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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

UK: Cameron's politics of austerity « Previous | |Next »
October 21, 2010

So the Conservative and Liberal Democratic Government in the UK have swung their axe into the welfare state They say that this is in order to prevent the UK from sliding into bankruptcy. There is an £81bn cut to government spending to ensure Britain has a better future of lower interest payments on the national debt.

This politics of austerity is being spun as anchored in "fairness" ---and as supportive of growth, fairness and efficiency.

RowsonMCuts.jpg Martin Rowson

Apparently, the private sector will step into the deflationary vacuum caused by 490,000 jobs going in the public sector during the rest of the parliament, massive cuts in university funding, wholesale reform of public housing and further cuts to the welfare budget. There will be at at least an equivalent number will be lost from private sector firms – in the construction sector, for example – that rely heavily on state contracts.

Now that the nanny state is off the backs of Britishcitizens the efficient and dynamic private sector has the space to provide the boost in economic growth in a national economy that is clearly slowing down, an international economy in slowing down mode, and a banking sector still in a poor state.

It reads like a fairy tale for grown ups doesn't it. Who said economics isn't about myth making?

The political myth is the the "big society" can fill gaps left by cuts to public spending ie., ordinary people will step intot eh vacuum and take on extra roles in the community running public services. Presumably, those who do so will be those who become unemployed. Or maybe it is the charities, the other strand of the voluntary sector that will plug the gaps. Or a disabled or seriously sick person who has a working spouse, however low-paid their job may be, who will lose their personal entitlement to benefits after a year.

And the Liberal Democrats go along with the pre-Keynesian views of the Conservatives---that one should look on the finances of government as if they were those of a household, that monetary policy remains effective and that fiscal deficits do not support economic activity. Or do they see it in terms of the first along a path towards redefining the role of government itself – what the state in a Western society does for its citizens, and what it does not or indeed cannot do?

The British state is stepping back from, or shedding, some responsibilities--eg., welfare and social housing

| Posted by Gary Sauer-Thompson at 10:29 AM | | Comments (13)
Comments

Comments

The Tory right 's wet dream is to want every penny saved to come from the pocket of a benefit cheat or a useless Whitehall pen-pusher.

They don't realize the Keynesian insight that benefit cheats and Whitehall pen-pushers spend their income buying goods and services that others in the population provide.

They don't care about the cuts damaging the public service and give little thought to how the budget will damage the British economy.

They are hoping for a miracle.

In The Independent's So this is what austerity looks like it is stated that:

The figures in the CSR foretell a squeeze of epic proportions on local services. The local government budget will fall in real terms by 27 per cent over four years. This is likely to mean fewer social workers, pressure on rubbish collection and the closure of libraries. Social housing construction is set to stagnate, rising by just 27,500 homes a year despite ever-growing demand for such accommodation. The danger is that the severity of these cuts will cause councils to sink even further in the public's estimation, fatally setting back the cause of localism.

It says that the zeal with which the Coalition will go about shaking up the welfare system for the poor sits uneasily with the kid-glove treatment of wealthy pensioners, who will continue to receive their winter-fuel allowance payments and free bus travel among other benefits. It is an inescapable reality that the less-well off rely more than the prosperous on local council services. And it is poor people, not the wealthy, who will suffer as the legal aid budget takes a hammering.

"...to ensure Britain has a better future of lower interest payments on the national debt."

I'm sure those generations relegated for the scrap-heap will understand that sacrifices had to be made.

Well... thank goodness all those jobs in the finance sector were saved. They're the productive folk after all!

Gaaawd this sucks!

Prof. Krugman's view (ack. to Economist's View) (extract):

"The British government’s plan is bold, say the pundits... But it boldly goes in exactly the wrong direction. It would cut government employment by 490,000 workers — the equivalent of almost three million layoffs in the United States — at a time when the private sector is in no position to provide alternative employment. It would slash spending at a time when private demand isn’t at all ready to take up the slack.

"Why is the British government doing this? The real reason has a lot to do with ideology: the Tories are using the deficit as an excuse to downsize the welfare state. But the official rationale is that there is no alternative...".

http://economistsview.typepad.com/economistsview/2010/10/paul-krugman-british-fashion-victims.html

The "ideology" part is something we hear a lot about, but don't really think about much.

The idea that there are people out there who are prepared, even eager, to reduce overall living standards and cripple the economies of whole countries (their own countries, too) simply for their own private benefit is an idea which many of us simply find so repulsive and foreign that we can't grasp it. So the "ideology" thing gets mentioned but without any real thought about what it means.

The Institute for Fiscal Studies challenged the UK chancellor's contention that his plans for four years of belt-tightening would be progressive, safeguard frontline school spending, and require smaller savings for departments than Labour's Alistair Darling would have demanded.

The IFS said poor people would be hit harder than the rich, the four-year plan would see spending for most secondary school pupils cut, and Whitehall departments would face deeper cuts than under Labour's plans.The cuts are regressive.

The worst hit areas from the job losses, council cuts and benefit withdrawals are urban areas, largely Labour strongholds, with wealthier rural with traditional Tory constituencies suffering relatively little.

In the Independent AC Grayling says that hard tines are on the way. He adds:

In fact, there is a problem with the way politicians justify actions that have a swingeing and widespread effect on individual lives. The standard trick is to blame the necessity for it on their predecessors in government. So the current Coalition blames it all on Labour, not mentioning the bankers nor the unbridled greed of financiers in the years that preceded the crash of 2008. It is undoubtedly true that there are uncomfortable things to be done as a result of the mess the money men made, but a suspicion generated in the minds of those who bear the burden is that if the blame is not fairly apportioned, part of the remedy conceals ideological and not genuinely economic motivations.

He doesn't say what the ideology is or why people accept it. Margaret Thatcher's household economics are back in fashion, as are the virtues of the free market.

Grayling's point is that:

people will adjust just the same, and cope just the same, but they will be even less inclined to forgive when the time comes...If there is hope in the current gloom, it is that whatever we feel now about the coming savage retrenchment in the economy that many will have to put up with, they will indeed eventually put up with it, and survive. But they will not forget.

The Tory MPs appeared to be cheering the cuts during the Chancellor's speech--that's an image that may return to haunt them.

gordon,
I agree with Paul Krugman's argument in his British Fashion Victims in the New York Times. The Tories are using the deficit as an excuse to downsize the welfare state.

And Rupert Murdoch supports them in his Margaret Thatcher lecture. He says:

Like Margaret Thatcher, I make no apologies for my concerns about the growth of unaccountable bureaucracies – and the burdens they impose on hard-working people. Those inspired by her leadership must continue to champion government that is accountable to its citizens. The new prime minister has come to office inheriting a daunting deficit. I am encouraged by his response.

Many rightly applaud the coalition government for maintaining a tough fiscal line. We must be clear why this toughness is necessary.It is not a numbers game. It is about livelihoods, and eventually rebuilding opportunities and greatness.Strong medicine is bitter and difficult to swallow. But unless you stay the political course, you will be neither robust nor popular. So, like the lady, the coalition must not be for turning.The financial crisis was a shock to the system. While the effects linger, it must not be used as an excuse by governments to roll back economic freedom.

For Murdoch capitalism's slumps and recessions, bubble and froth--- Schumpeter the 'gales of creative destruction' ---are natural.

The inference is that people have to become unaccustomed to looking to the government – for their housing, for their health care, for their retirement –and accept the idea of looking out for themselves. The only real security is the security of opportunity.

Nick Clegg – the leader of a party that has long supported government intervention as a force for progress – has signed up to a programme that promises an unprecedented roll-back of the state.

Presumably, the Liberal Democrat's conception of liberalism is that which advocates small government and the free market that goes with a strong commitment to civil liberties and freedom of lifestyle. That is a market liberalism that is at odds with British social democracy.

"...I make no apologies for my concerns about the growth of unnacountable bureaucracies" (Rupert Murdoch).
Like Goldman Sachs, Murdoch media, Northern Rock etc?
And "opportunity" is actually a non sequiter: apart from pathological sharks like Murdoch.
What's been preserved in reality is only the illusion of choice.

I'd recommend some good discussion over at skepticlawyer, where there are some of the better economic liberals, including elaboration of two opposing models of disability and the workforce.

skepticlawyer.com.au/2010/10/07/foad

skepticlawyer.com.au/2010/10/21/the-daily-mail-says-no

Of course, there are other criticisms of the economic logic of these cuts, most notably from the likes of Paul Krugman. The "we're all Keynesians now" cry of Krugman, The Economist, now dismissed as soon as the largesse of the stimulus response to the financial meltdown has been soaked up by the guilty parties.

Not for nothing has Clegg a cherished place in Rowson's surrealist pantheon of the absurd
The dog who makes Meg Lees appear heroinic, by comparison.
The man who set the blood thirsty Cameron dogs onto the ordinary people, when a little common sense was called for.

paul, in his n his Progressive, like the 1980s in the London Review of Books John Gray observes:

A roll-back of the state of the magnitude that the coalition envisages will leave people more exposed to the turbulence of world markets than they have been for generations. Inevitably, they will seek protection...Reining back welfare benefits and shedding labour in the public sector as the government intends will only make the drop in living standards that is now unavoidable larger and more painful. There is much talk of the coalition’s lack of a ‘narrative of growth’ to complement the need for retrenchment, but in these circumstances its lack of any convincing narrative of fairness may be more disabling.

Clegg's problem is that he has no standard of fairness (inequality) independent of the market. For Clegg fairness requires that everyone be subject to the same insecurity caused by global capitalism.