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Britain’s Slumponomics. George Irvin, University of London (SOAS). 1. 05/06/2014. UK’s Crisis. Three aspects: Government budget NOT like a household budget Why cuts weren’t necessary Austerity isn’t working---reverse the cuts; we need growth ! and … we need equality. 2. UK growth.
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Britain’s Slumponomics George Irvin, University of London (SOAS) 1 05/06/2014
UK’s Crisis • Three aspects: • Government budget NOT like a household budget • Why cuts weren’t necessary • Austerity isn’t working---reverse the cuts; we need growth! • and … we need equality 2
Myths of Thatcherite economics • Public borrowing not a ‘burden on future generations’ • Govt borrows mainly from its own private sector (80%) • If I hold a gilt, it’s an asset for me, not a liability • Cause of crisis: Govt borrowed from public to ‘bailout’ the banks • Rich hold the assets • poor suffer the cuts in public spending
Lies, damn lies & stats … How debt measured? • Gen Govt Gross debt (red) includes • public bonds held by govt itself • financial interventions • Govt Net Debt (blue) is only: • Public debt held by private sector net of interventions NB: Public liability = Private Asset In 2008/09, UK net debt smaller than 60%! in 2010 net Govt debt < 60%
Longer than ‘Great Depression’ This is longer depression than 1930 (NIESR): may not end before 2015 Recovery up here We are here source: http://www.newstatesman.com/blogs/david-blanchflower/2011/07/growth-niesr-recession black dot: NIESR prediction for end of current recession
Unfair income distribution in UK In 1970 ratio of average workers wage to avge CEO pay was about 40:1 Source: Compass High Pay Commission (2011)
Growing inequality is the real problem in the UK! Rise in UK Gini coefficient for gross household since 1979;(wealth GINI far worse) Selected 2008 Ginis: USA 0.41 UK 0.36 France 0.33 Germany 0.28 Denmark 0.25 Sweden 0.23 Source: Hills Report (2009)
Osborne’s ‘austerity’ • Notion that Britain needs public austerity to promote growth is unfounded and incoherent! • ‘Going for growth’ means adopting large state-led investment stimulus package. • Create jobs; green the economy; finance through combination of QE, FTT (now adopted by DE, FR) and reducing tax evasion • ‘Tax gap’ (evasion by persons & companies) now costs us £25bn a year • Balls at last getting away from ‘cut slower’ argument and focussing on grown
conclusion THE END (is nigh?)