Setting the record straight

The coalition talks a lot about fairness, the deficit they inherited and the necessity for sharp cuts now- reduce the government and create big society. Ministers and MPs use emotive language and simple arguments, the media and the people have responded well to this. We know the cuts and where they’ll hit  but what is the ideology behind the cuts? I’d like to take a closer look at some of the fables ConDem and their spin doctors have created.

  • Britain’s debt can be compared to personal debt– this is simply not true as anyone who knows anything about economics will tell you. Britain does not have credit cards, a mortgage or an overdraft. The deficit cannot be solved solely through cutting spending- personal debt can be repaid by cutting outgoings but a country’s economy is far more complex. It is quite concerning that the Chancellor is arguing differently when every economist would laugh at the idea of this comparison. The draconian  cuts cause unemployment and unless the economy begins to expand much, much faster then there will be less people paying taxes and more dependent on the state, therefore greatly reducing the government’s income. If the markets think there will be high unemployment or people will be spending less then they will fail to expand and Britain will go into a double dip recession. My personal accounts cannot cause a recession.
  • Britain’s structural deficit was out of control. Before the recession, the country’s deficit was about 2.5%- one of the lowest in the world and far lower than the previous Conservative government. Until the election was called both the Conservatives and the Liberal Democrats agreed with all of Labour’s budgets- the Liberal Democrats actually called for higher spending. During their time in office Labour narrowed the gap between government income and spending in real terms.
  • The Coalition was unaware of the size of the deficit until they came in to government. This is perhaps their best trick. Both parties saw the budget set in March and the projections. After the election, the country was £10billion better off than had been predicted. The facts speak for themselves, it is simply a myth ConDem are using to justify breaking their electoral promises. In the lead up to the election, particularly the Liberal Democrats, made several promises than they would have never have been able to keep, that much was glaringly obvious to anyone who did the sums.
  • The recession was caused by the Labour government’s reckless spending and now they deny the deficit exists. The recession was worldwide and began in America. The government could have stemmed the damage by regulating the banks more. Had they listened to the opposition, the situation could have been much worse. The Conservatives called for de-regulation and criticised the government for holding the City back. Labour have admitted their mistakes but ConDem have just rewritten history and deny these things were ever said. ConDem have, rightly, introduced a bank levy but they are taking a serious gamble by making such deep cuts immediately. As for the argument that Labour have not produced an alternative- they did set out a four year plan to get rid of the deficit while protecting the economy and British people. Now in opposition and with a new leader, Labour doesn’t have the resources to compile a detailed plan and haven’t yet had the time but they will be releasing policies in due course. Both parties when in opposition said the same thing but now government demand that this is not good enough. Going back to the Labour government though, by the time they left office the market had grown by 2% (very good) and Brown’s model has been successfully used across Europe. It is a total lie for Osbourne to say Britain was close to bankruptcy, or that the country was close to a Greece-like crisis. These statements are completely unfounded by any stretch of the imagination and are nothing but scare-mongering. The Keynesian model (which Labour prefer) is widely respected by economists, the Neo-classical model (which ConDem are using) is incredibly dangerous. The government is relying massively on a major expansion of the market of which there is no sign currently, it is not looking likely the markets will even maintain the 2% growth. The Coalition enjoy reeling off reports which support their budget but fail to recognise how often these bodies are wrong, such as in the case of Ireland. The government is making cuts bigger and deeper than any government since the 1920s and are “saving” more captial  by cutting benefits for the disabled than they are from the bank levy- surely fairness (even by their definition) would increase the levy in order to protect the most vulnerable in society. The Chancellor will need to have a plan B as there is a very real danger of Britain going in to double dip recession. A government cannot pull so much money and jobs out of the market without dire consequences- the Coalition has a lot of work to do if it is going to encourage industry and persuade the markets to continue to expand. Comments such as “jump on the bus to Cardiff” (Ian Duncan Smith) will not stop the unemployment void created, firstly, by the recession, and now, by the government.

And lastly, I’d like to finish on the Coalition’s favourite, although very elusive, word- fairness. Is it fair that the tax payer paid for Cameron’d re-decoration of No.10 although he could obviously afford to pay for it himself? Is it fair that the taxpayer paid millions (possibly billions) for security in because Cameron and Osbourne stayed in their homes for over a week after the election? Is it fair that Osbourne spent horrifying amounts on champagne for his party when he became Chancellor but is cutting benefits for the disabled? But most importantly, is it fair that the Coalition keep telling the electorate all the lies I’ve listed above? If the Coalition is to continue its popularity, it must be truthful with the electorate and provide the real reason behind their choices. Reducing the deficit is not an ideology, it is a consequence of an underlying ideology, there is a belief the Coalition hold that informs their choices but who knows what it is? Just citing ‘fairness’ is not enough- what is the Coalition’s definition of fairness?

3 thoughts on “Setting the record straight

  1. How do you explain

    1) The CBI and the markets gave their backing to the spending review?

    2) The economy grew in the last quarter twice as fast as expected?

    3) A quote from a leading economist (can’t quite find the name) “Labour Party thinks that over-taxing businesses and wealth creators helps the poor. In fact, it does the reverse. It destroys British jobs and makes more people poor. “

  2. I already explained that there are people who back their plans but they fail to recognise how many countries and have not and are successful. For every person who is backing their plans, there is another who recognise how dangerous and un-necessarily deep the cuts are. Such as the long line of Nobel Prize winning economists who have criticized the government for taking un-necessary risks. I am doubting there are economists who back their plans and dislike Labour’s but the point is the model they are using is dangerous and caused the depression in the ’30s. After WW2 nearly (if not all) economically advanced countries used Keynes’ model because the neo-classical model is so dangerous and harmful to society. By definition they have to create unemployment in order for markets to expand because they can have cheaper labour but since its massive failures economists have recognised that it is just as likely that the markets will shrink because there is not as much money flowing through the system.

    I disagree with you on growth but if there has been even more growth than expected why is the government claiming that they cannot keep to their election promises because the country is an even bigger mess than they realized?

    And I stick to my other points that you haven’t queried. The government is lying to people and, like I say, if they want to remain popular they’ll have to change tack quickly. Cameron and Clegg promised a new politics, we can’t go on like this they said. Where is this new politics? And more importantly, what is fairness to them? It’s a very vague concept; but I do sincerely applaud their PR and spin doctors- C’s years in PR and a former ‘News of World’ employee have really paid off for them.

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