This morning's newspapers, mixed with some comment from Sunday's, reveal a continued confusion at the heart of UK economic and political policy that suggests how ill-equipped those tasked with managing it are for the job that they are about to face.
There are three crises that we really face right now. They are war, covid and climate change.
There are consequences that we face as a result. They are the impact of sanctions, inflation, refugees, sickness and the long term inability of our economy to survive without massive long term changes in our greenhouse gas emissions.
Dependent upon our reaction to these threats we also face the real risk of massive increases in poverty, rising unemployment, a significant increase in demand on the NHS, austerity, recession and despair as we fail to tackle the climate crisis, which is the biggest issue of all that must face.
What is the government doing as a result? It is permitting energy price increases. National insurance increases are planned. It is expected that official interest rates and so mortgage costs will rise this week. It is increasing benefits by much less than the current inflation rate, let alone one adjusted for fuel costs. It is planning austerity. It is seeking new carbon energy sources. It is abandoning green targets. In effect, full scale recession is its current plan.
The knock on effects will include substantial increases in poverty, increasing unemployment, failed companies, increases demand in the NHS, higher benefit payments, rising national debt, inflation higher than it need be, and a failed energy strategy. And that only scratches the surface of the issue. I ignored Covid in that, which remains a massive issue.
What remains apparent within government thinking is the belief that there is some ‘old normal' or, to use economic jargon, equilibrium, that they can re-establish if only the right combination of austerity buttons that magically shrink the state and simultaneously release a previously unknown spirit of entrepreneurship in the people of the UK can be found.
I have news for the government. There is no such old equilibrium that can be found.
First, that's because there was no perfect time anywhere in the recent past to which we should aspire again. In that case the very notion of recreation is based on false memory.
Second, that's because, as I keep saying, everything has anyway changed. War in Ukraine indicates that, and we're not going back to 23 February, ever, just as we're not going back to pre-Covid times, ever.
Third, that's because that ‘equilibrium' state had implicit within it all the failings that have led us to where we are now. If we have learned anything from what has, and is, happening, it should be that we do not want to repeat those mistakes again. And yet that would seem got be the government's objective.
So what might be done about this? First we need new strategic thinking. For defence. For health. For climate change. And as a result, for the economy. These strategies have to ask why we need to act, what we need to do, when, with what purpose and what hoped-for outcome, at what cost, with how this plan will be delivered and paid for being considered.
Of course those plans will not be right. But unless the state does plan at a strategic level again - and I would suggest that it has not for a long time - there is no way out of this mess.
Second, strategic plans need to change into operational realities that are consistent with them. Unless that is done there is always confusion in the actions that governments take, as is so very apparent at present. As example, if we really had and understood a plan for climate change then the focus at this moment would be entirely upon reducing energy consumption and the generation of energy from alternative sources, rather than upon the apparent goal of investing for medium to long-term increases in energy supply from the North Sea, which makes no sense at all.
Similarly, if we had an economic plan we would not be increasing interest rates; would be doing everything that I suggested over the weekend to reduce the cost of energy; there would be no tax increases; there would be a plan to use long term borrowing and maybe quantitative easing to support investment in critical infrastructure for climate change, healthcare, and other resources; there would be a windfall tax now, and they would be a massive reorientation of other taxation from those on low incomes to those with the greatest ability to pay.
What would the goals be? Peace. Freedom from fear. Full employment. Good healthcare. A managed approach to climate change. The development of the skills to deliver all of these. Transparent accountability for delivering them. Political freedom within a system where the rule of law is respected.
None of this thinking is happening in government right now. It is little in evidence elsewhere. That's why we're in a mess.
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As someone who understands French, yesterday I was watching French TV and it was saying that they are only expecting their inflation rate to be between 3 and 4% and the French government is giving a 15 cents discount off petrol – paid as a subsidy to petrol retailers – but then of course taxation in France is higher so they have better public services than here – especially health
France uses the Euro, which is, technically, a foreign currency, unlike the French franc. So, it is not entirely comparable re its currency system to the UK, which uses its own sovereign currency.
So I take it that having a sovereign currency rather than using the Euro is yet another benefit of Brexit? Not.
Security, Public Health and Climate Change….. surely, Richard, can’t we just let the “market” sort this all out???
Nobody can seriously believe this – it requires cooperation and collective action at national and global levels….. and I am afraid that this government is profoundly unwilling/unable to work this way.
All these things need government management and resources. There are some resources lying idle that can and should be put to work but the government needs to level with us and say that we need to redirect some resources away from some things that we like towards other things that we desperately need… but they are too scared to tell us.
Surely, the message from the early days of the COVID pandemic was that the public are ahead of government on many things. While government delayed a lockdown worrying about whether it would be observed, the public where clamouring for more action. More recently, the public was way ahead of the government on sanctions and refugees.
In short, the public are prepared tough times if (a) there is a vision of where we are going and (b) fairness in shouldering the burden (c) some prospect of success. What is lacking is Leadership.
Agreed
Exactly. Government is how you mobilise resources on a national scale to tackle these issues.
The current government is sorely lacking, but where is the attractive vision of the future presented by their opponents? Given our electoral system, the reality is that only one party – or a coalition led by one party – can do this.
For god’s sake, Keir, pull your finger out and get on with it!
The alternative is too depressing to think about.
Agreed, again, re Starmer
I blame neoliberalism
George Monbiot has a good piece in thE Grauniad.
https://www.theguardian.com/commentisfree/2022/mar/09/addiction-russian-gas-putin-military
Clearly the Germans have decided to rely on the markets to look after them rather than undertake even the most basic of contingency planning.
We really do need a strong state at the moment.
It seems to me that me that what we have now is a Rentier State whose only job in its eyes is to make money out of its citizens based of course on a false narrative about Government money.
Imagine that – a government scared of being short of money to the point where it will increase the hardship of its citizens because it chooses to ignore it’s own sovereign power.
Absurd.
I agree
I am working on more data to show this
So true. But neo-liberal economics apparently believes that the state should be small and ‘the market’ (which is a kind of secular ‘god’) will make all the decisions. Sadly this just means that ‘the strong [and rich] do what they will and the weak [and poor] suffer what they must’ as Thucydides wrote in ancient Greek, over 2000 years ago.
“When you are in the gutter, concentrate on the gutter rather than the stars”
It is the basic short term competence that needs to be addressed as well as longer term dimensions.
Can the state:
Properly house it’s population? No
Can it properly feed them? No
Can it properly educate them? No
Can it keep them properly healthy? No
Can it heat them affordably? No
Can it transport them affordably? No
I was taken by a journalist quote: “Johnson is good at raising flags and lowering standards”. Decline is everywhere, and it is not even managed decline.
If you change the question ‘Can the state?’ in 2 ways, I think it expresses the situation rather better.
Change ‘Can’ to ‘Does’ and you get all the same answers.
Change ‘Can’ to ‘Could’ and all the answers are reversed.
That is the problem – the state is choosing to fail to do what it is there to do.
I’m afraid the mistake you’re making is that we have a governement that gives a ****.
When will we realise that Putin and his kind are role-models for Johnson and his gang, not enemies?
Thought this was interesting re climate change and net 0. Basically the “plans” for retrofitting and new buils use up ALL the carbon allowance for achieving 1.5C and no more
https://threadreaderapp.com/thread/1501237824368136194.html
In some situations…..
I FEAR that all the clever compassionate people have fled the country and we are left with a Johnson and other clowns