Dr Michael Lloyd on the Public Sector Squeeze

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We asked our European economist, Dr Michael Lloyd, member of North Tyneside People's Assembly, for a response to Cameron on the 
public sector squeeze. Here it is: 

David Cameron, speaking at the Lord Mayor's Banquet in the City of London, has suggested that public spending should continue to be squeezed in a "fundamental culture change" that would leave the 
British public sector "permanently" slimmed down. “It also means 
something more profound, it means building a leaner, more 
efficient state. We need to do more with less. Not just now, but 
permanently," he added.

This is the clearest statement yet of the commitment of 
Conservatives and Liberal Democrats to pursuance of a neo-liberal agenda, based on a belief in the fundamental efficacy of the 
market mechanism; a strictly limited, non-interventionist role for the state, and minimal welfare provision. The apparent need for 
austerity has provided an excuse to cut public expenditure, embark on further privatizations, and start a substantial move towards 
creating a neo-liberal state structure. The marketisation and 
privatisation of the NHS provides clear evidence of what is 
happening, even though it is being denied.

It is imperative to challenge what is being done, without any 
electoral mandate, but with support from a populist media either 
supportive of the neo-liberal agenda or unable or unwilling to 
criticise it. First, public deficits and public debt are not the 
problem. These will be reduced by only two actions: economic 
growth stimulated by increasing public investment and stimulating consumer demand by raising the minimum wage, and by taxation of 
those who are, dysfunctionally, not spending or investing, i.e. the wealthy.

Public debt is not a problem; it is not strictly debt. When the government, as it does regularly, ‘borrows’, it issues 
interest-bearing, sovereign bonds which become an 
income-generating asset for the private buyers of the bonds. 
Deficits, though they should not be uncontrolled, aroe also not 
the problem they are suggested to be. The UK has had 43 years of 
deficits in the past 50 years. The UK, which issues its own 
currency, in which it denominates its sovereign bonds, and has a 
flexible exchange rate, cannot become bankrupt.

The economy may or may not be slowly recovering, but the social 
and economic damage has already been done; lost economic growth 
and wage income foregone can never be recovered. But the recovery at the moment is based in three areas: increasing house demand 
prices, supported by government, but driven by private credit; increasing demand for in the automobile sector, driven by private credit, and an expansion of financial sector activity. This scenario is the same one which got us into the financial mess in the first place.

There is not need to follow this failing economic policy or the 
neo-liberal political agenda which is behind it. We must challenge it and take action to arrest its development.

Dr Michael Lloyd

Want to know more? Dr Lloyd will be appearing at a WEA event in 
Durham called 'Deficits, Debts and Austerity: The Real Story' at the Radisson Blu Hotel, Framwelgate Waterside, City of Durham, DH1 5TL, at 1.15 - 3.00 pm, Saturday 16th November

Took book a place and more more info visit: http://www.wea.org.uk/news/Deficits-Debts-and-Austerity-The-Real-Story.aspx
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About farmerg13

22, Media Production Graduate (Sunderland Uni) from Hebburn, South Tyneside. North East Peoples Assembly and Coalition of Resistance Media & Communications Officer. Active in Hebburn South Labour Party. Admin of this blog, opinionated is putting it mildly. NUFC fan. Follow me @farmerg13
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