READERS' BLOG

by Nadia Idle of War on Want

 

Right, so like Ruth, I have approached my homework readings with some degree of fear; and more so because it’s my week to blog. Or rather I’ve put it off for a couple of weeks because I was too scared of the responsibility of having to write this, and so also missed out on watching the Masters of Money documentary. I kind of know the macro-analysis and I have little difficulty with debating supply chains and sweatshops for War on Want, but this economics stuff is what intimidation is made of and oppression by men in suits feeds off. Ok rant over, here we go:

 

I really liked the Chang article. It makes two crucial points so well. Firstly, he presents a neat, fact based argument that cutting spending on public services, i.e spending less of our money on us, does not, even within capitalism’s own logic, save the economy. It does not lift the economy out of recession, in fact it leads to recession. There is historical evidence for these policies failing over and over from the Great Depression to Argentina in 2002. Yet there is little recognition (or admittance?) of this in the public sphere. And cutting spending does not kick start growth either. And making the rich richer through tax cuts and deregulation (i.e less protection for society and workers from being bulldozed by big business) does not even help investment and growth. Flexible labour markets (i.e less job security and rights in the workplace) don’t seem to help growth either. So why the bloody hell are they doing it then?!

 

Chang encapsulates it like this: Austerity IS working. It is working to maintain and intensify an economic system that in fact works very well for the rich and powerful. This suggests that the need to cut the deficit and “pull Britain out of recession” are in fact excuses to push through policies that are continuing to support an over all strategy of trickle up, from poor to rich. In other words, there is a political and ideological agenda at work here, and it ain’t for mine or your benefit, mate.

 

The second point he makes urges us to rise above the clouds of neoliberal economic arguments and logic to ask: what kind of society do we want to live in? To me this means: do we want a society based on principles of rights, freedom and equality or where the majority live in servitude to the very rich? And stemming from that answer should be therefore what sort of economy we need to make that possible. Our economic system should be servant to society, not the other way round.

 

Part One’s readings taught us to be weary of the term “expert economists”, and so I think we should be, even if we think their comments are useful for our political arguments! I think this collection of quotes on the False Economy website are most useful as a go-to for demonstrating that many notable personas in finance and economics think that the government’s policies are barmy IF their intention is to lift the economy out of recession.

 

In a great 5 minute film, Mark Blyth deconstructs the idea that austerity is common sense, and shows that it’s nonsense. I have to say that despite the clever use of graphics to illustrate for the not-so economically literate – I had to replay the first part several times to actually get his argument. The strongest and most relevant bit is from 3min onwards where he explains how the debt is being paid for again by the poorest; the first time round being when the banks were bailed out.  His best metaphor is describing austerity as being marketed as the inevitable the pain after the party, except those who partied hardest get the least headache in the morning. Rather, the bottom 40% who didn’t benefit from the financial boom who are paying, although their personal debt was a small percentage of the overall debt. Falling real terms income meant that in order to pay for rent, school uniforms, fixing your car to keep your job, food, utilities etc, the poor had to borrow. In other words, they had to get into debt in order to survive and remain a functioning a participant in society.

 

The nice thing about Blyth’s illustration is that he demonstrates that the argument that the majority partied too hard and now have to pay, is akin to saying that single mum’s are to be locked up for benefit fraud of £20 a week, while ignoring the fact that Starbucks, Amazon, Google and the like, get away with avoiding millions in tax payments to the public purse.

 

I started off this blog uninspired and by writing stuff down I feel quite knowledgeable and empowered so I must have learnt something! In week one I learnt that economy is a set of social relations and not a sacred cow society needs suffer for. This week, I feel clearer about what austerity is for. As Chang said, will we allow ourselves to live within a logic where “the rich have to be made richer to work harder while the poor have to be made poorer to work harder?” That says it all for me.

Part 2: "We all spent too much"

Each week someone from the econowhat? team will be reading the books and articles and watching the film. That person will post up their comments here to get the discussion started, then please add your own comments. The bloggers are not expert economists, but other people we know are, so don't be shy to ask questions.

The Readers' Blog

Nadia Idle stacks_image_220_1ruthbergen Maddysmall

The bloggers

Nadia Idle, War on Want

Maddy Evans, Jubilee Debt Campaign

Ruth Bergan, Trade Justice Movement

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Part 4: Bank bailouts blog >>

Part 5 blog>>

 

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