Take it from an expert; economics is not that complicated

Photo by Olu Eletu via Unsplash

As more and more of the UK’s NHS is sold off to private companies and Theresa May’s right wing government enact further welfare cuts — with the promise of more to come — it is encouraging to know that leading economists see no reason or justice in the ideologically driven policies of the Tories.

The lies behind austerity have long been called out, as have the claims that somehow the Tories are the party of fiscal probity. That would explain why the national debt has doubled and the Tories have borrowed more since 2010 than all Labour governments combined.

So austerity is not only unnecessary but counter-productive in terms of economic growth and corporate subsidies in the form of tax cuts and topping up low wages from the reduced tax intakes from the rest of lead to greater national debt but the Tories and their cheerleaders in the right wing media maintain the lie that there is no other way. How does that happen?

One answer, of course, is that economics is portrayed as too complicated for the rest of us. The Tories try to have it both ways. They disparage experts — those economists who point out that there is no basis for the policies the Tories pursue — but claim the support of the financial sector. The financial sector — so badly exposed as know-nothings during the financial crash — is credited with the ability to tell us that austerity is good.

The reason the financial sector support austerity? Well, as wealth is ripped from the poorer parts of society it is redistributed upwards — as tax breaks, subsidies, or the asset stripping of the state in the form of privatisation — and it is the banks and their clients who prosper.

Ha-Joon Chang, in his excellent 23 Things They Don’t Tell You About Capitalism, is an academic economist at the University of Cambridge. He has this to say about economics:

95 per cent of economics is common sense made complicated, and even for the remaining 5 per cent, the essential reasoning, if not all the technical details, can be explained in plain terms.

Unfortunately, when the Tories and their media mouthpieces reduce economics to plain terms, they lie. They tell us that we have to run the national treasury like home finances, for instance. They tell us that unemployment benefits are bankrupting the country. They tell us that rich companies and rich business owners guarantee more jobs and wealth for all.

Lies, all of it.

The whole neoliberal project — based on unregulated free market capitalism — has failed most of us. The wealthy continue to gain from it, which is why its demise will be slower and more painful than it should be. Here’s Ha-Joon Chang again on the neoliberal policies enacted by Thatcher, then Blair, and now even more vigorously by the latest and most right wing Conservative government:

The result of these policies has been the polar opposite of what was promised. Forget for a moment the financial meltdown, which will scar the world for decades to come. Prior to that, and unbeknown to most people, free-market policies had resulted in slower growth, rising inequality and heightened instability in most countries.

This was written by an economist who believes that “capitalism is still the best economic system that humanity has invented”. His beef is with free-market ideology.

That said, I think we need to invent something better than capitalism if we hope to save the planet. In double -quick time. There may simply not be enough time to fatally subvert neoliberalism and tinker with capitalism before we move to something that puts the people and the planet above profits.

23 Things They Don’t Tell You About Capitalism is a good place to start, though. Uncovering the lies and hypocrisy inherent in the economic messages spewed forth from the media on a daily basis and applying common sense to what the world itself is showing us may at least keep us sane while we think about next steps.