Journalists are supposed to stay well away from Politics (and the capital ‘P’ is no typo). The fourth estate’s putative duty is to ask awkward questions, to speak truth to power, to avoid political biases, etc. etc….
But what happens when a cynical hack wakes up one morning and realises that the government he lives under is passing off myths and rumours as truth? That the country he lives in is about to be torn asunder not in the best interests of the people but for the sake of ideology?
Spending cuts are not inevitable, and what’s more they will destroy the livelihoods and futures of millions. This is a journalist making a statement of fact that can be supported by evidence (some of it below) but it is also a concerned citizen waking up and smelling the coffee.
The time has come for me, and you, to cross the Rubicon, to openly question the economic orthodoxy that threatens to decimate the UK. We need to make a political stand, many of us for the first time in our lives, before Britain cuts itself back into the 1930s.
On October 20 Chancellor George Osborne set out proposals to cut government spending by some £81 billion in the next four years. Osborne said that only such drastic spending cuts would bring Britain back ‘from the brink’. But is this really true?
Well, almost every non-aligned economist (those not in the pay of think tanks, government or pressure groups) disagrees.
David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, describes the cuts as ‘unnecessary, misguided, doctrinaire’. Paul Krugman, winner of the 2008 Nobel Prize for Economics, has warned that, ‘the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump’. Leading UK economist George Irvin calls the Chancellor’s argument ‘a mixture of fact and myth’.
The economic case against cuts is manifold, but arguably the most important point is that for vast swathes of the population the economic crisis that began on Wall Street in late 2007 is nowhere near over.
Unemployment is already increasing across most of the UK (only the Conservative heartland of south-east England bucks the trend). With joblessness on the rise, what has our government decided to? Why, cut two million public sector jobs – directly and indirectly – of course.
Osborne’s argument that the private sector will simply ‘grow’ to fill the gap left by government is totally unproven and goes against the advice of everyone from the OECD and the IMF to the think-tank Compass, who have said that, ‘the government’s hope is that this will come about by simply creating ‘space’ for private initiative. It has an agenda for cuts but not for growth’.
Meanwhile, house prices are still far below pre-crash levels, economic growth hovers below the developed world average and is expected to fall in the next quarter.
So why are the coalition carrying out these savage cuts? Their answer is that without cutting the country’s budget deficit bond markets will lose faith in the UK’s ability to pay back its loans and interest rates on government borrowing will rocket to uncontrollable levels.
All available evidence suggests the exact opposite. Those countries that have radically cut public spending – Ireland, Greece – have seen their interest rates go through the roof, while those who have resisted the urge to self-flagellate have been rewarded with interest rates around 3 per cent. (Last week the yield on Irish government debt hit a record high of 7.19% after the government announced a further €15 billion cut in spending.)
Bond markets do not reward reckless deficit cutting: it radically erodes a country’s tax base (as Ireland is finding out) and leaves a massive black hole in tax receipts, both now and in the future.
Paul Krugman called it right when he recently described economic policy makers as ‘like the priesthood of some barbaric cult, demanding sacrifices in the names of invisible gods’. These ‘invisible gods’ are global financial markets, the ‘sacrifices’ gargantuan spending cuts.
If we no longer believe in pagan ritual, why are prostrating ourselves before an altar constructed out of smoke and mirrors?
Of course, economics does not easily set the blood racing. The dismal science is too often presented in opaque, jargon-filled prose that most are unwilling – or unable – to engage with. However, instead of accepting the cuts as ‘inevitable’ and the ‘only option’, the economic arguments against the cuts need to be presented as clearly as possible. When they are the holes and fallacies are all-too-clear.
Many economists agree the only way out of the black hole that we are in is sustained, massive increases in government spending. Not quantitative easing but government spending on capital and non-capital projects. This will produce employment, tax revenue and growth. Only then can we talk about deficit reduction.
But economics is not the only reason to oppose the proposed spending cuts.
Walk through any Scottish town today and you will see boarded up units on the high street, pass streams of jobless young men and women. Scotland, and many other parts of the UK, needs investment: imagine what these towns and communities will be like after five years of continuous disinvestment? What it will be like for a generation to grow up into unemployment? As many vital services are either pared back to the bone or cut altogether, the social glue that keeps the nation together will be pulled apart, inducing a downward spiral of poverty, crime and drugs.
Opposing spending cuts is not a matter of left or right. Wanting to stop our leaders’ grotesque experiment in political economy is not about socialism or capitalism: It is about our own, and everyone else’s, right to a reasonable future.
There are plenty of oppositional politics out there – as the endless reams of flyers and inky, black and red posters attests – but this cause is different. It is precisely this difference that means we must make the case against cuts and in favour of stimulus spending as cogently, as forcefully, and as creatively as possible.
Instead of shouting ‘down with this sort of thing’ we will explain to people the economic argument against deficit reduction in a language everyone can understand. But we also need to organise, to be bright, to be new, and to appeal across classes and affiliations.
I am still not exactly sure what I am proposing but it might go something like this: a broad-based campaign, involving everyone from pensioners and community groups to students and parents. This campaign will take the argument in favour of increased government spending right into the public domain, publishing economic data in pamphlets and online, and arguing our case in the media and elsewhere.
Of course mobilisation is vital, too. Old-school street protests and demos have their place but for this campaign to work we need to move beyond the tried and the tired. We need to be creative, to get our message across in a clever, innovative, and unpredictable fashion, from inventive PR stunts one day to reasoned public debates the next.
The time has come for all of us to take what belongs to us all – our future. If you want to call this a Tea Party go ahead, but this is not about getting ridding of government per se – government is the only way out of this mess – but changing government policy.
We already have the support of several leading UK economists, why don’t you come onboard, too?
This is probably the first considered, overtly political act in my life: I am calling on anyone reading this to help start something new, to imagine a better way. If it all sounds incredibly idealistic for a hack on a Monday afternoon, well it is, but if this is something you think you want to get involved in (and why wouldn’t you?) drop me an email, get in touch or follow me on Twitter (@PeterKGeoghegan).
Spread the word, the cuts may be coming but we are too.
4 thoughts on “Campaign for Spending Increases Starts Here (A Hack Gets Political!)”
Well written Peter. The cuts planned will decimate us not only economically, but socially and culturally too. Though I'm someone who's never really been involved in political action or protest before, I'm beginning to think there are few other options. The risk been played with the future of millions is too big of a gamble to take in the pursuit of ideology.
Let me know when you are meeting (I've supplied my email)
I got put on to your blog by Joan MacAlpine who, I believe, mentioned my blog to you at the Political Innovations event.
Welcome aboard to the world of activism!
The economists and commentators I'm following and who seem to have the best grasp of what's going on are Peter Schiff. He is from the Austrian school. Yes, that is pro-capitalist but we can use the core ideas of capitalism as a way of criticising the current viral form of crony capitalism. It is effectively capitalism for the poor and socialism for the rich. So, I may not agree with Schiff on the way ahead but he knows exactly what's wrong with the current system and infact predicted the crash in great detail long before it happened. See 'peter schiff was right' videos on youtube. Other Austrians like Max Keiser who broadcasts for Russia Today and Press TV is a must follow. His stuff, although sometimes a little sensational, is excellent. He worked Wall St. and developed the software that the global merchant banks are now using to front-run the stock exchange. It seems that most of the 'activity' there now is merely computers trading with each other to give the impression of activity in order to suck in pension funds to be slaughtered. Max's shows are hugely interesting – he calls himself an economic anarchist and has set up the 'pirate my film' site which is an attempt at undoing the intellectual property cartel. He is also trying to get a boycott of coca-cola in an attempt to have traders bet on its collapse – an interesting system backed up by theories of 'complex systems'. He is also right now moving a campaign to crash JP Morgan by having people buy physical silver. Right now on the metals exchange one hundred ounces of silver is being sold as paper contract based only on a single ounce of silver in the warehouse. By buying silver he hopes that JP M's system weakness is there and that a popular movement can bring it down.
I would recommend reading up on Gerald Celente – the world-famous 'trends forecaster', his predictions are respected by governments and multi-nationals and his interviews are fairly apocalyptic but well worth mining for info.
The best site on the web for exploding the mainstream economic memes is zerohedge – the quality and volume of material that's coming out of there is immense.
There is another campaign that we should look towards.
Given that the banks are causing these probems owing to leverage, like the silver issue, it stands to reason that citizens can have a leveraged influence by taking their money out of the big banks and put it into small independent banks like Airdrie Savings Bank. One pound sterling may mean as much as fifty and that's power – more than your vote can change. In the US the 'move your money' campaign is having real success.
Mike Hudson is a brilliant economist doing a lot to challenge the orthodoxy of paying private losses with taxpayers money. He advises parties and governments such as Iceland and in Latvia about how to deal with the banks. Steve Keen in Oz is non mainstream too and some reckon is the best economist alive.
Getting on to your case about spending. In my opinion there is definately a case against 'austerity' and there is evidence all over the place of how the IMF/World Bank strategy of austerity has paralysed countries. (See Greg Palast)
My worry about these campaigns, like the trade-unions, is that opposition can be led down the cul-de-sac of old fashioned class warfare strategies. We are not in a battle of left v right as you say. This is a small oligarchy against everyone else.
Stimulus failed. Why? Because the problem is not about economic or business cycles. It is about policy failure and systemic fraud. The bubble economy meant we had many jobs which were not of high value to the economy. Stimulus held them up for a while but got us into even more debt doing it. That debt will have to be paid for by the more productive side of the economy much of which is now disappering thanks to stimulus.
A problem of debt saturation, which was encouraged by fraud and policy failure, can not be fixed by more debt.
So, spending our way out is not the answer and serves only the banks interests.
The answer is to repudiate the debts like Iceland is doing. It is also to cut the costs of warfare by getting out. Renegotiating PFI. Most importantly, the banks have to go. We have 'moral hazard' now which means that banks have no risk because they are insured against risk by the taxpayer. They are still in so much debt that the hole can't be filled and trying to do so is causing a crisis on various fronts; finance, currency and economy. They are being allowed to lie about the debts on their balance sheets. The citizens will never fix this problem – it's too big and will be back soon but next time, who is going to bail out the government?
We are looking at the Western empire collapsing. I fear currency war may tip into more regional conflicts at best.
Underneath all of this is what I think is the real problem – peak oil. See http://www.peakoilscotland.org
Oil lets you get the job done and money the motivation to do the job. Without oil money has no value. Now, we see peak oil has been reached. What this means is that economies can no longer grow and so the capitalist model of investing in growth collapses.
It is my belief that the global banks know this and are transferring our wealth so that they can control the post-industrial landscape i.e. stopping people from using their wealth to invest in self-suffient models. They want complete neo-feudal, corporate control over the population which is controlled by debt.
Peak oil is of huge importance and yet it hasn't registered in public debate. Why? Well, without oil energy needs drop off and so you've solved the man made global warming meme and hit the new carbon-trading industry where it hurts. On top of that it causes the reversal of globalisation..
You probably know a lot of this stuff but I thought I would spill the beans anyway.
I'll stick a link to your blog on my own and I look forward to seeing what you bring forward.
To answer your question about where the economists blogging? We haven't started down the road of austerity but it's coming.
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