Category Archives: Economy
In the Financial Times, noting that Conservatives and Labour are ‘neck and neck’ in the polls, Jim Pickard – formerly a severe critic of Jeremy Corbyn – wrote today “With British politics in a state of acute flux, there is increasing interest from business leaders about Labour’s policy proposals”.
At the launch of the annual Living Standards Audit by the Resolution Foundation, an independent think-tank that focuses on low pay, the Independent reports that shadow chancellor John McDonnell (right) will announce details of Labour’s commitment to ending in-work poverty over the course of the next parliament, due to cover the years 2022-27 unless brought forward by a snap election.
The Joseph Rowntree Foundation said last year that ‘in-work poverty is the problem of our times’ and McDonnell will make a commitment to ending this modern-day scourge, eliminating it by the end of Labour’s first full Parliamentary term.
In September it was reported here that the Financial Times appeared to have left the anti-Corbyn/McDonnell media caucus, somewhat warming to the shadow chancellor. Following Jim Pickard’s first respectful report on any aspect of Labour policy, an article, by Jim O’Neill, chair of the Chatham House think-tank and former Treasury minister, had the headline, “The UK opposition steps into an economic void left by a government grappling with Brexit”.
The second sign was the FT’s comment in a December article that the UK lacks the kind of community banks or Sparkassen that are the bedrock of small business lending in many other countries adding: “When Labour’s John McDonnell, the shadow chancellor, calls for a network of regional banks, he is calling attention to a real issue”.
As a paragraph in his address today says: “As Chancellor in the next Labour Government, I want you to judge me by how much we reduce poverty and how much we create a more equal society, by how much people’s lives change for the better. Because that is our number one goal.”
So writes Alan Simpson (left), formerly Labour MP for Nottingham South.
Labour has to shift the focus to the health of the planet that is perilously at risk. More than 1,000 doctors (including 40 professors and former presidents of royal colleges) now call for widespread “non-violent civil disobedience” over Parliament’s failure to address the unfolding ecological and health emergency staring us in the face.
Everything, absolutely everything, must focus on two things. Labour has to block any prospect of a no-deal exit from the EU on October 31.
The trouble is that Labour is in almost as much of a mess as the Tories. At a time when the government is in complete disarray, Labour’s standing in the opinion polls is actually falling. Labour isn’t seen as offering the bigger, alternative vision and Brexit ambiguity looks more like weakness than leadership.
Mischief-makers are having a field day with identity politics in order to deflect attention from the structural issues that divide society, the deeper grievances; poverty, unemployment, squalor, ill-health, hopelessness, the towering evils the 1945 Labour government set out to tackle. As you set out to address them, the divides of race and religion melt to the sidelines.
We have to address the real “health disruptors” that stare us in the face:
- London’s current heatwave doesn’t compare with temperatures in France; 1.5°C higher than their 2003 heatwave in which thousands died.
- Catalonia is on fire.
- Guadalajara, in Mexico, woke up to find districts buried in two metres of freak hailstones, the size of golf balls.
- Similar “golf balls” had shattered windscreens in southern France only two weeks ago, just before the climate roller-coaster raced into overheating.
- The last 40 years has seen an 80% fall in bee and insect populations that pollination (and biodiversity) depends on.
It is all part of the unrecognised war we conduct upon ourselves (and our children)
So, back in Britain, where is the press challenging politicians on the existential crises facing our soils, water supplies, air quality, ecosystems and biodiversity?
On all the really big issues of the day, the press (and most politicians) have gone AWOL. One reason is that there are now no answers that don’t involve systems change.
The situation cries out for an urban mining, circular economics, that reclaims compounds and elements from products and buildings, reusing and recycling materials – including IT and electronic waste – that are finite rather than infinite. Product lifetimes have to be dramatically increased (along with the repair services to underpin them).
- There is as much copper circulating in the economy (or accumulating as scrap) as probably remains in the earth.
- Britain imports all of the 17 rare earth elements we rely on for everything from lasers to cancer drugs, from mobile phones to surgical supplies. Virtually all are currently lost as exported waste or inefficient recycling.
- We import 12.3 million tonnes of iron ore each year but produce 10m tonnes of scrap iron and steel, the bulk of which gets dumped abroad.
- The weight of clothing we discard is equivalent to the weight of clothing we import. And Britain discards the same weight of electronic equipment each year as the equipment we buy.
The Tory leadership race is dominated by prejudice and pandering to the rich and powerful. It will chase neoliberal delusions, no matter what social divisions or ecological disasters come in their wake. Labour must step beyond the politics of “me” and into the survival of “we.”
Simpson ends, “In doing so, I don’t care if my culture, my race, my sexuality, nationality or religion comes a poor second. The changes Labour must deliver, within the coming decade, will determine whether our children and grandchildren have the chance to sort these things out for themselves”.
Alan Simpson now advises the party on environmental issues. His article may be read in full here:
“The savage rules of the almighty Market have created the conditions that are speeding us to destruction”: Paul Halas
Paul Halas: “As we approach the 2020s there’s a growing awareness that we need change and we need change now. Running the country according to the savage rules of the almighty Market has created the conditions that are speeding us to destruction”.
In the Western Daily Press (26th April) Paul describes the Conservatives’ genius in persuading millions of long-suffering voters that the national economy operates like a household, so in order for the nation to “live within its means” we all have to tighten our belts.
But this concept – invented by Margaret Thatcher’s think tanks – was directed only at the 99% who always “suffer the destructive effects of austerity” as Halas points out.
The cuts to health, education, transport, disability benefits and other sectors go un-noticed by the I% who can afford to opt out of these systems – symbolised here by one of her ministers.
The household economics concept, Halas continues, ”echoed by every administration since . . . (is) easy to understand yet utterly meretricious”.
He refers us to sources such as the Office for Budget Responsibility, so the writer obediently found the latest report, which certainly did not confirm “the impression that everything in the garden is rosy”. Tax receipts have risen, but there is no indication that “lashings of money are flowing into the Treasury” as had been stated in the same column on 23rd April.
OBR: damned with faint praise?
- The economy ended 2018 growing a little less strongly than we expected in October. In recent weeks survey indicators of current activity have weakened materially, in part reflecting heightened uncertainty related to Brexit.
- The Government’s stated ‘fiscal objective’ is to balance the budget by 2025-26 and past forecast performance suggests that it now has a 40% chance of doing so by the end of our forecast in 2023-24.
- One risk to the public finance metrics that we do expect to crystallise over the coming months is an improvement in the accounting treatment of student loans . . . we estimate that it could increase the structural budget deficit by around £12 billion or 0.5 per cent of GDP in 2020-21.
- Net trade and private investment were markedly weaker than expected, weighed down by a slowing global economy and Brexit-related uncertainty. Business investment has fallen for four consecutive quarters – its longest continuous decline since the financial crisis.
Halas expands on tax issues and the misdirected quantitative easing adventure:
Although the prime function of tax is to regulate the economy and keep inflation under control, the failure of many of the richest individuals and corporations to pay their dues, thanks to absurdly flabby fiscal legislation, has helped fuel the UK’s runaway inequality and damaged society immeasurably.
It is estimated that 80% of new money created (by the government, via the banks) ends up into the coffers of the financial institutions and their clients, rather than funding investment and welfare as it should.
And ends: “The only sustainable way forward is to invest massively in greener forms of energy and greener transport, to create a greener infrastructure and a greener environment. This won’t be possible without a vast reduction in inequality, more public ownership, more localism, and a far more cooperative approach to economics – all policies the Labour Party is adopting. All those with vested interests will doubtless raise a billion objections, but the consequences of keeping our heads in the sand and trusting the Tories to come up with solutions would be catastrophic”.
Richard House draws attention to a letter by Ruth Steigman published in the Independent this week. She writes
In the 2017 general election, Labour gained 40% of the vote, and the largest increase in its share of the vote since the 1945 general election.
Jeremy Corbyn, who started the campaign 20 points behind in the polls, achieved this result following two years of attacks from all sides, and, in the words of the BBC, “in the face of a brutal onslaught from the print media”.
He had, again in the BBC’s words, “changed British politics” and “showed, amazingly, that Labour did not have to move to the centre to win votes but could do so from the unashamed left”.
Does this totally unexpected result explain the extraordinary escalation in the onslaught from the BBC and other establishment institutions since then?
Do the countless absurd smears stem from the fact that Jeremy Corbyn and his policies are now seen as a clear threat to the establishment in this country?
The Labour MPs opposing him see their power base in the party, established over the past 30 years, under attack, but know that with half a million party members behind him, a further challenge to his leadership would fail.
They do not understand that the era of submission to Thatcherite policies is over.
Anyone standing outside a polling station in May 2017 could see what these Labour MPs cannot: instead of the usual trickle of elderly voters, large groups of enthusiastic and optimistic young people turned out to demonstrate that they were not fooled by many of the unfounded smears of antisemitism, espionage etc, and that they understood the Labour leader was under attack from all sides because he stood outside the establishment, and because his policies threatened the political dogma that had prevailed since Margaret Thatcher won power 40 years ago.
Those who hold power naturally want the status quo to continue untroubled: power never cedes without a fight. But the people are eager for change, and want a government that serves the public, not powerful vested interests.
Jeremy Corbyn’s policies articulate their anger at the failed privatisations of public services, and widespread deregulation. Ordinary Labour Party members want MPs who will not undermine the party’s democratic processes, or sabotage their efforts to achieve a Labour government.
A Labour MP from the left of the party brought us our most treasured institution, the NHS.
Now that the country is suffering in every sphere under Tory austerity – from poverty to knife crime to slum housing – Labour has the policies to prove the BBC correct in their assessment that British politics has indeed changed, and moved, with the Labour Party, to the left.
This prompt led to the discovery of Ms Steigman’s signature below the following testimony in the Islington Tribune
One of the frequently expressed taunts equating Britain’s future under a Corbyn government with the current state of Venezuela is a Telegraph headline, above a recent article by William Hague:
“The tragedy of Venezuela shows us how dangerous Jeremy Corbyn and his acolytes really are”.
An article by American Ellen Brown, chairman of the Public Banking Institute (below left), explains that Venezuela’s problem is that it has massive U.S. dollar debts, mainly for imported food and medicine, according to online sources.
Ellen recalls: “When oil (its principal resource) was booming, Venezuela was able to meet its debt repayment schedule. But when the price of oil plummeted, the government was reduced to printing Venezuelan bolivars and selling them for U.S. dollars on international currency exchanges. As speculators drove up the price of dollars, more and more printing was required by the government, massively deflating the national currency”.
The government issued money to hire people to build infrastructure, provide essential services and expand economic development. Hugo Chávez had set in place a series of economic and social reforms nationalizing key components of the nation’s economy, dramatically reducing poverty and illiteracy as well as improving health and living conditions for millions of Venezuelans.
Governments that are sovereign can, and have engaged in issuing their own currencies for infrastructure and development quite successfully. Ellen has discussed a number of contemporary and historical examples in very interesting articles, relating to Japan, China, Australia and Canada.
Professor Michael Hudson confirms that Venezuela’s disasters are not due to governments issuing money to stimulate the economy: “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”
Venezuela is not technically at war but it is suffering aggressive economic attacks by a foreign power – ongoing U.S. sanctions have cost the country at least $20 billion in losses. About $7 billion of its assets are now being held hostage by the U.S., which has waged an undeclared war against Venezuela ever since George W. Bush’s failed military coup against President Hugo Chávez in 2002.
National security adviser John Bolton (right) was explicit about America’s interest in Venezuelan oil:on Fox News, “It will make a big difference to the United States economically if we could have American oil companies invest in and produce the oil capabilities in Venezuela.”
Bloomberg reported that, evading any further escalation of the debt trap, Nicolás Maduro, elected president following Chávez’s death in 2013, announced in October that Venezuela will not be trading oil in U.S. dollars following sanctions.
Full text here: Jeremy Corbyn’s speech to the Make UK conference (EEF Feb. 19)
Make UK, the manufacturers’ organisation, is the representative voice of UK manufacturing, with offices in London, Brussels, every English region and Wales
Manufacturing is the beating heart of our economy. For those employed in the sector, manufacturing doesn’t just offer a good job that pays well, it offers creative and satisfying work. But manufacturing needs the right environment to flourish: high quality infrastructure, a skilled workforce, and open and stable trading relationships.
A government prepared to invest in our economy and pursue an active industrial strategy could bring about a renaissance in manufacturing. The next Labour government will start with infrastructure. Our dilapidated transport, communications, and energy infrastructure is desperately in need of an upgrade.
Labour will unleash a massive programme of investment with a National Transformation Fund delivering £250 billion of direct capital expenditure on infrastructure and R&D, benefitting every region and nation of our country, not just London and the South East.
And we will establish a National Investment Bank to make available a further £250 billion over 10 years in the form of patient capital lent to small and medium-sized enterprises in line with the priorities of our industrial strategy, providing funding for green industries and the technologies of the future.
How can we mobilise industry to help avert the destruction of our climate?
Let me give you an example of the change we need. To avoid climate catastrophe we have to reduce our net emissions to zero by 2050 at the latest. That’s not going to happen by itself. It requires large-scale public investment into renewable energy and home insulation, which will in turn create new opportunities for private enterprise.
This is not a burden. It’s an opportunity to kick-start a Green Jobs Revolution.
Labour’s plans will create at least 400,000 skilled, unionised jobs and bring about a seven-fold increase in offshore wind, double onshore wind, and triple solar power. These new manufacturing and engineering jobs will bring skills and opportunity to parts of the country that have been held back by decades of neglect.
Technology and manufacturing don’t have to be a threat to the environment. Our responsibility is to develop the next generation of technology that will help us preserve our natural world.
Labour is committed to investing on a scale that will transform our economy. Those policies won huge public support at the general election 18 months ago. I’m disappointed that a small number of MPs yesterday decided to take a different path.
But university fees, the scrapping of grants, and cuts to training have made education less accessible just when we need a highly skilled workforce more than ever. So today I am proud to announce the appointment of our Commission on Lifelong Learning to help make the principle of lifelong learning a reality.
The Commission will bring together 14 experts from across education – top names in their fields – including Make UK’s very own Chief Economist Seamus Nevin. It is co-chaired by the former Education Secretary, Estelle Morris, and the General Secretary of the Communication Workers Union, Dave Ward. Lifelong learning will be available to everyone no matter their background. It will make detailed proposals on how to integrate qualifications, introduce a credits system to make qualifications transferable and make it as easy as possible for people to pick up or pause their studies at times that work for them. Under a Labour government workers will never again be left feeling discarded because there will be an industrial strategy creating good, well-paid jobs and training to help workers learn new skills.
I strongly believe there should be genuine parity between vocational education and academic education.
We have to end the outdated grammar school mentality of looking down on someone who does a vocational course and looking up to someone who does an academic course. I see the skills of electrical work of computer work of design work learned through vocational courses as just as valuable as academic courses taken at university. We need all of those skills in our society. In Germany, where they really value engineering, they say: “You’re a clever kid – get down the metal workshop.’’
We ask employers to step up to invest in their workforce too.
Last week I visited the gear manufacturer Beard and Fitch in Harlow, and met Carol, a supervisor who is partially sighted. She was doing the final checking and polishing of the gears, and she had been provided with big screens to help her do her work. That’s a sensible employer who has made an investment in someone who was very good at her job. And it was paying off.
Earlier this month I wrote to the Prime Minister laying out Labour’s alternative plan based around a permanent customs union with a British say in future trade deals, a strong relationship with the single market and full guarantees on workers’ rights, consumer standards and environmental protections. Later this week I will travel to Brussels to discuss it with Michel Barnier and others. Labour has consistently advocated a comprehensive UK-EU customs union to deliver frictionless trade and protect supply chains that stretch across the continent. Disrupting those supply chains would threaten good businesses and skilled jobs that we can’t afford to lose.
Concerns about a ‘no deal’ crash go well beyond the car industry. Take food and drink, which is actually the UK’s largest manufacturing sector. It needs frictionless trade for perishable goods, where time is of the essence. Or steel. Half the steel we produce is exported most of it to the EU. A disastrous ‘no deal’ Brexit would mean trade restrictions on virtually all steel companies’ export markets. And while the big household names get all the media attention, it’s the small and medium-sized manufacturers who will find it most burdensome to adjust to new customs arrangements.
Brexit has crystallised a choice about the kind of economy we want. On the one hand, the harsh economic environment fostered by the Conservatives: low investment, low productivity, low growth and a damaging trade deal with Donald Trump. On the other, Labour’s investment-led approach, underpinned by a close relationship with our European neighbours, in a rebalanced economy that no longer privileges those who lend and speculate over those who make things.
These are anxious times for manufacturers. But the future doesn’t have to be one of decline. With a government that believes in and supports industry, manufacturing will be the engine of innovation in the green economy of the future. Infrastructure, skills, certainty. That’s what manufacturing needs. That’s what only Labour will deliver.
Your chilling, but hardly surprising, front-page revelation that one in four Europeans vote populist was long on excellent analysis, but lacked any solutions. Reversing this trend and its fallout, including Brexit, will require tackling the reasons for its rise:
- widespread concerns about inadequately controlled migration
- and the economic insecurity now rife among both the employed and unemployed.
Tackling the latter will require spelling out a “project hope” agenda which reverses austerity and instead invests in the rebuilding of Europe’s social infrastructure, while also funding a massive green infrastructure programme for transforming the energy, energy-saving and transport systems continent-wide.
Europeans should take inspiration from the US, where progressive new congresswomen and men are now pushing the Democrats into adopting just such a “Green New Deal”.
They realise that a “jobs in every part of the country” programme is central to defeating Trump.
Here, Jeremy Corbyn could play a central role by capitalising on the present parliamentary chaos and asserting that Labour supports a people’s vote, but with the “remain and reform” agenda for Europe, similar to that he “campaigned” for in the run up to the referendum.
Putting rebuilding local economies at the heart of such reform would gain support from leave-voting areas and could be a rallying call for those fighting rightwing populism across Europe. It could also have the domestic payoff of forming the core of Labour’s next and hopefully successful election manifesto, whenever required.
Message received on Mon, 12 November: David Bailey presented Economics for the Many (link to slides) at an interesting event at the WM Labour Party regional office. Over a hundred people came and there was a great discussion.
Professor of Industrial Strategy
Aston Business School
The Aston Triangle, Birmingham, B4 7ET, UK.
tel: +44 (0)7981 925713 or +44 (0)121 204 5262
David’s Blog: http://www.birminghampost.co.uk/authors/david-bailey/
2nd August: already has over 55,000 ‘views’; go to https://twitter.com/jeremycorbyn
Ten slides, ends:
Kevin Pringle, former strategic communications director for the SNP, opens his latest Times article:
“Here are words I never thought I’d write: Jeremy Corbyn could save the country. But only if he wants to.
“Brexit is an Anglo-Saxon farce, revealing a depth of incompetence, division and utter lack of preparedness on the part of the UK government that has plumbed even my low expectations. The antics of Boris Johnson, Jacob Rees-Mogg and David Davis are about as funny as a Carry On film long after the franchise went stale. The issues at stake are too serious”.
Pringle continues with a summary of recent cabinet discussions and warnings from big business of the risks of relocation, withdrawal of investment and job losses.
He describes the prospect of Britain’s alignment to EU regulations in some sectors as a ludicrous mishmash that should be unacceptable to remainers and leavers alike – a ‘dud destination’, adding:
“Corbyn needs to take a long view of the country’s best interests and act accordingly. He should commit Labour to backing a fresh referendum so that people have an opportunity to exit Brexit when its final form is known. In these circumstances, the SNP would come on board alongside the Lib Dems and others. Such a bold move could attract the relatively small number of Tory MPs needed to deliver a House of Commons majority for a people’s vote.
“I’m no fan of Labour but I recognise that in times of need it has been the agent of Britain’s deliverance.
“One of the best-ever Commons speeches was by Michael Foot at the end of the no-confidence debate in March 1979, which the Labour government lost by a single vote. Foot argued that Labour had “come to the rescue of the country” on at least two occasions: “It is in the most difficult and painful moments of our history sometimes that this country of ours has turned to the Labour Party for salvation, and they’ve never turned in vain so far. We saved the country in 1940; we saved the country again in 1945.”
“He was right.
“It was Labour that forced a vote in the House of Commons in May 1940 after the debate on the military fiasco of the Norway campaign. The result precipitated the fall of Chamberlain as prime minister, and creation of the wartime coalition under Churchill’s leadership that was an essential element of victory.
“And in 1945, Clement Attlee’s Labour Party had the ideas and determination to rebuild an exhausted Britain, including creating the NHS 70 years ago.
“This is another historic moment, and once again only a decisive Labour intervention can set the country right”.