The economy again, inevitably

Back to the economy.  We have just had the Autumn Statement – the Chancellor’s view of the future prospects for the economy and the government budget.  The orchestration of these announcements follows a common pattern.  On the day itself, the Chancellor flits over any negative news (or blames it on his predecessors), spends more time magnifying any tiny ray of hope, and ends with a minor concession that is dressed up as a vastly generous gesture.  The rhetoric generally talks of shared burdens and concentrating help on those ‘most in need’.  The great man sits down to cheers from his supporters.  In the days that follow, when people have had time to analyse the figures, it becomes clear that (a) a very optimistic spin has been put on the facts but even so (b) things are much worse than presented and (c) on the whole, the poorest people will get it in the neck.  A particular feature – which governments of both persuasions use – is to present money already announced and committed, or a reduction in cuts, as an expansion.  This has happened in the last week in respect of more resources for tax inspectors (the service is not being cut quite as much as originally planned) and for overseas aid (a previously agreed fund has been re-announced).

A particularly unpleasant part of this year’s event has been the demonization of social security claimants, who are presented as people who choose to lie in bad whilst their neighbours – who are described as ‘strivers’ – get off to work.  Matthew Taylor feels that this has been so over-blown that the Chancellor has, in media language, jumped the shark.  I’m not so sure.  One explanation of Labour’s pallid response to the autumn statement is that their private opinion polls report the unpopularity of social security, even amongst low wage earners.  Surveys indicate that respondents vastly overestimate the proportion of benefit cheats.  About a fifth of the population think most claims are fraudulent: the actual figure is thought to be around 2%. But the reason we have growing benefit claims is because there are few jobs, particularly in depressed regions.  The fact that unemployment varies with the business cycle indicates that people become unemployed because they can’t find a job, not because they want to stay in bed.  This is also the main reason why the outcomes of schemes aiming to get the unemployed back to work are so disappointing.  And this is even more true of those claiming disability benefits.

Which brings me to my main point, which is that the important point is to achieve growth in the economy so that more worthwhile jobs are created.  This will require something more than the coalition approach, which is almost literally clueless.  It is not reassuring when even the Chief Executive of a major corporation tell us that a right wing government has no growth strategy.  But it will require rather more than the current Labour strategy, which is to do more of the same except for a bit of window dressing – such as funding more apprenticeships with a tax on bankers’ bonuses.  What those apprentices will do when qualified ? The current economic prediction is that we will have a triple-dip recession.  Who is going to employ even skilled people if there is no demand for their products ?

What is needed is an imaginative strategy (not a word that I like, but it represents the fact that we will need to go beyond tactics) for growth and jobs, one that involves employers and unions, that confronts the issue of funding expansion, that stretches over a substantial period of time, and one that does not regard reducing the National Debt as the crucial element of government policy.  One reason we have got to the pass we are at is because of the National Debt obsession.  I think my next post needs to concentrate on that.  It comes to something when a fallacy, exposed by Keynes in the 1930s and that I discussed in passing in a textbook written in the 1970s, comes back as government policy in 2012.  Marx said history repeats itself, first as tragedy, then as farce.  Looking at the human costs of unemployment, and of social security cuts, and wage freezes, that there’s not much farce about.  This time round, we have had two doses of tragedy.

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