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Corbynomics vs Ideological austerity

47 replies

blacksunday · 11/08/2015 19:15

The incredible surge in popularity of the Labour leadership candidate Jeremy Corbyn is proof of the fact that a significant proportion of Labour Party supporters are utterly sick of their party refusing to take a stance against Tory ideological austerity.

The mainstream media reaction has been to deride Corbyn's economic plans as some kind of left-wing lunacy, but this is merely an illustration of the fact for five years the mainstream media and the Labour Party have utterly failed to challenge the Tories on their socially and economically harmful ideological agenda, meaning that anything that contradicts it now lies outside the approved spectrum of debate, not that "Corbynomics" doesn't make an awful lot of sense on a macroeconomic level.

It's no surprise that the mainstream media have given the Tories such an easy ride on George Osborne's failing economic ideology, because the media is so heavily dominated by right-wing billionaires like Rupert Murdoch (S*n, Times, Sky TV), Jonathan Harmsworth (Mail, Metro), Richard Desmond (Express, Star) the Barclay Brothers (Telegraph, Spectator). The refusal of the Labour Party to challenge Tory austerity is a lot harder to fathom. Perhaps they thought they just couldn't win the debate against the right-wing dominated media? Or perhaps it was because the Labour Party had become so dominated by right-wingers (Ed Balls, Chuka Umunna, Chris Leslie, John Cruddas ...) over the years that they actually favoured the continuation of an economic ideology that results in a massive transfer of wealth from the poor and ordinary to the super-rich minority?

Whatever the case, at least there is now a movement within the Labour Party to actually stand up and challenge George Osborne's ideological austerity agenda as the socially and economically destructive con job that it is.

In this article I'm going to outline some of the important differences between George Osborne's ideological austerity agenda and the Jeremy Corbyn's stimulus and investment policies.

How ideological austerity has failed

In the absence of any coherent criticism of ideological austerity from the Labour leadership, it was left to a few backbenchers, left-wing journalists, trained economists and independent bloggers to make the case against Tory ideological austerity over the last five years. I've written a lot of articles on the subject, so instead of detailing the case all over again, I'll provide bullet points with links to corroborating evidence.

  1. In 2010 George Osborne promised that ideological austerity would have eliminated the budget deficit by 2015, in reality he didn't even manage to halve it.

  1. Ideological austerity resulted in the slowest post-crisis economic recovery in British history, meaning the UK's GDP per capita still hasn't recovered to pre-crisis levels.

  1. Ideological austerity coincided with the longest sustained decline in UK average wages since records began.

  1. Ideological austerity resulted in George Osborne creating more new public debt than every single Labour government in history combined.

  1. The majority of trained economists agree with the proposition that George Osborne's post-crisis austerity agenda damaged the UK economy.

  1. Ideological austerity has resulted in a massive transference of wealth from the majority to the tiny super rich minority.

OP posts:
Isitmebut · 12/08/2015 13:40

What complete and utter mis-information rollocks from start to finish.

1. In 2010 George Osborne promised that ideological austerity would have eliminated the budget deficit by 2015, in reality he didn't even manage to halve it.

Osborne had a policy target (not a 'promise') to get rid of the Labour £153 bil overspend, but the combination of the continuing biggest trading partner EU slump, the near £80 bil annual Structural Deficit Labour left WITHIN the Budget Deficit, the need to help businesses, citizens and everyone else Labour screwed for 13-years and left e.g. pensioners, meant it didn't fall as fast as first expected.

2. Ideological austerity resulted in the slowest post-crisis economic recovery in British history, meaning the UK's GDP per capita still hasn't recovered to pre-crisis levels.

Labour lost nearly 7% of of GDP output from 2008 to 2009 and decimated our manufacturing before the crash even began, and based on a fact an economy is like a Supertanker (taking ages to change direction even after new policies are put in place) - give this board all the Labour initiatives before May 2010 to help the recovery, as I can't see ONE?

3. Ideological austerity coincided with the longest sustained decline in UK average wages since records began.

The decline in UK real wages began in 2008, 2-years before Labour left power, what did THEY do and what ideas did they have up until 2015 - as the Conservative coalition significantly lowered taxes to help?

4. Ideological austerity resulted in George Osborne creating more new public debt than every single Labour government in history combined.

Labour left £1 tril of National Debt and an accumulating annual Budget deficit of £153 bil, and OPPOSED every cut to that annual deficit/overspend the Conservative chancellor proposed - which is the ONLY way to reduce the annual budget deficit INCREASING the National Debt. God knows where it would be now if a new Labour would have continued to do nothing from 2010.

5. The majority of trained economists agree with the proposition that George Osborne's post-crisis austerity agenda damaged the UK economy.

Most economists agree cutting spending in a recession is bad news, but that takes no account of the UK's unique position of creating a massive top heavy State, full of government quangos and other waste, with the £153 bil overspend, far, far bigger than any other country in Europe.

6. Ideological austerity has resulted in a massive transference of wealth from the majority to the tiny super rich minority.

Inequality rose under 13-years of Labour who thought a 10% all time low tapered Capital Gains Tax to their (then) rich contributors was fine, and under a Conservative administration, the rich are paying far more than they were under Labour in 2010.

Apr 2010; Inequality rose under Labour, says IFS

”The gap between rich and poor has grown since 1997, despite three successive Labour governments reforming the tax and benefit system in an attempt to reduce income inequality, the Institute for Fiscal Studies said .”

squidzin · 12/08/2015 14:55

Naaaah isit.
Black Sunday is bang on. PLUS No one is saying the labour party were any good. They were victims of the capitalist system in overdrive as much as the rest of us.

You are wasting your energy once again pinning all of the UK's problems on the previous labour government without actually addressing the exacerbating effect of Tory austerity.

Your claim that the wealthy are paying more tax under Tory is purely down to electorate pressure popularist reform in one or two areas but in actual fact haven't they significantly reduced corporation tax.

Their aim is to crush the state, become a mini-Washington and force everyone at all cost into the profiteering thieving private sector.

Inequality rose under labour coincidently once they abandoned the left of politics, moved to the corporate centre under the guise of it being "good for the economy" well whatdoyouknow the economy got fucked.

The Tory solution is making it worse.

Corbyn leftism has been missing for a long long time. Bring back our friend.

Interesting OP.

Isitmebut · 12/08/2015 15:20

squidzin ... BlackSunday 'banging on' about why the UK deficit is not lower, when the socialist movement has challenged every £ cut from a £153 billion annual overspend they left as "austerity", is not "bang on" - it is wank, I repeat wank, hypocrisy - the rest are just mistruths.

It is not me "pinning all the blame on the previous Labour government", it is others chosing to believe that there was some honking great economic, financial and social 'RESET' buttons after May 2010 - and blaming the Conservatives for Labour's abysmal record - as they blamed Thatcher for everything that went before 1979.

I don't understand your direct link between the wealthiest in society and Corporation Tax, are you ignorantly assuming that every small to medium sized business numbering many tens of thousands, was living high on the hog under Labour in 2010?

The rest of your rant is frankly just 'Wolfie' Citizen Smith bollocks e.g Labour changed direction after 2007/8 as they didn't, that silly ignorant socialists talk about unchallenged on their own websites, and hairy people with beards and a pipe (including the women) scratch their chins and say ^'Hmmm, yes, must stop that'.

Scratch your hairy chin, arse, whatever, while reading the following that does not include Corporation Tax.

Feb 2015: ”Britain's highest earners pay a quarter of nation's income tax”

“New figures published by HMRC show that the proportion of the nation's tax bill paid by the richest has risen under the Coalition”

“Britain's highest earners pay more than a quarter of the country’s entire income tax bill, more than when the Coalition came to power.”

“Nearly 300,000 taxpayers are forecast to contribute the equivalent of £45.9? billion in income tax between them by the end of this year, equivalent to £150,000 each. The amount they have paid has risen from 25 per cent of the nation’s tax bill when Labour came to power to 27.3 per cent this year.”

“The figures will be welcomed by the Conservatives, after repeated accusations from Labour that the party has given tax breaks to the rich.”

“They also suggest that the Coalition’s decision to cut the top rate of tax from 50p to 45p has increased revenues.”

“When George Osborne announced that he was cutting the top rate in 2012, Ed Miliband, the Labour leader, described it as a “tax cut for millionaires”.”

“However, the official figures show that the number of additional-rate taxpayers has risen from 273,000 to 313,000, with income tax revenues rising from £38billion to £46.5billion.”

“A Treasury source said: “This is more evidence that Labour’s chaotic gimmick raised no money but did drive away business and investment.”

Isitmebut · 12/08/2015 15:33

Corbynomics as followed by France, currently IMPROVING with twice our unemployment rate, less than half our economic growth and sadly seeing a RISING annual Budget Deficit - as they not only ignore the needs of businesses that PAY for the private sector, they ignorantly assume that a country has a god given right for inward investment/jobs - they assume real wealth, top few percent wealth, isn't mobile.

December 2014; "France forced to drop 75% supertax after meagre returns"

"Hollande’s measure was meant to force wealthiest to help dig country out of economic crisis, but was accused of being anti-business"

"François Hollande’s unpopular tax changes that imposed a 75% rate on earnings above €1m (£780,000) will quietly disappear into the history books from Thursday."

The French socialist president announced plans for the controversial measure during his 2012 election campaign as a means of forcing the wealthiest to help dig the country out of economic crisis.

"Although supported by the left, the reform sparked accusations of an anti-business agenda. After the “supertax” was announced in September 2012 the government was accused of shooting itself in the foot by risking an exodus of high-profile personalities. Business leaders expressed fears that investors would pull out of France."

"Despite the backlash Hollande clung to the principle of the supertax even after it was dismissed by the country’s highest court, fearing a revolt by his leftwing allies. The tax was subsequently adjusted to a 50% rate payable by companies after the constitutional council ruling in December 2012."

Finance ministry studies showed that despite all the publicity, the sums obtained from the supertax were meagre, standing at €260m in 2013 and €160m in 2014, and affecting 1,000 staff in 470 companies. Over the same period, the budget deficit soared to €84.7bn

squidzin · 12/08/2015 15:47

huh? I never said they moved to the centre after 2008. Blair moved them to the centre under Blair.

Your reply simply shows your utter contempt for any taxation system, that anyone should be putting anything back at all.

Yes obviously the wealthiest pay more tax it's because they have more money and the wealthiest have more money because they are rewarded through being compliant to a capitalist system that exploits everyday people going about their everyday lives with everyday needs.

A system of taxation regognises that you can't just take, take, take. As much as you would like to.

Corporation tax was only one example.

squidzin · 12/08/2015 15:51

Hollande would have great success if all countries followed suit. There are too many escape routes in a globalised system.

squidzin · 12/08/2015 15:59

However horrifying it is to you that the wealthiest pay so much in tax, is equally horrifying to me that they have so much money in the first place. If fair wages were paid and raw materials paid at a fair non-exploitative price, then taxation would be as even as earnings.

Isitmebut · 12/08/2015 16:01

"I never said they moved to the centre after 2008. Blair moved them to the centre under Blair."

Blair wasn't running the domestic economy, Brown was, hence the traditional Labour don't give a feck about business, big state, higher taxes for all especially on ANY wealth i.e. increases in the Home Stamp Tax and Council Taxes, and huge increase in Welfare/Benefits/Tax Credits.

The Conservatives moved closer to the centre, all of the above is the complete opposite of Conservative policies they left in 1997 and have implimented from 2010.

The wealthiest would have had a lot more money under Labour and their financial boom as EVERY asset price was going up - but the Conservatives go after tax evasion.

May 2014: “HMRC crackdown yields record £23.9bn in additional tax”

”The government has raised a record £23.9bn in additional tax for the year to the end of March as a result of a crackdown on tax avoidance.”

”HM Revenue and Customs (HMRC) said it had secured the money - the highest amount since records began - as a result of its investigations.”

”The figure is almost £1bn higher than the target set by Chancellor George Osborne in the Autumn Statement.”

”The extra money raised is in addition to regular tax receipts.”

”HMRC credited "increased activity" on unpaid tax for the figure.”

"HMRC will pursue those seeking to avoid their responsibilities and will collect the taxes that are due," said Treasury minister David Gauke.”

"The government is determined to tackle the minority that seek to avoid paying the taxes they owe," he added.”

Isitmebut · 12/08/2015 16:05

"Hollande would have great success if all countries followed suit. There are too many escape routes in a globalised system."

Yeahhhhh, tell that Corbyn message to the Japanese, Taiwanise, Chinese, Pick-a-knees and everyone else that tried to raise their country out of poverty by being competitive, plonker.

We are in a global village/market, best get your head around it or die.

blacksunday · 12/08/2015 19:38

A global village requires first a global union. Then, a global revolution.

OP posts:
Isitmebut · 13/08/2015 00:21

A global union assumes everyone is starting from the same industrial/welfare place and have some international agreement not to compete with each other - which if clearly Shangri-La-La land.

Take China, who needs around 7-8% annual GDP growth to stand still, over the past few days pan-holing their own currency without warning to the Far East or Western trading partners - to make their exports more competitive, import more expensive.

There's just over 1.4 billion Chinese citizens pissing their pants laughing at your last highly naive statement...and Vietnam is only just receiving it, and yes, soiling their skiddies as well.

cdtaylornats · 22/08/2015 13:39

Politicians haven't grasped the reality of a high tech workforce. My friends son develops software for a Scottish company but currently lives in Madrid. He could realistically live anywhere in Europe with air links to the UK and broadband Internet access. Push taxes to high and more of the high tech workers will do the same thing.

STIDW · 23/08/2015 11:29

I see 41 economists have backed Jeremy Corbyn's anti-austerity polices in this morning's papers.

"His [Corbyn's] opposition to austerity is actually mainstream economics, even backed by the conservative IMF. "

squidzin · 23/08/2015 13:47


I loved that the Guardian published this even while they are anti-Corbyn.

Mainstream political discourse is so far Right we don't even notice when a moderate gets called "unelectable" left, when he is not actually all that left.

squidzin · 23/08/2015 13:53

(In case you need reminding that the Guardian are Corporate Centrists run by a bunch of ex-bankers)

Isitmebut · 23/08/2015 15:31

"If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions." (Winston Churchill)

If the UK was being run as a lean, mean private sector machine in 2010, those economists might have a point, but it wasn’t, so they are wrong – the government spending stimulus was during the boom, when increased an unprecedented peace time 50% plus before the crash – so any economist who neither takes account of that, or believes the cutting of an annual 2010 budget deficit around 3 x that of socialist France is “austerity” are just being political and so professionally pants.

The public sector was bigger than the over taxed and bombed out private sector that was supporting it, so government borrowing supporting the unsustainable would have kept rising UNTIL addressed, by both reducing the size of government and stimulating the private sector.

In trying to rebalance the UK economy asap there will be a lot less national debt for future generations to take the hit/pay down, and once under way, we have had the fastest growth of the G7 nations and created more jobs than the rest of the Eurozone.

When the government’s cheque book is already tapped out, a country needs the private sector to have the confidence/ability to invest, grow, hire, cover the government’s annual bills AND start paying down the national debt that was £403 billion in 1996/7 and already £1 trillion in 2010 - growing by (then) £153 billion a year, now growing at around £70 billion a year of ‘austerity’.

STIDW · 23/08/2015 15:53

So Paul Krugman the American economist and Nobel prize winner was wrong and professionally pants too when he wrote the Austerity Delusion?

Isitmebut · 24/08/2015 11:45

STIDW … Krugman is similar to Blanchflower, Pickettywhich and every other left wing monetarist who talk in GENERALIST terms, ignoring the individual country public/private sector structure and therefore ability to ever repair itself.

With the overriding view, as Krugman states below, a country just keeps printing more money/debt, while choosing NOT to take from the Greek crisis what happens to a country when the levels of country debt are judged unserviceable, as 10-year interest rates first went to 14% and later creditors REFUSED to go on lending without enforced spending cuts and tax rises.

Krugman; ”It is impossible for countries such as the US and the UK, which borrow in their own currencies, to experience Greek-style crises, because they cannot run out of money – they can always print more.”

Governments increasing state spending/borrowing in difficult times is in reality not optional, its ‘automatic’ as the definition of the State’s ‘Automatic Stabilisers’ below explains - and happened after the early 1990’s UK recession – when the UK annual budget deficit rose, and the accumulation of the annual deficit saw the UK National Debt rise from around £190 billion in 1990/1, to £403 billion in 1996/7.

But in 2010 when the UK National Debt had already £1 trillion and we were annually over spending by £153 billion, by just glancing at the usual ‘High Growth’ example below, you should see the problems of an economy where;
Government spending had already risen by over 50% from 2001 to 2008, the government was borrowing over £30 bil a year to sustain itself before 2008, the UK economy had become unbalanced and the unemployment/welfare/benefits/tax credit COSTS THAT SHOULD KICK IN during a recession, had already risen during the High Growth boom.

Automatic stabilisers refer to how fiscal instruments will influence the rate of growth and help counter swings in the economic cycle.

Example of Automatic stabilisers

High Growth.In a period of high economic growth, automatic stabilisers will help to reduce the growth rate. With higher growth, the government will receive more tax revenues – people earn more and so pay more income tax (note the tax rate doesn’t change, the amount received just becomes higher). With higher growth, there will also be a fall in unemployment so the government will spend less on unemployment benefits.

Recession. - In a recession, economic growth becomes negative. However, automatic stabilisers will help to limit the fall in growth. With lower incomes people pay less tax, and government spending on unemployment benefits will increase. This increase in benefit spending and lower tax helps to limit the fall in aggregate demand.

Moreover UK taxes had already risen through the UK boom when should have at worst, stayed the same, as the Labour government had massive windfall taxes from the financial bubble economy BUT kept raising them instead e.g. Council Tax up over 105% on average - and Labour TOLD US in 2010, due to their 2010-2015 deficit reduction spending cut/tax rises plan, UK taxes were going to rise MORE under them than the other main political parties.

More …..

Isitmebut · 24/08/2015 11:49


In conclusion; left wing economic monetarists in their generalising neither acknowledge the 2010 previous growth in UK government welfare etc spending, or economic structure state of the State when government Automatic Stabiliser bills rose – or that the private sector that pays the bills was unable to help/free itself from the banking and global growth crisis.

Left wing economic monetarists in their generalising will never mention the current UK National Debt figure (currently £1,600,000,000,000) or how high that National Debt should go before panic sets in, as in their world, a government can just keep printing money.

Left wing economic monetarists in their generalising will never give ANY detail on how excessive money printing government spending, massively increasing government debt, is guaranteed to provide longer term economic growth and the means to pay back the government debt supporting that debt, on top of debt.

Left wing economic monetarists in their generalising never factors in that a government ONE DAY will have the same final solution of the combination of spending cuts/tax rises to first turn a budget deficit into a surplus, to start paying down the national debt.

The Conservative led coalition/government however, understood the government mistakes/imbalances of the previous 13-years and instead of making a massive generalist view that everything was fine up to 2010 – and used their grey cells both seeing that printing ever more government money/debt would not solve the UK’s structural problems – addressing the problems they inherited, individually, as the UK had already had its monetary stimulus/stabilisers BEFORE the crash.

And those that can stop regurgitating head-up-bottom economic generalisms to make political points, and take the time to look at the whole economic plan to rebalance the UK’s problems, might, just might, start to congratulate the Conservative’s efforts.

April 2015; ”IMF chief praises British government's handling of economy”

“Christine Lagarde says coalition’s ‘smart fiscal policy’ is delivering results, despite IMF itself warning about budget deficit and household debt”

”The head of the International Monetary Fund, Christine Lagarde, has praised the British government’s management of the economy, saying it is “clearly delivering results”.

”Her comments came a day after the Washington-based organisation took a gloomier view of the UK’s growth prospects over the next five years. It said Britain’s next government would struggle to reduce the budget deficit – the difference between tax income and government spending – and that rising household debt was threatening the recovery.”

”Speaking at a press conference in Washington alongside the UK chancellor, George Osborne, Lagarde took a more praiseworthy stance, saying the coalition had struck the right balance between spending cuts and tax income to deliver growth.”

”Lagarde, who is presiding over the IMF’s annual spring meeting, said the government had adopted a “smart fiscal policy – what I meant by that ... is a set of policies that are actually targeted and tailored to the state of the (UK) economy.”

”But added to that, it’s clearly also delivering results because when we look at the comparative growth rates delivered by various countries in Europe it’s obvious that what is happening in the UK has actually worked.”

squidzin · 26/08/2015 10:53


Isitmebut · 26/08/2015 12:20

Yes dear .... a Poll Tax where a home was charged on the amount of occupants within, was such a good reason for 'the people' and socialist politicians to march in the streets and protest against the Conservative government - yet when those same socialist politicians over 13-years puts the Poll Tax replacement Council Tax up around 105% on average, it was fine even in 2008 as real earnings were falling - why was that Sparky?

Here is an example of a fairly typical low band home those on low incomes in England might be living in;

Council Tax increases Band D from 1997/8 to 2009/10

North East……...£782 to £1,479 an increase of 89%

North West….....£798 to £1,441 an increase of 81%

East Midlands…..£705 to £1,454 an increase of 106%

West Midlands…..£701 to £1,388 an increase of 98%

Yorks/Humber…..£710 to £1,380 an increase of 99%

London………....…£651 to £1,308 an increase of 101%

East of England...£639 to £1,450 an increase of 127%

South East……...£641 to £1,437 an increase of 124%

South West……..£667 to £1,1462 an increase of 119%

In Scotland, the average rise was around 47%, I wonder why under a 1997 government packed with Scottish MP's in the cabinet, that was?

Because they 'roared' from the early 1990's - how fair was that?

Redkite2015 · 27/08/2015 19:23

Rent controls in Germany. Seems Germans agree with Corbynomics.

Isitmebut · 28/08/2015 12:15

Redkite2015 …. Whether from Corbyn, Miliband before him, Merkel, or any locally elected authorities, what we need from government is medium to long term solutions to our problems, not short term populist policies that may make ‘stuff’ better over the short term – but in reality those policies actually make matters worse.

The fact is that rent controls wherever implemented, tends to lead to both lesser quality and less supply of rental properties, as the FIRST paragraph (below) of the link you provided, alludes to.

”Germany has introduced a controversial law to cap rents, called a "rent brake". But there are fears that it may fail in its main aim of slowing down price rises and ultimately have the opposite effect.”

So politicians HAVE to have thought through their own policies, even in Germany, that has built on just a few percent MORE of their land so as a country has a better demand/supply balance, and as have been importing labour from Turkey for decades - didn’t have our sudden demand for home imbalance.

Politicians have to realise the BASIC problem a landlord might have when implementing rent controls, that every landlord has their own home purchase price and Buy To Let funding cost, that will be interest rate, any monthly voids, and maintenance cost sensitive – so for reasons landlords might think to continue to rent out was non viable for them, or any other reasons – they can just SELL UP reducing the rental stock.

Indeed, a similar argument has been made at the end of the link you provided (below) as governments can try to ‘control’ the private sector as much as they want, but whether a global company shareholder or landlord, they can VOTE WITH THEIR FEET and as this reduces supply – controls/caps can NEVER be a medium to long term answer to serious problems.

”But lawyer Carsten Bruekner disagrees.”

”He runs an organisation for property owners, Haus und Grund, and says that the law makes renting out flats financially unviable.”

”Owners will simply sell rather then rent out flats, so in the long term the law could lead to less rental accommodation on the market.”

”Small investors will be hit hardest, he argues, because the legal level set by local authorities is below market value, and often much less than the mortgage that an individual buy-to-let investor may have taken on.”

”Florian was unable to get the flat he wanted despite, or maybe even because of, the new rent controls.”

”When he mentioned to the landlord that the rent was almost 20% above the legal limit he was suddenly told the flat was no longer available.”

”That is because, although rents are capped, tenants can waive their new rights and accept a higher rent. And that is what is happening.”

”As a result many say that there is only one real long-term solution to rising rents: to build more flats”

Redkite2015 · 28/08/2015 20:19

Looks like that you have ability only to look at things from one extreme side only.

Redkite2015 · 28/08/2015 20:25

It would be beneficial if local authorities are given free hand in building social hosing, coupled with rent controls and tenants' right to buy.

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