Why Austerity Economics Doesn’t Work

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What’s wrong with an austerity economic policy?

When the Tories came to power 10 years ago they started a programme of austerity. They claimed this was essential to solve the problems inherited from the previous Labour government. They got it disastrously wrong as we all now know but to understand why, you need to understand the difference between Micro (how your personal finances work) and Macro (how government finances work) Economics. Don’t worry, it’s not as hard as you think. Watch this short video by Professor Richard J Murphy and you will see what I mean.

So, to put it simply, you can benefit personally by cutting your costs but only at the expense of somebody else. If a government cuts costs, the whole country – and that means you and me – are worse off.

How did they get it so wrong?

It’s beyond belief that civil servants and ministers didn’t know what they were doing. The answer is they didn’t get it wrong. They knew exactly what they were doing.

When I said before that the whole country is worse off, that was only on average. The wealthy ended up better off and the poor were disastrously worse off. Thousands of the poorest and most vulnerable in society died as a result of these policies.

So why would they do that? Well, when you realise that all the Tory cabinet are millionaires, if not billionaires, and most of the party donors are similarly endowed, you can probably work it out for yourself!

How did they sell austerity to the people?

They relied on most people equating government finances to their personal situation and assuming the same solutions would work. Nothing could be further from the truth. To understand why, watch this eye-opening video by Professor Richard J Murphy.

It’s interesting to note that the acronym for this, MMT, is the same as the initials for Magic Money Tree which Theresa May said didn’t exist. This is what Churchill would have called a “terminological inexactitude”.

Austerity is a policy, not a necessity

So if you’ve followed these two videos you should now see that the Austerity which the Tories claimed necessary to solve our financial crisis was nothing of the sort. It was a deliberate policy to line their own pockets and those of their donors at the expense of the poorest and most vulnerable in our society.

There is a better way

A wellbeing economy puts you and your family at the forefront of decision-making. Instead of regarding GDP as the only measure of success, it always looks at how any decision will affect people’s lives. For this to work effectively the lives of your children, grand-children and so on must also be included. So, it automatically addresses issues of sustainability, climate change and everybody’s on-going health and happiness.

Wales, Iceland, New Zealand and Scotland have all signed up to this way of thinking. It’s no accident that these are also amongst the countries that fared best during the global COVID pandemic. It’s also interesting that they are often led by very capable women.

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Mike Robertson

Author: Mike Robertson

The Treasurer, Organiser of SNP Orkney, and the webmaster for this site, Mike is a retired software engineer and company director. When not working towards an independent Scotland Mike enjoys photography, woodworking and cooking, but not all at the same time.

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