Tag Archives: economic incompetence

How Much Will It Cost? (Revisited)

The questions of “how much will it cost?” or “How will you pay for it?” are always posed by the media’s journalists to the planned spending proposals of Labour and all the other parties, bar the Tories. That the Tories have dominated the economic discourse since the 1980s cannot be denied.  Indeed, political journalists have accepted the economic orthodoxy uncritically in the decades that have followed and there are, in my mind, two reasons why they do this. First, they’re not economists and second, they’re lazy. Even the economics editors of the major news organizations tend to be drawn from the Thatcherite School of Household Management Economics, and will base their analyses and their questions on its flawed logic.

Now, I’m not an economist but my instincts regarding national finances are correct: household analogies are nonsense and journalists who repeat them are foolish. The reductivist economic dogma of the Tories and UKIP has dragged this country into recessions (there were three during the Thatcher years) and have forced people into ever greater poverty, while the rich have seen a manifold increase in their incomes.

In an article by Richard Murphy of Tax Research (two days after my piece), he puts to bed the myths that have passed for economic competence and credibility for over 30 years.  He opens by saying:

The most dangerous question in political debate in the UK is the one always rolled out by every journalist, on air or in other media, which is to ask a politician ‘How are you going to pay for it?’ where ‘it’ is whatever the politicians has just proposed to do.

He then provides three reasons why this question is a dangerous one and provides handy replies to the clueless hacks who insist on asking the question.

You can read the rest here.

All governments borrow and spend money. That’s how national finances work. In seven years, the Tories have racked up more debt than the previous Labour government did in 13 years. Moreover, Labour has a better record of paying off debt. In 1976, the Wilson government was forced to take out a loan from the International Monetary Fund to pay for the Sterling Crisis, which was caused by the Heath government’s economic mismanagement. It was paid off by 1979. Thatcher’s Tories continued to use the IMF loan as a stick to beat the Labour Party even though the loan had been repaid. Yet Kinnock refused to counter these lies. Finally, the Corbyn-led party has awakened to the need to counter the Tories’ myths and lies about the national economy and borrowing/spending. And about time too.

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Filed under economic illiteracy, Economics, General Election 2017, neoliberalism

How Much Will It Cost?

“How much will it cost?” is the question many broadcast hacks journalists ask of Labour politicians whenever the subject of spending is raised, yet the same question is rarely, if ever, put to Conservative politicians and there’s a reason for that.  It’s because the mainstream or corporate media has accepted Thatcherite economic orthodoxy and refuses to question it.  Moreover, the question itself is not only loaded, but predicated almost entirely on the Thatcherite logic that national finances are exactly the same as household finances. They are not. And anyone who thinks they are needs to listen to Yanis Varoufakis take down that myth when a member of the BBC Question Time audience repeated it without a moment’s thought.

Thomas G Clark of Another Angry Voice also debunks the myth here.

Television and radio hacks, and their commentator allies have accepted the Thatcherite logic of the market and the domestic finance analogy as fait accompli. For supposedly well-educated people, broadcast journalists have shown that they are neither capable nor willing to ask fundamentally straightforward questions about the Tories’ economic claims, and instead have focussed their attention on Labour’s mythologized economic incompetence.  But the questions they ask are not intelligent questions and behind them is a discourse of mocking and sneering of anything that diverges even slightly from the orthodoxy.

We see this whenever a Tory politician talks about tax cuts, they are never asked “how much will these tax cuts cost”? Instead, their proposals are taken at face value and their tenuous claims to economic competence are accepted as axiomatic. Yet, tax cuts do cost money and the burden will always fall on the shoulders of those who are least equipped to deal with it.  Tories will always claim that they have taken those who earn the least out of taxation altogether.   No questions are asked if the richest will pay more or how libraries, schools and the National Health Service are to be funded when ever-decreasing amounts of tax are being collected by the state.  Of course, Tory politicians know they will never be subjected to the kind of scrutiny reserved for Labour or even Green politicians (Andrew Neil is a possible exception). The deference with which most media journalists treat these puffed up charlatans is more sickening than eating ten Cadbury’s Cream Eggs in a single sitting and it’s getting worse.

This morning, Diane Abbott appeared on Nick Ferrari’s programme on LBC. When Ferrari questioned her about how much will more police officers cost, Abbott got into a muddle. Yet, when Theresa May was asked why nurses were forced to go to foodbanks on The Andrew Marr Show last Sunday, and could only summon up “there are complex reasons” by way of reply, few media commentators batted an eyelid.  Instead, all the outrage was focussed on Abbott’s apparent gaffe. Pathetic.

The level of political debate in the public sphere is shockingly juvenile and is driven by the discourses produced in the mainstream media. It’s no wonder many voters are left ill-informed about their political choices when journalists are only capable of asking stupid questions with the intention of getting a sensational headline.

If our media had any guts, it would have reported on the real story of the day.  Namely, Theresa May going full Erdoğan on pesky local reporters in Cornwall. But they didn’t.

 

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Filed under General Election 2017

The ‘Deficit’? Which deficit are they talking about?

Let’s get something straight: there is no such thing as “The Deficit” there are deficits, and the politicians of the three main parties are all guilty of presenting an image of a single monolithic deficit that must be “brought down” at all costs. This is to support their cock-eyed view that cuts, particularly to social security benefits are necessary, while tax cuts for the rich will somehow stimulate the sluggish (some would say moribund) economy because the “wealth” will miraculously “trickle down” to those below. Not even the very right-wing George H W Bush believed that and derisively referred to trickle down (or supply side) economics as “voodoo economics”.

Our imperial masters will confuse, sometimes deliberately, “The Deficit” with “The Debt”. Again, there is a debt and it’s called The National Debt, which is accumulated through government spending on wars, for example.  The current national debt has been around since the end of the First World War. Politicians, many of whom are not economists, will often claim that “The Debt” also needs to “paid off” and will again cite government spending on social security as the main culprit of increased borrowing. This is economically illiterate bunkum. Yet, we are now in a situation where, once again, the level of the nationals debt is set to be increased by a new war in the Middle East. Yet, the government can’t find money for the NHS? Please, pull the other one.

When politicians talk about The Deficit, most of the public haven’t a clue what it means and this suits our imperial masters well, for they can use this magic phrase to rebut any criticism of austerity, privatizations and cuts to public services. I have lost count of the numbers of vox pop interviews where some member of the public has quite literally repeated verbatim the spiel of some government minister or other. “The country is broke and we need to pay our debts” some ignoramus will opine, while another will claim “There’s no money, we need to cut something”. The United Kingdom is the seventh richest country in the world and there’s no money? Come off it.

There are five kinds of deficits. Let’s deal with each one in turn.

First, there is the structural or budget deficit. This is when the government is spending more money than it receives. Usually, governments receive money through taxation. If a government is cutting taxes for billionaires and faceless corporations, then it isn’t making any money. It’s simple logic. The other way a government can raise money is to print the stuff but quantitative easing, as it’s referred to, has only benefited the same people who got us into this mess: the bankers. The government could remedy this by taxing the rich more. Whenever this idea is proposed, our imperial masters respond by telling us this will hurt the “wealth creators”. These people only create wealth for themselves. They don’t even work for it. They get other people to do the work.

Work is over-rated. Hard work more so.

The cyclical deficit refers to, as its name suggests, the economic cycle and is caused by downturns in output. Low levels of business activity and high levels of unemployment are the manifestations of this kind of deficit. Some economists disagree over the terms ‘cyclical’ and ‘structural’ and claim that there’s no difference between the two.

A balance of trade deficit occurs when imports outstrip exports. If you’re not making and selling enough stuff to other countries but are buying in loads of stuff from overseas, then this is what happens. Every outgoing Tory government since 1964 has racked up a massive balance of trade deficit for the incoming Labour administration to deal with.

Finally, there’s the balance of payments deficit. This is related to the balance of trade. A balance of payments deficit is created when the imports of goods, services and investment income exceeds the exports of the same things. In 1974, this led to the Sterling Crisis of 1976.

So what is the national debt? Well, this is when governments borrow money from the central bank (In the case of England, this is The Bank of England), which is a private concern and not owned, in spite of its name, by the state. Governments borrow by issuing bonds, securities and bills.  In the United States the level of debt to GDP is 73.60%. In the UK, it’s 88.7%. Does this make a difference to you or I? Well, not really, since the government can borrow money at preferential rates of interest. The Tory-led government claims that it’s “reducing borrowing” but it hasn’t. It’s actually borrowed more money  than the previous government. Furthermore, all governments borrow money. It’s a fact of life.  The Tories’ continual claim that they’re borrowing less (sic) is a lie. In fact, most people don’t even know how much the national debt is, yet Westminster politicians will usually pretend to know when they’re busy conflating the national debt with ‘The Deficit’.

I realize that I have simplified these terms without going into heavy economic theory, but this is how deficits need to be explained to the public.

Do I expect our imperial masters to come clean on government finances any time soon? I doubt it. These people can’t even lie in bed straight.

Here are more blogs about the government’s deficit lies.

Finally! Exposed! The Deficit Myth! So, David Cameron When Are You Going To Apologise?

The Great Debt Lie and the Myth of the Structural Deficit

Another Cameron myth: the coalition hasn’t reduced the deficit by “a quarter”

 

 

 

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Filed under Conservative Party, Cuts, Government & politics