Process
Status Items Output None Questions None Claims None Highlights Done See section below
Document Notes
Some truths behind austerity and how it’s always a choice.
Highlights
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the idea that the UK government is facing some sort of fiscal black hole that will be impossible to fill without drastic cuts to public spending is simply absurd. As economists from across the political spectrum have been pointing out for decades, government spending in a wealthy economy like the UK is not constrained over the short term by tax revenues.
✏️ The common refrain when it comes to austerity. We have to cut costs because we’re in debt and financially in a bad place. 🔗 View Highlight
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First, the government is capable of issuing new debt to cover expenditure. As long as that debt is used for productive purposes — like educating the workforce, expanding physical and social infrastructure, and promoting decarbonization — it will be recouped over the medium- to long-term.
✏️ One thing that can be done instead of just cutting costs. 🔗 View Highlight
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Higher taxes on the wealthy and big businesses also meant that the wealth accrued from economic growth was shared much more equally than it is today.
✏️ Another thing, or seems to be related to thing number 1? 🔗 View Highlight
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the British state controls the UK’s monetary system. After the banks nearly crashed the economy in 2008, the Bank of England pulled out all the stops to protect the interests of asset owners. Interest rates were slashed and vast sums of money were pumped into the financial system.
✏️ Another thing to be done 🔗 View Highlight
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Now, higher interest rates mean government borrowing is much more expensive, and taxpayers have to foot the bill. But it doesn’t have to be this way. The government could manage inflation in much more targeted and effective ways through, for example, taxing the big corporations that have been profiteering through the cost-of-living crisis, or by more directly controlling how commercial banks issue credit. Instead, the British state continues to rely on the blunt tool of higher interest rates, which lead to higher bills for working people struggling to make ends meet as well as higher interest payments on government debt.
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Austerity is a choice — not a necessity.
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For many decades now, one of the favored tactics of neoliberal policymakers has been to claim that, in the modern globalized economy, the nation-state is too powerless to effect meaningful economic change. If a government tries to raise taxes or impose new regulation, wealthy individuals and corporations will simply leave. As former chair of the Federal Reserve Alan Greenspan once put it, “Thanks to globalization, policy decisions in the US have been largely replaced by global market forces.” The state, in other words, is powerless.
✏️ Neoliberal arguments about how the state is powerless. We can’t scare off wealthy people and corporations, right? 🔗 View Highlight
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When the banks needed a bailout after 2008, the state was there to provide it. When asset markets failed to recover in the wake of this crisis, the state once again stepped up. When big businesses needed rescuing during the pandemic, the state was there to provide support. In that period, the state was even powerful enough to shut down the entire economy.
✏️ Here’s where that whole thing about the state being powerless, and trusting in the free market.. goes out the window. When things fail, everyone waits for the state to bail them out. What happened to free market? Wouldn’t that be saying, “This is bad, so it dies.”? 🔗 View Highlight
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The problem is not that the modern state lacks power in a globalized economy. The problem is that the state’s power has been captured by vested interests, and is therefore only ever used to support them.
✏️ Here’s the truth. It’s not powerless. It’s just in the hands of the few vs the hands of the many. Capitalism/neoliberalism is not about free market.. not only that anyways. A key component is having the state in the hands of the few. #followup This is a key part of defining capitalism and neoliberalism I think. 👓 capitalism 🔗 View Highlight
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The idea that the state is powerless nonetheless allows politicians to publicly justify their failure to address deep-seated economic and social problems, while using every mechanism at their disposal to satisfy the interests of their allies and donors behind the scenes.
✏️ All the while, it’s doubly useful as a propaganda technique to pacify the masses. 👓 propaganda 🔗 View Highlight
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Starmer would never admit it, but he has the power to raise public spending and investment, increase taxes on the wealthy and big businesses, and properly regulate big businesses and financial institutions. Instead, he will impose renewed austerity on those least able to bear it. Not because he has to, but because he wants to.
✏️ Probably a statement you can apply to many nations doing austerity. 🔗 View Highlight