Osborne shouts bingo - but let's first keep up with Paraguay

The UK cannot achieve a sustainable recovery until it can pay its way in the world, and despite a 25% depreciation of the currency over the last 5 years it still fails lamentably to do so.

Osborne’s reckless boast that he has been proved right over the economy will come back to haunt him. None of his claims stand up to examination.

“Those in favour of Plan B” (i.e. stimulating the economy to produce growth), he asserts, “have lost the argument”. That will be news to employees whose real earnings at current rates will have shrunk by £6,660 during the 2010-15 parliament. It will also come as a surprise to the UK’s biggest companies still sitting on corporate cash stockpiles of £700bn because they doubt the level of demand justifies new investment in plant or services.   The stock exchange and finance markets may be frothing, but the real economy isn’t.

Nor is it likely to be any time soon. In the last 5 years UK investment has fallen by a quarter in real terms, which is devastating in terms of future growth potential. It now stands at just 14% of GDP, against a global average of 24%. Indeed in terms of the global investment-to-GDP league Britain now stands 159th, behind El Salvador, Guatemala and Mali. A recovery based on low wages, poor productivity and weak investment must be expected to stutter and slip back by 2015.

Nor does the historical evidence indicate that Osborne’s counter-intuitive plan, known by the oxymoron of ‘expansionary fiscal contraction’, has ever worked.  It has been tried three times before – the so-called ‘Geddes axe’ cuts in 1921-2, the May businessmen committee cuts in 1931, and the Howe budget in 1981. The first enforced expenditure cuts very similar in real terms to today and led to a decade of anaemic growth.   The second was only saved from a similar fate by Britain being forced off the gold standard. The third led to growth only because interest rates were eased, bank lending loosened and a reviving US helped to reflate the world economy. None of those conditions remain now to be applied, so there is no reason to believe the Osborne ‘recovery’ will defy historical precedent.

Osborne’s second claim is that “Britain is poorer because of a huge failure of economic policy in the past decade” (i.e. it was all Labour’s fault). In other words, falling incomes today are due, not to his own policies of austerity, but to Labour’s over-spending which caused the recession. But Labour didn’t over-spend, and didn’t cause the recession – the bankers’ crash did that. The budget deficit in 2007 just before the crash was only 2.9%, below the OECD average, and only rose to 11.6% in 2010 because of the enormous bank bailouts. Even by the time of the election in 2010 the UK national debt had only risen to 77% of GDP which compared with 75% for Germany, 84% for France, and 93% for the US. Labour spending was not out of line with other lead countries.

Equally it is disingenuous for Osborne to claim that today’s diminishing incomes – the longest fall in wages since the 1870s and on average 9% down in real terms since pre-crash levels – owes nothing to his austerity programme and all to the recession. Of course the latter has had a major impact, but to pretend that £81bn of expenditure cuts and £18bn (and counting) of benefit cuts have not significantly exacerbated the downward pressure on incomes is absurd.

Third, “nor are we seeing”, the Chancellor has claimed, “a return to unsustainable levels of indebtedness and household borrowing”. Well, actually, we are. Frighteningly, household lending is just 0.3% below its 2008 peak, while lending to firms is now 22% lower and if account is taken of inflation it’s fallen by a stunning 32%. There is no other way of describing this except as unsustainable. At the same time it’s clear that another major housing bubble is well under way, driven by Osborne’s own Help to Buy scheme, with estate agents the fastest growing sector in the workforce. Debt-to-income ratios, previously falling, have now turned up again. Plainly the recovery, such as it is, is propelled by borrowing.  And an economy dependent on consumer debt together with low wages, weak investment and poor productivity is likely once again to slip back after an initial short burst of expansion.

Osborne’s last assertion was that “growth had been too concentrated in one corner of the country – and HS2 will transform the UK’s economic geography”. The former statement is certainly true, with any recovery heavily concentrated in London and the south-east. But HS2, even if it goes ahead with a price-tag heading north of £50bn, will not remotely produce the degree of economic rebalancing required. The country’s finance sector is still too large and dominant, while manufacturing is shrivelled well below its potential.

The UK cannot achieve a sustainable recovery until it can pay its way in the world, and despite a 25% depreciation of the currency over the last 5 years it still fails lamentably to do so. The UK has only had a surplus in traded goods six times in the last 55 years, and last year the deficit on traded goods was £106bn, equal to 7% of GDP. HS2 won’t conceivably solve a problem of these proportions – only a fundamental revival of the UK’s capabilities for high-tech manufacturing will achieve that.

British Chancellor of the Exchequer George Osbourne speaks during the Conservative Party Conference in Manchester. Image: Getty
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America’s domestic terrorists: why there’s no such thing as a “lone wolf”

After the latest attack on Planned Parenthood in Colorado Springs, America must confront the violence escalating at its heart.

First things first: let’s not pretend this is about life.

Three people have died and nine were injured on Friday in the latest attack on a women’s health clinic in the United States. Planned Parenthood in Colorado Springs was besieged by a gunman whose motives remain unclear, but right-to-lifers—who should really be called “forced birth advocates”—have already taken up their keyboards to defend his actions, claiming that women seeking an abortion, or doctors providing them, are never “innocent”. 

This was not unexpected. Abortion providers have been shot and killed before in the United States. The recent book Living in the Crosshairs by David S Cohen and Krysten Connon describes in sanguine detail the extent of domestic terrorism against women’s healthcare facilities, which is increasing as the American right-wing goes into meltdown over women’s continued insistence on having some measure of control over their own damn bodies. As Slate reports

In July, employees at a clinic in the Chicago suburb of Aurora, Illinois, reported an attempted arson. In August, firefighters found half a burning car at the construction site of a future clinic in New Orleans. On Sept. 4, a clinic in Pullman, Washington, was set ablaze at 3:30 a.m., and on Sept. 30, someone broke a window at a Thousand Oaks, California, clinic and threw a makeshift bomb inside.

The real horror here is not just that a forced-birth fanatic attacked a clinic, but that abortion providers across America are obliged to work as if they might, at any time, be attacked by forced-birth fanatics whose right to own a small arsenal of firearms is protected by Congress. 

The United States is bristling with heavily armed right-wingers who believe the law applies to everyone but them. This is the second act of domestic terrorism in America in a week. On Monday, racists shouting the n-word opened fire at a Black Lives Matter protest in Minneapolis, injuring three. This time, the killer is a white man in his 50s. Most American domestic terrorists are white men, which may explain why they are not treated as political agents, and instead dismissed as “lone wolves” and “madmen”.

Terrorism is violence against civilians in the service of ideology. By anyone’s sights, these killers are terrorists, and by the numbers, these terrorists pose substantially more of a threat to American citizens than foreign terrorism—but nobody is calling for background checks on white men, or for members of the republican party to wear ID tags. In America, like many other western nations, people only get to be “terrorists” when they are “outsiders” who go against the political consensus. And there is a significant political consensus behind this bigotry, including within Washington itself. That consensus plays out every time a Republican candidate or Fox news hatebot expresses sorrow for the victims of murder whilst supporting both the motives and the methods of the murderers. If that sounds extreme, let’s remind ourselves that the same politicians who declare that abortion is murder are also telling their constituents that any attempt to prevent them owning and using firearms is an attack on their human rights. 

Take Planned Parenthood. For months now, systematic attempts in Washington to defund the organisation have swamped the nation with anti-choice, anti-woman rhetoric. Donald Trump, the tangerine-tanned tycoon who has managed to become the frontrunner in the republican presidential race not in spite of his swivel-eyed, stage-managed, tub-thumping bigotry but because of it, recently called Planned Parenthood an “abortion factory” and demanded that it be stripped of all state support. Trump, in fact, held a pro-choice position not long ago, but like many US republicans, he is far smarter than he plays. Trump understands that what works for the American public right now, in an absence of real hope, is fanaticism. 

Donald Trump, like many republican candidates, is happy to play the anti-woman, anti-immigrant, racist fanatic in order to pander to white, fundamentalist Christian voters who just want to hear someone tell it like it is. Who just want to hear someone say that all Muslims should be made to wear ID cards, that Black protesters deserve to be “roughed up”, that water-boarding is acceptable even if it doesn’t work because “they deserve it”. Who just want something to believe in, and when the future is a terrifying blank space, the only voice that makes sense anymore is the ugly, violent whisper in the part of your heart that hates humanity, and goddamn but it’s a relief to hear someone speaking that way in a legitimate political forum. Otherwise you might be crazy.

American domestic terrorists are not “lone wolves”. They are entrepreneurial. They may work alone or in small groups, but they are merely the extreme expression of a political system in meltdown. Republican politicians are careful not to alienate voters who might think these shooters had the right idea when they condemn the violence, which they occasionally forget to do right away. In August, a homeless Hispanic man was allegedly beaten to a pulp by two Bostonians, one of whom told the police that he was inspired by Donald Trump’s call for the deportation of “illegals”. Trump responded to the incident by explaining that “people who are following me are very passionate. They love this country and they want this country to be great again.”

But that’s not even the real problem with Donald Trump. The real problem with Donald Trump is that he makes everyone standing just to the left of him look sane. All but one republican governor has declared that refugees from Syria are unwelcome in their states. Across the nation, red states are voting in laws preventing women from accessing abortion, contraception and reproductive healthcare. Earlier this year, as congressmen discussed defunding Planned Parenthood, 300 ‘pro-life’ protesters demonstrated outside the same Colorado clinic where three people died this weekend. On a daily basis, the women who seek treatment at the clinic are apparently forced to face down cohorts of shouting fanatics just to get in the door. To refuse any connection between these daily threats and the gunman who took the violence to its logical extreme is not merely illogical—it is dangerous.

If terrorism is the murder of civilians in the service of a political ideology, the United States is a nation in the grip of a wave of domestic terrorism. It cannot properly be named as such because its logic draws directly from the political consensus of the popular right. If the killers were not white American men, we would be able to call them what they are—and politicians might be obligated to come up with a response beyond “these things happen.”

These things don’t just “happen”. These things happen with escalating, terrifying frequency, and for a reason. The reason is that America is a nation descending into political chaos, unwilling to confront the violent bigotry at its heart, stoked to frenzy by politicians all too willing to feed the violence if it consolidates their own power. It is a political choice, and it demands a political response.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.