Austerity is severe medicine administered by the minority for the majority, hence the notion of being, “All in it together” in practice is false. It is the Victorian bourgeois values of hard work not hurting anyone, providing it is you and not the idle rich who have to do it. It is the medical potion of the mountebank delivered alongside the whip hand of the likes of Duncan-Smith across the unruly backs of the “underclass” as they like to portray a section of the community. The potion is like a slow death poison administered by unscrupulous agencies such as in the ‘welfare state’, which anyway the neo-liberals are in the process of dismantling.
What is Austerity supposed to do?
Keep the workers in check, curb pay rises, maintain profits and put the burden of the crisis onto the backs of the people and not the rich. It is to bail out the banks, save financial institutions that carried toxic debt.
The banking crisis of 2008 caused the lack of lending and liquidity in the current Global Capitalist economic system. Starting in New York, on Wall Street, with Lehmans, Freddy Mac and Freddy Mae and others, it spread across the world and caused a near run on the Northern Rock Bank and the partial nationalisation of Lloyds-TSB and RBS. Lack of cash flow as a result made the world enter a deep recession. The Global-Capitalists, with no other ideology at the helm but neo-liberalism, set about “shock and awe” tactics to carry out the worst of their privatisation programmes and social spending cuts. The already worst aspects of monetarism and the Chicago School and Milton Friedmanism was to be rolled out further, already discredited as an economic re-hashed pseudo “laisser faire” market led economic set of pragmatic theories.
Does Austerity work?
No it has clearly failed, that is why Greece wants to abandon the policy set by the EU. Even economists and some political leaders want to stop doing it. In Britain, Scotland is clearly saying that it wants to be independent and abandon this disastrous policy.
Many regions of the country want to stop it and re-establish the funding known as “grants” to local authorities who cannot make the service cuts and do not want their local democracies dismantled because of outsourcing to private companies or bigger outside authorities.
Austerity covers local jobs, Social programmes like the NHS and Schools. It covers wages, pensions and housing and all services. It even aims at taxation. Jobs are being lost, the NHS is being dismantled and not “ring fenced”, schools are losing staff, wages held down and pensions attacked. The housing shortages, costs of rent and mortgages are too high, deposits are also too high and there is low stock. Local Government grants are reduced so low budgets are causing loss of jobs. Services are outsourced or lost with authorities being reduced to mere commissioning councils.
Austerity has failed because it has not delivered on cutting the debt or deficit. The sham pre-election budget delivered by George Osborne for the Con/Dem Government is a made up piece of nonsense that has little or no credence. Chancellor George Osborne’s budget was a political act of disinformation. The budget announcement was an attempt to give the impression that things are improving, that the “sun was starting to shine again”, thanks to austerity (though even in this, the Chancellor had to resort to trickery, such as the inclusion of one-off asset sales such as that of Northern Rock in meeting their targets). People are not “Walking Tall” the debt has not been cut significantly and Deficit has not been reduced either. GDP growth was all about “projections” and speculations.
Debt is an historic issue. In 1815, at the end of the Napoleonic Wars, British Government debt reached more than 200% of GDP. Thatcher was going to pay it off, then Gordon Brown then Cameron. The National debt has never been cleared since, without borrowing going up again by all Governments. Borrowing is used to fund various Governments spending instead of sorting it out through the social product. In this way Debt funds deficit too.
Deficit is dependent mainly on closing the trade gap and in Britain through balancing trade by exporting more than it imports. ‘Keeping costs down’ to compete is just a call to profit, it cannot work in market economies the world over. Work hard now benefit later, pain to gain, is only a ruse. Cost has nothing to do with wages or claims on the social product. Cost is due to supply and demand in the market and price fixing by multinational cartels and hoarding. Therefore trade is influenced by trade barriers or embargoes enforced by Monopoly Trade organisations like the EU, NAFTA and powerful states like Britain and the US. Productivity increases value of labour through exploitation but not necessarily output, which is governed by control over supply and capacity in production facility or machinery and technology, increase in capital is dependent on investment.
The present deficit was caused by trade decline due to worldwide crisis and recession. It was exacerbated by the bank crisis in 2008 due to a freeze on investment by bank lending. Government capital programmes have not prepared the economy for growth. Austerity conflicts with capital projects and investment in social programmes.
In the run-up to election the capitalists are trying to say that growth is suddenly back to 2006. This is also a fraud. If growth as a proportion of GDP has increased by this amount then there should be a corresponding reduction of deficit, but where is it? Austerity should be no longer an issue if capitalist logic is to be believed.
There is no growth affecting the economy concerning the people. Where is the growth? The Isle of Wight is an example, there are no new jobs and manufacture is in fact being exported in some sectors. The Capitalists are coming to the rescue in the media, mainly with propaganda to support Conservative rhetoric. Foreign multinationals like Honda, in Swindon, are saying that they are going to invest, Tata Jaguar in Birmingham, repatriate their profits into their Asian bank accounts. Japanese companies like Toyota, Nissan and Honda are doing the same. The Americans, like Ford, have always done it as well as Germans like BMW in Oxford. These are just car companies but Siemans do the same just as British companies like BAE.
What kind of growth is there? Growth in bonds? Growth in money supply due to Quantitative easing? Growth in bank profits? growth in interest payments to finance capitalists? Is the growth sustainable? Who benefits from Crossrail in London? Is it the financial districts and Canary Wharf? Who benefits from HS2 the districts and regions or the capitalist investors? Who benefits from Trident? Is it the Americans?
The working class does not believe the fraud or the lies.
The workers only survive or eat as long as they can find work. None of the Westminster cartel, of political parties, is any good for the workers. They only benefit the Monopolies.
They have their interests we have ours.
Only the independent political programme developed by the organised Workers’ Opposition can save the day on behalf of the working class.