” More than £42 billion pounds has been wiped off the value of the FTSE 100 banks this year amid a sector-wide exodus.
Most of them have fallen more than 20% since the New Year, with investors concerned that we are on the verge of another global financial crisis.”
Jamie Nimmo, Evening Standard 3 Feb 2016
Vicky Pryce has written an article for The Evening Standard setting out what she thinks will decide the forthcoming election. She is an economist. And she argues that “It’s still the economy, stupid”.
She makes a good point in her opening paragraph: “in reality voters are not stupid. What matters to them is the economy and jobs.” But in the very next sentence she lets you know that she is the economist who is clever enough to explain capitalist economics to us uneducated masses. She says; “Yet the information they are given on which to base their decisions is often biased, wrong, or wilfully distorts the truth. It is important that voters have the proper economic evidence: this is where the real battles will be fought.”
So here comes Vicky Pryce bringing “proper economic evidence” to the masses.
The problem I have with academic economists is that they purport to have “theories” which are based on some kind of scientific principles. But in fact their so-called science is nothing more than a description of what is in front of their eyes. No analysis. No attempt to go beyond superficial appearances and understand the reasons for the changes in world capitalism; growth, shrinkage, stagnation or even collapse. If they had anticipated the economic crash in 2008-2009, or had told us at the start of the recession that austerity measures would be counter-productive, they might have a little credibility. But most of them simply run with the crowd.
Where was Vicky Pryce’s when her husband was a Liberal minister in the coalition government, and joined the Tories in enthusiastically cutting the wages and social support for working people? She would have been a more credible economic commentator if she had rushed to the printing presses to attack a theory that she is now convinced is counter-productive.. When she gave evidence to the Parliamentary Select Committee in 2013 on the Eurozone crisis she commented:
“We are having countries where GDP is declining, like in Greece for the sixth year running, and loads of other countries. Of course, we are forecasting growth possibly to resume next year but perhaps not, so there will be more declines in some of the really big countries, including of course France, Italy and Spain.”
That’s what impresses me. We are forecasting growth to resume next year, then IMMEDIATELY she adds “but perhaps not”. There’s a really useful forecast. A few years later and we know what that forecast was worth: less than the paper it was recorded on in Hansard.
So what has Vicky got to tell us about the electorate and economics. Apparently the main issue is the deficit. “At the centre of the issue are policies aimed at eliminating the UK’s budget deficit, currently around five per cent of GDP.” That’s at the centre of the issue. That is that what the electorate genuinely feels strongly about.
In the last 10 years total government debt (i.e. all government debt minus its liquid assets) has more than doubled from less than £500 bn in 2003 to approximately £1.2 trn in 2013. In the same period total debt has also more than doubled as a percentage of GDP from less than 40% to 90%. The reasons for the sudden increase in debt do not need to be considered by our learned Vicky. They are not relevant to her message.
And her message is very straightforward. The politicians tell us we have to reduce the deficit. Therefore we have to reduce the deficit. Not very scientific, Vicky. Perhaps you could preface your conclusion with the phrase “economic theory tells us that …” and then we will definitely be convinced. Vicky is simply buying in to the right-wing cuts programme (euphemistically called “austerity” in the hope we will not realise what they are doing) which George Osborne and his Liberal cronies have been so enthusiastically espousing since the last general election.
Then later in the same article she says: “But again the evidence would suggest that there is nothing sacrosanct about a balanced budget — and nothing sacrosanct about when to reach it, especially if interest rates for government borrowing remain low.” I am afraid all this economic theory and evidence is confusing me, Vicky. One minute we all have to knuckle down and put up with the cuts Osborne, Danny Alexander, Vince Cable, Ed Balls and Miliband unanimously agree we have to suffer. The next minute “the evidence” suggests we do not.
Meanwhile we look at Greece and we see an increasing number of working class people attracted to the Syriza programme. Clearly there are economists with theories different from Vicky Pryce. The academic economists in Syriza, university trained and qualified, seem to think writing off half of Greece’s debt would be good economic policy. So too does the free-trade espousing Economist magazine.
So stop parading your opinion as science, Vicky.
Working people across Europe are not stupid. We know that ‘austerity’ means forcing ordinary people to pay for the financial crisis in the financial sector that they did not create.
It is time for working people across Europe to stand up and say the debts incurred by our capitalist leaders are not our debts. We repudiate them. Take over the banks, finance houses and insurance institutions in the name of the people, and put them under workers’ democratic control.
Our assets should be used for our benefit, not for the protection of the wealth and privilege of the few.
I get annoyed when politicians and their sycophants in the media speak to me as if I have the intelligence of an eight year old child. And that is exactly what they are doing when they refer to the economic policies adopted by the Tories and their Lib Dem supporters as “austerity”.