Coalition Multiplies the Damage

Background

Despite the IMF warning the UK government that its austerity measures are causing significant economic damage, George Osborne today announced a further round of spending cuts. Recently the IMF (International Monetary Fund) posted a paper noting that the British government had significantly underestimated the impact of the ‘Fiscal Multiplier’ which has caused even greater damage to the economy as they have pursued their ‘Austerity’ policies. The thing is I don’t think the Coalition did anything of the kind. I think they knew exactly what they were doing, but since this idea is not simple to understand, they thought they could get away with it.

The multiplier is a complicated and very wordy economic idea, and for that reason this news has largely missed the British public’s attention. However, this is the ‘smoking gun’ that proves that coalition policies are pre-designed to further their ideology of shrinking public services at any cost – and the costs are immense.

 Here I’ll try to take you step-by-step through the reality of what the IMF have said, and the real reasons for and effects of current government policies.

 What is the ‘Fiscal Multiplier’?

Imagine an economy of a government and only four people. One person is a hunter and the other three are unemployed. Right now all we have is a hunter hunting for themselves, and so the other three people are starving.

The government spends £1 training an unemployed person to be a builder, which he receives in wages, so that the economy is now worth £1. He spends the wages on meat, paying his £1 to the hunter. The hunter realises he needs help to hunt the extra animals and so employs one of the other unemployed people to help him hunt, paying them 50p to do so. The hunter has 50p profit which he spends on having a new roof built. From the helper’s 50p wages he spends 25p on the final unemployed person asking him to gather some vegetables, and the other 25p on building a new wall. So now, our economy is no longer worthless and no one is unemployed. The £1 spent by the government has caused much more than £1 of economic activity. The total value of the economy is:

£1 spent by government

£1 spent by the builder on meat

£0.50 spent by the hunter on building a new roof

£0.25 spent by the hunter on vegetables

£0.25 spent by the helper on a new wall

£3 Total economic activity

Thus, the £1 government spending has been increased by the fiscal multiplier of 3 to become £3. No one is now unemployed, and no one is starving. Instead of just having a hunter hunting meat for themselves, we now have more meat, vegetables and buildings.

*For a more precise and developed discussion of the Fiscal Multiplier please see this internal document from the very right-wing IMF which discusses it in more depth.

 

The Ideology of the Right

Economic growth, is the main economic aim of the government which is why it is such a problem for the government when the media report that the country is in recession (negative economic growth) as this means the economy is shrinking, or as in our earlier example; fewer people working, more people starving and the economy is worth less. However, the government have not told you how they have contributed to low and negative economic growth over the past three years.

Our Coalition government is dominated by Conservatives, who do not believe in government spending to help the economy or its people, and for this reason they have been cutting things. Some of the cuts include £6.2bn within the first 100 days of this government’s reign and have continued for example with plan to reduce spending on the NHS of £20bn by 2015 and £50bn by 2020. For some this is still not enough, with many prominent Tory cabinet members stating that further cuts should be made here.

In total the number of public sector jobs is expected to fall by over one million, but the misery continues for those who are the victims of these policies. If either you become unemployed, or your income is reduced because of these things you cannot expect much of a safety net. The government plan to cut over £23bn per year from the welfare budget meaning those on lower incomes will suffer. Indeed, over 7million working families are expected to see their incomes reduce as a result.

This is the result of having a government dominated by millionaires who do not need these services, and feel no obligation or desire to help those less fortunate than themselves. Think about it, if you have private health insurance would you be worried about the fact that the government has just removed its obligation to treat people’s health concerns equally, if at all. Similarly, if your child attends Eton, why would you be concerned that state schools are being turned into de-humanising exam factories?

Unfortunately though, these cuts (and they go far further than I have described) have a larger impact beyond the direct effects to your services. Austerity itself creates a need for further austerity which means the things we have lost so far are barely the tip of the iceberg.

 

The Fiscal Multiplier Effect

The UK government estimated that the multiplier effect was 0.5. This means that they thought that for every £1 they cut from the economy, only £0.50 of economic activity would be lost. The paper that I mentioned at the beginning of this article outlines that this was wrong, and states that the multiplier was likely to be 1.5. Some speculate it could even have been as high as 3, meaning that for every £1 cut from government spending £3 of economic activity was lost. This is what has caused the UK’s slow economic growth, and the consequent unemployment, fall in wages and fall in living standards that have accompanied it.

The UK government got it wrong! Or did they? When we consider the multiplier effect in reverse, we have to include the figure that is being cut. So, in our earlier example, the cutting of £1 led to a fall in economic activity of £3 including the money that the government originally spent, so a multiplier of 3. As we have to include the money that the government cut, it is very difficult for the multiplier to be less than 1. E.g.. Government cuts £1 from the economy, even if no further money is lost, the economy still shrinks by £1 because we count government spending in the size of the economy. Therefore, the minimum the multiplier can be is 1. The Coalition were telling us that they were in effect going to cut £1 from the economy, but that the economy would only get smaller by 50p. My A-level students could tell you that this doesn’t make sense!

Admittedly, George Osborne’s lack of economics training could be responsible for his mistake, but how did this get past the other 1,459 treasury employees,  Osborne’s four special advisors who are qualified or the nine members of the Monetary Policy Committee who effectively run our economy from the Bank of England? If you accept that such an obvious flaw cannot have escaped everyone’s attention, then we have to begin looking for other explanations of why this could have happened.

Remember, the incoming Governor of the Bank of England has stated that the UK is an economy in crisis. It has been estimated that the government cuts have contributed to this costing an additional £76bn, and this is a conservative estimate. The entire justification for this programme of cuts was to close the fiscal deficit, and yet because of the “miscalculation” of the multiplier effect, this has not happened. Thus, 4,800 nurses have lost their jobs for no reason, among 25,000 other NHS staff. This phenomenon is not particular to the NHS, as I stated earlier, over 1million public sector jobs are being axed.

 

The Rationale

Public sector workers are those who have chosen to accept lower pay to work in the interests of the public good. These people are being sacked through no fault of their own, not to do with their performance or their competence but because someone in a Whitehall tower decided it would be better if they weren’t paid by the state.

Why? I hear you scream. I could take you through the history of the Conservative party as an organisation of the financial elite. The land-owning aristocracy and the post Thatcher corporate glitterati. I could discuss how this party stood against the formation of the NHS and the welfare state at its inception and has attacked it ever since. I could talk about the number of Tory MP’s and Peers who stand to profit from the privatisation of the NHS, but it might be much easier just to follow the money…

The money previously earmarked for all of us through the public sector has been used to finance tax cuts for the already wealthy, and for large businesses that often currently do not pay their full taxes anyway. The TUC estimate that £25bn is lost annually from the treasury (more than the entire annual savings that the government expects to make from cuts to the welfare budget) in this manner, and while this is at the lower end of the estimates nothing is being done by the government to prevent it. Similarly nothing is being done to curtail the activities of the banks that gambled our way into this mess in the first place, and these are just a couple of small examples without referencing the estimated £20bn on offer in corporate profits from the widely discredited carve up of the NHS.

 

The Consequences

Let’s assume that the IMF is now correct in its assumption that the multiplier is 1.5 (Many suspect it is significantly higher than this). For every £1 that is cut from government spending, £1.50 disappears from the economy. As nurses, teachers, police officers and other employees are sacked as part of this policy, not only do we lose our services, but we also lose spending power from the economy.

Unemployed police officers spend an awful lot less on tax, reducing the money coming into the treasury for further spending. They also then claim unemployment benefit, increasing the money going out of the treasury. This means even less money left to pay for our schools, hospitals, fire-brigades and all the rest. It also means that the newly unemployed reduce their consumer spending, they have to spend less on everything including food, cars, entertainment electronics – everything.

This means that businesses suffer as they cannot sell things to people who do not have any money to buy them. Sales fall and as a result, profits fall. This means that business have to cut costs or go out of business. Thus, businesses have to let employees go, meaning that these employees have lower income and can spend less which forces the process to repeat itself, and compounds the entire problem. Sooner or later this lack of spending in the economy and consequent fall in business sales results in those businesses closing down.

Fundamentally, austerity is a policy of the wealthy for the short-term benefit of the wealthy, and everyone else will have to suffer the consequences. Austerity is the economics that can and will cause another great depression, just as it has before. When it does, we will all suffer but it will be the poorest and most vulnerable who will suffer first and suffer most.

We are beginning to see the first signs of this with growing demand for food banks, high unemployment and falling wages, but it’s going to get much, much worse. For every Police Officer, Nurse, Doctor, Fireman, Teacher or other Public employee that Osborne shows the door, not only are you less safe for them not being there but the threat to your job or your business grows.

Austerity is a nasty policy designed to transfer money from the poor to the rich, it is a threat to your job, your standard of living and potentially to your very life!

Are Lazy Ineffective Teachers Failing Your Children?

Background:

Today the Association of Teachers and Lecturers (ATL) roundly condemned the Educational policies of the Coalition government as they passed a landmark motion of No Confidence in Michael Gove (Education Secretary) and Michael Wilshaw (Head of Ofsted). For the uninitiated, the ATL is known as the most moderate of the Teaching Unions and up until recently had not taken industrial action for over three decades.

The other Unions (NUT and NASUWT) have also announced a ramping up of their own industrial action calling strikes as well as voicing their own criticisms of Mr. Gove’s Educational Reforms. To many outside the profession however, teaching is a soft option with short working hours, long holidays, comfortable pay and a cushy pension.

For Teachers and their Unions the issues are broadly centred around three areas:

·         Workload

·         Pay (Including Pensions)

·         The General Direction of Educational Policy

As a Teacher I hope to add as much clarity to this growing debate as I can in a [relatively] short blog post. I do not contrast the profession with situations in other industries since I know everyone works hard – too hard. Nonetheless, here is an example of our government’s “more-for-less” policies in action, forget the media bias against benefit claimants and immigrants, the Coalition are the biggest something-for-nothing merchants in the country!

 

Workload:

A day for a good or outstanding Teacher is as follows: Arrive to work at 7am to set out lessons and prepare for the day. After doing this, going through and responding to e-mails and having whatever briefings / meetings and morning duties that are normal for that particular school it is time to teach somewhere between 8.30 and 9am. Teaching is the fun bit of the job, but with upwards of 22 possible hour long lessons each week there is little time for anything else until the end of the day, with the exception of a bite of lunch or a coffee break perhaps if there is any time  - after dealing with student queries, any behaviour issues or anything else that may have arisen.

At 3.15, 4.15 or 5pm depending upon where you work it is then time to hold detentions before you have to attend any meetings scheduled for that day (the limit is one per week but this is now routinely ignored by schools. Then any phone calls home concerning achievement (the fun ones), concerns regarding academic progress, or concerns regarding behaviour.

Once this is done, preparation for the following day commences. This cannot be done entirely over the weekend since (A) there simply isn’t time; and (B) you need to know what your students have understood during the day in order to prepare appropriate lessons. This also means that marking has to be done, but this is a job for home.

You get home, have dinner and then settle down to marking. In primary schools for example, Literacy and Maths books have to be marked every day. Even allowing for only 5mins per book, a class of 30 takes a combined time of 300 minutes for both subjects, or five hours. But you aren’t finished there either.

Once this is complete and written feedback given you then have to prepare the following day’s lessons. Different activities have to be planned for as many as six lessons for different groups. These activities must all lead to the same points but in different ways so that all leaners can access the topic. This means planning work to stretch higher ability students; Writing frames and supported tasks for lower ability students; Language resources for students whose first language is not English; And additional materials and tasks for students with additional needs such as dyslexia. Each lesson must also include opportunities for Spiritual, Moral, Social and Cultural development as well as Literacy and Numeracy – in all subject lessons, yes even art, it’s not just drawing anymore!

Teachers are also responsible for the safety of students, child protection, a range of after-school activities, assessing and reviewing additional needs, completing student reports and attending Parents’ Evenings several times each year. Furthermore, in direct breach of the negotiated workload agreements from 2003, Teachers are now expected to attend additional meetings and training, design and implement classroom displays regularly (very time-consuming), collect pupils’ money for excursions or charity events, investigate absence and a range of other tasks that should be undertaken elsewhere in the school.

By now, if I have described the situation properly you have begun to realise there are simply not enough hours in the day. For this reason every Teacher I know sacrifices at least one day every weekend and often more. “Ah, but the holidays make up for it.” I hear you say….

Unfortunately, no. Our government likes to regularly change our national curriculum including the content of the courses every year, the methods of examination (exams, coursework etc…) every year and the way they want us to deliver lessons (the OFSTED framework for this has changed twice in the last five years). All of this means that vast swathes of holidays are spent catching up on work that it wasn’t possible to complete during the term or planning in order to figure out a way to jump through the next set of hoops that the government has moved tantalisingly out of reach.

 

Pay:

This is a relatively easy one. Government pay freezes and attacks on Pensions now mean that Teachers pay is now only 85% what it was in 2010. Meanwhile, the Pension age has increased to 68 and Teachers are expected to contribute more and receive less. All in spite of the fact that the Teachers’ Pension fund was one of the very few which already paid for itself due to earlier increases in pension contributions under the previous government in 2007, when Teachers were guaranteed that no further changes would be necessary.

Mr. Gove also plans to introduce performance related pay from September, without any consultation with the profession or its representative Unions. Again, he has not considered the wider context that many Teachers are responsible for students for whom education is by no-means the first priority. Students who are the victims of abuse or domestic violence, students from families in the midst of breakdown or living in poverty. Clearly he believes that the over-simplistic figures produced by exam results which reduce children to numbers on a spreadsheet are enough to determine the standards of living of those who work hard to educate them. One wonders how many strong, talented Teachers will now choose to teach in schools from poor or challenging areas.

For many Teachers the biggest issue here is the Pension, whilst it would be nice to receive the average pay increase of the private sector (circa 2%), most Teachers in my experience do not object to contributing some of their earnings for the sake of the wider economy. However, I know no-one in the profession who believes that continuing to teach until 68 is realistic, especially with the increasing demands that have been discussed above.

 

The General Direction of Educational Policy:

Teachers get into teaching for a myriad of reasons. However, they only stay in teaching because they enjoy working with young people, particularly the opportunity to make a difference in young people’s lives. More and more however, teaching seems to be reduced to an endless monotony of ‘teaching to the test’ and lesson observations. Both of these destroy the less tangible facets of the job such as building positive relationships with young people and facilitating their personal growth - there is no longer time.

I have already mentioned the immense workload that Teachers bear, but this has to be viewed in a context where every lesson is either observed or observable meaning that any deviation from this programme is impossible. Teachers now work in an environment where not a minute can be wasted, and where checks are regularly carried out to ensure that it is not. There’s no room for digression and no room for discussion beyond what the Teacher is forced to plan in a regimented fashion (even down to the questions that they will ask) prior to the lesson.

In this climate there is of course no room for student individuality let alone bad behaviour, and to that end students are endlessly drilled to make them compliant. They are lined up in silence up to 20 times a day. Uniform is checked at the start and end of every lesson, and talking about anything other than what is on the curriculum is strictly prohibited. Only impeccable behaviour is accepted on the corridors at breaks and lunch-times and these are rigorously planned by leadership teams across the country to ensure they have as little impact upon “learning” as is conceivable.

Children are no longer allowed to be children. They are herded relentlessly and indoctrinated every hour of every day so that the educational system can provide compliant and hard-working Human Resources to industry. The results they achieve in their exams appear increasingly to be little more than a measure of the extent to which they have learned to comply with authority. For some reason, no-one in the Department for Education seems to have considered the idea that this industrial scale repression of young people might actually be responsible for what the majority of Teachers describe as deteriorating behaviour over the last two years.

Whilst few Teachers are comfortable with this process, it is the individual educator themselves who is forced to foist this de-humanising and inhumane routine onto their charges. Off-topic talking in your lesson? That student is disengaged, time has been wasted and you must improve. Student late to lesson? What are you doing about it? Why haven’t you planned a lesson that fully engages all students? Hold on, there must be a magic wand around here somewhere…

The more ideological concerns are also evident in the ever changing curriculum. Mr. Gove’s view runs contrary to five decades of educational research and development, he would have Teachers teach children to recite facts and only facts. Understanding is secondary according to the government which is fortunate since as 5-7 year olds will soon have to learn about Parliament and the Monarchy, the likelihood of students so young  understanding such complex topics is fairly remote.

 

The Big Picture:

There are many other issues that I could cover here, but there simply isn’t the space. Essentially it comes down to unequivocal enforcement of the government’s programme no-matter how misguided, no matter how damaging. The only thing that matters is the exam results, students have ceased to be viewed as young people, and now are seen purely as materials to be moulded, tested, re-moulded and re-tested.

Teachers are over-worked doing a job they didn’t sign up for on vastly reduced pay. The job is rapidly becoming a forced process of exposing children to a stressful de-humanising routine, and they have no choice. Any dissent and the authorities are ruthless. An unsatisfactory lesson can lead to months of intense and pressure-filled capability proceedings, and a school failure at OFSTED leads to the prospect of  Special Measures or worse still, becoming an Academy. Should this happen, all bets are off. Teachers pay and conditions are transferred to their now Private Sector employers and they are often required to re-apply for their own jobs. There is no compunction for Academies to hold to the nationally agreed pay and conditions which in practice means that they are circumvented to an even greater extent.

Teacher’s lives are becoming a pressure cooker filled with guilt and misery, and these are the people looking after your children. Teachers no-longer prepare children for their lives ahead, they are forced to indoctrinate them ready for the tests ahead. To be fair though, it could be worse for the Teachers. With pressure from the age of five. Revision, tests and homework from day one. Summer schools extended school-days, after-school classes and booster sessions in the holidays, I would hate to be a child today.

Are Lazy Ineffective Teacher Failing Your Children? No, the government is failing Students, Teachers and the rest of society. It is time for us all to stand up and put an end to this madness.

Sources:

http://www.bbc.co.uk/news/education-21829950

http://www.bbc.co.uk/news/education-21931110

http://www.bbc.co.uk/news/education-21895705

http://www.bbc.co.uk/news/education-21857689

http://www.guardian.co.uk/education/2013/jan/15/teachers-pay-performance-michael-gove

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&ved=0CD8QFjAC&url=http%3A%2F%2Fwww.nasuwt.org.uk%2Fconsum%2Fidcplg%3FIdcService%3DGET_FILE%26dDocName%3DNASUWT_006849%26RevisionSelectionMethod%3Dlatest%26allowInterrupt%3D1&ei=EKRQUZTJNoeS0QX0rIGoBA&usg=AFQjCNHEGfiGk6eB8gIsX2Iph3Z7OwW5FA

http://www.guardian.co.uk/politics/reality-check-with-polly-curtis/2011/nov/28/pensions-public-sector-pensions

http://www.atl.org.uk/help-and-advice/workload-and-hours/workload-agreement.asp

http://www.education.gov.uk/schools/teachingandlearning/curriculum/nationalcurriculum2014

Does the Government Represent You?

Government of the people, for the people and by the people is the ideal of democratic nations, as Laid down by Abraham Lincoln in the Gettysburg Address (I haven’t seen the film yet honest…). Our democracy is older than that of the USA but the sentiment remains valid, a point Winston Churchill made when he echoed it in his famous “We will fight them on the beaches…” speech. I wonder though whether or not the UKs modern Conservative and Liberal Democrat coalition government has ever bothered to consider the broader spirit of the words because it seems to me that their make-up and their policies fall short in every area.

Two thirds of the cabinet  – the crux of government – are millionaires. Does anyone really believe they understand what it is to have been made redundant and be struggling to pay the mortgage? To have a disability? To have a low paid job and struggle to pay the bills? Have they ever been in a position where they have had to choose between heating and food, and are they ever likely to be? If not, then how can they represent those elements of society? 2,700 pensioers die each year because they cannot afford to heat their homes. According to the UK government’s own figures over 13m working people exist on less that 60% of the average income, and more than 7m people (again in work) in 3.6m households live in extreme financial stress unable to feed themselves and their families at the end of each month.

We have 2.6m unemployed people in this country, and according to the Office for national statistics one in four employed people want to work more hours than they currently do. In fact the number of these people has increased by 1million people in the last four years. Why do they want to work more hours? Because they cannot afford to support themselves and their families on their meagre wages. The Tory aim to increase labour market flexibility has meant that many have had to take part-time jobs because there are no full time positions available. These people do not sound like the benefit seeking scroungers that our government would have us believe they are, and yet the war on the welfare state continues.

Meanwhile we have a cabinet worth £70m pounds collectively, led by a Prime Minister of the rich who tells us “We’re all in it together” while cutting tax on the richest in the economy. The richest 1000 people in the country (according to the Guardian) have increased their wealth by £155bn while the rest of us suffer recession after recession and cut after cut. Why does he defend the priviledged so staunchly? Could it be anything to do with his net (largely inherited) £3.8m fortune? How does he get away with it? This is depressingly easy to answer. The telegraph estimates that there are 280,000 millionaires in the UK, or roughly 0.4% of the population and yet 67% of the cabinet are millionaires. It appears we do not have a government of the people, we are governed by the rich and as the old saying predicts: “Power corrupts”.

Does this government have a mandate from the people to do the things it is doing? On a seemingly constant basis the PM and those in both coalition parties tell us that they have to take unpopular decisions. That they are the ones with the strength to make difficult choices regardless of how unpopular they might be. This is wrong. The government of the UK is a representative body, they should be acting in accordance with the wishes of the electorate and doing nothing more. Clearly this is not what is happening, but if you’re not sure consider these points as examples and note that there are many, many more:

a.       Effective Privatisation of the NHS

This policy was so predictably unpopular that the Conservatives “forgot” to mention it during their electoral campaign. They did tell us that there would be no top-down reorganisation of the NHS, but I’m not sure that this statement really covers their policy of using the NHS as a franchise logo for private businesses that use your ailments to make a profit. Unsurprisingly the early signs predict disaster, with vast cuts in available treatments, privatisation of NHS trusts and individual hospitals and warnings from doctors, nurses and professionals throughout the organisation that there will be fewer treatments, more waste, less efficiency and a higher cost.

 

b.      Cuts to the welfare state

Most people take this to mean cuts to job-seekers allowance but it’s much more than that. Child tax credits have recently been re-structured in the least fair way that anyone can imagine. Being fair is not really this government’s priority though, for example the changes to child tax credits will save up to £1.5bn by depriving working families of that money, but the Tories gave this away by cutting the top rate of income tax and costing the country over £3bn. That’s a pretty tough pill to swallow for anyone who has been told that their allowances are being cut to help pay off the debts caused by rich investment bankers who will pay significantly less tax on their astonishingly large bonuses-for-failure in future. Nonetheless, the government has taken no direct action to tackle the banks or bankers and instead focussed on selling your healthcare to businesses that are trying everything to avoid paying tax at all.

 

c.       Reduction of your employment rights

In short, this government wants to make it easier and cheaper to sack you when business is poor. This may not be your fault, you may have served the organisation faithfully and successfully for years but as far as the government is concerned, the business owes you no loyalty. According to the Office for National Statistics there are 29.6million employees in the UK, and 2.6million job-seekersin a potential workforce of 34.1million people. This means that over 95% of people in the UK are employees or potential employees and the government is eroding their rights. In addition to this, cuts to the economy and the ensuing economic effects have meant that average pay increases have been 1.9%, considerably below the inflation rate which has been hovering close to 3%. This means not only are employees losing their rights, but they are also effectively taking a pay cut.

 

d.      I could go on…. And on…. I don’t want to over-egg the omelette though, so perhaps people could add other government policies since 2010 that have hurt the majority of the country to the comments (below).

It is clear that we do not have a government of the people, for the people or by the people. These people do not represent you, this is a collection of career politicians that are making decisions that benefit only the richest people at the top of the largest organisations in the country. A collection of people that pretend their decisions were difficult and have the temerity to tell you that they are acting in your best interests. We do need strong politicians that are capable of making difficult decisions, but those decisions are very different to the ones that are being made. We need politicians with real experience of life’s difficulties who are prepared to stand up to the tyranny of corporations and protect their people from the life-destroying effects of poverty and inequality.

Our current government however is simply a collection of weak politicians who are selling your rights, your health, wealth and your services. And they expect you to be grateful!