Austerity isn’t working but Osborne will extend it
We are currently living through the worst recovery from recession in over 100 years.
The financial collapse, the recession that followed and the bailing out of the banks caused mass unemployment and the government deficit and debt to rise hugely, and giving the excuse for austerity, which is rampant neo-liberalism.
Politicians will be cutting government spending, especially on benefits, whilst shifting as much as possible of what’s left into the private sector, giving ordinary taxpayers worse services at a higher cost.
PFI is possibly the biggest example of the outcomes of this kind of thinking producing a far more expensive system of building public infrastructure than paying for it ourselves, closely followed by the Work Programme which actually reduces peoples chances of finding a job.
The results of austerity are pretty stark – mass unemployment and underemployment: in the West Midlands unemployment figures have consistently risen, and in the rest of the country they have started falling only because of a huge rise in part time working, self-employment and workfare.
Anyone who is fortunate enough to have a steady job will have seen their wages falling in value as inflation outsrips raises.
The result is that wages have fallen back to the levels they were in 2003. Anyone on benefits faces rises of just 1%, whilst inflation on essentials like food and fuel is the highest in Europe.
For anyone except the richest people, CEOs (FTSE 100 CEO average payrise, 12%. FTSE 100 average fall in value, 5%. FTSE 100 average employee payrise, 1%) and millionaires, living standards are falling as the economy stagnates.
Those unable to find work face an increasingly fierce regime at the job centre with sanctions being handed out for ridiculous reasons, including having found a job that started in two weeks and not doing any jobsearch in those two weeks, and being unable to be in two places at once.
Targets at the job centre combine with language at the top telling people that sanctions are a useful way to help people into work, and should be used as much as possible and of talking of claimants as shirkers, lazy scum, undeserving undesirables.
Advisors at a local job centre were offered an easter egg as a prize for meeting sanctions targets. All the programmes to “help” unemployed people have failed because they do not create jobs or build real skills, too often just being CV writing courses over and over again.
Growth has stuttered, just 0.2% in 2012 with a triple dip recession avoided by moving in and out of growth each quarter. Without growth, if the richest are getting richer (and they are), then it stands to reason that everyone else must be getting poorer. Half a million people are now using foodbanks to stave off hunger, homelessness has risen by 23% in two years.
And the deficit? Well in 2012/13, Osborne managed to reduce it by just £300m, and only that because he delayed a load of payments from March into April.
On finding that cutting government spending in a recession hasn’t produced a significant drop in the deficit, Osborne will decide the only possibly way to continue is to cut even more. Instead we should be talking about a change in strategy.
Every crisis is an opportunity.
We are at a point in history where we need to make huge investments in infrastructure projects if we are to move past the linked problems of peak oil and climate change.
We need to replace our housing stock with zero energy houses.
We need to replace our energy supply with renewable, carbon free energy sources – of which we have some excellent ones available to us. We need to do all this, and doing this produces growth and creates jobs.
Which is exactly what we need to do right now because of the recession. We are able to borrow at historically low rates of interest, just 0.5%, far lower than the private sector can borrow at. The government also has lower debt than the private sector, leaving it best placed to borrow the money to build the infrastructure we need to take a huge step towards moving past our environmental and energy problems, and at the same time help our immediate economic problems.
The Tories say that you cannot borrow your way out of a debt crisis, but if you borrow and invest in profitable infrastructure then you can pay back your borrowing out of the future revenues.
You also save money by stimulating the economy and the private sector. You can pay living wages to the public sector employees and put pressure on private sector wages to increase.
All of this increases demand, most of which will be for private sector services and products, helping to produce more growth. This means more tax income and less spending on benefits which offsets some or all of the borrowing costs, with future income more than covering the rest.
In the case of housing this is doubly true because you would cut the cost of housing benefit hugely by increasing the supply of relatively cheap social housing, creating both a direct cut in the cost of rent and putting pressure on private rents to be cut.
Council housing provides a small surplus to the taxpayer each year, imagine how much more this would be if we built millions of houses. But don’t expect Pickles to respond positively to Birmingham Labour’s call to be allowed to borrow more money to build the houses we need for a growing city.
The core of an alternative economic strategy is to make growth and jobs the short term goal, and produce that in a way that designed to reduce carbon emissions and energy use.
We make reducing the deficit and debt the long term aims. It is the strategy that has worked since the great depression. It is the strategy that takes advantage of the crisis we face and uses it to help ordinary people, not impoverish them in order to make the rich richer. This is the reverse of the austerity strategy. This strategy will not come from the main parties. It can only come from outside of parliament.
- Posted by: Birmingham Against The Cuts at 7:11am on 26 June 2013
- Filed under: Benefits, Economy, Inequality, Poverty, Protest, Unemployment, Workfare
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