What a week we’ve had. Or is that a decade?
After almost 10 years of cuts to public spending and their destructive consequences, the nation is weary. We are mired in controversy over Brexit. We have a government in meltdown in which MPs are fighting like rats in a bag over a leadership race that shows every sign of descending into farce. And we should not forget the shameful behaviour this week of a Conservative MP at the Mansion House dinner and those who equally shamefully jumped up to defend his aggression or ignored it. The emperor’s nakedness is there for all to see in all its crude and tawdry coarseness.
We might feel slightly amused at the absurdity of it all if it weren’t so serious. Bemusement, head shaking and looking on in disbelief are natural responses to this on-going train crash come tragicomedy but looking at the candidates’ campaign promises, we can be reassured on one thing – it’s more of the same – only worse. Policies based on erroneous ideas of how governments spend and, of course, ideological preferences from tax cuts to help the rich and the corporations and diminishing the role of the state even further. And let’s not forget election promises also designed to garner support from the top end of town as if they haven’t got enough wealth stashed away in bank accounts and property already.
Boris Johnson defended his plan to cut income tax for those earning more than £50,000 as being ‘sensible’. The infamous ‘trickledown’ which harks back to Ronald Reagan and Margaret Thatcher’s economic dogma that prosperity for the rich leads to prosperity for everyone has been proved to be the biggest con ever. Tax cuts for the rich, as the 99% have discovered, don’t deliver; they just make the rich richer and the poor poorer.
The IFS (Institute of Fiscal Studies) was critical in its analysis of the plan on the basis that it wasn’t clear that tax cuts would be compatible with ending austerity or ensure prudent management of the nation’s finances thus and not unsurprisingly, maintaining the mainstream illusion of the state finances as a household budget where government needs people’s taxes before it can spend. They compounded their inaccuracy by a reference to the state of the public accounts as if they were an appropriate marker for measuring the government’s economic record. We balanced the books but hey we trashed the country!
Examining the pitch of the other contender for the leadership, Jeremy Hunt, is even less encouraging from the perspective of his ideologically inspired policies combined with his ignorance (or is that part of the strategy?) of how governments spend. He is laying out his campaign stall with a variety of proposals from cutting corporation tax to reforming social care, raising defence spending and buying off students as if business start-ups were more important than providing trained nurses, doctors, teachers and other professionals. His pledges he said were ‘designed to turbocharge the economy’ claiming that ‘by growing our economy we can afford to invest in our public services, support the lowest paid [and ensure] that debt continues to fall”. His aim, he said, was to tackle the £3.5 billion ‘black hole’ in social care which would see money taken out of the pay packets of working people to fund their care in later life. He wittered on about being a country ‘where people save for their social care’ promising that those that did the “right thing” would have their care costs capped. Carrots and sticks in abundance.
Here we have classic responses from a politician whose government has spent the last 9 years telling us that: a) there was no alternative to cuts because Labour had overspent and the country had to live within its financial means and pay down the debt, b) privatising public services was the only option to keep costs down and drive efficiency and c) drilling into the public consciousness the neoliberal narrative of personal responsibility, which has divided the nation through building a tale of spongers on the state versus hard-working people.
It’s worth reminding readers that this is an imaginary black hole fashioned out of nothing but a political desire to create a false narrative to justify reform. The pretence that public services, the NHS and Social Care are unaffordable and that the only alternative is to shift financial responsibility onto ordinary people is a disgraceful manipulation of the truth. Telling them that they must provide for themselves is an insult to the many who don’t even earn enough to keep their heads above the water today, let alone save for the future. It denies the realities of the power of a currency issuing nation to pay for public infrastructure, from health and social care to education and welfare. To explain it away as a lack of money is a shameful distortion of monetary realities.
Furthermore, the suggestion that investment in public services depends on a growing economy is an equally pernicious lie that fails to acknowledge the role that public infrastructure plays in ensuring the health and well-being of citizens and economic prosperity. A prosperous economy depends primarily on public investment in health, education, transport and all kinds of other publicly paid-for services both for today and the future. We need to restore the long-dead idea that government is elected to serve the nation rather than its corporate buddies.
Only two days ago, council chiefs were warning that as a result of cuts to local government funding, social services were ‘fragile and failing’ and despite an increase in funding further cuts to care services would be unavoidable. The lie of lack of government funds and unaffordability is being used to justify this shift towards personal obligation.
However, the nauseating truth is that we have a government that has chosen not only to leave our elders fending for themselves but also to leave people working in social care on low incomes and in poor working conditions. This can scarcely be said to be a recipe for human well-being or a prosperous economy. Austerity has always been a political choice and bears no relationship to the state of the public finances. It is designed to fulfil an ideological agenda of a diminished state which has abandoned democracy and public purpose to serve the interests of global corporations.
Again, in its analysis of Hunt’s plans, the IFS plays to the household budget narratives of how government spends by claiming that spending in other departments could suffer without tax rises or risk higher borrowing which would ‘amplify the long-run challenges facing the UK public finances’. The IFS and other institutions like it reporting on poverty and inequality always do so in the context of the public finances being the measure of economic health and what spending options it leaves open to government. Building a picture where government has to rob Peter’s government department to pay Paul’s, raise tax or the spectre of more borrowing. All illusory narratives with no application to a sovereign currency issuing government.
All these promises by prime ministerial hopefuls won’t sit well with the Chancellor and the pervasive belief that the public accounts and the economy are safe in Conservative hands. It would be interesting to be a fly on the wall at Number 11 as the candidates threaten his and his predecessor’s thrifty, penny pinching approach to public spending. Even Theresa May, the outgoing Prime Minister who was aiming to splash the cash on education as part of her leaving legacy, is having to reign in her expectations after discussions with the occupant of Number 11. It’s astonishing how spending promises, or tax cuts coincide with elections, isn’t it! The magic porridge pot that just keeps on giving to suit political agendas.
In the light of this disarray and the realities of the impact of government policies on UK citizens, it makes perfect timing for left-wing progressive parties like Labour to shift the language framing about how we pay for a progressive agenda towards one that represents an accurate description of how money actually works. It is regrettable on that score that the household budget and tax and spend mythologies are part of the discourse. Fixating on sound finance and Fiscal Credibility Rules, both indicative of a neoliberally inspired household budget framework, do the concept of delivering a progressive agenda a disservice.
Just a quick search on the internet shows how these household budget descriptions have been, and still are, dominant narratives amongst left-wing progressives and shadow Chancellors.
“…the Tories’ tax cuts plans would mainly benefit the wealthy few, as well as depriving public services of much needed resources.
“[we] will properly fund our public services and ask the wealthiest and corporations to pay more to fund it.”
“The budget deficit can be sorted if we set up a fair tax system which tackles the tax avoidance by the big companies and the very rich that costs us £100billion a year.”
“We are embarking on the immense task of changing the economic discourse in this country. We are throwing off that ridiculous charge that we are deficit deniers,”
“We are saying, tackling the deficit is important but we are rejecting austerity as the means to do it.”
“We will make sure the debt is falling at the end of five years.
Transforming the way capitalism operates by continuing to frame the progressive discourse in the context of how we can pay for the radical root and branch change we need will end in disappointment, if not disaster. It certainly won’t happen by making compromises with it. The progressive left can’t have its feet in both camps on the basis that that’s the best way to fight fire. There’s only one winner in that scenario.
Addressing the twin evils of poverty and inequality, combined with the challenges of climate change will never be a quick fix. It will require strong national governments utilising their currency issuing powers for the long-term to ensure that the planet’s productive capacity does not exceed its resource limitations.
The progressive left needs the courage of its convictions to recognise the currency issuing powers of the state to deliver an agenda which serves both national and local needs, enabling citizens and the communities in which they live to address the challenges we face and create economies which are sustainable and a planet on which its passengers can flourish.
It can’t said often enough, we are being deliberately lied to. All my life I have heard industry and right wing governments tell me, that the crisis they created was all working peoples fault and never received the scrutiny that put trade Unions under the microscope.
Money is not a problem, but lying Neo-Liberals are.