Wednesday, 16 March 2016

Awful Arguments #2 - The Myth That the Unemployed Caused the Economic Crisis

We have all heard it, the idea of a growing number of lazy people scrounging of the welfare state is repeated daily with little to no regard to the causes of mass unemployment. This is a myth usually perpetrated by the middle classes, comfortable in the notion that they will not need to know what it is like to live in poverty, nor ever have to look to the real cause of the numerous social problems we face today. Society has always had its scapegoats and it seems that next to immigrants and the disabled, unemployed people are currently at the top of the list. Despite this, a basic analysis of current economics reveals why a number of reasons why this idea that unemployment is a lifestyle choice is absolutely absurd. As such let’s go through these reasons one by one in an attempt to debunk this petulant and ignorant myth.

Justification Narratives explained

A Justification narrative is a simple propaganda story aimed at reducing complex political phenome to easy digestible sound bites or memes, such as ‘unemployed people are all lazy scrounges’. As you can probably tell, justification narratives are extremely reliant on confirmation bias, meaning they mainly work on people that are significantly unlikely to critically analyse an idea that fits into their own worldview. This means that Justification narratives are an extremely useful tool in getting the poorest members of society bickering among themselves, distracting them from the people responsible for the economic meltdown of 2008.

As anyone with any sort of moral compass whatsoever knows, it is entirely natural to react negatively to perceived injustices within society. Therefore, when the idea of ‘lazy people scrounging of the welfare state, at the expense of the taxpayer’, is repeated on a regular basis, it becomes easy for it to stimulate strong emotional reaction. When this happens people become less likely to acknowledge the fact that benefit fraud only represents a small amount of the benefit system. To prove this, we can look at the evidence that the public estimate the amount of fraud in the benefits system to be £24 in every £100, when the real figure is just 70p. In addition to this, contrary to popular belief that more is spent on welfare then on pensions, we actually spend 15 times more on pensions then welfare. We all see the justification narrative used, whether we want to believe that or not. In order to avoid such blatant misrepresentations of facts, politicians and the media need to be made aware that they should be more forthright with facts and evidence rather than blurting out meaningless buzzwords and phrases.

Who is really responsible for the economic meltdown?

Largely due to a belief in free market fundamentalism and mass lobbying by the banking sector, governments and politicians during the 80’s and onwards, set about commencing a mass deregulation of the banks. In the UK, this began with Margaret thatcher’s attempt to make the British economy reliant on financial services. This was continued during the 1990s by labour chancellor Gordon Brown, when he handed over all public control of the bank of England to private companies. However this was not just limited to the UK. In America, Bill Clinton and George Bush, despite being on different ends of the so called ‘political spectrum’ both took on the Job of dismantling the economic firewalls that had been put in place In order to prevent another wall street crash. All throughout Europe and North America governments began blatantly tearing up legislation that had been put in place because of the reckless nature of the financial sector, disregarding the consequences in favour of neoliberalism.

As a result of this deregulation, banks began creating as much new debt as humanly possible, lending it out in the form of loans, presumably with the hope that the income from the loans would be more than the cost of borrowing. Due to the large amount of money in the economy house prices rose faster than wages. This meant that, people starting using more and more of their salary in order to pay for the debt. After years of banks betting on property assets the inevitable happened, and the whole western world went into economic meltdown. Despite pre crisis rhetoric about the free market, western governments immediately labelled many of the banks effected ‘too big to fail’ In order to pay off the banks monumental debt. How did they cover the cost? This was largely done through brutal cut backs on infustructure and benefits, under the guise of reducing the deficit. This in turn led to reduced demand for goods and services, making the economy even more stagnant and creating more of a debt burden. 
How helping to cause a financial crisis and then punishing the people affected, using yet more of neoliberal policies that caused the crisis in the first place is considered acceptable in modern democracies is utterly ridiculous. While you might be tempted to argue that those loans should not have been taken out in the first place, by this logic why not let financial institutions try and take advantage of people in every aspect of life?  Ultimately it was not the poor or unemployed that caused the economic crises but a vicious system of financial sector deregulation and betting.

The Tory’s won’t solve mass unemployment

As we have seen thus far, in order to justify their privatisation and austerity measures, the Tory’s, through their political discourse and propaganda, have spun the following Justification narrative:

This Country has spent too much on helping those that refuse to work for two long, leaving us with a massive deficit. Therefore, it is necessary to make cuts to reduce the deficit, and make sure people work for a living.

Despite this, evidence has shown that the Tory’s in their implementation of the austerity agenda have done more to make people unemployed than anyone. Since the conservatives first came to power in 2010, long term unemployment rose by 115,000 for those out of work for longer than one year, and by 167,000 (+58.8%) for those out of work for longer than two years. In addition to this, long term youth unemployment rose by 120,000 to 257,000 (+65.8%). In addition to this, many people on Ian Duncan smith’s illegal workfare and ATOS, schemes are excluded from unemployment statistics, meaning the situation is much worse than it is made out to be. These examples completely fly in the face of Tory rhetoric about the unemployment crisis left by the previous government, and the idea that conservatives are ending dependency on benefits. If they truly cared about being the party of economics they would acknowledge this, rather than blaming the victim.


Perhaps the most annoying thing about writing this, is that some people who red it will blatantly disregard the evidence, and continue to spew their right wing, pro establishment justification narratives. In my last blog post, I explained the problem with social democratic policies as viewing people as mindless robots that need to be incentivised to work. While we should seek policies such as investing in infustructure as short term alternatives, we should ultimately look beyond both social democracy and conservativism to having the right to manage our own communities, only then can we be free from narratives about those who ‘contribute’ to the economy and those who don’t.

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