State finances are not like a household or a maxed out credit card

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 Prue Plumridge patiently explains to a Conservative MP the true nature of Osborneomics and their devastating impact on the UK’s economy and people.

 

Dear Mr Whittingdale

I would like to take up where we left off at Sunday’s hustings on the subject of the national debt/ deficit, since not being a quick witted politician, I was unable to reply in the way I would have liked.  Let’s start with the Tory pledge that they’d balance the books by 2015.  Clearly this has not happened and, not only is the government on course to break this promise with the deficit set to be £75 billion next year, but is also set to borrow £207 billion more than planned. George Osborne’s plans to make more cuts (whilst not saying, unsurprisingly, where these cuts will fall) will take Britain back to 1930s levels of public spending, and that’s without the planned £7 billion of unfunded tax cuts. The effect on our economy and our people don’t bear thinking about.

Now, unlike you and David Cameron, I have not studied economics.  However, I do know that people have been deceived by a lie which compares our State finances to a household budget or a maxed out credit card.  In our ignorance this is the analogy which people can most identify with, but it is simply untrue.  Furthermore Britain was neither bust nor bankrupt – this sadly was used by coalition ministers to justify their ideologically inspired cuts to public expenditure. What was a genuine private debt crisis caused by reckless banks and absolute greed became a supposed sovereign debt crisis in order to justify austerity and the sale of public assets to the private sector.

As the economist David Blanchflower commented about the oft repeated lie about maxed out credit cards ‘Cameron is an economic simpleton who shows no understanding of basic accounting’. Furthermore the idea that future generations will pay for so called Labour government profligacy is yet another of those lies which the coalition has used to deceive the people of this country.    George Osborne’s statement in 2010 that ‘we have taken our country back from the brink of bankruptcy’ and that spending cuts were vital to avoid ending up like Greece was another of those misleading statements. We have full monetary sovereignty i.e. control over our own currency (unlike Greece) and we are the sixth biggest economy in the world whilst Greece the 32nd[1].  When Chuka Umunna asked Lord Turnbull who was testifying to the Treasury Select Committee in October 2010 whether he thought that the UK had been on the brink of bankruptcy he replied quite simply ‘No I don’t.’[2]

As Johann Hari wrote in the Independent ‘If we are bust today, as George Osborne has claimed, then we have almost always been bust. We were bust when we pioneered the Industrial Revolution.  We were bust when we ruled a quarter of the world. We were bust when we beat the Nazis.  We were bust when we built the NHS.’[3]

You pointed out quite rightly that my own party is planning to reduce the deficit and balance the books, albeit more slowly.  I cannot pretend that I approve of such a move but as a member of a democratic party I am entitled to disagree with it. However, my support for Labour is given on the basis that it wants to create a fairer and more socially just society – something the Tories have been working to dismantle over the last five years. It has created myths and lies about the state of our economy in 2010 and pointed the finger at every one other than those who are the real authors of our economic collapse, in order to justify disabling the welfare state, selling off our public assets, not to mention privatising our NHS.

George Osborne in 2010 said ‘reducing the deficit is a necessary precondition for sustained economic growth’.  This is the biggest deception of all. Deficit reduction, book balancing and surpluses simply remove money from the economy and make the situation worse.  Patently you have never studied Keynes or the conditions which led to the Great Depression in the 1920s. The economists Ann Pettifor and Victoria Chick studied data from 1918 to 2009 and concluded that the evidence runs counter to conventional economic wisdom and such policies have not improved the public finances – instead they increase rather than reduce the level of public debt associated with prevailing economic conditions[4]. In terms of people they destroy lives.  Indeed Keynes wrote in 1937 that ‘The boom not the slump, is the right time for austerity at the Treasury’.  Austerity can never be a solution but then this has been an ideological choice by the Tories rather than a necessity. I should point out that on seven occasions in US history when the government balanced the budget it was followed by recession/depression.

Mr Whittingdale – it doesn’t have to be like this.  There are alternative economic models which, over decades, have been airbrushed out of the mainstream in favour of this destructive neoliberal dogma which has brought many people to their knees whilst enriching a few. We are paying now for the dominance of the ideas of Hayek and Friedman which posit that the individual can best determine his needs and that free markets will always find their equilibrium, not to mention trickle down wealth.    Keynes’ ideas obviously spring to mind along with John Kenneth Galbraith and his son James, Wynne Godley, Mary Mellor, Bill Mitchell and Warren Mosler.  The thing seems to be that we have lost sight of the idea that money should be a public resource and not for private gain. The debt based society of the past decades is crushing us, indeed enslaving us.

We should see our monetary system as a public utility which is employed to finance the production and exchange of goods and services, not an opportunity for greedy speculation. It is our monetary system and it should be used to achieve the full potential of society and improve the lives of our citizens.

To finish where I started whilst there are always limits in terms of, for example, environment and resources there can be no such thing as an economic limit due solely to our society being ‘out of money’.  Government deficits do not take away from savings; government revenues are not constrained i.e it does not need to tax or borrow in order to spend – indeed logically government must spend first before it can tax or borrow; our children will get to consume what they produce and it has nothing to do with the deficit; tax is a mechanism to balance budgets and distribute wealth more fairly; and finally as the issuer of its own currency governments cannot be forced to go bankrupt[5]. The push for privatisation of public sector services and decimation of our social security system, on the basis that we can’t afford it, has been ideological and simply a way to destroy the foundations of a fair society and generate more profits for the private sector, as you most certainly know.

The emphasis on the national debt, deficit reduction and book balancing, hides the real issues that should be of concern to all – the trillions of pounds of private debt and the worst trade balance in history. But I notice Mr Osborne says nothing of that – he is relying on debt based consumption and a housing bubble to keep the economy afloat.

Yours sincerely

 

[1] Summer of Unrest: The Debt Delusion Medhi Hasan

[2] Summer of Unrest: The Debt Delusion Medhi Hasan

[3] The Paradox of Thrift: Johann Hari

[4] The Economic Consequences of Mr Osborne: Ann Pettifor and Victoria Chick

[5] The Seven Deadly Innocent Frauds: Warren Mosler

Guess Who Profits From Selling Off NHS?

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Russell Brand speaks ‘human’ about the Coalition’s heist of the NHS – selling off the publicly owned ‘Crown Jewels’ to the highest bidder or rentier, under the duplicitous fraud of Austerity.  The EU-US trade deal, TTIP (or NAFTA on Streoids) is intended to make these sell-offs impossible to reverse in the future.

Guess Who Profits From Selling Off NHS: Russell Brand The Trews (E208)

Published on Dec 10, 2014

Russell Brand The Trews (E208).
Reaction to news that a £1billion contract – the biggest ever in the history of the NHS – is out for tender to private companies.
Sign the petition and get involved with your local community http://www.38degrees.org.uk/page/s/Pr…
http://www.keepournhspublic.com/index…

David Malone Interview 2014 : Trade Deals and the Death of Democracy

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David Malone Interview 2014 : Trade Deals and the Death of Democracy

The way to win is to attack the opposition’s civilian population

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August 6, 1945, the United States used a massive, atomic weapon against Hiroshima, Japan. This atomic bomb, the equivalent of 20,000 tons of TNT, flattened the city, killing tens of thousands of civilians. While Japan was still trying to comprehend this devastation three days later, the United States struck again, this time, on Nagasaki. ( 9th August 1945)

68 years on from Hiroshima, The Nuclear Madness Remains

 

The 69th anniversary of Hiroshima and Nagasaki, reminds me of Chomsky’s observation that the way to win a war is to attack the other side’s civilian population … it worked in Japan, and (particularly at the moment) it is obviously the strategy.

More than ever before, we are being brought face to face with the horrors of the bloodshed.  The genocidal intent of the Israelis in Gaza, the barbarism of ISIS in Iraq, the murderous gas pipeline power struggle in Syria, the little reported ethnic and cultural ‘cleansing’ of the Donbass region of Ukraine and many unreported massacres in the Congo, Sudan and more.

Chomsky illustrates the effectiveness (and hypocrisy) of the strategy in recent piece about downing of the passenger plane in the Ukraine:

Every literate person, and certainly every editor and commentator instantly recalled another case when a plane was shot down with comparable loss of life: Iran Air 655 with 290 killed, including 66 children, shot down in Iranian airspace in a clearly identified commercial air route. The crime was not carried out “with U.S. support,” nor has its agent ever been uncertain. It was the guided-missile cruiser USS Vincennes, operating in Iranian waters in the Persian Gulf….It was a major factor in Iran’s recognition that it could not fight on any longer, according to historian Dilip Hiro. 

http://mwcnews.net/focus/analysis/44265-outrage.html

Naturally, if it is ‘their’ forces, it is described as a massacre and an outrage, but if the killing is from ‘our side’, it is simply collateral damage, unreported or reported as if legitimate.

This is not new, as Nafeez Mosaddeq Ahmed details in his lecture ‘The Hidden Holocaust’, reposted below.  Historically, this was the pattern of colonisation.  Millions of indigenous peoples were systematically exterminated and their cultures erased.  The remaining population was cowed and of necessity compliant.

But the killing continues.  It may be overt as in Gaza, Donetsk or Iraq… or it may be hidden in the statistics about ever increasing global poverty or the million children who die every year from Malaria or from the unrecorded effects of sanctions or from polluted environments or the people dispossessed of their land by corporations or poverty wages or by removing social security or from climate change.  None of these need be happening.

Nowadays, colonisation is less about occupying a land mass and more about controlling the economy. For example, in order to eradicate the socialism of Allende and impose strict free market-oriented neoliberal economic reforms, the US-backed Pinochet’s armies killed or ‘disappeared’ at least 3,000.  These were representatives from the cultural world, intellectuals, university staff and students, forcing 200,000 Chileans into exile – up to 80,000 people were interned and as many as 30,000 were tortured during the time Pinochet was in government.  The proposed trade deals, TTIP, TPP and TISA are the latest way to achieve the same, by setting corporate rule above national governments, to the detriment of ordinary people and threat to the most vulnerable.

But in addition to all of this, the other side’s ‘massacres’ are exploited to persuade populations that their side are the ‘good guys’  and if required, they should go and fight…  Pearl Harbour and 9/11 spring to mind.  Jim Grundy writes of the start of WW1:

A hundred years ago today the most advanced military machine in the world, the Germany Army, invaded its neighbours.  Within 48 hours, the first massacres of civilians took place, not by accident but as a matter of deliberate policy. Thousands were to be murdered in the coming weeks.  British public opinion, that had not been sympathetic to Serbia after the Sarajevo assassinations, was appalled by the stories of mass murder committed against a defenceless population.  The British State might have gone to war to protect the European balance of power, its own imperial interests but the reason for war was clear to most British people – the avoidance of the fate meted out by an aggressive military power to women and children here at home.

 

Massacres and atrocities are brilliant tools for galvanising ordinary people into the required behaviour…  Capitulation to stop the killing, compliance on the part of the oppressed and public support for conscription, surveillance and draconian security clamp-downs.  The global power elites need to convince us because they cannot further their own interests, without our being frightened or fooled into backing them.  Don’t believe the hypocritical and sanctimonious talk about the outrage of killing civilians.  It is palpably untrue.

As Chomsky says – Israel could “defend” itself by withdrawing from territories it illegally occupies.

When the powers-that-be talk about security, it is not for you and me .. the security they mean is security for the rich and powerful to stay rich and powerful.

Nafeez Mosaddeq Ahmed : The_Hidden_Holocaust

 

Political analyst on security, conflict and global crisis. Director of Institute for Policy Research & Development, London. Author of “The London Bombings: An Independent Inquiry” (Duckworth, 2006) and “The War on Truth: 9/11, Disinformation and the Anatomy of Terrorism” (Arris, Olive Branch, 2005).