Wednesday, 2 October 2013

The great austerity con - how austerity was sold as the answer to Britain's woes, when it has just made matters worse

The present government has carefully used what has become known as the austerity agenda to dump on working people. So a crisis that began five years ago with the reckless behaviour of the banks has effectively been used to cut and privatise public services, reduce wages and slash benefits. Worker’s rights have been reduced in the common media parlance “to enable British business to be more competitive in world markets.” Put another way, these moves have benefited only bad employers by making it that much easier to exploit workers. Among the consequences of the austerity approach has been the sight of over 300,000 people going to foodbanks over the past year, the disabled being denied benefits and more than one million unemployed young people between the ages of 16 and 24. The whole process was nicely summarised by the late author Iain Banks who said: "Your society's broken, so who should we blame? Should we blame the rich, powerful people who caused it? No, let's blame the people with no power and no money and these immigrants who don't even have the vote – yeah, it must be their fucking fault." The crisis has effectively been used to once again reconfigure capitalism, so that workers have to work harder for less whilst those who own capital take ever greater profits. Data from the Office for National Statistics confirms the trend, showing that between 1977 and 2008 the wage share fell from 59 per cent of national income to 53 per cent, while the share of profits rose from 25 per cent to 29 per cent. The way in which the crisis has been handled, targeting the public sector and welfare for the poor, confirms the intent to restructure capitalism once again in favour of the rich. The PCS union have questioned: how £30bn of welfare and tax credit cuts can be necessary when there is £30bn to give back to businesses in tax breaks? “If university fees have to be trebled, then why is Trident replacement essential? Why does the government spend huge resources on £1.2bn of benefit fraud, while £120bn of tax is avoided, evaded or uncollected?” said Mark Serwotka, general secretary of PCS. This is not to mention the £37 billion already expended on the war in Afghanistan or the “legitimate” welfare subsidies to low paying corporations in the form of benefits to make up employees wages. The deficit could be reduced in a whole number of different ways, including higher taxes on high earning individuals and companies. So the austerity agenda has a direct political intent, which is to make working people pay for the behaviour of the banks. What makes the trick of selling this con all the more impressive is that in economic terms the austerity approach has failed. Economist and academic David Blanchflower points out that GDP per capita is now around 7% below where it was five years ago. “66 months in, the UK economy is still approximately 3% below its 2007 peak. This compares with the recessions of the 1920s and 1930s when at a similar point GDP was just under 7% higher. GDP after the shallow recession of the 1990s was 10% higher,” said Blanchflower. “The UK has grown 1.8% since 2010 but this is markedly slower than the United States, Canada, Australia and Germany.” Jonathan Portes, the director of the National Institute of Economic and Social Research and former chief economist at the Cabinet Office points out that in June 2010, the Office of Budget Responsibility predicted that by now the economy would be about 7% larger, driven by a sharp rise in business investment and exports, while the deficit would have fallen by two-thirds. “What has actually happened? In fact, GDP has grown at less than a third of that rate, business investment has fallen, and the path of deficit reduction bears no resemblance at all to the original projections,” said Portes, who claims that “without austerity, UK real output would now be steadily climbing above its 2007 peak, rather than being stuck 2% below.” Yet despite the clear failure of austerity as an economic as opposed to a neo-liberal idealogical strategy the narrative still holds good with the public. This no doubt has much to do with the selling of the narrative in the media. This meant in the early stages, first likening the crisis to the inter-war crash and then blaming it all on the last Labour Government. Carys Afoko, head of communications at the New Economics Foundation, tells how “well-framed, well-crafted and often repeated, the austerity story is the dominant political narrative in Britain today.” “It shapes how most of us think and talk about the economy. It has convinced most of the country of the need for huge public spending cuts and presents a coherent vision for the kind of society we should live in,” said Afoko, who tells how “vivid images” and “emotional metaphors” have been used to sell the austerity story. The central themes are dangerous public debt caused by excessive public spending; Britain is broke; austerity is a necessary evil: welfare is a drug with benefit claimants weak, reckless, undeserving and addicted to hand-outs. There is also the strivers and skivers element. The story clearly sticks with people. “Polling data shows that month on month, no matter what people think about the Coalition, they continue to believe their spending cuts are necessary for the economy. Attitudes to welfare have hardened over time so that half the country believe the unemployed choose to stay out of work. Evidence indicates that more people may blame Labour for the economic situation we are in now than did three years ago,” said Afoko. The effectiveness of selling the austerity story through the media has now set the scene for the final act, which is that the medicine worked and those promoting austerity were right all along. The Chancellor has begun this process with the news that the economy grew 0.6% in the last quarter. This has been heralded as a great success, “turning the corner” and vindicating his policies. This view is also resonating with the parts of the public because the austerity story has been so well received earlier. The lowering of expectations when mixed with a helping of historical amnesia mean that this tiny upward turn in growth can be trumpeted as a success, when as Blanchflower and Portas have pointed out nothing could be further from the truth. Britain is way behind the recovery in other countries that took a different approach to the economic crash. What is needed is a new alternative vision that can be communicated effectively to counter the austerity narrative. The NEF suggest creating a counter version with powerful frames. This could centre on the casino economy and big bad banks. The theme of treading water, stagnation and not moving on as a nation. Some of these themes were picked up by the Labour Party at its recent conference. TUC general secretary Frances O’Grady set out five simple aims that resonate with Labour’s programme and could form the basis of an alternative. The first was a return to full employment with decent jobs. These would be paid for by fairer taxes. Second, the building of one million new council and affordable homes.Third, fair pay. This would mean a living wage and new wages councils to back it up. Fourth, that the NHS will once again be a public service run for people and not for profit. Fifth, fair rights at work. There is much to be done if the austerity story is to be truly exposed and replaced by another approach that seeks to make those who created the crisis in the first place pay the price of recovery.

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