10 Bits Of Nonsense We Hear About The Economy

by Ray_North on February 13, 2015

Unknown‘It’s the economy stupid.’
Well, no it’s bloody not. Well, not just about the economy – it’s about children going to school, and ill people being cared for by doctors and nurses; it’s about having a good justice system and a working transport system and affordable housing and the chance of a job that will reward you for your efforts.
It’s about all those things and more. And yes, sure, having a strong economy goes hand in hand with all these things – but the creation of an economy that is superficially or otherwise, thriving is not the one and only aim of government.

In the run up to the next general election we are going to hear an awful lot about the economy, and, alas, not much of it will bear much semblance to the truth.

I’ve compiled a list of ten pieces of nonsense that we will hear about the economy.

1. ‘The coalition have cleaned up Labour’s mess’ – not true, when the coalition took over in May 2010, the economy was growing, austerity and, amongst other things, changes in VAT stalled the economy and led to two years of negative growth.

2. ‘Austerity is working’ – not true either, the defecit is still huge, public borrowing is still massive, and, pretty much all of Osborne’s predictions have been wrong – austerity didn’t even ensure that Britain retained its ‘triple A’ standard credit rating, all austerity has done has given the Thatcherites the chance to pare back the state.

3. ‘Labour spending caused the collapse of 2008’ – particularly ridiculous this, as regular readers know, I hold no particular brief for the Labour Party, but the crisis of 2008 was the fault of bankers, pure and simple. I accept that there is a strong argument, indeed overwhelming argument, that Chancellor Gordon Brown could have done more to regulate the banks, but, if Brown failed, it is a failure that would have absolutely been replicated by any Tory Chancellor at the time, whilst it should also be remembered, that without Gordon Brown’s intervention, the banking collapse of 2008 would have been a damn sight worse.

4. ‘Economic growth means everything is rosy,’ – well, only if you are the beneficiary of the growth, which at the moment means if you are a shareholder in a number of companies or if you are in a well-salaried job, because the growth is most definitely not trickling down by way of increased tax receipts increased wages or ‘nationwide’ socio-economic progress.

5. ‘The legacy of debt is bad’ – more nonsense, the UK has lived with debt pretty much throughout the twentieth century; what is dangerous is if you borrow money to fund tax cuts, because there is a risk that those who benefit won’t spend their money in the UK; if you borrow to build schools and hospitals then this can be a positive way of structuring your fiscal policy. David Cameron’s analogy of ‘the household credit card running up debt’ is boloney – because you don’t pay off your credit card by stopping going to work and selling the family car and computer that might help educate you and get you to work in the first place. In any event now, with interest rates at extremely low levels, and the UK credit still extremely good, now is a pretty good time to borrow.

6. ‘The richest must have low taxes’ – why? Are they somehow different to the rest of us who have to work for peanuts! The last thirty years has seen the establishment of the orthodox view that the creation of a super rich will somehow benefit the rest of us, well, this theory is nonsense, and the fact that we are now cutting public sector jobs, laying off teachers and rolling back the state proves it.

7. ‘Spending on public services is wasteful, when the private sector can do it better,’ – I’m not someone who necessarily believes that the public sector is always superior, because clearly it isn’t – but, an ideological and dogmatic belief in the supremacy of the private sector has blighted rather than served our economy (and society) for the last three decades – think about it, if you invest a pound in the building of a road, then that is a pound well spent, if you invest a pound in paying a foreign company to build a road, that’s most of that pound gone – just saying!

8. ‘Falling unemployment is indicator of economic success,’ – sure everyone wants to see higher employment and lower unemployment, and I’m not going to get all churlish about falling unemployment, but, it is right, that jobs should be properly rewarded and this means job protection and a decent wage – all the evidence suggests that many of the jobs being created at the moment are low paid, or through a kind of forced self-employment, which is precarious. Ok, low pay, is better than the dole, but it’s not something that any government should be proud of.

9. ‘Economic growth can be brought about by a housing price bubble,’ – much of the current growth can be explained by a further hike in house prices, artificially brought about by government policy – bloody dangerous this, after all, the inflation of house prices in the 1980s and again in the early 00’s proved to be foundation of sand when it came to sustained economic success.

10. ‘That it’s acceptable to have growth in only or two places in the UK,’ – well, no, it’s not. Do we want to live in a country where some areas enjoy massive economic success, whilst other swathes of the country flounder in the mire of under-development, under-investment and under-achievement? Well I don’t, it’s economically wasteful (should London and the South East bankroll the rest of the UK) and socially divisive.

Economics is just a tool that can be used to bring about social cohesion and individual and collective well-being – it is not just a set of statistics to allow a politician to justify himself, it’s far more profound than that, I just hope that our politicians and political parties start to realize that when they campaign over the next few months.

{ 2 comments… read them below or add one }

George_East February 13, 2015 at 11:32 pm

Hey, I was going to write this.


Ray_North February 14, 2015 at 10:12 am

Yeah, but you’re in Berlin – polemic waits for no man.


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