The shame of Austerity Britain

Yes austerity is a political choice. Many Brexit voters voted as a protest against austerity believing the line that they would be better off outside the EU. Now it appears that austerity isn’t going to end anytime soon.

'Printing money' isn't 'devaluing it', Jane10. That is an idea which belongs to the old days when the amount of money a government could use or issue was restricted by the amount of gold they held. 'Devaluation' then meant that the pound (or any coin/note) was backed by a smaller amount of gold and thus worth less in relation to gold reserves. But we came off the 'gold standard' in the 1971. Since then sterling has been backed by nothing. Its international 'value' is dictated by the money markets and affects imports and exports but 'internally', so long as there are resources available (goods and services) to be bought the government can issue as much as it needs to. Inflation (too much money chasing too few goods/services) can be controlled by taxation. Taxation is the method by which a government gets back money it has issued and so reuse it. So long as money is circulated in the 'real' economy the government doesn't 'lose' it as it comes back to it via taxation.

It's the 'real' economy that matters. When the government created money by 'quantitative easing' after the banking crisis of 2009 very little of it was used in the real economy where it would circulate in the form of wages and purchase of goods and services. It just went into the equities and bond markets where it inflated prices and profits were frequently squirrelled off abroad into tax havens. So very little was returned to the Treasury and the country generally had very little of the benefit of it.

For those who would reply with Venezuela and Zimbabwe I'd just say that their economies were very different from ours and much more vulnerable to scarcity and inflation.

Spending your way out of a depression is sound economics, Austerity, by reducing the amount of money in circulation just leads to poverty. As we know from our experience of the last eight years.

If you're going to run a capitalist based economy like ours it depends on people spending money. Reducing the amount of money they have to spend makes no sense whatsoever.

I have just read an interesting article in the New York Times of all places, about austerity and its effects in Britain In Britain, Austerity Changes Everything. It is a full and comprehensive review of austerity in UK in last 8 years and in summary states After 8years of budget cutting Britain is looking less like the rest of Europe and more like the US, with a shrinking welfare state and spreading poverty.
I wholeheartedly agree, but is this the way we want our erstwhile generous nation to go I wonder? Austerity I believe is a political decision rather than a necessity.

The choice is between paying more tax for decent services or having a low tax, low welfare system.

Even the Labour party hasn't the guts to admit that to provide the services we should expect and have received in the past, standard taxation rates need to go up by at least 10p in the £1, but keeps standing on its head to try and convince us that everything can be improved simply by 'soaking the rich' while keeping tax rates low. The British electorate, of all political persuasions has consistently voted for low taxes rather than good services.

I would be quite happy to see basic rate tax go back to the 33p in the £1 that it was in my early working years to get in return decent education, decent health services, free university education and roads that are not so potholed that my DH has to avoid some because he has a spinal problem.

You cannot have a Scandinavian welfare state on US level taxation. This is what all our politicians are too frit to admit.

Quite agree paddyann.

there should have been investment in infrastructure thst way we were creating /keeping jobs and building homes etc.Money doesn't trckle down as many appear to think ..its SPENT by people on low or average incomes..so the very people these kinds of jobs would benefit. That spending and taxation would have benefitted communities and local governments and been of far more use to the ordinary joe than a foodbank is .Tax cuts for the wealthier doesn't work the same way ..just more money to stash in offshore accounts

Doing that by devaluing the currency ie printing money doesn't have a great success record.

The economist Richard Murphy says of “austerity”:

The result has been a myth about money that is now being used to oppress people. That myth suggests that governments do not have money, and that they only use taxpayer-generated funds. It also claims that this means that the money in question must be restricted in use. And it suggests governments must copy the characteristics of households, with whom they have literally nothing in common because governments can create money which households can't, and so limit the amount of money that they might put into use.
www.taxresearch.org.uk/Blog/

In other words governments can create money to invest in the economy. More money for the NHS would create more secure well paid jobs, meaning these workers can then afford to spend more thus creating more demand for goods and services, ultimately creating more jobs. Investment in building new houses creates jobs, demand for building materials to be manufactured and then those workers create more demand for goods and services etc.

The same could happen in social care, road maintenance (those damned potholes), libraries, Sure Start nurseries, schools, fire services, police forces and so on.

The extra income and spending means much higher tax receipts coming back to the government. A small amount of investment can go a long way. Win, win!

I agree with you but how to redress this state of affairs is the problem -

the national debt started at 800million when the coalition took office,its now over 1.9 TRILLION and rising.Austerity isn't and never was a necessity ,its ideological .Tories attempt to keep the "common" folk in their place .Foodbanks are a "good thing" according to JRM ..well it saves the government cash when they cut folks income doesn't it?Austerity will be around as long as the tory government is

The coalition Government’s Austerity policy was supposed to be a short term solution to balance the books. But eight years of austerity have seriously damaged our economy and society. And our national debt has nearly doubled in that time. It clearly isn’t working.