Neo-liberalism and the Conservatives: using intellectual and moral bankruptcy to run the UK

Since the onset of neo-liberalism with the Thatcher government, successive governments of both main parties have followed fundamentally the same ideological and economic script.

Back in the 1970s, the British economy was struggling to adapt to the various crises that struck the world economy. The skyrocketing cost of living, loss of British companies' competitiveness, and inflation, all had the effect of bringing increasing demands from the unions, who sought to buffer their members from the worst of it. As we know now, the rise of Thatcherism created an "agreed consensus" that it was the unions that caused the crisis in the UK in the 1970s. Likewise, the same "agreed consensus" is at play with the Conservative government today, who successfully blamed the previous Labour government for "breaking the banks".

The "plan" that Thatcher and her successors have followed for the last thirty-five is simple: to "re-figure" the British economy from a manufacturing (production) based economy to a service (consumption) based economy. At the same time, this service-based economy has been supported by a massive expansion of the banking and financial sector, making the service-based economy - which has been designed to take up the slack of the loss of manufacturing - heavily reliant on the fate of the banking sector. Whereas a production-based economy is reliant on a competitive (i.e. relatively weak) pound to make British products attractive to buyers abroad, the kind of economy Thatcher introduced was reliant on a strong pound: this was what the financial sector was craving, and would also help consumerism (as it made imports cheap).
The result of this was the slow death of manufacturing in the UK, and a balance of payments that has been in a serious state of disrepair for years. Though no-one has seemed to care.
Following on from this, the Blair government took up the idea that young people in the UK were under-qualified for the modern world. For this reason, successive governments since then have promoted the idea that a much larger proportion of younger people should have degrees; the logic being that better-educated young people could get better-paid jobs.
The problem - as we now see plain today - is that these two plans are in many ways nonsensical, and also logically contradictory. But this is how those in government have been running the country.

Intellectually bankrupt

To the casual observer, the UK has done really quite well since the "neo-liberal" revolution has been introduced. GDP is up, and the country is self-evidently more prosperous. Except that it depends on who you are talking about.
Back in 1978, this was when "egalitarianism" was at its height: the gap between rich and poor was at its smallest. Things were only "bad" if you happened to be very rich and Conservative; for everyone else, things were - basically - fine. This all ended with Thatcher. Within a short time, unemployment had trebled. Since the "neo-liberal" revolution in Whitehall, the gap between rich and poor has successively widened, so that now while those at the top ten per cent are many times richer than they were, those at the bottom ten per cent are actually worse off. Yes, they may have some consumer goods that they can afford due to advancements in technology and cost-effectiveness. But they are still - financially - worse off than they were before. This is how this economic system works.

British governments since Thatcher have had plenty of time to make manufacturing more productive and competitive. The fundamental problem about British inefficiency stems back to the end of Empire. It may seem like a difficult point to deal with, but Britain's manufacturing and productive base was reliant on demand from the Empire to keep things afloat. This was surely shown during the Second World War, and going even further back. Once the Empire starting breaking apart, British governments never grasped the nettle about how to make British industry competitive in a real world economy, rather than in a "fake" Imperial economy. The "oil shock" of the 1970s brought that into stark relief, and the Thatcher government decided that it couldn't be bothered to try and make it work. The government would rather let the whole thing die.
As mentioned earlier, the UK has turned into a consumption-based economy, which ironically seems not far off how an Imperial Homeland would be run. Except that Britain no longer has an "empire" that can do its production for it. Instead of factories, the UK now runs on banks. Like in Switzerland. Instead of an "empire", it now runs the country like a PLC, where its citizens are treated like mere "employees", who can be hired and fired at will. Instead of colonies, the UK has "assets", which it sells off to the highest (foreign) bidder.

Which brings us to Germany.

Germany is the country that many others aspire to be, for the simple reason that it is perhaps one of the best-run countries in the world, in terms of productivity, efficiency of government, and the well-being of its people. In this sense, Germany is the "anti-Britain": a country which learned some very hard lessons before 1945 but also learned how to get the best out of its people. Germany is what Britain could have been, if the country were run intelligently.
Britain's economic system can be called intellectually bankrupt because it is a system that a con. By allowing Britain's productive assets to wither and die, though a combination of incompetence and recklessness, successive governments have put all the country's eggs in one basket. That was found out in 2008, when we suddenly realised how absurd the UK's "miracle" of banking really was.
Since then, the British government has decided to react to the greatest financial crisis since the Depression by doing...the exact same thing. Nothing has changed about how the UK economy is ran. The huge bubble that burst in 2008 is being re-inflated once more, except that this time the "recovery" is even more of an illusion than the growth that was created under New Labour. The economy now is growing only due to debt-fueled consumer spending, ever-worsening working conditions, a much greater number of low-skilled and low-paid jobs, and an out-of-control property bubble. The state of the economy is based on even more fragile foundations that before the crash, but George Osborne, the architect of this "long-term economic plan", is only motivated by short-term political gain and the harvesting of votes.
The governments of the past thirty years have all been complicit in the "asset-stripping" of the nation, leaving the taxpayer doubly worse off - in selling off national infrastructure at below-market value, and then allowing these privatised assets to fleece their customers. as mentioned earlier. For the private sector this is a win-win situation.

What has been created since the "neo-liberal" revolution has been a system of Corporate Socialism, where assets are privatised and those privatised companies are then subsidised and if need be bailed-out by the government - the worst outcome of all from the government's financial point of view. In the meantime, this amoral system creates a morally-bankrupt government as well as an intellectually-bankrupt ideology.

Morally bankrupt

The logical conclusion of this economic system is a moral system that has destroyed the essence of society.
On top of increasing inequality to levels now not seen since the Depression, those who have become the victims of this system are then demonised as the causes of its problems. This is where the idea of blaming those on welfare for the need for "austerity" comes from. Back in the 1980s, when the government started selling-off council housing, this meant that only those with the severe social and familial problems became entitled to state housing. The effect of this was creating "sink estates", and thus another "scapegoat" for the government's problems was formed.
This vicious circle is repeated time and time again: the government creates a problem, then blames the victims for the problem.

George Osborne is the architect of the current government's version of this system, where he has implemented a policy of "divide and rule" to a ruthlessly-effective degree. In reality, all his decisions are not based on what's best for the country, but what's best for his prospects. From "help-to-buy" to racking up tuition fees, Osborne implements policies that simply store up nightmares for the future. While David Cameron is the charmingly-affable front man to this game, it is Osborne who is the real "master in the shadows".

Dividing young against old, rich against poor, working poor against jobless poor, this is the morally bankrupt system that the Conservatives use to rule the UK.

George Osborne: the master tactician

Since the "omnishambles" of the 2012 budget, Osborne has become a master of using them for ruthlessly-efficient political purposes. From the "Wonga budget" of 2013, to the even more cynically-minded budget of last year, Osborne demonstrates repeatedly how he uses his control of the nation's economy to mastermind the control of the allegiance of the key segments of society he needs to retain power. This is both a complement and a damnation. It has nothing to do with economics, and everything to do with power. As the author wrote previously, Gideon Osborne is the "master of the dark arts" - the political Lord Voldemort of Westminster, with his hand behind every key decision made in government, relishing in his notoriety.

Since the (unexpected) Conservative victory in the election, it has given Osborne more freedom than had been planned for. It also made the severe swathe of cuts predicted before the election more difficult to administer, with no LibDems there to take the credit for making the cuts more politically-viable (and saving the Conservatives' frugal insanity from themselves). So what would he do?

The Machiavellian trickster

In many respects. Osborne is a terrible economist. It's now long-forgotten that Osborne's original plan when arriving at the Treasury in 2010 was to cut the deficit in one parliament. In the election campaign of that year, he opposed Alastair Darling's plan of doing the same over the period of two parliaments. Then, after two years of following his own plan and seeing that the economy was going from bad to worse, Osborne then decided to follow Darling's plan after all, and carry on as if nothing had changed. The Conservatives had spent their time in government rubbishing Labour and using snappy (if factually inaccurate) soundbites ("don't hand back the keys to the guys who crashed the car"; "paying down the debt that Labout racked up" etc. etc.). So Labour were left on the defensive and had no time to regroup and attack Osborne's blatant, massive policy U-turn.

This theme has continued through Osborne's tenure: whenever Labour came within a sniff of seriously damaging the government, Osborne was able to deflect attention elsewhere. While austerity has been the theme of the government, Osborne has implemented it in such a disproportionate and inconsistent way that it is hard to know where to see a common theme or economic purpose. While some departments face cuts of 40%, the largest outlays of all - pensions, the NHS. and education - are hardly affected at all in real terms. Likewise. while Osborne originally intended before election to have most of the cuts achieved within the first two years of this parliament, now they will be stretched out longer, to just shy of the next election, lessening the appearance of the impact. It is as clear as day to see that the real purpose of this strategy is to smooth things for "the succession", and the expected period of grace before the 2020 election that Cameron would give his successor (i.e. Osborne) to settle in.

Osborne is really enjoying himself these days, as he twists the knife into the open wound that is the post-election Labour party. With the benefit of hindsight, his electoral strategy looks to have been "destroy the Labour party, then steal their best ideas". Before the election, the Conservatives rubbished many of Labour's ideas as left-wing nonsense. Now, Osborne takes some of them as his own, such as the introduction of the "living wage". Paid for by the abolition of tax credits for many families, this is (according to the IFS) nothing less than an enormous fiddle, and one where the sums do not add up, leaving the working poor massively out of pocket. But again, Osborne the trickster has created another illusion, and one for the Labour party to work themselves into knots over.

Like the Conservative Party he represents, Osborne has few real principles that can't be sacrificed if it will help retain power. This is why he has been at times so hard to pin down in terms of real political consistency While the Conservative Party represents the establishment, it will bend over backwards and back to front to defends its self-interest. Osborne is the perfect example of this. What matters is what works for the Conservatives: if that means calling a Labour policy "Marxist" one month, then adopting it themselves the next, so be it. This is what keeps Labour on the back foot, always wondering where the next "trap" will come from. This is what makes Osborne a master at the political dark arts, even within his own party.

Divide and rule

So now the Machiavellian trickster models himself as the "workers' champion". The claim that the Conservatives are the true "workers' party" is a bold one, which requires some expansion. This goes back to another of Osborne's tactics: divide and rule.

The chancellor coined the expression "strivers versus skivers" a few years ago, as a way of explaining the economy. This is, in reality, a very old right-wing theme, where the "earners" are being used to support the "loafers" in society. It has simply been updated using 21st century terminology: it is the classic politics of Ayn Rand and her perspective of individualism and morality.
But is it a con, of course. Dividing the working poor against the unemployed poor helps neither: both are poor, for different reasons. This is simply a political tactic. And in the election, it worked.

Also, Osborne recognises who is most likely to vote at elections, and gears his economic and electoral strategy (in reality, the same thing) around them. In the UK, the older you are, the more likely you are to vote (and also, vote Conservative). It is for this reason why pensions are protected (triple-locked) and why the "help-to-buy" scheme is expanded, yet while there is no control applied to property prices, resulting in year-on-year the increasing unaffordability of housing.
But also it is the reason why tuition fees are extended (to fatten the budgets of the universities); why support for young people is cut back; and why there is no help to give young people genuine skills (a low-skill economy is also a low-wage economy i.e. better for employers). The "recovery" may not be benefitting those under thirty at all, but when they don't vote, who cares what they think? Fundamentally, this is the cynical calculation at the back of Osborne's mind.

Meanwhile, the Labour party is caught in a "triangulation" trap, where it doesn't know where to look to get its lost voters. Seen objectively, Osborne is a terrible economist, storing up problems that will only get worse with time: the low-skill nature of the economy post-2008; the housing crisis; increasingly unaffordable pensions etc. etc.

But Osborne seems to have little regard for this: his focus is only on "the prize"...