The Cost of Saving

A long-term view of Austerity

The Cost of Saving

This continued obsession with universally driving down the cost of government in the holy-name-of-austerity is thankfully starting to raise a few eyebrows amongst the more open-minded sections of the electorate.

The difficulty that the opposition faces, is that this is a convincing argument. When the Conservative party came to power it was very much on the promise of “balancing the books,” a key theme of the 2017 manifesto. There was a heavy rhetoric pushed about the legacy the Tories had inherited from the Labour party, following their “gross overspending” (and a global economic crises, where taxes went to bailing out banks rather than helping people) despite the fact that during their time as opposition the Conservatives pledged to match, or raise labour's spending plans.

It was quickly realised, however, that the “overspending” argument would justify an austerity program that would cause Labour's most fiercely defended organisations such as the NHS to dwindle, and eventually fail. Meanwhile, the public are digesting and regurgitating the misleading message of “If YOU can't afford it YOU don't buy it, so why should the government be any different,” which is economic nonsense, but people seem to still believe that this is a valid comparison.

To understand the government budget and deficit, we have to first understand that spending money isn't necessarily a bad thing or going to lead to a long-term increase in the deficit or debt. This follows the logic that it depends entirely on what you spend the money on and what the return is on that investment.

The majority of buy-to-let landlords have a mortgage on their properties, some choosing to own 10% of 10 houses, rather than 100% of one (for argument's sake, £100,000 value per house). This is because the return or yield of the asset is more than the cost of the finance—but it would still be £900,000 worth of debt.

This is crucial to understanding that borrowing is the absolute cornerstone of the global capitalist system, and that the fastest way to drive strong returns/growth is to invest someone else's money. The “Rich” see debt as a tool to drive growth, whereas the “Working Class” typically see debt as a yolk around their necks.

Any long-term investor (ie property) understands that you will generally make a loss before you break-even, and eventually turn a profit. This is absolutely the same for government investment in national infrastructure and during turbulent economic times, cutting the deficit cuts growth and will lead to a long-term increase in national debt.

One of the deeply concerning facts about the Austerity-Mad government we've had is that this false narrative has led to cost-cutting decisions being made across the public sector. It's sometimes easy to get swept up in the normality of a government which repeatedly breaks their pledges but the result of this is a domino effect that results in tragedies such as the Grenfell Towers blaze.

Decisions were made, in the name of Austerity, to opt for cheaper cladding which is looking increasingly as a significant factor in the fire. Looking further back, the move Cameron took to "build" 100,000 affordable homes, which in essence consisted of selling public land to private developers, has meant that the construction in the Kensington area has been significantly focused on the private sector. This is why the taxpayer has now had to foot the bill for a public buy-back of properties to house the Grenfell victims in, at significant cost. You could even argue that, had the government pursued a housing program focused on social rather than private development, Grenfell Tower may have become redundant as other residences were built in the area, or at the very least that it could have been redeveloped or effectively updated.

The saddening truth is that a pattern is developing within the recent challenges we have faced as a country, where at least some accountability can be traced back to conservative policies or cuts.I really don't think that it's too bold to suggest:

  • That lack of community policing due to cuts has led to a rise in Terrorism
  • That cuts to public budgets have led to threats to the public housing safety
  • That privatisation of areas of the DWP has led to people dying
  • That cuts to the NHS has led to a rise in infant mortality

The list goes on and the cost to the public is great.

There is a vast difference between proactive spending and reactive spending. Only if we can secure a government that plans for the future and invests in long-term infrastructure instead of constantly draining the taxpayer to service the few, will there be hope for a way out of this mess.

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Jordan Catto

Mid-Twenties Socialist Millenial writing for a better world!
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