IS A MYTH
THERE IS AN
IS A MYTH
THERE IS AN
The government needs to balance its books, just like households.
This is a key myth based on economic illiteracy. The key difference is that if a household cuts it expenditure, it will not directly affect its income but if a government does the same it will because cuts to government expenditure usually involve putting people out of jobs thus reducing tax income and increasing benefits claims. Balancing the Budget is therefore a way to get a permanent budget crisis which can then be used to justify more cuts.
The Global Financial Crash means everyone has to tighten their belts.
This, too, is an economic fallacy. George Osborne managed to find £375bn to bail out the banks and the economy after the crash of 2008 even though he then passed the bill onto the public thus adding to government debt levels. Equally after the Brexit vote the Bank of England managed to find £250bn to keep the money markets afloat. When their systems are threatened the Tories find the money. However when it is paying for services for people they claim there is no money is made.
We are all in this together.
The Tories cut the top rate of income tax from 50% to 45% benefiting the rich. At the same time there have been changes to tax credits and various benefit allowances which make the situation of the poorest worse.
The cuts will help the economy.
All the evidence is that because of the increase in insecure and zero hours contracts the amount of tax paid by people may reduce and by cutting public expenditure this will also reduce tax take and increase benefit expenditure and thus could actually make the situation worse.
The cuts will reduce the national debt.
UK Government spending as % of GDP fell from 49.6 in 2009 to 43.2 in 2015 as the Tory cuts hit home. However this did not reduce the level of debt because the level of government debt as a % of GDP rose from 76.6 in 2010 to 89.2 in 2015.
The Labour party crashed the economy.
The banks crashed the economy with their attempts to keep financialised capitalism afloat. Bailing out the banks and the economy cost about £850bn – which the banks referred to as ‘profit’ and used to pay their bonuses and to inflate the prices of core commodities such as wheat and fuel. It was paying for parts of this which made the government deficit rise which in turn gave Osborne the economically illiterate excuse to impose austerity. The alternative to a bailout would have been even worse depression. But the alternative to deficit-reduction politics would have been the Green New Deal or the People’s Quantiative Easing proposed by the Labour party to stimulate a dynamic, resilient, sustainable economy and promote fairness and social justice.
There is no alternative.
Today we will explore the alternatives – of which there are many – to find those that will work best locally and nationally. If we want to move into a future with our welfare systems intact, we need to take the argument out into our communities and explain the lies and the fallacies, and how things can be done better: today, we will learn how to do this.