David Cameron, just before he was due to give his leaders speech to the Conservative Party Conference, was forced into an embarrassing volte-face under pressure from business leaders, economists and leading members of his own party. The originally trailed version of his speech wasn’t to their liking.
According to our neoliberal economists it is ok to roll back state spending during times of economic crisis, even though today’s speech coincided with the announcement that growth figures for the first quarter of 2011 (April to June, for you non-economists!) have been revised downwards to 0.1%. That is to say that the economy barely grew in the last quarter (and 0.1% is surely well within any margin of error……). Only the most dyed-in-the-wool Thatcherite ideologue could continue to argue that the government’s current macroeconomic policies are working. We seem to living through the 1920s again, although this time we’ve skipped tragedy and have moved straight onto farce.
Nevertheless the same commentators and thinkers all rather baulked at Cameron’s planned suggestion to the British people that:
“The only way out of a debt crisis is to deal with your debts. That means households – all of us – paying off the credit card and store card bills.”
Under pressure, he was forced to replace the offending line with the meaningless
“That is why households are paying down the credit card and store card bills.”
The difficulty is of course that Cameron, entirely inadvertently of course, may actually have hit on something worthy of closer examination. The condemnation that prompted the decidedly un-Thatcheresque U-turn has generated an awful lot of heat, but very little in the way of actual insight.
Clearly if people decide to stop spending and accumulating debt then the economy would rapidly go into a tailspin. Cameron, as a true believer in free markets, surely understands this and to suggest otherwise is perplexingly naïve on his part. Indeed the pitiful growth figures partly reflect the consumer’s unwillingness to go out and spend spend spend.
But here’s the rub. The economic boom years in the UK were built on foundations of sand. Britain stopped making things, and it’s growth has depended on a voracious and out-of-control financial services sector and a huge accumulation of personal debt to fund ever-increasing consumer spending. Up and down the country people, mostly from the working class, have been taking out loans to pay for new kitchens and holidays. More than ever materialism and endless, mindless consumption has been celebrated and taken as a given, inevitable part of the new world, and it has been facilitated by more and more individual debt. If your job doesn’t provide you with a salary to pay for endless rounds of consumption, then take out a loan to cover it, and worry about repayment later.
What are to all intents and purposes glorified loan-sharks providing immediate, no questions-asked finance have seen their business and profit-margins explode in recent years. If you switch on the TV during the day, (and increasingly of an evening) you will find a plethora of innocent-looking firms offering easily available credit (one of the most gratuitous examples of course being Brighthouse) but at immorally exorbitant rates of interest. Daytime TV is frequently the preserve of the unemployed, i.e. those least able to afford the loans, but often, sadly the most gullible and likely to take the loans out. The companies offering the money are repulsive, parasitic and predatory scum.
A couple of startling statistics:
- As of November 2010 personal debt in the UK stood at £1,454 billion
- Average household debt is £16,336. And that excludes mortgages……..
(Figures courtesy of http://www.debtsimple.co.uk/uk-debt-statistics.shtml)
The economic policy of many of those berating Cameron today is essentially of more of this shit, even though it has clearly been at least one contributing factor in getting us in our current, ‘end of days’ mess.
Of course it is important at this point to differentiate between the macro- and microeconomic. The austerity programme being pursued by the Tories and their Lib Dem lackeys is economically illiterate, spiteful and potentially very dangerous. The state is the one body we all have a vested interest in taking on significant debt to fund future growth and recovery. But the idea that we can return to the economic model of a few years ago is laughable. The proliferation of ever-increasing personal indebtedness is not a serious economic policy. Cameron, for whatever convoluted reason, may for once have called something right (and it would be a first).
It says something profoundly worrying about Britain’s capitalist model that the choices on offer appear to be people spending money they can’t pay back or certain economic catastrophe. And for that Labour, as much as the Tories, have to take responsibility. It was on both of their watches.