Category Archives: Political Decision

Saving the NHS

What does it mean that the NHS is in deficit to the tune of £930m? It’s not a business trying to make a profit for its shareholders – the deficit doesn’t refer to losses. The forecast is that the deficit will be as much as £2.8bn by the end of the financial year next April. But that’s the difference between the actual costs of delivering NHS services, still mostly free at the point of delivery, and the budgeted costs agreed by the Health Secretary for the financial year. It looks like the Health Secretary got the figures badly wrong.

The budget figures are set and NHS Trusts have to work out how such targets can be met. Clearly a major component of costs relate to staff: doctors, nurses and other staff. The only way the budgeted figures could be achieved is to reduce numbers employed. So those cuts are made as a result of the annual budget process. The shadow health secretary quoted a figure of 6,000 nursing posts, for example, as being cut during the last parliament.
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TTIP – Plutocratic Victory

The Friedmanite Neoclassical Economic Belief System (FNEBS) now dominates the developed and developing world. It is taught across the globe in business schools and universities. It is the orthodox wisdom among the Self-Perpetuating Industrial, Financial, Media, Academic and Political Establishment (SPIFMAPE).

The SPIFMAPE is the shadowy presence in our economy which has the real power and resources to ensure its continued dominance. It includes those Industrialists corrupted by the pursuit of wealth, Financiers who pay the £billions of fraud fines as the necessary entry fee, the Media controllers who shape the news to their advantage, Academics who accept ‘research’ income for conformist enquiry and teaching, and those Politicians nurtured within the SPIFMAPE, warmly accepting the FNEBS, otherwise referred to as in the ‘Westminster bubble’.

Those who know the FNEBS appear to really believe in it; and those who don’t know it, accept it as a truth. However, J K Galbraith identified such matters as ‘institutional truths’: that is not a truth at all, but a downright lie that people must buy into if their careers are to progress within their chosen institution.

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Austerity a Vote Winner!

The media, including the Guardian, report that an independent poll shows the government’s austerity agenda is a vote winner. That conclusion is drawn from responses to a statement that “We must live within our means so cutting the deficit is the top priority.” Agreement was registered by 84% of Tory voters at this year’s election, 63% of UKIP voters, 58% LibDem and even 32% of Labour voters of whom only 34% disagreed. Therefore, the argument is, voters believe austerity is a Good Thing!

Everyone knows from personal experience that living within your means is important to peace of mind since living beyond your means generally has pretty disastrous results. So cutting the deficit is, of course, a top priority. But austerity is not cutting the deficit: it is just one possible way of achieving that end; and a horrendously inefficient one at that.
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Greece Again

So the ECB has agreed to raise its limit on emergency loans to Greek lenders by a further €900m over one week. And acting on the assumption Greece will stay in the Euro, the plan was finalized to provide a €7bn bridging loan to avoid a default on Monday. In response, the Tsipras government has caved in over EU’s insistence on more austerity – tax up, pensions down. So Eurozone finance ministers have agreed to talk about an €86bn rescue package.

What does it all mean?
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The Common Sense of Austerity and GDP growth

The anti-austerity protest which is getting under way on 20th June, is not just a politically motivated objection to a policy of the governing Party. It is a protest with deep foundations in both theory and common sense.

For successive governments GDP growth has been the holy-grail. Despite misgivings over its validity (https://gordonpearson.co.uk/2015/02/19/the-great-gdp-deception/#more-1278), it is accepted that balancing a budget with a growing GDP is a whole lot easier than doing so in recession. But imposing austerity on the economy only stifles GDP growth. So why do governments of both main Parties – assuming Labour takes the suicidal Blairite route – accept austerity as the necessary medicine for our economic ills?

The economy is a complex of many different sectors, public and private, that relate to each other in all sorts of different ways, and it is continually on the move with some sectors growing and some shrinking, some dying off altogether and new ones emerging. That dynamic is the result of millions of people striving to make progress. Politicians don’t control the economy; the best they can aim for is to do the people no harm.
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Corbyn-led coalition government

The dominant political, financial and media establishment seems close to resolving the outstanding Labour leadership problem to its satisfaction. There will be no serious challenge from Andy Burnham or Yvette Cooper, or, of course, Liz Kendal. Nor would there have been from Mary Creagh who pulled out of the leadership race, blaming Miliband’s lack of business friendliness as the reason Labour lost the election. The only difficulty might lie with Jeremy Corbyn, should he achieve the necessary nominations to stand for the leadership.

Corbyn could be dangerous to the established Tory/ New Labour Westminster consensus simply because he does not go along with it. His candidacy would challenge that Osborne-Cameron clique in a way the other candidates would fear to tread.
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The Economist’s advice to Labour

Why would the Economist publish an article commending Labour to vote its ‘Blairite candidate’ to the Party leadership? Why would that rather formulaic libertarian publication be concerned?

The Bagehot article purports to be about Liz Kendal, Labour Party MP for Leicester West. But in reality it is just another salvo in the mainstream media’s attempt to ensure Labour poses no threat to the established Osborne-Cameron clique. The main message is the suggestion that Labour lost the election because, under Miliband’s leadership, it moved too far to the left. If it is to have any chance of future election success, it must recover its Blairite centre ground by voting Kendal. That was the suggestion.

Acknowledging Labour lost all but one of its seats in Scotland to the SNP, the article pretends that Scottish failure was all about independence. The establishment is clearly nervous that Labour might follow the SNP example offering policies focused on fairness and social justice, financed by the fruits of economic stimulus rather than being strangled by austerity.

What would happen to Labour support if it were to go against all privatisation of public services in health, education and social welfare, against the fire sale of UK publicly owned assets to foreign investors, and focus on the eradication of poverty, the building of affordable social housing, government subsidized higher education, and serious investment in renewable energy as well as progressive taxation of income and wealth. Such a social democratic programme is currently only advocated in England by the Green Party. But if Labour was persuaded to that position based more on human values than Old Labour class war loyalties, there might be a genuine threat of Labour revival.

With its miniscule majority, the Osborne-Cameron offering of privatisation and surrender to corporate monopolists, might then find the Labour / SNP opposition more than just challenging. If, on the other hand, Labour could be misled into appointing its ‘Blairite candidate’, the challenge would be easily repelled. That is why the mainstream media, including The Economist, is concerned.

Tory’s Rocky Road Ahead Confirmed

Survey data re the 2015 general election is confirming the previous posting. But it is not a picture that is widely acknowledged. For example, Martin Kettle in today’s Guardian, suggests it is more important we should ask why the Tories succeeded, than why Labour failed. But the truth is the Tories are only a smidgeon ahead of their 2010 vote when they had to rely on Lib-Dem support to form a government. That can hardly be regarded as great success. The 24 additional seats those few additional votes produced was a quirk of the first past the post system. Labour undoubtedly failed, being stuck only 1.5% above their 2010 low point in terms of votes, but losing 26 seats, also a result of first past the post.

The survey sample referred to in the previous post has produced some further confirmation. The Lib-Dems were written off some time ago as having completely sold out. That may be grossly unfair, but that is the predominant reason being given by those former Lib Dems surveyed. The main cause emerging for Labour’s rejection was their failure to offer an economic programme that was significantly different from George Osborne’s. In particular, Ed Balls’ adherence to the Tory austerity programme, in case Labour should be seen as irresponsible, appears to have been a prime cause of frustration and rejection.

Those small changes in voter numbers disguise a lot of voter movement. In the survey, a significant number of former Labour voters turned to UKIP and the Greens, where they substantially increased numbers to around 5m but produced no additional seats. Labour’s losses to UKIP and Greens appear to have been more than compensated by deserting Lib-Dems.

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New Tory’s Rocky Road Ahead

The election result took many by surprise. As the results became clear, George Osborne briefly stated the Tory commitments to an essentially social democratic sounding manifesto, including more jobs, affordable housing, tax cuts for working people, help with childcare, improved educational chances for all etc, etc. He concluded that they had put it all in the manifesto and “it seems to have been warmly received.” Further detail was later spelled out by David Cameron in his victory speech outside No 10, a transcript of which follows.

It is possible there may be some misunderstanding. Osborne’s perception of a warm reception may be sadly mistaken. Prior to the election, extensive campaigning was focused on what appeared to be deliberate misinterpretations so as to spread misunderstanding and deliver tactical voting, ie voting not for what you believe in but in order to prevent what you actively reject. The result is uncertainty about the electorate’s true position.

The most actively rejected were, of course, the Lib Dems, followed by Labour. A rather non-scientifically designed survey sample, but nevertheless one of considerable geographic spread, is being conducted to identify reasons for that rejection, with some preliminary results are already to hand. In both Lib-Dem and Labour, the main cause emerging for their rejection was their failure to offer a real alternative to the Tory manifesto. The Lib-Dems were written off as having completely sold out. That may be grossly unfair, but that is the predominant reason being given by those former Lib Dems surveyed. Labour also lost support because of their failure to offer a significantly different economic programme. In particular, Ed Balls’ adherence to the Tory austerity programme in case Labour should be labelled as irresponsible, appears to have been a prime cause of frustration and rejection.
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The Great GDP Deception

The idea of GDP is simple: the summation of what is produced within the UK avoiding any double counting. It is used to assess how well the economy is doing overall. For the government of the day, growth is good because it suggests we will all be better off. Though GDP is a very imprecise measure, it is one that most people broadly accept.

The economy used to be measured by gross national product (GNP). That measured what UK-owned assets produced, irrespective of where they were in the world. But GNP fell out of favour as UK owned assets were sold to foreign investors with the result that the economy, by that measure, appeared to be in decline. Successive Chancellors tried to make out the sale of UK owned assets was good, because it showed UK was ‘open for business’. But it didn’t really wash. So, since the 1980s, GDP has been the standard measure.

GDP is calculated by simply adding the product of various sectors together as if they were all of equal worth. But in truth some sectors benefit the common good and others are predatory on the common good. But if GDP is growing the government of the day takes credit for successful economic management, irrespective of the fact that it is the predatory components that have grown at the expense of the good sectors.
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