All Just One Big Lie

These were the words attributed to Bernard Madoff the Wall Street trader who has been charged with investment fraud that would set a new world record. The Ponzi (pyramid type) scheme that he has apparently admitted running and the thirty three billion pounds it is said to have lost would indeed be a monstrous lie, but it is by no means the only big lie that is lying around.
I’m not just talking about rising corporate fraud or incompetent, greedy and boastful bankers and fancy financiers taking easy cuts, pushing loans on people who could not afford them, extorting savers, deluding investors and treating ordinary people as so much bonus fodder. For instance there are also the lies that England was well placed to withstand a recession (few countries are worse placed as is now all too apparent) and the associated deception that a post-industrial ‘creative’ economy is the modern way to high living standards and that financial services (services to what by the way?) are a most important part of a modern growth economy (what was it that was supposed to be growing all these years?). There were also the deceivers in the form of regulators who did not regulate, auditors who did not audit, rating agencies who ratted rather than rated, financial advisers who gave false advice and the masquerade of fund ‘managers’ who showed all the diligence of dilettantes.
I also refer to the super-lie that Globalisation - the surrender of self-sufficiency and self-respect in equal measure - Is Good For You. Even a Toucan shouldn’t believe that! Giving in to globalisation is the real surrender of national sovereignty - Europe is a sideshow in comparison. We are still told that the big G is something wonderful that should be ‘embraced’. The only embracing that has been done is by the boardroom pillagers hugging their boom-time profits from exporting English jobs to the Far East and those of our politicians who outsmart themselves with desiccated theories from the ‘miserable science’ about everything except the real economy. Globalisation has to be dealt with like a flu pandemic - avoid it if you can and try to change the ways of life and values (if lack of loyalty can be seen as a value) that give rise to it.
No one else believes that it’s good to embrace the evisceration of industry - certainly our colleagues on the continent do not - nor do an increasing number of Americans. I was not the only one saying a decade or more ago that when the tide turned for the USA, as turn it would with the gutting of their own industries especially in the mid-west, and they stopped being apparent winners in the game of globalisation they would start to whistle a different tune. And they’re quite right to do this. The January package by the Obama administration with a big emphasis on public works and measures to restore industry will be revealing in this regard. I hope that our national leaders will already be dancing to a similar tune of our own but I fear that, especially in the shape of Mr Mandelson, they may not.
However, the Government, after years - decades in fact - of economic make-believe, have not made too bad a start. There was no choice but to bail out the bankers and avoid compounding the damage they had already done and we certainly need Keynesian action. But in my view that latter needs to be much more direct in terms of public works and infrastructure projects. Tax cuts leak away into frivolous spend on imports from which free riders such as Germany and China will benefit more than ourselves.
For example, this country should have begun work on an electricity generating Severn barrage twenty five years ago at the time of the eighties de-industrialisation when the temporary oil revenues were building up. There was no need to privatise water - as a nation we could have invested in that too. Not to mention power generation and fuel storage nor the railways and the nonsense of rail privatisation instead of rail investment. These are some of the worst examples of the release and squandering of national equity to use a re-mortgaging metaphor.
Interest rate cuts have limited if any impact. They hit savers immediately (for more on this see my website at http://www.michaelwilkes.mycouncillor.org.uk/ ) and are only partly passed on (in some cases loan charges went up) to borrowers. The economic effect can even be perverse. In Japan in the 90s as interest rates were cut people took out fewer loans and saved harder to make up the lost income - but then the Japanese can be more traditional which is reflected in the fact that the Yen is rising and the pound falling. How we have lost our way!
One absolute certainty is that reducing planned government expenditure or cutting further still in the teeth of a major recession would be breathtaking stupidity. Nevertheless the Conservative opposition here now seem tied to this in so far as their latest policies are clear at all. The great depression lasted as long as it did due to siren voices like these. Roosevelt in the US favoured public works and could have done even more. It was not the approach of war that pulled their economy out of the doldrums but the centrally directed increase in manufactures (albeit of armaments) that was associated with it. The recovery would have been the same from making ploughshares. We can certainly argue on the form that the Keynesian methods should take (the mix of public works and tax cuts) but not on their necessity. Cure-by-cuts is as rational a remedy for recession as the application of leaches was for fever.
However, there will be no miracles. We first avoid making things worse by dealing with the bankers and their ill-begotten financial brethren and apply Keynesian methods to take the bottom off the depression and build for recovery and the future. This does not mean that there’s no price to be paid for the froth, falseness and folly of the last decade, we just get the bill on easier and less destructive terms with a bit more time to adjust.
But in the longer term we must as a nation as well as individuals make a big adjustment and return to being self-sufficers in more things - particularly industry and agriculture. Fields (with English people working in them) as well as factories should be part of our plans for the future. We must provide for moral re-education so that our economy can be trusted to build for the future and on behalf of the whole nation. Before this there must be hands on regulation with teeth. Light regulation only works in the context of a moral society. Saving must be encouraged and savers supported (no contradiction with what is needed for recovery here if the saving takes the place of spending on imports).
Above all, we must rebuild our industry and if that means restoring, preserving and, yes, protecting what we have left then so be it. We are advised that we mustn’t do this sort of thing (as if other countries haven’t been cheating for years). Why are our leaders so gullible? But what would you think of advice that said don’t protect your house and possessions because burglary is an important part of a modern economy and it doesn’t really matter who owns what? For burglary read globalisation and the loyalty-free libertarian profiteering (sometimes known as ‘free’ trade) and the destruction of industrial employment and the environmental degradation overseas and dereliction at home that is part and parcel of it. This is the greatest lie we face today against which even the ‘one big lie’ attributed to Mr Madoff seems but a peccadillo.