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Fairy tales and the vocabulary of scarcity. Protecting the wealthy and hurting the rest

Fairy tale princess and books in fantasy landImage by Mystic Art Design from Pixabay

“Last time, most of us fell for it. This time, it is critical that we do not. Because, in reality, the crisis we just experienced was waking from a dream, a confrontation with the actual reality of human life, which is that we are a collection of fragile beings taking care of one another, and that those who do the lion’s share of this care work that keeps us alive are overtaxed, underpaid, and daily humiliated, and that a very large proportion of the population don’t do anything at all but spin fantasies, extract rents, and generally get in the way of those who are making, fixing, moving, and transporting things, or tending to the needs of other living beings. It is imperative that we not slip back into a reality where all this makes some sort of inexplicable sense, the way senseless things so often do in dreams.”

David Graeber –  After the Pandemic, We Can’t Go Back to Sleep

 

 

Rishi Sunak is looking to raise funds! So says an article in the mainstream media this week. Raise funds for what? A gym, a swimming pool or perhaps tennis courts for his £1.5 million manor? No, nothing so trivial! The article, like so many over the past few months, was speculating on how the Chancellor might get the public finances back on track after the huge spending response by the government to keep the country economically afloat and functioning during the pandemic.

What’s it to be? Capital gains tax, targeting public sector pensions, abandoning the pensions triple lock, cutting public sector spending, raising taxes, or perhaps increasing National Insurance (to fund the proposed social care reforms if they ever get off the drawing board). After all, you’ve got to find the money from somewhere, haven’t you? At this point one cannot help but note with a hint sarcasm, that an excessively wealthy Chancellor is now considering cutting benefits for some of the poorest people in our society, putting balanced accounts over people’s lives.

Last week, the BBC covered yet another fake story about government borrowing. It reported that whilst overall borrowing was down on the same time last year, the government had spent a record £8.7bn in interest on repaying its debts in June, three times as much as in June 2020, as a result of inflation which had raised the value of index-linked government bonds. It also noted that debt to GDP was at its highest since the 1960s.

In the same article, the Chancellor, whilst patting himself on the back for the ‘unprecedented package’ of pandemic support, the only option that he actually had to keep the economy from taking a nosedive, commented that he needed to ensure debt remained under control in the medium term and indicated that his ‘tough choices’ in the last budget were ‘to put the public finances on a sustainable path’.

The IFS, relishing its doom-mongering task, as always, said in July that they expected that the ‘tough choices’ would continue, even if the economy appeared to be recovering more quickly than had been expected at the last budget. It noted that ‘permanent economic damage’ had been done by the pandemic, and that rising debt interest costs meant that, under their forecast, the Chancellor would have little, if any, additional headroom against his stated medium-term target of current budget balance (borrowing only to invest, not to fund day-to-day spending) in this year’s Autumn Spending Review. Analysts did, however, stress that despite record interest, debt servicing costs as a share of GDP remained low by historic standards.

Ruth Gregory, a senior UK economist at Capital Economics, said that ‘the public finances should reap the benefits of a fuller recovery in GDP than the OBR expects, meaning that the deficit will fall still further.’ Assuming of course that the proclaimed recovery remains on track, which is looking less and less certain.

You can trace in the above text a common theme. Tax, borrowing, deficit, debt, and fiscal headroom is the vocabulary of choice by politicians, journalists and institutions when describing how the government spends. It is, therefore, unsurprising that the public accepts the deficit and debt fairy tales.

Whilst it may be the case in terms of how the public accounts are presented, the reality is that it is merely an accounting framework which fails to reflect the capacity of the UK government, as the currency issuer, to spend money into existence, and is designed to keep a lid on monetary reality.

Instead, the media in its analysis, acts to reinforce the incorrect narrative of how the government spends, and focuses either on the capabilities of the chancellor of the day to manage the economy in a fiscally sound manner, or aims to shock the same public when the deficit and debt increase, leading to false accusations by the political opposition of economic mismanagement and spending beyond the nation’s means.

We can certainly expect more of this household budget nonsense in the months to come. After a vast round of government spending to prop up the economy, someone’s got to keep the public’s expectations in check, to keep the status quo in place by suggesting that government must balance its books, sooner or later.

In this, the journalists fall over themselves, as Will Hutton did this week in an article discussing the current economic situation, to frame the issues as per usual in terms of borrowing, deficit and debt, as if they represented monetary reality. To give him his due, he was clear, in a deficit dove sort of way, that the spending responses the government had made to address the prevailing economic conditions had been necessary to stop the economy from crashing, and went on to suggest that such spending would need to continue to support the economy. However, even if he didn’t say it, caught as he is like many others in the false paradigm of how the government spends, he will be equally quick to suggest at some time in the future that whilst we might continue to borrow while interest rates remain low, eventually there will be a reckoning and government will have no alternative but to curb its spending and restore fiscal discipline.

Now is the time to challenge this notion of monetary scarcity, and also the economic orthodoxy which has done huge harm to the UK, and also globally.

As the MMT Lens has noted many times before, it’s not the state of the public accounts that are important in themselves, but the economic conditions that lie behind them. What choices did the government make, faced with those economic conditions? What did the government do, or not do, who benefited and who did not?

The media, acting like a magician using his powers of sleight of hand, guides the public to be afraid of public debt and its consequences, when all the while the future of the planet hangs in the balance, not just in terms of planetary degradation, but also the poverty and inequality which will continue to grow without urgent action.

We need a State of the Nation Address to make clear what the consequences of the ideologically driven policies of successive governments and their spending choices have been, and most particularly over the last decade. While the rich have benefited from an ever-larger proportion of wealth, the living standards of successive generations have fallen, increasing poverty and inequality.

The ‘cheap as chips’ economy flourishes increasingly for only one section of it. The corporate sector. Earlier in the year, it was reported that the wealth of the world’s billionaires had grown by $4tn during the pandemic, despite the global economy suffering its deepest recession since the Second World War. Jeff Bezos, Mark Zuckerberg, and Bill Gates are just a few of those who have come out of the crisis unscathed, and in some cases even richer.

At the other end of the wealth scale, the gig economy continues to flourish for owners of exploitative companies like Deliveroo, whose workers can earn as little as £2 an hour, unscrupulous employers employing the dirty tricks of fire and rehire on the back of the pandemic, and a continuing low wage economy (even if some sectors are under pressure due to shortages). When the question is asked why such employment standards have been allowed by law and why have they persisted under successive governments, there is only one answer; that those successive governments have served their corporate friends and their own interests through the revolving door, rather than those of the electorate.

This week, the charity Citizens Advice warned, as many have been doing over previous months, that the government’s planned £20 a week cut to Universal Credit could drive 2.3million people into debt. That includes people who were already struggling to make ends meet before the pandemic as a result of government policies.

A survey had shown that more than a third would be in debt after paying just their essential bills, if their benefits were to drop by £20 a week. This increased to half of claimants in the so-called ‘Red Wall’ areas. The organisation is warning of a ‘triple whammy of benefit cuts, rising energy bills and further redundancies as the furlough scheme ends, which will push families into hardship.’

Dame Clare Moriarty, the chief executive of Citizens Advice, described the cut as “a hammer blow to millions of people”, saying that it undermined the chance of a more equal recovery, by tipping families into the red and taking money from the communities most in need.

Whatever happened to Boris Johnson’s levelling up plan? In his usual defence of cutting the Universal Credit uplift, he suggested that claimants should rely on their own ‘efforts’ rather than accept ‘welfare.’ More ‘it’s your own fault if you can’t find a job’ neoliberal twaddle!

Whilst some in the media suggest that cutting the uplift would create electoral risks for Conservative constituencies in the Red Wall, they often fail to bring attention to something much more significant. That the poverty which preceded the pandemic, although alleviated by the increase in Universal Credit, is not a blip of nature, it has been politically induced. Johnson’s mantra of ‘getting people into work’ is no option at all, if wages are not high enough to keep people out of want. It helps no one apart from profit-seeking business, and the irony is that in the end, the whole economy suffers. People are poor, not because of their shortcomings or because they are lazy shirkers and not trying hard enough, they are poor because the government has decreed they should be.

The media should name the economic ideology that drives poverty and inequality and creates the vast disparities in wealth that we are seeing today. Neoliberalism. A phenomenon which has captured political parties, institutions, and the media which parrots its tenets of faith. The fact that many on Universal Credit are in work, surviving from hand to mouth on low wages, is a red warning indicator that something is wrong. It is an indictment of the government that poverty and employment insecurity has been built into the system to serve its corporate supporters who lobby to serve their own profit interests. But neoliberalism teaches, falsely, that government has no power to change the economic paradigm, and that its policies are constrained by scarce monetary resources. It is the spread of neoliberalism’s teachings that has prevented people from seeing the possibilities for positive change.

It was depressing this week to read about Labour’s plans for overhauling the Universal Credit System through allowing low-income workers to earn more, without seeing a cut in their welfare payments. The phrase ‘making work pay,’ featured in the presentation of their plans, which was horribly reminiscent of Iain Duncan Smith’s dictionary of human torture which informed his welfare shakeup and the Universal Credit Plan in 2010, and which incidentally and shamefully Labour supported. What changes? Labour sharing a bed with its corporate friends alongside the Tories, when it had the opportunity to break free of the economic ideology which has done so much damage already.

With increased knowledge about the capacity of government to act, it doesn’t have to be this way. With a government that puts the needs of its citizens at the top of its agenda, it could, through adopting full employment as a policy objective, and the implementation of a Job Guarantee, ensure that people are paid a living wage instead of what happens now, which is, in effect, a wage subsidy to help out their corporate friends.

Since the government is the price setter for labour through its legislative capacity, a Job Guarantee would help both those in work on low wages and those who are involuntarily unemployed and seeking work. A centrally paid for employment scheme, paid at a living wage set by the government, would provide training, give people dignity and purpose as well as offer a transition into better paying, private sector employment, as and when economic conditions improve. That is the best option of all.

The macroeconomic bottom line is that people with more money in their pockets spend it back into the economy, thus benefiting their local communities and the wider economy. They can pay for the real essentials like rent, food, clothing, and travel, with enough left over for life’s pleasures. Nobody should have to rely on food banks to feed themselves or their children.

What’s not to like? It’s a no-brainer. The economy would benefit, (which in an alternative world to the one we currently inhabit should be the aim of all governments whichever side of the political spectrum they stand) and working people would benefit through increased financial security and improved health and well-being.

Furthermore, with the challenge that is being presented by the urgent necessity to address the climate emergency and work towards a just transition to a truly sustainable world, it offers us an important opportunity to rethink the way we do things, re-examine what work is, and move towards a world that is less oriented towards the consumption of things, to a world concerned with sustainable living and dedicated to fulfilling public purpose. We need to do this within the context, not of monetary constraints, but the very real constraints related to resources.

This week the Financial Times ran an article with the headline ‘Climate action will stall until the finance problem is solved’, in which it said:

‘The options are to raise debt, raise taxes (including wealth taxes) or adopt a wartime mentality. None are politically attractive which at a profound level is the reason why the finance question remains unanswered, and the climate crisis remains unresolved’.

On that basis, as humanity sinks beneath the waves, the politicians will still be puzzling their little brains about how to pay for it, when all the time they should have been looking at the real and finite resources we will need to deliver a green transition, and how they can be shared fairly to create a more equitable world. As a social media friend commented, referring to what would have happened if the government had said in 1939 at the beginning of the second world war, ‘We will not defend Britain until the finance is sorted’, it would have been lunacy. The government did what only it could do to prepare for the battles to come, it spent the money into existence, whilst at the same time, offering war bonds to remove private purchasing power to ensure that it was not competing for the resources it would need to prosecute the war. Those same tools can be used for a just, green transition.

When the fate of the planet and its citizens are at stake, it is a paltry and self-serving argument to ask how it will be paid for, or to claim that balanced budgets must come before action on climate, poverty, and inequality.

Whilst we may indeed have to develop a ‘wartime mentality’, we should interpret that, not as deprivation but as an opportunity for cooperation. A transformation from a society of endless consumption of things we don’t need, to one which really delivers public purpose, a society formulated around human and planetary well-being. A cup half full and not half empty.

Such a world seems light-years away, when the Business Secretary Kwasi Kwarteng, continues to advocate a ‘free market’ approach to the economy, that same approach which has created the structural weaknesses revealed over the past year and that will do nothing to save the planet. Whilst, at the same time, right-wing journalists mourn massive state intervention and a culture of unlimited spending (even though it’s poured vast sums of public money into private profit) and promote instead a return to the good old days of unrestrained growth and market dominance.

But in the light of the challenges we face, it is time to acknowledge the damage this approach has already caused and will continue to cause if we fail now to rethink how we live.

Finally, with the news that global trade uncertainty continues to affect the economy, retail sales suffered an unexpected fall in July, and figures show that consumption has levelled off. It rather takes the shine off the expectation that people would be anxious to spend their savings as soon as they were able to, thus saving the government from the ignominy of having to admit that its growth expectations were miscalculated or wishful thinking. The exhortation to spend has fallen flat on its face, for the time being at least.

The elephant in the room crashes about as the government continues to ignore its role in the economic trends, which were already weak before the pandemic as a result of cuts to public spending. And, that it needs to spend sufficiently to deal with the ongoing economic uncertainty and create confidence that government actions are operating in the favour of working people and their families, not the politicians’ corporate friends. In such circumstances, it is clear that those lucky enough to have savings are reluctant to splurge out, just in case things go pear-shaped, and it ignores the many who have no such savings and who have been living on the edge for years as a result of government spending and policy decisions.

While the government continues to threaten more cuts and more public sector austerity to pay down the imaginary debt, the removal of the Universal Credit uplift and potentially the pension triple lock, with the still to come uncertainty surrounding the planned withdrawal of furlough arrangements, people will continue to hunker down after a short flirtation with spending, if they had anything to spend.

Such a strategy, based as it is on a false narrative of government spending, and the evils of deficit and debt, and spending beyond the nation’s means, will constrain the government’s promises, weak as they are, to act on the climate crisis and address the consequences of their own ideologically-driven policies.

If we are to avoid further planetary degradation, destruction of land, resources, and biodiversity, and all that will mean for the future survival of human beings on this planet, we cannot afford to ignore the warnings. We have no monetary constraints, only real resource ones, and it is now for governments across the world to cooperate to ensure that we can deliver a sustainable global economy and a fairer distribution of real resources in both the poorest and richest countries alike. Everything is possible with political will, if we choose it.

 

 

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The post Fairy tales and the vocabulary of scarcity. Protecting the wealthy and hurting the rest appeared first on The Gower Initiative for Modern Money Studies.

Neither Green Savings Bonds nor your pension money are needed for the government to invest in an environmentally sustainable recovery

Wind turbines in fieldsImage by Yves Bernardi from Pixabay

“We can pretend that extending the status quo into the future, unchanged, is one of the options available to us. But that is a fantasy. Change is coming one way or another. Our choice is whether we try to shape that change to the maximum benefit of all or wait passively as the forces of climate disaster, scarcity, and fear of the “other” fundamentally reshape us.”

― Naomi Klein, On Fire: The Case for the Green New Deal

 

This week, the Telegraph reported on a new poll saying that Rishi Sunak’s push to rein in government finances was backed by Conservative voters who were concerned that the government was spending too much and must do more to cut expenditure. According to Andrew Neil, who interviewed the Chancellor on GB News, he did not deny that he had indicated to Johnson that ‘he might have to take his credit card away’, and confirmed his statement made earlier this month that it was right that he should be ‘responsible with other people’s money’.  It would be interesting to be party to conversations between No. 10 and No.11 – Johnson promising the Earth without consulting his Chancellor – whatever next!

Whilst voters on the right worry about the state of the public accounts, on the left we have politicians supporting this narrative; Labour’s candidate for Batley and Spen stated in an interview with Owen Jones prior to election day that ‘People are … sick of thinking there’s a magic money tree, there isn’t, so we’ve got to be clear about that’.

You could not make it up! While the planet overheats, in some places literally, landscapes and oceans degrade, and biodiversity and the natural world is under threat as a direct result of human behaviour, the state of the public accounts takes precedence over addressing the vast man-made politically created poverty and inequality, and even human and planetary survival!

And while the toxic consequences of neoliberal economic dogma prevail, and people get poorer and less equal while the rich go on raking it in, balancing budgets is apparently far more important than advocating the creation of a fairer and more sustainable economy.

This ‘past its expiry date’ understanding of how the government spends spreads its noxious tentacles into every aspect of our lives, suggesting that government spending is constrained by a finite pot of money that depends on taxation and borrowing. And that is before the political pundits or orthodox economists even get started on fearmongering about the size of the national debt. And yet, as destructive as the narrative is, it forms part of public and political debate on a daily basis on the news and social media alike.

It is disappointing, to say the least, that the winning Labour candidate in Batley and Spen is happy to sign up to the right-wing narrative of fiscal discipline and to reinforce this to her electorate, a narrative so beloved by Margaret Thatcher, who claimed that there was no such thing as public money. Dealing with the key challenges of the day, including saving humanity is, according to that message, limited to the tax paid in by working people. By that token, we will have to save up for it, or not do it at all! But do not worry, it is only the planet at stake.

This week the Chancellor, in his Mansion House speech about the future of financial services, yet again reinforced the false taxation paradigm, by claiming that the financial sector contributed ‘£76bn in tax a year’, which he stated was enough ‘to pay for our entire police force and our entire state schools’ system.’ It must have made the chests of those present puff out with pride at their contribution. Of course, on paper, one can do those calculations or costings, but the truth is that government does not need their tax, or anyone’s tax, in order to spend.

The Chief Bean Counter, yet again, leads the public astray with his household budget descriptions of how the government spends, and later in his speech reinforced the lie that it needs to borrow to fund its programmes. He confirmed the ‘final part of his vision’ which would give the public, he said, an opportunity to invest in the government’s green initiatives through NS&I Green Savings Bonds. It seems after a bank bailout over a decade ago which failed to spill the beans on how the government really spends, combined with a year of government borrowing from itself to manage the economic fallout from the pandemic, it is choosing yet again to reinforce the message that government needs to borrow from people or institutions in order to spend to save the planet. However, gilt and bond sales, although presented as a borrowing mechanism, have a quite different role and do not equate with borrowing. For more information on that point, you can find out here.

The government does not have to issue bonds, green or otherwise, to fund its spending, any more than it needs to issue bonds to savers to fund infrastructure schemes and create green jobs. That is just the smoke and mirrors of paper accounting. The government is the currency issuer, and with that comes the capacity to invest in creating a sustainable economy and create jobs, both in the public and private sectors, or through the implementation of a Job Guarantee programme which would act as an automatic stabiliser to smooth out the ups and downs of the economic cycle. It is the only body that has the legislative power to do so, and it is the only body with the monetary firepower.

And again, this week, in yet another game of smoke and mirrors, it was reported that the Government had been in private talks to direct billions of pounds of pension money into infrastructure and start-up companies to boost the economy. Industry sources have apparently been discussing how a portion of workplace pension schemes – those which staff have to join – would go into a fund which will launch this year. Yet again we are faced with the same government-sponsored tall tale, but the government does not need to raid pension funds to boost an economic bounce back, or indeed pay for a green agenda.

Such false narratives strengthen the false idea, which has been drummed into the public consciousness over decades, that the financial sector and markets hold the key to economic health, and that the government relies on their expertise and ‘talent, energy and imagination’, as Sunak explained in his speech, to revitalise the economy, which, according to him, matters more for this industry’s success than any government policy.

Is that the same financial sector that crashed the economy in 2007/8? The same financial sector that operated like a casino whilst believing it was invincible, and, in doing so, ruined the lives of hundreds of thousands of people; destroying jobs, depriving people of their homes and contributing to huge economic instability, which in the end led to the poison of damaging austerity.

It calls to mind the words of another Chancellor, Gordon Brown who, addressing the City of London just two months before the run on Northern Rock said:

‘Over the ten years that I have had the privilege of addressing you as Chancellor, I have been able year after year to record how the City of London has risen by your efforts, ingenuity and creativity to become a new world leader… I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London.’

No sooner had he said it than the financial edifice came crashing down. Clearly, the beginning of this new age was put on hold!

Like governments before, even in the light of the great financial crash politicians such as Sunak are following the same path, bowing to markets and the financial sector as if they are the authors of economic well-being.

And like governments before, it is relinquishing its responsibility for the state of the economy and the health of the nation or the planet, with the implication that the state’s role is a limited one. Even though its vast power has been demonstrated clearly over the last year and more and has prevented an economic meltdown.

It is government policies and legislation that make the rules by which private companies operate, and it is shameful that for decades successive governments have given the financial sector free rein to do as it pleases, with dire consequences. It is also shameful that the government suggests that it needs the money of private savers, the financial sector, or other institutions in order to spend. It is equally shocking that successive Chancellors have pulled the wool over the eyes of the public about how the government spends, by continuing to bow down to the gods of the market and the financial sector.

Wherever you look, the household budget paradigm rules, to the detriment of the biggest challenge we have ever faced. The future of humanity. And still, in the face of rising temperatures and seas, the question on everyone’s lips is: ‘who will pay for it?

This week, an article in the Guardian put the oil industry on the spot over the decades of denying the effect of their business on the climate. It suggested that whilst we cannot get back the 40 years lost to the oil industry’s climate lies, that it should now pay for those deceptions with higher taxes to fund the green agenda. Of course, again, the household paradigm rules in the same way as the left clings to the idea that we should get the excessively rich to pay more tax to pay for the radical environmental programmes that will be needed.

Again, the bottom line is that tax does not fund government spending; the only body with the real monetary capacity as the currency issuer to pay for what we must do is the State. That does not mean to say, however, that they should not be made to bear the burden of their lies, indeed they should – through legislation and taxes designed to drive a move away from damaging carbon-based energy towards developing sustainable technologies harnessing wind, water, and the sun. That is the power of the state, assuming it chooses to use it, rather than deferring to the market for solutions. So far, this government’s record on environmental action has been lukewarm and as changeable as the weather.

Again, this week, in another article commenting on the appointment of Sajid Javid to the position of Secretary of State for Health, the author focused on the problem of MONEY, or rather lack of it, writing:

‘But in every battle Javid fights from now on there will be another familiar problem: money. How to fund a reshaped, modernised health service from Treasury coffers already run bare by the pandemic. How to modernise social care without blowing another hole in the public finances, or putting up taxes, or slashing pensions

Putting aside the idea that this government has any intention of reshaping the health service or social care as publicly paid for, managed, and delivered services and has, in fact, been working for the very opposite, once again the ‘state coffers are bare’ message predominates. It reflects the strategies of successive governments for decades, on both the left and right, who have introduced the private healthcare sector into the mix, in the belief that the private sector is more efficient and uses public money wisely, regardless of the fact that public money is going into private profit and results often in poorer quality and restricted services. Corporate welfare has been the aim of the government game, influenced by those very same corporations advising on policy.

However, the idea that the government has to make choices between putting the finances straight and people’s lives, is not only cruel in its conception but also incorrect. The government does not have to blow any holes in the public finances, put up taxes or slash state pensions. Quite simply, all the government has to do is authorise its central bank to spend.

The question, as someone noted this week on social media, is not how are we going to pay for it, but how are we going to resource it? Do we have the nurses, doctors, other health professionals, hospitals, and other facilities, not to mention social care workers, to provide good health and social care? And if not, why not? Who has failed to make provision through its policies and spending decisions? Where does the blame lie? At the feet of the government, of course.

It is all the more concerning that Javid, a former chancellor who promised an end to austerity and then broke his pre-election pledges by ordering his ministers to identify savage departmental cuts, on the basis that they had been ‘elected with a clear fiscal mandate to keep control of day-to-day spending’, and who said that ‘this means there will need to be savings made across government to free up money to invest in our priorities’, is now in charge of the Department of Health and Social Care. The public should at least know what his priorities might be.

We now have a truly clear idea, based on previous and current experience, that it means pouring public money into big corporations and the pockets of relatives, friends, and mates of mates, whilst depriving the public sector of the means to function efficiently and effectively. Misusing their spending capacity for their own agenda at the expense of serving the public purpose.

The government does not need to examine the state of its finances or whether it can raise taxes or borrow to fund its spending or if it should cut back its expenditure, its role should instead be to look at the bigger picture of resource availability and decide what its priorities should be. What it does need to explore is how can it release the resources it needs to deliver those public priorities by reshaping the balance between private and public sector employment? And as the currency issuer, it certainly does not need to rob Peter’s department to pay Paul’s, or even make savings.

While the Chancellor considers his potentially cost-cutting or tax-raising moves, as a result the Prime Minister’s levelling up and other promised spending plans could be in jeopardy, if indeed they were ever intended to be more than hot air to make him look good.

Restoring fiscal discipline would put paid to those plans. You cannot do both. Government has the tools to improve people’s lives if it chooses to use them. Instead, it prefers to defer to market solutions again and again with damaging consequences.

Successive neoliberal governments have relied on the view that a light-touch regulatory environment is what is needed, and that letting the rich get richer will allow wealth to trickle down. All government has to do, apparently, is wait, and bingo! Poverty will be a thing of the past and public services affordable. And yet the evidence is now, and has been for some time, that doing so has led to the lives of the poorest continuing to deteriorate along with public and social infrastructure.

A paper from the London School of Economics (published in December 2020) which compared 18 developed countries that cut taxes in 1982, (when Ronald Reagan cut taxes on the wealthy) with those that did not, found (surprise, surprise), that instead of wealth trickling down to boost jobs and incomes, such tax cuts only helped one group – the already rich.

Over the last few years, the reality of the consequences of government spending and other policy decisions which have led to rising poverty and inequality, have continued to make media headlines. Along with the decaying public and social infrastructure facilitated by austerity-driven, neoliberally inspired government, we have seen, over the last decade, a continuing deterioration in living standards. Rising homelessness and food bank use, housing unfit for human habitation, compounded by unaffordable rents and insufficient housing stock, inadequate access to health care and good education, not to mention the hardship caused by low incomes and precarious employment.

A study carried out by an All-Party Parliamentary Group (APPG) has found that England’s poorest neighbourhoods have the biggest shortages of social infrastructure such as parks, playgrounds, pubs, shops and sports facilities. It also showed that such neighbourhoods are least likely to get government funding to support their communities and found that they were less than half as likely to have charities and community groups in their local area. These ‘left behind neighbourhoods’ as they have been called were, it noted, overwhelmingly concentrated in the post-industrial towns and cities of the north of England and the Midlands, as well as coastal areas of the south-east.

Whilst Sunak continues to tell the public that he has to be ‘careful with other people’s money’, alluding to the increasingly discredited view of Margaret Thatcher about state money, he is reinforcing in their mind that, at some point, there will be a price to pay in higher taxes or more public sector cuts, however damaging that would be to an economy still struggling to get back on its feet. He is reinforcing the idea that dealing with the key issues of our time is financially unaffordable, whether that is addressing the consequences of the climate crisis or the decades of neoliberally created poverty and inequality.

Neoliberalism is not dead, as some on the left seem to think. It is morphing into something else even less wholesome, and we still have major political parties signed up to the corporate charter of planetary destruction, whilst talking in the misleading language of green growth and the lie that we can continue as we are.

We must keep pushing back on these false ideas, which have already done vast damage to the planet and all life that depends on it being healthy to survive. We must acknowledge our connection to the natural world which sustains us and recognise our interdependence.

There are choices. We just have to decide on which path we prefer to stride. Balancing public budgets and allowing corporate control over the green agenda and the demise of our democratic values, such as they are, or accepting that an understanding of the reality of how money works must be the baseline for what comes next, and that such an understanding offers real opportunities to create the sustainable, steady-state economy that we seek.

 

 

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