We published this shorter video at 17.00 today:
Can growth fix our NHS? Will a booming private sector fund schools and care homes? Rachel Reeves thinks so. I don't. This video explains why growth consumes the very people and resources we need for care and education—and why it's time to stop chasing infinite consumption on a finite planet.
This is the transcript:
Rachel Reeves says we can't have better healthcare, education, or public services in the UK unless the economy grows.
But what she really means is that private sector growth must fund the state, and that's not just wrong, it's impossible.
The UK, as a country, has finite numbers of people and resources.
Even with migration, we aren't seeing a significant increase in the number of people working because migrants are replacing those who are now retiring, who can't be replaced by those who are born in this country, because there aren't enough of them.
So, in other words, there is a fundamental physical constraint in this country, and the private sector is competing with the public sector for both people and resources.
So if Rachel Reeve says the private sector has to grow as a precondition of the public sector growing, what she's saying is, there won't be enough resources left over for the public sector to grow anyway, because the private sector will have already absorbed all the necessary resources. What she's claiming, therefore, is something that has to be untrue, and that's because growth in this situation creates scarcity and not abundance.
If more people are employed making luxury cars or financial products, then there are quite simply fewer available to teach, or to nurse, or to care. Reeves' model assumes we can take from the same pool and still grow both, but that's economic nonsense unless, of course, she is making some very big assumptions about AI.
One of those possible assumptions is that the state sector might use AI and significantly reduce the number of people it needs, or alternatively, she's assuming that the sector will do the same and grow without using more people.
There's no evidence that this is really happening on a big scale in the private sector as yet, excluding a few sectors like, curiously, law and accounting.
But there is most definitely a need for people in the public sector.
Can a robot, for example, nurse your elderly parent? I'll put it to you quite simply. It can't.
Can Chat GPT teach a dyslexic child? I'll also put it to you quite simply. I don't think it can.
And can AI diagnose what a really distressed patient cannot explain in simple terms? I don't think it can.
All of those things are impossible because AI can only answer the questions we can put to it. But many people who need care, or support, or assistance with regard to teaching, or whatever else it might be, can't actually articulate what they need.
That's why they need the help of real people. They need human contact, empathy, and judgment. 📍 And those aren't growth sectors. They're care sectors.
Reeves is demanding more private sector growth to fund public goods, but growth in the private sector will prevent resources being available to the public sector.
And anyway, what she's tried to do is promote infinite consumption on a finite planet.
Everything that she's talking about is a trap, and she's walked straight into it. It's as if she didn't see the fault in the argument before she presented it.
Reeves isn't offering a new model. She's actually doubling down on Thatcherism.
She's saying let the market grow and then hope to tax the scraps that are left over.
In any other language, this is trickle-down economics, and because we know the rich don't pay a fair share of tax and markets don't want to fund what people really need, she's actually offering us a fantasy and not a model of sustainable finance.
So what should we be doing? We should be prioritising public services.
We need to properly fund care, health, education, and other public sector activities directly and that means the state has to get at least an equal footing to the private sector, and on occasions, more.
The real question isn't 'How do we grow?' It is 'How do we live well within our means on a finite planet?' And that means putting well-being and care at the centre of our thinking, and not GDP.
Rachel Reeves is wrong. Economic growth is not the answer to any known problem that now exists on our planet, let alone in our country. It's time to ask better questions, starting with how do we make care, education, and dignity central to our economy?
Taking further action
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here.
One word of warning, though: please ensure you have the correct MP. ChatGPT can get it wrong.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Ok, so let’s say we know what Reeve is trying to do, starve public service in favour of private. Say she achieved this and, for example, the NHS collapses. Is there resource in the private sector to pick up the collapsed services? Do private health companies want A&E? Complex mental health care? Do private education companies want dyslexic and autistic kids? Is there the will in the private sector to replace all public services. I can tell you there isn’t, based solely on observation.
And I agree with you.
And none of them will want to deal with the elderly and their multiple comorbidities.
Based on my experience with dealing with private providers for diagnostic imaging I can assure you the answer is no. All they want is quick and easy stuff – in and out the door with as little hassle as possible. Leaving all the complex, specialist and difficult work to the NHS. It’s even written up in their contract – our local private parasite provider only has to do 2.5% complex work. Another reason for NHS staff burnout – the workload is becoming ever more challenging as a result of the previously diluting straightforward cases being mostly diverted to the private provider.
I can tell you from my own experience a year ago that the private health sector cannot deal with anything other than routine cases.
Last year I went to the treatment centre at my local NHS hospital, which is contracted out to a private provider, for a colonoscopy and endoscopy. I had requested sedation. The young woman on duty was concerned when I told her that I have difficult veins, and eventually asked me if I would have the procedures without sedation, which I did.
This was because the private contractor didn’t have anyone trained to cannulate difficult veins. They would have had to get someone from the NHS part of the hospital to do it.
See also the BBC series ‘This Is Going To Hurt’, which may still be on i-player
My brother is regularly treated by a doctor who specialises in cerebral palsy. I can’t see how a private health care provider would allow for, or see the need for, such a specialism. Only a public institution like the NHS, set up to cater to needs rather than profit, could allow for such a thing. Under a system set up to cater to the market, such outliers couldn’t exist.
Agreed
https://weownit.org.uk/act-now/governments-plans-privatise-our-nhs
We own it had a campaign last year called Only the NHS. Followers asked them to make sure that every time they wrote about the NHS they told readers that
Only the NHS
Takes care of patients at A&E — the private sector doesn’t have A&E.
Trains our doctors and nurses — the private sector relies on NHS-trained staff.
Looks after all patients — the private sector cherry picks.
I just wish that more people would take notice and believe them.
I wish they would realise that the NHS will not be there for them or their children and grandchildren as it was in the past.
Considering the cost of the USA health is high enough to make the cost of workers makes the manufacturing cost so high that all USA the manufacturing went to China.
Starmer do you really want to destroy UK all exports.
I thought the mantra of ‘growth’ was always just Tory 2.0 anyway. If the markets grow who are they growing for? The rich who are already wealthy and avoiding and evading tax as a matter of course. The last 40 years or so hasn’t only seen the rise of brutal and draconian economic inequality, but also the political marginalisation of the majority too, and a focussing on the wealthy and wealth and right wing concerns. The last outing of the Tory Party was the very nadir of the whole abysmal and dreadful circus summed up here, and Trump now in America. Lawlessness, injustice, the denial of hope for those particularly at the bottom of the socioeconomic pile and the proliferation of corruption, financial shenanigans, political lies and chicanery as the norm is now an inescapable fact, let alone the price rises and the sheisterism of privatisation of gas, electricity, water and transport. Even the middle class are beleaguered financially. Where that leaves us who struggling financially is nobody’s business and generally those in the establishment and the political establishment do not care. I mention again, and will keep mentioning the 350,000 needless deaths under the last round of austerity under the Tories now being reintroduced by man of the people Sir Keir. So instead of repenting of it all, he and the Labour Party are doubling down for no doubt another round of poor and disabled bashing because we cannot absolutely raise taxes on the wealthy and super wealthy, so let’s genocide the poor, disabled and vulnerable yet again.
What are we talking about here? A society that is wilfully punishing the poor and vulnerable for the greed and avarice of the already obscenely wealthy, so we can shift more money to them so they can stick it in tax havens or whatever. If that isn’t an obscenity on a biblical scale, I don’t know what is.
My personal testimony is that me and my wife are struggling financially and if they are going to punish us and further genocide people what choice do we have but to speak openly about these things? The rich have gone too far. The next political agenda has to be a much fairer redistribution of wealth, which includes taxing the wealthy more, looking at those tax havens, better wages and welfare for the people at the sharp end of the socioeconomic pile, nationalisation of privatised industries, a properly funded NHS and price controls of necessities and cheaper public transport. That’s just the beginning.
Great point about asking AI the right questions.
This question can be entered into the prompt over at https://chat.deepseek.com/ (make sure the “DeepThink” and “Search” buttons are enabled first):
Neoclassical economics relies on the Loanable Funds model but the Bank of England has admitted it uses endogenously created money (https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy). How does the collapse of the Loanable Funds model affect the validity of neoclassical economic theory?
The answer shows that a “reasoning” chatbot can figure out what has completely evaded Andrew Bailey 🙂
Obvious questions that can be addressed to both sectors
1. Productivity
2. What are we hiring people to do? If we have a labour shortage do things like Hand Car Wash’s, Deliveroo etc represent a sensible use of scarce labour
3. Why have so many people dropped out of the labour market? Why not go out and talk to them?
Re your point 3. I’ve dropped out of the labour market – and did so at age 55 too. Although I did go back to work after nearly 3 years it was part time and time limited – and at my choice. Would I go back again? No. I realised in that second time that I’m now too “old school” for the new tech in use, and having had freedom I no longer want to be told where to be, what to talk about etc as happens in the working world. However, having sufficient “wellth” (Richard’s term) I am busy trying to spend my resources into the local economy of pubs, restaurants, cinemas, theatres and so on. Am I still contributing – yes I believe so including paying income tax. Just one person’s drop out story – anecdote, not data!
🙂
Indeed, we have many people doing low productivity jobs that could easily be automated or more automated, these usually don’t meet the financial desires of employees who given a chance could do more productive and better paid jobs. Often they are subsidised by the state, making them an even cheaper option for employers, and they often have low hours and poor job security. Employers feel (rightly or wrongly) that it’s cheaper than investing in improving productivity, and government love it because it keeps the headline unemployment numbers low.
Also in that situation, faced with their only employment prospect being a crap job with low pay/insufficient hours, some people, who can afford to, will drop out of the jobs market.
Clearly, if a load of people are employed in what one might term for want of a better phrase “unnecessary non-jobs” and others removing themselves from the job market because it’s so horrible then low unemployment figures will no longer be indicative of the economy being close to full potential capacity.
Overall national result : very low productivity, high expenditure on in work benefits, generally disenchanted workforce/voters and neither business or consumers spending but hey, the unemployment figures aren’t bad
There is nothing more to exploit. No new boom industry coming – was mobile phones and tech the last hurrah?
The rich want to stay rich and the only way to do this is to rig the game in their favour.
Their spin and their formulas telling us growth works… I wonder if even they believe their own waffle.
I think you’ve touched the eye of the needle with this analysis on so-called ‘growth’, completely exposing the myth and chimera that it is.
And yet, all weekend we’ll have to suffer fools in the media and countless politicians bleating on about how growth will solve our economic and hence societal problems.
As you correctly explain, it’s all nonsense.
Really, the only answer to our problems is education. These blocks of wood masquerading as learned people should start learning real economics and more importantly, start applying it forthwith.
We cannot afford not to.
You really are trying your best to lead them in the direction they need to be moving in. We all need to keep pushing.
A colleague told me of a discussion with Homes England about some state subsidy for some Council built units in the city where he works.
Turns out that the money is available because the private providers – mostly registered social landlords – have given back loads of grant because of high interest rates for the loan portion of their investment – so this money – now having been refused by what are essentially private orgs – is only being made available to councils because of the refusal. Cogitate on that a while in a ‘growth’ context. Council’s only get it if the private sector cannot use it? In this case, the treasury wankers have printed the money and it has to go somewhere and to them, Councils are the ‘last resort’! The last fucking resort!!!!
Anyhow, the bid for the money was submitted and found to be too high. Why? Because the ‘rule’ is that subsidy should be around 40% of the cost only – this is at a time when Councils up and down the country recently asked for a £664 million state cash injection into the now stand alone housing revenue accounts because Councils too are suffering because the government will not intervene in supply markets and are happy to preside over high interest rates.
There was also a discussion about s.106 and the private sector where private developers wriggle out of being required to supply 30% of affordable units on their schemes. Private developers often deliver much less than that, quoting viability (because they only get 52% of market value for the units). Again think of the ‘growth context’. Now, the idea is to go around s.106 and entice developers that way outside of the planning system.
I offer you these recent titbits to illustrate just how fucked up it all is. That we have an anti-government civil service supporting an anti-government government. And as Richard has so ably pointed out, housing is also subject to the Neo-liberal economics of scarcity in order to boost values and rents – monetary factors.
No system like this can ever be justified in my view and is eligible for termination. It can only exist because of vested interests and corruption – moral, ethical and financial.
I am afraid , much to agree with.
I recall hearing Thatcher say that ‘we need to have a thriving economy before we can fix the environment’ or words to that effect.
Well, in the 40y of neoliberal experimentation. the environment has not been fixed. One might deduce that the economic policies followed by successive Tory and Labour governments have all failed. No land of milk and honey.
And now health, education and even pensions have become hostages to fortune. This is going to end in tears.
Do any politicians understand how money really works? How the economy could work were it not for the ideological blindness that afflicts the Bank of England, Treasury , the Chancellor of the Exchequer (natch) and apparently all MPs?
I argue for independence for Cymru and Scotland to hopefully avoid the damage that is coming home to roost in England now and accelerating very soon.
Much to agree with
Richard,
Good blog on public v private sector. I agree with this.
Recently I have been looking into nominal GDP growth since 2010. Various sources but growth was circa 37%. France a bit less. Germany more like 50% and US more like double so an outlier.
As you know quite difficult to get figures for wealth but UK was a similar nominal growth figure to GDP.
When looking at public sector expenditure it looked like we had gone from circa 744bn in 2010 to 1280bn in 2024.
When you try to take inflation into account nominal growth looks much less impressive alongside the reality public sector cost is rising slightly faster.
Hence the establishment’s panic whether Tory or Labour the economic model isn’t delivering much if any real growth for the wealthy despite oodles of tax breaks, guarantees etc.
And the public sector costs despite best efforts are rising faster than economic growth and because of an ageing population likely to continue.
As you say their received wisdom in this situation is that more of the same efforts we’ve seen over the 15 years are still needed.
How their efforts will lead to a virtuous private sector growth public sector growth is beyond me.
I suppose the apparent success of the US in GDP/Wealth still convinces our establishment that they need to keep plugging away.
Economic dogma like religion by the looks of it is impervious to evidence to the contrary.
Perhaps this is the real doom loop.
I am not sure I recognise your data – what are your sources?
Richard,
Sources looking at Chrome internet searches are:
Wikipedia
Statista
Google
Globaldata.com
EC.Europa.en National Accounts
Publications.bundesbank.de
Apologies I’m not more specific. I will remember next time
If austerity is the stick to beat us, then growth is the carrot dangled in front of us.
They must think we are donkeys, not lions led by donkeys.
My husband, my sole carer, needed a cataract operation so 3 weeks no lifting. I apparently need 2 carers for 30 minutes morning and evening. I tried local agencies, but found no takers, so turned to Social Services. They had no joy either and told me that agencies have no interest in rural areas. We’re 3 miles from Whitchurch, Shropshire! So, the only thing Social Services could do was stick me in a care home.
Here I sit at £960 a week for want of 2 carers for an hour a day. That’s the ‘success’ of private services.
I am so sorry, for you both.
I hope your husband recovers soon.
I have never understood why our govt’s haven’t appeared to be aware that thanks to the baby boom we have an older population.
Did they not anticipate older people requiring more NHS help? If not why not.
All the best with getting home @Janet.
Les