As an enthusiastic purchaser of all Apple products, my attention was caught by an article in my paper, in which it was stated that Apple was having problems selling it latest Iphone. It’s stores are apparently stockpiling unsold IPhones. Today as if in confirmation of this I received an email from Apple offering me generous terms for upgrading my IPhone 5s to the latest model. What I am going to suggest is that Apple itself is in part responsible for its own woes.
Reading this article reminded me of a story about Henry Ford. It might be apocryphal but Henry Ford was considering automating the production line at his Detroit car assembly plant. He spoke to one of his most trusted advisers, who said it is claimed, ‘that if you lay all these men off, who will buy your cars’. Henry Ford considered his friends advice and continued with his labour intensive methods of production and so the story goes sales of his cars remained high.
Apple and all the major manufacturing companies in the US and Western Europe have done the opposite of Henry Ford. They have by outsourcing production to foreign countries where labour is cheap, impoverished many of their potential customers. When the Rover car plant was being closed in Oxford, a study was produced that showed the replacement jobs for those car workers would be in the service sector, where wages were 30% lower than in manufacturing. Similarly in those former mining areas in England, high income mining jobs have been replaced by low income jobs in call centres or warehouses. The same trend is evident in the USA where increasingly the new jobs that there are created are relatively low income jobs in the service sector. If they are in manufacturing they are again likely to be relatively low income low skill jobs. A recent study showed that incomes for men in the USA with no more than a high school diploma showed a decline in incomes since 2007.
Checking with Amazon I note that the price of the most basic IPhone 6s is £524 in UK and the similar model in the US is over $800. In the new age of capitalism when increasing numbers of workers are in low wage economy, they are effectively priced out of the market for expensive smart phones. The wisdom of Henry Ford seemed to have been forgotten by the current generation of business leaders.
What is common to all large corporations is the tax strike, as these businesses use a variety of tax avoidance schemes to avoid to paying their taxes. Usually this involves locating the head office in a low tax location, so corporation tax due on profits on the profits earned from sales in high countries . Ireland is the low tax headquarters for Apple in Europe and Luxembourg is that for Amazon. The scale of corporate tax avoidance is subject to varying calculations, in Britain even the conservative tax authorities estimate the scale of tax avoidance at being a sum in excess of £30 billion, other sources such the sum is much higher. The consequence is that the government’s of Western Europe and have less cash than is normal for the government of a developed country. The consequence is that government’s lack tax revenues to fund those activities undertaken by government and are over dependent on borrowing to finance their activities. This has had a knock effect in that in times of financial stress governments are forced to cut their borrowings and spending, resulting in an age of austerity. This austerity further reduces the incomes of the low paid through benefit cuts and job losses. These newly poor Europeans are unlikely to be customers for new expensive IPhones.
I believe businesses such as Apple face a problem in that by minimising their costs of production in by outsourcing production and by minimising their tax payments they maximise short term profits, at the expense of long term sales revenue. It is the latter which generates real profits for the company and actions which damage revenue streams threaten the long term viability of the business. Car manufacturers have long faced this problem and have overcome that by boosting the income of potential buyers by offering low cost loans for car purchase. Perhaps Apple to maintain sales will have to look to alternate ways of boosting their potential customers income.
This particular economist doubts the wisdom of replacing earned income with cheap loans as an the main means of increasing household incomes. Already consumer debt in the UK is reaching 180% of GDP, a sum which becomes unviable if there is a collapse of the banks, as happened in 2008/9. Borrowed income is more volatile and less reliable than earned income and is a source of financial instability and economic meltdown.
Category Archives: society
The Demise of the Liberal Democratic State and the rise of the Corporate State
Francis Fukuyama was wrong the 1990s did not herald the triumph of liberal democracy, but its showy demise. George Bush’s attempt to impose democracy on Iraq by force demonstrated the folly of this premise. Even the democratic programme that he sketched out gave a dominant role to the business corporations that would effectively control the new Iraq. Giving lie the all the claims about remaking Iraq on democratic lines. Prior to the invasion there was a quarrel between two of the main participants in the invasion over the distribution of the spoils between the victors. British oil companies believed that the post invasion constitution gave too much to American and too little to British oil companies. The chaos of the post invasion Iraq denied the business corporations the influence and income they expected. Although the part of the profitable oil industry that is not under the control of Isis, is run by American oil corporations.
Perhaps it is in Europe that the evidence of the new nation state is best demonstrated. What is developing in Europe is a new corporate state, a state which functions primarily for the benefit of the business corporations? The financial crisis of 2008/9 illustrates this all too clearly. Due to irresponsible lending practices the banks failed, even if only a few crashed all threatened by the crash. Rather than let the banks fail the governments of Europe injected cash into the banks to prevent them failing. In Britain the bailout was equivalent to 10% of GDP, although given the huge size of the banking deficit the government was effectively mortgaging the countries assets and wealth to save the banks. It was not the banks that had to pay the price of their failure but the peoples of Europe. Europe wide austerity was regarded as necessary to reassure the banks creditors of the financial worthiness of the nations that were the guarantors of their debts. A government with small debts would be regarded as a better guarantor of the banks credit than one with large debts. Surprisingly the banks got of almost scot free apart from a demand that they increase their cash reserves to 3% of total liabilities and ring fence retail banking, on which the banks are stalling. The Banks are now asking for the government eforms of an increasingly dysfunctional financial sector. In response to the pleas of the banks the demand to increase their cash reserves to their required total has been constantly put back, nowhere more so than in continental Europe. Despite claiming a government of financial prudence Germany has been one of the worst offenders. Only the other week the government in Britain refused to renew the contract of the chief executive of the Financial Conduct Authority as the banks had accused him of being to hard on them. In Britain as in Europe, what the banks want the banks get.
There are many serious problems that the government in Britain needs to tackle but one of them is not the reform of the state funded broadcaster the BBC. The agreement under which the BBC is funded is up for renewal soon and the government has used this as an opportunity for root and branch reform of the broadcaster. One of the main backers of the winning Conservative party was News International, the largest shareholder in Sky TV. The directors of this company has long argued for a change in the nature of the BBC, a change that would make it less of a competitor to Sky News. Its former Chief Executive James Murdoch argued for a change that would benefit Sky TV. He said in a lecture that the BBC had a role as an innovative producer of TV programmes but it was not its role to exploit those innovative programmes. Once those programmes had been developed they should be given to the commercial broadcasters as the role of the BBC was to experiment not create popular TV. Unsurprisingly the main conservative spokesman on the media has echoed these views. He wants to end the BBC’s role of producer of popular programmes that compete with those of Sky TV. There is little doubt that one of the priorities of this government is to repay its corporate sponsors with favours.
Rather than continue with list of items that illustrate the increasing corporatisation of Britain, I want to compare the British governmental system to that of Russia. The Russian system of governance is often referred to as a mafia run oligarchy. All these commentators that do so fail to recognise the similarities between the Russian and British system of governance. Probably the only difference is in the level of criminality of the oligarchs in each country.
When the Soviet Union collapsed in 1990 the reformers in charge of the country wanted to adopt the free market of the West, so as to enjoy a similar level of prosperity. However they rushed into privatising their stated owned industries, without realising that the free market economies of the West were only successful because the market operated within a strong legal system that prevented the many abuses that occur in an unregulated market. Given what was literally a ground zero, the oligarchs were able to remake the Soviet economy to their own liking. They bought up the businesses at bargain prices and controlled the various sectors of economy, however for complete control they required control of the governmental system. This they achieved through bribery, intimidation and violence. Now President Putin runs a collective oligarchy, an oligarchy that exploits Russia wealth largely for its own ends. Opposition to the oligarchy is suppressed in ways similar to the former communist system, critics are subject to intimidation, often including violent assaults, and if that fails they are sent either to a mental asylum or camp where the mistreatment continues.
The oligarchs in Britain and Russia believe in a similar free market system, that is a free market in any obstacle to the free operation of business enterprise is removed. Obstacles such as trade unions, labour protection legislation and government interference. In Russia there was little too prevent the rise of the oligarch as in a ground zero economy (one in from which the state was largely absent) there could be no effective opposition and by controlling the government they can ensure that none arises. The task for the British oligarchs was much harder they had to create a society that was favourable to the free market (as they saw it). This meant they had to capture government and ensure that it introduced measures to remove all the obstacles to the smooth running of the market. Chief of these is the trade union movement and not surprisingly one of the first measures of this new corporate friendly government is legislation to further emasculate the trade union movement, so as to ensure that it cannot interfere with the smooth running of the market. The proposed legislation will effectively prevent trade unions from striking, so removing the threat they pose to employers.
There is however one significant difference between Russia and Britain. Elections in the former are largely controlled by the state and there is never any likelihood that the opposition can come to power. In Britain elections are open and fair and the opposition can become the government. However the two main political parties are coming to resemble each other, when the opposition criticises a government policy, it is not so likely that they disagree with the policy as believing that they could implement it better. Increasingly the two main parties are becoming the mirror image of each other, but are committed to the philosophy of Neo-Liberalism. Unfortunately elections are increasingly becoming a competition between the groups competing to be the representative of corporate Britain. One of the main concerns voiced by competitors for the leadership of the opposition party is that the previous leader was too distant from the corporate interest. Unfortunately too many politicians now see politics means to win a seat on the board.
The recent history of the Greek crisis shows how dominant is the corporate interest in Europe. When the Greek crisis caused by the nations over indebtedness occurred, the European policy makers could have agreed to a restricting of the Greek debt. This restructuring would have either involved pushing debt repayments in some time in the distant future or forcing the nation’s creditor to take a ‘hair cut,’ that is force them to accept a downsizing of the Greek debt. Either of these policies would have hurt the corporate interest, that is the banks would have lost billions of Euros in the ‘write down’ of the loans that they had made to Greece. Instead the European politicians forced on to the Greek government a programme Neo-Liberal market reforms. These policies were intended to make the Greek economy more competitive and boost exports. The surplus earned on the export trade could be used to pay of the Greek debts. Unfortunately this Neo-Liberal experiment failed and after five years of austerity, economic growth has stalled and GDP is down 25% making it increasingly unlikely the debt will be paid.The International Monetary Fund states that payments on Greek debts should be deferred for thirty years, as only then will the economy have grown sufficiently to enable the Greeks to begin to pay off their debt. Despite the urging of the USA the European politicians stubbornly support the banks cause and refuse to allow the Greek nation any debt relief.
Quite possibly the triumph of the corporate state is best demonstrated by the proposed Trans-Atlantic Trade and Investment Programme (TTIP). When this treaty comes into force any business corporation that believes government policies have caused it a loss, can refer their case to an international arbitration panel. This means that if government legislation aimed at limiting the harmful effects of tobacco restricts the sale of this product, the tobacco company can go to the panel asking for compensation or a revoking of the act. There is one such dispute between a South American company and an American Tobacco giant. Soon such actions will become common place and the sovereignty of European governments will be undermined. In Britain at least too many politicians are in favour of this policy, as they believe their support for TTIP will earn that a well paid position with one of the business corporations, they will willing surrender power for cash.
There is one failing of the corporate state and that it is remarkably incompetent, in that it lacks the competence to deal with a major crisis. The banks only survived the crisis of 2008/9 because they were supported by the government. There will be other such financial crisis in which business corporations will only survive with the support of government. There is in Europe the unresolved debt crisis, not the one of popular imagination but the combined private sector banking debt. A debt that in Britain exceeds 400% of GDP and in Germany 324% of GDP.
These business corporations have only a narrow minded view of the world a view one that is focused on their own self interest. The banks in Britain have been campaigning successfully for an end to restrictions on their less desirabale activities and the government has complied. It has largely passed unnoticed but at a recent City of London banquet the governor of ‘The Bank of England,’ said he saw no reason why banks should not be allowed to increase their assets to 900% of GDP. The majority of a banks assets are loans which are funded by borrowing from others, so if Mark Carney has his way the debts of British banks will rise to astronomic levels. There will at some time be a crash that in scope will exceed that of 2008/9. A crash of these dimensions would force a collapse of the corporate state as the government will be no only body with the authority and power to avert the collapse and rebuild the damaged society. One economist Anne Pettifor has written a book called ‘The First Word Debt’ crisis, a book which is ignored by all European politicians. Rather than act on the basis of the precautionary principle, the European politicians seem to act on t’he eyes firmly shut’ principle.
All political systems contain within themselves the seeds of destruction, in the social democratic society of the past it was the conflict between the major business corporations and society. A conflict that the former won. The corporate state is more unstable than other political systems as there is no great vision or commonality of view that unites the community of business corporations. The only commonality is their hostility to any regulation of the free market and in reality they are a number of social units all pursuing their own self interest. This means that the corporate society lacks the strong mechanism for directing society to towards a greater end other than mere self interest, lacking this overarching powerful body, society can only fall apart in the event of being struck by an economic or social tsunami.
The great floods that devastated New Orleans demonstrate how the new corporate state fails to cope with crisis. Cuts made to the emergency and environmental services made at the behest of a business dominated tax cutting government had left these services unable to respond adequately to the floods and their inaction prior to the flooding worsened the devastation. The levies that protected the town were in a state of disrepair and unable to resist the tidal surge and broke. All the world could do was watch in horror as the American government failed to halt the destruction of New Orleans.
The failure to resolve the Greek crisis points to a future crisis in Europe. Greece is but a small country accounting for but 3% of the European Union’s GDP, yet the European Union struggles to find a solution to its problems. It’s only success is in replacing the various democratically elected governments that are hostile to its austerity programme. Greece only rid itself of the military junta popularly known as the Greek colonels in 1974. The Greek army is the one institution that has not been devastated by the Neo-Liberal reforms imposed by the EU and it may be the only body that is capable of eventually restoring social order after the havoc caused by the latest austerity and reform programme. Possibly this is the future for us all as the failures of the Neo-Liberal or corporatist state can only result in its replacement by authoritarian state supported by the military. The pro business agenda so having hollowed out the democratic state its institutions lack the resources to respond to a major crisis. This is demonstrated by the financial crash of 2008, the Chancellor of the time commented in a newspaper article that the crash was imminent. Yet despite this knowledge the government and Treasury were incapable of taking any action to avoid the crash, much like a rabbit that is frozen by fear when faced with the headlights of an oncoming car.
The Deceivers
Theology with its emphasis on ‘other worldly’ experiences appears to be at the opposite end of the spectrum of thought to economics which deals with the mundanity of every day existence. It’s a science of facts far removed from the speculative thinking of the theologians. Yet this is a false understanding of theology, as it can be as every day as economics, the only difference being the approach to life. A theology that had no relevance to daily existence would be pointless subject of study. Adopting something of the perspective of theology would be of benefit to economics.
What I intend to do is demonstrate how an analytical framework taken from St.Augustine’s Fifth Century classic, “The City of God” can be used to explain developments in the economy of today.
The City of God & the City of Man | Koinonia palamas.info
Although Augustine’s book is primarily intended to explain why the eternal city of Rome fell to foreign invaders, what interests me particularly is Augustine’s account of the role of its Gods in Roman society. The Roman’s assumed one of the reasons for their success was their fidelity to their ancient Gods. Castor and Pollux the heavenly twins were thought to have intervened in a crucial battle to assure the Roman army of victory. In gratitude to the two Gods the Romans constructed temple in the forum for their worship. When Rome fell it was thought by some that the cause was the abandoning of the worship of the old Olympian Gods, the Gods who had always stood by Rome and ensured its survival and success. Augustine suggested a very different Christian version of Roman history
The Olympian Gods were for Augustine not Gods but demons who lead mankind astray. Stories about these God’s such as Zeus’s rape of Europa in the for of bull demonstrated their demonic nature. The nature of these Gods was capricious and cruel. Apollo was for instance challenged to a music contest by the satyr; unfortunately for Marsyas he was judged the loser and for having had the impudence to challenge a God Apollo hung him upside down and flayed him alive. Roman cities that had temples of Mars, chained the statue to the temple in the hope that the God would not wander and provoke war with a neighbouring city.
Augustine saw these God/demons as having bodies of air and circulating around the earth in the atmosphere waiting for the opportunity to intervene in the affairs of men and cause mischief. Misleading mankind was not difficult for them as all men were corrupted by original sin and easily corrupted. Despite pretending to be protectors of Rome, they had according to Augustine in fact allowed it to be sacked in the past by the Gauls; so the sacking of Christian Rome by the Visigoths was little different from the sacking of pagan Rome by the Gauls in earlier centuries. The visions and dreams that Roman’s had of the God’s which they thought gave them insight into future events, were nothing more than trickery intended to mislead the dreamer. On innumerable occasions Roman Emperors and Generals made sacrifices to the God’s to ensure victory. Yet on so many occasions instead leading their armies to victory they led them to defeat.
The Gods for Augustine were the deceivers of men, leading them into error from their own sense of mischief. This concept of a group of deceivers leading mankind into error by making deceptive promises is a useful concept when it is shorn of its supernatural context. I would like to recast Augustine’s concept of a world of men mislead by a race of demons into a more human form. Rather than seeing original sin as the corrupting element in mankind, I see ambition as the corrupting element, something best expressed in the term vainglory. Leaders wish to be remembered in history as men and women who changed the world for the better. While this is a laudable ambition it can led them into following certain practices or beliefs which they believe will improve the lot of mankind, but which in fact does the reverse. Unlike the demons of Augustine these deceivers often deceive themselves as they really do believe that they have discovered the holy grail of human betterment. The current race of deceivers are not demons but Neo-Liberal economists and philosophers.
These philosophers and economists have been campaigning actively since the 1970’s for the adoption of Neo-Liberal economic policies and the creation of a free market society, one largely free of government intervention. The argument in the 1970’s by these economists was that by freeing markets to find their own equilibrium there would no longer be any foreign exchange crisis, as currencies would freely move up and down to their natural level. (This was a time of crisis when the IMF was constantly having to bail out countries such as the UK which were experiencing such crises.) Despite that the world has not seen an end of foreign currency cries. However Neo-Liberal economists would assert that these have been due to governments not wholeheartedly adopting the Neo-Liberal agenda.
The UK is one of the countries that have most wholeheartedly adopted Neo-Liberal economics, through the practice of supply side economics. Supply side economics stated that the cause of economic under performance were the various restrictions imposed the markets that supplied the factors of production, in particular labour. Following these policy prescriptions the government almost completely destroyed the powerful trade union movement and removed most of the employment protection measures that previous governments had imposed on the labour market. The UK now has one of the most flexible labour markets in the developed world, a market in which employers have few restrictions on how they use labour. Yet the UK is not an economic success story, 1 in 3 workers in the UK are receiving less than the living wage, having to rely on government handouts to held them pay for their accommodation, food and clothing for their families. The trade deficit also has spiralled out of control, in the 1960’s it averaged 0.2% of GDP, whereas today it is 30 times larger at 6% of GDP. Despite all the increased flexibility in the labour market, the productivity of the average British worker is significantly less than in our European partners such as Germany or France. However Neo-Liberal economists continue to assert that the economy is healthier than ever, usually citing some statistics to prove their point. They are self deceiving as many of the statistics that really matter show an economy that is performing badly.
However the self deception is largely that of the politicians, as economists have always known that changing to a Neo-Liberal economy would create a substantial group of losers. The deception has been in that they have always dismissed the losers as a small and insignificant minority. Those British economists asking for reform in the 1960’s argued for an unemployment level of 3% and for those economists this would be made up largely of those people temporarily unemployed and who were between jobs. However the more influential have been the public choice theorists and Neo-Liberal philosophers such as Ayn Rand, who have argued for a more social Darwinist approach to public policy making. Ayn Rand argued that the poor had little place in society as they contributed little to it and saw starvation as one means of reducing the number of useless mouths. (Atlas Unshrugged). She has been extremely influential in British political circles and her followers have been effective in creating a society wide contempt for the poor, which has led to a whole series of measures directed against them. These politicians have never gone so far as advocating the starvation of the poor, but they have implemented policies that have impoverished them. What these deceivers have been successful in doing is portraying the poor as the OTHER, a group to which the majority never belongs. They have successfully concealed from the public imagination that disabling illness is not confined to the poor, but it can affect anybody and only the richest can avoid being driven into poverty by disabling illness.
Perhaps the worst of the deceivers are the public choice theorists who pretend that privatising public services will only create winners as we all will benefit from cheaper public services. However these are labour intensive services and cheaper services can only be delivered through reducing the incomes of the people working in these services and through worsening their conditions of service. One very effective way of doing this is to abolish extra payments for working outside normal hours, or by using zero hour contracts, by rewriting the terms of employment or using temporary agency staff. All of which enables the employer to get more for less. Today my dustbin was collected by the refuge service on a day which for most is a public holiday. In past I had to wait until the day after the public holiday. While most people will probably appreciate the fact that there is no break in the service; I am concerned that the families of the three men on the lorry are deprived of their company on a holiday. Am I in a minority in preferring to have my bin collection delayed by one day so these men could have a day with their children?
These Neo-Liberal deceivers have succeeded in portraying those who lose as a consequence of their reforms as the losing OTHER. Yet there is a danger that this other might become the majority should society move backwards in recreating the widespread hardship and misery of previous eras. These economists, philosophers and politicians have successfully deceived the majority by portraying their changes as necessary if society and the economy are to prosper and that the only losers will only be the insignificant OTHER, not them. Yet the purpose of a Neo-Liberal agenda is to create a large impoverished serice or underclass to service the deserving better off minority(?). In fact in 2011 a group of politicians published a book which blamed the poor for their plight, they were poor because they lacked the work ethic. I don’t think it’s wrong to compare the Neo-Liberal deceivers of today with Augustine’s demons, as both promise a better tomorrow, while in fact intending the opposite.
Scroogism the principle at the heart of the New Economics
Washington University Political Review
Scroogism is key principle at the heart of the new economics, that is economics as practised since the 1980’s. This can be explained by reference to the opening pages of Charles Dicken’s novel Scrooge. When he arrives home from the office, Scrooge gets an unwelcome visit from two of men collecting money for distribution to the poor at Christmas. His famous answer is, are there no longer any workhouse or prisons in which the poor can be housed and fed. The assumption at the heart this tirade is that money should go to to those who deserve it most and who will make the best use of it. Men such as Scrooge a banker and trader who will invest it wisely to create more wealth. Any money going to the feckless poor is wasted, as in their folly they will only squander it. A philosophy best expounded by the politician who said installing bathrooms in the houses of the poor was the height of folly, as they would only use their baths to store coal.
The belief that money is best kept in the hands of the deserving rich and out of the hands of the undeserving poor, is one of the core beliefs of the new Neo-Liberal economists. If money is in the hands of the entrepreneurs of society, ‘the great movers and shakers’ society will benefit from the activities of these people which creates more wealth for society to enjoy. Fairness is redefined, the majority of wealth created in society should goes to those that deserve it most, that is the wealth creators. The poor are poor because they create little in the form of wealth, their poverty level wages are fair recompense for their lack of effort and skill. The beggar who so inconveniences the theatre goer by asking for money at the entrance to the theatre is there because he deserves to be there, it’s his own fault.
Whenever their is any debate about welfare or the plight of the poor in Parliament Scroogism is seen at its most active. When parliament ever approves giving money to the less well off its only ever given on the most niggardly of terms, the unspoken assumption is that he poor are poor because of their own failings. Benefit caps are imposed or penalties are imposed on the most of undeserving of the poor. Parliamentarians are loath to throw good money after the bad, that is giving it to the poor, whereas they are over generous in giving tax breaks, subsidies and grants to the deserving rich. Some of the richest landowners in the country receive hundreds of thousands of pounds from the tax payer in agricultural subsidies.
Scroogism is the hypocrisy of the well-off, it’s provides a moral justification for ignoring the needs of the less well off. This hypocrisy is best demonstrated in the debate on social mobility. Rather than give money to the poor, they will be given ever opportunity to better themselves, that is become one of the better off. In what can only be described as cover for the inherent meanness and nastiness of the prevailing philosophy of Neo-Liberalism, the poor are to be helped to become one of the well off. A good education is seen as the best means of achieving this, consequently there is in education a ‘constant revolution’ in teaching methods and practise. While this ‘constant revolution’ has achieved little in practice, it gives politicians the sense of moral superiority in that they are doing their best to help their inferiors. If the recidivists among the lower orders reject there help its nobody’s fault but there own.
There is one fact ignored by the politicians who preach the virtues of social mobility, if people are to move up the social scale this can only be made possible is some move down. Whether well off parliamentarians and the class of well to do, recognise this fact either unconsciously or consciously, they do their best to prevent anydownward movement as this would harm them and their families. In Britain the barriers of social exclusiveness give it one of the lowest rates of social mobility in the developed world. Education provision is strictly rationed according to income. The quality of education varies according to the income of the pupils, an apartheid of wealth applies. In the wealthy suburbs pupils receive an education that is beyond the dreams of those living within the impoverished areas of our cities. Given that the children of politicians are educated in the wealthy suburbs, it is going against human nature to expect them to sacrifice the advantages that their children enjoy to benefit the poor.
The only effective way of increasing social mobility for the poor is to increase their income. If a family has sufficient income they will keep their children in school to enable them to gain a higher education. Wealth is a qualification for citizenship, the individual on a low income, who perhaps has two jobs, who suffers from insecurity of employment and tenure, will lack the time and confidence to participate fully as a citizen. They know that their social situation excludes them from full citizenship. A confident well resourced class of the less well off would exert pressure on the socially exclusive social system to provide ‘real’ opportunities for their children to join the social elite. What is needed is a political and social revolution similar to that which developed forbtge organised working classes of the nineteenth century.
What economists will never tell you and what politicians prefer not to know
Gordon Brown when Chancellor of the Exchequer was responsible for the infamous quote, ‘No return to boom and bust’ and then when the economy went bust in 2008 he had to retract his words. There was even the Stalinist rewriting of history when all references to this quote were removed from the Treasury website. Possibly Gordon Brown is amongst the cleverest of the Chancellors of the Exchequer that we have had this century, yet he got it all so wrong.
What his Treasury advisors should have told him was that the trade cycle is an unavoidable feature of capitalist economies and that all politicians can do is ameliorate its worst effects. There are invariably periods of boom followed by bust. A quick glance at history would have shown Gordon Brown the truth of this. In 1990 there was the collapse of the property boom, which bankrupted many property companies and in 1999 there was the collapse of the dot.com bubble. The latter bankrupted GEC which at the time was Britain’s largest electrical engineering company. A bankruptcy caused by paying too much to purchase a series of over valued software businesses. It does seem that with the bust of 2008, these financial crisis’s seem to occur every nine years. Unfortunately the current Chancellor of the Exchequer seems to be demonstrating a similar naivety to his predecssor about the economy. He claims to have put the economy on a sound footing and his preventative measures will prevent a repeat of the crisis of 2008/9. If history repeats itself there will be a financial crisis in 2017, something of which he appears oblivious.
Why is there this constant misreading of history? One reason is the arrogance of both economists and politicians. Economists having discovered in the free market the equivalent of the economists philosopher’s stone cannot believe that there are times when the market will fail. If the free market is the best possible of organising economic activity and can’t be bettered, it is foolish to look for non-existent flaws. Any economic crisis is not caused by any dysfunction in the market it is the politicians who fail to implement policy correctly, it’s human not market failure. There are economists who claim that the financial crash of 2008/9 was not due their lack of regulation in the financial markets failing to rein in the irresponsible banks but through there being too much regulation of the banking industry. Although economic reality intrudes all too often when the economy takes a down turn, economists prefer to ignore this inconvenient fact.
Peter Cook in a scene from the film ‘The Rise and Rise of Michael Rimmer’
Economics should not shoulder all the blame for the belief in what can only be best described as a preference for the economics of fairy land. The message has to be doctored to meet the demands of the economist’s political masters. Economists must be on the message politicians only want good news.
The new politics can be best explained by reference to a Peter Cook film, ‘The Rise and Rise of Michael Rimmer’. In this film Michael Rimmer on becoming PM cuts the defence budget to finance a tax give away. When faced with the disgruntled generals he shows them a film of the marvellous new weapons that he has purchased for the military. The generals immediately praise him for his policies, even when he tells them that the weapons they have seen featured on a film don’t really exist. What matters is what appears to be, given the guarantee of their jobs and incomes the generals are only to happy to acquiesce in the disarming of Britain. All party leaders now have their coterie of ‘spin doctors’, whose job is to make bad appear good. Politics is increasingly coming to resemble the public relations industry and as a consequence policies are never subject to proper scrutiny, as any policy debate within a political party is increasingly seen as an example of disunity. It is one of the many assumed truths that voters don’t like political parties that appear disunited, so politicians will do all they can to avoid appearing disunited, so any of story will do as long as all party members stay on message.
Not only is this a society in which appearances matter more than the truth, it’s also a society that prefers to avoid unpleasant truths. The economist or politician that disrupted the pleasant complacency by voicing inconvenient truths is vilified and silenced. When Alistair Darling (Chancellor of the Exchequer) in 2007 spoke of an impending financial crisis he found that he was a lone voice speaking the truth. There was no politician or economist who spoke in support of him. Some politicians and economists would have known he spoke the truth, yet all preferred the pretence of the ’emperor’s new clothes’, that is were willing to keep up the pretence that all was well. Not even opposition politicians spoke in his defence, as they did not to be seen to be going against the preferred wisdom of the times.
What I am saying is that as economists and politicians have abolished the trade cycle, at least in their imaginations, any economic downturn will be the unexpected event that catchesus all by surprise. It should not have happened, it came out of nowhere, was the reaction to the crash of 2008/9.,Famously the Queen asked why no economist correctly predicted the crash. She failed to get any meaningful reply from the collectivity of academic economists, as any truthful response would have meant admitting that all their theorising and policy recommendations were wrong.
“Untergang der Titanic”, conception by Willy Stöwer, 1912
Can I put it in terms of the Titanic metaphor, would the passengers of that ship wanted to know that it would shortly strike an iceberg, which would cause the ship to sink and most of them to drown? No they would have preferred ignorance, so as to enjoy the last moments of their life without it being spoilt by a knowledge of their impending doom. However what they would have wanted was the captain and crew to have prepared adequate means of evacuating the ship in the case of it sinking, so as the minimise the loss of human life. Economists by ignoring the existence of icebergs (economic downturns) fail to prepare adequately for them and fail minimise their negative effects on society.
Britain’s policy towards its ageing population, an example of the inhumanity of current economic practice.
Cassandra by Evelyn De Morgan (1898, London); Cassandra in front of the burning city of Troy at the peak of her insanity.
Being an economist you are given an insight to society’s social and economic problems denied to others. There are times when like Cassandra you regret that insight, as apart from feeling anger there is nothing that you can do to prevent the disasters you foresee happening. Cassandra could not prevent the fall of Troy and alternative economists such as myself are powerless and are unable to change the foolish or cruel economic policies of governments.
One of the problems obsessing the current generation of politicians is how to afford the pensions and care demanded by an ever growing number of elderly people. Given the predominance of Neo-Liberal thinking, the only option considered is how to reduce the cost of incomes and care of the elderly. What is never considered is how to enable the elderly to maintain a reasonable standard of living and to enjoy a reasonable level of care when they become physically frail. As a consequence, the current generation of politicians have decide to reduce the cost of pensions by increasing by stages the age at which state pensions will be paid until it reaches the age of 70. They are at the same time freeing employers from their obligations towards their employees, which includes paying a pension. Only one option occurs to this current generation of politicians, which is to reintroduce poverty as a necessary accompaniment to old age.
Increasing the pensionable age to 70 is promoted as a positive change as most people will live to an increasingly old age and their years enjoying a pension will remain unchanged. However this ignores the problems of old age; while medical,advances have extended the life span, what they have not done is abolish physical frailty. Given the arduous physical nature of much work there are many occupations in which work is not practicable beyond a certain age. In the building trade it has been the custom that once a worker through ageing becomes to infirm to work as a bricklayer or labourer, they are given the job of tea boy. There are only a limited number of such tea boy type jobs available. No politician has considered the cost of transferring the burden of income from pensions to welfare payments. Although to be fair to the government welfare payments are considerably lower than pensions and are discretionary, so their is plenty of scope to refuse or reduce payments to reduce the cost of the elderly.
When Bismarck the German Chancellor was faced with the demand for pensions from the veterans of the 1870 Franco-Prussian war, he asked at what age do the veterans die? When he was told 65, he said that will be the age at which pensions will be paid. Similarly when in the 1960’s most male teachers who retired at 60 died at 63, there was no concern about paying pensions. The government was making a healthy profit out of the public sector pension scheme, as payments into the fund greatly exceeded payments. Increasing the pension age to 70 has the unspoken intention of decreasing the number of claimants. The average age of death for men is 78, which means 50% of men die before the age of 78. Increasing the pension age to 70 will deny an increasing number of the elderly of a pension. It is no surprise that given these figures there are a number of politicians arguing for the pensionable age to be increased beyond 70. To put it simply if the pension age is increased to an age at which the majority of an age cohort do not live to collect them, the government pension fund will be in surplus.
Unremarked on by commentators is the other approach to reducing the cost of pensions and that is to reverse the trend toward an ever ageing population. If there is a gradual reduction in the average age of death, the cost of pension provision will be much reduced. Rather than an explicit policy, this is one British governments have drifted into unconsciously, through their indifference to the welfare of their people. There are precedents for this most notably in post communist Russia, where in the chaos of the post Soviet years the life expectancy of men fell. There the average life expectancy of men has fallen to 64 years and of those men that die before the age of 55, 35% die of alcohol related illnesses. (BBC News 31 Jan 2014). In Britain the government has stumbled into a social experiment in which the people are now subject to unrestricted alcohol sales. Alcohol sales have increased and anecdotal evidence suggests that the British are the binge drinking champions of Europe. Excessive alcohol consumption is damaging to health as alcohol includes a toxin (ethyl alcohol). There is evidence for the damaging effects on health, but it’s effect on life expectancy have not yet become evident. There is one tragic victim of the British booze craze, the child that suffers foetal alcohol syndrome. These children suffer brain damage and possibly physical disfigurement. Government estimates suggest that there may soon be a million such children in the UK. None of these damaged children will live to the average British life expectancy of 81 for men and women (World Bank 2012). While the numbers in Britain that have similar drinking habits to the Russians is still relatively small, the number is growing and will impact negatively on life expectancy. A government that is indifferent to the welfare of its people, but overly concerned with the welfare of the private alcohol business (doing all they can to facilitate their profit making) can expect to preside over a declining life expectancy.
Glasgow is notorious the heavy drinking of its male population and in 2013 the average life expectancy of the Glasgow male was 72.6 years, six years less than the UK average. (The Guardian. 16.04.2013) Obviously with the English drinking habits increasing resembling those of the male Glaswegian, the government will get a bonus when having increased pension age to 70, an increasing large minority of the age cohort never claim their pensions.
The main factor in increasing life expectancy has been the improvements in the standard of living, which was particularly marked in the years of social democracy. I as a one of the many ‘baby boomers’ benefitted from this benign period in British society and it is us healthy sixty year olds that are pushing up the average life expectancy. However Britain has embarked on a policy of reversing the rise in the standard of living for an increasing large minority of the population. If the current impoverishment of the middle classes continues it could be the majority that experiences a decline in their living standards. Governments have adopted the policy of making Britain the low cost or low wage capital of Europe. This has involved the deregulation of industrial practice allowing businesses to only have minimal regard for the welfare of the workers. Gresham’s law states that bad money drives out good money, but it should be better applied to British business where bad employment practices drive out the good. This is illustrated By this example, Sir John Randal announced the closure of his department store in Uxbridge. One of the main reasons for closure was his inability to compete with other retail outlets that used all the unfair working practices of low cost Britain, zero hour contracts, split shifts etc. His business was penalised for treating its staff well. In low wage Britain poor diet and poor housing will lead to an increase in poor health and a consequent reduced life expectancy.
While it would be wrong to accuse our leading politicians of deliberately embarking on a policy to reduce the life expectancy of many British people, they cannot be excused from not knowing the malign effects of their policy decisions. They as a group have opted out of any responsibility for ensuring the welfare of the people. What they are collectively guilty of, is desiring a return to the society that prevailed in the 1930’s one of low wages, poor health economy and a limited lif expectancy. In the Britain of this time it was regarded as a boost to health, as if all teeth were removed when w person in their twenties still had healthy test, they would avoid all the problems of bad teeth in later life. Politicians may use words that minimise the inhumanity of their policies, removing labour protection legislation is renamed the creation of a flexible labour market. Just like the American politicians who during the Vietnamese war called civilian deaths collateral damage, so in modern Britain the collateral damage of our leaders economic policies are poor health and a reduced life expectancy. I can find no other words for it that as a social experiment in the practice of ‘cruel economics’.
Religious mysticism and economics
Javanese Mystical Beliefs The New York Times
All my adult life I have been trying to come to terms with what I learnt in my undergraduate philosophy classes. Coming from a relatively isolated rural Anglican background I had a belief in moral absolutes such as good and truth. Such terms where regularly used in conversation in my rural community, local villains were known as such and there was no ambiguity in our moral understandings. However at university I was introduced to a critical philosophy that undermined my belief in moral absolutes. One such example were the writings of Gilbert Ryle in which he dismissed the concept of a moral good. Good he explained was a term incapable of definition, as people would give differing explanations of what good meant, therefore could could be no more than an emotion. The same philosopher dismissed human consciousness as the ‘ghost in the machine’. He was sceptical of the notion of a special quality called consciousness existing apart from the biological mechanisms, which produced emotions and feelings. The idea of self was suspect, it did not fit with the understanding that biologists had of the human being. Consciousness and self were unscientific, their existence could not be proved, so it was illogical to believe in them. I guess I like many students felt the moral tectonic plates shift beneath my feet and realised the moral truths in which I believed had no firm foundation. Using the biblical analogy I was living in a house built on the shifting sands of contemporary morality.
However these relativist philosophers had not abandoned any notion of moral good. In practice they saw good as having some functional value, they behaved as would good men and women. They were fair in their treatment of us, turned up regularly to lectures etc. If they had behaved immorally the whole system would have collapsed. The first lesson I absorbed as that even if they did not see good and truth as moral absolutes, they saw them as having a practical utility.
I never really abandoned my Anglican beliefs, although I ceased to be a practising one. The 1960’s and 1970’s were an age of secularism and I used to enjoy discomforting my friends by telling them I was a Christian. Christians were for them a kind of pre-modern being, who were as distant from modern man, as were the Neanderthals from Homo Sapiens. Intelligent people for them could not believe in the myths and fairy stories of which organised religion was composed.
What I have sought since my university days is some intellectual underpinning or substance for my pre-modern beliefs in good and bad. I could not accept that there only purpose was that of enabling men to live together in an organised society. Interestingly I did learnt of one community in the Pacific, where stealing and dishonesty were valued. However this particular community, because of its dysfunctional nature was dying out.
Obviously I read widely, there is probably not a major philosopher of whom I do not have some knowledge, but it was not until I studied theology as a postgraduate that I began to make progress in finding solid ground on which to found my beliefs. The answer lies in the paradoxical nature of the unknown God, whose is both unknown and known. All theologians are to some degree negative theologians, they admit God is beyond human understanding, yet they claim some knowledge of this unknown God. Bertrand Russell scoffed at these theologians who believed in an unknown God as he pointed out that it was absurd to claim belief in a being that had no existence. However he misunderstood what theologians mean when they say they have no knowledge of God. God is unknown because he cannot be known through the usual methods of human understanding, as he exists beyond human existence. There can be no book of God as it is impossible to describe or explain what God is in language. There can be no science of religion, the science of observation or the laws of cause and effect have no relevance to the study of God. Yet this God can be known to the individual, but not through the usual means of human understanding.
Knowing God is a peculiarly individual experience, it is not as Kierkegaard states something that can be picked up from an afternoon’s study. There are no texts of instruction as such or a required reading list. Following Kierkegaard we cannot use direct language to speak of God, he cannot be described, but instead the language of God must be indirect language. The great religious teachers of the past are largely ignored but to learn the way to knowing truth or God it is to them that one must turn. It’s a knowledge quite unlike the knowledge of science or the humanities. Indirect learning or knowledge is the means of accessing these higher truth. The twentieth century philosopher Jasper explains that myth is one very successful way in which these truths can be accessed. Probably he’s thinking of Plato’s myth of the cave, in which he compares humanity to a group of men chained in a cave facing a wall behind which is a fire. Behind that wall are passed images which cast shadows of the cave wall and the chained men believe that those shadow images are reality. When one of the chained men escapes and goes into the sunlight and returns to tell the chained men what he has seen they refuse to believe him; they prefer the shadows or appearances with which they are familiar. What Plato is demonstrating is that the knowledge for understanding everyday existence is inadequate for the task of understanding what he and his Islamic successors (Sufis) would term the real. Plato has another a myth that explains the link between the real and the world of appearances in which we live. The creator God fashions the world and humanity out of clay and he uses as his model for creation the ‘real’. We are but copies of what the creator God could see, but which are concealed to us. Plato never believed the myths he created were ‘real’ but they was the only way he could explain, the complex nature of reality and existence. Jaspers put it more succinctly, there are some truths that can only be told through the use of myths.
Plato’s separation of the world into two spheres that of appearance and reality has remained influential. It is an understanding of existence that has been developed within the religious traditions of both Christianity and Islam. Rather than myth the Sufi sages use poetry, metaphor being a substitute for myth. One of my favourite phrases is taken from Rumi’s poem ‘The North Wind’
‘No matter how hard you stare into muddy water
you will not see the moon or sun’
It’s one of the best summaries of the Platonic need to search for truth beyond the world of ‘appearances’. However describing this world as one of ‘appearances’ does contradict our understanding of reality. Doctor Johnson gave the best retort, when he criticised Bishop Berkley’s theology, which saw the world as a product of God’s imagining. He said the pain he felt when stone he knocked his foot against was all too real, and was not a product of somebody’s imagining. All I can say is that Plato was trying to describe a level of reality that as it was not immediately visible and it could be distinguished from a reality that was all too apparent, which appears to us.
A person such as myself is described as a mystic, a term which I feel is derogatory as I believe my approach to knowing truth is quite rational. There is however a good reason for writing about my understanding of mysticism as a economist. Mysticism gives a very different understanding of the world to that of a practitioner of a science of the world of appearances. Economics judges the world in quantitive terms, using terms such as cost, loss and profit; it has no place for values. Therefore its practitioners are capable of making the most inhumane decisions, as they lack any sense of value. Milton Friedman could approve the torture and killing of trade unionists because their destruction paved the way to the free market. Ian Duncan Smith the minister for welfare can pursue a policy that through the removal of benefits impoverishes the poor and which even in extreme cases has led to suicide, as a means of incentivising people to return to work. To an economist misery and suffering are good if they produce the right result. Religious mystics could never accept such an inhumane belief system, they value the individual human too highly. Inflicting suffering is never an option for them, one hungry child is never the justification for this cruel method of incentivising work. Only an economist of the Neo-Liberal persuasion could be indifferent to human pain. Economics will constantly fail as it lacks a value system that would enable it to satisfy human wants. What economics so lack as a contemporary science is a knowledge of the old.
Notes
Plato (428/427 or 424/423 – 348/347 BCE) Classical Greek philosopher
Jelaluddin Rumi (30 September 1207 – 17 December 1273) Islamic jurist, theologian and mystic
Søren Aabye Kierkegaard (5 May 1813 – 11 November 1855) was a Danish philosopher, theologian, poet, social critic and religious author
Milton Friedman (July 31, 1912 – November 16, 2006) American economist
Why there will never be another British Winston Churchill, the theory of political dwarfism
Political dwarfism explained
Politics in the UK is dominated by a set of mediocrities, not that this is new, if you read history there is frequently despair about the quality of political leadership. What is not new is the depths to which our current leadership has plunged. They seem to be indifferent to the problems besetting UK society, seeing it as not their concern. At the risk of using an over employed metaphor, they are the band playing on the deck of the Titanic, although unlike that band they are oblivious to the dangers that surround them.
There is one startling example that demonstrates this indifference. In London a housing estate has been taken over by an American property company; that will make the current tenants homeless through the simple expedient of tripling the rents on existing properties to bring them in line with current market rates. Fortunately the tenants have secured a stay on the rent rises which will enable them to stay in their homes over Christmas. Originally the estate was established to provide housing for people on low incomes, a good intent that matters little in a residential property market driven by speculative greed. Despite the publicity given to the plight of these people in the media, the political classes as a whole have remained indifferent to their plight. Even the Mayor of London a man ever eager to court publicity has remained aloof from the tenants campaign. The only public figure to have sided with the tenants is a comedian, Russell Brand. A man demonstrated the commitment that should be expected from the politicians. Instead they are all to keen to demonstrate their helplessness in the face of ‘market forces’. What is so puzzling is why even the publicity seeking mayor like his Westminster colleagues is so eager to embrace this culture of ‘political dwarfism’.
Politics should be about doing, however British politics is about not doing, postponing decision making to the distant and ever receding future or making ‘faux’ decisions. (A decision that turns out to be less than it appears, often nothing more than ‘soundbite’). If decisive action is ever taken its at the behest of some superior force, either the world’s superpower or more usually a large business corporation. So eager are our politicians to embrace insignificance that they are negotiating the Transatlantic Trade and Investment Partnership. This a treaty that will give business corporations a major voice in policy making and the power to veto decisions they dislike. When the treaty is in place, business corporations will be able to bid to run various public services and if denied the that opportunity they can sue the government for compensation for lost revenues. A good example of this is the private health care provider who is suing a local health care trust for turned down their bid. The bid was rejected because because the price was too high. They are asking for a judicial review of the decision because in making its decision the health care authority had not taken into account the private health care providers need to make a profit. Quite probably in the near future private corporations will be deciding what public services will and should be provided by them. The only role for the government will be to sign cheques promising tax payers money to these corporations.
Probably there any many reasons for the popularity of adopting ‘political dwarfism’ as a persona amongst our current generation of politicians. The one most normally cited is the popularity of Neo-Liberal ideology, which relegates politicians to the role of bit players on the world stage. However explanation that interests me is language and the culture that determines how politicians use that language.
Contemporary Political Language
Greek philosophers originally put their philosophy into verse believing that the language of poetry was the best means of explains the ultimate truths of existence. In contrast political language today has very different functions rather than being the language of challenging truths its that of complacency, one of non enquiry, the means for reciting pre-agreed truths and pre-agreed propaganda. A language that obscures and hides truth. The current Chancellor of the Exchequer is a master of rephrasing his language to hide the failure of his policies. We are living in the fastest growing economy in the developed world according to his speeches. What is hidden is that it’s a recovery of statistics, a sleight of hand to hide the emptiness of his political rhetoric. The recovery is a debt led property boom, inflating property values and the property trade, which generates an inflationary increase in national incomes, demonstrating what appears to be a rise in the average incomes of all. Yet the truth is that for the vast majority there has been no increase in incomes, either they are experiencing slow or no growth in their incomes, or working for poverty wages.
One would expect the opposition to make the most of this growing inequality and inequity in incomes, yet all they can offer is a ‘faux’ policy alternative. They will generate a faster growth in the economy, which will boost incomes for all. However it is a policy so light on detail that it is practically meaningless, more a hope than a policy. Politicians seem to have lost the ability to express meaningful truths in language, language for them is the language of non truths, the language of evasion and obscurantism.
Why this decline in the spoken language?
Politicians have always used language for propaganda purpose or evasion or what parliament calls dissembling (lying), but it was never in the past the predominate use of language. This example provides an interesting illustration of this. When a young man was asked by Lloyd George at house party what he hoped to do with his future, he answered that he was undecided between a career in the navy and politics. Lloyd George advised him to go into politics as he would experience more ‘boardings and mutinies’ than he would in the navy. This politician had a reputation for deviousness, he was the Welsh wizard, yet he introduced the beginnings of the welfare state and led Britain to victory in a world war. Today’s politicians could probably match him for deviousness, yet not for vision. His vision came from an upbringing in Welsh baptism, that imbued him with a sense of justice.
If I can go back to Churchill I can make the point more clearly. Churchill would have studied classics at Harrow and many of his contemporaries would have gone on to study classics at one of the Oxbridge colleges, whereas today contemporary politicians study PPE at an Oxbridge college. This is a significant factor as the education of today’s politicians and the past differs drastically. One classical writer studied on both classics and politics courses is the Roman philosopher Cicero, but who is treated very differently in each subject. Students of classics particularly of Churchill’s time would have seen Cicero as a heroic figure whose command of language was one to emulate. A man whose courage was matched by his oratory. The Cicero they studied was the Cicero who at risk to life and reputation defended in court a man who was the victim of a friend of the dictator Sulla. (Sulla was a dictator who had killed hundreds, when taking over the Roman Republic.) This was also the man who gave up his life to defend the restored Roman Republic. He was such a significant opponent of Mark Anthony (one of the triumvirate of politicians seeking to overthrow the Republic), that he had the murdered man’s hands nailed to the Senate door to demonstrate his command of Rome. In my politics course as is so of contemporary politics courses, Cicero was dismissed as a plagiarist, whose books were copies of better Greek originals. A man who rather than being a heroic defender of the Republic, was a man who took many ignoble actions to advance his career. In the space of 50 years Cicero had been diminished from being a man to aspire to to being to yet just another very ordinary politician motivated by the spirit of self advancement, all be it a good self propagandist. With an education devoid of heroes or heroic figures, an education that trashed the value driven figures of the past, future politicians educated in politics courses were lacking the language of value. A realist education that sees only human frailty and failure cannot but give a very downbeat view of the world.
An observer of the 19th century parliament would have noted that speeches were liberally sprinkled with Latin phrases, speakers tried to out do each other in their command of rhetoric. Observers could drop into parliament to be amused by the wit of Disraeli or the eloquence of Gladstone. The latter a man who on his campaign trails could speak to an audience of thousands for an hour or more and yet command their attention. Today’s politicians could not speak for ten minutes and hope the attention of an audience for that time span but instead they sprinkle their speeches with brief ‘sound bites’ (always of less than a minute’s duration) to capture their audiences attention.
Obviously the decline of the teaching of classics cannot be held responsible for the decline in the quality of parliamentary debates. It is just one factor but one that I think is a predominant factor. Now There is an intellectual culture that values mundanity and the accepted over creativity and originality of thought. A culture that equates any value system or ideology as a fantasy, at best useful for getting out the vote, but nothing more. This culture of mundanity goes by many names, the most popular are post modernism and Neo-Liberalism. While the first is a both a philosophy and a literary theory and the second is an economics, what they both have in common is a contempt for any value driven system, seeing instead a society of things in which values are an alien intrusion.
Why how language is used matters
Language is both a servant and a master, and it is the extent to which it is the latter that explains the mediocrity of the present political class. It is a servant when I use language to get something done, as when I order my cappuccino at my favourite coffee shop. Using it is this way has no impact on my behaviours, it’s nothing more than a request. However language is much more than a means of making requests, it is determines my perception of the society in which I live. Society is one of those strange objects that is both intangible and tangible. I know it’s there it is a given in my life, but it’s not something than I can readily comprehend. I just know it’s there, I know it’s an organised system of social relationships, whose meaning I understand through language. When I go into my coffee shop I am immediately aware that I’m entering a place of structured inter relationships. I know to order my coffee from the barista and not the manager or the chef. All have a identity disclosed in language, which tells me how I should interact with them or even not at all, as is the case with customers to whom I am a stranger. The coffee shop etiquette is something we all learn, and that etiquette is expressed in language. Anybody who fails to understand that etiquette will get bad or poor service.
Similarly the politician has come across a language which explains to them their role and that role within the greater network of social relationships that is the political system. If as at present it is the language of Neo-Liberalism, it is a language of can’t does. Neo-Liberals believe humankind has discovered the perfect social organisation, the free market and their only role is to remove any obstacles that prevent the free market operating. Consequently the voter that expects their MP to do something about the pitifully poor wage they receive is doomed to disappointment. The MP believes in the long term, in the long term the market will right itself and all will receive a living wage.
This stance of ‘doing nothing’ is reinforced by contemporary post modern philosophy that teaches that the higher moral order of which past philosophers such as Marx spoke are only the wishes of a particular age. Socialism was only had meaning in the Industrial Age of great factories, when labour protection and wage legislation made sense, because all did similar jobs in large industrial units. Now when all do very individual jobs in very different work environments, universal legislation covering all workers makes no sense and so it’s right to abolish all worker protections. Also there can in the post modern age there be no universal values as it is an age of extreme individualism. Values are relative to the individual and their unique social circumstances. Although it rarely said any notion of universal human rights is contrary to post modernism. All there can be is a democracy of rights, a competition of rights. Alistair McIntyre when speaking of a debate between two people debating the rights of their own ethical position, likens it to a shouting match. If they have different ethics, there can be no common ground between them which make any meaningful communication between them impossible. They might both be English speakers, but as for any chance of communication between them, they might as well be speaking different languages.
If the members of our political classes, particularly the leadership have been schooled at the elite colleges that teach post modernist philosophy and Neo-Liberal economics they will have been schooled in a culture that has little belief in the efficacy of human agency. Values have no place in the pseudo-science of Neo-Liberal economics and values for a post modernist are little more than an individual’s chosen life style, they have no universal validity. How can the product of such a culture, be value driven as was aWinston Churchill who had a belief not only in the rightness of British democracy, but in Britain’s unique role in the world. In an education system that excludes any education in values from its curriculum it is not surprising that it produce politicians that are only capable of having a mundane hum drum vision of the world. John Major the British PM summed up the current way of thinking, when he spoke of the need for a ‘vision thing’. He was unfairly characterised by cartoonists as a grey figure, when in fact it was a characteristic he shared with his generation of politicians.
How can such language of universal,dullness produce and thinkers of great thoughts? Whether the politician be David Cameron, Nick Clegg or Ed Miliband, all will be indistinguishable to the future historian, just a group of indistinguishable mediocrities that will fail to leave their mark on history.
The New Generation of ‘Wreckers’ (at Westminster)
Originally the wreckers were inhabitants of the costal regions of Cornwall, who during stormy weather would lure ships on to rocks, where they would kill the surviving crew members and loot the wreck of its cargo. While today’s wreckers are very different, in that they are politicians that inhabit Westminster, their motives are very similar to those of the Cornish wreckers. They want to break up the public service organisations and sell off the most profitable parts to favoured buyers. Parts of the NHS are sold to Virgin Care, prison and probation services to Care4, the list is almost endless. These politicians would never view themselves as wreckers, they instead are the new Neo-Liberal thrusters, breaking up the old complacent society to remake it as a dynamic free market society.
The recent privatisation of the Royal Mail provides a good example of this wrecking process. The Royal Mail was established in 1840 to provide a universal mail service at a fixed price to all customers. In Neo-Liberal Britain this in the words of one expert is an anachronism. The service could be broken up into its various parts and sold to for profit providers, who motivated by the need to make profits would provide a better service. What this means in real terms is that the customers of the most profitable parts of the mail delivery service would get a better service and the least profitable customers a worse one. Consequently the government first disposed on the profitable corporate mail shot business to private contractors, then permitted these same companies to cherry pick the profitable London mail delivery service, leaving the high cost universal mail delivery service to The Royal Mail. Now the now privatised Royal,Mail is requesting that it be relieved of the burden of providing a six day a week universal service. Inevitably its request will be granted as the universal service obligation is contrary to profit making. Soon Britain will,have an expensive fragmented mail delivery service similar to that in the Netherlands, where profit making rather than service delivery is the priority.
While a dysfunctional postal service may cause some problems it does not pose a major problem for British society. We can all learn how to manage with delays in post, however the wreckers in politics seem unaware of the damage that they are inflicting on the social fabric damage in their effort to create the perfect Neo-Liberal society. It is as if they have taken a ‘wrecking ball’ to the fabric of that society, they are on the same spectrum of political leadership as Chairman Mao. He was responsible for the death of millions, when he tried to impose a communist agenda on China with the ‘Great Leap Forward’. I guess we should be content that our current leaders are content with the remaking of society only involves the immiseration of the majority, and not their death in service the higher cause. Food banks, zero hour contracts, low wages, insecurity of tenure and homelessness are the price to be paid for the ‘Great British Leap Forward’. Our leaders as with Chairman Mao hope to recreate a new society out of the ruins of the old state. Any price paid is regarded as one well paid for the creation of the day new society.
The Real Price paid for the ‘Wrecking Ball’ of Westminster politics.
As with Chairman Mao’s ‘Great Leap Forward’ the real price paid by the people for this misguided reform is largely hidden from view. The losers are the poor, the underclass largely hidden from the view of the media, unless they are needed for examples for the purpose of scapegoating the feckless poor. Strangely enough for a political class that lauds the family as the cornerstone of society, it shows little concern about the destructive impact of its policies have on the family unit. It is recognised that financial stress in one of the main factors in family breakdown, yet successive governments have imposed more and more financial stress on the family unit.
Their Neo-Liberal or supply side side reforms require a labour force that is infinitely flexible, one that can and will move from one job to another, at a moment’s notice and one also that is so cheap to employ that high wages are no bar to employers wishing to take on extra staff. By removing employment protection laws, wage councils and emasculating the trade unions the government’s of the UK have achieved this flexible labour force so desired by businessmen and economists. Recently a think tank of Swiss millionaires lauded the UK for having the most flexible of labour markets.
The price paid for this free market in labour is high in terms of human suffering. A comparison is the family structure within the Victorian army, offers a useful parallel to today’s family. Then because of the high mortality rate amongst the soldiers a fluid family pattern developed. The loss of a male partner meant poverty for the family, so frequently the woman in the relationship had more than one partner so as to avoid the poverty that would be attendant on the death of the breadwinner. For the same reason serial monogamy was a necessity as women would need a succession of male partners, if the woman based family unit was to survive. Many middle class commentators saw army wives as little better than prostitutes, as they failed to recognise the financial stresses that made this a necessary way of life. Any reader of today’s papers will recognise this description of family life as that ascribed to the underclass. Stories abound in the tabloid press of the amoral underclass, not recognising that it’s the way the poor have of coping with the stresses of everyday life. Only a fluid weak family structure can survive in a situation of extreme financial stress.
There is the impact on the men in low wage insecure occupations, which impacts negatively on family life. As demonstrated in Wilfred Foote Whyte’s book ‘Street Corner Society’, there the men he interviewed had numerous liaisons and partners. What is he discovered was that it was not so much amoral behaviour, but shame that drove these men into having numerous sexual relations. What forced them to move on from one relationship to another was the shame of being unable to support a family properly because of their low income. Running out on the relationship was the only way to avoid the humiliation of not being able to buy one’s children clothes. This explains the prevalence of so many one parent families in the UK.
Family breakdown is not unique to the underclass, it is spread throughout society. A society that regards people as resources of labour to be used when and as the employer pleases is bound to be destructive of social relationships. Social change has made once secure jobs, such as the professions insecure. One comment strikes me as typifying today’s destructive society, a neighbour said that if she became pregnant she would have to have an abortion, as her partner’s salary would be inadequate to pay the mortgage and support a stay-at-home wife. A society such as Britain which has bought wholeheartedly into the Neo-Liberal agenda is uncaring of damage inflicted on its members if it boosts the bottom line.
What prompted this essay was the evident damage shown in our society from just a few years of the Neo-Liberal experiment. In primary schools there are an increasing number of children starting who lack social skills or in some cases language skills. (There are children of five who can only only communicate, with sounds lacking any language skills.) There are even children attending school who have rickets, the illness of poverty, once thought to have been eradicated. Blame for this is put on inadequate parents, but with the destruction inflicted on the family, it can be no surprise that damaged families produce dysfunctional, inadequate adults. Are these the people that made up the mob so feared by Victorian society?
There has been another warning sign, it has been estimated that societies where average income is less than $7,500 social discontent is endemic. Just recently recently our major cities were subject to a spate of rioting in which the police temporarily lost control of the streets. It goes almost without comment that the riots were the young on disproportionately low wages. If current trends continue with average wages continuing to fall, inner city violence may become endemic.
The Return of the Old Fear of Revolution
Strangely the best educated generation of British politicians has an appalling ignorance of the past. When at university in the 1960’s it was an age of optimism. My teachers in common with the rest of society thought that the evils of the Victorian cities were a thing of the past. Society had been remade along social democratic lines, so as to eliminate the evils of that time. Too many politicians could remember the horrors of the ‘Great Depression’ and wanted to ensure that they would never return. Yet our current generation of politicians seem to want consciously or unconsciously to return to the divided society of Victorian times. The Victorian middle classes had a constant fear of revolution and the masses. When the Chartists marched through London in 1848 to demand universal suffrage, the fearful middle classes turned out in force as special constables to police the marchers, such was their fear of revolution. Such was their fear of the masses that a series of murders in the East End of London, became magnified into the ‘Jack the Ripper’ scare. For a fearful middle class it was all to easy for to imagine that the poor areas of the East End, were the breeding ground for monsters such as Jack the Ripper. This fearful middle class fled the city and the mobs for the green suburbs. I now live in one such suburb created by the mill owners of Leeds who wanted to distance themselves from the city poor.
Now having started to create an divided and unfair society, politicians and the middle class have rediscovered their fear of the poor. Such is the fear that the rioters of 2011 that judiciary under pressure from frightened politicians handed out draconian sentences to deter future rioters. A practice common in the 19th century when hard labour and hanging were the punishments for rioting and offences against social order; however in such a divided society such punishments had little impact on reducing violence.
Today the East End of London is an area of new city blocks and affluence, yet in the recent past it was a place in which the well off feared to venture. I remember a professor telling me that when he ventured there in the 1930’s he was driven out for being posh. He was subject to stone throwing from the local youths.
Although it might be disputed by some but the fear of revolution has returned in the guise of Muslim extremists. Only today the Home Secretary warned that the likelihood of a terrorist attack was at the greatest since 9/11. It is from those areas of the ‘Other’ in which the fearful rich and well to do never venture, that they fear attack. They have declared a war on terror, they fear Muslim minority, regardless of the fact this minority has integrated well into society. While there is a justified fear of Muslim extremism, extremists are a minority and it was largely complacent policing that allowed them to thrive.
There is however a disaffection amongst the young, they see a society that is indifferent to them. It is a society that cares little for its young people, denying them good wages and housing, it is a society in which disaffection will grow. At least in the majority it’s protests that are legal, but in minority groups that are feeling oppressed a small number while turn to more violent means. Even history teaches us that this minority can be contained through good policing. The Fenians in the late nineteenth century were as dangerous as any modern Islamic terrorist and yet the police successfully contained them. Unfortunately the return of the ‘great fear’ of the dispossessed ‘other’ means that our political leaders will inevitably overact to a small disaffected group. The best advocates for the extremist cause are the politicians who constantly over estimate the power and success of them. They cannot see that Islamic extremists are as much a creation of their making, as of their religion. If a people are impoverished and brutalised through political and social change, social order and peace will be undermined, but our current complacent political class never realise that. They will instead resort to more and more repressive measures to control the simmering discontent. The 1950’s and 1960’s were an unusual period in British history, one of social peace, achieved because the vast majority felt they had a stake in maintaining the well being of society.
Why the privatisation of health care is wrong
Political leaders in the UK are enthusiasts for Neo-Liberalism they are committed public services to the out sourcing of public service provision to the private sector. The latest folly is the desire to privatise much of the state run and funded National Health Service. Our political predecessors who nationalised health care in 1948 had a shrewder grasp of the economics of health care than do today’s politicians. What I will argue is that the politicians of 1948 were correct in their understanding that the free market mechanism was ineffective in providing universal health care.
At the heart of free market economics is the belief that society is best served if individuals freely enter into exchanges of goods and services. They, the people know what they want, it is wrong for the state to second guess the consumer. Certainly the free market is an unrivalled mechanism for the buying and selling of cars; but just because the free market works well in the consumer goods market does not mean it will work elsewhere. What makes the car market work is the approximate equality of knowledge, the customer knows how a car functions and what they want from that particular car. The salesman understands the customers needs and can supply a car that meets the customers specifications. Obviously this is an over simplification as the seller is usually better informed that the buyer, but any fraudulent action by the seller is subject to severe legal sanction. This market is completely unlike the market for health care, which is characterised by ignorance rather than knowledge. There can be no equal exchange when cash is exchanged for a service of which the buyer is almost totally ignorant of the product (Pharmaceutical drugs) that they are buying. This relative inequality in which all knowledge resides with the seller (medical practitioner) means that the buyer is totally dependent on the seller’s knowledge and good intent, which means that the free and equal exchange of goods and services that is experienced in car market is impossible.
Blame must also be apportioned to economists who believe that any free universal service will be misused, if it’s free people will over use it, as it costs them nothing. They believe in some principle of charging as it would compel people to make a rational decision about whether or not they really need medical care. What they ignore is that the NHS devised a much fairer system of rationing health care, in which front line practitioners, general practitioners acted as gatekeepers, only allowing those who needed intensive medical care access to hospital services. It did mean queues developed for some services, but better that than cash be the criteria by which access to health care was decided.
What else is unique in the health care market is that it is contracts are based on a mixture of desperation and hope. Illness makes the customer (patient) so desperate that they want a cure at almost any cost. This gives the medical practitioner the opportunity to exploit that person’s desperation or to use an economist’s term they charge what the market can bear. Therefore in a free market the poor are priced out of medical care. Prior to 1948 doctors could get a good income from treating the relatively few well off who paid well for their services. Medicine then was an occupation for gentleman, a well brought up young man would not have to sully his hands dealing with the poor. People such as my grandmother depended on charity, when my mother was being born it meant a call on the services of ‘The Sisters of Mercy’.
There can be no equality in the bargaining process when the client is largely ignorant of the product or service they are buying. People of my grandmother’s generation believed that Beecham’s pills taken once a day, were essential to maintaining good health. Not realising that none of the pill’s ingredients helped maintain good health. One ingredient was detergent. Pharmaceutical companies and ‘medical practitioners’ have always been able to exploit the gullibility of people. Health care is perhaps the only market in which the characteristic feature is ignorance.
Health care is the one market that needs regulation and in the UK there is an effective system of self regulation. If a medical practitioner wishes to be recognised as an M.D. they must undergo training at a college recognised by the British Medical Association and then be accepted as a doctor by the same body. This means the sick person can get treatment from a health professional, who will not administer ineffective or harmful treatment. However that leaves plenty of scope for practitioners of alternative medicines to sell treatments to the desperate. The BMA’s self regulation is only effective because it has the support of the government. A truly free market in health would mean that the market would be free to any new entrant who claimed to be a doctor, which would be harmful to the nation’s health. At least the present system excludes dangerous practitioners from the market.
However ignorance of the means and the effectiveness of treatments is not confined to the patient. Unfortunately the doctor also displays a degree of ignorance about his trade which you would not find with the car dealer. One estimate is that there are 10^34 pathologies than can affect modern man, while the GP will have a good knowledge of the more common pathologies there are many of which they will be ignorant. One recent study of post mortems revealed that 40% of the deceased had been misdiagnosed. A market in which relative ignorance of the practitioners is prevalent needs to be regulated. Consider this, arsenic was used in treating syphilis until the 1950’s and earlier in the twentieth century it had been used to treat arthritis. Unlike in the car market where the bad dealer loses out to better performing rivals, the ill informed medical practitioner has little to fear because of the ignorance of his patients (customers) because they have now way of judging his competence.
Good medical practice has been ensured in the UK through the following government funding for a system of universal health care and the high quality of care being maintained through a combination of the public service ethos and the Hippocratic oath. Now there will be with the proposed privatisation of the NHS there will be added a new commercial ethos, profit maximisation. Adding the profit maximisation imperative into the medical practitioner ethos will do little for patient care, as reducing costs to maximise profits does the reverse.
Politicians have assured us that it does not matter who Is the service provider whether it be the state managed NHS or a private health care corporation as the same service will be delivered to the patient. Naively this is what politicians believe despite evidence to the contrary. A private health care corporation has an incentive to perform those medical treatments that are straight forward and involve short term stays in hospital, as this will increase turnover and profits. The long term and difficult treatments will receive a much lower priority as they involve long and expensive treatments that reduce the profitability of the business. If cancer treatment is for instance delayed more people will be entering hospital at an advanced stage of cancer with the likelihood of a reduced life span and a shorter period of expensive treatment. The private health care corporations that are poised to take over large parts of the health service will inevitably prioritise profit making over health care.
In countries such as the USA where health care is in the hands of private corporations there is an incentive for over treatment, that is advising surgery where treatment is straight forward and recovery certain, whether or not the patient needs it. Once such procedure is hysterectomy and health economists can always get a laugh at conferences by trotting the old joke about no woman in America over forty still possessed her own womb. Treatments that maximise profits will get priority over those that are costly and which yield little profit.
What our political leaders fail to realise that in a free market an approximation to equal power in the buyer and seller is needed to make the market work well for both buyers and sellers. When as in the example of the health care market the is an asymmetrical power relationship between the doctor and desperate patient the market cannot work well. In 1948 it was decided for that reason most people should be removed from the free market in health care, as they would never be able to get fair treatment in a market where the odds where stacked against them. The only exceptions were to be the rich and powerful, as they were not at a disadvantage when bargaining for health care, doctors desperate for money would ensure that they received the best possible treatment. Unfortunately the low income majority did not have that power, they were liable to exclusion from the health care market. Having known of the evidence of market abuse when doctors worked in practice with one or two partners now having GP’s contracted to a large private corporation can only lead to greater market abuse. The post code lottery will work with a vengeance in health care, there will be excellent health care for the rich citizens of Mayfair and poor health care for the Inhabitants of Newham in East London (England’s poorest borough).
While the National Health Service has been subject to unfair criticisms in parliament and the media, in which all blame for failure is attached to health care professionals and none to political mismanagement, commercial confidentiality will protect the new worse and privatised health care service from proper scrutiny. It must also be added that politicians knowledge of medical care is little better than that of the average citizen, which means they are not qualified to oversee these changes in health care.
Blame must also be apportioned to economists who believe that any free universal service will be misused, as if it’s free they will over use it, as it costs them nothing. They believe in some principle of charging as it would compel people to make a rational decision about whether or not they really need medical care. What they ignore is that the NHS devised a much fairer system of rationing health care, in which front line practitioners, general practitioners acted as gatekeepers, only allowing those who needed intensive medical care access to hospital services. It did mean queues developed for some services, but better that than cash be the criteria by which access to health care is decided.
An Unusual Economist 