Why Labour is crushing your living standards

March 30, 2025 by Gary Stevenson

"The rich accumulate an enormous amount of money and use that to outcompete other groups in society."

"Your grandparents fought for a better settlement... they understood the only way to do that was to tax the rich."

In this episode of 'Gary's Economics', the host dives into the consequences of austerity policies implemented by the Labour government, which he labels as 'Austerity 2.0'. He critiques the media's focus on superficial political details during important statements rather than addressing the underlying economic issues impacting living standards.

Central to the discussion is the concept of 'squeeze out', a framework used to explain how the wealthy accumulate resources and outcompete the middle and working classes for assets. The host describes how a series of economic stages have progressed, initiated by the reduction of taxes on the rich, leading to increased asset prices that the working class cannot afford. As asset ownership dwindles, debt levels rise, culminating in economic crises where the government must intervene, often at the cost of their own wealth.

The episode delineates the five stages of the squeeze out: firstly, the escalation of wealth inequality, gradually reducing the asset ownership of the middle and working classes; secondly, the incapacity of these classes to sustain consumption due to debt and poverty; thirdly, the government finds itself in debt as they attempt to provide services; fourthly, the reduction of welfare services as governments become asset-poor, and finally, a potential societal transformation where the majority are impoverished, and only the elite possess wealth and power.

The host closes by emphasizing the necessity for taxing wealth, not work, to reverse these trends and promote a fairer society.

Key Takeaways

The concept of 'squeeze out' explains how the wealthy exploit the economic system, leading to diminishing assets for the working and middle classes.
Austerity policies are exacerbating living standards and pushing the working class deeper into debt and poverty.
Historical shifts in wealth distribution indicate that wealth can be reclaimed from the rich through taxation, but current policies are moving in the opposite direction.