Tuesday, May 4, 2010

Cutting Public Debt: Economic Science or Class War?

Hugo Radice
The B u l l e t
Socialist Project • E-Bulletin No. 350

In The Bullet no.345, Ingo Schmidt showed how the credit rating agencies have sparked an assault by international bondholders on the sovereign debt of Greece, where workers are being made to pay heavily for the fiscal crisis of the state.

The following day, April 28th, the London-based Institute for Fiscal Studies made a major intervention in the British election campaign, publishing a report which called on the three main parties to ‘come clean’ about their plans for dealing with Britain's very own fiscal crisis – a deficit in 2009-10 of £163-billion, or around 12% of GDP. This prompted me to ask the question: why are the three parties, and all the British media, accepting without question the need to cut the deficit?

This week's major intervention in the election campaign has surely been the call by the Institute for Fiscal Studies (IFS) for the major parties to ‘come clean’ about their strategies for reducing the public sector debt, if elected. The IFS report has chimed strongly with the overall public attitude in this campaign, which is that politicians are all devious and untrustworthy. The media response to the report has therefore been to pander to this attitude by unthinkingly echoing the IFS position. The Guardian asserts that the IFS is “the leading economics think-tank” in the country, clearly implying that its views must be accepted without question.

But why should the IFS be beyond criticism? Is cutting the public debt really an objective economic necessity, or is it actually a deeply political stance, reflecting the interests of the business and financial élites?
Read the full article here.

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