The title of this post is an allusion to Jon Stewart’s recent debate with Bill O’Reilly (watch it here – it’s very entertaining). Stewart’s argument was that many Republicans dwell on “Bullshit Mountain”. Their view of the world is completely skewed and this prevents the nation’s problems from being solved, as complex issues are turned into simple (but false) choices. Many Tories also seem to live on Bullshit Mountain, and today was George Osborne’s turn to appeal to this demographic. This post will provide some commentary on Osborne’s speech and point out some of its logical flaws. I won’t deconstruct the whole speech, just pick out a few gems.
“The deficit is down by a quarter. There are one million more private sector jobs. The economy is healing.”
Three sentences, three misleading statements. When Osborne says the deficit is down by a quarter, he means the deficit in 2011/12 was a quarter less than in 2009/10. This is true, but what he doesn’t say is that the deficit for the first 5 months of 2012/13 is up on the first 5 months of 2011/12. So it is more accurate to say that the deficit is going up.
As for the million extra private sector jobs, that may be true, but Osborne doesn’t mention the half a million less public sector jobs, or that a significant number of these jobs have been part time or temporary. Or that there are still less jobs in the economy than before the beginning of 2008. Or that the employment rate is still significantly below its pre-crisis level.
Osborne says the economy is healing, but we are in recession. To many people that doesn’t feel like healing.
“Our country would have been all-but ungovernable if we had not been straight with the public before asking them to cast their vote.”
If they had really been straight with the public, our country would have been ungovernable – by the Conservative Party, because they would not have won enough seats in the election.
“We’re not going to get through this as a country if we set one group against another, if we divide, denounce and demonise.”
Let’s not forget he had spent the whole morning doing just that when talking about further cuts to welfare!
“Each one of my Budgets has increased taxes overall on the very richest.
And we’ve achieved that while getting rid of a cripplingly uncompetitive 50p rate that raised no money and cost jobs.”
If the first statement is true, it kind of undermines the second. If the 50p rate is so uncompetitive, so wealth destroying, why aren’t the other supposed tax hikes on the rich equally as damaging?
“But just as we should never balance the budget on the backs of the poor; So it’s an economic delusion to think you can balance it only on the wallets of the rich.”
This plays to two of the key beliefs of the residents of Bullshit Mountain. The first is that Government is like a giant household and should try to balance its budget at all times. This is nonsense. You only have to look at the Government’s budget outcome over the last 40 years to see this. A deficit is the natural state for the UK economy. This is a neutral fact. It is neither good nor bad.
The second belief is that if you hike taxes on the poor, they will work harder, but if you hike them on the rich, they will work less!
“Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits?”
Ignoring the fact that they might be sleeping off the night shift they’ve just arrived home from, this plays up to another Bullshit Mountain belief – that there are millions of people living the Life of Riley off the backs of the hardworking ‘strivers’ out there. If only there would get off their arses and find a job, we wouldn’t be in this mess. The poor are to blame! This viewpoint demonstrates an inability to reason correctly. Are we really to believe that sometime in 2008, millions of people independently from each other suddenly decided to quit their jobs and sign on the dole. Of course not! The problem is a macroeconomic one of not enough jobs. Repeatedly beating the unemployed with a stick will not help them find jobs if no jobs are available.
“Some of the biggest issues in British politics, so big people thought them too controversial to fix, we have been prepared to tackle. A state that had become too expensive to pay for. Public sector pensions we couldn’t afford. People earning low incomes but still paying income tax. Business fleeing Britain because our taxes were too high. “
These are all pure Bullshit Mountain. A state that had become too expensive to pay for? What does he mean? We can afford any size state the people in our democracy decide we want. Public sector pensions are always affordable. Their size is a political decision. It has nothing to do with affordability. People earning low incomes are still paying income tax. Which businesses are fleeing because of excessive taxation? Certainly not ones whose loss we should mourn.
“They think that extra borrowing could pay for spending, or indeed tax cuts, in an attempt to put money in the pockets of consumers. But the extra borrowing would come at the cost of higher interest rates and everyone would know there would be higher taxes to pay for it, coming down the track. The higher interest rates would pick the very pockets of the working people you are trying to help and the fear of extra taxes would undermine their confidence.”
TINA is back! This is the only argument Osborne has left now. Even though the deficit is going up, because he is not doing it on purpose, the markets have confidence in him, but if he were to increase the deficit on purpose, they would turn against him. Not very convincing is it? Our low interest rates have nothing to do with austerity. They are low because we have our own currency so the markets know there is no default risk on UK bonds. Even if the markets did start to lose faith, they can’t hold us hostage. All the BoE need do is announce a target interest rate and commit to buying and bonds that go unsold at this rate. End of the problem of the markets.
“Now, as well as those critics saying we’re cutting too fast, there are those who say we’re cutting too slow.”
The only people saying that are those living at the very top of Bullshit Mountain. No serious person would say that.
“Our published plans already require us to find £16 billion of further savings. As I have said, the broadest shoulders will continue to bear the greatest burden.”
Apparently £10 billion is to be cut from the welfare budget. Not sure welfare recipient’s shoulders are all that broad.
“Nor am I going to introduce a new tax on people’s homes. It would be sold as a Mansion Tax. But once the tax inspector had his foot in the door you’d soon find most homes in the country labelled a “mansion”. Homes people have worked hard to afford and already paid taxes on. It’s not a Mansion Tax it’s a Homes Tax and this Party of home ownership will have no truck with it.”
What does Osborne think council tax is? All he need do is introduce a couple of extra council tax bands to ensure someone living in a £10m house doesn’t pay the same as someone in a £500k house.
“We have never argued that you stop what economists call the automatic stabilisers operating – the lower tax receipts and extra government payments that follow if, for example, the global economy turns down.”
What does he think welfare payments are? The are automatic stabilisers designed to prevent the economy from sinking into the abyss when it is hit by a shock like the financial crisis. He is already weakening them and is proposing to weaken them further. This will unsure the next crisis will be much worse.
Osborne finished his speech with some supply side bullshit. This is music to the ears of the residents of Bullshit Mountain. Business taxes are too high, regulations to tough, we want people to aspire blah blah blah. Osborne even thanked Adrian Beecroft for his piss-poor report! Our problems are absolutely not due to business taxes or regulation. These are ideological demands from people whose interests differ dramatically from the vast majority of the population.
So to end then, here are a few facts for the residents of Bullshit Mountain:
1. Government is nothing like a household. A balanced budget should never be a policy goal;
2. The reason the deficit is so high, is not because Government is recklessly spending too much, it’s because the private sector is not spending. So we can either tax the excess savings of those who are hoarding money, or we the Government can spend more. Those are the only two choices if we want a swift recovery.
3. The vast majority of benefit claimants are not out of work because they are lazy, or ‘scroungers’. They are out of work because there are not enough jobs. Repeat after me “We demand aggregate demand!”
4. Our business regulations and taxes are already some of the lowest in the developed world. Don’t believe me? Check out the stats for yourself on the OECD website. Cutting them further will not strengthen our economy. Quite the opposite. It will only speed up the transfer of resources from the bottom to the top, and hasten the arrival of the next crisis.
We should never pander to Bullshit Mountain, as Labour currently seem to be trying to do (Liam Byrne anyone?). If we could all agree on these four things, we can start to talk about actual solutions to the problems we face. I’ve outlined some approaches we could take here:
6 thoughts on “Bullshit Mountain, UK”
Fantastic deconstruction (and demolition) of Osborne’s dishonest speech. It is fascinating how often the ‘delusional’ word is cropping up in commentaries but I much prefer your ‘bullshit mountain’ 🙂
Perhaps you could have also mentioned that the real free riders “living the Life of Riley” are not the benefit scroungers, which cost the Exchequer an estimated £1.2bn each year (taking scrounging to mean fraud), but rather the largely well-off tax-avoiders which cost us at least £25bn.
Thanks for reading. I agree with your sentiment, but I don’t think going after avoidance harder is an efficient way of dealing with the problem. There is a whole tax industry built around devising new ways to avoid tax, so it will always be a war of attrition with the taxman. A better approach I think would be to overhaul the whole system, shifting taxes more onto property and land charges and tax incomes, capital gains and corporations equally.
It was really only the sentiment I was trying focus on: that public outrage towards the problem of free riding ought to be directed at those who abuse the system the most, which I was suggesting are tax-avoiders. How we deal most effectively with these ferrari free riders if honestly beyond me.
Lots of double standards, lots of hypocrisy. Govt self contradictions are not drawn attention to enough. I’d like some consistency. If its bad for them (rich) its bad for us(poor). If its good for them (elite in 6-figure salaries and real gold-plated pensions) its good for us (poor) = decent wages and good pensions, etc. But its all a con game of the rich fleecing the poor, that’s how they got rich and remain. Exploitation is the fastest money-maker. The parasites at the top are destroying society.
Reblogged this on Citizens, not serfs and commented: