Austerity Kills the Poor and Creates Deeper National Debt

It is time for British Politics to present an alternative to the Austerity Myth

This Article Previously published  by  Anastasia England

  1. Austerity Kills:  It Always Kills, and Brings a Worse Economy

New Labour derides Corbyn for being Anti Austerity. Jeremy Corbyn has given the retort to his Labour critics that his mandate to lead the party would stretch beyond Westminster if he won the Labour leadership contest to succeed Ed Miliband.

Amid rising concern among established Labour figures at the huge numbers of members being behind the momentum for the veteran leftwinger, Corbyn said his campaign had captured a public mood against austerity also seen in Spain, Greece and the US.

Bearing in mind that membership since Jeremy Corbyn announced his leadership bid had increased more than in the last two thirds of a century. (1)

  1. Austerity: The Daftest Idea in History, in A Recession

Austerity is not tough for the highest in income, nor sensible for most on basic income. Inflicting spending cuts on an already depressed economy is an illogical experiment, discredited by most mainstream economists. Austerity is eroding our public services on which all income levels rely and accelerating the redistribution of wealth to the rich. As it squeezes living standards for the majority, austerity is also quietly inflating another private debt bubble and laying the foundations for the next financial crisis. It isn’t just that austerity is unfair, it’s that it’s downright dangerous and unsustainable. Another way is possible. With anyone but Corbyn at the helm, we would have five more years of New Labour agreeing to Tory austerity and a status quo that serves an ever-shrinking minority of the population. With Corbyn in charge, a new kind of politics of courage and hope that believes it can actually make a difference. (2)  

  1. Austerity is Only for the Poorest 75%

From babes in wombs to grannies, millions live in terror of austerity, whilst the richest 10 per cent have grown ever richer (including our MPs) and the 80 per cent got closer or in starvation and on the streets. The middle class are just 10 per cent who could fall foul of life’s miseries at any time, crunched up inbetween the rich getting richer and poor (most of us) getting poorer. The state pension, payable if can remain in work or not, is sole pension provision for millions, because did not have any other opportunity in life. For further millions, our low wages mean a works pension only about 4 per cent lowest income.
We have little or no savings, because living costs took what little money we had entirely.
Worse is to come from next year. See who loses under the flat rate pension at end of my petition: (3)

  1. Austerity and the Upper Middle Class

Only 25 per cent of the population earns more than £30,000 a year. For them the country basically works and politics does not affect them and is about how other people are treated, about which they have not one interest at all, as they are ‘alright jack’.To people in that position, austerity is regrettable but pragmatic as it has no effect on them. To the rest, it is not regrettable nor pragmatic , but terrifying as threatens wellbeing or even life, from babe in womb to granny. The crackpot, gimcrack ideological nature of austerity becomes more apparent the closer you get to the point of delivery, the 80 per cent of the poor in a nation. (4)

  1. Austerity is a Lie

The last Tory government (with a compliant Lib Dems contingent now happily pretty well wiped out as a party since general election of May 2015) defined itself as a government of austerity, saying it had the courage to take the hard decisions necessary to deal with the deficit. But those hard decisions are only for the poor, not the rich who have benefitted big time. In 2010-2012 deep spending cuts were made and the result inflicted palpable harm on the economy. The recovery was delayed, costing the average household the equivalent of at least £4,000. GDP per head, a far better indicator of prosperity than GDP alone, grew on average by just 1 per cent a year between 2010 and 2014. The average growth rate from 1950 to 2010 was close to 2.25 per cent. Under the last New Labour government, average growth was 1.5 per cent, and that period included the global financial crisis in 2008, caused by the Lehman Bros, amongst the world’s biggest company bankruptcies that nearly wiped out all the money in the world’s banks of government, business and household. (5) 

6 . Why Tory Austerity Created More Debt, Not Less

Tory Chancellor George Osborne has created more national debt since the Tory government started to rule from 2010, than every Labour government in history.
In his first 3 years as Chancellor, Osborne managed to add more to the national debt than the Labour Party did in the 13 preceding years.
By George Osborne’s own estimates, the national debt will have grown by 26.9 per cent of GDP between 2010 and 2015.
The national debt from New Labour in 2010 was 53.5 per cent for 2009-2010

In 2014-2015 tax year, the debt to GDP radio was 80.4 per cent.(6)

7. Why Tory Austerity Has Not Paid Off National Debt:

In the last Autumn Budget before the May election in 2015, the Tories said they had paid off old national debt. Note that Tory Chancellor Osborne said “pay off”.

A government borrowing £100 billion a year and change cannot be paying off any debt whatsoever. But just swapping one debt for another. By the definitions used by Tory Chancellor Osborne, WWI debt was all paid off in 1927. Which, given that bonds are still around relating to that debt, shows that a refinancing is not actually the same as paying off a debt. (7)

8. How Welfare Reform under gusie of “Austerity” is Driving Nation deeper into Debt

The Department of Work and Pensions spent almost twice as much on salaries, welfare-to-work schemes and administration in tax year 2013-14 than they did on unemployment benefit. The DWP’s six monthly report shwoed that £7.7 billion was spent on administration costs in 2013/14 compared to £4.3 billion on Jobseeker’s Allowance, otherwise known as the dole. In 2015 administration spending is expected to hit £8 billion, whilst spending on JSA is forecast to fall to £3.7 billion as hundreds of thousands of people are bullied off benefits with sanctions and workfare.

The DWP is a big department, and this colossal spend also includes administration of pensions, sickness, housing and disability benefit spending.  All being cut so leaving people in penniless starvation, with no hope of re-employment, especially if over 50. (8)

9. Where the Austerity Lie Came from:

An American 28-year-old economics graduate student looked again at a study, led by USA Harvard University economists Carmen Reinhart and Kenneth Rogoff that has been widely cited as the intellectual basis for worldwide government austerity measures.

The Harvard study had put forward the idea that higher public debt slowed down economic growth when the GDP rises above a 90 per cent threshold.

But after an attempt to duplicate the Harvard study’s findings, Thomas Herndon, a Ph.D student at the University of Massachusetts-Amherst, ended up debunking the myths in Reinhart and Rogoff’s austerity solution to deficits and national debt.

The being selective withe the data. Herndon did not look at the politics of the study, but focused only on the statistical and Excel spreadsheet inaccuracies of the influential paper. Not least that 5 wealthy nations – Australia, Austria, Belgium, Denmark and Canada – were removed. And Iceland was not even mentioned that entirely debunked the austerity theory.

On April 17 2013, the University of Massachusetts researchers, Thomas Herndon and his two economics professors, Michael Ash and Robert Pollin, published the paper debunking the theory of austerity. (9)

10. How the Austerity Lie Continues to be Disproved

The debunking of the theories of Carmen Reinhart and Kenneth Rogoff continue.The Harvard economists try to stand by their flawed research. But even this claim has now been disproved by two new studies, which suggest the opposite might in fact be true: Slow growth leads to higher debt, not the other way around. University of Michigan economics professor Miles Kimball and University of Michigan undergraduate student Yichuan Wang looked again at Reinhart and Rogoff’s data and found “not even a shred of evidence” that high national debt levels lead to slower economic growth.

Another published paper by University of Massachusetts professor Arindrajit Dube finds evidence that Reinhart and Rogoff’s austerity theory actually caused higher national debt, by austerity slowing growth. (10)

11. How Austerity Kills

A triple suicide happened in the seaside town of Civitanova Marche, Italy. A married couple, Anna Maria Sopranzi, 68, and Romeo Dionisi, 62, had been struggling to live on her monthly pension of around 500 euros and had fallen behind on rent. The husband had no state pension because of the raised retirement age and was out of work due to austerity hitting the construction industry. Then the wife’s pension was cut even more. (11)

12 .Had Austerity been Tested like Clinical Trial, it Would’ve been Discontinued

(Given Evidence of Deadly Side Effects)

In their new book, Kindle “The Body Economic: Why Austerity Kills,” 
Economist David Stuckler  and physician Sanjay Basu
examine the health impacts of austerity across the globe

The authors estimate there have been more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States
since governments started introducing austerity programs
in the aftermath of the economic crisis of 2008. (12)

13. Iceland  – The Better Way

Stuckler says, “There is an alternative choice that we found in the historical data and through the present recessions: When we place people and their health at the centre of economic recovery, it can help get our economy back on track faster and yield lasting dividends to our society.” When asked why Iceland was enjoying such a strong recovery while everyone else was still mired in debt, Iceland’s President Olafur Ragnar Grimmson said in 2013: (13)

“Why are the banks considered to be the holy churches of the modern economy?
Why are private banks not like airlines and telecommunication companies and allowed to go bankrupt if they have been run in an irresponsible way?
The theory that you have to bail out banks is a theory that you allow bankers enjoy for their own profit, their success, and then let ordinary people bear their failure through taxes and austerity. “People in enlightened democracies are not going to accept that in the long run.”

4 thoughts on “Austerity Kills the Poor and Creates Deeper National Debt

  1. Pingback: Austerity Kills the Poor and Creates Deeper National Debt | Think Left | kickingthecat

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