Time for some real changes

We live in diminished and threatening times. The original source of much of the damage to our economy, the public well-being and our national standing was of course the greed and reckless incompetence of the banks – still largely unreformed – and that is how they are likely to remain given the totally undue influence that the financial sector continues to have both in terms of national policy and contribution to party political funds.

This has been and will continue to be compounded by the 'austerity for some' policies of this government and those of our economic and geographical neighbours. Then there is glorious globalisation (if I hear the word 'embrace' once more in this context I'll explode) driven either by the public spirited and 'all in it together' captains of industry or by the avarice of individuals high up the corporate ladders and in hedge funds operating in a patriotism-free zone allied to their political placemen – I'll leave you to guess which.

There is a perverse competitive force at work here that belongs more to Catastrophe Theory than the ‘dismal science’ - an old nickname for economics that's more apt than ever in these benighted days – and the self-serving and lemming-like mentality of large scale businesses: "the others have made a killing out of 'shutdown-and-offshore' so we deserve to have this extra lucre too".
Thus it was that our real industry, especially manufacturing and engineering, was eviscerated along with other productive sectors such as mining - and agriculture has had its standing much reduced. We sometimes hear convenient rationalisation about a ‘post industrial society’. But you cannot have a post-industrial economy with a fair and decent standard of living in a country much larger than the Cayman Islands, Bermuda or other disreputable havens for tax-dodging, disloyal, avaricious and morality-free capitalists.
I have said for many years that when the United States Government came to see that the 'globalisation' (often meaning little more than 'send the workers' jobs to China and points east') trumpeted by self interested executives and stockholders was not working for the country they would stop singing along with the shrill brass. There is evidence that this is now the case in Democratic circles – but not of course in those associated with the likes of the Tea Party and Bain Capital. It remains to see what becomes of this however, given the weight of money and influence.
‘Free trade’ is a hypothetical, bookish concept that is never realised in practice. In theory it might work to the mutual benefit of some sections of societies when practiced by responsible agents between countries with similar values. But here in contrast I am refering to the real world and fundamental moral concerns such as pre-Victorian working conditions, lethal factory buildings, child labour, befouled environments and corporations that knew full well for years what has been going on.
‘Free trade’ - is neither inherently good nor inherently bad. Its merit depends on the conditions and principles under which it operates. A bit like America’s constitutional right to bear arms - one thing in the birth of a nation phase, quite another today. What can produce benefit of sorts in one set of conditions can be malignant in another.
And trade is not the only thing that should be assessed as to its ‘freedom’. The people producing the goods to be traded should be free too. Unless they are, we do not know that the export / import imbalance in their societies is what the people would choose to have. And national currencies should have their relative levels set in comparable and consistent fashions. These conditions do not exist for many major participants in global trade. Fair trade amongst free peoples should be the goal. What we have now is far from fair and there has been too much cheating for many years.
There is another critical factor - the distribution of power and choice in overseas countries and regions used - I choose this term deliberately - by globalised corporations to make their vast profits. Used and abused with fatal consequences and then ignored in the ruthless quest for ever greater ‘shareholder value’ and executive bonuses.
The domestic consequence here has been the demise of great swathes of the Midlands and the North of England and also the Midwest of the United States. The production of industrial wastelands and ruined, demoralised communities at home is as corrosive a by-product of global profiteering as is the effluent recklessly discharged in countries to which jobs and production have been sent.
An essential context for free trade to work fairly and in the interests of the common good is morality and social conscience. We’ve seen the lack of principle (which resulted in the lack of principal) in the banking sector and the disregard for the fate of communities shown by those entrusted with the power to manufacture.
Executives should not be able to act regardless of scruple (nor should they want to - a change essential for a long run solution) any more than they should be free to ignore safety or chemical pollution. Corporations should be trusts, not in the sense of being monopolies (although they are often effectively these anyway) but in the sense of holding the livelihoods of individuals, the life of communities and the self respect of nations in their hands. We need to see due diligence here rather than just in takeover bids.
The timescale required for such changes could be a generation – the spots run deep. We’ve seen the resistance to social pressure to reform disgusting bonus cultures and the continuation of contempt for people seen as ‘punters’ and profit fodder in banks and other ‘services’. There needs to be a comprehensive re-education of our corporate and political leadership. They should stop moaning about the education of youth and concentrate on their own re-education. And to get the policy right, the funding of political parties desperately needs to be freed up from the unseemly and unseen influence of all big donors – we should see more than just tribal attacks from one party on another. In fact we need our own cultural revolution.
Nicknames apart, the original name for economics was ‘political economy’. What is needed now is a ‘virtuous economy’ where concern for the human consequences of decisions is embedded in the mindset of corporate bosses and national leaders - as should be a sense of responsibility to the society that gave big business the opportunities that they so frequently now abuse.
Some genuine competition in the provision of goods and services might not be a bad idea too, rather than the spurious competition (such as in banking, communications, power and fuel supply and a good chunk of retailing) that is little more than informal cartelisation designed to exploit consumers and produce huge and unwarranted profits.

Included too should be the politicians who have so often seen their primary role as the reinforcers of, and apologisers for, this dire mis-managerial capitalism. Democracy is not a free good – we pay for it one way or another – so much better to have public funding than costly biased policies.
International economic discussions should have an infusion of social, moral and environmental responsibility and develop a global taxation framework – what is good enough for the workers jobs should be good enough for the owners' profits too. If profits are reaped abroad so should be taxation.
Failure to get a grip on the greed and disloyalty of a 'jobs only' globalisation, the culture of cheating, deceiving and tax dodging, the disregard for people's lives as well as livelihoods, sustainable limits to growth and the lack of morality that produced these and other undesirables will show us what a post-industrial society in the Western world would really be like. Trust me, we do not want to see this!

Spot the Difference!

A vital ingredient of any political system fit for purpose is having a significant amount of policy difference between major parties so that the options placed before the electorate are clearly distinct and represent important alternative choices that would lead to different trajectories and outcomes for society.
But these days I’m reminded of those games in newspapers where you get drawings that look the same in major respects but have some very minor differences of detail. Just like politics today! You can hardly get a tissue paper between the policies of the three main parties. For example, in terms of economic strategy none will contradict the cutting and austerity approach inflicted on the country – mainly on the less well-off parts of it - even though this policy plainly and demonstrably does not work even on the government’s previously stated terms. At least two of the main parties actually believe in austerity as an economic policy. The third believes that the idea of cutting has been sold to the general public and they are now afraid to gainsay this and come forward with genuine alternative basically Keynesian policies.
There is thus effectively an informal political cartel forever looking over their shoulders and using the same focus group approach equally devoid of insight, vision, courage or even an awareness of economic history. As one commentator so vividly expressed it one can imagine a modern variant of martin Luther King’s speech: “I have a dream – a dream to do pretty much what the other lot have been doing…”. No wonder electoral participation rates have been going down and hence also the rise of a fourth party threatening the upper political class in Westminster that at least is different but in the wrong ways.
This last aside, what does it really matter who gets elected nowadays if the policy choices are austerity, austerity or austerity? And of course it will continue not to work. Austerity pushes the domestic economy down and as other countries, being each other's export markets, also pile on the misery it is no use looking abroad for salvation. That only works if other economies with whom you do much trade have different, more sensible and effective policies on which a free ride can be taken - as for example with Canada some time ago when the US was booming. That isn't the case now, as European economies all want domestic cutbacks and export led recoveries.
So we have national and international economic prescriptions equivalent to the 18th century medical 'cures' of leeches and bleeding. If the patient isn't recovering then bleed some more – as we shall see in the upcoming spending review. And if the patient does perk up a bit that is, of course, due to your policies.
The big worry is that short of a catastrophic upheaval here and elsewhere there is no evident solution to all of this - not even in the medium term. Elections need to matter, the common good should be to the fore, a basic financial morality should prevail and loyalty to community and country should permeate our economic and business activities as well as our social life.
That is the essential change that we need to see - along with an unwinding of globalisation a stop to the evisceration of our industries and the re-creation of jobs.
And yes, this could be done if the will was there in major western economies. The mutation of economic and political processes that appeal to the contemporary elite has taken deep hold, but both are human creations not laws of nature as Smith, Marx and various toxic ideologues would have us believe. The economic, social and political worlds are what we choose to make them - and we can make a different and much more attractive picture if enough of us choose to do so.

The Generation Game

The increasingly frequent and disparaging comments in the right wing press about the older generation are now infecting worthwhile newspapers of the centre-left. They peddle the austerity-based argument that older people are scarcely touched by the recession and are becoming an increasing burden on other generations.
Having given the impression before the general election of being on the side of pensioners, the coalition parties are now looking for ways to minimise this clear commitment and maximise clawback. Witness the attempted redefining of the retail price index to give lower values and consequent lower upratings despite the fact that generally the effective rate of inflation for pensioners is well above the average figure. Furthermore, there is the talk about cutting winter fuel allowances, travel passes and free television licenses (for the very elderly) for supposedly ‘better off’ pensioners.
All this as if current and soon-to-be pensioners were not contributing substantially already. All pensioners with savings – so most of this generation - have been severely hit by the artificially cut and sustained minuscule interest rates losing hundreds or thousands of pounds in interest income every year. And annuity values for those coming up for retirement have also tanked as another consequence of the nailing down of interest rates and the policy of ‘quantitative easing’.
There is also the practice of the financial cartel that I’m afraid also includes many building societies as well as the banks of slicing away even further at interest rates on ISAs so that there’s now hardly any benefit from the tax-free nature of these investments. This along with the miserly rates deliberately applied when bonds mature which is another example of the punishment of loyalty. So another big thank-you to our wonderful financial services ‘industry’.
All of this represents a massive transfer from the older generation to those much younger people (and many not so young) who have mortgages and also to those who have run up debts either just to survive (both these cases understandable) or because of ‘must have’ profligacy (not acceptable).
How much longer the pensioner generation can continue supporting the deeply indebted generations to this considerable extent is unclear, but no doubt this patient generation who raised families and did things by the book will soldier on and reflect on all that was built up by them prior to the modern curses of globalisation, privatisation, corporate greed and tax dodging, exploitative pricing and the thoroughly discredited economics of austerity.
Despite these many adverse factors this is not to say that nothing can ever be touched. For example I for one would support the idea of winter fuel payments being taxable so that those eking out small pensions would continue to get the full amount. Similarly, bus passes and television licenses for the very elderly could remain free for those on low incomes and be counted as income in kind and incur a tax liability at graduated rates for those who have been able better to provided for themselves.
This would be all the more palatable if the feral rich were made to pay their fair share in ways that I have indicated in earlier postings. Then for goodness sake let’s invest the money so generated in public works to get things moving again and provide jobs for the young – so much better than financial devices that get siphoned off by the banks.
Leaving aside this wretched government's blatant favouritism towards the outrageously wealthy, big business and those that fund their politics, there is still a sense in which most of us are in this together right across the generations. Taking the long view also involves a look at the past and the near present - especially the last few years - as well as projected futures.
So let’s have an end to spiteful comments about the older generation and understand that we have, over the years, built up a mutually supportive society – something that’s going to be needed as the age of austerity is dragged on by the misconceived policies of this government and now apparently to be followed by the next.

The Darling Buds of May?

The economic news for the month of May looks modestly encouraging – we certainly needed something to cheer us up both weather-wise and economy-wise.
It is to be hoped that these modest improvements will continue. I use the word ‘hope’ because there is no guarantee of continuing pick-up and of course nothing by way of Government policy to ensure this.
But doesn’t it mean that Mr Osborne’s austerity policies are working despite the discovery that their academic underpinning was shown to be riddled with errors? Not a bit of it – the improvement comes despite the Government’s policies – there can be no positive correlation assumed.
Back in the 18th century some of the sick people who were bled and had leeches applied did in fact get better. It’s much the same with our economy today – and there are more rounds of cuts to come both in the near future and for 2015/16. Talk about nipping things in the bud!
We shall be hearing more news of the government’s next round of cutbacks in Mr Osborne’s upcoming spending review. One thing we can be sure about is that the rich will not be hammered and the ever-increasing inequality in wealth and incomes will continue.
So it was doubly depressing to hear the Shadow Chancellor bind himself to the coalition’s austere plans for 2015/16. Why are parties these days so frit to be different? Where’s the vision and inspiration? Look what the Atlee government achieved against a far worse background. And thinking of the NHS, thank goodness for it and stop the constant messing about and the cuts by another name. And let’s see a bit of nurturing for those darling buds!