Monday 30 September 2013

George Osborne's totalitarian "benefits crackdown"

The fact that George Osborne and the Tories are using their 2013 Conference to launch a new "benefits crackdown" is a clear demonstration of their absolute determination to appeal to the reactionary rabble, to the lowest common denominator, to the tabloid thinking political illiterates.

To some deluded individuals, the idea of forcing the unemployed to work for their benefits, or to attend the job centre every single day sounds like some kind plan for incentivising to unemployed "scroungers" to stop lazing around.

To anyone with a clue how the economy is actually structured, these plans sound like nightmarish Stalinist rubbish devised by a man that hasn't done a proper day's work in his life (unless you count towel folding, or being a career politician).

Unfortunately (or fortunately as far as the Tories and the establishment elite are concerned) vast swathes of the public lack anything resembling a coherent understanding of how the economy actually works. It is pitiful, but it is true - The majority of the UK populace are economically and politically illiterate. There are millions of people that are so desperately ignorant that they actually believe that it makes any kind of sense for a political party that loves to dress itself up as champions of "free-market capitalism" and the "small state" to announce the launch of a massive state administered forced labour project that wouldn't have looked out of place in the Soviet Union.

There are many complaints to be made about this kind of state administered mandatory unpaid labour project, but in this article I'm going to stick to one central theme in order to make the point as clearly as I can.

The criticism is this:

If the Bank of England see the ideal rate of employment as lying somewhere between 6.5% and 7% (some 2 million people) and actively plan for unemployment to remain at this so-called "equilibrium level" (which they absolutely do), forcing those that find themselves amongst the "necessary unemployed" into mandatory work schemes is nothing short of state administered slavery.

According to the bankrupt psueedo-economic theories that George Osborne adheres to, two million UK citizens must suffer unemployment at any given time. His beloved neoliberal theories say that this massive standing army of unemployed must exist, so punishing them by forcing them to work is state administered abuse of people that simply can't help their situation. Even if they could find a job, their place would be taken by someone else, because the establishment has an ideological commitment to maintaining the standing army of unemployed that they believe is necessary in order to drive down wages. Using people that are unemployed due to the deliberate macroeconomic policies of the political establishment as forced labour, is grotesquely exploitative and blatantly unfair.

George Osborne's vision for Britain is of a nation where the controllers of monetary policy (the Bank of England) are determined to maintain a standing army of 2 million unemployed, and the controllers of fiscal policy (the Tory led government) are determined to ruthlessly exploit these non-working workers as a free source of labour.

If the people of the United Kingdom allow this to happen it will signify the end of our labour rights and the long predicted descent into totalitarianism, where the state essentially owns the citizen, to do with as it pleases.

The only people that will be exempt from these mandatory labour schemes will be the well-to-do, whilst the rest of us, upon finding ourselves unemployed, will be left with the abject choice of either accepting some shitty Zero Hours job which provides us no economic security, or being forced onto a government administered forced labour project under threat of absolute destitution.

If you are a wealthy landowner, an idle buy-to-let slumlord or an inherited wealth trustafarian, you will be able to not have a job with impunity, but if you lack capital, then you will be sentenced to mandatory labour for the "crime" of not having a job, even though your not having a job is a result of deliberate macroeconomic policy from the Bank of England.

I assume that there are some on the libertarian-right that would be absolutely appalled at the concept of vast state administered forced labour schemes. However, since news of George Osborne "benefits crackdown" leaked out, they seem to be an absolutely silent minority. The vast majority of the right clearly support this kind of overtly fascistic (and I do not use that word lightly) brand of right wing economic policy.

It will be interesting to see how the UKIP stance develops, considering that a number of their followers are labouring under the impression that they are some kind of libertarian party. If UKIP don't oppose these state administered work camps, they will be demonstrating their contempt for the principles of libertarianism. It is impossible to see how any libertarian thinker could possibly approve of the resurrection of the Victorian workhouse mentality (especially when the state actively plans to keep these people in a state of unemployment). Perhaps the UKIP leadership will see sense and oppose this totalitarian exploitation, niftily repositioning themselves as the moderate centre-right, who subscribe to Thatcherite neoliberal dogma, but remain "centre-ground" enough to oppose massive state administered forced labour schemes? Such a strategic switch could see them grab an even larger proportion of the Tory vote come the next election if they play it just right.

The Lib-Dem stance is much easier to predict. They will go along with this fascistic nonsense just as they went along with other overtly totalitarian schemes such as the Secret Courts bill and the Retroactive Workfare bill. Despite having the word "Liberal" in their bloody name, they have repeatedly shown their willingness to vote in favour of disgustingly illiberal legislation simply in order to hold onto the trappings of power for a couple more years. After the totalitarian crap they've already voted through, they've ceded any any right at all to call themselves "Liberals", and only a hopelessly naive fool would pin their hopes on these spineless cowards suddenly rediscovering their liberal principles and refusing to endorse this totalitarian crap with their votes.

Labour should oppose this fascistic nonsense. It is yet another open goal presented to them by the most inept and malicious Tory government in living memory. All they need do is to frame the narrative correctly and they'll obliterate the Tories on this issue. However, the shadow Work and Pensions minister Liam Byrne (a Tory in all but tie colour) is a pathetically craven creature who seems to be perpetually running scared of the braying right-wing press, so it is not inconceivable that Neo-Labour will not only miss the open goal, but actually kick the ball all the way downfield into their own net by implicitly supporting this totalitarian lunacy (exactly as they did over Iain Duncan Smith's Retroactive Workfare bill just a few months ago).

Let me reiterate one more time. If it is official Bank of England macroeconomic policy to maintain a standing army of some 2 million unemployed (which it is), any government decision to force those unemployed individuals (under threat of absolute destitution) to work on government administered work projects is committing an act of totalitarianism more befitting a pseudo-communist personality cult or a fascist dictatorship than a supposedly democratic state like the United Kingdom.

If, even after reading this, you are the kind of blustering political illiterate that agrees with this 21st Century Workhouse policy, you have embraced totalitarianism to such an extent that you actually believe it right that the state owns the citizenry, to do with as it pleases. You are a fascist sympathiser in all but name. You have contempt for your own labour rights. Your political worldview is so simplistic and malleable that the right-wing propaganda machine can make you hate your own rights as a citizen! Throughout the 20th Century it was the ignorance of feeble minded conformists like you that allowed brutal totalitarian states to develop and to flourish. You are disgusting, and a great number of your fellow citizens are ashamed to have to even share a country with ignorant scum like you.

One last time: If it is the official economic policy of the state to keep some 2 million people in a state of unemployment (which it is), any decision by the state to utilise this vast standing army of unemployed as an unpaid workforce is an overt act of totalitarianism. Functional democratic states simply do not treat their own citizens as slaves to be herded into mandatory work camps. If you are ignorant and malicious enough to approve of state administered mandatory work camps, perhaps you are the one that should go and live in North Korea?

 Another Angry Voice  is a not-for-profit page which generates absolutely no revenue from advertising and accepts no money from corporate or political interests. The only source of revenue for  Another Angry Voice  is the  PayPal  donations box (which can be found in the right hand column, fairly near the top of the page). If you could afford to make a donation to help keep this site going, it would be massively appreciated.

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Thursday 26 September 2013

Price Freezes, energy blackouts and Tory hypocrisy

After Ed Miliband unveiled his policy of freezing energy prices for 20 months should he win the 2015 general election there was a predictable tide of vehement opposition from the Tory party and the right-wing press.

The two most commonly heard complaints from the Tories and their mouthpieces in the right-wing press have been squeals of "price fixing" and "government interference in the market". I'm going to demonstrate how utterly hypocritical these claims are.

In June 2013 the Coalition government announced that they were going to bribe the French electricity company EDF with £10 billion worth of "financial guarantees". Essentially, they will lend EDF money at a much cheaper rate than is available to them on the commercial market to fund their infrastructure spending. If that isn't "government interference" in the energy market, I don't know what is!

The coalition government is also set to agree minimum energy prices, called Contracts for Difference (CfDs) with EDF, to ensure that if energy prices fall below a certain level, the government will use taxpayers' money to top up the prices paid to EDF in order to safeguard their profits. Energy market CfDs (government guarantees to top up corporate profits) are already commonplace in the UK energy market. Here's an official government policy document which explains how CfDs are used to fix prices in the energy market, which includes a commitment to extend the practice to the nuclear industry.

EDF are arguing for extremely high CfDs before they agree to start work on building two new nuclear reactors at Hinkley Point, and the government looks set to give into their demands, the only point of negotiation being the level at which these taxpayer funded price fixing subsidies will kick in.

For members of the government to attack Labour for "government interference" and "price fixing" looks very hypocritical indeed when official government energy policy involves massive "government interferences" like the £10 billion worth of "financial guarantees" being handed to EDF to help them avoid having to borrow at a higher rate of interest from the commercial market, and the increasingly common use of energy market CfD "price fixing" agreements to ensure that the taxpayer will pay for any corporate shortfalls, should energy prices (and corporate profits) fall below predetermined levels.

Personally I don't think that Ed Miliband's energy price freeze goes far enough. The UK energy market has operated like a price-fixing cartel for decades, virtually since privatisation began. Everyone has seen the way that the big energy companies have repeatedly hiked their prices in unison. Everybody has seen the way they use rises in wholesale prices to raise the prices they charge, yet when wholesale prices fall back again, the high energy prices stay the same.

These largely foreign owned companies have become a parasitic drain on the UK economy. Their vast profits are generated by soaking away what should be the disposable income of millions of families, and the profits of small and large businesses all over the UK. This kind of blatant rentierism damages the UK economy by reducing aggregate demand and harming British industry.

In my view, fixing prices for 20 months isn't even a half measure because the only real solution would be large scale renationalisation of British energy infrastructure. I mean, Ed's energy price freeze has already got the Tories hypocritically foaming at the mouth, so why not go the whole hog an announce the strategic renationalisation of UK energy infrastructure?

I mean, all the Tories could possibly offer in opposition to renationalisation is a load more hypocritical hot air. Recall the £10 billion bribe they're handing to EDF. Well EDF is 85% owned and operated by the French government! The Tory stance is this (and I'm not joking): The British are such a cretinous bunch that they are utterly incapable of running their own energy infrastructure, and that is why they need to bribe the French  government to the tune of billions of pounds in order to run it for them!

EDF is not the only example of foreign governments running supposedly "privatised" British infrastructure. Other national governments own stakes in our "energy market", our public transport network, our water companies and various other bits of formerly state owned infrastructure.

What is it that makes the Tories believe that the British state sector so desperately uncompetitive that we should just let the French state run our major infrastructure projects for us instead?

The fact that so much British infrastructure has been flogged off to foreign interests by the Tories utterly destroys their "wrap themselves in the flag" claims of patriotism. Especially the fact that many of these foreign owners are actually foreign governments and foreign government controlled sovereign wealth funds. They clearly believe that it isn't important who owns British infrastructure as long as it's not the British public.

In my view, if we're going to have state run companies administering our major infrastructure projects, they might as well be run by the British state, because at least there is a veneer of democratic legitimacy and accountability about it if it is done that way.

Before I conclude I'd just like to cover one more element of the right-wing reaction to Ed Miliband's energy price freeze policy: The disgusting fearmongering. The Daily Mail claim that freezing energy prices would take us back to the "bad old days of the 1970s". The energy companies themselves are overtly threatening to inflict energy blackouts on the country if they are not allowed to continue their profiteering. And most shockingly of all, instead of condemning these efforts to blackmail the country into allowing them to continue brazenly profiteering, the Liberal Democrat Energy Secretary Ed Davey actually joined in the fearmongering campaign by invoking the energy blackouts in California as a probable consequence (completely failing to take account of the corrupt practices at energy companies like Enron that played such a major role in the California blackouts).

That Ed Davey would actually join in with the fearmongering campaigns orchestrated by largely foreign owned corporations to blackmail the British public, is an absolutely clear demonstration that this government has a commitment to serve corporate interests. Surely it is the job of the energy secretary to oppose energy companies that threaten to impose energy blackouts if they don't get their own way, not to repeat their threats in order to score political points against an opposition party.

Lets have a little think back to the 1980s when the coal miners went on strike. They knew that Tory plans for their industry would mean an end to their jobs and the destruction of their communities. They were fighting for their livelihoods. They were fighting for the survival of their communities. Remember how the Tories and the baying right-wing press labeled these men "the enemy within" and accused them of "holding the country to ransom"?

Now look at these largely foreign owned power companies blackmailing the UK with threats of energy blackouts if their blatant profiteering is curtailed. Are the Tories calling them "the enemy within" and accusing them of "holding the country to ransom"? Of course they're bloody not.

In conclusion, the power companies threatening to impose energy blackouts as retaliation, illustrate that Ed's energy price freeze doesn't go far enough. These largely foreign owned companies are utterly unscrupulous, and totally disinterested in what is best for the UK economy. They'll only build new infrastructure if they get massive multi-billion pound bribes and agreements that prices will be fixed in their favour (with the taxpayer underwriting their profits if energy prices fall). But if the boot is on the other foot, and the government fix energy prices for the good of the British economy, they threaten to impose energy blackouts as retaliation (even though some of them were actually offering to freeze their own energy prices until 2017 before Ed Miliband even announced his scheme!).

These largely foreign owned energy companies are clearly "the enemy within" and Ed's plans have revealed that they will quite gladly hold the UK economy to ransom if anyone dares try to curtail their obscene profiteering. At least the miners were fighting for their jobs and the very survival of their communities when they went on strike. These corporate parasites are planning to hold us to ransom just to protect their obscene profits, which are made at the direct expense of the wider UK economy.

That the Tories and their cheerleaders in the right-wing press are siding with these largely foreign companies, when they dealt so ruthlessly with the native British miners is an absolutely clear demonstration of their ideological commitment to "Profits over People". So much so that the protection of foreign profits is vastly more important to them that the protection of British people, British jobs, British communities and the British economy.

 Another Angry Voice  is a not-for-profit page which generates absolutely no revenue from advertising and accepts no money from corporate or political interests. The only source of revenue for  Another Angry Voice  is the  PayPal  donations box (which can be found in the right hand column, fairly near the top of the page). If you could afford to make a donation to help keep this site going, it would be massively appreciated.

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Tuesday 24 September 2013

George Osborne's "all in this together" fallacy

The "All in this together" fallacy is one of the most brazenly untruthful propaganda narratives in a shocking litany of utterly deceitful Tory public misdirection strategies. 

The Chancellor of the Exchequer is the man behind this absurd "all in this together" narrative, designed to deceive the gullible into thinking that everyone is making sacrifices in "Austerity Britain". 

In 2009 George Osborne used the expression "we're all in this together" at the Tory Party Conference to justify his plans to launch savage attacks on public sector wages, and despite near constant criticism of the phrase in the intervening years, he regurgitated it as "we are all still in this together" during his speech to the 2012 Tory party conference.

The problem is of course, is that, from an evidence based point of view, "all in it together" is transparently counter-factual nonsense. There are many, many examples to illustrate the fact that we are not "all in this together". In this article I'll go through just a few of them.

Perhaps the most high profile illustration that we are not all in this together came in April 2013 when the Tory led coalition launched a "Bedroom Tax" scheme designed to further impoverish hundreds of thousands of the most vulnerable families in the UK, and in the very same week handed an average £100,000 a year tax cut to the 13,000 British income millionaires.

Another glaring illustration of the fact that we're not all in it together can be seen in the fact that George Osborne has enforced below inflation 1% pay raises on public sector workers for three consecutive years, yet there is one small group of public sector workers that have been made exempt from this real terms pay cut. That group is George Osborne and his fellow MPs who will get an 11% pay rise, worth £10,000 a year. If we were actually "all in this together" then surely MPs would be treated like any other public sector worker and be made to endure year after year of below inflation pay increases like the rest?

Another example can be seen in the wildly different attitudes to unpaid work. In April 2013 Iain Duncan Smith botched together a ridiculous piece of retroactive legislation in order to undermine an Appeal Court ruling that his mandatory unpaid labour
("Workfare") schemes for the unemployed were unlawful and undemocratic.

With direct support from the Liberal-Democrats and de facto support from the Labour
so-called opposition (who were whipped into abstaining on the vote) the Tory led coalition managed to rush this atrocious piece of legislation through parliament in a matter of hours, meaning that they could continue compelling the unemployed to do unpaid work for corporate interests, all paid for at the taxpayers' expense.

Now contrast this with the Liberal Democrat stance on unpaid "internships". The Lib-Dems want to end the practice of giving unpaid internships to youngsters from affluent backgrounds. Meaning that if you are poor and desperate, you will be forced to give up your labour rights and work for no wages for major corporations by legislation passed with Liberal Democrat votes. However if you are lucky enough to come from a wealthy family that can cover your living costs while you work for no wage for a major corporation, national newspaper or major political party, the Liberal Democrats will claim that they are determined to protect you from this kind of exploitation (despite using unpaid interns themselves!).

The most compelling evidence that we are not all in this together can be found when we look at wages. If we were "all in this together", one would expect every sector of society to have endured similarly low increases in their salaries. However the evidence shows us that the opposite is happening. Since the Tories came to power the highest earners have been getting richer at a faster rate than ever, whilst the vast majority of people have seen their wages fall in real terms month, after month, after month.

It should be headline news that the average wage has failed to keep pace with inflation every single month since the Tories came to power (except for one single month - April 2013, when the average wage was dramatically skewed upwards by the £billions in corporate remuneration deferred until after the 50p tax cut came into effect), but the mainstream media are almost totally disinterested in telling the British people that they are being terribly ripped off.

In 2010 the average salary rose just 0.3%, whilst inflation was measured at 3.3%. In 2011 the average wage rose 1.4%, whilst inflation was measured at 4.5%. In 2012 wages fell in real terms once again, with the average wage increasing by just 1.4%, whilst inflation was measured at 2.8%.

If we take these figures cumulatively, the average wage has increased by just 3.1% since Labour's last full year in office, whilst prices have risen by a supposed 10.1% (I say "supposed" because it is absolutely clear that inflation is a lot higher than the official figures claim). Even if the extremely conservative inflation figures are accepted at face value, this means that the average British family had 7% of their income eroded away by inflation between January 2010 and December 2012.

Now lets contrast the fortunes of the extremely wealthy. One particularly wealthy group is the corporate executive class. In 2010 executives at the FTSE 100 companies enjoyed average pay raises of 33%, in 2011 they took home record breaking average salary hikes of 49%, and in 2012 the trend of enormous, inflation busting pay hikes continued with average pay increases of 27% for the corporate executive class. [for sources to back these statistics see this article on Wage Repression]

Taken cumulatively, these figures demonstrate that the average corporate executive has more than doubled their salary since the Tories came to power. In fact they are now taking home 251% of what they made during Labour's last full year in office.

In real terms (adjusted for the effect of inflation), the salary of the average worker has fallen by 7%, whilst the salary of the average corporate executive has increased by 141%. Does this seem like everyone is "all in this together" to you? 

In light of these facts. How is it possible for anyone to believe the Tory "all in this together" propaganda narrative?
Even though economic demand has been stagnant for years, and the economy still hasn't recovered to pre-crisis levels, it isn't difficult to explain where all the extra cash is coming from to allow these corporate executives to gorge themselves on inflation busting pay hikes every year. 

Since George Osborne became chancellor he has cut the rate of corporation tax from 28% to 24% (with an announcement in the 2013 budget that it will be further slashed to just 20%), but instead of investing this tax giveaway in creating jobs or improving company infrastructure, the major corporations have used this flow of extra cash to generate shareholder profits (creating the artificial stock market boom) and to fuel the ludicrous inflation of corporate remuneration.

Where has George Osborne found the money necessary to hand out such massive corporate tax breaks? The answer is that he hasn't. He's giving these lavish tax handouts despite running up more additional debt in the last three years than Labour ran up in 13 years in office (which included, lets not forget, the biggest financial sector meltdown since 1929).

Whilst George Osborne has been using the national debt, and the budget deficit as excuses for public sector pay freezes, savage attacks on the welfare state and drastic cuts in public services (police, fire services, local government, libraries, the justice system, the NHS ...) he has simultaneously been lavishing tax cuts upon the corporate classes. 

If we can't afford to keep public sector workers salaries from in line with inflation, if we can't afford a humane welfare system and we can't afford things like libraries, bobbies on the beat and local A&E services, how on earth can we afford such lavish corporation tax cuts?

Just think about it for a minute. By 2015 Britain's major corporations will have had their rate of tax cut from 28% to 20% (a 40% tax cut), and the salaries of their corporate directors (if the ludicrous inflation of executive salaries continues as it has), will have more than quadrupled (461%) by the end of 2014.

Ask yourself this: Have you had a 20% tax cut since the Tories came to power, with another 20% tax cut in the pipeline? Has your salary more than doubled since the Tories came to power? and does it look set to near enough double again by Christmas 2014? Or are you one of the millions of people that are still paying massive chunks of their salary in regressive taxes (such as Council Tax, fuel duty and VAT) and have seen prices for basic necessities soar way above the rate at which your salary is increasing?

Are you one of the favoured minority that is getting richer at a faster rate than ever in "Austerity Britain"? Or are you one of the suffering majority?

Whichever group you find yourself in, surely you're not credulous enough to take George Osborne's ludicrously counter-factual "all in it together" propaganda at face value are you?

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Monday 23 September 2013

What the hell is Ed Balls playing at?

On paper, Ed Balls has one of the easiest jobs imaginable. All he has to do is demonstrate that he is less of an economically illiterate buffoon than George Osborne! The problem of course is that Ed Balls is a dolt who seems determined to make himself seem just as incompetent as the most hated chancellor the UK has ever had.

When Osborne became chancellor, Ed Balls did initially get something right. He set the Labour narrative as "the Tories are cutting too fast and too deep and risk derailing the economic recovery". After more than three years of ideological "Osbornomics" and a spectacularly derailed recovery, Balls' original narrative has been proven right. Osborne has missed all of his economic predictions by huge margins, he's overseen a bigger accumulation of national debt in just three years than Labour did in the preceding 13 years (which included the biggest financial sector meltdown since 1929) and despite the desperately cherry-picked statistics being presented by the Tories as evidence of "economic recovery" the UK economy is still significantly smaller than it was before the financial sector meltdown occurred.

This track record of failure, and Osborne's malicious and aloof character have made him extremely unpopular. Who could forget the way he was booed by a packed crowd at the Paralympics? It is truly a mark of unpopularity when you're the least popular minister in a government that includes a grotesque character like Iain Duncan Smith!

Given this appalling track record of failure and Osborne's massive unpopularity with the public, Ed Balls should be nailing Osborne to the wall for his ideologically driven incompetence. However, Ed Balls has somehow decided that it would be a better strategy to implicitly support Osborne's mismanagement of the economy by pledging to match Tory spending plans, should Labour win the next election.

Essentially, Ed Balls' message to the electorate is this:

"George Osborne is economically incompetent. He's cut too hard and too fast, ruining the economic recovery ... so that is why we will stick to his economic plans should we win the next election"
It's actually quite difficult to think of a more incoherent and self-defeating stance on the economy for Labour to have taken, which is a testament to Ed Ball's incompetence.

As if this ludicrous stance wasn't bad enough, Ed's latest strategy is even more ridiculous. He's actually asking the Office for Budget Responsibility to audit Labour's manifesto spending plans. In order to understand exactly how stupid this ploy is, you first need to know what the OBR actually is.

The OBR was founded by George Osborne, first as a Tory party scheme, before it was officially established as a taxpayer funded thinktank designed to add a veneer of legitimacy to his ideological austerity experiment. Everyone who works at the OBR owes their job to Osborne, and one might expect them to be loyal to the man that handed them their lavish taxpayer funded salaries.

Another factor to consider is that the OBR is stuffed full of economists that belong to the orthodox neoliberal school of pseudo-economics. There is absolutely no way this lot would approve anything even remotely progressive, so asking them for approval is an explicit admission that Ed Balls and Labour are still ideologically committed to the toxic brand of neoliberal gibberish that has brought us deindustrialisation, mass unemployment, profiteering utilities companies, hopelessly botched outsourcing contracts, decades of wage repression, a shambolic and absurdly overpriced public transport system, ripoff PFI "economic alchemy" schemes, and not least, the financial sector meltdown which was caused by an orgy of reckless gambling enabled by wave after wave of neoliberal financial sector deregulations on both sides of the Atlantic.

If Ed Balls is confident enough to ask such a bunch of incompetent neoliberals for their approval, he's openly broadcasting the fact that Labour is an orthodox neoliberal party, not a socialist one. That he's doing so in the same week that his party leader decided to tell the Labour party conference that he wants to "bring back socialism" creates yet another contradictory message. Instead of getting their narrative straight and sticking to it, Labour seem to be casting all over the place, resulting in confusing and mutually contradictory messages..

Perhaps the most damning thing of all about the OBR is the fact that they happily signed off on George Osborne's ideological austerity experiment. All of the predictions the OBR generated to support Osborne's austerity agenda have been missed, and not just missed by a bit, missed by absolutely flipping miles.

Back in 2010 Osborne claimed he could eradicate the budget deficit in a single parliament, and the OBR signed off on it. After three years of economic stagnation that's simply impossible, it now looks like the budget deficit won't just persist all the way through this parliament, it is likely to persist all the way through the next one too, into the 2020s.

Back in 2011 George Osborne claimed that the UK economy would grow by a healthy 2.5% in 2012, and the OBR signed off on it. As it turned out, the economy barely grew by an anemic 0.1%, and without the Olympic bounce, it would actually have been a year of negative economic growth.

Back in 2010 the OBR signed off on Osborne's plans, that had been worked out using a fiscal multiplier of 0.5 (essentially an assumption that all government spending is 50% waste). Two years later they sneakily admitted that in order for Osborne's austerity experiment to be entirely responsible for the stagnating economy, the fiscal multiplier would have to be about 1.3. In the very same month the IMF announced that "in today’s environment of substantial economic slack, monetary policy constrained by the zero lower bound, and synchronized fiscal adjustment across numerous economies ... multipliers have actually been in the 0.9% - 1.7% range.  The OBR's 1.3 figure happens to be slap bang in the middle of the IMF's revised fiscal multiplier range, meaning that if the IMF research is right, the OBR have admitted that Osborne single-handedly destroyed the economic recovery with his ideological austerity agenda, meaning that they made an unforgivable mistake in signing off on it.
The fact that the OBR has persistently produced wildly over optimistic economic predictions to support George Osborne's ideological austerity crusade, and their embarrassing litany of feeble excuses every time their forecasts have had to be downgraded, led to calls that they be disbanded, from the extremely right-wing Osbophiliac Daily Telegraph, and to me re-branding them as the Office for Budget Recklessness.

That the OBR signed off on, and gave a false veneer of legitimacy to George Osborne's reckless ideological austerity experiment suggests that they are one of the last organisations Ed Balls should be turning to for approval. This organisation has a track record of giving approval to hopelessly botched economic strategies, and producing wildly inaccurate economic forecasts, so what the hell does Ed Balls even have to gain by asking them to approve his plans? If the OBR charter is changed, giving them the powers to audit opposition economic forecasts, there are two possible outcomes.

1. The OBR approve Ed Balls plans, which would mean absolutely nothing, given that they also approved George Osborne's catastrophic ideological austerity experiment. All it would do is demonstrate that Ed Balls' plans are riddled with orthodox neoliberal pseudo-economic gibberish.
2. The OBR don't approve Ed Balls plans (quite likely given that every last one of them owes their job to George Osborne), which would give the Tory party an enormous stick to thrash Labour with until the next election.
In my view, the only thing that Ed Balls is demonstrating with this ploy to have his economic plans vetted by George Osborne's Office for Budget Recklessness, is that he really doesn't have a clue what he's doing.
 Another Angry Voice  is a not-for-profit page which generates absolutely no revenue from advertising and accepts no money from corporate or political interests. The only source of revenue for  Another Angry Voice  is the  PayPal  donations box (which can be found in the right hand column, fairly near the top of the page). If you could afford to make a donation to help keep this site going, it would be massively appreciated.

More articles from
Neoliberalism and Communism

Sunday 22 September 2013

How Equilibrium Unemployment theory proves Tory malice

That many people would try to dismiss the idea that "capitalism needs a standing army of unemployed" as some kind of Marxist, anti-capitalist, loony-left conspiracy theory, is indicative of the level of widespread economic illiteracy these days.

The fact is, that under the current neoliberalism riddled economic system, these vast standing armies of unemployed do exist, and what is more, the ruling establishment believe them necessary in order for their pseudo-economic models to work properly (which they clearly don't anyway). The term they like to use to describe their "standing army of unemployment" is the "equilibrium rate" of unemployment, which is credited to the ideological guru of Chicago school neoliberalism, Milton Friedman. Some people may be more familiar with Norman Lamont's 1991 description of mass unemployment as the "price worth paying". 

As is the case with a lot of neoliberal theory, the idea of "unemployment equilibrium" is unproven nonsense treated as unquestionable dogma. It is the idea that in any economy there is only one single ideal point in the balance between the negative impact of mass unemployment and the negative impact of increased inflation (caused by "too many" people having jobs). Quite clearly this is absurd, over-simplistic nonsense.

The "labour surplus", as Marx defined it, as the standing army of unemployed that capitalism relies upon, actually makes sense. But the neoliberal pseudo-economic theory that there exists some kind of magical optimal point of unemployment in something as complex and ever-changing as an economy, and that this optimal level of unemployment can be identified and actually planned for, is the same kind of absurd mystical mumbo-jumbo as the deity like "invisible hand of the market" that underpins the neoliberal fixation with market deregulations.

The nonsense theory that there is just one single point of optimum unemployment in something as complex and variable as a national economy would seem utterly laughable if it weren't for the fact that economic policymakers across the globe take this idea very seriously indeed, and have deliberately worked it into their macroeconomic policies. The Bank of England has defined this optimum level of unemployment as somewhere between 6.5% and 7% unemployment. When unemployment is above 7% they have pledged to keep the interest rate at the all-time record low rate of just 0.5%, but if it falls below 6.5% they plan to take active measures to counter falling unemployment.

Essentially, they have decided that the "optimal state" for the British economy is to have something like 2 million people that are capable of work, but not working.

The realisation that high unemployment is actually planned for by the establishment, brings us to the subject of unemployment scapegoating and "scrounger narratives", which is a right-wing propaganda technique used to justify the savage and sustained Tory party assault upon welfare provision.

Just think about it for a moment: If the central bank of the nation is ideologically committed to the neoliberal theory of unemployment equilibrium, they see millions of unemployed as economically optimal, they have a commitment to counter the trend when unemployment becomes too low for their liking, then it hardly makes sense for government ministers to be deriding the unemployed as "scroungers" and "skivers" and attacking welfare provision, does it?

Considered in light of the fact that a standing army of unemployed is considered desirable, even optimal, under the neoliberal theories that the Bank of England and the Tory government adhere to, it becomes clear that the savage Tory attacks on welfare entitlement have been conducted with malicious intent. 

The stories of incentivising people to work by slashing their benefits becomes even more nonsensical than they were before, once we realise that the ruling establishment have an ideological commitment to maintaining high unemployment.

The idea that further impoverishing the unemployed and the working poor alike would give them more incentive to work is ludicrous nonsense (surely increasing wages and improving access to affordable childcare would be more sensible measures if that were the true objective), but this "making work pay" narrative is completely and totally undermined, once we accept the fact that the political establishment has an ideological commitment to maintaining an "optimum" level of unemployment of around 2 million people.

The fact that the establishment are committed to maintaining this army of 2 million odd impoverished and unemployed people makes the existence of mandatory unpaid "Workfare" schemes for the unemployed look even more sinister that they already appeared.

The thinking behind these unlawful Labour party approved "Workfare" schemes, is that if the bonkers pseudo-economic theories that you accept as unquestionable dogma dictate that you need to maintain this army of "impoverished paupers", then you might as well cash in on the situation by putting them to work as free labour for your corporate mates!

If, under your beloved pseudo-economic ideology, it is necessary for your nation to have a standing army of 2 million people unemployed, then slashing their benefits and deriding them as "skivers" is clearly abusive behavior, as are schemes to compel them to do mandatory labour under threat of absolute impoverishment.

If the ideologically driven economic dogma that you subscribe to says that 2 million people shouldn't have jobs, you're an absolute git if you then go around berating those that find themselves unemployed, and repeatedly voting in favour of legislation to further impoverish them and to compel them into abandoning their labour rights and working for free. Thus the vast majority of the Tory party are clearly acting like complete gits.

Although finishing up with an assertion that the Tory party are behaving like a pack of over-privileged gits is hardly the most enlightening conclusion I've ever drawn, I hope you have at least learned something interesting from this (rather hastily written) piece. Perhaps the fact that Karl Marx's assertions about capitalism relying upon a standing army of unemployed is, right now, being proven absolutely correct by the way neoliberal theory is being applied.

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