Labour has rejected the economics of austerity




14 January 2016

Labour is developing “a pragmatic and deliverable economic policy for our country and in developing a fairer and more prosperous economic alternative based upon investment and growth which reaches all sections of society.”

This will “oppose austerity and to set out on economic strategy based on investment in skills, jobs and infrastructure.”

The Tories remain in thrall to austerity as the “way forward”, and as a consequence, the failed policies of austerity will continue to overshadow the lives of millions every day.

This is despite the fact that these policies, where implemented, have been shown quite emphatically not to have worked, having created economic insecurity, a rise in social inequality, and a collapse in living standards for very many.

Austerity is a political choice , not an economic necessity, and it is self-defeating.

The Tories have attempted to create a false record of the last Labour Government on public spending with deceitful claims about it being “profligate” and “runaway” , and that this caused the recession in 2008-9.

Leading economists have dismissed the Tory charge of profligate public spending as nonsense.

As has been pointed before, employing more NHS staff or raising the pay of the lowest-paid didn’t crash the economy ; the banks and their light-touch regulation did.

In April , over 400 practitioners in the field of mental health warned of the serious consequences of the flagship UK government policy of austerity.

They called for “a broadly based campaign of organisations and professionals against the damage that neo-liberalism is doing to the nation’s mental health” and that it was time to “unequivocally denounce the emotional toxicity of neoliberal thinking “

In the same month, it was reported that the numbers using foodbanks in Britain had topped 1 million for the first time.

The Tory Government’s choice of austerity rather than an expansion of the economy and a commitment to growth was an ideological choice to shrink the state and so reduce the role of the public sector in society.

They could have chosen the long-established method of using government spending to retain and to create the jobs that provided the income that supplied the taxes to reduce the deficit.

Instead, the Cameron-Osborne approach was to squeeze growth out of the economy, reduce people’s income and ability to pay taxes and so make it much more difficult to bring down the deficit.

For the Right , this was an opportunity to shrink the state.

Instead, there needs to be government intervention in the economy rather than withdrawal from it.

There needs to government responsibility for the condition of society, rather than denial of it.

And a common political purpose to end austerity and its injustice.

In the broadest terms, we need an economy that works for all rather than just for the financial markets of City of London, that shares prosperity, where investment is equitable, produces jobs of quality, and raises labour productivity which results in higher wages.

Such a strategy addresses the related social issues of poverty, health and inequality.

For example, the diverse North East economy shows a great deal of resources and potential that could be better used in creating that kind of economy.

The Extent of Unemployment in the North East

Figures released this month by the Office of National Statistics (ONS) from its “model-based” approach of calculation, estimates that unemployment in the 12 month period up to June 2015, the number and percentage rate of unemployed in each of the 4 council areas were :

Aberdeenshire 3,700 ; 2.6 per cent

Aberdeen 5,400 4.1 per cent

Angus 2,900 5.1 per cent

Dundee 5,900 ; 8.4 per cent

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