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

UK: austerity economics « Previous | |Next »
November 13, 2010

The function of the Conservative Party in the UK, like that of the Liberal Party in Australia, is to defend inequality: to make acceptable the social and economic unfairness inherent in a predominantly capitalist economy; to preserve the interests and privileges of social elites. They have had recourse to many specious slogans or rhetoric in the defence of inequality.

Martin Rowson

In Nothing to do with the economy in The London Review of Books Ross McKibbin argues that the Conservatives large spending cuts don't have very much to do with the economy. He says:

The importance of the cuts is not economic but political and ideological. First, they restore an apparently coherent, specifically Conservative and politically useful identity to the Conservative Party, distinguishing it from Labour...The cuts have to be big in order to confirm the Conservative explanation of what happened. That they saved the country from the brink, from disaster, from national bankruptcy – in other words from Labour’s incompetence and profligacy – is a line the Conservatives use well and often.

That is the first reason for the austerity measures.

This is the same kind of rhetoric that the Liberals use in Australia. The cuts are justified on the grounds that the state should conduct its own finances in the manner of a prudent household, and this has always been thought plain common sense by many voters.

McKibbin's second reason is that:

the crisis allowed the Conservatives to transform a crisis of the banks into a crisis of the welfare state. This, they hope, will enable them to restructure government and ‘shrink’ the state and its welfare systems once and for all, something they have been trying to do for the last 30 years. As the state moves out the Big Society moves in. But welfare states are hard to reshape, as Thatcher found.

Politically, it is hard to cut welfare benefits significantly and it would be surprising if the cuts turn out to be as severe as advertised. In practice it is also very difficult for the voluntary sector to fill the state’s shoes: it has neither the expertise nor the funding. He adds that the reducing funding to local government band the capping of the council tax conform to a pattern of persistent Conservative attacks on the scope and autonomy of local government.

He says that the big cuts are unquestionably a strategy that has worked politically in the past: the electorate seems to agree that there have to be cuts and is apparently willing to blame the Labour Party for them. However, the outcome of the cuts will not be a ‘fairer and more liberal society’, and that does not bode well for the LIberal Democrats

| Posted by Gary Sauer-Thompson at 9:08 PM | | Comments (4)


Geo. Monbiot offers an interesting sidelight on the whole necessity for cutting by pointing to the enormous scale of tax avoidance and evasion in the UK.

He says: "[Richard Murphy of Tax Research] estimates that avoidance now amounts to £25bn a year, evasion to £70bn, and outstanding debts to the tax service to £28bn: a total of more than £120bn(3). That’s roughly three-quarters of the budget deficit(4)".

Monbiot gives the big chemist chain Boots as an example: "A recent edition of the BBC’s File on 4, for example, found that the chemist chain Boots, after relocating to a post office box in Switzerland, has legally cut its tax bill from over £100m a year to around £14m(20). That’s roughly 3% of its profits".

Monbiot points out that virtually no effort is being made to claw back any of this boodle; on the contrary, Her Majesty’s Revenue and Customs is itself being cut.

The Tories budget cuts mean that students are paying for the cost of the bank bailout in the UK through paying for student fees. They students are not happy with increased fees and the budget cuts.

"Less government" is considerably more popular in the abstract than cutting back most of the (often popular) things that government does. So politicians run against Big Government - but very few candidates propose any cuts in public spending. Tge reason is that most of the electorate Mn want government to do more, not less, if only it could do it better.

the right's gut intuition is that big states create poverty -and that rolling back the state will lead to a more equal, empowered society.

an interesting article:

Over the past few years, the government tax office appears to have been mutating into a subsidiary of the corporate avoidance industry....It’s arguable that the UK government does not have a spending crisis; it has a tax avoidance crisis.

In an earlier article--Britain's Shock Doctrine Monbiot argues that the Conservatives are using the economic crisis to reshape the economy on corporate lines. For example:
Public bodies whose purpose is to hold corporations to account are being swept away. Public bodies whose purpose is to help boost corporate profits, regardless of the consequences for people and the environment, have sailed through unharmed. What the two lists suggest is that the economic crisis is the disaster the Conservatives have been praying for. The government’s programme of cuts looks like a classic example of disaster capitalism: using a crisis to re-shape the economy in the interests of business.

The tactic appears to be for a short, sharp shock, before the window of opportunity closes.