We live in a two party electoral system where the choice for government is likely between Conservative and Labour. Yet even the chancellor Jeremy Hunt admitted that there is no difference between the two main parties during his Budget. He noted that shadow chancellor Rachel Reeves was “acting like a Tory”, while he talked about the UK’s creative industries.
In the Budget itself, Hunt’s announcements included 2p lower national insurance contributions, a change to non-dom tax status, and minor improvements in people’s ability to pay back loans. It was a drop in the ocean compared to what’s possible. It also contained real term cuts to public services.
“Anything we can actually do, we can afford”
It’s true: Labour is acting like the Tory Party. Reeves argues we should treat public finances like a household budget. She recently said:
I will never spend what we cannot afford
But in a 1942 BBC address, renowned macroeconomist John Maynard Keynes made a point highly relevant for today:
Anything we can actually do, we can afford.
By “we” he means the government and by “do” he means both the country’s resources and its available workforce. This investment can also create jobs and gives us returns. For example, it was state funding that gave us the internet, GPS, and voice activation.
It often takes the collective purse to make the high risk investments. The private sector tends to come in when its seen as low risk.
So Reeves saying we must ‘balance the books’, as if the government is the same as a household on very limited finances, is propaganda.
Similarly, Hunt claimed he was “bringing down borrowing” during his Budget speech. But the whole concept of government borrowing is a lie to manufacture consent for the establishment.
The government does not need to borrow money. This is because it operates a fiat currency – one that is not backed by gold but simply exists because the government creates or sanctions its creation. So again, the limits on government spending are to do with its limits in resources and manpower. It’s not how much it can borrow, given it creates the money in the first place.
So it’s like Keynes said: ‘we can afford what we can do’ – not ‘we can do what we can afford’. The government is not a household.
Cosy set up
During the Budget, both the main parties championed their “plan for growth”. Yet they never actually say what that plan is. That’s because it is essentially just the neoliberal status quo that they all agree on. This means privatisation, austerity and deregulation of capital.
In Keir Starmer’s Budget response, he didn’t say anything major he would do differently. In fact, he backed a number of Hunt’s measures and repeated the same slogans on Gross Domestic Product (GDP) per capita, arguing that’s what is important.
In another point of near complete agreement between the two parties, Starmer argued that Hunt’s changes to non-dom status where in fact Labour’s policy. These will raise £2.7bn per year.
Quite the Budget admission
Hunt’s comment that Labour is basically Tory is quite the admission. The chancellor is acknowledging that our democracy is a sham because there is no difference between the main parties in a two party system.
One thing we can do is improve and protect democratic access to Labour to ensure its leadership reflects the views of the people. Another thing is to focus on new parties and independent candidates.
Featured image via Sky News – YouTube
