From Boris Johnson’s earlier reincarnation as Churchill in the pre-Brexit era, he has now been reborn as FDR, or at least likes to think so. According to the Conservative website, taking on FDR’s mantle Johnson has set out his plans to put jobs, skills and infrastructure investment at the heart of the UK’s economic recovery post-coronavirus. He claimed in his speech that his plans were ‘positively Rooseveltian’ and suggested that ‘It sounds like a new deal. All I can say is that if so then that is how it is meant to sound and to be because that is what the times demand. A government that is powerful and determined and that puts its arms around people at a time of crisis.’
As a speech, much of it sounded just like many speeches politicians make, just more rhetoric designed to carry the populace along but with little backbone to the words. Certainly, once dissected, it shows little evidence of truthfulness or desire for real change. And ‘putting its arms around the people’ seems just a tad overdone given the last 10 years, even if the spending taps have now been turned on.
Whilst the Times hailed it as a ‘spending spree’ that was as ‘bold as Franklin Roosevelt’s New Deal,’ in the post-analysis phase it has become clear that the speech’s promises were anything but and indeed were not only less than truthful but also a signal that it’s back to the usual Tory business. As pointed out by a political commentator ‘not much of the announcement was new and it wasn’t much of a deal’.
The promised paltry £600bn turned out to be worth £5bn, as much of the spending had already been announced by the Chancellor. That equates to less than £100 per capita across the UK or 0.2% of GDP. In fact, Roosevelt’s New Deal investment amounted to 40% of US GDP at that time, which was 200 times larger than Johnson’s.
It will prove nowhere near enough to dig the UK out of the economic hole it has in fact been excavating since 2010 through unnecessary cuts to public sector spending which have left our public and social infrastructure in tatters and least prepared to deal with the coming economic fallout as a result of Covid-19. Neither will it be enough to deal with the coming climate disaster that faces us without an even bigger spending programme designed to stabilise the climate and deliver a more sustainable world. The closest Johnson got in his speech was planting more trees! It’s going to need a lot more than that!
We need to examine who the real beneficiaries of this spending will be although the clues are already staring us right in the face.
As an article in Open Democracy described it this week, it is nothing but a ‘new deal for rentiers’. It noted that Roosevelt, in his first inaugural address in 1933, had declared the cause of unemployment and economic distress was not scarcity but rather that ‘the rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetency’ (although the word incompetency might be disputed in today’s world).
Roosevelt made it clear that his political enemies were ‘business and financial monopoly, speculation and reckless banking’ (much as they are ours still today). The article also makes the point that the New Deal was not just about investing to create jobs, it was about rebalancing power away from rentier capital and towards working people
With just a quick read through Johnson’s speech, it becomes clear that his modus operandi for bouncing back is just more of the same. He emphasised that ‘levelling up’ did not mean ‘launching some punitive raid on the wealth creators’ and added that ‘yes, of course, we clap for our NHS, but under this government, we also applaud those who make our NHS possible: our innovators, our wealth creators, our capitalists and financiers; because in the end, it is their willingness to take risks with their own money that will be crucial to our future success.’
Those few words indicate very clearly which path the government is intending to follow as it continues to peddle the myths about how we owe a successful economy to the wealth creators, when the truth is that it is exactly the opposite. It has been generally accepted that the wealth creators, through their efforts, generate tax payments which then fund public services without which difficult decisions would have to be made about their continuing affordability. Indeed, that ruse has been used by politicians on numerous occasions to justify punitive cuts to spending.
Thus, in economic downturns, as tax revenues become smaller it proves the perfect opportunity to sell the narrative that we need to downsize public services or outsource or sell them off to private profit on the basis that they will be more efficient and provide better value for taxpayers. Or so the story goes. Except that it is not true.
As GIMMS has pointed out many times before, our NHS or other public services are not dependent on a healthy economy. They are instead dependent on a well-functioning public and social infrastructure upon which the businesses and corporations depend, in turn, for their success. This includes such things as education and health, public transport networks and good national and local governance.
It is also vital to challenge the notion that the government needs that tax before it can spend. It categorically doesn’t. In making affordability a key demand, it is in truth less about whether the government has the money (which it always does) and more about delivering political ideology related to who should run public services.
As we have seen, vast sums of public money have already been shovelled into private profit to deliver public services with no sign of abating. Indeed, under cover of Covid-19, the process seems to have speeded up and we have seen a huge rise in the number of contracts being dished out by government even to companies that have no assets or employees as revealed only this week.
The power of the nation-state to direct the economy in the nation’s interests has been much undervalued in recent years as global interests have dominated public policy. But with the power of the public purse, the government can determine who will be the beneficiaries of its policies and spending. As we have seen over the last decade, instead of focusing on promoting the well-being of the nation which should be its primary goal, the government has focused on lining the pockets of corporations with public money and thus ensuring their own wealth and security through the revolving door. At a huge cost to working people’s lives and the public services on which they depend.
Johnson’s claim this week that government had overseen a reduction in child poverty and that 400,000 fewer families were living in poverty now than there were in 2010 was called out this week by the Office of the Children’s Commissioner for England. His claim is symptomatic of the massaging of data by the government which, like snakes, try to slither their way through the lies and dissimulation to present a positive view of their economic record.
A quick look at this week’s news is instructive and demonstrates that all is not as it seems or as it has been promised. It was revealed that half of school leaders still have not received the promised laptops for disadvantaged children. Whilst government clattered on about the importance of getting disadvantaged children back to school, it has failed to do the very thing that would have helped those children while in lockdown. It has failed over a decade to improve the life chances of poorer children by addressing the fundamentals – decent housing, well-paying jobs and access to decent services – all of which are in a state of decay.
And, as Johnson invites people to spend, spend, spend and talks about a grand ‘new deal’ many people can barely afford to eat. Over this decade and more the nation has accepted the presence of food banks as a necessary feature of British life, as if somehow the government could not have avoided that growth through its own policy and spending decisions.
According to food bank providers during the Covid-19 crisis, there has been a surge in demand in some areas of around 300%. As Marcus Rashford so clearly highlighted in his campaign to force the government to continue providing funding for free school meals over the summer holidays, over the coming months the need will grow. Do we really want to see children going hungry when the government could avoid that scenario with a simple instruction to the central bank to spend the money into existence to alleviate the temporary disruption?
And yet that is only half the story.
The combination of the damaging consequences of existing low incomes, precarious employment, a benefit system which is not fit for purpose and years of austerity with the damaging economic fallout from Covid-19 which is likely to get much worse in the coming months should provoke outrage. That the government, instead of addressing the fallout of their previous policies, think that shovelling more money into the pockets of the ‘wealth creators’ and reinforcing a rotten political and economic system is the way forward. They dress their speeches with soothing words about compassion and levelling up and then act to enable the maintenance of the status quo.
Much is revealed by the government’s approach to hunger. Instead of dealing with the fundamental reasons why children are hungry, it chooses to fund food banks and other organisations to deal with the consequences rather than through its policies. The charitable sector and volunteering are replacing government provision.
Government has the tools to ensure that no child goes hungry, by setting the rules and supporting employment policies designed to ensure full employment as prerequisite, through the implementation of a job guarantee offering public service work at a living wage, which in turn drives good wages and security in the private sector.
That is what will make the difference between an economy on its knees and one which prospers. Instead, it has given in to global pressures to compete and denied its power to address these issues. It has shifted the responsibility downwards praising the role of the charitable sector and voluntary organisations in the delivery of public services.
The main thrust of Johnson’s spending plans is a capital infrastructure programme. However, this was as Chris Packham, the naturalist and campaigner, rightly noted not about building a green economy but building more roads and more concrete to continue with a carbon-based future. The one small concession he observed was planting more trees and a miserly £40m towards kickstarting a greener economy. Not exactly radical and not nearly enough.
No mention was made either of the need to invest in better public services or to ensure that there is a pool of well-trained labour to service that infrastructure programme. More hospitals and schools are all very well but without the nurses and doctors to work in them, such construction could become an enormous white elephant. Capital and day to day spending are intimately connected, not stand-alones. It seems that it’s all money for their business friends but no substantial investment in the things that count and make people’s lives better. An opportunity squandered.
Instead of telling people to ‘spend, spend, spend (which in the current economic uncertainty is unlikely to stimulate the required response and anyway do we really want to continue along the path of mindless consumption?) the better mantra would be ‘jobs, jobs, jobs but not any old jobs. A job guarantee would not only provide public service jobs creating real value to society, a liveable income and security for the coming days as employment rises but could also assist in enabling a just transition towards a more sustainable world, as old jobs become redundant and new ones develop to take their place.
Whilst it is true that currently there doesn’t seem to be any desire by the established powers to embrace a new economic paradigm, it is vitally important that we keep the fires burning for change and raise public awareness of what an understanding of modern monetary reality could do in terms of delivering a fairer distribution of wealth and to address the key challenges we face. We have as a nation to decide what we want. To continue as we are and all that implies for the future, or take a different route to a fairer and more sustainable planet? What shall it be?
You can find out more here:
https://gimms.org.uk/mmtbasics/
https://gimms.org.uk/job-guarantee/
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