Wednesday, 15 September 2010

The myth of "the cuts that aren't cuts"

In timely fashion, the Devil's Knife has proved my point about the authoritarian tendencies of the "libertarian" right with a post called "Time to kill the unions." He opens the post with something else common across the right: the idea that talk of cuts is being blown out of all proportion.

He links to the Adam Smith Institute (ASI) - a think-tank which has nothing to do with the real Adam Smith - who tell us why we should "take a deep breath, look at the numbers, and then calm down."

In their own words;
the government's proposed cuts are pretty small beer. In nominal terms, spending will rise every year. In real terms (assuming 2 percent a year price inflation) this equates to small cuts in 2011-12, 2012-13 and 2013-14, followed by small rises in 2014-15 and 2015-16. Compared to the c.60% real terms public spending rise that took place under the previous government, this is, frankly, insignificant.


What the coalition's spending plans really amount to is a five-year, real terms freeze of current expenditure, combined with three years of significant falls in capital expenditure. The overall impact of that is a a very small, real terms drop in TME [Total Managed Expenditure] (roundabout 1.5%) between now and 2015-16.
Although "you would be forgiven for thinking that the coalition government's planned public spending cuts are every bit as swingeing as the BBC would have us believe," the "fuss the unions are making" blows things out of all proportion.

So there's no need to go jumping out of windows just yet. Or so the ASI and DK would have us believe.

The main problem with the ASI's figures is that they'll go tits up with the comprehensive spending review. This is where the bulk of cuts come in, with a target of 25 - 40% reductions.

Before that arrives, we have promises of 800,000 claimants being thrown off incapacity benefit and £4bn being cut from the welfare bill. Cuts in housing benefits put 200,000 people at risk of homelessness, at a time when construction of social housing will slump by 65%.

In the workplace, the GMB union estimates there are nearly 150,000 job losses are already in the pipeline. The Sunday Times doubles that, whilst the Chartered Institute of Personnel and Development expects the final tally to be closer to 725,000. Which, of course, gives the most conservative estimate to the "fuss-making" trade union.

Compared to the stale, impersonal figures of the ASI, this paints a more credible picture because it is a human picture. The economy doesn't exist in abstract, after all.

As I noted earlier this month;
Back on planet earth, it is the real economy which produces actually existing wealth, and upon which genuine economic stability is built. After all, it is no good having vast quantities of imaginary wealth if you can't keep your family fed and clothed and a roof over your head.

But the British government (among others) want austerity. That is, they want cuts in jobs, benefits, and public services. Even within the parameters of the existing economic system, this is little short of madness.

As workers, our labour power is reduced with less of us working. As consumers, our purchasing power is diminished with less money to spend on the goods being produced. Each impacts on the other, and production and consumption are driven into a downward spiral.

Thus, the real economy contracts. The effects of this, based upon the tangible rather than on generated figures, is far more damaging than of a recession in the financial markets.
But, of course, pointing this out makes me a "deficit denier." I could probably also be labelled a union thug for recognising that people will want to defend their livelihoods. And a filthy commie for not believing in the joys of capitalism or the self-evident divinity of "the marketTM."

In which spirit, I gladly ignore the ASI's advice to "take a breath," and will continue to organise against attacks on my class. No matter how bland the number crunchers make those attacks look.