CRISIS - WHAT CRISIS?

The last time there was a great economic collapse, some major political and economic changes followed it. Now this was a combination of the legacy of failure to deal with the political, economic, and social consequences of the economic collapse, combined with a desire not to return to a grim pre war world and the positive legacy of the combined effort to win the war and defeat fascism. This 'economic revolution' was established or perhaps enshrined at the Bretton Woods conference (in 1944) and lasted until the late 1970's.

This time around following the greed and stupidity induced banking crisis which triggered economic collapse there has been no 'economic revolution', there appears to be no collective desire to make sure the same mistakes does not happen again – at least amongst the political elite. We are collectively stuck with the same old deeply flawed unregulated 'free market' theories that helped to contributed to the banking crisis in the first place - there is apparently 'no alternative' but simply to hope that the failures of the past don't come back to haunt us in future years.

Yet, the version of 'free market' unregulated capitalism, where the big banks pretty much hoovered up their smaller competitors in the years before the collapse (the one legacy of Thatcher that's never talked about is the eradication (with a few exceptions) of our building societies). The same thing happened with the electricity and gas companies, which were rapidly smothers and absorbed to leave us with the unpalatable, untouchable 'Big 6' cartel members - who continue to squeeze their customers and monopolise the so called 'free market'.

Somehow, while Westminster and Washington were distracted or disinterested we ended up with privately owned, privately funded institutions that had become 'too big to fail'. Their financial misdemeanours largely went unchallenged, un-investigated and unreported (save by a few honourable individuals at Westminster who did their level best to shine a light on the nefarious activities of an increasingly unregulated banking sector).

One take on this is that the Westminster elite (elected and non- elected) have for far too long been far too closely involved with the pernicious influence of the city. It has always been too easy for the Westminster elite to flit back and got into and out of lucrative employment in the City (and back again) with little beyond half-hearted ineffective scrutiny.

This was as true under the long Conservative period of governance between 1979 and 1997 as it was under the New Labour governments between 1997 and 2010 and to a great extent remains largely unchanged if not unchallenged. The questionable privatisations under the Conservative, New Labour and Con Dem governments certainly provided plenty of opportunities for cosy well salaried non executive jobs on the board. 

This combined with the blending of private capital with the public sector, begun under John Major, accelerated by Blair / Brown and continued by the Con Dens blurred the boundaries between the public meant that when the crash happened there was real panic, followed by the handing over of significant amounts of public money to private business (banking) concerns pretty much will little regulation of what was done with it (hence the continuance of the business as usual banking bonus culture even within those banks that ended up effectively under public ownership).

After the current crash, unlike after the crash in the 1930's there has been no period of reflection of reform and very little legislative or regulatory action to try to ensure that the circumstances that led to the crash don't happen again. The speed with which the current unrestrained Conservative government has moved to lighten the tax load on the big banks and to reduce corporation tax - something that a former New Labour government would have probably done - reflects the continued unhealthily close relationship between the City and Westminster.

When the crash happened governments and internal financial institutions stood blinking like rabbits gazing into the headlights of an oncoming car - the hard impact that followed left the rabbits stunned and in shock rather than dead. There has been no fix beyond collective wishful thinking that it won't happen again and perhaps a silent hope that some other financial rabbit will take the head on impact next time.

The 'free market' ideology that we have got lumbered with is perhaps the adoptive child of all those other financial experts who were proved so wrong by John Maynard Keynes (back in the 1940's). Certainly the 'free market' economists have re-shaped (shattered) or shaken our world since the late 1970's and unleashed a ‘free market unregulated capitalism' onto the developed, the developing and the former communist worlds - with some pretty dire consequences.

Whether you live in Russia or the old West by and large (although with a few healthy exceptions) former state / publicly owned enterprises and assets are largely no more. They were depending on how you see it, privatised (on the cheap) or plundered by a new class of carpet baggers who enriched themselves at our collective expense. In the East the process was more brutal and profits of the oligarchs larger and even more unregulated. Embedding and developing democracy was always secondary to making a profit - something that has not helped ordinary people very much at all – but has made the city traders very happy!

AUSTERITY OR AUSTERITY LITE?

It’s not much of a choice, especially when you consider that by polling day only 40% of the Con Dems cuts will have taken place. Before the Autumn Statement, Plaid warned that the Government’s spending plans for the next parliament would take us back to the 1930s if the proposed reductions in public spending were pushed through.

The Labour party understandably attacked the Tories for their plans to reduce spending on public services to levels not seen since the 1930s, at 35% as a share of GDP. Yet, what should alarm people is that the Labour parties’ economic plans are essentially the same. Labour’s plans would see spending on public services at roughly the same, 37% of GDP – reducing it to a level that we have not seen since the 1930s, a time before the creation of the NHS and when people left school at the age of 14.

If nothing else, this reveals that there is little or no difference between any of the larger Westminster parties, with Labour lumped to the Tories’ ideological plan to shrink the size of the state and intentionally hack at our public services. At the next Westminster general election, the real choice being offered the people of Wales is between the Westminster parties who all offer more austerity and more hardship, or Plaid Cymru - who, in the forthcoming hung parliament where every vote counts, will demand an end to austerity and fight for the need to invest.

Plaid Cymru has set out its plans to increase investment infrastructure by 1% of UK GDP annually. Institutions such as the International Monetary Fund and the Confederation of British Industry have noted that for every £1 invested it produces £2.50 - £3.00 in the real economy. This would be an investment of around £16 billion at a UK level, bringing £800 million to Wales to invest in schools, hospitals, and other works to improve the economy.

This investment would help us to tackle the deficit over a much longer period. Investment is the perfect antidote to the cosy Westminster Parties’ consensus, which seeks to inflict ever greater levels of austerity on our people. Austerity will ensure that places like Wales suffer as they seek to balance the books on the backs of the poor.