal of the Tory Tax cut for Hedge Funds; freezing gas and electricity bills for every home a the UK for at least 20 months; the big energy firms will be split up and governed by a new tougher regulator to end overcharging; banning exploitative zero hour contracts; introduction of a living wage (already introduced by some Labour councils); a reversal of the £107,000 tax break that the Tories have given to the millionaires; reintroduction of the 50p tax; scrapping George Osborne’s “Shares for Rights” scheme that has opened up a tax loophole of £1 billion; ensuring Water Companies place the poorest households on a Social Tariff that makes it easier for them to pay their Water Bills; breaking up the banks and separating retail banking from investment banking; introduction of measures to prevent corporate tax avoidance, scrapping the Profit Tax Cut (Corporation Tax) that George Osborne has already announced for 2015 and many more.

These are not austerity measures. They are much needed, strongly redistributive policies.

The Organisation for Economic Co-operation and Development (OECD) has recently found what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via taxes and benefits encourages growth.

Will the super-rich leave the UK, bag, baggage and all, as the right-wing scaremongers bleat, if we have a fair government that expects tax contributions from the cosseted rich? I seriously doubt it. They could start an exodus to New York I suppose, a city with a currently heavier tax regime, yet curiously not short of thousands of super-rich residents.

Ask yourself this: what are these tax-evading, hoarding and loudly complaining people actually contributing to our society? As far as I can see, they are supported by enormous state handouts, at everyone elses’ expense. They are propped up in their greed for ever-increasing profits,

Tax avoidance is costing us at least £70bn each year.

The most costly benefit payments in the UK are Tax Credits, Housing Benefit and Child Benefit, totalling £56.4bn a year.  These are not out of work benefits.  Some 65% of the total spent on working age benefits, is paid to people in work, whose wages are below subsistence levels.

Add to that the corporate tax benefits, such as the value of the cheap credit made available to banks and other business, the insurance schemes run by the government to protect exporters, the marketing for British business laid on by Vince Cable’s ministry, the public procurement from the private sector … a recent study conducted by Kevin Farnsworth, a senior lecturer in social policy at the University of York, concludes that direct corporate welfare costs British taxpayers just short of £85bn a year.

The Tory’s justification for allowing exploitative tax avoiders to have all of their own way is the mythological “trickle down effect.” Or “voodoo economics” to Keynsians. It was also known as the “horse and sparrow theory” a couple of centuries back. The idea being that if you feed a horse plenty of oats, the sparrows in it’s wake will also be fed .

And we are most certainly being fed horsesh*t.

It’s time to put an end to corporate welfare, and state handouts to the wealthy. We can do that by voting for a Labour government.

And if some thieving, hoarding, greedy misers threaten to leave the UK, why, I think I’ll offer to help them pack.

rich keep millonsBig thanks to Robert Livingstone for his excellent memes.

The Conservatives are guilty of great deceit in blaming Labour for the deficit – Ed Miliband.

gret deceit

The first part of this article was originally posted in the Guardian, on Thursday 6 January 2011:

Ed Miliband accuses the Conservatives today of a “great deceit” in blaming Labour for the national deficit and warned that they have concocted a false narrative to justify politically driven cuts. Speaking at Labour’s campaign centre in Oldham yesterday, the Labour leader  attacked the Tories for rewriting history.

In announcing a raft of swingeing public spending cuts the coalition government has repeatedly sought to portray that its hands are tied because of the size of the deficit it inherited from the last government.

The same argument was rolled out this week to defend this week’s rise in VAT from 17.5% to 20%, after warnings of the likely impact on low and middle-income families and the fragile economy. Amid Labour concerns that the opposition has not been forcefully contradicting the coalition’s narrative on the deficit, Miliband insisted that it was not caused by Labour overspending but by the global financial crisis.

“My concern is that a great deceit designed to damage Labour has led to profoundly misguided and dangerous economic decisions that I fear will cause deep damage to Britain’s future,” he writes in today’s Times (paywall).

The Labour leader says that by blaming the deficit on overspending the Conservative-led government is seeking to win consensus for its policy of cutting the deficit “as far and as fast as possible”. But he accuses the chancellor of “gambling on a rapid rebalancing of the economy” and says he is going “too far and too fast on the deficit”.

Accusing the Tories of attempting to rewrite history, Miliband points out that Britain’s debt at the outset of the economic crisis was the second-lowest in the G7 and lower than it was under the Conservatives in 1997 and says neither of the parties in the coalition government called for lower spending at the time.

Miliband repeats his warning from earlier this week that the VAT increase will squeeze families on middle and low incomes and says growth will be restricted as a consequence. He argues that while some would argue those are prices worth paying in the short-term, the effect will be to store up greater problems for the future.

He says Labour is not opposed to every cut, but that he does oppose those being inflicted on the county’s poorest. He added: “but neither is it true that Labour is to blame for the deficit or that the deficit-reduction programme being pursued by this government is necessary and fair. Because this Conservative-led government is trying to deceive people about the past, it is making the wrong judgments about the future”.

David Cameron said yesterday that the joint impact of increases on duty and VAT meant things were “very painful and difficult” and raised the prospect of introducing a fair fuel stabiliser which would keep fuel duty down when oil prices rise. He also admitted that the rise in VAT to 20% this week was regressive in terms of people’s income but “might not be if it was looked at in terms of people’s spending.”

See also: Ed Miliband’s speech on the deficit and economy: George Osborne’s cuts are extreme and ideological.

scroll2
Ed Miliband’s speech shows that he is a very perceptive and conscientious leader.

The claims made by the Conservatives that Labour “left a mess” don’t stand up to scrutiny. Here is a little evidence which demonstrates that the Tories have a track record of lying, and of blaming everyone else for their own ideological preferences, policy decisions and economic incompetence:

https://i1.wp.com/www.taxresearch.org.uk/Blog/wp-content/uploads/2014/10/Screen-Shot-2014-10-06-at-09.36.30.png

Thanks to Richard Murphy, who produced this graphic, all data is from the HM Treasury Pocket Bank for 30 September on the Government’s own website.

See also: Labour is not responsible for crash, says former Bank of England governor

OBR head rebukes Osborne: the UK was never at risk of bankruptcy. Osborne was rebuked by the Office for Budget Responsibility (OBR) for telling the great big lie about Labour leaving the country “near bankrupt”, yet Cameron has used that same lie in the televised leaders debates. You’d think that a near “bankrupt” country would have had the Fitch and Moody triple A credit ratings downgraded …oh hang on, didn’t that happen … under the TORIES?

And haven’t the Tories borrowed more in 5 years than Labour did in 13? Surely we must be bankrupt now, by the Tories’ own reckoning.

Then there is the oft-cited Liam Byrne note. The jest recalls a similar note left by Tory Reginald Maudling to his Labour successor James Callaghan in 1964: “Good luck, old cock … Sorry to leave it in such a mess.”

Byrne clarified at the time that the note was meant in jest: “My letter was a joke, from one chief secretary to another,” he said. “I do hope David Laws’s sense of humour wasn’t another casualty of the coalition deal.”

Treasury sources said the full text of the letter from Byrne – dated 6 April, the day Gordon Brown called the general election – was: “Dear chief secretary, I’m afraid there is no money. Kind regards – and good luck! Liam.”

Byrne’s notes have caused bemusement before. When he was promoted to the cabinet in 2008, he gave officials a set of instructions entitled “Working with Liam Byrne”, which included the lines: “Coffee/Lunch. I’m addicted to coffee. I like a cappuccino when I come in, an espresso at 3pm and soup at 12.30-1pm … If I see things that are not of acceptable quality, I will blame you.”

Gary Gibbon of Channel 4 News remembers that former chancellor Alistair Darling had also left a note for his successor, George Osborne, as well as a bottle (how very civilsed) – but, in Gibbon’s words, “no revolver.”

It’s an indication of how desperately determined this government are to blame the previous government for the consequences of their own policy decisions and economic catastrophe, that the Tories have to seize on a traditional and humorous exchange between outgoing and incoming ministers as “proof” to bolster their spurious claims and to prop up such deception.

The Office of National Statistics (ONS) has said that David Cameron has presided over an economy with the weakest productivity record of any government since the second world war, and revealed that output per worker fell again in the final three months of 2014.

In a separate blow to the credibility of the government, two-thirds of leading UK economists said they believed George Osborne’s austerity strategy had been damaging for the economy.

The Centre for Macroeconomics polled 50 leading economists, asking them whether they agreed that the government’s deficit-reduction strategy had a positive impact on growth and employment. One third disagreed and a further third strongly disagreed.

Furthermore, 77% feel that the outcome of the general election will have serious (“non-trivial”) consequences for the economy, and are clearly not in favour of the Conservatives’ “long-term economic plan.”

The Tories seem to think we have forgotten that it was they that lost the Moody’s Investors Service triple A grade, despite pledges to keep it secure. Moody’s credit ratings represent a rank-ordering of creditworthiness, or expected loss.

The Fitch credit rating was also downgraded due to increased borrowing by the Tories, who have borrowed more in 4 years than Labour did in 13.

I remember that we were very well sheltered from the consequences of the global banking crisis by the last government. It’s remarkable that despite George Osborne’s solid five-year track record of failure, the Tories still mechanically repeat the “always cleaning up Labour’s mess” lie, as if increasing the national debt by 11% of GDP in 13 years, mitigated by a global recession, caused by bankers, as Labour did, is somehow significantly worse than George Osborne’s unmitigated record of increasing the national debt by 26% in just 5 years. Osborne has ironically demonstrated that it is possible to dramatically cut spending and massively increase debt. Austerity doesn’t work as a means of reducing debt, but works exceptionally well as a smokescreen for an ideologically-driven reduction of the state.

econ lies

The Tories have seized an opportunity to dismantle the institutions they have always hated since the post-war social democratic settlement – institutions of health, welfare, education, culture and human rights which should be provided for all citizens. The Tories attempt to destroy fundamental public support for the health, education and welfare of its people. Offering and inflicting only regressive, punitive policies and devastating cuts, the Tories lie, lie and lie some more to attempt to justify the unustifiable.

proper Blond

The Conservatives have not encouraged investment in the UK either:

 

The Tories have told many lies. Here’s a list of those that have earned them official rebukes – A list of official rebukes for Tory lies.

Further reading:

The Austerity Con Simon Wren-Lewis

The Tory election strategy is more of the same: Tories being conservative with the truth.

The Great Debt Lie and the Myth of the Structural Deficit.

One of the most destructive Tory myths has been officially debunked.

“The mess we inherited” – some facts with which to fight the Tory Big Lies.

Political scrapbook: Telegraph business leaders letter ‘was padded out with Sam Cam’s luvvie friends’

Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor.

The word “Tories” is an abbreviation of “tall stories”.

10689499_731152076954323_875040546185242333_nWith thanks to Robert Livingstone 

Ed Miliband’s speech on the deficit and economy: George Osborne’s cuts are extreme and ideological

10424302_677497562319775_766713150422913861_n

Ed Miliband will today (Thursday) deliver a major speech on how the next Labour government will build a strong economic foundation by dealing with the deficit and balancing the books – but never going down the Tory road to take Britain back to 1930s spending levels which existed before the NHS.

In his speech, Mr Miliband will attack the Tories for pursuing an extreme project, motivated by ideology rather than necessity, which will put vital public services at risk:

“My speech today is about the deficit. Its place in our priorities, how a Labour government would deal with it, and how we would do so consistent with our values.

“The Tory plan is to return spending on public services to a share last seen in the 1930s: a time before there was a National Health Service and when young people left school at 14. There is only one 35 per cent strategy in British politics today: the Tory plan for cutting back the state and spending on services to little more than a third of national income.

“And they have finally been exposed by the Autumn Statement for what they really are: not modern compassionate Conservatives at all – but extreme and ideological, committed to a dramatic shrinking of the state and public services, no matter what the consequences.

“They are doing it, not because they have to do it, but because they want to. That is not our programme, that will never be our programme, and I do not believe it is the programme the British people want.

“This is a recipe for public services that will disintegrate and for a permanent cost of living crisis because we won’t be investing in the skills and education people need for good quality jobs, and indeed for sufficient tax revenues. And we know what the result will be: the Tories might be able to deliver the cuts they have promised, but they won’t be able to cut the deficit as they promised.”

Mr Miliband will set out a tough and balanced One Nation Labour approach to dealing with the deficit based on five principles:

1.      Setting a credible and sensible goal to balance the books and get the national debt falling as soon as possible within the next Parliament.

Not having a fiscal plan which sets a target of a 35 percent state, putting public services and productive investment at risk.

2.      Recognising that Britain will only be able to deal with the deficit by tackling the cost-of-living crisis.

Not allowing welfare spending to rise and tax revenues to fall because of low wages, insecure jobs, housing shortages and social failure.

3.      Making common sense spending reductions with departmental spending falling and using money better by devolving power, breaking down old bureaucracies, and rebuilding public services around early intervention.

Not cutting spending to 35 percent of national income that will lead to disintegrating public services and a permanent cost-of-living crisis because we won’t be investing in the skills needed for good jobs and healthy revenues.

4.      Protect everyday working people by ensuring those with the broadest shoulders bear the greatest burden.

Not cutting taxes for the wealthiest while asking everyday working people to pay more.

5.      Promising new policies only when they are fully funded, like Labour’s £2.5 billion time to Care Fund for the NHS, so that they do not require any additional borrowing

Not making commitments that depend on borrowing or promising unfunded tax cuts skewed to the wealthiest that will eventually be paid for by bigger cuts to public services or increases in VAT.

Ed Miliband will say:

“Labour will make fairer choices to help protect vital services and balance the books with measures including a Mansion Tax on properties worth more than £2 million, cracking down on tax avoidance, and reversing the millionaires’ tax cut to restore the 50p rate on incomes over £150,000 a year.

“In these hard times, we are determined to do everything we can to protect everyday taxpayers from bearing an increased burden and to do all we can to protect public services. And those who have done best, under this government and indeed under the last, must pay their fair share. 

We want successful entrepreneurs and those who do well to be rewarded. But we must pull together as a society not drift apart and we cannot do that if deficit reduction is simply on the backs of ordinary people.”

He will say that Labour will only make new commitments that are credible, costed and funded without additional borrowing – unlike the Conservatives who are promising unfunded tax cuts that would put public services at risk.

“This is an essential test of credibility. There is huge uncertainty about the deficit because of economic circumstances and on the basis of recent experience. That makes it all the more important that parties do not spray around unfunded commitments they cannot keep.

“It is why we will only make commitments in our manifesto that are properly funded – not commitments that depend on borrowing. That’s why we’ve explained how we will pay for every policy that we’ve put forward: costed, credible and funded.

“In contrast, the Conservative Party has pledged to make tax cuts when they have absolutely no idea how they will fund them: tax cuts that will cost over £7 billion a year at the end of the Parliament and even more, billions more, if they happen earlier in the Parliament.

“The Tories cannot say how they would fund their tax cuts skewed to help the wealthiest. This is not responsible and it is not right: the British people should be in no doubt what the Tory promise means: they will pay the price for tax cuts in higher VAT or even bigger cuts to public services. The Tories’ priority is unfunded tax cuts, Labour’s priority is to save our National Health Service.”

Labour’s costed and evidenced key policy pledges to date.

To underline Labour’s determination to deal with the deficit fairly and balance the books as soon as possible in the next parliament, Ed Balls has written to members of the Shadow Cabinet. He says:

“It’s now clear the Tories have abandoned any pretence of being in the centre-ground with an increasingly extreme and unbalanced plan. They have made an ideological choice to pencil in deeper spending cuts for the next Parliament because they are refusing to ask those with the broadest shoulders to make a greater contribution and, crucially, are ignoring the need for a plan to deliver the rising living standards and more good jobs that are vital to getting the deficit down.10001887913_f8b7888cbe_o

In contrast, Labour will take a tough but balanced approach to getting the deficit down. Our economic plan will deliver the rising living standards, more good jobs and stronger and more balanced growth which are a vital part of any fair and balanced plan to get the deficit down.

We will make different and fairer choices from the Tories, including reversing this government’s £3 billion a year tax cut for people earning over £150,000 and taking action to close tax loopholes and introducing a mansion tax on properties worth over £2 million in order to help save and transform our National Health Service.

And unlike George Osborne, we will not make any spending or tax commitments without saying where the money is coming from.”

Ed Balls intends to raise state spending rather than complying with Mr Osborne’s austerity plans of further drastic cuts, and he said his party will ring-fence more Whitehall budgets. A recent report by the Organisation for Economic Co-operation and Development (OECD) has found what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via taxes and benefits encourages growth. Osborne’s economic policy is damaging the economy. Miliband has consistently put equality high on the list of Labour’s priorities, and quite rightly so.

Labour have proposed progressive taxation, they have pledged to save the NHS, safeguard benefits and repeal the Bedroom Tax, which affects the poorest people: those on low wages and those on benefits, costing them money that was calculated to meet only the basic living costs of food and fuel, originally. Benefit was calculated on the assumption that full housing costs and rates/council tax were also paid by Local Authorities. That is no longer the case. The Tory welfare cuts and rising cost of living have meant a return of absolute poverty, not seen in this country since before the establishment of the welfare state.

At the moment, health, foreign aid and schools are protected from spending cuts, but in his letter, Mr Balls told members of the shadow cabinet that “our manifesto will spell out other limited areas which will have spending protected.”

The Tories’ stated plan to continue cutting even once the deficit has been eliminated has given Labour the opening needed to point out the damaging ideological drive to shrink the state, and to dismiss austerity once and for all. Given that the Conservatives have rigidly set the terms of economic debate and have established a dominant frame of reference since taking office,  I think the response to the Autumn statement from Labour is deft, careful and the proposals are costed, fair and viable.

Reducing the deficit can only happen once we have genuine (and widely shared) economic growth.

The alternative is the Conservative’s extreme, ideological never-ending austerity – all pain with no gain whatsosever for most people. For better or worse, deficit reduction is the political reality against which Labour’s economic credibility is now being defined. Cut the deficit Labour must; but they have taken reassuring steps to do it in a genuinely more comfortable, fair and intelligent way than the Tories.

The full text and more details of Ed Miliband’s speech about the deficit can be found here.

Related 

One of the most destructive Tory ideological myths has been officially debunked

Osborne’s Autumn statement reflects the Tory ambition to reduce State provision to rubble

Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor

14533697838_dffcc736f2_o (1)
Many thanks to Robert Livingstone@LivingstonePics

One of the most destructive Tory myths has been officially debunked

1450041_569755536427312_1698223275_n

The Organisation for Economic Co-operation and Development (OECD) has discovered what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via progressive taxation and benefits encourages growth.

The recent report from the OECD, a leading global think tank, shows basically that what creates and reverses growth is the exact opposite of what the current right-wing government are telling us, highlighting the truth of Miliband’s comments in his speech today – that the Tory austerity cuts are purely ideologically-driven, and not about effectively managing the economy at all. But again, many of us knew this was so.

The Labour Party’s economic plan, based on progressive taxation, equality and funding of public services is the best way forward for economic growth and social stability. The Conservatives have killed the potential for a sustainable economic recovery, and will continue to do so, because they promise endless austerity. This is rather akin to treating a disease with more disease.

Osborne’s economic policy is comparable with riding the fabled rubber bicycle.

We aren’t going anywhere.

The report showed evidence that the UK would have been at least 20 percent better off if the gap between the rich and poor hadn’t widened since the eighties under Thatcher, and successive Conservative administrations – the most recent having reversed the equality measures put in place by Blair. (Yes, he really did).

Prior to the global recession, the Tories said they would match the Labour government’s state spending and suggested they may even further it. However, when the global crash happened, a sudden opportunity presented for Tories to become fully-fledged… Tories, grinding their ideological axe, taking a neoliberal swing at the “bloated” public sector and at Labours’ public spending for the protection of public services and the most vulnerable citizens during the economic crisis.

It’s worth remembering that the Coalition has borrowed more in just 3 years than Labour did in 13. In fact Osborne has borrowed more than every Labour government since 1900 combined. And the current government have nothing to show for it, whereas the Labour government at least adequaltely funded public services and effectively sheltered the poorest citizens from the worst consequences of the global crisis.

Let us not forget that this feckless government inherited an economy that was in recovery. They destroyed that and caused a UK recession by imposing austerity, savagely cutting public spending and public services. Thatcher used the same basic strategy to redistribute public wealth to private bank accounts and create inequality, although she didn’t cut as deeply. It didn’t work back then either. She caused a deep recession, as did John Major – Tories being Tories.

Let us not forget that despite the finger-pointing blame game that the Conservatives indulge in – their perpetual attempts to undermine Labour’s economic credibility and bolster their own ineptitude – that it was Osborne that lost the triple A Fitch and Moody credit ratings, despite his pledge that he wouldn’t. We are regarded as an economic liability on an international level, which flies in the face of Osborne’s lies about economic growth and removes any credibility from his blustering, swaggering claims. I do wish the public more broadly would engage in some joined-up thinking, since many have believed that the cuts were inevitable, but Tory propaganda, in fairness, is designed to fragment the truth and disjoint rationality.

The truth is that Gordon Brown was right with his ideas about fiscal stimulation (rather than Osborne’s coercive fiscal contraction): it’s been a confirmed model over and over by economists and by the fact that we were out of recession in 2010. The Tories’ austerity measures have since damaged the economy profoundly.

But austerity was never about what works. Austerity is simply a front for policies that are entirely founded on Tory ideology, which is  all about handouts to the wealthy that are funded by the poor. 

Accumulation for the wealthy by dispossession of the poor.

The OECD report highlights the fact that Conservative economic rhetoric is based on utter nonsense: it isn’t remotely rational. Tory ideology is incoherent, vindictive towards the poorest and extremely damaging, socio-economically. It shows us that the sacrifices of austerity, which were cruelly imposed on those least able to carry that burden, were justified by a malicious lie dressed-up as a promise of economic growth. But that is precisely what the Tories are destroying.

We knew that the laissez faire capitalism of industrial capitalism  and the more recent financial capitalism of post industrial neoliberalism  extend inequality. How can such systems, founded on competitive individualism, not do so? But now we have the evidence that inequality damages rather than encourages economic growth.

I’ve said elsewhere that Conservatism is centred around the preservation of traditional social hierarchy and inequality. Tories see this, erroneously, as an essential element for expanding economic opportunity. But never equal opportunity.

Conservatives think that civilised society requires imposed order, top down control and clearly defined classes, with each person aware of their rigidly defined “place” in the social order. Conservatism is a gate-keeping exercise geared towards economic discrimination and preventing social mobility for the vast majority.

David Cameron’s Conservative party got into Office by riding on the shockwaves of the 2008 global banking crisis: by sheer opportunism, dishonesty and by extensively editing the narrative about cause of that crisis. The Conservatives shamefully blamed it on “the big state” and “too much state spending.”

They have raided and devastated the public services and social security that citizens have paid for via taxes and national insurance. Support provision for citizens is cut to the bone. And then unforgivably, they blamed the victims of those savage, ideologically-directed cuts for the suffering imposed on them by the Conservative Party, using the media to amplify their despicable, vicious scapegoating narratives.

Conservatives really do think that inequality is necessary, they think that our society ought to be divided and hierarchical. They are traditional rather than rational. They have an almost feudalist approach to economic policy, blended with a strong old boys network of corporocrats.

The Tories have long been advocates of the market society, which turns everyone and everything into a commodity. Neoliberalism is an invisible hand in an iron glove, with its whispered broken promise of a mythological “trickle down” as justification – now the new right neoliberals are officially a cult of vicious cranks.

 

Related

The BBC expose a chasm between what the Coalition plan to do and what they want to disclose

The word “Tories” is an abbreviation of “tall stories”

Conservatism in a nutshell

Osborne’s Autumn statement reflects the Tory ambition to reduce State provision to rubble

A list of official rebukes for Tory lies

 

1017174_500690710000462_512008904_n
Many thanks to Robert Livingstone @LivingstonePics


I don’t make any money from my work. I am disabled because of illness. But you can contribute by making a donation and help me continue to research and write informative, insightful and independent articles, and to provide support to others.

The smallest amount is much appreciated – thank you.

DonatenowButton