Following on from their recent report on local government, last Thursday Channel 4 broadcast a quite astonishing programme by Martin Durkin: Britain's Trillion Pound Horror Story. For reasons to be established, the broadcaster seems intent on repositioning themselves as the public voice of right-wing think tanks and corporate lobbyists. Taking the viewer on a painful journey of half truths, fictions and ideological dogma, Durkin’s polemic reflects abysmally on Channel 4.
Durkin himself is no stranger to controversy. In 1997, his attack on the Green movement, Against Nature, led to Channel 4 issuing a public apology. The Independent Television Commission ruled that Durkin had both distorted the views of his contributors as well as “misleading” them about the nature of the programme. In 2007, Durkin released his seminal work, The Great Global Warming Swindle, which again aired on Channel 4. Again, contributors complained of being "totally misled" by Durkin, and the programme was widely denounced as misleading propaganda.
The latest film centred around a number of key ideas as it examined the country’s national debt and proposed various solutions to recover the nation’s finances. Having assembled a suitable range of views from various right wing lobby groups (The Adam Smith Institute, Institute of Economic Affairs, Tax Payer Alliance), Durkin set out his case against the state:
Big government kills growth
In the latter half of the 20th century, Britain’s economy grew substantially under the welfare state. GDP per capita, in real terms, was around four times higher in 1998 than it was in 1900. The post-war period, the birth of the welfare state that Durkin so maligns, saw some of the highest sustained growth of the century. That it has drastically reduced poverty, homelessness and infant mortality whilst increasing literacy and life expectancy is unworthy of mention. The repeated claim that the government, as a buyer of goods and services, “cannot stimulate growth” is a claim almost no economist would agree with – they might disagree when it does so, but not that it can do so. Government spending constitutes aggregate demand, and when there are no other sources of demand, it contributes to growth.
Quantitative easing – “theft and fraud”
In an interesting section, Durkin rails against QE and the mechanics of inflation. The creation of money from thin air by the central bank is then used to purchase various bonds, increasing the money supply and deflating the value of everyone’s money. Eamonn Butler, of the Adam Smith Institute, says:
“So if you’re a saver you’re putting money aside in a bank in order to pay for your retirement and when your retirement comes you find that it’s worth an awful lot less than you originally thought. Who’s had the benefit of that? Not the bank, no, the government. People are cheated and defrauded by this… Inflation is theft, there’s no question about it at all.”
What Butler and Durkin fail to mention to viewers is that private banks create money from thin air every single day when they issue loans; the loan is not taken from deposited money, it is conjured from the ether as a book entry. The bank is then repaid the loan in full, with interest. Under the fractional reserve system, the people’s money is leveraged constantly not to aid government but to finance private projects (and, of course, line the pockets of private banks). As with the rest of the film, criticising the private sector is strictly off-bounds – even if guilty of industrial scale “fraud” and “theft”.
The Bank Bailout
“In the private sector if you really fail and you’re doing nothing useful nobody pays you anything…” (Sir Anthony Jay)
This will come as news to the British taxpayer; the failed banks rescued at enormous public expense have still been handing out billions of pounds in bonuses year after year. The difference between “free markets” in theory and practice seems to entirely escape Durkin. On the bailout, he says, “the real cost of bailing out the banks was trivial, it’s estimated to have added a mere £73bn to our debt”.
Taking his figure for the national debt as £4.8tn, this is close to the Office of National Statistics estimate released in July of £4tn. The ONS figure includes a sum of between £1tn - £1.5tn for the takeover of RBS and Lloyds Banking Group. Has Durkin used ONS data whilst simultaneously denying the bailout element? It’s impossible to say, he doesn’t reference his assertions. Furthermore, Mike Denham of the Tax Payers Alliance estimated the cost of the bailout to be “£1tn higher” even than the ONS figure. That’s the same TPA for whom Matthew Sinclair is “research director”. Sinclair is one of the main speakers in Britain’s Trillion Pound Horror Story. Perhaps they never got round to discussing the bailout.
Britain’s decline: from the workhouse to the welfare state
In quite a lengthy section, Durkin looks back longingly at the golden-age of the good society, “the 18th and 19th centuries”, periods marked by obscene poverty, ill health, squalor and extreme inequality; true Dickensian Britain. These were the days of child labour, fifteen hour shifts in lethal factories and, of course, actual slavery – justified with the same sort of crude economic reductionism that pervades his entire programme. Indeed, it was the appalling conditions of Britain’s poor that gave rise to the welfare state in the first place.
As for welfare destroying manufacturing, Durkin would do well to have a look at Germany. It remains one of the top three manufacturers and exporters in the world despite having an effective and comprehensive welfare state. How does he explain this? He doesn’t. Nor does he mention the real death blow to British manufacturing – Margaret Thatcher, the doyenne of the very same neo-liberals that he lauds with such zeal.
These are, we are told, appalling – but only in “health and education”. There is no mention of private monopolies like the trains or local bus services, and with good reason. Privatisation has transformed Britain’s rail from a cheap and relatively efficient service into the modern nightmare we face now; extreme overcrowding, a four-fold increase in the level of state subsidy to £5bn and prices so high it is cheaper to fly around Britain than use the trains. The programme showed no awareness of “natural monopolies” at all, nor the dismal inefficiencies created when they are privatised. But private monopolies do not earn a single mention. Instead, the real target is the NHS:
“Many [people] are dying and they don’t know it’s the fault of the NHS… it’s the worst system in the advanced world… for treating the poor.” (James Barthomolew, Institute of Economic Affairs)
This is not just false but completely absurd. In the US, a nation who spends nearly twice as much on health as Britain as a percentage of GDP, a substantial number of the poor have no medical insurance at all; it is this that drove the widespread calls for public health provision. In Britain, those same poor are entitled to the same treatment as everybody else. In terms of results, life expectancy in Britain is two years higher than in the US, despite the US being a far richer nation. Around 45million of America’s poor have no health insurance at all, and it is estimated that around 45,000 die each year for this very reason. Bartholomew’s claim is a patent falsehood.
The film's climax arrives with Durkin’s call for inheritance tax and capital gains tax to be abolished, and for a flat tax of no more than 20% on income. Both inheritance and capital gains are unearned income for the recipient; the taxes they provide contribute to schools, hospitals and a host of other public services. A flat rate of income tax breaches a fundamental rule of fair societies that those who have more, and can afford more, should contribute more as a proportion of their income.
Ireland, the “Celtic Tiger”, gulped down the medicine Durkin prescribes: it slashed taxes, geared itself wholly to business demands and substantially liberalised its economy – they unleashed the magic of ‘the market’. They are now all but insolvent, a true basket case; they are in such a dire financial state that they threaten to collapse the entire European project. The forces of “creative destruction”, unchecked, soon become simply destruction for the many and creation for the few.
“Taxes aren’t just for the super rich, or the affluent, they hit everyone”
Of course, taxes really aren’t for the super rich or affluent, only everyone else. In the world of market fundamentalism, “wealth creators” should never be overly pursued for the taxes they owe; their mere presence is gift enough to the little people. So in the entire course of the programme, tax evasion and avoidance merit not a single mention, despite being estimated to cost Britain between £42bn and £120bn annually.
All considered, the film was little more than an unashamed propaganda effort, bereft of any balance or nuance. The film itself can still be viewed in full at Channel 4’s online service, 4OD. It is recommended viewing, though probably not for the reasons Channel 4 intended. With the axe in full swing, the broadcaster’s aspirations now seem no higher than playing chorus right to Chancellor Osborne while even he, if he has a shred of integrity, would be embarrassed by its crude errors and excesses. They no doubt feel they are delivering ‘edgy’, ‘daring’ material; in reality they are simply regurgitating the most pernicious and misleading dogma of the corporate lobby.