THE BIGGEST LIE IN BRITISH POLITICS

By Johann Hari

 

British politics today is dominated by a lie. This lie is making it significantly more likely you will lose your job, your business, or your home. The lie gives a false explanation for how we came to be in this crisis, and prescribes a medicine that will worsen our disease. Yet it is hardly being challenged.

 

Here’s the lie. We are in a debt crisis. Our national debt is dangerously and historically high. We are being threatened by the international bond markets. The way out is to eradicate our deficit rapidly. Only that will restore “confidence”, and therefore economic growth. Every step of this program is false, and endangers you.

 

Let’s start with a fact that should be on billboards across the land. As a proportion of GDP, Britain’s national debt has been higher than it is now for 200 of the past 250 years. Read that sentence again. Check it on any graph by any historian. Since 1750, there have only been two brief 30-year periods when our debt has been lower than it is now. If we are “bust” today, as George Osborne has claimed, then we have almost always been bust. We were bust when we pioneered the Industrial Revolution. We were bust when we ruled a quarter of the world. We were bust when we beat the Nazis. We were bust when we built the NHS. Or is it George Osborne’s economics that are bust?

 

Our debt is not high by historical standards, and it is not high by international standards. For example, Japan’s national debt is three times bigger than ours, and they are still borrowing at good rates.

 

David Cameron claims that, despite these facts, they need to cut our debt by slashing our spending because the bond markets demand it. If they do not obey, then our national credit rating will be downgraded, and we will have to pay much higher interest on our debt. But here’s the flaw in that plan. That’s not what the bond markets say. Not at all. Professor Paul Krugman, the Nobel Prize-winning economist whose predictions have consistently proved right through this crisis, says Cameron is conjuring up “invisible bond vigilantes” who “don’t exist.” Who is the bond market really punishing? It’s the countries that cut too fast, and so kill their economic growth. The last two nations to be down-graded were Ireland and Spain, who followed Cameron’s script to the letter.

 

It turns out that cutting our debt rapidly doesn’t cause an increase in “confidence” and so save the economy. Professor Krugman mocks this idea by calling it “The Confidence Fairy,” and goes through the historical record to show she doesn’t exist. Cutting doesn’t create fairy-magic. No: it has a very different effect.

 

Here’s what we learned during the Great Depression, when our view of economics was revolutionized by John Maynard Keynes. In a recession, private individuals like you and me, perfectly sensibly, cut back our spending. We go out less, we buy less, we save more. This causes a huge fall in private demand, and with it a huge fall in economic activity. If, at the very same time, the government cuts back, then overall demand collapses, and a recession becomes a depression. That’s why the government has to do something counter-intuitive. It has to borrow and spend more, to apply jump-leads to the economy. This prevents economic collapse. Instead of spending a fortune on dealing with mass unemployment and economic break-down, with all the misery that causes, it spends the money on restoring growth. Keynes called it “the paradox of thrift”: when the people spend less, the government has to spend more.

 

Wherever it has been tried, it has worked. Look at the last Great Depression. The Great Crash of 1929 was followed by a US President, Herbert Hoover, who did everything Cameron demands. He cut spending and paid off the debt. The recession grew and grew. Then Franklin Roosevelt was elected and listened to Keynes. He ramped up spending – and unemployment fell, and the economy swelled. Then in 1936 he started listening to the Cameron debt-shriekers of his day. The result? The economy collapsed again. It was only the gigantic spending of the Second World War that finally ended it.

 

It is working now. There are enough countries in the world trying enough different economic solutions that we examine them like laboratories. which countries have come out of this recession fastest? They are the ones like South Korea, which have had by far the biggest stimulus packages, paid for with (yes) higher debt. Which countries have fallen furthest and shattered most severely? The ones that tried to pay down their debts immediately with huge cuts.

 

Indeed, there’s an irony here. It turns out that if all you do is fixate on paying your debt now now now, and so you smother your economic growth, you will end up not being able to pay your debts off anyway. That’s what just happened to our nearest neighbor Ireland, may she rest in peace. And it’s what has happened throughout British history. Professors Victoria Chick and Ann Pettifor conducted a detailed study of the last ten recessions, and they found that consistently “fiscal consolidation increases rather than reduces the level of public debt as a share of GDP.” Think of it this way. It’s as if tomorrow you became so panicked about your mortgage that you decided to pay it all off in one year, by ceasing to buy food and water. You get sick, and your house gets repossessed.

 

So debt isn’t the problem. Debt is part of the cure. The facts suggest need to spend more, not less, to get the economy back to life – and pay back the debt in the good times, when we will be able to afford it.

 

I am not a doctrinaire defender of the last Labour government. I think Tony Blair should be in prison, and Gordon Brown will be damned by history for his role in deregulating the banks – the real cause of this crisis. But to claim that this crisis was caused by Labour “racking up debt” is simply false. When the Great Crash hit, Britain had the second-lowest debt in the G7 club of leading economies. To react to a recession by increasing spending, and so keeping the economy afloat, is the only rational response. The real criticism is that they didn’t go anything like far enough, and now Ed Miliband’s Labour Party is now too cowardly to defy the false conventional wisdom and make the case for fiscal stimulus, instead promising merely slower, smarter cuts.

 

The real reason why David Cameron is imposing these massive cuts has nothing to do with the national debt. It is because he regards himself as, in his words, “the child of Thatcher”, and he wants to pursue her agenda harder and faster than she ever dreamed. He can do the difficult job of selling that to the British people if he wishes – but he should stop doing it on the basis of a swollen, suppurating lie.

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Pretty much proves everything I ever suspected about these cuts.... Frankly this supposed "necessity" for cuts is an even bigger pack of lies than the Dodgy Dossier.... And Cameron is perhaps an even more shameless liar than even Blair... And the office of National Statistics has just revealed that there has been the first drop in household income in 30 years... 1981... Gee, remind me, who was it that was in power back then....... Looks like someone's taking the "80s Revival" a bit too literally.....

The contents of that article are nothing any Uni level finance/accounting/economics student doesn't learn by the end of 2nd year [scot].

 

Backed by the western media however, this kind of crisis is lapped up and the consequences are going to be dire.

I assume the article is from the Independent. If so, why has he used the American spelling of neighbour?

I assume the article is from the Independent. If so, why has he used the American spelling of neighbour?

Probably poor sub-editing. As ever a wonderful article, but it's one Johann's done about ten times before :lol: He just mixes and matches the economic information he used in about three articles for the election last year for each one - but then, who can blame him when people clearly aren't listening?

I assume the article is from the Independent. If so, why has he used the American spelling of neighbour?

 

I think because it was written for an American publication? He does write stuff for Huffington Post as well....

 

Probably poor sub-editing. As ever a wonderful article, but it's one Johann's done about ten times before :lol: He just mixes and matches the economic information he used in about three articles for the election last year for each one - but then, who can blame him when people clearly aren't listening?

He's not alone in making the same points. Polly Toynbee does it regularly in the Guardian.

 

Of course the gist of the article is correct. The Tories like to give the impression, by their use of the term "record debt", that the accumulated debt is higher than ever before and worse than any other country in the developed world. This, of course, is a long way from the truth. The actual "record debt" merely refers to the excess of expenditure over revenue in a roughly two year period. While that trend cannot be allowed to continue indefinitely, it shouldn't be used as an excuse to impose ideologically driven cuts. If only someone could explain that to Nick Clegg.

I think because it was written for an American publication? He does write stuff for Huffington Post as well....

Oh, does he? It must have been a struggle to find an American publication - even a web-based one - willing to publish UK-centric articles :lol:

Cameron really called himself the child of thatcher? :mellow: How come the media didn't rain down on him like a ton of bricks after that?

 

Must be in it for the blockbuster movie somewhere down the line...

 

Seriously though it's not a surprise to be told the governments are shady. Everybody knows it but most people are content to do "their bit" complaining about it rather than doing anything about it. I'd be in the same bracket as that too....and probably a lot of people here would be as well. Either the people are just really lazy (or don't know where to start) or we haven't been pushed to the absolute limits yet.

 

A very interesting read though.

Edited March 30, 201114 yr by Sabrewulf

Of course the gist of the article is correct. The Tories like to give the impression, by their use of the term "record debt", that the accumulated debt is higher than ever before and worse than any other country in the developed world. This, of course, is a long way from the truth. The actual "record debt" merely refers to the excess of expenditure over revenue in a roughly two year period. While that trend cannot be allowed to continue indefinitely, it shouldn't be used as an excuse to impose ideologically driven cuts. If only someone could explain that to Nick Clegg.

 

Well, Nick Clegg has his tongue firmly up Cameron's arse, so I wouldn't expect him to listen..... :rolleyes:

 

Cameron really called himself the child of thatcher? :mellow: How come the media didn't rain down on him like a ton of bricks after that?

It's not quite as straightforward as that - he said he'd 'rather be a child of Thatcher than a son of Brown' in response to a jibe from Ed Miliband at Prime Minister's Questions, and the hostility to Brown within the UK media is such that it was either ignored or held up as a great comeback.

I think the majority of people on this forum suspected that this was the real truth about the cuts... it's still a little alarming so see it written so plainly though.

 

I'm half convinced that Cameron is actually doing what he thinks is best for the country, he's just horrendously misguided and has begun to believe the hyperbole he was spouting during the election campaign about all debt being evil.

It's not quite as straightforward as that - he said he'd 'rather be a child of Thatcher than a son of Brown' in response to a jibe from Ed Miliband at Prime Minister's Questions, and the hostility to Brown within the UK media is such that it was either ignored or held up as a great comeback.

 

I genuinely think Cameron is miscalclating when he assumes association with Brown is more toxic than an association with Thatcher. I don't think there's any real hatred for Brown among most of the public... people only ever thought he was a bit pathetic, some even felt quite sorry for him... but I really don't think he inspires strong negative reactions in the way Thatcher still does for many, many people. Even Clegg probably has more people who hate him right now than Brown ever did.

I genuinely think Cameron is miscalclating when he assumes association with Brown is more toxic than an association with Thatcher. I don't think there's any real hatred for Brown among most of the public... people only ever thought he was a bit pathetic, some even felt quite sorry for him... but I really don't think he inspires strong negative reactions in the way Thatcher still does for many, many people. Even Clegg probably has more people who hate him right now than Brown ever did.

 

Exactly, Brown was just an idiot, a bungling fool who stupidly chose to believe everything the bankers were telling him.. I've got far more hate for the banks than for Brown.... Thatcher on the other hand, was a genuinely evil, heartless f**king bitch who destroyed entire communities and didn't give toss about the lives she was wrecking.....

 

..By allying himself to Thatcher, Ca-Moron is showing his true colours.....

 

Exactly, Brown was just an idiot, a bungling fool who stupidly chose to believe everything the bankers were telling him.. I've got far more hate for the banks than for Brown.... Thatcher on the other hand, was a genuinely evil, heartless f**king bitch who destroyed entire communities and didn't give toss about the lives she was wrecking.....

 

..By allying himself to Thatcher, Ca-Moron is showing his true colours.....

 

Brown was foolish for letting the banks get into that state of course, but I think he deserves at least some credit for his reaction after the crisis hit - Labour at least had the right idea of keeping pumping the money in.

 

If we think having the Tories in is bad now, imagine how they'd have handled the situation in the two years leading up to the election... not even worth thinking about.

I genuinely think Cameron is miscalclating when he assumes association with Brown is more toxic than an association with Thatcher. I don't think there's any real hatred for Brown among most of the public... people only ever thought he was a bit pathetic, some even felt quite sorry for him... but I really don't think he inspires strong negative reactions in the way Thatcher still does for many, many people. Even Clegg probably has more people who hate him right now than Brown ever did.

'Maggie' is absolutely revered around here, and I'm not exaggerating. So sad and deluded.

Exactly, Brown was just an idiot, a bungling fool who stupidly chose to believe everything the bankers were telling him.. I've got far more hate for the banks than for Brown.... Thatcher on the other hand, was a genuinely evil, heartless f**king bitch who destroyed entire communities and didn't give toss about the lives she was wrecking.....

 

..By allying himself to Thatcher, Ca-Moron is showing his true colours.....

 

Thatcher was those things in YOUR opinion Scott. For me she was the best PM that ever lived. A true heroine who put the Great back in to Great Britain, rescued the strike-ridden country from Callaghan in '79 and put the greedy miners in their rightful place. I shall proudly attend her State Funeral when she dies.

Thatcher was those things in YOUR opinion Scott. For me she was the best PM that ever lived. A true heroine who put the Great back in to Great Britain, rescued the strike-ridden country from Callaghan in '79 and put the greedy miners in their rightful place. I shall proudly attend her State Funeral when she dies.

Perhaps you could remind us what these "greedy miners" wanted. Perhaps you could also tell us how she ranks above Attlee (who gave us the NHS), Lloyd George (who established a large part of the welfare state and reduced the powers of the House of Lords) and Churchill (the WWII leader rather than the ineffective PM from 1951-55) to name but three.

Thatcher was those things in YOUR opinion Scott. For me she was the best PM that ever lived. A true heroine who put the Great back in to Great Britain, rescued the strike-ridden country from Callaghan in '79 and put the greedy miners in their rightful place. I shall proudly attend her State Funeral when she dies.

 

I've said it before and I'll say it again. Give Thatcher a state funeral and you have to give Blair one as well. Oh, and I'll be dancing on the old bag's grave because even someone who was born three years after she was booted out knows that she was a catastrophically evil bitch who tried and thankfully just about failed to sink this country's working classes.

I've said it before and I'll say it again. Give Thatcher a state funeral and you have to give Blair one as well. Oh, and I'll be dancing on the old bag's grave because even someone who was born three years after she was booted out knows that she was a catastrophically evil bitch who tried and thankfully just about failed to sink this country's working classes.

 

I think Blair should get one too actually.

I think Blair should get one too actually.

 

Chris, I'm seriously getting fed up of your spamming, and I reckon it's pretty obvious you just post complete crap on this forum just to wind everyone up, because there is not ONE shred of proof for anything you go on about.... Hopefully you'll go the way of Craig soon...

 

And "greedy miners", WTF are you even talking about...???? Yeah, so "greedy" to actually want to earn a decent living doing a very dangerous job (which the cave-ins in Chile and elsewhere over the past year or so have proven).. But then, you wouldn't know a f**king thing about earning a living anyway you work-shy prick..... People who claim benefits off the state have NO RIGHTS to criticise those who actually graft and do a decent day's work..... But, in a way you're also the very definition of Tory scum, you denigrate and disrespect the people who are the backbone of this country - the workers, the WORKERS create the wealth of the nation through their graft and labour, they pay taxes, they pay council tax, they create the profits for the employers and the shareholders..... Just what the f**k do people like you and the Tory vermin who are currently f**king up this country contribute to our society...? Nothing.....