Sunday 3 June 2012

Tory U-turns are welcome, but we're still waiting for the big one

David Cameron's idol was a lady that was famously
"not for turning", Dave doesn't seem to have the same
  determination to see his parties barmy policies through.
 Here is a quite extraordinary quote from the UK Prime Minister David Cameron:

"When you've got something wrong, there are two things you can do in government: you can plough on regardless, or you can say, 'No, we're going to listen, we're going to change it, we're going to get it right'."

Taken out of context one could almost see it as an admission that their "cut now, think later" indiscriminate austerity policies have driven the UK economy back into recession and that instead of ploughing on with their disastrous policy of imposing ideologically driven neoliberal pseudo-economics on the UK economy under the guise of austerity, they are going to change course and accept the need for state investment in order to stimulate economic demand. This would be a hugely embarrassing u-turn but hardly difficult given that UK government borrowing is so cheap that the real interest rate on government borrowing is negative, because the rates of interest are below the rate of inflation, creating negative real interest rates.

David Cameron and George Osborne came to power with a tidal wave of support for their hard line austerity agenda from Britain's so-called business leaders, who wrote a congratulatory letter of support for "Osbornomics" to the Telegraph. The fact that the rapid indiscriminate slashing of state spending and a severe reduction in the disposable income of the masses would create a large decline in aggregate demand, and a fall in corporate profits seemed to pass Osborne's applauding band of corporatist cheerleaders by altogether.

After two years of this barmy ideologically driven gibberish in place of sound economic policy, the UK economy is in recession and the British Chamber of Commerce (who describe themselves as "the national voice of local business) are calling on Osborne to abandon across the board austerity and use the UK's negative interest credit facilities to promote economic growth through strategic investment in fiscal multipliers.
"[The UK has] considerable credibility in the financial markets, and [Osborne] is now in the position to increase spending on growth-enhancing policies without endangering Britain’s AAA rating. This is necessary, because persistent stagnation threatens to damage the economy’s long-term productive potential." - David Kern, Chief Economist at the British Chambers of Commerce
The fact that the Tories key supporters are publicly calling for a reversal of Osborne's indiscriminate campaign of cuts speaks volumes and suggests that the Cameron quote in the introduction may have been a recognition that "Osbornomics" is responsible for this economically damaging  "persistent stagnation" that the BCC are complaining about, yet what Cameron was actually talking about are a sequence of budget blunders from Osborne, including the granny tax, the pasty tax, the philanthropy tax and the static caravan tax.

Osborne's millionaire's budget has turned into an absolute farce, much like
 his wider economic strategy of "cut now, think later" indiscriminate austerity.
 Despite being warned by his adviser that the Granny Tax would be spectacularly unpopular, Osborne included them in his Millionaires budget and he didn't even bother to consult charitable organisations or the culture secretary before announcing his "philanthropy tax". Osborne's farcical budget proposals have come under a sustained barrage of criticism, including the extraordinary criticism from the Conservative back bench MP David Ruffley, who claimed that Osborne's tax calculations had been drawn up "on the back of an envelope". Another Conservative MP writing on condition of anonymity in the Daily Mail accused Osborne of being a part-time chancellor with little grasp of the detail. In the face of this barrage of criticism Osborne had to drop the pasty tax, cut his proposed VAT hike on static caravans from 20% to 5% and abandon his philanthropy tax proposals altogether, all within a week.

The fact that the man feted as the key Conservative political strategist over the last five years has been found out as a guy that announces legislation without adequate consultation or any kind of evidence based analysis of the potential consequences, then ignores the advice of his key advisers is quite remarkable. If Osborne's recent budget farce is indicative of his general methodology, what on Earth is there to reassure the public that the central Tory policy of indiscriminate austerity isn't similarly conceived, "back of an envelope" ideologically driven rubbish?

If even Tory MPs are lining up to criticise the man, perhaps the Tories could abandon their economically destructive indiscriminate austerity strategy, pinning the blame on Gideon as he is booted out? Then set about attempting to salvage what remains of the economy with some coherent evidence based growth strategies. Pretty unlikely I know, but Cameron has shown time and again that he is a man for turning.

See also

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