Saturday, 11 October 2014

It's time to shut up about "government piggy banks" and "national credit cards"

After I posted an article defending the NHS to the Another Angry Voice Facebook page, someone purporting to be a left-wing NHS supporter popped by to leave a comment in which they claimed that the NHS is great, but unaffordable in it's current form "because the piggy bank is not just empty, but shattered and in pieces on the floor".

The first thing to ask is why this person felt it necessary to use such melodramatic language? The frantic desperation of the phrase "
shattered and in pieces on the floor" makes it sound like something rote-learned from the pages of the right-wing tabloid press, not anything divined through academic research or considered analysis.

The UK debt to GDP ratio is currently around 80%, and the cost of servicing this debt has been artificially lowered to the cheapest rates ever through the ongoing practice of holding interest rates at the all-time-low of 0.5% (for six long years) and inventing hundreds of billions in new money through the process of Quantitative Easing           
To put the size of the current debt into perspective, in 1947 the UK debt to GDP ratio had risen to an incredible 238%. This huge debt came about as a result of participation in two catastrophic world wars with a great depression in between them, all crammed into the preceding three decades.

If the piggy bank is currently "shattered on the floor", what state must it have been in back in the late 1940s? Perhaps "Blitzed" or "A-bombed" might be appropriate melodramatic descriptions using the vernacular of the era?

So, back to the NHS that we supposedly can no longer afford to maintain in its current form because of the quite frankly awful "shattered piggy bank" situation. Well did you know that the NHS was built in the late 1940s along with hundreds of thousands of decent houses per year, despite the national debt then being three times the scale it is today?

The really amazing thing is that this massive post-war investment in infrastructure and services had the effect of stimulating the economy to such an extent that the following two decades became known as "the golden age of capitalism". The sustained period of economic stability in the 1950s and 1960s saw increasing prosperity for all sectors of society: rich, middle-income and poor alike. In contrast, George Osborne's so-called "recovery" has only benefited the wealthiest, who are becoming richer at a faster rate than ever, as the rest of us endure the dire consequences of austerity.

The Tory "recovery" has benefited the wealthiest minority enormously, whilst ordinary wage earners have seen their incomes fall in real terms month after month after month in an unprecedented period of sustained wage repression. Those of us reliant upon savings or pension funds rather than earnings have also lost out terribly as our investments have been eroded away by inflation. Meanwhile the speculative classes have benefited by borrowing to fund their speculative investments at the very same ultra-low interest rates that are destroying the value of the labour, savings and pensions of the rest of us*.

The one thing that right-wing apologists for austerity really don't want you to think about is the fact that by the time Margaret Thatcher was elected in 1979 and set about her ideological destruction of the post-war settlement with her mantra of "modernisation" and "opportunity", the national debt was down to just 43% of GDP.  This means that decades of state investment, improved infrastructure, access to social housing and well funded universal services coincided with an almost 200% reduction in the national debt!

In contrast, after just four years of George Osborne's slash and burn economic lunacy, the national debt has risen so dramatically that he's already created more national debt (as a percentage of GDP) than all of the Labour governments in history combined

Only the economically uneducated could think about something as complex as the national economy in terms of "shattered piggy banks" and imagine the opposite of the truth to be the case. History has shown time and again that you can't simply cut your way out of a crisis, this is because you need to spend money to make money.**


             When people from the left lower themselves to using the economically illiterate tabloidesque language of "government piggy banks" and "national credit cards" to explain our views on the economy, we play right into the hands of the wealthy minority who understand how the economy actually works, and have spent the last three decades rigging the whole system in their own favour.

These beneficiaries of the crony capitalist system know that "the left" will never be able to effectively oppose the right-wing orthodoxy (austerity, privatisation, deregulation and tax cuts for the rich) if the public have got heads so full of economically illiterate nonsense that they don't have a chance of properly understanding how the system actually works.

So next time you hear someone purporting to be left-wing harping on about "overusing the national credit card" or complaining that the "government piggy bank is broken". You've got to stop them - because as long as people continue to think in such simplistic and misleading economic terms, they can be easily led by the nose by those who have a vested interest in the public not actually understanding the basics of what's going on.

If we allow ourselves to remain so economically uneducated that we believe in such simplistic nonsense, we can easily be convinced that good is bad, that black is white and that we can't afford to keep the NHS despite the fact that the tiny super-rich minority are busy making themselves richer at a faster rate than ever.

If you want to learn more about economics, you could use my guide to learning about economics as a starting point.

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* This is hardly controversial stuff. Even the IMF have finally admitted that ultra-low interest rates have benefited the speculative class, who have borrowed at low interest in order to inflate vast and unstable speculative bubbles like the London housing market. 
**of course you have to spend money wisely, to make money - but that's a whole other story.

The "maxed out national credit card" false analogy
Recommended reading - economics
George Osborne's incompetence is undeniable, so why do so many people rate the Tories as the most economically trustworthy?

What is ... Fiscal Multiplication?
The "unpatriotic left" fallacy 
Who is to blame for the economic crisis?
Why Quantitative Easing is bad
Why bailing out RBS was a catastrophic mistake
The Tory ideological mission
Margaret Thatcher's toxic neoliberal legacies