A minor element in the News today is the information that local authorities are braced for more cuts to their allocation from central government. This is particularly important because for several years local councils have not been able to make compensating increases in local taxes and charges - notably rates - when government cuts the direct funding of their budget for things that the councillors consider it important to deliver to their constituents. Within the past week the government has tried to remove the 'nice little earner' of penalty charges for parking from the array of sources: that will get the coalition partners a few votes in May at the cost of real human misery.
The coalition government had previously offered most local authorities the sop that if they do not charge more in local levies, the state will make up some of the deficit from central funds. Now the pruning of the national expenditure has reached the point where the Chancellor can no longer push some pennies in their direction and tell them to make do with that.
Soft services, starting with libraries [again] will be cut back. Care for the aged and disabled will be rationed more tightly. School maintenance programmes will again be delayed. Jobs will be held open for longer, and more vacant posts will quietly be frozen. As always, the spin spivs have stories ready with which to claim that the modern world is coming to the rescue of the old: this week's example is that there is a prospect of getting a computerised national libraries ticket, so that anyone from anywhere can go to a town whose library has a book that they want to read, and borrow the copy. In this world of funding cuts and petty theft, ensuring the security of the stock under such a system would be hugely expensive; and insuring it would be unaffordable. Most people do not have the IT skills, the energy, the time or money for the fares to be able to access such a system; and the costs of running it remotely after the cuts would be prohibitive.
The Tories claim that future cuts in public spending will have to be greater than those so far made by the coalition if the deficit is to be cleared; and that the pace of cutting will have to be speeded up. Labour also promise cuts, but in a much gentler pattern that would never lead to ending the deficit on annual spending by the state. Either proposal would result in massively worse public and social services. The reduced police force would be had-pressed to monitor dissident movements or to contain riots.
Whatever comfortable view of British society David Cameron has adopted from Eton, Oxford and the Witney constituency stands to be corrected quickly and brutally. Milliband may have a slightly fuller perspective from the very limited time that he has spent in his northern constituency, but he has no preparation for the realities that will scream for redress if the present destructive policies are continued.
The comfortable notion that the ghettoised majority of Muslims who hold British passports will maintain 'British values' as tighter bounds are set to the benefits system will not survive for much longer: and their lack of empathy [or even of passing acquaintance] with their 'white' fellow-disbeneficiaries will exacerbate tension that will too easily be dubbed 'racist'.
Oh dear!
Thursday, 18 December 2014
Saturday, 13 December 2014
Political Idiocies: Privatisation and Competition
As every user of a traditional open market knows, there are great advantages for the customer if traders in many areas of business have to compete. On a larger scale, examples like Marx and Spencer versus Waitrose [on food] and versus Next [on clothes] are beneficial to customers and healthy for capitalism.
But some manifestations of the Economist-driven obsession with competition are counter-productive. One of the most obvious is the encouragement of competition to Royal Mail. Royal Mail is obliged to meet an obligation to deliver at least five days a week to every postal address in the land [with the specific exception of a few exceptionally remote addresses]: historically this was tantamount to creating a natural monopoly. It would be an insane waste of resources to construct a system that would also have the resources to compete with Royal Mail for every address in the country, every weekday. But in allowing 'competition' in urban areas and their immediate hinterland a huge unfair advantage is conferred on Royal Mail's competitors. And now at least one of them has proved to be under-resourced to meet the current demand: so while Royal Mail is 'rationalising' its service delivery and cutting its workforce, flashy competitors are failing to deliver as promised: but they are not under the universal service obligation, so failing to deliver what they promise to their customers does not draw down regulatory sanctions - as it could with Royal Mail. So in the aggregate the service is worse.
Equally bad is the failure of the National Air Traffic control computer for southern England. By making the 'company' 51% 'private' government has attempted to evade responsibility for notorious under-investment. Yesterday chickens came home to roost, and once such a process begins it can only continue to let down airlines and their passengers - the paying customers for the service. In many cases privatisation has simply allowed foreign owners permanently to tax British consumers: in others, like NATS, supposed responsibility for the false economy of underinvestment has been transferred to a firm; but all users suffer for it.
Well done, political idiots who believe Economists!
But some manifestations of the Economist-driven obsession with competition are counter-productive. One of the most obvious is the encouragement of competition to Royal Mail. Royal Mail is obliged to meet an obligation to deliver at least five days a week to every postal address in the land [with the specific exception of a few exceptionally remote addresses]: historically this was tantamount to creating a natural monopoly. It would be an insane waste of resources to construct a system that would also have the resources to compete with Royal Mail for every address in the country, every weekday. But in allowing 'competition' in urban areas and their immediate hinterland a huge unfair advantage is conferred on Royal Mail's competitors. And now at least one of them has proved to be under-resourced to meet the current demand: so while Royal Mail is 'rationalising' its service delivery and cutting its workforce, flashy competitors are failing to deliver as promised: but they are not under the universal service obligation, so failing to deliver what they promise to their customers does not draw down regulatory sanctions - as it could with Royal Mail. So in the aggregate the service is worse.
Equally bad is the failure of the National Air Traffic control computer for southern England. By making the 'company' 51% 'private' government has attempted to evade responsibility for notorious under-investment. Yesterday chickens came home to roost, and once such a process begins it can only continue to let down airlines and their passengers - the paying customers for the service. In many cases privatisation has simply allowed foreign owners permanently to tax British consumers: in others, like NATS, supposed responsibility for the false economy of underinvestment has been transferred to a firm; but all users suffer for it.
Well done, political idiots who believe Economists!
Thursday, 11 December 2014
Why Build on Brownfield?
Every spiv in and out of government is at some time bitten by the bug that says "Let just a little bit of the Green Belt be used for housing".
Political Economy has a very good answer to that. Homes built are added to the national wealth just once; they can be counted as part of the 'output' of the years in which they are first sold, to occupants or to landlords.
But in every future year that land is out of production for farming, or for leisure activities that can be replaced by farms; as happened to a huge acreage especially in the Second World War.
The facts and figures for High-Speed Two indicate the costs of building railways. In my youth I never understood why the depredations of Dr Beeching were not shown as negative on the national balance sheet. The cost of building railways, per mile, is horrendous: so the loss to the national wealth of tearing them up should have been shown. National income probably showed negative growth in that period. The same is true of steelworks, dockyards and other installations that had a long potential future existence until they were wantonly destroyed in the pursuit of short-term policies, chiefly under the Thatcher regime.
Inflating the amount of money that can be borrowed per house adds nothing to real national production. The lending officers of building societies and the estate agents with the highest 'productivity' add nothing to real national production: their labour in not substantially productive, regardless of how much 'profit' it turns in to churn on through the consumer-driven economy. This is quintessentially true of resales of houses that were first built on greenfield sites.
Restoration of the many despoiled old urban areas of the UK remains an urgent task; and the need for homes is desperate. Looking to the green belt to provide easy pickings [usually for the better-off members of society] is distracting and destructive.
Political Economy has a very good answer to that. Homes built are added to the national wealth just once; they can be counted as part of the 'output' of the years in which they are first sold, to occupants or to landlords.
But in every future year that land is out of production for farming, or for leisure activities that can be replaced by farms; as happened to a huge acreage especially in the Second World War.
The facts and figures for High-Speed Two indicate the costs of building railways. In my youth I never understood why the depredations of Dr Beeching were not shown as negative on the national balance sheet. The cost of building railways, per mile, is horrendous: so the loss to the national wealth of tearing them up should have been shown. National income probably showed negative growth in that period. The same is true of steelworks, dockyards and other installations that had a long potential future existence until they were wantonly destroyed in the pursuit of short-term policies, chiefly under the Thatcher regime.
Inflating the amount of money that can be borrowed per house adds nothing to real national production. The lending officers of building societies and the estate agents with the highest 'productivity' add nothing to real national production: their labour in not substantially productive, regardless of how much 'profit' it turns in to churn on through the consumer-driven economy. This is quintessentially true of resales of houses that were first built on greenfield sites.
Restoration of the many despoiled old urban areas of the UK remains an urgent task; and the need for homes is desperate. Looking to the green belt to provide easy pickings [usually for the better-off members of society] is distracting and destructive.
Monday, 8 December 2014
Prelate and Premier
Today the Archbishop of Canterbury is publicising a report, prepared under the direction of the Bishop of Truro and the excellent Frank Field MP, that heavily castigates the extent of the need of British families to resort to food banks in this year of grace 2014.
The need is largely due to the fact that families are literally penniless in many thousands of cases where benefits are due to be paid, but there are institutional and bureaucratic delays in the release of the extremely modest funds to which the families are entitled. But there are many other causes of the distressing circumstance where a parent literally cannot feed a child - or herself - of which only a minority are fecklessness, cretinism, intoxication or narcotic catalepsy. Society is failing, and the economy is failing; and government has no remedy.
Meanwhile, on the same day, the Prime Minister warns his cohorts that Britain's "prosperity" would be at threat if Labour and/or the Liberal democrats will the forthcoming general election. One may ask, "What prosperity?" As the government promises some £55billion a year of cuts to public expenditure by 2020, on top of the approximately £35billion annual 'savings' so far achieved, it is legitimate to ask what of the economy, and of the social structure, will survive?
The Chief Constable of Lincolnshire has asked the Home Secretary to explain how that huge county can be policed if the foreshadowed cuts are made: we can expect no direct answer to that question.
Clegg has no answer.
Milliband has no answer.
And now Alex Salmond reckons that he can exploit an electoral stalemate next May to pursue his obsessive agenda in defiance of the democratic vote of the Scots people in the recent referendum.
In his speech announcing his intention to disrupt the UK parliament, Salmond repeated the assertion - which is almost certainly true - that the one way for him to forfeit the trust of his followers would be to enter into any sort of pact with the Conservatives.
The rump of the LibDem party is also likely to decide after the May election that their role in any future government will be with Labour.
In the unlikely event that UKIP get enough seats to swing a hung parliament, they will exact a tremendous toll for coalition with the Conservatives.
What hope have we?
The need is largely due to the fact that families are literally penniless in many thousands of cases where benefits are due to be paid, but there are institutional and bureaucratic delays in the release of the extremely modest funds to which the families are entitled. But there are many other causes of the distressing circumstance where a parent literally cannot feed a child - or herself - of which only a minority are fecklessness, cretinism, intoxication or narcotic catalepsy. Society is failing, and the economy is failing; and government has no remedy.
Meanwhile, on the same day, the Prime Minister warns his cohorts that Britain's "prosperity" would be at threat if Labour and/or the Liberal democrats will the forthcoming general election. One may ask, "What prosperity?" As the government promises some £55billion a year of cuts to public expenditure by 2020, on top of the approximately £35billion annual 'savings' so far achieved, it is legitimate to ask what of the economy, and of the social structure, will survive?
The Chief Constable of Lincolnshire has asked the Home Secretary to explain how that huge county can be policed if the foreshadowed cuts are made: we can expect no direct answer to that question.
Clegg has no answer.
Milliband has no answer.
And now Alex Salmond reckons that he can exploit an electoral stalemate next May to pursue his obsessive agenda in defiance of the democratic vote of the Scots people in the recent referendum.
In his speech announcing his intention to disrupt the UK parliament, Salmond repeated the assertion - which is almost certainly true - that the one way for him to forfeit the trust of his followers would be to enter into any sort of pact with the Conservatives.
The rump of the LibDem party is also likely to decide after the May election that their role in any future government will be with Labour.
In the unlikely event that UKIP get enough seats to swing a hung parliament, they will exact a tremendous toll for coalition with the Conservatives.
What hope have we?
Friday, 5 December 2014
And Now He's Cross
The BBC has been very naughty. Its news teams have told the country that by the end of the next Parliament - if Gideon Osborne is elected to get away with it - public spending will be at its lowest for 80 years. The fact that this is a reasonable extrapolation from his own figures is not relevant, from his perspective on this political argument.
The population of the UK is around 50% greater than it was in 1935 and it is growing rapidly. The amount of money that is taken in as taxes and returned to the people through schools, the Health Service, benefits and other channels, is massively greater, per head, than it was in 1935. So the removal of health, help and support from every citizen [whether or not they are deserving of all that they get] would be dramatic. It is not achievable, because the state would have been brought down by rioting mobs long before the target was hit. Once people have nothing - literally nothing - to loose, they will ally with others in the same position; and the depleted, demoralised police force will be incapable of stopping the destruction.
One has to go back to 1848 to find any comparable situation to that which could exist in the UK by 2018. The situation then was that the 1834 Poor Law reform had taken effect, the Workhouses had been built and were fully functional, and [at least in principle] all the cash benefits that had been available under the Speenhamland System had been withdrawn. Many of the marginally-employed found it very hard even to put bread on the table for their families: and the Liberals [not least, the new capitalist class] blamed the high price of corn, not the low wages that they paid, for the distress that was evident among the working poor. Capitalist-funded orators ranged the country arguing against the landlord class and the farmers, who benefitted from the high price of food. By the mid eighteen-forties the Russian Empire, the USA and Canada had all become capable of exporting large quantities of grain; but Britain kept it out by imposing the tariff specified in the Corn Act. The Anti-Corn-Law League invested heavily in the campaign to keep industrial profits high and wages low, and hundreds of thousands of people signed the petition demanding repeal. There was a clear threat that violent riots would be staged if the demand was not met. Tens of thousands of middle-class and aristocratic men signed up as special constables; rather looking forward to being licensed to crack a few riotous heads. Among them was the exiled Louis Napoleon Bonaparte, who was soon to return to France, be elected President and then declare himself Emperor Napoleon III.
Sir Robert Peel's government duly climbed down, the Tory party was rent apart, and the Corn Act was repealed. This settled Britain a low-wage country, which enabled our industries to remain competitive on price even as German and American firms adopted newer technology to produce better products. The cost of becoming dependent on imported food only became fully apparent in the losses to the mercantile marine in the First World War; and the UK only began to pay high prices for food when it entered the EU and the Common Agricultural Policy in 1973.
Politics in 2015 will enter a new and frightening period. Labour is largely responsible for the mess that we are in: the Tories and the LibDems have not understood it, so have made it worse.
Stick with this blog: it is depressing, but it says it as it is!
The population of the UK is around 50% greater than it was in 1935 and it is growing rapidly. The amount of money that is taken in as taxes and returned to the people through schools, the Health Service, benefits and other channels, is massively greater, per head, than it was in 1935. So the removal of health, help and support from every citizen [whether or not they are deserving of all that they get] would be dramatic. It is not achievable, because the state would have been brought down by rioting mobs long before the target was hit. Once people have nothing - literally nothing - to loose, they will ally with others in the same position; and the depleted, demoralised police force will be incapable of stopping the destruction.
One has to go back to 1848 to find any comparable situation to that which could exist in the UK by 2018. The situation then was that the 1834 Poor Law reform had taken effect, the Workhouses had been built and were fully functional, and [at least in principle] all the cash benefits that had been available under the Speenhamland System had been withdrawn. Many of the marginally-employed found it very hard even to put bread on the table for their families: and the Liberals [not least, the new capitalist class] blamed the high price of corn, not the low wages that they paid, for the distress that was evident among the working poor. Capitalist-funded orators ranged the country arguing against the landlord class and the farmers, who benefitted from the high price of food. By the mid eighteen-forties the Russian Empire, the USA and Canada had all become capable of exporting large quantities of grain; but Britain kept it out by imposing the tariff specified in the Corn Act. The Anti-Corn-Law League invested heavily in the campaign to keep industrial profits high and wages low, and hundreds of thousands of people signed the petition demanding repeal. There was a clear threat that violent riots would be staged if the demand was not met. Tens of thousands of middle-class and aristocratic men signed up as special constables; rather looking forward to being licensed to crack a few riotous heads. Among them was the exiled Louis Napoleon Bonaparte, who was soon to return to France, be elected President and then declare himself Emperor Napoleon III.
Sir Robert Peel's government duly climbed down, the Tory party was rent apart, and the Corn Act was repealed. This settled Britain a low-wage country, which enabled our industries to remain competitive on price even as German and American firms adopted newer technology to produce better products. The cost of becoming dependent on imported food only became fully apparent in the losses to the mercantile marine in the First World War; and the UK only began to pay high prices for food when it entered the EU and the Common Agricultural Policy in 1973.
Politics in 2015 will enter a new and frightening period. Labour is largely responsible for the mess that we are in: the Tories and the LibDems have not understood it, so have made it worse.
Stick with this blog: it is depressing, but it says it as it is!
Monday, 1 December 2014
Gideon's Grim Delusion
The usually-arrogant Chancellor, Gideon Osborne, is occasionally rattled when he comes under challenge: then he quacks like a cartoon duck. His place in history will be that of a pathetic puddle-duck, swimming aimlessly on a polluted pond while he is under the impression that he is a Master of the Universe.
His boasts about the strength and the growth of the British economy now face the fact that the economy is really so weak that taxation revenues are falling - spectacularly. As this blog has reported for some years now, the growth has been of spending by consumers: largely on imported goods, or on goods that are produced by foreign-owned firms so that any profit is allocated abroad and not to the development of the UK economy. Much of that spending is supported by benefits: including in-work benefits because mass wages are not sufficient to maintain families decently. So even with 20% VAT payable on some items, the exemptions of food and children's clothes mean that even VAT revenues are less than the statisticians would have expected from the GNP that they report to exist.
Now he admits that - in the unlikely event that he will be the Chancellor in the next government - he would have to make cuts in state spending that would be so severe as to make national defence, policing, education and the functioning of both urban and rural local authorities non-viable. But, of course, he does not interpret what he says in those terms; because he has a huge disadvantage. He studied Economics and he still believes in it. So he is taking the country to hell in a handcart; unrestrained by his fellow PPE graduate the Prime Minister.
Meanwhile the financial services industry is also doing its bit to encompass the ruin of the economy. An 'expert' at the normally-excellent advisory firm, Investec [by the name of Rami Myerson: note that well!], suggests that one of the best of British firms should be subjected to asset-stripping. He proposes that Rolls-Royce should either sell off its heavy engine business [that which supplies marine, railway and large tractor engines] to release cash to short-termist money-grubbing shareholders. He may be right to note that many institutional shareholders employ such stupid 'analysts' themselves that they do not recognise the advantages of diversification [by the right management] and just want to own aero-engine shares even if that market is suffering from the European recession and the slower rate of growth in China. Many of them will be equally purblind with him, and fail to see that large companies are better served by having diverse aspects of business. And if he has studied Economics he will probably have succumbed to the idea that investment just 'happens; that it does not need soundly to be planned. He is the sort of twerp who has done much to assist in the deindustrialisation of Britain; and he would doubtless regard it as a feather in cap if he could stimulate a seismic shift for the worse in the national economy and in the micro-economy of Derby where devastating unemployment would follow.
His boasts about the strength and the growth of the British economy now face the fact that the economy is really so weak that taxation revenues are falling - spectacularly. As this blog has reported for some years now, the growth has been of spending by consumers: largely on imported goods, or on goods that are produced by foreign-owned firms so that any profit is allocated abroad and not to the development of the UK economy. Much of that spending is supported by benefits: including in-work benefits because mass wages are not sufficient to maintain families decently. So even with 20% VAT payable on some items, the exemptions of food and children's clothes mean that even VAT revenues are less than the statisticians would have expected from the GNP that they report to exist.
Now he admits that - in the unlikely event that he will be the Chancellor in the next government - he would have to make cuts in state spending that would be so severe as to make national defence, policing, education and the functioning of both urban and rural local authorities non-viable. But, of course, he does not interpret what he says in those terms; because he has a huge disadvantage. He studied Economics and he still believes in it. So he is taking the country to hell in a handcart; unrestrained by his fellow PPE graduate the Prime Minister.
Meanwhile the financial services industry is also doing its bit to encompass the ruin of the economy. An 'expert' at the normally-excellent advisory firm, Investec [by the name of Rami Myerson: note that well!], suggests that one of the best of British firms should be subjected to asset-stripping. He proposes that Rolls-Royce should either sell off its heavy engine business [that which supplies marine, railway and large tractor engines] to release cash to short-termist money-grubbing shareholders. He may be right to note that many institutional shareholders employ such stupid 'analysts' themselves that they do not recognise the advantages of diversification [by the right management] and just want to own aero-engine shares even if that market is suffering from the European recession and the slower rate of growth in China. Many of them will be equally purblind with him, and fail to see that large companies are better served by having diverse aspects of business. And if he has studied Economics he will probably have succumbed to the idea that investment just 'happens; that it does not need soundly to be planned. He is the sort of twerp who has done much to assist in the deindustrialisation of Britain; and he would doubtless regard it as a feather in cap if he could stimulate a seismic shift for the worse in the national economy and in the micro-economy of Derby where devastating unemployment would follow.
Friday, 28 November 2014
Failure and Flannel
David Cameron has given his long-awaited, much leaked speech on EU immigration to the UK.
He admitted that he was impotent to change the situation within the present EU rules; and the tacit side admission was that he has little chance of achieving any significant change. He has refused to say whether he will advocate a 'No' vote in the event of a referendum on EU membership that offers no substantial change. He has evaded saying what would be the basis for any negotiation of Britain's possible future status within the Union. The pusillanimity of his approach, and the flannelly words in which he tries to clothe his obfuscation, make him look even more painfully inadequate.
Occasional displays of a flaring temper - whether genuine or simulated - do not mark Cameron out as a statesman. Indeed, keeping cool and clinical is the mark of a successful politician who is maturing into a statesman: such as Disraeli, Baldwin and Macmillan.
More importantly, Cameron claims success for the Tories' management of the economy since 2010. He and Gideon are constantly asserting that the British economy is growing more quickly than any other mature post-industrial economy. One set of data, cash turnover of the economy as guessed by the official statisticians, is logged as the GNP - Gross National Product - and the latest three-month results have recently been published. The recorded consumption per head of the population is increasing; on average, with most descendants of the former working class receiving less than average pay. An increasing amount of individuals' spending is on imports [up 1.4% over the quarter] while exports declined over the three-month period by 0.4%. Investment is weak [around half of one per cent]. The claims of economic success are flannel: as are pretences that the government has come even one metaphorical inch to meeting its promise eradicate the budgetary deficit by May next year.
There is a good chance that the universal failure of the coalition to meet either the participants' 2010 election promises or the terms of the Coalition Agreement will help to ensure mass abstention in the general election, mitigated by a rising cohort of UKIP voters. Chaos beckons!
He admitted that he was impotent to change the situation within the present EU rules; and the tacit side admission was that he has little chance of achieving any significant change. He has refused to say whether he will advocate a 'No' vote in the event of a referendum on EU membership that offers no substantial change. He has evaded saying what would be the basis for any negotiation of Britain's possible future status within the Union. The pusillanimity of his approach, and the flannelly words in which he tries to clothe his obfuscation, make him look even more painfully inadequate.
Occasional displays of a flaring temper - whether genuine or simulated - do not mark Cameron out as a statesman. Indeed, keeping cool and clinical is the mark of a successful politician who is maturing into a statesman: such as Disraeli, Baldwin and Macmillan.
More importantly, Cameron claims success for the Tories' management of the economy since 2010. He and Gideon are constantly asserting that the British economy is growing more quickly than any other mature post-industrial economy. One set of data, cash turnover of the economy as guessed by the official statisticians, is logged as the GNP - Gross National Product - and the latest three-month results have recently been published. The recorded consumption per head of the population is increasing; on average, with most descendants of the former working class receiving less than average pay. An increasing amount of individuals' spending is on imports [up 1.4% over the quarter] while exports declined over the three-month period by 0.4%. Investment is weak [around half of one per cent]. The claims of economic success are flannel: as are pretences that the government has come even one metaphorical inch to meeting its promise eradicate the budgetary deficit by May next year.
There is a good chance that the universal failure of the coalition to meet either the participants' 2010 election promises or the terms of the Coalition Agreement will help to ensure mass abstention in the general election, mitigated by a rising cohort of UKIP voters. Chaos beckons!
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