Tag Archives: Great Depression

Let’s Talk About: Economic Growth

Images like this mean nothing to Dan Hannan. who prefers to deal with fictional characters than real people and their complicated lives.

Economic growth or just ‘growth’ is the holy grail of career politicians, neoliberal economists and their hangers on in the media. We’re often told how important it is to have ‘growth’ in our economy and it is only then that everyone will see the benefit. The trouble with this notion is that those who continually spout this rubbish aren’t the ones who need to worry. They’re already comfortable. The ones for whom these pronouncements mean little, if nothing at all, are the poor and the low waged. They continue to see their income squeezed, while the cost of living continues to rise. But the media and the government will have none of it.

A few weeks ago, the BBC’s economic editor, Robert Peston, was crowing over low oil prices. He told the nation’s viewers that “everyone” would now feel “richer” because of the continued fall in petrol prices. This is not only misleading; it’s also dishonest. The only people who can feel “richer”, by definition, are the rich themselves. If you are poor, you cannot be “rich”, it’s an absurdity. Yet this does not stop the likes of Daniel Hannan repeating this meaningless tosh. In Thursday’s blog for CapX, he repeated Peston’s bogus claim that “The rich are getting richer and the poor are… getting richer”. This is a measure of how out-of-touch our media and politicians are in relation to the people they purport to serve. We can also draw the conclusion that the mainstream media, the Westminster politicians and economic cults like the Adam Smith Institute and the Institute for Economic Affairs are in a cosy conspiratorial relationship with one another. The relationship between these institutions and ordinary people themselves is one of power. They consider themselves to be the voices of authority and we must listen and obey… or so they think. So when they tell us that “things are getting better” we are expected to believe them. But I no more believe them than I believe in the existence of God, the tooth fairy or Father Christmas. I see no improvement and neither do millions of other people.

The problem with those who constantly talk about ‘growth’ is that they can only speak the language of statistics and mathematics, and can only view the world through the lens of their social status. They are incapable of relating their nutty ideas about economics to the average person because what they’re saying bears no relation to everyday life. Trickle down, for example, is one economic fallacy that is repeated ad infinitum by economic cultists and held up as a model for ‘growth’ and economic well-being. But not even right-wingers like George HW Bush believed it and derided trickle down as “voodoo economics”. Yet the Hannans and Osbornes of this world cleave so tightly to it like men at sea clinging to any bit of flotsam that comes their way.

A couple of months ago, the Labour leadership claimed that if the Tories were re-elected, they would take public spending back to the levels of the 1930s. This was enough to get all manner of right-wing economic cultists into a lather. Hannan was one of those. In this blog, he does his best to claim how the 1930s was a “time of growth”. It’s a risible misrepresentation of a decade that’s become synonymous with economic hardship.

Well, here’s a fact that may surprise you. The 1930s saw more economic growth than any other decade in British history. It’s true that there were patches of deprivation. As in all times of economic transition, some industries declined while others rose. The poverty of the Jarrow Marchers was genuine: theirs had been a ship-building town, devastated by the collapse of international orders.

Sophistry, damned sophistry. For the millions of working class people who struggled to survive the decade, this is an insult to their memory. My mum’s family was Liverpool working class and I can remember her telling me what life was like in the Thirties: if you were poor or low-waged, you had no access to affordable or decent healthcare, because there was no National Health Service (the Tories will abolish it if they are re-elected). There was very little work on Merseyside in the 1930s, so people lived a hand-to-mouth existence.

Hannan continues his fantasy tour of his romanticized past:

Yet these were golden years for new industries such as electrical appliances and aviation and cars, the years when Morris, Humber and Austin became household names. The 1930s also saw an unprecedented boom in construction, as the comfortable suburbs of Betjeman’s Metroland spread across England. The Battersea Power Station raised its minarets over the capital, a symbol of self-confidence in architecture.

Here, Hannan waxes floridly about a world that only those with the economic means could take part. The appliances and cars that he talks about were beyond the means of my family and many others. No working class people owned cars, let alone possessed household appliances. My grandmother was still using a boiler and a mangle well into the 1970s. As for Metroland, the houses that were built there were for sale. Only those with nice, middle class incomes could afford a mortgage.

Here, Hannan slaps more gloss onto his fantasy.

 Britain responded to the 1929 crash by cutting spending drastically and, in consequence, soon saw a return to growth. The United States, by contrast, expanded government activity unprecedentedly under the New Deal, and so prolonged the recession by seven years. Yes, seven years. Here is the conclusion of a major study published in 2004 by two economists at the UCLA, Harold L Cole and Lee A Ohanian:

Cole and Ohanian are comprehensively defenestrated in this blog. Hannan isn’t interested in reality and like all right-wingers of his ilk, he exists in the hermetically-sealed space of privilege. The material of history is bent and twisted to shrink-fit a weak narrative. Like many of his fellow Tea Partiers, he makes the same feeble argument for cuts.

Contrasting the American and British experiences, we are left with an inescapable conclusion. Cuts work, and trying to spend your way out of recession doesn’t.

Let’s put it this way, if a company doesn’t borrow or spend money to invest when it is doing badly, it will go under. Cuts only work for the already wealthy. They are also a means by which the powerful punish the poor for being poor. Hannan makes clear his hatred of FDR and the New Deal. This is the same position held by the economic cultists at the Ludwig von Mises Institute as well as his fellow Randists.

This is perhaps the greatest fallacy of all:

Still, if only for the record, let me set down the real lesson of the 1930. The best way to recover from a crash, not least for low earners, is to bring spending back under control. Growth follows, jobs are created, and the people taking those jobs thereby gain the most secure route out of poverty.

It’s easy for those who have never personally experienced poverty to claim that “the most secure route out of  poverty” is work. Low-paid and zero hours contract jobs actually lock people into poverty. Hannan is not only a fool, he’s a dangerous fool. Leaving people to fend for themselves without a safety net will lead to greater social problems. Hannan is unmoved by such concerns. Yet he would be the first to complain that shanty towns are an “eyesore”. This is the man who calls himself a “Whig”.

Talking about economic growth when people are struggling to survive is deeply offensive. Talking about GDP is meaningless because not only is it a poor way of measuring economic performance, it means nothing to ordinary people. For all his claims of how cutting public spending will improve economic performance, Hannan has never had to suffer the privations of working in a low-paid job. Like all of his pals in Westminster and beyond, he is a bully, who talks a good talk but when his words are unpacked, they reveal the true horrors of the current political system.

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Filed under 20th century, Conservative Party, Cultism, economic illiteracy, Economics, Government & politics, Growth, History, History & Memory, laissez faire capitalism, Let's Talk About, Media, Neoliberalism, propaganda, Spiv capitalism, Tory press

Let’s call it what it is: a depression

Are we about to witness the revival of Hoovervilles?

Are we about to witness the revival of Hoovervilles?

So, place your bets, readers.  How long will it be before some economic guru has the guts to admit that we’re living in the midst of an economic depression? Or is it the case that we’re just hanging around waiting for the next recession to come along, like the London bus of legend: three arrive at the same time and then we can call it a “depression”. So we’ve had two recessions, when’s the next one due [looks at watch]? I’m freezing my arse off!

Recessions, depressions, panics, slumps, credit crunches, call them what you will but they all amount to a failure of the capitalist system. The problem is that no one in authority (and I use that word loosely) wants to stand up and say that “This is a depression”. An economic depression apparently is determined by a sequence and length of recessions but no one wants to agree on the number. That’s because there is no set figure but there was an alleged benchmark to which all future depressions are supposed to aim. We are also told that in order for a recession to be classified as a depression, there needs to be a contraction in economic activity. This is happening now with banks refusing to lend to small businesses.

We are told that the last depression, now referred to as the Great (apparently) Depression of 1929 to 1939 was the longest and deepest depression. But there’s nothing “great” about a depression. This depression was preceded by the Depression of 1920 – 21, which was later downgraded to the status of “recession”. There were also 2 recessions during the 1920s. In Britain, the previous Great Depression of 1873 to 1896 was later called the “Long Depression” and was preceded by the Panic of 1872.

The tale of that period has been told innumerable times: a panic on the stock market and a run on the banks that combined with poor harvests to spawn a series of recessions that resulted in extreme hardship for millions, if not, billions of people around the world.

It was a “contagion” that began in Wall Street and spread around the world like some kind of economic plague. Shirts, jobs and homes were lost in short order. It was a tough time but not for the ruling classes, whose social and economic capital exists in perpetuity… much like the inexhaustible body armour cheat in a console kill game (Medal of Hour, etc). They would survive. They would have to get used to having foie gras only twice a week instead of six until the good times returned (on its high horse).

But could there ever be another depression that matches or exceeds the Great One for sheer, uh, depression? Apparently not. We were supposedly inoculated against further outbreaks of widespread panic… until Callaghan discovered monetarism and the genie was released from his bottle, free to wreak havoc.

The Great Depression has been fixed in the public memory as  a sort of golden age of economic depressions. It has supposedly surpassed previous depressions and panics – each and every one of them devastating in their own right, but ignored for ideological reasons – for its near-total effect on all levels of society. The previous depression has become folklore; its mythology has become the model of perfection against which certain economists and their forecaster allies (sic) judge current and future economic catastrophes.  But why?

Is it because our political leaders (that’s another word I use with caution) lack the intellectual courage to admit the truth of the situation, or is it because they have reached their intellectual limits and lack the honesty to admit that they have no plan for the future of civilization? Could it be because they don’t want to “panic” the public with the admission that the current economic situation is, in truth, a depression?

The issue of mass panic has never stopped them before.

Governments have never been afraid to use fear to coerce the public into accepting their version of the truth in order to prosecute pointless wars, as this clip reminds us.

That’s “good” panic. It’s the kind of panic that protects “freedom” and defends “our way of life”. Today William Hague claimed to have seen “some evidence” that the Assad regime in Syria has chemical weapons. There is a school of thought that believes the only way out of an economic crisis is to start a war. But wars are costly.

Depressions and recessions only ever benefit one kind of person and I don’t need to tell you that person isn’t you or I, dear reader. This is a time when the capitalist sees the opportunity to pit worker against worker. We have already seen how this government uses divide and rule in the way tries to create a false conflict between public and private sector.

This is a depression.

The have been dark murmurings of another recession on the horizon and yet, Osborne continues on his reckless course like a blind ship’s captain, who’s full of Dutch courage after drinking his crew’s rum rations.  But he’s fine. He’s got a wallpaper fortune and an Irish baronetcy to look forward to… not that he isn’t loaded already.

Two and a half years of this government’s bungling has done nothing to give people hope. Instead, prices increase year on year and incomes stay the same for average workers. For many people, there is nothing to look forward to. There is no trust in this government or in Her Majesty’s feckless opposition to put things right either, with disciplinarian Liam Byrne claiming that his party didn’t do enough to clamp down on benefit “cheats”. Trust left town on the same train as hope and it isn’t coming back.

There is a solution to this. It’s just that the ruling class and their lackeys in the media and the think-tanks don’t want to hear it. They have much to gain from economic catastrophes but, potentially, so do we.

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Filed under Conservative Party, Cuts, economic illiteracy, Economics, Government & politics, laissez faire capitalism, neoliberalism