Long time commentator on this blog Ivan Horrocks has posted this comment:
It'd be an interesting exercise in prediction if between the us (ie. you and the commentators on your blog) and using our collective expertise, we put together a list of all the negative outcomes we expect to flow from the policies adopted between 2010 — 2015. I only flagged a few but there are others that I expect to emerge from policies that were a lot less “public” than they ought to have been. For example, Private Eye recently reported that the pipeline and supply network for supplying fuel to military bases and other strategic facilities (I forget it's name) was sold off just before Parliament rose so nobody noticed. Then we have the privatised air sea rescue service, and so on. I'm not expert enough in those areas to say what the negative outcomes might be — perhaps they'll all be positive — but it'd be interesting to second guess what other disasters await this government beyond the obvious ones like the NHS and poverty.
I think this an interesting idea and have already commented on both the NHS and the deficit this morning.
Guest posts on this blog are rare but I also recognise that I am a long way from the fount of all wisdom on such issues.
I am therefore open to receiving comment on this issue. But, I stress, I am not interested in party political comment. This is policy blog, not a political one, although one of course informs the other. I am interested in reasoned argument and most especially in solution focussed argument that suggests solutions to problems and that does not just say that it is a mistake that X, Y or Z has happened.
So, contrary to normal practice I am open to guest blogs on this theme. Make them up to 800 words (no more by preference). They can have been posted elsewhere already. And if you know of a good blog that fits the bill, draw attention to it in the comments with details of the author so I can get permission to reproduce it here.
Building the narrative of what can be done about the crisis we are facing is an important part of debate. Let's see what can be delivered.
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“I am not interested in party political comment”
“we put together a list of all the negative outcomes we expect to flow from the policies adopted between 2010 — 2015”
Very funny. Why specifically 2010? Why not since 2007? 2002? 1997? Why not positive outcomes?
Because the narrative changed in 2010 as did the entire outlook do so at that time post 2008
These are economic facts
Why not deal with them rather than complain?
You can suggest positive outcomes if you can find them
How can something which includes “it’d be interesting to second guess what other disasters await this government beyond the obvious ones like the NHS and poverty.” have anything other than a partisan political slant?
It can also be an observation based on suggesting there are unpublished but foreseeable consequences of what it is doing
That’s criticism for sure, but not partisan politics
The same may be (is) true of other parties. They’re just not in government
Forgive me, I know I am a bit of a one trick pony, always banging on about the NHS, only retired from the nursing profession 8 yrs ago, last ten yrs as a district nurse, what a fantastic service. Perhaps I am not really answering the brief but these lovely words from Nye Bevan 1942, who can failed to be moved.
Society becomes more wholesome, more serene and spiritually healthier if it knows that its citizens have at the back of the consciousness the knowledge that not only themselves, but all their fellows have access, when ill to the best that medical skill can provide.
Hope I have not misquoted. May I add, that the education system is struggling with low morale, too many changes, please leave the teachers to educate, possibly leave religion out of the classroom. I understand if you don’t put this in your blog, I do go off on a tangent..
You are welcome, as is your comment
Thanks for your comment Sylvia -I think 90% of our society is struggling with low moral-the top 10%, though, are ‘partying.’ Somehow we need to rediscover social purpose and create real meaning beyond the ‘I’m-alright-Jackism’ that predominates.
I would add an observation: beware of obfuscation and misdirection, especially where the failure is a slow descent rather than a sudden drop.
Social security is one of these, and the failure is already here: imagine saying, in 2010, that over a million households would rely on charitable food donations in order to survive.
Really?
There’s no way that anyone would or could believe that, back in 2010: it could only have been introduced into the conversation as a limiting condition for declaring the total failure of the postwar welfare state, sometime in a distant hypothetical dystopia.
And yet, here we are. And much of the population seem to approve.
We have something of a ‘boiling frog’ effect in play, here.
Likewise, the Army. Google for ‘Worse than a defeat’ and see what’s there to be read about Afghanistan. That’s a result of cuts, and of privatised training, loss of managerial talent, and high-level infiltration by private-sector rent-seekers.
I can predict that the next Grand Adventure for the British Army will be an embarrassing failure and a bailout by the senior partners of whatever coalition operates it; but there might be no more large-scale foreign missions, ever, so there will be no ‘sudden drop’ failure to notice.
And we mostly didn’t notice the significance and the scale of the failure in Afghanistan: Britain is no loger a credible military power and the processes of failure in the Army are accelerating.
But where will the general public read about it?
Policing and the courts are the one to watch – but that’s arriving piecemeal, an injustice here, a riot there, a lack of crimibal barristers everywhere, an intervention by the Ministry of Justice in a failed Police Authority sometime soon.
All very much a ‘boiling frog’ effect of no-one noticing how much worse it’s getting, and no single debacle we could point to and declare a failure.
Note, also, that the point of failure might be now, or well into the past; the consequences will emerge more slowly.
So do, please, bear in mind that the failures we predict here and now may be less dramatic than we think – though no less severe – and it’s entirely possible that we’ve missed a big one.
But….but…..
We have indoor toilets!
And we do not burn animal dung for cooking/heating!
Our cup runneth over!
“And we mostly didn’t notice the significance and the scale of the failure in Afghanistan: Britain is no loger a credible military power and the processes of failure in the Army are accelerating”
Both the US and the Soviet military forces failed to win in Afghanistan. That in spite of the massive Soviet military presence.
Lost on the political elite is the fact that if you cannot win the peace, then winning the war matters not.
But it is such a “buzz” to be “in charge” and send your military minions to foreign climes to die for no good cause..
The thing that worries me is the increasing amount of taxpayer spend that benefits only the wealthy. eg Working Tax credits became a corporate wage subsidy/ BTLers turned Housing Benefit into a taxpayer funded money stream for the already prosperous using lack of supply to increase rents to fleece taxpayer thru HB.
Imbalance and state subsidy of the UK Housing market though has got to be one of the top risks to UK economy, and inequality of income and wealth may also do it when real disposable incomes become too low to sustain enough economic activity to provide sufficient jobs and taxable income – a potential vicious cycle.
Moving on from those personal bugbears though –
NEF report on financial system resilience makes interesting reading (page 48 onwards of pdf for UK suggestions – http://www.neweconomics.org/publications/entry/financial-system-resilience-index)
“The UK has failed to recover the ground it lost during the
2000s, but can we expect our financial system’s resilience
to improve in future? We examine five realistic policy and
market development scenarios, concluding that those
which introduce real diversity into the current system —
such as new local banks, P2P lending or separating big
banks — are the most promising”
(Extract)
This last bit for info only – too long for word count criterion.
Interesting report from NEF
Have not seen it getting publicity
Bit of a read, but some interesting points.
Only coverage I saw was on RT
http://rt.com/uk/264257-banking-sector-vulnerable-crisis/
Was in the Guardian too
Says a lot it was not in the FT
The gradual destruction of local government and its replacement by outsourcing services such as Capita.
The Tories rely on a gradual loss of collective memory (25 years +/- since power/power networks were privatised – 20 years since rail) this will lead to a situation where people are unable to imagine alternatives to private provision.
It is ridiculous that we the taxpayer own 81% of RBS bank, yet not a single one of us has any say in how the bank is run. None of us have any say in the salary paid to the chief executive, or in the size of the bonus pot they pay out each year. We do however incur an 81% share of all the fines they have received for illegal rigging activities. None of us can even attend a shareholders meeting, let alone vote at one, even though we are the majority shareholders.
It has also been the plan to turn RBS back over to the private sector, as the chancellor has already started doing with our shareholding in Lloyds. The bank has already been broken up into what some have called the good bank and the bad bank, making in ripe for selloff. Actually, more accurately, in all likelihood the “good bank” will be returned to the private sector and we will be left carrying the burden of the “bad bank”, as happened with Royal Mail when it was sold off in 2014.
The following is a simplified sample of an idea from the New Economics Foundation and I have added a couple of bits in. I support the idea of breaking up the bank as has been done. But instead of selling any of it, we could buyout the other 19% shareholders and own the bank outright. Everything except it’s business and personal banking arms would be sold off. In the case of those that may not be sellable, the bad bank, personally I would give these away if necessary just to get rid of them. The remainder could be broken up int a network of let’s say 50 individual and wholly independent banks, spread across the whole of the UK.
Each bank would be owned & run, by and for local people. The executive board would be made up of local citizens, local businesses, staff and industry advisors. The bank would provide local people with personal banking needs and local businesses with loans that would be used to invest in new technology and modernisation, with a particular emphasis, though not exclusivity to businesses in the productivity industries, making things for sale. The closest example I can think of to the structure of this new network of banks is the way in which John Lewis is set up, except it is we the taxpayer who own the banks, but staff and interested parties are shareholders.
The benefits of such a setup are self evident. Local people would run their local bank, therefore increasing confidence in the sector. The millions of people who currently cannot obtain a bank account, or access banking facilities would be provided with that access. Loans to small businesses would allow them to invest in new technology, employ more staff, from which the government would benefit it increased tax revenues. People employed in those business would receive a fair wage for a fair weeks work, meaning them have more disposable income from which the economy could benefit again when they spend. We could forbid the use of compulsory zero hours contracts at companies to which the banks are lending. Paying the national living wage to all employees could also be a condition of all loans, as could signing up to the Fair Tax campaign.
This is a very brief breakdown of the NEF’s idea and I have added a few bits of my own as well. However I hope to have given a basic outline of their idea.
I support this idea
But I stress – it is a banking idea
Decent idea. A bank to address local concerns is a good one – a return to more customer focused banking as opposed to box ticking.
My concern would be if it just ends up making loans that the banks in the private sector wouldn’t make (i.e. the ones deemed unprofitable), and we just end up burning more taxpayer money. I also don’t like the living wage condition. All you would be doing would be making the business less likely to succeed and hence more likely to default by imposing restrictions that don’t apply to competitors. If the living wage is justified then campaign to make it the minimum wage.
Overall though, if the proposal is that localised decision making means that suitable corporate borrowers can be better identified then I like it.
Thanks James,
I appreciate your comments.
Of course this is a rough outline of the idea and does not contain every necessary detail. The original idea belongs to NEF as I said and their publication contains a lot more detail.
http://www.neweconomics.org/publications/entry/reforming-rbs
The living wage idea however is mine and I disagree with you that paying it could make SME’s less likely to succeed. This is a commonly held belief and I believe it is completely inaccurate because labour is an essential part of any business. If companies do not pay a decent wage, there is no incentive for workers to work more productively. Productivity per hour has remained stagnant for some years now in Britain, but no one seems to have worked out that low pay could be one of the reasons for that.
It’s a bit like the old saying of “pay peanuts and you get monkeys” or in other words pay low wages and you get poor output from staff. Paying the living wage to all workers would be an investment rather than a cost to businesses because the workers would feel valued and therefore be more inclined to put in the extra effort, thereby increasing productivity and output, followed by increased profits for the company.
From my understanding the problem is not that private banks are not lending to only the non profitable SME’s, it’s that they are not lending to any. But whichever way it is, there would have to be a system of deciding which SME’s to lend to, rather than any SME can borrow as much as they want. I can’t actually remember whether NEF covered this in their publication, but I don’t know enough about the banking sector to suggest what that system of decision making might be.
Here’s a cast iron certainty:
Neither of the two Queen Elizabeth class aircraft carriers will be in service – despite being due to be so by 2020.
Even if they are, the F35 strike fighter will not be ready by then. When it does become available its design will almost certainly be obsolete (which it may already be for many of its roles).
Oh, and seeing as we’re not actually going to be buying sufficient planes to fully equip one of these lumbering, all-eggs-in-one-basket, missle-targets, ordering two is rather pointless.
The answer is clear: Cancel the projects and use some QE to pay off the QEs. But the programmes will stumble on, with their spiralling costs, because we do so desperately need to ‘project power’ across the ‘world stage’ don’t we(even if what that actually ammounts to these days is firing expensive missiles at pick-up trucks).
With the F35B costing in the region of $251 million (EACH), not too many will be purchased.
The carriers will cost £3 billion each….
The 35 aircraft expected to be carried will cost 3 times more than the carrier…
And lets face it, we just do not have the fleet capacity to make a US-style carrier battle group….or two….
We may find out soon about the US capacity effectiveness…with US-CHINA relations drifting close to conflict, and US-RUSSIA ditto….
One nuclear strike and it will be goodbye battle group….
I would very strongly recommend the “BillyBlog” for any debate regarding the deficit, austerity, or anything to do with the economy in general.
Written by Professor William Mitchell, University of Newcastle, Australia. He seems very interested in the UK and the Eurozone, having written on his blog about UK topics and written a book recently about the Eurozone.
You get a daily lecture from an economics professor of very high quality and honesty, very critical of the neoliberal mantra which he picks apart with great dexterity.He is an MMTer.
He has covered a lot of topics, so use the search button on his blog. He is very keen to “spread the word” so I am sure he would be willing to have anything he has covered shared.
As an MMTer, he is obviously well versed in and very critical of currency issuing governments cutting the deficit when they should be increasing it to achieve full employment and the well being of the nation. He is critical of the Eurozone as it has turned nations into “households” with the inability to issue currency to prevent deflation and recession. He says that “the economy is us,” it should be run for people and judged on what achieves for them, not for technocratic and wrong economic reasons.
I think he is very relevant, but he writes so profusely that I have scarcely scratched the surface, but he is very relevant to problems we face in our economy.
http://bilbo.economicoutlook.net/blog/
It is, indeed, a good blog
For me, the Govt’s housing policy will be a disaster.
Supply won’t meet demand for housing. I use the word supply to mean both the supply of new houses and also an increase in the number of empty or under occupied homes are brought back onto the market.
There will be some increase in private sector housebuilding as currently housebuilders are scaling up their operations as there is money to be made. But it still will be a long way off meeting demand. Also housing associations which have driven a lot of housebuilding over the past 10-15 years will be put off/unable to build new houses due to housing association right to buy. And I doubt that the govt will introduce any new foreign ownership rules/tax measures as they did this in the last parliament already. Therefore there will still be the problem that market failure at the top end of the market (houses being used as investment vehicles etc) distorts the rest of the market.
The most worrying impact for me however will be on affordable housing. Due to the localism act, affordable rents for new housing can be set at 75% of the market. Which everyone knows isn’t affordable. Quite often any new affordable housing below this level will actually be because they are replacement homes for current social housing impacted by regeneration schemes. So my great worry is that excepting regeneration schemes where assured tenants will often be given equivalent homes at comparable rent levels, there will in fact be almost no new affordable homes.
So more people being excluded from affordable housing, more people being pushed into the private rented sector with all the associated problems and a continuing and probably sharper increase in the housing benefit bill.
Which has two knock on effects: the govt will draw up some harsher measures than exist currently to impact on claimants. Also, as the private rented sector becomes more attractive as a buy to let investment, more and more people will withdraw their pension to purchase such properties. So lets hope for their sake there isn’t a property crash which destroys their pension assets.
Thanks
If I may, social rents are being set at 80% of market rents on instruction from the HCA who distribute Social Housing Grant from Government. I should know as I apply for these grants on a regular basis. Rents have been going up in order to cut the amount of grant from Government in order that new developments can break even with less grant. That is a fact. That the same Government then moans about the cost of housing benefit is so cynical, and that it has also brought in the bedroom tax and the benefit cap. Support for affordable housing is being cut – simple. There is a new twisted logic to the ‘property owning democracy’.
I think that the proposed privatisation of the Housing Association stock is going to be very risky proposition. The Government might very well come unstuck here. The potential cost will be more than has been openly discussed. And I expect that the HA s will fight hard. The banks will also want their money bank plus interest income they will be losing.
Not all HA properties will have received grant to build them; unpicking this is going to be a real headache for someone.
My view is that housing is not over priced because it is in short supply. It is over priced because it is being priced as an asset. We could build 1 million more homes and the price would still go up or just stay high because that is how assets behave in a bubble. Housing is also a commodity that we consume – but the asset price and potential is leading the way to high prices. There is a perverse logic at work here.
RTB is a one way ticket out of the affordable sector into the market. So one generation of HA tenants will benefit – so what?; after that, there will be limited access to affordable housing as the rates of replacement are cut to a trickle.
Further to the above, it appears to me that we are actually being turned into a ‘landlord democracy’.
The reduced support for council housing (State supported affordable housing) will only funnel people into the private rented sector (PRS) over time.
So the current policies are turning Council tenants into fodder for the PRS.
This opens up all sorts of concerns – I see a country where private landlords live off the housing needs of the poor. In a world of low basic wages, zero hours contracts etc., such poeple will find it hard to move up. Indeed there will be a perverse disincentive not to increase wages and opportunities for the poor in order to create an ongoing stream of people needing accommodation in the PRS. This could be yet another brake on social mobility. We will have the ‘perma-poor’who will be seen as an investment opportunity because of course Government will conintue to spend money on high PRS rents – but not Council ones.
I also think that State funding (which is increasingly hijacked for supporting private means) will happily meet the costs of PRS rents as in the past housing benefit has always ‘taken the strain’ but this time it will be funding PRS landlord lifestyles – the new 4 x 4 they want etc., instead of being reinvested in maintenance and provision of the homes perhaps?
The housing sector in this country is almost a separate economy to the main one but saying that there is no influence on the mainstream economy is like denying that the moon affects the tides.
Also, the over-heated property market is hiding the wider fact that the general economy is still rather weak and that this country is still in some form of decline – output remains low – even compared to 1970 levels as I understand it.
BTW in my comment on June 4th I meant to say ‘money back’ not ‘money bank’. As I get older my fingers seem less likely to keep up with my brain!!
I find it frustrating that the fear of public debt has so much traction. The ‘we can’t leave this for our children to inherit’ so must reduce it immediately with austerity argument is very irritating.
Amartya Sen has an article in the New Statesman today noting that when MacMillan said ‘you’ve never had it so good’ in 1957 the debt to GDP ratio was 120%. As he says economic growth over the following years reduced it and at the same time the welfare state and public services were enhanced. That is better scenario for children to inherit. As Sen says austerity is anti-growth. We don’t want the children of today to inherit a crumbling welfare state and infrastructure and lack of job opportunities.
I am puzzled how this message doesn’t seem to be clearly publicly argued. I guess the right wing press dominate (media macro as wren-lewis says) but I didn’t think the anti austerity parties in the election campaign were all that good at articulating the sentiment.
It seems to me that somehow a clear, punchy and simple argument of this kind needs to gain widespread attention. I don’t know how that could be done. But I kind of think you need something that could fit on a small leaflet with direction to the more detailed discussions provided.
Perhaps need to get some good copywriters to work out how most effectively to get the message across in fairly short statements.
If I could find the time….
Writing like that takes a lot of effort
The fact that the Shadow Cabinet don’t use these arguments is extremely depressing.