We have been getting some great feedback about the inspiring interview Sam Seder had with the journalist Johann Hari (@johannhari101) about UK Uncut and resistance to austerity that we decided to create a written transcript after the break. Enjoy!

To listen to the interview click here.

Note: This is a rush transcript. This copy may not be in its final form and may be updated.

Sam Seder: On the phone Johann Hari. He is an award winning journalist who writes for The Independent UK. You can see his stuff in The New York Times, Los Angeles Times, Le Monde as we say in this part of the world. Welcome to the program Johann.

Johann Hari: Hi Sam. It is great to be with you.

SS: There’s a couple of things I want to talk to you about. Obviously one of the really pressing things that’s happening now and it’s actually… I was on MSNBC six months ago and the question was posed to us; Britain is now about to engage in an austerity program or has determined they’re about to engage in one. Do you think they we’re going to hear any lessons from this? Is this going to be a model for us? And of course now that we’re starting to see the implications of British austerity and we’re essentially in the process of the US establishment deciding that’s what we need, I thought now would be a great opportunity to ask you: How’s it going over there with the austerity?

JH: Your right it’s a great model of how not to do things. I mean just to talk to you about the social cost. To give you just a couple of examples. This is affecting everyone’s lives now. The governor of The Bank of England, who is no one’s idea of a left-winger said we’re experiencing the worst squeeze in middle class family living standards since the 1920’s. And whether it is some of the best children’s hospitals having huge crises laying off loads of staff. Most of our homeless hospitals are being shut down. Most of our shelters for victims of domestic violence are being shut down. In London alone 200,000 poor people are being made homeless because the housing subsidies for them are being taken away. Even the conservative mayor of this city, Boris Johnson, called that Kosovo-style social cleansing.

This idea that in a democracy you can cut massive amounts of government spending on the poor and the middle class and not have a huge number of victims is proven to be terribly wrong. Also, crucially, it doesn’t work. It doesn’t achieve its central goal. Every time they introduce a new program of cuts, economic growth goes massively down and the ability to pay the debt goes massively down. So it doesn’t even work on its own terms. If your economy is collapsing you can’t pay off your debts. It’s very interesting, our equivalent of the Treasury Secretary, George Osborne, said in 2006 look and learn from across the Irish sea. He said Ireland is the model he wanted to follow for Britain. You know, we followed Ireland into the absolute sinkhole and it would be crazy for the US to follow us. And it looks like, unfortunately, these deranged cuts that Obama has agreed to your heading our way pretty fast.

SS: Let’s go backwards a little bit because we should talk about… First off when we talk about British society we’re talking about a society that provides a far greater amount of social services for the middle class then ours does and so the imposition of these cuts… What was the justification at the time? I mean take us back when it was, I guess, maybe six months ago now, when the decision to impose these cuts was made. What was the theory?

JH: It was an almost entirely fictitious one which was that we are in the middle of a debt crisis, our debt is freakishly high, we need to panic. In fact Britain’s national debt has been higher for 200 of the past 250 years. If we’re bankrupt now we were bankrupt when we built our health service, we were bankrupt when we built our pension system, we were bankrupt when we beat the Nazis, we were bankrupt when we ruled most the world. In fact what’s really bankrupt is this whole way of looking at national economies which is based on a basic misunderstanding. It’s a return to pre-great depression understanding of economics. When I read Paul Krugman, the  great Nobel Prize-winning economist, some of David Cameron’s speeches he gasped and said this is pure Herbert Hoover economics. One of things we learned in the 1930’s is that in a recession, totally sensibly, individuals like you and me spend less and save more if we possibly can. If at the same time the government is doing that then demand completely collapses because no one is spending. So you have to do something a little bit counter-intuitive, we learned this from the greatest Englishman of the twentieth century John Maynard Keynes, you have to do something slightly counter-intuitive when individuals cut back their spending the government has to do the opposite. The government has to borrow and spend or a recession turns into a depression. The government has to take out the jump leads. Now obviously David Cameron ignored all that. He ignored all the economies who’ve been consistently right throughout this crisis and went for massive cuts and we’re seeing the costs.  The cost is huge social collapse, disaster for the country and you can’t even pay your debts then because, you know, you can’t pay your debts because you haven’t got any money. That’s what happened… you can’t pay your debts. An analogy would be if you and me would get so panicked about our mortgage that we stopped buying food and starved and then our house got repossessed anyway.

SS: That’s right.

JH: … have extra money and you can pay your debts. The way out of this is growth. That’s what Paul Krugman has been saying. That’s what Joseph Stiglitz has been saying. That’s what all the Nobel Prize-winning economists who’ve been right throughout this crisis have been saying.  But just like the Republicans, David Cameron has been shifting the argument to blame this crisis which is a crisis that was caused by deregulation, by the government not acting, by the government failing to regulate the banking system, blaming it somehow on big government. It’s absurd. It’s like blaming 9/11 on Snooki. It’s a completely bizarre misallocation of blame to a group of people who had nothing to do with it.

SS: Right, and we all know that Snooki was far too young at that time to have really been involved in any fashion whatsoever…

JH: That’s not what I heard.

SS: Well, (laughs) we may need to have a special investigative report on this show in terms of Snooki, but what a second… I want to go back – you said that it was a misunderstanding of a economic principles and this is the thing that sort of continues to baffle me as we see this same “misunderstanding” in quotes taking place in this country because when this government as well as yours trumped up the notion that this debt and deficit was a crisis. The idea was that it’s going to scare away essentially people who are willing to lend money to the country to finance the deficit or the debt – our bondholders and the idea is that if we proved to them that we are going to make cuts and bring the deficit down theoretically it is going to renew their desire to loan us money. Now in this country ten year treasury bonds are still below four percent in terms of return signifying that it’s not a very risky investment otherwise we would have to give you more returns for it. Same with the twenty and thirty year bonds. At the time where the Cameron administration decided to, or government decided to impose these cuts, what was the bond situation? I mean the idea is that we’re going to create confidence and fairies are going to come and all of a sudden  everything is going to be fine.

JH: You’re so right. Two countries have just been massively punished by the bond market. What were they? Ireland and Portugal. What had Ireland and Portugal doing for two years? They have been massively cutting. They have been implementing extremely stringent austerity programs. That’s why the bond market turned on them because they imposed austerity programs and their economies collapsed. So this idea that the way to fend off the bond markets or please the bond markets is to precipitate economic collapse by abandoning all the most basic Keynesian principles is the opposite of the truth. And it is very clear that the bond markets… when have the bond markets threaten to downgrade Britain? It’s not when we were borrowing it’s recently because our economic growth is so bad the bond market started warning that we might get in trouble. It’s really important – As Paul Krugman keeps saying- the United States and Britain can get very good and favorable terms to borrow on the bond market at the moment. We can afford a Keynesian stimulus to get our economy back on its feet to get people back to work. Indeed we need it. The idea that we can’t afford it or somehow the bond markets will punish us is not true and Krugman has that great phrase he calls it “the confidence fairy.” This kind of magical “competence fairy” which will come back. In fact far from confidence coming back we’ve seen a collapse in competence in response to austerity here. Also he talks about claims about the bond market. He calls them “invisible bond vigilantes.”  The right has created a bond market that isn’t there and isn’t saying what they say it’s saying.

SS: Or that bond market is completely irrational. They’re not players who know what they’re doing because otherwise they would be demanding higher interest rates for their loans right now on and if they’re that irrational in the first place then creating confidence because you’re cutting is not going to happen either.

JH: It seems that you are astutely right that the bond market is inconsistent but, you know, look at what they’ve done to Portugal and to Ireland. They did that because of the effect of austerity. So what you got to do is to choose what is best for your economy, what is best for jobs and what is best for growth. That’s what you have to do.

SS: And you make a good point that at these interest rates it’s ridiculous not to borrow money because the scenario that everyone is talking about is that there is bound to be some inflation in fact we want some measure of inflation  because wages will come up. It will take some debt pressure off and at that point you’re going to have money that you’re paying three or four percent interest on when interest rates are closer to five or six percent.

JH: We learned in the 1930’s debt is part of the solution here not part of the problem. Look at what happened in your country in the 1930’s. Every year that Franklin Roosevelt borrowed and spent to get the economy moving again the economy grew and unemployment fell. In 1937 he starts listening to the shrinking deficit hawks we hear now. What happened that economy started to go right down again and the only thing that ended the great depression was an absolutely massive stimulus called the Second World War.  Now I’m not urging Germany to invade Poland but that was a way in which you then got absolutely massive government spending that did in fact end the depression, you know? When we listen to these people in the past it has led to a disaster. Which countries have done best in this recession and which have done worst? The country that has had the biggest fiscal stimulus, South Korea, came out this recession fastest. The country that followed the Cameron, Tea Party script most closely was Ireland and it has had the worst economic collapse of any country since the Second World War. That should tell us something. That is a real world out there. There are enough countries trying enough different solutions that we can see the effects of the policies. These are economic policies based on blind faith and on quasi-religious principles and a refusal to look at the evidence.

SS: My sense is at least in this country, at least coming from the Republicans is that this is the agenda is ideological and that there is an attempt to use this in sort of the classic shock doctrine scenario. To use this to reshape our society in a way that provides ultimately for less regulation. The biggest cuts that we took in this budget deal where from the EPA, less regulation for industry and essentially less of a safety net for the vast majority of Americans. Is it similar in the UK?

JH: Absolutely. Just recently a conservative government minister boasted that they were making cuts bigger than Margaret Thatcher could have thought of in her wildest dreams. This is an ideological project and it’s also part of a trend that has been going on in Britain for quite a long time which is the transfer of wealth upwards from the middle class and the poor to the bottom. In 1976 sixty five percent of all of British GDP went in wages, now it’s down to fifty three percent and it’s falling further. Where did it go? It went to the rich, it went to corporations. This is part of a trend that has been going on for a while. I should say I think it is useful to let your readers know about, your listeners know about which is a real kickback against this in Britain which has been quite inspiring and quite interesting. What we’ve had here is what you guys had since Reagan as well which is the rich effectively being exempted from taxation. For example Philip Green, sixth richest man in Britain and 1.2 billion pounds last year- paid no pounds in taxes. Look at another example, Vodafone, which is one of our biggest cell phone companies, had been refusing to pay a very large part of its tax bill for years. The last Labor government were pursuing it through the courts. They’d racked up six billion pounds that they owed which is equivalent to all the money of all the 200,000 people who are being forced out of their homes because their housing subsidies are being cut. And when the conservatives came to office they just canceled Vodafone’s tax bill.. almost all of it. They just said, you know what let it go, it’s fine, don’t worry about it. And people like me wrote articles saying isn’t this terrible but there was kind of a fatalistic mood that a lot of people have, a lot of liberals have a lot of the time.

And then something really interesting happened. Twelve ordinary citizens were meeting in a pub one day here in London and they were really angry about this. And instead of just mouthing off they said what could we do about this? What if we were to just announce on Twitter that on Saturday we’re going to go to the  biggest Vodafone store in London and we’re going to physically shut it down. We’re going to say, You want to operate on our streets you’re going to pay our taxes.  So they did it. They announced it on Twitter. They had the kind of Kevin Costner principle you know – “If you build it they will come.” So they went and they did it and about 100 people turned up and they shut it down. And it got a little flurry in the news but not much.

Then something really interesting happened. Two days later in Leeds, a city quite far from London, another big group of people went and shut down the Vodafone store in outrage and then the next weekend in 50 places across Britain people went and shut down their Vodafone shop and it went on for weeks and weeks and is still going on and it became a really big news story that, hang on, we won’t let these people rip us off. We pay our taxes. If we don’t pay our taxes we go to prison. We won’t sit here and take these cuts when almost all these cuts could be made up by making these grossly rich people just pay their fair share. It’s an amazing thing to go to these protests and see the reaction of the public which was so positive. I have never been at a protest before where people passing in the street would come up and embrace you and say, “I’m so glad someone’s doing this.” The mixture of people, you’d get elderly people who are frightened of losing their benefits, you get young people who are so angry that the educational costs where massively going up. It’s been a really inspiring movement. It’s also been huge in very conservative areas – places like Tunbridge Wells which is synonymous with English conservatism – has one of the most active. They shutdown their Vodafone store every week. It’s really popular. Seventy seven percent of people in the polling say they believe there should be a crack down on this.

It’s really changed the argument because until now there have been people saying the kind of Paul Ryan script – yes there’s definitely got to be cuts and definitely going to be targeted to the poor and middle and this movement has really shown that there’s an alternative to that. And it has already started working. The National Audit Office, an independent, quasi-governmental body has now announced that they are going to have an investigation into the Vodafone tax bill. They are going to go  through all the documents. That’s a huge deal. Our equivalent to the IRS has announced it is moving a large number of people from scrutinizing the tax bills of small business to scrutinizing the tax bills of big business. This has already had a huge effect. And I think in a way is useful, and obviously in America you have an even bigger issue – GE, one of your biggest corporations paid no tax last year but was actually given three billion pounds of your money of the money of everyone listening to this show in tax credits and bonuses.

SS: Well to be fair, Jeffrey Immelt is working for the president to create jobs for us so that probably why they got some of those billions of dollars back. So basically what you are talking about is UK Uncut movement…

JH: Yes it is UK Uncut and there has been an American equivalent set up by some fantastic people originated in Jackson, Mississippi. If people want to find out about that they can go to  www.usuncut.org. The British example has really shown how this can be done. I think of it slightly the really best way to answer the right. I think of it as a thought experiment. Someone like Philip Green, a massively rich man through running stores all across British High Streets says well, why should I have to pay taxes I did it all myself. I hear this from the Republicans all the time. Well, let’s imagine a thought experiment, right.  Let’s take one of his stores called Topshop and for one month let’s just test that, right. So he thinks he does it all himself we’ll let him do it all himself. We’ll won’t collect the garbage out the back of the shop. When the rats come, we won’t send the pest control people. When he get shoplifters in his shop, thieves, we won’t send the police. If there’s a fire, we won’t send the fire brigade. When his staff gets sick we won’t treat them in our hospitals. Oh, he can’t employ anyone whose education was paid for by us. Let him come back to us at the end of that month and say he did it all himself. No he didn’t. He did it with money that you and me pay. And what we’ve seen is a situation where the superrich have become effectively parasitical. We provide all the services they depend on; the roads, the police, the fire brigade and they don’t pay anything back towards it. Indeed they take our money as you saw in the banking crisis. And it’s simply not true to say that we can’t do anything about. People say well they store it in tax savings, what can we do? After the 9/11 attacks it took one week for every Al-Qaeda account in the world to be shut down. Every single one because there was political will to do it.

This is one of my favorite examples: in the early 1960’s  Monaco, the tax haven, was refusing to hand over details of French tax-dodgers to French authorities, so Charles De Gaulle, the president, surrounded Monaco with tanks, cut off the water supply and said, You ain’t getting any water until you tell us where the tax returns are and they gave in very quickly. You know if you want to make tax-havens hand it over it’s very easy and actually Obama, president Obama talked a lot in the campaign about this. It was Frank Luntz, the opinion pollster, said that it was some of his most popular lines. He talked about how in the Cayman Islands there’s one building that houses twelve thousand corporations and he said that’s either the biggest building in the world or the biggest tax scam record. And he actually said this [unknown] every dime of his spending and tax cut proposals he said will be paid for by closing corporate loopholes and tax-havens. Well, that’s not how it’s turned out. In fact, as you said, he’s been appointing huge numbers of tax dodgers to advise him rather than dealing with them.

I think the UK Uncut thing has shown lots of things. It’s shown ordinary people don’t have to sit back and be ripped off by these people. The Government Accountability Office is given a list of the American corporations that are scamming you, that are stealing from you. It’s a long list of those that are using tax-havens. To give you some; Apple, Bank of America, Best Buy, Exxon Mobil, FedEx, Kraft Foods, McDonald’s, Safeway, Target. You know – don’t let them do this to you. Act in your own self-defense . That’s what UK Uncut has done – they just gone and shut down these shops. And it has had a really big effect here in Britain. There’s a quote from Rebecca Solnit, the great writer, who wrote a book called “Hope in the Dark.” She said about this, and I think UK Uncut is a good illustration of it, “Hope isn’t a lottery ticket you can sit on your sofa and clutch feeling lucky. Hope is a axe you use to break down doors in an emergency.” I read that as hope is not a passive thing. You don’t sit back and hope for things to get better, you act for things to get better. UK Uncut is a really good example.

When I was trying to persuade people to join UK Uncut it was examples from American history that I drew on. Examples of how protest really come out. I don’t know if we have time, but just to give you two very quick examples. I don’t know if your listeners know but incredibly [unknown] have shown why this kind of action is  so worthwhile. We’ve got some really interesting declassified documents from the Vietnam War where people in 1965, scientists in the Pentagon, strategists in the Pentagon, go to Lyndon Johnson and they say Mister President we’ve got a way to end this war now. We can scientifically prove it will save lives. They tap it all into the computer. Very easy – you nuke Hanoi. And LBJ who as you know, when it came to Vietnam a real thug and was actually quite tempted by this and was really weighing it. And then one day there were huge protests outside White House and he called these strategists back in and he said I just want you to put one more thing into this computer. I want you to figure out how long it will take all those protesters out there to scale the White House wall and lynch their President if I do what you are telling me to do. And he explicitly said I can’t do it because the protest in the United States will be too great. Again when the plan is put to Nixon years later he said exactly the same thing. I bet all those protesters outside the White House that day went home thinking they’d failed. They probably even remember it as a failure. Actually they didn’t realize they had succeeded in preventing a nuclear war. That is so important for people to know – that protests raises the price of politicians making terrible decisions and there is just one more story I think that illustrates that in a kind of amazing way in terms of the ripple effect of protests.

A group of mothers whose sons died very early in the Vietnam War and they set up a group called “Mothers Against the War” which actually became quite a big movement later in the war. But there was something that they did at early on that they remember as a terrible, humiliating failure. They called for every mother with a son in Vietnam to go to the White House and protest and they turned up and seven other women turned up. And all their lives, even when it became an important movement, they remembered that with a real sting until one day in the 1990’s one of them happened to be reading the autobiography of Benjamin Spock, he was the guy that was almost like the Oprah of his day, a very influential child doctor, he was on the radio, who’d come out against the war in 1968 had been a big turning point. And he said why he’d did it. He said that he’d been in the White House one day in the early 60’s, being briefed on the war which at that time he supported and he came out and he saw seven women protesting in the snow and he remembered this and it really seared his mind – and thought that if these women are brave enough to speak out against the war, why aren’t I? And he had nightmares about these women for years  and it was the memory of those women that made him come out against the war. So this thing that they had remembered as a failure had actually turned the course of history. I think when people are looking for something like UK Uncut and US Uncut. They are looking for a way to act. You can say to people you don’t know what the ripple effect  of your actions will be, but there will be a ripple effect and the one [unknown] if you don’t do anything and  if you just sit at home and go, Isn’t it terrible that GE is ripping me off. It’s taking three billion dollars of my money when I have to pay and I have to work. And if I don’t pay my taxes, I go to prison, isn’t that awful.  Instead of just sitting there lamenting it you can go out and you can change it.

SS: Johann Hari from johannhari.com thanks so much for joining us. Great stuff. Great stories. I had never heard those.

JH: Great to be with you. Thank you.