The real impact of the cuts

George Osborne apparently believes that the cuts he announced yesterday are the salvation of the economy, and of the government's finances. However, in reality, they will seriously damage both our economy and our society. Lets look at some of the implications.

Unemployment
Osborne announced just under half a million job cuts. These jobs are people in the public sector whose jobs will go as part of the cuts. If you add in the jobs that will be lost by private sector contractors, charities whose state funding dries up, and jobs that depend on the personal spending of public sector employees (and others whose jobs are lost), then we're probably looking at about a million job losses. Osborne's free-market ideology believes that the private sector will pick up the slack. However, this would mean that the private sector starts creating far more jobs than it did during the last boom, and that's just to keep the number of people in employment stable, not to supply jobs for the people who are already out of work due to the recession.

And this mass unemployment will have serious consequences for the economy, and the governments' finances. Welfare costs will go up at the same time as tax revenue goes down. Therefore, the deficit will not come down as quickly as Osborne projects. In fact, there's a chance that the deficit will actually increase as a result.

Deflation
Because there will be more people out of work, you would expect both prices and wages to go down. Prices because there is less demand for non-essentials, and wages because with even more people competing for every job the salaries on offer can be lowered, and people will be less willing to press for pay increases. When this happens in an economy, inflation tends to slow down, and often prices begin to lower. This means that people tend to put off purchases, which tends to lead to more deflation, and threatens jobs in retail, and in manufacturing.

Unfortunately for Osborne, high levels of inflation would actually help to pay off the national debt. Because government debt is owed in pounds sterling (rather than, say, US dollars), inflation would mean that we owe less in real terms. Deflation, however, would mean that we owe more in real terms.

Economic Slowdown and the Double Dip
A side effect of the mass unemployment, and of the government generally spending less money is that economic growth will reduce. Whilst I believe that, in the long term, economic growth is environmentally unsustainable, in the short term, this does threaten a very real chance of a double dip recession - a second recession following hot on the heels of the first. If we're lucky, the slowdown caused by the cuts will be slightly less than the growth that's happening already, and things will stay more-or-less the same. Otherwise, we'll be seeing more companies going bust and more people out of work.

Growing Inequality
There is a group of people who will be almost entirely unaffected by the cuts. I like to call this group of people the rich. The more money you earn, the less you depend on the services the government supplies. The less money you have, the more you benefit from those services. Because the government is trying to deal with the deficit almost entirely through spending cuts, people who are already poor will suffer, and far more people will join them at the bottom of the ladder. At the other end of the scale, rich people will continue the trend of the last few decades, where they've accumulated an ever greater share of the nation's wealth.

Social Costs
Finally, there are a whole range of social problems that will be caused by the cuts. Working out all of these costs would take a lot of research, as there are literally hundreds of services that are impacted by the cuts, and in many cases there will be several different social problems that are caused or made worse by the cuts. So let's just take one area of spending as an example. Raising the rail fare cap and slashing bus subsidies is a major part of the savings in transport. This will force many people off public transport and into cars, increasing the number of car accidents, increasing air pollution, and increasing carbon emissions. Raised costs and decreased services will make It harder for those of us who cannot afford to run a car (or who choose not to). It will also make the benefits trap worse - if it costs you more to get to work, the job has to pay more in order to be worth taking.

So, in short, these cuts are likely to cause tremendous damage to the British economy and to British society. They mean that, in the next couple of years, the economy will either end up in a double-dip recession or in a jobless recovery. They will cause a whole range of social and environmental problems, and they may well make it more difficult to reduce the government's deficit and repay the national debt.

The Power of Community

Transition Towns are showing a film at 7.30pm on Monday 26th July at Coventry Council House (Diamond Room 1).

The film is called "The Power of Community", Jo Rathbone from Transition Towns says it's a great film about how folks in Cuba managed when cheap Soviet oil stopped flowing and the impact this had on their communities. The Government decided not to go for the heavily oil dependent industral farms but allowed individuals to use small amounts of land for growing food - much more productively. The result? Havana produces 60% of it's fruit and veg within the bounds of the city and farmers and horticulturalists are as valued as doctors! A really inspiring fim.

Public Sector Cuts

We keep hearing it. It's coming. Lots of public sector workers will soon be out of jobs.

Is it their own fault for being part of the Governments overspend? Is it the only way forward to get this country out of recession?

I read a great book about 18 months ago called "The Corporation: The Pathological Pursuit of Profit and Power" by Joel Bakan. I may have mentioned it before but it just seems so apt with all of the current public sector cuts being seen as a necessity. It also had a great interview with Noam Chomsky at the end from 24th October 2000.

In the book they point out that whilst originally being useful organisations, Corporations grew in the late 19th centuary and wanted to administer themselves rather than face public control. Corporations were legally afforded the rights of a person but of course they have no moral conscience, are concerned only for the short term and their only purpose also stated in law is to make money for share holders above all else.

"Any tyrannical system is going to want to maximise it's control over the society. So anything that is under some public accountability it will want". They make people believe the systems are in crisis (my mind currently springs to schools which in the main are great), so people accept when they are privatised. The best way to improve schools is to do things like improve teachers salaries, increase the number of teachers to make class sizes smaller or improve school buildings. The last thing they need is cuts, followed by privatisation.

In any recession where people are loosing their jobs and more people relying on benefits, what you need is a proportion of the working age population in employment, doing useful jobs, paid for by the state to help others. This keeps unemployment lower and means that people still get the services they need and rely on. Cutting the public sector workforce is asking for high unemployment and a lower average standard of living.

Corporations must create profits for shareholders assuming limitless resources, no matter the costs and detrimental effects on society. Why don't we try and change it. We need more regulation and to keep our public sector, surely?

With the risk of mentioning another party...

Did anyone else watch the Newsnight Labour Leadership Hustings and think Diane Abbot was the best of the bunch? From what I've heard from her so far, I think she should consider joining the Green Party.

http://news.bbc.co.uk/1/hi/politics/10317445.stm

Cut Spending! (But don't mention Afghanistan)

The coalition government are introducing over £6billion worth of cuts. These will inevitably lead to more people being out of work among other things and are only the very first of what will be a whole series of spending cuts.

Of course we have to tackle the deficit sooner or later, I'm not trying here to join the already vast argument over whether these cuts should be made now.
But I do think it is ridiculous that we are being asked to face domestic cuts by the government while we are still maintaining a military presence in Afghanistan at a huge cost. Even those who supported the war should now accept that we can no longer afford it. Every time we are asked to face cuts we should ask why we are still fighting this war.

Coventry Green Results

Just realised I didn't post the local Green results, so here they are:

http://www.coventry.gov.uk/ccm/navigation/council--government-and-democracy/elections/

It's nice there was a higher voter turnout generally with it being a general election. Enjoyed going to the count, like watching democracy in motion but we still need proportional representation to reflect what people are really voting for:

http://www.jeanlambertmep.org.uk/news_detail.php?id=552

Food can help cut the fiscal deficit

I like this article in the Guardian. It makes so much sense, why are we paying hardly anything to people in 3rd world countries to grow food cheap for us when they need it to eat themselves. And why are we flying it half way around the world when we've perfectly lovely fields being set aside in the UK.

http://www.guardian.co.uk/commentisfree/2010/may/17/food-help-cut-fiscal-deficit

The Truth about Climate Change

I've just come across this Youtube channel with a lot of good info on the issue of climate change.

http://www.youtube.com/user/greenman3610

At the moment there are a lot of voices who are saying there is no problem with man-made global warming despite there being a strong consensus on the issue within the scientific community. It's good to have some accessible sources defending the science on climate change since most of us don't have the time to read all the scientific papers on the issue.

Lets hope Lib Dems don't blow it

I am disappointed with the Lib Dems. After the elation of the first Green MP and it being a hung parliament (as opposed to Tories in control) it is disappointing that we may end up with a Cons-Lib Government after all. See Caroline's warning Will fickle Lib Dems blow their chance to make history?

The Environment vs Social Justice

Why do the main parties put the economy above everything? I know it's important but people's lives, social justice and having a world to live in are surely more important. See Caroline's interview with Jon Snow

I like that the Green Party realise what really are the important things in life. Instead of measuring countries using GDP, surely how equal, happy and healthy people are are much better indicators than how many TV's or cars people own.

More equal societies almost always do better than less equal ones. See the Spirit Level slides. I find this facinating.

What Do You Want Your MP To Fight For?

Simple but effective

Check out the Green Party - 2010 Party Election Broadcast

It's been a while

Sorry folks,
No blogging for a while because Scott the wonder blogger moved to pasture's new. I'm new to the whole blogging thing so will do my best to get things going again.

Check out the Green Party Policies at
http://www.greenparty.org.uk/policies.html

Over and out
Laura