Further to yesterday’s article on Cameron’s speech, I’d like to quote a few paragraphs from the Another Angry Voice blog, explaining the phenomenon known as the Justification Narrative – and how it is used to dupe the unwary voter!
The article cites several examples, including the following, which are used regularly by the UK Conservative Party.
The trickle down-effect
A justification narrative with an inexplicably long shelf-life is the trickle down-effect. In the 1970s and early ’80s neoliberal politicians came to power and began a massive transference of wealth to the wealthy establishment elite. Their justification for this kind of policy was that wealth would then trickle down to wider society. There is an overwhelming amount of evidence that this effect never happened. A large proportion of the wealthy establishment simply paid tax lawyers to hide their wealth in tax havens, and the gap between rich and poor has grown wider and wider ever since, especially in the UK and the USA.
Even though the trickle down effect has been shown to be an absolute fantasy, the same policy still exists today, just with a slightly altered form of justification narrative. These days Republican politicians harp on about “job creators” instead. The narrative is that it is important to cut taxes on wealthy “job creators” in order to allow them to create jobs and stimulate the economy. This “job creator” narrative defends exactly the same policy, and it is equally inaccurate. The Bush tax cut for the richest 1% of Americans turned out to have one of the lowest fiscal multiplication values in the history of American spending plans (for every $1 given in Bush tax breaks, only 23 cents returned to the economy). The American venture capitalist Nick Hanauer clearly expressed the economic illiteracy of the trickle down/job creator narrative:
“There’s this idea in our society that rich people are job creators, and if you tax them more, then they’ll create less jobs. This is simply a misunderstanding of how the economy works; it’s actually the middle class that creates the jobs with the demand that forces businesses to increase employment.”
The maxed out national credit card
One of the most brazenly misleading right-wing justification narratives is the national credit card fallacy which has been trotted out by the Tory party time and again. This fallacy relies on the creation of a simple narrative equating national economics with household finances. It is a simplistic analogy between government borrowing and unsustainable borrowing on a credit card. It is obviously popular because almost everyone is familiar with credit cards, which makes the story nice and accessible. The problem is though, that the whole argument is absolute nonsense. As a result of the Bank of England’s monetary policies (all-time low interest rates, £375 billion in Quantitative Easing) the cost of government borrowing is at an all-time record low. The UK government can borrow at an interest rate of just 1-2%, whilst most credit cards charge well above 10% and often much higher. A much more suitable analogy would be between PFI economic alchemy schemes and credit cards, since PFI often ends up costing vastly more than an up-front cash payment would have done. However the Tories have absolutely no interest in creating a more realistic narrative, since they approve of the transfer of taxpayers’ cash to the private sector via rip-off deals.
Osborne’s confidence fallacy
Another simplistic but highly misleading Tory justification narrative is George Osborne’s confidence fallacy. This fallacy relies upon taking credit for virtually the only bit of positive economic news that the Chancellor can find. He calims that his “cut now, think later” indescriminate austerity policies have inspired such confidence in “the market” that the cost of government borrowing has fallen to an all-time low. Even on the face of it this seems like nonsense, why on earth would investors be at an all time high in confidence, when “Osbornomics has driven the UK economy back into a prolonged recession? On deeper analysis it becomes obvious that Osborne is simply taking credit for the consequences of the Bank of England’s monetary policy outcome. It is absurdly obvious that all-time low interest rates and the creation of £375 billion to turn (normally illiquid) government bonds into cash (the most liquid asset possible) – has led to – all time low bond yields.
Osborne has been simply conflating fiscal policies with monetary consequences, meaning that he is either economically illiterate or relying on the fact that the majority of the public are economically illiterate. Anyone with a decent understanding of economics should be able to see the fallacy, however the vast majority of people don’t have a decent understanding of economic theory, therefore the narrative sticks (and goes completely unquestioned by the mainstream media).
The Great Neoliberal Lie
Perhaps the most astonishing justification narrative is the Great Neoliberal Lie. After neoliberal politicians and economists had spent decades ensuring that financial markets were dangerously deregulated, the financial sector went on an unprecedented binge of reckless over-leveraged speculation (at best) and outright criminality (at worst). Eventually the entire financial system got so clogged up with toxic junk that the credit markets froze up and virtually every major financial institution either went bust or only survived due to the biggest government interventions in human history. After preaching a mantra of deregulated markets stabilising themselves and the evils of state interventions, this financial sector collapse should have been the death of the neoliberal ideology. However the neoliberals quickly cobbled together an alternative narrative; that rather than reckless gambling and financial sector criminality causing the crisis, it was actually caused by government overspending. It doesn’t matter that the narrative is completely false, it appeals to those that would prefer to see a continuation of the status quo, rather than a huge revolutionary change in economic practice.
This new justification narrative allowed the orthodox neoliberals to present exactly the same batch of neoliberal policies that caused the crisis (mass privatisation, deregulation, attacks on wages and working conditions, welfare destruction, tax cuts for corporations and the rich, tax rises for ordinary working people) as the solution to the crisis. The same old neoliberal policies that caused the crisis were rebranded as “austerity” and described in terms of being absolutely necessary in this time of crisis. This crude rebranding exercise relies on one of the most brazen false narratives ever presented to the public, that they themselves are to blame for the crisis because of their “over-use” of the welfare system, rather than the rich speculators that in many cases walked away with £billions in personal profits despite committing countless immoral and criminal acts.