‘The ultimate test of man’s conscience may be his willingness to sacrifice something today for future generations whose words of thanks will not be heard.’
Gaylord Nelson, founder of Earth Day and a leading figure in the fight against environmental degradation and social injustice in the 20th century.
Scrooge today and the promise of jam tomorrow if we just tighten our belts, aptly describes this week’s Autumn Statement. A plan which has been described by the government as aiming to restore economic stability, protect high-quality public services and build long-term prosperity for the nation, will, in reality, deliver the exact opposite.
Blaming the cost-of-living crisis on ‘unprecedented headwinds’, Jeremy Hunt, who, along with the Prime Minister, is clearly suffering from selective memory loss, has conveniently ‘forgotten’ a decade and more of cuts to public sector spending, which have left our public and social infrastructure in a state of decay and inflicted rising poverty and inequality on a beleaguered nation whose life-support systems are now crumbling around them.
Cuts that had left us unprepared for those global ‘headwinds’, as a result of a concentration on delivering market-led solutions to everything and balancing the books, instead of real investment in the economy, not just to improve standards of living, but also address the key challenges we face, as the evidence inexorably grows that the climate crisis is becoming not just urgent but an existential challenge.
As Hunt revealed the UK’s new age of austerity, which will involve more vicious cuts to public spending (note though not until after the next general election) and tax rises amongst other things, the mind could only boggle at its economic absurdity at a time of national crisis, or indeed anytime. Margaret Thatcher’s dictum, ‘There is no such thing as public money. There is only taxpayers’ money’, has been given a new lease of life.
That poisonous narrative has been at the heart of spending policies by successive governments, and over recent months politicians, economists and journalists have been doubling down on refreshing that narrative in the public consciousness. Now the politicians tell us there is no alternative to another round of pain and hardship for the nation. We have, apparently, had the jam, not that most people noticed, and now we have to pay for it, or so the story goes. Ironically, instead of Labour crashing the economy as the conservatives like to point out, this time around, it is the Tories.
Jeremy Hunt suggested that there are no ‘rabbits’ to be pulled out of the hat, whilst claiming bizarrely that he is ‘Scrooge, out to save Christmas’. Dickens would rightly be appalled at the misappropriation of his novel’s character. Scrooge saw the error of his ways, the greed, selfishness and lack of goodwill towards his fellow man. Hunt is doing no such thing. He’s going in the other direction. The idea being promoted, that if we are fiscally prudent now and can make savings, we can have good things later, is just a repeat of the false notion that the priority of government is to balance the public accounts. And apart from anything else it hardly sits with the notion of Hunt’s promise to grow the economy at the same time. Austerity and growth are mutually exclusive propositions and are proven by history to be so.
When Rishi Sunak, at the G20 meeting in Bali, called Russia a rogue state and said China represented the ‘biggest state-based threat to our economic security’, one might better see those ill-judged remarks as a distraction from the real enemy to our economic security. Our own governments past and present. Whether in their tax, spending and legislative policies, or with the current ill-conceived sanctions on Russia which have, instead, rebounded onto those countries imposing them.
To get back to austerity, let’s refresh their memories and ours. From 2010 onwards, following the global financial crash and the claim by the then Chancellor, George Osborne, that there was no alternative to a fiscally disciplined approach to spending, to ‘balance the books’, claiming that Britain was on the brink of bankruptcy, the nation paid the price in the first round of austerity which cut spending on public and social infrastructure and led to rising poverty and inequality. The growth of food banks was one of the shocking outward signs of that policy.
The Trussell Trust food bank network is just one of many around the country which have witnessed the devastating effects of government policies made worse by the current economic crisis. Almost 1.3 million emergency parcels have been distributed over the past 6 months by the Trust; a shameful comment on government failure to act adequately. As one of their volunteers noted:
‘We’re seeing a level of fear in people that we haven’t seen before. In that, literally, they don’t know what they’re going to do to try and pay the bills and feed their families.’
At the same time, the rich got richer in a shameful appropriation of both wealth and real resources, aided by the government itself through its tax and spending policies. Not a new phenomenon, of course, as the trickle-down promised by successive governments never actually materialised, as the share of productivity travelled upwards into fewer hands, incomes declined and living standards fell.
But then, as now, this was a political choice, not a necessity, based on a false depiction of monetary reality. The allusion in the press to ‘choppy waters’ ahead are not financial, they are the result of a decade of government cuts and the current global economic instability. There is no ‘fiscal black hole’, only made-up fiscal rules which bear no relationship to the state of the real economy which should be the real objective of government spending and taxation policies.
They represent the smoke and mirrors of the public accounts, designed to create fear, and deceive people. Jeremy Hunt’s ‘getting the economy back on track’ can, without doubt, be translated more accurately as setting the scene for an economic train crash, the exact opposite of his message.
As Richard Tye, one of the authors of the Accounting Model of the UK Exchequer, tweeted in response to the budget;
‘The economic crisis is a policy choice. Government finances are not constrained by tax revenues. Government debt is net national savings. Lack of government financial support leads to under-investment, unemployment, and a real resource crisis.’
Sunak spoke in Bali at the G20 about why he thought financial markets were stabilising, suggesting that it was because they expected the government to clamp down on borrowing and reduce spending, to put the ‘public finances on a sustainable trajectory.’
As Prem Sikka noted in a tweet last week; ‘[The] UK economy/democracy is broken because the state is aligned with big money which demands less public spending, deregulation, transfer of wealth to corporations and the rich. None of this can bring prosperity and happiness to the masses.’ ‘We can have either democracy and public accountability, or rampant corporate power concentrated in the hands of a few business executives, but not both,’ he noted in his article in Left Foot Forward.
Balancing the public accounts to appease the markets when there is no need to appease them, and those who stand to make even more money in the recession on our doorstep, will not deliver nirvana or a happy Christmas for many for that matter, just more pain and hardship.
To be frank, it is a criminal act being perpetrated on the nation for political purposes. It deliberately ignores the real power of government through its spending, tax and legislative policies to manage the economy. The inevitable decline in incomes and standards of living, coupled with the prospect of a continuing rise in interest rates, which will inevitably lead to more unemployment and precarious, insecure employment practices, are evidence of wanton and wilful acts of destruction, and, it might be suggested, an attempt to put working people back in their box. It is nothing less than an outbreak of class war being waged by the current establishment occupiers.
As Hunt and Sunak talk sombrely about difficult decisions as if they weighed heavily on their minds in a compassionate sense (which the evidence is clear they don’t), the public is led by the nose by false narratives. We have it all back to front. To repeat, the dodgy metaphor of ‘black holes’ is not based on monetary reality. Deficits are not inherently bad and borrowing and debt are deliberately crafted narratives, not based on how government really spends, and are aimed at creating fear and public compliance. But, inevitably, shrinking the deficit, (which is the private sector surplus) and reducing the so-called accumulating national debt will be a real loss to the economy and people’s pockets. Those ‘hard decisions’, described as vital to the economic health of the country, will lead to even more hardship.
In this discourse, talk of black holes to fill, trumps that of the victims across the board, but particularly in the public sector which has borne the brunt, over a decade, of both the neoliberal ideology of shrinking the state and the accompanying spending cuts. Without a properly funded public sector which both underpins the good functioning of the economy and ensures a healthy and educated population, a civilised society crumbles.
It is ironic therefore that the former head economist at the Bank of England, Andy Haldane, very much a part of an establishment which has promoted the years of underinvestment he speaks of, on the spurious grounds of unaffordability, suggested in an article that the worsening health of the British people is holding back economic growth for the first time since the Industrial Revolution.
Never mind the fact that people have died under this regime of under-investment of which there has been scarcely a whisper, when it suddenly affects the ‘economy’ by which he means the ability of big business to function and make profits, it becomes big news! Self-interest is a wonderful thing when it suits.
As GIMMS has made clear many times before, public services don’t depend on a growing economy to fund them. They depend on politically derived tax and spending choices, related to how real resources are distributed, and who benefits. The answer to the question of which comes first – chicken or egg – is of course the latter.
Understanding how the UK government really spends is fundamental to challenging this mainstream notion of monetary scarcity and setting it in the context of a discussion about what sort of society we want to see, and how the government could, if it chose to, use its powers as a sovereign currency issuer, taxer, and legislator, to command those real resources to create it.
MMT alone recognises that the UK Government and its agents are the only suppliers of
that which it demands in payment of taxes. That is, the currency itself is a simple public monopoly.
To reinforce the issue, yet again, because it is vitally important to emphasise this point, it is purely a matter of political priorities and real resources, not financial affordability. Whether a government has chosen, or not, to invest in its people and the public infrastructure that underpins their lives. Whether it uses its tax and spending policies equitably or not. But we have been ill-served by a government fixated on a discredited economic ideology and balanced budgets, instead of delivering public purpose.
When the Chancellor says that the NHS is on the brink of collapse, as he did this week, but warns that the struggling service will have to play its part in fixing the UK’s broken economy, even though what is left is looking over a precipice, it is just another sign of things to come. When will the question be asked as to just who is responsible for breaking the economy?
It is deliberate and calculating. The use of a crisis to drive political ideology. Government administering the coup de grace on the basis of a convenient lie that there is a crisis in the public finances, and the public sector will have to pull its horns in, still more, to fix it. From the NHS and social care, both on the brink, to education and local government, we are witnessing the demise of that vital publicly funded, managed and delivered infrastructure, just as successive governments have planned for decades.
We should be absolutely clear about what is happening. When a Chancellor fixates on the public finances on the basis of not leaving debts to future generations as he did this week, he is talking not about the real debt that future generations will face when a government fails to invest sufficiently today for the benefit of those to come, he is talking about an imaginary financial burden.
As Professor Bill Mitchell wrote in 2014 during the early years of the first round of austerity;
‘The idea that borrowing ‘takes money from the pockets of future taxpayers’ is nonsensical. The funds to pay for the bonds originate in the government net spending in the first place. Clearly, deficits now are in part helping the current generation with income transfers and the like. But they also facilitate public education, public health and other infrastructure which provide massive benefits into the future for the current generation and their children.
Once you understand that, then the idea that there is a future burden will make you laugh.’
Talking of burdens and in the same vein, while Hunt and Sunak feverishly try to make the numbers add up, and the bean counters in the Treasury pore over the public accounts and demand government departments find cuts and savings as if the government were like a business or a household, we face a growing catastrophe of epic proportions.
The Autumn Statement had little to say about the climate crisis, and as the rich and powerful flew into Egypt in their private jets, after last year’s razzmatazz, COP 27 seems to have taken a back seat in discussions about the future. No surprise that it seems to be going the way of all the rest. Hot air and little else. But as the UN Secretary general, Antonio Guterres has forcefully pointed out:
‘We are on a highway to climate hell with our foot on the accelerator. Despite decades of climate talks – the Egypt COP is the 27th Conference of the Parties – progress has been insufficient to save the planet from excessive warming as countries are too slow or reluctant to act. Greenhouse gas emissions keep growing. Global temperatures keep rising. And our planet is fast approaching tipping points that will make climate chaos irreversible. Humanity has a choice: cooperate or perish.’
The question we should all be asking is, if we are on the ‘highway to hell’, why are there more oil and gas lobbyists than delegates from the most vulnerable countries, and why is Coca-Cola a sponsor? Frankly, we don’t need an answer. It is staring us in the face. The big greenwashing scam continues to profit from human-created warming and the associated exploitation of people and resources. And as long as we don’t look up and face reality, we can feign concern or deny that reality, and carry on as before.
Maybe part of the logic here is that, if governments spend like a household budget, then it is clear we can’t afford to save ourselves until we get the public finances back into balance or have saved up enough in the state piggy bank. Could that explain the silence on the matter? The lie of monetary affordability trumping common sense.
Whether it’s our services which are facing huge shortfalls in funding, a decade of austerity and now rising inflation which have weakened our public infrastructure and left it on the brink of collapse, or indeed a decaying planet, over at the Treasury the government’s number one priority is building confidence so that, at an as yet unspecified date, the country can grow its economy’ and ‘pay its way’. All hail to the markets!
But it is time to take note of the evidence and demand better. If the government is not dependent on raising taxes to fund wars or deal with the fallout from pandemics, bail out banks or failing pension funds, then it is not dependent on them to spend for public purpose.
As the currency issuer, it just spends the money into existence to meet its daily expenditure, invest in the future or manage economic crises of whatever sort. But no, the charade continues, and we are told that money is scarce, difficult decisions have to be made and the axe will have to fall somewhere. Just imagine, our lives put on the line for a monstrous lie, but one which serves a political agenda. The shrinking of state involvement in public provision and further ceding of control to a corporatised world, profiting from and living off state welfare.
A strong economy depends on a government which prioritises public provision to create the foundations for a functioning economy, and dare we say it, a functioning planet. What we have now is a government determined on the exact reverse. There is an alternative and it starts here.
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