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Lies told by economists 2 – the economy is always managed so as to maximise the welfare of all

One of the constantly repeated stories told by economists is that the current programme of austerity is for the good of us all. The austerity programmes adopted by Western governments are necessary to root out from the economy of the excesses of the past spendthrift governments. The austerity programme will restore the economy to health and all will benefit from a new era of economic prosperity. A story that is so untrue, as acute observers will have noticed that it is the less well off who have suffered disproportionately in this recession, while the incomes of the better off have hardly been touched. Despite the recession, London for instance is home to a record number of billionaires.

There is another story that needs to be told and that is that economies very rarely work in a way that maximises the welfare of the majority of the population. They instead maximise the welfare of those groups with the greatest market power, who use that power to gain the largest share of wealth for themselves. Only very rarely does market power reside with the majority as happened in the social democracies of Europe after the Second World War.

This is demonstrated in the current time period which its one characterised as the time of Neo-Liberalism. A misnomer as it is a period that has seen the ever increasing accumulation of market power by the owners of capital at the expense of those who depend on earned incomes. Neo Liberalism is a political doctrine that these wealth holders have cleverly exploited to aid their rise to power. This doctrine states the the greatest impediments to the free market and the maximisation of wealth are over powerful governments and power trade unions, both of which impede the workings of the free market. Strong Governments and trade unions are the two factors that place obstacles in the path of those who wish to acquire unlimited wealth.

Growing up among the serving classes in the 1960’s, I observed close up the anxieties and fears that gave rise to the putsch against the strong governments and trade unions of the social democratic state. The 1960’s were a period of relative prosperity, there was full employment, constantly rising incomes and people were well housed, yet the rich hated this period. All they could see was the threat to their social and economic status from the newly prosperous working and middle classes. It seemed to them that all the barriers that preserved their social exclusiveness were under threat. Students from the working class now attended the two bastions of educational privilege, Oxford and Cambridge. Working people could own cars and more threateningly rise up the social and occupational ladder and threaten to displace the previous incumbents.

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Tunbridge Wells and its environs where I grew up were home to exiled European aristocrats forced into exile by the communist revolutions of Europe. Travelling on local buses you would come across impoverished Eastern European aristocrats talking about their lost estates and wealth. I lived near a family of White Russians who were so worried about the possibility of a communist uprising that they were only family locally permitted to keep fire arms. It was this anxiety that fed into the paranoia of the wealthy who feared for their social position.

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One of the most frequently expressed concerns was that people no longer knew their position. Servants would talk back to their masters and mistresses. The relative prosperity of the times meant it was difficult to get servants, as who would want the demeaning job of servant when a job a sales assistant in a shop gave gave greater freedom and a better wage. It was this newly acquired power to be no longer beholden to The Lord of the Manor for employment, that empowered servants. This group looked back to the horrors of the Great Depression as a ‘golden age. Then servants were plentiful and people knew their place. On the estate in which I lived prior to World War 11, it was a dismissal offence to talk without being first addressed by old Lord ***, now the very real shortage of estate workers and servants meant at worst all that could be done was reprimand the worker. I can remember a servant at the castle being reprimanded for being cheeky to her ladyship, an offence that would have warranted instant dismissal in the 1930’s. How the rich hated the prosperous sixties, with their indolent and independent minded workers.

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Even in these social democratic times the rich had begun to regain their former powers. The setting up of trusts encouraged by a friendly judiciary enabled the aristocratic owners of the great estates, meant that these aristocrats could claim that their estates were held in perpetuity by a trust and therefore not subject to estate duties.

The determination of this group should never be underestimated, they worked constantly to weaken their two enemies over mighty governments and trade unions. Rather than going through the details of how they achieved this weakening it is sufficient to say that in their enterprise they were greatly aided by the naivety of social democratic politicians. Today the most powerful groups in society are the financial, business and landowning elites. Given the lack of restrictions on their power they are able to abuse that power to award themselves an increasingly disproportionate share of the nations wealth. In 2000 the average company directors pay in Britain’s top companies was 69 x that of the average employee and by 2009 it increased to 149x that of the average employee. This disproportionality in income take demonstrates why the British economic recovery will be good for the rich and the super rich but less good for the majority.

Economists fail because they see a society as one atomised individuals, who are best off if they can trade freely amongst themselves, as they individuals know what they want. Any intervention by a government no matter how well meaning, could not second guess the wants and wishes of individuals and they whatever they did would lead to people being more dissatisfied that satisfied. The only social group that they recognise are trade unions which they identify as malignant growth which disrupts the efficient running of the business enterprise. They never recognise that owners of capital might group together to abuse their market power to gain a disproportionate share of society’s wealth. For an economist bankers, financiers and land owners only act in a benign way for the benefit of society.

Society in reality is divided up into a number of social groups competing for power and wealth. This power and wealth is distributed disproportionately, the owners of capital compared to the owners of labour have disproportionate power. This disproportionality of power and its potential for harm was recognised in former times. Durkheim in the 19th century wrote of the essential role of the state to protect the individual from local bullies and tyrants. He knew that employers had unlimited power to abuse their workers, with their being no labour protection legislation, they could pay as little as possible, work them for long hours, subject them to unhealthy and unsafe working conditions and dismiss them if they fell sick. The state was needed to regulate conditions of employment and protect the worker against unfair exploitation by bad employers. A lesson forgotten by the current generation of economists and politicians.

I can as a child of the serving classes quote an example. A remember an old servant telling my mother of the bad country house in which she worked. The men of the house if a young pretty house maid took their fancy, they would abduct her and rape her in the cellars. Staff were powerless to intervene and the abusive males never faced any sanction. It is this story that springs to mind whenever I hear a politician or economist advocating the removal of yet more labour protections.

Today Britain is a country that is safe for the rich, but unsafe for the poor. The poor can be housed in unhealthy private rental homes for which they pay exorbitant rents and dare not complain for fear of eviction. A good government would legislate to prevent such tenants as recommended by Durkheim, instead we have a bad government, supported by bad parliamentarians of all major parties who would never countenance such a measure. In contrast the government does its best to make life comfortable for the rich by co-operating in all schemes to protect their wealth, most notably in the emasculation of the tax collecting agencies.

When being wrong is being right, the majority perspective on economics

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One of the greatest of follies is the excitement that is generated over the Bank of England’s announcement of interest rates. Once a month the monetary policy committee meets to decide the bank rate, that is the rate of interest the bank will charge on loans it might make. This committee of the great and good holds the nations future in their hands, holding rates steady as they have done yet again, brings great relief to the nation’s borrowers. In a nation that is as over indebted as the UK even small changes in the interest rate can be of great significance to borrowers, particularly those with large outstanding mortgages. Yet this is an illusion as so much economic policy making is a matter of smoke and mirrors. What matters is what people believe, if they think, as do the nation’s politicians and financiers, that such rate changes are of great importance, they are of great importance. However in moments of great crisis when events spiral out of control, they are almost useless. On Black Wednesday bank rate went up to 15%, 30 times today’s rate of 0.5%, yet it did little to halt speculation against the pound in the financial markets. The speculation was only ended when the pound was effectively devalued by Britain leaving the European Exchange Rate Mechanism and accepting a low market valuation for the pound. Raising interest rates did not stop financial speculators bringing the Bank of England to its knees.

While focusing on bank rate politicians and central bankers can pretend that they are in control of events. Stagnant incomes, over indebted banks (whose debts in 2013 were approximately 500% of GDP or £6.7 trillion), low productivity and spiralling trade deficit (now the highest in the developed world at 5% of GDP) are problems that can be ignored. At least until some future crisis reveals the fault lines in the UK economy. Incompetence in managing the economy despite popular misconceptions to the contrary never results in a lost election, unless it impinges on the popular imagination as in the form falling house prices.

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There is another misconception that a dysfunctional economy such as that of the UK is self correcting or pressures from within society will lead to a correction of the failures within the economic system. Nothing of the kind is true,dysfunctional economies such as the UK’s can function as they are for many years unless some internal or external shock forces traumatic change in society. If the political classes can somehow convey the impression that they are in control of the economy nothing will change. Nonsense if dressed up as sound economic policy will be accepted by the people as a whole in an economically illiterate society. Strangely enough for a subject whose practitioners claim to subject the economic to forensic analysis, artifice and appearance are often what matters.

I am not alone in my analysis as today one economics commentator described the policy of the central banks as applying cosmetics to the mummified economy.

Spoken or written truths are not welcome in such situations as this when the political,class and the supporting cast of economists are all desperately reassuring us that everything is well. The shrillness of the abuse with which they shout down proponents of alternative strategies is an indication of weakness of their grasp of the truth. They are aided in the suppression of the truth by their media allies who through controlling print and media outlets can prevent any alternative strategies being published or becoming known. What matters is that only the same story is told by politicians, economists, industrialists, the media etc.

What should not be underestimated is the staying power of the fictional story that by manipulating the bank rate the government is in control of the economy. Fortunately for all in the governing classes economics is going through the ‘dog days’, when all pretence of critical objective analysis of economic affairs has been abandoned, in favour of just telling the one story. If it is possible to describe one of the social sciences as a dead science, that description is true of economics. There will never be a university economist who will state that the emperor has no clothes.

Given my interest in theology, I can cite a similar example. Belief in the Gods of Olympus persisted for hundreds of years, even through the late days of the Roman Empire, when the educated classes had long since abandoned such a belief. Conservatism and the usefulness of such beliefs to the government, who could manipulate the fears of the population through supernatural portents gave belief in Jupiter and the other Olympian Gods an exceptionally long life. Belier in the efficacy of manipulating bank rate to control the economy started in the 19th century and despite a few short periods of disrepute it continuing to be the main measure of government economic policy.

There will be another financial crisis possibly worse than that of 2008/9 and again economists despite all the evidence too the contrary will again say that it was an event that nobody could have predicted. Policies that were adopted in 2008/9 despite their evident failure will be used again, as to do otherwise would be an admission of fallibility among the ruling class of politicians, bankers, industrialists, economists etc. What is needed is a new governing class with a new set of stories about the economy, hopefully stories that are grounded in reality. That will only result from a major trauma within society that destroys the myth of infallibility that cloaks the governing classes. The last time this happened was after World War 11 when a series of military disasters destroyed the credibility of the governing classes, when they were replaced with a middle class imbued with the ideals of social democracy.

What should we do about the rich?

What to do about the rich, is a question never asked, yet this deviant group with its anti social behaviours is the one that inflicts more harm on society than do the much maligned poor. It is a poverty of resources that limits the harm that the poor can do to others. The most anti social might become muggers or burglars but the damage they can inflict on society is very limited. Usually it is individuals who suffer burglaries or muggings, whereas the rich or super rich can number their victims in thousands or at the most extreme in hundreds of thousands. Wealth gives the rich power, power over people which means they can hurt many more through their anti social or even criminal behaviours.

Having described the rich as a deviant social group, that deviancy needs to be demonstrated. Perhaps the most destructive behaviour is their refusal to pay taxes. A good society is one in which taxes are paid to finance those joint enterprises that benefit of society as a whole. Britain is a bad society as few of the rich, particularly the super rich pay taxes. In fact the higher up the social scale an individual moves, the more tax becomes a voluntary payment. Millionaire footballers and others can reduce the proportion of their income paid in tax to 2% through having their income paid into a company set up to receive their income. Some rich tax payers find even a tax of 2% onerous and become overseas residents to avoid tax. Unlike other countries the tax authorities in Britain aid rich residents to avoid paying tax. Given that some of the super rich find that the requirement to live six months abroad to qualify as an overseas resident is too onerous, the tax authorities allow them to break the six months into a series of extended week end breaks. There is one British millionaire who who qualifies for non residency status by taking to the air for the weekend. One estimate of the scale of tax avoidance is £100 billion (estimate. made by Richard Murphy the anti tax avoidance campaigner) which is just about 10% of national income. This huge tax avoidance is not cost free, public services such as health and education are left short of funds, the ill are delayed treatment and admission to hospital and classes in schools are constantly increasing in size due to shortages of teaching staff.

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Another deviant act are the ways in which the rich and super rich have managed to manipulate company regulation, to turn many businesses from being wealth creators into money harvesting machines. The ways in which this is achieved are numerous, but in essence they are all the same reduce; that is to the costs of production or service to a minimum (usually achieved through wage and staff cuts), if it is a service industry to reduce service to a minimum and to manipulate costs to make it appear that costs are much higher than they really are to justify high prices. There are also the various means used to artificially reduce profits to avoid tax, the most usual being to borrow large sums of money from a another company in the group, usually located offshore, any ‘artificial repayments’ reduce the companies profits and its taxes. The usual way in which this is achieved is through private equity, whereby a public company open to the scrutiny of all is turned into a secretive private business, where these changes can take place away from public scrutiny.

One criticism that could be levied at my analysis is that the majority of business is conducted by large companies which are owned by thousands of people and in some instances millions. However all companies are dominated by a few large shareholders, these large shareholders are often proxy companies owned by groups of the super rich. It is through these proxy companies that rich and super rich are able to manipulate companies to serve their own interests. These large shareholders can nominate their own directors knowing that the others will follow their lead.

In their greed for more money the rich often force these companies to adopt cost cutting measures that can impact very negatively on society. Due to such cost cutting as reducing their in house quality inspection services to a minimum, scandals such as the substitution of cheap horse meat for beef in meat products will occur with increasing frequency. Companies selling these food products are not subject legal redress and can continue with these dubious practices.

The very structure of business in which proxy company is layered on proxy company means the rich owners are never held to account for negligence even if criminal. If a company through an act of negligence caused an accident which lead to the death and injury to hundreds, it could avoid liability for its actions. All has to be done is for the company to be wound up and to the business to be transferred to a new company. This company cannot be held liable for any of the acts of negligence committed by the former company. The new company may be almost identical with the former company, it will have the same business premises and much the same staff, but as a new business it has no responsibility for the actions of the former business.

Usually the rich seek to corrupt the government as a means to protect their interests. Usually corruption is by means of illicit payment, but in Britain its a more subtle form of corruption. Corruption is by ideology, this ideology is Neo-Liberalism an ideology that states societies welfare is maximised if the free market is left free of all state interference. Intervention in the markets is regarded as anathema and so British government refuses to intervene even in the most dysfunctional of markets. They regard the various scandals in the food trade as a small price to pay for the benefits of the free market system, which are principally low prices. This ideology has such a dominant hold on the political,imagination in Britain the government invites businessmen to run services that would normally be undertaken by the state, hence the privatisation mania. They also advise government on the regulation of their industries, for example the manufacturers of pesticides run the service that advises on the use of pesticides. It is a system that is open to abuse, it can be compared to inviting criminals to advise on policing on the grounds that they best understand criminal behaviour.

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What is to be done about this deviant group, how are they to be stopped from doing harm to society? They like the criminal cannot be eradicated from society, their violent removal through revolution never ends well. Wise politicians have known that it is impossible to eradicate crime from society, but it is possible to minimise its harmful effects. The harmful effects of crime are minimised by having laws that outlaw criminal activity and a police force to enforce those laws. The sanctions for being caught are never going to be a deterrent to all criminal activity but they are a sufficiently effective deterrent to most criminal activity. To minimise the harm done to society by the rich, the tactics used by the judiciary and the police should be copied.

One of the most blatant abuses is the avoidance and evasion of tax. What needs to be introduced is a law which makes all tax avoidance illegal. This would remove the majority of the ways by which tax is avoided. Penalties could be introduced to penalise those that devised such schemes. At present accountants who devise tax avoidance schemes suffer no penalty if the scheme is found to be illegal. In such cases the only loser is the client who avoided the tax. As with policing any crime there needs to be an effective policing force, at present the numbers of British tax officials are too few to effectively police the system. Unlike other forms of government increasing the number of tax inspectors would increase and not diminish government revenue. After all there could be as much as a £100 billion in lost tax revenue to be recovered.

There is then the much trickier problem of what to do about the proxy organisations through which the rich rob society. Company law reform would be difficult to achieve, but some of the more obvious abuses could be quickly remedied. Setting up arms length companies in tax havens such as Luxembourg, Dublin or the Cayman Isles to acquire a head office in a tax haven for the purpose of avoiding tax could be made illegal. The argument is that by doing so it would result in a exodus of businesses to countries in which taxes were lower is unlikely. Some footloose companies would move but for most companies Britain is an important market and it is unlikely many would really go. The list of potential changes to the law is almost endless.

Convicted criminals while in prison are subject to education programmes, such an approach should be tried with the rich. Previous generations of the landed aristocracy has a strong sense of noblesse oblige, which meant that they believed that in return for the the privileges and benefits they received they had in return an obligation to improve the lives of the les well off. From my childhood I can give a good example. The Lord of the Manor on the estate on which my father was employed put into practice a welfare system to improve the life of his employees. He saw to it that all his estate staff were well housed, if necessary funding improvements to the housing stock, providing retirement homes for retired workers and treating well those unfit for full time work. There was on the estate a man blinded by gas in the First World War. He was employed to collect eggs from the hen houses and given a house to live on in the estate. If it had of not been for the charitable intent of Lord *** he would have been unemployed and forced to live on benefit. When his son inherited the estate he declared that this welfare system was too costly and brought it to an end. Children of the rich need to be educated in the ways of noblesse oblige, there is a price to be paid for wealth and the price is to behave responsibly. Why not compulsory lessons in civic responsibility for the rich?

What I believe is that until the most powerful deviant group in society is identified as such no action will be taken to reduce the harm they inflict on society. The super rich should not be celebrated, as they are not the ‘movers and shakers’ that are responsible for the dynamism that drives society forward but a group that is moving society backwards to an unpleasant past.

Stepford Teachers, Doctors, Social Workers the cloning of work

There is a film called ‘Stepford Wives’, which gave me the inspiration for this essay. In that film all the wives in the Connecticut town of Stepford are replaced by replicant androids, who unlike the former wives are submissive and docile homemakers. These androids only have one desire and that is to please their husbands. The men in this town have created a race of women who fulfil a particular kind of male fantasy. In the England a similar process is being adopted in the teaching profession, whereby the Department of Education is trying to create android like teachers who behave in identical ways and who are responsive to the ever changing demands of the Education Minister. In the film the intent of the dominant men is to erase any trace of feminism and independent thinking in their wives. Education ministers wish to eradicate child centred education from schools and any independence of thought or action from the teaching profession. What they wish to do is to create their own ‘Stepford Teachers’.

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Successive Education ministers have identified a series of qualities that they believe that make the ideal teacher. They have implemented training programmes to create teachers who possess those qualities. These new teachers have a limited range of teaching skills, which are those of the ministers imaginings. This imagining is informed by what are misremembered school days and are usually a range of rather mundane skills. Those skills must be quantifiable and measurable, otherwise how can these education ministers measure the success of their programme. Uwhat ever the skills they exclude those that are innovative and creative, as they are extremely difficult to measure.

Anybody with any experience of the classroom knows that the relationship between the learners and teacher is an extremely complex one that is not reducible to a simple range of skills. There is a degree of individuality to each distinct teaching session, in each the combination of circumstances that apply differ, even if it is the same teacher and class. Yet the education ministers believe that all teaching sessions can be reduced to a simple level of sameness which can be repeated over and over again, not only ‘Stepford Teachers’ but ‘Stepford students’. Sameness means dullness which will eventually produce a negative reaction in the students, as evidenced by one recent survey that found English students were some of the worst behaved in Europe.

There is one problem with creating a generation of ‘Stepford teachers’, they tend to be frozen in the time of their creation. They will as a profession be unresponsive to change, any change in the curriculum or teaching methods must be sanctioned from the top, only if the minister first can be persuaded of the need for change, will there be change. A story from the First World War illustrates the problem. A German plane dropped a bomb on some store house which immediately caught fire. The Australian troops rushed to the scene of the fire to put it out, unlike the British troops who assembled in parade ground formation waiting for instructions from the sergeant about what do about putting out the fire. Innovation and creativity will be lost from the English education system, a system which will have a tendency to repeat yesterday’s lessons rather than innovate.

Robert Merton’s manifest and latent functions can contribute the understanding the role ‘Stepford Teachers’ in the education system. The manifest or apparent function of The reforms are to improve state education, while the latent or real function of those reforms is increase the ministers control over the education system. Michael Gove is the latest in a sequence of education ministers who have behaved like latter day Ozymandias. What Shelley wrote about Ozymandias could be repeated about a succession of increasingly arrogant education ministers. On the plinth of the wrecked and disregarded statue of a once mighty Pharaoh are the words ‘King of Kings: Look on my works, ye mighty, and despair!’ The education ministers certainly try to impress themselves on the profession and country through a series of grandiose reforms.

Education ministers in their attempt to impose their wishes on a recalcitrant profession seem to have borrowed from the rulebook on governance used by Stalin. He understood that a combination of constant purges and revolution created an atmosphere of uncertainty which enabled him maintain control of the Soviet Union. Our education ministers purge schools of their staff and governing bodies by declaring them ‘failing schools’ . They then transfer power and control of these schools to their own favoured education providers who get rid of the old staff and replace them with new teachers. By constantly rewriting the rules by which schools are judged head teachers and staff can never be sure that their school will not be downgraded at the next inspection with dire consequences for them. Through exploiting such techniques which create uncertainty and fear the education ministers can ensure compliance with their dictates.

I am convinced that if one education minister decided the most effective teaching was done by teachers standing on their heads in front of the class not voice would be raised against such a proposal. Not only that but all teachers would be standing on their heads by the end of the week following the pronouncement.

What puzzles me is that these ministers are intelligent people who are usually parents themselves. In bringing up their own children they are too well aware of the difficulties of doing that successfully. One of the staples of discussion between any group parents is the disasters they experience in guiding their own children through the crises of childhood. These ministers must surely be the same as other parents. Yet these same people believe that despite their own limitations in educating their own children they are able to dictate to teachers how they should educate other people’s children. In the past ministers recognising their own fallibility would consult with educational experts and professionals before initiating changes in education. Now ministers believe that their own instincts and intuitions are a sufficient guide. Can there be a better demonstration of cognitive dissonance?

There is nothing unique to the changes that have occurred in the English education system, similar changes can be noted in all areas of the over managed English society. Usually the Neo-Liberal ideology is given as the cause of this unimaginative approach to organising society. Can I cite a different source the sense of self loathing and doubt that permeates the governing classes. This group in England is infected by a collective sense of failure. Their grandfathers were masters of the universe controlling the world’s largest land empire, their father’s fought a Great War then created the NHS and a new fairer England, whereas all the present governing class can do is manage England’s decline. Even the two last wars they participated in ended in defeat. All they can do is assuage their collective sense of failure in displays of conspicuous consumption. A group that is consumed with self loathing has a dismal view of humanity and cannot conceive of any positive or benign way of organising society, instead with such a gloomy world view all they can conceive of are authoritarian management systems that minimise the scope of individual deviancy. For them relying upon staff to be motivated by the public service ethos and to be allowed a degree of independence in deciding how best to provide that service is the height of folly. They know that the ‘stick’ is the best way to motivate them. This is why all our public services are increasing run on authoritarian lines.

This is why I fear for my future grandchildren’ education. All the reforms have the potential to make Dicken’s Dotheboys Hall seem to a chidren’s paradise with compared to the new schools peopled by ‘Stepford’ Teachers.

Why you can never understand what economists are saying

Being a theologian as well as an economist gives me an insight into the subject of economics that is denied to my non theological colleagues. When puzzling over the the current mundane level of thinking that passes for economic analysis, I came to the realisation that economics is not one of the analytical human sciences so much as a new mystery religion. A cult of economics that can be compared with the cult of Mithras in classical Rome or the Eleusinian Mysteries of dark ages Greece. Initiates in the latter achieved enlightenment by using psychedelic drugs, economists through years of confinement in economics departments. By a mystery religion I mean that religion whose truths are only known to its initiates, its truths are concealed from outsiders. While economists practise their craft in the full view of society their arcane truths are known to them alone. The language in which they conduct their dialogues and debates is incomprehensible to the uninitiated, that is non economists. Rather than it being a language of clarity that informs it is that of the obscurantist, a language that hides and conceals and deceives, a language almost totally devoid of common sense meanings. Gordon Brown was mocked for using the phrase ‘endogenous growth’ in one of his speeches, when what he meant was he wanted an economy that was characterised by self generated growth without the need of any external intervention. Economists never, but never speak in a language that people understand for that would take away from the mystique that attaches to the profession. It would also reveal the insignificance of much of their thinking and threaten their high status as experts.

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There is a better example of this from British economic history. All economists would agree that the free market economy of today is superior to the state managed economy of the 1960’s. Yet in the 1960’s unemployment averaged about 2% of the workforce, while today it is 7% of the workforce. Today the deficit on foreign trade is nearing 5% of GDP, it is the highest deficit of any developed country. In fact a trade deficit of these proportions more nearly resembles that of a developing country,that is that of a country insufficiently productive to pay for it’s much needed imports. Economic growth for the past five years has been below the trend rate of 2% per annum, whereas in the 1960’s it for many years it was over 4%. Only naive economists such as myself can fail to recognise the superiority of the dynamic free market economy of today, compared to the sluggish corporate economy of the 1960’s, we let statistics blind us to the truth. Economists judge the performance by other standards, standards which non economists are ignorant. Any apparent failures are but the consequence of the slowness of transforming the economy, unemployment is but a function of the existing remnants of the old dysfunctional economy persisting in their dysfunctional manner in the new age. Economists don’t need statistics they ‘know’ that their reforms will initiate a new golden age for the British economy.

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Economists who practice the cult of economics have created a new God, that in many ways is as barbaric as the Gods of classical Greece and Rome, a God that is the economy. This new God demands the sacrifice of the hopes and aspirations of youth to satisfy its demands. Youth unemployment averages over 20% in much of mainland Europe. Unemployment caused by the implementation of one of history’s most savage programmes of austerity. Economists believe Europe suffered a catastrophic financial crisis in 2008/9 caused by overspending, a problem that can only be put right by a savage programme of cuts to ‘balance the books’. A programme of savage cuts made mainly by denying employment to the young. The young ‘indignacios’ of Spain who rage against the austerity programme lack the understanding of economists who know that there suffering is necessary for the well being of the economy and that this is but the first stage in creating a better world for them. Is it unfair to compare the cult of economics to that of some primitive religion, whose practitioners believe it is necessary to sacrifice their young to appease their savage God?

What economists see is not the world as others see it, but one constructed according to their imaginings. They see in every society that the free market God is frustrated in its desire to create the good society. Frustrated by such as the devils of state intervention, trade unions and all the other enemies of free enterprise. Their beliefs blind them to reality, they don’t see a world in which young workers who lack employment rights are exploited by greedy and cruel employers. Instead they see a Britain in which labour is infinitely flexible, an economy whose labour force can adapt rapidly to change demanded of them. One of the boasts of coalition politicians is that Britain’s flexible labour force (easy to dismiss and paid near third world level wages) attracts foreign firms to invest in Britain.

How in a democracy have economists been able to persuade politicians to accept and implement the most inhuman of economic strategies? It is in a large part because economics is in a large part similar to the old mystery religions. Outsiders fail to understand the truths of the economists because the difficult language in which they are phrased makes understanding only possible to insiders, that is other economists. Politicians have long been persuaded of the desirability of supply side economics, without understanding what it really means. They believe it means increasing the productivity by policies such as improving schools and universities to give the young the skills to make them more productive. This is the nice but incorrect understanding of supply side economics. Below the surface of this public debate on supply side economics, lurks the very different understanding of what supply side economics means. It means changing the character and nature of the labour force to make it more suitable for employment in a contemporary society. Those ‘realist’ supply side economists lurk beneath the surface in institutions such as the UK Treasury and political consultancies and who seek to make politicians to adopt whatever inhuman policy is necessary to make labour fit for work in a people unfriendly economy.

One of the great concerns of the UK Treasury was the immobility of labour. Workers were not willing to move to find work. They saw labour shortages caused by labour’s unwillingness to move, as causing production bottle necks as firms lacked the workers to needed if they were to operate at full capacity. What they as saw causing this immobility was security of tenure, tenants in secure social housing or in owner occupied homes, were unwilling to give up their homes to move to find work elsewhere. Treasury officials saw the ending of security of tenure as the means to achieve this end.

They (the experts) could always sell this policy to the politicians who never really understood what the Treasury officials were saying as the technical language employed by these these economists hid its inhumane policy implications. One such technical term was the inefficient use of housing stock, what they by which they meant too many houses were under or unoccupied or under occupied for long periods of time. If tenancy agreements were changed to favour the landlord, more landlords would come forward to offer accommodation in areas of greatest need, such as London. This was made possible with the assured short term rental system. More important was the destruction of the system of social housing (council housing) which these officials believed discouraged tenants from moving from areas of high unemployment to those of low unemployment. Rather than go into the details of the policy changes, it is sufficient to say that the majority of social housing has been transferred from state to private ownership. What economists knew was that by changing the nature of the housing stock they would replace security of tenure with insecurity of tenure, with all its unpleasant consequences such as market abuse by unscrupulous landlords. What economists had persuaded the political classes was that PEOPLE HAD TO BE MADE TO WORK THE BENEFIT ECONOMY, NOT THAT THE ECONOMY SHOULD BE MADE TO WORK FOR THE BENEFIT OF THE PEOPLE. They could sell the new economics to politicians as making the economy more productive which inevitably would benefit all. However they knew that their actions would do the reverse as to benefit the economy one group in society would be impoverished, that those dependent on social housing. The reforms would create a new group in society the house and home poor.

The new economics can only be understood by using concepts borrowed from the study of religion. Those who had undergone a rigorous schooling in economics would have revealed to them the truths known only to economists, as in many cultist religions. It is this learned language that prevents the layman from participating in the cult of economics. Their only role is that of bemused bystander.

A similar criticism could be made of the study of physics or cosmology, but the difference is that these subjects seek to understand the world, not remake it according to the revealed truths of their subject. There is a religious like fervour to the study of economics; economists like the religious missionaries of the Jehovah’s Witnesses or the Church of the Latter Day Saints wish to remake the world according to the revealed truths of their belief system. Just because the revealed truths of economics come from a profane rather than a scared source does not exclude the cult of economics from being a contemporary religious belief system.

One final remark, the free market economy that economists believe in is as unreal as the God Mithras worshipped by Roman soldiers. The other night on the television I saw one cultist who stated that our current high level of standing was due to a combination of technological advance and the market economy. Only when such beliefs are recognised as just another cult belief on a par with that of Jehovah’s Witnesses will society be able to look to real solutions to its problems. Cultists are the only people that believe society is perfectible and that is why their beliefs are so unreal. Society is an organised mess and muddle, which can be improved but never perfected. Economics can help find the answers to problems as it does contain some very real insights into the nature of society, but not while it remains a cult belief system.

Don’t believe the pessimists who are our leaders, it is possible to build a better society

Western societies are affected by a paradox which is that as these societies become richer and richer they are less and less able to ensure that their peoples enjoy a reasonable standard of living. This is in large part due to the malaise that affects the political classes. They know something is wrong, they are disturbed by their inability to help the neediest, yet they believe it is impossible to help their peoples. All they can do is repeat the failed policies of the past and hope than eventually these policies will deliver better outcomes.

Their problem stems from the fact that work within a very narrow set of guidelines which are known as free market economics or Neo-liberal economics. Their policy mindset can be summed up in the following phrase, if the problem cannot be resolved by the actions of the free market that their is nothing they can do. When it comes to the unfairness of zero hour contracts they are unwilling to act for fearing to upset the market equilibrium and that their misinformed actions can only make the situation worse. They for instance fear that by putting restrictions on the use of zero hour contracts that they will by increasing the costs of labour will increase unemployment.

What our political leaders lack is a sense of ‘can do’, a political philosophy that validates their taking action to end the abuses in society. Although I cannot draft that philosophy, I can put forward a theory of economics that justifies an activist economic policy, and that is MODIFIED MARKET THEORY. One of the greatest problems afflicting society is gross inequality which impoverishes many people which in turn prevents them experiencing any of the benefits that should accrue to people living in one of the world’s richest societies. Rather than the free market functioning well, the market has become a dysfunctional mechanism which enriches the few that possess market power and impoverishes the many that lack any real market power. What is needed is a recognition that the market does fail and state intervention is needed to correct those failures.

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The Ideal Economic System

The market fails when the market mechanism rather than creating wealth impoverishes people. Market economies such as Britain have created a system of social and economic equality that is dysfunctional. Rather than being a wealth creating economy ours is a wealth taking economy, which only benefits a small high status group.

Critics such as our Neo Liberal politicians will criticise those such as myself for naivety. The core criticism is that we are being unrealistic as we fail to recognise the realities of a world in which people have unequal talents and skill. Life is a competition and its wrong to expect the losers in the occupational race to have the same income as the winners. There is even a theory of inequality propounded by Davies and Moore which explains the benefits of social inequality. They explain that inequality is an economic sorting mechanism which distributes the right people to the right jobs. Society needs the best people as doctors, so the best should be encouraged to become doctors by paying them the most. It is the competition that is training to be a doctor that weeds out the incompetent and leaves as the winners the best educated and most skilled practitioners of medicine. There is no society that would benefit if it paid road sweepers received the same salary as doctors, as that would result in a shortage of skilled doctors and many unnecessary deaths.

This is as an unfair criticism as we too are realists. We recognise that society is unfair and unequal and believe that inequality must be one of the principles on which society is organised. What I and others want is a narrowing of the range of inequality, we don’t see why being in a low status and low income occupation should deprive people of their rights to a reasonable standard of living. Social Democrats such as myself accept that the rich as with the poor will always be with us, what we cannot accept is that there should be a large number of people who are impoverished in a market society which deprives of many of the decencies of a civilised life.

David Ricardo clearly understood this problem when he wrote about the price of labour. There were for him two prices for labour, the natural and the exchange price. Their former was the price which gave the worker an income sufficient to pay for the necessities of life and the latter is the price which the worker gets when he sells his labour in the market. Problems occur when the exchange price of labour falls below that of the natural price, as is happening in contemporary Britain. Many workers are on zero hour contracts or work split shifts both of which pay a price for labour way below that of its natural price. These people are poorly fed, housed, face constant insecurity of income and employment, suffer disproportionate ill health, living a life coming to resemble that of the slum dwellers of Victorian England. (Having worked as a social worker on some the poorest housing estates, I can state that this is an unfortunate truth, not an hyperbole.)
One of the major evils that afflicts British society would be removed if all who wanted it could receive the natural price for their labour. This would enable them to participate in society and enjoy the benefits of a rich consumer society.

There is a criticism that can be levelled at the understanding that labour can have a natural price, and that its extremely hard to determine what would be a natural price. Already those advocates of a living wage accept that the living wage will be different for those in London and the regions. The real criticism is that the list of items that the person earning the minimum wage be able to purchase can be limitless. What are the necessities of life? How many of today’s consumer goods are one of life’s necessities, is for example a smart phone a necessity? Yes if an individual needs it for their work. When I fell and cut my forehead badly the surgeon took several pictures of the gash on her iPhone, including before and after surgery, to guide the surgery and my after care, so for her a smart phone was a necessity. The real problem is that what is a necessity is both relative to the individual, the society in which they live and the time in which they live. I have a silly example as an illustration. I heard on the radio a rich women saying that the rich have greater needs than the poor so they need a greater income as their lifestyle has more wants and needs. She needs to go the Opera and theatre, which is a want a poor person lacks. However despite these criticisms there is an answer.

The answer can be formulated in in terms of what a natural price is not. A person is not paid the natural price for their labour, if they are unable to feed and clothe themselves adequately, lack the income to purchase reasonable living accommodation and lack the income for those simple luxuries that make life pleasant. Why should not the poor buy a packet of cigarettes is it gives them a sense of relief from a life of hard labour and pain? If any of these is lacking they are not receiving the natural price for their labour. While it is impossible to give an exact monetary value to the natural price for labour, it can be used to identify those incomes that fail in to come near what is the natural price for labour. A pizzeria in London that pays only the minimum wage to its staff and gives them only the minimum hours of work is not meeting this criteria.

Similarly for coffee addicts such as myself paying perhaps 10 pence more for a price of coffee is not a great hardship. Even if it increased it by 20 pence a cup that would be little compared to the future price rises that are in the pipeline. Climate change is adversely affecting the coffee crop both in terms of quantity and price and this will result in huge rises in the price of coffee. At present my small cappuccino in Starbucks costs £2.15 a price which could conceivably rise to £3 in the near future.

What I don’t want to do with this essay is describe in any great detail how the government can ensure that all who want can earn the natural price for their labour. Intervention can be justified because the labour market is broken, its dysfunctional, by its very nature it prevents millions earning the natural price for their labour. Our politicians who claim that any state intervention would have a malign effect on the labour market are those who have not recognised this fact.

There would need to be further interventions in the market other than legislating for the introduction of the living wage. If the example of London is considered it can be seen how inadequate is the concept of a living wage. Prices for accommodation are exorbitant, high rental prices deny the majority the option of having decent living accommodation. If the living wage was increased to take account this fact the average London income would have to rise in excess of £50,000. Obviously such a large increase in incomes would be inflationary and would have a negative impact on the London economy. The only practical solution are rent controls, controls that reduce rents to an affordable level. If the cuts were large enough it could reduce the need for a large increase in the living wage. Yet again there is every reason for the state to intervene when it is obvious that there is a failing market. There is only one beneficiary from the housing market being organised as it is and that is the 2% of the population that are landlords. A figure that rises to 33.3% when the question is asked what proportion of MP’s are landlords. This is a group who aggressively promotes their self interest over that of the nation.

The defenders of the current private rental market claim that rent controls would harm tenants as many landlords would withdraw from the market and cease to rent out property. This is extremely unlikely, as many have borrowed heavily to buy their properties and would not want to risk personal bankruptcy. A timely rise in the bank rate would make it even less likely to happen. There is no reason why a system of fair rents would not allow landlords to earn a reasonable income; all that’s preventing it is the current extortionate high prices in the property market. Landlords have for a long time been the beneficiaries of an unfair housing market being indirectly subsidised in their life style by the state paying housing benefit to finance their accommodation of their tenants.

To conclude I want to return to Victorian Britain and its writers. When studying this period at university I was made acutely aware of the fear of destitution in the middle classes. Dickens demonstrated this in his character Wilkins Micawber who is best known for his phrase “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.” At the end of ‘David Copperfield’ a destitute Wilkins Micawker is fleeing England for hope of a better life in the colonies. Britain in the immediate post war period and up to the 1980’s had freed from the minds of the people the fear of destitution, now that fear has returned to the minds of the people.

To conclude I want to return to Victorian Britain and its writers. When studying this period at university I was made acutely aware of the fear of destitution in the middle classes. Dickens demonstrated this in his character Wilkins Micawber who is best known for his phrase “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.” At the end of ‘David Copperfield’ a destitute Wilkins Micawker is fleeing England for hope of a better life in the colonies. Britain in the immediate post war period and up to the 1980’s had freed from the minds of the people the fear of destitution, now that fear has returned as is to real.

Why the British will never have an efficient or effective railway system.

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In Britain we have some of the highest bus and train fares in the world, yet the service we pay for is one of the worst in the developed world. Wherever you look in the UK the public transport system is a mess. How is it that the sixth wealthiest country in the world is unable to develop a system of public transport that works? Economists will give an answer couched in economic theory but I think the answer is to be found elsewhere, in the British political culture. I take as my starting point a comment made by Saul David about the Victorian army, the officer class as a whole disliked clever officers. This belief has persisted through to today our contemporary governing classes. A characteristic demonstrated most clearly by our First World War Generals. One German soldier observing the conduct of our troops at the Battle of the Somme, said they were ‘Lions led by donkeys’. Then General Rawlinson who commanded the conscript army at the Somme believed the conscripts were incapable of mastering good soldiering skills, so ordered them to advance in line abreast much like Wellington’s soldiers towards the German machine guns. The result was a slaughter. This same lack of imagination, the inability to consider alternatives is still the cultural mindset in today’s governing classes. Once this group fixes on an idea it refuses to change, whatever the evidence to the contrary. Within Westminster the privatisation of the public services such as railways is the current ‘idee fixe’ despite evidence of the many failings of the rail system. Just like a World War 1 General bringing out a dubious set of statistics concerning German casualties after yet another failed offensive, transport ministers can produce one dubious statistic after another to demonstrate the success of the privatised railways.

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There can be several from our current political leaders who fit the General Rawlinson typology of unthinking leader. My favourite example is the Shadow Chancellor of the Exchequer, Ed Balls. He when pressed by members of his party to renationalise the railways, in response uttered the memorable nonsensical phrase, that he favoured a ‘non ideological’ approach to the management of the railway service. What he meant was that he did not want the state management of the railways, believing instead in the superiority of current market based approach. He stated that in future government owned ‘arms length’ railway companies (the only similar business is the state owned mutual, that is Welsh Water, run independently of the Welsh government) would compete with private companies for rail franchises. Many have pointed out the impracticalities of the scheme. Samuel Johnson memorably described the philosophy of Rousseau as ‘nonsense on stilts’, a phrase I would apply to Ed Balls approach to railway management. It is hard to think of a more unrealistic approach to the running of the railways.

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Interestingly it was criticised not for its impracticality, as it fell within the accepted parliamentary consensus of views, but for its lack of ideological purity. Within Westminster and Whitehall it is considered a heresy to believe that the state could provide any public service better than a privately owned business.

Any thought given to Ed Ball’s scheme will demonstrate its impracticality. This and the previous Labour government have stripped the department of those top level ciivil servants, who could prepare a tender for one of the rail franchises. Instead the government would have to call on one of the many private consultancies that advise the rail industry to prepare its tender. Given that there is no existing government rail company (the state owned East Coast railway will cease to exist when its franchise runs out) it would be an imaginative paper exercise on what a hypothetical state owned railway company. Perhaps the best sign of a failing political system is when politicians resort to meaningless paper exercises as a substitute for decision taking.

Charles Dickens in his novel ‘Bleak House’ described the template for the model of British political governance. In the case of ‘Jarndyce and Jarndyce’ the case continued interminably only to cease when legal fees had swallowed up the capital in the contested inheritance and the lawyers could no longer be paid. Fortunately for transport consultants their excessive fees will never exhaust the available funds as the fund is constantly replenished by tax payer monies. What successive governments fail to realise is that it matters little to this army of consultants whether or not a project is ever finished as they still get paid, they as with the lawyers in ‘Jarndyce and Jarndyce’ consultants have an interest in spinning out the consultation process for as long as possible. Already the unbuilt HS2 (the proposed high speed rail link between London and Birmingham) has incurred costs of £1/4 billion largely in consultancy fees without a rail being laid. Each time their is significant opposition a new consultant’s report is required to answer the questions raised by the opposition. When HS2 is finally cancelled it will be the final proof of the inability of the government to undertake large scale transport infra structure projects.

There is a concept rarely used in contemporary economics and that is the natural monopoly. A natural monopoly occurs when the market conditions favour there being only one supplier of the service or product. This type of market occurs where there are very high capital costs to providing a particular product or service. One such example is the huge costs of a railway system, there are the costs of purchasing rolling stock ( one of the new HST125 train engines cost Great Western £5 million) and the cost of the construction and maintenance of rail track. It is this reason why the nationalised British rail scrapped the North Devon railway line, because it was competing with the South Devon line to take passengers to Cornwall. It was uneconomic to have two competing rail lines. There is at present one railway between London and Leeds and it is perfectly feasible to build a competing line covering the same route. There would then be two companies competing to take passengers on this route, but given the huge costs of running a rail system, any price war between the two could bankrupt them. More likely they would be too aware of the disastrous consequences of a price war and they would come to some agreement to divide the revenues between them. Another way of staying in business is to keep investment to a minimum. This is what happened in the period 1919-1948, prior to the nationalisation of the railways. While other developed countries had introduced the new rail technologies, British rail companies were still operating steam engines (The technology of the 19th century).

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This is were the comparison with World War Generals comes in, they failed to recognise the realities of contemporary warfare, that was the machine gun and barbed wire, contemporary politicians fail to recognise the realities of the rail market. When the government in 1993 privatised the railways they failed to recognise that railways were a natural monopoly and that there could only be a monopoly provider of rail services. Politicians never read history and if they had they would have been familiar with the story of George Hudson and the railway crash of 1859. Prior to 1859 there was the railway mania when rival companies set up competing rail companies to the same destinations. The market could not support so many rail companies so many rail companies made little or no profit train services a situation that could not continue. When this became knowledge there was a financial panic which saw many rail companies bankrupted. After that there was the consolidation of the railway system to reduce competition so much so that by 1947 there were only four railway companies each being a regional monopoly. However the political classes have the collective memory of the codfish, which is reputed only to be able to remember the last 10 seconds of its life and being ignorant of the past they embarked on the folly of rail privatisation.

Once the process of privatising the railways began the politicians and civil servants preparing the legislation began to realise the difficulties of grafting a competitive model onto a natural monopoly. Whatever they did there would still be a monopoly provider of rail services on particular routes. The solution they adopted was to have time limited franchises, so they could claim that there would be competition for the franchise whenever it came up for renewal. Not competition today or tomorrow but in five years time. A very unusual competitive market that limited competition to specific time slots.

Whatever the benefits to society of a rail network most of their services run at a loss. Therefore the government devised a system of subsidies to be paid to rail operators, while it was claimed that it was a subsidy for running unprofitable services, it was in reality a subsidy to make each rail franchise profitable. No private rail operator would bid to run a rail service unless it could be guaranteed a profit and that was guaranteed by the subsidy system.

To disguise the uncompetitive nature of the ‘new competitive rail market’ all contracts between the government and rail companies are secret. The excuse given is that businesses who bid for rail franchises require commercial confidentiality, as a knowledge of one businesses costs would enable a rival to set costs below that of a rival. Publication of the details of a contract after completion would confer little benefit on rivals, because all cost calculations etc. will change over time. The real reason for confidentiality is that these contracts would not stand up to public scrutiny. Secrecy is the best guarantor of continued bad practice.

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Passengers forced to get on the temporary bus service between stations, because of some failure on the rail network, should recognise that the failure lies not with the rail operator but with the politicians who devised the system and who are committed to its continuing into the indefinite future. It is in the nature of business to provide the minimum service it can get away with, as reducing costs is the most effective way of increasing profits. It is in the nature of feral profit takers to behave in this way to expect them to behave contrary to their nature is foolish. The fault lies with the politicians who decided that this unworkable system of rail management is the only one that is possible. They cannot conceive of an alternative system. There are probably clever cynical politicians who realise the rail management system is an ungovernable mess, but realise that to speak the truth would damage their career.

Cleverness is still frowned on in the army, which continued the ignoble British tradition of sending too few under equipped troops into conflict, as demonstrated in the Afghan conflict. In the Helmand province an area of British army governance, the lack of numbers and attack helicopters prevented the British army from effectively taking on the Taliban. Only when the well equipped American marines arrived were the Taliban driven out of Helmand province. When intelligence is a quality frowned on in the governing classes, it is doubtful that any government could deliver a high tech infra structure project such as HS2.

Mean spiritedness pretending to be sound economics. The ending of free fares for senior citizens.

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There is a mean spiritedness in contemporary culture which masquerades as economics. One good example is the public debate over free fares on public transport for pensioner or senior citizens. Bus companies have been complaining that the revenue that they get from the government is an inadequate return for transporting all these pensioners. They claim it is the cost of transporting all these extra people for minimal return that is hitting their profits. There is at present a dispute going on between pensioners in Barnsley and the South Yorkshire Passenger Transport Executive (SYPTE). The executive wants to end free travel to the Meadowhall, (the great shopping mall) in Sheffield and impose a charge to help fund the cost of providing the service. What from a common sense point of view seems to be reasonable, is in fact poor economics. Unfortunately the UK suffers from a surfeit of poor economic decision making.

Listening to the SYPTE its seems reasonable to suggest that the pensioners from Barnsley should make a contribution to the increase in costs consequent on the large number of pensioners travelling to the Meadowhall shopping centre. However there is no extra cost imposed on the train company through having to transport large numbers of pensioners to their favoured destination. The company is already running running a regular train service from Barnsley to Meadowhall and it is not putting on any extra trains to accommodate these pensioners. The real cost of transporting these extra passengers is zero as the company is already running these trains. Only if they provided more trains would there be an additional cost. There are also no extra staff employed either to man the stations or run the trains, so no additional costs there either. In fact the subsidy paid by the central government and local authorities for transporting pensioners adds to their revenue.

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What has hit companies most is the cut in government subsidies for the running of train and bus services. This has really impacted on their revenues and free travel for pensioners has little or nothing to do with this loss. Already fares on trains and buses in the UK are the highest in Europe, so the public transport companies are already doing their best to squeeze every last penny out of the travelling public. Obviously they feel frustrated that government policy exempts one group, the pensioners or senior citizens from this policy.

Any service that is free at the point of use has attracted the ire of big business. They will claim that without the discipline of price, people will wastefully use free services as it costs them nothing. Yet there is little evidence of public transport companies having to put on extra bus or train services to accommodate these free loading oldies. However it does make it more difficult for them to reduce bus and train services, as they are denied the excuse that these services are not needed as the demand for them from pensioners is high. Yet this has not stopped bus companies in Yorkshire cutting services, its only made it a little harder for them to make this decision, as their under used service excuse has been removed.

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While it is impossible to obtain accurate figure for the cost of a bus, the new double decker buses bought for London will cost £300,000 each. Given that many of these buses will be purchased by central or local government and then hired out to the various bus companies, it is a great waste of tax payers money if they are under used. In London alone £180 million was spent by Transport for London on new buses. If bus companies cut services and leave these buses in the garage for increasingly long periods of time, it represents a very poor return on tax payers’ money. If the extra demand created by pensioners really did mean these buses undertook more journeys it would be much better investment of tax payers’ money.

The companies claim that if these pensioners paid the full fare their finances would be transformed. This ignores the fact that most pensioners that use public transport are on low incomes and any increase in bus fares would reduce their demand for bus travel. The rich ‘baby boomers’ who could pay the higher fares will be using their cars rather than using uncomfortable public transport. The basic state pension is £113 per week and any additional benefits pensioners get will be spent on housing or energy costs. For me to travel to the centre of Leeds on the bus costs £2.00 or £4.00 for the return journey, which is a small but significant part of the basic state pension. Looking at the off peak buses I use, I estimate that each contains between 10 and 30 pensioners, a number which would would be considerably reduced if they had to pay the full fare. Now if the number of pensioners using these buses fell to 2 or 3 there would be little financial gain for the bus company, possibly even a loss as the pension subsidy for 20 passengers would probably exceed the revenue from 2 to 3 passengers paying full fare. While I can only speculate as to the reduction in passenger numbers, it is unlikely that by ending free fares for pensioners the public transport companies would gain much in extra revenue as low income pensioners would probably cut the number of journeys they made to the detriment of the bus companies wallet. There has been no research into the real loss or gain in revenue due to providing free pensioner fares, all there has been is speculation.

If public transport companies are really losing money, there are better ways of increasing their revenues than by ending the free senior travel passes. The much more effective way would be through reforming the structure of the large dysfunctional inefficient multinational companies that run public transport services. They are structured to provide the maximise the financial return to their owners not to provide a good transport service. My example of the inefficiency of these companies is a personal one. When I came to Leeds in 1970 the bus I travelled on then is very little different from that on which I travel today as a senior citizen. Forty years in which there has been minimal technological advance demonstrates the inefficiency and technical backwardness of these companies.

Why politicians would benefit from reading fairy tales

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Folk tales and fairy stories with their black and white characterisation for example the evil step mother and the virtuous, noble and abused step daughter are characterised as stories only for children. Their tales of good and evil are seen as being far too simplistic for adult reading. This is a misreading as the fairy tales we tell our children are but sanitised versions of the original folk tales. In the original story the step sisters cut off parts of their feet so as to fit their feet into the glass slipper. What is not understood is that folk tales are but attempts to explain the malevolent world in which our peasant ancestors lived. Fairies were not seen as good but as spirits that had to appeased as angering them could result in misadventure. When the Church insisted this was a good world created by God, how could the misfortune that people suffered be understood except by understanding there must be a lower level of supernatural beings who were responsible for the evil men suffered. What our peasant ancestors saw was that they lived in a world in which good and evil co-existed, not so simple but realistic.

This simple world view is in contrast to the sophisticated society of today. Rather than the simple black and white world view, it a world view of greys, varying from the darkest of greys (bad) to the palest of greys (good) and between these two there are a whole series of different shades of grey. However bad is not totally excluded, but bad only applies to those people, the psychopaths who operate outside the normal range of behaviours. When morality is seen from the perspective of the political and dominant social classes there is an incredible fluidity to moral concepts, particularly when the politeriat who govern Britain is considered. This merging of good and bad can be seen in the concept of the just war. Killing is bad except when its undertaken as part of a just war. St. Augustine defined the concept when he cited the conditions under which a soldier could kill to defend his country. Others such as Thomas Aquinas further refined this concept. While there was justice in fighting the Second World War to remove Hitler the concept becomes stretched to breaking point with the Iraq war. Our leaders invented the threat of Saddam Hussein’s weapons of mass destruction and the threat they posed to the West to make the war just. One bad example does not made a moral principle bad, however the concept is open to misinterpretation or abuse, as political leaders are always tempted to give it a meaning that suits them. Government’s never fight bad wars only just wars.

Goodness takes on an incredible diversity of meanings when used by politicians. Good for them is the greater good, a good which only they understand. Only they can make the greater good a reality. The austerity programme the UK government imposed on society is for the good of all. It will like the medieval practice of bleeding purge society of ills. All very reminiscent of Stalin, who regularly sent thousands to the death camps, for the good of Russian society. Killing thousands of Ukrainian farmers led to starvation and the death of millions. Britain’s austerity programme has impoverished millions and the spread of poverty level wages has reduced demand and slowed the recovery from recession. When political leaders define good or the greater good it rapidly loses any moral content and all kind of evils can result from this. The Iraq war was intended to achieve two goods, the removal of weapons of mass destruction that threatened the West and the freeing of the Iraqi people from a cruel dictator. Instead of it being a being it good action the reverse happened. Thousands were killed in a bloody civil war consequent on the invasion and now the country is threatened with a new civil war, one against an extremist Sunni militia.

Perhaps if George Bush and Tony Blair had a sounder understanding of morality than they displayed at the time, they would not have committed themselves to the folly of the Iraq war. Politicians have long given up reading Christian moralists such as Erasmus, but if they had not, they might have come across his article entitled ‘War is sweet to those who have never tried it’. Nothing is new, ambitious princes have always through the folly of war damaged the health and welfare of their peoples.

There is a danger in our contemporary society of having leaders lacking any fixed moral reference points. If good is a flexible thing only given the meaning that the leaders and political class give it, there is nothing to stop them committing inhumane experiments of their people. Stalin, Mao and Pol Pot murdered millions in the name of their self proclaimed goods. On the same spectrum but at the other end our politician practice inhumane experiments on us. Austerity is perhaps the worse, although there are plenty of other examples. Children in Britain have had to endure endless experiments with their schooling experiments of varying degrees of cruelty. Education ministers impose diktat after diktat on our schools which seem destined to introduce the spirit of Gradgrind into our schools. Schools are becoming akin to Victorian factories with child labourers repeating a series of unending mundane tasks. Experimentation is not limited only to our children but also to the sick, the disabled and the young unemployed, all the major political parties seem to be engaged in a competition to produce the most inhumane policies towards these groups. When any real understanding of the good is lacking, cruel and inhumane policies will result not so much from a sense of cruelty but an inability to see people as other than things, just another resource. Possibly the bear pit that is Prime Minister’s Question Time is the best representation of the callous unfeeling nature of our politicians.

Not recognising or understanding good is only one part of the problem, the other is the failure to acknowledge the bad. Children understand that out there are bad people, be they evil fairies, step mothers, dwarves or trolls. Politicians having no conception of bad fail to recognise bad people. The evil financial wizards who managed to make billions disappear were never recognised for what they were, in fact many of them were rewarded with titles from the government. Similarly politicians never recognise the evil trolls, dwarves and queens that populate the market. There are many bad landlords who charge exorbitant rents for unfit housing, yet politicians don’t recognise that there can be bad landlords and that only government regulation can resolve this problem. When reforms of the private rental market are suggested, a chorus of ministers, politicians and journalist cry it is impossible. They claim that any regulation would make the market worse, claiming that regulation would force landlords to withdraw from the market. Conveniently ignoring that those self same landlords have borrowed vast sums to buy their rental properties and it would be suicidal not to let them. The free market for them is an unalloyed good in which their can be no bad or evil. Bad landlords are not a problem that the market can’t resolve.A child from their knowledge of fairy tales would recognise really do exist, while politicians with a moral free sensibility cannot.

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There has always been a clash between doing what is expedient in politics and what is principled. However what is unique in the present parliament is the lack of great principled individual politicians, our current parliament is a moral free zone. All the great reforms of the past have been driven by outstanding principled leaders. Lord Shaftesbury a Christian politician was the driving force behind the ending of child labour in the factories and Non-conformist Christian politicians such as Keir Hardie, Lloyd George and Aneurian Bevan were largely responsible for the creation of the welfare system, which their moral free successors are in the process of hastily dismantling.

It would be naive to claim that the politics practised in the past was much superior to today, but then unlike today there were moral giants who could drive through measures of social reform. One has to ask why is our parliament populated by a generation of moral pygmies? Perhaps an answer can be seen in the education of our predecessors. Not so much academic education as their education in values in the wider community. Wilberforce and Shaftesbury were evangelical Christians, Lloyd George and Aneurian Bevan were Non-Conformists and it was their Christian education that gave them a fierce attachment to a compassionate value system. Interestingly Lloyd George was as venal in many respects as our contemporary politicians, a womanising politician who willing sold political office; yet he was redeemed by a greater moral vision. What is lacking in contemporary society is the moral counterweight that the churches in the past provided to unbridled self interest. The great universities educate politicians in the practicalities of government, usually in PPE (Philosophy, Politics and Economics). Contemporary philosophy courses teach scepticism, politics courses the art of vote winning and economics the management of society, skills needed for the second rate political Machiavelli’s. As an economist I tend to single out economics for the greatest part of the blame, it is the great leveller, a subject in which everything is reduced to a material benefit or cost, much like Oscar Wilde’s cynic who knows the price of everything but is ignorant of the value of anything. Economics I believe has a tendency to shrink people’s moral vision. Particularly as current Neo-Liberal economics teaches that the economy is best left untouched by government intervention and that it is the unregulated free market that will deliver the goodies that people want, be it a home or high quality medical care.

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What is moral in a government that values the interests of the drinks industry above that of the health of the community. Successive governments be they Labour or Conservative have facilitated the expansion of the drinks industry by easing the licensing laws. Our more principled ancestors (Non-Conformist politicians) recognised the evils of too free a consumption of alcohol and introduced licensing laws. Neo-Liberal economics teaches that the greatest freedom is the freedom of the individual to consume what they please. The costs to the health service of alcohol abuse, the increase of the number of babies damaged through alcohol fetal syndrome and alcohol induced violence count as nought against the individuals right to self abuse.

The present cannot be remodelled according to the ground rules of the past societies. It is not possible to reinstate the church as a powerful institution in society and it is probably not desirable. There are too many examples from the past of the church abusing its powerful position, not least with the burning of heretics. One answer is to demote the inhuman human sciences from their dominant position in the political and public dialogue. Plato does for me provide a way forward, he said that whoever knows good desires nothing else. What he meant by this was that the study of the nature of good has the potential transforms the human personality. (Such a brief statement does not do justice to the complexity of Plato’s thought, to do it justice would require a lengthy exposition.) Only Christians take the study of good seriously, university ethics courses teach students that good is an unknowable concept and at worst an emotion. I guess contemporary philosophers would be unsuitable to the teaching of good and probably only theologians could teach it without self mockery. What I desire is a reordering of the university syllabus particularly for the great and good in the elite universities. Obviously I am not naive enough to think this teaching would modify the behaviour of the great and the good that enjoy the ‘frat boy’ life style at university, but it might produce a new Lord Shaftesbury to be a moral counter weight to the moral free sheep that populate our politics.

Why economists should be banned from public life; it’s for the good of us all

Can economists ever do good for human kind? If its contemporary economists that the question is asked of, the answer must be no. There are a few exceptions but generally speaking economists support the most inhumane of political experiments on mankind. With very few exceptions they have been the cheer leaders for the programme of austerity that has been inflicted on societies in Western Europe and the USA. Possibly there is some poetic justice in this turn of events. The leader of the IMF is always a European and the IMF has wreaked havoc on the economies of the developing world over the past decades. Whenever a developing country has turned to the IMF to finance its debts, the money has only been given on the condition that the country adopts the harshest of austerity policies. Health and education services are always the first the IMF insists on cutting, its a kind of perverse morality that believes the inhabitants of poor countries are deserving of poor health and education. Now the EU has adopted the same austerity policies to protect the debt holders (in this case German banks) who over invested in the Greek economy. The loans that saved the Greek banks from bankruptcy was only given on condition that Greece adopted the policies that turned the country into a basket case.

What I would like to suggest that governments adopt a ten year moratorium disbarring them from employing economists for that period. Society would be far better governed if politicians took responsibility for their actions instead of outsourcing the decision taking and blame to others. Perhaps if Tony Blair instead of sending his shadow cabinet on a business consultancy course but one on moral philosophy the horrors of the Iraq war may have been avoided. Infra structure products are hopelessly delayed as government invariably outsources decision making to think tanks, such as ‘The Adam Smith Institute’ or in the case the Third Heathrow Airport to an economist called Howard Davies. Stanley Baldwin when under pressure from the press barons to reverse his policy giving self governance to part of the British Empire spoke of them wanting the prerogative of power without responsibility, this is the prerogative of the harlot. The current generation of politicians want neither the power or the responsibility, just the opportunity to enjoy the trappings of power. The British government will not make the final decision on the High Speed 2 railway, that will be left to others.

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There is a striking counter example which both throws light on the poor political governance of the UK and that is the Senate of Republican Rome. The Senate before it authorised any major action by the Roman State, asked the Pontifex Maximus (High Priest) to read the auspices to assess the prospects for success. This involved divining the attitude of the Gods to the enterprise by examining the entrails of a sacrificed animal. If the enterprise failed it was because the priest reading the entrails had made an error and had failed to recognise the hostility of the Gods to this enterprise. Today economists are asked to perform the a similar ritual, it is the economic report into the viability of the project. They read the auspices by examining the entrails (statistics) of the economy. While it is not hard for a minister to find a tame economist who will divine the government’s intention and predict the success of the enterprise, our system has one major flaw and that is the divining the auspices rarely delivers a single definitive reading. There are several economists who claim to perform the economic ritual better than the chosen government economist. They will deny that the government economist gave the correct reading of the economic auspices which generates confusion as to what is the correct reading and hesitancy in decision making. Their are too many high economic priests.

George Osborne the Chancellor of the Exchequer is the driving force behind proposal to build a new town at Ebbsfleet in Kent. What I can predict is that is that there will be numerous other economists claiming that the entrails were read incorrectly by the Treasury and that a new town is not needed or that Ebbsfleet is the wrong location etc. Putting a measure in the Queen’s speech does not guarantee that the town will ever built, as it depends on the agreement of that quarrelsome collective the economists to sanction it. With the government having outsourced decision making to the economists, I cannot see the new town of Ebbsfleet being built. Rather it will be a project whose merits will be debated into the indefinite future.

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Despite the Roman system of decision taking appearing to depend on the whim of a supernatural deity, it was far more effective than ours. Firstly the Roman Pontifex Maximus (High Priest) was a senator and was always a powerful figure , unlike in Britain where the equivalent of the Pontifex Maximus is an outsider and is not regarded as an authoritative figure by other priests (economists). In Rome the reading of the auspices was merely confirming what the most powerful group in the Senate had decided. Murder was not an uncommon way of eliminating one’s opponents, as eliminating one’s opponents either ensured that only your supporters remained in the a Senate or it cowed the opposition into acquiescence. Mark Anthony was initially a gangster used by Caesar to intimidate his opponents in Rome. Our political leaders have rarely decided in advance what the policy will be, even if they favour one decision over another, they still outsource the decision to others. Economists the chosen group of outsiders lack the authority of the Pontifex Maximus, they all claim to be the Pontifex so there is no authoritative policy statement. What makes the Roman Senate a superior policy making body to the British Parliament was that the ritual was subordinate to art of decision making, whereas it is the reverse in the UK. The Senate unlike the British Parliament could make decisions even if they were bad ones. A similar phenomenon can be observed in the US congress which also appears incapable of decision making. One of the few policies Congress agreed on was designating the tomato sauce on pizzas as being one of an individuals five a day portions of fruit and vegetables. Congress can agree on meaningless acts but avoids difficult decisions.

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Another advantage of the Roman reliance on the Gods providing supernatural policy sanctions is that such authority is far more persuasive than that conferred by economists on government policy. If the Senate wanted to oppose a particular policy, usually one that favoured the lower order the plebeians, they could claim the opposition of the Gods. Threatening natural omens would be reported such as cows with two heads all suggesting that the Gods were angry. Claiming a policy that you don’t favour will make people worse off, does not carry the same threat as a policy that angers the Gods.

It may seem strange to state that the decision making process of the Roman Senate is superior to that of the UK government, when it has access to a wealth of economic statistics and computers to aid decision taking. I argue that the Roman system was superior because the Senate’s decisions were made on qualitative grounds not quantitative. A boldness of vision comes naturally to individuals who celebrated virtue. Their moral exemplars were men such as Lars Porsena who burnt off his right hand to demonstrate Roman courage and steadfastness to the enemies of Rome, who held him captive. British politicians schooled in the world of cost and benefits are incapable of any grand vision. It breeds a kind of modesty in decision making and with it a desire to avoid big difficult decisions. There was a heroic generation of British politicians it was those who had guided us through a Great War. It was that generation that gave us a National Health system, free legal aid so the poor would be on an equal footing with the rich in court. Both of which our modest generation of pseudo economists want to end because of their supposed ‘unaffordability’ . The grandest vision any contemporary politician could envisage, is cutting the cost of a public service. In these modest time the hero is the cost cutting politician. Certainly there is not one contemporary politician who venture any project as grand as a national health service.

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This is why this particular economist wants all economists banished from government and all forms of public service. I want to take away that prop politicians use to avoid making decisions, that is the economy, when everything is deferred due to economic considerations. University education is too expensive so the pseudo economists increase university fees to £9000 pa. The consequence is that a black hole develops in university funding into which the government is having to pour more and more money. Stupidity rules in Westminster/Whitehall masquerading as economic good sense, if higher education is really that unaffordable why not just cut the number of university places, instead of using the economic fudge of pretending it will be solved by increasing fees.

One further observation the contemporary Lars Porsena would not be the one who resisted the over mighty enemy, but the one who capitulated to the enemy and who facilitated their aims. Successive British governments when faced with the problem of tax evasion and avoidance by the rich and powerful, rather than taking action to end this abuse of power and offend these powerful men instead took action to make tax avoidance easier.

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