Tag Archives: Austerity

The alternative to austerity takes shape

Last night’s vote in the Greek Parliament rejecting the government’s candidate for the presidency for the third time now opens the way for a snap general election on 25 January which could well bring the Syriza party to power (it has a regular 4-7% lead in the polls over the current right-wing government).   If so, it will be because the Greek electorate adamantly refuses to accept any more austerity (shades of Britain, 2015?) and despite the risks is determined to break with the EU orthodoxy which has rocketed unemployment to 40% and laid waste the country with nearly half the population driven below the poverty line.

The significance of this moment cannot be exaggerated.   It is the first time that a political party anywhere in Europe with a real chance of gaining power has repudiated austerity as the central instrument of economic policy.   Fundamentally it is therefore a challenge to the right-wing ideology that has ruled the Western economies ever since 1980, producing the biggest financial crash since the 1930s and the longest and deepest depression since the 1870s, yet still clung to by the EU Commission, the ECB, and the IMF as the source of their power.   If however Syriza succeeds, it will have consequences that ricochet across the EU, not least Portugal, Spain, Italy and perhaps Belgium.   From that point the unravelling of austerity will gather momentum.
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Will 2015 be the year when the UK awakes to how disastrous right-wing economic, political, military ideology has been?

The end of 2014 has certainly brought home some hard economic truths.   Osborne told us he had a long-term economic plan and it was working because the UK had the fastest-growing economy in the G7.   Well, it isn’t: the UK economy is now growing at only half the rate of the US economy, and even Australia is now growing faster than the UK.   Worse, the UK economy is slowing,   David Kern, chief economist at the British Chambers of Commerce, comments that “the stark revision (downward) in annual growth confirms that the pace of recovery is slowing.”   The budget deficit, which according to Osborne’s long-term economic plan, was supposed now to be £40bn is actually £100bn.   Worse, the deficit is now beginning to rise, not fall at all.   The re-balancing of the economy, another key part of the government’s long-term economic plan, hasn’t materialised and in fact has got much worse.    Kern again: “the current balance of payments deficit has risen to an unsustainably high level….owing to the fall in net investment”.   Business investors clearly don’t believe Osborne either.
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Austerity nears its Waterloo

The third vote, tomorrow, to try to elect a president in Greece, normally a figurehead, could well turn out to be the hinge point which starts, if not a landslide, then at least a series of momentous changes that could steadily unwind the grip of austerity across the EU.   Right on cue, the entire Establishment both in Greece and outside Greece and grandees like Juncker of the EU Commission have been pouring fire and brimstone on Syriza and its leader Tsipras, and promising absolute catastrophe if the existing Conservative government in Athens doesn’t get its way.   Well, of course they would say that, wouldn’t they?   What is at stake is not the election of a new president, but a vote of confidence in the current conservative Samaras government.   Samaras’ aim, if he can win this third vote (he has already lost twice), is to use it as a springboard to ram through massive further cuts so as meet the austerity targets imposed by the troika (the EU, the ECB, and IMF) as a condition for further bailout payments.   But even that is not what is ultimately at stake.
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10 objectives for Labour for 2015

As the election comes into sight, what should be the 10 pledges that Labour should make to maximize its vote for 7 May 2015?   Here are some proposals which should certainly be included:

1  End austerity because the policy of endless spending cuts is clearly not working – deficit reduction (the ostensible purpose of the whole exercise) has ground to a halt and the deficit may even rise this year.   Adopt the obvious alternative policy, which would cut the deficit far more quickly, by expanding the economy, creating hundreds of thousands of real jobs, raising household incomes, and using the higher tax take to pay down the deficit faster.

2  Make the revival of British manufacturing industry the key objective of domestic economic policy as the only way to pay our way in the world and reverse the disastrous slide to the biggest balance of payments deficits in British history.

3  Make full employment equally a central objective of economic policy when  there are still today 2 million persons jobless and up to a further 5 million in short-term insecure jobs often dependent on zero hours contracts.
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Osborne’s boastfulness comes back to haunt him

Osborne is now in trouble.   One after another, all the things he so confidently promised 5 years ago have now turned to dust.   He pledged then that the deficit would be down to £37bn by the end of 2014; it is now actually about £100bn.   He said that with economic growth real terms pay rises would soon return; they never have.   He loved to boast endlessly that Britain had the fastest rate of growth in the Western world; now that has been blown apart today’s announcement that Britain’s annual rate of GDP growth in the 3rd quarter of this year was just 2.6%, whereas the annual rate of growth in the US in the 3rd quarter was nearly double that, namely 5%.   He claimed he would rebalance the economy in favour of manufacturing and set in place ‘the march of the makers’; the opposite has happened, with the latest export figures registering the worst in Britain’s history.   He promised that private investment would rapidly recover; it has recovered a bit from a deep fall in 2008, but is still below pre-crash levels and far short of what is needed to bolster sustainable growth.   It is one long dreary story of blown promises.
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New Labour turns to dross

When Blair had been prime minister for about 3 months in 1997, the Daily Telegraph carried a huge picture of Thatcher with Blair standing in front of it.   The caption underneath says it all: ‘to Thatcher, a son’.   It was the start of the Labour pseudo-Tory interregnum which has allowed Right-wing rule to prevail continuously in this country for the last 35 years    That Blairite brand is now utterly toxic, made worse by his own insatiable lust for money and publicity.   If Labour is still too craven to make a clean break with prolonged Tory austerity – though that is far and away the party’s best chance of opening up a big lead over the Tories and also stopping the haemorrhaging to UKIP and the Greens in England and to the SNP in Scotland – surely Labour has the guts to slough off its biggest mistake and regain a new identity, as Ed Miliband  has repeatedly indicated he wanted to do, which portrays Labour as genuinely concerned with voters’ needs rather than with the inward-looking selfies of the Westminster bubble.
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Osborne overplays his hand

The two most recent polls, one showing Labour with a 5-point lead and then a second two days later indicating a 7 -point lead for Labour, may just possibly suggest that the electorate is finally getting its mind around what the Tories plan to do over the next 5 years if they win, and they don’t like what they see.   They keep on being told by the Tories that the cuts are more than half over, which they plainly are not, and they had previously put up with austerity on the grounds that  by 2015 nothing much more would need to be done, and anyway cuts were for shirkers and scroungers, not hard-working people like themselves.   It is now beginning to dawn on them that all these sweet billets-doux cooed at them by Cameron and Osborne are just so much moonshine.   The £30bn further cuts (at least) in the next Parliament are going to hit them hard – tax credits cutbacks, huge benefit cuts focused 80% on women, further large squeezes on local authority budgets leading to big job cuts, etc. – and understandably they don’t think that’s fair.   In fact they’re seething.
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Deficit nonsense

It is extraordinary that both the main parties have now put forward their plans for meeting the deficit, which is going to prove the centrepiece of the election, yet neither plan carries credibility.   Osborne has once again committed the Tories to £30bn of further spending cuts on a rolling 3-year programme, i.e. currently targeted at 2017-8.   Even if that were politically practicable, which is far from certain,  the idea that this will eliminate the structural deficit within that timescale is laughable.   The deficit this year is likely to end up at around £100bn, and because of the fall in the government’s tax take (caused by the continuing squeeze on incomes, very low wages and zero hours contracts), the deficit is already growing, not falling, and for the reasons just given will continue to rise further in future.   Osborne grandiosely claimed yesterday that “it commits us to finishing the job – and getting our national debt falling……….Once we have got rid of the deficit and have debt falling, we should be running an overall budget surplus”.   This is total arrant nonsense.
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Labour’s missing link

It’s good news that at last Labour is launching a 10-point list of policy commitments which should silence those who continue to say on the doorstep that they don’t know what the party really stands for.   These are all powerful points, and if repeated enough by party spokespersons and party activists on the ground, they should succeed in making the Labour case a strong, positive and evocative one.   But there is one key element which is missing, and the omission of this could seriously harm Labour’s prospects in pulling back absconders to UKIP in England and the SNP in Scotland where the 2015 election looks likely to be settled.   That key missing element is the commitment, if Labour wins, to shift away from the failed policy of endless spending cuts which have lost all sense of purpose to the already proven policies of economic expansion, growth, jobs, and higher incomes.
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