George Osborne's Decadent Budget

Let's scotch a myth that's been multiplying like typhus in news about the so-called emergency budget. George Osborne is no "political genius".

Take a look at the measures he's outlined. All of them are imprinted with his partisan political economics designed as traps for the Labour Party. The cut on corporation tax - any attempt to reverse it is a tax on business. Increasing the inheritance tax threshold - a reversal appropriates a chunk of a lifetime's hard work. Opposing the extension of the MOT is punishing car ownership. Wanting to see public sector salaries rise above 1% is "profligacy". Voting against freezes to tax credits would be not getting serious with the social security bill. Fighting the conversion of grants to loans falls into the trap of allowing the successful to be subsidised by the not-so-successful. Getting hot and bothered about forcing market rents on "high earners" in social housing is cut from the same cloth. And taking the field against the ill-named living wage for the over 25s is obvious political suicide, even though the recipients on the whole are going to be left worse off when the subsidy of their low pay is cut back.

Sure, these measures are driven by short-term political calculation and boost Osborne's standing as the figure who delivered the first "proper" Conservative budget in almost 20 years. No bad thing in the eyes of the thinning blue ranks who'll be voting for a new leader in three or four years time. But genius? Surely, genius political moves wouldn't be so transparently obvious. A genius political manoeuvre wouldn't leave obvious gaping problems, like the refusal to extend the increased minimum wage to low paid public sector workers, or overseeing what will likely be an explosion in homelessness among young people as a consequence of refusing housing benefit to the under 21s. These are, of course, political time bombs a new Labour leader could use to beat the Tories with. Depending on who we end up getting, it remains to be seen whether that will be the case.

What was interesting about this budget though was a grudging recognition of really-existing reality beyond the walls of Westminster. Dave has previously said that the welfare merry-go-round of low pay being subsidised by the state cannot stand indefinitely. There's also a sense, partly thanks to the campaigning done by Labour around the cost of living crisis, that wages cannot lag behind on prices and share of national income forever either. But that's as far as it goes. Effectively, the 'official' living wage - that £9/hour by 2020 (don't be too shocked if it ends up being a smidgen more) - represents a cut in the subsidy employers receive via the tax credit system, and a simultaneous knock to the worker in receipt of it. The overall problem of egregious inequality remains largely untouched.

There is a word that sums up Osborne's budget nicely. It's not genius, it's decadent. The ruling class and its organs are no longer fit to rule when they start actively undermining the system on which their power rests. Osborne's programme is the very distillation of this problem. All throughout the planning process of this budget, he and his team could have made different decisions. They could have pursued policies that strengthened British capital as a whole, such as infrastructural investment, making sure more people and more money in their pockets, supported the expansion of post-16 education, provided housebuilding an impetus, and thrown the government's weight behind green industrial development. All of these are essential to the economy's long-term health, and each and every time Osborne chose a policy that served the short-term interests of the Tory party or, more accurately, his leadership ambitions. Putting the interests of your party before those of your class was Marx's definition of socialist sectarianism. That insight can apply equally here too.

Yet it's much, much worse than business-as-usual decadence. Osborne's austerity lite - again, very careful to hammer only relatively small numbers of people less likely to vote - is premised on some pretty healthy economic growth projections. The Office of Budget Responsibility has revised expected growth this year down to 2.4%, which is still pretty good for a mature economy. Yet you've got to wonder what planet these 'independent' analysts are living on. Right on Britain's doorstep, the EU and the Eurozone faces its biggest crisis since the old Steel and Coal Community was established in the 1950s. There's no way of knowing what fall out a Greek meltdown could shower over the economies of Western Europe, especially when it's difficult to tell a toxic "asset" from a healthy one. And secondly, and more ominously, was anyone at the OBR, the Treasury, and over at Number 11 paying attention to what's happening in China? All of a sudden the global outlook looks less benign - all the more reason for money not to be taken out of the domestic market. Last time Osborne did this in 2010-12, growth was choked off and unemployment rose. Luckily, the economy self-corrected and eventually climbed out of that period of unnecessary stagnation. It seems Osborne is set on trying his luck a second time.