The Tories' transparent agenda

As Budget Day looms, George Osborne has laid out plans to give taxpayers a detailed breakdown of how their taxes are spent in the name of transparency and accountability. According to Exchequer Secretary David Gauke, "We want to make tax more transparent and we want people to be more engaged with their own tax affairs".

Let's not kid ourselves that the initiative has anything to do with transparency or openness – it is instead about re-enforcing a neo-liberal assault on public spending.

The cognitive linguist George Lakoff – in his fascinating book Don’t Think of An Elephant – explores how conservatives consistently win political debates through their control and manipulation of language. Lakoff’s basic idea is “framing”, the idea that appropriate language can create a framework evoking a set of concepts supporting your point of view. Just as our natural reaction when someone says “don’t think of an elephant” is to think of an elephant, our natural reaction when someone says “look how much you’re spending in tax towards health” is to think we’re spending too much.

The mainstream media has neatly mimicked and echoed this discourse. BBC Breakfast News, the Telegraph and the Daily Mail – with varying degrees of vitriol – have focused on specific fields – particularly welfare, health and education – where the government are making the most brutal cuts. The fact that the political and media establishment have focused on these areas – rather than, say, Defence spending – demonstrates the real target of this policy.

The "frame" for Osborne's idea is not about increasing accountability, engagement or transparency. The implication is that social spending – on health, education or welfare – is inherently wasteful. If people can physically see where their taxes go, they are more likely to support the Conservatives’ austerity measures.

Labour cannot oppose the move – based as it is on 'progressive' values such as openness and accountability – but it can change the field of debate in three ways:

Firstly, in terms of value for money. According to the Treasury, someone earning £25,000pa contributes £743.26 towards education. As someone who received free education until the age of 18, it seems like a bargain – especially when you consider any children I have are entitled to free education too. Under £1,000 for full medical cover on the NHS also looks like a snip – especially when you compare it to the cost of private health insurance.

Secondly, in terms of real transparency. Osborne’s proposal will show us which areas our taxes are going to, but it won’t show us who they are going to. Where is the breakdown of how public taxes are being used to subsidise big business? Whether it’s bailing banks out during the financial crisis; subsiding multinationals such as Tesco through Workfare; or bankrolling private companies like A4e in the Work Programme – the Left must shape the debate to show the real abuse of taxpayers’ money.   

And finally, how about publishing a register of how taxpayers benefit from public spending – from museums, galleries and libraries to parks, roads and hospitals? As the Con Dem attack on public institutions continues unabated, it might prove a valuable historical document.

“In no way do these changes represent a change in our goal of building socialism”

We first heard about Cuba’s economic changes in September 2010. Headlines declared that 1 million state jobs would be cut and David Cameron exulted that “even communist Cuba has got with the programme that we need to cut the budget deficit and get spending under control”. Meanwhile the media revelled in accusations that the economic changes represented an abandonment of socialism. Continuing the theme of half a century, neo-liberal vultures circled Cuba waiting for the inevitable collapse of socialism. 

The Cuban economy has suffered as a result of global financial crisis and a number of devastating hurricanes, but media analysis has instead portrayed the changes as a response to structural flaws in the Cuban model. I met Carlos Camps, Political Counsellor at the Cuban Embassy, to examine some of the most prominent new policies and find out the truth behind the media headlines.

Although areas of the Cuban economy remain unproductive – and the socialist principle of distribution has been challenged by unearned remittances – Carlos points out that the Cuban economy grew 2.7% last year whilst capitalist countries struggled to recover from recession. As Carlos observes: 

We see the American model everywhere, but this is not the model for us because it is in a very profound and very deep crisis … The international press is always looking to discredit Cuba and the socialist character of our revolution, but in no way do these changes represent a change in our goal of building socialism.

Shake Your Moneymaker, Mr Osborne

"I've got the brains, you've got the looks. Let's make lots of money"

Prior to the World Cup in 1998, the England football squad famously amused themselves by dropping song titles into media interviews. Talismanic centre-half Tony Adams declared “I’m so excited” about the upcoming championship whilst Alan Shearer insisted the team were keeping their feet on the ground and not “dancing on the ceiling”. It was a bunch of rich kids playing a harmless game. And even Alan Shearer was funny.

Fast-forward 13 years and a different bunch of rich kids – the coalition government – are playing a much more dangerous game with our economy. Where Shearer and co. referenced well-known 80s tunes, we now have Osborne et al regurgitating stale references to the "economic mess" the previous Labour government left us in. And whilst England's japes earned them a few quid in bets with teammates, the coalition's financial tomfoolery is going to cost us all dearly. The only 80s throw-back being cited now is Maggie Thatcher. 

Re-worded, re-packaged and repeated ad infinitum, the phrase has prefixed Conservative and Lib Dem responses to every question since the formation of the coalition:

"How many slices of toast for breakfast, George?" asks Mrs Osborne.

"Two please – although if it wasn't for the economic mess Labour left us with, I could probably afford to have three ... and make sure you serve them on our Ming Dynasty plates," replies our humble Chancellor.

We have been pummelled into merciless submission and bitter acceptance through its endless repetition. It has allowed the government to force through ruthless cuts by sidelining Labour and marginalising economic alternatives.  

However – although it is a powerful political weapon to relentlessly demonise Labour's economic record – it is also a double-edged sword. It does indeed damage Labour's credibility, but it also creates a culture of gloom and cynicism that undermines consumer and business confidence. The irony is that – whilst the economy under the Con-Dems flat lines – Labour’s more interventionist policy saved us from depression and sowed the seeds of growth through positive action and investment.

According to Ernst & Young Item Club, our recovery has slowed and our economy has "stalled at a dangerous junction". The simple reason for this stagnation is that – because government economic chauvinism has engendered low confidence – banks are not lending and people are not spending. Furthermore, draconian austerity and rising unemployment further erodes confidence.

As David Blanchflower, Professor of Economics at Dartmouth College, states in an open letter to George Osborne: 

It hasn't helped that you have described the economy as "bankrupt" when clearly it was not, and also compared the British economy with that of Greece, Ireland, Portugal and Spain, which are locked in monetary union, do not have their own central bank and cannot depreciate their currency or engage in credit easing. With such unpatriotic talk, you and other coalition leaders have caused business and consumer confidence... to collapse. They are at frighteningly low levels and I suspect they will fall a lot further unless you act quickly. 

Negative rhetoric is essential to force through ideological cuts to public services and welfare provision, but by constantly talking-down the economy, the government has undermined our chances of recovery. The economy requires positive language and action to flourish. From cutting VAT, payroll tax-breaks, bringing back the Future Jobs Fund, linking corporation tax to unemployment or introducing a Robin Hood Tax and Tobin Tax, there are numerous policies which would increase employment and stimulate growth.

If economics – like football – is a game of two halves, then now is the time for some inspirational half-time words and positive substitutions from the gaffer. The coalition might be committing economic suicide, but with unprecedented and irreversible public sector cuts, they’ll go down in history as hard-nosed neo-liberal martyrs.

Time for a tax on unemployment

According to Karl Marx, capitalism requires a reserve army of surplus labour to squeeze working conditions and maximise profit: 

Big industry constantly requires a reserve army of unemployed workers for times of overproduction. The main purpose of the bourgeois in relation to the worker is, of course, to have the commodity labour as cheaply as possible, which is only possible when the supply of this commodity is as large as possible in relation to the demand for it, i.e., when the overpopulation is the greatest.

This inevitably means a rise in unemployment and, with unemployment rising by 80,000 in the second quarter of this year, we can see how the conditions of working people are being attacked whilst financial institutions remain protected. As public sector pay is frozen, jobs are cut and trade union rights are eroded, the government’s package of quantitive easing will go straight to the banks. It’s effectively a second bail-out which banks will use to service debt rather than inject money into the economy to stimulate growth.

What we really need is full employment and a population with disposable income to spend and kick-start the economy – but the dialectic interests of the capitalist class and working people makes this impossible.

I was surprised, therefore, to read a letter today in the Morning Star by Bill Banning which offered a relatively simple solution to this diametrically opposed impasse:

Let's have a tax on unemployment, a tax to create jobs ... The unemployment or austerity tax would be linked directly to the rise and fall of the labour market and would be applied to company profits, including banks, financial institutions, multinationals, millionaires and oligarchs.

It would be based upon the cost of unemployment to the economy so that it would increase as unemployment goes up and reduce as it comes down.

This would mean that those doing well despite the recession would share the pain and at the same time provide a positive incentive for job creation.

Surely if, as we are constantly being told, we are all in this together, there could not be a fairer, more equitable system than one in which those that are suffering most from the austerity measures demanded by the need to reduce our national debt can clearly see that their sacrifice is acknowledged, and that those able to reduce their hardship by virtue of their good fortune are doing so.

Bravo Bill! A simple but effective idea to link corporation tax to unemployment. If Ed Miliband is serious about favouring ‘producers’ over ‘predators’ then this would be a good first step to re-engineer capitalism in favour of the people currently paying for the costly mistakes of financial institutions. 

Declaration of Co-operation with Cuba requires concrete action

Last month Cuba and the United Kingdom signed a formal declaration to strengthen bilateral co-operation. The agreement champions “closer dialogue and economic, scientific, technical, educational, cultural and sporting links between the two countries” and highlights key areas for collaboration including environmental issues, biotechnology, trade and investment, regional security, child protection and disaster preparedness.

The move should be welcomed as a positive step – not just by those supporting the Cuban people – but also by those looking to expand British trade relations in Latin America. In order to make tangible change, however, the agreement must be substantiated by positive action – something which has been lacking in previous UK policy towards Cuba.

The UK is the 6th largest economy in the world and the 3rd largest economy in the European Union. It is the 7th largest importer and the 11th largest exporter in the world. In spite of this, the level of trade between Britain and Cuba is derisory. Exports to Cuba totalled an abysmal $14.4m (£8.9m) in 2009 whilst imports came to a pathetic $15.8m (£9.8m). Compare this to September 1958 when the UK government exported 25 fighter jets to General Batista’s dictatorship. The equivalent value today – at around £40m a plane – would equate to an annual UK export to Cuba of around one billion pounds.

It is tempting to explain the lack of commercial activity between our two countries as a legacy of the Cold War, however back in 1986, Cuba constituted the UK’s fifth largest market in Latin America. Furthermore, UK trade with Cuba is dwarfed by other EU countries including Spain, Italy, France and the Netherlands. Indeed, in 2008, the UK was only the 11th largest exporter of goods to Cuba from the EU.

It is therefore more appropriate to view the level of trade as a direct consequence of policy adopted by consecutive UK governments. In particular, the Blair government – as a result of closer ties with the Clinton and Bush administrations – took an increasingly aggressive and hard-line stance against the island. Blair was a keen advocate of the EU Common Position – which suppresses trade and exchange with Cuba – whilst, in 2003, the UK was instrumental in blocking Cuba’s entry into the Cotonou Agreement which gives trade preferences to former European colonies.

According to UK Trade & Investment (UKIT), “the greatest hurdle to doing business in Cuba is painfully slow decision-making which result from all investment decisions being referred to the highest levels of government”. However, as indicated in the graphs below, there are a number of other countries which manage to cut through the perceived ‘layers of bureaucracy’. It is ridiculous that UKIT blames restrictions within Cuba for the lack of trade when the main obstacle remains the UK’s unwillingness to challenge the ongoing US blockade.

In theory, the UK Protection of Trade Interests Act makes it illegal for UK companies to comply with extraterritorial US Helms Burton legislation but, in practice, the UK government replicates the pernicious and illegal blockade. Transactions cannot take place in US Dollars and payment cannot be channelled via American Banks. The risk of US sanctions creates uncertainty and banks, businesses and companies can get caught between conflicting legal requirements. For instance, in August 2010, Barclays Bank was fined $298m (£190m) by US authorities for handling transactions with banks in Cuba. The result is that the little trade that does occur often takes place through ‘third parties’ and unfairly increases Cuba’s import costs.

The blockade also restricts access to long-term credit which means Cuba is often limited to dealing in cash transactions or expensive short-term credit. This makes bilateral trade more costly for the island and significantly stifles their economic freedom. The uncertainty caused by the blockade creates a volatile market and increases the risk of liquidity problems. As the UKIT report says:

Even when there is potential demand for many products, the reality is that not all companies are in a position to ensure payment or to finance long-term payments … This is mainly due to Cuba’s lack of access to the long and middle term financial market, so relying mostly on short-term credit, and credit offered by the providers.

It is peculiar that David Cameron has spent much of his tenure attempting to expand British markets abroad – in places such as China, India and the Middle East – but Cuba’s potential remains untapped. Cuba’s geographical location – as both a Caribbean and Central American nation – represents a strategic advantage whilst the Cuban market offers various long-term benefits. Cuba has a highly educated and literate population and there is an abundance of experienced and qualified employees. Brazil has already recognised the business potential in Cuba and has invested heavily to make Mariel Port the leading freight port in the Caribbean.

The UK should be applauded for repeatedly voting against the US blockade at the United Nations, but further action is required to normalise relations with Cuba and develop real, discernible trade and co-operation between our countries.

The Cuba Solidarity Campaign and the British trade union movement have worked tirelessly to promote the normalisation of relations and it is clear that real political will does exist. Early Day Motion 1171 supporting the strengthening of ties between the UK and Cuba was signed by 248 MPs whilst over 92% of candidates in the 2010 General Election supported better relations. The examples of various EU countries – including Spain, Italy, France and the Netherlands – demonstrate that the debilitating effects of the EU Common Position can be circumvented if perceptible political will exists. It is now crucial that we harness political will within the UK to turn this ‘paper’ agreement into something more concrete.

This article originally appeared on Left Foot Forward and the Guardian's Comment is Free.

Crisis is the locomotive of history

The Bolshevik revolutionary Leon Trotsky famously declared that “war is a great locomotive of history”. Over the last half-century, however, territorial expansion has ceased to be a legitimate reason for waging war – although this hasn’t stopped covert conflicts and has given birth to new justifications such as humanitarian intervention and pre-emptive strike.

Naomi Klein – in her monumental book The Shock Doctrine – frames modern history as the evolution of disaster capitalism and the shock doctrine. Klein debunks the myth that the rise of neo-liberal hegemony was achieved democratically and contends that free-market capitalism requires (and encourages) crisis to force through the contentious and unpopular corporate reengineering of society. Laissez-faire policy-makers capitalise on the public’s disorientation following massive collective shocks – such as wars, terrorist attacks and natural disasters – to implement economic shock therapy. In this sense, crisis – not just war – can be seen as the locomotive of history. Indeed, as the Chicago School economist and grandfather of disaster capitalism Milton Friedman stated in 1982:

Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

The Shock Doctrine argues that Friedmanite economics has been applied throughout the world in response to crises since the 1970s – from Pinochet’s Chile to the occupation of Iraq. Free-market reform – always serving American corporate interest – has required the shock therapy of torture, war and repression to subdue popular unrest and smash opposition. International bodies under the control of America – such as the IMF and World Bank – have used the debt crisis in Latin America, Africa, Asia and the Soviet Union to hold democratically elected governments to ransom and push through an agenda of privatisation.

Klein generally equates disaster capitalism with war, terrorist attacks and natural disasters – but the shock doctrine also provides a useful framework to view the recent economic crisis. Britain’s recession has been characterised – by the Tories, Lib Dems and mainstream media – as a result of economic ineptitude on behalf of the previous Labour government. All government responses to questions – regardless of topic – start will a denunciation of the “economic mess” that Labour left the country in. Samantha Cameron’s probably stopped asking David what he wants for breakfast fearing the inevitable tirade against Brown and co. – but all this rhetoric is necessary to soften up the population for economic shock therapy. As the Nazi Minister for Propaganda Joseph Goebbels declared, “if you tell a lie big enough and keep repeating it, people will eventually come to believe it”. In the same way, if the government repeat often enough that cuts are necessary, people will come to believe it. It is here that the dichotomy of Friedmanite crisis – both actual and perceived – becomes blurred and mutually reinforcing.

There are stark parallels between the shock therapy of military intervention and the current economic shock therapy being implemented by the government. In Shock and Awe: Achieving Rapid Dominance – the military doctrine that underpinned the invasion of Iraq – the authors state that the invading forces should “seize control of the environment and paralyze or so overload an adversary’s perceptions and understanding of events so that the enemy would be incapable of resistance”. In Britain, the invading forces – or the government – seek to paralyze their adversaries – or the electorate – by perpetuating the idea of crisis and the need for the economic reconstitution of society. Furthermore, the violent repression of student protests can be seen as a direct corollary of repressive shock therapy and serves as a stark warning to those who might consider future protest.

A perceived culture of crisis is required by Conservatives to fortify a systematic assault on the state. As Klein states:

People can develop responses to gradual change – a slashed health programme here, a trade deal there – but if dozens of changes come from all directions at once, a feeling of futility sets in, and populations go limp.

Furthermore, ensuring all the cuts come at once forces Labour Party collusion. If Labour oppose cuts they are accused of being “deficit deniers” whilst their economic credibility is shattered by the government attributing the economic crisis to Labour mis-management. Labour do not wish to appear out-of-touch with the electorate and are thus forced to meekly accept government economic policy. Its effect, as Milton Friedman declared, is that something which was previously “politically impossible becomes politically inevitable” – in this case the underhand privatisation of the NHS and Royal Mail.

As the political scientist Michael Wolfe states:

Conservatives cannot govern well for the same reason that vegetarians cannot prepare a world-class boeuf bourguignon: If you believe that what you are called upon to do is wrong, you are unlikely to do it very well... As a way of governing, conservatism is another name for disaster.

Despite what Conservative mantra tells us, the real crisis we face is not the result of global financial recession, it is the effect of ideologically-driven neo-liberal economic policy: mass youth unemployment; the privatisation of the NHS; the narrowing of access to higher education; and the championing of the corporate agenda.

A Victory for Keynesianism?

According to the Office for National Statistics, economic growth between April and June this year was the fastest rate in nearly a decade. GDP rose by 1.2% during this period – primarily due to an 8.5% increase in construction output and a 0.7% increase in consumer spending. But don’t send off the thank you cards to Mr Cameron and Mr Clegg just yet, because the Coalition’s Emergency Budget didn’t take place until 22 June.

The recent economic growth is significant – not because it guarantees recovery – but because it suggests that Labour’s policy to invest rather than cut was working. The economic growth of the last quarter is underpinned by a 0.3% advance in Government spending. This includes £986m towards transport projects and £480m towards new school buildings – most of which has been abandoned by the Coalition. A large proportion of private construction relies on state subsidy and public contracts – so where else is the stimulus going to come from? Cameron is desperately trying to encourage international trade to fill this government void – but the international economic situation is far from stable – whilst Cameron’s diplomatic faux-pas will probably undermine any meaningful discussions, anyway.

Furthermore, an increase in consumer confidence is contributing to the economic recovery, but what will happen to confidence when the cuts of the Comprehensive Spending Review come into effect, VAT rises, public sector redundancies hit and unemployment increases?

The Coalition recognise that the economy is in for a “bumpy ride” but they seem intent on steamrollering through their regressive economic policies. Perhaps economic fragility – and even a possible ‘double-dip’ recession – is a price worth paying to reduce the role of the state. But for all those interested in economic recovery rather than political point-scoring, maybe Labour’s spending wasn’t so “crazy” after all.