How reducing government spending is fueling household debt

Think back to July, the Tories cheered on economic results from the ONS, that revealed a budget surplus in July for the first time in 18 years. Those cheers do not reasonate with people around the British Isles, as all this Tory government has done is shift borrowing. From the public sector and onto the private.For the first time since the credit booms of the 80s British households now spent  more on average than they received in income.

In 2017 the Equality and Human Rights Commission published a report on the full impact that austerity will have by 2022, its findings are intrinsic to understanding why U.K. Household debt is rising. It confirmed that policies of austerity will affect the poorest in society, the most. Bluntly speaking by 2022, those earning the least will be 10% worse off, the richest just 1%. Even worse is that neoliberal policies discriminate, ‘Black Households’ as these will be 5% worse off than their white counter-parts.

These Conservative policies have further reinforced the barriers of upwards social mobility, allowing the introduction of zero-hour contracts in-order-to make the U.K. economy, ‘more flexible’, but is just an indirect means of introducing a hire-fire culture and eroding worker rights. The poorest in 2010 are even poorer now, because the Government has allowed companies to pay below a truly ‘living wage’, which forces low-income families to borrow, in-order-to meet their every-day needs. Which is where the problem lies, U.K. households now spend an average of £900 more than they receive and this problem will only worsen, as inflation rises, so do interest rates. The government has shifted the deficit from the treasury to our back pockets.

In March 2012, total household debt stood at £1,518.5bn in today’s prices compared with £1,630.1bn in 2017. This implies that U.K. households are having to borrow to fund spending, this is closely linked with the fact that real term wages rose just 0.7% over the same period. Before 2016, U.K. households were net savers, but now we are partnered only with Canada in the G7, as two countries that are net borrowers. More striking is the fact that Germany’s financial saving ratio is positive 35%.

Source: ONS: Household debt: statistics and impact on economy 

Samuel Tombs, UK Economist at Pantheon Macroeconomics, said: ‘Rapidly falling public borrowing continues to reflect sharp falls in spending, rather than a reviving economy.’ This is where government policy has failed us, GDP growth since 2010 has been fuelled by an expansion of consumer credit, rather than investment which our economy so desperately needs. As Philip Haynes, lecturer in Public Policy points out, ideas surrounding national investment strategies, come second to balancing the budget. The most recent OECD statistics on government spending are from 2016, and at that point they placed the U.K. in 20th, with government spending at around 41%, a figure that has been steadily decreasing. This is in comparison to the world’s happiest country, Finland, where spending is near 56%. Although a variety of factors contribute to why a nation’s economy grows, in 2016 Slovakia finished one place above the U.K. in terms of government spending and has steadily increased since, as we have gone the other way, their economy grew by 4.2% last year.

The obsession with eliminating the deficit and pursuing neoliberal policies, has cost us a decade of wage growth, squeezing living standards and plunged millions into poverty. The Conservatives have presided over negative real wage growth. In real terms we earn less now than we did in 2010.

A report in 2017 by The Joseph Rowntree foundation found that 14 million people in the U.K. now live in poverty, including 30% of Children. The effects on mental health are also startling, with nearly 25% of adults suffering from depression or anxiety in the poorest fifth of the population.

The problem that I have with our current economic situation is that it is completely reversable and is largely self-inflicted, this Tory government prioritises ideology over the people of Britain. The relentless rhetoric surrounding the deficit, is nonsense. The only thing saving the inept Conservative party is credit, we are running on fumes, this country desperately needs investment, basic economic theory tells you about the multiplier and what government spending can do in terms of increasing GDP, unsurprisingly this is neglected. Recollect your thoughts and think back to the circumstances in which the Tories were first elected, on the back of the worst economic crash in history, the people have been made to pay, for the failings of big banks. You, the people, paid for July’s budget surplus, and you the people will pay when this credit bubble bursts. Trust me when I say, the Government will be unforgiving in inflicting further neoliberal policies, when that happens.

Could the Daily Mail’s new editor help deliver a soft Brexit?

Yes, you read that correctly, it’s a question that may well enter the mainstream political debate in the near future. Which again, may come as a shock, but the decision by Daily Mail and General Trust plc to replace Paul Dacre, with Geordie Greig, is something that rightly should send shock-waves within the British media and British politics, for it may change the common discourse for years to come.

The consequence of this appointment lies in the fact that many journalists and academics acknowledge that the Daily Mail is Britain’ most influential newspaper, the print edition reach is over 3 million people and it boasts a combined PC and Mobile reach of over 16 million people. Online, they largely impression people over the age of 35, and the print version is read overwhelmingly by C2, D, E voters, both are key demographics when considering who voted Brexit. With such a readership comes great power to influence public policy, and although it is difficult to quantify just how influential the Daily Mail was in 2016 and how many people voted to leave the European Union based on the articles they had read, Paul Dacre would find comfort in any evidence linking his editorship and the referendum result. The atmosphere of hostility that he aggressively pursued as editor, be that towards migrants, the EU and anyone that disagreed with the Daily Mail line is something that has undoubtedly caused a lasting impression on this country.

The appointment of Geordie Greig then, is all the more startling, evidenced by this graphic published online. From September 3rd 2015 til September 3rd 2016, the Daily Mail led with a story on migrants 60 times, that’s a front-page story on migrants every 5.2 days, (because it’s only published 6 days a week.)

Propaganda in the modern context, whether that be from news organisations, newspapers or any other media outlet is as follows. Media outlets provide their readership, viewers or listeners with a variety of media content, be that images, videos or articles – most lacking nuance and of dubious intellectual merit – that serve the intended purpose of promoting an ideology while fuelling disdain for the ‘opposition.’ The agenda that Paul Dacre pursued during his rule seemingly ticks all of the boxes, in defining propaganda, and certainly the headline ‘Enemies of The People’ springs to mind.

Geordie Greig brings a problem to Theresa May, as the anti-EU peppering of the Daily Mail readership slows and starts to shift to remain, it is now unlikely that she will have the backing of the Daily Mail for a Hard Brexit. Especially as Mr Greig was this week quoted by the Guardian as saying, ‘We want the least damaging Brexit.’ Note that although the Daily Mail’s proprietor Lord Rothermere has long made clear he doesn’t intervene on editorial-lines, he is Anti-Brexit, it could be a coincidence that such an appointment has been accelerated. If it isn’t though, Mrs May knows that her political career rests on how her deal with the EU is perceived in domestic politics, which is set to be mapped out in October/November time. If the extremist tone used in the Daily Mail, that has long been used to promote Boris Johnson’s and Jacob Rees-Mogg’s vision of how Brexit should look, is no longer endorsed in the Daily Mail, she may find herself an unlikely-ally. And again, if, today’s paper is anything to go by, the change is now, as Andrew Pierce’ piece details Chuka Umunna’s interview with the New European, describing the MP as ‘dapper’, and includes the quote from Mr Umuna that ‘we’ve conceded too much ground to the far right.’ The idea of Mail moving its stance was picked up by the Financial Times, showing that it is not just me who has noticed the shift.

Beyond Brexit though, this appointment may begin to heal a divided nation, one that was seemingly fixated on migrants, how they destructed British culture and an addiction to everything negative, may have run its legs. Don’t hold your breath though, come November we may be looking at a WTO trade deal, the damage inflicted by Paul Dacre’s tenure has already been done, 26 years of spreading racial hatred has had its impact. Mr Greig has made clear that a drastic change in the editorial line will not be hurried in fear of alienating its readers, I’m not predicting that the Daily Mail is going to start supporting socialist policies delivered by Jeremy Corbyn himself. Simply, that by next year a more nuanced and less radical view of the news will be presented to the British public. Geordie Greig may have been the last way we thought we’d avoid a Hard Brexit, he may now be the only way.

The BBC and the dangerous precedent it continues to set.

Many people argue that attacking the BBC is disingenuous. Indeed, as a national broadcaster and also the world’s most trusted news organisation, it really does hold a significant and unique position in British society. So, with this in mind, how has it failed us so badly, in our time of need?

We need not look further than when BBC 2’s Newsnight presenter Kirsty Wark interviewed Cambridge Analytica whistleblower Chris Wylie on Friday night. She began by asking questions on a variety of topics including the complicity of Facebook in allowing CA to harvest data from millions of users and then use such data to target voters in elections, including the 2016 U.S. Presidential Election and the Brexit vote. They then moved to discuss the recent ruling from the Electoral Commission which declared that Vote Leave had broken electoral law. Yet, despite the insurmountable evidence, Kirsty Wark dismissed Chris Wylie 5 times, claiming that rulings are just ‘allegations’, adding: ‘we couldn’t prove that this data misuse actually swung elections.’ In an attempt to rebuke, Chris Wylie responded: ‘Vote Leave have been found to have broken the law’, ‘these aren’t allegations and every time I come on the BBC I get told these are just allegations.’

If this doesn’t concern you, it should. Undoubtedly – as I have said before – the BBC is a key mechanism in holding the government to account. What’s more, as a public service broadcaster, it also has a duty to the public to uncover scandals such as this. But when Kirsty Wark merely states that “we can’t prove the effect that such data misuse has had on elections”, it suggests that the BBC has lost its investigate drive. Similarly, as news leaked that Vote Leave was going to be found guilty of breaking the law, Laura Kuenssberg cast doubt by writing the following piece. In took her just under 4 lines to quote a criticism and 5 lines to write about how it was being rebuked by prominent Brexiteers. This sets a dangerous precedent, I understand the BBC must find a balance on how it reports on breaking news, giving views that represent its entire audience, but she is the political editor of the BBC, and the article she wrote undermined a critical institution in a British democracy that is slowly crumbling.

With the BBC’s style in serious doubt, it seems that Channel 4 has adopted the responsibility of demanding difficult answers to the difficult questions that this country so desperately craves. For example, it broke the news on Cambridge Analytica having conducted months of undercover evidence gathering and seems to be asking the hard-hitting questions. Take for example the recent news about Aaron Banks, it’s been reported that he was seeking to gain investment for his failing diamond mine from Russian businessmen as early as 2015. At this moment in time, despite the various allegations, there is no link between Russian money funding the Brexit vote through an intermediary. It is, however, suspicious that a man who’s diamond mines have failed and are bankrupt in South Africa, was the largest donor to the Vote Leave campaign. Again, the BBC which has a responsibility to investigate such matters has failed. As one of the largest broadcasters, it invests vast sums of public money into journalism, but where’s our return? With this in mind, you’d be surprised at the work Channel 4 do. When you consider that their total revenue was in 2017 £970 Million in 2017, in comparison to the BBC where revenue in was over £5 Billion, we are treated to far more in-depth expose

My view? In struggling to provide a balance to cater to a deeply divided country, the BBC has lost factual objectivity. Facts are now debated on the BBC, in a way they shouldn’t be, in ‘simplistic’ terms. As flippant as it may sound, if my house is green, no impartial news programme should then invite two guests and allow one of them to tell viewers that it’s actually red. Although it may be a lighter/darker shade, it can still be classified as red. What’s worse is that in recent times, views often go unchallenged, no-one properly interrogates wild, inaccurate, and improper statements.

A recent report on BBC bias concluded that a pro-Brexit bias exists within the organisation, it would be unfair to judge an organisation based solely on this. The BBC has a duty to the people to change, but it ’s running out of time. The problems lie in the way guests are interviewed, the lack of preparation from presenters, its crumbling accountability. We should be careful what we wish for, but we should wish for much better.

 

 

Woodcock should make sure he is accountable by calling a by-election

Not since the election of Cecil Franks in 1987, has the Barrow-in-Furness constituency turned blue, that so nearly changed in 2017, although re-elected John Woodcock has long been fighting a loosing battle, suspended in April for allegedly sending inappropriate text messages to a female staffer, his time is up.

This is the tale of the Sheffield born MP whom, if he chooses to fight another election, will have his work cut-out.

As calls intensify for John to face the electorate by triggering a by-election, he has so far resisted. A spokesman for Jeremy Corbyn had the following to say, The spokesman said: “In normal circumstances, if you stand for election on one platform and then decide to abandon the platform you stood on, basic rules of democratic accountability suggest that you should then put that to the electorate.”

In 2017, John Woodcock came awfully close to losing his seat, the margin closed to just 209 votes, between a Conservative candidate that quite literally no one knew. John Woodcock once attended a debate at the local college, for the majority of the time he sat on his phone, when I tweeted him, he called me out, professionalism hasn’t always been his forte.

It must be admitted that John backed Trident, the latest Submarine programme, and key Labour figures did not, considering that BAE Systems employs over 7000 people in Barrow and many more businesses in the local economy depend on the ‘Shipyard’, this was always going to be an uphill struggle for a candidate that didn’t exactly ‘resonate’ with the local electorate.

A constituency on the coast, it does not fare well in terms of Socio-economic statistics, for example, Barrow is nearly 7% above the national average for percentage of DE voters, and over 7% for C2 voters. More telling is that, 19.3% of residents are on benefits, compared to the national average of 13.5%. I could go on and on with figures, about how the town and surrounding areas rank lower in terms of health and education, but you begin to get the picture.

 

Without delving into Labour policy too much, it is quite obvious that Jeremy Corbyn is attempting to introduce a socially progressive agenda. An agenda that focuses on pressing issues such as soaring inequality and falling wages, caused by years of cuts to public services and austerity measures. Corbyn a candidate that prioritises health, education and giving the people of Barrow, for example, the opportunity to progress through the social ladder and into secure employment that does not revolve around zero-hour contracts. Interestingly Len McKluskey had the following to say following his resignation:

It must be said John has been an MP that has fought hard on local issues, such as running a campaign to save the local maternity ward. There have also been a variety of factors that have been out of his control, such as local train services, which are ultimately down to Tory failure. For example, in the last 100 days, the Barrow-Preston 4:53 train has been late 75% of the time, if you’re unlucky enough to travel on the 7:46, that service has arrived delayed 88% of the time. He has also presided over cuts to services to Manchester at their peak 8 services used to connect the two towns a day, before the infamous ttimetablechange it was down to 3.

Will he or won’t he trigger a by-election, I doubt it, not if he values his cushty MP salary.

Tick Tock, the Tory game of Brexit Chicken.

With 69% of Britons saying Brexit is going badly, (including 58% of leavers), May is under increasing pressure from her critics, be that in her Government or on the opposition benches.

With her Brexit plan that was agreed upon at Chequers already on the rails and two senior figures handing in their resignation, she is now also faced with the reality that it will almost certainly be rejected by the EU. Whilst talk intensifies about the 48 signatures needed to trigger a Vote of No Confidence for the Tory Leadership, what is less certain is whether MPs will trigger such a mechanism.

The rebels have more problems than simple numbers, firstly who to replace her, there’s an open field of budding candidates, but the Tories haven’t yet united behind one candidate as an ideal replacement. Ruth Davidson looks like a likely front runner amongst Tory voters, but critically not MPs, she polls highest in 4 of 6 categories, but there’s no indication as to whether she’d put her name in the hat. Secondly and significantly, she campaigned for Remain, which is unlikely to heal any divisions in the Tory party.
Critically for Corbyn however, is that May will likely stay on, and he’ll relish being able to face the predictable and easily malfunctioning Maybot at PMQs, just look at how it played on CNN on Monday evening. Although, a general election is unlikely even if the VONC was triggered, the lack of rebellion within the Tory party may be a blessing in disguise for Corbyn. Voters will likely come to a realisation down the line about the economic hardship that a Brexit pursued by the Tories will deliver.

Consider this though, if a Vote of no confidence were to be triggered and somehow the Hard Brexiteers managed to install someone that shared their vision post-European European Union model for the U.K would look, for example Boris Johnson. Corbyn may encounter issues of his own 43% of people oppose the Brexit that Corbyn is pursuing, if by the time the next general election came around the Tories had started to repeal worker rights, whilst the economy crumbled and inequality soared, the pitch forks may come for Labour HQ, as a party that complied in the process.

For now, Corbyn will have the benefit of hindsight on the top issue of the decade, an advantage that may yet become a hindrance. Theresa will likely remain in power, but picture a Jenga block with 48 signatures. The powerful backbenchers from the ERG group, that have seemingly dictated policy within the Tory party are playing a game of chicken, they realise that the Brexit that has to be agreed upon by October will not deliver their dream of a fully neoliberal state.

“Corbyn is a Brexiteer for one reason, to help workers”

As the debate surrounding Jeremy Corbyn and his views on Europe are debated in the media, it’s worth discussing how he’s arrived at this position. Rather than lobbying the leader of the opposition, who has no majority in the Commons, it might be worthwhile asking and understanding how the Tory’s and Labour have arrived at Eurosceptic views.

Consider the core of Corbyn’s political plan. Nationalisation of key industries, trains, energy, water etc. Jeremy Corbyn realises the European Union law enforces competition within all such industries. As member states brace themselves for such changes and begin to implement neoliberal reforms, see, Corbyn stands to see himself on the right side of history once again. Although national ownership isn’t forbidden, private companies often undercut the state in the bidding for franchises or contracts to provide public services in a competitive tender. Subsequently slashing wages, eroding their rights and providing a lower standard of public service, in order to make it profitable. Few would argue that the quality of service in Germany, France and Spain on the railways is not value for money, at least now while it’s in the safe hands of the state but under EU law contracts must be on offer to private companies and go to the cheapest provider. Neoliberal laws that would hold back Corbyn’s

Secondly, free markets often lead to the exploitation of workers, to increase profits, costs must be lowered. Corbyn, a long-standing advocate of worker rights, said this in 2017, “What there wouldn’t be is the wholesale importation of underpaid (EU Migrant) workers from central Europe in order to destroy conditions, particularly in the construction industry.” Not only does Corbyn see the single market as a method of exploiting British workers, but also EU workers. Particularly in low-skilled industries, where advertising agencies attract workers from low-pay countries. This is an area of much debate, and whether EU migrants have genuinely caused a decrease in the wages of U.K. workers is something I could not judge on, as many reports have shown the impact has apparently been minimal. The principle remains.

The problem is, Brexit in any form will make us worse off, and we live in a globalised world, so it’s unrealistic to expect to cut ourselves off completely from the single market. Yet, EU rules will allow Corbyn to implement a socialist agenda, something that otherwise would’ve been difficult.

Two steps left, three steps right.

How will the right utilise Brexit then, for decades now just as Margret Thatcher had envisioned successive governments have stripped workers of their rights, and the ‘free market’ has depressed wages, in the United Kingdom wages still haven’t recovered to pre-crisis levels, the EU has in many cases intervened to support citizens. In the same instance as Corbyn will be free from EU rules, so will the Tory’s, expect deregulation like no other, I quote Charles Koch, ‘Restaurants should be permitted not to force employees to wash hands, if they display this is the policy openly.’ Bon Appetit. The Tory’s will continue to implement a vision of business free from government oversight, as citizens, as consumers, that should worry you.

Such policies of deregulation led to the Flint Water Crisis, and will lead to the next crisis and the one after that. Don’t be surprised if we crash out of the EU without a deal, a crisis would inevitably follow, and shock therapy would likely be used again. For example, in a recession, a government often asks for concessions from the electorate, i.e. Further cuts to public services, to ‘cut the debt’, which has ballooned, by the way. Or tax cuts for business designed to ‘attract investment’ and ‘stimulate the economy.’ Such policies lead to further transferring of wealth to the elite, fulfilled by all too willing Conservative representatives, who often have conflicts of interest in such cases.

Analysis comparing the vote share of the Leave vote in U.K. Counties and the Strength of the Import Shock in such counties shows direct correlation between one another, which gives basis to Corbyn’s argument that Free Markets have a negative impact on workers.

Corbyn supports Brexit for the right reasons, it doesn’t necessarily make it the right decision. Unfortunately, we live in a globalised world and we do need companies to invest in our economy and our people, leaving the single market and customs union will have a negative impact on our economy, which is the great deliberation.

Corbyn may yet leave the Tory’s to implode as part of his cunning plan, but the road to socialism is, ironically, filled with pot-holes.

Why Neoliberalism seeks to undermine Democracy.

Neo-Liberalism has always been thoroughly unattractive to the voter. In normal times cuts to the public sector, choosing to reform the tax system to be more regressive and getting less for your tax money at the expense of corporate profits would never get into government but in a crisis can be delivered to government, as the UK knows only too well.

During times of crisis, Neoliberalism breeds mistrust amongst people in elected representatives through its many outlets in the media. By portraying the state as bankrupt, neoliberal institutions such as the ECB and IMF have implemented constitutional reform in countries, normally on the matters of debt, to reduce and limit the ability to borrow for public spending.

For example, in Greece and Italy, the Budget deficit must not be more than 3% of GDP per annum. This is a fundamental mechanism to enabling neoliberalism to come to fruition, representatives are portrayed as corrupt and inept to make economic decisions, hence power is transferred to market institutions, such practices are taken to lock-in neoliberal governance.

A look back on history shows financial bail-outs are key to understanding how neoliberal policies are applied in democracies. The Structural Adjustment Programmes implemented during the 1980’s coincided (incidentally) with the debt crisis in the developing world. The IMF provided finance for debt, in return for the restructuring of the economy, and cementing of neoliberal governance in such countries. Such policies included, the privatisation of national industries, removing subsidies in agricultural and focusing on export-led growth, the result being the vicious exploitation of such states and its people by Transnational Companies.  The ECB has used similar means in the modern-era, where during the period of the Greek debt crisis bail-outs were used to implement constitutional reforms because during normal times neoliberalism cannot garner the consent for it policies through democracy. In the UK, for example, there is little support for policies of austerity, and in addition, there is growing support for public ownership, for example, 89% of Brits, want to renationalise the railways. The last few years have seen the NHS being tipped to breaking point, through underfunding and in other public services it is worse still, all because of loyalty to an ideology. The Conservative government effectively used the crisis of the global financial crash to deliver policies that without the scaremongering about debt and overspending would have been vastly unattractive.

The Greek debt crisis of 2010 shows how Neo-Liberalism uses crisis to undermine democracy. A report analysing how leading mainstream media outlets reported on the Greek crisis showed that the blame was laid squarely on two factors. Overspending and malpractice of the state. Journalists argued that the Greek state had been living beyond its means, public spending was overly generous, as was its pension system, they deemed corruption to be rife. This is fundamental in how neoliberalism works, it allows the ideology to breed mistrust amongst voters in democracy, for who do you blame when your pension has disappeared, or you cannot access money at the ATM, the state of course. Representatives are left as the enemy and the cause of the crisis.

The central belief of neoliberals in the Mont Perlin Society was that the market was always more efficient in its allocation of resources than the state. Neoliberals during the latter half of the 20th century saw representatives having to cater to the various demands of the electorate, often promising increases in public spending. Which explains the view of neoliberals that the problem with the dominant political system in the ‘West’ was democracy itself. Buchanan saw the promises to increase public spending as an encroachment on the freedom of the individual, hence, his resolution to a conflict between democracy and ‘freedom’ is to always rule in favour of ‘freedom’.

The encroachment he saw was that rich men, and it was men he referred to, would end up paying for such public services through higher taxation, he saw it as a discriminatory, as did his bankrollers, the Koch brothers. Charles Koch, in particular, was a devoted neoliberal and its noted that he asked Buchanan to study Vladimir Lenin’s tactics of rule, including the methods used to oppress the masses and then apply it to the Libertarian cause. Consider then that, Ordoliberals (a strand of neoliberalism), were opposed to democracy as they thought representatives and officials were prone to corruption, they saw representatives doing the bidding of special interest groups following the collapse of the Weimar Republic. Yet the Koch brothers and other neoliberals have lobbied representatives for decades, to implement neoliberal policies, one of the Koch brothers even tried his hand at the US Legislature himself.

Although there is no definitive figure to sum how much Charles Koch has given to advance his cause, he funded James Buchanan’s Centre for Study of Public Choice, lobbied representatives for decades and in 2016 alone, the Koch brothers announced they had a $900 Million kitty to spend on the campaign. How to explain this? Neoliberals have exploited democracy and its representatives during times of crisis, this idea that during times of financial distress, neoliberal policies are a necessity. Yet, that is the key revelation, because during normal times such policies are rejected, no one votes to receive less for their tax money.

Democracy is a political system that gives power to the people, for all its flaws, quite simply it is a political system that can bring about change. Neoliberals know this, Buchanan and co. saw representatives bring about desegregation because that was the will of the people, to put it bluntly, democracy is an obstacle to neoliberal policies. Yet, in 2018 most major economies are neoliberal. Take for example in Italy where they are resisting change, the discourse and commentary on the crisis has begun, Jean Michel Barnier called the Italians ‘corrupt.’ This then is the incompatible relationship between democracy and neoliberalism.