Reading the Financial Crisis Through the FT's UK Deficit Buster Simulation

With the UK election campaign in full swing, it has recently begun to dawn on media commentators that the focus on the high probability of a hung parliament and what kind of coalition might be formed--if any--has meant that very little attention has been placed on each party's specific plans for cutting the national deficit.

To help voters understand the scope of cuts that the parties are pledging to undertake based on their manifestos and their effects, the Financial Times has designed a UK Deficit Buster simulation where players get to choose what will be slashed in order to meet deficit reduction targets.

As a simulation, what makes the Deficit Buster effective is that it is able to convey how deeply unpleasant and intrusive these cuts are going to be. Vital front-line services are going to be effected and the impacts are going to be disruptive no matter the assurances that Brown, Cameron, and Clegg have given the public over the past three weeks.

Where the simulator is genuinely dishonest is that it provides no mechanisms for raising revenue from measures like an increase in tax rates on those with incomes over £150K a year (the wealthiest 0.6% of the population), the introduction of a financial transactions tax, or the elimination of out-dated military programs like Trident.

But beyond these specific points of weakness, what strikes me as most interesting is how the Deficit Buster simulation is indicative of a deeper problem with the way in which in the UK deficit is being understood as a political issue. And that problem is that the source of the current deficit is being willfully forgotten.

The origins of the current deficit have been completely de-contextualized. It did not appear out of thin air or as a product of carefree spending. It resulted from the financial crash and the UK government's attempts to mitigate its worst consequences. Just over a  year ago, Bloomberg reported that government bailouts to UK banks had already reached £1.4 trillion. This was in addition to other forms of economic stimulus spending. And the financial crisis itself arose from a failure to effectively regulate the banking sector, a failure made possible by the total acceptance of the necessity of financial deregulation across the big three political parties.

What is so amazing is the astounding feat of jedi mind trickery that Labour, the Conservatives, and the Liberal Democrats have been able to pull off despite these circumstances. In securitizing the deficit--that is by representing public spending as an existential threat that requires the imposition of emergency budgetary measures-- they have managed to deflect all responsibility for bearing the cost from the banking sector and placed it squarely on the laps of the general public.

The current situation--regardless of who gets elected--is one where those least culpable for the financial crisis--those on benefits, front-line public sector workers, children, and universities--are being asked to take primary responsibility for sorting its lingering effects as though this is a common-sense and uncontroversial solution to the problem.

Therefore, in the waning days of the election campaign, I would argue that if people are interested in real change, it will not come from accepting the deficit as a political issue and seeing which cuts you find the least objectionable. Rather, real change will only emerge if the electorate makes it clear that it understands that the positioning of the deficit as a political issue is itself extremely political and that it is not prepared to accept this framing. One can only hope that someone raises this as a question at tomorrow night's debate...

And here's a slogan: It's finance capital, stupid.

Photo credit: Helga's Lobster Stew

Comments

[David Campbell]

"What is so amazing is the astounding feat of jedi mind trickery that Labour, the Conservatives, and the Liberal Democrats have been able to pull off despite these circumstances. In securitizing the deficit--that is by representing public spending as an existential threat that requires the imposition of emergency budgetary measures-- they have managed to deflect all responsibility for bearing the cost from the banking sector and placed it squarely on the laps of the general public."

Yes - that should be the issue of the campaign and its been dodged. We also have to ask about the media's role in letting this happen. I think simplistic 'blame the media' critiques don't get us very far normally but the issue is so glaringly obvious we have to start there.

So let's consider the graphic from The Guardian's Datablog that makes crystal clear how bailing out the banks has been the driver of the deficit, at http://www.guardian.co.uk/news/datablog/2010/apr/22/uk-deficit-government-borrowing

This appeared in the daily paper so it wasn't hidden. But why doesn't this prompt journalists to ask of Mr Cameron, for example - "given the banks' role in creating the problem, why do you put welfare dependency before bank reform in your opening statement for last night's debate?"

Well, of course, we know the Tories political reason for that. But surely Cameron and the others should come under some pressure on this? Contra the Datablog, I wouldn't say (all) "facts are sacred", but to use the managerial lingo, couldn't we have 'evidence-based' journalism and policy once in while?

[kyle@chasingdragons]

David, I think you're spot on in your assessment. While it is easy to 'blame the media', the lack of media scrutiny on this issue has been glaring.

I was watching Channel 4's election special on Sunday night and they conducted a poll that indicated 70% of those surveyed believed that necessary spending cuts to balance the budget could be realised through efficiency savings alone! The media pundits present were amazed by this result; they didn't make the connection to how they themselves have neglected to comprehensively cover this issue until the past couple of days.

And still, even with some focus on what halving the deficit in the next two years might mean to frontline public services--and I shudder at the ferocity of the cuts will be coming to higher education--how we got to this point remains completely unexamined.