Why There Isn’t A Recovery Really…….

kamsandhu —  May 16, 2014 — Leave a comment

By Thomas Barlow

The Tories have trumpeted economic growth, saying the IMF have had to eat their words, after they suggested that austerity was damaging the UK economy.

By some polls they have leapt into the lead for the Euro elections this week, and are almost certainly are putting that down to a positive message of economic recovery and competency. So are the Tories really putting us on the right path, just in time for the elections?

In short, no.

A false housing boom has been created to give the impression of growth, which has only benefited an international class of landlords and shareholders, and what drop in unemployment there has been has come from London centric, insecure and low paid work, mostly self employed.

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Image: Another Angry Voice

All this to create a level of growth lower than at it’s lowest level under Labour.

So let’s walk through the housing boom first, and what it means for us.  Then we will talk about debt, inequality and unemployment.

The government ‘Help To Buy’ scheme seems reasonably benign – helping people to buy houses in a time of economic turmoil is a good thing right?

The Thatcherite dream of being a house owning democracy is still alive – but before we fall too deep into praising the wonders of having your own house, it is worth remembering the three EU countries with the highest rates of home ownership are Greece, Ireland and Spain.

The problems with ‘Help To Buy’ and increasing house prices (which have been encouraged by the Chancellor) are multiple.

First this is consumer led economics – something which the Tories promised they would avoid as it creates the bubbles that got us into this situation in the first place. It means (in part) that growth is based on (mostly unsecured) borrowing, which will lead to another credit crunch, far worse than the last one, as we are all a lot worse off than before.

Second it doesn’t create jobs that actually produce anything.  Manufacturing jobs have fallen by 300,000, whilst the number of estate agents has risen 100,000 (since the 2008 crash). We now have a class of landlords who only make money off owning and selling property.

Thirdly, these houses are too expensive for the local population.  75% of all new homes have been bought by foreign investors, further fuelling the bubble, and making the houses impossibly expensive for people to actually live in.

This bubble has almost wholly occurred in London and the South East, which has meant a completely geographically isolated boom, and a serious problem for the young and poor trying to live in these areas.  The Telegraph went so far as to suggest that it was making London ‘boring’, as only bland rich kids can afford to live there any longer.

Even if buying these houses wasn’t damaging the economy and they weren’t foreign owned, home ownership shouldn’t be the de facto cover for falling pensions and lower standards of living – which currently it is.

We need high quality social housing, higher average wages and better pensions.

What wealth has been created has been unbelievably unequally distributed. Pay for the rich has increased and dividends being paid to shareholders have gone up and up.

Big companies have managed to increase dividend pay outs through stagnating and cutting pay whilst avoiding investing anything in their own companies, or elsewhere. Which may make sense considering they are sitting on private debts of 113% of income.

However real wages have fallen considerably since the crash and they continue to do so.  As Unions struggle to represent the unemployed and the casually employed, and as wages fall, so does the health of the economy, and all of our living standards.

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UK Wages since 1997

On top of this, 4 out of 5 new jobs are in insecure or low waged positions – earning less than a quarter of national average wage!

In the 1980’s Thatcher hid the levels of unemployment by moving lots of people onto disability benefit.  

Here at RealFare we know there are targets for sanctions (depriving the poor of the money they need to live – let’s call it what it is) to lower the unemployment figures, whilst there is also lots of manoeuvring people onto various other benefits that don’t count as unemployment – mainly into self employment through Working Tax Credits.

As the number of Self-employed has increased 375,000 in the past 12 months, average earnings for the self-employed has dropped £5000 a year to a measly £10k P/A. This self-management of poverty is clearly a new feature of the new economy.

To top this all off, for all of us outside London, we’re screwed.  These shitty jobs, with falling wages and no security, are almost entirely being created in London (80% of them anyway), the one place with ever increasing house prices and living costs.

Maybe the fact we can afford a smart phone, and get most of our entertainment for free is going to be enough to make us not notice the real truth of the state of the economy.  On the other hand, the rise of UKIP (despite support for them being bizarrely similar to shitting in your own bed) may suggest otherwise.

Don’t believe the hype, the economy isn’t recovering, and the Tories aren’t the ones to make it all better.  That is going to be down to us.

READ THE EXCELLENT RECOVERY REPORT BY THE NEW ECONOMICS FOUNDATION

And last year’s Open Democracy article on housing

PLEASE CHECK THE WEEKLY DIGEST BELOW -THERE ARE SOME GREAT THOUGHT PROVOKING ARTICLES TO SHARE, AND A LOT OF FUN AT THE BOTTOM

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REGULARS – Some digested pieces to help you fight the war on the mind.

Liberty – Economics – Environment – Good News!

Liberty

One of the greatest attacks to our liberty is through what we think – as we will come to soon – so exploring why we hate immigrants so much as a society is massively important.

One of the things that is very little talked about is the psychological impact of heavy handed, punitive policing.  Those who wish to make a difference to society through protest will be familiar with what this article talks about.

Apparently tweeting about UKIP is illegal now? 

Economics

So much for falling numbers of unemployed – how come there 60% more people in-work, claiming housing benefit?  Because it isn’t a recovery for all.

Gove makes a ‘lunatic raid’ on £400 million for poor pupils to save his shitty free school program

Privatisation – a very British disease.

Environment

Lord Howell, Osbourne’s moronic father-in-law, has yet again called for the Tories not to frack in Tory constituencies and pointed again to the ‘desolate’ north as fair game. Fracking is too unpleasant for nice Tory voters, but fine for northern scum.

Meanwhile Germany manages to power 74% of it’s energy needs through renewable energy!

Good News!

Maxine Peake smashes it out of the park again!

Solar panels could replace roads!

Medical tourism generates millions for NHS and wider economy.

David Cameron gets insulted in a wonderful variety of ways.

Not that we care about how many people live in the UK or where they were born, but for those who scaremonger about ‘hordes’ of immigrants, it is interesting to note that 400 Bulgarians and Romanians actually left the UK since their countries joined the EU.

Not so much good news, but a thought provoker for the end – maybe you should consider voting alternative?

 

kamsandhu

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kambass@hotmail.co.uk

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