New Internationalist

The Facts

Issue 188

new internationalist
issue 188 - October 1988

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New Right policies are no longer on the fanatical fringe - they have become the bread
and butter of most Western governments in the 1980s. We can now measure their impact
by comparing the social and economic statistics of 1988 with those from a decade ago.

NB Each national government produces its statistics in a different way. So
it is more useful to look at the trend
within a country than to compare one
country with another.

Illustration: Hans Georg Rauch

The value of a dollar is social,
as it is created by society.


RALPH WALDO EMERSON
1803 - 1882

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POVERTY
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Countries draw their poverty line in different places - and there are usually more poor people than is claimed by official figures. But those living below the official poverty line face conditions which even budget-conscious governments have to admit is unacceptable. And the trend is clear: even in nations claiming to have become wealthier over the last ten years, the number of poor people left behind is increasing.

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1 1973-4 figures; higher than for other countries because calculated by independent economist Brian Easton rather than by government sources.
2
1979 figure; Child Poverty Action Group.
3
Percentage of families on low incomes 1985, Statistics Canada.
4
1985 figure, Child Poverty Action Group.
5
1986 figure.

 

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UNEMPLOYMENT
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Unemployment has risen sharply in most Western countries in the 1980s. Part of this is because of the way new technology has been introduced. But unemployment has also been used as a tool to discipline the labour force, erode trade union power and control inflation.

Percentage of workforce unemployed
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1 Up 11.7% in the March-June quarter of 1988 and climbing alarmingly fast.
2
Frank Field. chair of House of commons Social Services committee.

Official unemployment figures should be treated with caution. The UK's Thatcher Government, for instance, has changed its way of calculating unemployment statistics no less than 20 times.2 Each statistical change has managed to lower the numbers technically described as 'unemployed'. This has helped to reduce the percentage of the workforce unemployed from an early 1980s peak of 13.5%.

 

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INFLATION
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One of the New Right's prime economic goals is the reduction of inflation. The statistics show their success - though this is largely due to dramatically lower oil and commodity prices worldwide.

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1 Average 1970-80. World Bank World Development Report 1962.
2 1966 figure. Canada Year Book. Statistics Canada.

 

Leaders of the Western World unite around new right economics: Aotearoa's David Lange (left), Britain's Margaret Thatcher, the US's Ronald Reagan, Canada's Brian Mulroney and Australia's Bob Hawke (right).

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[image, unknown] Richard Open / CAMERA PRESS [image, unknown] Sven Simon / CAMERA PRESS

 

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TAXATION
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Tax policies have traditionally been those of common sense - weighted to take more from the rich than from the poor. The New Right has cut the rate of income tax paid by average earners - but it has slashed by even more the top rate paid by those on the highest incomes. As a result the rich have made windfall gains.

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The rich have made windfall gains from this change in this policy. For example, since it came to power in 1979, the UK's Thatcher Government has given away £20 billion ($33 billion) in tax cuts. The richest 10% of tax-payers receive 47% of this, an average of £4,500 (57.4001 a year; while the poorest 10% received just 2%, or £120 ($200) a year.

The other key New Right tax policy is to shift away from direct or income taxes towards indirect or sales taxes. This is because sales taxes apply equally to rich and poor. A 1985 study in Aotearoa (NZ) showed that the bottom 10% of households paid 14.8% of their income in indirect tax - while the the richest 10% of households paid only 8.4%.6

Sales tax, per cent 1978:1988

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Tax burden

Changes in US tax policy meant that those on less than $10,000 a year paid $95 more tax in 1984 than they had in 1980. Those on 810-20,000 paid $186 more. At the other end of the scale, those people on $100-200,000 a year paid $2,269 less tax in 1984 than they had in 1980. While those above $200,000 paid $17,403 less.'

1 1976 figure.
2
Percentage of tax paid by someone earning the national average wage.
3
1976 and 1986 figures, calculated on equivalent low incomes in real terms.
4 Calculated on equivalent middle incomes in real terms.
5
Hansard, April 29,1988.
6
Household Income & Expenditure Survey, Broad and Bacica 1985.
7
US Congress Joint Taxation Committee.

 

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DEFENCE
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New Right politicians tend to believe in what they call 'a strong defence'. But their period in power has shown significant shifts in arms spending only in Aotearoa (NZ) and the US - and these have radically different approaches.

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1 All 1978 figures from World Bank World Development Report 1981.
2 All 1988 figures from official government budgets except where indicated.
3 1985 figure, World Rank World Development Report 1987.
4 1986 figure.

 

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OVERSEAS AID
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Aid to the Third World is, to say the least, not a priority for the New Right. Aid budgets have been cut deeply, taking them even further below the UN recommended minimum of 0.7% of gross national product (GNP) - let alone Norway's example of 1.2%.

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1 1978 figures from World Bank World Development Report 1981.
2
1988 figures from official government budgets except where indicated.
3
1986 figure.

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