Each week, GIMMS aims to keep its readers abreast of the latest stories in the news and they form the basis of our weekly MMT Lens. Each week we search for positive signs that things are changing, given that it always seems to be a catalogue of increasing doom and gloom which can be depressing at times. However, this week we’d like to begin the lens on a positive note with reference to Professor Bill Mitchell’s blog earlier this week ‘We are approaching an era of fiscal dominance’. We can surely be encouraged by his words which suggest that we are observing a paradigm shift as the neoliberal narrative is failing big-time and the dissonance in mainstream economics and political debate is getting more intense and more public. It shows promise that such questioning is beginning to take place in public arenas. Recent articles from Reuters and Bloomberg, along with the growing understanding of monetary realities by more and more people across the globe, must give us hope that the challenge to the mainstream macroeconomic consensus which has dictated government policies for decades is beginning to bear fruit. All we need now is to get the politicians on board! Alexandria Ocasio-Cortez in the US and in the UK, MP Chris Williamson, are already shining a light on how money works and how such an understanding will allow us to respond to the challenges we face and deliver progressive agendas to meet them. To use an analogy from nature, a seed planted and nurtured will grow.
However, whilst bearing that in mind, we cannot ignore the daily news which demonstrates how the flawed economic system which has dominated the last four decades, along with the last 9 years of government-imposed austerity, have created vast disparities in wealth and increased poverty and inequality. Whilst Brexit thunders on in the political arena and mainstream news reporting the very real consequences of public sector cuts and government spending policies are increasingly in evidence. People are suffering, people are dying, and our public and social infrastructure is crumbling and breaking down. All those things which form the foundations of a healthy society and allow it to function are failing (although the government propaganda might lead you to think otherwise). These are the very real consequences of government cuts and policies and should be the wake-up call that shocks the nation into active opposition.
The government is promising increased spending on policing and proposes extended stop and search powers in response to rising knife and other crime. However, it has failed to acknowledge the role of austerity in rising crime and the drug crisis which has been termed as a public health emergency and has resulted from the decay of our publicly paid-for institutions, local government and other supporting organisations along with rising poverty and inequality. Over 760 youth clubs have closed and 3500 youth workers have lost their jobs as a consequence. Nearly 130 libraries, which provide many other important services including access to the internet, were scrapped in 2018 alone and those that remain do so on reduced hours or are serviced by volunteers instead of a paid workforce. Our public land assets are increasingly being sold off, from our parks to playgrounds, police stations and NHS estate. Developers are doing very nicely from this sell off of previously owned public assets.
As our communities start to shrink and die, crime rises, the old and sick become isolated and distrust and fear grows as the social frameworks which knit people together as communities are dismantled and fall into decline. The last 40 years, which have given precedence to business and profit seeking, have diluted the importance of the public institutions which lie at the heart of a healthy economy and national well-being. It is withering away and with it any semblance of a civilised society. The neoliberal narratives of self-help and a blame culture have poisoned the concept of human cooperation, and are leaving us confused and lacking in hope.
As noted in last week’s blog, far too often the loss of this public and social infrastructure is explained away in financial terms of unaffordability; that expenditure on such infrastructure is reliant on an economy that is growing and a fiscally prudent approach to the state finances. Indeed, Sajid David the new Chancellor suggested only this week that it was down to the hard work of the public that investment in public services could be made, once again making an implied but incorrect connection between tax collection and paying for public services.
The public has been bamboozled for far too long by household budget descriptions of how money works. It seems only right and proper to us that like private individuals and households, governments should behave the same and spend in relation to income. However, instead of looking at the deficit and debt arguments which proliferate and determine the public response to a government’s actions we should be examining its economic record and ask ourselves whether it has delivered a healthy and sustainable economy that serves the public purpose? It’s what you do with your spending that really counts. Who benefits and who doesn’t? Not whether you balanced a budget or achieved a surplus. Deficits certainly matter but not in the way that most of us think they do.
In the case of the UK, the ones who have benefited from Tory policies are corporations, big business and wealthy people, not just in money terms but also through the influence that such organisations and private individuals exert on politicians to favour them.
Just a quick flick through this week’s newspapers brings to the fore the consequences of ideology, austerity politics and government spending decisions on people’s lives.
The founder of the Museum of Homelessness reports that one homeless person dies every 19 hours on average, while shamefully more than a quarter of a million homes lie empty. Matthew Downie, the director of policy and external affairs at Crisis, commented that was disgraceful that hundreds of vulnerable people across the country have died without the dignity of a secure home. He points out that many of these fatalities are occurring, not while people are sleeping on the streets but when they are in temporary accommodation that is not fit for purpose. Most people don’t choose to live on the street or want to be shoved from pillar to post living in temporary accommodation or relying on the goodwill of friends, sofa surfing. Families with children, young and older people have become victims of government spending choices, not because there was no money but because it suits an ideologically driven neoliberal agenda of a small state and self-reliance.
The Bureau of Investigative Journalism researching effects of poverty in Oxford which is a city with one of the highest average salaries in the UK has found that in its poorest wards, men die on average fifteen years younger than their counterparts living in Oxford’s more prosperous areas. It noted that the gap that had been recorded between 2011 and 2015 had increased by four times more than it had been between 2003 and 2007. Over England and Wales, differences in life expectancy for those living in the most and least deprived areas was nine and a half years for men and seven and a half years for women (2015-17). The increasing divide between the rich and the poor is conveyed in their stories which are distressing to read (link here). While the public applauds fiscal prudence, people’s physical and mental health is declining, and people are dying as local authorities and organisations struggle to keep up with the demand for support because of cuts to government funding leading to cuts in social programmes designed to assist vulnerable individuals, families and children.
Added to this situation are the cuts to spending on a welfare system which, following reform, is not fit for purpose and has left people struggling financially and in fear of getting into debt. The bottom line is that when people don’t have sufficient monetary resources to live a decent and dignified life, not only do they suffer unnecessarily but the economy also takes a hit. Money removed from people’s pockets through spending cuts is money removed from the economy.
While the Chancellor of the Exchequer applauds the Conservative record on employment this week and thanks the public for their hard work, unemployment rises by 31,000, which is the biggest rise since 2017, vacancies are down and although earnings did rise once adjusted for inflation, they are still below pre-crisis levels. As usual, the government fails to acknowledge the working realities of those figures. People doing three jobs just to keep themselves and their families afloat, the increase in zero-hour contracts to near record levels, up 15% from 791,000 a year ago to 896,000 in the last three months, bogus self-employment and the gig economy which is increasingly being used to supplement people’s wages are the realities of the statistics presented by the government.
It was also revealed this week that NHS spending on private mental healthcare had risen by almost 30% to £100m in just one year. Sick and vulnerable patients are being sent hundreds of miles away from home away from their families for lack of sufficient local NHS beds to accommodate sick individuals who need expert care. The government’s pledge to end out of area care by increasing the number of beds has yet to be honoured and the NHS is paying huge amounts of public money to private, profit motivated companies whose rationale is deriving profit, not delivering first class, expert care.
Figures from the Department of Health and Social Care show that last year it handed a record £9.2bn to private providers such as Virgin Care and the Priory mental health group. When Matt Hancock pledged ‘there is no privatisation on my watch’ clearly his statement fails to reflect the policies of successive governments, including the current one, which has until more recently been a slow burn towards privatisation and is now speeding towards a successful conclusion – the creation of a two-tier health services ‘alla’ accountable care in the United States. The media and the politicians have done an exceedingly good job at concealment of the intentions.
The beneficiaries of money from the public purse are not confined to the NHS and nowhere more evident is the outsourcing of children’s services. In 2014, despite opposition, changes to regulations made it easier for commercial companies to bid for contracts and for-profit organisations are now involved in the provision of foster care, children’s homes and children’s social services. Ray Jones, Emeritus professor of social work at Kingston University and author of ‘In Whose Interest? The Privatisation of Child Protection and Social Work’ (link here) noted in an article last week:
“For the past 40 years, successive governments have pushed crucial services out of public ownership and into the private market. Despite the dismal track record of big outsourcing companies failing to deliver on their public service contracts, and overcharging central and local government, opportunities continue for private companies to make money from the public purse”
While this government has pursued austerity on the basis of money scarcity, the idea that public services can only be paid for if we have a healthy economy and the belief that the private sector is more efficient, the facts tell a different story. As Ray Jones notes:
‘not only are local authorities spending large sums with private companies, they are purchasing poorer quality services at a higher cost.’
Public money is being siphoned off into the private sector for profit whilst at the same time, the government plays the ‘Mikawber’ card which suggests that there is no money for public services and deceives the public with its lie. As was pointed out earlier, we should be less concerned about the size of the deficit which should always be seen in context and more concerned about what the government is spending on.
As fares are set to rise on a privatised rail network, a private company wins a ‘lucrative’ contract to run the HS2 and graduates in England face increasing debt burdens as total interest on undergraduate student loans is set to double, it is clear that the effects of the last 40 years of entrenched neoliberal dogma, combined with a deliberate political intent to use false analogies about how money works are now coming home to roost as daily we see evidence of the consequences.
This is not a time to watch as bystanders; this is a moment for action. Some will tell you that ‘we can’t do anything so why try?’ But let’s not be defeatist. We are already making a difference, as activists and campaigners from around the globe work together to challenge an idea that’s had its day. As one of GIMMS’ favourite economists reminds us from time to time, we need to keep on PUSHing until something happens.
This article plainly justifies the recommendation ‘Keep Pushing’, however the shocking and unnecessary suffering it describes needs to be stopped and cannot be tolerated in a civilised society. This not only justifies action, but makes it a moral imperative in my opinion!