Wednesday, October 20, 2010

A gilded age for some...

"The cost of delay [in applying cuts] would result in almost £100 billion of additional national debt by the end of this parliament alone. In the end, the result would be deeper cuts, or further tax rises, in order to pay for the extra debt interest. The cost of delay could be even greater than this. As recent events in some European countries have demonstrated, if the markets lose faith in Britain, interest rates will rise for all of us. There is no reason to think that the pace of consolidation envisaged in the Budget will undermine the recovery. The private sector should be more than capable of generating additional jobs to replace those lost in the public sector, and the redeployment of people to more productive activities will improve economic performance, so generating more employment opportunities" - 35 major UK capitalists, Daily Telegraph.

"His economic strategy is to cross his fingers and hope that the private sector will create 2.5m jobs within five years, despite the fact that between 2000 and 2008 only 1.6m private sector jobs were created. Recovery is going to be a long slog. Contrary to claims made by various members of the government, there is no believable evidence that fiscal tightening on the scale that is being proposed has ever worked. When Canada implemented its fiscal tightening its neighbour was experiencing the Clinton boom, plus it was able to cut interest rates ... And there is no evidence whatsoever that the markets are actually demanding these cuts. The government continues to be able to borrow cheaply. It is true that government bond rates in the UK have fallen since the ConDem government took office, but they have fallen even faster in the US, which is not engaging in a suicidal austerity programme." - David Blanchflower, The Guardian.

"The big argument in favour of the UK government's austerity is that the alternative might, in the words of George Osborne, be 'bankruptcy'. Why a country whose actual and prospective public debt will remain below the average of the past two centuries should be in such dire straits is very far from evident." - Martin Wolf, Financial Times.

"Lower aggregate demand will mean lower tax revenues. But cutbacks in investments in education, technology and infrastructure will be even more costly in future. For they will spell lower growth – and lower revenues. Indeed, higher unemployment itself, especially if it is persistent, will result in a deterioration of skills, in effect the destruction of human capital, a phenomena which Europe experienced in the eighties and which is called hysteresis. Lower tax revenues now and in the future combined with lower growth imply a higher national debt, and an even higher debt-to-GDP ratio." - Joseph Stiglitz, The Guardian.

"Public bodies whose purpose is to hold corporations to account are being swept away. Public bodies whose purpose is to help boost corporate profits, regardless of the consequences for people and the environment, have sailed through unharmed. What the two lists suggest is that the economic crisis is the disaster the Conservatives have been praying for. The government's programme of cuts looks like a classic example of disaster capitalism: using a crisis to re-shape the economy in the interests of business." - George Monbiot, The Guardian.