Austerity – It’s a lie & unnecessary!
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”
Joseph Goebbels, Hitler’s Reich Minister of Propaganda
It’s a political – not an economic – decision to maintain austerity.
The lie that’s been told in the UK, and all over the world, is that austerity is necessary to reduce debt. Yet after 5 years of austerity in the UK, the Institute for Fiscal Studies1 tells us that only 40% of the planned public spending cuts had been implemented by the end of 2014.The election result means the Tories have the requisite majority to start implementing the remaining 60%, including the £12 billion of welfare cuts they managed to avoid quantifying before the election. But has debt reduced?
Far from it! the Office of National Statistics has just issued the latest figures and in August 2015 the debt was £12.1 billion, over 15% higher than in August 2014. It appears that Osborne’s debt reduction strategy is in tatters but the reality of austerity is that it reduces wages, conditions of employment and social security entitlement, while asset values, bonuses and dividends increase. Austerity is not about economic recovery, but is an integral part of neo-liberal economics, the de facto economic belief of most Governments today.
Radical Soapbox has previously looked at the economics of neo-liberalism, and compared them with the economics of fascism, commenting that privatisation is at the heart of both. The word has its root in the German word reprivatisierung (denationalisation) and it is this economic relationship between the State and corporate power that makes neo-liberalism so chillingly terrifying.
Much of privatisation is outsourcing, and the idea is sold to the public on the basis of the projected ‘saving’ of taxpayers’ money by using efficient and competition-driven private enterprise. Radical Soapbox has looked at outsourcing companiessuch as G4S, Serco and Capita, and found that the shareholders are often the same large finance companies.
How can this provide genuine competition between companies who are tendering for Central and Local Government contracts? It doesn’t. In fact, it looks more like an auction ring, where the successful bidder is determined in the pub in advance of the auction. Now the Institute for Government tells us that the UK taxpayer is paying $10 billion a year to just 20 outsourcing companies!!2
Right now, the corporations are lobbying hard for the world’s governments to conclude Free Trade Agreements. Not surprisingly, these agreements will give the corporations unfettered control of trade on their own monopolistic terms, including over Genetically Modified Organisms (GMOs). The treaty being negotiated between the EU and the US is called the Transatlantic Trade and Investment Partnership (TTIP) and one of its many detrimental effects on the UK would be to finally dismantle the NHS completely. It is a treaty made in hell.
Privatisation and outsourcing have reduced the size of the State but, paradoxically, the power of the State has actually increased. In the economic and financial hurricane of neo-liberalism, workers’ rights have been dramatically reduced; trade unions emasculated and both have fewer rights than over a hundred years ago! So much for progress!
This has been accompanied by a reduction in the right to protest, so that it’s much harder to oppose the lie of austerity. This, frighteningly, is in line with Goebbels’ comment that the state has to use its powers to repress dissent, so as to be able to maintain the lie.
The relationship between the state and corporate power can be clearly seen in the collection of tax – or, rather, non-collection of tax, especially by the large corporates such as Amazon & Google, who purport not to sell anything in Britain!
Any government has to try to balance income and expenditure, but the idea that this can be done by austerity alone is palpable nonsense! Her Majesty’s Revenue and Customs (HMRC) told the House of Commons Public Accounts Committee (PAC) in Dec 2013 that the UK’s ‘tax gap’ (uncollected tax) was £35 billion. But the chair of the PAC, Margaret Hodge, believes this is just the ‘tip of the iceberg’.3
It is quite obvious to anyone with half a brain that if this money – just the £35 billion – was collected, there would then be no need for austerity. Therefore, choosing austerity rather than collecting tax is a purely political decision.
The question that must be asked is why are so many large companies, especially high profile multinationals, allowed to pay so little tax? This is not about the rate of tax, but about the avoidance of paying any real amount of tax by the use of artificial schemes.
Do the politicians really believe that neo-liberal economics will deliver a prosperity that will trickle down to everyone? Or is it just that they don’t notice the food banks and the widening inequality in our society? Or maybe they do notice, but they’re not bothered about it, since they arrogantly believe our resistance is broken and we are too weak and badly organised to fight back?
Whatever the reason, it’s clear that there’s no political will to end austerity, or to collect tax from the corporations.
The challenge for the 99% of us is to bring the lie of austerity into the public domain. Then, perhaps a real fight-back can begin. Or is it already too late?
Mike Gold
@radicalmic
1 http://www.ifs.org.uk/pr/Green_Budget2014.pdf
3http://www.theguardian.com/politics/2013/oct/28/britains-tax-gap-tip-of-iceberg-says-margaret-hodge
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To put it bluntly what on earth makes you think collecting more tax means less austerity needed? Has nothing to fo with tax collected. Govt doesn’t need tax to spend. You have fallen into their trap.
Andy,
Thanks for your comment and apologies for the time taken to reply.
Bluntly, as well, we either accept the framework that exists or produce another that we prefer. If we want to change the society we have to deal in the realities that the majority can identify with.
Michael
COllecting more tax means the exchequer has more funds to meet its outgoings… including benefits and welfare. Thus more tax revenue reduces the need for austerity.
‘Bluntly’, Mike, AndyMMT is right, and in fact the framework already exists.
UK Gov is issuer of its own fiat free floating currency, and neither does, nor needs to collect (national) taxes to *pay* for anything.
Taxes have very important functions in the economy, but paying for Gov spending isn’t one of them.
#LearnMMT. And then learn what that means for macro policy options which are simply arbitrarily ignored at present.
Here are some links to help with exposing the Lie of Austerity:
Professor Mark Blyth: https://www.youtube.com/watch?v=go2bVGi0ReE
(this is the quick and dirty version – look for much longer lecture by him with the detail)
Transition Network – Austerity Basics
https://www.transitionnetwork.org/austerity-basics
New Economics Foundation – Framing The Economy – The Austerity Story (tells the story of how Austerity is propaganda): http://www.neweconomics.org/publications/entry/framing-the-economy-the-austerity-story
John,
Thank you very much,
Michael
Not sure I trust NEF so will read that paper with scepticism but thanks for the information and the soapbox,
though your ideas don’t seem to radical to me, so perhaps that is a good sign!
The key here for me is the undisputable truth that vested interests have taken hold of our enforcement. Why would there be only 400 tax inspectors chasing £35billion?
Why would offshore capital gains tax be reset in April 2015? Why would people with offshore trusts and businesses be able to buy rental properties inside businesses free of stamp duty, inheritance tax and capital gains? While locals must pay those taxes for the defense of that wealth.
Why would known individuals who rigged Libor and Forex not go to jail with reduced sentences for squealing?
Once we accept that there appears to be only one way out. Public empowerment. But that means that we need to educate voters.
pic.twitter.com/J0uVyBQDlP
SMART-voter.org
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” How ironic. John Maynard Keynes did note say this. but keep it up there.. maybe people will believe it.
Andrew,
Thanks for your comment but the quote I use at the beginning of this article is from Joseph Goebbels, Hitler’s Reich Minister of Propaganda.
However, I do see that using it in an abbreviated form in the tweet and having the Keynes quote attached could cause confusion so apologies. Michael
A very gracious reply to an embarrassing remark.
I appreciate your article and hope to become better informed on these issues you address. As a Christian and an American I am aware of the tremendous influence of Europe and it’s approach to economic solutions for its people. I am also aware of how America, as the ‘lion’s welp’ of England, has become very foolish as a government that is no longer “for the people or by the people”. Our original Declaration and Constition, in terms of their intent, are being revised to bring upon us they very delima and consequences of that which you write about.
I often associate austerity with the black death – everyone dies whilst survivors take hold of unoccupied lands, become wealthy and punish those who don’t. This has been happening for almost some millenia and a Brand revolution is the only way out of it, if your not afraid of radical change.
Shikira, An interesting analogy and not one I’ve come across before. Many thanks, Michael
You might be pelased to learn that the Tory wives will be hit by the biggest con in UK history of the flat rate state pension, that is not more but LESS state pension.
And even NIL STATE PENSION FOR LIFE.
It is the beginning of the end of the state pension, which for so many are their sole pension provision in life.
See more and you might care to widely share my blog:
http://swansengland.blogspot.co.uk/2015/05/did-government-hoodwink-us-all-as-far.html
Oh by the way as to Austerity.
I am half Greek
Enough said?
Capitalism is 1) voluntarism in the market and 2) sound money.
We have *never seen* true capitalism (freedom from some form of government coercion in the markets) in history. We’re still waiting for the absence of coercion and the creation of a sustained sound monetary system.
One hopes that people begin to understand that when government protects the biggest companies from competition, and even funds them with taxpayer dollars, that’s not capitalism. So-called “crony capitalism” (government-protected capitalism) is not capitalism in any sense of the word.
Capitalism is the enemy of bankers who create the wars and who *hate* capitalism with a passion because it levels the playing field. The bankers are monopoly men. They use governments to push competitors out of the marketplace and establish legal monopolies. Monopolies could never happen in a truly capitalist society. If you hate what the bankers are doing to our world, you’ll love capitalism.
Coercion (force) *is* part of communism and socialism and fascism and even, as we know, democracy (please take note of forced medical care: Obamacare, a fully unconstitutional healthcare mandate, and forced vaccination, in the democratic society of the U.S.). There is only one system that does NOT use force, and that is capitalism (voluntarism in the marketplace).
“Capitalism should not be condemned, since we haven’t had capitalism.” – Ron Paul https://www.facebook.com/mises.institute/photos/a.123255378934.100895.36496893934/10153189913578935/?type=1&theater
Have a government-free day (which is to say, a coercion-free day).
Thanks Mark