When I was studying in the UK during the dark Thatcher years there was a rat plague in Manchester. The reason was traced to the public spending cuts that had led to the reduction in rat catchers/baiters who had worked on the canals that go through Manchester. Later that year (December 1982), there were widespread collapses in the Manchester underground sewers which caused effluent in the streets, traffic chaos and long-term street closures. Major inner city roads were closed for a good 6 months while repairs were rendered. The reason – cut backs in maintenance budgets. The repairs ended up costing much more than the on-going maintenance bills. That experience brought hometo me the myopia of austerity. While the austerity causes massive short-term damage, it is clear that it also generates a need for higher public outlays in the future as a response to repairing or attending to the short-run costs. The latest focus in Britain is on rising waiting lists in hospitals and increasing violence in prisons. All these examples of austerity compound and reverberate throughout society in countless little ways that accumulate to one huge mess. The Thatcher years were highly destructive for the well being of the British people contrary to the myths that the conservatives pump out. The current period will be of a similar ilk. And spare a thought for the long-term damage in places like Greece! It is beyond belief.



The following photo (from Chapter 3, Sewers: Repair and Renovation: Repair and Renovation, edited by Geoffrey F Read, Ian Vickridge, Butterworth-Heinemann, published 1996) shows Market Street, Manchester just after the collapse began.

The problem wasn’t confined to Manchester. Margaret Thatcher’s destructive reign undermined public infrastructure throughout Britain.

This graphic comes from the British A-A’s Drive Magazine, July 1983 and reports on the widespread breakdown of the drainage and sewerage systems in Britain as a result of lack of upkeep and repair.

Sometimes the damage that austerity causes does spill out into the streets in the form of acrid human waste as public infrastructure collapses.

Often, though, it is a slow grinding process of degradation that is largely unseen until the dysfunction becomes palpable.

I was reminded of those awful days living in Manchester when I read the UK Guardian article (June 7, 2015) – Austerity isn’t ‘good housekeeping’: it’s dogmatic, risky and unjust and the article (June 10, 2015) – Growth, what growth? Thatcherism fails to produce the goods.

The Conservatives (who promote austerity that the so-called ‘progressives’ in Labour-type parties then just ape, given that it is not in their DNA to conceive it) like to wax lyrical about the Thatcher years as if it saved Britain from the bad old days of labour.

They claim that Thatcherism revitalised the British economy through privatisation, welfare cuts and deregulation (the so-called ‘light-touch’ approach).

The claims were always false but have gained a life of their own – a ‘sort of say it often enough and it will be true’ type status.

One of the UK Guardian artices (June 10, 2015) reviews a new study – The Macroeconomic Impact of Liberal Economic Policies in the UK – by Cambridge researchers Ken Coutts and Graham Gudgin who provide a substantial evidence base which leads them to categorically reject the claimes that Thatcherism produced higher real GDP growth and more efficient industry (via higher productivity growth).

We read that “contrary to widespread belief, GDP and productivity have grown more slowly since 1979 compared with the previous three decades”.

The authors are quoted as saying:

… the most important economic indicators, including growth in GDP per head, were in fact no better in the post-1979 decades.

The major change was the “financial liberalisation … the most important economic indicators, including growth in GDP per head, were in fact no better in the post-1979 decades” but “led to a huge, and eventually unsustainable, expansion of household borrowing. This temporarily accelerated the growth of consumer spending and hence GDP and of house prices, but in 2008 contributed to a banking crisis and the longest recession for over a century.”

The facts are:

1. Per capita GDP growth averaged 2.6 per cent per year between 1950 and 1980, but fell to 2.2 per cent per annum from 1980 to 2007. It declined by 0.2 per cent after 2007.

2. Productivity growth averaged 2.9 per cent per year between 1950 and 1980, but fell to 1.7 per cent per annum from 1980 to 2007. It declined by 0.2 per cent after 2007.

3. Unemployment and inequality have risen substantially since 1980.

4. Variability in real GDP growth was much higher from the 1980s, relative to the 1950s and 1960s.

Meanwhile, we learn more about what we are up against in forcing the debate to acknowledge the evidence base rather than run around in circles discussing myths and degrees of myths.

The UK Guardian article (June 9, 2015) – Secretive donors gave US climate denial groups $125m over three years – doesn’t tell us very much that we didn’t know but the scale of the information presented is confronting.

The article says that:

The secretive funders behind America’s conservative movement directed around $125m (£82m) over three years to groups spreading disinformation about climate science and committed to wrecking Barack Obama’s climate change plan, according to an analysis of tax records. The amount is close to half of the anonymous funding disbursed to rightwing groups, underlining the importance of the climate issue to US conservatives. The anonymous cash flow came from two secretive organisations – the Donors Trust and Donors Capital Fund – that have been called the “Dark Money ATM” of the conservative movement.

Progressive ‘think tanks’ get nothing compared to this and rely on goodwill and overworked staff to put their messages out into the public.

They cannot afford the massive marketing and publishing apparatus that the conservative think tanks deploy to pump out the lies.

That is a serious issue that I have been struggling with for most of my career – trying to run a research centre and use our research output for advocacy – but always having to chase funds – in the tens of thousands rather than millions.

So the Thatcherism myth is likely to continue because there are massive funds backing its perpetuation.

The other UK Guardian article cited above talked about the way in which the Conservative British government via its Chancellor has been able to con the British people into believing that the:

… latest round of cuts in the Commons last week – a down payment on the £25bn he plans to make over the next three years … [represent] … a “culture of good housekeeping” in government. Austerity as common sense.

The fact that the Conservatives have been able to get away with overseeing the slowest recovery in British history is testament to how bad the Opposition is in Britain.

It will be a similar story in Australia when the next federal election comes up in 2016. We now have the Treasurer lecturing people about the housing crisis in Sydney – saying that if people want to buy property in what is a dramatically inflated housing market that they should “get a good job that pays good money”. He had previously claimed that “poor people don’t drive cars” so increasing costs of motoring was not inequitable.

The Opposition, as noted in the recent blog – Why no-one should vote for the Australian Labor Party – only want to compete on who will deliver the austerity the quickest (which translates into claims and counter-claims about who will deliver a fiscal surplus the earliest). It is a nightmare.

The UK Guardian article reflects on what is happening in Britain in this regard and what might happen given the outlandish austerity plans that the newly-elected Government has announced in its 2015 fiscal statement.

The Chancellor is due to speak tonight at the “annual Mansion House Speech” and it is rumoured he will outline a plan “for permanent budget surpluses” – that is, a fiscal position where “tax revenues should cover spending on both infrastructure and the day-to-day running of government” (Source).

He plans to call “the first meeting in more than 150 years of the committee of the commissioners for the reduction of the national debt”, which was a body set up “by William Pitt the Younger to help repair the damage to the public finances caused by the Napoleonic wars”.

This is not only a nightmare for the British people but an intensification of the madness that ruled when Thatcher was Prime Minister.

While the Conservatives abandoned a substantial part of their initial austerity push in 2012 when it was obvious they were going to drive the British economy into depression – they succeeded in pushing it back into recession – the cuts they did introduce have been damaging.

Many of the cuts are of the slow-burn type – hidden from the daily life of many Britains but highly damaging to some segments of the population.

Two areas where austerity has impacted badly are in “waiting times at hospital accident and emergency departments” and in “rising assaults in prisons as staff numbers are cut” (Source).

These are the rat-plague/sewerage collapse type of manifestations.

I had a look at the statistics to check the situation.

The National Health Service in England provides Weekly Data and Quarterly Aggregates of hospital waiting times. The following graph is taken from the – Quarterly time series 2004-05 onwards.

It shows the Percentage of Emergency Arrivals who get attended to (admission, transfer or discharge) within 4 hours beween the second-quarter 2004 to the first-quarter 2015.

It is clear that waiting times have increased with less people now being attended to in under 4 hours since the Tories were elected.

This sort of impact has flow-on effects in the same way that the sewerage collapse imposed costs on individuals and businesses for years after the initial problem became obvious.

People who are hanging around hospitals are not attending to other activities – work, play etc – all of which compound.

Last year, there were several reports covering the “rising wave of assaults, murders and suicides in Britain’s jails” (Source).

A BBC news report earlier this year (January 29, 2015) noted that:

Serious assaults in prisons in England and Wales reached their highest level for at least ten years … There were 1,958 in the year to September 2014, including 431 on prison staff, statistics show. There were also a record 170 sexual assaults in England and Wales’ prisons in 2013.

The problem is two-fold:

1. Recession and rising unemployment causes crime rates to rise with subsequent increases in the number of people imprisoned.

2. Fiscal cuts to the Justice Department leads to staff cuts in prisons and probation centres

The prison chaos in Britain goes back, in part, to the Thatcher days. The Prison Reform Trust – Prison Facts, May 2014 – note that:

1. “The UK has the most privatised prison system in Europe.”

2. “There has been a 25.9% reduction in the number of directly employed NOMS staff since March 2010” (NOMS is the National Offender Management Service).

3. “Since December 2010 the number of staff employed by probation trusts has fallen by 15%, there are now nearly 1000 fewer Probation Officers.”

4. “The ratio of prison officers to prisoners in 2000 was 1:2.9, by the end of September 2013 this had increased to 4.8 prisoners for each prison officer.”

On April 30, 2015, the British Ministry of Justice released the latest – Safety in custody quarterly update to December 2014 and annual.

The incidence of Assaults per 1,000 prisoners has risen from 169 in December 2010 to 190 in December 2014. Both male and female assault rates have risen.

Assaults on prison staff per 1,000 prisoners have risen from 34 to 43 over the same period.

The following graph shows the total prison assaults (raw numbers) from the first-quarter 2003 to the fourth-quarter 2014.

The rise in recent years is prominent.

We could accumulate all sorts of ‘austerity indicators’ many of which would be of this type – not particulary noticed by the mainstream population but which have cumulative and compound effects on society in general.

For example, the rates of rescidivism among those incarcerated in British prisons has risen significantly since 2000. As at May 2014, “46% of adults are reconvicted within one year of release” (Source).

Upon release, the people that end up homeless or unemployed are highly likely to reoffend. What other option is there?

While out, they are beating up people, robbing houses and inveigling others into a life of crime. Compound effects.

Which always raises the question that the proponents of austerity never address: What are the longer-term public outlays required to address the damage that the so-called cost savings of the austerity initiatives provide.

Note that the true cost of a public policy program are to be measured in the real resources that are diverted or activated by the program.

The numbers that appear in ‘fiscal’ (aka ‘budget’) statements are not true costs.

But even within the logic of the neo-liberals, austerity is a myopic strategy because it often leads to higher future net outlays relative to the short-term reductions in outlays.

The cost of the Thatcher sewer collapses were enormous.

The cost of leaving a generation of unemployed youth in Greek without paths to education, training and work experience will resonate over their lifetimes, the lifetimes of their children and on.

These things are never fully appraised in public policy decision-making by the likes of the IMF, the World Bank, and governments.

That is one of the reasons Modern Monetary Theory (MMT) proponents advocate continuous full employment. It is a way to minimise the waste of real resources. But it goes well beyond that of course.

Austerity undermines human potential and opportunity. Full employment with evolving definitions of what constitutes productive activities allows humans to achieve what they can and then functional finance principles allow those who are left behind as a result of their own capacities to more fully participate in society.

Austerity white ants those aspirations.

Conclusion

The week the sewers collapsed in Manchester was a very stark lesson for me as a postgraduate student. It brought home – around my feet if you like – the myopia of austerity Thatcher-style.

As more information emerged, it became obvious that the outlays necessary to repair the damage would far exceed the outlays associated with on-going maintenance.

There are countless examples of this sort of myopia.

The current focus on the rising inefficiency in the British hospital system and the violence in British prisons is just two areas that austerity impacts in this destructive way.

That is enough for today!

(c) Copyright 2015 William Mitchell. All Rights Reserved.