Future government austerity unlikeley

There is much anxiety on Tax Research UK about how austerity may be just around the corner and will be used by the Conservatives as a means for ‘payment’ of the current significant bail-outs to pretty much everyone. They just have it ingrained in them.

Yes they probably do – even though Johnson has said he doesn’t like the term, which seems to leave open that he might be indifferent to the fact.

The reason why I hope austerity is not going to be possible is that everyone will know where money comes from. When even the Daily Telegraph knows there is a Magic Money Tree then it is doubly incumbent on all progressives to ensure it is, as it were, very well watered.

Maybe this is a folorn hope, because, after all, (unlike me 🙂 ) not everyone, reads the Daily Telegraph… Yet most Conservatives do, so they might just realise the game is up.

Moreover it must be the case that with 20% unemployment in the US – still supposedly the world’s largest economy – and probably 10% in the UK, and similar or higher levels in mainland Europe, that generic demand will collapse or has already… Everlasting growth will be more like everlasting recession. People without money or with money but without confidence in the future do not spend and especially don’t borrow. That is already evident.

So any ‘austerity’ will be driven by the the failure of market capitalism not the government. The capitalist ‘growth’ economy is likely to be on life support for some considerable time yet. That support can come only from the government and the light will be shining brightly on them. I suggest that even this government will not be able to unsee the inconsistencies.

I therefore find it highly improbable that any sort of government-led austerity will be able to recommence any time soon. All the more so when Easyjet and Richard Branson have their begging bowls out and especially when they find their loans difficult to repay in a timely fashion, which with BA and Ryanair redundancies and the suggestions of a two year ‘recovery’, I consider probable. (Ironically the fact that Lufthansa and Air France KLM seem already to have been given special subsidy treatment that makes the UK loans look even more doubtful – and looks certain to ensure airline overcapacity.)

And with the current and probable ongoing crisis in care homes, where many are owned by private equity and where the ‘occupation rate’ is an important statistic for financial wellbeing , who in their right mind would now or in the future be volunteering to put a relation in a care home? There are, as we know, lots of places now newly available. Some care homes are going to dissolve into bankruptcy and the government might appear to be a shade culpable.

The government have in short, a perfect storm of problems both ongoing and approaching. I cannot see why they’d even have the time to think about austerity in the next couple of years. They might just be too worried that capitalism won’t last.

In this crisis period progressives must persuade everyone to read the Daily Telegraph.

No, not really.

But we must make sure that they know that there really is a Magic Money Tree.

Comments

  1. Bill Hughes -

    Thanks Peter for keeping us abreast with Daily Telegraph commentary. Yes it is is very surprising, I wonder whether the millionaire Barclay owners and all the other journalists are all in agreement is a different matter.. Certainly on the odd occasion when I have had the discomfort of reading the Torygraph if a copy is left on a train or bus, my hair stands on end with their reactionary nonsense. Whether their readers like spreadsheet Hammond will take any notice of this new tack (if in deed it is) will be very intriguing to follow.

    1. Peter May -

      Agree the Telegraph is generally dire, but somebody, somewhere usually points out anything decent!
      Think it an important source for winning over the austerity merchants.

  2. Tian_Ha_Li -

    Please define ‘austerity’. If you can define it in a way which means that about half of countries did it, either post GFC or post CV-19, that would be helpful, and then it makes it easier to analyse whether restraining the amount of spending that passes through government works, compared to the alternative. Thanks.

    1. Peter May -

      Austerity is difficult to define – but is generally assumed to be the result of a government choice to be parsimonious with its spending. I suggest that never needs to be the case as long as a government owns its own central bank and creates its own money at will. Indeed there is no logical basis for not spending money that government itself creates unless you purposely want to reduce the size of the state and inhibit prosperity – something recent UK Conservative governments have delighted in…

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