The Enervated Economy

When I was a schoolboy the immensely tall Canadian economist, J K Galbraith, produced a book called The Affluent Economy, which had huge success. It gave a message that both North Americans and west Europeans wanted to receive: that the traumas of the Second World War and [in the case of Europe] of post-war reconstruction were pretty well over. The British had re-elected Harold MacMillan's Conservative government with their slogan "You've never had it so good!" The French were coming to a settlement under deGaulle after the traumas of losing their south-east Asian colonies and Algeria [which had been accounted part of metropolitan France]. The Federal Germans were proud of the 'economic miracle' that had been achieved under Chancellor Adenauer and economy minister Erhardt, and of their country's rehabilitation within the western alliance. Life did seem good, society seemed stable and politics were - broadly - honest.

Now, in 2017, we Brits agonise over economic growth figures as they weaken, and accept that the economy is likely to 'slow down' as wages rise more slowly than prices, and as millions of households reach their debt ceilings [especially as the banks are being urged to lower the headroom] and are thus unable to prolong the false economy in which consumer spending has been the 'driver' of the economy. Exporters are maintaining their earnings by raising the sterling prices of their products, so that they get an approximation to the pre-Brexit real-world price in external markets, rather than significantly increasing the volume of exports. This is disappointing, because in historic experience when a currency is devalued relative to others [as the pound has been since the Brexit vote] exporters from that country have been able to maintain a price advantage over their alien competitors to gain to greater share of the export market for their produce; and thus maintain employment for their factories and their employees. Indeed, in several post-devaluation periods Britain's exports have grown significantly, enabling firms to pay overtime wages to employees and sometimes to take on more staff and expand their investment plans.That is not happening now.

British industry has very few current schemes of major capital expenditure actually coming to fruition, whether the produce would be aimed at domestic or export markets. Yet, as is often mentioned in this blog, British firms are at least as innovative as at any time in history, but they are prone to alien takeover because there is a dearth of imaginative investment support in the country.

The media are celebrating the decision of BMW to keep production of the mini in the well-worn Oxford factory where it was first introduced six decades ago; but the electric engines for a new version will be imported from Germany. The innovatory element will not be British: typical of the international firms that use established plant in the UK. Even though manufacturing in Britain is continued, a foreign-owned firm can gather its cash reserves for use anywhere in the world while the UK factories are run down. So long as British labour is cheap, and the factory can be patched up, it can carry on. This is a dispiriting view, and not wholly typical of British plant today, but there is enough of it about to be worrying. The economy is increasingly enervated: lacking in energy, vigour or drive.

The announcement that new petrol and diesel cars are to be phased out completely by 2024 is no surprise; but one automatically sets beside that announcement the lack of any coherent policy to generate the necessary cheap electric power to enable the masses to run their own vehicles in 2041. In virtually every aspect of the economy a lack of vigorous innovative energy is apparent. Even the Brexiteer ministers who are supposedly planning a bright future for the UK "outside the EU" show all the signs of physical exhaustion and intellectual stagnation: of enervation.

Then, today, we get the headline news that the male human sperm count has declined catastrophically, with the prediction that reproduction may become difficult to achieve by the time petrol cars are banned. That is a cheerless prospect!

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.

Being Mr May

A huge burden has fallen on the shoulders of Philip May over the past few days. His wife opened her innings as Prime Minister extremely well; then within a very short time she embraced a clutch of harebrained policies that undercut her position - notably her advocacy of foxhunting and grammar schools. Then she opted for a general election, at a time when the opinion polls indicated that the Labour party was seriously unpopular; apparently without checking that her own situation was strong. Thereafter she relied an her two close confidants, who had been unpopular at the Home Office where they had [or so it is now alleged] led her into several delusory paths. Thus came about the catastrophic manifesto and the idiocy of constantly asserting that she was 'strong and stable' as she demonstrated herself, and her position, to be anything but secure.

Most significant, and dangerous for the entire country, was her inability to explain how she would lead the negotiations on Britain's exit from the European Union. Part way through the election campaign I decided that this was because she genuinely did not understand what was expected of her. I do not think that she begins to understand what a 'hard Brexit' would be, or what catastrophic effects in would have on the entire population. I do not think that she understands any economic issue at all, whether in terms of rational ratiocination or idiotic economic theory.

She has now put her party in a position when they are in office but not in power, and even Boris Johnson has been able to see that she has earned the painful position that she must now be kept in for as long as possible. Michael Fallon and other senior ministers have made it clear that she will be controlled from now on; that policy will be made in cabinet, and she must follow it. So there is a hope that the country will get a decent outcome, and the Tories may even achieve a little credibility.

Mrs May will not enjoy that situation. Recently it has been made even more clear than before that she it utterly dependent on her husband: to a degree that makes her marriage very different from Denis Thatcher's. Denis became a popular figure, who was seen as powerless but fully autonomous; and Margaret's loyalty to him was unquestioned. Mrs May's dependency is palpable and painful, and the removal of her guard-dogs leaves the couple dangerously exposed in their isolation from real life.

Prime Minister's spouses have long been important, but to go back just eighty years, no-one doubted the calming and cheering influence of Lady Churchill. Then, when Labour won by a landslide in 1945, as Harold Laski and Herbert Morrison were said to be plotting to remove Clement Attlee from the Labour leadership, Mrs Attlee drove the small family car to the palace and her husband was given the King's commission; thus the plotters were stymied. Lady Eden took her husband on holiday when he ran off his trolley after Suez, and thereafter the nation was polite about the difficulties of the MacMillan marriage. Mary Wilson became a national treasure, supporting Harold in sickness and in health and later taking care of Lady Thatcher when she was a demented widow. Cherie Booth's independent career - and her republican reputation - did her no harm, nor did she have any detrimental effect on Tony Blair's career. His relatively recent marriage, and the children it produced, gave Gordon Brown a positive future after his defeat; and the loss of office after the loss of the referendum reanimated "Sam Cam's" career.

How Mr May fits into that catalogue is yet to be proven: but few people could envy him.

Silly Speaking

So: David Cameron made a last-minute deletion from his Great Speech, toning down his pre-announced  admonition to the British people to pay off their debts. What a cock-up!
Tens of millions of those people are net debtors: their mortgages plus unsecured debts greatly exceed their assets. Many people do not even have one month's income in reserve. Meanwhile the overwhelming majority of the population have declining real incomes;  their wage or benefit increases - if they have any - do not meet the rise in prices and taxes that they must pay. If they are able to pay anything off their debts [and some people are being required to do so] this is a small sum each week, and it causes them to reduce their standard of living commensurately
Until today The Prime Minister's silliest utterance was his repetition of the meaningless 'Big Society' tag, which has never had any meaning for either the media or the public.
Now he has just avoided plunging headlong into a display of profound incomprehension and insensitivity. He and his team clearly have no understanding of everyday life under his own regime. Unlike the greatest Tory Prime Minster, the Marquis of Salisbury, David Cameron does not have daily conversations with the grooms, keepers and tenants whose lives were entwined within the routine of a great estate and who were used to speaking with complete frankness to the great man. Unlike Disraeli, Cameron clearly does not have the common sense that enabled the founder of modern Conservatism to say - and to mean - 'Trust the people'. Harold Macmillan was much criticised in the establishment for the 'vulgarity' of his adopting the phrase 'You've never had it so good': but it resonated with the mass of the population and ensured an election victory. Stanley Baldwin had managed a steelworks before he went into politics and he kept the lessons in mind. Winston Churchill was brutally blunt with aides whose recommendations showed an absence of common sense or a failure to appreciate the public mood.
David Cameron's intended admonition to people who simply can't do it to 'pay off their debts' shows a profundity of ignorance that is comparable with Marie Antoinette's 'Let them eat cake'. It is comprehensible [though it proved to be inexcusable] for an eighteenth-century Habsburg to have lived in ignorance of the condition of the people.  It is inexcusable in a twenty-first century Prime Minister to allow a similarly silly assertion to get into the text of a major speech. It may be comprehensible, given Cameron's origins and the fact that he has spent almost all his adult life in the political bubble; but it will not be forgotten as he and his chosen Chancellor stick to their increasingly isolated programme.