A short and readable explanation of the reasons for the banking crisis of 2007 and the power of the bankers over government. The austerity policies of cuts to public services and associated job losses and pay cuts to public employees has no intellectual or evidential basis to provide a solution to the problems of UK and western societies, as the authors point out. The 1945 Labour government increased the National Debt to establish the welfare state. The false claims of neo-liberal economic propagandists are shown to be exactly that: political dogma that works to enrich the millionaires in political power at the expense of increased taxation on the middle and lower classes with increased income tax and VAT and to roll back the gains made in social welfare through the sell-off at bargain basement prices of income generating taxpayer paid for assets like the Post Office and through scams like PFI/PPP schemes that further enrich private bankers and their friends. National Debt is not the problem, nor is fear of inflation. The alternative economic strategy based on the need to sustain full employment and create real wealth based on ideas of "political economy" espoused by many economists from Keynes to Skidelsky get no mention on the BBC because, according to the BBC economics correspondent Evan Davies, it would only "confuse our audience". (Page 123). Readers might also enjoy David Graeber's "Debt: The First 5,000 Years" for a longer term view of debt and society and a myth buster of current propaganda.
The Kushner brothers have put together an eminently readable book which ought to be read by both politicians and journalists.
Why do we so easily accept the assertion that the former Labour Government was responsible for profligate spending fuelled by excessive borrowing? A graph on page 56 shows that from 1997-98 to 2007-08 borrowing was consistently far lower than during the 1991-92 to 1996-97 period of Conservative government. I had heard the opposite story so often that I checked it out from the original data. It is easy to retrieve on the Office for Budget Responsibility web site.
I have ordered Alistair Darling's "Back from the Brink" because he at least could see clearly what happened. "Between 1979 and 1997 the Conservative government borrowed on average 3.4 per cent of national income; between 1997 and 2007, Labour's borrowing averaged 1.2 per cent". Of course for the years 2008-09 and 2009-2010 borrowing hit the heights. This was nothing to do with overspending on public services and benefits, and everything to do with baling out the banking sector.
The Kushners challenge many details of the single narrative that is coming from the government, the BBC and even, it seems, the Bank of England. Throughout their work I trace the fact that they are writing from a genuine concern for real people, the most vulnerable of whom are suffering most from the effects of the austerity agenda.
They deserve to be heard and the single narrative must be challenged.
My only caveat are some points of detail. Another edition of the book could benefit from careful proof reading. Roosevelt would have been hard pushed to deliver a State of the Union address in 1953, having been dead for nearly 8 years (footnote 125), and some bars on the graph on page 56 should be checked - although if inaccuracies are corrected it would make their case even stronger visually.
This could be read in a sitting (138 pages). To repeat, it is a message which needs to be heard, one which is vital if we are to avoid long term damage to the fabric of our society.
Worth reading to put to bed Government lies about economic policy. A needed reminder that the mess we're in isn't our fault but the fault lies with Big Business, The Bankers and the Tax Avoiders of this world.
The authors wrote this book after becoming exasperated at the cuts narrative and its one-sided portrayal in the media and the fact anyone proposing an alternative was branded a `deficit denier'. As the authors point out `deficit deniers' were castigated as wicked, immoral people using emotive language redolent of attacks on Holocaust deniers.
They were also exasperated at how the media and politicians were able to turn a banking crisis with its roots in the USA into one of overspending by the UK government, even after Mervyn King had stated "the billions spent bailing out the banks and the need for public sector spending cuts were the fault of the financial services sector".
The BBC is a particular target for the Kushner's ire for their decision to ignore the views of Nobel Prize winning economists who were saying the sovereign risks to the UK were being exaggerated. They quote a bizarre statement from the BBC saying "..... the BBC is not required to cover the countervailing view .... on the deficit and on the spending review and cuts in order to achieve due impartiality". As the Kushner's ask angrily, but how else can it be done?
The book is divided into sections on the debt narrative and how the media and politicians set up this storyline; the history of debt and deficit in the UK; an explanation of government spending and income; what caused the deficit, where income, tax revenues and unemployment are studied; the banks and the role they played in causing the deficit via `casino banking' and government bailouts; a section where the authors argue the cuts narrative is a political not economic argument; and finally a chapter where alternatives to cuts are explored.
There are plenty of convincing arguments in the book that the cuts strategy is wrong and unnecessary and that the banks, not government spending, caused the deficit such as the fact debt is lower now than it has been in 200 of the last 250 years; George Osborne admitting that UK debt is lower than Italy, France, Germany, Japan and the USA; that our debt during most of the economic crisis was lower than the upper mark set by the Maastricht Treaty; that debt is historically low compared to other periods in our history; and that debt started in 1692 and was far higher in 1920 and 1947 than it is now; and that borrowing has been higher under previous governments.
The Kushner's point out some of the absurdities surrounding the cuts, such as the fact that so called expert economists missed the biggest financial crash in their lifetimes but are now advising governments on how to solve the problem. They also show the different attitudes to cutting the banking deficit - pour money into the system by borrowing; and the public deficit - take out money via cuts. They show that the deficit is made up of income and spending but the debate has solely focussed on spending and no one has asked, why is our income so low? In other words why is the debate not centred on jobs and growth?
In conclusion the book argues the deficit has been a cover to dismantle the public sector and has squeezed out debate on whether this is what we really want for our country. This is all the more extraordinary when you consider that no party was strong enough to win the 2010 election and there was clearly no public mandate for such huge public sector cuts.
The last word will go to Paul Krugman, Nobel Prize winner for economics whose statement sums up the book in a nutshell - "jobs now, deficits later was and is the right strategy".
This book provides an excellent example of how mainstream journalists allow themselves to promote an establishment or even government narrative with little attempt to investigate and challenge. We see how once a `consensus' is established, most journalists seem to lack the courage or even just a professional curiosity to probe behind the official message. It seems, they don't want to rock the boat and at worst be side-lined for having eccentric views. Sticking with the official narrative is the safest way to play it.
The book focuses on the case made by the coalition government for austerity measures, and how so many leading journalists preferred to `go along' with an official narrative rather than probe for alternative view points, or even to challenge politicians on some very misleading statements.
We learn that while we were being told `the UK is on the brink of bankruptcy': - National debt was half what it was when Harold MacMillan declared "you never had it so good" in 1957. - National debt had been higher in 200 of the previous 250 years. - UK had a lower national debt than USA, Germany, France and Japan. - The recent rise in debt was not due to over-spending by the previous government, but due to a reduction in tax revenue, resulting from a rapidly slowing economy - which the cuts only slowed further, pushing the debt even higher.
Many similar examples of an alternative perspective are provided in a very readable account.
The book makes a clear case that there was a valid alternative to severe austerity. In fact, we have seen since, some commentators, and even the IMF coming round to a similar view. It also highlights the very questionable policies of bailing out the banks at any cost, while letting the rest of society take the blame and the pain.