The October Revolution

October 21, 2010

Martin Wolf on “fiscal deficits” in late September:

“In short, not only can we deal with the private sector debt overhang by increasing the fiscal deficit, but we must do so. It is the only way of avoiding a deep slump and the immense disruption of mass bankruptcy. But this is not to preclude debt restructuring, as well. It is important to develop ways to restructure private debt, too. But, for this to happen, we must be prepared to impose more losses on financial intermediaries and so on their creditors.

Analysis of the economy is not the same thing as analysing a single household. What is true of the latter is not true of the former. The unwillingness to recognise this truth will lead to serious policy mistakes.”

And today:

“The chancellor presents the proposal for cutting fiscal deficits and reducing the share of public spending in gross domestic product as “unavoidable”. This is not so. It was a choice to concentrate so much of the fiscal adjustment on spending. Similarly, the UK government was never Greece or Ireland. Would it have become Ireland, without this consolidation? Maybe. The chancellor presents the hypothesis of looming national “bankruptcy”. If so, the UK must have been bankrupt for much of the past two centuries..”

Seamus Milne, in the Guardian, today:

“The Tory-led coalition is using the economic crisis not only to rein in the state, but to reorder society…This is to be Britain’s shock therapy. It is the culmination of the Conservative project to dismantle the heart of the welfare state – or, as Osborne put it today, to “reshape” public services – that began more than 30 years ago.

…when it comes to choreography, the Bullingdon boys, Osborne and David Cameron, a former PR executive and a master of the darker political arts, have played a blinder. Months of leaks of staggering cuts and carefully timed announcements of raids on middle-class incomes, from child benefit to tuition fees, were used to soften up the public for today’s package with the preposterous theme of “we’re all in this together”.

Tom Clark;

Local authorities will get new “flexibility to manage … council tax benefit”. Aside from the inevitable administrative shambles that will be produced by hundreds of town halls administering a complex benefit in entirely separate ways, the 10% cut in the overall budget returns us to the days of the poll tax, by requiring councils to chase poor people for a fraction of their personal bill.

Recall that the poll tax payments for the poor were capped at 20% of the total bill, but that did not prevent a spot of bother on the streets. In the light of this, I’m tempted to say that I predict a riot.

But, and this really is the most important thing to remember, Murdoch loves it.

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One Response to “The October Revolution”

  1. WatsonLow Says:

    The French rioters and the fine people who massed outside 10 Downing Street on Wednesday night are the Polish cavalry in the face of Hitler’s panzers. Or as was said of an earlier conflict: “C’est magnifique, mais ce n’est pas la guerre!” As you and the Guardian columnists aver, Cameron and his people have played a canny PR game. Soon the British populace will not know if they are coming or going, befuddled by the media. Also the French rioters will have been put back in their box. Ho Chi Minh would shake his head sadly. He fought the war on his terms and on his terrain.


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