A lot is still uncertain about what the Chancellor’s Emergency Budget of July 8th – tomorrow (or most likely as you read this, later today) – will contain. Some policies have been ‘leaked,’ already, of course – in line with his pursuit of an ever-smaller, ever less tax-reliant state, it has been confirmed that a savage cut to the benefits cap is in Gideon’s red briefcase, as well as a rise in the inheritance tax threshold – but much still hangs in the balance. Will he cut the headline rate of income tax to 40%, as it is rumoured the Lib Dems prevented him from doing in 2012 by demanding a mansion tax in return? Will we finally see exactly where and how fast £12 billion will be cut from welfare? While the specific policies in the Budget remain somewhat mysterious, there is one thing that remains absolutely certain, and that is what the tone of the Budget will be – that is to say, the language that Osborne will use to explain his damaging central policy of austerity.
This budget will be triumphalist, certainly – references to “the first all-Conservative Budget for almost 20 years” will surely abound. There will also be reference, if the Chancellor is challenged from the opposition benches, to “sorting out Labour’s mess” (you wonder if, fifty years into a dystopian future of Orwellian Toryspeak, we may still be paying the price of austerity for the ‘sins’ of our New Labour fathers). And underpinning it all will be the ‘common sense’ economic argument that is favoured by Osborne and Cameron – the (entirely false) idea that Britain’s economy should be run as you would ‘budget’ for your own household. This conflation of the macroeconomic with the microeconomic is not only utterly without any basis in reality, but it is also dangerous – both to the health of our economy in the long term, and to the welfare of our most vulnerable citizens.
We are all familiar with the rhetoric, whether it is used in terms of “getting our house in order,” “not spending beyond our means,” or “balancing the books.” Phrases such as the “long-term economic plan” are in fact so tediously ever-present that one Conservative backbencher, on hearing it at the start of the Queen’s Speech debate, was heard to mumble “Ding! First one of the session.” The problem with these metaphors is that they ignore basic facts of the national economy – facts such as ‘we have always been in debt – historically much higher debts have persisted without crisis,’ ‘most of our debt is within our economy,’ or ‘it is impossible for a country with its own central bank to go bankrupt.’ And yet these former vacuous sentiments not only pass for intelligent thought but are allowed to shape the way our economy is organised.
The argument against austerity is very clear, and has been since long before Gideon Osborne could even say the word “efficiency.” When he popularised the idea of the “paradox of thrift” in the 1930s, John Maynard Keynes was referring to the idea that an attempt to make savings to a government budget will reduce aggregate demand in an economy (that is, demand over public and private sectors) therefore leading to a reduction in both government income through taxes – as people will not be earning as much – and GDP growth (although the concept of GDP itself would not enter economic discussion until after Keynes’ time). It is a “paradox” precisely because it goes against the ‘common sense’ of household economics. This is not just an abstract argument, though – it is backed up by recent figures. The OBR, Osborne’s brainchild, calculates that Gideon’s austerity between 2010 and 2013 caused a loss of 5% of GDP in that time – roughly £4000 per household. And the devastating effects of austerity are seen also in people’s day-to-day lives. The economist David Stuckler estimated in 2013 that upwards of 10,000 additional suicides were caused by austerity in Europe and North America in the aftermath of the 2008 financial crash. So if the above bit of Keynes went over your head, don’t worry – the really crucial difference that Osborne et al. wilfully pretend to misunderstand between private ‘budgeting’ and government austerity is that when someone decides that maybe they can’t justify buying chocolate everyday anymore, thousands of people don’t kill themselves in a spurned cry for mercy. As Stuckler himself put it – “recessions can hurt, but austerity kills.”
The problem with the simple ‘common sense’ argument for austerity, then, begins and ends with the fact that it is so simple. It is simplistic in the economic sense, in that it does nothing to adequately describe, explain or address the problems (and to counter a common lefty stereotype – yes, we do know there are problems) that face our economy in the modern age, as outlined above. But its simplicity also poses a tactical problem for any serious opposition – it resonates with ordinary people. People who have to budget on any level – for themselves, for their families, or for a business, know that being in debt or having your expenditure exceed your revenue is a serious problem at these levels – particularly in the current economic climate. It is duplicitous and two-faced in the extreme, incidentally, of Osborne to help create the economic environment, through austerity, where the need for microeconomic (that is, personal or business) budgeting is far more keenly felt, and then to use that same environment to further justify austerity (macroeconomic ‘budgeting’) – but I digress. Simply put – it is impossible to make the case for investment targeted at growth in as basic and commonly resonant terms as you can make the case for “tightening our belts,” or some other ironic metaphor.
Or at least, that’s what most of the candidates currently running for the leadership of the Labour Party would have you believe – except for one. Jeremy Corbyn, whom I was lucky enough to meet recently, is one of the only voices in the current (nearly) mainstream discussion who challenges what many like him call the “economic orthodoxy of austerity” (although even this label is misleading – ask Thomas Piketty, Paul Krugman, Simon Wren-Lewis, Amartya Sen or Robert Skidelsky, all leading economists who are against austerity). Though he acknowledges the task will be difficult, Corbyn believes he is the man who can educate the public on the economics that goes beyond simple received ‘household’ wisdom. Though I’d like to believe him – God knows very few people other than him are even willing to try – I am currently sceptical. Not, as my fellow blogger Seb has argued, on the basis of his personality or his past, but because he has not yet provided a convincing lexicon for this task. If politicians can translate austerity into “good housekeeping,” it is our task on the left to translate Keynesian investment-led economics into a vocabulary that is useful to ordinary people (people who are not, like your correspondent here, young layabouts with very little better to do than think about and research economics). I am not claiming to have the answers to this, the most fundamental question for modern socialists – upon which (and I do not believe this to be an exaggeration) our very existence as an engaged and engaging political voice potentially depends. I am willing now, though, to invest the most unrealistic of my hopes in Jeremy Corbyn, even if I cannot stretch to anywhere near certainty that he will succeed. He is the only one who has any chance, and that is not a burden I would like to carry.