It has been suggested that on average U.K. households have saved more than £7,000 during the coronavirus period. But averages are deeply misleading. I am aware of households where that is just the cost of a summer holiday.
And there are also many households where there have been no savings at all. The exact opposite, in fact. As the Guardian reports this morning:
More than half a million households have fallen behind on their energy bills since February, taking the total number of billpayers in arrears to more than 2 million, according to Citizens Advice.
The consumer charity said an extra 600,000 households owed payments to their energy suppliers, with the coronavirus outbreak leading to record high redundancies this year.
On average, billpayers who have fallen behind on their payments owe their energy suppliers about £760 for electricity and £605 for gas, according to Citizens Advice.
And remember, this period does not include a winter. It is thought that one in four households will struggle with fuel bills in coming months.
This is the reality of 2020 for many. It has been a desperate struggle.
2021 will be worse. There will be winter bills to pay. There will be fewer jobs. There will be a down turn. The government is intent on cuts. So far, the plan to cut Universal Credit remains in place.
And people will become ever more desperate.
But I hear nothing of what the government is going to do about that.
And yet it does have time to talk about.how to make the UK a more effective tax haven.
As evidence of misplaced priorities that is sickening.
And the reality is that there need be no shortage of money to help those in need. But conceited economists, safe with their large incomes earned in service to the status quo, say otherwise.
And you wonder why I am angry?
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Among my friends I have two broad categories: savers and spenders.
The spenders don’t worry about tomorrow, feel that having money is a fun chance to do nice things and are usually to some extent in debt. One example is a friend who under pressure from a pushy teenager has now promised her a £1000 phone for Christmas. But the mum is in debt and not that well paid.
I can see why just not worrying about stuff is in many ways a useful heuristic. Less stress, less sleepless nights, more immediate gratification. It trades off constant low level stress for, potentially, a hit of absolute disastrous stress.
If the mum loses her job she’d be on benefits with three dependent children and with her debts. How will the decision to buy such an expensive present feel then?
But here’s my point: she is, I think, fairly normal and the planners and forward thinkers are weird. There is a reason why most people are two paychecks away from financial ruin or whatever the stat is. OK, multiple reasons, partly well worn themes here of real wage stagnation etc. But another issue and one that can’t be fixed with macroeconomic levers is that for many people the point of money is to have nice stuff and they will always spend to a point where they are nearly broke.
How do we get more people to be prudent (or at least less daft) with money? Can it be delivered through the schools?
It could be
But most of all, we transform the rules on advertising
An economy that requires people to go into debt for things they do not need because of the power of advertising is one with a deeply flawed economic model
“things they do not need”
Who gets to decide what people do and do not need?
Is it you?
No, governbments
Tasked with making sure we live within sustainable limits
You may not think that necessary
But I do
And ask young people.
Banning all adverts for gambling would be a start. We managed it with tobacco so the only reason that it can’t be done with gambling is corruption. (Was pondering a softer description….. but I am afraid that corruption, in its fullest sense, is the only word).
Thank you for mentioning advertising.
We need to understand the purpose of advertising. There was a time that it’s purpose was to bring to people’s attention the goods and services that would improve their quality of life. This is no longer the case. It’s purpose now is to make people unhappy. Once that has been achieved, it is relatively easy to persuade them that they can become happy again by going into debt-slavery by buying this or that piece of useless c**p, produced at enormous environmental and human cost at many and varied points along the supply chain.
I have no idea how we can change this.
One possible starting point might be to reverse the culture of respect and admiration for conspicuous consumption that pervades our society. Imagine a world where the kids struggling on with last year’s latest smartphone get to poke fun at and generally demean the flash g*t with the very latest version, where the yuppie with a second-hand Fiesta gets to do the same to the colleague with a new Porsche, where no-one gives a monkey’s what this or that vacuous celebrity does etc.
George.
The change is coming. It might not happen by choice though.
Consumption, like everything else, will stop when we plummet over the climate change cliff edge.
How soft can we make the landing is the question now.
In rural and or isolated areas many have oil fired boilers and cook using bottled gas. Both of these are paid for before use. In their cases do many simply have to do without resulting in a hidden group suffering from fuel poverty.
As you say averages don’t tell the full story.
But the answer is surely that you need both – spenders and savers – and you should also be aware that the roles change but both roles have their rightful contribution to a properly functioning economy.
We recently saved to have our bathroom done and upon paying the bill went from saving to spending. So are these roles as truly static as we portray them?
Would the mother you spoke of save more if she had a decent wage? Does not the economy benefit from spending £1000 on a new phone? (Yes it does).
The issue is credit – there’s too much of it and not enough hard cash in the form of wages or social security.
And the moral aspect – well she’s not robbing a pension fund and buying her second yacht is she? Hmmm?
C’mon!!?
The best society is that in which people have enough to spend, to save, to pay debt without going to loan sharks and spending a high proportion of their income on debt which is subject to bubbles.
We are getting further and further away from that ideal now as investors realise that they don’t need people to work for them or that it is better to give people interest bearing debt as income because they can profit from that too.
You may have seen this already but this is a new low for this country (from the Guardian):
“For the first time in its 70-year history, Unicef has launched a domestic emergency response in the UK to help feed children hit by the Covid-19 crisis.
According to a report by Sky News, the UN agency responsible for providing humanitarian aid to children worldwide has likened the effect of the coronavirus pandemic on youngsters to that of the second world war.
In May, a YouGov poll commissioned by the charity Food Foundation found that 2.4 million children (17%) were living in food insecure households. And by October it said an extra 900,000 children had been registered for free school meals.
Unicef has now pledged a grant of £25,000 to the charity School Food Matters, which will use the money to supply 18,000 nutritious breakfasts to 25 schools over the two-week Christmas school holidays to help vulnerable children and families in Southwark, south London. Each box will provide enough food for 10 breakfasts.”
The bill for bailing out the banks was £685 billion wasn’t it?
What’s wrong with bailing out your citizens Rishi? Boris?
As I said in a tweet on this:
“A lot of people will look to tax as an answer to this. And so will I. But there is more to it than that. We have an economy designed to shovel wealth upwards. The real issue is changing that and creating an economy where all can prosper. And this government does not want that.”
“But most of all, we transform the rules on advertising
An economy that requires people to go into debt for things they do not need because of the power of advertising is one with a deeply flawed economic model”
The entire business model of the new surveillance capitalists is built on selling information about us to advertisers, who in turn will use that competitive advantage to try and sell us more things we really don’t need.
Trying to unravel that nest of vipers is not going to be easy.
Thanks to your previous blog which elicited book recommendations for drawing to my attention The Age of Surveillance Capitalism, Shoshana Zuboff. I thought I understood what Google and Facebook are up to, and I was severely underinformed.
Thank you Mz Heenan, an invaluable point. I was thinking it, when I saw your comment.
“The entire business model of the new surveillance capitalists is built on selling information about us to advertisers”
This is far more dangerous, insidious, pernicious than general advertising; and while I think restrictions on tobacco, gambling and usury (pay-day loans) is wise, I believe giving governments the liberty to control adverstising across the board is also unwise; and misses the real danger of surveillance capitalism (we know not what we have already done – permissionless innovation transforms capitalism but is lethal for liberty) for old-fashioned purposes that capital will in time merely by-pass without concern.
What I term ‘effortless convenience’ is a method of siren seduction unknown to capitalism before in history; it is the rock on which our liberty ship will founder. Its greatest strength is exactly the fact that like the mythological siren, it does not come dressed as tyranny, but as your imagined personal desire.
Remember subliminal advertising, unlike in the USA, is illegal in this country and has been since the late 1950. I think subliminal should be updated to encompass the continual bombarding to your subconscious mind.
To expand on my earlier reply. I’m sure some savvy lawyer could have a field day equating subliminal advertising with targeted advertising.
I made the error of watching STV quiz shows one afternoon and after being bombarded with funeral plans, funeral services, injury lawyers et al, I was feeling pretty suicidal. Imagine your subconscious mind pounded with this day in day out.
Time to have the cookies crumble (ouch sorry)
While not strictly illegal in the US, the FCC prohibits it and this is stated on its web site.
https://www.bbc.co.uk/sounds/play/collection:p021gdts/p091fz27
Radio 4 did a programme about MMT this morning. Rather poor in my view, but then what would you expect someone who believes in accountability to say. I still listened to the end to see if there was a contribution from you though.
I reviewed it on Tuesday – it was first broadcast on Monday – it was dire
I too am livid. As usual when there is wasted pmq’s, the last of the year, I can’t remember the last time there was actually a curtailed political calendar as we have been subjected to for the last 18 months.
At least Bercow kept them going longer than they wanted – he pays the price daily but will eventually get his statue, when these pirates are dealt the justice they surely deserve.
With so many open goals and a hapless spaff stain mini me Churchill waving it all about and whipping it in and out of his pocket, did Starmer say ANYTHING on the enforced keeping open of schools in London this week while Eton has bolted its doors already, without even a whimper from the even littler stain Williamson.
Did he even ask about the great debacle of Bozos dinner with the EU commissioner and the Fish dinner he was served?
Did he joke about his holiday to India where he will see in the New Year trumpeting a great ‘beefy’ deal with the arch Hindu nationalist government?
Nah Keir is happy to see his inner London constituents and fellow MP’s get as shafted as possible – he is practicing for HIS visits to the Colonies.