Election Myths #2: “Spending cuts are an unfortunate necessity to balance the books and reduce the deficit.”

jamie oliver

SANJOY BANERJEE

It is good to see Jamie Oliver has waded into the debate about Conservative election plan to end spending on free school meals for infants in the first three years of primary school.

I really admire his passion on this subject. He states more than once he is apolitical, and the issue is not a question of one party or another, yet sadly that is exactly what it is.

This is because it is just one example of an ideological cut to public spending. What do I mean by that? This isn’t a question of balancing the books, or having different spending priorities (though this is how such cuts are often represented). Instead it is consistent with the main guiding economic philosophy of transatlantic conservatism of the last 35 years: free-market economics.

The free-market economic doctrine, expounded by the likes of Alan Walters in the 1980s is that the State has no place providing for economic needs at all, whether it is free school meals, homes, jobs, healthcare etc. It dreams of a public sector pared down to a minimum, and consequently a minimal tax burden. One of its biggest fans was Margaret Thatcher and she remoulded Conservativism in Britain to put this doctrine at its core.

The argument is that it is more efficient if the free market provides what people need rather than the State, through the profit motive that entices companies into the spaces the State retreats from. It argues that by lowering spending and lowering tax, you put money back in individuals pockets and they can make their own choices how they spend it. This is its core philosophy and its advocates, including so-called ‘Orange book liberals’ as well as many modern Conservatives, pursue it with the unadulterated fervour of the zealot. Indeed ‘austerity’ was the sheep’s clothing under which this agenda has most recently been pursued to slash public funding both locally and nationally to levels not seen since the end of the Second World War. And yet the National Debt has tripled! This is because if you starve an economy of investment, economic activity declines and the tax take falls over a cliff edge. You spend less, but you take in even less. That is why the analogy of the household pocket book is, at best flawed, at worst a whopping great lie.

Predicated on the emotional appeal of cutting tax, the reason the whole house of cards falls down is because the free market is notoriously bad at providing public goods. The private sector is ideally suited to innovation in luxury consumer goods, such as the latest gadget or eye-catching outfit, where investment is offset by marketing to create desirable products that we can choose to buy or not. But when it comes to public goods that we all need and cannot manage without, such as transport infrastructure, prisons, schools, hospitals etc., it can either provide them cheaply and shoddily, or at a very high cost available only to a few. The Thatcherite economy consists of Yarl’s Wood or Eton ie. either scandalously badly run or priced out of the reach of majority. Or the free market cannot provide for it at all and, as in this case, the onus falls back on parents and when the lack of spending shows up down the line as a public health issue, we end up paying twice!

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