Tag Archives: Charles Dickens

The Corrupted Human Spirit

economic history, Economics, Education, Philosophy, , , , , , ,

What economics lacks is the space to include other human sciences such as philosophy in the scope of its subject matter.  Philosophy has the grand vision that is usually lacking in economics, which is all too often a science of the minutiae of life. One concept outside the understanding of economists is Hegel’s zeitgeist or the spirit of the age. What Hegel means by this is that there is one overall idea that animates a period of human history. It is an idea which expresses the characteristics of an age, such as the ‘bélle époque’ of 19th century Paris. A Paris of the freeing of human spirit, painting was freed from the old conventions demonstrated in the art of the impressionists, the vitality of popular culture was epitomised by the exuberance of the ‘Can Can’ yet this was a freeing that also allowed the darker side of the human spirit, corruption and venality to thrive. French politics of this time was characterised by a series of corruption scandals. As a believer in the zeitgeist, I wondered what was the spirit of this age? What was the spirit that informed human behaviours in our contemporary world?

Usually this is seen as the age of Neo-Liberalism ,  yet that phrase needs explaining. According to its advocates the freeing of the markets will lead to a freeing of the human spirit. Yet the art of the age does not seem to embody the freedom of the human spirit, rather it embodies the spirit of reproduction or copying. One art work that epitomises this spirit of reproduction is an art work by Damien Hirst, it was a series of dots on a white background. These dots varied only in colour but not in any other way. They seemed to have been placed in lines on the screen only the colours of the dots seemed to be chosen at random. I as a viewer could see little creativity at work, it was a machine like picture, a picture that for me could only be produced by a machine. What it lacked was the spark of human imagination. Damien Hirst work demonstrative of an age that is lacking in originality and creativity.  A lack of originality that can be seen on any new housing estate, which consists of houses which are copies of those built for generations by the builder’s predecessors. They are inferior copies of the house of the past as they are being built of inferior materials and to much smaller dimensions. Houses that were built according to a least cost formula, a least cost that necessarily implies a lack of originality. Why go for the expense course of employing an architect to create a contemporary house incorporating new materials and bold design, when it is cheaper and easier to copy an old design?

What Neo-Liberalism has given to the age is a dominant mode of thought. Policy decisions are not to be made of according to values or any grand vision but according to a cost benefit calculation. A government project such as the High Speed Rail link from London to the North is made on this basis. Do the demonstrated costs outweigh the benefits in cash terms? This leads to all sorts of strange calculations to render values such the enjoyment of living in the undisturbed countryside in cash terms. Decisions can only be made on quantifiable or cash terms, this thinking leads to a diminution of the human spirit, as decision making is reduced to a process of calculation.  Human values have been reduced to a simple cash nexus, it is a corruption of the human spirit.

It is a world in which the heroes are the bankers and speculators, those who are the masters money. There heroic status derives from the fact that they handle vast quantities of money, money a product which is the holy grail of contemporary society, in that those who are greatest possess the most of this asset.  We know a footballer is a footballing genius as much through the income he commands as for his skill on the football pitch.

There is embodied in Neo-Liberal philosophy a realism of the most naive form. What is valued is what is tangible, what can be counted and weighed, not abstraction? There is the belief that abstract universal values have no place in contemporary society. What counts is the practicality of a belief or ideology. Neo-Liberalism is the most practicable of beliefs in that only those outcomes that can be quantified, the benefits be counted, are valued. Only those practices that have a quantifiable end result matter. The result is the target culture in the public sector, where performance is measured in terms of targets achieved. The emphasis is on ‘through put’ not on quality. In hospitals the target culture has damaged good practice. What matters is that the target is met, not the quality of service. This results in some bizarre practices, because there is a time limit set for treating patients in Accident and Emergency (A&E), patients will be deliberately kept waiting in ambulances, as by so doing the patient has not yet been admitted to A& and is not counted as an in patient. This means that the time they spent waiting in the ambulance does not count when it comes to measuring how successful the A&E department has been in meeting its  performance targets.

One of the most damaging aspects of the Neo-Liberal zeitgeist is to found in our schools. What is causing great excitement is the new stem subjects, the officially defined list of subjects in which students are expected to do well? These stem subjects are little more than a sophisticated version of the 3 r’s ‘reading, ‘riting and ‘rithmetatic’ that formed the curriculum of many state schools in the 19th century. Dickens’ Wackford Squeers would feel very much at home in the new academies. This change has happened because schools are now measured by output. The output that matters is in that of the skills that business wants. Businessman want employees that are competent in the 3 r’s, if they do want painters it is a painter who can paint a wall, not an artist. There is in our schools a deskilling and narrowing of the curriculum. A deskilling in all that matters is those skills that can be quantified and measured, so creativity achieves a zero score while the rote repetition of the agreed answer gets the highest score.The narrowing the curriculum is caused by the downgrading of the creative arts, that is art, music and drama get few marks in the current system, so headteachers that wish to do well, discourage their brightest students from doing anything but the stem subjects.  There cannot have been a curriculum more designed to create a dull, boring and miserable education for children than the current one.

When economists look for reasons for the poor performance of the economy, the look the reasons that do not relate to the human spirit. The reigning zeitgist is one that is unimaginative, it only values the measurable and is one of uninspiring dullness.A corruption of the human spirit, one that discourages all that is best in the human personality. Are not some of the failings of the British economy to be found in a zeitgeist that discourages innovation and creativity. If economists raised their eyes from their desks they might see that there are studies pointing them in this direction. A recent study of the booming computer software industry in East London showed that one of the reasons for its success was that it was perceived as a ‘cool’ place to work and live and as a consequence attracts some of the best computer software engineers in Europe. Rather than worrying about how to make workers more productive, perhaps economists should look more to creating a zeitgeist that encouraged creativity and innovation. A zeitgeist that would drag the society out of its current doldrums.

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Scroogism the principle at the heart of the New Economics

Economics, Politics, society, , , ,

  

Washington University Political Review

Scroogism is key principle at the heart of the new economics, that is economics as practised since the 1980’s. This can be explained by reference to the opening pages of Charles Dicken’s novel Scrooge. When he arrives home from the office, Scrooge gets an unwelcome visit from two of men collecting money for distribution to the poor at Christmas. His famous answer is, are there no longer any workhouse or prisons in which the poor  can be housed and fed. The assumption at the heart this tirade is that money should go to to those who deserve it most and who will make the best use of it. Men such as Scrooge a banker and trader who will invest it wisely to create more wealth. Any money going to the feckless poor is wasted, as in their folly they will only squander it. A philosophy best expounded by the politician who said installing bathrooms in the houses of the poor was the height of folly, as they would only use their baths to store coal. 

The belief that money is best kept in the hands of the deserving rich and out of the hands of the undeserving poor, is one of the core beliefs of the new Neo-Liberal economists. If money is in the hands of the entrepreneurs of society, ‘the great movers and shakers’ society will benefit from the activities of these people which creates more wealth for society to enjoy. Fairness is redefined, the majority of wealth created in society should goes to those that deserve it most, that is the wealth creators. The poor are poor because they create little in the form of wealth, their poverty level wages are fair recompense for their lack of effort and skill. The beggar who so inconveniences the theatre goer by asking for money at the entrance to the theatre is there because he deserves to be there, it’s his own fault.

Whenever their is any debate about welfare or the plight of the poor in Parliament Scroogism is seen at its most active. When parliament ever approves giving money to the less well off its only ever given on the most niggardly of terms, the unspoken assumption is that he poor are poor because of their own failings. Benefit caps are imposed or penalties are imposed on the most of undeserving of the poor. Parliamentarians are loath to throw good money after the bad, that is giving it to the poor, whereas they are over generous in giving tax breaks, subsidies and grants to the deserving  rich. Some of the richest landowners in the country receive hundreds of thousands of pounds from the tax payer in agricultural subsidies. 

Scroogism is the hypocrisy of the well-off, it’s provides a moral justification for ignoring the needs of the less well off.   This hypocrisy is best demonstrated in the debate on social mobility. Rather than give money to the poor, they will be given ever opportunity to better themselves, that is become one of the better off. In what can only be described as cover for the inherent meanness and nastiness of the prevailing philosophy of Neo-Liberalism, the poor are to be helped to become one of the well off. A good education is seen as the best means of achieving this, consequently there is in education a ‘constant revolution’ in teaching methods and practise. While  this ‘constant revolution’ has achieved little in practice, it gives politicians the sense of moral superiority in that they are doing their best to help their inferiors. If the recidivists among the lower orders reject there help its nobody’s fault but there own. 

There is one fact ignored by the politicians who preach the virtues of social mobility, if people are to move up the social scale this can only be made possible is some move down. Whether well off parliamentarians and the class of well to do, recognise this fact either unconsciously or consciously, they do their best to prevent anydownward movement as this would harm them and their families. In Britain the barriers of  social exclusiveness give it one of the lowest rates of social mobility in the developed world. Education provision is strictly rationed according to income. The quality of education varies according to the income of the pupils, an apartheid of wealth applies. In the wealthy suburbs pupils receive an education that is beyond the dreams of those living within the impoverished areas of our cities. Given that the children of politicians are educated in the wealthy suburbs, it is going against human nature to expect them to sacrifice the advantages that their children enjoy to benefit the poor. 

The only effective way of increasing social mobility for the poor is to increase their income. If a family has sufficient income they will keep their children in school to enable them to gain a higher education. Wealth is a qualification for citizenship, the individual on a low income, who perhaps has two jobs, who suffers from insecurity of employment and tenure, will lack the time and confidence to participate fully as a citizen. They know that their social situation excludes them from full citizenship.   A confident well resourced class of the less well off would exert pressure on the socially exclusive social system to provide ‘real’ opportunities for their children to join the social elite.  What is needed is a political and social revolution similar to that which developed forbtge organised working classes of the nineteenth century.

Stepford Teachers, Doctors, Social Workers the cloning of work

Education, Politics, , , , , , , , ,

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 are we are where we are today. Some answers from Alfred Marshall, David Ricardo and Charles Dickens

Economics, Philosophy, society, , , , , , , ,

Philosophers define our contemporary society as post modern, but economics remains apart as it belongs to what those philosophers disparaging call the modernist tradition. A science of humanity that believes its analysis and truths are true for all societies and their economies, whereas post modernists believe the truths of economics are only relative, rooted in a particular society at a particular time. Philosophy and other post modern sciences seem to have passed economics by, left it in some historical lay-by. Unlike other human sciences the truths enunciated by Alfred Marshall are held to be valid today as when he first enunciated them in the 19th century. Teachers of economics such as myself taught generations of students Marshall’s theory of the market. They copied us in replicating Marshall scissors diagram of demand and supply not realising that they were doing the same as their 19th century peers. Today after many minor modifications Alfred Marshall’s theory of the market forms the central core of contemporary economics. It is this theory that I shall take as my starting point for my new perspective on economics.

Economists believe that in the free market they have discovered the fairest way of allocating resources, one that can be rivalled nowhere in the efficiency of its distribution mechanism. According to economists this how the market works. All goods and services are sold by price and if consumers want them they are free to buy them. There are no restrictions to the freedom to buy and sell, it’s the key economic freedom. This is the only economic system that maximises consumer satisfaction and gives sovereignty to the consumer. Price is the key factor that enables consumers and suppliers to get the best deal in the market. The market is incredibly flexible as both consumers and suppliers constantly responding and responding again and again to the signals given off by changing prices in the market. The market for smart phones illustrates how the free market works.

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Initially all mobile (or cell phones) were relatively simple devices that allowed users to make phone calls, store a list of contacts and enable the user to send text messages. Further improvements were made to the phones and a revolution occurred in the phone market when Blackberry and Apple introduced their smart phones. Now people wanted smart phones because of all the extra facilities they offered, emailing services, instant messaging (BBM), cameras and the millions of apps on Apple’s and Samsung’s phones. Consumers saw these phones as being so desirable that they were willing to pay up to £400 for them, whereas the best of the old models Blackberry phones had sold for les than £200. The bottom dropped out of the market and simple mobile phones can now be bought for less than £20. Producers reacted by cutting down on their manufacture of these simple phones as there was little profit in making them and increasing their manufacture of up market phones as they were so profitable. Firms such as Apple and Samsung are constantly innovating and improving their phones so they retain their position of market leaders and earn a premium price for their products. This strategy has been so successful that Apple has an income greater than that of many countries. Those companies that can read the market correctly and anticipate consumer demand can make fortune. This is a win win situation as these profitable companies are those companies making what people want.

Nokia the firm that originally dominated the mobile phone market saw sales plummet as consumers did not want its old fashioned phones. It had to cut back on phone set production to match its shrinking share of the market. Declining sales and loss of income would probably forced it to close, if it had not been purchased by Microsoft. The market is a harsh master towards those companies that don’t read the signals correctly. Those signals are simple to read if Nokia was having to cut the prices of its phones it failed to understand the message which was nobody wanted their phones now. Another term for this is consumer sovereignty, the market is the only mechanism which enables manufactures are other producers to keep up with the ever changing needs of the consumer. There are in history many examples of economies that are not run on the free market model collapsing because of the discontent of their people. East Germans living in a communist society were discontented with the limited variety of goods available in their country and once they had the chance they opted to join free market economy of West Germany.

Having demonstrated the superiority of the free market I must now point out the flaws in what seems to be the perfect economy. In fact economists frequently refer to perfect competition, which demonstrates all the perfections of a competitive market, an ideal to which all economies should strive. Unfortunately in real economies there are imperfections in the market which can result in the minimising of consumer satisfaction and sovereignty.

One of the best ways of explaining the fault line that runs through the market is to look back at the work of another nineteenth century economist, David Ricardo, on the price of labour. He distinguishes between two prices paid for labour, the first is the natural price and the second is the exchange or market price. Natural price is that price which is sufficient to cover all the necessities of life, while the exchange price is that paid for labour in the market. Throughout most of the latter part of the twentieth century the exchange price of labour was higher than its natural price. This was an era associated with rising living standards. However increasingly since the early 21st century for many people the exchange price of labour has fallen below its natural price. Increasing numbers of people are classified as the working poor, relying on food banks and social security payments to feed, clothe and house their families. The current debate about the living wage is about the failure of the market to pay increasing numbers of people an income that is equal to their natural wage. Britain as with many other developed European countries is reverting to an older historical pattern in which increasing numbers of people experience poverty and want.

This can be clearly demonstrated by one example. When I was teaching in London in the 1970’s the exchange price paid for my labour exceeded my natural price; I could if I had wished bought a house as did many of my colleagues. Today the exchange price of a teachers salary is so far below its natural price, that it only yields enough income to pay for one room in a shared house.

There is another fault line running through the market and that is that for many the much valued economic freedom does not exist. Free market economists when they use the term effective demand acknowledge this. We may all want to live in an idyllic country cottage in rural Berkshire but only those who have sufficiently large income may do so. However it is not just about pointing out the impossibility of achieving our dreams. There are obstacles in the market that prevent many even making the most minimal of choices. Dominant market players such as landlords abuse their market power. They charge such exorbitant rents that many are only able to afford the poorest of accommodation and the cost of that accommodation may be so high that other choices are denied to the individual. Stories frequently appear in the media about tenants having to choose between a whole variety of necessaries, paying rent, buying food or clothes or paying heating bills. Economists will never admit it but for many the so called freedoms of the market are illusory, in reality the necessity of survival means they have no choice.

What economists and our political leaders educated in the Neo-Liberal tradition need to recognise is that the free market that they worship does not work. What is needed instead is a MODIFIED MARKET a market that delivers all the benefits of the free market but one from which intervention by the state has removed the most pernicious of abuses associated with the free market. If only everybody who participated in the market could earn the natural price for their labour those abuses would disappear. There is no reason why a country as rich as Britain could not achieve this end. After the much poorer Britain of the 1950’s achieved that end.

Readers such as myself of 19th century novelists will realise that destitution was an ever present fear. Charles Dickens due to his father’s mismanagement of the families finances ended up working in a shoe blacking factory, while his father sent to debtors prison. The memory of which haunted the adult Dickens. Unfortunately the circle of history is turning and a run of bad luck could result in many a contemporary Dickens suffering a similar fate.

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

economic history, Economics, Politics, Railways, , , , , , , , , ,

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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.

Charles Dickens’s was a far better economist than either Nick Clegg, George Osborne or Ed Balls

Economics, Politics, society, , , , , , , ,

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If I wanted to understand the nature of our current economics problems I would be better turning to the novels of Charles Dickens’s than by reading articles on economics by the current generation of politicians. Rooted at the heart of the political consensus is a misunderstanding of the current economic crisis. Any politician if asked will say that its a crisis brought on by government overspending, which can only be resolved by a prolonged period of austerity which will reduce the deficit that is at the heart of the problem. This week this misunderstanding has been put into words by Ed Balls, George Osborne and Nick Clegg. They have all stated that the priority of government should be to reduce or eliminate the government deficit. All claim ‘responsibility’ as their guiding principle, all must suffer because of the foolishness of past governments. They all assume a highly principled stance of statesmen making the painful but necessary decisions to secure the nations future.

The cleverest of them must know that they are spouting nonsense, but go along with it as they it’s what everybody or so they believe, in the gilded circles of power believe. (The speculative frenzy that resulted in the crash that bought society to its knees in 2008/9 is never mentioned.) Lying was never a barrier to a successful political career. What we most need now is a Charles Dickens’s to expose the charlantry, hypocrisy and foolishness than passes as informed political debate.

Nick Clegg Deputy Prime Minister, a millionaire owner of luxurious homes on the continent preaches the need for self restraint on an impoverished people, as do the fellow members of a cabinet of millionaires. The country cannot afford to pay the living wage to workers on part time contracts but instead pays the minimum wage or less if agency workers; but it can afford to allow Barclay’s Bank to pay bonus’s of £1.8 billion to its staff. (most of which will go to top executives and highly paid traders). I read somewhere that City bonuses this year could top £80 billion. A word has been coined to characterise such behaviour ‘Pecksniffery’. Seth Pecksniff was a character in one of Dickens’s novels, an unpleasant hypocrite who affected benevolence and high moral principles. Best illustrated by the Conservative Minister who characterised the large numbers going to food banks as going there because the food was free. Those who would rather depend on charity than work for a living. Conveniently ignoring the fact that free food is only given to those in possession of vouchers given by a charity to certify real need, many of whom were the working poor.

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Self deception and hypocrisy should be regarded as two of the principles that inform economic policy making. These two attitudes are embodied it what is called supply side economics. It states that people are unemployed because of regulation and restrictive practices in the labour market. Trade unions, regulations on hours worked and on conditions in which people are employed only serve to push up the cost of labour, meaning that fewer workers are employed that might otherwise be the case. If trade unions are emasculated or abolished, labour protection laws removed the cost of employing labour will fall (wages) and many more people will be employed. All benefit because more are employed and the economy becomes more productive. This increased productivity will push down prices, so wages become worth in terms of what they can buy. Actually this has elements of a fairy tale in it. In the 1960’s when wages were relatively high compared to the other costs of production unemployment averaged 2%, today when wages are relatively low as a cost of production unemployment is 7%. If the unemployment measure used in the 1960’s was used, unemployment would probably be about 10%. Many of those now employed struggle to make ends meet.

There is one beneficiary from this change, the better off upper middle classes. Mark Harper the recently resigned immigration minister was able get as a cleaner for four hours a week at the cost of £22. This woman was an illegal immigrant who was probably desperate for the money. One consequence of the change in the labour market is that people are now cheap to buy. The Mark Harpers and Nick Clegg’s of this world can now benefit from a plethora of cheap services provided by people on poverty wages. I imagine there is much less concern about the servant problem today. In the sixties I lived on a country estate and my social betters were concerned about two things, the high cost of servants today and the insolence and less than respectful manner of those servants. Lack of respect deriving from the fact that servants would have no difficulty finding another job, so they were unwilling to adopt the demeaning behaviour expected of them. They as human beings had rights and exercised them to the perceived detriment of their betters.

Charles Dickens’s would have understood the behaviours of our governing classes and predicted that their economic policies would be designed to benefit the better off no matter in what guise they appear. Nick Clegg, George Osborne, Ed Balls etc. are all blinded by hypocrisy, unable to recognise that they govern in their own interests and that of their friends and not the nation. One image from ‘David Copperfield’ characterises today’s society for me. While David Copperfield and the other orphans sup on thin gruel, Bumble the Beadle and his friends enjoy sumptuous meals funded by money intended for the orphans. What better image to capture the nature of today’s society.

The Uncommon Man or the Right to a Better Life

Economics, Politics, society, , , ,

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What I want is the right to be the uncommon man, the right to a life lived on my own terms, not a life lived in conformity to somebody else’s expectations of me. The English used to value individualism, as key feature of their national character. Whether it was the English eccentric or the stubborn figure of Hodge. The first is reflected in Noel Coward’s song, in the line ‘that only Mad dogs and Englishmen go out in the midday sun’, a reference to the behaviour of the English in colonial India. Hodge was very different he was the backbone of England, the man that formed the core of the regiments of the line, that won many a battle for England. He was a country either a farmer or farm labourer, who had the following English characteristics. Fashion left him unmoved, he was always a little behind the times. Personal characteristics included stubbornness, stoicism and a strong sense of personal rights. A person with a strong sense of individualism. Hodge is now a forgotten figure, now replaced the ‘reality TV star’, a hollow figure of all show and no heart. A confection created by the media industry lacking any real identity or sense of self.

I would like to rehabilitate Hodge as a national icon. In these current times there is a need for an iconic figure that personifies liberty and the best human values to oppose the Stakhanovite model of man urged upon us by the ‘new’ employer. The employer who believes that the best way to get a task done is to give it to a busy man. The man whose business embodies the philosophy of overwork. For whom the good employee is the one who uncomplainingly will work many ours of overtime. Recently a young intern died at one of our city banks from an epileptic attack brought on by working excessive hours. This young man was the ‘good employee’. Faust is a story that could not be written today, because every man has already sold his soul to the company.

Hodge in the form of ‘Ned Ludd’ and ‘Captain Swing’ made his opposition to the inhuman values of the new Industrial Age in machine breaking and rick burning. At the beginning of the 19th century there was widespread and violent opposition to replacement of human labour by machines. Although the authorities suppressed this violence, it was partly the fear of this violence that made the authorities agree to political and social reform. The Great Reform Act of 1832 which extended the suffrage, was passed in part due to the rumours of armies of the disenfranchised gathering in the Midlands and other industrial areas, which were planning to march on London.

What I want to celebrate is the creative Hodge. Growing up in a rural village I had the privilege of taking part in a mumming play featuring St. George the perennial English hero. Hodge being a seasonal worker had unlike the contemporary worker an ‘off season’, post harvest in which there was little to do on the farm. This left time for creative activities, all which were embodied in what is called the folk tradition. There was time for dance and music. It is from this rural community that our great heritage of folk music comes. Unfortunately much of the drama of the time has been lost, mumming plays are now a rarity in village communities. The significance of has now been largely lost.

What is forgotten is that Hodge’s opposition to the machine age was not the hard work entailed by factory work. Hard work was common to all farming communities it was the loss of liberty. Men now worked to the rhythm of the machine. There was no longer a season off for the worker to enjoy. It was no coincidence that much of our traditional culture disappeared in the 19th century. People no longer had the time and liberty for play.

Hodge’s successors in the new industrial towns worked to bring back the liberties of the past. The new trade unions and socialist parties had by the middle of the 20th century brought about some amelioration of working conditions. Hours of work were limited and the weekend became an agreed period of rest. Shop workers had one day a week was early closing, in which they had a free afternoon in lieu of the hours worked at weekends. The weekends were the time people used as they pleased whether it was gardening, DIY or sport. The Right saw this social regulation as non work time that damaged the nations productivity and they campaigned ceaselessly against it, as they believed all these restrictions contributed to the relatively low productivity of the British worker. They were able to take advantage of the periodic crisis that befall any society to sell to the political classes the idea that all problems of the 1970’s where due to social democracy. All the gains of over a hundred years of struggle disappeared as politicians eagerly adopted the cruel philosophy of Neo-Liberalism.

II
In Britain and much of the West the poverty, insecurity and inequality of the Victorian times is being recreated. Social commentators such as Charles Dicken’s can teach us a lot about contemporary society as they were all too familiar with a world of insecurity and poverty. How often does a Dicken’s story feature a family reduced to poverty. There is a scene in ‘ The Old Curiosity Shop’, where a group of school girls and their teacher come across the impoverished Nell sitting at the side of the road. Seeing Nell the teacher asks the girls what the role of a poor girl should be in life. Dissatisfied with the answers of the girls, the teacher answers her own question, ‘it is to be as busy as a bee’. Obviously the teacher regards the poor as little better than an insect. Poverty has removed from Nell the chance to choose her own life. Instead it has given somebody else the right to choose their life for them.

In contemporary Britain decreasing wages, increased hours of work and increased job insecurity deny many the right to have any real control over their lives. Poverty or relative impoverishment gives power to the employing classes, people are so desperate to boost their income that have to give the power on how to live their lives to their employers. In Britain job centres could compel a young person to work in the sex and porn industries, if it was the only suitable vacancy available to them, as a refusal could result in loss of benefit. Not as yet as sex workers, but in a host of ancillary roles, such as receptionist or bar staff. More usually the use of zero hours contracts reduces many workers to serf like status. Coffee shops may guarantee 20 hours employment a week, but staff must be on all for 15 hours a day. In this new serfdom it is the employers who dictate what life their employers must live, a life of servitude.

There is a solution to this current malaise, and that is ‘Hodgism’ so named after the sturdy yeoman of Britain’s past. ‘Hodgism’ is nothing new in 1885 Joseph Chamberlain campaigned for the right of every rural worker to ‘own three acres and a cow’. This has been scoffed at for its naivety by politicians and historians, yet that is based on a misunderstanding. I don’t know how literally Joseph Chamberlain meant it, but this was a time of great misery for agricultural workers. What he was really proposing was to give farm workers to the means to achieve some independence by giving them the means of subsistence. They will still have to work for the farmers for part of their income, but they would have sufficient independence to be able to bargain effectively with the farmer. (Farm then was casual and workers were hired for the year at fairs at the beginning of the year. This new found independence would mean they could turn their back on the cruelest of employers who paid the least and imposed the worst working conditions.

I prefer to use the word ‘Hodgism’ to either socialism or Marxism. The latter is discredited through its association with the utopian communist state and the former is too easily misunderstood as meaning absolute inequality of income which can easily be discredited. There is just too much ideological baggage attached to socialism. If any politician campaigned for socialism there campaign would be lost within a stale debate from the past. What I propose is a more realistic alternative.

‘Hodgism’ to me means giving everybody sufficient independence to live their life on their own terms. Insecurity is the bane of our time, people lack security of employment and tenure. Life lived in fear of losing your job or home is destructive of the human personality. There is a photograph from the Victorian era of a young woman in her twenties, but the harshness of her life makes her look like a woman in her sixties. Current trends might make such women a feature of our society in future. What I want is the independence for all to live a life on your own terms which will come from the regulation of work and housing, neither of which will be granted easily by employers or landlords. Income and the cost of living need to be addressed. Regulation could ensure that people received the living wage and rents were kept under control.

Today in Parliament at Prime Ministers Question Time, David Cameron rejected the idea of extending the minimum wage to agency workers. He claimed that this would lead to increased unemployment as firms would no longer be able to afford to employ these workers. Wages in the UK are at the lowest level historically as a share of national income, yet unemployment remains stubbornly high. Apprentices from the job centre can be paid as little as £2.50 an hour yet youth unemployment stubbornly remains at 20%. If wages were higher employers would have to treat their employees better as they would become too valuable a source. Society has forgotten that in the 1950/60’s when labour benefitted from labour protection laws, when trade unions or wage councils ensured that all received a reasonable income, many lived in low cost social housing, unemployment was below1% all items that feature in the economists nightmare, economic growth was far higher than it is now.

Karl Polyani is a forgotten figure, yet what he wrote in his seminal text, ‘The Great Transformation’ is still true today. The free or unfettered market is destructive of the good society. What our governing classes should not be the imagined or illusory Neo-Liberal paradise, but the best possible achievable society. The Britain of the 1960’s is a good place to start.