Last week GIMMS covered the Conservative Party leadership contest, which this week continues unabated and dominates the news. In a game of one-upmanship, each contender woos the voters with fancy promises whilst at the same time surely leaving the public puzzled. For almost 10 years the government has claimed there was no money and this week the money tap has started to flow – well at least in promises.
This week we’ve had Boris Johnson promising to review so-called ‘sin taxes’ to see if they unfairly target those on lower incomes, pledging to recruit 20,000 more police officers and talking in warm terms about being a champion for those working in public services but not quite going the full hog by promising to increase public sector pay as Matt Hancock had pledged on his behalf!
On the opposing side, Jeremy Hunt has promised a £6bn ‘war chest’ to help farmers and fishermen in the case of a no-deal Brexit and has called for a cut to corporation tax. He also told firms that might go bust in the case of a no-deal Brexit that their sacrifice might be necessary which, on the other hand, doesn’t seem to be much of a vote attractor, at least for the business community.
As noted in last week’s blog, it beggars belief that, after having been told for almost a decade that there was no money, both Hunt and Johnson seem to be pretty flush with it in the run up to the leadership election. Of course, previous experience of politicians’ fine words should tell us that once an election is over they can flow like water through the fingers and down the plughole.
Unsurprisingly, Chancellor Philip Hammond who, like his predecessor, advocates fiscal discipline, has criticised their spending pledges saying in a tweet that:
The ‘fiscal firepower’ we have built up in case of a No-Deal Brexit will only be available for extra spending if we leave with an orderly transition.
“If not, it will all be needed to plug the hole a No Deal Brexit will make in the public finances.”
Here we have yet again the classic language narrative that suggests that the state money system is like our own household budget; limited by income, savings or the ability to borrow. The ‘building up fiscal firepower’ ‘war chests’ and ‘plugging the hole’ analogies are quite simply incorrect and are used cynically by politicians to create public confusion about how governments actually spend. And just to be absolutely clear and to correct misunderstandings, in the case of the UK the government is the sovereign currency issuer and unlike currency users cannot ‘save’ its own currency. It spends it into existence and taxes it out of existence. Quite simply, governments issue money via computer keystrokes as a result of a policy choice unrelated to the state of the public purse. Its ability to do so is unaffected by Brexit, a no-deal Brexit, Remain or any other combination.
It is cold comfort to realise that austerity, which has been so damaging to whole sections of society including those who are the most vulnerable, was a ploy with no financial basis. The public surely should be sceptically scratching their heads when Johnson suddenly pledges to recruit 20,000 more police officers after having voted consistently for cuts to central government funding for local and regional governments on the basis of the lie that public services were no longer affordable. As a result, 45,000 of the police work force have lost their jobs since 2010 and the consequences (even if denied by government ministers) are the rise in violent and knife crime and increasing pressures on prison services. In short, when you remove money from the economy through austerity policies people suffer in all sorts of ways – the public and social infrastructure we all rely on is starved of funding and redundant workers either can’t find jobs or end up in lower paid and more precarious ones. The obsession with fiscal surplus is literally driving the economy over the cliff and we haven’t even left the European Union yet.
If Johnson and Hunt, after almost 9 years of politically imposed government austerity, can suddenly find the money as a vote winning ploy, they could by the same token find the money to fund the NHS, education, local government and other public services if they chose to do so – in the same way that the previous government bailed out the banks with not a taxpayer in sight. No-one passed the tax bucket around for that!
Despite all the warm words, displays of phoney compassion and promises for change, this is not likely to be about a reversal of the status quo. Even though people from all sides of the political divide are beginning to wake up to the realities, the lie of trickle down is still being enacted through, for example, promising tax cuts for business. It is unclear how such cuts could stimulate a faltering economy when people are struggling under the weight of increased personal debt, low wages and insecure employment. It should be seen quite simply as more corporate welfare at the expense of the health of the nation and its economy and yet more evidence of government serving the interests of the global corporations instead of citizens.
Even Johnson’s pledge to review so-called ‘sin taxes’ to see if they unfairly target those on lower incomes should be viewed with suspicion. The sugar tax was announced by George Osborne in 2016 and was aimed at reducing childhood obesity (with the added benefit of raising revenue or so it was said – even though tax does not fund government spending).
Given the life-threatening nature of obesity from diabetes to heart disease and cancer, it is difficult to see the logic of such an approach even if viewed as a populist move to gain support. The costs of such a reversal would have huge implications for the health of the nation, not to mention the health service already struggling under the burden of years of crippling funding cuts.
Whilst the issue has caused some disagreement within the party, it remains mind-boggling that the Treasury Minister Liz Truss said ‘taxes on treats’ hit those on the lowest incomes, and people should be ‘free to choose’. That phrase ‘free to choose’ is again indicative of the ideology of personal responsibility and blame in an environment where the state plays an ever-smaller role in public well-being. On the other hand, one might see it as an extension of Conservative welfare policies in which people have died.
Predictably, Jeremy Hunt’s preferred option would be to target manufacturers who produce less healthy products and threaten them with legislation if they don’t comply. But as the evidence shows voluntary agreements between the food industry and government have proved ineffective in improving public health and governments have shown little inclination to rectify that through legislative intervention.
It is truly to be regretted that whilst the focus in the media has been on the political games and posturing associated with the race for the leadership, other more important news has taken second place as both politicians have relegated climate change and the UN Rapporteur’s report on the consequences of austerity to the realms of indifference. It is truly a shameful circus of which none of the participants should be proud.
At the end of last week, Philip Alston wrote in the Independent that the architects of austerity were doing all they could to undermine those who have pointed out the predictable effects of their own policies. And more worryingly this week scientists announced that since 2014 there has been a precipitous fall in Antarctic ice which could potentially lead to further warming of the climate. While the human race faces two of its biggest challenges – climate change and human and planetary exploitation – to satisfy capitalist greed and keep profits flowing, we have politicians either in denial or worse prepared to accept the consequences and putting their own political careers over and above that of human well-being and survival. further warming of the planet.
Yes, Theresa May might have pledged to introduce a legally binding target on green-house gas emissions, but political promises are one thing, making it happen quite another, particularly when corporations lobby in the corridors of power.
In the midst of what could be described as a potentially defining moment whether a further shift to the right or a move to the left, we should not forget that these political manoeuvrings are taking place within a much wider context. For the last forty years or more, we have been living in a rigged global system from the power of big business and governments serving their interests to institutions like the World Economic Forum, the World Bank and the IMF which underpin their power structures. The big players shift around like pieces on a chess board. Recent dubious appointments in Europe including Christine Lagarde as President of the European Central Bank are symptomatic of a whole system which is past its sell by date.
It is particularly shocking given that the IMF, with Lagarde at its head, was part of the Troika that imposed harsh structural adjustment programmes in countries like Spain and Greece as a condition for bailouts. People are still living with the harmful consequences of austerity which has occurred not just because of a dysfunctional Eurozone but also adherence to a neoliberal corporate inspired agenda. And if that wasn’t enough, only yesterday we hear that the architect of UK austerity, George Osborne is planning to throw his hat into the ring to replace Lagarde at the IMF.
Who was it that said ‘There’s something rotten in the state of Denmark” only it’s not Denmark and WE have to root it out.
Whilst it seems the political establishment is hunkering down and not for turning whatever the cost, this is a real opportunity for left-wing progressives around the world to unite and dislodge the forty -year old market-dominated dogma for good. A part of this process should be a drive to give people a better understanding of the role of a nation state in delivering public purpose reinforced through a democratic framework which gives people a real voice.
In addition, the left needs to challenge the current household budget framing of government spending and demonstrate the importance of the role of the currency issuer in initiating change, both at national and local level. The organisation of local economies and supporting infrastructure can only be achieved in conjunction with the spending powers of central government.
The left also needs to challenge the worn-out record of “taxes fund government spending” which forms part of the daily campaigning diet of the right and the left. By hovering between two stalls, one proposing radical change and the other framing plans in the household budget narrative, the left wing will reduce its ability to deliver a progressive agenda for a secure and sustainable future.
Howard Zinn, the American historian, playwright and socialist thinker said:
“I believe there are huge numbers of people in this country who would be willing to have radical changes in our economic and social system in order to make it a more egalitarian society and do away with homelessness and hunger and clean up the environment. But these people have no voice.”
We need, as a matter of urgency, to start building public confidence in the electoral system and restoring trust in our politicians to serve citizens and deliver public purpose.
Let’s remember that the ‘government is us.’