There are many on the right of politics who deny there have been cuts in government spending, saying that totals have been broadly constant. That's sophistry as the FT shows this morning, reporting:
Several government departments will have lost more than £3 in every £10 they once had available for spending, by the time of the next election, according to Financial Times research.
The Treasury has begun a spending review for 2015-16, the financial year spanning the next poll. Departments, including justice, business, culture and local government face cumulative real-terms cuts of more than 30 per cent since 2010-11.
The defence budget will have fallen more than 20 per cent and faces a cut of nearly £700m, about 2 per cent, in 2015-16 if the chancellor sticks to his plan of maintaining the distribution of pain he imposed in the first spending review in 2010.
Yes, there has been an increase in social security spending. That's what happens when well over 1 million are forced out of work.
And yes, there has been an increase in interest payments. That's what happens when a government refuses to address the deficit.
But there have also been deep cuts. And let's never deny it. And those cuts have a real impact on real people. Those who lost their jobs were first. Then the suppliers. Then the beneficiaries of the spend. Then there was you if you're not already in that list.
And what is more, none of those cuts have done anything to cut the deficit. All this is utterly in vain. And that's what is so profoundly annoying. All we have done is dumb down the economy whilst failing to meet real need. And one day we'll weep for the waste of this generation.
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We need a revolution
I think not
They have a disastrous track record
But we do need radical reform
Richard
So do you recommend a Keynesian approach? We keep hearing about how government will be spending on infrastructure – but this appears to me to be money already budgeted rather than an increase and it is always tomorrow. Yet until the government primes the pump I cannot see private investors putting in their capital, the markets indicate how cautious investors are as they take their profits this week.
Like you I greatly concerned about the cuts – these have not been achieved by economies – but by reducing head count. We now have a vast pool of white collar workers and others from the public sector yet it appears that the private sector is only creating unskilled jobs many only part-tiem and at the minimum wage.
I strongly endorse a Keynesian approach
We need a change of mindset amongst our political elites, I doubt very much that this is likely to happen in the next 5 years. Revolutions can be dangerous , often much bloodshed and very little political change to show for it. Anyone who studied the French Revolution will know this and fear that something similar could happen here. Also the rise of Hitler was a revolution for Germany when discredited polticians were cast aside. We have to be mindful of what we wish for because it could be very unpleasant.
As the father of children reaching adulthood I see a generation of determined, articulate, creative and resourceful if somewhat frightened young people. More than anything it is they who give me hope for their future. We clearly owe it to them to make the reforms necessary for them to fulfil their potential for a rewarding life. The key reforms are to do with money, debt and taxation. The debts created by the abuse of fractional reserve banking are as much a product of the offshore banking system as the secrecy and tax evasion. Destroying this system for corruption and introducing full reserve banking with government control of a debt free money expansion as required are the main reforms needed. The resulting reinstatement of political power has implications for democratic reform and if globalisation is to be positive in its effects an international trading currency needs to replace the reserve currency system. This would be enough of a revolution for me, but hardly an agenda that can be reduced to slogans shouted from the barricades.
A rallying cry for Keynes, I think – and his Bancor
With a debt crisis still raging and inflated asset values and monopolies standing as obstacles to the prospects of the young as much as the refusal of the government to stimulate demand, surely we need more than Keynesian economics. We should at least be examining the idea of abandoning fractional reserve banking. It drives corruption, inequality, distorting speculation and short term investment as well as creating the absurdity of debt exceeding money. Unless economies are bound by exchange controls and credit and controls, it leaks money into powerful funds that can destabilise markets in response to policies that do not favour their interests. There is something occult in the nature of money, based as it is on the prevailing beliefs more than on a true understanding of its role as a tool for collaboration. Faced with our urgent need to use our resources efficiently in the interests of the billions of us now living, removing the mysticism from money is essential.
I’m not sure I but that answer as a panacea
I do see reason to tax banks heavily for creating money
Yes, a rallying cry for all facets of the Keynesian approach. Not those cherry picked and used in the post war consensus before the Chicago neo-liberal doctrine took hold.
For a start this means not beggaring thy neighbour for a start.
Creditor nations should support debtor nations so that they are able to pay back the debt.
“Currency wars” entered into in order to gain a trading advantage should be avoided. This race to the bottom and is a zero sum game.
“Tax wars” also entered into in order to attract trade from elsewhere should be avoided. This race to the bottom is a zero sum game too.
If ever a “Bretton Woods 2.0” is needed it is now to head off trade tariff wars and the “shooting war” that is likely to follow. Why wait until the “shooting war” is nearly over…..
At Bretton Woods 2.0…. what to do about the Banks and debt should be number 1 on the list!
Please excuse the poor editing due to the hurried submission…