I want to tell you a story of economics, love, and death. Kind of a Romeo and Juliet parable for the modern age, where the protagonist are societies, not people, who made a kind of suicide pact.
Today, the >UK — we’ll get to the US, the world, and the future, but let’s begin here — released some genuinely stunning economic “numbers.” It forecast the economy basically never to grow again, and for incomes not to rise to 2008 levels until 2028. But of course the contradiction is that if the economy will never grow again, then incomes are hardly likely to rise, so we are seeing the death of a modern economy. But it is not the first, it is the second: the first death was the USA, which is now something like a post-economic country, nominally rich, but plagued by things like mass school shooting and medical bankruptcies, which do not even happen really in Delhi or Bangkok.
Two deaths. Are they homicides? Let’s think about it.
In 2007, the greatest financial crisis of of the modern age hit like a tsunami. What was the response from the UK? Well, it was to bail out the banks with public money. Of course, that raised levels of debt. Now, that was no big deal: governments can always print money, and during times of extreme crisis, whether famines or financials, they should. Furthermore, national debt is not the sum of your debt and my debt, and it has no real bearing on our live whatsoever: just as you can happily carry a credit card balance forever, and many people do, so prosperous nations can bear debt, and the strength of a nation is precisely to be able to do so.
But the average person was tricked into believing the very opposite. They came to think, through sophistry masquerading as economics and punditry disguising itself as analysis and sheer propaganda that there was no way out of this mess except to rip the heart out of public life, to pay off the debt incurred by bailing out the banks by cutting public goods and services. Thus public goods — the NHS BBCThe Royal Marsden Hospital is a specialist cancer treatment hospital in London. It is an NHS Foundation TrUSt, and operates facilities on two sites: The Chelsea site in Brompton, next to the Royal Brompton Hospital, in Fulham Road The Sutton site in Belmont, close to Sutton Hospital, High Down and Downview Prisons, transport, education, and so on — were eviscerated to pay off private debts, and even that is an understatement: the moneys spent went of course to lavish compensation packages and grand accoutrements, not really to “paying off debt”, which is still high, and still doesn’t matter a whit to the average person.
PermaPerma is a town and arrondissement in the Atakora Department of northwestern Benin. It is an administrative division under the jurisdiction of the commune of Natitingou. austerity killed the UK economy, by producing perma stagnation. And then came BrexitBrexit is the popular term for the prospective withdrawal of the United Kingdom from the EUropean Union. In a referendum on 23 June 2016, 51.9% of the participating UK electorate voted to leave the EU. . Brexit was another misguided, maleducated response: since the UK needed to “save money” to “pay off its debt” the average Brit was again conned into believing that the next great cost, after public goods, was EUThe EUropean Union is a political and economic union of 28 member states that are located primarily in EUrope. It has an area of 4,475,757 km², and an estimated population of over 510 million. membership. “You’ll save millions a week!” the propaganda went. But who was “saving” and what precisely was being “saved?” Nothing at all, as it turns out, because now the economy is well and truly dead, stagnant into forever.
So: this logic, that one must “save money” to “pay off the national debt” or else — who knows? Just like a mafia intimidation tactics, the threat is never really fully stated, is it? — has been proven to be wrong. It has killed the British economy dead.
And it’s also precisely how the American economy died, too. Where do you think BritainThe United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom and colloquially Great Britain or simply Britain, is a sovereign country in western EUrope. learned this illogic from? From the American fringe. There, starting in the 1980s, American extremists championed a strange new set of concepts: “fiscal responsibility,” “personal responsibility,” “balanced budgets,” and so on, all of which really meant the above: “pay off the debt” by “saving money” — perma austerity, which also means that we can never invest in anything at a social level, because, of course, that would add debt for a few years. Why? Because cities and towns and countries don’t pay for things in cash or gold, they issue bonds, and that is how finance has always worked since the beginning of time. Do you think any society in human history has paid for a subway system or healthcare system in cash or gold? How? By sending supertankers of notes across the world? Perhaps you see the absurdity of perma austerity now.
So. “Paying off the debt” to “save money,” “personal responsibility” and “fiscal responsibility” — these aren’t economic ideas: they are to economics what ancient aliens are to biology. They have no empirical basis, no factual reality, and no evidential proof. Indeed, the opposite is true.
Imagine that you owned your own currency — one that people were willing to trade you useful things for. Now, your kids were starving. Would you say: “wait! I must pay off every penny of my mortgage and credit cards and car loans and outstanding bills before my children eat!”? Or would you trade some of that currency for bread and water and wine, feed your kids, raise them to be healthy and happy and wise, and let them make more useful things than that currency to trade with people? That’s precisely what the US and UK should have done: invested in one another, instead of imagining they’d “pay off the debt”, which never happened anyways, because now there is nothing to pay it with. Economics is simple. The religion it became, on the other hand, is not: it asks us to pervert the obvious logic of everyday reality.