I took part in a discussion with a group of economists yesterday. There is nothing unusual about that. The sombre term of the discussion was, however, exceptional. What I and some others, but I stress not all, of those partaking in the conversation suggested was that the scale of the economic crisis facing the UK is being vastly underestimated by most people, including the Labour Party, at present.
Discussion focused on unemployment. One economist suggested that survey data implied that at least one in three people currently furloughed will be made redundant and will not return to work. Adding those people to the existing number of unemployed people suggest that unemployment would rise to 4.5 million.
I suggested that the total could be much higher because this analysis ignored the self-employed, where I think it entirely plausible that at least one in three people will cease to be in business, adding at least another 1.5 million to the number of unemployed, bringing the total to more than 6 million in all. Give or take, that is around 20% of the UK workforce. I think this the likely total.
It is fair to note that some thought that this was unduly pessimistic. What was notable was that the biggest pessimists in the discussion were those who, I think, had greatest experience of running commercial activities. Just as I cannot see how many companies can survive this crisis, nor could the others who have had experience in business. As I have suggested ever since this crisis began, it is cash flow that is king now, and rational business owners who realise that government support for their activities is running out are now planning redundancies, whether they would wish to make them or not, in a desperate bid for their own survival.
Taking this into account, I was far from alone in having concern at the timidity of Labour's current position. If its job is, as I think it always has been, to represent the interests of working people then its need for a viable economic plan is, at this point in time, very high and yet there is no indication that it has one.
I do, of course, accept that the shadow cabinet has come into office at a particularly difficult time for them to recruit staff and develop policy. This is, of course, indisputable and has to be allowed for. But, vision and direction have to come from the top, and I am beginning to worry that we are not seeing that.
I stressed my concern that Labour might continue to commit itself to the absurd fiscal rules that John McDonnell put in place, over which I fell out with him. The possibility that it will place a greater importance on fiscal prudence and balanced budgets than on job preservation is, I fear, real. If so, that would not only be desperately depressing, but also a complete abandonment of responsibility. That is the route to austerity.
Instead, this is the moment for Labour to understand modern monetary theory. It is also the moment for it to commit to full employment. And it has to say that this is the moment when, like it or not, the private sector cannot deliver and this, therefore, is the time when government has to act.
That does require vision.
It does require a plan.
That plan is a Green New Deal, but not in the feeble form that some NGOs are now promoting. Their suggestion of 100,000 new jobs a year is hopelessly inadequate given what is about to engulf us. We, quite literally, need millions of new jobs, and the process of transforming our economy to a sustainable basis is the only viable way of delivering many of these jobs.
So, we have to plan for massive insulation programmes. Large-scale solar installation is also necessary. Heat pumps need to be rolled out at the rate of more than 20,000 a week if we are to have any chance of reaching net zero commitments, and these could be made in the UK using skills now being declared redundant in many factories. And all this, of course, is just a start.
But this is not the only area where we need more employment.
We need more people in education: children who have lost out need support.
And the care sector is critically short of staff to meet need.
In addition, almost every aspect of the creative sector needs support.
That said, Labour will have to be discriminating: there are jobs that do not need preservation. The days of air travel may be numbered. We are over endowed with financial services. The world could survive without Uber and Deliveroo, because it did until recently, and these are not good jobs. What this means is that choices will have to be made.
The overwhelming requirement is, however, that we have an Opposition in the UK that is completely committed to the delivery of full employment and is not frightened of the cost of fulfilling that promise, when the one way for this policy to pay for itself is to put it into action, and in the meantime money is no constraint.
The question is, when and if we will get that Opposition.
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Greening the planet is hugely important but it has a limited timeline and to a large extent represents swapping dirty technologies for clean ones. Dirty jobs for clean jobs. The greener the planet the harder it will be to create new consumption of green tech and, therefore, new work. With the rapid rate of automation, the Green New Deal isn’t enough. A job guarantee will rely on consumption. That’s how we got into this mess. “Full employment” or a “job guarantee” sounds absolute. Neither represents that there will be fewer and fewer hours of work needed.
And if consumption is of care education and the creative arts you have a problem, with that?
Why?
What is the limit to what we can do for each other?
[…] was not only talking to economists yesterday. I also had one of my regular discussions with an […]
Given the chance, people are highly adaptive and it is only by making a start on GND will we see more of the opportunities for good employment.
I agree that it is time for Labour to formulate good policy – I very much hope that people like Richard can get in front of the likes of Keir Starmer and his team.
I do think that there are enough people in this country who can get behind an evidence based approach – i.e. to keep out of the Left – Right historical ideologies and avoid the them and us factionalism. It is perfectly possible to be pro public services, pro business and pro people.
All you are going to get from the Labour Party is a slightly kinder version of Toryism. The people in the PLP who gave Corbyn such a hard time now run the show and a pathetic lot they are. This crisis hasn’t been bad enough to spark radicalism. Climate change, here we come!
[…] And what people need to know is precisely how the government is going to spend to support them in the crisis that we are facing. QE lets the government hide from this degree of honesty, and that is unacceptable when very high […]
“This crisis hasn’t been bad enough to spark radicalism.” … yet !
On the horizon – there are many issues nested in this crisis that will unfold, even if we don’t experience a second wave.
Combine Covid with Brexit and climate change (practical elements of, eg climate migration, disruption of harvests etc), impacts of geopolitical turbulence etc.. the _need_ for a radical alternative may reach critical mass?
IMO appearances are deceptive with Starmer (“centrist”) – I blieve he is a formidable opponent who deploys his legal abilities tactically and shrewdly gearing for broad appeal whilst retaining a socialist agenda. My concern is that it’s a long view. 5 more years of this government would irrevocably damage the UK for decades, and that is far from a worst case scenario.
“The world could survive without Uber and Deliveroo, because it did until recently, and these are not good jobs. “
Bit of an totalitarian attitude!! My son is working as deliveroo courier before he goes to Uni and the flexibility is great as he works when he wants. It is likely Uber drivers would say the same.
Oh come on, the gig economy is not good work – and holiday jobs existed before these ones
Last time I checked, minicabs and motorcycle & bicycle couriers existed before Uber and Delivero, the only thing different is they use different radio frequencies to dispatch the self employed drivers.
Your really do talk some utter garbage
They did
But the terms of engagement were different
Labour are not the answer. Kinnock and Blair turned them into a centre right party. Representation now needs to come from grassroots, forcing a consensus around and economic model that is sustainable, and one that can challenge current thinking.
The Green party is the most likely, as it already has an national organisation, and could be persuaded to adopt something like MMT.
From the Labour report on why it lost the election:-
“…a manifesto packed with spending pledges that was not seen as credible sealed the “terrible” defeat in 2019.”
https://www.independent.co.uk/news/uk/politics/jeremy-corbyn-2019-general-election-result-uk-boris-johnson-labour-conservative-a9574371.html
This is precisely the point Stephanie Kelton makes very clear in her book “The Deficit Myth” that unless voters are educated to understand how their country’s sovereign monetary system really works the Right are going to repeatedly use voter ignorance to bash the Left’s spending plans.
If Starmer doesn’t come out and say Labour will pursue an education campaign to this effect then you can take it Labour has learnt very little from its cataclysmic election defeat last December.
This will be especially trite of course given the Bank of England is currently using its monopoly power to create reserves to buy up the major portion of government issued gilts as fast the government creates them to rescue the economy and minimise very high levels of unemployment a consequence of inadequate demand!
You got it…
What about getting more people back onto the land?
Things like The Land Settlement Association spring to mind as does The Ecological Land Co-Op
Whatever you think about the economic viability of many of these projects there seem to be a lot of people who would like to at least try living on the land.
You know how few people it takes to work the land, I presume?
And that there are no jobs available there
I know – plenty of people are trying to get them and there are none available
Steve p says:
June 19 2020 at 12:08 am
Last time I checked, minicabs and motorcycle & bicycle couriers existed before Uber and Delivero, the only thing different is they use different radio frequencies to dispatch the self employed drivers.
Your really do talk some utter garbage
Richard Murphy says:
June 19 2020 at 7:31 am
They did
But the terms of engagement were different
From my knowlege of the Taxi Trade, the conditions that private hire drivers worked under were nothing to write home about but they were mostly employed by small business’s which may – or may not have been that profitable. Its when a massive company like UBER steps in that it starts to become News
These comments utterly ignore the whole story
Just go and google it