What's the worst that could happen?
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It is the contention of this book that there has been a move away from democratic politics, to one in which decision-making is driven by the media, big business, the rich and the think-tanks that have been set up by them. That is, policy is determined by a minority group, vested interests which have power and influence, but whose needs and demands may be diametrically opposed to the needs of the ordinary people.
Ultimately the issue is about what sort of society we want; do we ignore the poverty, the inequality, the dominance of special interest groups, or do we try to change the world around us?
Something has to be done, and politicians seem to have no idea as to what to do. But when we look at the problems, the global recession, the debt crisis, climate change, unemployment or poverty, big business is usually not far behind.
The crash of 2007 was caused by a failure to regulate banks, especially those of the United States, and a failure to regulate mortgage lending in that country. But no politicians or bankers or mortgage lenders ever accepted any responsibility for the disaster that they created, and no one was punished, reprimanded or even publicly blamed for the financial crisis that followed.
It is difficult to understand why some political leaders, specifically in Britain and Germany, feel that austerity is both necessary and the only choice. There is no observable justification for it, so one as to ask if we are being governed by little more than whim. Increasingly, the modern politician is not in office to look after the nation, the ordinary citizen or even those people who are most in need. Modern politics is the realm of the corporate shills, the PR hucksters and those looking for an easy career. *
But these smooth talkers do have the reassurance of knowing that both the power of money and the influence of the media are behind them.
They are in office to look after vested interests, but they must give the impression of wanting to look after both the country and its people.
For example, when David Cameron promised prior to the 2010 election, that there would be no major reorganisation of the National Health Service, which should have been taken as a firm policy commitment. The electorate should have been entitled to see that as an irrevocable guarantee that the NHS was safe with the Conservatives. But it soon turned out that Cameron's promise was meaningless, as Andrew Lansley introduced changes that would involve the biggest transformation of the NHS since its creation in 1948.
Sadly, in breaking his one most important promise, Cameron lost any right to describe himself or his government as a democratic regime. Its subsequent obsession with austerity was deeply misguided, but in breaking a promise about the NHS the Cameron government should have been widely condemned as an abuser of democratic processes. Politicians owe us better treatment than that.
But, before the election, David Cameron promised, “a cut in corporation tax for banks, offset by a withdrawal in support the “manufacturing industry…”
Manufacturing is often regarded as the foundation of the economy. Manufacturing is also one sector where increases in efficiency are almost unlimited, and all its products can be exported, which is not always true of the service sector.
In the 19th century, Britain was described as the workshop of the world, as it produced one half of all the manufactured goods in the world.
In Britain in the 1980s, the Thatcher government was particularly contemptuous of the role of old-fashioned metal-bashing. The result was that under Thatcher, one fifth of British industry vanished.
To dismiss a whole sector of productive activity, when unemployment is at * historically high levels, and the nation is on the verge of a recession, is little better than stupidity.
British politicians are not only exceedingly relaxed about the rich getting richer, they are also extremely relaxed about prestigious elements of British industry being sold to foreign companies.
Perhaps the real problem is that Britain's banks are too big, and have too much power. Their size makes them big enough to demand special treatment, low taxes and influence on banking policy and regulation. It therefore also makes them too big to control, and if anything, the banks control the government.
There were actually two separate recessions under the Thatcher regime, and it is said that the first eliminated Britain’s weaker businesses.
Thatcher’s second recession wiped out what could have been strong and healthy businesses. The damage that was done to the economy was so great that now, three decades later, the British economy has still not recovered.
There are deep flaws in the neoliberal world view. One part of it is the idea that regulation is a bad thing, as this involves interference by the government, and it does not allow the market to operate freely. Yet much of the economic crisis that the world faces now is due to the laxity of regulation in Britain, the United States and much of Europe.
The market view of the consumer is a very theoretical and shallow one, and views the consumer’s self-interest and rationality in a very superficial way.
Economics postulates a “rational consumer” who maximises their self-interest by looking at the price of things.
The theoretical rational consumer does not exist in the real world therefore one should not use the “rational consumer” or theoretical views of the markets in determining real-world policy. It is simply not appropriate.
Once the big players in the economy reach a certain size, the free market in the economist’s sense has ceased to exist.
Governments take the deregulation and free market approach not because of any evidence for that stance, but at least partly because it has become the accepted wisdom.
For Tony Blair Gordon Brown, it is quite possible that they were dazzled by the wealth of the business leaders whom they spoke to.
With David Cameron and George Osborne, it is quite possible that they were indoctrinated with neoliberal views as part of the air that they breathed in their public schools.
Either way the net result is that the default policy for government will not be the policy which is the best one for the nation, or for the economy or for any particular group in society, unless that group is one which has no need of any help. *
Democracy has been captured by those who find it most useful for their own purposes. Politics has become a charade in which, guided by a biased and corporate-owned media, we vote for the most confident and articulate members of a group of shabby con artists.
Our elected tormentors are out to persuade us to vote for them, despite the fact that they intend to make us worse off. To do this – acting against our interests, while claiming to be acting for us - requires persuasion and repetition.
The political right, aided by a right-wing big business-owned media, has managed to persuade the electorate to vote for their own impoverishment, to see their economy and their jobs vanish down the plughole while they applaud the small government, low tax, unequal society that has been created.
If we look at the case of Britain, we see political leaders with a clear idea of what they want to do, but with a huge gap between the altruism and compassion which they claimed to possess, and the total disregard for general well-being which their policies display.
Osborne in particular gives the impression of not being the least bit concerned about any damage his policies might be doing, either to society or to the economy. Some people believe that underneath his sarcastic, arrogant exterior is a soul that is filled with contempt for anyone who is not of his social class.
The Cameron-Osborne government has shown itself to be remarkably lacking in compassion, trampling over the welfare of most vulnerable and the most needy. This has not attracted as much attention as it deserves, due to the discretion of most of the media, and the presentation skills of the Prime Minister.
Since 1980, governments have become notorious for the multiple petty, pointless pieces of interference with education and healthcare.
Yet it is notable that the only major alteration to the NHS’s working practices in the last few years that has been an undeniable success was one that was motivated and guided entirely from within the NHS.
But ministers chose not to publish this because it would clash with their claims that the NHS was doing a poor job, and would undermine Lansley’s insistence on the need for a radical restructuring.
Lansley and Cameron have been less than fully open and honest about the strengths and weaknesses of the NHS. It would not be sensible to regard any of their statements on the subject as worthy of respect..
The problem with American healthcare is that it is driven by health insurance companies, big commercial hospitals and doctors who look for financially rewarding specialisms. Americans who know how healthcare works in other countries look with envy at those nations that have a single-payer system, such as Britain.
Congressional Budget Office estimates that by 2035, spending on health care will devour more than a quarter of the entire economy. This is not merely unsustainable, it is utterly insane.
For many people in the US, long-term treatment with expensive drugs or regular medical procedures is a quick route to either bankruptcy or death.
The fact is that there are no countries where medical care exceeds costs in the US, while the countries that have worse life expectancy of the US tend to be countries like Haiti or Burkina Faso.
To copy the American for-profit market system of health care at a time when US politicians are becoming increasingly aware of its faults, shows a recklessness that verges on stupidity.
For Lansley to publicly criticise the NHS without paying tribute to its achievements was cavalier at best, at worst, one suspects an attempt to mislead the public.
Remarkably, on one important indicator, access to healthcare, the NHS is outstanding. It was the only country out of 11 developed industrial nations “where wealth does not determine access to care.”
The report, which was scathing about health care in the United States, also found that the NHS was one of the most cost-effective of the 11 nations studied. The only healthcare system that was cheaper was that of New Zealand.
If the NHS can transform its own performance in cardiac surgery, and has the best access to healthcare out of 11 major industrial nations, one cannot meaningfully talk about needing to change the NHS.
Indeed, it would be difficult to find anybody in the medical profession who actually supports Lansley's restructuring.
Lansley seems to have achieved the remarkable feat of uniting every major medical organisation and publication against his proposals. For an outcome of this magnitude, we have to assume that the so-called reforms contain flaws that totally and utterly discredit them.
That in itself says, here is a government that does not care if the poor lack vital services, or if they can only access second-rate health care – or perhaps no health care at all.
The worst and the most harmful of the Cameron-Osborne policies was the unrelenting austerity.
The logic was that paying the interest on high levels of debt was crippling the economy and that if the government cut spending, its costs would be lower and therefore it could pay off some of the existing debt.
In other words, high levels of public debt limited what the government could do. This analysis is so shallow that it is scarcely credible that any politician would actually believe such an outcome
Even before the 2010 election, the Conservatives announced that if they won, they would begin cutting public spending straightaway.
Osborne claimed that “that a consensus of economic experts supports his policies.”
Spending cuts mean fewer nurses, teachers, civil servants, builders, transport staff and road engineers. And in a reverse of the job creation, every worker who loses their job ceases to pay tax, and therefore government revenue falls. However, now they are unemployed, they are entitled to claim benefits, and therefore government expenditure rises.
Perhaps the most important argument is that the economy is not recovering, and Britain is not able to pay off any more debt, because the economy is actually shrinking.
This is the crucial test; no matter how well constructed and rigorous a theory is, if it doesn’t work in the real world, it has no practical value.
Wealth through austerity has the same reek of irrationality as trickle-down theory, which was, “make the rich richer and everyone else worse off, and then the rich will make everyone else better off.”
Paul Krugman, a professor at Princeton University and a regular columnist for the New York Times, described the austerity measures as “destructive.” He was baffled by the view that, “less than a year into a weak recovery from the worst slump since World War II, is the time for policy makers to stop helping the jobless and start inflicting pain.”
In April 2011 employment minister Chris Grayling said the “vast majority” of new claimants for sickness benefits were in fact able to go back to work…”
It is just the Conservatives playing their favourite game, divide and rule, so that the ordinary voter blames the victim of the cuts, rather than the penny-pinching bully making the cuts.
Newspapers have only recently been weaned off the habit of fulminating against gays and racial minorities. It may be a long time before they point their wrath at politicians, rather than the disabled, the unemployed or single mothers. *
The coalition also scrapped a scheme designed to protect women from domestic abuse, by excluding violent partners from the home. This was done as part of the overall programme of spending cuts, and managed to endanger many women’s lives at the cost of one of the smallest savings that have been achieved.
In addition, according to the Institute for Fiscal Studies, changes to the tax and benefits system will push 500,000 children into absolute poverty by the year 2015.
Finally, one last petty saving to achieve maximum damage, the coalition has closed 124 Sure Start centres. This was part of an early start educational support scheme, designed to help disadvantaged children, and fight child poverty.
The inequality and poverty that Blair and Brown failed to reduce will almost certainly get much much worse under Cameron and Osborne.
The support of the media is useful to the coalition to distract attention from the harm that is being done to society, and to the many thousands of people that are being made worse off.
By 2015 the impact of Osborne’s plans will be literally, almost 10 times what it was in 2012. This could add another 3,000,000 to the rolls of the unemployed, giving a total of almost 10,000,000 people who will be financially worse off.
A government policy that institutionalises low wages is a dream come true for some big corporations. The fact that it harms the economy is not a problem for an executive who can now add an extra million to his or her salary.
Perhaps the most offensive of the many dubious ideas that have emerged under the coalition’s reign was making about 80 of the long-term unemployed work as stewards for the Queen’s Diamond Jubilee celebrations.
To make it even more offensive, many of them were not given anywhere to stay overnight. Their supervisors told them to sleep under London Bridge.
A survey found that three quarters of the chief executives of Britain’s top businesses believed that austerity was damaging the UK economy.
At the time of writing, HMRC faces 2,721 tax disputes with Britain’s big businesses. “They cover all taxes ranging from corporation tax to specific taxes such as the petroleum revenue tax and insurance premium tax. The oldest dispute goes back to 1990, although most are recent, according to the Revenue.”
It is surely a duty for all citizens, and indeed all beneficiaries, to contribute to society in order that it may continue to function, with all the services and institutions that it requires for its continued existence.
What seems to have happened over the years is that bureaucrats and civil servants have become part of the same power elite as politicians and corporate executives.
Increasingly the very concept of democracy seems outdated and inappropriate. Bureaucrats and functionaries of various sorts make solemn and weighty decisions which impact greatly on the lives of ordinary people, but not only do we not take part in decision-making process, we do not even hear that there is a decision to be made until after the event.
What has become quite clear from the News International scandal is that Downing Street was hand in glove with big business. It is not that the coalition is the puppet of big corporations, or that it is subservient to them; it is simply that commerce and politics are the two faces of a single social circle.
Increasingly, for the student of politics, the difference between image and reality is the central issue. And the question is raised, how much truth is there, indeed how much expertise or knowledge is there in the claims and statements made by politicians. Or are they simply skilled public speakers that by luck or practice have simply developed the ability to seem knowledgeable?
It should be noted that there is no evidence that IMF policies are based on what is sensible or workable. They are entirely based on neoliberal economics, with a bias towards what is good for the West, especially western banks and big corporations.
Given the IMF’s dismal record of economic failure, impoverishment and misery, it is difficult to understand why any moderately affluent government – or group of governments – should turn to the IMF for what they unwisely refer to as help.
Unicef, the children's fund of the United Nations, points out that, “In the wake of the food, fuel and financial shocks, a fourth wave of the global economic crisis began to sweep across developing countries in 2010: fiscal austerity.”
Unicef warned of the “"irreversible impacts" of wage cuts, tax increases, benefit reductions and reductions in subsidies that bore most heavily on the most vulnerable in low-income nations.”
Given that the report talks about spending cuts in 70 out of 128 countries studied, what one can say is that millions of people will be worse off in terms of housing, diet, education, heating and other essentials of life. It is the impoverishment of millions to make up for the greed and recklessness of a few hundred.
Over the years most politically involved Europeans have accepted the effective colonisation of Latin America by the US. It was something that was simply too big to change, while the US was simply too powerful to combat. In addition, Europeans assumed that as the allies of the United States, we were safe from the depredations of the IMF. It now seems that we were not safe and there is no telling how destructive its interventions will be in future.
The longer the misguided policy of austerity lasts, the more money would be needed to lift us out of recession. Europe could be plunged into a decade-long slump that would make Japan's “lost decade” look like an afternoon of sunshine and joy.
We see technocrats who do not even recognize their mistakes, much less understand them. We see policymakers who cannot even engage in debate, much less offer a rational justification of their policy. And we see harsh austerity imposed on 27 member nations of the European Union, even as we see growth slowing and recession intruding in those economies that first took up austerity. *
The first problem with the EU is the lack of democracy. Power was transferred from the elected governments of 27 nations to the unelected technocrats of Brussels and the political establishment of Berlin. Then there was the dogmatic insistence on austerity, a counter-productive piece of self-flagellation, which has been proved beyond all reasonable doubt to be utterly destructive. Finally, there were the rigid controls on deficits and government debt, which at the time of writing take no account of the state of the economy.
The IMF has arguably the worst track record of any international institution and is only able to maintain its dubious prestige because of its massive financial clout and the strength of conventional wisdom.
Referring to the roles of the IMF and the World Bank, because these two bodies have tended to have the same sorts of policies, Global Exchange has said, “Under the guise of promoting "free trade," market liberalization, and financial stability, these two institutions have forced cuts in health care, education and other social services for millions of people across the planet, thereby deepening poverty and increasing inequality.”
The Fund’s ignorance says a lot about attitudes within Washington, but when one discovers the reason behind it, the explanation is even more disturbing. Stiglitz says that both the Fund and the World Bank deliberately refused to study East Asia, because the countries that would become known as part of the East Asian miracle had succeeded by explicitly ignoring the Washington consensus. Their success had been an undeniable refutation of neoliberal policies.
It is probable that what disturbed the Fund most was these countries’ rejection of the Washington consensus, which disregards any concern with inequality or industrial policy and is mainly focused on trade and capital liberalisation.
A nation that allows unlimited borrowing will soon find itself in the middle of the property boom, with homebuyers and property companies eager to buy the biggest home or the biggest skyscrapers and shopping malls, while the gap between what is affordable and what is being constructed grows wider and wider.
Every factor that contributed to the success of the East Asian nations contradicted the claims made for the Washington consensus and the policy prescriptions of the IMF
For 30 years, these countries expanded steadily, with growing levels of investment, gradually expanding property markets and steady increases in personal wealth. There was absolutely nothing wrong with the prosperity that they achieved, and indeed, the only harbingers of doom on the horizon were the flawed and unwanted prescriptions of the IMF. Together, the IMF and the US Treasury destroyed the stability of at least half a dozen nations, and set them back decades. The idea of inviting one of these ideological institutions to influence policy in a divided and weakened Europe is just another example of the flawed thinking that has characterised the EU from the beginning.
Like the IMF, the EU is driven by ideology, and it needs radical reform just to be allowed to continue. To allow the EU to expand and engage in deeper integration would require top to bottom, root and branch reform.
Now, the United States is clearly a nation in decline and almost three quarters of the US population senses that decline. So how did America get there? *
In fact, a large part of the problem was self-destructive policies, driven by the interests and demands of tiny, but powerful minorities. Corporations shipped whole factories abroad, not merely with the approval of Congress, but with the benefit of taxpayers’ funding.
And all the time, the laws and policies that made America great were gradually being eroded, by politicians claiming to bring reform.
If we look around, for most people, regardless of the country that we are in, we can see the same process going on even now, weakening our job security, cutting into our pensions and destroying our way of life. The most obvious example of this is the crash of 2008, the subsequent recession and the debt crisis in Europe.
A large part of the problem is that America’s politics have become increasingly dominated by big business.
As Justice Louis Brandeis said, “We can have concentrated wealth in the hands of a few or we can have democracy, but we can’t have both.”
So the crisis was partly due to the policies of George W. Bush. Dubya, named after the Texas pronunciation of his middle initial, was probably the most right-wing, dishonest and pro-big business president in a century. His main policy themes were to weaken constitutional controls, give tax cuts to the rich and big business and to generally make life easier and more profitable for big businesses.
Many people would struggle to think of anything that Bush had done for ordinary people. He seemed to regard the government of the United States as intended solely for the benefit of rich individuals and big corporations.
Admittedly, government funds can be badly targeted. For example, when the Bank of England engaged in quantitative easing – basically, printing money – a lot of the money simply went into the coffers of the high street banks, and was used to build up their sorely depleted reserves.
Driven by lobbyists, think tanks and influence in high places, the entire political system of the United States is now driven by the demands of big business and the rich. The tax system is filled with loopholes and deductions that enable them to minimise their tax liability.
But when politics is reduced to this level, where no attention is paid to facts or truth or evidence and not even credibility is relevant, meaningful debate has ceased to exist. At that point it is not even a matter of who has the most ridiculous theory, or who has the most exciting theory; it is who can shout the loudest. In a modern context that means who has the most money, who has the support of the most vocal media and who has the support of the loudest pundits.
A large part of this translates to simply, the support of big business. It is they who fund election campaigns, who finance the think tanks and create the Astroturf groups. And it is they who own the media.
At the time of writing, the United States is dangerously close to having a power structure that is quite capable of excluding or manipulating the electorate, so that the desires and needs of the ordinary person cease to be relevant.
Perhaps it is no coincidence that in both Britain and the US, governments want to monitor every aspect of our online activity, from e-mails to spending patterns. It is suspiciously close to the authorities wanting to examine every item of communication, especially those verging on protest or activism.
But ultimately, this is the death of democracy. Britain and the United States may retain the physical manifestations of democracy – elections, ballot boxes, campaigning and counting the votes – but it will be a charade.
But if that is the reality of the political system that we face, what sort of society will we have once our elected kleptocrats have fully taken over?
At the time of writing, we face what could be the longest recession in a century…On closer examination we not only find that the causes lay with the politicians and the bankers, but that they should have known in advance that there were problems with their policies, with deregulation, the free market and hands-off politics.
The problem was not that politics was managed by people who lacked the competence or insight to know the correct policies; although that was indeed the case. The problem was that they did not care which were the right policies, and were not willing to listen when somebody pointed out the massive flaws in the ideological bigotry which they had chosen.
As far as practical outcomes are concerned, if such policies make our quality of life or standard of living worse, it does not matter if they are driven by dogma, bigotry, stupidity or malice; the politicians have made the wrong policy choices and deliberately ignored outside advice.
But if policy-making is responsive to neither the needs nor the demands of the voters, then how do we know that policies would benefit the ordinary person? The answer is, that we don’t. And increasingly, they don’t. Elections are a charade in which politicians make promises that they don’t keep and if Cameron and Osborne are anything to go by, if they win the votes, they can then do exactly what they like.
By 2015 the impact of Osborne’s plans will be 10 times what it was in 2012. This could add another 3,000,000 to the rolls of the unemployed, giving a total of almost 10,000,000 people who will be financially worse off. And this, in an economy that was already more than ungenerous with most of its workers, and therefore lacking in purchasing power as well as standards of living.
Discussion of which laws are debated or passed becomes a commodity that is for sale.
When that pattern moves from being a rarity to a commonplace, democracy has ceased to exist.
Given that democracy is an absolutely fundamental prerequisite for creating a healthy, egalitarian society, all of us, regardless of nationality, need to work very hard to preserve the legal protections that we do have.
Let us hope that at some point in the future we can build a society that is both democratic and egalitarian, affluent without being class conscious or environmentally destructive and a society in which quality of life is more important than material possessions.