Public sector cuts: Will government debt become public debt?
You know the story by now. Feckless Labour government spends all our money. Brave Conservative-Liberal Democrat coalition rides into parliament on a white horse to rescue us all from fiscal collapse. It’s a narrative that has been recapitulated more times than we’ve felt like shouting at the television while watching Question Time. Yet it’s riddled with more holes than … well, than George Osborne’s credentials as Chancellor.
We read this article in the Guardian today, and were particularly struck by this sentence: “it looks likely that the most plausible way the coalition will meet its growth forecasts is if we all carry on racking up debt as we did during the bubble.” In other words, Osborne’s cuts are not a cure for our economic malaise. They are simply a way of transferring responsibility for managing the economy from the government to the populace at large.
In itself, this may be no bad thing. The blatant flaws in Osborne’s supposed economic masterplan seem obvious to most of us, so who’s to say that we won’t do a better job than him? On the other hand, nowhere in the official story is the likely effect of Dr. Osborne’s Marvellous Medicine accounted for. Cuts are touted as a cure that will bring back economic prosperity, not a bitter pill that will force us into austerity or into increasing already overblown levels of debt.
The distinction is important, because it reveals a fundamental shift in the way we apportion responsibility. If we are relying on a cuts regime to stimulate growth and prosperity, we are subscribing to a doctrine that cannot possibly succeed. If, on the other hand, we take on more individual debt to meet the shortfall in government policy, we are allowing the coalition to abdicate responsibility for a problem they claim to be resolving.
Perhaps the third way lies in bypassing, as far as possible, the large institutions that control our conceptions of wealth, in realising that we are more powerful as a global community than the unholy alliance of government and big business, and coming together to take action for ourselves. Complementary currencies that circulate wealth in the community rather than dispersing it to governments and banks already exist. If we find ourselves in the grim situation of choosing between austerity and further debt, maybe we’ll need to start creating our own.