Monday, November 15, 2010

It's not the economy, stupid

Any of you wondering how to feel about the unanaesthetised surgery being performed on the British welfare state and public sector have only to read this, Nothing To Do With The Economy, Ross McKibbin in the LRB.
Much of the government’s budget strategy is dependent on consequences which might be favourable, on premises which are almost certainly wrong, on sheer fantasy, and on that will-o’-the-wisp, ‘confidence’. It is pretty clear that those on benefits of whatever kind will suffer, however the cuts are interpreted. Anyone disabled, or partly disabled and on employment support, or dependent on housing benefit, or in need of social housing, or reliant on local authority care – indeed anyone on a low income – will lose.

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The country is not on the verge of bankruptcy. There is no evidence that the bond market was reacting against British debt, despite the best efforts of the Conservative Party to encourage it to do so. Our fiscal position was never like that of Greece, which had cooked the books and was struggling to cope with short-term government debt, though Osborne et al insisted it was. Why was it necessary to take such drastic action at all? Our debt ratio was much higher after the Second World War and neither Attlee nor Churchill felt any obligation to do what Cameron, Clegg and Osborne have done. Even Darling’s proposed schedule of deficit reduction seems excessively prudent. A less political chancellor might simply have allowed economic recovery (i.e. increased tax returns to the Treasury), modest reductions in new spending and inflation to deal with the debt
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