John Weeks is a professor emeritus of the University of London's School of Oriental and African Studies and author of Economics of the 1%: How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy. His recent policy work includes a supplemental unemployment program for the European Union and advising the central banks of Argentina and Zambia.
transcriptJAISAL NOOR, TRNN PRODUCER: This is The Real News, and I'm Jaisal Noor in Baltimore. In news from Britain, George Osborne, the country's chancellor, or finance minister, recently announced a new round of austerity measures, totaling some $41 billion, including $20 billion in cuts to welfare over the next two years. Here's a little bit of what he had to say.~~~GEORGE OSBORNE, U.K. CHANCELLOR OF THE EXCHEQUER: If 2014 is a year of hard truth for our country, then it starts with this one: Britain should never return to the levels of spending of the last government. We'd either have to return borrowing to the dangerous levels that threatened our stability, or we'd have to raise taxes so much we'd put our country out of business. Government is going to have to be permanently smaller, and so too is our welfare system.~~~NOOR: Thanks to the BBC for that footage. Now joining us to discuss this is John Weeks. He's a professor emeritus and senior researcher at the Center for Development Policy and Research, Research on Money and Finance Group, at the School of Oriental and African Studies at the University of London. Thank you so much for joining us.JOHN WEEKS, PROFESSOR EMERITUS, UNIV. OF LONDON: Thank you for inviting me. Always a pleasure.NOOR: So, Professor Weeks, George Osborne and his supporters, they point to improving jobs numbers, an improving housing market, overall some improving economic indicators, that this path of austerity has worked. And England and Britain was one of the first states to adopt this back in 2010. What is your response to these arguments? And what is the impact going to be on the British society?WEEKS: Well, I'll begin by saying that George Osborne never took an economics course in his life, but I fear that if he had, he would be even worse, because economics has turned to be a really reactionary subject. The first point to make is the most recent information data that has come in from the Office of National Statistics of Britain suggests that the recovery is not as strong as George Osborne says. Well, three months ago, I and another ancient professor, a fellow from Leeds, Hugo Radici and I wrote an article in which we said that we did not think the recovery would be sustained, and people derided us and said, you know, you're--people on the left should just recognize that the recovery's coming and stop trying to pretend it's not. Well, it's possible that we might be vindicated. Second point to make is what George Osborne is bragging about is 1 percent growth, 1 percent annual growth. He's hoping it'll be 2 percent, but today it is 1 percent. I mean, if that's something to brag about, we have very low expectations indeed.Next point to make is about employment. The British Office of Statistics that I mentioned produces very detailed data on employment, as in the United States, and the information is quite clear. Most of the growth of employment has been part-time. And surveys--we got official surveys, by the government, of people in part-time. When they are asked, would you prefer to work full time, would you prefer to work longer hours, the overwhelming proportion of them, about 70 percent, say yes. So what we're getting is a recovery of based on shifting full-time employment to part-time employment. Now, I suppose it's better to have a part-time job than to have no job, but again, this does not greatly--give a great deal of confidence about the recovery. Then the housing market. They talk a lot about the housing market. Most of the increases and booming prices in Britain are in the south of the country, the southeast--London, southeast. This is an area in which demand from overseas buyers is extremely high. London housing market is driven by wealthy people from the Middle East, from China, from other wealthy countries, less so the United States all the time. So this is not a housing market which reflects the general recovery of the country. It reflects other factors. So I'm not saying there is no recovery, but I will say that it will be interesting when the next set of statistics come in, which will be in about a week. We'll know what happened in the fourth quarter of 2013. And until then, we can say with confidence it is a very slow recovery, the slowest recovery on record. We are now, you know, almost four years since the austerity policies began, and the economy is growing at 1 percent. That is unprecedented. There has never been a recovery that lagged more than about 13 quarters, that is, that's about three years. So we're far, far behind what is normal.So I would say don't get too enthusiastic about the recovery, about what George Osborne is bragging about. A second point is the austerity policies are completely unnecessary. It's not, you know, frequently--frequently is a cliché. When you're trying to be understanding and open-minded, you say, no one is wrong all the time. George Osborne is wrong all the time. He's wrong about everything. Austerity is not necessary. Britain does not have a large deficit. It does not have a large public debt.The deficit, to the extent that it is being closed as a proportion of GNP--and it is getting a bit smaller, not very much smaller--that is a result of this extremely slow growth of the economy. The economy grows, tax revenues come in; the deficit as a consequence declines. More people are employed, so they're kicked off the unemployment rolls. You pay less unemployment. It's a very simple relationship.Actually, in absolute terms, Osborne's borrowing now, adjusted for inflation, is no less than it was when labor went out. So he's made no progress whatsoever in the absolute deficit. He's made some progress in the relative deficit, that is, the deficit relative to GDP, relative to national income, and the reason he has is because the economy has grown a little bit. If the economy had grown more, there would have been more progress in reducing the deficit, if that's what you call progress. But the reason it didn't go faster is because of his austerity cuts. And as I say, when you put it all together, it's not a very pretty picture, and it's certainly not a very pretty picture for the 99 percent. But it's an extremely pleasing picture for the 1 percent.NOOR: John Weeks, thank you so much for that report. We really appreciate it. We're out of time for this one, but we'll have you on again soon.WEEKS: Okay.NOOR: Thank you for joining us at The Real News Network.
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