‘Growth is one of the stupidest purposes ever invented by any culture.
We’ve got to have an ‘enough’.
Always ask growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s the cost to the planet, and how much is enough.
Donella Meadows – Environmental scientist, educator and writer.
We are living in troubling times. Whilst Western vassal leaders pursue endless wars at the behest of the hegemon, cheer on death, destruction and facilitate injustice under the illusory banner of freedom and democracy, the existential threat of climate change and its consequences for humanity has been put on the back boiler, shuffled off the list of priorities. As vast resources are poured into a profitable war machine with seemingly no end of monetary resources available, humanity sits at a crossroads as snake oil politicians re-sell the politics of public austerity dressed up as pain today for future gain.
As Antonio Guterres noted in a speech at the UN last month, referring to Derna in Libya where thousands lost their lives in unprecedented flooding:
‘Derna is a sad snapshot of the state of our world – the flood of inequity, of injustice, of inability to confront the challenges in our midst.[…]
“Our world is becoming unhinged.
Geopolitical tensions are rising.
Global challenges are mounting.
And we seem incapable of coming together to respond.”
After decades of COP conferences, it is clear that commitment to action has been little more than hot air and promises which go nowhere, by politicians driven by short-term political objectives and winning the next election, not forgetting the corporate influence which coerces political decision-making. The pandemic and the war in Ukraine have changed the world in ways that are difficult to comprehend for many, and yet the political response is to forge ahead with further destruction.
As we have seen in recent weeks during the Conservative conference, and to the consternation of many environmental campaigning organisations and some in his own party, Prime Minister Rishi Sunak has delayed or abandoned critical measures to reduce emissions and approved licences for more oil and gas development.
Whilst we should have our doubts about the concept of net zero as a mechanism to cut emissions, we are without doubt currently travelling in the wrong direction, as three climate scientists discuss in an article in The Conversation:
“The time has come to voice our fears and be honest with wider society. Current net zero policies will not keep warming to within 1.5°C because they were never intended to. They were, and still are, driven by a need to protect business as usual, not the climate. If we want to keep people safe, then large and sustained cuts to carbon emissions need to happen now. That is the very simple acid test that must be applied to all climate policies. The time for wishful thinking is over.
The only way to keep humanity safe is the immediate and sustained radical cuts to greenhouse gas emissions in a socially just way.”
This will mean a global rebalancing of access to real resources, and support for the Global South to address the Western-imposed climate injustices, exploitation, poverty and inequity which has its roots in colonialism. We urgently need to sweep away the economic model which puts growth and profit over people’s lives and planetary well-being, and then greenwashes its way to more of the same and is a toxic mix of short-termism and greed which pervades government and the corporate estate.
While politicians focus on domestic issues, important as they are, we can no longer ignore the wider planetary context of our existence and the interdependent nature of the world in which we live.
The UK may be an island (still holding on to pretensions of colonial power and influence), but it is not unaffected by the geopolitical twists and turns that are currently determining a shift in the balance of power as countries in the Global South begin to reject the western economic model of exploitation, and theft of their resources.
A model which has been promoted by a US-led IMF and World Bank predicated on the lie of household budget economics, unfair trade rules and corporate domination which has overseen more exploitation as a result of its actions and the growth of poverty and inequality to prop up what has become a monstrous economic model. Indeed, what we are seeing is a Western world in turmoil at those power shifts, doing its best to hold on to the status quo, so favourable to itself.
Equally, none of us, as we are beginning to realise, are unaffected by a changing climate which will increasingly impact water resources and global food production which will most certainly affect everyone without some strategic, targeted planning, as an unstable climate becomes the norm across the planet.
Factor into this that it is the people who are causing the least emissions that suffer the most, as more extreme weather conditions, being exacerbated by the current El Nino weather system, have produced unprecedented droughts and floods.
While the West largely refuses to accept its culpability and is unwilling to offer reparations, the Global South is, without doubt, waking up to the possibility of an alternative even at this late stage. What is needed, as the economist Fadhel Kaboub suggests, is a new financial architecture – for the Global South to ‘design a coherent comprehensive vision for south-south cooperation, complete with trade, finance, and investment policies on its own terms, then welcome cooperation and partnership from the global north on fair, equitable, and transparent terms, under a new model of multilateral cooperation.’
Even as a new world order is emerging, with all the uncertainties that occur in times of change, we have politicians in the UK and elsewhere still behaving like the colonialists of old, still able to dictate the rules of engagement.
Worse, they are still stuck with their heads in the sand, bleating about whether action on climate change or to address global inequity is currently affordable. Indeed, cuts to foreign aid announced in 2020 have been attributed to the government’s aim to cut public expenditure.
Even an article published in the Guardian in August quoting Katy Chakrabortty from Oxfam repeated the nonsense suggesting that “The UK government has tried to give what it could, but it has no emergency reserves to dip into.”
Oxfam, like so many other charities, mitigating a rotten economic model rather than challenging it, fails at the first hurdle by implying that the government has no money of its own and must pull in its horns and get the public finances in order.
At the same time, both parties are fixated on future growth as the mechanism to manage public finances and create future funding for public services. A morally indefensible use of a lie to justify cuts at home and abroad. On that narrative, we are certainly done for.
Whether it’s the yearly ‘we’ve run out of money’ joke surrounding the US debt ceiling, or an EU which, when it chooses, imposes rules on deficit and debt (unless there is a pandemic or a war), or indeed the UK where Mrs Thatcher is still alive and well, dictating to the left and right her mantra ‘There is no such thing as public money; there is only taxpayers’ money’, orthodoxy rules. If it weren’t so serious, it would be laughable.
Fiscal discipline is the guiding force for decision-making, wherever you look. Certainly, over the last few months which culminated in the latest conference season of the usual hot air, lies and propaganda on all sides, that narrative has been predominant, with institutions and the media doing their usual good job at keeping the public in the dark. The willing participation in a lie about how the government spends to deceive an ignorant public.
This is a common thread which pervades economic policy and has done so for decades, pursued by successive governments both Labour and Tory.
In a speech in 2012, Rachel Reeves said ‘Sound public finances will always be the indispensable platform for delivering better jobs, better services, and a strong, growing economy.
What I want to demonstrate this morning is that being trusted with the nation’s finances and building a stronger, fairer, Britain are imperatives that are not only compatible they are inseparable’.
Then last month in a recent article in the FT she wrote: ‘During my time as an economist at the Bank of England, I learnt a very simple lesson: your sums must always add up.’ Ergo she ‘will never spend what we cannot afford.’
Reeves still backing the austerity horse as if there were a scarcity of money, and as if the government’s role is to manage the finances and balance the books, rather than to provide stability through its spending and taxation policies throughout the economic cycle, or when disasters strike, to ensure that the public infrastructure meets the needs of all, and that there is a fair and equitable distribution of real resources. These are the starting blocks for a functioning economy.
Then, predictably, with the same message in her speech in Liverpool last week, whilst committing to ‘rebuild Britain,’ she vowed to deploy ‘iron clad fiscal rules’, stupidly comparing the state finances to her own mum’s, sitting at the kitchen table doing her accounts.
So, Labour’s big plan is to rebuild Britain but impose fiscal discipline at the same time, two clearly mutually exclusive propositions. As Professor Mitchell put it in a recent blog aptly entitled ‘British Shadow Chancellor promising the impossible:’
“The general problem with fiscal rules, […] is the government of the day does not have the capacity to directly control all variables that come together to determine the final fiscal outcome.
The point is that essentially non-government, spending and saving decisions, determine economic activity in tandem with government spending and tax decisions; and tax revenue and welfare spending are functions of that economic activity.
So, if the non-government sector reduces its overall spending, then other things being equal, economic activity falls and tax revenue declines, and as unemployment rises, welfare spending also increases.”
So much for fiscal rules and common sense.
A functioning economy needs good public services and a well-educated workforce to service it and a decade of austerity has left the sector in a state of decay. Capital investment in such things as schools and hospitals is all very well and good, but such infrastructure also requires nurses, doctors, teachers and other public sector workers to run them. Reeves’ big idea to borrow for capital investment and cover day-to-day spending through tax receipts is just more of the same old nonsense couched in household budget economics and ignores the fundamentals. That government is the currency issuer and spends the money into existence first and from that everything else flows. Rebuilding Britain starts there.
In a nutshell, with Labour at the helm spending is to be predicated on the holy grail of future growth to raise the taxes to pay for public services. Can we wait that long? How many will die in the wait?
And so much for rebuilding Britain, as if the future can be predicted with certainty. A former Bank of England economist clearly too clever by half and a plan with a potential dead end. On the basis of previous and current experience, from financial crashes to pandemics and wars, the future has proved itself to be less than certain, indeed unknowable.
In the meantime, whilst we wait, the waters in every sense will continue to rise. Indeed, the reality is that without adequate spending and appropriate legislation now to address a decaying public infrastructure, deliver a green transition and protect people from the worst excesses of a world ruled by corporate diktat, the future will be very bleak.
The Tories, also on the same old track at their Conference, ‘sound money or run out of money under Labour’, will, apparently, ‘always protect public services’ (yes Jeremy Hunt actually said that), but they are ‘always honest about the taxes that pay for them.’ Just those few words are instructive about their intentions.
This of course is nothing new. We can trace this neoliberal narrative way back to the 70s and Callaghan’s Labour government. However, George Osborne with his Thatcherite credentials gave us an austerity package that cut spending on public infrastructure and services, cut welfare spending, imposing sanctions and other destructive mechanisms wrecking people’s lives, whilst at the same time creating a fractured and divided society. The pandemic brought home to the nation the terrible consequences of those cuts to spending and we are still paying the price.
Putting it politely, the nation is being stuffed by politicians fixated on fiscal discipline to serve their own political objectives or prove they are fiscally responsible. Instead of using the power of the public purse to rebuild a fairer Britain, oversee a more equitable distribution of real resources and a green transition through targeted spending, taxation and legislative policies, what we have, as Matt Kennard describes in his book ‘Silent Coup’, is the unstoppable rise of global corporate power, with the full compliance of government. With both Labour and Tory promising yet more partnerships with big business in one way or another, the die is being cast.
In a saner world, where democracy counted and where the government put the interests of its citizens and the planet first, before those of its corporate mates, we could do so much better. The heart of change lies in understanding the power of the pound. And yet we seem incapable of even engaging with monetary reality, not even to ensure a future for our children.
Every day the evidence piles up about what happens when governments use the lie of scarcity of money to excuse their cuts to spending or to delay action. From a collapsing NHS and social care system, schools and other public buildings that are falling down due to faulty construction and lack of adequate maintenance, local authorities facing bankruptcy and all that means for local service provision, food banks, rising homelessness, the list goes on. And still the lies just keep spewing from their mouths.
Political manoeuvring to discredit the party in power or the party in waiting, while Rome burns, is the name of the game. Not only is it shameless and shameful, it is a political choice unconnected to the state of the public finances. That surely should be the wake-up call for all.
When all is said and done, the tax and spend model is destroying the infrastructure that sustains a functioning economy and is, to be frank, killing people. And yet politicians are doubling down on that narrative as if there were no alternative.
An understanding of the power of the pound, the role of government as currency issuer, imposer of taxes and legislator is the starting place. But, at heart, it is the political decisions that derive from that monetary framework that really count. Is it so hard to understand that the real constraints to spending are not financial but real resources, followed by the decisions about how and to whom they are distributed to create equity and address the key challenges we face? On current experience, we have seen exactly how that system works for the richest and most powerful.
Regrettably, it is clear how the political establishment views citizens. Outside of their inclusive rhetoric at election or Conference time, we are just expendable pieces on a chess board, pawns in the great neoliberal game of securing power and wealth for the few.
Here’s what we could do with an informed public, a functioning democracy and a political class that served citizens instead of itself and its corporate masters. It starts here. Pass it on.
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