The Archbishop of Canterbury had significant business experience in a major company before he was ordained, and can therefore speak on economic matters with at least equal authority to most Members of the House of Commons. As a member of a commission whose interim report has just been published, he has issued his own statement that declares the British model of managing the economy to be 'broken'. Living standards for the mass of the population have been static [on the average] and declining [for many] since the financial crisis ten years ago; and this is noted to be the longest period of stagnant earnings since the 'great depression' around 1870.
The interim report highlights the fact that has frequently been referred to in this blog: this issue of productiveness. It is well understood that productivity in British companies is some 20% below the more advanced European economies, and a greater productivity gap exists between the UK and the USA. Successive government members have wailed about it, and promised to do something about it; and they have not done so. The more important fact about productiveness has been ignored: and it is brilliantly summed up in the commission interim report. The British economy as a whole is recording more depreciation of productive resources than investment in new plant and equipment: if you tot up the notional 'value' of the amount of equipment that is abandoned or accepted as becoming obsolescent [and thus recorded in company and government accounts], that total exceeds the total spend on new equipment.
In real terms, in its capacity to support living material human beings, the British economy is shrinking: FACT!
But the government asserts that there is constant economic growth. Only a couple of years ago Britain's reported growth was boasted to be the fastest in the group of advanced economies. This blog pointed out that what is recorded in these figures is the fact that more money is spent on more transactions, at higher prices; and an increasing majority of these transactions that include a material component in the goods traded are handling imported commodities. Thus the balance of payments deficit increases.
Confronting the evidence accumulated by the commission, Treasury spokespersons affirm the growth rate, the fact that on the basis of national income figures the UK still is the 'fifth largest economy in the world', and the assertion that 'inequality' between socio-economic groups is reducing. You can claim anything with statistics, of course: but the issues of productivity and productiveness are fundamentals to an understanding of the economic system: which is certainly failing in Britain.
Two groups of people who ignore the concept of productiveness are the Econocracy - the professors of Economics, as characterised by a group of dissident students - and the 'hard Brexiteers' who lurk within the Conservative Party. These are they who encourage each other to believe that the economy will automatically grow much faster if Britain is freed from the constraints of the European Economic Area.They are utterly wrong. The world does not conform to Economists' models: all countries and communities are heavily protectionist when it suits them, not least in their protection of agriculture. All the evidence of real-world activity by human animals, as opposed to the specious models that can be produced from statistics of turnover in a UK economy whose money supply has massively been inflated by a decade of Quantitative Easing, is of dereliction, decay and decline.
Regrettably, this truth has to take a major part in the blog. One could hope that things were different: but they aren't.
Showing posts with label Econocrats. Show all posts
Showing posts with label Econocrats. Show all posts
Wednesday, 6 September 2017
Saturday, 29 July 2017
Insurers, the Fire Service and the Grenfell Tower Tragedy
Not many years ago, the local Fire Brigade would have been needed to certify the arrangements for controlling the risk of fire in the Grenfell Tower, Kensington; as they were for all such buildings. Since the millennium, governments of all parties have slackened the regulations and the Fire Brigade has no statutory role in fire protection. Whether or not the London Fire Brigade was aware of the innate vice in the sort of cladding that was recently applied to the Tower is a moot point, because the brigade was no required to verify the suitability of the material.
The local authority [as the ultimate owner of the structure] and the management company did what was minimally necessary to comply with safety law: which was thereby shown to be grossly inadequate.
In parallel with the slackening of standards for fire certification of structures, so insurers made economies [thus keeping down the cost of policies] by becoming much less interventionist in regard to the structures they insured. Half a century ago, an early stage in the career of any promising recruit to the insurance industry included a period - usually a few years - serving as an Inspector. By sending inspectors to make announced and unannounced checks on the buildings and the processes that they insured, the insurer could be reasonably satisfied that the conditions applied to the policy were being met. Thus the subject of the insurance was compliant with the law on structural soundness, health and safety and any special regulations relating to what the building or the machinery was used for. More recently insurers have shunted the burden of verification to the insured, who simply "warrants" that the conditions of the policy, including legal requirements, are fully met.
If, in such circumstances, a George Osborne heavily influenced by the Econocrats come into power, the fire brigade and the insurer have no direct influence in the operational decisions taken by the occupant of a building [such as a housing management company].
On a national scale, admonished and applauded by the Econocracy, young George pursued his historic mission to eradicate the deficit on the national accounts: by imposing austerity. The only other way to remove a deficit of the size of the British budget deficit in 2010 would have been by a massive scheme of investment to kick-start economic growth: which was ideological anathema to the Econocracy. The coalition government in which George was loosed upon the economy deliberately decided on the austerity policy, as a whole government of Conservative and Liberal Democrats. Thus they were - entirely unintentionally - responsible for the impact of austerity on the Grenfell Tower. Combine that with the previous Labour government's decision to reduce the cost of the fire service by removing their role in building certification, and a diabolical cocktail of governmental failure was served up to the residents of Grenfell and [apparently] dozens of other towers.
Little local people all went along with the flow, and some may be faced by charges of personal liability; but the real chain of high command that was responsible for the tragedy is unambiguously clear.
The local authority [as the ultimate owner of the structure] and the management company did what was minimally necessary to comply with safety law: which was thereby shown to be grossly inadequate.
In parallel with the slackening of standards for fire certification of structures, so insurers made economies [thus keeping down the cost of policies] by becoming much less interventionist in regard to the structures they insured. Half a century ago, an early stage in the career of any promising recruit to the insurance industry included a period - usually a few years - serving as an Inspector. By sending inspectors to make announced and unannounced checks on the buildings and the processes that they insured, the insurer could be reasonably satisfied that the conditions applied to the policy were being met. Thus the subject of the insurance was compliant with the law on structural soundness, health and safety and any special regulations relating to what the building or the machinery was used for. More recently insurers have shunted the burden of verification to the insured, who simply "warrants" that the conditions of the policy, including legal requirements, are fully met.
If, in such circumstances, a George Osborne heavily influenced by the Econocrats come into power, the fire brigade and the insurer have no direct influence in the operational decisions taken by the occupant of a building [such as a housing management company].
On a national scale, admonished and applauded by the Econocracy, young George pursued his historic mission to eradicate the deficit on the national accounts: by imposing austerity. The only other way to remove a deficit of the size of the British budget deficit in 2010 would have been by a massive scheme of investment to kick-start economic growth: which was ideological anathema to the Econocracy. The coalition government in which George was loosed upon the economy deliberately decided on the austerity policy, as a whole government of Conservative and Liberal Democrats. Thus they were - entirely unintentionally - responsible for the impact of austerity on the Grenfell Tower. Combine that with the previous Labour government's decision to reduce the cost of the fire service by removing their role in building certification, and a diabolical cocktail of governmental failure was served up to the residents of Grenfell and [apparently] dozens of other towers.
Little local people all went along with the flow, and some may be faced by charges of personal liability; but the real chain of high command that was responsible for the tragedy is unambiguously clear.
Tuesday, 25 July 2017
The Fantasy Powerhouse and Historic Reality
Andy Burnham, having moved into the new [and partly undefined] job of a civic mayor has joined in the clamour - which resonates over the Pennines but hardly gains a mention in the London media - as to what has become of George Osborne's 'Northern Powerhouse'. The idea, such as it was, was to persuade Chinese and other foreigners to invest in Manchester and Leeds [and possibly Sheffield and Liverpool], to begin to lift those cities out of the post-industrial depression into which the Thatcher-Major-Blair-Brown-Cameron-Clegg continuum had left them. The concept was predicated on the assumption that there were no significant government funds, beyond the mega-scheme for a bifurcation of the [Chinese financed] HS2 railway to Manchester and to Leeds, north of Birmingham and perhaps some electrification of other lines in the north [to be paid for by the Network Rail budget; not by the government directly]. So a great bubble of talk was built up, Vice-Chancellors pledged their universities to help with surveys and research and local councils hoped to bring their districts into a new co-prosperity sphere.
No material structures were built. A few alien takeovers were made of firms in northern cities. Then came the Brexit vote, Mrs May, the removal of George Osborn and the dissolution of his verbal construct. He asserted that the powerhouse concept would continue, but [notwithstanding his editorship of a London paper] he was just a voice who occasionally visited the wilderness of the north.
Thus the desolation that Andy Burnham sees dragging on into the future is the most realistic prospect for the areas that were exposed to Osborne's 'powerhouse' fantasy. This contrasts directly with the picture as it was half a century ago. Under the Labour Government of 1945 the supposedly exhausted and bankrupt country that is depicted in Econocratically-influenced history set about rebuilding the railways. They began with a massive northern powerhouse project: a fully-electrified, largely newly-routed railway over [and through] the Pennines, between Lancashire and Yorkshire and planned to link with electrified east and west-coast main lines between the midlands of England and the midlands of Scotland. The massive Woodhead Tunnel was driven through the higher hills on the route, and the new Sheffield-Manchester route was a subject of national celebration when it was completed. While the primary use of the railway in its early days was to carry goods, and especially coal as the great source of power for the new economy, it was seen as a significant first step in modernising the entire rail network, as was to be done on the continent over the next couple of decades.
Then came Mr MacMillan and the motorways; and the decision that the country would not afford to develop the railways and new roads: even though the continentals were doing just that. Then, eventually, came Blair and Cameron and the promise to phase out coal burning power stations; which was logical as the Thatcher gang had shut the mines and coal - unlike oil, which had been found under British home waters - had to be imported, to the detriment of the balance of payments. The last vestiges of the real, material northern powerhouse were destroyed: symbolised by the closure of the Woodhead Tunnel. Sheffield and Manchester are now linked by a meandering branch railway and by an overcrowded M62; and there is no sign that this will change. This exemplifies a total and dramatic failure of governance, in what used to be a great country.
Just a footnote, on debt. Consumer debt - especially car loans - is a worry for the Bank of England, whose officials have begun to bang on about it. The government is silent on the matter, so far. When the Woodhead Tunnel was being built, the government directly controlled consumer debt: there were controls of hire purchase, a set minimum for the deposit that had to be paid in cash, and control of the period over which the debt could be spread. No-one felt unduly oppressed by such regulation: it was all accepted as being part of a plan for postwar reconstruction of the economy, that people could see was working as homes became available and the roads were repaired after wartime destruction and decay. Hope and promise were in the air: so control of credit was no harm at all. Now the government is under the influence of the Econocrats who would oppose any reintroduction of state control of credit, which [they say] is the business of the banks and the supposedly-independent Bank of England. So we are exposed to a credit crunch, again: to set alongside material failure of the economy.
No material structures were built. A few alien takeovers were made of firms in northern cities. Then came the Brexit vote, Mrs May, the removal of George Osborn and the dissolution of his verbal construct. He asserted that the powerhouse concept would continue, but [notwithstanding his editorship of a London paper] he was just a voice who occasionally visited the wilderness of the north.
Thus the desolation that Andy Burnham sees dragging on into the future is the most realistic prospect for the areas that were exposed to Osborne's 'powerhouse' fantasy. This contrasts directly with the picture as it was half a century ago. Under the Labour Government of 1945 the supposedly exhausted and bankrupt country that is depicted in Econocratically-influenced history set about rebuilding the railways. They began with a massive northern powerhouse project: a fully-electrified, largely newly-routed railway over [and through] the Pennines, between Lancashire and Yorkshire and planned to link with electrified east and west-coast main lines between the midlands of England and the midlands of Scotland. The massive Woodhead Tunnel was driven through the higher hills on the route, and the new Sheffield-Manchester route was a subject of national celebration when it was completed. While the primary use of the railway in its early days was to carry goods, and especially coal as the great source of power for the new economy, it was seen as a significant first step in modernising the entire rail network, as was to be done on the continent over the next couple of decades.
Then came Mr MacMillan and the motorways; and the decision that the country would not afford to develop the railways and new roads: even though the continentals were doing just that. Then, eventually, came Blair and Cameron and the promise to phase out coal burning power stations; which was logical as the Thatcher gang had shut the mines and coal - unlike oil, which had been found under British home waters - had to be imported, to the detriment of the balance of payments. The last vestiges of the real, material northern powerhouse were destroyed: symbolised by the closure of the Woodhead Tunnel. Sheffield and Manchester are now linked by a meandering branch railway and by an overcrowded M62; and there is no sign that this will change. This exemplifies a total and dramatic failure of governance, in what used to be a great country.
Just a footnote, on debt. Consumer debt - especially car loans - is a worry for the Bank of England, whose officials have begun to bang on about it. The government is silent on the matter, so far. When the Woodhead Tunnel was being built, the government directly controlled consumer debt: there were controls of hire purchase, a set minimum for the deposit that had to be paid in cash, and control of the period over which the debt could be spread. No-one felt unduly oppressed by such regulation: it was all accepted as being part of a plan for postwar reconstruction of the economy, that people could see was working as homes became available and the roads were repaired after wartime destruction and decay. Hope and promise were in the air: so control of credit was no harm at all. Now the government is under the influence of the Econocrats who would oppose any reintroduction of state control of credit, which [they say] is the business of the banks and the supposedly-independent Bank of England. So we are exposed to a credit crunch, again: to set alongside material failure of the economy.
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