Is the economy recovering?

The supposed economic ‘recovery’ does not sit well with newspaper headlines such as ‘Thousands in court for council tax arrears as benefit cuts hit home’. Structural causes of poverty and inequality are conveniently overlooked, while benefit claimants, a large proportion of whom are working-age families with children needing housing benefit and tax credit to survive, are made the individualist targets of government rhetoric suggesting, by implication at least, that benefit claimants and recipients are idle and not wanting to work

– ‘scroungers versus strivers’ – and that billions more must be saved by taking away even more of what little they have left.  Feedback from charities such as Citizens Advice, and surely from most peoples’ own experience, suggests that most people do not want to claim benefits, and that if they do need them, they want to get out of them as soon as possible.

Even apart from the unfairness of targeting draconian cuts on the poorest in society, (including many with mental and physical disabilities and with sometimes drastic consequences including attempts at suicide, and where sanctions such as failure to meet targets eg the correct number of job applications can result in loss of benefits), when it is accepted by nearly everyone of all political persuasions that the financial crisis has been caused by the recklessness of the banks and lax financial regulation, there are counter-productive  consequences for the economy at large (especially with yet further huge cuts on the agenda), for example contributing to avoidable use of the NHS including crisis services, failure to keep disabled people in work, and of course with even less income, the inability to contribute to consumer spending and the virtual inevitability of increased debt.  (Also  worth noting that there have been thousands of legal challenges where people have been inappropriately judged as fit for work). These cuts are happening while for many the cost of living is going up, energy prices are huge,  employment is unstable (and most of the current ‘benefits’ to society are acknowledged to be overwhelmingly in London and the South-east), and with the rise of zero-hours, temporary and part-time and low-wage contracts. A recent study found that up to 40% of full-time workers in one bank said they had to rely on overtime or a second income to make ends meet, with some 12 % saying they had to use pay- day loans during the last year, and with some employees feeling the need to use food-banks.

Benefit costs (with the government at times covertly including pension costs in this figure to make the costs sound even more) did not cause this crisis any more than will the draconian cuts solve it.

Add to that that there are plenty of other options to ‘reduce the deficit’ ( interesting that the Scandinavian countries are described as having dynamic, wealth-creating economies, egalitarian societies, and high taxes that pay for strong welfare provision) – but other specific options include of course the often-mooted financial transaction tax (a government ‘sacred-cow’  non-starter one feels!), the suggestion by the Nobel Prize-winner Professor James Meade for the sharing of a firm’s profits equitably between workers, managers and shareholders, – with more radical suggested options including the transfer of the national debt to those with assets of more than say one or two million pounds – or an option surely worth consideration by those with no huge vested interests (i.e. most of us) – of a land value tax. Winston Churchill of all people is quoted as saying that the owners of land ‘contribute nothing to the general welfare.’ As land values rise, as it almost always does – and then some! – this has been described as an unearned and undeserved gift to land owners. And often one of the greatest problems contributing to everyday costs is high-cost housing, with successive governments failing to effectively regulate and bring rents under control. And the oft suggested freeing up of money and loans to facilitate capital expenditure on projects such as affordable/social housing could greatly help to house those in need as well as boosting  the economy and increasing employment.

Britain is already said to have shown the fastest increase in inequality in the OECD, and to be 28th out of 34 counties in the equality ‘league table’. To use a comparison with a TV programme, (TOWIE), the only government way seems to be downwards. There is good evidence (as quoted in the 2012 report of the Liverpool Fairness Commission) to demonstrate that it is the extent of inequality within a society that is the key factor in explaining comparative health and social problems – and that a clear link can be demonstrated between the level of inequality in a country and the prevalence of issues as wide-ranging as mental illness, drug and alcohol addiction, limited life expectancy, infant mortality, obesity, children’s’ education performance, teenage births, murders, imprisonment rates and social mobility.

So, the inherent unfairness of more and more cuts in benefits, the increased inequality and resultant counter-productive effects to society and its general well-being, as well as taking account of the other many options to save money and help the economy, all surely leads to the inescapable conclusion that the further draconian cuts to be implemented by government is driven more by political than economic motives – the cutting back of the welfare state as a political goal.

But this will also surely be seen by future generations as very much an ‘own’-goal as well as a political one, and not as leading to the kind of more equal and fair society that most of us would like to see.

Jim Lees 28.1.2014

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