Tag: The Great Depression

Conservatism in a nutshell, part 2: Laissez-faire isn’t.

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 “David Cameron and George Osborne believe the only way to persuade millionaires to work harder is to give them more money.

But they also seem to believe that the only way to make ordinary people work harder is to take money away.”

Ed Miliband.

Source: Hansard, December 12, 2012.

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Oh, the irony of Cameron trying to blame the “global economy” for the utter mess of the UK economy that his party has created. (Well, unless you are a millionaire, then it’s all a pretty good mess, actually.) Cameron’s mess is an entirely homegrown one, and is entirely down to his policies. Worse still, no matter how desperate things get, his message to the UK is that the only solution is to stick to his plan – more austerity – the plan that has created the problems in the first place.

Labour dealt with the global banking crisis without the need for austerity, and had steered the UK out of recession by 2009/10, Cameron, and his government caused a homegrown recession just like Thatcher and Major did, through redistributing public wealth to private pockets and offshore bank accounts.

The Conservative’s “long term economic plan” is to continue transferring public funds to private bank accounts. Not for the benefit of the economy, or the public, but for the sole benefit of hoarding millionaires and Tory donors who are sucking our public funds out of circulation and killing the economy.

“Trickle-down economics” is a term imported from the US, to refer to the idea that tax breaks and other economic benefits provided to businesses and upper income levels of society will benefit poorer citizens by improving the economy as a whole. It’s linked with Laissez-faire ideology.

Laissez-faire is basically the theory of Conservative/Liberal governments that uphold the apparent autonomous character of the economic order, believing that government should not intervene in the direction of economic affairs. “Free markets” and “free competition” are seen as a reflection of the natural system of liberty.

From a Laissez-faire perspective, the State has no responsibility to engage in positive intervention to promote equality through wealth distribution or to create a welfare state to protect people from poverty, instead relying on charity to provide poor people with relief. I rather suspect this is what Cameron means by “big society”.

The claim that people who have their taxes lowered, with greater wealth, will distribute their benefit to less wealthy individuals, so that a fraction will reach the general population and stimulate the economy, is of course completely unfounded and absurd. It’s worth noting that proponents of the policy generally do not use the term “trickle-down” themselves. But the underpinning assumptions of trickle-down theory are implicit in the rhetoric of Laissez-faire/supply-side economics, and clearly expressed in social policy.

The phrase “trickle-down” has been attributed to humorist Will Rogers, who originally said of the US New Deal (the response to the Great Depression of 1930s) that “money was all appropriated for the top in hopes that it would trickle down to the needy.”

It’s original use was entirely pejorative and it was drawn on as a lampoonery device .

The Depression of the 1930s profoundly influenced our theories of economics and resulted in many changes in how governments dealt with economic downturns, and the subsequent widespread poverty, such as the use of stimulus packages, Keynesian economics, and Social Security, manifested in our post-war settlement.

Cameron is dismantling those civilised foundations we built, using the malfeasance of his own administration – austerity – and of the finance sectors that caused the global crash, as an excuse to drive their prize ultra-conservative Ayn Rand ideology into manifest existence – the withdrawal of State support for anyone who may need it. For those that don’t, the State is there as your best buddy, and will continue to intervene on your behalf to feed you great gifts.

For a party claiming to reduce the State and reduce interventions, they sure intervene a lot. Talk about an Adam Smith sleight of hand…with one “invisible hand” they take money from the poor, by introducing policies that purposefully cut income and public services, and with the other, they hand out our money to the millionaires.(See: Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor.)

The trickle-down theory is not a genuine feature of the economy, but an illusion maintained by Conservatives to fool the poor into believing that there is opportunity for social mobility, and to excuse their miserly, cruel cuts to the poor, and generosity to those that don’t actually need it. It’s political hocus-pocus.

What we need, as history has taught us, is broad fiscal policies that are directed across the entire economy, and not toward just one specific income  group: that merely condenses wealth into the private bank accounts of a few, reducing the entire economy and society to a few stagnant pools of hoarding greed. It also reflects the implicit Conservative advocacy of Social Darwinist philosophy, with the “market place” absurdly operating as “natural law”, generating a socioeconomic hierarchy.

A 2012 study by the Tax Justice Network indicates that wealth of the super-rich does not trickle down to improve the economy, but tends to be amassed and sheltered in tax havens with a negative effect on the tax bases of the home economy. (See: Wealth doesn’t trickle down – it just floods offshore, research reveals.)

The trickle down theory and Laissez-faire philosophy formed the basis of economic policy during the industrial revolution of the 1800s.  It didn’t work then either, in the wake of widespread absolute poverty resulting from deeply exploitatively low wages combined with very dangerous work environments, it became evident that exclusively Laissez-faire economic attitudes resulted in the political engineering and endorsement of exploitation and harsh mistreatment of citizens. It shortened people’s lives and reduced most citizens to a harsh, miserable existence. It was a time when economic theory was mistranslated into a social doctrine of”survival of the fittest.”

Conservatives: the more things change, the more they stay the same.

Bloody Feudalists.

As Hilary Mantel observed this week, the Tory-led Coalition are more brutal towards the poor and vulnerable than Thomas Cromwell was, she said that the Middle Ages appeared a positively enlightened era compared to the “retreat into insularity” which the UK had currently embraced. Mantel summed up criticism of this Government’s regressive justification narratives very well:

The government portrays poor and unfortunate people as being morally defective. This is a return to the thinking of the Victorians. Even in the 16th century, Thomas Cromwell was trying to tell people that a thriving economy has casualties and that something must be done by the state for people out of work.

“Even back then, you saw the tide turning against this idea that poverty was a moral weakness.”

Of course we know that poverty is caused entirely by Government policies. And if you didn’t know that, then ask yourself how the following policies could possibly cause anything but inequality and increasing poverty for the poorest:

These cuts, aimed at the poorest, 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 imposed on the total amount of benefit working-age people can receive.

At the same time, note the Tory “incentives” for the wealthy:

  • Rising wealth – 50 richest people from this region increased their wealth by £3.46 billion last year to a record £28.5 billion.
  • Falling taxes – top rate of tax cut from 50% to 45% for those earning over £150,000 a year. This is 1% of the population who earn 13% of the income.
  • No mansion tax and caps on council tax mean that the highest value properties are taxed proportionately less than average houses.
  • Benefited most from Quantitative Easing (QE) – the Bank of England say that as 50% of households have little or no financial assets, almost all the financial benefit of QE was for the wealthiest 50% of households, with the wealthiest 10% taking the lions share
  • Tax free living – extremely wealthy individuals can access tax avoidance schemes which contribute to the £25bn of tax which is avoided every year, as profits are shifted offshore to join the estimated £13 trillion of assets siphoned off from our economy.
  • Millionaires were awarded a “tax break” of £107,000 each per year.
  • The richest 1,000 in UK double their wealth since crash while average incomes drop 6%

That most definitely does not indicate any “trickle-down” of wealth.

It was noted by the Keynsian economist John Kenneth Galbraith, adviser to President John F. Kennedy, that trickle down theory was originally less elegantly called the “horse and sparrow” theory in the 1800s.

The original theory was based on the idea that if you feed a horse enough oats, it will shit enough to feed a lot of sparrows.

And the Conservatives are certainly feeding us horse shit.

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Related

The Great Debt Lie and the Myth of the Structural Deficit

Conservatism in a nutshell

The World At One, Radio 4, 17th November, 2014“The economic situation explained in 3 minutes.Tory austerity has given us the slowest recovery since the South Sea Bubble.Professor David Blanchflower absolutely slaughters Cameron over his pre-excuse warning over the world economy, he blames Tory austerity for tanking Britain’s economy and preventing a recovery, and states that any recovery we do have is simply part of the cycle as long as you don’t wreck it with austerity, and confirms that our economy was on the RISE in 2009 / 2010.” Robert Livingstone.

Some highlights of the Conservative long term economic plan so far:

540525_186110078206715_79170441_nFitch and Moody triple A credit rating lost
1390648_548165358586330_1740107407_nThe return of absolute poverty and Victorian malnutrition-related illnesses, such as rickets and scurvy.
10001887913_f8b7888cbe_oAusterity was never about “paying down the debt”, that was a Tory lie: it is entirely about “raising more money for the rich“.
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This is conservatism in a nutshell

482882_456712161064984_1212213617_nConservative socio-economic ideology is incompatible with human rights.

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Many thanks to Robert Livingstone for his persistence in exposing the Tory lies and hypocrisy in his pictures.


Tory dogma and hypocrisy: the “big state”, bureaucracy, austerity and “freedom”

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The Tories are not “paying down the debt” as claimed. They are raising more money for the rich.

Labour’s social and economic policy was a success, and this is substantiated by the LSE’s definitive survey of the Blair-Brown years:

There is clear evidence that public spending worked, contrary to popular belief.” Nor did Labour overspend. It inherited “a large deficit and high public sector debt”, with spending “at a historic low” – 14th out of 15 in the EU.

Labour’s spending increased, and money was invested in public services and social programs, and until the crash was still “unexceptional”, either by historic UK standards or international ones.

Until 2007 “national debt levels were lower than when Labour took office”. After years of neglect during the previous Conservative administration [2 recessions during the Thatcher era, another during Major’s],  Labour inherited a mess: public services in very poor state, shabby and squalid public buildings and unforgivably neglected human lives that formed a social deficit much more costly than any Treasury debt.

Labour Ministers set about addressing the causes and devastating effects of poverty and social marginalisation. Both poverty and inequality had risen to levels unprecedented in post-war history. This process accelerated during the 1980s.

Unlike every other post-war decade, in which the benefits of economic growth had been shared across social groups, the economic gains of the 1980s disproportionately benefited the rich at the expense of the poor (Hills, 2004). Social inequality on such a gross level was not only the result of Thatcher’s policies, she celebrated it. She declared that inequality is essential to fostering “the spirit of envy” and hailed greed as a “valuable spur to economic activity”.

The mess that Thatcher left is verified by several longitudinal studies. Dr. Alex Scott-Samuel and colleagues from the Universities of Durham, West of Scotland, Glasgow and Edinburgh, sourced data from over 70 existing research papers, which concludes that as a result of unnecessary unemployment, welfare cuts and damaging housing policies, the former prime minister’s legacy

…includes the unnecessary and unjust premature death of many British citizens, together with a substantial and continuing burden of suffering and loss of well-being.

The article also cites evidence including the substantial increase in income inequality under Thatcher – the richest 0.01% of society had 28 times the mean national average income in 1978 but 70 times the average in 1990, and the rise in UK poverty rates from 6.7% in 1975 to 12% in 1985.

It concludes that:

Thatcher’s governments wilfully engineered an economic catastrophe across large parts of Britain” by dismantling traditional industries such as coal and steel in order to undermine the power of working class organisations, such as unions. This ultimately fed through into growing regional disparities in health standards and life expectancy, as well as greatly increased inequalities between the richest and poorest in society.

Blair established the social exclusion unit inside No 10. “Social exclusion” signified not just poverty, but its myriad causes and symptoms, with 18 task forces examining education, babies’ development, debt, addiction, mental health, housing and much more. Policies followed and so did improvements.

John Prescott’s department published an annual Opportunities for All report that monitored these social targets: 48 out of 59 indicators improved. So when Cameron and his band of brigands sneer that “all Labour did was give tax credits to lift families just over the poverty line” – “poverty plus a pound” – they lie through their teeth.

Contrary to Tory claims, benefits were not Labour’s main instrument of social change: the benefit budget fell as a proportion of spending, outstripped by increases in health, education and other social services.

Despite Blair’s neoliberal turn, Labour’s social policies enshrined principles of equality and inclusion. The Tories deplore such principles, yet that doesn’t stop them claiming that their socially regressive policies are somehow “fair”. Things got better with a Labour administration, money was mostly well spent. That’s not the case now. It’s all being intentionally and spitefully undone. We are moving backwards on just about every positive social measure Labour put in place: the coalition’s “more for less” is exposed as pretence. They are simply raising more money for the rich.

And all because of their driving ideology. George Osborne’s “plan A” isn’t about economics: it amounts to little more than a rehashed Thatcherite ideological agenda of deregulation and labour market “flexibility”, as modelled by the Beecroft report – the assault on the rights of employees, and Labour’s historic equality legislation. The Tory demand for a “nightwatchman state” is both ill-conceived and completely irrelevant to Britain’s economic circumstances.

The Coalition have borrowed more in 4 years than labour did in 13 and have NOTHING to show for it except a handful of wealthier millionaires. And the return of absolute poverty.

We know that austerity was intentionally imposed by the Coalition, using a feigned panic over the budget deficit to front an opportunistic vulture capitalist approach to stripping our public assets. With the Coalition in power for 4 years, the deficit has apparently receded in importance.

We can hope that Labour can return to its  pro-social role of advocating government spending for the provision of public services. Conservatives have always played on dogma and popular prejudice by constantly equating government with bureaucracy. But that’s just the superficial excuse for their obsession with removing every trace of supportive provision and our public services.

It’s more accurate to say that Conservatives equate socially responsible, democratic, caring governments with “bureaucracy”. Conservatives aren’t ever interested in championing independent and merit-based public service. But most criticisms of government bureaucracy are based on myth, not reality.

The agencies that the Tories attack and destroy actually play a valuable and indispensable role in making our society a better place to live. They are the very hallmarks of what makes us civilised, they are how we support vulnerable citizens, ensure equal opportunities, uphold human rights.

The whole point of having human rights is that they apply to EVERYONE – something the Tories never understand – if rights are  not universally applied, then they are worthless. In fact they are hostile to the very notion that we each have equal worth, as we know.

Tories value and develop social hierarchy. When Tories want to make “shrinking” government sound attractive and feasible, they claim they are cutting “bureaucracy” and not social “programs.” Most people recognise the public value of State programs – in the areas of education, health and the environment for example – and don’t want to see these reduced; but everyone hates bureaucracy.

Using the term “bureaucracy” in this way is a rhetorical sleight-of-hand that attempts to obscure the real costs of cutting back on government programs. The lack of coherent reasoning underpinning the rhetoric is because this is simply Tory fundamentalism: it is not founded at all on rational, evidenced discourse.

I’ve said elsewhere that Edwardian levels of inequality led to the Great Depression. Austerity measures under Chancellor Hindenburg contributed to the rise of Nazism. The drop in household income in Japan between 1929 and 1931 led to a wave of assassinations of Government officials and bankers.

Social policies after World War 2 turned the tables and brought peace, with inequality steadily dropping in Britain until recently. But inequality is now returning to pre-war levels. The Tories are incapable of learning from historic lessons, because of their own sense of entitlement, privilege and ideological bondage.

In response to the atrocities committed during the War, the International Community sought to define the rights and freedoms necessary to secure the dignity and worth of each individual. Ratified by the United Kingdom, one of the first countries to do so, in 1951, those human rights originally established in the Universal Declaration have been steadily eroded since the Coalition gained Office.

There’s a clear link between high levels of inequality and failure of Governments to recognise human rights, and to implement them in policies. Authoritarians view the rights of the individual, (including those considered to be human rights by the international community), as subject to the needs of the Government. Of course in democracies, Governments are elected to represent and serve the needs of the population.

Democracy is not only about elections. It is also about distributive and social justice. The quality of the democratic process, including transparent and accountable Government and equality before the law, is critical. Façade democracy occurs when liberalisation measures are kept under tight rein by elites who fail to generate political inclusion.

Related articles:

How remarkable that a government that argues against bureaucracy on the grounds that it’s a “threat to individual freedom” have no problems imposing the Gagging Act and the Legal Aid Act – policies purposefully designed to severely limit our freedoms. But then, the Tories were never known for their rationality, coherence and joined-up narratives. Or for integrity and telling the truth.

Thatcher’s secret plot to dismantle the welfare state and privatise the NHS revealed

The mess we inherited: some facts with which to fight the Tory Big Lies

The great debt lie and the structural deficit myth

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Osborne’s real aim is not budget surplus, but attack on Welfare State & public sectors It’s not a difficult task for a government to guarantee a safety-net that is always available for anyone who falls on hard times during an era of huge social and economic change. We all fund it, after all. And we all know that unemployment, injury or illness may happen to anyone through no fault of their own. It’s considered a duty of any first-world government to provide the means of basic survival for its citizens and to fund that with the money we contribute via taxes. In fact such an approach to social and economic welfare is internationally codified in human rights.

Article 25 of the Universal Declaration of Human Rights, to which the UK is a signatory, reads:

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

The Tories prefer to spend the tax they take from you on Tory donors – private companies that don’t deliver a service but simply fleece profit; on undeserving millionaires’ tax breaks – the feckless, scrounging rich had at least £107,000 each per year extra already. Then there is the never ending list of Tory expense scandals – all at our expense. And tax evasion. Why are we paying for this?

Furthermore, why are we indifferent as a society to the fact that our government is causing harm to our fellow citizens? I can’t comprehend this, how can we have allowed this to happen, as a so-called civilised and once democratic society? It’s about a driving ideology that is socially detrimental, malevolent, and not economically necessary: the Tories do not think that people have a right to food, housing or medical care, that much is clear. But they continue to take the money we have paid since the 1940s for those things. And hand it out to the wealthy.

Despite these facts, the Govt and the right-wing media have the audacity to talk about welfare claimants, as if all our woes are their fault. They aren’t, the spiteful authoritarian Tories are the problem.

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We can’t afford this government, economically, socially, morally or psychologically. Osborne’s austerity message was seriously undermined, and his lies in trying to blame the last government were demonstrated last November when the Office for National Statistics found that the coalition had borrowed £430.072 billion since it took over, whereas the last Labour government managed to borrow just £429.975 billion in 13 years. –  George Osborne Says Britain’s ‘Best Days Lie Ahead’, Ignoring These 6 Graphs

 

Many thanks to Robert Livingstone for his brilliant memes