The Age of Austerity?

Of course, the economy is struggling at the moment and people are angry about it. Those financial institutions which are at the centre of the media narrative about the economic crisis are probably bearing the brunt of the vocal criticisms from protesters the world over. But when things calm down and the protesters go home, and the finance ministers of the world step back from the void and find some other plaster to slap over the utter mess that is the global economy, we should remember that the media narrative about the big bad banks only tells part of the story. The banks were aided and abetted by complicit government regimes who often backed, if not demanded, some of the more extravagant lending decisions that have now created such headaches. Furthermore, those governments were the ones who rushed to the aid of said banks when they began to flounder with fistfuls of the taxpayer's cash. But the banks and the government were only responding to the demands of millions of people who wished to live beyond their means. You want to know why banks offered 110% mortgages? Because people were willing to take them on. And yeah, you can argue for government regulation to stop people from doing so and yeah, you can argue that banks should not have offered anything so ludicrous from a business point of view. But it was just the government and the banks that brought us here; it is we the people as well. Substantial numbers of the 99% that the occupy protests (falsely) claim to represent.

The reality is that people, government and banks were all irresponsible, and now it has reached a point where they are going to be forced to take responsibility for the implications of that lack of responsibility. And yeah, it is unfair that we all have to pay for it, and that our children (well, your children if you already have them/are planning to have them) will also have to pay for their/our mistakes. Yeah, to some extent the falsely created, inflated and maintained boom of the past two decades or so has changed things for the worse not just for us, but for the next generation as well. But there is something positive that can be passed on to the next generation well as being heeded by this one. And it all boils down to that one word: responsibility.

We need to make governments responsible for their actions. If they create unreasonable expectations with the services they claim to be able to provide, then they should be punished at the ballot box. If they spend billions part nationalising failed banks, then they should be punished at the ballot box. And if they studiously refuse to accept responsibility or learn from their mistakes then - you guessed it - they should be punished at the ballot box.

Then we have business - financial institutions or otherwise. Again, they need to be responsible for the outcomes of their own choices and decisions. To some extent all business is a gamble - sometimes taking a risk will really pay off, other times it will be a disaster. And businesses of all shapes and sizes need to realise this. But crucially, they need to understand that if they take a gamble and it doesn't pay off (and they don't have the funds to cover that gamble) they need to understand that the government - or, more properly, the taxpayer - will not be there to bail them out. If your business fails, then it fails; there is no recourse to the public purse.

And finally we the people - we have to understand that, collectively, we cannot always get what we want. That money, those homes, those mortgages are not rights - rather, they have to be earned. And when all this is understood, we need to get out heads around the idea that the state does not exist to make up for any shortfalls between what is in our wallets and what makes up our expectations. Yeah, the government is going to have spend less on public services. A whole host of things that people had started to take for granted will no longer be there unless they have the cash to go out and get them for themselves. Which will be deeply disappointing for some, but a true return to reality for all.

It will be interesting to see how the history books end up describing the era we are now entering. So often, I hear it referred to as another age of austerity. Yet I can't help but wonder whether it will one day be seen as the return to reality; that, far from being an aberration, it was actually the return to normality after a rather ludicrous era when all sorts of outrageous claims, such as the supposed yet largely impossible end to boom and bust, were not only made, but also widely believed.  That the myths of a comprehensive and ever more extensive welfare state were exposed, and the idea of people, businesses and governments being responsible became acknowledged as common sense once again.

Whether or not this happens is largely dependent on the people; on you and me. It is about whether we allow ourselves to be deceived by business and government on an ongoing basis, and whether we allow self-aggrandising politicians to again sell us the most improbable myths in return for votes they blatantly do not deserve. But above all it is about whether we are going to invest so much time and energy again in allowing ourselves to be deceived by ourselves, or whether we face up to a reality where the future isn't always better, and where we can't always have more and more. It's about, in short, whether we are going to face up to reality.

The coming age - of austerity, or reality, or whatever you want to call it - is going to hurt, and its going to hurt some more than others. But we can avoid a repetition of that pain in the future by keeping our feet on the ground and by making ourselves and those people and institutions around actually responsible for what they say, promise and actually do.

We can make the age of austerity into a return to reality - and in doing so, witness the ressurrection of the idea of responsibility in all of our lives.

Yes, because the problem is, and always has been, a lack of spending, rather than - say - an ongoing refusal to reduce taxes so people can actually spend their own sodding money.

Fucking, fucking idiots.

*NEWSFLASH* Rupert Murdoch is not a Libertarian

From the BBC news website:

Rupert Murdoch is a libertarian - against too much state control, and in favour of individuals taking responsibility.

Is he a libertarian? Really? Or is he just an economic liberal? Because there is precious little in a rag like The Scum to suggest anything other than a deep conservatism when it comes to social matters. Indeed, the next sentence arguably shows this social conservatism:

Hence the high praise for Margaret Thatcher.

Thatcher wasn't a libertarian. She was an economic liberal in a number of ways, but she was also deeply socially conservative. Furthermore, when you factor in the reality that Murdoch religiously flirts with successful political leaders of all parties in all countries, including the likes of the utterly illiberal Tony Blair, it is difficult to conclude that he is truly interested in anything other than the health of his business empire. That might be why he's a successful businessman; it certainly means he isn't a proper libertarian.

Libertarians need to work hard to stop this association of libertarianism purely with economic freedom. True libertarians (to use a phrase that is almost designed to provoke outrage) are just as much interested in social freedom as they are in economic freedom. To be free you have to be able to spend your money how you like and live you life how you like* - and as far as I can see, Murdoch only really cares about the former. That might make him a champion of economic freedom, and see him leaning more towards anarcho-capitalism. But it sure as hell doesn't make him a libertarian.

*Constrained by something like the Harm principle, of course.

Monbiot On The "Free" Market

George Monbiot bloviating on some dickhead who used to run Northern Rock:

A couple of weeks ago, I wrote a column for the Guardian exploring the contrast between Matt Ridley's assertions in his new book The Rational Optimist and his own experience. In the book, Ridley attacks the "parasitic bureaucracy", which stifles free enterprise and excoriates governments for, among other sins, bailing out big corporations. If only the market is left to its own devices, he insists, and not stymied by regulations, the outcome will be wonderful for everybody.

What Ridley glosses over is that before he wrote this book he had an opportunity to put his theories into practice. As chairman of Northern Rock, he was responsible, according to parliament's Treasury select committee, for a "high-risk, reckless business strategy". Northern Rock was able to pursue this strategy as a result of a "substantial failure of regulation" by the state. The wonderful outcome of this experiment was the first run on a British bank since 1878, and a £27bn government bail-out.

It seems curious to me to be making a case against the free market by discussing a market that was not free. But that is precisely what Monbiot is trying to do. He's arguing that because the market was free, Northern Rock was able to follow a dumb-as-fuck business strategy and ended up having to be bailed out by the government. The problem with this "logic" is given away by those final five words: "bailed out by the government". Fundamentally, if the government is intervening in failing companies, then the market is not free.

Both now and when Northern Rock went tits up, we had a mixed economy. The government regulates and regularly intervenes in that economy - even in the banking sector. Had the market actually been left to its own devices, then Northern Rock would have gone under and the government could have saved billions. Furthermore, other businesses would have seen the result of pursuing a dumb-as-fuck business strategy, and might well have decided to change their business plans accordingly.

That's what would happen in a free market - business could take risks, but if those risks don't pay off, then the business itself has to take responsibility for that.

Now, I can certainly understand a certain indignation here: a man who used to run a business that ended costing the taxpayer billions writing a book on best business practice might be a little hard to digest. But the reason why that business cost us billions is because the government decided to bail that bank out. Gordon Brown is just as responsible for the Northern Rock bailout as Matt Ridley. He made the choice to spend that money; not Ridley, and certainly not an unregulated market.

By all means make your case against the free market - there's certainly one to be made. But if you want it to stand up to even the most basic scrutiny, you need to discuss the free market. Not a mixed economy.

The Recession *Ends*

So, the recession is over. Whoop-de-doo, as it turns out. As this graph at Guido's place points out, there is a long way to go before the economy truly recovers.

I've not got any interest in doing a detailed economic analysis - it has been done to death, and by far more impressive economists than me. No, it is the political aspect that fascinates me. Because there can be no doubt that the Labour party, and in particular Gordon "Saving the World" Brown, will claim credit for what is a perfectly natural tentative step in the direction of recovery within the global economy. This is nonsense, as Jackart points out:

This is good news, but whenever Mr James Gordon Brown of No. 10 Downing Street, London, SW1 refers to it, replace the words "because of" with the word "despite".

As in "despite the actions taken by this Government, the UK has now emerged from recession."

Well, quite. But what impact is this going to have on the General Election? Because if there is one thing that Nu Labour has shown, it is that large minorities of the British public are happy to be bought off by false claims from the Labour party. Yet I think the Labour party will have a tough job passing any recovery off as their achievement. For exactly the same reason as the Tories had trying the same thing in 1997. In 1997 the Tories could boast of an economic recovery. The only problem is they had caused the economic meltdown in 1992. Just as Gordon Brown now claiming a role in the recovery will be undermined by the fact that he was Chancellor and then Prime Minister as the economy disappeared down the toilet.

Of course, that will only work if the Tories consistently remind the British public that Labour were in command as the recession began, and have wasted billions chasing a recovery that was going to happen anyway. The recession was a godsend for the Tories, but the recovery can be too. Gordon Brown has wasted billions. Taxes will go up because of Gordon Brown. That's the new Labour Double Whammy, and that's Cameron's working majority, right there.

Recessions do end. And the demise of this one should do nothing to change the upcoming demise of Gordon Brown.

A Spending Cut Proposal

Obviously it is the done thing in modern British politics - after years of unrealistic and unconvincing denials - to talk about spending cuts and to start ear-marking potential areas of government influence for the chop. Now, I'd like to propose a cut in spending that I genuinely think everyone can get behind. Yes, I think we should stop spending money on failing banks.

For Marxists, this sort of behaviour is simply propping up the "terrible" capitalist regime. For socialists and social democrats, this is rewarding failed rich people and taking resources away from those more "deserving" of government cash. For conservatives, bailing out failing businesses means people are absolved of responsibility for their failings by the government. And for free market capitalists, this represents yet another unwarranted and unwanted government intervention in the economy.

And for the man on the street, who has been indoctrinated with the idea that bankers are bad through a programme of government indoctrination and propaganda that truly would make Stalin proud, this is again a good thing because those bankers are pretty much evil.

I know we have already invested a lot in some of these banks, and that if we don't continue to prop them up then that investment is pretty much gone. Yet partial government ownership doesn't seem to be helping the likes of Lloyds pull themselves up out of the shit, and I can't help but think that all we are doing is increasing the amount we are inevitably going to lose when the government finds it can no longer bail these banks out.

There is such a thing of throwing good money after bad; and it increasingly looks as if funding Lloyds et al is doing precisely that.

£519,868,800 per day

The Times is reporting on the rising amount of staggeringly large debt that the British Government - and therefore Britain - is in:

Britain is clocking up debt at a rate of £6,017 per second as the Government struggles to balance the books. With tax receipts plummeting because of the recession, state borrowing grew by £16.1 billion last month — almost twice the entire budget for the 2012 Olympics.

Let's think about this. £6,017 per second means £361,020 per minute. Which means £21,661,200 per hour. Which means £519,868,800 per day. And so on. You get the point. It is fucking terrifying.

Now, I don't like any of the major parties, but reading figures like those listed above make me hate Labour that little bit more than the others. Because they have to take the responsibility for allowing an unelected Prime Minister to drag this country into the sort of debt that could cripple it in the future. And there still isn't really a plan as to how the government will manage this debt, let alone try to bring it down.

Brown hasn't so much mortgaged the future as taken out a massive loan with an angry, unpredictable loan shark. And at some point - most probably when Brown is out of power - that loan shark is going to come and demand payment. And then, because of the delusions of Gordon Brown, the incompetence of the Cabinet and the cowardice of the Labour party, we're all fucked.

Lies, Damn Lies and Gordon

"Politician Lies" is hardly a news story these days, but this story does take some beating:

The Conservatives today accused Gordon Brown of lying to Parliament as they published Treasury papers on public spending.

The document, prepared by officials in June, appears to show how the Government would meet Alistair Darling's pledge to cut the massive budget deficit in half in four years. It outlines spending falling by more than 9 per cent between now and 2014.

After a whole summer of talking about the Tories' 10% spending cuts, Labour now reveal that they are going to have to reduce spending by 9.3% themselves. The shameless nature of it is utterly staggering. Still, it just goes to show that they didn't pluck the 10% figure out of the air after all. It came from the Treasury.

This will probably lead to a whole host of rhetoric about how a fall in spending is not the same as a spending cut, and that the Tories are planning a 0.7% greater decrease in spending, and that Gordon Brown wouldn't lie anyway because of his much vaunted (but apparently soundly fucked up) moral compass. In fairness, I don't believe Labour did lie about spending cuts. Not for the crap reasons listed above, but simply because at this rate they aren't going to be in power long enough to have to implement them.

Finally!

Gordon Brown is poised to announce that spending cuts are going to happen:

The prime minister is due to say it will be necessary to "cut unnecessary spending on low priorities" but will not say where the axe will fall.

Personally, I love the fact that only now will Brown grudgingly talk about cutting "unnecessary" spending. It speaks volumes about his mindset and the mindset of those in his party that only now will they consider cutting unnecessary spending - spending which, against every sensible parameter, should be cut anyway. What with it being unnecessary and all.

Of course, spending cuts have been inevitable since Brown spent billions propping up certain financial institutions, and desirable for a lot longer. The fact that Brown has only just brought himself round to this point of view shows how hopelessly out of touch he is with anything even approaching economic reality. The fact that he has finally caught up with everyone else deserves minor applause. Yet Brown is still refusing to say where these inevitable spending cuts will fall. And at the current rate of accepting the idea of spending cuts, he should have a good idea of where they will fall in about December 2010. By which time - thank Jesus - Brown will no longer be in power...

Gordon Brown: A Lying Incompetent

Gordon Brown is again talking about a recovery in the economy. Man, those green shoots are certainly taking their time in blooming into something more useful. But this being Gordon Brown, he can't resist the opportunity of announcing good news in tandem with a jibe against the Tories:

"Don't risk it with the Tories whose obsessive anti-state ideology means they can't see a role for government in either recession or recovery"

It is just plain nonsense to accuse the Tories of having an "anti-state ideology". It is a startling mis-representation of the Tory position to say (as Gordon Brown effectively does) that the Tories see no place in the economy for the government. You know this, I know this, the Tories know this and Gordon knows this. He is simply showing his naked political opportunism once again. He is interested in saving the country from recession, but he is just as interested in his attempts to alleviate the suffering of the people being an opportunity to give the Tories a swift kick in the balls.

Still, there is a wider issue with what he is saying. Now, I'm not quite anti-state, but I am certainly wary of state intervention. And I do have to say that the Brown administration stands as a stunning rebuke to those who would argue that the state has to have a role in a recession and/or recovery.

Brown has spent money like it is going out of fashion. And what do we have to show for it? Other governments - despite the promises of Gordon - are coming out of recession before us. The state owns banks, which are the poorest performers and least efficient organisations in that sector. We have businesses still going under, and we have growing unemployment lines. The schemes set up to alleviate some of the symptoms of recession for the people do not reach their target audiences in a timely fashion, if at all. Brown hasn't shown that a government can spend their way out of a recession. All he has shown is that a government can use a recession as a reason to spend terrifyingly huge sums of money without any real opposition.

And if we are moving towards recovery, then it is worth noting that the spending policies of our Prime Minister are going to have an impact on that recovery. And on the country as a whole. Brown's Viv Nicholson approach to the recession has left this country not only unable to pay for any further economic stimulus packages, but also for other fundamentals. Like, say, equipping an army fighting in the hostile environs of Afghanistan. Furthermore, the extent of the recovery is going to be stifled, if not suffocated, by the tax burdens that almost certainly will come given the massive borrowing of Gordon Brown. In a sort of sickening irony, Brown's attempts to create a recovery may damage that recovery. If not provoke another recession.

So there we have it. Brown. Wrong on the Tories. Wrong on the recession. Wrong on the recovery. And bankrupting the country to boot. Remind me, why is this man still our Prime Minister?