the myth of austerity

we hear, again and again, by politicians, journalists and ordinary people, that we have to go through the tough time of austerity (despite ruining the welfare state and the quality of life for the majority of the nation) in order to sort out the nation's debt, but does the policy of austerity actually work?

austerity is the policy of reducing spending in order to decrease the debt. the debt is the money the uk has spent that it didn't have - as of the first quarter of 2018, uk debt stood at £1.78 trillion, or 86.58% of gdp. the deficit is the gap between what the government's income and spending, and whenever there is a deficit, debt increases. debt increased because of deficit in 2017 by £46 million. so, we need to make the deficit into a surplus in order to pay back the debt owed. but is are there other, less destructive and more efficient ways to pay back debt?

in short - yes.

currently, austerity isn't really doing great for itself. in the uk, homelessness has doubled since 2010, 100,000 more children are in poverty since last year, and the nhs, as we regularly hear, is in crisis. the welfare of the people, and the welfare state itself are not the pride of the uk at the moment. as well as this, people are not getting what they used to out of their wages. life is not great for most people. but, it's all in the name of austerity, right? we have to go through this, for however long it'll be (10, 20, 30 years??) in order to sort out the country's ginormous accumulation of debt, don't we?

well, after nearly a decade since the first austerity policies were put in place, the economy still isn't doing great. the tories say they are handling the economy successfully because they are cutting down the deficit, though really what they are doing is cutting necessary services. though we need to make the deficit fall, the manner in which this is being carried out is destroying our country.

borrowing has decreased from 9.9% of gdp in 2010 to 2.6% - a decrease of 3/4, an important step which needed to happen. however, when we look at where cuts have been made the picture seems not so great... for instance, the nhs is not being given the money it needs to survive, with the nhs finishing 2017/18 with £960 million deficit. spending by councils on adult social care has fallen by £1.3 billion since 2010, with 425,000 fewer adults receiving social care between 2009/10 and 2013/14. between 2010 and 2017, 500 children centres and 1,200 sure start centres were closed. funding per student has also fallen in real terms since 2015/16. austerity is stretching public services and many services not have the money they need to provide their services to the people who need them. social services are necessary for the well-being of the people, and the well-being of the people is necessary for a good economy.

increasing poverty together with stagnating wages, falling funding for education and the under-funding of the nhs means that there are children growing up in the uk today, one of the richest countries in the world, are facing acute malnutrition, without medical help. there are children, 30% of children in fact, in poverty, with a lack of opportunities because of poor education facilities. austerity is increasing poverty and not providing a way out. whilst this is happening, mp's wages have increased 1.8%. defence spending remains at 2%, one of the highest in the world when taken as a percentage of gdp. and, let's not forget, may's deal with the dup, giving northern ireland £1 billion spending money to prop up her 'money-saving' government.

the imf said back in 2012 that austerity measures have probably worsened the debt crisis because they slow economic growth. this is what we are seeing currently. the uk economy is growing at a slower rate than the average for eurozone countries. uk economic growth has been overall falling since 2014, from 2.8% to 1.3% in the most recent quarter of 2018, whereas since 2014, both the eurozone and the eu have been overall growing. austerity is making the lives for hardworking people who cannot afford luxuries like private healthcare and education, harder, and ruining our economy in the long term whilst not even helping it in the short term.

austerity prevents growth, increases poverty, causes worse qualities of life and puts strain on the economy. what we need instead is for the economy to grow. the way to help get us out of this mess is to increase gdp, encourage wage increases from corporations and cut some more unnecessary services.

•  implementing activist industrial policies, where the government funds certain sectors such as civil aircraft, and eco-friendly industries like the electric car or tidal power industries, helps to grow the economy and provides training, skills and employment for people working in that sector. 
• cutting some benefits that the most wealthy in society also recieve, such as free bus passes for better off pensioners, would be a more worthwhile spending cut than those that are being carried out currently. 
• increase the minimum wage, or implement wage ratios, in order to raise salaries for the lowest paid workers, which will then feed back into the economy through increased personal spending and increased disposable income. helping increase people's salaries would also help to decrease the number of people in working poverty and some people's reliance on council services. 

with more people earning higher salaries, paying more tax and requiring less social benefits, these policies help to decrease government spending and increase government income. growing the economy also helps to decrease the deficit as the gdp is higher and thus the figure is a lower percentage of gdp. the economy needs to start growing at a better rate to help tackle the debt issue, and increasing industrial spending can only be good when facing the tough post-brexit trade world.

portugal is one example of how socialist alternatives to austerity can help the economy and society hugely. portugal was one of the worst hit by the economic crisis, and had to be bailed out by the imf. the first thing that the country jumped to, as we did, was to implement austerity measures. poverty increased, unemployment increased, there was an increase in bankruptcies, salaries had decreased 30% - portugal was not in the best state, to say the least. then the socialist government, led by antonia costa, of 2015 overturned the policy of austerity with socialist alternatives. by 2016, there was a 13% increase in corporate industries, the economy has been growing for 13 successive quarters, the defecit has halved and the country is booming!

the strain which debt and austerity are causing on our economy, the increase in poverty and wage stagnation can have dangerous consequences. as history has told us, when there is an economic crisis, extremism brews. with tommy robinson supporters around every next corner the concept of extremism becoming the norm in britain is an unusual but very real prospect for our futures. we need to sort out the economy, and more importantly, the impact it is having on every day people to make sure this doesn't happen!

austerity is killing everything we love about britain and literally putting people's lives at risk due to the dramatic increase in poverty we have seen. we need a change.

20:1 wage ratios are the solution we need

the news, if you can call it that, as we are all already blatantly aware of the extreme inequality and working poverty in the uk this week, that the median annual pay of a ftse 100 boss is on average 167 times more than a worker on a median salary, only further demonstrates the disgusting nature of this version of capitalism. one of the reforms we need to help solve this solution we need comes in the form of 20:1 wage ratios.

let's start here - why is this a problem first of all?

looking at the gini coefficient, which measures inequality, where a score of 0 means everyone has an equal income, and a score of 1 means one person has all the money, the uk scored 0.62 in 2017, which really isn't great. as well as this, the top 1% has 21% of all income, and the top 10% has over 50% of income. but saying this doesn't really mean anything - in nearly every society there is going to be an income hierarchy. this inequality is an issue in the uk because the people at the bottom are suffering - poverty is rising, with it being predicted that 5 million children will be entering 2020 in poverty. additionally, in-work poverty is increasing, with even 55% of homeless people being in work and 60% of people in poverty being in work. so this inequality is not just a wage hierarchy, it is one that is causing extreme levels of poverty and suffering, levels which we should not be seeing in the 21st century in the 9th richest country in the world.

as well as the damaging consequences of this level of inequality, it is also abhorrent ideologically. wage hierarchies give people ambition and inspiration, though the level of inequality in the uk means that the wage hierarchies are causing exploitation and poverty.

additionally, companies cannot function without their lowest paid workers. whether they are cleaners, sales assistants, waiters and waitresses or truck drivers, these roles are all vital to the running of a business. saying this, the top positions of companies are also vital - where would a company be, for instance, without a ceo or founder of said company?

though a ceo probably deserves their income, a production worker also deserves an income high enough to keep them and their dependants out of poverty.

this level of inequality is completely unjust and unfair. we need to make wages fair - not equal, fair.

and that is where the 20:1 wage ratio comes in.

20:1 wage ratios are quite simple - all it means is that the highest paid worker of a company cannot be paid any more than 20 times the salary of the lowest paid worker of said company. they used to be used in the 1920s, and even the famous lefty, trade union championist david cameron supported them!

portugese prime minister antonia costa has made a brilliant example which all eu nations should follow - that where if you give workers rights and good wages, the rest will follow. in his words, “we devised an alternative to the austerity policy: focusing on higher growth, more and better jobs, and greater equality. the rise in earnings made economic operators more confident, resulting in the fastest economic growth since the beginning of the century and it has produced a sustained rise in private investment, exports, and growth.”

20:1 wage ratios would solve so many socio-economic issues we see in the uk today. minimum wage increases are great, but businesses often look to cut down their spending elsewhere, leading to buying worse-quality, unsustainable and even more unethically sourced goods to solve this. whereas, the 20:1 wage ratio supports balancing out the incomes themselves to make the system fairer.

when income inequality is causing the catastrophic levels of poverty we are seeing in the uk today, it is not creating inspiration, aspiration or encouraging social mobility. it is causing children to be malnourished and unable to concentrate in schools. it is causing the exploitation of workers who are unable to heat their homes. this level of inequality and its consequences on the lowest paid workers is absolutely disgusting, and unfortunately, the greed of capitalism means that we have to implement policy to allow everyone to live and not survive.