The People’s Assembly and Austerity

So I’ve looked at Caroline Lucas’ and Owen Jones’ speeches from the ‘anti’-austerity march on Saturday. (I didn’t bother with Russell Brand.) I know you can’t tell a lot from three-minute speeches, but I get the feeling that the whole People’s Assembly thing is really off-message and confused. If I could boss them around, here are some things I would tell them to do:

1) Stop saying that the bankers caused the ‘economic crisis’. They really didn’t – not even the control fraudsters who deserve blame for the run of insolvencies starting in 2007 (who aren’t ‘the bankers’). Banking crises on their own don’t have to lead to ongoing poverty, unemployment, and homelessness. After a banking crisis, people spend their money on debt repayment instead of consumption. As a result, there isn’t enough income for people to maintain current consumption. Businesses suffer from lack of demand and have to lay off workers. Times are hard. But all the government has to do is put enough money into the economy to reverse the contraction. It didn’t, and so we have all this deprivation. The People’s Assembly message seems to be that it’s the bankers’ fault that times are so tough and they should be made to bear the brunt of the pain. But the fact is, times didn’t need to be tough at all. It’s austerity that made them that way. The pain doesn’t need to be visited on the bankers or anyone else; it doesn’t need to exist. I think the government secretly likes all this banker-scapegoating, since it gets them off the hook. Anyway, why alienate all of the whole 2 million people working in the banking sector if you’re trying to start a popular movement? Banker bashing is so 2009 anyway.

2) Stop being pro-austerity. If your agenda is anti-austerity, stop saying pro-austerity things! Caroline Lucas took the opportunity to call for the government to impose a Robin Hood tax, close tax loopholes, and cut defence spending. Wait a minute… isn’t that austerity? Austerity is just a fancy word for the government sucking money out of the economy, either by reducing its spending or increasing its taxes. Of course there’s better and worse austerity, but if the point is simply to oppose austerity – as it should be – then it’s just confusing the message to get into those sorts of distinctions. Surely the prime directive is to get hospitals, schools, public transport, disability and unemployment services, etc. less overused, understaffed, and, to use the technical term, hellishly awful than they currently are. But even more basically, the point is just to put more money into the economy so that it can move back towards operating at full capacity. So stop talking about where to take money out from when you’re trying to argue against taking money out at all. People are confused enough as it is.

3) Focus on why austerity is pointless, not on how it ‘doesn’t work’. It’s all very well to say that austerity is counterproductive. But the upcoming growth figures don’t look all that bad. Arguing that this is in spite of austerity looks awfully quibbly. Why not just say that regardless of overall economic performance there’s just no point to austerity? Anti-austerity policies really aren’t a hard sell. There are plenty of people who need more work to earn enough to get by. There is plenty of work for them to do, for example in getting public services to do something that at least vaguely resembles functioning. I have an idea. Let’s hire the people desperately in need of work to provide services to the people desperately in need of services. Oh, and remember when we put all that money into the banks to try to get them to lend it into the economy, because the economy is so short of money right now? And remember how it didn’t get into the economy after all because the whole plan didn’t make the remotest semblance of sense? Well I was thinking, how about we put the same money into the economy by paying people in the public sector properly, instead of working them until they starve and then cutting off all their children’s benefits ha ha ha ha ha. Then the private sector will have to raise wages too, and people will have enough to spend at all those businesses currently complaining about lack of demand. I mean, if you can’t sell that to the public, what can you sell?

4) Learn about monetary operations, then explain them to people.  You have to address the primary arguments offered against deficit spending rather than just bashing austerity. AUSTERITY BAD is not a counterargument to the ignorant nonsense right-wingers talk about sovereign insolvency, crowding out private sector investment, inflation, debasing the currency, etc. These arguments don’t sound like the nonsense they are – in fact they don’t sound bad at all – until you understand basic monetary operations. It’s impossible for the debate to go anywhere when both sides fail to understand what they’re talking about. For instance, people on both sides still talk about whether people will stop buying UK Treasury bonds in the future and how this should affect spending decisions today. Hardly anybody asks why the government should offset its spending with sales of bonds at all. Pre-2006 it would make some sense to say ‘because reserves need to be drained from the banking sector so that the Bank of England can meet its interest rate targets.’ But now excess reserves go into the BoE’s deposit facility and earn interest, so the bond sales don’t matter at all. For another example: people still talk about the possibility of ‘printing money’ to pay down debt, as if if in any case the ‘debt’ and the ‘money’ used to pay it weren’t exactly the same thing – accounting records at the Bank of England. I won’t go into all this now. Suffice to say that the conversation really needs to move to a higher level if people are to understand why austerity is completely pointless – why all the ‘risks’ that economists find in deficit spending are based on an understanding of monetary operations that is either hopelessly inadequate or embarrassingly outdated. It’s boring stuff, but there simply is no way around the silly pro-austerity arguments that doesn’t require people to know it. Once people see that austerity is pointless, and that deficit spending carries no serious risks, then there is nothing to recommend austerity. If you can provide services to people who need it, and if there’s no real cost to doing so, most people would say that we might as well do so. The people who wouldn’t are the types that care a lot about liberty, specifically the liberty to derive repressed sexual pleasure from the knowledge that their neighbours are suffering from needless poverty. But libertarians are a subject for another day.


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