Tuesday, 17 July 2012

The wreath of conservatism. Niall Ferguson gives us a lecture. Part One

I have finally worked out the perplexing intellectual strategy of modern conservatism. It is, despite appearances, nothing to do with personal responsibility, wealth creation, the minimal state or really not liking gay marriage. It is rather aimed at constructing a parallel universe in complete contradiction to the way the world actually is. And then to go to work to get people to accept this surrogate version of reality and use the ensuing collective delusion to quietly fleece people seven ways from Sunday in the interim. 

For the first four years of this economic crisis, the strategy worked like a dream. Now the cracks are beginning to show.

It is an epiphany that springs irresistibly to mind when the poster boy of contemporary conservatism, Niall Ferguson, opens his mouth. The problem with austerity, he evinced in a recent BBC Reith lecture is not that there’s too much of it, but not enough. (It might be said that in his contrarian relish for austerity, Ferguson is the mirror image of the inveterate Marxist-Leninist Slavoj Žižek – Stalin did not go far enough. But that is a matter for another post).

“If young Americans knew what was good for them, they would all be in the Tea Party,” says Ferguson. You will search in vain for a ‘not’ in there. He really means it. Capitalists of the world unite and stop all those poor people getting hand-outs from the government.

But there are obstructions in the way of sating the conservative dream. “Today’s Western democracies now play such a large part in redistributing income,” frets Ferguson, “that politicians who argue for cutting expenditures nearly always run into the well-organised opposition of one or both of two groups: recipients of public sector pay and recipients of government benefits.”

Those pesky benefit claimants, selfishly opposing reform by committing suicide.

Seeing that government’s redistribution of income plays such a large role in conservative demonology, it is worth examining this crime in detail. It would be amiss not to start with the £1.5 trillion increase in the national debt of Britain caused by the banking bail-out in, a redistribution described as the largest single transfer of wealth from poor to rich in England since the time of William the Conqueror. But, William, it was really nothing compared to the US bail-out which cost the government $7.7 trillion, more than half the value of everything produced in the US in 2008. I think that can be classed as a redistribution though not the direction traditionally imagined by conservatives like Ferguson.

Since then of course there has been further government generosity for the richest among us. In June the British government announced an £80 billion emergency support programme for banks, through which they will be given cheap loans in exchange for “poor quality assets like credit card debt”. The Bank of England also promised to pump a minimum of £5 billion a month into “City institutions” to “improve their liquidity”.

This is all in addition to the ongoing marvel of Quantitative Easing, the creation of money by the government. QE is paid, not to benefit claimants or public sector workers, but to banks. Government QE hand-outs will soon amount to £375 billion. The Federal Reserve in the US has dallied a little more in this particular dark art. The practice has cost more than $2.2 trillion there.

It is worth adding that the country highlighted by Ferguson as having the highest public debt, Japan, is the very same country that pioneered Quantitative Easing and has been furiously bailing-out its finance sector for 20 years. There might be a clue there as to the cause of its public indebtedness but I’m not an economic historian like Ferguson.

In totting up the full extent of government redistribution, it’s important not to forget the Private Finance Initiative in Britain: a policy that originated with the Conservative government in 1992, and was then enthusiastically adopted by Tony Blair’s New Labour. It is estimated this will cost taxpayers £300 billion. The poor, unless they own a large percentage of shares in Siemens, don’t benefit from this particular act of government redistribution.

A fifth of government spending in the UK now goes directly to the private sector in form of payments for outsourced services, a proportion that will only increase as outsourcing enjoys a boom not seen since the 1980s. And these companies are always such tremendous value for money. Since the railways in Britain were contracted out to the private sector (by John Major’s Conservative government), taxpayer subsidies have increased twelve-fold to £6 billion a year. The cost of the collapse of tube maintenance company Metronet to the taxpayer £2 billion. The cost of bailing-out the privatised nuclear power generator, British Energy in 2003, was £3.6 billion. The Labour government’s scrapped identity card scheme was estimated to have benefited private contractors to the tune of £6 billion. The bill of the recent car-crash of a PFI project involving Somerset Council and IBM has been put at £31.5 million.

The great leap forward in corporate welfare undertaken by the current Con-Dem government is workfare. A scheme in which the state forces young people to work for large companies for nothing, while paying bare subsistence costs – ie their benefit.

“It is a mystery that while traditional right-wing commentators like the TaxPayers Alliance and the Mail object to funding an individual’s benefits,” writes Alex Andreou in the New Statesman, “they appear quite happy to cross-subsidise huge conglomerates.”

And all this without mentioning the war. The Iraq War, that is. In whose cause Ferguson was such an enthusiastic cheerleader. The war cost the American government an estimated $3 trillion and the British government £4.5 billion. The cost to the UK is £20 billion if Afghanistan is included. And who is exactly is paid to make all those missiles, aeroplanes, guns, bullets and uniforms? It wouldn’t be private, profit-making corporations would it? The bill is always posted to the same address – the state, funded by the taxpayer.

While we’re on the subject of war, it is timely to mention a confession in 2001 by the then US Defense secretary Donald Rumsfeld that the Pentagon “cannot track $2.3 trillion in transactions”.

“I could go on” as Steve Coogan once put it. But you’re probably getting bored by now.

“In the absence of effective scrutiny,” writes Dan Hind, “popular resentment of state expenditure concentrates on transfers of wealth from the middle classes to the poor, rather than on transfers from the majority to a relative handful of insiders."

And for conservatives, resentment, unlike government spending, is something you don’t want to go to waste.


  1. We liked this a lot - especially the righteous middle paragraphs where the sheer scale of the economic enclosures is breathtaking.

  2. A truly excellent post.

    But lay off Zizek! He isn't Ferguson's 'mirror image.'

  3. Excellent take. I have blagged that one.

  4. I would love to see Niall and his fellow travelers in a soup kitchen.
    He is a war mongering shill for the uber banksters.

  5. @Tony.
    thanks for linking me over to here.

  6. Thanks for the comments and cross-postings


    I like some of what Žižek says a lot. I think he touches on the just right raw nerve in criticising the bad faith of liberals who don’t like the effects capitalism has but refuse to make the obvious connections to the system itself. He’s also the only left-wing thinker I know to analyse Hollywood films and popular culture in terms of the broad social and political assumptions they make. But he does have an inveterate Leninism I don’t agree with, that he won’t let go of, partly I think because it’s so effective in annoying liberal, humanitarian types. The above isn’t probably expressed very well but it is 9.10 in the morning.

  7. On the subject of Niall Ferguson again. I did find this comment piece via greenerblog.blogspot.co.uk. http://www.telegraph.co.uk/comment/personal-view/3620229/Were-turning-Japanese-so-Labour-could-have-30-more-years-in-power.html. Two things stand out. One the assertion that “recessions are happening less often and when they do they are not too steep and less protracted”. That’s plain wrong. The one thing you can say about the Great Recession is that it’s protracted. Secondly, the claim that, “the huge increase in international capital flows mean that it is far easier than it used to be for advanced economies to finance both budget and current account deficits. This year the United Kingdom will run a current account deficit that 30 years ago would have sent the pound over a cliff, closely followed by the party in power. Today no one cares.” In 2005, no-one cared about budget deficits. Now they are so serious that they are subject of BBC Reith lectures. I wonder what happened in the meantime to change his mind so drastically.