Inflation drop doesn’t mean wages will rise

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‘For the privileged few’: If you’re earning the average wage of £26,500 per year, or less, then nothing George Osborne says will be relevant to you.

Why are the mainstream media so keen to make you think falling inflation means your wages will rise?

There is absolutely no indication that this will happen.

If you are lucky, and the drop in inflation (to 1.7 per cent) affects things that make a difference to the pound in your pocket, like fuel prices, groceries and utility bills, then their prices are now outstripping your ability to pay for them at a slightly slower rate. Big deal.

The reports all say that private sector wages are on the way up – but this includes the salaries of fatcat company bosses along with the lowest-paid office cleaners.

FTSE-100 bosses all received more pay by January 8 than average workers earn in a year. Their average annual pay rise is 14 per cent. Bankers get 35 per cent. These are all included in the national private sector average of 1.7 per cent, which means you get a lot less than the figures suggest.

Occasional Chancellor George Osborne said: “These latest inflation numbers are welcome news for families.” Why? Because they aren’t sinking into debt quite as fast as they were last month? They’re great news for the fatcats mentioned above, along with MPs, who are in line to get an inflation-busting 11 per cent rise; but as far as families are concerned, rest assured he’s lying again.

“Lower inflation and rising job numbers show our long-term plan is working, and bringing greater economic security,” he had the cheek to add. Employment has risen, although we should probably discount a large proportion of the self-employed statistics as these are most likely people who’ve been encouraged to claim tax credits rather than unemployment benefits and will be hit with a huge overpayment bill once HMRC finds out (as discussed in many previous articles).

The problem is, Britain’s economic performance has not improved in line with the number of extra jobs. If we have more people in work now than ever before in this nation’s history, then the economy should be going gangbusters – surging ahead, meaning higher pay for everybody and a much bigger tax take for the government, solving its debt reduction problem and ensuring it can pay for our public services – right?

We all know that isn’t happening. It isn’t happening because the large employment figures are based on a mixture of lies and low wages. The economy can’t surge forward because ordinary people aren’t being paid enough – and ordinary working people are the ones who fuel national economies; from necessity they spend a far higher percentage of their earnings than the fatcats and it is the circulation of this money that generates profit, and tax revenues.

Osborne compounded his lies by adding: “There is still much more we need to do to build the resilient economy I spoke of at the Budget.” He has no intention of doing any such thing. He never had.

Conservative economic policy is twofold, it seems: Create widescale unemployment in order to depress wages for those who do the actual work and boost profits for bosses and shareholders; and cut the national tax take to ensure that they can tell us the UK cannot afford a welfare state, opening the door for privatised medicine and private health and income insurance firms.

This is why, as has been discussed very recently, leaders of the Margaret Thatcher era including Nicholas Ridley and Keith Joseph determined that the defeat of the workers would require “the substantial destruction of Britain’s remaining industrial base” (according to ‘The Impact of Thatcherism on Health and Well-Being in Britain’). It is, therefore, impossible for George Osborne to seek to build any “resilient economy” that will improve your lot, unless you are a company boss, banker, or shareholder.

The plan to starve the public sector, as has been repeated many times on this blog, has been named ‘Starving the Beast’ and involves ensuring that the tax take cannot sustain public services by keeping working wages so low that hardly any tax comes in (the Tory Democrat determination to raise the threshold at which takes is paid plays right into this scheme) and cutting taxes for the extremely well-paid (and we have seen this take place, from 50 per cent to 45. Corporation tax has also been cut by 25 per cent).

This is why Ed Balls is right to say that average earnings are £1,600 per year less than in May 2010, why Labour is right to point out that the economy is still performing well below its height under Labour…

… and why the government and the mainstream media are lying to you yet again.

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Don’t believe Cameron’s claims; there is no need for austerity – and there never was

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Flinging around the bling: Someone should have told David Cameron that he shouldn’t surround himself with gold when he’s rubbing the proles’ noses in unlimited austerity. The horse impression may also have been ill-judged.

David Cameron must think we are a nation of fools.

He came into office by the back door after failing to convince a majority of British citizens that his pal Gideon’s George’s plan to starve the economy of money would magically refill the Treasury’s empty coffers. Three and a half years of relentless pro-Tory propaganda from the tabloids later, and he tells us – at an opulent banquet, no less! – that austerity is here to stay.

Isn’t that because his policies have been a disaster, then?

Yes. But a disaster for us, not him or his bankster/financier/corporate masters.

As this blog stated more than a year ago, “people need to understand that the Coalition government’s fiscal strategy isn’t about reducing the national deficit at all. If it was, we would not have had a big tax break for the richest in society as part of the last budget. It’s a strategy to axe public services, selling off to rich corporations any that might be capable of yielding a profit. George W Bush followed this policy in the United States a few years ago; it’s called ‘starving the beast’.”

Look this up on Wikipedia and you will find that it involves cutting taxes in order to deprive the government of revenue in a deliberate effort to force reduced spending. In the USA, we are told, “the short- and medium-term effect of the strategy has dramatically increased the United States’ public debt rather than reduce spending”.

Republican presidential candidate Fred Thompson’s tax-cutting plan was expected to be funded by lower government spending on social security and healthcare – and it is important that people here in the UK should see the similarities between that and the Coalition government’s privatisation of the National Health Service (we’re told the NHS is a registered company now), along with its many attacks on people who claim social security benefits.

We’ve had tax cuts for the very rich – the so-called “millionaire’s tax cut” that brought the top rate of Income Tax down from 50 per cent to 45 per cent. Corporation Tax is coming down from 28 per cent to 21 per cent while the corporations that write UK tax policy are using it to facilitate tax avoidance schemes. And the poorest workers in the country are being fooled into believing they are getting a good deal out of the policy of raising the tax threshold to £10,000 per year.

Let’s look at that. Nick Clegg wants to raise it still further, so that nobody is taxed on earnings below £10,500 per year, but this means the Treasury will be starved of £1 billion. That’s a lot of money. Meanwhile, the deficit – and the debt – keeps rising.

We’ve had almost no change in the national deficit, year on year. Michael Meacher’s latest blog entry tells us, “the UK debt overhang is growing, not reducing… the budget deficit is not going down appreciably either. In 2011 it was £118bn and in 2012 this had hardly fallen at all at £115bn. The 40% cut in public spending budgets and the £18bn cut in benefits and hence in consumer demand, plus the £40bn further intended cuts after 2015, has produced searing pain, yet next to [no] improvement in the national accounts which was supposed to be the whole aim of the exercise.”

It is also important to note that the effect of raising the tax threshold for poorer people has been completely negated by other changes in government benefits for people on low incomes, unemployment or incapacity support; in fact they are worse off.

It is against that background – tax cuts for the very rich and the corporates, “searing” pain for the poor and worsening national debt – that David Cameron announced, at the gold-trimmed Lord Mayor’s Banquet, “We are sticking to the task. But that doesn’t just mean making difficult decisions on public spending… it means building a leaner, more efficient state. We need to do more with less. Not just now, but permanently.”

At last he has admitted the point of the last three and a half pointless years. He has been starving the Treasury of the cash it needs to balance the books, and now he feels able to tell us that it isn’t going to happen unless public services are cut drastically.

He must be so happy.

Presumably he hasn’t realised that he has just told the British public that his policies, those of his political party and the Coalition of which it is a part, have been an abject disaster for the people of the United Kingdom.

He promised that he would get the deficit down; he failed.

He promised that the measures he took would be applied equally to everyone, from the highest-earners to the lowest; they weren’t.

Now he has promised to build a leaner, more efficient state, using examples from education and health, whose funding has been ring-fenced throughout his period in office; he is lying.

It is time, now, for serious-minded people to draw a line below the selfish policies of the last 30 years and start thinking about government for all the people once again.

When governments talk about making cuts, they’re not talking about help for the rich. Social or economic programmes, supported by taxes, are only ever put in place to level a playing field that would otherwise be tilted against the poor or disadvantaged. Removing such programmes means a less equal society; one that is more UNfair.

Remember that when Cameron and his cronies – especially people like Iain Duncan Smith and Esther McVey – talk about making Britain a fairer place to live and work.

Their words carry about as much weight as their leader’s 2010 election promises.

Don’t expect any U-turns from our blinkered Chancellor

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It’s no good pulling a face, George; we can all see exactly what you’re doing – and it’s neither big nor clever!

There’s absolutely no possibility that George Osborne will give in to the latest calls for him to ditch his ‘deficit reduction strategy’ and adopt a more moderate plan.

Firstly, people need to understand that the Coalition government’s fiscal strategy isn’t about reducing the national deficit at all. If it was, we would not have had a big tax break for the richest in society as part of the last budget. It’s a strategy to axe public services, selling off to rich corporations any that might be capable of yielding a profit. George W Bush followed this policy in the United States a few years ago; it’s called ‘starving the beast’ – look it up on Wikipedia.

Secondly, a more moderate plan, mixing appropriate savings in government costs with growth-creating measures, is something Mr Osborne could never palate for one reason: It’s the policy put forward by the Labour Party before the 2010 election. Adopting it would mean that he was admitting Labour were right; the Conservatives were entirely wrong to put forward their ideologically-driven austerity plan as an alternative; and that he had wasted everybody’s time and tax money for the past two and a half years.

At least we get the joy of watching all his support flow away, drip by drip. The current story shows nine of the 20 economists who signed a letter supporting austerity back in February 2010 (just before the general election) have had a change of heart. Others have already done so.

Furthermore, Boris Johnson merrily stabbed the part-time Chancellor in the back, at the same time as the economists. He called for David Cameron to “stop pussyfooting around” and invest in major infrastructure projects in London.

His outburst was an outstanding achievement as he managed to shoot himself in both feet at the same time – putting himself at odds with the Conservative leadership and showing the country as a whole how out of touch he really is.

London has just received £9.3 billion worth of investment for the Olympic games, along with related infrastructure investments worth a further (reputed) £16 billion. Other parts of the UK are desperate for investment on a fraction of that scale!

For example, the people of Scotland might reconsider whether secession from the United Kingdom was a good idea, if the UK government invested a little cash in their country; as might the people of Wales.

Oh! But then, Scotland and Wales don’t vote Conservative, do they?

USA – another great depression or greatly depressing?

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Will the American public realise what Mitt Romney’s fiscal plans mean, or will they elect him anyway?

Now that the Olympics are over and everybody’s having a rest from medal-counting (don’t forget the Paralympics will be starting soon, though, providing the opportunity to do it all over again), may I just take this opportunity to ask readers in the USA, just what the blazes is going on with your Presidential candidates?

A few years ago, your economy was devastated by comedy president George W Bush, with a policy known as ‘starving the beast’. For those with short memories, this involved tax breaks for the very rich, creating a deficit in the US Treasury, which made it possible for him to claim public services were costing too much – and then cut public services.

Bush left the White House in 2009 to pursue his career in stand-up comedy (and sank without a trace) but his ideas were taken up on my side of the Atlantic by one David Cameron and his bestie, George Osborne.

They realised that, after the credit crunch of 2008, there wasn’t enough money coming into the British Treasury to pay for public services and launched their policy of fiscal austerity on the UK’s already-depressed economy. The tax breaks for the very rich arrived a few years later.

Now, back in the States, you have a new Republican Presidential candidate, Mitt Romney, who – and please, correct me if I’m wrong – wants to starve the beast all over again.

Mr Romney wants to impose tax cuts for the very rich, but has no plan to offset the effect of these cuts by closing other tax loopholes or the like.

As one influential commentator has it: “Romney is just intending to blow up the deficit to lavish favours on the wealthy, then use it as an excuse to savage Social Security and Medicare.”

He claims there will be fabulous growth effects.

Well.

Seeing as Mr Romney’s policy seems so similar to Mr Osborne’s, lets look at what’s happened here in Blighty since fiscal austerity started biting, shall we?

It tanked.

From the moment Osborne’s first spending review (a mini-budget in late 2010) took effect, the economy flatlined. Since the beginning of 2012 it went back into recession in a big way, knocking a whole one per cent off GDP.

Meanwhile, the Coalition (Conservative and Liberal Democrat parties) has cut taxes for the very rich but also raised the amount people can earn without being taxed. This inevitably means less revenue for the Treasury. Services are already being cut and they’re discussing ways to cut further than previously planned.

Does anybody really think those poor people who’ve been lifted out of tax are going to be better off for the loss of the public services they need?

Do any US citizens reading this seriously think that lower and middle-class people in your country are going to benefit from the loss of public services that will be required to make your ultra-rich even richer?

And what’s the incumbent, President Obama, going to do? Are his budget plans any better?