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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.
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
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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.