Andy Haldane, Chief Economist at the Bank of England gave a speech at the TUC on Thursday. I was not there, but it was noticed widely in the media.
Attached to the PDF of the speech there were some charts which are telling. Like this one:
That's pretty clear indication of serious under employment.
And then there's this one:
Which is pretty clear indication of an increase in insecure employment, even with the caveat.
And lastly there is this:
Which makes it pretty clear that labour has lost out since 2009.
So who has won from austerity? Very clearly not those in employment.
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Did I mention that the Osborne’s objective is to maximise the concentration of wealth?
Also: I don’t have the resources to challenge that chart for zero-hours employment rates – I couldn’t find anything from the TUC – but the 2.5% figure I read from it may well be an understatement.
Here’s why:
The concept of ‘contractor furlough’ is becoming widespread: firms using contractors and consultants are using a backdoor method to shave 10% or more off their bill by requiring contractors to be available for any hours requested, but arbitrarily imposing ‘furlough’ days when their services are not required.
This is the same asymmetry as the classic ‘zero hours’ contract, under another name.
I do not doubt that the press abd other print media, notorious abusers of freelance and contract labour, are pressuring sub-editors and graphics designers to come into work on furlough days, unpaid, or lose their jobs.
But, like some in academia, they will be reluctant to describe themselves as ‘zero-hours’, an unpleasant term implying that they – or we! – are like the cleaners and the catering staff.
However, I’ll stick to the basic point: that 2.5% is likely to be an underestimate of the ‘classic’ zero-hours contract, as the businesses that use them heavily – contract cleaners, hospitality, and security – are also heavy users of subcontracting and of undocumented labour. Such businesses, and their working practices, are intentionally difficult to document and measure.
Andy Haldane’s paper palls in its analysis when compared to this interview with Adair Turner:-
http://www.nakedcapitalism.com/2015/11/to-fix-inequality-and-steady-the-economy-think-radically.html
I think the questions were different
The saddest thing is that , in the end everyone loses out (even those in gated communities) due to a generation of the young deprived of training, quality jobs with social meaning and more importantly hope. These are the costs that future generations have to pay for not deficits or future taxes and similar assorted myths. What we can expect is.
1) A wasted generation
2) Increased poor mental health
3) Decreasing social care and overburdened hospitals
4) Increased use of policing to protect the 1% in their ‘gated’ communities
5) Worst of all-social unrest when the tipping point is reached
The lessons are their from History-bu they don’t seem to teach critical and analytical thought at Eton-special measures required!
Austerity has certainly made the trends worse, but they have been ongoing since at least the 1980s:
http://bilbo.economicoutlook.net/blog/?p=31981
Indeed-stagnation of wages goes all the way back to late 70’s with the neo-liberal trend beginning with the Callaghan Government-Thatcher took up the baton and ran with it.
here’s Callaghan in 1976:
” We used to think you could spend your way out of recession and increase employment by boosting government spending.I tell you, in all candour,” that that option no longer exists. And in so far as it ever did exist, it only worked on each occasion… by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step…”
The faulty analysis par excellence. The rest is history, as they say.
It’s worth observing that this passage was written by, or at least powerfully influenced by/suggested by Callaghan’s son-in-law, Peter Jay, an economist of near neo-liberal persuasion, and that Callaghan himself of later glossed this statement as being something he was far more tentative about than its apparent magisterial certainty would suggest, and that he only included it for the current tactical reasons.
Alas, this was Callaghan’s version of Liam Byrne’s stupid “there’s no money” letter, but with THIS difference – unlike Byrne, Callaghan really DID understand how the economy worked.
I suspect Callaghan was confusing structural deficiencies in the economy with the automatic stabilisers. You couldn’t find a misunderstanding like that in the senior ranks of the Labour party these days…….
A 10 point plan for austerity economics:
1) Cut govt spending and raise taxes. Especially regressive taxes like VAT.
2) Abandon any pledges for full employment.
3) Argue that full employment will return when inflation is under control.
4) Do nothing as unemployment increases.
5) Do nothing as inflation falls.
6) Do nothing as the numbers of those working in low paid low skill unemployment increases.
7) Argue that increased unemployment is due to wages being too high.
8) Remove the power of the Trades Unions to keep them high.
9) Reduce unemployment benefits to create more “incentive to work”.
10) Keep thecurrency high to allow the price of imported labour to undercut the price of local workers.
And in whose interest is all this? Need we ask?
Well put, peter-the whole thing is a whirling vicious cycle which confines most of the populace to a depressing and meaningless treadmill.
Listend to a good interview with Dr. Scott Atran, an anthropologist who thinks that Islamic extremism is so enticing because our culture has no real narrative of meaning and needs to find it quick. The neo-liberal treadmill is not a meaningful narrative.
see: https://www.rt.com/shows/sophieco/322242-isis-paris-attacks-war/
John Maynard Keynes once said that if practical people such as politicians, bankers and industrialists do not succeed in grasping the complex abstract ideas of modern economics, then they will inevitably be eliminated.
Bernard Lonergan’s answer is that undoubtedly they will, but so shall we, for they are our leaders.
So we cannot rely on the austerity mantra to self destruct. Too many livelihoods depend on us (society, collectively) to get it right. So we need intelligent engagement with the arguments, exposing and ridiculing the assumptions of an elite who try to get away with an easy ride on the backs of those who can’t afford it.
Who has won from austerity? There might be no winners. The point of austerity is that a pound saved today is a pound we can spend tomorrow. We could all be winners, but in the future. Those employment graphs even support the argument, showing that we are paying for it now, but with supposed dividends to reap in times to come. Some people might gain more, others less, but that’s life.
But if we could show that those supposed future benefits were non existent, then the austerity narrative would be bankrupt. I suggest that Bernard Lonergan’s method of circulation analysis is a possible tool that could help to put this into context. It looks at the productive process from raw materials to finished consumer goods, and identifies natural phases when different parts of the economy are expanding or contracting. Unfortunately I can’t summarise 40 years of his work in a single comment, but I think his conclusions can be aligned with Prof Murphy’s work to show that austerity is never required to stimulate economic growth; rather it arises from a misguided attempt to keep the economy in a state of credit fuelled expansion when its natural expansionary phase has come to an end.
Right now, with new investment at an all time low, it is important to expand the basic money supply so industry can have an income from consumer expenditure. And I do not doubt PQE would be one of the best ways available of achieving this. But we must not make anti-austerity an ideological choice. It is about recognising the natural phases of economic growth, and making economic choices that work with, and not against the natural flow. This is the only way to gain economic credibility, for if by a stroke of good fortune the economy starts to recover naturally, George Osborne will not hesitate to claim all the credit. But if his choices are shown to be driven by an ideological fancy, then he can be held accountable, even if the economy improves despite his recklessness.