Tuesday, 28 May 2019

Tory austerity fanaticism is nonsensical backwards-economics


The Tory austerity myth told us that the only way to reduce public borrowing was a massive programme of public sector spending cuts.

During the austerity years the Tories and their Lib-Dem enablers pushed all kinds of ruinous policies that resulted in the slowest economic recovery in centuries, and the worst collapse in the value of UK workers' wages since records began, but perhaps the most damaging aspect of all was their deliberate reduction in infrastructure investment so that the UK became the lowest-investment country in the entire developed world.

The bulk of the Tory austerity cuts (especially reductions in local government funding and cancelled infrastructure projects) have been deliberately aimed at non-Tory voting areas like the North East, South Wales, the central belt of Scotland, and the former industrial cities of Yorkshire, the North West, and Midlands.

Infrastructure investment is generally a strong fiscal multiplier, especially at times where the cost of borrowing is exceptionally low (like the last decade), because this kind of spending creates jobs and economic demand in the short-term, and increases the future economic potential of an economy in the long-term (high-skill, high-tech, high-pay companies are far more likely to locate in places with great infrastructure, than places with failing public services and outdated and over-crowded public transport links).

It seems too obvious to have to spell it out in simple like this, but a near-decade of Tory austerity fanaticism has proven that huge swathes of the UK population will simply believe that the only way to reduce borrowing is to wantonly slash spending on the things that actually increase economic potential and prosperity!

The latest evidence that "let's cut our way to growth" austerity fanaticism is completely backwards comes from the Office for National Statistics data on economic surpluses and deficits by region, which demonstrates a strong correlation with their data on investment on stuff like infrastructure and public transport.

It's surely no coincidence that the two regions with by far the highest levels of public investment in infrastructure and public transport also have the biggest per capita surpluses, while the three most austerity-blighted regions with the lowest levels of investment are the ones with the worst per capita deficits.

Of course this isn't a hard and fast rule, because the North West and Scotland buck the trend slightly in the graph with larger per capita deficits despite higher rates of investment, but it's important to note that these regions have also suffered much more severely due to Tory austerity fanaticism compared to regions with higher levels of habitual Tory-voting, like the South West, East of England, and East Midlands.

All the evidence points to the fact that the Tories have got it completely backwards. That cutting the deficit is achieved by increased public investment, and that low-investment high-austerity regions continue running deficits.

The more you cut, the worse the deficit.

But this blatant Tory backwardness won't bother most people.

Most of the mainstream media will continue refusing to explain explaining the relatively simple fact that austerity fanaticism does exactly the opposite of what the Tories claimed it would, so they people won't even know about it, and many of those who do somehow come across the mountains of evidence that austerity is completely backwards economic gibberish will simply ignore it because it actually takes bravery to admit that you've been the subject of a decade-long con job, when it's much easier on the ego to just ignore the compelling evidence that you got totally duped.

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20 comments:

Anonymous said...

Thomas makes the school boy error of assuming that correlation equals causation!

More people in London and the south east speak with a southern accent - maybe that's the reason? Or maybe the daytime temperature in in London and the south east is higher than "up north", maybe that's the reason for the apparent differences? As Thomas points out, but then dismisses, he wrote "Of course this isn't a hard and fast rule, because the North West and Scotland buck the trend slightly in the graph with larger per capita deficits despite higher rates of investment".

Contrary to that which Thomas would have you believe, employment is growing rapidly, unemployment is falling rapidly, the deficit is almost gone, growth is now at the EU average (higher than Germany), Corporation tax receipts continue to grow far faster than inflation and have risen 26% since the EU referendum and wages are now growing ahead of inflation too. The country is in infinitely better shape than when the Tories came into office and were left a note by the outgoing Labour government saying something along the lines of "sorry, there is no money left".

Things are not perfect and never will be. Nevertheless, if you want to know how Corbynomics work, in actual, real world, actuality, then you only need to glance over the Atlantic to Venezuela. Maybe Corbyn prefers the executioner in chief, murderer and rapist model demonstrated by that very nice man, Che Guevara?

Anonymous said...

Got to disagree on this point hud, Thomas is spouting a fair hit of gibberish per usual but the Tory austerity measures (backed by the E.U of course) did nothing but shrink the U.K economy when they were implemented. A mix of high migration, austerity and raising taxes is the basic reason 25% of the U.k population in in poverty. The Torys certainly aren't as bad as Corbyn economically, but they're still neo liberal shills without the faintest idea what they're doing with the economy.

Antitoria said...

Can anyone explain in relatively simple terms how Scotland (I live there) and the North West have relatively high levels of investment
7.4 and 8.9 billion, but have negative surpluses/per person of £-2600 and £-2800 respectively. As opposed to London at near +£4000/per
person with only slightly more investment ?

Anonymous said...

Scotland has a high rate of welfare (particularly high medical for heart disease and lung cancer as well as the effects of heroin being widespread in major cities) with little industry apart from north sea oil which has been on the decline this last decade. This means they receive subsidy from the u.k that usually doesnt see a return by billions.

Anonymous said...

London has the banking sector and business, however it does receive a disproportionate amount of tax competitive to its tax revenue and the rest of the UK.

Btw, a lot of that extra money gets sunk into transport, look how well that's going. Fuck TFL.

Antitoria said...

Thanks Anon

Unknown said...

Another employment of the "look at Venezuela" trope who conveniently overlooks the "toughest set of sanctions ever" they are subject to. The point of sanctions is to impose economic pressure right?

The Moon said...

Westminster and the Two Party State is the Problem https://themoonfromsyb.blogspot.com/2019/05/westminster-is-problem.html

Anonymous said...

To Unknown at 03.16

... you demonstrate the usual deflection tactics used by those that desire to cover up the indefensible. Indeed, economic sanctions were imposed in 2017. This followed events in 2014 and 2017 when the Venezuelan public protested against the urban violence, inflation and chronic shortages of basic goods, corruption and oppression. The Sanctions were a response, not the cause. Fool.

At this point, I always find it useful to ask readers to point me to an example of a socialist state that represents their view of where we should be heading. China? Ussr? North Korea, Cuba? East Germany? Cambodia? Alternatively, point me to a country that has successfully implemented socialism - anywhere on the planet - ever.

Anonymous said...

Uh huh, those "sanctions" realistically only cover Maduro and a few of the top tier levels of government.

Chavez created state funded co operatives that still function. They're awful, literally individuals creating business, getting free money then closing the business down multiple timess in a never ending run of smabused state welfare. That's the sort of economic policies, along with state run farms (hah!) That sunk Venezuela.

Anonymous said...

But the Nordic countries... oh, wait, they love they're free market enterprise. So much so they're leading in renewables,isnt that funny? ;)

Simon J Broome said...

"Something Something Tory PR Tory PR, VENEZUELA."

Some people are Nakedly obvious, and can be Summarily IGNORED.

The Nerd Nest said...

A country that has successfully implemented socialism? Britain.

The NHS, social security system, nationalisation of key industries and massive increases in council house building were all socialist policies implemented by Labour under Clement Attlee's government, and then broadly accepted by the Tories for the following couple of decades (until Thatcher introduced neoliberalism to the party when she became leader in 1975, though the Tories started moving back to the right under Heath before her).

We saw a tremendous fall in the debt-to-GDP ratio, equality improved as both richer and poorer people became better-off, and our infrastructure by the end of the Sixties was practically state-of-the-art. Yes, there were problems, but Thatcher's neoliberal policies didn't fix them.

Anonymous said...

And British socialism resulted in: a three day work week, coal miners using outdated equipment and contracting black lung in rates decades behind other countries due to outdated equipment, a 1.4 billion (probably much higher) loan from the IMF by Callaghan to keep up welfare subsidy for the coal mines... fuck me mate: nation wide power cuts, morgues backed up with bodies weeks out of date...

Neo liberalism fixed these, but it opened up corporate cronyism through the banks resulting in the current debacle. To say socialism is an answer is naive at best or wilfully stupid.

Anonymous said...

That's probably your best bet if you want to continue your narrative, cant let all those facts get in the way can you lol.

Anonymous said...

.... Reply to Mr Broome at 19.30 above.

Definition of Socialism: "a political and economic theory of social organisation which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole."

Mao tried it and killed 10s of millions of its people. The USSR tried it and killed 10s of millions of its people, etc, etc.

Doubtless you are some numpty that has a notion that you know how to implement socialism without killing a country's economy and oppressing and murdering its people. Totalitarian authoritarianism inevitably results and the only equality that results is that everyone becomes equally poor - except the corrupt elite. FACT!

... unless of course, you can point me to a country that has achieved the unicorn nirvana you want the UK to become.

Please re- read the definition of Socialism i provided above to make sure you understand what you are advocating. All successful capitalist countries have "public services".

Anonymous said...

...to the Nerd Nest at 8.02

Wow! Your definition of a "successful" implementation of Socialism .... is Britain in the 70's!!!!

As another commenter pointed out, 3 day week, strikes, power cuts, rubbish piled in the streets unemployment, etc. OMG

... God help us!

Daniel C said...

Anonymous with the various vacuous daily mail opinion piece comments;

Can you put your name to this gibberish you are posting please?

I do like the way at *28 May, 2019 18:06* you go from Corbynomics (despite these policies being pretty tame acts of socialism and actually not controversial https://www.theguardian.com/politics/2015/aug/22/jeremy-corbyn-economists-backing-anti-austerity-policies-corbynomics ) to Venezuela to Che! All in one slightly bizarre sentence.

Keep up proving AAV's points every time you post

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Anonymous said...

Well I cant speak for that anon but I myself do it because there are members of antifa on these pages whove threatened me violence for questioning the labour manifesto and frankly however paltry they may be I'd rather not risk any grievance to my family.

As for the policies: I'm sure people dont think re-nationalisation of UK energy is controversial until you have to foot the 250 billion bill even if it is over a ten year period,what with Edf only earning 330 million a year in revenue...