Archive | June, 2013

The government’s austerity project seems more like malice every day

27 Jun

By Chris Hansell

Photo by mjtmail (tiggy) via Flickr

Photo by mjtmail (tiggy) via Flickr

Question Time, the BBC’s flagship political debate programme, can be both intriguing and insufferable. Last week’s edition, with the Lib Dem’s Ed Davey and Labour’s Harriet Harmon using up lots of words but saying very little, was a paint-by-numbers example of this.

Dropping divisive comedian Russell Brand into the pot was not therefore unwelcome. It’s always nice to see someone on Question Time who isn’t weighing their every word against their own political ambition. But this post isn’t really about QT.

What I’d like to talk about is a comment that seemed to be ad-libbed by Brand. Speaking about the bankers and the crisis they created the comedian said ‘incompetence of that degree, with those kinds of consequences, is indistinguishable from malice.’

I haven’t decided whether I agree with this yet, but it’s an idea we should all give a lot of thought. Given the many people who have suffered, been plunged into poverty, had their safety nets yanked from beneath them, found themselves jobless, is there any difference between having caused this crisis through self-interest or ineptitude?

We should ask ourselves the same question about the calamitous economic policy of our dear Chancellor. On Wednesday George Osborne stood in the House of Commons and remarkably managed to surprise no one with another set of budget cuts. But at this point what can we really expect from a man who seems to lack the imagination of even an economist?

Way back in 2009, before the Cameron-Osborne Austerity project found its way into Downing Street, world renowned British economist David Blanchflower made an obvious point: ‘You don’t cut public spending in a recession’. The sense of this statement is obvious. If you have debts to pay back the absolute worst time to pay them off is when you have no money.

Even after four years you can feel Blanchflower’s exasperation when he says of the Tories’ austerity plan ‘I haven’t seen such blinding incompetence for a very long time’. There’s that word again: incompetence. But how many people really believe that anymore? Headlines from the 2013 spending review include a ten per cent cut to local government budgets, ten per cent from the Environment department and a new cap on welfare spending. This is just a slice of the cuts. Nearly every government department has seen reductions. A government department can seem a bit abstract but we shouldn’t forget how budget cuts will damage the services millions of us depend on every day.

Local councils will be next to useless once they have combined these latest cuts with the ones they already have to implement. The welfare safety net is clearly not something the millionaires and Eton alumni in Cabinet see as important. With the Work and Pensions budget slashed by nine and a half per cent and housing benefit and disability living allowance capped this message could not be clearer.

Yet can this economic policy be, as Blanchflower suspected in 2009, simply the result of economic incompetence? In May I wrote a blog post about the media buzz surrounding an IMF visit to the UK. Really it should not have been a big deal, but key members of the IMF had said some very surprising things about our economy. Someone else who wrote about the trip was Korean economist Ha-Joon Chang. Chang had this to say about our economic bind: ‘Current policies in the UK and other European countries are really about making poor people pay for the mistakes of the rich.’

For Chang the IMF’s trip showed that our government was persisting with a policy that unnecessarily hurt poorer people because the results would benefit the rich. I find it hard to disagree with this assessment when our Chancellor slashes vital public services so freely while multinational corporations are able to pay such low amounts of tax with only token political opposition.

Internet giant Google can pay only £6 million on UK generated profits of £2.6 billion while new university students must burden themselves with £9,000 a year course fees on top of living costs. Corporation tax is lowered by eight per cent in the space of three years but freezes to public sector pay and housing benefit make the cost of living more difficult to bear for hard working people.

When Russell Brand talked about incompetence and malice on Question Time last week he could just as easily have been talking about the policies of our government and our Chancellor. What has become clear though is that the UK’s grand austerity project is more about malice than incompetence.

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Greece, Europe and an abandoned generation

4 Jun

By Chris Hansell

Photo by linmtheu, via Flickr

Photo by linmtheu, via Flickr

In April a bill passed in the Greek Parliament which will lead to a loss of 15,000 public sector jobs by the end of 2014. It’s just the latest wave of austerity measures that have crippled a country and left more than 60 per cent of its young people without work.

The bill was passed as part of an agreement with the so called ‘troika’ – the European Commission, the European Central Bank and the International Monetary Fund – who have in return obligingly supplied €8.8 billion to the cash strapped country. This money should be used to help Greece get back on its feet. Instead it will almost certainly be used to service an astonishing national debt burden.

In a complex but insightful analysis of the Greek debt burden Nikos Tsafos highlights a vital point. Between 2010 and 2012 the Greek government spent more than 50 per cent of the money it acquired from borrowing and privatisation on servicing its debt burden. This included €37.9 billion in interest on the debt. There is no doubt certain parts of Greek society (most specifically its government and the banks it borrowed from) have lived beyond their means. But like other countries across Europe, such as Spain and Italy, its young people are being unfairly punished for excesses they did not commit.

It does not need to be this way. The troika has already forced the Greek government into lowering the minimum wage and slashing social welfare spending. Austerity is slamming the brakes on economies across Europe, including the UK, and abandoning the youngest generation of workers to a job market that seems to fall away from under them. At the same time private companies like Google and Starbucks pay astronomically low tax thanks to shady but legal tax practices.

It’s hard to dismiss the idea that Europe is in the midst of some shock therapy a la Naomi Klein’s The Shock Doctrine. In the case of Greece it is most potent – cuts to pensions and public services, privatisations, immigration used as a spectre to divert anger away from brutal economic policy – but it’s evident across the continent.

The goal of this kind of austerity is alluded to in the IMF’s recent review of France’s economy. Among its main recommendations are less public spending and reforms to make it cheaper for businesses to hire workers. The message could not be clearer: France must become attractive to multinationals by making it easier to hire and fire workers who they are allowed to pay substantially less.

Last week figures published by the EU’s data office revealed that in the Eurozone nearly one in four young people (aged 16 to 24) were unemployed. April saw a rise in overall unemployment across the Eurozone of 95,000.

Reacting to this sort of news with anything other than a sense of cynical resignation is becoming more and more difficult. As someone who fits the age band for these statistics I cannot help but feel like the horse with the longest odds at the races. But in this case my entire generation is that horse – because we only turned up after the race had finished.

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