This quote from the FT this morning is telling, and I think accurate:
The Bank of England this week cut its forecasts for UK growth, citing weakness in productivity growth. Across the continent, unemployment remains high, investment is weak and banks remain weighed down by non-performing loans.
To put it another way global capitalism is far from out of the mess that 2008 created as yet.
This is important. As I noted yesterday, George Osborne faces a whole raft of economic problems now. Some like EU and Scottish exit are wholly self imposed. Falling productivity, increasing interest rates and a fundamental failure to address the over-dependence of the UK economy on banking are broader based, but have been ignored for too long.
This is important for a great many reasons. First, there is much more risk in the economy than the electorate perceived last week. That was because in no small part the leaders of the two main parties ignored these issues.
Second, this means that we are unprepared for what may come our way, which is at the least worrying. That's true even if it does not happen: a lack of contingency planning reveals that nothing has been learned from 2008.
Third, it means that the risk is being transferred back onto ordinary people, who picked up the burden in 2008 even though the crisis was not in any way of their making.
All these do, though, suggest bigger issues of concern.
Why, for example, can't politicians either see or address these issues?
And why will none of them, almost certainly, feature in any Labour leadership debate when it is obvious that they are issues of concern for the future direction of UK politics?
If that's true why too then aren't alliances being built in the political arena, as they are amongst civil society groups, to begin to address them? Why is there now such a massive disconnect between what is being said by economic activists on the left and what the major political parties of the left (the SNP included, and dare I say it, the rump of the LibDems if Farron is leader?) are saying?
If the lack of trust in politics is to be addressed then these questions have to be on the agenda.
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To raise those issues implies criticism of the City, finance in general and big business, Richard. In short, the real power-brokers in the country (world) in which we live, and the paymasters of the Tory party, puppet masters of our government, and past or future employment opportunities for many of our MPs. So, as the recent election campaign demonstrated, even the most mild and totally legitimate criticism of the activities and practices of business and/or business people becomes “anti business” – an attack on wealth creation, so called aspiration, and thus UK PLC as a whole. Miliband paid the price, as we now know. So I’ve absolutely no reason to expect any other politician to be other than cowardly in terms of raising these issues – particularly if they’re ambitious. Sadly, yet another example of the depth to which the polity has been undermined and polluted by a distorted, corrupted, view of what’s acceptable and what’s not, and the fact there’s set of laws (more accurately perhaps, world) for the rich and another set for the rest of us.
You may well be right Ivan
But I have realised I must be an optimist and will live in hope
And as I rely on your optimism to keep me optimistic, Richard, I hope I’m wrong on this and many other things 🙂
Well, we know that this stuff won’t go on for ever and if Tom Hartman is correct the present cycle of ‘great forgetting’ as he call sit in his book ‘The Crash of 2016’ only has a few decades to run -pity it just happens to intersect with out lives!
Little surprise I suggest that the BOE wait until after the GE to cut it’s forecasts for UK growth, or indeed that it cites low productivity growth as at least one reason for doing so. The distinct lack of discussion about predicted growth in the productivity sectors was deafening in the GE campaign. It is I suspect a symptom of our over reliance on the financial services industry for economic growth and given what happened in 2008, that is a very dangerous position to be in with many economists predicting another financial crisis being only a matter of time. With £1.5trillion of government debt, we certainly can’t afford to pick up the tab for bailing out the banks next time.
I suspect most politicians cannot see what is going wrong because they have signed up to the “free market is best” rhetoric and are too heavily influence by powerful lobbyists from the City of London. In truth at least some politicians are more interested in serving the needs of a free market economy and it’s lobbyists, than the needs and aspirations of those they were elected to serve and unfortunately it is those politicians who are promoted to the top of the political parties.
New labour abandoned it’s left roots when Tony Blair was elected leader and they too are fully paid up members of the “free market is best” rhetoric. Many of their mega rich donors have threatened to withdraw support for the party if it returns to being a party of the left. So again those who have been heavily influenced by the City of London lobbyists are most likely to be promoted to positions at the top of the party.
I suggest in fact that all your questions can be answered with the response that most politicians are now fully paid up members of the same rhetoric. Not only our human rights, but our very democracy is under siege by powerful lobbyists including those from the city of London. If we are ever to regain our position as a democratic state, it falls to us the common people as it always has to do something about it. We cannot rely on our politicians to make the necessary changes. It is us who must form alliances and take back our democracy.
Hi Richard,
I’m astonished how politicians seem to be able to ignore the herd of elephants in the room.
I’ve been following you, Tim Morgan formerly of Tullett Prebon, Ha Joon Chang, Thomas Piketty (Tom Spaghetti!)the Tax Justice Network, Nicholas Shaxton just to name a few,
the chancellors and shadow chancellors just seem to spout washington consensus claptrap
I’ve lived my life waiting for statesmen to pick up on the warnings starting with the Club of Rome report on the limitations of growth in the 1970’s, the growing enviromental movement, James Howard Kunstlers book ‘The Long Emergency’ and most recently Tim Morgans ‘The Perfect Storm…energy, finance and the end of growth’
now we are past 400ppm CO2, 80% of the british economy seems devoted to ‘financial services’and our own internal service economy consisting of haircuts and fast food. the simplest human requirement ‘shelter’ i.e. housing has been turned into a financial asset bubble open to international ‘investors’ with the majority of the uk population tied to huge mortgages or inflated rents pouring their income into servicing this debt to the delight of the banking industry,(the greatest mis-allocation of captital in history) we have reached peak oil, peak ore, peak mineral, peak rare earth, peak uranium,
Energy companies are gleefully cheering on the melting icecaps whilst circling like vultures to pounce on whatever mineral and fossil fuel resources may be uncovered,
and all our politicians can say is ‘more growth’
although I’m sad to have no children I am relieved of the guilt of passing on this world to my own next generation.
I look at the possibility of a collapse of the global finance ponzi scheme as an opportunity for a return to a real economy, not a catastrophe,
I look at the final depletion of fossil energy sources as the only way of disarming humanity of the energy leverage that gives it currently the ability to wilfully destroy it’s own (and only) habitat.
my only consolation is that only 37.9% of the 66.1% who turned out voted Tory,a quarter of the uk population, I wonder who the elephants voted for?
Matt
Bubble bubble toil and trouble, I do not like some of what is out there at the moment. We are only an off shore set of islands vulnerable to any major disruptions.
“my only consolation is that only 37.9% of the 66.1% who turned out voted Tory”
Many people on here seem to be making that point. Is it only when the Tories win that the failings of FPTP are used to devalue the legitimacy of the government?
2015 – Tories win, 11.3m votes
2010 – Tory coalition (Tories got 10.7m votes)
2005 – Labour win 9.6m votes
2001 – Labour win 10.7m votes
1997 – Labour win 13.5m votes
1992 – Tory win 14.1m votes
1987 – Tory win 13.8m votes
1983 – Tory win 13.0m votes
1979 – Tory win 13.7m votes
Quite frankly it seems disingenuous in the extreme for Labour supporters to be moaning about the voting system.
It’s not all Labour voters who are doing so
I increasingly find it difficult to describe the ongoing economic crisis as ‘a mess’.
Certainly from the point of view of the vast majority of us the consequences of what we see as global economic mismanagement are invariably catastrophic.
And from the point of view of many, if not most, of the businesses and individuals whose viability is dependent on the continued success of a capitalist system, the continuing instability of the free market house of cards should,at least, be deeply troubling.
But I think we make a mistake when we view the prevailing trends as accidental.
The root of that mistake lies in the conflation of two mutually exclusive systems, namely capitalism and Neo-liberalism.
Far from being, as is often portrayed, a natural outcrop of the Capitalist system (Capitalism 2.0, if you will) Neo-liberalism enjoys the same relationship with Capitalism that a virus enjoys with its host. To extend the simile Neo-liberal thought resembles one of the nastier viruses like Ebola, which relies on the destruction of the host organism for its own advancement.
Once we accept that, we begin to see that our economic model is not (as far as Neo-liberals are concerned) in a mess. Things are exactly as they should be.
What we mere mortals regard as ‘boom and bust’ are in fact simply the growth and harvest cycles of the Neo-liberal pathway to the new feudalism.
Many commentators on the left (I am one of them) regularly apply the term ‘economically illiterate’ to our Chancellor. But do any of us (personal antipathy aside) really believe that a man of Osborne’s education, cunning and intelligence is really that politically inept?
And if the boom/bust model is a ‘failure’ of free market economic theory, it is certainly a very successful ‘failure’, when the 1% have doubled their wealth in ten years.
The degree to which not just our politicians but our whole political system is invested in Neo-liberal thinking indicates that we should not expect a return to stability and sustainable growth.
Our hope, our only hope, lies in the emergence of a new movement that wholly rejects the current political concensus in favour of a new paradigm that embraces such ‘unthinkables’ as protectionism and economic stasis.
And I would tentatively suggest that the window of opportunity for that is no longer than five years.
Martin
This is a theme many on this blog will recognise and agree with
I suspect now that only a new movement can challenge what is happening
Whether that is likely in five years I do not know
It is possible
Richard
My concern is that the mechanisms of democracy itself are being eroded at such a rate and the fabric of the society in which we live so fundamentally abraded that beyond 2020 I seriously question whether such change will be even remotely possible, short of a violent revolution.
This, and the environmental damage that will result from the policies of this Government should inform our sense of urgency.
It will not, of course, be easy but it is worth remembering how much of the work that would constitute a new political philosophy has already been done.
Moreover, the meteoric (and almost overnight) rise of Podemos highlights the potential for a socially positivist movement that gives a voice to the voiceless.
I tend to agree
We know many answers
We need audiences to be open to hearing them