The economic strategy of the coalition
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The document discusses the economic strategy and impacts of austerity measures by the UK coalition government. It argues that the scale of planned cuts to public services is unrealistic and will disproportionately impact the poor. Significant job losses are predicted as public sector cuts will induce further private sector job losses. The document proposes alternative policies like increasing taxes on corporations and the wealthy, nationalizing banks, and investing in renewable energy to create jobs instead of austerity measures.
The economic strategy of the coalition
- 1. The Economic Strategy of the Coalition The Economics of the MadhouseRaphie de Santos Scottish Socialist Party 1
- 2. Their Strategy Cut burden on state by rolling back public services to 1945 levels
- 3. Out source NHS to private sector
- 4. New stagnant capitalism cannot support current public services
- 6. Cut real wages and increases productivity through threat of unemployment/welfare cuts
- 7. Endure recession in first half of term
- 8. See recovery based on private sector innovation in second half of term
- 9. Driven by corporate tax cuts & incentives and new self-employed
- 10. Elected on the back of this recovery
- 11. Is this s realistic proposition or the economics of the madhouse?2
- 12. The Scale of their Cuts The coalition are intending to reduce the debt/deficit by 贈113bn by the end of the parliament.
- 13. This is made up of 贈83bn of cuts and 贈30bn of tax rises.
- 14. Labour had planned 贈51bn in cuts and $21bn in tax rises
- 15. The figures may be larger on the cuts if they go for 40% instead of 25% cuts if the economy is weaker than they estimated which I think will be the case.
- 16. NHS strategy to out source and reduce costs
- 17. Private sector can provide same services more cheaply 3
- 18. Who Will The Cuts EffectThe budget will take more than twice the income from the poorest 10% of households as a share of their annual incomes than from the second-richest group (richest 80% to 90%) which has four times as much income a year after tax and benefits the report says. The richest 20% of households has 16 times the income of the bottom 20% of households before tax and benefits are taken into account.
- 19. Yet the cuts planned by 2014 fall much more on families with children than on the childless and pensioners. 油The single beneficiaries of the budget the report concludes are childless households in the richest half of society. 油This puts to bed Nick Cleggs claim that what the coalitions budget is setting out to do is create the opportunity for greater social mobility.4
- 20. How Many Jobs Will Be Lost?Capital economics- 750,000 public sector jobsOxford Research 2.2m private jobs linked to public sector650,000 will go as a result of public sector cutsAnd the recession cuts will induce will see another 500,00 jobs go5
- 21. State of World EconomyDeveloped countries economies slowing down sharply
- 22. 40% chanced of second recession
- 23. Only 90% of pre peak production of developed countries reached
- 24. Restocking of inventory finished
- 25. No sign of consumer led demand
- 26. Individuals and corporation still deleveraging
- 28. Banks unwilling to lend still polluted by debt
- 29. Danger of hard landing in China property and stock market bubble
- 30. China recovery was import driven with infrastructure and lending to banks tapped tuned off
- 31. Trade war developing through currency devaluation
- 32. Benefits to west will disappear6
- 33. The Current State of the UK EconomyMild recovery in 2009 Q4 and Q1 2010
- 34. Q2 2010 saw benefit of delayed construction spending and weak pound now passed
- 35. Unemployment starting to rise prior to cuts
- 36. Housing market falling 5of last 7 months (Halifax data)
- 37. Bank lending to corporations declined for 11 successive months
- 38. Bank lending to individuals a fraction of pre credit crunch
- 41. Inflation still high on damaged production capacity, weak pound and demand from emerging middle class in developing world
- 42. With cuts second recession looks certain7
- 43. Banks Have Recovered But Why?Rise in financial markets in Q1 2010 now reversed
- 44. Big cuts in jobs and wages
- 45. Attacks on employees pension schemes
- 46. Big margins on current lending because of historically low central bank borrowing rate
- 47. But still lending declining to corporations and individuals
- 48. Future profits will be hit by declining house prices8
- 49. Looming Government Debt Crisis Current Total 贈950bn end 2009/2011
- 50. Government forecast over next five years to grow by 贈535bn
- 51. 贈270bn of existing loans have to renewed over next 5 years
- 52. Interest payments total 贈40 bn per year rising to 贈60bn at a rate of 4.4% a total of 贈250bn over next five years
- 53. Holders of debt 30% overseas
- 54. We have to find a 贈1.1 trillion over next five years
- 55. Weak pound and economy (receipts)
- 56. Have to borrow IMF 9
- 57. Structure of UK EconomyFails on All Points Small manufacturing X
- 58. Large Services sector X
- 59. large bank sector X
- 60. housing boom X
- 61. Credit X
- 62. Large Public Sector X10
- 63. Can The Private Sector Provide Jobs?Declining rate of profit has continued in UK during recession and recovery
- 65. Lower wage rates
- 66. Higher rate of exploitation
- 67. More human labour means higher rate of profit
- 68. We cannot compete this strategy will fail11
- 69. New Industries & Self EmployedNeeds investment and help from government
- 70. e.g. Renewable energy Bio technologies
- 71. Free market approach of coalition will preclude this
- 72. Self employed is dependent on growing private personal consumption through credit
- 73. At odds with what is happening12
- 74. Coalition to Extreme Right Of Global Economic Policies Monterey Policy is at dead end
- 75. No scope for lowering rates
- 76. QE not putting money into the economy - banks holding onto money
- 77. Other Governments now looking to infrastructure spending and direct help to new innovations13
- 78. Alternative to the Madhouse Part OneRather than cut future projects that provide services you could cut Tridents replacement saving 贈20 billion of the defence budget cuts this expenditure saving could see a swords for ploughshares conversion of defence for social useful projects.You could reduce spending on defence by half and withdraw from the Afghanistan and Iraq saving up to 贈40 billion per year on expenditure. Rather than raise national insurance you could introduce a minimum wage of 贈8 per hour. Instead of raising indirect taxes or widening there scope you could raise taxes on corporations which have seen their tax rates halved under successive Conservative and Labour governments and a further 4% cut is planned in the budget. This could raise an additional 贈50 billion a year in revenues.Instead of the cuts in services you could close the loop holes in tax avoidance schemes - this would save 贈20 billion a year.You could tax the rich and wealthy. A one off 10% tax on Britains richest people would raise 贈35 billion. This would be used to provide millions of much needed houses through building conversion, building renovation and housing insulation and all the jobs that would be needed to achieve that.14
- 79. Alternative Part 2You could shift the burden of taxation from the poor and middle earners to the wealthiest 20% in society who earn 16 times more than the poorest 20% of society. Per head of the population the UK is the third richest country in the world but the second most unequal. This could generate up to an extra 贈70 billion a year a local progressive service tax replacement in Scotland could generate an extra 贈1.5 billion a year for local council spending.You could take the banks under full social ownership and control they have 贈560 billion in liquid cash and 贈5 trillion of assets. This would not only allow us to recoup the 贈375 billion that we have ploughed into them during the financial crisis but allow us to fund socially useful projects. An example of this would be a renewable energy programme.油 The design, administration, construction, maintenance, running, assembly, commissioning and servicing of the programme would create hundreds of thousands of jobs and apprenticeships for our young and old.
- 80. 油
- 81. Taking North Sea Oil under common control and ownership would generate an extra 贈50 billion a year for 15 years.
- 82. Instead of cutting pensions and demanding people pay more towards their pensions you could look to provide an alternative retirement provision that is not dependent on the whims of the financial markets.油 You could provide for all people over 60 free rented housing, electricity and gas, public transport and free access to cultural and sports facilities.油 15