Money, or: The Fallacy of UK Economics

Central to debate in the run-up to the 2015 General Election was the ‘economy’.

There’s a certain irony to this (though also a grim predictability: the Conservative Party has played this tune at every election since 1979, when it formed an administration which tripled unemployment, squandered the North Sea oil windfall on the increased benefits payments which resulted, and began to inflate an unsustainable housing bubble) as in fact there is little difference in economic outlook between Conservatives, Labour, Lib Dem and UKIP.

Though they certainly differ in the details, all four now fully adhere to a capital- and market-centric system, in which policy is driven (and also dictated) by money.

In this way, we hear arguments from Conservatives that we ‘cannot afford’ services (not only is this untrue in the most simple sense, inasmuch as the UK is the world’s sixth largest state – if we cannot afford something then who can? – it is also untrue in the conceptual sense: for a developed state, the words ‘cannot afford’ are literally nonsense, provided one is committed enough to the provision of what is best for its people to change its own rules).

We hear from Labour that we must ‘work with’ private enterprise to ‘fund’ hospitals, schools, and infrastructure projects (even though in effect this meant the state running up debts which must be ‘repaid’ to those private firms many time over – a little like claiming the £5 you borrowed off Bermondsey Dave at 1,000% weekly interest was a ‘partnership’ to help you ‘meet your immediate housing need’).

The Lib Dems are led to well-meaning but in the end self-defeating money-led initiatives which look progressive only until one spends a moment actually thinking about them (lifting the poorest from tax is a warm-hearted idea, but if one reduces the tax-take in our current system, those who are poorest suffer most, as they are the people who rely most upon tax-funded services).

And UKIP present us with ‘Tory Max’ – the arguments Conservatives might like to make, but have so far shied away from: ‘we can’t afford it’ combined with ‘…and it’s the fault of immigrants and the EU which allows them in’ (even if UKIP’s immigration figures were correct – and it is distressing that a party whose entire raison d’etre is immigration is so often so far from accurate on that – they would still not plug the central, howling gap in all of their arguments: if immigrants are stealing jobs, and tax pays for social services, how can immigration possibly be the reason we ‘can’t afford’ anything?).

In the face of such uniformity of approach (the Green Party comes closest to an alternative – underlying most of its policies is the necessity for a new economic approach – but so far has struggled to articulate it in the face of the blank cliff that passes for economics in the modern UK) it’s easy to forget the central question: why?

It’s a useful question in part because of the direct answers it suggests (perhaps the Conservatives govern for their friends, Labour in fear of the market, the Lib Dems under a mist of misunderstanding of the model and its parameters, and UKIP is literally nothing without the 10 per cent of people who look back rather than forward, always forgetting that like the Doppler effect, the echoes of history may not reflect any truth so much as distance and direction of travel).

But it’s also useful because asking it – perhaps only asking it – opens a new line of inquiry. If we can ask ‘why are things done this way?’, we must then accept that there is another.

From there, we can ask a series of questions ‘how did we come to this model?’ ‘what would happen if we altered this, ditched that, tweaked a third thing?’ can we, in short, innovate our way to a better system?

Because it’s hard to argue that what we have is the best we can do as a species. In the world’s sixth-richest state, the current argument is that we ‘cannot afford’ to improve services – indeed that we must make them worse – even as one million people here rely on charity food hand-outs to survive.

The UK’s five richest families own more money than its 12.8m poorest people, and the former more than tripled their wealth in the years 2010-2015, even as the latter suffered the longest consecutive fall in living standards in recorded UK history.

Some of this is deliberate. The political Right is driven by an economic belief that inequality is good for society, driving production and therefore national wealth (though the current government appears to have forgotten that that wealth is supposed to be used for the good of the nation’s people). But the Tory Party did not invent Capitalism, and far less is it responsible for the existence of money.

In the end, while it may give us a sense of dizziness and shortness of breath to think so, we should conclude that we are not where we are because of some kind of grand plan (whether benevolent, as the Tories claim, or malevolent, as conspiracy theorists everywhere are simultaneously angered and reassured to believe) but by a sequence of unthinking, unconscious accidents.

The discovery of this raw material, at this moment, by a state following this model, led to this outcome. Another material, in another time and place, could just as easily have led us somewhere else.

It’s useful to recognise this because the idea that we are where we are because we ‘must be’ or as a result of some grand plan, prevents thought. It prevents imagination, and it prevents innovation. And those three things are the human race’s greatest characteristics – they must not be shut down in relation to the most important matters facing us as a species.

When it was first used, money was a token. It represented goods, and could be exchanged for goods and services. It was not wealth in itself, nor was it the point of goods and services. It was simply a means to make their exchange simpler and easier.

Yet today, as noted above, money has become something else. It is at the centre of – and is a major determining factor within – all of national and international policy. A tool has become the central purpose of society.

It’s as if we had allowed hammers to become the fundamental purpose and point of all craft and construction – as if we were refusing to build because that cannot be done with hammers, and because all our activity should be about the collection of hammers, and in some cases the free movement of hammers across borders and social boundaries.

It’s absurd. Because it’s the process of exalting a tool to a position way beyond the sensible limits of its abilities and usefulness.

It’s probably not fair to level blame for this. The average politician is generally no more or less intelligent than the average voter (though of course some have been, and have changed the game in sometimes quite striking ways – and they are employed to be more focussed on exactly these issues than anyone else is) and if we have been caught up within this error, perhaps they have been as well.

Even in those cases where some blame could be attributed, it will do us little good now to attempt to hold the dead responsible for the struggles of the living.

And it’s easy to see how in a system in which money has become the central societal element; where everything literally relies on it, is driven by it, and is shaped to suit it, rather than the other way around, politicians and the rest of us are dictated to by it to the extent that even the innovators are trapped within the system and so create debt or come up with ideas which are undermined by the system itself.

But there is an alternative. And we have a responsibility to work on it. To spend our time, rather than blaming the dead, working to improve the lot of the living.

And the first step is to question what money is for.

The fact that this seems like an odd question is central to our problems as a species at this point in our history. The fact is, when someone tells us they want to be rich, instead of simply nodding, or – at best – saying something along the lines of ‘money isn’t everything’, we ought to be asking ‘why?’

Not because there’s no reason, but because the reason, not the money, should be the driving factor. That is, what we do with money is surely more important and enjoyable than simply sitting, staring at figures on a screen, or notes in a pile, and smiling to ourselves – at least, if we are not fetishists (and some of us are).

And this works at a national and international level. What is the point of money? Surely, the only point, if there is any at all, is to provide a decent standard of living for people, to provide housing, food, water, heat and light, to prevent people living on the edge of starvation and death. It’s not to say ‘look at all the money we have’ or to leave it glistening in a pile in the living rooms of the extremely rich.

Because that can’t be the point of humanity. The collection of bits of metal and paper we created and we have assigned value to, cannot be what we aspire to as a species, and cannot be how we judge our success or failure.

And in the end, that is what is missing from the argument about economics – not who is best at saving money, but what is money for, and how can we assure it is used to that purpose?


Osborne’s World; or, how a lack of imagination makes a bad politician

I HAVEN’T BLOGGED for a while – the never-ending job search taking priority over everything else.

But yesterday’s speech from our esteemed Chancellor was just too much for me to pass up.

I’m not saying he’s an idiot – though he is – and nor am I saying he’s deliberately dismantling the state (though that’s also true).

There’s something more insidious than that in his speech. And it’s something which has happened time after time in Tory statements and broadcasts since late 2009 – when they rose from the graves they’d been resting in.

And it’s this: the Tory Party does not argue its stance. What it has done instead for the last three years is to state what the national position IS and say ‘therefore, the following is true/must happen…’

This would be OK, if their starting point wasn’t just something they made up to suit their purposes.

So the following is just one way in which we can ‘turn the tables’ a little. It contains no accusations of lies, just points out where Osborne’s speculum – as later historians will bewilderingly refer to it – fails in logic, and where its foundations are shaky.

So, yeah, blah, blah, blah.

Hugs, etc…

AT THE last election, the Conservative Party used a quote from Albert Einstein to explain the need for a new government.

The definition of insanity,’ its candidates said. ‘Is doing the same thing over and over again, and expecting different results.’

If this statement was ever true (and some claim the physicist never actually said it), the people of the UK could be forgiven for questioning the mental state of Chancellor of the Exchequer George Osborne, after his speech to the Conservative Party conference on Monday.

Mr Osborne has promised that the system of cuts he called for and has dedicated his chancellorship to delivering will continue until 2016 at the earliest.

Since June 2010, Osborne has slashed state employment, decimated public services and cut benefits to those who cannot find work, or are too ill to work.

He told us this was because it was ‘necessary’ – the only way to cut the deficit.

He promised us his cuts would hurt, but that the economy would recover from its damaged state ‘by 2015’.

He packaged the policies as ‘austerity’.

The name itself was an unfortunate choice, as the International Monetary Fund – not a body known for its ‘left-leaning’ views – has since confirmed that the result of all 173 ‘austerity’ packages enacted across the world to date was recession.

And, as in any system in which one ‘tries the same thing over and over again’, the results this time have been the same. Recession.

Mr Osborne’s plan has not decreased the deficit – his one justification for stripping jobs and money from the economy and actually reducing the state’s income over the last two and a half years.

Instead, from April –August this year, the deficit actually increased 22% to £61.3bn, £12.9bn higher than in the same period last year.

Austerity isn’t working. And yet, at the Birmingham ICC, Mr Osborne’s response to the failure of his economic policies to date was… ‘to try the same thing again, and expect different results.’

Mr Osborne has promised to cut £10bn more from welfare spending. He has told us that he will not use taxes – the government’s sole dependable income – to raise money to pay off the deficit. Instead, he plans to rely on cuts.

He says the cuts will come from indexing benefits in line with inflation, cutting housing benefit from the young and cutting benefits for families with several children.

He said: ‘how can we justify the incomes of those out of work rising faster than the incomes of those in work?

Of course, it is difficult to justify such a thing. But it is Mr Osborne, not those who are out of work, who must take responsibility for the fact that public sector workers are receiving lower than inflation wage settlements – for it is his policy.

It is Mr Osborne who must take responsibility for the fact that the private sector is choosing to cut employees’ wages, or increase them below the rate of inflation – for it is his austerity package which means there is so little money in the UK that private firms fear expenditure will force them to the wall.

So the question is not, ‘how can we justify the incomes of those out of work rising faster than the incomes of those in work?’ It is instead, Mr Osborne, how can you justify an economy in which those who work earn less money every year?

To put it another way, what are you doing to increase wages, to make work a worthwhile and attractive option? If you believe people are not working because they are richer on benefits, why not encourage higher wages, to reduce the attraction of welfare?

He asks: ‘How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?

But the cost of houses is not dictated by those who claim housing benefit. It is dictated by those who build houses, and those governments who refuse to take action over ever-increasing house prices and rental costs.

Nor is the housing shortage in this country caused by ‘benefits claimants’ selfishly living in a house. It is caused by factors including land banking by major corporations – a practice the Treasury could combat head-on by introducing empty land taxes – and by a system in which prices have been allowed to increase unchecked, while incomes have been held down at inflation-level or below.

So the question is not ‘how can we justify giving flats to young people…’ It is perhaps more appropriate to ask ‘why can 32 year-olds in full-time employment not earn enough money to afford to move into their own place of residence?’

Mr Osborne asked: ‘How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?

But everyone in the country receives a state benefit – one from a fund into which everyone in the country paid in in the first place – when they have children.

Or at least they did, until Mr Osborne decided to remove child benefit payments from selected families across the country.

So perhaps the question should be ‘Mr Osborne, why are you making life harder for parents, regardless of whether they are in work?’

Mr Osborne then outlined his vision of Britain.

He said: ‘We modern Conservatives represent all those who aspire.

‘Whether it’s the owner of the corner shop staying open until midnight to support their family.

‘Or the teacher prepared to defy her union and stay late to take the after-school club.

‘Or the commuter who leaves home before the children are up, and comes back long after they have gone to bed, because they want a better life for them.

Mr Osborne’s view is indeed an inspiring one, as long as one does not ask the following questions:

Why should a shopkeeper have to open a shop from 7am-12am, solely to earn enough money for their family – who they presumably never see – to survive?

Which teacher has been told by ‘her’ union she must not take the ‘after-school club’?

On the latter point, the NUT and NASUWT have, since the end of September, followed a ‘work-to-rule’ but have specifically stated that teachers who have volunteered to take after school clubs should continue to do so.

Why should ‘commuters’ leave home before their children are awake and get home after they are asleep? Why can’t they earn enough money working sensible hours to provide a decent quality of life for their children?

And does Mr Osborne believe that ‘a better life for their children’ will be delivered by a situation in which a parent never sees their children?

Perhaps, if a decent standard of life for working people is what Mr Osborne wants, he could call for ‘a fair day’s work for a fair day’s pay’?

On energy, Mr Osborne claims the government will ‘open up the newly discovered shale gas reserves beneath our land… so that Britain is not left behind as gas prices tumble on the other side of the Atlantic.’

But even setting aside the fact that energy consultancy Redpoint, advisor to the government’s own independent Climate Change Committee, has pointed out that a gas-based energy production system would cost the taxpayer £23bn per year more than we pay at present for the same power – without factoring in inflation – even the foundation of the statement is questionable.

Because the same report, using the government’s own predictions, along with those of the International Energy Agency, states that: ‘These (groups) envisage rising gas prices in the US and the EU over the next two decades, and a significantly higher gas price in the EU than the US, notwithstanding the potential impact of shale gas.’

Finally, Mr Osborne argues that: ‘Western democracies like ours are being out-worked, out-competed and out-smarted by these new economies. The question for countries like Britain is this: are we going to sink or swim? And the truth is some western countries won’t keep up, they won’t make the changes needed to welfare and education and tax, they’ll fall further and further behind … they’ll become poorer and poorer. I am determined that will not be the Britain I leave to my children, or you leave to yours.’

It is a grim study, of a grim future – and to a man of Osborne’s mental capacities, seemingly a foregone conclusion.

But how are ‘new economies’ ‘out-working, out-competing and out-smarting’ Western states?

In the main, it’s because wages are lower, working hours are longer and social services, such as education, health and sick pay are overlooked in the interests of ‘growth above all else’.

But we have walked a different path, and have used the benefits of our wealth to deliver a better life to the people of the UK.

What else is wealth for? Why become a wealthy state if your wealth delivers no benefit?

Why, in short, should we give up the achievements we have already made – the achievements on which we must build – to become like countries which are less developed than our own?

That is Mr Osborne’s plan A. He says there is no Plan B.

First, why accept as Chancellor a man who refuses to take the time to look at alternatives to a failed strategy?

And second, is UK Plan A really a state in which anyone would aspire to live?