I try to avoid bringing up Margaret Thatcher when I talk about politics, mostly because I have a physical dislike of the woman and the policies she typified. But it’s undeniable that her policies were revolutionary in the worst sense of the word: her fiscal policies were the start of a steepening wealth divide in the UK, her abiding dislike of U turning even when her policies caused a longer, deeper recession, and the fiscal squeezing to deal with inflation before the days of initiatives like quantitative easing, changed the face of the UK. No longer a nation of industry, we became part of the wealth and services sector. But her most insidious legacy is the continuation of short termist fiscal policy which hurts the already suffering. Anyone familiar with this type of fiscal policy groaned when the Tories kept winning elections over the last fourteen years- but are we set to see a continuation of this under Labour, with Reeves’ fiscal determinism set to repeat the mistakes of the past?
Quantitative easing was the strangest creation of the 2008 financial crash: banks creating money to buy bonds was meant to ease economic pressures and reduce the length of time we were in recession. 40% of quantitative easing funds created were taken up by the top 10% of wealthy Britons, though. Even though QE caused a surge in asset value like houses which benefited those who borrowed around the 2009 period, the true wealth was absorbed by those who didn’t need the easement of issues caused by recession. It seemed that this, again, was another monetary exercise which led to the rich of the UK benefiting from disaster capitalism- in some cases, no doubt from the irresponsibility of their own endorsement of loose banker rules.
In 2016, the brexit referendum caused a run on the pound with predatory British firms like those owned by Crispin Blunt and even our own government- Jacob Rees-Mogg prominent amongst them, benefiting from the financial slowdown as the world markets lost confidence in a nation determined to tear itself out of long established free trade agreements. One could argue that quantitative easing went on too long in both periods, actually causing its own set of problems. There’s also an overreliance on it as the new default method to solve market uncertainty.
Reeves seems to be gearing up to repeat an argument so well worn that pages are beginning to drop from the script: that the economic failure of the preceding government prevents investment, that fiscal austerity is the sensible choice.
Austerity was wrong in 2008 in response to a bankers’ crash and it’s the wrong choice now. Labour setting out this sensible framework of fiscal squeeze is another eyeroll inducing moment we should be striving to avoid even as we run headlong into it.
The UK has lagged behind other markets for years now, because in 2008 along with every other economy- hence the conveniently forgotten “global” in front of the crash- we faced a global financial catastrophe on the scale of a possible new depression. QE was the salve, with a package of financial cuts introduced by Osborne which felt and still feels like some sort of finger wagging punishment for ever moving away from Tories- more of a punishment for choosing Blair than a sensible method to ease the financial instabilities we faced.
We’re told constantly that the Tories are the party of fiscal responsibility. When I was born in 1987 I’d just managed to miss the damage of Thatcher’s commitment to fiscal austerity and adherence to policy which ballooned what could have been a milder recession. I dodged seeing the highest unemployment in decades, managed to swerve most of it though no doubt I’d have been happy to be taken to marches against the poll taxes…
I was born in a northern town, watching the reverberations of our once thriving industries being torn down as our locales fought for new identities without the long standing businesses that brought micro economies to much of the north which was lost without them. Even thriving businesses were sent into insolvency by Thatcherite fiscal policies- it wasn’t even about survival of the fittest, it was about throttling inflation out even at the cost of welfare, about shrinking the welfare state even as people relied on it.
We now stand at the cusp of yet another round of fiscal bullying meant to rip money away from public infrastructure investment and give the government more money to steady the illusory ship that is the UK.
All too often we’re given the ridiculous parity between country finance and household finance. The problem is, people are trained to take politicians words at face value. When Reeves tells us her mother taught her to balance the books at the kitchen table, she was talking about the home, where once you run out of money you are trapped so you must be smart with money to avoid this undesirable outcome. The UK is a sovereign currency- we cannot run out of money. Yes, overproduction can lead to runaway inflation, yes you can use QE to attack that, yes that can cause problems with interest rates. The point, though, is that this reductive nonsense parroted by anyone near the wheels of power is a misdirection- and all the parties with stakes in leadership do it. Reform’s fiscal policies would quite literally melt the UK’s economy down overnight: they promise to sever payment promises to foreign banks which would “free up” money, forgetting that if the UK refuse to pay its’ debts government borrowing would become impossible and foreign investment would drop off in a matter of days. The conservatives fiscal policy is explained simply: they want to shove every pound they can touch into their own pockets, those outside the elite circle be damned and damned more if we complain.
Labour will be the the UK’s next government. We’re told endlessly by Labour adherents that they must move into this pale ghost of Tories in order to win. And people accept these ridiculous, weak, visionless fiscal policies instead of demanding a revitalisation of the country’s infrastructure after sixteen years of continual spending aversion.
Part of the 28 billion pound initiative towards green policy labour has cut focuses on insulating millions of homes. Not only would this drive down bills for working people, allowing them to be more fiscally responsible by spending money elsewhere or saving, upsizing etc, it would ease the usage of climate change inducing services- refusing to do this, stalling it again is irresponsible not just because climate scientists are protesting about our actual mass deaths but because the continual abandonment of policy to directly help people spend less on utilities we need is a further capitulation to the idea that we can’t attack problems at their root source: not to mention these companies have had a longtime run on our pockets; minor windfall taxes haven’t prevented some energy companies from gaining fifty percent increases in revenue. When it comes to public ownership we’re told it’s too expensive- whilst being asked to pay increased bill costs to foot the costs of, for example, water companies building better water infrastructure. The same companies Thatcher privatised who took insane profit and gave it to rich foreign nationals want more of our money to fix the infrastructure they’ve been in charge of since the 80s… something just doesn’t seem right there.
We’re told that Reeves’ rules are non negotiable, and this of course is meant to be a throwback to the “strong and stable” governance line that signified May’s tumultuous primacy. I see it as a bullish overcommitment to outdated fiscal rules which imperil the welfare of people unlucky enough to be born working class in the wrong decade and prioritise the riches of those who already have more than most of us can accrue in a lifetime.
I see financial disaster on the cards again, whoever takes control of the country’s purse strings after the election this year.
When I started to learn about economy more in the middle of last year one of the first lessons I understood was that refusing to invest in public spending as Reeves threatens to continue is one way to ensure a country mires itself in its own mess, refusing to develop new methods of revenue. It’s such high irony that it’s not just the conservatives who claim to care about British people who have brought about these circumstances of marked wealth inequality, and a Labour who have picked up the discarded clown outfit of the Tory crime syndicate and begun to don it who threaten its continuation.
I’m tired of being negative about labour, forecasting doom like an uglier Cassandra but at this point, I’m tired of watching the UK continually gulp down a humble pie we never asked for. The population at large do not deserve to suffer punitive fiscal policy over and over and over because of some abiding commitment to the idea that suffering leads to greatness: this is labour resting on the confidence that the UK’s population will believe that we’re an irresponsible nation who must pay the price for things we often have no say in.
If we don’t enter a period where the UK can spend the incredibly high taxes we’re under on new methods of growing the economy, then leverage that into better services, incentives to help people grow their own personal wealth and income security, we will not drag ourselves from the mud we’re currently sinking into.
Most of all, though, it’s absolutely ridiculous that, everywhere we turn, be it the insane Tories, the obviously foolish radical Reform and the incumbents of labour, we’re told that fiscal policy that punishes us is good, responsible, the right thing to do. My kingdom for a government who doesn’t think that advertising it’s contempt for working people’s welfare and pitches our suffering as advancement.
Politically Enraged 