Peter May wrote this on Progressive Pulse, which is the other blog I direct. I thought it worth sharing:
This is a quote from Richard Murphy's blog on Sunday, which I've been mulling over:
That, in a nutshell, is why we're a relatively poor country. We refuse to employ people to do desperately needed value-added work in the state sector to guarantee a supply of labour to those doing shit jobs with zero social value in the private sector.
I'm beginning to conclude that this must be in fact why the UK, is so ‘unproductive'.
It is not because the workers are so lazy as our ‘Britannia Unchained' if not actually decidedly ‘Unhinged' government would tell us, but it suggests to me that it is simply because we do not properly invest in the state.
All major European countries have a bigger state sector than the UK (something which is quite unaccountably disapproved of in the UK and the US), but in fact a properly functioning state sector gets things done.
I suggest that actually the ‘Productivity Question' is in fact a ‘Neoliberal Question'.
Almost everywhere in the UK the private sector is involved in what is the ‘state' provision. But of course there are necessary inefficiencies in their involvement. Things have to be quoted for and contracted. Contracts are for a specific period and then change. There have to be administrators to organise and regulators to ensure fair play.
All these requirements need people. But they are people doing useless jobs.
Useless in the sense that, when we now know that government creates money as it spends, there is actually no possible point in requiring people to do useless jobs – such as refereeing a panoply of providers to do a job you could do yourself.
All the more important when post Brexit Britain is so short of labour.
The system simply puts money into private hands – not a bad thing in and of itself. But the private hands are not actually our people, they are private corporations – and ever so frequently they are structured to funnel money upwards and outwards in those corporations – and to pay as little as possible to our people – or their ‘labour'.
I find it difficult to conclude other than productivity would actually be much improved by the state ridding itself of its private contracting…
And that's why I suggest Neoliberalism is at the core of the UK's productivity problem…
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I’d say the role of the state is precisely about improving those parts of the world that can’t be easily done through private enterprise, and much of that is about growing the proverbial pie. Infrastructure and transport are obvious examples – many cities in the UK have people languishing in congestion because transport policy hasn’t moved on substantially since the 80s (think more roads and let public transport “compete”, though that’s slowly starting to possibly change).
Let’s have the state build a better world, and that means not just more pleasant, but more productive, for a whole host of reasons. If we fixate on the idea that the state is just a cost to be just about tolerated and removed whenever possible, of course we’ll miss the opportunities it can bring.
Personally, I’m not really going to bust my chops for an organisation that can get rid of me at the drop of a hat. Our “flexible” jobs market!! Flexible in one direction.
I cannot remember the math or how productivity is actually worked out – does it include wages as part of output? Is it about ROI?
I’ll have to look into it, but the eloquent argument here is compelling and points to me that the private sector cannot carry the burden of a country’s output – that you need a proper functioning state sector too – both in fact. As I’ve said before when I build some social housing, I’m employing private sector contractors to solve a social problem of affordable housing need. I am both adding to the output of the private and public sectors.
But it’s so typical of Neo-liberal dogma to work against the very thing it says are its objectives.
All Neo-liberalism is after all is just a dodgy load of arguments to justify being anti-statist – to work against something some of us don’t like. And that’s all that matters – expressing the hate and prejudice – the wider collateral damage is of no importance to these idiots at all.
I suspect the reason we’re so unproductive compared to elsewhere in Europe is we allow buyback and the rest of it, by and large, doesn’t. Instead of increasing production, then, we increase inequality.
The UKs poor productivity is partly a consequence of the low wage / zero hours culture for low skilled jobs. In higher wage economies there is a real incentive to replace many of these jobs with technology, thus increasing productivity while saving on wages.
Our council has a poor recycling system. Of course waste disposal is contracted out. The council signs a contract for specific services to be provided. But as needs change, it still must honour its side of the contract and sign a new contract for the new services needed. Of course if the contractor failed, the council would have to pick up the tab. If the council had kept waste disposal in house, it could simply have adapted as needed. Any money it has saved on lower wages, has simply been less money to feed into the local economy
@ Michael G
My sentiments entirely..
@ PSR
I’m not at all sure that productivity is worth researching – is it not just that contrived and unnecessary subcontracting is logically inefficient?
Agree of course that the public sector supports the private – but I do think that the public sector should be more prescriptive when the private sector is used (as I agree it should be) such as exclusion if say, CEO’s pay was more than 10x that of its lowest paid employee.
But I do suggest that we don’t need contractors for things the state does on an everyday basis.
I know my local (now Labour) council looked at bringing housing maintenance in house and decided it would require too much capital (£2million) so be too expensive.
When they’ve built more housing, (in due course) it will, they suggest, be worth it.
Difficult for a local council of course, but it could start a local debate as something they wished – or ought – to do..
It is interesting that Barnet council has announced an end to its outsourcing everything policy. Admittedly only because it has changed from a Tory-led to a Labour-led council. I hope it will make a huge difference and demonstrate the stupidity of state out-sourcing.
Pilgrim: productivity=(all outgoing costs of input)/(income received from selling output). Fairly simple. It’s very much at the “maths” end of economics and immune to opinions.
Nothing is immune to opinions
Productivity require explanation. That is all opinion
What is the income received from the output of the NHS?
If bankers charge higher fees is the nation more productive?
There are real problems with measuring productivity… but even so, we do have a productivity problem.
https://www.ons.gov.uk/economy/economicoutputandproductivity/publicservicesproductivity/articles/publicservicesproductivityestimateshealthcare/financialyearending2020
This is a good read on nhs productivity.
It will have dipped during Covid , but will get better as the backlog is tackled.
The record has been good.
Fairly simple, but you’ve got the calculation upside down.
Productivity = output / input
Now, how do you measure both. And what are you doing about externalities?
I didn’t even notice…
I’ll go and sit down, quietly
Hope you are feeling better
Well on the mend, thanks, but it is not monotonic: the not so good days are usually followed by better ones, but a good day may be followed by a worse one. From previous experience, I am expecting this to take at least a couple of weeks. Still taking it easy.
Did you see my comment the other day about the June ONS debt figures? Wondered if you were waiting for a good time (no problem if so) but perhaps I forget to post it?
That is my pattern too
And I am registering clear…
I have the comment – but no energy
Tomorrow maybe
Be kind to yourself. The body will take the time it needs to recover.
I recommend reading “Bigger Government : The future of Government Expenditure in Advanced Economies” by Marc Robinson.
It shows that Increased spending on Health and social care , and on dealing with climate change are inevitable and affordable ; but will require a redistribution in spending.
Other countries are already getting on this route . The UK however remains a middle ranking country in terms of both tax and spending.
In latest rankings the UK has risen on spending but a lot of this was unnecessary and wasted on PPE and ineffective Testing .
Truss and Sunak are speaking outside of the need of the times.
Its a lie to say that the UK is a high tax and spend country ; and its a lie to say that individuals know best how to spend money on investment , and improving competitiveness and productivity. It is also a lie that the UK private sector are very good at it either. The countries excess cash has been invested for decades in a bidding war for poor quality housing , boosted in value by shortages.
Post-WW2, with much capital investment, the economy of the UK experienced much growth through the application of engineering, science and practical skills. This resulted in the generation of considerable, national wealth.
Since then, in short, the country has been asset-stripped and the majority of the population robbed of their inheritances. The few benefitting.
The greatest act of criminality on the part of successive governments has been the debasing of our state education system, where many young people, on leaving school, struggle to read and write and do sums. Compare this with the performance of our public schools. QED.
The solution to our social and economic problems is education, education, education (including politics and economic & social history).
David Byrne.
Democracy depends upon knowledge
I am summarising Socrates
Compare other countries public education systems to UK public education systems.
Its a UK problem not a public education problem.
Its a bit like healthcare the problem is that many UK decision makers are not users of state services.
In the UK a public school (also called a private school) is not attended by the general public it is attended by a fee paying elite. The public attend state schools.
How did we ever achieve such confusing terminology? Or was it deliberate?
Cyndy,
It certainly confuses people from other English speaking countries. I think the term “public school” originated before state schools even existed and the term public in that case meant open to enrolments (or applications) from all those who could afford it as opposed to “private” schools whose enrolments were selective and restricted.
An even greater neo-lib inefficiency is that of financialisation, whereby the financial sector that, for the most part, produces nothing, expands at the expense of the real economy. Its a process that adds to the creation of useless jobs like derivatives speculator, hedge fund manager, serial landlord etc.
But that’s another (albeit related) topic for another time I suppose.
This is our great source of low productivity