It was almost inevitable that the right-wing think tanks would start clamouring for austerity by delivering attacks on the most vulnerable in society as soon as they felt the coronavirus made it possible to do so, and the process has now started.
The Guardian reports this morning that:
The coalition government policy that led to state pensions rising quicker than wages should be scrapped as part of an “intergenerational reciprocation” for the costs of battling Covid-19, a thinktank has said.
The Social Market Foundation (SMF) proposes that the massive economic cost of the emergency measures deployed to manage the pandemic must be shared fairly between old and young, and that some of the huge anticipated government deficit could be funded by abandoning the so-called triple lock guarantee on state pension rises.
The economic logic underpinning this demand is entirely flawed.
It assumes that there the coronavirus crisis must be paid for, when all that is missing is credit at present, as I have explained.
It assumes that payment must come from across society when many have nothing more that they can contribute.
GDP is down by perhaps 25%. That means production is down by perhaps 25%. That also means that consumption must fall by 25%. Because production equals consumption – that’s part of our GDP definition.
Someone, somewhere, must reduce their consumption. It isn’t all just about the pieces of paper we use to ration consumption, it’s not all about money. If less is being produced then some must consume less.