Scrap this austerity election

There are grave reasons for regarding the British general election in May as a deadly farce. If the major parties are sincere about eliminating the deficit, running a surplus and seriously reducing public debt they threaten to ruin the country. If they are not than they have failed to declare the real objectives of their austerity programs. Moreover in attempting to market austerity they have scapegoated the poor and deeply divided Britain. It may even be wise to postpone the election until expert advice can be taken.

It’s helpful to cite anthropologist David Graeber whose BBC series – Promises, Promises: A History of Debt – was broadcast earlier this month.

Ever since the creation of modern central banking systems at the end of the 17th century all governments have maintained a national debt and all politicians have spoken as if they shouldn’t have one. They all agree that we should balance our books and the national debt should ultimately be repaid. In fact on the few occasions when a government has achieved a budget surplus and begun to repay a significant portion of the national debt the results have invariably been disastrous…Modern money is just a collection of circulating IOUs. Governments create money by borrowing from banks and banks issue IOUs. These IOUs are what we call money. If there was no national debt governments would not have to borrow from banks and banks would have to create all the money themselves through private loans. But there simply aren’t enough private borrowers. As a result if the government stopped borrowing money the money supply itself would collapse.

Indeed The Independent reports that the public would have to go on a £360bn borrowing spree over the next five years to support George Osborne’s deficit reduction plans. That would involve a “fundamental reimagining of the role of the State”.

Despite this background George’s pre-election budget spiel amounted to the following: Britain’s public debt must be paid. That calls for another three years of “roller-coaster” spending cuts. Supporting feckless benefit claimants and single mothers is driving the country to the wall. Welfare support must be slashed. ‘Austerity’ is the only way to reverse the recession and provide jobs. What’s more, it’s working.

The People’s Assembly against austerity called George’s bluff. Austerity has not reduced the deficit. It grew 10 percent to over £100bn last year. Borrowing (£430bn) has overtaken that of the previous government. Austerity has not helped the economy but led to the worst decline in living standards since records began in 1856. Meanwhile the wealth of the 1000 richest people has doubled. Employment creation is a fake. Government investment has been hacked from 3.5% of GDP to 1.5%. Only 1 in 40 new jobs is proper full time employment.

No reason for surprise. Austerity –  shrinking public spending and consumer demand – is an illogical response to a recession and an affront to accepted economic wisdom. It is quite simply a con says Simon Wren Lewis, professor of economic policy at Oxford. He dismisses the thought that George, a prospective baronet with an Oxbridge education, has made a mistake which he is afraid to admit.

“It is as if Osborne’s real priority was and still is to cut all forms of government spending, and as if the deficit was, and he hopes will remain, a convenient pretext to achieve that goal.”  Professor Wren conservatively estimates that – so far – austerity has cost the country about £100bn, or £1500 for each adult and child. He  believes Osborne has been able to get away with it because of a compliant media.

If any other government department had wasted that amount, there would be a huge outcry from the media. Yet when it comes to macroeconomics, the media seems to play by different rules. It continues to misrepresent economic ideas even though it has access to academic expertise…Part of the explanation, I think, is that we have a particular problem with macroeconomics, which is the influence of economists working in the City… Their views tend to reflect the economic arguments of those on the right: regulation is bad, top rates of tax should be low, the state is too large, and budget deficits are a serious and immediate concern. And part of their job is publicity, so they are readily available when the media needs a reaction or a quick interview. There is obvious self-interest here: the more market reaction is thought to be important, the more the media will want to talk to City economists.

Clearly this is a hugely important issue. Market reaction – often fluffy and incoherent -is not a substitute for explaining economic policy options. But audiences are easily deceived into believing it’s their fault if they can’t understand the experts. That allows George and the media to obsess over a cynical distraction -the deficit – as if it is the overriding priority.  Macroeconomics becomes ‘macromedia’ –  an elevated branch of spin.

This distortion of reality has been compounded by ‘poverty porn’, a nasty subgenre of ‘reality TV’ masquerading as the public conscience. Essentially this digital version of the medieval stocks – and handmaiden of austerity – allows you to spit on the poor from the comfort of your armchair.

The BBC led the way. In July 2013 it broadcast We Pay Your Benefits. Four taxpayers got the right to scrutinize – one on one – how four claimants spent their dole money.  The series comes out of the same neoliberal stable as The Apprentice where contestants must outdo each other in amorality if not  ruthlessness. The foundational assumption of We Pay Your Benefits is that the unemployed don’t want to work although everyone can get a job in the new economy.

A month later Channel Four delivered Benefits Britain 1949. It raised the question that haunts England. Could today’s claimant live on the support provided when the welfare state was first created. The channel also offered How to Get a Council House and Why Don’t You Speak English? whose titles speak for themselves.

Channel Five went for programs with a proud ending. On Benefits and Proud, Pickpockets and Proud, Shoplifters and Proud and inevitably Gypsies on Benefits and Proud. The BBC contributed Britain on the Fiddle to this canister of smut. Benefits Street, six lavish episodes of poisonous innuendo set in Birmingham, made a fortune for Channel Four before decamping to Immigrant Street.

Imogen Tyler writes: “From the programmes title, Benefits Street, through to the splicing of images of rubbish strewn streets, unattended children, loitering youths, cigarettes and alcohol, hooded tops and baseball caps, punctuated by a soundtrack of ‘unemployed, unemployed, unemployed’, the audience is instructed to reimagine the welfare state as a ‘benefits culture’, which impoverishes citizens, feeds addictions and creates what government ministers such as Iain Duncan Smith have described as fatal dependencies amongst ‘those trapped in its clutches’. As a headline in The Spectator summarises, ‘Benefits Street exposes Britain’s dirty secret – how welfare imprisons the poor.”

This is patently not voyeurism. These programs promote a  neoliberal agenda in which the need for punitive welfare reform is regarded as self-evident and unquestionable ‘commonsense’. The explosion of poverty porn creates a climate of suspicion in which the ruling elites can screw the poor harder. Ordinary folk are making the connection. Last year a banner was unfurled by football fans at the Riverside Stadium in Middlesbrough.  It declared: “The poor are not entertainment. F**K Benefits Street!”

Poverty porn insinuates into the public imagination the notion that benefit claimants and cheats are responsible for the deficit, austerity and immiseration. The reality is that most of the welfare budget some £77bn (42%) goes on pensions. Around £31bn (15%) is paid in child benefit and child tax credits. About £11bn is used to top up the wages of those on low incomes. Only about £13bn (7%) is claimed in unemployment benefits and income support for those able to work. The actual loss through fraud is a mere £1.2bn (0.7%) while some £15bn goes unclaimed each year. But Britain is the lowest waged country in Northern Europe and over 20 million families (64 percent) receive benefits. The assault on benefits – with these facts deliberately left out of account – is nothing but a declaration of war on the poor.

This is fascism’s wet dream; class warfare for cowards and the outing of the poor as a lesser race. It is part of an ideological response across Europe to the global financial crisis and subsequent recession. Through this ‘alchemy of austerity’ says Tracey Jensen “the social problems of deepening poverty, social immobility and profound economic inequalities are magically transformed into problems of ‘welfare dependence’, ‘cultures of entitlement’ and ‘irresponsibility’…The preferred figure of crisis in today’s welfare debate is ‘the skiver’, a term of social disgust which has gained traction because of its connotations with criminality and fraud.”

The skiver propaganda model was shaped in the late 90s when New Labour decided that ‘failed citizens’ – those who did not take responsibility for their own welfare –  should have their benefits cut. The myth that the poor had only themselves to blame was born. In 2011 – in opposition – the party was able to bequeath ‘workers’ and ‘shirkers’ to the nation.They didn’t last long. A year later the Conservatives struck back replacing them with ‘strivers and skivers’. The slimeballs who produce poverty porn simply follow the scent.

To believe that all this fear and loathing is being spread just to keep austerity on track requires a suicidal leap of faith.There is no reason to repay the public debt anytime soon or in large chunks. And even if there was that’s not a problem. Here’s David Graeber again.

In the beginning of 2014 for example the Bank of England published a paper called Money Creation in the Modern Economy that completely broke with established orthodoxy and admitted that money is in fact credit created by making loans. So far this understanding has been in no way reflected in the rhetoric of politicians of any party but it is the sign of the beginning of a convergence between the understandings of social movements and those of the technocrats who are entirely obliged to make the system work.

The social movements to which Graeber refers are groups like Positive Money who argue that if banks can create money out of thin air so can governments. The admission by the Bank of England that this is true has profound implications. It holds out the possibility of nations and societies freeing themselves from the bondage of bankers. Austerity is about emasculating the power citizens wield through the State before that happens.

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