“Economic Murder” and the Reality of Economic Cycles

One does not have to search for long in the archives of Financial Regulation Matters to find criticism of the Conservative Government. Whether the focus is on the increase in food banks, tax avoidance, elitism, siding with business over the public, or a level of privatisation that is forcing the U.K. into a corner it will struggle to get out from, there has been no shortage of criticism. However, the first thing to note is that today’s post is not, nor the blog moreover, pro-Labour (or, in fact, any political party); Labour are simply just as culpable as their Conservative brethren. To demonstrate this point, today’s post, the first of two, will look at the recent ‘landmark study’ that suggested the Conservative Party’s austerity measures have caused upwards of 120,000 deaths, unnecessarily, since embarking upon this attempt to recoup the losses caused by the financial sector; yet, the analysis will do so from within the parameters of the need to understand economic cycles.

With the Conservative Party taking power in 2010 as part of a Coalition Government it effectively controlled, austerity measures have been ruthlessly implemented across a wide range of British society. Whilst it is expected that the Party would go after the poorest first, traditionally speaking, this era was, and still is, defined by the broadening of that net to the middle-classes. It is on that basis that Johnathan Watkins et al produced the research paper Effects of health and social care spending constraints on mortality in England: a time trend analysis, which was made publically available via the British Medical Journal. The paper is based upon statistical analyses regarding spending levels in two specific categories: public expenditure on health (PEH) and public expenditure on social care (PES), with PES suffering greatly in the hands of the Tories. Yet, whilst the paper ultimately calls for an increase in PES, which seems obvious but is supported by statistical evidence, the media have found delight in picking up on certain elements of the report. The Independent takes the lead with the extracted phrase of ‘economic murder’, whilst continuing by affirming that whilst mortality rates declined between 2001 and 2010, they rose sharply in the following years; the study suggests that, based on the trends identified, there would be 152,000 austerity-related deaths between 2015 and 2020 – 100 a day – mostly because the majority of these people will be reliant on social care rather than health care. Yet, the authors of the paper were keen to temper their findings, expectedly, and stated ultimately that the paper cannot prove ‘cause and effect’, only ‘association’, which was highlighted by critics of the paper like Local Councils who suggested the statistical background of the research could not be relied upon. This all makes sense, but in reality it should be no surprise that savage cuts, across the board, have led to an increase in the mortality rate.

For the Tories, figures like these are par for the course. This is demonstrated in the callousness of some of their most senior figures, and in the recent ‘gaffe’ made by Chancellor of the Exchequer Philip Hammond with his ‘there are no unemployed people’ remark on a morning political TV show. Whilst the comment was, in reality, taken out of context – Hammond was discussing the effect of technological innovations on sectors in different eras, although the claims made by some that actually Britain does not have an unemployment problem can be easily dismissed – the comment was ‘bad for the optics’ in a world where, apparently, that is all that matters. Just two days out from today’s Budget, the timing could not have been worse for Hammond in theory, but in reality it matters very little. This is because the focusing upon who said what and when is nothing more than a distraction from the reality of the situation – the systemic reality. Let us take a step back from Tory-bashing for one moment, and let us look at the Labour Party’s role in this situation where disabled people are being forced to climb stairs to prove their disability, and young families with young children are being forced into food banks after having their benefits effectively suspended for six weeks. Since the 1980s up until the Financial Crisis, of which Labour Governments played an active part (from 1997 to 2010), financial entities within the City of London were actively deregulated, with the Labour Party overseeing the final ten years of the project to extract more wealth from society then has been witnessed before – the Crisis cost the U.S. more than $22 trillion, and the U.K. £7.4 trillion which, if it were not for the heart-breaking human cost would be almost laughable figures. Labour played its part in this system, and they are as much to blame as anybody else; this is not to put the blame on any one particular group, because the political elite is now paying for their subservience to the financial elite by way of record numbers of politically disengaged and disenfranchised citizens.

Ultimately, it is important to have some perspectives when phrases like ‘economic murder’ are being put forward. Yes, the Conservative Party is at the forefront of the attack upon society, but we must focus on what they represent more than what they actually do. Doing this will allow people to predict the effects of economic cycles, rather than find themselves caught up in the crossfire. When the next boom comes around, and credit is flowing free again, society needs to reject the allure of an easy and commercialised life in the knowledge of the damage that is inevitably lurking around the corner; whether this happens is anybody’s guess, but history tells us that, at some point, we will see this all again.

Keywords – Austerity, Conservative Party, Labour Party, Politics, Business, Poverty, Economics, @finregmatters