The notion of unaffordability has been an extremely potent weapon for market fundamentalists. If we can’t afford to do something, it doesn’t matter how desirable it would be to do it, we can’t. It’s not a choice, it’s just reality.
A decade of needless austerity was justified with precisely this argument, based on the false claim that the state of government finances was so dire that there was no alternative. And we’re starting to see the same false claims being made again.
But there is something different this time. The government and the Bank of England have between them made it very clear that the government can afford far more than we thought.
The Bank of England has, through quantitative easing, created £745 billion of new money, most of which it has used to buy government bonds. Of our supposed £2 trillion worth of debt, therefore, more than one third is money that the government owes to itself and which was created out of nothing.
And the government has used its freedom to ‘borrow’ in this way to distribute huge amounts of largesse to its friends in the private sector. We have written about the more than £1 billion worth of suspect procurement of personal protective equipment (PPE). And the failing test and trace contracts, much of it awarded to SERCO, is so far worth no less than £12 billion.
And yet the government claims to be unable to afford to provide £90 million of support to businesses and individuals in greater Manchester, and not to be able to find another £120 million to extend the free school meals for the poorest children.
This gives a very curious picture of what the government says it can and cannot afford.
In this picture, the amounts the government says it cannot afford are so small as to be invisible. So we present the same data slightly differently here, using a logarithmic scale to make all the columns visible on the same chart.
And perhaps an analogy might bring it to life.
Suppose that you are a investment banker and have just received a bonus of £900,000. You decide to spend 1/62 of your bonus on a nice swiss watch at, say, £15,000 as a present for your girlfriend. And to celebrate, you buy a bottle of Chateau Lafite for £1,200 (1/12 of the price of the watch).
But you decide you can’t afford to help your mother who needs £150 to pay her weekly rent (1/9 of the price of your wine).
This is the kind of ‘affordability calculation’ the government is doing right now with those in poverty in the UK.
If this matters to you, please do sign-up and join the 99% Organisation.