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Austerity Has Changed How the World Views the UK
Why, for the love of God, don’t governments utilize the most obvious solutions to solve their budgetary challenges whenever a global financial crisis hits, instead of defaulting to budget cuts that can appear either inept or mean-spirited?
Finance Ministers don’t set out to craft inept or mean-spirited policies during times of economic crisis, but that’s how it plays out in the media and in living rooms across the country or wherever people gather to discuss the economy.
In the UK, this manifests itself in the names that people call their political parties.
If government austerity cuts don’t affect you, you continue to call the Conservative Party by its rightful name. But if austerity hits you hard, then you’re one of those who’ve taken to calling the Conservatives ‘The Nasty Party’ — and they’ll never get your vote ever again, etc., etc. (Yes, I do empathize, BTW. But that’s not what this blog post is about)
It just depends upon which side austerity hits you.
And budget cuts (at least budget cuts perceived as unfair by a significant percentage of the population) almost always result in either a lost election or loss of parliamentary majority at the next election. Check out those stats! (You’ll see how true that statement is)
Theresa May’s ‘hung Parliament’ election result in June 2017 is 100% attributable to the UK austerity budgets that have been in effect since 2010, and hers is just one example out of many majority governments around the world that have suffered as a result of their austerity policies.
There IS a Better Way!
Due to market conditions, about every 25-years a recession comes along in the capitalist countries. You can almost set your clock by it. It’s the ‘nature of the beast — carry on’ is how recessions are described by economists, and nobody tries to prevent recessions, as such ‘resets’ help to prevent even worse economic crashes in the future.
Still, there’s a way for countries to survive economic downturns WITHOUT shooting themselves in the foot every day of the recession. (A novel idea!)
The public knows an economic downturn when they see it. In fact, they have enough experience in their own lives balancing family finances when times are good, let alone when domestic financial challenges appear such as a job loss or (suddenly) another mouth to feed. Therefore, they know the government must compensate whenever the country faces a financial challenge.
The question for governments is how to do it and not lose the next election. Or the one after that.
And the answer is; To do it fairly.
That is; Apply cuts that will be perceived as ‘fair’ by a majority of the public — instead of deep cuts to some departments while other departments see no cuts at all, or worse, are able to increase their spending.
Does it seem fair to you while in recession that Health or Education should receive deep cuts, while spending on the military or the environment is unaffected? (I’m just using hypotheticals here for an example. Every Briton knows their military is chronically underfunded and few begrudge the UK military being exempted from budget cuts)
Back to the subject at hand; Every department in practically any organization on the planet has 5% ‘fat’ built-in to it. It’s just the way of organizations.
Budgets tend to be tightly managed in the first few years, then, over time, surpluses accrue or unused properties aren’t sold off as quickly as they could be, or in other ways there’s potential for either budget savings or revenue increases. Or, depending on the department, perhaps a combination of selling off unused assets and departmental savings could meet the new budget targets set by the government.
If you’re a large organization like the UK government and you expect your revenue to fall by 7% (for example) here’s the way to do it fairly!
Simply inform your departments of the 7% budget exigency, and instead of arranging deep cuts for some departments and zero cuts to others which sets the seeds for future electoral defeat, inform all departments to cut their budget by 7% — or alternatively — tell them to find ways to increase their revenue by the shortfall amount.
Let me be clear, if former Chancellor of the Exchequer George Osborne had simply told every government department in 2010, “We’re facing a 7% (or whatever percentage) cut in revenue, therefore, each government department must cut 7% from their annual budget until further notice,” each department would’ve done exactly that and hardly anyone would’ve noticed. (Remember, every organization/department already has 5% ‘fat’ in their system, so only a 2% budget challenge remains in this hypothetical example. At that point, accounting for the final 2% equates to selling off surplus real estate assets until that amount is obtained)
On the other hand, some departments might be real estate ‘heavy’ and could counter their entire 7% budget challenge by simply unloading their surplus real estate, thereby meeting the government’s directives to cut costs by 7% or increase revenues by 7% (or any combination thereof) to hit their departmental budget targets.
Wouldn’t that have been much better than the pain inflicted on the bottom-two economic quintile people in Britain (and which cost Theresa May a parliamentary majority) all of which has conspired to cheapen the ‘British brand’ around the world?
Read here, in the New York Times just how ‘fairly’ or ‘unfairly’ (depending on your worldview) the United Kingdom’s austerity plan has been portrayed around the world.
A country’s fortunes (fairly or unfairly) can rise or fall based on the perceptions of large numbers of people. Let’s hope that future UK budget cuts will not only be fair, but be seen to be fair by large numbers of Britons and by people around the world.
The EU Relationship: After Brexit
Overcoming significant obstacles in the postwar era, continental Europe has grown into one of the world’s most developed and successful grouping of nations in every possible category.
From conflicted littoral states pre-1945, to a unified trading bloc in 1972 (the EC) to a full customs and trade union in 1993 (the EU) and with several future member states lined-up to join, the modern European Union continues to morph into all that it can and should be.
From its rich history, to its culture and its support for the rule of law, and by placing a high priority on governmental and non-governmental institutions, EU countries have set a global standard in the architecture of governance.
Yet, it isn’t for everyone. Greenland left the bloc in 2009, followed by Switzerland in 2014 which withdrew its application to become an EU member. The Swiss are like that anyway. Very Independent People!
The Swiss remain members of the EFTA, which is simply a group of four like-minded European nations who’ve agreed to streamlined trading arrangements. The EFTA serves to improve trade flows between its members.
Norway, for example (an EFTA member) chose to not join the EU, but participates in many European Union institutions on an al a carte basis, although it must pay a higher price than EU members to have the option to join or not join certain EU institutions and frameworks.
And finally, the UK voted to leave the European Union in the June 2016 referendum, but the Brits joined to leave anyway, it was just a matter of time before they left.
Even with those disappointments (as seen from the EU side) the European Union is still a stunning success with every opportunity to double its standing in the world. Viel Respekt!
Taking the High Road with the EU in the Post-Brexit Timeframe
As good as the European Union is for its continental partners, it just doesn’t work as well for the UK and its Commonwealth partners, which has resulted in the inevitable Brexit vote and all the subsequent steps the UK government has taken towards Brexiting the European Union.
Of course, the EU people may feel some hurt feelings when a country wants to leave its bloc — nobody likes a one-sided divorce. But there soon exists the possibility of creating a new and better relationship between the UK and the EU. And there is plenty of room to improve on that count.
For some, getting Brexit out-of-the-way is merely a necessary step towards getting on to the super-important work of creating the all-time best possible relationship between the UK and the European Union.
The potential for increased trade between the two blocs, for additional mutual aid in addition to their respective NATO commitments, for multi-lateral support at the UN (for example) and to have two powerful European voices registering their positions in the world media instead of one, are just the beginnings of helping the two main European blocs hold even more sway in international affairs.
Yes, the EU can seem a little bureaucratic and autocratic, but they are dedicated to creating a peaceful world order within a standardized regulatory environment centred around global trade. Unless you just arrived from Mars, you’ve got to like that.
For its part, the UK can seem a little disorganized and even frantic at times, but forced to become all it can and should be via the Brexit change-up, it should emerge as a calmer and more mature country that happens to be attached to a large Commonwealth bloc of 2.5 billion citizens.
If managed properly, Brexit will move the UK and the EU relationship one order of magnitude forward — instead of the present situation where the EU is holding the UK back from fulfilling its best destiny and the United Kingdom appears as a thorn in the side of continental European plans.
Time for the UK and the EU to Write Their ‘Best Possible Relationship’ List
Yes, let’s get Brexit over and done with as soon as possible so we can get onto the far more important work of deciding how to maximize European clout in the world and then working together within a permanent pan-European institution set-up for that purpose, figure out how to best work together for mutual economic benefit, and how best to share the overwhelming number of obligations that are owed by developed nations to developing nations.
Things evolve over time. But just because they evolve, doesn’t mean that those things are the best they can be. It simply means that evolution has occurred.
For example, no modern city planner would’ve located Athens where it is now. It’s impossible to defend militarily (in our modern era) it suffers from lack of rainfall+water shortages, it’s hellishly hot in the summer, and it sits atop a major earthquake fault system. Yet, the city evolved and both its residents and the city government have made the best of it.
But it would have been far better for everyone if Athens had been located near the cities of Ioannina or Arta in Greece, where the city of Athens could’ve prospered a 100-times more than it has in its present location.
Likewise, now is the time to draw up what could’ve been all along and work towards what it still could be with the right vision, leadership, and management.
Rather than a splintering Europe that is getting weaker and less goal-directed as time rolls forward, Brexit offers the opportunity to make Europe work better for all its citizens and to strengthen the pan-European worldview — starting with a clean sheet that allows the UK, the EU, Switzerland, Norway and Greenland to succeed as never before!
