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Luckiest 4%

That’s what I was told I was in this week; that’s 4% of the whole world. Now I have no idea whatsoever if that’s true and as it’s what I would consider to be an entirely subjective measure it’s not a statistic I will be dwelling upon. What it did do was made me think about the context being used to put me in the 4% – which happened to be a western capitalist democracy. And I also wondered if the measure had been arrived at by some instrument developed in the western capitalist democratic society, society that values success, worth and even luck in monetary terms.

For a passing moment it just seemed the like most atrocious cultural imperialism of the mind.

‘We think we are more lucky than you.’

*points to anywhere that isn’t the US or Europe*.

I wondered who was mad? Me, who can see the most terrible things going on everywhere: destruction of communities, hate for fellow humans, abuse and neglect of children, lack of care and concern for others, a loss of humanity in our daily transactions… or Them, who see a sick, money-driven consumerist society that values appearances more than wellbeing as a great place to live.

There’s no answer to that.

An Economic Nightmare: Keynesian Growth v Hayekian Austerity

I am no economist, as the state of my bank deficit can testify, nonetheless I have taken some time to try and understand what the hell has gone on with the global economy in the last few years. I lived through the boom and bust of the late 1980s and early 90s and my experience with credit then, gave me a good grounding in how fragile life becomes when we live on a play now, pay tomorrow basis.

On the other hand I still live in a Western capitalist economy, some people live without debt, but they are probably the minority. I learned from the 1980s but I could not entirely mend my ways. I did learn one thing though. Don’t buy a buy now, pay later sofa – that’s just stupid.

And that’s where Friedrich August Hayek comes in. His economic theory can be loosely applied to DFS, MFI and the like. If too many people buy sofas they don’t strictly speaking need, with money they don’t strictly speaking have, we have created a sofa purchasing bubble. The bubble contains too many bums on sofas that will be paid for later, and when easy credit becomes hard to come by, the sofa bubble bursts. Suddenly, the demand for new sofas, or kitchens, or white goods decreases sharply. Companies that manufacture or retail these items make less money and worse might not even be receiving the money for the sofas they sold two years ago. Production slows, jobs are lost; it’s not a pretty sight.

Hayek said that to return to a sustainable model of production, liquidation was inevitable. Liquidation of companies and jobs – that’s the pain of a recession. Sustainable production and the accompanying modest consumption, as a model is not all bad surely? However, in a recession I find I am far more drawn to the Keynsian way of doing things. John Maynard Keynes promoted the idea that government could control the business cycle of boom and bust and that in times such as now the government should spend to stimulate growth. There’s sense in both. The weakness in the Keynsian model is that national government most evidently cannot control the business cyle in a global economy that relies so heavily on the financial sector. The weakness in the Hayekian approach is that he would see us all return to subsistence farming, living hand to mouth whilst the sustainable model of production found its feet.

Given that both these influential economists were knocking about in the 1930s and 40s isn’t it well overdue that we quit with the either or approach, where we put the notionally opposing ideologies in conflict, and try to take the elements that might work in a 21st century context?

Take the state sector in Britain, it is true to say that the public sector payroll swelled under the last Labour government, but the proportion of people employed did not exponentially increase. Employment of workers by the state is unevenly distributed regionally. Putting the same proportion of state sector workers on the dole in areas of low industry and high unemployment is not going to make Hayek’s model kick in, as if by magic. It might work better in the South East, where the spread of private and public sector employment is more equally balanced. On the other hand it might not, and it has not so far. Cutting jobs as George is doing is effectively making the poor poorer and increasing unemployment in places where you are more likely to stay unemployed – which is why Keynes’ growth model is so much more attractive.

Having said that Hayek was right at a fundamental level, which is that false demand for consumer goods will lead to boom and then bust. Equally, Keynes was right about the state spending to stimulate growth either; note no Plan B George Osborne’s announcement about a building programme to enhance rail and road infrastructure – jobs and income to stimulate the economy.

To be bold and try to decide which came first, the chicken or the egg you might conclude that the generation of state income needs people employed in the private sector. I have heard it said that the split for public sector and private sector employment is around 40/60. Apparently it has not changed much in the last half century and was actually the highest it’s ever been, in terms of jobs in the public sector, under Thatcher and not Labour, which is interesting and not much advertised. Therefore despite the private sector apparently driving things we may surmise that the state and the private sectors’ fortunes are now inextricably linked – which probably puts Keynes back in the driving seat. After all, when the banks were deemed too big to fail, who bailed the private sector out – the public purse.

In a sense, the balancing act is to cut carefully and judiciously, not quickly and savagely, and to implement a more finely tuned tax system where the rich, the 1%, are not getting wealthier at the expense of the majority. As President Obama asks ‘Is it right that Warren Buffet’s secretary pays more tax than he does?’ Warren says no, I think Obama says no. Certainly the Occupy movement say no! I am not so naive as to think that slamming the super-rich against the wall and fleecing them through higher taxes is going to generate enough money to reverse the tide, but it is can’t be beyond the wit of man to develop a fairer tax system – the paltry 0.001% levied on bank trades is a joke.

To be fair to the coalition government it appears the Big Society, with its focus on the development of social enterprise at its heart, does aspire to take a combination of Keynsian and Hayekian theory – the state funding new businesses with a heart (not for profit). The problem with this approach is that the cutting of the public sector does not immediately covert into quantities of social entrepreneurs kicking their heels. Becoming an entrepreneur, even a social-minded one, takes a particular vision and skillset, an low aversion to risk and a willingness to work every hour of the day – making money available to set these businesses up does not guarantee a supply of people wishing, or able, to start and run them.

The best that could be hoped for is that voluntary sector providers going to the wall due to lack of funding manage to rejig themeselves into a social enterprise model. There’s another problem too. Sustainable business develops at a steady pace, the subsequent impact on unemployment and growing the economy is a very long way down the line and in the meantime the unemployed (former public sector workers included), especially those in regions of high unemployment, cost the state money and generate precisely zilch state dividends. As much as I fulminate against the current regime, there’s no doubt, particularly set against the Eurozone backdrop, we are in a tight spot indeed.

Here’s some food for thought. I was listening to a radio programme at the weekend that contrasted our Chancellor and his career to date with that of his opposite number, Ed Balls; the link is here. It turns out that although Osborne has been an MP for a number of parliamentary terms, his most notable achievement has been his contribution to consistent team failure (Back to Basics, BSE, four election defeats for his party).

You might well argue that creating the largest deficit in history is nothing to be proud of either (Balls), but Labour’s subsequent management of the crisis did indeed seem to be shepherding the UK economy back to some sort of mini recovery until Osborne came along and put the skids under that with his swingeing cuts, incidentally the largest and fastest programme of its kind ever, in the world. As I personally carried on in some degree of debt having learnt my lesson partially in the last millenium, so did the Labour government and every other Western capitalist government, more, or less. What we are not told by the government when we are being given the message that budget and household deficits are bad, is that debt long since became a commodity in itself. That much of the crisis was caused by the slicing and dicing of debt and the selling it on, and on, and on, in various forms for profit. Bad, wrong, mad? It doesn’t really matter now, it is a fact. And to deal with the situation we have to deal with the facts at hand. Putting growth and austerity into head-to-head conflict with each other undermines both approaches – and in the meantime the Eurozone, lead by Germany and France, try to repackage their member states debts to make them more attractive to traders and our own government offers start-up loans to social enterprises willing to develop and sell more financial loan products to new social enterprises…

And that’s kind of what happens with this whole debt-ridden thing: we all start chasing our tails and it needs to look like we’re not because at a corporate or national level this kind of behaviour rattles the markets, stocks and bonds take a tumble and we are back to chasing our panic-stricken tails in ever decreasing circles. Which is a bit how it felt trying to write this.

It’s broke folks, and it needs some fixing. We need some radical responses to effect some real change. I wish I knew where they were coming from. In the absence of that, we probably are stuck with an ideal of cautious austerity with a little bit of growth. It’s like nursing the Selfish Giant’s garden back to life when the children have all gone away. But before we can do that, the Giant needs to drop the Selfish bit…

Why Cameron is wrong

  • Because his ideology is getting in the way of rational thinking and action contingent on circumstances.
  • Because he refuses to admit that without a real strategy for growth, there will be no growth.
  • Because he insists the world economy is in trouble which is simply not true (last time I looked Asia and the Far East were doing fine).
  • Because he suspects he might be wrong, but he doesn’t know what to do about it; he has painted himself into a corner and he can’t find a way out without leaving telltale footprints.
  • Because even if he is right, he has a way of making it feel wrong.

The whole coalition government shebang seems to be predicated on one enormous gamble: cut fast and hard, shrink the state to fit the Tory persuasion and cross your fingers hoping that, in the full term before the next election, unemployment falls and business flourishes to fill the gap. 
It’s a hopelessly optimistic strategy given the fundamental trouble with the European and US economies, the increase in inflation partly as a direct result of the one tax hits all increase in VAT, and the fact that the pound in your pocket is now worth about 80p (pay freezes, inflation again, cost of fuel and knock on costs).

Cameron cut out the bit referring to personal households reducing their own debts in his conference speech the other week, but the fact that he had it in there at all betrays his deep lack of understanding of the hole capitalism has put us all in: people, business and nations.  The whole damn shooting match runs on debt you prat.  Shuffling notional money around so someone, somewhere can cream off the full fat. 

I heard it put very well on the radio a while ago in relation to the Chinese economy, which is doing ok.  The commentator remarked that they had played the capitalist West at its own game, and beat it hands down: by making tat cheaper than we could make our own tat and selling it to us by lending us money we don’t have.

The system is creaking like rackety ship and what we need is some proper intellectual rigour brought to bear on the economy; not half-baked schemes, total inflexibility and antiquated economic policy. I wonder if Ed Miliband can get that creative. On all evidence so far we can be sure Osborne and Cameron cannot.

The culture of capitalism must keep individuals sufficiently dissatisfied that they continue to seek satisfaction from it, but not so dissatisfied that they reject or resist it outright

Dr William Davies

Resist, reject, recycle. Make-do, muddle, mend, & don’t buy crap you don’t need.

Capitalist Consumerism meets Existentialism: what happens this evening?

We are all hoping London will be quiet tonight, but shops in Hackney, Mare Street have been closing early and battening down the hatches just in case. I am sure there will be many more elsewhere.

My particular interest is that my daughters are staying in Hackney with relatives, last night elsewhere near Leyton. My maternal alarm bells have been ringing for 24 hours now, but common sense says if they stay in the house they will be fine. Perhaps it will be no more noisy than a usual summer’s evening in Hackney…

I was noting how many times the word ‘unacceptable’ is being used by the authorities in relation to the London riots; I have now lost count. Their whole tone is too obvious, insulting to the rest of us who can work out the criminality and chaos on our own. We don’t want words, we want to see some action. Balls to the rewarding the criminals line you’ve been peddling Mr Mayor’s Office – your job is to be seen on the streets you are in charge of, with something more creative to say than lofty rhetoric.

There is a line in a book I have been reading by John Macquarrie – it is discussing the human need to have a basic minimum of things for an existence and then from that foundation a human might begin to realise the uniquely human challenge of self-determination, or indeed simply the self. Without the bare minimum humans are put in a constant state of need. Inversely with too much a human being no longer just has things, rather the things have them.

Too much, too little, they both can amount to the same stunting of humanity, most particularly when one is juxtaposed closely with the other. This is not an excuse for what has gone on on the streets of London, but it is a potent ingredient to throw into the bubbling pot of disenfranchised youth who hitherto no-one much cared about as long as they stuck to maiming and killing each other.

Tradescant House, Hackney - I used to live on the 8th floor, far left

Update @ 18.30

Watching the unrest in Hackney on the television now it strikes me that the groups at the north and south end of Mare Street are in different gang territories: the Pembury and the London Fields. A young man I know told me this morning that his old ‘crew’ from Enfield had been touch yesterday telling to come to the hood and do some shopping. The other areas in London that have been affected will have similar gang problems. No-one is mentioning the gang word yet – too loaded and scary for a nice Tory government to address in the middle of the summer holidays. They need to wake up and admit to what is going on: the heart of London communities are being torn out by gangs and gangs step in to fill voids in society. I started the day with my head in hands, I’m going to end it that way.

Education, education, education…

My mother, who worked in education for her whole life, always used to say that it was a political football; what I never quite grasped was that education is the first knackered old ball a new government reach for when they want a kickabout.

I spoke to the deputy at the kids’ school the other week. The subject of the new government saw her slump in her chair, her face fell. My words in her mouth are that education in schools is just a merry-go-round and there is little new thinking. Instead a sense of: oh here we go… we’ve all get to get out of the red teacup and into that blue teacup on the roundabout and spin round until we are dizzy and sick.

All the news is about cutting funding to our universities and allowing them to raise their fees. Certainly that’s going to make a lot more families think twice about the cost of a degree. Maybe it will put it out of reach of some them. It is a devastatingly efficacious way for the “progressive” coalition to begin to reverse the effective Labour policy of many more young people getting a university education, thereby restoring the natural, elitist order of things. Keeping the majority of people in their place, whilst ensuring we all know that the poor smelly kids will get extra help from a caring regime.

And that’s a problem isn’t it? It’s patriarchal munificence – like chucking a penny in the beggar’s hat. It might help the odd young person follow their dreams and aspirations, but most of them will be left as they are. The Tories may believe in a meritocracy where the Sir Alan Sugars will rise to the top regardless, able to flourish as individuals in a market economy, but actually aren’t they banking on keeping just enough of the electorate in the style to which they are accustomed and not worrying too much about the rest?

I think the main problem, at the root of many ills, is that education in schools has been designed to meet the needs of the market place. Do we really teach kids what they need to be fully-functioning human beings or are we educating future worker bees, drones if I want to be really negative? So many adults I meet don’t know how to think independently and believe what they read, see or hear whilst absorbing capitalist and government messages by osmosis. If people are not taught as children how to learn and think for themselves, what use is school?

Yet the government are in there like Flint, tinkering around at the edges and cutting budgets, because they know best. Schools are factories, and the product is mainly people who conform without challenging the status quo. How can they not be when they are dealing with the quantity of kids that they do. Of course not all schools are equal, some teachers are gifted and inspire children, but even gifted teachers must surely become bowed under the sheer weight of the unequal task, wrapped as it is in unremitting bureaucracy and in a perjorative political climate.

David Cameron and his crew misunderstand humans because primarily they are marketeers selling a product. Today he is going to tell parents who don’t get on with each other that their children are going to be poor, and probably criminal when they grow up. Don’t worry though, Dave is going to fix your problems with the Family Champion scheme. The help offered is of the Victorian kind, where they keep the power and influence entirely for themselves and the effluent is the oppression of others. Until schools are free to produce adults that know that learning is their lifelong right and that their independent thought is vital to resist the pervasive influence of the market, nothing much will change.

43 students went to hospital yesterday, maybe some of them were what the media will brand troublemakers, but I know in my heart there will be at least one brave and independent thinker amongst them. Hope is not quite dead.

George Loveless, Tolpuddle Martyr

Measure for Measure

I’ve had a few things I was flipping about in my brain so I have decided to try and link them together under the mantle of David Cameron’s proposed happiness index. This is the development of measures to ascertain our deepest joy generally, as well as under our new dear Condem government surely. The cost of developing these questions none of us are going to answer is approximately £2 million. I can say from the off, I am not overly happy about that for obvious reasons. Have you noticed how the government say we can’t afford most of this, but at the drop of a hat we can afford that.

Then there is the knotty problem of how to measure such a transient thing as happiness at all. Apparently Tony Blair had a little go at it when he was in charge, but gave up as it was too ephemeral to capture. Not to say expensive I’d guess. Notwithstanding that minor glitch, Dave has set the Office of National Statistics the task of consulting with you and me to find out what criteria we think happiness should be measured on.

What they’ve come up with is not very imaginative I can tell you (here if you care). Have you got a job, have you got cash, have you got an education, do you have any friends, are you healthy, do you recycle and how long do you think that might all carry on? It doesn’t take a genius to work out that what Dave is trying to measure is not actually happiness, but 21st century consumer satisfaction with life. He may as well come round and ask me how much I like my breakfast cereal (I don’t).

Your actual personal satisfaction gets lumped in with: (volunteering, caring). Their brackets not mine. That mean one category also includes anything that could be accused of being spiritually or personally enriching as it mentions art and kulcha. Whoah. Could it really be that in measuring our prosperity you can arrive at a measure of our happiness as if they were always intrinsically linked? Of course being poor does not guarantee happiness, but having loadsamoney doesn’t either.

Mr Cameron may have confused the purpose of our lives (which is, incidentally, to be happy according to the Dalai Lama and that’s good enough for me) with a money-making and production line existence. Fortunately for him, most people meekly morph into conformist consumers that the capitalist societies depend on; those who believe that if they get what they want they will be happy. Actually, I think a fulfilled life is a little more about getting what you need.

to be continued… otherwise it would not be a blog post, more a rant, and my mother is not keen on those!