Is George Osborne failing … or succeeding brilliantly?

Obviously the answer depends entirely on what are George Osborne’s actual intentions?

We are led to believe by government and commentators in the mainstream media that George is trying to ‘re-balance’ the economy, eliminate the deficit by 2017 (sorry 2018!) and create the conditions for the private sector to grow and export the UK out of recession/depression. He and David Cameron tell us that fiscal austerity or expansionary fiscal contraction, is showing signs of working and anyway, there is no alternative (TINA).

However Martin Wolf, the distinguished FT journalist, describes Cameron’s arguments for sticking to the government’s programme of fiscal austerity as ‘overwhelmingly wrong-headed’. (1)

Duncan Weldon quotes the FT leader ahead of the Budget and writes:

FT leader ahead of the Budget opens by stating:

More than halfway through the UK coalition’s term of office, the British economy is becalmed. Output is flat and confidence is perilously weak. The UK is experiencing its slowest recovery since the 19th century. Nearly half a decade has passed since the crisis erupted and the economy remains no bigger than it was in 2006 – more than 3 per cent below its 2008 peak. It is no longer fanciful to talk about a lost decade.

As we approach the Chancellor’s fourth Budget, we can already guess that much of the content will feel eerily familiar – growth revised down, borrowing revised up, an insistence that his policy is working and delivering low interest rates, some additional austerity measures to be announced for the future and some ‘more of the same’ policy in the short-term (corporation tax, the personal allowance and generic ‘deregulation’ being likely candidates). (2)

 

I could find dozens of quotes in the same vein.  So in terms of mending the UK economy, George Osborne has signally failed!

Furthermore, it is not just that he has failed on economic indicators.  His ‘austerity’ cuts have or will have severe consequences for the social fabric.  For example, more than a million more families will be living in poverty by 2015. (3)

Research published by the TUC earlier today shows that the decisions being made by the government will cost middle-income households £1,200 a year. By the time of the next election, nine in ten households will be worse off, and half of all children in the UK will live in families below the breadline. (4)

However, this aspect of George Osborne’s strategy is, in his own terms, a success .. a real success.

Such impacts were implicit in the CSR (Comprehensive Spending Review October 2010) which if implemented in full would result in less spending on public services in the UK than that of the US by 2014/15  (5)

However, it has to be said that not everybody accepts George Osborne’s stated agenda as being his real purpose.

Ivan Horrocks, commenting on Tax Research UK as long ago as September 2011, wrote:

 I do wonder if part of the issue you and many other commentators have with Osborne and co is that you/we are ascribing to them a primary economic policy aim which is in fact not their primary aim. We assume that Osborne and co’s primary concern (aim) is to get the economy growing again. And to be fair, this is the impression that Osborne and co promote.

But what if their primary aim is in fact to (try to) fundamentally restructure economic (and social) relations in this country (and beyond if they can) and that their belief is that to do that “austerity” is an essential tool. It can be argued that this is similar to the approach Thatcher employed between 1979-83. For example, under the cover of “austerity” we are witnessing a massive fire sale of public assets, planning laws are being relaxed, the NHS is being “restructured”, and so on and on, all to the considerable benefit not to the “big society” but to big business and big finance.

My conclusion would be that the “austerity” approach – and the narrative that’s been developed to support it – will not be dropped, regardless of any arguments put by the IMF, UN, you, Martin Wolf or anyone else – or the production of data that shows how dire the economic situation of this country is – until Osborne and his supporters are confident that their primary policy aim is sufficiently entrenched to withstand efforts to stop or undo it. Again, we see this approach reflected in the behaviour of Thatcher’s first government. And, furthermore, it resonates with the reported view of senior/influential Tory thinkers, that the first Blair government wasted their first two years in power. In summary then, we could argue that Osborne and co have simply been very good at learning from history. (6)

The passage of time has certainly vindicated Ivan Horrocks assessment. The ‘austerity’ approach and accompanying narrative (“its all Gordon Brown’s fault”) have not been dropped.  And regardless of the economic data, the arguments of the IMF, UN, Richard Murphy and Martin Wolf, we continue to witness the fire sale of public assets, planning laws are being relaxed, the NHS is being “restructured” and so on… to the benefit of big business and big finance

Richard Murphy is also in firm agreement that George Osborne’s real agenda is a Tory revolution  ‘aimed at creating a managed, corporately controlled, and deeply unequal ‘democracy’.(7)  (Note the quotation marks around ‘democracy)

He quotes Ivan Horrocks who is unsurprisingly, not surprised at all:

… It’s the inevitable conclusion of a strategy and process that was undoubtedly conceived while the Tories were in opposition and in concert with many of those who stand to benefit.… Now the Tories are aware they’ll only be in power for one term completing the demolition of the state, the fire sale of public assests and services, and the engineering of the corporate control of as many regulatory and governmental institutions as is possible will gain pace drastically. As will the tempo and harshness of the attack on the poor and less fortunate in our society. (7)

(edited)

Michael Hoexter makes a similar argument in New Economics Perspectives:

After the initial panic surrounding the global financial crisis of 2007-2008 subsided, an opportunistic brand of neoliberalism emerged, that continued neoliberalism’s attack on government as a stabilizing, moderating force in society.  This re-energized brand of neoliberalism advocates fiscal austerity and balanced government budgets, “worrying” that public bond issues floated during the economic stabilization process were “unsustainable” debts….

(T)hat the prime drivers of fiscal austerity were representatives of the financial industry, which had just been bailed out by government and had gotten themselves into trouble via high levels of private “leverage,” has, so far, escaped the notice of most sectors of the press in Europe and the United States and, therefore, the consciousness of the public.  Furthermore, the potential future advantages to that same industry of austerity’s selective shackling of government’s ability to create and control the liquidity of the economy have also, so far, escaped the notice of a gullible press and, by extension, a good portion of the public. (8)

So is George Osborne failing or is he succeeding brilliantly?  And does he know which agenda he is following?  Does he actually believe in the failed neoclassical nostrums?  Is he being ‘manipulated’ in some way by those vested interests who stand to benefit?  Or was it always his intention to keep the crisis going to provide the ‘shock doctrine’ which justifies asset-stripping and re-structuring the economic/social relations of the UK ?

In writing about the imperative for a macroethics, Michael Hoexter makes the observation:

… fundamental moral confusion may be mere pretense in the sociopaths and Machiavellian political operatives who are, no doubt, crucial to the success of the austerity campaign.  Yet, their (fallacious) ethical argumentation has swept along more gullible political leaders who have not paused long enough to consider the uniqueness of their role as leaders of governments.  These leaders, with the exception of the Euro-Zone countries, can move their governments to issue currency to bail their nations out of any real or imagined financial bind (though finances do not necessarily solve real economic difficulties).  Either, believing the fiscal reality of currency-issuing governments was identical to that of a business or a household or fearing their constituents would view them as immoral if they did not treat the national budget as that of a household, politicians have, so far, acted as if they do not recognize their distinct macroethical duties as regards the national budget. (8)

A similar point made by the Guardian’s Zoe Williams when she speculated about … the true division of the Conservative party – the ones who are mistaken versus those who are wrong deliberately… Some of them are simply out of their depth, do not understand the benefits system or a government’s realistic prospects of controlling the economy…Others take the Fox News approach: if you can just get enough misinformation out there, enough people who were only half-listening might half-believe you. Competing claims don’t need to relate to facts, their validity will be judged on the manner in which they’re delivered. You may have to retract later, but what does that matter? (9) 

Michael Hoexter provides a disturbing rationale for neoliberal behaviour:

Conventional neoclassical economics has normalized sociopathy in economic life by assuming the “utility maximizing individual” at every turn, which aids sociopaths in gaining positions of power and influence in our contemporary society.  In the political science derivative of neoclassical economics, James Buchanan’s “public choice theory,” politicians are assumed to be as fundamentally amoral as neoclassical economics’ model of the person, which has the effect of excusing or making invisible political corruption…. (8)

Disturbingly, I conclude with the (edited) view of Andrew Dickie, another regular commentator, on Tax research UK whose opinion is respected by Richard Murphy:

Ivan and I have been in agreement on this before – this will be a Neo-feudal state, in which we subjects in the oligarcho-democratic state we now enjoy are transformed into serfs,without rights, in a feudal state where the land-basis of mediaeval fedualism will be replaced by a “territorial” carve-up on the basis of income streams from taxation = Prince HMRC and Duke NHS and Marquess Tertiary Education, and Earl Secondary Education – somewhat reminiscent of Prohibition Chicago!…. These new “garagiste/card-sharping/rent-seeking” baronage know the price of everything and the value of nothing, and their only skills are those of rip-off and plunder, and are a universe away from the real economy and real wealth creation, which will be the task of the serfs – as it always was….. (10)

Andrew Dickie ends with the advice that “ Labour should be putting down a marker – a future Labour Government will bring all these illicitly disposed of mutually created assets back under democratic control, without compensation where possible, which, given that it is highly likely that their new “owners” will already have made more than they have paid for the assets, will be easy to justify.” 

I’ll more than second that… but in the meantime, there’s another Osborne budget….

Related Think Left Posts:

Capitalism – Neoliberalism, Plutonomy, and Neo-feudalism.

Soylent Green, George Osborne and Plutonomy.

Plutonomy – Invasion of the Political Body Snatchers.

What is George Osborne playing at?

(1)  http://www.ft.com/cms/s/0/1670a3d2-880f-11e2-8e3c-00144feabdc0.html#axzz2NQUQ6WUO

(2)  http://touchstoneblog.org.uk/2013/03/through-the-looking-glass-economics/

(3)   http://touchstoneblog.org.uk/2013/03/a-million-more-families-below-the-breadline-by-2015/

(4) http://touchstoneblog.org.uk/2013/03/next-wednesday-george-osborne-should-admit-hes-got-it-wrong/

(5)  http:// onlinelibrary.wiley.com/doi/10.1111/j.1467-923X.2011.02169.x/ful l 

(6)  http://www.taxresearch.org.uk/Blog/2011/09/06/maybe-osbornes-quite-happy-a-double-dip-that-provides-cover-for-all-he-wants-to-do/#comments

(7)  http://www.taxresearch.org.uk/Blog/2013/03/14/the-tory-revolution-is-aimed-at-creating-a-managed-corporately-controlled-and-deeply-unequal-democracy/

(8)  http://neweconomicperspectives.org/2013/03/without-an-effective-macroethics-our-civilization-is-doomed.html#more-5010

 (9)  http://www.guardian.co.uk/commentisfree/2013/jan/02/iain-duncan-smith-polemic-politics-cynical

(10) http://www.taxresearch.org.uk/Blog/2013/03/14/that-tory-revolution-and-the-rise-of-neofeudalism/