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Confusions, persistence and the dismal science

We are still being force-fed the bankrupt theories of ‘supply-side economics’ on the assumption we won’t really know what it means. Time to swat up.

Today we discover that George Orborne might have a  brief and momentary windfall in government cash flow. Great; the country could do with the investment.  So what to do with it? Of course, we should give it to the rich and the powerful. But better call it something. Open the book, pick a euphemism; right, it’s a supply-side measure.

With each passing day I find myself in increasing despair at economics in general. It was a certain gourd of economists who did more than anyone else to crash the world economy. Their big contribution to the world was to take the selfish desires and prejudices of the super-rich and hyper-powerful and codify them into a theoretical framework which was to gain international recognition and respect. This in turn has become something of a global religion with its catechisms and calls to faith.

I shall make this point over and over again so my apologies in advance but concepts such as ‘the wealth creators’ which have flown from the theories of ‘supply-side economics’ are simply nonsense. The idea is that economic activity in a country is a function of the owners of businesses; it is their ‘agency’ (the things they do) which creates all the economic value, their entrepreneurship which causes everything good in the economy.

This is the heart of supply-side theory. This assumes that growth and wellbeing best come from ensuring that those who ‘supply’ goods and services (i.e. businesses) are given ‘the best possible environment’ to do what they do. Interestingly (as we see again today) this includes not the endless calls to ‘deregulate’ (or to translate, to allow businesses and their leaders to act in an unconstrained and feral manner) but the inescapable need to make the owners as rich as possible. That is why an unnamed source states with the confidence of those who don’t believe they have to answer for their previous actions (you know, trashing the global economy) that the 50p tax rate for top earners should be abolished. The theory is that making the rich richer will make them run their businesses better. And even though I use the word theory I of course mean fairytale.

Supply-side economics is just another name for right-wing politics – it can be a ‘business-agenda’ today, a ‘free-market’ solution tomorrow and a ‘trickle-down strategy’ at the weekend. The endless rhetoric and impenetrable theory are necessary to cover up two important points; the real-world evidence shows the theories don’t work and just as importantly they seek to distort any realistic picture of how growth works. You don’t need to be Karl Marx to be aware that the hours of hard work put in by the entire working population has something to do with the economic outputs of the economy. And you don’t need to be John Maynard Keynes to grasp the fact that people buying things (demand-side) has at least as much to do with economic growth as people selling things.

This dismal science gives credibility to what history will come to see as the total corruption of government by a small elite of the super-rich. It should simply be impossible for someone to make a claim for a supply-side-only model of our current economic woes and not be laughed out the room.  Supply-side strategies (suppress wages, deregulate relentlessly, don’t tax wealth, allow the rich to get inexorably richer) caused our current problems; they are in any meaningful sense discredited. But since only a small number of people understand what all this obfuscation and pseudo-theory really means and most of them are complicit. To say ‘cut the 50p rate as a supply-side’ measure as a contemporary political statement requires one major criteria to be in place – that no-one who hears it actually understands what it means.

This garbage must be challenged wherever we find it. It main breeding colony my be in Downing Street and it’s nest primarily lined with The Telegraph but it has also found a home in Scotland where we still have people advocating tax cuts for business as a sound economic strategy (and with straight faces too). Its a crap theory to mask a venal act of robbery by a class already fat on the proceeds of previous thefts from the wider public.

If people don’t yet know what the euphemism ‘supply-side’ means, it is time to gen up.

Robin McAlpine