The big lie comes up repeatedly in any kind of political discourse about the causes of the 2008 global economic meltdown. Liberals such as our small minded corporatists and free-marketeers use the lie to defend their favoured policies of cutting spending on infrastructure, healthcare, education and welfare in the name of “austerity”. The lie goes along the lines of:
We have spent too much on infrastructure, healthcare, education and welfare and has borrowed excessively to pay for it, creating the budget deficit and increasing the national debt. The only way to to reduce the deficit is to cut government spending.
The first fault in the theory is that the economic crisis and subsequent rises in government debts were not caused by excessive government borrowing, they were caused by reckless lending to speculators (punters) in the financial sector.Probably the most famous example of “tax and spend” is Franklin D. Roosevelt’s New Deal in the United States which resolved the post Wall Street Crash depression through policies such as; reform of the financial sector (closing the banks down entirely until they agreed to proper regulation), wealth taxes, the initiation of huge state funded infrastructure projects, a massive reduction in unemployment, large scale house building and the repeal of prohibition. These measures pulled the United States out of recession while maintaining a carefully balanced budget (until America joined the Second World War).
The problem with the short term thinking regarding large across the board cuts in government investment, is that in many cases it creates false economies, e.g, the support for the less well off and unemployed is a ‘stimulus’ that the Government actually “claws back” in taxes almost immediately. The people who receive this support spend it almost immediately in their local area. By reducing that flow, means many businesses will be hurt by the drop in cash flow.
Reducing unemployment payments by half ads up to more than
$150 million cash flow out of the top dollars of small business.
Unfortunately the Government wants to see its own numbers go down and ignore the adverse consequences of the harm they pass on to business.
In fact, studies show that increases in the minimum wage actually puts more money in the pockets of people who then spend it — resulting in more jobs and counteracting any so called negative employment effects of an increase in the minimum wage.
Researchers at the University of California at Berkeley — Arindrajit Dube, T. William Lester and Michael Reich — have compared adjacent counties and communities across the United States, some with higher minimum wages than others but similar in every other way.
They found no loss of jobs in those with the higher minimums.
The truth is, the lurch toward widening inequality can be reversed. But doing so will require bold political steps.At the least, the rich must pay higher taxes in order to fund better-quality education for kids from poor and middle-class families. The minimum wage must be raised.
Don’t listen to the right-wing lies about inequality. Know the truth, and act on it.Many people have ruined their lives when they could have prevented it …. simply by opening their minds. .
The following is an excerpt from Tony Abbott’s 2013 election campaign launch speech with an interactive report card on how he is going so far. Click on the links to read further.
“This election is about making a great country even better; and that starts with changing [to] the worst government in our history.
I will spend the next two weeks reassuring people that there is a better way while Mr Rudd will spend the next two weeks trying to scare you about what might happen if he doesn’t keep his job.
Mr Rudd thinks this election is all about him.
Well, it’s not about him and it’s not about me.
It’s about you and how a better government can help your family and make your job more secure.
We know that a stronger economy is not about picking winners but about helping everyone to get ahead.
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