{"id":12997,"date":"2011-01-03T18:15:25","date_gmt":"2011-01-03T07:15:25","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=12997"},"modified":"2011-01-03T18:15:25","modified_gmt":"2011-01-03T07:15:25","slug":"the-big-society-aka-bs","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=12997","title":{"rendered":"The Big Society aka BS"},"content":{"rendered":"

\t\t\t\tHappy new year to everyone! It is starting out pretty poorly despite the nice weather and personal fun. On the last day of last year, the British Government released its Giving Green Paper<\/a>, which apparently provides some detail about how it sees its Big Society concept working. As one commentator said it reads like it was written by a bunch of amateurs. But what it tells me is that the conservatives haven’t really evolved much since Maggie Thatcher declared there was no such thing as society. The Big Society is just a reprise of that concept with some mention of mobile phone apps and ATMs to match the historical period of technology that the latest attack on the welfare of the citizens is occurring. The Big Society is a blatant relinquishment of essential government roles and in that sense is a politically cynical attempt to cover up the impossibility of individual action relaxing systemic spending gaps. My training as a macroeconomists tells me that individuals cannot ease such macroeconomic constraints. Only the national government via appropriately sized budget deficits can do that. Which is exactly the responsibility the British government is recoiling from. The Big Society aka BS. More the fool anyone who believes in it.
\n
\nMany people seem to go through the charade on December 31 or January 1 of making a New Years Resolution, often related to diet or exercise, and then after a period of adherence to the new routine – maybe a week – the patterns of old return and nothing much happens until the next year when the process is repeated. I don’t bother – if I am unhappy with something I change it.<\/p>\n

The US President seems to be in the former category and told US citizens during is Weekly Address<\/a> (January 1, 2011) that his resolution was:<\/p>\n

\n… to do everything I can to make sure our economy is growing, creating jobs, and strengthening our middle class. That’s my resolution for the coming year.\n<\/p><\/blockquote>\n

I think he abandoned his commitment to his resolution immediately because in the rest of the speech there is no recognition that the US government could be creating jobs immediately. Instead, there were generalised statements of the American dream and his willingness to work “to work with anyone of either party who’s got a good idea and the commitment to see it through”.<\/p>\n

The problem is that the political sway in the US now (after the mid-term elections if not before) is all anti-jobs and it is likely the demand for fiscal austerity will actually undermine the growth that is now emerging.<\/p>\n

Then you read a recent blog from the Director, Congressional Budget Office (December 10, 2010) which summarised this publication – Economic Impacts of Waiting to Resolve the Long-Term Budget Imbalance<\/a> and you realise what the daily advice Obama is receiving which makes it virtually impossible for him to live up to his resolution. The main conclusion of that blog was:<\/p>\n

\nWaiting to put fiscal policy on a sustainable course would lead to higher levels of government debt, which would be costly in several ways:<\/p>\n

* Higher debt would reduce the amount of saving devoted to productive capital and thus would result in lower incomes than would otherwise occur.<\/p>\n

* Higher debt would lead to higher interest payments, meaning that larger tax increases or cuts to spending programs would be needed to make fiscal policy sustainable.<\/p>\n

* Higher debt would make it harder for policymakers to respond to unexpected problems, such as financial crises, recessions, and wars.<\/p>\n

* Higher debt would increase the likelihood of a fiscal crisis.\n<\/p><\/blockquote>\n

My responses to each of the dot points are:<\/p>\n

– No, as long as the deficits are supporting growth they are creating savings not reducing the pool. But at any rate, loans create deposits in the banking system and private spending brings forth its own saving. Please read my blog – Why budget deficits drive private profit<\/a> – for more discussion on this point.<\/p>\n

– Higher deficits imply nothing at all about interest payments nor the future direction of tax rates. Further interest payments are private income which is typically something we desire (equity considerations notwithstanding). Please read my blogs – Will we really pay higher taxes?<\/a> and Will we really pay higher interest rates?<\/a> – for more discussion on this point.<\/p>\n

– The financial capacity of the US government to increase (or decrease) its discretionary net spending is not dependent on decisions made in the past. It is true that spending programs can be captured by political lobbies which make them hard to undo. But the reality is that the government can respond to a crisis by expanding fiscal policy whenever it so chooses. The other point is that running surpluses is likely to undermine the economy (in usual conditions) and necessitate deficits to counter the spending decline exacerbated by the fiscal drag. Please read the suite of blogs – Deficit spending 101 – Part 1<\/a> – Deficit spending 101 – Part 2<\/a> – Deficit spending 101 – Part 3<\/a> – for more discussion.<\/p>\n

– Final point is nonsensical. What is a fiscal crisis when we are dealing with a sovereign government that is never revenue constrained because it is the monopoly issuer of the currency? There is no meaning to statement that the US government will encounter a “fiscal crisis”.<\/p>\n

So Obama’s resolution is just a piece of political cynicism – welcome to 2011.<\/p>\n

Which brings me to the idea of the Big Society!<\/p>\n

On October 31, 1987, the then British Prime Minister Margaret Thatcher told the UK Women’s Own Magazine:<\/p>\n

\nI think we’ve been through a period where too many people have been given to understand that if they have a problem, it’s the government’s job to cope with it. ‘I have a problem, I’ll get a grant.’ ‘I’m homeless, the government must house me.’ They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There’s no such thing as entitlement, unless someone has first met an obligation.\n<\/p><\/blockquote>\n

Two years earlier she had been victorious in destroying the National Union of Miners (NUM). In her famous speech<\/a> to the 1922 Committee<\/a> on July 19, 1984 she called the workers the “enemy within” who were “dangerous to liberty” and a “scar across the face of our country” because they were “ill motivated, ill intentioned … [and] … politically inspired”.<\/p>\n

I was living in the UK at that time (doing my PhD at the University of Manchester) and I have first-hand experience of the travails that the poor went through dealing with the attack by their own government on their entitlements.<\/p>\n

A major campaign against the miners triggered the 12 month’s long coal miner’s strike<\/a> (1984-85) which ended in disaster for the workers. Thatcher also systematically undermined the “triple alliance” (coal, steel and rail unions) – the steel unions capitulated early and the rail unions were bypassed by government-organised road transport.<\/p>\n

The Trade Union Congress leadership effectively sold the NUM out and the government won the battle. This was also, arguably, the point at which the Labour Party and the trade union leadership turned to the right and abandoned their commitment to a just society. We started to hear about the “New Realism” which led to “New Labour” and the “Third Way” – all sell outs.<\/p>\n

But the “there is no such thing as society” was a dominant theme of that era and there were many harsh policies introduced to force people to “take care of themselves”.<\/p>\n

For example, Thatcher’s government decided that “thousands of unemployed young people living in bed and breakfast rooms” on government benefits would have their payments “stopped unless they move elsewhere after a certain length of time”. This was part of a plan to force the unemployed workers who were under 26 years of age to “return to their families” and thus privatise the lack of jobs.<\/p>\n

This article – Benefit curb turns young into ‘nomads’<\/a> – appeared in the The Sunday Times on June 23, 1985 and was written by journalist Brian Deer, who had a long record of reporting on social issues in the UK. It describes what was going on at the time.<\/p>\n

The conservatives have learned a bit along the way. The current conservative government aided and abetted by the turncoat liberals (who I predict will get wiped out at the next election) are reprising Thatcher’s harshness but dressing it up as the Big Society<\/a>.<\/p>\n

The Big Society<\/a> is another example of political cynicism. The swing to the right over the last 30 years in many nations has served to undermine the quality of education being offered. No wonder they think we are so stupid as to actually believe this sort of stuff.<\/p>\n

The Big Society which I think of as BS – claims its aim is:<\/p>\n

\n… to put more power and opportunity into people’s hands.<\/p>\n

We want to give citizens, communities and local government the power and information they need to come together, solve the problems they face and build the Britain they want.\n<\/p><\/blockquote>\n

Compare that to Maggie’s “there is no such thing as society” quote – the Tories haven’t changed at all – they are just pitching the same denial of government responsibility in a slightly softer way now.<\/p>\n

The BS is about “volunteering”, “charitable giving and philanthropy”, indoctrination of children via the “National Citizen Service” program (an army of 16 year olds being brainwashed into believing this stuff).<\/p>\n

I read the latest piece of obscenity in this piece of politically cynically campaign today in the guise of the Giving Green Paper<\/a> – which the British Government released on December 31, 2010. I wish this nonsense had have stayed in 2010.<\/p>\n

The Green Paper emphasises the message:<\/p>\n

\nThe main lesson is to acknowledge the limits of government. Social action is not something that government can, or should, compel people to do; it has to be built from the bottom up, on the back of free decisions by individuals to give to causes around them. This is not easy, particularly given the pressures of life in 21st century Britain. For many of us it can feel like a struggle just to keep up with commitments spanning work, family, and friends.\n<\/p><\/blockquote>\n

If it wasn’t so serious the document would be a total humiliation. Its proposals are almost child-like in their naivety and their “bright eyed and bushy-tailed” enthusiasm. The ignorance that underpins those who embrace this stuff is staggering.<\/p>\n

Clearly, I don’t consider the government has a role in dictating social actions. I am a social libertarian and consider there is very little role for government in making policies to control the way we interact. About the only controls I approve are those that restrict adults taking advantage of children (sexually or otherwise).<\/p>\n

But I also understand that we should not conflate these “limits” on governments in directing our social interactions with the national government’s fiscal policy capacities where there are no financial limits. We should always understand why we bother with government in the first place.<\/p>\n

We want government to advance the well-being of the populace which I often refer to as advancing the public purpose role of government. The dimensions of this are clear in my mind and most of the commonly considered constraints on the national government pursuing this role are illusory.<\/p>\n

The state should maximise the potential of its population – a zero waste of people – which at least requires the state to maximise employment. Once the private sector has made its spending based on its expectations of the future, the government has to render those private decisions consistent with the objective of full employment.<\/p>\n

The non-government sector typically does not spend all of its income over the business cycle. What does this imply? It means that non-government spending gaps over the course of the cycle can only be filled by government.<\/p>\n

The national government always has a choice:<\/p>\n