In response to The Daily Post’s writing prompt: “We Can Be Taught!.”
William Keegan (2014) Mr Osborne’s Economic Experiment. Austerity 1945-51 and 2010 –
The first question when purchasing a book about economics is it worth the money? Let’s look at the evidence. The book costs £10 or thereabouts. This includes delivery. Not bad. But it is very short—or concise—depending on your definition. Large borders on the page. Empty spaces. Empty pages to seem more value for your buck, or pound sterling. Notes. Index. I’d guess less than 50 000 words. You can read it in one sitting. And there is a tendency to repeat the same story or telling phrase twice or thrice in different parts. ‘Pushing on a piece of string’ to describe monetary policy or ‘sadomonetarism’ for the government’s reliance on this as a tool to adjust consumer activity is a favourite.
William Keegan writes for the Observer. Anyone familiar with his work knows that he is an advocate of Keynesian expansion during times of economic contraction in the economy. He does not shirk from using words like Depression. In the aftermath of the banking crisis of 2007-8 and its aftermath when our then Prime Minister Gordon Brown ‘saved the world’ by galvanising world-wide support for government intervention and injecting government money into banks to keep them afloat and save economies going into free-fall, as they did in the 1930s, there was little or no talk of austerity—not even from the Conservative frontbenches.
That came with Osborne and his crony crew of Cameron and Boris Johnson that run government for the rich. Post-second-world- war London like the rest of the nation suffered from shortages of just about everything. ‘Economists calculated that, in order to balance the books, exports would need to rise not only to pre-war levels, but to 75% above those levels.’ In addition to this the flow of cash that supported the British economy, the Land Lease agreement, running at ‘£2 billion a year’ (multiply that by 100 for nowadays) was, with the war ended, abruptly terminated. The winter of 1946-7 was one of the coldest on record. Nationwide power cuts. A debt ratio of around 148% more than can be produced by all the goods and service that Britain could produce in any one year.
Osborne’s great con trick was a debt ratio inherited from Gordon Brown and Labour of around 7% and making most observers believe that this was insufferable and like Greece, the road to bankruptcy. As Keegan shows John Major’s government ran a greater debt to GDP ratio. And it’s worth noting if the Greek government went to the troika that issued their loans and were asked to pay it back in fourteen years, bond renewal, as the current government has, and not six months then most governments, of whatever political persuasion, would hardly constitute it as a crisis.
Lots can happen in that time. Even a rudderless ship eventually hits shore. With a growing population and expansion from a low starting point in the economy grass roots of economic expansion have begun to appear. Osborne claims credit for this. Austerity works, even when it doesn’t. His failure to use fiscal policy, build a nation for the future when money literally costs virtually nothing is short-sighted and stupid. By measuring Britain’s progress prior to the shock of 2008 Osborne by IMF projection has set back the county by several years.
Listen, who cares? The problem with Keegan’s polemic is those reading it are already aware of this. Just as they are aware of Tory government’s attack on welfare abuse as a Trojan horse to dismantle the welfare state and increase the flow of money to crony capitalists like themselves.
Those who believe all is light in the world of Tory finance and the government is doing a grand job would not pay for Keegan’s book. The problem isn’t preaching to the converted. The problem comes when the Conservatives win the next election and begin in earnest to dismantle the welfare state. What is to be done?
Not many people read dictionaries, especially, a dictionary of money-talk that will be out of date by the time it gets to print, but I was always a bit weird. One of the few and therefore scarce O’grades I got was in the ‘dismal science’ of economics. I got a B grade. Put that in your pipe and smoke it. I know you’re secretly impressed. I was surprised. I’ll tell you my secret: if it wasn’t supply; it was demand. I could even pontificate about elasticity: elasticity is when something is not inelastic. I was good on the laws of diminishing return. It was always a farmer’s field and planting crops and well, you’ve watched The Waltons, you know what happens next. John Boy comes out with a piece of folksy wisdom and in a good year he gets a new hat. Economics is about telling stories. Recently I personally experienced the law of diminishing returns. At one level I attempted to sell the same story –Lily Poole – to the same people again and again. Chances of that happen diminish with each frantic effort. The people that buy have already bought. One of the problems of classical economics is it assumes – among other things – that the seller will have perfect knowledge of the market. I look across and in the next field Lavadis and Ewan are also selling the same product, but they are having three and four times the success rate I’m having. I don’t know how that happened. I have imperfect knowledge. But I want to move into their field and bring down their margins of success while boosting mine. Most folk do. In the pub I conducted a quick survey of who had perfect knowledge. I got two ‘Yes’ votes. Three ‘No’ votes and two ‘Fuck off’ votes. ‘Fuck off’ ties with ‘Yes’ and that’s how economics works.
Lets look at ‘paradis fiscaux’ before looking at the mucky letter ‘r’. You’re probably thinking ‘Jo le taxi’ and Vanessa Paradis. That’s how I didn’t get an A-grade in that O’ level all those years ago. Paradix fiscaux is just a fancy way of saying to poor people, fuck off, we’re not paying taxes. We live in Paradis-fiscaux land and if Vanessa lives there all the better for us.
Our beloved Prime Minister Margaret Thatcher put it quite plainly. ‘Nations depend for their health, economically, culturally and psychologically upon the achievements of a comparatively small number of talented and determined people.’
The Wealth of Nations will trickle down to those who don’t really deserve it, but there are a number of economic tools to help them adjust. ‘Reducing payroll – sacking people’. ‘Redundancy –sacking people’. ‘Reform –sacking people’ and making those that stay more productive, which generally means working longer hours for less money and foregoing luxuries such as being sick, wanting a holiday or worrying about pension plans. ‘Rent’ is an interesting word. It’s unproductive, yet it drives the money and housing market. ‘It is an attempt to take a bigger piece of the existing pie rather than make the pie bigger’. The Shards and glass-fronted tower blocks of Central London are the flagships of rent-seeking behaviour, and banks like RBS are the privateers that sail on a sea of finance. The UK taxpayer, of course, owns ‘82% of RBS, and at the time of writing is sitting on a loss of £15 billion’. The Government couldn’t let such banks sink and I dare not speak its name, has nationalised the big four banks.
A comparatively small number of talented and determined people have smashed the global economy, which since 2008 has resulted in world-wide depression, and this governments answer has been more or the same, more of the four ‘r’s. Let’s look at risk. Perhaps we better not. Sometimes it’s better not knowing. The rich get rich. The poor get poorer. That’s one constant. Perhaps it’s best to end with an old joke ‘Well, that works in practice, but let’s go and see if it works in theory.’