George Osborne has warned that quitting the European Union would be far worse for people on lower incomes and with less job security than it would be for those with the wealth to avoid suffering during a recession.
In this article I'm going to explain how he isn't actually wrong to point out that the poor would suffer more during a post-Brexit recession, but that he is staggeringly hypocritical to suddenly begin feigning interest in the poor after six long years of making them carry the burden of ideological austerity whilst handing out huge tax cuts and vast slices of public infrastructure to his super-rich mates.
A post-Brexit recession is likely
You only need to look at the stock market falls and collapsing value of the pound to see that the financial markets are afraid of the UK engaging in a rapid bailout of the EU without anything even remotely resembling a coherent and costed economic restructuring plan from the OFFICIAL Brexit camp.
A lot of people seem content to wait and see what appalling surprises could be hidden in the Brexit mystery box, but a lot of businesses and economics experts are deeply concerned about such uncertainty, because they understand that uncertainty is one of the main triggers of economic crises.
Even leading Brexiters like Iain Duncan Smith openly admit that Brexit is likely to cause a recession and give the Tories an excuse to push even more of their toxic ideological austerity. However his claim that these cost would be "a price worth paying" is very easy for a millionaire who was given his plush country estate by his in-laws to say, but much less easy for someone who could lose their livelihood, their home or their family life as a consequence.
The poor do suffer more during recessions
George Osborne is absolutely right that the poor generally do suffer the most during recessions. People who earn so little that they scrape by from one pay packet to the next are usually the ones who end up destitute when their wages and in-work benefits are slashed, or they are made redundant.
Better off people, who have earned or inherited enough wealth to put something aside for a rainy day will usually feel the pinch during a recession, but instead of skipping meals or living without heating during the winter or not being able to afford basic things like shoes for their kids or losing their home, the pinch for the well-to-do means means they might have to make a few sacrifices. Instead of cutting back on essential things like food, heating or clothes for the kids, the well-to-do can cut back on things like new cars, foreign holidays and trips to exclusive restaurants.
What George Osborne doesn't mention is that there are always winners during recessions too. There are the obvious examples like budget supermarkets, which see increases in trade as people search for bargains in order to try to make ends meet, but the much bigger recession beneficiaries can be seen in the financial sector.
Many financial institutions deserved to be left to bankruptcy back in 2008 when their reckless speculative gambling on sub-prime mortgage junk left them technically insolvent. We all know that governments in the UK, US and Europe rescued the financial sector from the wave of bankruptcies they so thoroughly deserved with the biggest state subsidies in economic history. The bailouts gave the banks a free pass from the consequences of the competitive environment that hard-right capitalists (like George Osborne) refer to as the main justification for their "private is always more efficient than public" ideological mantra.
These vast state subsidies meant that the private banks were given a reprieve from their fate, so they still exist now. The bankers will have learned two valuable lessons, both of them pertinent in a post-Brexit recession.
The first lesson is that it's important to hedge your bets. Strategic investments can be made so that whichever way the referendum goes, the bankers' losses will be mitigated. The lack of strategic investment to mitigate the losses should the sub-prime market collapse (especially by AIG) was the main cause of the global financial sector insolvency crisis. Any remotely competent financial institution will now be carefully hedging their investments to make sure their losses are minimised whichever way the referendum goes.
The second, and more important, lesson the bankers learned back in 2008 was that if the crisis gets really bad, governments will use public money to bail them out, then extract the huge cost of rescuing them from insolvency by squeezing it out of the taxpaying public. The banks will know that even if the doomsday scenarios come true and Brexit triggers a major economic crisis, the government will ride to their rescue with hundreds of £billions in public cash, just like they did in 2008.
The effects of the 2008 bailouts (and quantitative easing) and the six years of Tory ideological austerity that followed it were that ordinary British working people suffered the longest sustained income declines in recorded history while the super-rich minority collectively doubled their wealth.
George Osborne is a hypocrite
George Osborne's hypocrisy is obvious. He's not wrong that Brexit could cause a severe recession, and neither is he wrong that the poor are far more likely to suffer the worst of it than the rich. However it's utterly hypocritical for him to make such points when the exact same criticisms can be made against his own ideological austerity agenda.
Here's what George Osborne said:
"We have got to make sure people understand the big economic risks facing the country, leading to real economic consequences for families. It’s the people on the lower incomes, the people who have got less job security, that will be hit first if there’s a recession. Brexit is for the richest in our country, they can afford recessions." [source]And here's what anyone who is not economically uneducated enough to still be believing in George Osborne's austerity con might have been saying before the 2015 General Election.
"We have got to make sure people understand the big economic risks facing the country, leading to real economic consequences for families. It’s the people on the lower incomes, the people who have got less job security, that will be hit first if there’s more Tory austerity. Voting for the Tories is for the richest in our country, they are the intended beneficiaries of Tory economic ideology."George Osborne has spent six long years wreaking social and economical chaos with his ideological austerity con which is clearly intended to produce a vast transfer of wealth to the tiny super-rich minority at the expense of the majority of UK citizens, and most especially at the expense of the poorest sectors of society.
After repressing wages, attacking workers rights and deliberately orchestrating such a vast transference of wealth from the poor to the rich, George Osborne has got some damned cheek to suddenly pretend that he's sticking up for the interests of the poor, the low-earners and people with low job security.
If Brexit triggers a major recession, three things are certain (especially under a Tory administration): The poor will generally suffer the worst of it, the well-to-do will generally have to make more superficial sacrifices than the poor, and the super-wealthy minority will continue getting richer (especially if the crisis leads to more bankers' bailouts and more Tory austerity).
George Osborne isn't wrong to claim that a post-Brexit crisis is likely (it is) or that the poor generally suffer more than the well-to-do or the rich during a recession (they do, especially if the Tories are in power).
What makes George Osborne so wrong is that his criticisms clearly make an equally compelling case against his own ideological austerity agenda as they do against Brexit.
Furthermore, the negative consequences of Brexit are still hypothetical (highly likely but not certain), while the disastrous consequences of George Osborne's austerity agenda are all too real (six years of hard evidence that the super-rich have been getting richer at the expense of pretty much everyone else while Osborne has ended up borrowing more than every Labour government in history combined).
His appalling track record of ineptitude and his continued unpopularity make George Osborne an terribly self-defeating spokesperson for the remain camp, but when his criticisms of Brexit are even more applicable to his own ideologically driven austerity agenda, it makes him look like an extremely hypocritical opportunist who is simply feigning concern for the poor in order to obscure his real motivations for supporting Remain.
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