Don't be fooled: Britain's coronavirus bailout will make the rich richer still

The government schemes protect asset owners, while the bulk of the costs will eventually be borne by ordinary people writes Christine Berry in The Guardian


Posters for a rent strike during the coronavirus lockdown, Bristol, 31 March 2020. Photograph: Ben Birchall/PA


Recent weeks have been profoundly disorienting, as we all adjust to life in lockdown during a pandemic. For the left, they have also been politically disorienting, as a Conservative government borrows hundreds of billions of pounds to underwrite wages.

Some have been mesmerised by this spectacle, convinced that a socialist utopia is just around the corner. We need to snap out of this, and fast. Instead, we must ask the same questions we always should: who benefits from these interventions, and who pays? Who will be empowered and who disempowered?

The crisis itself is already exacerbating economic inequalities. At first sight, the government’s income support schemes might look as though they will help to redress this. In reality, they will achieve almost exactly the opposite. It’s been widely noted that many people remain excluded from the safety net, but the problem goes deeper than this. Where is all this money coming from – and where is it ultimately going? 

The answer lies principally in a massive expansion of debt. Wage support is being funded by large-scale public borrowing of the kind we were told was unaffordable just a few months ago (although this is now being supplemented by direct financing with newly created money from the Bank of England). Yes, this could usher in a new era of state intervention – but it could just as easily herald a new era of austerity.

Conservatives such as Sajid Javid – who tweeted that “the whole point of fiscal conservatism in normal times is to be able to act decisively if there is a genuine economic emergency” – are already trying to reconcile the crisis response with austerity politics. Fiscal hawks will be keen to draw a line under the crisis period and insist that we now need to tighten our belts again to pay for it.

Meanwhile, mortgage and rent “holidays” and guaranteed loans for small businesses require people to take on private debts that they will have to pay back when the crisis is over. One way or another, then, the bulk of the costs will still eventually be borne by ordinary people.

On the other hand, virtually no sacrifices have been demanded of banks, landlords or profitable corporations, such as utility companies. The only people in society not being asked to share the burden are “rentiers”: those who make money by owning assets they can charge others to use.

Landlords have access to mortgage holidays but are not required to pass these on to their tenants. If they do, they can recoup any missed rent when the crisis is over. Since the same cannot be said for tenants’ lost income, many will be pushed further into debt or face eviction.

Banks are enjoying government loan guarantees with few strings attached. This means that they are not shouldering the risk of extending credit to struggling businesses during a downturn – that is being borne by the state. Meanwhile, mortgages and credit card debt will still be repaid in full – or with added interest if holidays are granted.

Given all this, wage support acts primarily to protect rentiers’ income streams by enabling working people to keep paying rent and bills, and debtors to keep making loan repayments to their creditors.

The government moved swiftly to protect the interests of rentier capital but has consistently dragged its feet in protecting the interests of workers. Indeed, most support has been channelled through banks, landlords, employers and utility firms – with government simply trusting them to benignly pass it on. This is at best naive and at worst irresponsible.

Guidance innocently declares that mortgage holidays for landlords “will mean no unnecessary pressure is put on their tenants”. Unsurprisingly, emerging anecdotal evidence suggests precisely the opposite. The business interruption loan scheme has already had to be overhauled after banks failed to extend low-cost credit to struggling businesses, while the Financial Conduct Authority was forced to stop them hiking overdraft charges. Meanwhile, some large companies are still laying off workers, or at best, pocketing government support and refusing to top it up from their own coffers.

The government has built an economic bunker from which rentiers will emerge unscathed into the scene of devastation wreaked on the rest of the population. Many will find their bank balances considerably enhanced, since they have been unable to spend money in theatres, bars and restaurants. As economist Gary Stevenson points out, if some of this windfall is spent on property, the result will be to push house prices up – adding insult to injury for the low-paid renters who will have borne the brunt of the crisis. All of this is simply indefensible. 

Crises always create winners as well as losers. The bank bailouts of 2008 should have taught us that state intervention is not necessarily progressive. Back then, the state assumed the liabilities of finance capital and ordinary citizens ultimately footed the bill. Now, we are seeing a very similar story play out again – but the mechanisms at work are more subtle, the implicit subsidies for rentier interests passing under the radar.

The left must ruthlessly follow the money and ask in whose pockets it will end up. It must stand alongside those demanding that the big winners in our economic system pay their share: groups such as London Renters’ Union, demanding a true rent freeze. Wetherspoons workers, still fighting to be paid in full. The Jubilee Debt Campaign, calling for personal debt repayments to be frozen and ultimately written off.

Perhaps, as Stevenson suggests, we should also be demanding an emergency wealth tax to redress this huge tilting of the scales towards the asset-owning rich. Without such measures, we should be under no illusions: this crisis will leave our economy even more unequal and unstable than it was before.

This Conservative budget is Keynesian economics reborn

Will Hutton in The Guardian

Britain’s national debt over the past decade has always been a non-problem. For most of the last 300 years, it has been very much higher as a share of national output. Our public debt has been well-managed by the Bank of England, so that the average duration of government bonds is 15 years: there is close to zero chance of a crisis of refinancing or of confidence in public debt. At current rates of interest the overall cost of debt service is among the lowest in our history.

Britain has thus plenty of room to spend and borrow, and there was no need for the draconian Cameron-Osborne austerity squeeze in which cumulative cuts in public spending in many areas of government exceeded 40%. Deficit reduction could have been more measured and the pain mitigated. It was baloney from top to bottom – a cruel hoax that was one of the reasons for the Brexit vote, imposing wanton and needless suffering. I and other Keynesian economists have made these arguments in vain for more than a decade – indeed for most of my working life. So Wednesday’s budget was an extraordinary moment.

Chancellor Rishi Sunak repudiated the entire discourse and accepted core Keynesian propositions. He delivered the biggest fiscal boost for nearly 30 years, coordinating it with an interest-rate reduction by the Bank of England – exactly the Keynesian stimulus a flagging economy needed. Public investment was on target to become the highest since 1955, he declared – actually understating the coming public investment boom because in 1955 the comparable figures included investment by the nationalised industries, now nonexistent. The coming wave of investment in roads, rail, housing, schools, further education and ports is unparalleled. It was not just that the investment is needed: he accepted it was part of the government’s role in raising parlously low levels of productivity. Right again.


Yet a rubicon has been crossed. Keynesianism has been restored to its proper place in British public life

Alongside it current public spending is going to rise again, with an additional £12bn package to alleviate the impact of Covid-19. The government would do everything it could to alleviate the spread and impact of the virus. The larger point was that fiscal policy – excusing his party’s volte-face by trying to position it as part of the new international consensus – has got to shoulder its responsibility for driving the economy forward. Amen to that.


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On the Today programme the following morning my jaw dropped as Sunak informed his audience that reasons for confidence in his package included Britain’s public debt averaging 15 years in duration and debt service costs being extraordinarily low. To make the same argument during the Blair, Cameron and May years was to ensure you wore the mark of Cain – an outlandish Keynesian perspective that branded you as ignorant of the basic laws of economics and public finance. But if a Tory chancellor backed by his press makes the same argument, suddenly it becomes the new economic common sense. To be on the liberal left, as Neil Kinnock once remarked, is to be made to feel an alien outsider – even if reason and a majority of the electorate are with you.

Of course cruel truths remain. The colossal errors of the past decade, Brexit and austerity especially, cannot be expunged at a stroke. Britain’s long-run growth rate is barely above 1% as the Office for Budget Responsibility recorded. The impact of Brexit, it declared, would be to lower output over the next 15 years by 5.2% below what it would have been. The much-vaunted US trade deal, if it ever happens, will raise output by a mere 0.16%. Over the next decade exports and imports will be 15% lower. Britain, tragically, is closing – and becoming more intolerant and anti-foreigner in the process.

Nor can the social carnage of the past decade be quickly corrected. Sunak did little or nothing to address child poverty, the desperate plight of the court and criminal justice system or a host of other casualties. This was government from the centre for the centre: local government remained a neglected Cinderella. The increase in current public spending will redress only about a quarter of the cumulative loss in health and education spending since 2010.

Yet a Rubicon has been crossed. Keynesianism has been restored to its proper place in British public life. The Conservatives have once again shown their breathtaking and shameless capacity for reinvention. If Labour wants to trump them, it will need to take Keynesianism even further – into the wholesale Keynesian recasting of the way the financial system intersects with the real economy.

In the meantime it’s a big moment. Perhaps in this respect – and this only – Labour did win an argument at the last election. At the very least a new and beneficial consensus has been born.

It's time to retire metrics like GDP. They don't measure everything that matters

The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore writes Joseph Stiglitz in The Guardian 

‘And it should be clear that, in spite of the increases in GDP, in spite of the 2008 crisis being well behind us, everything is not fine.’ Photograph: Johannes Eisele/AFP/Getty Images


The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.

The standard measure of economic performance is gross domestic product (GDP), which is the sum of the value of goods and services produced within a country over a given period. GDP was humming along nicely, rising year after year, until the 2008 global financial crisis hit. The global financial crisis was the ultimate illustration of the deficiencies in commonly used metrics. None of those metrics gave policymakers or markets adequate warning that something was amiss. Though a few astute economists had sounded the alarm, the standard measures seemed to suggest everything was fine. 

Since then, according to the GDP metric, the US has been growing slightly more slowly than in earlier years, but it’s nothing to worry about. Politicians, looking at these metrics, suggest slight reforms to the economic system and, they promise, all will be well.

In Europe, the impact of 2008 was more severe, especially in countries most affected by the euro crisis. But even there, apart from high unemployment numbers, standard metrics do not fully reflect the adverse impacts of the austerity measures, either the magnitude of people’s suffering or the impacts on long-term standards of living.
Nor do our standard GDP measures provide us with the guidance we need to address the inequality crisis. So what if GDP goes up, if most citizens are worse off? In the first three years of the so-called recovery from the financial crisis, about 91% of the gains went to the top 1%. No wonder that many people doubted the claims of politicians who were then saying the economy was well on the way to a robust recovery.

For a long time I have been concerned with this problem – the gap between what our metrics show and what they need to show. During the Clinton administration, when I served as a member and then chairman of the Council of Economic Advisers, I grew increasingly worried about how our main economic measures failed to take into account environmental degradation and resource depletion. If our economy seems to be growing but that growth is not sustainable because we are destroying the environment and using up scarce natural resources, our statistics should warn us. But because GDP didn’t include resource depletion and environmental degradation, we typically get an excessively rosy picture.
These concerns have now been brought to the fore with the climate crisis. It has been three decades since the threat of climate change was first widely recognized, and matters have grown worse faster than initially expected. There have been more extreme events, greater melting of glaciers and greater natural habitat destruction.

It is clear that something is fundamentally wrong with the way we assess economic performance and social progress. Even worse, our metrics frequently give the misleading impression that there is a trade-off between the two; that, for instance, changes that enhance people’s economic security, whether through improved pensions or a better welfare state, come at the expense of national economic performance.

Getting the measure right – or at least a lot better – is crucially important, especially in our metrics- and performance-oriented society. If we measure the wrong thing, we will do the wrong thing. If our measures tell us everything is fine when it really isn’t, we will be complacent.

And it should be clear that, in spite of the increases in GDP, in spite of the 2008 crisis being well behind us, everything is not fine. We see this in the political discontent rippling through so many advanced countries; we see it in the widespread support of demagogues, whose successes depend on exploiting economic discontent; and we see it in the environment around us, where fires rage and floods and droughts occur at ever-increasing intervals.

Fortunately, a variety of advances in methodology and technology have provided us with better measurement tools, and the international community has begun to embrace them. What we have accomplished so far has convinced me and many other economists of two things: first, that it is possible to construct much better measures of an economy’s health. Governments can and should go well beyond GDP. Second, that there is far more work to be done.

As Angel Gurría, secretary general of the Organisation for Economic Cooperation and Development, has written: “It is only by having better metrics that truly reflect people’s lives and aspirations that we will be able to design and implement ‘better policies for better lives’.”

UN report compares Tory welfare policies to creation of workhouses

Robert Booth in The Guardian

A leading United Nations poverty expert has compared Conservative welfare policies to the creation of 19th-century workhouses and warned that unless austerity is ended, the UK’s poorest people face lives that are “solitary, poor, nasty, brutish, and short”.

In his final report on the impact of austerity on human rights in the UK, Philip Alston, the UN rapporteur on extreme poverty, accused ministers of being in a state of denial about the impact of policies, including the rollout of universal credit, since 2010. He accused them of the “systematic immiseration of a significant part of the British population” and warned that worse could be yet to come for the most vulnerable, who face “a major adverse impact” if Brexit proceeds. He said leaving the EU was “a tragic distraction from the social and economic policies shaping a Britain that it’s hard to believe any political parties really want”. 

The New York-based lawyer’s findings, published on Wednesday, follows a two-week fact-finding mission in November after which he angered ministers by calling child poverty in Britain “not just a disgrace but a social calamity and an economic disaster”. Now he has accused them of refusing to debate the issues he raised and instead deploying “window dressing to minimise political fallout” by insisting the country is enjoying record lows in absolute poverty, children in workless households and low unemployment.

The “endlessly repeated” mantra about rising employment overlooks that “close to 40% of children are predicted to be living in poverty two years from now, 16% of people over 65 live in relative poverty and millions of those who are in work are dependent upon various forms of charity to cope”, he said.

Amber Rudd, the work and pensions secretary, said in November she was “disappointed to say the least by the extraordinary political nature” of Alston’s language after his tour of places including Newcastle, Glasgow, Belfast, Cardiff, Jaywick and London. Alston replied in his 21-page final report that there was an “almost complete disconnect” between what ministers and the public saw. The impact of austerity was obvious to anyone who opened their eyes, he said.

In his most barbed swipe at Rudd and her predecessors in charge of welfare, he said: “It might seem to some observers that the department of work and pensions has been tasked with designing a digital and sanitised version of the 19th-century workhouse, made infamous by Charles Dickens.”

He said he had met people who had sold sex for money and joined gangs to avoid destitution.

The government hit back calling Alston’s report “barely believable”.

“The UN’s own data shows the UK is one of the happiest places in the world to live, and other countries have come here to find out more about how we support people to improve their lives,” a spokesperson for the Department for Work and Pensions said.

“Therefore this is a barely believable documentation of Britain, based on a tiny period of time spent here. It paints a completely inaccurate picture of our approach to tackling poverty.”

Alston will present his report to the UN Human Rights Council in Geneva next month and will argue that successive Conservative-led governments persisted with austerity and welfare cuts amid high levels of employment and a growing economy despite evidence that large-scale poverty was persisting. In doing so, “much of the glue that has held British society together since the second world war has been deliberately removed and replaced with a harsh and uncaring ethos ... British compassion has been replaced by a punitive, mean-spirited and often callous approach apparently designed to impose a rigid order on the lives of those least capable of coping.”

The report slams the government’s austerity programme, with criticisms of “shocking” rises in the use of food banks and rough sleeping, falling life expectancy for some, the “decimation” of legal aid, the denial of benefits to the severely disabled, falling teachers’ salaries in real terms and the impoverishment of single mothers and people with mental illness.

Alston said austerity had “deliberately gutted” local authorities, shrinking library, youth, police and park services to the extent that it was not surprising there were “unheard-of levels of loneliness and isolation”.

There was some praise for ministers for increases in work allowances under the universal credit welfare system and supporting the national minimum wage, but Alston said these measures had had not stopped the “dramatic decline in the fortunes of the least well-off”.

He recommended ministers reverse local government funding cuts, scrap the benefits cap, eliminate the five-week delay in receiving initial universal credit benefits and rethink the privatisation of services including rural transport.

“Thomas Hobbes observed long ago, such an approach condemns the least well-off to lives that are ‘solitary, poor, nasty, brutish, and short’,” he said. “As the British social contract slowly evaporates, Hobbes’ prediction risks becoming the new reality.”

It took a UN envoy to hear how austerity is destroying British lives

Philip Alston’s inquiry into poverty in the UK has heard a shocking truth that British politicians refuse to acknowledge writes Aditya Chakrabortty in The Guardian

 

Philip Alston with pupils from Avenue End primary school in Glasgow. Photograph: Murdo MacLeod for the Guardian


The room is packed, people spilling out of the doors. The atmosphere crackles. So it should, for this is what it feels like when an entire society is held to account. Over 12 days, the United Nations’ special rapporteur on extreme poverty and human rights is touring not Bangladesh nor Sudan but the UK. And what Philip Alston has discovered in the fifth-richest country on Earth should shame us all. From Newcastle to Jaywick, he has uncovered stories of families facing homelessness, of people too scared to eat, of those on benefits contemplating suicide.

'A political choice': UN envoy says UK can help all who hit hard times


This UN inquiry could prove one of the most significant events in British civil society this decade, for one simple reason: for once, poor people get to speak their own truth to power. They don’t get talked over or spoken down to, lied about or treated like dirt, as happens on any other day of the week. Instead, at these hearings, they speak to Alston and his aides about their own experience. The white-haired Australian academic lawyer doesn’t cross-examine; no vulgar TV debate ensues with some hired contrarian. In its unadorned humility, the process matters almost as much as the press statement on Friday or the report to be published in a few months. Here is someone above party politics, outside the parameters of national debate, determined to treat all sides – poor people, the politicians, the academics and NGOs – as equal.

Bearing their crutches and their prams, the crowd gathered in this east London hall on this Monday afternoon knows visitors like Alston come along but once. “We’re really glad you’re here,” one person tells him, to general approval. That enthusiasm is widespread: the UN team has been deluged by a record-breaking number of submissions (nearly 300 for the UK, against 50 when it toured the US last year); city councils have passed motions requesting his presence. After eight years of historic spending cuts, a decade of stagnant wages and generations of economic vandalism, these people and places want to bear witness.

Without media training, some speak off mic, others run over time. While talking, they clutch friends’ hands or break down. When the subjects are too raw, they look away. But the stories they tell are raw. In tears, Paula Peters remembers a close friend who jumped to her death after her disability benefits were stopped. With nine days to Christmas, “she left behind two small kids”. Trinity says she and her children eat from food banks and “everything I’m wearing, apart from my hair, is from jumble [sales]”.

The welfare secretary, Esther McVey, has never conducted such a listening project. Instead she makes up her own fantasies about the effect of this government’s austerity. This summer she fabricated stories about the National Audit Office’s report into universal credit, for which she was later forced to apologise. A couple of months later, she told the Tory faithful that claims of cuts to disability benefits were “fake news”, just days after House of Commons research showed that the government planned almost £5bn of cuts to disability benefits.

The effect of those malicious government lies resounds through this afternoon. We hear how ministers talking of “shirkers” creates an environment in which people in wheelchairs are spat at. Still in his school uniform, 15-year-old Adam talks about boys being knifed in his suburb and links it to cuts in youth services, in policing, in schools. In this Victorian-built hall, where Sylvia Pankhurst once spoke and the GMB trade union was formed, he half-shouts, half-pleads with Alston: “Label this government as criminal, because that is what they are.”

Over the weekend, I asked Alston whether he heard any echoes between British experiences and the testimonies he heard last December while investigating Donald Trump’s US. “In many ways, you in the UK are far ahead of the US,” he said. He thinks “the Republicans would be ecstatic” to have pushed through the kind of austerity that the Tories have inflicted on the British.

Like others at the Guardian, I have been writing on the debacle of austerity Britain for years now. Rather than the goriest details, what strikes me is how normalised our country’s depravities have become over the course of this decade. Ordinary people speak in ordinary voices about horrors that are now quite ordinary. They go to food banks, which barely existed before David Cameron took office. Or they go days without food even in London, the city that has more multi-millionaires than any other. They spend their wages to rent houses that have mice or cockroaches or abusive landlords. Any decent society would see these details are shocking; yet they no longer shock anyone in that hall. What will remain with me of that afternoon is the sheer prosaic weight of the abuse being visited on ordinary people who could be my friends or family.

Alston has heard so many stories about the toxic failings of universal credit and the malice that is the disability benefits assessment scheme that he is in no doubt about the truth. The question for McVey, who is due to meet the UN party this week, will be how she responds to the weight of people’s lived experience. None of those giving evidence this afternoon want victim status. They are, as Trinity says, “survivors”. What they want is to be heard – and after that they want remedies.

Whether it’s Tony Blair and his “big conversation” or Cameron and his false belief that the Brexit vote was in the bag, leading British politicians don’t do listening – for the simple reason that they wouldn’t like what they’d hear. The evidence about austerity, about economic hollowing-out, about a shoulder-shrugging bureaucracy was all readily available before Alston flew over from the UN. But the government, like most of the press, didn’t want the truth to be acknowledged – because then it would be compelled to act. This is what Britain has been reduced to: hoping that a foreigner has the stomach and integrity to hear and record our decade of shame.

Finally, the Tories are discovering the state can be a force for good

Martin Kettle in The Guardian


 

Illustration by Mitch Blunt


According to WH Auden, all good dramas consist of two contrasting acts: “First, the making of a mistake; then, the discovery that it was a mistake.” A similar corrective arc often also applies in politics. On the issue of the progressive role of the state, the late-20th-century Conservative party made a historic mistake. Now it is struggling with the dawning of discovery.

The single most obvious thing to say about the Tory party in autumn 2018 is that it is split over Brexit. But the significance of the Tory divide on Brexit, and its tendency to dominate all aspects of domestic political coverage, masks another internal argument – one that is more important in terms of the party’s history, and may hold the key to its future too.

This second argument is about the necessary role of government in shaping economic and social policy. One way or another, this is an issue that has woven its way through Conservative history since the late 18th century. Tory leaders from William Pitt the Younger to Theresa May have confronted it. Philip Hammond’s budget this week was a striking embodiment of why the issue is both enduringly important and still politically unresolved.

His budget was not the end of austerity. But it was unquestionably a decisive move away from it. If the austerity doctrine of 2010-18 had still been in full force, the £68bn windfall in government receipts over the next five years announced this week would have been overwhelmingly used to get the finances back in the black by the mid 2020s as planned. Instead, the normally cautious Hammond chose to spend the lot, mainly on the NHS, but also in a cluster of short-term giveaways and to pump another £15bn into the economy next year.

This would not have happened in the previous eight years. It has happened because May is trying to reposition her party more centrally on domestic policy in the aftermath of the Brexit deal she hopes to secure. May herself would probably have gone further this week.

May and Hammond are not trying to “out-Corbyn Corbyn”, as former chancellor George Osborne put it this week in an interview in which he offered a mea culpa on the EU referendum but not on austerity. But they see the need to counter the Labour leader. This was in many respects a holding budget, but it placed anti-austerity options in tax and spending and in the role of government back on to the Tory agenda.

May and Hammond are a bit like a couple circling a roundabout in their car, debating which route to follow, but clear which one they should no longer take.

This is where Auden’s point comes in. Many times in its pre-1975 history, the Conservative party found its way, often against its supporters’ instincts and interests, towards strengthening the role of government in rebalancing the economy in favour of the poor and the moderately waged. From Robert Peel’s reintroduction of peacetime income tax in 1842 onwards, the one-nation tradition was the key to the party’s famous ability to reinvent itself.

The problem the modern Tory party faces is not confined to the unpopularity of austerity. Its roots lie in the period after 1975, when Margaret Thatcher – massively aided by the press – captured the party with her rejection of postwar Keynesianism in favour of an agenda of privatisation, small government, tax cuts and individualism. It won the Tories four successive elections. But it was also massively destructive and divisive.

The Conservatives have not won a decisive general election majority since Thatcher did so in 1987. John Major, David Cameron and May have all led weak governments. In spite of efforts by all three, the party seems unable to move decisively beyond Thatcherism or to reconnect fully with its one-nation past at a time when it is needed. As one senior Tory put it bluntly to me recently: “We will never win a clear majority while we remain in thrall to Margaret Thatcher.”

  Harold Macmillan: many of today’s Conservative MPs relate to his approach. Photograph: Fox Photos/Getty Images

Brexit is tightly bound in to this problem. Most ardent Brexiteers are ardent Thatcherites, just as most Thatcherites are Brexiteers. Many of the most threadbare of the Brexit fantasies – those about easy free trade deals, a no-deal break with the EU, Singapore-style deregulation and Britain’s supposedly enhanced standing in the world – contain ghostly echoes of Thatcher.

But the central issue is political economy. In 1938, Harold Macmillan warned the Tory party: “Unless we can continue this peaceful evolution from a free capitalism to planned capitalism, or, it may be, a new synthesis of capitalist and socialist theory, there will be little hope of preserving the civil, democratic and cultural freedoms.” No Tory MP would write in such terms today. But the essence of this warning remains valid on many levels 80 years on.

Today’s party contains more MPs who relate to Macmillan’s approach than you would ever guess from the constant publicity given to the Brexiteers. The most prominent of these is May herself, with her repeated – but unfulfilled – commitment to the section in the 2017 manifesto that said “government can and should be a force for good – and its power should be put squarely at the service of this country’s working people”.

May is not alone. Justine Greening said this week that the Tories should “get into the centre ground” and that they had not properly connected with the public in more than 30 years. George Freeman wrote in September that aspirational professional voters under 45 are rejecting the old politics. “Unless the Conservative party reconnects with them, we risk becoming a rump party of nostalgic nationalists,” he claimed. Nicky Morgan wrote last month that “we cannot secure growth in the 21st century by following a 20th-century model”. Jesse Norman, in his recent book on Adam Smith, writes: “It is easy to forget the central importance of the state in his thought, as protector of the nation, adjudicator and enforcer of justice … provider of public works, infrastructure and local schools, and, yes, as regulator of markets.” Most of the 2010 and 2015 Tory intakes share these instincts.

These MPs do not have identical views. But they all share the crucial recognition that government is, as the US writer Garry Wills puts it, “a necessary good not a necessary evil”. If Labour people tend to be too starry-eyed about government, too many Tories, influenced by Thatcher’s aberrant period of power, tend to be unduly distrustful of it. The public, who depend on good government, do not share either view.

The most interesting current question in British politics is this: what comes after May’s Tories and Corbyn’s Labour? My guess is that a large part of the answer will depend on the road May and Hammond decide to take off the roundabout to which they have belatedly returned this week.

A civilised society supports people in need, but our brutal system shatters lives

Aditya Chakrabortty in The Guardian



Simon’s death certificate tidies away his life in a few terse official phrases. Date of death: 12 November 2017. Causes: “a) Fatty liver” and “b) Alcohol misuse”. No bureaucratic curiosity about how a 51-year-old’s life came to be cut so short.

Which leaves his only brother, Dave, dealing with the grief and asking all the whys. Why did Simon die so young? Why did no one else try to help?

No obituaries will be written for Simon, no plaques mounted, no tributes passed by politicians. But if you want to understand how Britain fails so many people in so many places, it’s stories like his you need to study.

Some people’s lives are like arrows, flying straight to their destinations. Not Simon’s. The Rhymney Valley, in south Wales, is where he was born and died, but it wasn’t where he spent most of his adult years, and it was never where he meant to land up. Bright boys, he and Dave had one notion drummed into them: get an education, and get out. On TV, Dave remembers, “We’d see the yuppie revolution going on in London – the Porsches and the red braces. It may as well have been another country.” For them, Thatcher meant mines closing, factories shutting, men being laid off in their thousands, and families going under.


Yet there are so many people like Simon, all surplus to requirements of this shrunken economy


Both sons flew away. Simon was the high-flyer, leaving Wales to do a science degree, going to Cambridge for postgraduate study, and becoming a software engineer with a giant defence firm. He married and settled far away, in Bushey, on the outskirts of London. He had got on his bike; he had looked for work. Now he was earning three times what his younger brother was making, and raring to join the yuppies.

Just as he was starting to live the dream, the dream fell to bits. He got divorced. He got laid off. Then their mother’s breast cancer returned – this time for good. The prodigal son moved back, moved in, and became her carer. Dave doesn’t remember him complaining once during the years their mother spent deteriorating and then dying.

Such setbacks await all of us, but one test of any civilised society is how well it supports us through them. In Simon’s case, Britain botched this test – over and over again. By the time his mother died, he had spent seven years outside the job market. It was 2007, the start of the credit crunch, and the economy was slowing. Even in boomtown London such a gap on the CV would have raised recruiters’ eyebrows. Here in south Wales, where jobs were already scarce, it was the kiss of death. Besides, it simply did not have positions for Si, with his Cambridge postgrad and software engineering background.

Simon “spent 25 years building up to be somebody”, says Dave. A quarter-century observing the social mobility rules laid down by Margaret Thatcher and Tony Blair. He had aspired, he’d grafted, he’d kept his side of the bargain. But while social mobility trumpets opportunity for individuals, it ignores the communities where those people live. The result was that Simon’s ambitions had outgrown his home, and now he was trapped.

Dave showed me the small terrace house their mother passed on to Simon, where he spent the last years of his life. No one was about as we walked through the speck of a village – just two long rows of cars parked outside the train station. This is the new Welsh commuter class that economists such as Cardiff University’s Calvin Jones talk about, the people who travel from the valleys to staff the call centres, shops and other minimum-wage employers in Cardiff or Newport.

Governments in Westminster and Cardiff Bay have spent decades promising to rebuild the shattered economy of south Wales. Serious money has been spent on shopping malls, new motorways and sweeteners for big business. Each time, the firms come, take the cash and – at best – leave a few poverty-paying jobs. You see the same cycle in so many deindustrialised parts of Britain. And each time, the politicians learn no lessons, and try the same thing again.
A few minutes from Simon’s old home is the town of Bargoed, where the greatest excitement in recent years was the opening of a Morrisons. Much of the rest of the high street is just memories: a huge statue to commemorate dead miners, the chapel turned into a library, and shop after shop with its shutters pulled down for good.

A rural bus services in Fochriw village, Bargoed. South Wales is one of the poorest regions of the UK. Photograph: Martin Argles for the Guardian

Simon signed on at the jobcentre, which told him to apply for 35 jobs a week. He sent off to become a teaching assistant, a warehouse operative, all the minimum wage jobs going. Barely an application led to an interview. Sometimes, “angry and very down”, he’d miss his targets or appointments. He would get sanctioned, go broke, and have to call on Dave to tide him over.

After years of knockbacks, Simon declared he’d never be able to work again. It came almost as a relief. “It meant he didn’t have to think of himself as such a failure. Now he could be a victim.”

Simon had always been a pub man. But now he’d get up in the morning and start on a glass of watered-down scotch and a sci-fi DVD. By the end of a day, he’d have finished the DVDs, his fags and an entire bottle of Scotch. Why does Dave think no employer wanted him? His answer comes back in a small, tight voice. “No one wants a 50-year-old, unemployed, overweight, drinking guy on the books, do they?”

Yet there are so many of them, all surplus to the requirements of this shrunken economy. A GP in Bargoed estimates that up to one in 10 of her patients have some kind of drink or drug addiction. Up to one in three suffer depression or anxiety. In these parts, a newborn boy can expect to live just over 61 years in good health; in the richest parts of London, it’s 75 years.

Having been one of Blair’s strivers, Simon was now one of George Osborne’s skivers. He was moved on to disability benefits, before the Department for Work and Pensions assessors declared him fit for work. His money would periodically stop until his GP contested the verdict. This spring, he was moved on to universal credit, which meant six weeks with barely a penny. Again and again, it was Dave who had to bail him out. It was Dave who suggested jobs Simon could apply for, small businesses he might start. The younger brother was filling in for the state, while Si lived in ripped clothes and ate junk. “The government was abusing a vulnerable man.”

Alcoholic Simon would go to the local NHS drink service once every few weeks – and every few months, he’d end up in such a bad state he would be admitted to hospital. They’d “dry him out, then spit him out”, says Dave. According to the thinktank the Nuffield Trust, the Welsh health system is underfunded by £500m a year.

Simon died in his small house, waiting to go back into hospital to dry out. He grew up in a town with men who’d had to dig out children from the Aberfan mining disaster; he died the year Grenfell Tower burned down. When such obvious tragedies strike, the politicians and the press vow to tackle the social injustices that caused them. But Simon was just one man dying in plain sight of his neighbours, his family and state officials. Far easier to chalk up his death to a fatty liver and booze, rather than inequality and austerity and the false promises peddled by politicians from Thatcher to May. A dead man, a dying town: he spent his last days being told he’s fit for work in an economy that has next to no work.
What’s left is a younger brother beating himself up about what he should have done and angry at others for letting them both down.

Before we part, Dave asks: “Why wasn’t there someone who could step in and help? Is that naive of me? To think that a modern, 21st-century society could do that for people who need it?”

The names in this piece have been changed and details obscured in order to protect the identity of Simon’s family

The magic money tree does exist, according to modern monetary theory

Youssef El-Gingihy in The Independent


After seven years of austerity, we are accustomed to thinking of the economy as a household with the nation’s credit card maxed out, to paraphrase David Cameron. The fetishisation of debt translated into massive cuts to UK spending on public services. At the same time, there remains widespread public anger that the big banks continued to make record profits and bonuses in spite of George Osborne’s assurances that we would all be in it together.

That was then though. Both Cameron and Osborne have since departed. This year, the political climate turned on its axis. The Conservative majority of 2015 gave way to a hung parliament with 40 per cent of voters opting for Corbyn’s Labour. The electorate’s acceptance of austerity mantras had evidently reached its limit.

Against this backdrop, the publication of Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal Worldcould not be more timely. It is written by 65-year-old Australian heterodox economist William Mitchell and the journalist and author Thomas Fazi. The book’s introduction is topically titled “Make the Left Great Again”; a sentiment that will no doubt chime with many progressives.

It diagnoses that neoliberalism was not just a right-wing Thatcherite-Reaganite prospectus. The centre-left, as embodied by Mitterrand’s socialists in France, Blair’s New Labour and the Democratic Party in the US, was complicit in its imposition. This consensus culminated in the decimation of manufacturing, decline of union membership, the expansion of financial services, wage flattening, falling living standards and the privatisation of public services. At the heart of neoliberalism was the assertion that the free market is the supreme arbiter with the economy managed by technocratic expertise. The flip side of this depoliticisation resulted in ordinary people becoming alienated and disillusioned with the social democratic parties that formerly represented them. Instead they turned to anti-establishment (usually hard right) parties.

Margaret Thatcher and Tony Blair both knelt at the altar of neoliberalism (AFP/Getty)

Furthermore, Mitchell and Fazi point out that the notion that neoliberalism is anti-state is a misconception. In fact, the state has been essential to the neoliberal project as became evident in the aftermath of the 2008 financial crisis. The state is not only required to bail out corporations and banks but to create new markets and in an authoritarian mould to police its citizens. However, Mitchell and Fazi intend to reclaim national sovereignty as part of a 21st century progressive vision. This is where modern monetary theory (MMT) comes in.

Bill Mitchell is one of its key proponents. MMT is one of those Alice in Wonderland, down the wormhole kind of concepts that neutralises every received wisdom – from that childhood conversation when your father sat you down to explain banks using saving deposits to invest in other businesses right up to politicians telling us that the UK is broke. In other words, prepare to be blown away and forget what you think you knew about money.

MMT essentially proposes that money is created ex nihilo or out of nothing. Whether it is private banks, central banks or governments, money is an abstract concept of ones and zeros. Thus, when your bank lends you a mortgage, it essentially creates money by typing it up on a computer. Similarly, the government has the power to create “fiat money” – that is money established by government regulation or law as opposed to currencies with intrinsic value, such as gold.

In effect, the usual dictum of “tax and spend” is inverted to “spend and tax” with spending stimulating jobs and growth, which can later be taxed. Taxation is not therefore a way of raising revenue but a tool for either controlling the money supply or shaping policy through incentives. Of course, it is much more complicated than that as certain conditions must be met. Public spending cannot be unlimited and must be commensurate to the capacity of the economy amongst other things in order to avoid hyper-inflation.

Ecomomist William Mitchell argues that the notion that neoliberalism is anti-state is a misconception

Both authors have been on a global book tour taking in the US and Europe. In London, Mitchell and Fazi gave their talk at the Newington Green Unitarian Church – one of Britain’s oldest nonconformist churches. Mary Wollstonecraft was the most famous member of its congregation and was inspired by the sermons of the radical minister Dr Richard Price in her thinking on the new French republic and the rights of women.

The setting is certainly suitable for the preaching of a heretical doctrine. In fact, I am reminded that it is the 500th anniversary of Martin Luther pinning his 95 theses to the door of a Wittgenstein church. The parallels are hard to overlook; then as now Europe was in crisis with Britain exiting the established order.

Huddled on a church pew for the interview, I ask Mitchell what exactly is MMT? He answers that it is “a lens through which we can understand the monetary system”. Remarkably, the elemental question – where does money come from? – does not have a settled answer amongst economists, experts and policy makers. Organisations such as Positive Money have already embarked on the process of demystifying money creation. I am reminded of the chapter “The Great Money Trick” in Robert Tressell’s The Ragged-Trousered Philanthropists in which loaves of bread are used to illustrate how the concept of money and surplus value (profit) guarantees perpetual penury for the working class and concentration of wealth for the ruling class.

So how might all of this play out post-Brexit? Mitchell and Fazi seem to be making the progressive argument for Brexit (nicknamed Lexit). This is in keeping with the old-left position that the EU does not represent genuine international solidarity. They acknowledge that it is difficult to make progressive arguments for sovereignty as nationalism has been condemned to a default reactionary position.

John McDonnell and Jeremy Corbyn have pledged to take private finance initiative contracts back into public hands, but how would financing of infrastructure work under a Corbyn government? (Getty)

Yet polling demonstrates that sovereignty was the most common reason for people voting Brexit. Mitchell and Fazi reformulate a progressive definition of sovereignty as having democratic control over the economy rather than simply within ethno-nationalist parameters. According to Mitchell, sovereignty is absolutely fundamental in order for countries to exercise power over their money creation. As long as a country has its own central bank and currency then it is free to spend. While Greece, bound by the constraints of the European Central Bank and the euro, does not have this freedom. After the talk, Mitchell tells me that sovereignty entails having a currency issuing monopoly: “The reality is that national governments are the monopoly issuers of their own currency.”

Mitchell also debunks the idea that governments borrow money from international markets and with it the notion that they are hostage to the market. He has recently written a blog on how Corbyn should not be afraid of global markets. Mitchell cites the 2001 Argentinian debt default as demonstrating that a country can get away with it and recover. Similarly, Iceland imposed capital controls (measures to regulate capital flows in and out of a country) in order to steer the economy through rough waters after its banking system crashed.

In the same vein, Mitchell proposes that governments do not use bonds and gilts to raise revenue. He cites a previous Australian Conservative administration issuing debt when they were running surpluses as an example of the use of bonds as corporate welfare thus “exposing the game”.

At the recent Labour conference, Shadow Chancellor John McDonnell stated that Labour would take private finance initiative (PFI) contracts back into public hands. So how would financing of infrastructure work under a Corbyn government? At the start of the year, this question might have appeared absurd yet only this month The New York Times published an op-ed piece titled “Get ready for Prime Minister Corbyn”.

Milton Friedman said money supply must be controlled in order to limit inflation, so government debt must be prioritised

Here is where quantitative easing (QE) comes in. QE was intended to stimulate bank lending in the aftermath of the financial crisis. However, growth levels have remained stagnant in Britain and Europe. In reality, the banks simply said thank you for the free lunch and used QE to restore their balance sheets. Studies have shown that much of QE ended up contributing to stock market and property bubbles.

Economist Richard Murphy – whose work has focused on tax avoidance and the offshore world – proposed what came to be termed “people’s QE”. For a while, this was a central tenet of the Corbynomics programme. Murphy’s basic idea was that if QE could be used for the banking system, then why not use it to build new homes or create climate jobs? As long as sufficient value was created then the nemesis of hyper-inflation could be avoided.

It therefore appears that Theresa May’s oft-repeated refrain attacking Corbyn on the grounds that there is no such thing as a magic money tree is not exactly true. So if money can basically be created with the press of a button, then suddenly our world appears to be (pacePanglossian disciples) the craziest of all possible worlds.

At this point, you might understandably be asking why on earth we do not just spend our way out of the current mess. And while we are it – give the NHS more money, shelter the homeless and feed the poor of the world. This is where we come up against the ideological edifice of neoliberalism.

Monetarist doctrine states – as per the Chicago School’s Milton Friedman – that the money supply must be controlled in order to limit inflation. Thus, government debt must be prioritised. The Maastricht treaty, which founded the EU, stipulated limits on public spending. Greece is the textbook example of austerity in which debt repayments are prioritised in order to appease creditors (mainly banking institutions).

Banks used quantitative easing to restore their balance sheets (Getty)

However, even mainstream economists feel that the logic of austerity is somewhat fallacious. Keynesian economics posits that public spending stimulates growth with debt as a secondary consideration. As the New Economics Foundation think tank points out, Britain has historically seen much higher levels of public debt. The debt/GDP ratio was higher during a whole century between 1750 and 1850 (at the time of the Napoleonic wars and the height of Britain’s imperial glory) as well as in the aftermath of the Second World War when the welfare state was created.

While a landmark 2014 study demonstrated that the UK coalition government’s welfare changes enabled tax cuts for the wealthiest thus cancelling out any impact on the deficit. Former Greek finance minister Yanis Varoufakis has also argued that the austerity strategy applied to Greek debt has been extremely counterproductive. The combination of bailouts with cuts has depressed the economy resulting in an increase of the debt (as a percentage of GDP).

The ascendancy of neoliberalism was such that its ideology became an all-pervasive atmosphere. During the event, Mitchell asks how many in the audience have heard of the Powell memorandum. Only a couple of hands go up. Lewis Powell was an American lawyer – later appointed as a Supreme Court justice by Richard Nixon – now indelibly associated with his eponymous 1971 memorandum. This outlined a blueprint for the American conservative movement and the network of think tanks funded by business interests. It recommended that the business class should close ranks in order to present a united front. It also stipulated that lobbyists would be needed to influence policy makers and legislators. And it suggested that infiltration of the media and academia would be necessary in order to achieve the goals of unshackling free enterprise from government interference.

So what would happen if governments followed through on the logic of MMT? Well for a start the Goldman Sachs, JPMorgans and HSBCs of this world would not be as rich or powerful and in the worst-case scenario they might even cease to have any purpose. A recent comprehensive survey from the pro-market Legatum Institute confirms that significant majorities of the British public are in favour of renationalisation of utilities and railways. The public is equally split on nationalisation of the banks with 50 per cent in favour. Corbyn and McDonnell have proposed a national investment bank with a network of regional banks in order to help rebalance the economy and encourage lending.

Whether or not one accepts MMT, it is increasingly apparent that public and democratic oversight of finance and money is becoming a central pillar of progressive postcapitalism alongside public control of public services, a green economy, full automation and the four-day week.

No alternative to austerity? That lie has now been nailed

Owen Jones in The Guardian

Ever since the banks plunged the western world into economic chaos, we have been told that only cuts offer economic salvation. When the Conservatives and the Lib Dems formed their austerity coalition in 2010, they told the electorate – in apocalyptic tones – that without George Osborne’s scalpel, Britain would go the way of Greece. The economically illiterate metaphor of a household budget was relentlessly deployed – you shouldn’t spend more if you’re personally in debt, so why should the nation? – to popularise an ideologically driven fallacy.

Greek debt crisis: ‘People can’t see any light at the end of any tunnel’



But now, thanks to Portugal, we know how flawed the austerity experiment enforced across Europe was. Portugal was one of the European nations hardest hit by the economic crisis. After a bailout by a troika including the International Monetary Fund, creditors demanded stringent austerity measures that were enthusiastically implemented by Lisbon’s then conservative government. Utilities were privatised, VAT raised, a surtax imposed on incomes, public sector pay and pensions slashed and benefits cut, and the working day was extended.

In a two-year period, education spending suffered a devastating 23% cut. Health services and social security suffered too. The human consequences were dire. Unemployment peaked at 17.5% in 2013; in 2012, there was a 41% jump in company bankruptcies; and poverty increased. All this was necessary to cure the overspending disease, went the logic.

At the end of 2015, this experiment came to an end. A new socialist government – with the support of more radical leftwing parties – assumed office. The prime minister, António Costa, pledged to “turn the page on austerity”: it had sent the country back three decades, he said. The government’s opponents predicted disaster – “voodoo economics”, they called it. Perhaps another bailout would be triggered, leading to recession and even steeper cuts.

There was a precedent, after all: Syriza had been elected in Greece just months earlier, and eurozone authorities were in no mood to allow this experiment to succeed. How could Portugal possibly avoid its own Greek tragedy?


In 2016 – a year after taking power – the government could boast of a 13% jump in corporate investment

The economic rationale of the new Portuguese government was clear. Cuts suppressed demand: for a genuine recovery, demand had to be boosted. The government pledged to increase the minimum wage, reverse regressive tax increases, return public sector wages and pensions to their pre-crisis levels – the salaries of many had plummeted by 30% – and reintroduce four cancelled public holidays. Social security for poorer families was increased, while a luxury charge was imposed on homes worth over €600,000 (£550,000).

The promised disaster did not materialise. By the autumn of 2016 – a year after taking power – the government could boast of sustained economic growth, and a 13% jump in corporate investment. And this year, figures showed the deficit had more than halved, to 2.1% – lower than at any time since the return of democracy four decades ago. Indeed, this is the first time Portugal has ever met eurozone fiscal rules. Meanwhile, the economy has now grown for 13 successive quarters.

During the years of cuts, charities warned of a “social emergency”. Now the Portuguese government can offer itself as a model to the rest of the continent. “Europe chose the line of austerity and had much worse results,” declared the economy minister Manuel Caldeira Cabral. “What we are showing is that with a policy that restitutes income to the people in a moderate way, people get more confidence and investment returns.”

Portugal has increased public investment, reduced the deficit, slashed unemployment and sustained economic growth. We were told this was impossible and, frankly, delusional. And so British workers endured the longest squeeze in wages since the 19th century, while the coalition did not even come close to meeting its commitment to eradicate the deficit by 2015. Why? In part, because low pay means workers paying less tax, receiving more in-work benefits, and spending less money. Portugal is increasing demand; the Tories suppressed it.

Portugal’s success is both inspiring and frustrating. All that human misery in Europe – and for what? What of Greece, where over half of young people languished in unemployment, where health services were decimated, where infant mortality and suicide increased? What of Spain, where hundreds of thousands were evicted from their homes? What of France, where economic insecurity fuelled the rise of the far right?

Portugal and Britain offer lessons for social democracy too. In the aftermath of the bankers’ crash, social democratic parties embraced austerity. The result? Political collapse. In Spain, support for the socialists fell from 44% to the low 20s as the radical left Podemos ate into their vote. In Greece, Pasok almost disappeared as a political force. In France, the Socialists achieved little over 6% in the first round of this year’s presidential elections. And in the Netherlands this year, the Labour party slumped from a quarter of the vote to less than 6%.

By contrast, the two social democratic parties that have broken with austerity – in Portugal and Britain – are now performing better than almost all their sister parties. Indeed, polls show Portugal’s Socialists now 10 points clear of the country’s rightwing party.

Europe’s austerity has been justified with the mantra “there is no alternative”, intended to push the population into submission: we have to be grownups, and live in the real world, after all.

Portugal offers a powerful rebuke. Europe’s left should use the Portuguese experience to reshape the European Union and bring austerity across the eurozone to a halt. In Britain, Labour can feel more emboldened in breaking with the Tories’ economic order.

Throughout Europe’s lost decade, millions of us held that there was indeed an alternative. Now we have the proof.

There is a magic money tree. But only for the Queen and the DUP

Owen Jones in The Guardian


There is no magic money tree, say the Tories: unless it’s to bribe extremists to keep them in power, or to renovate the palaces of multimillionaire monarchs. Today nurses take to the streets to demand an end to a pay freeze that has slashed the living standards of these life-saving, care-giving national heroes. One such nurse confronted Theresa May – whose lack of emotional intelligence is only matched by her lack of authority – on national television before the election. There was no magic money tree, was May’s robotic response. If the nurse had been met with a middle finger, it would scarcely have been less insulting.

Let’s be absolutely clear. The Tories’ programme of cuts – austerity, whatever you want to call it – is a con, a lie, an ideologically driven act of sadism that has caused immeasurable and unnecessary hurt and pain. The Tories are keen to portray Labour as shambolic and wasteful spendthrifts. In this they are aided and abetted by the party’s post-crash failure to defend its own spending record. Then the Tories lost their majority, and lo! They did conjure up the magic money tree to shower gifts on their homophobic, anti-choice, climate change-denying, sectarian friends.

While nurses are driven to food banks in one of the richest societies that has ever existed, the Tories have almost doubled the Queen’s income. We live in a country that cannot provide affordable, comfortable and safe homes for millions of its own citizens, but the Tories can suddenly find tens of millions more each year to help renovate Buckingham Palace. There is a magic money tree for palaces, but not people.


The money soon to be showered on Northern Ireland will undoubtedly help the Six Counties

The cost of the Tories’ calamitous failure will be significantly more than £1bn, of course. As Nick Macpherson – a former Treasury official, puts it – this is just a “downpayment. DUP will back for more ... again and again.” And neither can they be trusted with taxpayers’ dosh, having wasted nearly half a billion on a failed energy scheme.

But do you know what? The money soon to be showered on Northern Ireland will undoubtedly help the six counties. It will improve public services, education, the health services and infrastructure. It will undoubtedly lift living standards and fuel economic growth. That is what public investment – so mercilessly slashed by the Tories – achieves.

And if it’s good enough for Northern Ireland, it’s good enough for the rest of us. We can ask the most well off, for whom the crash was only ever something they read about in newspapers, to pay a bit more money; the same with booming big business. The billions are there: for housing, education, infrastructure, police – and, yes, to pay our nurses a decent wage.

The Tories are nothing more than a racket for their wealthy backers, a crude political instrument to defend the interests of Britain’s shameless vested interests. They will happily locate a magic money tree if it’s their own political survival that’s at risk. But what is good for the partisan interests of the Conservative party is not good for the nation.

The Tories’ Ulster spending spree should embolden all of us who always believed austerity was an ideologically driven con. On Saturday, thousands will march with the People’s Assembly to demand the end of the failed Tory experiment. The Tories have legitimised their arguments. Austerity is over for Northern Ireland, it’s over for the Queen, and now it must end for everybody else too.

Yes this really is the end of Tory austerity – because it was never about economics in the first place

Ben Chu in The Independent

“The crisis”, the economist Rudiger Dornbusch once noted, “takes a much longer time coming than you think. And then it happens much faster than you would have thought.” A similar dynamic describes the progress of Conservative austerity politics.

The stunning failure of Theresa May in last week’s general election signalled to Tory MPs that the public have had enough of spending cuts. Though the deficit still stands at £50bn and the national debt is £1,700bn (and rising), austerity is over, we’re now told.

Seven years of Tory lectures that eradicating the deficit for the good of future generations is paramount suddenly fall silent. Politicians who have tarred critics as criminally irresponsible for suggesting an increase in public borrowing have now, in an instant, changed their tune.

People who insisted that if we did not balance the budget at the earliest possible date Britain was destined to become an economic basket case, like Greece, apparently no longer fear such a gruesome outcome. The collapse of the citadel of austerity rhetoric is truly remarkable in its rapidity.

But it was a very long time coming. It became clear within a year of George Osborne’s 2010 “emergency budget”, which forced through huge cuts in capital budgets and an intense squeeze on Whitehall departments and welfare spending, that the austerity medicine was hurting, not helping.
The economy was flatlining, teetering on the verge of recession. Whether this was primarily due to the crisis in the neighbouring eurozone or because the negative knock-on impact of the government’s domestic spending cuts was bigger than initially thought is still debated by economists.

But it doesn’t really matter. Even the conservative estimates of the Office for Budget Responsibility suggest that GDP growth would have been around one per cent higher in both 2010-2011 and 2011-2012, if the Coalition government hadn’t slashed domestic spending on the scale and pace it did.

With interest rates as low as they could go and the Bank of England struggling to support demand through money printing, this was a time for the Government to ramp up capital investment spending to offset the general slowdown – something numerous distinguished academic economists, and even the IMF eventually, urged. It would have made us all better off, putting idle resources to use.

But despite such a capital spending stimulus being permitted under his own fiscal rules, the former Chancellor George Osborne refused to do it. He told us that the international bond markets would lose confidence in the UK’s creditworthiness if we deviated from his original plan – a risible claim given that UK borrowing costs were plumbing new depths as investors around the world ploughed money into government bonds.

The reality was that Mr Osborne didn’t want to do it because it would have meant losing face. He would have had to admit that his previous pigheaded insistence that he didn’t need a fiscal “plan B” was wrong. The credibility risk was not to the UK’s borrowing status but his own political stock.

With the help of a cynically conceived and distorting subsidy to the housing market, the Conservatives managed to eke out a surprise victory in the 2015 general election. Drawing the lesson that austerity had become an electoral asset and useful stick with which to beat Labour, the Chancellor doubled down. He tightened his fiscal rules in a way that virtually the entire economics profession regarded as economically illiterate, making no distinction whatsoever between day-to-day government spending and productive capital spending, and also unveiled a round of large welfare cuts for the working poor.

Hubris set in. And nemesis soon followed. Unexpected parliamentary resistance mounted to Osborne’s welfare cuts, prompting a humiliating reversal on tax credits. At the same time the impact of extensive cuts to policing, schools, social care and the NHS finally became apparent in the form of deteriorating services. It took longer than expected, but it finally arrived.
Yet when Theresa May replaced David Cameron as Prime Minister and Philip Hammond replaced George Osborne as Chancellor last year, they didn’t reverse any of the inherited departmental spending or welfare cuts. And they went into the 2017 election with the same old scare stories about Labour’s reasonable capital investment plans, the same old specious lines like “no magic money tree”. Only now has the dam of Conservative denial crumbled.

Reducing the UK’s deficit, which had ballooned to 10 per cent of GDP in 2010 due to the financial crisis, was a necessity. Cutting it without regard for the state of the overall economy and the feedback effects on aggregate demand was unscientific stupidity and wanton vandalism. Austerity, as practiced by the Conservatives, was a policy driven not by economics, but by politics and ideology. The politics was baiting Labour. And the ideology was the desire to reduce the size of the state.

Who was to blame? The prime culprits were George Osborne and David Cameron of course. But Treasury civil servants were also enthusiastic supporters. It was enabled by two senior Coalition Liberal Democrats, Nick Clegg and Danny Alexander. It was endorsed by economists in the City of London and cheered on by Tory-supporting newspapers. It was abetted by ostensibly neutral political journalists, who unthinkingly succumbed to the fatally misleading idea that a government’s finances can be compared to a household’s budget.
They say victory has a thousand fathers whereas defeat is an orphan. But if we look carefully it’s clear the austerity failure of the past seven years has a sprawling parentage.

We carry on giving, but isn’t charity an offence to basic dignity?

John Harris in The Guardian


Someone needs cancer treatment only available in Germany. Someone else is leading a 187-mile bike ride across India to pay for research into brain tumours. Top right is a team of swimmers with learning disabilities who want to attend an international competition in Sheffield; bottom left is a girl who desperately needs a bone marrow transplant. And all around are numbers that dance in front of your eyes: “£64,994 raised by 2,773 supporters … £1,044 raised by 47 supporters … £900 raised by 23 supporters.”

The online donation platform JustGiving seemingly soothes the world’s ills with a sleek, altruistic efficiency the pre-digital world could get nowhere near. Since its foundation in 2001, it claims to have raised $4.2bn (£3.3bn) for “good causes” in 164 countries.

It also styles itself as a “for-profit, for-good organisation”, but those two elements might not mesh together quite as gracefully as its founders would like. The 5% that JustGiving skims off each donation – slightly more if they are gift-aided – reportedly amounts to £20m a year. According to its accounts, one director has a salary of £152,000 plus pension contributions of £46,600. Recently there have also been questions about the provenance of two high-profile appeals it has hosted, both related to the recent Westminster attack.

Somewhat unbelievably, online donation platforms fall outside the remit of the fundraising regulator and, as reported by the Guardian this week, there are now loud calls to correct such a glaring anomaly.

According to a recent survey by the Charities Aid Foundation, only 50% of us now think charities are trustworthy. On top of hostility to government and big business, the inward-looking sensibilities crystallised in the Brexit vote might be colouring public attitudes towards the so-called third sector.

There is a sense of the same sentiments in all that noise about aid spending, now the subject of an intervention by that great charitable icon Bill Gates, who wants Theresa May to stick with the UK’s commitment to spending 0.7% of GDP on aid.

There again, even if a new public meanness partly explains some people’s scepticism, it may not explain it all. Many may well have more rational reasons: the sense of a world too beyond scrutiny, highlighted by the Kids Company saga; a reasonable suspicion that high-profile fundraising is often an easy way for governments to be let off the hook, and for wealthy people to draw attention away from their tax affairs.

But here is the strange thing. We still give almost as much to charity as we did 10 years ago, and the imperative to dig in one’s pocket has never been more ubiquitous. The shaking of tins on drizzly Saturday mornings is the stuff of the 20th century: now, charity is loud, brash and firmly built into the narcissistic, virtue-signalling world of social media. The unfortunate are helped via South American trekking and polar hikes; venturing to the other side of the world is said to be the most efficient way of helping the needy. Equally, few question the motives of the apparently selfless soul who has put up a JustGiving page or appealed for help via such platforms as GoFundMe.

Meanwhile, charity increasingly extends to things that once came out of our taxes, with the frontier between the two disappearing fast: NHS appeals for radiotherapy equipment in Swindon, support for people with dementia in Essex, cancer treatment in London, and much more. And whereas fundraising drives for state schools were once presented as a means of funding climbing frames, school trips or specialist sports equipment, donations now increasingly pay for the fundamental things that cuts are putting in jeopardy.

‘Help for Heroes is also a symbol of the fact that the state cannot adequately provide for the soldiers it puts in harm’s way.’ Photograph: Sam Frost

A primary school in Sheffield has just launched a campaign for the £100,000 it needs to fix its roof. In January, a headteacher from Brighton told the Guardian that every computer at her school was bought via fundraising, and that the proceeds from the annual school play now go on “resources to use in lessons”. In that context, if you have affluent parents and staff who know how to tap the right people, you survive. But what happens if you don’t?

Clearly, a lot of the worthy causes that benefit from sponsored walks, bake-offs and Indian bike-rides can easily be recast as examples of outrageous government negligence. There might be no better example than Help for Heroes – which nobly assists those who have “suffered injuries or illness as a result of their service to the nation”– but is also a symbol of the fact that the state cannot adequately provide for the soldiers it puts in harm’s way. Why does such a basic aspect of any advanced society require a begging bowl?

The word “normalisation” springs to mind. That said, some of us are old enough to remember the hardcore socialist values that once damned charity as a get-out for vested interests, and an offence to basic human dignity. As far as I can tell, the basic argument still stands: charity eats away at the idea of a decent life as a basic right, and turns its recipients into supplicants; not for nothing is it the favoured get-out of tyrants, tycoons and monarchs.

Scepticism about fundraising may be a sign that some of this critique lingers in the public mind; the pang of unease people feel when presented with heart-tugging appeals might be about something much deeper than the predicament of the people in the photographs.

Certain economic and cultural changes vividly denote our seemingly endless passage away from the postwar settlement into a much more Darwinian world. Trade union membership declines. Private debt soars. Public housing is consigned to history. And at every turn, what one group of people rely on is suddenly dependent on others’ generosity.

That is not to deny the sterling work charities do, or the inescapable compulsion to meet their appeals by reaching for your debit card. What bothers me is the future implied by some of the categories listed on JustGiving’s website: “education”, “international aid”, “health and medical”, and “disability”, the latter with a cutesy little icon of a wheelchair.

In the midst of an election called by a Tory vicar’s daughter in which the opposition is trying in vain to land arguments about austerity and poverty, the key question seems more relevant than ever: where is all this is taking us, and who will the bowl be passed to next?