Thursday, December 4, 2014

George Osborne's 2014 Autumn Statement: the madman at Number 11?

There's a fair body of evidence to suggest that George Osborne is the worst chancellor in living memory: both as a chancellor, and as a human being.

There was a famous phrase that came out of the Labour government when Gordon Brown was chancellor: as his enemies in the Labour Party liked to say to those who'd listen "remember, the chancellor is mad".
Brown can be blamed for creating a unsustainable economic model that contributed to the UK being over-exposed financially when 2008 hit, but for his mistakes as a chancellor, it was clear that he also has a very large design towards social justice. He created measures such as working families tax credit, and channeled money into the NHS and other social programmes.
He may not always have been an obviously likeable person (and even less so during his time as PM), but it was evident that his heart was in the right place. Listening to his speeches, especially recently in the Scottish referendum, and there is an unmistakable humanity to his words. The tragedy is that never really showed when it needed to matter, when he was Prime Minister.

A calculator and a puppet master?

George Osborne, on the other hand, has less of the economic acumen of Brown, but makes up for it in devious, political cunning (which he doesn't seem to bother to hide). He has replaced Brown's clear sense of social justice, with a clear sense that George Osborne is only pretending to understand how ordinary people live their lives, and a sneering contempt for his enemies.

In this sense, Osborne appears as a pure, amoral political machine, with every calculation and decision based around how it can be made to benefit his agenda.

In some ways, Osborne and Cameron are the ideal political match: Cameron appears as the self-assured (if not terribly cerebral), statesman-like actor-cum-salesman who "does human" quite convincingly (more on Cameron's personality here); Osborne, on the other hand, is the real political calculator and the real "power behind the throne", who doesn't deign to stoop to Cameron's efforts of pretending to be something he isn't - Osborne is as he is, and seems very comfortable with it. It is Osborne's vision that the country is being subjected to, not Cameron's; Cameron simply understands the goal and acquiesces.

It has been said that Osborne rarely does press conferences; unlike the Prime Minister, who can't get enough of them. While it would be too flattering to compare Cameron and Osborne in the same light as Blair and Brown, it would be similarly too condescending to compare them to George W. Bush and Dick Cheney. The truth may lie somewhere psychologically in the middle.
Osborne's performances in parliament (as seen in the Autumn Statement) can be psychologically-painful to watch, as he appears to revel in playing the part of a pantomime villain, verbally attacking his enemies with sneering snide remarks and cutting put-downs. As a man clearly happy in his own skin, he doesn't feel the need to pretend to be nice for the sake of it. These types of behaviour alone tell us much about George Osborne's potential psychological make-up (it would be awful to be his psychiatrist...).

Austerity for the sake of austerity?

So much for George Osborne, the human being. As a chancellor, he has been an almost complete failure; in fact, making the economic situation worse in the long-run rather than better. He would be the first to blame it on inheriting "Labour's economic mess" (more on that old chestnut here), but the bare truth is that he simply doesn't understand how the macro economy works. If he did, then he would understand why the masses of low-paid, low-skill jobs that are filling the economy are the reason for the low tax revenues, which is also one reason why the deficit keeps on going up. You can cut spending as much as you like, but if taxes are declining also, the result will still be zero. In other words, you are back to square one, except that now people are on average poorer than before. It looks like the Conservatives' economic plan doesn't understand this basic truth, along with some others. Their idea of having a "low-tax, low-spend" economy looks idiotic, if not economically insane, in the contemporary economic climate. It is a recipe for self-inflicted masochism, as the countries in the Eurozone are finding out.

Osborne's plan is simply "austerity, austerity, austerity". Austerity until kingdom come! While back in 2010 "the plan" was envisaged to last for only one parliament, it will now last for two. And the majority of the cuts haven't happened yet. Now that Osborne has successfully twisted Labour into accepting much of Osborne's plan, what is there left to vote for in 2015, if you vote for the three main parties?

What is the point of austerity? It was said by former Downing Street advisor, Steve Hilton, that by the end of this parliament "everything must have changed". The question is: why? George Osborne has now cornered the three main parties into largely accepting austerity (the honourable exception being the Greens, while Ukip want even more stringent austerity than Osborne). But what is austerity for?

As the economic evidence shows, "austerity" fails at its basic aim of getting the national finances in order, and in any case, it's ludicrous to think of the national finances in the same way as, say, household finances. You cannot take micro-economic policy and apply it to macro-economics - this has been the ultimate failure of Thatcherite economics, with the deregulation of the financial market happening at the same time as allowing the manufacturing industry to collapse thirty years ago. While a strong pound is great for the financial markets, it spells disaster for exports. That's why the UK exports so little now, and has a bloated, (and with "too big to fail" banks, a effectively state-subsidised) banking sector.
The UK economy now subsides on finance on one hand and a mass of low-paid, low-skill jobs on the other. Engineering and other skilled industries are the exception to the rule. This is the economy that Osborne now champions.

After the Second World War, Britain faced years of austerity due to the bankruptcy of the empire. And in spite of all that, the Labour government still created the NHS and the modern welfare state. These days, Osborne's plan is a second dose of austerity after a world financial crisis, with the effect of degrading the welfare state and the NHS to minimal levels, and levels of state spending lower than before the welfare state was created. In other words, in a very real sense, the UK is going backwards, not forwards.

Is this Osborne's "vision" for the future?

The only conclusion to reach is that "austerity" is Osborne's policy because he ideologically believes in a smaller state: but not for the sake of improving the welfare of society (as austerity not only doesn't work as a social incentive, it also doesn't work to reduce the national deficit, as we have seen with its negative effect on tax receipts).
No, Osborne's vision, like that of Iain Duncan Smith, can only be an effect of his lack of empathy towards society at large. He fails to understand how people cannot be able to get jobs that pay well, and has little sympathy for the worse-off. Why should the rich pay for the "idle" poor? Why should the rich have to give money to people they have no affinity for?

This is the politics of real "class war" - and the rich are winning.

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