It’s a curious thing. The right wing unionist media are so entrenched in the tory narrative they sell every day that they seem to have forgotten that they’re salesmen. Well salesmen with a dash of the magician about them, misdirecting their audience so that they miss the act of deception itself and instead buy the illusion; only in this case it seems the magician has also fallen for the illusion, and to such a degree they’ve even forgotten it’s a trick.
The narrative I speak of is the one where we’re told everything in the country will be just fine as long as we go from fiscal deficit to surplus as quickly as possible, and do so mainly by cutting public spending.
This, along with the constant diversion of shifting blame for the state of the economy from incompetent bankers and politicians to benefits claimants and immigrants (and of course all whilst making no mention of the billions lost in tax noncompliance or indeed corporate welfare) constitutes both the misdirection and the illusion that the right wing establishment perpetuates.
And it is an illusion because the contention that we need to make cuts – especially to benefits – is a lie.
Indeed the idea that austerity economics is the only approach to economies either in, or recovering from, recession – and that therefore all debate should take place within this narrative – is entirely laughable; not least because the economic tale of the need for austerity has been largely rubbished and rejected by the world’s economists.
This has been elucidated particularly well by US economist and Nobel Laureate Paul Krugman, who remarked in April “since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer”. He adds “all of the economic research that allegedly supported the austerity push has been discredited”; thus it has failed both in practice and in theory. Indeed his fellow economist and Nobel Laureate Joseph Stiglitz sums it up nicely: “austerity has been an utter and unmitigated disaster”.
Even still Krugman notes that the three main UK establishment parties and indeed most of the UK media “still believes it”, adding “by 2013, austerian doctrine was in ignominious retreat in most of the world – yet at that very moment much of the UK press was declaring that doctrine vindicated”.
Some might argue that the coalition (as well as the Labour Party) and most of the media took such a view as a result of the signs of economic growth by 2013. However this growth wasn’t a sign of the success of austerity, rather it was a sign of applying the brakes; Krugman comments “given the fact that the coalition essentially stopped imposing new austerity measures after its first two years, there’s nothing at all surprising about seeing a revival of economic growth in 2013”.
That economic growth in the UK jumped up again in 2014 further exemplifies Krugman’s point: “Britain did almost no fiscal tightening in 2014, and grew 2.9%. In other words, it performed pretty much exactly as you should have expected”, he then adds the crucial point “and the growth of recent years does nothing to change the fact that Britain paid a high price for the austerity of 2010-2012”.
In case there was any doubt that British economists largely agree with the conclusions of most others elsewhere, the 2015 survey by the Centre for Macroeconomics makes the reality clear: they concur in spades.
Indeed in its survey of leading UK economists CFM found that only 1 in 6 mildly agreed with the proposition that austerity had stimulated growth and employment (no-one strongly agreed).
It’s very clear at this point that with a Tory government planning a further round of deep cuts we can expect the same kind of stalling growth for no economic reason or gain.
Indeed Stiglitz has commented that continued austerity in the EU is leading to resurgent ‘stagnation’. Even leading economist at the IMF, Olivier Blanchard, as reported by Brad Plumer in the Washington Post, has admitted that “recent efforts among wealthy countries to shrink their deficits…have been causing far more economic damage than experts had assumed”.
So why is the UK government and most of our media perpetuating this illusion of the need for continued austerity when it’s clear that this has been, and will be, damaging to our economy?
Well I am sure for most of us the reason is already very obvious: the real aim behind austerity is shrinking the state; and indeed on this point we cannot purport that the intention has been hidden.
David Cameron has been very clear his party’s purpose has been to cut the size of government spending “not just now, but permanently”. The lie of course being that this is good for the economy as well as each and every British citizen, rather than the truth which is that this is ideological and the only people who benefit are the richest in society; who now not only have more power over the rest as a result of austerity, but who’ve also seen their wealth increase at astonishing rates, rivalled only by the rate of increase in food poverty and malnutrition in this ‘one nation’ Great Britain.
Of course the reasons for Labour’s adherence to the illusion are no less selfish.
They may not be as ideological when it comes to austerity as the Tories (although granted this is presently debatable) but their adherence to the Tory austerity mantra of the need for spending cuts meant that in the General Election people in the UK weren’t given the alternative of fiscal stimulus and sustainable growth (the economically credible course of action) from either of the two main parties. Of course this stimulus approach preferred by economists would not only have been better for the economy, but also the majority and certainly the most vulnerable; and yet the party that is supposed to be ‘for the working people’ embraced austerity instead.
So why did Labour do it?
Arguing within the Tory narrative was obviously the only way the Labour party thought it could win people’s votes; though one might have hoped they would have had more concern for the outcome. Krugman commented before the election: “both major parties are in effect promising a new round of austerity that might well hold back a recovery that has, so far, come nowhere near to making up the ground lost during the recession and the initial phase of austerity”.
The sad thing now of course is that after losing so comprehensively Labour are adhering to the Tory narrative more than ever before. Absolutely hopeless.
And that takes us back to our unionist-media salesman with a penchant for the illusory (much like their political counterparts): in a Twitter conversation I had with a Times columnist recently he commented that a SNP MP had refused to debate the SNP policy of Full Fiscal Responsibility and instead responded when questioned that the SNP will do ‘better than the Tories’ when it comes to running the Scottish economy.
The journalist felt this was simply an effort to shut down debate, however my take was that more than likely it was simply a refusal to argue within the Tory narrative – i.e. that the issue surrounding FFR is simply a question of where the Scottish government would make cuts to fill its £7.6 billion ‘black hole’, or rather Scotland’s projected deficit for the year 2015-16 as a result of being part of the UK.
We must also remember to take the relevance of this projected deficit with a pinch of salt – not least because no-one knows the total tax revenue for Scotland due to the refusal of successive Westminster governments to detail this information. Not to mention the obvious fact (ignored by the IFS) that the whole point of FFR is to do things differently to how they are done now.
In my view any refusal to engage in the Tory narrative is thus a wise move by SNP MP’s; not only does the SNP have nothing to gain by debating on the false premise that you have to cut to deal with a deficit (and one which would be different anyway) but in refusing to do so, whether in parliament or elsewhere, they are also doing the British people a good turn.
Indeed all people and parties upholding the Tory narrative are continuing an illusion that serves only to damage the lives of the majority, and bring misery to the most vulnerable. Charities on the frontline of stemming the devastation of UK government policies make it clear there can be no doubt that austerity has come at great human cost.
Thus the SNP, by challenging this narrative and arguing real progressive politics, are slowly but surely opening up the terms of the debate and helping to break through the illusion so that we arrive at the simple reality: there is another way, and it’s far better.
The failure of many journalists to understand that this is even a possibility is quite astounding, as in the end all it is testament to is their ability to be taken in by their own illusion. As Krugman noted, somewhat stunned, they still believe it…
So if cuts aren’t the answer then what is?
Krugman asserts that ‘fiscal expansion’ is the initial means of creating economic growth for the UK, i.e. an increase in public spending through borrowing ; indeed Stiglitz has been arguing the same position and it is widely understood by economists that this is the path to take. Krugman adds that this is nothing new, contrary to what we may read in the UK papers or indeed hear on the BBC “mainstream, textbook economics not only justified the initial round of post-crisis stimulus, but said that this stimulus should continue until economies had recovered”. In other words the majority of economists have been telling us this from the start, it’s just more are doing so now than ever before.
This is also the SNP position and has been since before the election. The idea of course being that the need to borrow will gradually reduce as the economy grows stronger.
However the vision of a ‘recovered economy’ needs some attention here. George Osborne has argued that this government, as well as all its successors, needs to ensure there is a ‘permanent budget surplus’; the idea being that this is the way to run a healthy economy. However yet again the Tory storybook of economics has been rubbished by the world’s leading academic economists.
On Friday 77 of them, including Ha-Joon Chang, Thomas Picketty and David Blanchflower published a letter in the Guardian newspaper pleading with Osborne not to play politics with the economy, stating quite simply that his plans “have no basis in economics” and that his policy of enshrining surpluses into law “requires an urgent rethink”.
They go on to warn if Osborne enacts his policy of bringing a permanent end to government borrowing, it could have a knock-on effect to personal debt; “households, consumers and businesses may have to borrow more overall, and the risk of a personal debt crisis to rival 2008 could be very real indeed” they add further that Osborne risks a ‘liquidity crisis’ which could result in “banking problems, a fall in GDP, a crash, or all three”.
These experts thus make clear that of course governments need the option to borrow, and of course this is part of a healthy functioning economy and they are utterly incredulous at the idea that any government would think otherwise. They are at pains to point out that running surpluses shouldn’t be the main economic goal of responsible government, but rather the goal should be “(the ability) to respond appropriately to constantly evolving economic circumstances, good or bad” in order to “deliver a stable economy in which all can prosper”.
So recovered, healthy economies may still run deficits and this isn’t a bad thing. In fact it’s crystal clear that the main focus should be on creating sustainable economic growth, using the right kinds of levers including borrowing when needed, in order to effect the kind of ‘stable economy’ these economists have made clear is currently in a state of utter peril in the UK, whilst in the hands of the apparently economically illiterate Conservative government (and clearly Labour are no better).
Not so with the SNP; indeed this very recognition is clearly why in addition to John Swinney’s comments that the Scottish government will use its new borrowing powers sensibly for investment to stimulate growth, the SNP have put forward a proposal for the phasing in of FFR that begins with Scotland taking on the right set of powers in the right order to be able to grow our unique economy, in a stable, sustainable way.
And of course if the Scottish government were able to implement FFR they would gradually be able to take further growth measures:
For example they could levy new progressive taxes, the kinds recommended by charities such as Oxfam to deal with the stain that is rising inequality; a financial transactions tax and a land value tax would be a good start. And of course with the Scottish Government’s tight tax avoidance laws they could recoup lost tax revenues currently uncollected due to (deliberately) lax UK tax laws and procedures. To put these into perspective the land value tax alone could add billions to the budget each year (we should also note that for this particular tax we don’t even need FFR). And indeed these are ongoing redistributive taxes which in addition to strengthening our economy would also help to create a more equal society.
They could also look at innovative finance options such as green infrastructure quantitative easing.
Economist Richard Murphy from Tax Research UK argued in Holyrood Magazine that the Scottish government could use such money creation to invest in “infrastructure, housing, new energy systems, transport and the other essential underpinnings of growth in Scotland”. And he is not alone; left wing economic think tanks such as the Common Weal Project and the New Economics Foundation have promoted the same idea.
Murphy has also made it clear that he rejects the growth forecasts of the ‘neoliberal’ IFS and that once the Scottish government was able to put its economic ideas into practice “Scotland could deliver exponential growth”.
We must also remember that the UK as a whole in the five years up to 2013-14 ran a cumulative deficit of £600 billion. This should give us some indication of the reality that having deficits, even substantial ones, doesn’t prevent a country from running her own finances. This should go without saying, however when the establishment parties and media are citing this as the reason why Scotland should not be fiscally autonomous, it becomes incumbent on those of us who still rely on principles and common sense to state the ridiculously (and woefully) obvious.
Therefore it’s not a question of whether or not we can become fiscally autonomous or indeed of which cuts we would make; as has been demonstrated here these questions are rooted solely in the illusion of neoliberal austerity politics (or indeed complete distortions of fact) and thus are undeserving of the dignity of a response; as a progressive I simply refuse to lend any validity to this socially oppressive narrative.
Instead I feel duty bound to both highlight and challenge this very narrative – the one we see reflected all around us – everywhere from the Telegraph to the Daily Record -and from David Cameron to Kezia Dugdale; by focusing on the deficit and portraying its significance in the way they do they show their hand and I say call them out on it, and indeed for the socially and economically destructive politics they are propping up even in their questions.
There is a valid narrative in which to debate the merits of FFR: how can the people of Scotland and our representatives build our country according to what we voted for and what we want to be, rooted in the economic reality that we not only can grow without cuts, but that we must; and to those unionists who refuse to acknowledge this final point and prefer their hall of mirrors, I say goodbye – because at least as far as this debate goes, it’s time to leave you behind.
And of course the most important question here has already been answered, and that is the question of who we trust with the job of growing our economy and to take the right decisions for all of our people, not just the privileged few; not only so that we have a fairer, more equal society, but so that we prosper too.
We answered this question on May 7th by returning an overwhelming majority of 56 SNP MP’s to Westminster, who won not only the majority of seats but the majority of votes as well, and who stood on a manifesto platform of negotiating FFR for the Scottish people; thus both their mandate and our response couldn’t be clearer: we trust ourselves.
However those in the commentariat who always anchor themselves in the real debate, such as Iain MacWhirter of the Herald, have argued for a long time that FFR will not happen as it’s too close to independence for the unionists. It should be very clear to us all by now that they aren’t wrong.
Indeed the Tories, cheered along by a gleeful Labour, are ignoring the mandate our MP’s have been given by the Scottish electorate and instead are overruling our demonstrated will and imposing theirs on us instead. We essentially voted for devo max last month and the UK government has told us tough – you’re not getting it – not even close to it (it might lead to ideas above the station we want you at).
The irony of course is that in an effort to retain the union they are committing yet another act that will condemn it. It seems the level of idiocy within these parties when it comes to the economy is matched only by the same in their approach to the union.
And indeed just as it is clear what to expect with the economy in (either of) their hands, it is now clear what to expect for Scotland as well: We will be at the mercy of governments we don’t vote for (this is now likely to be the case whether it’s Tories or Labour winning the UK ballot) and they will only respect what we do vote for insofar as it coincides with their own interests, no matter the detriment to us (and if there was ever any doubt as to whether this is in fact the case, their income tax trap decisively laid that doubt to rest).
This is the unionist idea of democracy.
And it’s in this contempt for the values underpinning ours that the UK government refuses to implement FFR, or indeed to hold to the unionist party promises of devo max/home rule made before the referendum (or indeed it seems even to Smith); and this will leave us with a watered down Scotland Bill that provides very little room for economic manoeuvre. This does, however, precipitate the helpful clarity that the constitutional choice before the Scottish public is now both apparent and incontrovertible: if we want the powers we vote for, or indeed any more substantial powers at all, the only option left is independence.