So who should we trust with our economy? To get a wider context on the UK political landscape let’s briefly consider some relevant history.
After the Second World War there was a broad agreement between the main political parties that capitalism should be moderated by some form of state intervention. Capitalism was seen as a necessary evil; an economic system that was far from ideal but arguably better than the alternatives. But it was generally agreed the state should actively mitigate the worst excesses of capitalism using policies which act to redistribute wealth more evenly across society. This was the so-called social democratic post-war consensus.
This broad political consensus persisted for some time, right up to the years immediately preceding the Conservative Thatcher government in fact. Then things began to change. The UK economy was impacted by the effects of globalization, resulting in a sustained period of soaring inflation, rising unemployment and a stagnant economy. People naturally questioned why this was happening, but unfortunately got all the wrong answers. It is at this point the Thatcher government comes into the picture.
The Thatcher government succeeded in convincing people that the previous Labour government’s socialist policies; government subsidies to vulnerable industries, inefficient nationalized industries, welfare dependency etc, were all to blame. The reality however was that the economic downturn was more to do with the effects of globalization (the UK had already started the process of outsourcing much of its manufacturing base to developing economies such as China for instance). But this did not stop poor people getting the blame for many of the problems.
Hence began a period of privatisation of key industries, deregulation of the financial sector, withdrawal of government subsidies from vulnerable industries, and reduction of trade union power. A culture of blaming individuals for their circumstances was carefully nurtured by the government and right-wing media, downplaying or ignoring altogether the wider economic factors leading to unemployment and welfare dependency (ironically many of Thatcher’s policies directly led to a rise in unemployment).
At the heart of all this was an individualistic worldview, an idea that ‘there is no such thing as society’. This was mirrored across the Atlantic with the Reagan administration, where ‘rugged individualism’ was championed by the Republican government of the day, and resulted in the wholesale deregulation of the financial sector (amongst other things).
A key government strategy for generating widespread support for ruthless right-wing policies was to demonize the poor, which means persuading people it is their fault if they happen to be living in poverty. If they are poor they must be doing something wrong – which then justifies not helping them! Does this view stand up to close scrutiny however?
On a global scale this almost certainly can’t be true. Consider the starving people of Africa. Is it really their fault they live in such conditions? If you agree that it is not then the above question reduces to – are poor people who live in Western capitalist societies to blame for their own poverty?
It seems to me that blaming people in capitalist economies for being poor is more or less equivalent to blaming runners in a marathon for not all coming first, or in the top few percent. A race by its very nature will produce winners and losers. It is an intrinsic part of the nature of a race to do so. To not understand this fact is equivalent to not understanding what a race actually is. Similarly, not understanding the fact that a capitalist system will produce poor people is equivalent to not understanding how capitalism works. Capitalism by its very nature relies on a certain percentage of the population not doing well in economic terms. It is built into the very nature of capitalism. Some degree of exploitation is inevitable (I believe Karl Marx made this point). In fact some analysts claim that full employment is not compatible with a capitalist system, as this would produce upward pressure on wages due to the forces of supply and demand. There allegedly has to be an excess of labour to drive down wages.
Another factor to consider is ethnic-based inequality. Consider America for instance. Statistical data consistently exposes an ethnic-based inequality running across American society. Is it really the case that a particular ethnic group just happens to be lazy? This can be the only conclusion if one chooses to cling to the idea that people are always responsible for their own circumstances.
So I think it is reasonable to conclude that people are not necessarily responsible for their economic plight – even in Western capitalist societies!
How do the governments and the right-wing media succeed in convincing so many people that poverty is self-imposed? Time and again the same tactic is used – focus on the lowest denominators and then make unfair and misleading generalizations based on these few extreme and unrepresentative cases.
The Tories are ideologically opposed to state intervention in economic affairs (or at the very least policies which redistribute wealth). They claim that nationalized industries are always inefficient so therefore need to be privatised. And this includes healthcare. You will never see this in a Conservative manifesto of course as they know they will never get voted in. So they used backdoor privatisation by inserting the purchaser/provider system into the NHS. As my partner works for one of the Healthcare Trusts that has been affected by this I am aware of the negative impacts this restructuring has had on the health service. Ironically the level of bureaucracy has actually increased, contrary to the Tory claim that efficiency would increase. And the level of paperwork has in fact increased markedly. More time and resources than ever before are now spent on form-filling and administration, with client care suffering as a result. This is largely owing to the pressure on healthcare providers to attract purchasers by looking good on paper. Looking good on paper however is not the same thing as being good in practise. In fact there can be an inverse relationship between the two things, as this case well illustrates.
NHS privatisation aside, who actually believes that privatising the UK energy and transport industries has increased efficiency (or at least efficiency which has translated into consumer benefits)? The fact is that increased efficiencies generally tend to involve cutting corners, the corresponding financial gains immediately going to the top (and staying there). It will rarely, if ever, translate into benefits from either the consumer point of view or the point of view of the average employee working in the associated industry. This is just a myth perpetuated by right-wing political parties.
The global financial crisis happened just a few years ago but many appear to have forgotten that this is the reason why all this austerity has been imposed upon us in the first place. The Tories would have you believe the financial crisis was all Labour’s fault. But all Labour did was recapitalize the banks and then attempt to stimulate the economy Keynesian style, using monetary and fiscal stimulus. Whether or not you agree with this approach, one thing is for certain – the massive budget deficit did not come about as a result of excessive public spending by an overzealous socialist government.
In retrospect the UK’s sustained economic boom that essentially started in the 1990s clearly relied on factors that were unsustainable. We enjoyed consistently low inflation (in no small part due to the huge influx of cheap manufacturing goods from places such as China), increased expansion and reliance on the financial sector, and a housing market where property prices consistently outstripped the rate of inflation. The growing reliance on the financial sector was partly based on financial products which eventually had catastrophic consequences for the UK, and made us ever more susceptible to the financial crisis that eventually occurred in America. However once the Tories succeeded in creating this false link between public spending on vital services and the budget deficit, the solution was manifestly apparent – make cutbacks on vital public services! This was however a clear cut case of penalizing the less well off in society for the mistakes of the financial sector, since they are disproportionately more reliant on such services than the more affluent members of society. It effectively empowered the Tories to finish what Thatcher started in the 80’s under the guise of there being no viable alternative. But make no mistake – irrespective of what the Tories claim these cuts are ideologically driven!
The oft used ‘balancing the books household analogy’ used by Cameron and his sidekick Osborne is severely misleading. A single household budget is much simpler than a national economy. Net income and expenditure dictate the financial health of a family unit. The complexities of a national economy however have a whole multitude of factors than cannot naturally be applied to the simple concept of a family budget. Simply put, there are many long term feedback mechanisms in a national economy that are not present in a family budget situation. Although stimulating the economy invariably incurs short term costs, there are often associated long term payoffs – generating jobs, increasing tax revenues, and driving down the welfare expenditure. This process has no obvious parallels in the context of a household budget.
Another related point is that policies which redistribute income do not necessarily adversely affect the economy. In fact the reverse can often be true. It is usually implied that welfare expenditure somehow results in money leaving the economy. However the reality is that the money is fed straight back into the economy, usually via the purchasing of staple products. The money is simply redistributed – nothing more and nothing less. It does not ‘leave’ the economy so therefore does not ‘cost’ the economy, contrary to popular perception. And the wealth is usually redistributed in a manner which has direct benefits to the economy anyway. To illustrate this point consider the case of the 1929 Wall Street Crash, the event which precipitated the global depression of the 1930’s. Gross inequality was at the heart of this crisis. In the time period leading up to this tragic event, mass produced goods rolled off the assembly belts as fast as consumers could purchase them. And there was no obvious reason to believe this process would ever grind to a halt. But grind to a halt it did. Basically it was only the relatively small wealthier section of American society that was in a position to buy all these mass produced manufactured goods. But once these wealthy Americans had bought all the consumers goods they needed they stopped buying (this was before the advent of built-in obsolescence). Once the shareholders realized what was going on it was already too late. Suddenly realizing their shares were soon to become worthless they panic sold, hence creating the Wall Street Crash. If wealth had been distributed more evenly across America it is likely the Wall Street Crash could have been averted altogether – along with the global depression which followed. And what eventually got America out of the depression? Fiscal stimulus! And this came about in two stages. Firstly there was Roosevelt’s New Plan, generating thousands of jobs by government investment and subsidies to failing industries (this stood out in sharp contrast to the previous Republican Hoover administration who basically sat back and let people starve because of their dogmatic stance on rugged individualism and laissez-faire politics). And secondly there was World War Two. This abruptly ended the recession by providing fiscal stimulus in the form of mass government spending on weaponry.
Let’s finally consider UKIP – the single-policy far right-wing phenomenon that has enjoyed a significant rise in popularity over the last five years.
There has been some lengthy debates over whether or not Nigel Farage is a racist. Ostensibly UKIPS policies are not racist. And UKIP certainly can’t be accused of not taking reasonable measures to distance themselves from accusations of being a racist party, such as prohibiting former BNP supporters from party membership for instance. However the question remains – is this simply because Nigel Farage is a more shrewd version of Nick Griffin? Some people suspect so (myself included). He is certainly smart enough to know the only plausible path to power lies in convincing the majority of the electorate that he is not racist, and his party is not racist either. Realization of this fact does not in itself entail that Farage is a racist of course, but it is certainly noteworthy that any time Farage is caught out uttering a borderline racist remark he turns round and uses the excuse that he was ‘a bit tired’ at the time. From my experience however people are more inclined to tell the truth when they are ‘a bit tired’. Being knackered leaves one’s defences in a somewhat compromised state, occasionally leading to a bit on unintentional truth telling.
Racism aside however, UKIP are clearly a party which relies extensively on scaremongering, scapegoating and political rhetoric, to persuade people that the economic woes of this country are primarily down to immigrants. And this is despite a number of independent studies conducted by various universities demonstrating the net positive economic impact of immigration on the UK.
The bottom line is that policies should be based on rational debates, not scaremongering and scapegoating. There is a clear and distinct difference between rationally debating immigration policy and blaming immigrants for clogging up the healthcare system, nicking all our jobs, placing an unsustainable burden on our infrastructure, being responsible for crime epidemics, anti-Semitism, traffic jams, and all the other zany things that UKIP have accused immigrants of.
The issue of immigration is complex and nuanced. Farage is not.
Regarding the accusation that immigration is having an impact on healthcare, ask virtually anyone who works in the NHS, including UKIP supporters, what the problem really is. They will concede that the crisis in the NHS has much more to do with an ageing population due to people living longer than it has to do with immigration.
Cameron has repeatedly played into UKIPs hands by pretending he can renegotiate the terms of our membership of Europe. I think virtually everyone knows he cannot really do what he is claiming he can do. Realistically the only way to curb immigration is to leave Europe. The main political parties are reluctant to have a referendum on the issue of European membership because they believe, rightly or wrongly, that the general public is not really capable of making an informed choice on this. Whether they are correct on this point or not however, one thing is for certain – if you believe the issue of European membership is a simple black and white issue then you probably haven’t grasped all the subtle nuances and ramifications of leaving Europe. And UKIP have certainly been guilty of portraying the UK membership of Europe in simplistic black and white terms. The reality however is that there are many pros and cons to factor into this decision. It is in fact one of the most complex and thorny political issues of recent times.
Perhaps you don’t believe that any of the major political parties offer a genuine way forwards. I am not altogether convinced of this either. But there is nonetheless a clear choice to be made here – voting for the lesser of two evils. The Tories will without question continue to zealously pursue their ideologically driven program of cuts and continue their wholesale dismantling of our public health service. And they will continue to target and demonize the vulnerable and poor in society in order to justify their savage cuts. They will continue to insult our intelligence by claiming ‘we are all in it together’ whilst giving tax breaks to their wealthy friends and ruthlessly taking away the safety net protecting the most vulnerable and needy people in our society. They will continue to attempt to convince us that the economic hardship experienced by the average person has nothing to do with the Britain’s richest 1% have more wealth than the poorest 55%. In fact they will try to persuade you that such inequalities are good for society because the wealth will eventually ‘trickle down’.
To date, sixty people have died as a direct result of ruthless welfare cuts and brutal welfare reform policies. And many more have been made to suffer needlessly as a result of these reforms, including people with severe disabilities. In the sixth biggest economy in the world we now have well over a million people using food banks, many of whom have full-time jobs but are trying to survive on a pay packet below the living wage. And this situation will get a whole lot worse if the Tories are permitted to carry out their next round of even more savage cuts for the next five years.
If this is the kind of society you want then by all mean vote Conservative. But if you feel that this does not represent the society you wish you and your families to live in, then vote Labour. It is the surest way of getting the Tories out of power.