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“Cameron lied to the country”, says Clive Peedell

Yes, the Coalition is privatising the NHS, and yes it does matter who provides the service, says Clive Peedell of the National Health Action Party

World Health Organization (WHO) definition of healthcare privatisation:

“A process in which non-governmental actors become increasingly involved in the financing and/or provision of healthcare services”.

The NHS is being increasingly privatised

The Conservatives and Liberal Democrats have repeatedly claimed that their NHS reforms would not lead to increasing NHS privatisation. In their response to the Future Forum report, the Government stated they would rule out “any question of privatisation”, and Nick Clegg is on record as saying “You told us you were worried about privatisation through the back door. So we have made that impossible”.

The Department of Health website even stated that “Health Minsters have said they will never privatise the NHS”.

Andrew Lansley went one step further by accusing critics of ludicrous scaremongering”.

Yet according to the WHO definition of healthcare privatisation (above), they have clearly misled the public, or in common language – lied. The Health and Social Care Act clearly fulfils all the commonly accepted criteria for healthcare privatisation, as I have described in a recent article in the BMJ.

The legislation also fulfils the definition of privatisation proposed by Minister of State for Policy, Oliver Letwin, MP, as laid out in his book, “Privatising the World”:

“It typically takes one of three forms: contracting out of government, deregulation of activities previously dominated by the public sector, and sales of public assets to existent private sector companies…these are important and powerful tools, each of which is particularly suited to the privatisation of a particular aspect of the public sector: contracting out for public services, deregulation for statutory monopolies, and trade sales for companies in poor financial condition”

And as former Head of the Privatisation Unit at Rothschild’s in the 1980s, Letwin clearly knows a lot about privatisation of the public sector.

The business community also saw that the legislation meant increasing opportunities for them via NHS privatisation. Look at the results of thisQuestionnaire for Health Investor magazine, which concluded that:

“…the healthcare industry still wholeheartedly subscribes to the belief that the Tories will accelerate the expansion of the role of the private sector in the NHS…… our experts are almost unanimous in predicting that the looming real terms cut in the NHS budget will boost demand for private care provision for the next two years”

Mark Britnell, former head of Commissioning for the DH, and currently head of global health at KPMG, infamously said at a recent US private healthcare conference :

“In [the] future, the NHS will be a state insurance provider not a state deliverer. In [the] future ‘any willing provider’ from the private sector will be able to sell goods and services to the system. The NHS will be shown no mercy and the best time to take advantage of this will be in the next couple of years.”

Britnell and the respondents to the Health Investor barometer were spot on, of course. According to academic analysis published in the BMJ and the Lancet, the Government’s Health and Social Care Act legislates for the NHS system of public funding and mainly public provision and public administration, to be replaced with a competitive external market of corporate providers in which the government finances but does not provide healthcare.

This is all in keeping with the broader neoliberal policies of this Government. Of course, they realise that the majority of the public do not share its views on privatisation of public services, especially the NHS, so alternative narratives are constructed and the media have been largely compliant in maintaining them.

However, if the public knew the full implications of what this would actually mean for the NHS, potential support for private provision of NHS services would plummet.

Why does it matter who provides the service?

The NHS is a tax funded or “single payer” system, which means it has a fixed budget. It needs to use that budget efficiently and effectively to ensure the healthcare needs of the population are met. The proponents of increasing private sector provision in the NHS argue that this will increase efficiency, innovation and responsiveness to patients.

Privatisation needs a market, and the big secret of ‘markets’ is that they actually impose considerable costs and overheads which need to be recouped by efficiency savings and innovation.

Market systems drain billions of pounds from the NHS budget and away from frontline care, by the creation of a huge bureaucracy of commercial contracts, accounting, legal challenges, advertising and billing. The funding stream for health services becomes highly fragmented. A Health Select Committee report on Commissioning noted that the internal market brought in by Thatcher in 1991, increased the administration costs of the NHS from 5% of total budget, to 14% total budget by 2005. The current system is even more complex, bureaucratic and costly with three levels of bureaucracy replaced with seven.

The increasing complexity and bureaucracy of the system also increases opportunities for the private management consultancy industry to offer their expensive advice to the NHS. This forms the business model basis of Commissioning Support Units (CSUs), which offer their support to Clinical Commissioning Groups to help manage the new healthcare market. The classic McKinsey slogan “If you can measure it, you can manage it” is apt. That phrase should also end with the words “and then you can bill for it”.

Moreover, private companies could end up playing a major role in deciding how up to 60% of the NHS budget is spent, raising serious issues about conflicts of interests and greater risks of further privatisation.

Another problem is that private healthcare firms are by their nature profit maximisers, not cost minimisers. Strategies that bolster profitability often worsen efficiency in healthcare and also reduce the quality of care. Since staff costs represent at least 60% of health budgets, sacking staff, and reducing the levels of more experienced (and costly) staff, is often the first port of call to maximise profits for private companies.

The market system or ‘patient choice’ agenda also turns patients into consumers of health care, forced to “shop around” for their care, creating competitive forces between providers to increase the efficiency of the market. Andrew Lansley famously stated that competition was the number priority for his reforms:

So the first guiding principle is this: maximise competition

But consumers consume, which is not a good for systems with a fixed budget, like the NHS. In addition, competition requires a plurality of providers, which potentially creates excess capacity in the system and duplication of services, because choice is only possible where alternative options exist and are available. This is clearly inefficient.

Privatisation destabilises local health economies. Private firms cherry pick the most profitable services, taking the government money that’s attached through the Payment by Results system. They leave local NHS Hospitals underfunded to pick up the pieces and deal with everything else they are expected to deal with – the full and comprehensive range of healthcare services to local communities. The NHS currently subsidises this comprehensive range of services with the more profitable treatments. As these are picked off by private providers, the NHS is already struggling – even leaving aside the huge financial pressure of the Nicholson cuts.

The NHS will either have to cut back staff and close services, and/or increase their private income by treating more private patients, taking advantage of the Health and Social Care Act which allows them to make half their income this way. They may even have to consider closing and/or merging with other Trusts. This actually reduces choices for local people as they lose local services, and a two-tier system is created, whereby those with health insurance can get access to NHS beds quicker than those without.

There is also a serious problem with staff transfers from NHS hospitals to private hospitals (which don’t train their own staff). This will take vital expertise out of the NHS and create yet more pressure, especially in professional groups where there are already national shortages. Care pathways will also become fragmented as patients have different parts of their care performed in different hospitals depending on the contracts that CCGs have signed up to. Quality is put at risk, expertise diluted, and costs driven up.

Healthcare systems need to be planned and develop and evolve over many years in order to provide for the specific healthcare needs of the local populations they serve. Instead they are being destabilised by the “creative destruction” of market forces.

Increasing the use of private sector providers also causes “Privatisation creep” and a “revolving doors” culture between the private health firms, politicians, think tanks, and civil servants within the Department of Health. Once the private sector starts getting contracts with the Department of Health, it becomes increasingly influential and entrenched within the policy making community. This leads to the “privatisation” of the policy making process, reduces trust in our democratic political system, and increases the risk of corruption.

NHS culture and professionalism is also undermined by the privatisation and marketisation of healthcare. Running hospitals along business and financial lines distracts from patient care, which was highlighted by Francis in his Mid Staffordshire NHS Trust public inquiry.

During the rapid commercialisation of the US healthcare system in the 1980s, the American medical profession lost public support faster than any other profession.

We should listen carefully to warnings of the former editor of the New England Journal of Medicine, Professor Arnold Relman:

The continued privatization of health care and the continued prevalence and intrusion of market forces in the practice of medicine will not only bankrupt the health care system, but also will inevitably undermine the ethical foundations of medical practice and dissolve the moral precepts that have historically defined the medical profession

Finally, in wider economic terms, the use of the private sector in the NHS can also damage our economy. Since public funds are used to pay for private sector provision of NHS services, taxpayers’ money is going directly into the profits of multi-national private companies and their shareholders. It is diverted away from direct patient care, and also diverted outside of our economy. Many of these companies are also registered in offshore tax havens. Privatisation of the NHS is a false economy.

There is clear evidence that this Government is increasing private sector involvement is the delivery and commissioning of NHS services. Coalition denials of increasing NHS privatisation don’t stand up to scrutiny, and they have tried to use the argument that “it doesn’t matter who provides care, as long as it is free at the point of use” to justify their reforms. However, it clearly does matter who provides the service, because the use of private sector creates requires an expensive and inefficient market system, which drains money from frontline care, fragments care, undermines professionalism, and destabilises local health economies.

It creates a vicious circle of increasing health care costs and financial pressure on the NHS. It leads to staff cuts, hospital and ward closures, increased waiting lists, and fewer core services provided by the NHS. A failing NHS will further stimulate the secondary market in private healthcare insurance for those that can afford it, thus signalling the death knell for a universal healthcare service, free at the point of use.

In practice, public-private competition means that private firms carve out the profitable niches, leaving a financially depleted public sector responsible for the unprofitable patients and services.

According to Professors Woolhandler and Himmelstein from Harvard University, writing in the BMJ,

“….based on this experience, only a dunce could believe that market based reform will improve efficiency or effectiveness.”

But then as we know, Oliver Letwin MP, current Minister of State for Policy has said:

The NHS will not exist within 5 years of a Conservative Government

About the author:

Consultant oncologist Clive Peedell is Co-chair of the NHS Consultants’ Association, a member of the BMA Council and the BMA Political board.

This article is published under a Creative Commons Attribution-NonCommercial 3.0 licence. If you have any queries about republishing please contact openDemocracy. Please check individual images for licensing details.

Clive Peedell details Privatisation of NHS to Max Keiser

Money Myths Debunked

Donna D’Souza aka Trixie aka @HaikuCharlatan‘s excellent animation of J.D. Alt’s ebook Diagrams & Dollars: Modern Money Illustrated.  The way ‘money’ really flows around the economy instead of the way that we’re invited to see the system.   (In the UK: for dollars read ‘pounds'; for China read ‘foreign investors’)

Diagrams & Dollars: Modern Money Illustrated

Recipe for Ruin: TTIP the Transatlantic Trade and Investment Partnership

John Hilary, Executive Director of War on Want, introduces TTIP, the free trade and investment agreement being negotiated between the EU and USA; talk given to Friends of Le Monde Diplomatique at Café Diplo, London, 4 November 2013

StopTTIP is the UK part of an international campaign to oppose the TTIP.  The following information kit, about the US/EU Transatlantic Trade and Investment Partnership (TTIP), was compiled on behalf of StopTTIP campaign by Linda Kaucher.         

Their e-list can be joined via:

StopTTIP-request@lists.riseup.net

 

 a)  The US/EU Trade and Investment partnership (TTIP), called Transatlantic Free Trade Agreement (TAFTA) in the US, is a bilateral ‘trade’ agreement between the US and the EU.  (The EU shifted from a primarily multilateral WTO focus to a bilateral agreement focus in 2005).  The TTIP goes much further than any previous EU ‘trade’ agreement in deregulating, in establishing the rights of transnational corporations and in undermining the ability of governments to control corporations.  It is set to completely change our society, and is already in process, as with the NHS.

 This agreement was formally launched at the G8 meeting in July 2013, but has been in process for much longer.  The decision to launch the agreement supposedly involved waiting for a final report from a ‘High Level Working Group on Jobs and Growth’, though it was obvious that the recommendation would be for a free trade agreement.  Although information about the ‘HLWGJG’ was not easily obtained, there was actually no membership list for this group and the ‘decisive’ report was just produced by the usual EU and US trade bureaucrats.

The WTO Doha Round ground to a halt because in the context of the World Trade Organisation, developing countries were able to join together to resist the demands of western governments and the transnational corporate agenda.

So in 2005 big business pushed the EU to change direction with its trade policy.  Peter Mandelson was Trade Commissioner and the EU Trade Commission produced the Global Europe document, mostly a copy of a business lobby document, and the EU shifted to pursuing bilateral and regional trade agreements.

The EU is now either considering, negotiating, or has completed free trade agreements with most countries of the world.

b)  In parallel to the transatlantic TTIP, there is a Trans Pacific Partnership agreement (TPP), with similar aims and inclusions to the TTIP.  The US is party to both. 

 The twelve countries in the TPP are Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico New Zealand, Singapore, Peru, Philippines, US, Vietnam.  As at December 2013, the TPP could be finalised very soon, unless any of the 12 included countries reject it.

c)  ‘Trade’ and ‘international trade agreements’ are different.  While most people would consider trade to be good thing, international trade agreements give rights to transnational corporations while reducing states’ rights to regulate them, thus reducing democracy.

Tariffs on goods between the US and the EU are already minimal, so the TTIP won’t make much difference in that regard, though this the aspect ‘trade’ deal that is often emphasised.

Trade-in-services liberalisations, talked about much less in relation to trade agreements, give corporations rights.  The services categories, as defined by the WTO, are Business, Communication, Construction and Engineering, Distribution (includes food), Education, Environment (includes water, waste, nuclear waste), Financial, Health, Tourism and Travel, Recreation, Cultural, and Sporting, Transport and ‘Other’ – so it is a comprehensive list.

The usual way of including services in trade agreements, including in WTO agreements, was by countries listing the services that wanted to include.  This is ‘positive’ listing.  However, the EU is now using ‘negative’ listing, including in the TTIP, whereby countries list the services they want excluded from the deal.  This is much more encompassing and coercive.

International trade agreements are for the benefit of transnational corporations.  For the most part, domestic firms cannot use the provisions and do not benefit from them.   In fact trade deals set the stage for domestic firms to be squeezed out by transnational firms, for instance on public procurement contracting.

d)  All free trade agreements include goods and services and intellectual property rights but the additional elements of the TTIP that are the main part of the agreement are much more far-reaching.  These are regulatory harmonisation, investor state dispute settlement and the intention to establish global rules via these trade agreements.

e)  ‘Regulatory harmonisation’ means ‘harmonising’ regulation between the EU and US downwards to the most lax form, across all areas, to suit transnational corporations.  This will mean the degrading of regulation on health and safety, food, environment, labour standards, privacy and much more, including financial services regulation.   The NHS is now already ‘harmonised’ with the US corporate-access public health model.

As this ‘trade ‘deal is a corporate agenda, regulatory harmonisation will clearly be in a downward direction, getting rid of what are called ‘trade irritants’ such as the EU’s bans on GM food, chlorinated chicken and hormone loaded beef’ and other higher EU health and safety standards.  In another example, ‘harmonising’ our public service broadcasting model with that of the US will mean big changes to the BBC.

State-owned enterprises are a particular, named target in this agreement.

f)  TTIP and TPP will also include Investor State Dispute Settlement (ISDS), allowing transnational corporations to sue governments directly for the loss of any future profits resulting from any government action, at any level, such as new legislation.  Where ISDS is already included in ‘trade’ deals, it is shown to lead either to big pay-outs from governments to transnational corporations or to deter governments from legislating – the ‘chill’ effect.

 There are many examples around the world of where ISDS has had or is having these effects, for instance where environmental legislation has not gone through because of the threat of legal action.  Canada failed to legislate for cleaner petrol, Germany is being sued for ending its nuclear power program, as is Australia for its cigarette plain packaging legislation.

 g)  TTIP and the TPP are intended to set global ‘trade’ rules which will eventually become the norms for the multilateral WTO, but formulated outside of a structure that allows other countries to jointly resist the corporate-dominated agenda.

The WTO Doha Round collapsed because within the WTO structure developing countries are able to join up to resist the western corporate-driven agenda.  This TTIP/TPP mechanism for achieving globalised trade rules bypasses that possibility.

h)   As with all bilateral ‘trade’ agreements, TTIP and TPP negotiations and agreement texts are secret until the negotiations are completed.

 The European Parliament, the European Council, member state parliaments and the public cannot see the content of TTIP negotiations and texts so as EU citizens we are not able to know the commitments being made on our behalf, and on behalf of future generations until negotiating is finished.  Yet business has privileged access to this information and to influencing negotiators to obtain what it wants from these deals.

There is no justifiable reason for the secrecy because negotiators on both sides, as well as business, know what is on the negotiating table.  The information is kept secret from the public, which might protest commitments being made on its behalf.

i)  International trade agreements are effectively permanent.

International ‘trade’ agreements are intended to tie future governments into neoliberal deregulation whatever their political persuasion.

What makes them effectively irreversible are Dispute Settlement Mechanisms, as in the WTO, whereby states can be challenged in relation to not keeping to their commitments, but much more so by Investor Protection Dispute Settlement whereby corporations can sue states directly for financial compensation.

For ISDS, arbitration takes place in courts of the corporation’s choosing, outside of the legal framework of the host state, with arbitration panels that make decisions on the basis of ‘free trade’ rather than any other values.

 j)  Although international ‘trade’ agreements are negotiated government-to-government (by the Trade Commission for EU member states), they are promoted and driven by transnational corporations, which benefit from states being bound by international trade law.

 The Commission’s ‘competency’ to negotiate international ‘trade’ deals on behalf of Member States was strengthened in the Lisbon Treaty, though this change was not part of the public debate on the Lisbon Treaty before it was passed and came into force.

Transnational firms and industry organisations have a great deal of access to the Commission to dictate what they want from the Trade Commission’s negotiating.  These include American lobbying organisations, such as the American Chamber of Commerce and US legal firms which, because of legal confidentiality, do not have to disclose on whose behalf they are lobbying.

k)  The main corporations are the same transnational financial service corporations that caused the global financial crisis.  The City of London is the world’s main international financial services centre, with transnational banks and insurance corporations, the Big 4 accountancy firms and other financial service firms based there.  The City of London has a major influence on the EU’s international ‘trade’ agreements.

 The power of the City of London Corporation and its front group, TheCityUK, in UK policy input into both EU internal and EU external trade policy, and in the formulation of UK domestic policy to fit with those broader ambitions, is only just now starting to emerge.

The City of London Corporation has a dual role, as a Local Authority for the City square mile and also as the organisation promoting the interests of the financial services industry and channeling its demands to policymakers e.g. in  both Houses of Parliament, in Brussels and at the World Trade Organisation (WTO).

In 2010, the City of London Corporation joined with International Financial Services London (IFSL), which had been the financial services lobby organisation for a decade, to initiate ‘TheCityUK’ as the financial services lobby organisation.

At that time, according to the website, there was a third partner, UK Trade and Industry (UKTI), a government department that straddles the Departments of Business, Innovation and Skills (BIS) and International Development (DfID).  This showed government and business joined at the hip.  However the overt involvement of UKTI was quickly removed from the website.  Now, senior civil servants from the main departments of Treasury, BIS and others attend meetings as ‘observers’.

Members of the committees of TheCityUK are from the biggest financial institutions and include individuals who have been main movers in deregulation and the liberalised international ‘trade’ agenda over the last 3 decades.

Considering the power of the City, its role in dictating policy, and its £90m budget to influence policy and public perceptions, it attracts relatively little attention in the public sphere and this is even more the case for its lobby organisation, TheCityUK.

One of TheCityUK’s committees is the Liberalisation of Trade in Services (LOTIS) committee, previously a committee of IFSL.   In this committee, the existence of which was secret until uncovered by Non-Government Organisation World Development Movement, senior staff from major financial service organisations dictate UK input into EU trade policy to the UKTI bureaucrats who attend for this purpose.  These bureaucrats then take that message directly to the fortnightly EU Trade Committee meetings of trade bureaucrats from all member states and the Trade Commission.

In this process, transnational financial service firms direct UK input into EU international trade policy, bypassing the parliament, the public and potentially even the UK government.

In Brussels, the European Services Forum (ESF), representing transnational corporations including US companies and working closely with TheCityUK, has privileged access to influence and direct EU trade negotiators, and to influence the European Parliament (EP) in respect of its role in ‘trade’, especially at the important committee stage via the EP’s International Trade committee (INTA).

l)  As part of the TTIP, a framework for the ongoing ‘harmonisation’ of all future regulation is being put in place with the setting up of a Regulatory Co-operation Council.  This non-elected Council will be able to override national and EU legislating.

This will make this a ’living agreement’ as the Trade Commission calls it, continuing to dominate government regulating into the future.

It will allow for the fast completion of the TTIP because this committee will be in place to continue the regulatory harmonization process, for all existing and new regulation.     

The plan is also for business ‘stakeholders’, including from the partner country, to have a role in the preparation of all future regulation.  So e.g. US corporations will have a say in all EU regulation and UK government regulation at the draft stage.   

m)  ‘Public procurement’, that is all government spending, is a major target in the international trade agenda.

Government spending is a big part of the global economy.

‘Public Procurement’, in trade terms, means transnational corporations gaining rights to access all government spending, including public services like the NHS.

This part of the trade agenda is largely hidden.

n)  The TTIP is being rushed through, with the aim of completion by the end of 2014.

There are specified ‘rounds’ of face-to-face negotiations, with the third round in mid Dec 2013.  These are a focus for media, although the content is secret.  However negotiations are actually continuous, some involving sections of  negotiating teams and some by digital conferencing.

o)  TTIP will include provision for the movement of temporary workers across borders.  This will inevitably mean cheap labour, and the undermining of working conditions and labour rights, especially in a context of overall degraded regulation. 

Companies moving workers temporarily across borders for services work, primarily as cheap labour, is a big part of the neoliberal international trade agenda.  It is called ‘Mode 4’ in ‘tradespeak’.   The EU includes Mode 4 provision in all of its ‘trade’ agreements, and stipulates skilled workers, that is with a degree or equivalent

Most EU trade negotiations are with developing countries and its Mode 4 offers can be an important factor in getting countries to sign up to trade deals and to help them ‘sell’ the trade deals domestically.

For instance, in the EU/India free trade agreement, negotiated for 5 years but now in an apparent lull, the single demand that the Indian government is making is for any Indian firm to be able to supply workers into the EU.  Leaked documentation affirms that the UK is the main and willing target for this cheap labour supply, and WTO frameworks, which are used generally, do not allow any numerical limits or quotas on Mode 4.  David Cameron has confirmed these conditions on his several visas to India as UK Prime Minister.

Officials at the very top of the Trade Commission repeatedly lie about the EU’s Mode 4 offers, for instance pretending that the India deal is about the Intracorporate Transferee (ICT) Mode 4 category, that is workers moved across borders by transnational companies to work within the same company when the Indian government’s demand in this deal is for any Indian firm to supply skilled workers, a different Mode 4 category.  The UK and the EU already have ICT commitments from 1995 under the GATS (General Agreement on Trade in Services) on ICTs – and this system is already abused in the UK.

This secretive EU/India free trade agreement, involving almost a third of the world’s population (India + EU) still being negotiated and could be signed any time.

Mode 4 will be a part of the TTIP. The US has withheld Mode 4 offers in its trade negotiating Instead it has a visa quota system for temporary skilled worker (H1B visas), a system that India has long tried to break through.

Mode 4 offers in the TTIP will not just apply to EU and US forms supplying labour across borders, but also subsidiaries from third country firms established in either of those partner states, supplying workers into the other partner state.  So, for instance, the many Indian corporations established in the UK would be able to utilise TTIP provision to supply workers into the US, or, if established in the US, to similarly supply workers here.

Yet a main claim of the TTIP ‘spin’ is that it will create jobs on both sides of the Atlantic, as in  the overused phrase ‘jobs and growth’.

p)  The Trade Commission has set up a special unit to attempt to control public perceptions of the TTIP.

 The Commission’s strategy document on this, produced for a meeting of member states representatives, has been leaked.  Secrecy, spin and technical language are usually very effective in keeping the trade agenda out of the media and out of the public sphere.  However this document acknowledges that there is unprecedented public interest in this agreement, requiring a spin strategy that is ‘radically different’ and tailored to individual Member States.  The strategy is about trying to put across a proactive message of claimed benefits and to avoid being forced into a defensive position for instance on regulatory degradation and ISDS, and also to ‘reassure’ third countries, particularly China (indicating there must be unease about the TTIP agreement in third countries).

The point is made that the co-operation of member state government propaganda machines is essential to this.

This means we are paying even more to be targeted by ‘trade’ propaganda.

There are observable signs of this radical strategy being enacted, including in the UK. One aspect appears to be a seeming climb down from an absolute hard line ‘free trade’ agenda, with some minor concessions (e.g. the reconsideration of UK plain packaging legislation) in order to manipulate public opinion for the big prize of the agreement.

UK Trade and Industry, the government department that liaises between the Corporation of London and the EU Trade Commission to ensure that the financial services industry gets the trade agenda it demands, is also now placing large ads in newspaper, paid for from the public purse, to obliquely promote the benefits international trade.

q)  Once TTIP negotiations are completed, the European Parliament will only have the right to say yes or no to the agreement, with no amending. It will then, as with all EU ‘trade’ agreements, be provisionally implemented before it comes to member state parliaments for ratification.

 The European Parliament can hardly be an effective democratic mechanism when so few people know who their MEPs are and know even less how they vote.

Aside from that systemic failing, the European Parliament has limited powers.  And in regard to trade agreements, its power of assent on trade deals means that the Parliament can only vote for or against the deal, at that late stage.

r)  In the US, the government is seeking ‘Fast Track’ provision or Trade Promotion Authority (TPA) from the Congress.  If granted, US representatives will similarly only be allowed to pass the agreement or not, without amendment.

 The vote on this is likely to be in January 2014 and opposition to it is growing.  US trade deals have only ever gone through under Fast Track.

s)   The WTO is being used in an ongoing way to further the deregulation agenda.

It is important to recognise that the WTO is subject to the same power plays of transnational corporate forces that dominate EU external trade policy, internal EU policy and UK national policy-making.

Apart from the minimal part of the Doha Round agenda that was signed up in Bali in early December 2013, other important agreements are quietly proceeding within the WTO, without publicity.

There is a grouping of some WTO members within the multilateral WTO who are signatories to a plurilateral Trade-in-Services agreement (the TiSA) for which the intention is to gradually coerce other countries to join, towards a global services agreement, a similar strategy as that intended for the TTIP and the TPP.  There is a similar mechanism and intention for the plurilateral Global Procurement Agreement within the WTO structure.

Resources

EU Commission’s (leaked) mandate from EU Council to negotiate TTIP

http://www.s2bnetwork.org/fileadmin/dateien/downloads/EU-TTIP-Mandate-from-bfmtv-June17-2013.pdf

EU Commission’s (leaked) PR strategy “Communicating on TTIP” http://corporateeurope.org/trade/2013/11/leaked-european-commission-pr-strategy-communicating-ttip

EU Commission’s (leaked) concept paper on regulatory coherence

http://corporateeurope.org/sites/default/files/ttip-regulatory-coherence-2-12-2013.pdf

Corporate Europe Observatory’s analysis of the regulatory coherence document  http://corporateeurope.org/publications/regulation-none-our-business

George Monbiot articles on TTIP:

http://www.theguardian.com/commentisfree/2013/nov/04/us-trade-deal-full-frontal-assault-on-democracy

http://www.theguardian.com/commentisfree/2013/dec/02/transatlantic-free-trade-deal-regulation-by-lawyers-eu-us

Big business control of UK policy-making,including the UK government White Paper on Trade :  http://www.theguardian.com/business/2012/jul/10/brittan-cameron-increase-skilled-foreigner

Is the MSM designed to disinform, mute and dilute democratic discourse?

Much could be said about the current state of global ‘democracy’ but one thing is certain, access to full and accurate information is a prerequisite for a real democracy.

However – there is another certainty – the mainstream media’s daily performance does not provide such coverage.   So does that result from incompetence, commercial decision or is it a ‘skillfully evasive success’ designed to disinform, mute and dilute democratic discourse?

 

Screen Shot 2013-12-27 at 21.16.19

 

According to Philip Mirowski (Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown) the founders of neoliberalism, the Mont Pèlerin Society was:

‘… a society of ‘rationalists’ who ended up promoting ignorance as a virtue for the larger population… The political project of Neoliberalism is not laissez-faire; rather, it is to use state power to get the populace to prostrate themselves before the only dependable source of Truth and Wisdom in human civilization—viz., something they call “The Market”. The more discombobulated the average citizen can be rendered, the quicker they will get with the program.

 

This has particular significance in the lead up to the May 2015 General Election.  Pundits and politicians alike, predict that it will be a dirty and negative campaign.  That it will be full of discombobulation, misinformation and spin from the Tories and the Tory-dominated, capitalist press, can be of no surprise given their record to date.

This Tory/LD coalition is a frighteningly extreme neoliberal right wing, asset-stripping, destructive government, and it is imperative that they are not allowed to complete their project of creating a low-waged, low welfare, high unemployment ‘third world’ society… an undemocratic neofeudal society comprising serfs and the super-rich.

The spin is that newspapers are in Murdoch’s blood… that the oligarchs want to own bits of the media as ‘playthings’… but clearly the real motivation is an intention to control the political cycle. Challenging the propaganda, we need to understand how the media manipulates the agenda.

In May 2001, (prior to the extraordinary media manipulation that followed 9/11 and the occupation of Iraq), Michael Parenti wrote ‘Monopoly Media Manipulation’ for an American audience.  He identified various techniques facilitating a media bias which moves in more or less consistent directions, favoring management over labor, corporations over corporate critics, affluent whites over low income minorities, officialdom over protestors, the two-party monopoly over leftist third parties, privatization and free market “reforms” over public sector development, U.S. dominance of the Third World over revolutionary or populist social change, and conservative commentators and columnists over progressive or radical ones.’

 Familiarity with these techniques helps read between the lines…   and whilst we still have the access (threatened by the EU-US FTA /TAFTA/TTIP, the TPP and other attempts to censor the internet) there is often greater information online.

Suppression by Omission

 Where to begin?  The non-coverage of any industrial action; the BBC’s omission to report Lansley’s NHS ‘reforms’/ Welfare ‘reform’; the absence of news about the EU and in particular the mass protests against ‘austerity’; the lack of analysis of the EU-US Free Trade Agreement (TAFTA, TTIP) let alone the TransPacific Partnership Agreement.  The list could go on and on… but as a final example, the downplaying of the significance of the Snowden surveillance revelations (Guardian journalists being the exception).  These are all major stories of huge importance to the UK population but they have received little coverage in the MSM.

 Attack and Destroy the Target


 When omission proves to be an insufficient mode of censorship and a story somehow begins to reach larger publics, the press moves from artful avoidance to frontal assault in order to discredit the story.

 A perfect example would be the attacks on the Guardian and Glenn Greenwald for supposedly putting the UK at greater risk of terrorism, by printing the leaks about NSA/GCHQ activities.  The Parliamentary Select Committee also focused on the Guardian Editor’s patriotism rather than the revelation that the NSA were funding the GCHQ to provide them with surveillance of European leader’s mobile phone records etc.

 Labeling

 “Free market” has long been a pet label, evoking images of economic plenitude and democracy.  In reality, free-market policies undermine the markets of local producers, provide state subsidies to multinational corporations, destroy public sector services, and create greater gaps between the wealthy few and the underprivileged many.

The use of labels prefigures our perception of a subject.  For example, ‘Islamic terrorist’ evokes a different emotional response than ‘Islamic freedom fighter’.  Particularly ironic is the labeling of the BBC as ‘left wing’.

Equally toxic is the label of ‘reform’ – as in ‘Welfare reform’ or the ‘reforms’ required by the IMF.  ‘Reform’ is code for dismantling and privatization of public services.  The IMF ‘reforms’ that have been used in developing countries for the benefit of the corporate investor class, are now being implemented in the UK under the label of ‘austerity’.  Global poverty is increasing at a faster rate than population growth.  As Edward Herman once noted, “reforms” are not the solution, they are the problem.

Preemptive Assumption

 Frequently the media accept as given the very policy position that needs to be critically examined.

 The media rarely questions the underlying assumptions.  For example, it is taken as a given that the UK government has to clear the deficit/debt by cutting benefits.  That even Mervyn King has said that the UK can never ‘run out’ of money and be unable to pay its debts, is never acknowledged… let alone questioning the economic illiteracy of cutting benefits in order to cut the deficit… let alone that the unemployment figures indicate that the deficit is not big enough and that the government should be spending as the investor of last resort… let alone that the UK government doesn’t need to borrow to spend (look at QE or spending on military adventures in Libya).. let alone that the last Labour government did not overspend.  It rarely even acknowledges that there was a global banking crisis:

‘.. the banks… ended up costing the country (taxpayers) £68bn in direct bailouts and indirectly hundreds of billions more in soaring national debt generated by special liquidity provision, loan guarantees and asset protection schemes.   And even that excludes further dozens of billions in lost revenues to the Exchequer resulting from the deep recession caused by the banking crash, let alone the incalculable losses in tax revenues caused by the banks running amok in industrial-scale tax avoidance.

http://www.michaelmeacher.info/weblog/2013/12/2014-15-the-return-of-the-state/

Face-Value Transmission

 Many labels are fabricated not by news media but by officialdom. U.S. governmental and corporate leaders talk about “our global leadership,” “national security,” “free markets,” and “globalization” when what they mean is “All Power to the Transnationals.” The media uncritically and dutifully accept these official views, transmitting them to wider publics without any noticeable critical comment regarding the actual content of the policy.

For example, George Osborne is uncritically reported as ‘cracking down’ on tax avoidance through his General Anti-Abuse Rule (GAAR).  However:

The GAAR was therefore deliberately devised to give PR protection to the government while at the same time opening up a loophole so large that even the City lawyers were delighted – they could still make a highly lucrative living from dreaming up fancy tax avoidance devices, only now they could avoid the ignominy because Osborne had made it all legitimate.

http://www.michaelmeacher.info/weblog/2013/09/osborne-hypocrite-over-tax-avoidance-caught-out/

 Similarly, the Government’s Lobbying Bill is rightly described by Michael Meacher as ‘an artifice of hypocrisy designed, not to end lobbyists’ abuses, but to bash the unions’… but notably not described so by the MSM who only document concerns about the impact on charities.

 Slighting of Content


 ‘..the corporate news media.. gives so much emphasis to surface happenings, to style and process, and so little to the substantive issues at stake.’

 So the reasons for workers taking strike action are rarely reported – it is always implied that the reasons are negative.  The focus is on the inconvenience/cost for the public and the management.

Political reporting has degenerated into some sort of sporting fixture.  The issues are ignored but instead we are offered a running commentary on tactics and whether or not Ed Miliband is as attractive as his brother.  That David Miliband was an uber-New-Labourite whilst Ed is considerably more left wing (not difficult to be) is never mentioned.  Parenti suggests that the commentators ‘sound like theater critics as they hold forth on how this or that candidate projected a positive image, came across effectively, and had a good rapport with the audience.

Furthermore, demonstrations are reported as some sort of contest between protestors and police with little reference to the issues of democratic sovereignty and unaccountable corporate power that impel the protestors.

 False Balancing


 In accordance with the canons of good journalism, the press is supposed to tap competing sources to get both sides of an issue.

 This false balance is particularly noticeable on the BBC’s political discussion programmes.  Invariably, a Blairite is invited as the ‘left’ balance, together with a Tory and a LD, and all chaired by a Tory presenter.  Furthermore, both sides of a story are not usually all sides. The whole left-progressive and radical portion of the opinion spectrum is amputated from the visible body politic.

False balance is also created by giving equal time to a minority opinion.  For example, Climate change deniers are often given equal opportunity to argue even though 90+% of climate scientists believe that man-made global warming is occurring.  The assaults on Palestine by the infinitely more powerful Israeli forces are reported as if it is a conflict between equals.

 Follow-up Avoidance


 When confronted with an unexpectedly dissident response, media hosts quickly change the subject, or break for a commercial, or inject an identifying announcement: “We are talking with [whomever].” The purpose is to avoid going any further into a politically forbidden topic no matter how much the unexpected response might seem to need a follow-up query.

 A good example was a Newsnight item about 10y ago.  Allyson Pollock (professor of public health research and and author of NHS plc: the Privatisation of Our Health Care) was invited to discuss the New Labour health ‘reforms’. Subsequent events have demonstrated the accuracy of her analysis but she was only allowed to speak once, and the rest of the discussion continued without reference to her contribution.

This is also a technique used by politicians and bureaucrats.  The presenter on R5’s Drive programme, Peter Allan, tried to pursue the concerns of parents about the lack of accountability at the recently closed Crawley ‘free’ school.  However, all the ‘independent’ experts persisted in ignoring his questions, promoting their support for ‘free schools’.

 Framing


The most effective propaganda relies on framing rather than on falsehood. By bending the truth rather than breaking it, using emphasis and other auxiliary embellishments, communicators can create a desired impression without resorting to explicit advocacy and without departing too far from the appearance of objectivity. Framing is achieved in the way the news is packaged, the amount of exposure, the placement (front page or buried within, lead story or last), the tone of presentation (sympathetic or slighting), the headlines and photographs, and, in the case of broadcast media, the accompanying visual and auditory effects.

 There was a recent example on the BBC radio news.  A story about the bedroom tax and the cuts, was immediately followed by a story about banker’s bonuses averaging £1m+.  The invite from the presentation was to see the two stories as completely unrelated.  Indeed, it may be that the newsreader was unaware of the irony because the tone of the delivery was so seamless.   The very juxtaposition of the items emphasised the message that it was perfectly reasonable for one group to struggle financially to pay for the mess created by the other group, who were receiving unreasonable sums of money to carry on designing the next financial crisis (probably 2016 according to Thom Hartmann).

So does the poor coverage of the news result from incompetence, commercial decision or ‘skillfully evasive success’ designed to disinform, mute and dilute democratic discourse?  

Undoubtably, incompetence and commercial decisions are relevant but there can be no doubt that powerful corporate interests are trying to disinform, mute and dilute democratic discourse.  Inherent to Neoliberal thinking is that ignorance should be promoted as a virtue for the larger population… and that democracy inhibits the ‘wisdom of the markets’.

I will leave the last words to Michael Parenti:

Many things are reported in the news but few are explained… we are left to see the world as do mainstream pundits, as a scatter of events and personalities propelled by happenstance, circumstance, confused intentions, bungled operations, and individual ambition — rarely by powerful class interests. Passive voice and impersonal subject are essential rhetorical constructs … Recessions apparently just happen like some natural phenomenon (“our economy is in a slump”), having little to do with the constant war of capital against labor and the contradictions between productive power and earning power…. International “free trade” agreements set up international trade councils that are elected by no one, are accountable to no one, operate in secrecy without conflict of interest restrictions, and with the power to overrule just about all labor, consumer, and environmental laws, and all public services and regulations in all signatory nations. What we actually are experiencing with GATT, NAFTA, FTAA, GATS, and the WTO is deglobalization, an ever greater concentration of politico-economic power in the hands of an international investor class, a global coup d’etat that divests the peoples of the world of any trace of protective democratic input.

Screen Shot 2013-12-28 at 14.16.15

http://www.theguardian.com/commentisfree/2013/dec/27/digital-age-politics-analogue-voter

http://www.michaelparenti.org/MonopolyMedia.html

http://www.nakedcapitalism.com/2013/08/fixing-old-markets-with-new-markets-the-origins-and-practice-of-neoliberalism.html

http://www.mirror.co.uk/news/uk-news/david-camerons-dirty-war—2962226

http://www.michaelmeacher.info/weblog/2013/12/2014-15-the-return-of-the-state/

http://www.michaelmeacher.info/weblog/2013/09/osborne-hypocrite-over-tax-avoidance-caught-out/

http://www.michaelmeacher.info/weblog/2013/09/the-govts-lobbying-bill-is-an-artifice-of-hypocrisy-designed-not-to-end-lobbyists-abuses-but-to-bask-the-unions/

Osborne’s ‘false dilemma’

Great analysis by sinisterfootwear in response to the Guardian article:

‘George Osborne announces fresh attack on welfare budget – In challenge to Labour, chancellor tells MPs billions will need to be shaved from welfare to avoid deeper departmental cuts’ -

Guardian comments thread 12 December 2013 
Too good not to be shared:

Osborne presents us with a classic “false dilemma”. He deceitfully presents us with the stark and false choice between welfare cuts or cuts to other departments of the state. He is asking us to consider limited number of preselected alternatives when in fact there numerous other options available to us. Let me elaborate.

As a world economic system capitalism is inherently and increasingly crisis prone: that’s its “natural” state. In fact, since the 1970s the rate of crises has speeded up with crises regularly occurring throughout every decade. So, what does that mean for contemporary capitalism and the future of the welfare state.?

According to David Harvey: A crisis is “(a)n irrational, rationalizer of an irrational system; the irrationality of the system right now being masses of capital and masses of labour side by side in the midst of a world that is full of social need.

How stupid is that?

The rationalization that capital is looking for is the re-establishment of the basis for the extraction of surpluses: to re-establish the profit rate. The irrationality in which they (capitalists) are going about this is to actually suppress these possibilities by suppressing labour and suppressing the circulation of capital.

As socialists there is another way of rationalizing; the big question is how to take all that equipment and all that labour and put it together so that it meets human need? That is the rationality that we should be looking for right now, at a moment of crisis, at a moment of opportunity to think about the transition to socialism”.

Make no mistake, austerity is a class project the aim of which is to roll back the advances made by working people for the further enrichment of the ruling class. Austerity isn’t intended as a short/medium term measure, it is, as Cameron said, forever.

Surrounded by the opulence of the Guildhall’s grandest room, Cameron addressed 900 rich and well-pampered guests enjoying a sumptuous banquet, courtesy of the City of London Corporation. He used the annual speech at the Lord Mayor’s Banquet to declare that the devastating austerity being imposed by his government will be “permanent.”

Chancellor George Osborne’s Autumn Statement announced further billions in spending and welfare cuts. The “recovery” hailed by Osborne is actually the slowest in more than 100 years, with the economy more than 3 percent smaller than before the 2008 crash.

The UK economy has only been able to remain afloat through a guarantee of cheap money via the £375 billion of quantitative easing that been made available to the banks. This could rise to as much as £425 billion.

Through the progressive commodification of the means of social reproduction (education, health, welfare, etc.), the neoliberal state has engineered a social catastrophe. The goal is to finally destroy what remains of the Keynesian welfare state that emerged during the long post war boom, and replace it with a neoliberal “workfare” state.

Whereas the role of the state in the Keynesian model was to try to extend the social rights of its citizens, the “workfare” model is concerned to provide welfare services that benefit business, both national and international. The net result is that the needs of the individual/society will take second place to capital accumulation forever.

Permanent austerity is a class project under taken by states on behalf of the rich. It is class war pure and simple.

Related posts:

‘Politics and Parasites’

Nineteen Eighty Four revisited – Is there a ‘world domination’ study course?

The hidden welfare state

What does Leveson tell us about the Tories and their plan to wipe out state services?

Why do politicians tell us Debt/Deficit myths which they must know to be untrue?

Why the deficit myth is a useful deception

It is often difficult to understand the economic-speak into which so many expert-explanations seem to lapse.  I imagine that I am not alone so I will share a version of the explanations that make sense to me.  Unfortunately, I no longer remember everyone that I should credit.. apologies.

The deficit is the putative shortfall in government tax receipts or ‘income’ relative to its ‘spending’.   The words ‘income’ and ‘spending’ are deliberately put into inverted commas because George Osborne and his ilk would have us believe that the UK budget is like our own individual household income and spending. (To be fair so do most mainstream economists.)

This generates an extremely useful word confusion because we all know the consequences of households getting into more debt than they can afford.   In the absence of a real analogy, ordinary people are easily persuaded that government must cut ‘spending’ which of course is the ultimate ideological goal of the tea-party Tory neofeudalists.

However, government ‘spending’ and ‘income’ are nothing like household spending and income.  Furthermore, the word ‘deficit’ itself consciously, and unconsciously, invites the belief that it is a ‘bad thing’ that must be ‘sorted out’.   Again for emphasis – the term ‘deficit’ in this context does not mean the same as it would in a household.  Bill Mitchell proposes that all ambiguous macroeconomic terms have to be reframed so as to undermine the ideological metaphors of the neoclassical consensus.  He proposes that all statements be qualified as in, for example, ‘The government deficit rose and generated higher levels of wealth for households and firms.’

Screen Shot 2013-12-08 at 20.05.42

http://www.youtube.com/watch?v=w2JwUKEUdPY#t=302

The deception that arises from the deficit myth is that the government ‘spending’ more than it receives in tax is detrimental and holds back economic recovery – hence the argument for the cuts and austerity.

In order to understand why the deficit fears are just hype, it is helpful to look at how money and tax have historically been used to control and direct the behavior of populations.  For example, British Colonialism in South Africa.

Essentially, the motivation for invading and colonising a foreign country is about land – new land for settlement, agriculture and to exploit the foreign country’s natural resources.  All of these require a substantial labour force.

Obviously, the colonialists could have tried to import all the necessary workers (as the US has done) but the most practical quick solution was to use the indigenous population.

The problem was how to get the indigenous population to plough the fields or go down the mines to dig for gold.  Why would people, who had been living and surviving perfectly well for generations, want to give up their way of life to work for the colonialists?  Not only was the work demanding and uncongenial but their own self-sufficiency would be threatened.

Basically, there are three possible answers:

Offer high wages… not only would that be beside the point of colonising in the first place but (initially at least) money would only be an inducement if it could be spent on some stuff or service that the indigenous population wanted or needed.  No-one can eat bank notes.

Enslave the population and force them to work at gunpoint … but that in itself is quite labour intensive, requiring guards as gang masters, and generally incurs an inconveniently high mortality rate (as in the Belgium Congo).

The third option is much simpler…. create a currency and require the indigenous population to pay tax in that currency.

Warren Mosler has a neat routine which explains how taxing works.  He tells the audience that he is turning his business cards into a currency and that he will pay each of them, one business card, to clean the lecture theatre at the end of his talk.  The audience laugh until Warren Mosler adds that there will be armed guards at all the exits who will only allow individuals out of the lecture theatre if they pay a tax of one Mosler business card.  So now the audience has the choice of being trapped in the lecture theatre all night, or do the cleaning, get their business card ‘pay’ and be allowed to go home.

So by creating a Business card currency and enforcing ‘tax’ collection, Warren Mosler is able to control and direct the behavior of the audience.

The same system held in inducing the indigenous population to work for the colonists.  Those who failed to pay their taxes were imprisoned and could then be used as unpaid forced labour.  Either which way, the indigenous population were snookered.

Now the main point is that neither the colonists or Warren Mosler had to wait until the tax was collected before they could ‘spend’ their currencies on paying their workers.  In fact, it would have been impossible because there wasn’t a currency before they created it out of thin air. (The pound sterling became the standard currency of the Cape of Good Hope colony in 1825 … Before a unified South Africa, many authorities issued coins and banknotes in their own pound, equivalent to sterling.)

The Colonial and Mosler ‘governments’ had to ‘spend’ before the workers could pay their taxes.  Futhermore, the tax that was collected was quite irrelevant in determining how much the Colonial/Mosler ‘governments’ could spend.  If they needed more labourers, they just created more money.  The tax was not government income in the household sense.  The tax was simply part of the mechanism to get the work done and make the money flow.  In fact, after collecting, the tax receipts/business cards could just be thrown away .. the only cost would be the cost incurred in the actual manufacture of the bank notes/business cards.

Now in the Mosler currency system, the amount of tax received back would equal the amount that his ‘government’ created.. so there would be no ‘deficit’.

However, if someone wanted to ‘save’ a Mosler card memento more than they wanted to go home… there would be a ‘deficit’ of one Mosler business card collected in ‘tax’.  Nevertheless, the deficit would not be any problem to the economic system.  Warren would still have got the Lecture Theatre cleaned, he could print another set of business cards whenever he needed to, and the Mosler business card collector would have ‘saved’ his card to spend at a later date.

Essentially, the ‘deficit’ is a reflection of the total amount of saving, investment and employment that is occurring in the economy.  It is not something which has to be paid back.

Just as with the unilateral decision of the ‘saver’ of the Mosler business card:

‘It is the non-government sector deciding to save more than it invests that generates the government deficit’ (Neil Wilson cif).

Michael Burke provides the numbers to show that it is indeed the current non-government sector ‘saving’ (ie. not investing) which accounts for the ‘entirety of the prolonged crisis’.  It is estimated that private sector businesses are holding back £700+billions.  Effectively, there is an investment strike by the private sector:

The driving force of the slump remains the fall in investment, led by the fall in business investment. The fall in business investment alone more than accounts for the entirety of the prolonged crisis.

Michael Burke (and others) stress the necessity for the government to act as the ‘investor of last resort’:

Government could act to offset this by investing on its own account, if necessary drawing on the resources of the private sector to do so. Instead, the Coalition cut public sector investment by £6bn after Labour increased it modestly…. It is still the case that increased public sector investment is the only viable means of resolving the crisis that doesn’t lead to further misery for the majority of the population.

Neil Wilson writes:

Why is it so difficult for people to connect the dots… When money is injected into the economy it bounces around generating transactions and taxation. Anything left is saved by somebody and eventually ends up being swapped for Gilts.

Government spending pays for itself.  Each time every time.

It is, at least arguable, that Osborne knows that his policies on deficit reduction are a complete but ideologically useful fiction.  Generously, the Financial Times’ Martin Wolf wrote in response to the Autumn Statement:

“The government has been led astray by focusing on deficit and debt rather than the health of the economy.”

However, Professor Bill Mitchell does not mince his words and they can act as a conclusion as to why the deficit myth is a useful deception:

Structural deficits – the great con job!

… the constraints imposed by neo-liberalism are entirely ideological and came about from a concerted campaign to win the battle of ideas. There is nothing about deficits that should frighten international capital. In fact, capitalists will make higher profits in a fully employed economy than in a stagnant economy.

Update:

Important point made in comment’s thread by petermartin2001 

The question of inflation also does need to be answered. No economist, including Warren Mosler and Bill Mitchell, would say that the deficit didn’t matter. Although their argument is often deliberately misrepresented in that way. The argument at the moment should be that, as inflation isn’t the major issue at present, therefore the deficit isn’t the major issue either..

Its an argument which, as Bill Mitchell points out, doesn’t bother the more progressive of the capitalist class. They know they don’t make profits from low deficits if low deficits mean reduced business activity and higher unemployment. There’s no profit , or surplus value, to be made from an unemployed worker!

Reply:

I was trying to keep it simple. I did try working inflation into the Mosler business card model but it all got a bit surreal!

Inflation is only a problem when all the potential capacity of the economy has been reached which with our levels of unemployment/underemployment is not an immediate problem. In the words of Neil Wilson (filched from Cif):

‘five million without work that want it, education opportunities for our youth, limiting the excessive growth of house prices, and euthanising all the rentiers and oligopolists out there.’

I know that the OBR etc question that the UK has suffered a decline in capacity post 2008 but you know how iffy their predictions are.. and can’t see it being a problem when we need ‘a New green Deal’ to be zerocarbonbritain 2030!

References:

http://think-left.org/2012/08/25/why-does-the-structural-deficit-remind-me-of-libor/

http://www.youtube.com/watch?v=Z1uWVj0YJ3M

http://socialisteconomicbulletin.blogspot.co.uk/2013/11/a-milestone-reached-in-british-slump.html

http://bilbo.economicoutlook.net/blog/?p=2326

Why do politicians tell us Debt/Deficit myths which they must know to be untrue?

The Pathology of the Rich

The Pathology of the Rich – Chris Hedges on Reality Asserts Itself pt1

TheRealNews TheRealNews

Published on Dec 5, 2013

On RAI with Paul Jay, Chris Hedges discusses the psychology of the super rich; their sense of entitlement, the dehumanization of workers, and mistaken belief that their wealth will insulate them from the coming storms

Why do politicians tell us Debt/Deficit myths which they must know to be untrue?

First posted on 3rd December 2013 at Think Left

The New Economic Perspectives’ video clip on the Government budget, Deficits and Debt presented below (produced for educational purposes), debunks the myths that politicians tell their populations to justify ‘austerity’.  In the case of the clip, it starts with 3 full minutes of American politicians misinforming the electorate.  An identical montage aimed at the UK electorate could undoubtably just feature George Osborne’s utterances from his forthcoming Autumn statement scheduled for this Thursday (5th December 2013).

However, the reality is that all economists know that the deficit and debt mythologies are not true and ‘have long known that the idea of balancing budgets over the cycle is a bit like a fairy story we tell to frighten the kids’.  Economists, and Central bankers like Mervyn King, Ben Bernanke, Alan Greenspan, all know that:

The UK government can never ‘run out’ of money;

The UK government can never be forced to default;

The UK government can never be forced to miss a payment;

The UK government is never subject to the whim of ‘bond vigilantes’.

In fact, the St Louis Federal Reserve, from the heart of Western capitalism in the US confirms the same for the US dollar (and any other nation that creates its own currency) :

‘As sole manufacturers of dollars whose debt is denominated in the dollar, the US government can never become insolvent ie. unable to pay its bills.  In this sense, the government is not dependent on credit markets to remain operational.  Moreover, there will always be a market for US government debt at home because the US government has the only means of creating risk-free dollar-denominated assets.’

Paul Samuelson, ‘father of modern economics’ and Nobel Prize winner, suggested the reason for perpetuating the mythologies in a 1995 interview:

“I think there is an element of truth in the view that the superstition that the budget must be balanced at all times [is necessary]. Once it is debunked [that] takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency. And one of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that the long-run civilized life requires. We have taken away a belief in the intrinsic necessity of balancing the budget if not in every year, [then] in every short period of time. If Prime Minister Gladstone came back to life he would say ‘uh, oh what you have done’ and James Buchanan argues in those terms. I have to say that I see merit in that view.”

It may be that politicians fear the ‘anarchic’ demands of the electorate were the public to understand that the UK economy is not like a household and can never be bankrupt.  However, these distortions of reality have been carried to a new pitch by George Osborne and the Coalition government:

The scale of the Coalition government’s intended austerity measures are on a scale never seen in modern Britain. What is planned here will dwarf anything that was undertaken by Thatcher in the 1980s. There is already massive unemployment in the public sector….Massive unemployment and lower wages mean lower tax receipts, and even bigger budget deficits and debt loads…It is now clear that the austerity policy in the UK is not a matter of economic necessity but of political choice… It is obvious that the cuts of this scale are about much more than just deficit reduction… The cuts are part of an agenda to transfer services from the public sector to the private sector. The pretence of ‘there is no alternative’ is a means for the Conservative project to radically transform the state.

http://www.globalresearch.ca/uk-economy-falls-into-double-dip-recession/5313842

It would be just as well to remember this week, when listening to George Osborne and Danny Alexander, that Keynes said:

’Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all.’

 

New Economic Perspectives on the Government Budget, Deficits, and Debt

Published on Nov 28, 2013

The video clip features the following speakers, in order of appearance:

L. RANDALL WRAY
Professor, Economics, University of Missouri-Kansas City
Senior Scholar, Levy Economics Institute
Author, Understanding Modern Money, Modern Money Theory
http://www.economonitor.com/lrwray/

STEPHANIE KELTON
Professor, Economics, and Chair of the Department of Economics, University of Missouri-Kansas City
http://stephaniekelton.com/

WARREN MOSLER
President, financial services firm Valance Co. Inc.
Author, Soft Currency Economics, The Seven Deadly Innocent Frauds of Economic Policy
http://moslereconomics.com/

For More Information:

University of Missouiti-Kansas City, Economics Blog:
New Economic Perspectives
http://neweconomicperspectives.org/

The Modern Money Network
http://www.modernmoneynetwork.org/

Other posts from Think left:

George Osborne says we’re running out of money ..

The fundamental deceit of ‘There’s No Money Left’

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