Today Vox Political is offering a guest blog, for your edification and education. Graeme Beard wrote the following in response to ‘Millionaire’s government will make paupers of us all’. It’s far too long for me to put in the ‘Comment’ section of that article but far too interesting to let it go unpublished. Therefore I am reproducing it as an article in its own right. If anyone else has anything they want to get off their chests, I’ll happily consider other submissions as well.
Over to Graeme:
OK – well let’s get something rather nasty out of the way first. Austerity for the masses is an extremely efficient and effective macro-economic device. Absolutely counter-productive and even destructive to a consumer based economy it is the best way by far, (apart from slavery) on a macro-economic level to shift money from the pockets of the poor to the pockets of the rich.
Make no mistake, the austerity measures being introduced are moving £Billions ‘upward’. None will come ‘downward’. The national debt will be paid off by the poor and the poorer. It will not, and is not being paid off by the rich and affluent. They are untouched and seem to be untouchable. In fact the rich and affluent are seeing their personal wealth increase at an incredible rate.
The following is a global perspective but it applies just as strongly to the UK. The rich are enjoying a boom time and for this particular conspiracy theorist I am of the opinion that it is a deliberate measure. They want it all.
Secondly, let’s state the ‘bleedin obvious’: We live in a consumer society. Like it or not – want to change it or not – it’s what we got, playmates. To that end we have to play the ‘consumer game’ cards in hand. There is no choice. It is a given.
A consumer society (be it local, national or global) depends almost entirely on consumers having a disposable income. That is, money above and beyond that which they need purely to survive. If they do not have a disposable income over and above that needed to satisfy their basic needs such as food, clothing, utility bills, shelter etc then, in many ways, they become what economists call ‘non-consumers’.
For instance, they can’t spend money on what some would consider to be luxury goods like new or used motor cars, or books, or education, or to replace a cooker or fridge that’s on its way out. They make-do, make-shift and mend. Their ‘extra’ spending on consumer goods (the very goods we need to be purchased by consumers in order for the economy not only to grow, but survive) is dead in the water. If they haven’t got it they can’t spend it. The more that have no – or diminishing – disposable income, the more the economy will contract.
It’s happening now and there’s more to come. Far more. People thrown out of work, because of slowing demand or even a demand crash in consumer goods they make or services they provide, or those that become disabled and draw state benefits, are a prime example. They do little more than survive and become non-consumers above subsistence in double quick time. Ergo they are lost to the consumer society. It is a downward spiral and the Multiplier Effect takes over in negative form. See below.
Now this is not rocket science and can plainly be seen repeatedly with only a cursory glance at macro-economic history. Don’t believe me? Look for yourself! To introduce and pursue measures of austerity for the mass of the population in an attempt to ‘heal’ a consumer economy is like trying to catch hold of the world by the arse and pull it uphill.
These austerity measures are either being pursued in ignorance (which I find very hard to believe) or as a deliberate measure to engorge the rich and affluent at the expense of the poor.
For 35 years, post-Second World War, the UK had full employment. Bankrupted by the conflict and in massive national debt, the population was fully employed; the NHS was introduced; the welfare system proposed by ‘The Report of the Inter-Departmental Committee on Social Insurance and Allied Services.’ (The Beveridge Report) was adopted and applied with vigour. People had jobs with disposable income; they consumed (and in quantity – demand for consumer goods went through the roof); tax incomes to the government went up enormously; numbers of people on benefits were minuscule (they had jobs); the construction industry went off ‘bang!’; etc etc. I’m sure you get the drift. John Maynard Keynes’ ‘Multiplier Effect’ in motion and this time in positive mode.
Bit of a problem though! Full employment came with a terrible cost. It gave those in employment power – mainly the power to withdraw their labour and expertise.
And that’s the reason we will never have full employment in the UK ever again.
It gives people at the bottom power and those at the top really don’t want that. They need the sticks of unemployment and poverty for them to sustain their lifestyles. People on the breadline and/or in debt or under threat keep their heads down, live smaller and smaller, and consume less and less in the hope it will eventually, by some kind of magic, get better. It rarely does.
In concert with that, and at the very same time, those who feel insecure and threatened but are in decently-paid jobs and who could shut down their spending too and save more and more for their (maybe) ‘rainy day’ are also removed, if only in part, from the consumer society that we all depend on.
So, actually impoverishing consumers – the very consumers who could – and, history shows, would – drag this economy out of the faecal mess that the cretinous politicians and bankers put us in in the first place, means they are unable to do so – because they are struggling with ‘austerity measures’ and seeing their disposable income decrease alarmingly.
Full employment, as dangerous to those ‘above’ as it may be, is good for a consumer society. Taxes are paid alongside National Insurance contributions; welfare payments reduce exponentially because people have jobs; demand for consumer goods increases and, via the ‘multiplier effect’, more jobs come online and more money is made available to spend. It is an upward spiral.
If you want to heal a consumer economy, don’t introduce more disease. Austerity for the masses is exactly that – a disease – to a consumer society. Don’t believe me though – gawd forbid! Look around you, because it’s happening now, and happening just about everywhere apart from the more affluent areas of the UK.
And that, in part, is why our towns as a working example are full of charity shops, pawnbrokers, and people wanting to buy your surplus gold for two and a half buttons so they can get rich and you can eat or heat next week.
As an addendum: http://www.ted.com/talks/richard_wilkinson.html?utm_source=newsletter_weekly_2011-10-25&utm_campaign=newsletter_weekly&utm_medium=email