The Tories say the economy is recovering, and they point to GDP growth statistics of 1.7% last year and a forecast of 2.7% for 2014. Labour, however, say that this doesn't matter, because the cost of living is still high and on the up. At first glance, this might seem absurd - how can a growing economy not lead to increased living standards? The reason is actually quite simple.
By making significant real-terms public spending cuts, Osborne has stifled inflow of money from the Treasury into the wider economy. Keynesian economic theory holds that governments should use public spending to stimulate demand in times of recession, but Thatcher threw Keynes out of the window back in 1979 and Osborne has ramped up the neoliberal experimentation to the point where even Maggie would be disgusted.
Lack of economic stimulus. has contributed heavily to wage repression - as this graph shows, wages have increased at below the rate of inflation in every quarter since the coalition came to power bar one. It is interesting to note that the brief pre-election recovery in real wages came only after two years of fiscal stimulus packages by the Brown ministry. His chosen method of stimulus, relying heavily on quantitative easing and the bank bailouts, was far from optimal - it injected money into the finance industry but neglected other sectors - but it did actually start to show some results by early 2010. Naturally, the Tories took swift steps to shut that nonsense down immediately upon assuming power.
With average wages so far below inflation, it is easy to see why most people just aren't feeling the so-called 'recovery'. Abstract GDP growth figures, however promising on paper, just don't mean anything to ordinary people if the money in their pocket isn't there. But if the economy is growing, and yet it isn't making its way down to us, then where the hell is it?!
That's an easy one too. It's in the pockets of CEOs and bankers, of company shareholders and major landowners. The combined wealth of the richest 1,000 UK households jumped 15% in 2013 and now stands at almost £520 billion, with the result that the UK now has more billionaires per head than any other country. The baseline for entry into this super-elite group is now £85 million - £5 million more than before the recession. So, while the UK as a whole has only just surpassed 2008 levels and the average person is still some considerable distance from that, the richest members of our society are actually much better off than they were six years ago.
Some people, then, have done very well out of the global economic crash and the suffering of millions. The rest of us, meanwhile, are a little more strapped for cash - and it doesn't look like it's getting any better anytime soon. With the Tories plotting a law which will make eliminating the budget deficit by 2018 a legal requirement, more cuts are on their way, which will lead to further wage depression and thus falling demand in the economy. The current trend towards underemployment, with more and more people disappearing from unemployment stats into false self-employment or abusive zero-hours contracts, will continue and the queues outside food banks and job centres will only grow.
Of course, that will push up the welfare bill, sending Daily Mail readers frothing at the mouth and baying for blood. Then the government will be 'forced' to slash social security further, driving more and more people - particularly young people - onto the scrapheap. Welcome to the age of austerity politics. It hasn't worked so far, but the elitist, neoliberal mainstream parties aren't about to let a silly little thing like that stop them! They have the lower orders to crush.
When Margaret Thatcher uttered those now-infamous words in an interview with Woman's Own journalist Douglas Keay, she did not mean quite what many assumed she did. The gist of the wider context of that statement was that society was not some giant, conglomerate entity in and of itself - rather, it was made up of individuals and families living together and that the actions of individuals dictated how 'society' functioned.
But unfortunately the late Mrs. Thatcher seems to have been blessed, if not with the gifts of diplomacy, tact or indeed economic understanding, then with a supernatural prescience. Society at the time of the statement - 1987 - was still relatively intact, though hard-pressed by the introduction of neoliberal economic doctrine. Today, however, this is no longer the case.
The post-Thatcherite consensus - in place in the UK arguably since 1983, and certainly since 1995 - is the general acceptance between the major political parties that a free market economic model - with private control of industry, low taxation, limited state spending, reduced welfare provision and deregulation of the economy - is fundamentally a good thing.
The four largest political parties in terms both of membership and votes at the last general election (Conservative, Labour, Lib Dem and UKIP) all basically follow the same economic policy. There are small differences, placing the parties on a continuum - UKIP are the most neoliberal, Labour the least - but all four are basically in agreement on the core tenets of economic policy.
The consensus among the main parties means - short of a seismic shift in UK politics - neoliberalism is set to remain the guiding economic ideology in the UK for some time to come, but the social impact of this model is extreme and highly damaging. The idea of neoliberalism is that a deregulated economy with minimal state interference will allow competition to flourish, driving the market forces to create masses of wealth. This wealth will be concentrated at first in the hands of large corporations and the individuals who run them but, over time, expenditure by these big beasts will cause that money to 'trickle down' into the rest of the economy and everyone else benefits too.
All sounds very reasonable, doesn't it? The problem is, it doesn't work.
Or rather, stage one works sublimely well. A deregulated economy does indeed allow large corporations to generate huge amounts of wealth, and the CEOs and major shareholders of these companies do very well as a result. But the 'trickle-down' effect simply does not happen. Last year, the top 1% of earners in the UK took in 10% of total income, whilst the bottom 50% received only 18%. A recent report by Oxfam revealed that the five richest families in the UK own more wealth than the poorest 20% of the population. Clearly, the money is being generated at the top and staying there.
And this causes a polarised society. Politicians on the economic right often accuse those on the left of promoting class warfare when they talk of the redistribution of wealth and the equalisation of society. But it is the neoliberal economic system imposed by the right, and accepted by the traitorous so-called Labour Party, which creates the classes in the first place. Inequality in the UK today is higher than it was before the First World War. In light of that, of course those at the bottom of the economic hierarchy are angry with those at the top. Why shouldn't they be?
Not only does neoliberalism affirm and enhance class distinctions, it also splits society along racial lines. It is the failure of the neoliberal economic system which caused the financial crash of 2008. In the aftermath of that crash, right-wing parties with strong anti-immigration and openly racist rhetoric have been going from strength to strength all over Europe. Why? Because, when money is scarce, people want to ensure that the pool of people competing for resources does not grow any larger. It is difficult to blame the average UKIP voter for being concerned, even scared, of immigration when money is so tight and immigrants represent more competition. Thus, the right creates social problems with its economics and then exacerbates them by offering false solutions.
Then there's the obvious - poorer people means more crime. By increasing inequality, neoliberalism creates an underclass - a group characterised by chronic unemployment, low standards of living and high crime rates. When you have nothing, or next to nothing, you will be more inclined to steal in order to get more - or alternatively, to blow what you do have on drink and drugs to escape the ordeal of life. Neoliberal economics are largely responsible for much of today's crime and increased drug and alcohol dependency. They also must bear some of the blame for rising suicide rates, particularly among the high-risk category of middle-aged men who find themselves unable to support their families due to inability to find decent work.
In short, neoliberalism promotes greed, disincentivises altruism and co-operation, polarises society along class and ethnic lines and contributes to the creation of an underclass which is then demonised by the press and systematically purged by government policies. Margaret Thatcher was not passing judgement when she made her famous statement, she was making a prediction. A prediction her government, and every government since, has helped to fulfill.
About time we did something about it.
Well, THAT was anticlimactic, wasn't it?
For those who pay no attention to politics whatsoever - other than reading this masterpiece of a blog of course - yesterday the Right Honourable Mr. George Gideon Osborne announced the government's Budget for the financial year ahead. This document contains many things, ladies and gents, but by far the most important is that word which strikes fear into the hearts of princes and paupers alike - taxes.
Now, the Budget is usually one of, if not the most important pieces of legislation of the year. It allows an ambitious chancellor to restructure the UK economy at a stroke, changing the very way in which that shiny stuff we call cash in transferred to and from the vaults of Her Majesty's Treasury. Judicious use of the Budget can make the reputation of a Chancellor, and of a party too.
But it can also break it. And perhaps that is the reason why this particular Budget has contained virtually nothing of any importance. There is an increase in the Personal Allowance (untaxed income) to £10,500. That is welcome, but is a limited change, considering that such an Allowance still falls more than £5,000 short of covering the minimum wage. The threshold for the top 40% rate of income tax has also been raised slightly, effectively extending the tax break given to low earners to those earning more money. For those lucky enough to fall into the reprieved bracket, such a change will also be more than welcome - for the rest, this is actually a bad thing, as it means less tax revenue for government and therefore more spending cuts to follow. But hey, we're used to that, right?
Other than this, not a lot has changed. Pensioners can now withdraw their savings as a lump sum rather than an annuity - this makes sense, as it allows people to organise their own spending, but has little actual effect, provided the pensioner in question is able to resist the temptation to spend it all on sweets. Savers have had a break - after long years of irritation over the low 0.5% interest rate, the removal of the 10% starting tax rate on income from savings will surely be welcome. Alcohol duty is down 1%; tobacco duty up 2%. But these are small changes - tinkering at the edges. There is no meat on the rather bleached and sandblasted skeleton of this Budget.
Why is this? Most likely, Osborne is saving himself for next year. For that will truly be a momentous occasion - the last Budget of this Parliament, just a couple of months before the general election in which the record of the first Coalition in Westminster since the Second World War will be tested. Osborne will be desperate to make sure that that budget goes down very well with the public indeed. It could have a huge effect on the outcome of the election, one way or the other, and the government needs as much money in the bank as possible to create a plan which will inspire the public to cast their vote in a favourable manner. The best way to achieve that, at least in the traditional Conservative mindset which dominates the Coalition, is to keep the economy steady and scrimp on spending now so more money will be available in the future. Hence the tinkering.
Oh, and give us a lovely new pound coin to keep everyone occupied. Look! Isn't it shiny?!
Ahem. In any case, Osborne and co. must have access to data I don't if they think that their current approach is going to get the economy to a position in just one year that they can provide an attractive Budget in time for the election. Much has been made of the drop in UK unemployment in the last quarter, but it must be emphasised that this is merely a numerical drop. Percentage-wise, it hasn't budged one iota - it remains 7.2%, currently 2.33 million people. And that figure doesn't include other dependents, such as pensioners and children. There's still a long way to go before Britain is working again.
Meanwhile, the government - for all its talk of austerity - borrows more every year, with the result that the UK structural deficit is now 5% of GDP. To put it another way, fully one twentieth of everything this country produces is rerouted to pay off the interest on our national debt. The interest Not the debt itself - not by a long way. Despite this rising borrowing, however, public sector cuts continue. All this begs the question - where the Hell is all our money going?! It would be incredibly cynical even for me to suggest it might be to line the pockets of wealthy elites and Tory business partners, but there it is.
All in all, not very impressed, Mr. Osborne. For your sake, and your Party's, next year's Budget had better be a vast improvement.
Now, if you'll excuse me, I'm off to play with my shiny new twelve-sided pound coin like an obedient corporate puppet.
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