Wednesday 18 November 2020

Taking from the poor to give to the rich


One of the advantages of the oft-debunked household budget analogy applied to government finances is that it is easily understood by people. That in turn allows ideologically motivated governments to create and promote false dichotomies about priorities for spending. The decision, for instance, as to whether to maintain and increase pensions has nothing to do with spending on health or education. And International Aid has nothing to do with the pandemic (or with housing ex-servicemen, to refer to a common meme on social media). ‘Looking after our own first’ may be a powerful message, but there is nothing other than ideology stopping the government from looking after our own anyway, and cutting spending on aid is more likely to boost the wealth of the wealthiest than to help a single homeless person. The simpler explanation is that just as the current government believes that the rich should stay rich whilst the poor remain poor, they believe that the same should be true internationally as well.

Of course it’s true that money spent on x can’t be spent on y, but the idea that we therefore must choose between them is dependent on the assumption that money is in limited supply. The counter-intuitive truth is that we can have as much money as we want. Limits apply only to the goods, services and resources on which we can spend that money: create too much money and inflation will result unless taxes are increased. In practical terms and in current circumstances that means that any decision to cut International Aid has nothing at all to do with pressure on domestic finances. The government is simply seeking a convenient excuse for reneging on (another) international commitment. And if there is one consistent truth about the current government it is that it is always the poorest – whether at home or across the world – who will suffer the most. That is an ideological choice, not an economic necessity.

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