Debating furiously over fictional realities

Posted: April 8, 2015 in Uncategorized
Tags: , , , , , , , ,

Imagine you lived in a tiny village across a river, with only a single bridge connecting it to the outside world. Any time you needed provisions, a business meeting or simply a night out, you’d have to go over this bridge (unless you were a strong swimmer and had a change of clothes). The bridge was made of wood and iron, and its integrity was unsurpassed.

Now imagine the mayor on the other side announced the bridge was rotting, and urgent remedies were needed. He announced a new super-bridge to be constructed just down the river, but this bridge was made of a metal suspected to be toxic to fish when immersed in water. Obviously you would not be happy.

So you and the village folk gather to protest. You insist the new bridge is not worth killing most of the fish, and it would cost too much money. You insist a different design will have to be drawn up. Meanwhile, the mayor puts up posters and runs television adverts proclaiming the new bridge to all and sundry. Suddenly, everyone is open to the idea of this flash new construction, and your protests are beginning to fall on deaf ears. You and your hardy group plead with locals, but they seem to now believe that this new bridge is the only way to go. Some are more inclined to believe something that has been on television and official posters.

Away from this imbroglio, a tiny faction of ‘militants’ hire in an outside body to assess the old bridge, and their thorough report documents that the bridge is in fact structurally sound, with no signs of rot. These people release the report, but it hardly gets a mention, even among the strong ‘new bridge opposition’ group. The pro and anti-bridge rhetoric flies back and forth, while the people who understand that the original bridge is fine shake their heads and wonder what the point in anything is any more.

This whimsical allegory of course illustrates the ‘austerity’ argument, and the foundations on which it is based. The problem is not whether more austerity or less austerity is required; the problem is why is it deemed necessary at all when we look at the evidence?

It’s evident that the national debt as a percentage of GDP has been higher for the majority of the last century (chiefly driven by the two World Wars), so we might ask why it has suddenly become a major issue. The interest payments again are not even half of what would risk defaulting, despite the current coalition vastly increasing the national debt. Looking at ‘social spending’ (welfare and pensions) as a proportion of GDP, it becomes clear that the biggest outlay for welfare comes during the Thatcher years and post-2008 crash. This seems pretty obvious, as Thatcher dismantled the full employment agenda of the State, leading to permanent levels of unemployed, and of course the crash led to mass redundancies and contraction of the private sector:

So from these two statistics, the ‘massive debt’ and the ‘massive welfare bill’ are overblown and also more likely under recent Conservative governments. Another point to take from the debt charts is that despite the debt slowly growing post-2000, the Labour government prior to the worldwide financial crash had a national debt-to-GDP ratio lower than that it had ultimately inherited from John Major’s Conservative administration, who went from a low of around 25 % GDP to over 40% when leaving office in 1997. The New Labour administration was hovering just over 36% when the financial excrement hit the fan.

But of course then the coalition would likely mention that it is the deficit (gap in spending to tax collected) that they are most concerned about, and that ‘you can’t borrow your way to prosperity’. So the fact that they have failed to wipe out this deficit as they promised, as well as losing the UK’s AAA rating, and borrowing more in the first 3 years in government than New Labour did in 13, is a glaring and insulting contradiction:

So, rather than arguing about what kind of new bridge we should be building, perhaps we should remember that there is nothing fundamentally wrong with the old one. Let’s base arguments on facts instead of propaganda.


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