The debt and the deficit are reflections of the failing economy. They are not the cause of the jobs and living standards crisis. We need to stop self-harming with ‘austerity’.
Published on May 17, 2013
Professor Robert Reich talks about what’s wrong with austerity and the current direction for the UK economy. Part of the After Austerity series from the TUC: http://www.afterausterity.org.uk
In 1844, Ignaz Philipp Semmelweis graduated as a doctor, and was appointed assistant at the obstetric clinic in Vienna. At the time, the great scourge of new mothers was ‘childbed’ or puerperal fever. It was thought that the deaths were unpreventable… the result variously of overcrowding, poor ventilation, the onset of lactation or a dreaded ‘miasma’.
However, Semmelweis oversaw two maternity wards and couldn’t help but notice that the puerperal death rate was two or three times in one, to what it was in the other. In fact, the pregnant women were only too aware because they would go to all sorts of lengths, pleading to be booked in on the lower mortality ward.
The two divisions were apparently identical except that the first, with the higher mortality, was used for teaching student doctors, whilst the second was staffed with just midwives. Semmelweis noted that the student doctors were coming to the maternity ward directly from the dissecting room, having just completed autopsies on women who had died from puerperal fever…. he suspected that somehow (at that time no-one knew about bacteria or viruses) that the students might be carrying the infection to healthy mothers on the ward.
As an experiment, he ordered the staff to wash their hands in chlorinated lime water before each examination, and within the week, the mortality rate dropped from 18% to 1%. Furthermore, no women died on his wards between March and August 1848.
So with such an immediate, dramatic drop in the death rate, why was there no corresponding immediate and widespread acceptance of the practice of hand-washing?
Why did the editor of the Wiener Medizinische Wochenschrift write that it was time to stop the nonsense about the chlorine hand wash? Why did pregnant women have to wait over 25y for the importance of hygiene to be accepted; with Joseph Lister being credited as ‘the father of modern antisepsis’ instead of Semmelweis?
The reasons are still relevant not only in medicine but also in politics and economics …
Despite various publications of results where hand-washing reduced mortality to below 1%, Semmelweis’s observations conflicted with the established scientific and medical opinions of the time and his ideas were rejected by the medical community… Semmelweis’s practice earned widespread acceptance only years after his death, when Louis Pasteur confirmed the germ theory and Joseph Lister, acting on the French microbiologist‘s research, practiced and operated, using hygienic methods, with great success.
In other words, Semmelweis’s findings required a ‘paradigm shift’ but the old-guard ‘power elite’ were ‘invested’ in maintaining the status quo in spite of all the statistical evidence of the efficacy of hand-washing. The weight of authority stood against Semmelweis’s prophylactic practice.
Exactly the same is true of the ‘austerity’ which is being inflicted on the UK and across the Eurozone. The tenets of neo-classical economics are daily shown to be completely wrong, contradictory and ill-conceived. Furthermore, the policies (just like puerperal fever) are inflicting enormous damage on the most vulnerable in our populations. Nevertheless, our politicians and our media go on spouting the same mythologies and neglecting to see the obvious.
… the Tory/LD coalition government is borrowing £245bn more than expected in 2010 and the economy has grown by just 1.1 per cent, 4.9 per cent less than expected …
Sticking with TINA (monetarism) is clearly a madness akin to the rejecting of hand-washing on the labour wards of the 1850s.
There is an alternative!
However, just as the medical professors had not wanted to relinquish their status or their paradigm of miasmas, the 0.1% have too much to gain from pursuing the current paradigm. In this, they have been ably aided and abetted by the embedded assumptions of the so-called ‘free press’ and MSM which are owned and dominated by the ‘oligarchs’.
Mainstream economist Paul Krugman writes in the NY times:
… the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.
You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.
The ‘Deficit’ is the new ‘miasma’ analogous to the flawed theories of puerperal fever causation.
But the deficit is just a reflection of the state of the economy. In a sovereign country like the UK with its own currency, it is not a cause of anything. If there is no problem of excess demand, there is no ‘deficit problem’ regardless of the magnitudes, short term or long term. The methodology of its calculation is wide open to dispute and in any event, one agent’s deficit is another’s surplus. As Professor Bill Mitchell writes
Structural deficits – the great con job!
Similarly, with the so-called ‘debt’ problem …
but my intention is not to discuss economics but to show that disastrously ‘wrong thinking’ and manipulation can persist to our detriment and against all the evidence for extended periods of time… particularly when there is wealth and power to be gained.
As Paul Krugman concludes:
.. the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.
And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?
Payam Sharifi quotes Mark Thoma, an economist who runs a popular economics blog :
“too many minds in the profession cannot be changed even when the empirical evidence is relatively clear…the politicization of the profession…plays a large role”. Could it be that this reflects a crisis in economics, which is a crisis in its method of analysis and even the subject matter itself?
That seems like good thinking .. there needs to be an Economic Reformation:
As Antonio Gramsci wrote from his Italian prison cell, sometime in the 1930s:
‘The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.
I think it is more than time for our politicians to ‘wash their hands’ of the ‘miasma of deficit reduction’ and act as ‘midwife’ for an economics which serves the 99.9% and the natural world.
For more information about heterodox economists and MMT (Modern monetary theory – macroeconomic reality):
and many other sites
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Hat tip
Prue Plumridge
I appreciate there will always be huge differences of opinion regarding politics and there will be many thousands of people who have attended Margaret Thatcher’s funeral and I am not affected by this. (although I do take offence at the obscene amount of money it is costing during a time of severe austerity) Also many thousands will have watched it at home caught up in the pomp, circumstance and emotion of the occasion, that is obviously their right just as it is my right not to watch it. I cannot be a hypocrite unlike some of her own party who actually stabbed her in the back, which resulted in a very undignified exit from no.10 in 1990.
Therefore I do hope in the same way people will not take offence if I in my own way reminisce on why I do not think Margaret Thatcher left this country in a better state and show my respect to all those who suffered and continue to do so due to the extreme ideologies surrounding Thatcherism. Her death sad as it is for her family, friends and admirers for me has been a salient reminder of how it all started to go wrong and brought to my attention the major difference between compassionate politics and conviction politics.
Clement Attlee and Aneurin Bevan have long been my heroes; they did so much for the working class people of this country that was in desperate straits after two world wars and the great class divide.
Attlee introduced the welfare state and the NHS, got rid of the horrendous workhouse ethos and made life bearable for countless millions, not just the privileged few, giving them the right to a decent life, equality, freedom from fear and last but not least aspirations. Bevan was a lifelong champion of social justice and spearheaded the establishment of the NHS, the most equitable universal health care system in the world. I was one of those able to benefit from this major change in society, I left home and took up further study and subsequently had a decent, fulfilling profession, unlike my parents who in their working class family could not even afford to attend the grammar school they should have gone to after passing their 11 plus, both leaving school at a very young age.
I am therefore lighting a candle for Atlee and Bevan and all they stood for and which tragically are ultimately being destroyed by Margaret Thatcher’s legacy.
- A candle in honour of Nelson Mandela who did so much for apartheid and whom Mrs. Thatcher called a ‘grubby terrorist.’
- A candle for the thousands of innocent people murdered by Pinochet and whom Margaret Thatcher called a champion of freedom, who was later charged with genocide.
- A candle for the thousands of families and communities who suffered and are still suffering due to the destruction of our 150 coal mines, resulting in the importing of very expensive coal from abroad. We had the safest and most organised mining industry in the world; miners had fought long and hard to get this through their unions. I am sure we can all remember the many stories of colliery disasters in the past. However it was still a challenging and gruelling job and like many I felt so desperately angered about what happened to these hardworking miners.
- A candle for the many unemployed as manufacturing industries were also closed during Margaret Thatcher’s time resulting in 3.6 million plus citizens ending up on the scrap heap, suffering depression and deprivation with crime and poverty doubling.
- A candle for the 96 Hillsborough victims whose deaths were not fully investigated during her time.
- A candle for all of those hardworking people who lost money when banks collapsed and all those suffering now due to the current austerity measures because of bank failures. Financial deregulation that Margaret Thatcher introduced, has turned city institutions into avaricious money pits with their strangle-hold on the lives of ordinary people.
- A candle to the dead and dying public services and the privatisation for profit that Margaret Thatcher introduced and not forgetting the ensuing corporate greed culture that now exists. These services should be there to benefit the citizens of this country who pay inordinate amounts of varying taxes for such services and should not be allowed to line the pockets of the greedy. Overseas companies are now running many of our services inefficiently and for maximum profit and in which many members of parliament have vested interests.
- A candle for the thousands who ‘inconveniently’ died after they were found fit to work by Atos, another private overseas company demonising the very sick, some of them my heart buddies. (See Calum’s list if you do not believe me)
- A candle to the present day draconian measures been undertaken by ‘Thatcherism’ that sees many working families struggling and relying on benefits due to the appalling lack of a living wage, rip off utility prices and astronomical rents. Margaret Thatcher opposed even a minimum wage.
- A candle to the many homeless and those facing that imminent possibility, due to the bedroom tax as there is a drastic shortage of housing. Margaret Thatcher gerrymandered local authorities by forcing through council house sales which may have been good for the council tenant that could afford them but she prevented councils from spending the money they got from selling the houses to build new ones, in fact spending on social housing dropped by 67%…
These are just a few of the policies that I cannot ever condone, there are many more.
Ultimately there is no doubt in my mind that the rich are getting richer and the poor poorer and I like many activists and campaigners are merely striving to make the world a better, safer and fairer place for the many not the few, with their great sense of entitlement. This is what we have fought for for so long and we cannot allow it to be stolen away, we must protect our rights and particularly those who are particularly vulnerable and fall on hard times through no fault of their own, it could happen to any one of us…No, do not celebrate Margaret Thatcher’s death but consolidate and reflecting on where we are heading and remember the famous words of Bevan:
‘‘No longer will wealth be an advantage nor poverty a disadvantage.”
People of a certain age will remember, the third-of a-pint milk bottle, drunk with a waxy bent straw on school morning breaks. I am one of them. Provision of free milk in schools went a long way in the efforts to eradicate rickets. Free school meals ensured that children in poverty received a wholesome meal.
After the passing of the 1906 Education Act Local Education Authorities were empowered to provide free school meals. In 1921 this had been extended to free milk. However, an investigation by John Boyd Orr (published as Food, Health and Income in 1937) revealed that there was a link between low-income, malnutrition and under-achievement in schools. Following the 1945 General Election, the new Prime Minister, Clement Attlee, appointed Ellen Wilkinson as Minister of Education, the first woman in British history to hold the post. Wilkinson had long been a campaigner against poverty and in 1946 managed to persuade Parliament to pass the School Milk Act. This act ordered the issue of one-third of a pint of milk free to all pupils under eighteen. (Spartacus)
School Milk for all children, like the National Health Service were both introduced by the 1945 Labour government. It was a brave government, supported by a unified population intent on rebuilding society , as shown in ‘Spirit of ’45‘. Policies like these demonstrate the commitment the 1945 government had in improving living conditions, health and education for working families and to help eradicate the poverty and poor health which many children faced, rickets was not uncommon. A caring welfare state built communities and brought people together – a unified society. Provision of milk for all children avoided the stigma at being ‘ seen to be poor’ and in need of charity. There was real movement towards a more equal society which turned its back on the Dickensian state.
The signs that the Conservative Party opposed a more united society were there in 1973, when as Education Secretary, a young Margaret Thatcher’s intention to remove the entitlement of school milk for all children. I remember the anger she caused and in defence of the welfare state, protested and marched chanting, ” Maggie Thatcher, Milk Snatcher.”
But the scale of the plans she had to break up the welfare state, were kept secret, and not publicised until 30 years later in 2001. At the time it was vastly underestimated
“…. documents released under the 30-Year-Rule paint a more complicated picture of what the future prime minister was prepared to sign up to.
Shortly after election, Prime Minister Heath wrote to his cabinet, telling them: “We shall need determination and a willingness among spending ministers to accept reductions in programmes which, from a departmental stand point, they would be reluctant to make.”
And in August 1970, the new Secretary of State for Education responded to a Treasury demand for education cuts in four areas:
- Further Education fees
- Library book borrowing charges
- School meal charges
- Free school milk “
The Tories always had a plan to reverse the improvement in living standards. Even then they knew their policies would be so unpopular it would induce civil unrest. She also introduced fees for museum entry. Since the Coalition government has been introduced , the dismantling of the welfare state in but just one term is ensured. They planned it as such because, like then they knew of its unpopularity, and have done so by deceit. It is not necessary to wait for another 30 years, the evidence is already clear, though hidden in the main by the mainstream media. The internet has allowed the lay person a voice. How long until it is silenced. She oversaw the increase in charges for children’s meals, through the principle of entitlement for free school meals has remained, with the belief it would invoke public outrage. Until now. Now we hear that free school meals are under threat and the return to Dickensian Britain will be complete.
Free school meals could soon be scrapped and people paid to look after elderly neighbours as councils take desperate measures to deliver a “tidal wave” of spending cuts, ministers will be warned on Tuesday.
Closures of municipal theatres, leisure centres, libraries and play groups will accelerate because of a 50 per cent reduction in local authorities’ spending power, according to a report from an independent think-tank.
The New Local Government Network said town halls will struggle to cope with a £16.5bn gulf which could, under current Coalition plans, open between their income and the demands on them.
Austerity is based on lies, that ‘there is no money left’ It is time for some straight – talking from politicians and the lie about the structural deficit exposed. This is a time for investment not cuts. These Austerity policies being put in pace are totally unnecessary. It is a planned, ideological programme, continuing Margaret Thatcher’s great plan to dismantle the welfare state which protects us all. Undoubtedly she was clever in avoiding the truth, in Dickens’ own words, an “Artful Dodger”.
If Thatcher was ( to some degree) cautious in the rate at which she dismantled the welfare state, Osborne has no such qualms. Now, one hundred years on, the return to a Dickensian state is ensured, and Osborne has said as much. The believe that Victorian Britain is desirable is surreal, like the worst nightmare from which we awaken, shaking in disbelief.
We have all heard stories of Victorian Britain. Apparently it was a golden age, or so our current government wishes us to believe. For some of us Victorian costume dramas are not merely agreeable ways to while away Sunday evening but enactments of our inner fantasies … “I don’t think there has been a better time in our history.” said Michael Gove Guardian Clearly Mr Gove’s history is quite different to mine, and to the vast majority of people living in the UK today. The Guardian article adds:
David Cameron had stated that his goal is to defund and deconstruct the welfare state, to “dismantle big government and build the big society in its place”. His ambition is radical in the purest sense of the word, for it is a conscious attempt to turn the clock back to the historical period for which he feels the greatest affinity: the 19th century.
Victorian Britain was a land of laissez-faire capitalism and self-reliance. Government regulation was minimal and welfare was left to charity. With little tax burden and low labour costs, industrialisation turned Britain into the workshop of the world and created a thriving middle class. The state helped promote and safeguard trade through a bullish foreign policy that created a consumer’s empire. In 1839, we even went to war with China to force the Middle Kingdom to lift its ban on imported British opium.
Disappointingly, in 2010, the previous Labour government was not courageous enough to show the Spirit of 1945. The document Child Poverty Act of 2010 to eradicate child poverty is available here for downloading. This was Labour’s plan. Spot the difference.
Section 26: Free School lunches and milk
111. Section 26 concerns the provision of free school lunches and milk. Subsection (1) amends section 512ZB of the Education Act 1996 to give the Secretary of State (or, in relation to Wales, the Welsh Ministers) an order-making power to extend eligibility for free school meals if the child meets prescribed conditions and the child’s parent is in receipt of a prescribed benefit or allowance.
112. The Secretary of State may extend eligibility for free school meals to a primary school child if the child’s parent is entitled to Working Tax Credit and the family has a household income below a specified threshold. Currently, the Education Act 1996 allows the Secretary of State (or the Welsh Ministers) to adjust eligibility for free school meals only on the basis of the benefit being received by the parent, rather than the age of the child. It is therefore not possible to use existing powers to extend the entitlement to free school meals to primary school children of parents who are entitled to Working Tax Credit without also extending the entitlement to secondary school children within the same family.
Now the nightmare is a reality, it is time to wake up, discover a “Spirit of 2015″ , plan for a Courageous State. A united left needs to plan a better future together just as the Labour Party did seventy years previously.
