While the UK’s poor have their benefits cut, even threatening some with near-destitution, the rich have been awarded nice big tax cuts – of, on average, £100,000 a year for those on annual earnings of over £1m. Incentivise the poor by hitting their tiny, state-subsidised incomes; incentivise the rich by giving them loads more money.
What those on the receiving end might see as the utterly contemptible unfairness of it all is justified on the grounds that we must cut the public debt, for fear of landing future generations with high taxes, low growth and, generally, miserable lives. Hence, the neo-liberal political and economic agenda that is ruling the roost at the moment. And no more so than here in the UK.
But there is a growing network of economists who believe this perspective is not only pure bunkum, but that it is also being espoused by people with a very tenuous grasp of economic reality. One of the alternatives emerging from this is the concept of Modern Monetary Theory (MMT), which is essentially an updated version of Keynesian theory.
Writing about MMT for New Economic Perspectives, Dale Pierce argues that the shift to Margaret Thatcher’s and Ronald Reagan’s neo-liberalism, far from heralding a new age of modern capitalist democracy, has landed us with the constant threat of policy by masochists and sadists.
He said: “The public policy reversal that began with Margaret Thatcher and Ronald Reagan promised that the deregulation of capitalism would lead to greater shared prosperity for everyone. Today, even though the falsehood of this claim is brutally obvious, the same economic nostrums and stupidities that were used to justify it in the first place continue to be trotted out and paid homage to by a class of financial-media personalities who equate making a lot of money with understanding money. It does not seem to occur to them that financial criminals and practitioners of bank-fraud can get rich through sociopathy alone.”
From this perspective, the coalition government’s attacks on the welfare state could be seen as merely an extension of that sociopathic approach to public policy, particularly as the view grows that the coalition’s overall economic strategy lacks merit. Indeed, George Osborne and his band of supporters form an increasingly small minority of pundits and economists who believe that austerity has worked as intended – or has any chance of working at all. Even the IMF, not hitherto known for its leftist tendencies, has warned the government that it needs to change course.
Given the pain that the coalition’s welfare and NHS reforms are thought likely to cause, together with the drive to ‘make work pay’ – or, to put it another way, to drive more people into poverty-pay, low-status, insecure, part-time jobs that probably don’t exist in the numbers required – this debate is central to the quality of millions of people’s lives.
The discussion about MMT, therefore, is well timed. Here’s Dale Pierce’s full article to help set the scene.