Tuesday, 20 November 2012

David Cameron's "economic war"

On 19th November 2012 the Prime Minister David Cameron gave a nauseating speech at the CBI annual conference.

For those that don't know, the CBI are a powerful right-wing business lobby group that claim to represent "British business" and boast about having 240,000 members. In essence they are a kind of trade union for business owners, corporate executives and the like.


Cameron started off his speech to the CBI with some ingratiating audience acknowledgements, singling out particular business folk in the crowd for attention and adding some tripe about what a great job he has been doing hawking military hardware to despotic regimes in the middle-east during Remembrance week.

Cameron began by talking up his business credentials and connections as if he were a cross between the compare at Live at the Apollo and a talentless graduate at a job interview shamelessly name-dropping people he's met because he's got nothing by the way of skills or experience to offer. After this he moved smoothy into inaccurate Tory bragging mode.

He claimed the the government have been "Reforming welfare so that it pays to work", which is a brazenly absurd claim, given that one of the Tory flagship policies is the Workfare mandatory unpaid labour scheme that ensures that it actually doesn't pay to work.

Even if the Tories hadn't pushed 100,000s of people into economically illiterate mandatory unpaid labour schemes, the idea that work can be made to pay through attacks on welfare entitlements alone is still transparently wrong. Surely the best way to ensure that it pays to work is to make sure that companies pay their staff a living wage, which would have the double benefit of increasing consumer demand and reducing the amount of tax that needs to be redistributed (via schemes like housing benefit and tax credits) to employees as a kind of taxpayer funded state subsidy to companies that refuse to pay reasonable wages to their employees. Cameron is hardly likely to tell assorted business people that they need to pull their weight and remove the burden on the taxpayer they are inflicting by paying poverty wages though is he?

The next claim that I've singled out for attention is nothing short of an egregious lie. Cameron claimed that the government have "protected the science budget". It doesn't matter how much Cameron lies about this one, the evidence is there that the Tory led government have been ruthlessly slashing investment in science. Even the extremely right-wing Daily Telegraph have noted that cuts to the science budget will have disastrous effects on the economy. Not only have the government overseen a huge cut to the science budget resulting in the abandonment of numerous cutting edge science programmes and provoking strong criticism from high profile science commentators such as Brian Cox (who said that the bankers' bailout was worth more money than the UK had spent on Science since Jesus), they have also been slashing funding to science charities and to university science departments across the country. That the Prime Minister is able to lie like this is a shocking indictement of accountability in British politics.

Next he wheeled out the timeworn "our fiscal polices are working because interest rates are at record lows" fallacy, which is an obvious conflation of fiscal policy with monetary outcomes. By which I mean, he is trying to claim that low interest rates and low bond yields have nothing to do with the Bank of England holding the base rate at an all time historic low since 2009 and "magicking up" £375 billion to manipulate the government bond market and everything to do with George Osborne's ideologically driven fiscal austerity agenda.

I've already torpedoed this lame fallacy in this article about Tory economic illiteracy. If this fallacy isn't considered a full on lie, it must at least be considered as either a demonstration of Cameron's economic illiteracy, or a demonstration of his assumption that everyone else, including his audience of successful business people, are so economically illiterate they wont even notice this conflation of fiscal policy and monetary outcomes.

Cameron's next boast was about exports being "up dramatically". Again, this is a stunning bit of revisionism that people at the CBI really should be capable of spotting. The trade deficit reached an all time record high in June 2012 of £4.4 billion and peaked again in August 2012 at £4.2 billion. Perhaps exports may have risen slightly, but they are still being monstrously dwarfed by imports. Even if the claim that exports are up were true, it would be yet another example of a Tory politician brazenly cherry-picking data, however the actual evidence is that exports are down. Here's a report (again from the right-wing Daily Telegraph) detailing "a worrying drop in export demand from Asia and the Eurozone" and providing evidence that manufacturing output fell for the sixth consecutive month in October 2012. Again Cameron is either outright lying about this rise in exports, or he's found some speck of data that he can cherry-pick and present in isolation to create the misleading narrative that British industry is thriving. The business leaders who have actually experienced these worrying declines in productivity should surely have reacted angrily to this attempt to mislead.

His next step was to begin bragging about Michael Gove's great school give-away, where taxpayer built and maintained schools are handed over for free to be run by private interests at the taxpayers' expense. The give-away of so many £billions worth of taxpayer funded property is concerning enough, but the abject lack of oversight and accountability is even worse. Cameron bragged that his party have forced 200 primary schools to privatise themselves this year and intends to force the same process upon 400 more next year. One could see how the privatisation of the education system might appeal to some business leaders, perhaps hopeful of getting in on the taxpayer funded schools free-for-all themselves, however one lesson that they must overlook entirely to approve of the education privatisation agenda is another Tory mandated school privatisation catastrophe. Cameron actually indirectly referred to this privatisation disaster in his speech by making reference to the oft heard business claim that school leavers are just not up to scratch.

This catastrophic privatisation can be traced back to the introduction of the national curriculum by the Tory education minister Norman Baker in 1988 which saw private companies "compete" to provide curricula and exam packages to schools. Obviously the only real element of competition was in which exam boards provided the easiest curricula. Schools have an obvious incentive to pick the curricula that give their kids the best chance of passing, thus the exam boards have an incentive to produce simpler curricula and easier exams, causing a race-to-the-bottom which resulted in 29 consecutive years of improved exam results at the national level. Yet each year's improved exam results met with a chorus of business leader complaining that school leavers are severely lacking in basic numeracy and literacy, devoid of critical thinking skills and unable to think for themselves. The Tories hasty efforts to further privatise the education system will certainly create yet more disastrous consequences, especially if they allow lunatic creationist groups to teach their anti-scientific mumbo-jumbo to generations of British school kids.

Next Cameron began to present his policy of "cutting red tape" to "speed up" the processes of implementing reforms and building infrastructure. In this section he made an absolutely shameless claim that it should be left to "smart people in Whitehall" to consider "equalities issues" and economic consequences whilst making policy. This is frankly absurd from a government of over-promoted millionaires that have shown absolute disregard for the adverse impact of their economic polices on the poorest and most vulnerable in society. It is also a ridiculous claim because of the catastrophic failure of their ideological austerity agenda.

Remember that George Osborne and his pet project at the OBR predicted 2.5% growth for 2012, well the actual rate of growth has been minus 0.117% over the course of the last year. The "smart people" in Whitehall have overseen a vast transference of wealth from poor and ordinary people to the super rich elite and tanked the UK economy in the process. What is needed is not less regulation and oversight to "hinder them" but more regulation and oversight to prevent them from implementing catastrophic ideologically driven nonsense. What British politics needs is more evidence based analysis, not less.

As supporting "evidence" for this agenda Cameron cited a pathetic anecdote and a rubbish analogy. The first being the facile claim that "if Cristopher Columbus had an advisory committee, he would probably still be in the dock" and then the even more feeble-minded analogy about roadbuilding. He said:
"In the 1950s it took 8 years to design and build the first 50 miles of the M1. Today it can take that long just to widen a stretch of motorway"
This statement tells us absolutely nothing about the burden of "red tape" and everything about Cameron's breathtaking ignorance of road engineering. It is obviously much easier to build a stretch of brand new motorway through the countryside than it is to upgrade a stretch of motorway that is in constant use by 100,000s of vehicles every day. The constant traffic flow presents a massive problem to engineers and construction workers, but so too does the pre-existing infrastructure. Anyone that travelled on the A1 during the lengthy upgrade process would have noticed the sheer number of bridges that needed to be widened, service stations that needed to be demolished and relocated, slip roads than needed to be completely redesigned, all without breaking the (economically vital) flow of 100,000s of vehicles a day. That the Prime Minister is prepared to make such an ignorat comparison is truly breathtaking demonstration that the man really doesn't have a clue about infrastructure development.

Cameron then invoked the "war spirit" by stating that:
"When Britain was at war in the 1940s Whitehall underwent a revolution, Normal rules were circumvented and convention was thrown out. Well this country is in the economic equivalent of war today - and we need the same spirit"
It is noticeable that Cameron didn't even bother to explain who the UK is supposed to be at "economic war" with. I'd like to make a suggestion that the UK economy is currently under economic attack from tax-dodging multinational corporations, that siphon £billions out of the UK economy without paying their fair share of tax, leaving ordinary people and small and medium sized British businesses (SMEs) to carry some of the extra burden whilst the government brutally slashes investment and services and engages in deficit spending to make up the rest of the shortfall.

The problem is of course, that Cameron and Osborne are blatantly serving the interests of these tax-dodging corporate parasites, have nothing but empty rhetoric about tax-dodging and hypocritical statements to offer and have even deliberately opened up more tax-loopholes to help multinational corporations avoid even more tax.

If Britain is at "economic war", Cameron and Osborne are traitors working for the other side.

In order to counter these economic attacks, Cameron proposes slashing consultations, rights to appeal and judicial reviews, while the real "red tape" that is actually inflicting severe damage on the UK economy is the convoluted 12,000 page UK tax code that allows large companies and rich individuals to dodge paying their fair share of tax. A simplification of the tax code to explicitly prevent tax avoidance schemes and a change of Whitehall policy to only allow companies that pay their fair share of tax to obtain government funds (subsidies, grants, loans, PFI deals, outsourcing contracts, supply contracts...) would be a great place to start on cutting harmful "red tape". However Cameron and the Tories have absolutely no intention of removing the kind of "red tape" that directly benefits giant multinational corporations at the expense of the wider UK economy. He is only interested in removing the kind of "red tape" that protects the wider UK economy from the interests of the multinationals.

Cameron's proposals are not a war on "red tape", they are a war on accountability. What he is actually proposing is that stakeholders in the UK economy (including small and medium enterprises) should be shut out from policy making by cutting back on consultations; that processes should be sped up by cutting impact assessments and evidence based analysis, which obviously increases the probability of making disastrous mistakes; and that accountability should be eliminated by stamping out appeals and stymieing judicial reviews.

Cameron's agenda is to increase the ability for the government to implement ideological policy, kneejerk reforms and to steamroller through developments that benefit multinational corporations at the expense of the local economy.

What is most astonishing about Cameron's agenda is that it runs counter to the principle of small-government the Tories claim they stand for. In essence Cameron is saying that government knows best, and that he plans to make it much easier for them to hammer through their favoured ideological policies regardless of the actual socio-economic impact and to reduce the ability for local people to appeal against barmy decisions or to seek redress when the whole thing turns out to be a poorly conceived catastrophic mistake.

This breakdown of Cameron's speech demonstrates that he is prepared to lie and mislead in order to make his case; he is all pally with the business leaders he addresses, but he assumes that they are idiots that can be taken in by his lies and misrepresentations; he relies on anecdotes and absurdly ill informed comparisons to build his case; he knows nothing about the practicalities of infrastructure development; he has absolute contempt for the concepts of evidence based policy and accountability; and that he is only interested in furthering the government's ability to inflict poorly devised ideologically driven policy on the UK economy.

The CBI represent thousands of small and medium businesses across the nation and they should have at least questioned Cameron's bizarrely misleading claims about the health of the economy and his brazen lie about protecting the science budget. After two and a half years of Tory ideologically driven policy driving the UK economy into recession and crushing the manufacturing and construction sectors, they should also have raised the question of why on earth would anyone want to see the Tories award themselves the ability to inflict even more poorly conceived, ideologically driven, top-down nonsense and to remove any vestiges of accountability? Another key question they failed to ask is what Cameron intends to do about the sheer scale of tax-dodging, that is leading to terrible tax asymmetry between Small and Medium enterprises and the global tax-dodging corporate kleptocracy.

The response of the CBI obviously contained no critical analysis at all. The Director General of the CBI, John Cridland stated that "Difficult times demand difficult approaches - we welcome government’s renewed push to get things done" as part of his glowing review of the speech. Given that the CBI boasts that it represents the interests of many of the FTSE100 companies (98% of which are tax dodgers) it is hardly surprising that the CBI didn't mention tax asymmetry between SMEs and the corporate tax-dodging giants. In fact, given Cridland's glowing review of the speech, you could say that, just like Cameron and Osborne, he too is playing the role of traitor in the economic war being fought between the multi-national tax-dodging corporate brigade and the real economy of the UK that are left carrying the burden of increased taxation, slashed services and investment, counter-productive attacks on the education system and a soaring national debt.

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