Panic is on the way. The headline of the FT screamed "Italians Deliver Austerity Warning". Such was the reaction to the successful election of two comedians. A real one Bebbe Grillo will control the parliament. An old one Silvio Berlusconi will control the senate. Exit polls in this pivotal Italian election indicate the heroic cycle Italian coalitions is alive. The people have spoken. This is a potential game changer and a warning for austerity politicians from the third biggest economy in Europe. Watch the fear spread throughout the political classes.
In all of their calculations the bureaucrats in EU, the Troika and the devotees of the Mount Pellerin society did not count on this outcome. The tactics of austerity fear did not work. The master plan is unwinding for a very simple reason. They have underestimated the people and the democratic process. Over the last six years people across Europe have been told they must atone and accept austerity. The deal was if citizens took the cuts to services, schools, health the selling off of taxpayer state assets then the fictitious 'collective debt' would be cleared. The truth is the debt is not collective. The debt was run up by a few and not the masses.
Ireland is the perfect case study for the failure of policies of austerity. Twelve property developers and speculators borrowed all the money. Today it is the tax payer and the electorate who are paying the bill. No prosecutions or jail terms for the twelve. No justice from the right wing school teachers in the Fine Gael government. Instead it is the poor, the middle classes and the elderly who see their services cut, pensions reduced, their tax funded energy companies and forests sold off to please the Troika. The man on the street in Dublin, Galway and Cork knows their is no justice in this. The man on the street has taken the bitter pill however instead the pill gets bitterer and the austerity goes on. This failure of government, politicians and fairness is a European trend.
The UK faces a similar fate with an economic policy in consternation. The Bank of England are set to start pumping more money into the banking system. Inflation will rise and squeeze consumers further reducing their purchasing power and creating unemployment. Six years into the recession the banks are still weak and require an estimated £60 billion of funds to make them viable. The government has been pursuing creative accounting with the unemployment by forcing people onto 'self-employed' status. Not one of the government promises for growth and recovery have been achieved.
The Conservatives claim they are 'cutting the state' while in fact they are extending it like an octopus around people. They are simply tying the tax payer into long-term privatised deals for schooling, health, prisons, disability services and the list goes on. The downgrading of the AAA rating should not come as a surprise to anyone. The economic process of Gideon Osborne has always been suspect long before his 'omnishambles' budget and his failure to understand how to create growth. If you want a chancellor with an economic plan then at least appoint someone with experience of life and work. Not a gilded bird living with a life experience of Persian rugs in the Westminster bubble.
One must have sympathy for him. He is a mere pawn and knave subject to greater powers. On one side he is being pushed by the Conservative 'Free enterprise' group to cut more and privatise the state further. On the other the discredited economic policies of the Mount Pellerin and the Ayn Rand quest for individualism.
The pursuit of Thatcherism 'mark 2' and cutting of red tape is indicative of a lack of understanding of economic history and policy. It is the pursuit of the elusive and never proven 'trickle down economics' which would liberate citizens to being 'wealth makers' and home owners. Ferdinand Mount (Thatchers head of policy 1982-1983) has noted in his book the 'New Few' the opposite happened. Power and wealth in Britain have slowly been consolidated the hands of a small elite, while the rest of the country struggles financially and switches off politically. At its extreme this is epitome the "something for nothing culture". Selling state assets and services for nothing to a private sector who then continue to charge the public ad infinitum. Look no further than the annual charges in rail tickets to prove this point.
It was these Hayekian policies born in the Mount Pellerin society, which Thatcher without taking a long view adopted in full. She never cared understood the impacts on the economy and the taxpayer. She privatised the railway, parts of the health system, social housing, energy and all other profitable parts of the state. (And lets be honest new labour followed through with many of these initiatives) These policies found their way into the heads and hearts of politicians across Europe. This ideology gained power in the bureaucracy of western governments, the EU, financial institutions. They worked their way across the political divide of the left and the right. They created the Lisbon Treaty and relinquished the political classes responsibility for citizens. At some point citizens stopped being citizens and became 'customers' of the private companies appointed by the state. Now they sit in the queue. This subtle shift tested the publics understanding and engagement with our tired and traditional political classes. Trust has been broken. As customers we buy the latest thing on the market that will please and take away the pain of austerity. We no longer have brand loyalty.
The Italian election is a warning to governments of the left and right across Europe. Many of whom are trapped by the Mount Pellerin myth. We need a new direction.
Whatever our political classes are doing now is not working. People like being citizens it makes them part of society. They don't mind paying in for services they own and and can shape. They don't mind paying their own debts. Selling everything and disenfranchising the citizen is the only outcome of the constant austerity and narrow corporatisation. It disengages the people from the political process. Creating a customer class instead of citizen class allows the citizen to vote for two comedians. They will choose a good joke over the bitter austerity pill peddled by our distant politicians.