The Economic Falsehoods Behind ‘Expansionary Austerity’

Expansionary Austerity is one of the discredited and utterly falsified economic theories the Australian economist John Quiggin attacks in his book Zombie Economics (Princeton: Princeton University Press 2010). It’s the idea that savagely cutting government expenditure will somehow restore economic growth. It was the policy adopted by governments across the world, including Dave Cameron’s Conservative administration in Britain, to save the global economy after it had been comprehensively trashed by the banksters in 2008. It was based on the theories of Albert Alesina and a number of co-authors, most notably Sylvia Ardagna and their study of how austerity had supposedly benefited various countries, Tales of Fiscal Adjustment: Can Austerity Be Expansionary. One of the countries examined in their study was Quiggin’s own, Australia. He went back and looked at what they said about it, and found that it was riddled with inaccuracies and errors. He gives the following examples to show how seriously, seriously flawed their study was:

*Alexina and Ardagna attribute the policy of austerity to “a leftwing government elected in 1985.” In fact, the government was elected in early 1983 at the depths of a severe recession. It implemented an expansionary fiscal policy. The recovery was well under way when the government took measures, beginning in 1984, to wind back the budget deficit.

• Alesina and Ardagna assert that the main budget savings came from “cuts in transfer programmes …. mainly concentrated on unemployment insurance.” Spending on unemployment benefits fell but not because of cuts. The unemployment rate was falling, and expenditure on benefits declined as a result. This is the standard Keynesian “automatic stabilizers” at work.
• Most strikingly of all they write, “Australia is a clear case of an ‘expansionary fiscal contraction.’ GDP grew faster during and in the aftermath of the adjustment, both in absolute terms and relative to the G7 countries. A private investment boom was associated with profits and easier access to credit following the financial deregulation process that took place in 1985-6. ‘ This is like the story of the man who jumps off a tall buiilding and says, as he passes the 25th floor, “All good so far.” Writing a decade later, in 1998, Alesina and Ardagna must surely have been aware that, almost immediately after their story ends, Australia entered the worst recession in postwar history.’ (pp.225-6).

Quiggin continues

‘Australia’s recession was triggered by contractionary monetary policy, but its severity resulted primarily from the collapse of the investment boom mentioned by Alesina and Ardagna. The boom was dominated by speculative investment projects undertaken by so-called entrepreneurs who took advantage of financial deregulation to build conglomerate empires that failed in the crisis, almost taking down the banking system with them. The Australian experience of the 1980s was a preview of what would happen in the United States and Europe in the 2000s.

To sum up, the tale told by Alesina and Ardagna bears no relation to the actual history of Australia in the 1980s. The most revealing point about their account is their eagerness to shift the burden of adjustment to a crisis onto its most vulnerable victims-the unemployed. In this respect, the literature on expansionary austerity of which this paper was a part might have served as a warning of the brutal policies that were to be adopted in the wake of the Global Financial Crisis.’ (p. 226).

Quiggin then goes on to discuss the global financial crisis and the austerity programmes that followed, showing how they were failures. These policies were nevertheless pushed because they allowed the 1 per cent elite to expand their wealth and power against everyone else. The chapter concludes by showing how the crisis could have been solved using Keynesian economics.

Despite the Tories’ pronouncements that austerity has ended, I’ve seen no evidence that this is the case. They continued to cut public expending catastrophically until forced to do the reverse by the Covid pandemic. And now that the world is going back to some semblance of normality, they’re going to return to it.

The working people of Britain and the west have been forced into poverty and starvation through nonsensical policies based on bad, massively inaccurate and biased research. It’s time austerity was discarded and Keynsianism, with a proper welfare state, was restored.

Hatey Katie Goes Tinfoil Hat over Lockdown and NHS Totalitarianism

Katie Hopkins has raised her head again. There was a video posted on YouTube last night of her talking to an ‘entrepreneur’ of some sort, which promised its viewers that she would reveal who was really controlling the world. Yes! We’re back to raving conspiracy theory paranoia of the time John Ronson explored a decade or so ago in his Channel 4 series, Secret Rulers of the World and accompanying book, Them! Adventures with Extremists. So, who did Katie think was secretly pulling the strings to establish the One World Satanic Communist superstate? Was it Klaus Schwab and the World Economic Forum at Davos? The Bilderberg group? The Trilateral Commission? International finance capital, in other words, the Jewish banking conspiracy? Reptoid aliens? I’m afraid I can’t tell you, because I didn’t get that far into the video before I’d had enough.

Hopkins started off by attacking the Covid lockdown, claiming that it was an opportunistic exercise in totalitarian social control using the Wuhan virus as a pretext. It was a test to see if they really could isolate people in their own homes. The NHS and socialised medicine was part of this conspiracy, because everyone’s concerned with their health. And this is why Joe Biden is so keen on introducing it in America. Really? I had no idea. It always struck me that Biden was a bog-standard American corporatist. The only trace of radicalism I’ve seen in the old boy is his support for the trans ideology through the appointment of Rachel Levine, a transwoman, as Surgeon General and a non-binary chap as head of the programme to dispose of nuclear waste. That’s it. I’ve seen no evidence he wants socialised medicine in the US. I’d have more respect for him if he did.

As for the NHS as an instrument of totalitarianism, this is pure Reaganite, libertarian twaddle. Way back in the 1970s Reagan gave a stirring speech about the need to defend freedom against state totalitarianism. This sounds all very well, but it was an attack on Medicaid, the state programme that provides medical care to elderly citizens that can’t afford it. I’ve also had American commenters state that the NHS must be against human freedom, because doctors are employed by the state, therefore they must have the same power as other state officials like the police or the government, and so you have to do exactly as they say. Um, no, you don’t. They don’t have that power. You don’t have to take their advice, and for serious treatment, like long term cancer care, you have to sign consent forms. Of course, you’d be daft if you ignored their advice, especially when it comes to serious illnesses like cancer. But you’re still a free individual.

This is, of course, the kind of crass stupidity Alex Jones peddles with his rants against the globalists, when he isn’t maligning bereaved parents of the victims of school shootings as crisis actors, screaming that the government is about to take away Americans’ guns, and that the government is about to call an environmental emergency and force everyone into refugee camps in order to establish a totalitarian state. Despite having been dumped by various media companies for her toxic views, particularly about race, Hopkins is still going the rounds. She was doing shows with Alex Belfield, the ‘Voice of Reason’, now doing time for internet stalking.

Despite her poisonous views, I don’t want to see her banned. There’s too much internet censorship, particularly of those on the left. I just want people to realise for themselves how nasty and toxic she is. I think she’s still making a nice living for herself, because she reflects some peoples’ fears of immigration and, like Belfield, attacks the bonkers part of the woke ideology. But beyond that there’s a general contempt for working people, regardless of colour. And it doesn’t matter how much they might agree with her about the threat of illegal immigrants, gay policemen and the transgender ideology, if she had her way the people, who go to see would be deprived of proper medical care. It would all be privatised and they’d be unable to afford it. Just as they wouldn’t have any employment rights or unemployment benefits, because she’d remove all the welfare legislation that they think is being exploited by chavs and benefit scroungers. If enough people realised that, hopefully stop supporting her and she might have to do a real job for once.

Hitler and the Imprisonment of the Unemployed in Concentration Camps

A week ago I put up a passage from Brady’s The Spirit and Structure of German Fascism about how the Nazis prevented anyone, who had left their job without good reason, to receive unemployment benefit for several weeks. I pointed out that this was similar to legislation passed in the 1990s by John Major’s Conservative government, which also prevented those, who had voluntarily made themselves unemployed from getting benefit for a set period of time. And a few years or so ago now, I also put up pieces about the Nazis’ incarceration of the long-term unemployed, whom they stigmatized as ‘workshy’ – arbeitscheu – in concentration camps.

Flicking through Hitler’s Table-Talk (Oxford: OUP 1988), the Nazi leader’s dinner conversation as recorded by Martin Bormann, I found Hitler’s own ideas about it. Hitler said

The ten or fifteen thousand professional loafers who were lounging around Germany at the time of our assumption of power, and who showed no inclination to take a regular job when once German industry had started to function again, have been put into concentration camps. For it is ridiculous to try to deal by ordinary methods with muck of this kind. The fear of being put into a concentration camp has had a most salutary effect, and it greatly facilitated the gearing up of the gigantic industrial activity which our rearmament programme demanded. (p. 559).

This supports the case of one of the left-wing Labour supporters, who was falsely accused of anti-Semitism by the Blairites and the Israel lobby. He was accused because he’d put up on his webpage a photo of a jobcentre, with its sign reading Arbeit Macht Frei. This was the infamous slogan the Nazis had placed on the gates of Auschwitz, hence, presumably, why the poor fellows accusers tried to claim he was an anti-Semite. But the slogan simply means ‘Work Makes You Free’, and it was put over the top of many of the concentration camps even before the Nazis embarked on their vile ‘final solution’. And among the prisoners in them were long-term unemployed. The accused man was also quite justified in using the slogan to attack the Tories’ attitude towards the unemployed, because one Tory minister – I’ve forgotten who it was – had actually started an article in the online version of one of the papers defending the Nazi slogan and saying it was quite right. Until someone had a quiet word with him and told him that supporting the Nazis in anything was not the way to gain support and would just alienate people. As it would and should. So that part of the Tory’s article vanished soon after.

The Tories haven’t yet started imprisoning the unemployed in concentration camps. But they are killing them through their reforms to the benefits system, reforms which have seen tens or hundreds of thousands of people thrown of benefits for even the slightest infraction of the rules. Even when it involves matters beyond their control, such as if they were in hospital when they were supposed to attend their appointment at the jobcentre. And the very many disabled people, who have been forced into misery, starvation and death because they were declared ‘fit for work’ under the unscientific and fraudulent Fitness for Work tests.

The unemployed have also been used as a supply of cheap labour for private industry through the ‘welfare to work’ scheme. In this, they have been forced to take unpaid work in various firms and charities, if they wish to continue receiving their jobseekers’ allowance. This is supposed to prepare them for work. But research has shown that it does not, and in actual fact those forced onto these schemes are actually worse off at finding proper employment, than those who are able to make their searches.

The Tories aren’t working the unemployed to death in concentration camps just yet, but they have the Nazis contempt for them, which is poured out regularly in the pages of right-wing rags like the Scum and the Heil. But you do wonder how long before the Tories get sick of pretending to support the welfare state, and end unemployment benefit completely, leaving the poor to starve and die. Or else start opening concentration camps in which to imprison the jobless in order to teach them how to support themselves by working.

It would only be a natural extension of workfare, after all.

Ismahil Blagrove on Why the Days of the Mainstream Media Are Over

This is awesome. I’ve posted up videos from Blagrove before, particularly one in which he laid into the mainstream media for their reporting of the Grenfell Tower disaster. In this very short piece from Double Down News, he rips into the mainstream media for its class bias – for the White, middle class elite, and against poor Whites, Muslims and so on. He has very forthright views about the Heil, stating that, yes, he would use it as toilet paper. Well, it’s got to be good for something. He tells how he was asked by someone from the mainstream media what they were doing wrong. He told them about how they were for the elite, and constantly attacked Jeremy Corbyn. This even included nominally left-wing papers like the Groaniad. Corbyn’s popular because he gives people hope and builds them up. The MSM does the opposite. When they talk about youths committing crime, they aren’t talking about the children of the middle classes, but lower class Whites. The same with their constant attacks on Muslims, and their refusal to recognize that British foreign policy and military action abroad has an effect on terrorism.

He talks about how he was an independent film maker for about 17-18 years, and never got a commission from the Beeb or Channel 4. Now both channels want him and his team. He rhetorically asks where they were when he was young and hungry? They don’t want him; they just want his contacts. But he talks about an independent film on young gun crime, which garnered four million views. He seems to be talking directly to DDN at one point, stating that he dislikes their name, but good on them, because they’re successful. He concludes by saying that the days of MSM are over. The revolution will be livestreamed!

Warning: the video contains images of Eton or other public schoolboys acting as such, which some people may find offensive.

Blagrove’s absolutely right. Corbyn is successful, precisely because he does give people hope. And that absolutely terrifies the media and corporate elites. As Servalan, the supreme commander of the Terran Federation, once said in Blake’s 7 ‘Hope is very dangerous’.

It’s why the Heil and Torygraph a few days ago started ranting about how the young supported Labour and Corbyn because they’d been indoctrinated by left-wing teachers. They haven’t. The vast majority of teachers simply want to stand in front of a whiteboard and teach. When they do become political, and criticize the government, or start mooting strike action, it’s because of genuine professional concerns, both for their careers and the teaching profession as a whole, and also because of the harm Tory educational policies are having on schoolchildren and their intellectual and moral development.

There is also very stringent legislation in place to make sure teachers cannot indoctrinate young children. If there is a situation, where they are asked to make a judgement about a political or religious belief, they have to state clearly that this is only their view.

The idea that there are somehow legions of left-wing teachers poisoning young minds is just more propaganda. I really shouldn’t expect anything more or better from them. Back in the 1980s under Thatcher the Fail and the Torygraph, along with the rest of the right-wing press, were screaming the same lies about Communist teachers and the Peace Studies courses, taught in some schools. Quite apart from the scaremongering about Brent Council and its crusade against sexism, anti-gay prejudice and racism.

There are very good reasons why many young people are turning to Labour: Corbyn is giving them hope. Hope that they might actually get a job, or if they don’t, that they might actually receive unemployment or disability benefit from the state. That the 50 per cent, which the government wants to go to uni, will emerge without something like £40,000 worth of student debt, a debt that they will never be able to pay off, and will stop them owning their own home. Corbyn gives them hope that their parents just might be able to afford to retire to a well-earned, decent pension. Hope that we are going to live in a civilized Britain, where the elite aren’t constantly whipping up hysterical fears about immigrants to divide working people, or demonise the poor, the unemployed, the disabled, the weak, the disenfranchised.

But the corporate elite are so convinced of their own right to rule, that they simply can’t get their heads round all that. Or rather, they don’t want to. And more importantly, they don’t want the British public, who buy their disgusting rags, to understand that either. And so it’s all back to the stale, antiquated Thatcherite lies about teachers.

Blagrove is also absolutely right too, about the way Corbyn has been properly reported and supported by the internet and social media, just as Obama and now Bernie Sanders is in America. And the plutocrats, who own it are frightened. It’s why YouTube is demonetizing left-wing internet news shows like The Young Turks, The David Pakman Show, Secular Talk and so on. It’s why Mike and other left-wing bloggers have found that Facebook has changed its sharing buttons, to make it more difficult for them to be reblogged and shared.

Because, as Blagrove has said, he trusts blogger to report the news better than the professional media.

I also applaud this video because Blagrove stands up, not just for Muslims and people of colour, but also for poor White kids. I’ve commented on a number of pieces in Counterpunch, which have observed that White and Black in the working class need to stand together, and that Trump and elite are using White racism to divide working people. These articles argued that Whites needed to reject racism. Blagrove here has embraced poor Whites. He doesn’t accuse them of racism, but recognizes them as fellow victims of elitist class rule.

It’s a very trenchant criticism of the media, and its failure to serve the real interests of the public over its corporate masters. But the internet has put the power of the media in the hands of the ordinary, working people, who are excluded from the corporate elite. And they are livestreaming the revolution.

The Aim of Tory Policy: The Expansion of Workfare and the End of Unemployment Benefit?

IDS as Stalin, image created from Another Angry Voice

The government has announced yet more sanctions and conditions to drive the unemployed into workfare. I’ve blogged before, along with others, such as the Angry Yorkshireman over at Another Angry Voice, on the similarity between IDS’ Department of Work and Pensions and Stalin’s used of forced labour in the Soviet Union. One consequence of this was that in the 1930s Stalin discontinued unemployment benefit, because there was officially no unemployment. It won’t be too long now before the same argument is made by the government to justify the workfare policy. The work is there, and we’re helping you into a job. Therefore there is no need to provide unemployment benefit, which only lazy scroungers would take anyway. Instead, those forced into workfare would be given something like a ‘retraining’ or ‘Probationary Employee’ allowance. Although, come to think of it, they’ve already taken away any claim that it’s about unemployment support by calling it ‘Jobseeker’s Allowance’. It’s nearly at this point already. We need to stop it before it finally gets there, and more people die.

More on Mussolini and the Conservative Industrialists

I’ve posted a number of piece on the way Mussolini appealed to the Italian middle classes to support Fascism through posing as defending private industry, property and free trade against Socialism and the organised working class. Denis Mack Smith in his biography also states that the Duce also talked about reducing bureaucracy, ending state unemployment payments and stating that social inequalities should be increased. (Mussolini (London: Paladin Grafton book 1983) 134). He also made moves to allow private enterprise a share of the telephone system and life insurance, both of which had been state enterprises. (p. 135).

One of the first things Margaret Thatcher did as PM was privatise the phone company. The Tories are also extremely keen on reducing bureaucracy and have increasingly cut down on unemployment benefit. They are also intending to end the NHS and introduce a system of private medical insurance, as in the US. And Kittysjones in one of her pieces last week pointed out that Maggie Thatcher also believed in increasing social inequalities as a spur to people trying to improve their position in society. With the ideological similarities between Conservativism and one section of Fascist ideology so strong, I’m surprised that there aren’t shouts of ‘Duce! Duce!’ at the Tory annual conferences.

Workfare and the Nazi ‘Arbeitscheu’

As well as Jews, the Nazis also condemned a number of other groups to the concentration camps. These included Gypsies; gay men; Jehovah’s Witnesses – who were a threat to the regime as they refused to obey Hitler as a ‘secular messiah’; habitual criminals; political prisoners – largely trade unionists, Communists and Socialists, but also those Liberals and Conservatives that defied the Nazi state – who had either already served prison sentences, or been acquitted by the regular courts; and the stateless, including those Germans, who had tried to escape from the Third Reich. They and the Jews were declared to be ‘anti-social parasitical elements’. This also covered the ‘asocial’, which seems to have been a catch-all category for people the authorities decided were somehow subversive or a threat, but had no clear reason why, and the ‘workshy’ – Arbeitscheu in German.

The ‘workshy’ included those, who had rejected offers of work ‘without good reason’.

SS leader Heinrich Himmler with Adolf Hitler. Under Himmler, the SS expanded into a vast industrial complex using concentration camp slave labour.

The reasons given for the imprisonment of Jews with criminal records, the asocial and the workshy were economic and military. They were to provide slave labour for the SS industries and the Nazi building projects. There was even a special branch of SS, the WVHA or Wirtschaftsverwaltungshauptamt, or Economic Government Head Office, that managed the SS’ commercial interests. In 1939 the SS was operating four main businesses. These included excavation and quarrying to supply building materials; a company dealing in products from concentration camp workshops; an agricultural company dealing in food, estates, fisheries and forestry; and a textile company producing uniforms for the SS from the female detainees of women’s concentration camp at Ravensbruck.

Through take-overs of companies in the Sudetenland, the SS controlled most of the Reich’s factories producing mineral water and soft drinks; a vast furniture-making conglomerate created through the forced acquisition of former Jewish and Czech businesses; as well as companies producing building materials – cement, brick, lime and ceramics. These were mostly Polish, and operated using Jewish slave labour.

The SS also rented out their slave workers to other, civilian companies, at the rate of 4-8 marks per slave per 12-hour day. The average life expectancy of an inmate in the concentration camps was 9 months. This gave the SS an average profit of 1,431 marks per each slave.

Now clearly the government isn’t running concentration camps. They may be horrendous in their treatment of the sick, poor, and unemployed, but they’re not that evil. Nevertheless, I have posted a number of pieces pointing out the similarity between workfare and other forms of unpaid labour in the Third Reich, such as Reichsarbeitsdienst, and the gulags in Stalin’s Russia. There is some similarity here with the Nazi’s use of slave labour and workfare.

Chancellor George Osborne, who would like sanctioned jobseekers work for big business for free under Workfare.

Since the 1990s, for example, there has been an insistence that those on Unemployment Benefit/ Jobseeker’s allowance should take any job they are offered. If they refuse, they lose benefits. The long term unemployed are placed on the Work Programme and forced to take voluntary work. This is similarly not so much a form of genuine voluntary work, but a means of supplying cheap labour to big business such as Tesco’s. Furthermore, George Osborne announced last year that he was expanding the Workfare system so that even those, whose benefits had been sanctioned, would have to do it. At which point the workfare system becomes true slavery. As many of those, whose benefits have been stopped because of sanctions, have taken their own lives or died or poverty and starvation, the government’s attitudes to disability and unemployment are also lethal. And if Osborne’s plan to force those whose benefits have been stopped to work for businesses for nothing goes through, then it could rightly be said that the only difference between that and concentration camp labour is that so far there are no concentration camps. Of course, this could all change if the firms profiting from workfare decide that they need to build special barracks for them.

I’ve no object to job creation schemes, or to voluntary work. But this is the point – it has to be proper voluntary work, where the worker and choose to do it or not, without losing benefits, and where they can choose for whom they work. They should also be paid a proper, living wage, or receive some other benefits so that they are genuinely trained for work and protected from exploitation. At present, the current workfare schemes do extremely little of this.

This system needs to change, and those responsible for it should be voted out.

The Creative Incompetence of the Benefits Agency and DWP

I was reading the grimly fascinating piece on Benefit Tales about the way Disability Benefit claimants have not been told Atos’ decision on their benefits, in order, it would seem, to prevent them from appealing against it. It shows the bizarre world that Atos inhabits, and is all too eager to inflict on the most vulnerable members of society. I’ve compared it to Kafkaesque’s novels, particularly The Trial and The Castle, where the heroes are arrested and condemned without knowing the evidence against them, nor the charges on which they have been arrested. These novels have, with more than a degree of justification, been viewed as ominous prefiguring the gross miscarriages of justice committed by the later totalitarian regimes of the 20th century, Nazism and Communism. Their more immediate inspiration in humdrum reality is just as relevant here. Kafka was an insurance clerk, and he based his novels on his experience of the bureaucracy in dealing with compensation claims for injuries. And a cold bureaucracy that does not tell its claimants why they are being persecuted, nor present the evidence on which they could make an appeal sounds very much like Atos and the current DWP.

Reading some of the comments to the post also revealed another tactic used by the DWP: that of notifying claimants of the decision to deny them benefits just in time for them to miss the appeal deadline. I’ve also heard about that from some of the my own friends on Jobseekers’ Allowance. This has happened repeatedly. Friends have also told me of repeated instances where the centre dealing with their claims has repeatedly lost their details, or claimed it never received them. This has happened to the same people not once, or twice but several times.

This suggests that it is not an accident, nor incompetence, but government policy.

The DWP has been caught acting like this before. A few years ago under New Labour one of the centres was revealed as having a secret policy by which they were to remove a certain percentage of their claimants from Jobseekers’ Allowance through similar manipulation of the claims system. Something very similar appears to be going on here. And it’s disgusting.