I asked our European economist, Dr Michael Lloyd, member of North Tyneside Peoples Assembly, for a response to Cameron on the public sector squeeze.Here it is: worth circulating. David Cameron, speaking at the Lord Mayors Banquet in the City of London, has suggested that public spending should continue to be squeezed in a fundamental culture change that would leave the British public sector permanently slimmed down. “It also means something more profound, it means building a leaner, more efficient state. We need to do more with less. Not just now, but permanently, he added. This is the clearest statement yet of the commitment of Conservatives and Liberal Democrats to pursuance of a neo-liberal agenda, based on a belief in the fundamental efficacy of the market mechanism; a strictly limited, non-interventionist role for the state, and minimal welfare provision. The apparent need for austerity has provided an excuse to cut public expenditure, embark on further privatisations, and start a substantial move towards creating a neo-liberal state structure. The marketisation and privatisation of the NHS provides clear evidence of what is happening, even though it is being denied. It is imperative to challenge what is being done, without any electoral mandate, but with support from a populist media either supportive of the neo-liberal agenda or unable or unwilling to criticise it. First, public deficits and public debt are not the problem. These will be reduced by only two actions: economic growth stimulated by increasing public investment and stimulating consumer demand by raising the minimum wage, and by taxation of those who are, dysfunctionally, not spending or investing, i.e. the wealthy. Public debt is not a problem; it is not strictly debt. When the government, as it does regularly, ‘borrows’, it issues interest-bearing, sovereign bonds which become an income-generating asset for the private buyers of the bonds. Deficits, though they should not be uncontrolled, aroe also not the problem they are suggested to be. The UK has had 43 years of deficits in the past 50 years. The UK, which issues its own currency, in which it denominates its sovereign bonds, and has a flexible exchange rate, cannot become bankrupt. The economy may or may not be slowly recovering, but the social and economic damage has already been done; lost economic growth and wage income foregone can never be recovered. But the recovery at the moment is based in three areas: increasing house demand prices, supported by government, but driven by private credit; increasing demand for in the automobile sector, driven by private credit, and an expansion of financial sector activity. This scenario is the same one which got us into the financial mess in the first place. There is not need to follow this failing economic policy or the neo-liberal political agenda which is behind it. We must challenge it and take action to arrest its development. Dr Michael Lloyd
Posted on: Wed, 13 Nov 2013 10:40:49 +0000
Trending Topics
Recently Viewed Topics
© 2015