“While we have Jack upon the sea/ And Tommy on the land/We needn’t fret. ”
The British are cheering again, as the present-day version of General Sir Douglas Haig – the chancellor and a cabinet packed with millionaires – send the equivalent of yesteryear’s Tommies off to the economic parallel of the Battle of the Somme.
On the 4th July, the Financial Times reported that George Osborne “is the most popular Conservative chancellor since Ipsos/Mori began testing public opinion on the issue in the 1970s.” His “Budget (which) heralded £113 billion of spending cuts and tax rises, (is) an austerity package whose necessity seems to be appreciated by the public, who have yet to see what it means in practice.”
However its not just the British people cheering on the Economic Generals, before understanding what the scale of the planned destruction “means in practice”. Four out of five of the UK’s company directors support the Budget, according to the Institute of Directors – even though this is not just a war on the public sector, but on the private sector’s potential profits and viability.
This optimism and high regard for the chancellor is in stark contrast to my own downhearted plunge into depression at the state of politics and economics – which is why you, loyal readers, have not heard from me for some while. For which I apologise. It’s just that repeating the same concerns, alarms and warnings sometimes seems pointless in a world in which the overwhelming consensus appears to be that Osborne’s war on public spending is going to be a Lovely War!
But I am now rid of such downhearted thinking. After all our warnings are now heard by others. The markets are waking up to the fact that what they wished for, might hurt them more than it hurts the public sector. Even Larry Summers of the US Treasury and the BBC’s economic staff are beginning to show signs of regretting their own role in cheering on the economic Generals as they prepared for this war.
And then there are Paul Krugman and Paul Revere prize-winner Steve Keen – in particular the latter’s recent paper for the Levy Institute “Are we ‘It’ yet?”. These two economists continue to blow the whistle on the flawed economics underpinning the strategy for this particular war.
Keen’s conclusion: ” The final debt-driven collapse, in which both wages and profitability plunge, gives the lie to the neoclassical perception that crises are caused by wages being too high, and the solution to the crisis is to reduce wages.
“What their blinkered ignorance of the role of the finance sector obscures is that the essential class conflict in financial capitalism is not between workers and capitalists, but between financial and industrial capital. The rising level of debt directly leads to a falling worker share of GDP, while leaving industrial capital’s share unaffected until the final collapse drives it too into oblivion.”
Sadly, Britain’s company directors are unlikely to read or take heed of Keen, as they rush headlong towards the ‘trenches’ of the ‘western front’.