Update: Food banks have become the latest symbol of poverty as Britain’s ruling class strips the national coffers and loots the economy.

Monday, 13 August 2012 00:12

In 1729, in a destitute and desperate Ireland plundered by the English, Jonathan Swift modestly proposed that the children of the poor be culled, and the carcasses sold to persons of quality and fortune through the kingdom. “I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed, is, at a year old, a most delicious nourishing and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricasie, or a ragoust.”

This would be kinder than starvation. It would reduce the increasing number of urchins and waifs and save them from being a burden on their parents and country. The costs of brutally repressing discontent, and policing crime, would fall and the public would benefit. Swift’s bitter satire was aimed at the fat cats of feudalism, parasitic landowners and their grubby political and clerical allies.

“A Modest Proposal” stripped away the hypocrisy. Almost three centuries on, the elite remain just as enthusiastic about dispossessing the masses of every comfort. Austerity – a policy of cutting government spending and slashing deficits – is being sold as the solution to the great depression of the 21st century.

Economist James K Galbraith calls this marketing operation, apparently rooted in common sense, one of the great misinformation campaigns of all time. “It may seem like homely wisdom, especially, to say that ‘just like the family, the government can’t live beyond its means.’ But it’s not. In these matters the public and private sectors differ on a very basic point. Your family needs income in order to pay its debts. Your government does not.”

Governments can’t run out of money. Public defaults only happen when they don’t control the currency in which they owe money. They don’t die and the public debt never has to be repaid. The debt and the interest on it are just computer entries. Government spending puts money, the lifeblood of an economy, into circulation and into the hands of the people.

It’s free and nobody has to pay it back. The other way to get money is by private borrowing through banks. But this money – advanced out of thin air – is different. If there is a default on payment, real assets will become the property of banks. Public deficits are a threat to the banks looking forward to a season of foreclosure.

These days the only difference between banks and leeches is that banks are much larger and have an inexhaustible appetite. Imposing “austerity” in a slump flies in the face of sensible economic theory and experience. Government spending is a stimulus especially critical in hard times. Swingeing cuts would destroy the American and British economies.

“For this reason”, says Galbraith, “the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It’s not just the old and the sick who are threatened; we all are.”

Nobel Prize winning economist, Amartya Sen, says the moral appeal of austerity is highly deceptive although its economic ineffectiveness has been clear at least since the Great Depression of the 1930s. Then people and machines remained idle because there was no money. It’s also self-defeating as it depresses government revenue along with growth.

Much of the Euro zone has been shrinking since the inception of austerity. Sen also believes there’s more to public expenditure than just strengthening effective demand.

“Savage cuts in important public services undermine what had emerged as a social commitment in Europe by the 1940s, and which led to the birth of the welfare state and the national health services, setting a great example of public responsibility from which the entire world would learn.” All of this should be obvious, not least, the terrible social costs inflicted on families and communities. But already, with a wave of the Westminster wand, the UK has become “Austerity Britain”.

Government investment has evaporated and hundreds of thousands of public sector jobs have been eliminated. As in “War Time Britain”, the public are patriotically expected to “Keep Calm and Carry On”. They must disregard the latest Bank of England pronouncement that things will only get worse.

The Guardian’s Breadline Britain Project will track the impact of economic decline for the benefit of readers. “As the cost of living rises, incomes shrink, and public spending cuts start to bite, we’ll be looking at how people are coping (or failing to cope) with austerity…we’ll be talking to people at the sharp end: living on, or hurtling towards, the poverty breadline.”

Economist Paul Krugman, New York Times columnist and a Nobel prize-winner, has been puzzled by the strategy. He chatted-up the British “austerians” across the Atlantic. They explained it was essential to shrink the size of the state – although there is no evidence this has any connection with the economic crisis.

“So the austerity drive in Britain isn’t really about debt and deficits at all; it’s about using deficit panic as an excuse to dismantle social programs. And this is, of course, exactly the same thing that has been happening in America… For economic recovery was never the point; the drive for austerity was about using the crisis, not solving it. And it still is.”

This supports what many suspect; that austerity is really a heist planned by banks using government as the hit man. The banks are desperate to shore up their insolvency with real assets and to swap their toxic derivatives for credible government paper. For the multinational corporations it’s an opportunity to get their paws on what little is left in public ownership. It’s easy to believe given the criminal talent that heads corporations.

The United Nations Office on Drugs and Crime (UNODC) reported that $1.6 trillion was laundered, mostly in Western banks, in 2009, one fifth coming directly from the drug trade. Jerry Del Missier a key figure in the LIBOR rate-rigging swindle will receive a severance payout of $13 million dollars. The list of celebrated misdemeanours goes on and on, but hardly anybody ever goes to jail.

There’s a reason for total tolerance says James Petras, sociology professor at Binghamton University, New York. “The ascendancy of a criminal financial elite and its complicit, accommodating state has led to the breakdown of law and order, the degradation and discrediting of the entire regulatory network and judicial system. This has led to a national system of ‘unequal injustice’ where critical citizens are prosecuted for exercising their constitutional rights while criminal elites operate with impunity.”

And it doesn’t end there. There’s more than enough evidence to suggest that austerity marks the latest post-industrial phase of “capitalism”. Michael Hudson, professor of economics at Missouri University, Kansas, says a financial class has usurped the role that landlords used to play. Landlords enjoyed a special privilege through their monopoly of land; today the banking set gets this from their control over the money supply.

“The great economic fiction of our time is that all debts can be paid – if only countries submit to enough austerity, impoverish their labour force, close down enough industry, and let banks foreclose on enough factories – and while they are at it, cut back social security, health care, and social spending across the board. This is class warfare waged by finance against the rest of the economy.”

Austerity is smothering Western industrial economies as it destroys markets. It’s reversing parliamentary reform secured over two centuries. Primitive exploitation based on cheapening labour is now the preferred option. The idea of progress is dead. Neo-feudalism and neo-serfdom are commonplace tags for the emerging austerity economy and the new arrangements. .

We can look forward to a world controlled by an aristocracy of inherited wealth and corporate power  – the now famous 1 percent. The rest are headed for servitude, bondage, serfdom and worse. We`will  be culled for organs and fun. And used to replant the seeds stored in steel-encased underground vaults after the nuclear war. Once again, lords and ladies will thrive in England’s green and peasant land.