Category Archives: political decision-making

In condemnation of privatisation – the naked pursuit of wealth

The ideology of competition and superiority permeates our culture, and the cult of privatisation is at the root of sub-standard, expensive railways, electricity, gas and water; miserable prisons; inadequate care; decreasing legal aid; and failing mental health services.

Personal success and the creation of wealth are goals in a wilderness of private interests. ‘Success’ has widely come to be defined in terms of superiority over others.

Our system of knighthoods and damehoods – the invidious use of ‘Lord’ and ‘Lady’ – symbolise a power structure where outsiders are tolerated, and often quietly absorbed into a corrupt environment.

People motivated by greed, like the authors of devastated pension funds, suddenly and mysteriously reappear in positions of authority. It is as if history has ceased to exist. Those with the courage to expose them are vilified.

Recent media expositions relating to the House of Saud and the huge-scale laundering of the ill-gotten gains of oligarchs and dictators through the City of London, for example, portray the corruption. Empty luxury flats are more desirable than homes for people.

Armaments, for some, are more important to our wellbeing than the lives of underprivileged Yemeni families.

This presents a challenge. Condemnation is not the way to tackle the cult of success. We need successful artists, business people, musicians, actors, social workers, doctors, scientists and engineers – and we must find ways of stimulating and supporting them.

A redefined concept of success will lie in focusing on the huge potential of every single member of our society and not just those with the existing resources – physical, mental, economic – to realise themselves. 

Edited from an article by Roger Iredale in the Friend, 23 February 2018

 

 

o

 

 

Advertisements

Should Labour put an end to PFI schemes and outsourcing?

George Parker of the Financial Times reported on the content of a video by Labour leader Jeremy Corbyn, watched almost 300,000 times in 24 hours on Facebook.

Corbyn sees the collapse of Carillion, the company responsible for everything from building hospitals to providing school meals, as a “watershed” moment that proves that the private sector should not be running swathes of Britain’s public services. More here.

The revolution in outsourcing public services was started by Margaret Thatcher and continued by New Labour under Tony Blair. Since 1980 public services — from providing school meals to refuelling RAF aircraft — have been outsourced to the private sector. Questions have been about whether the taxpayer is getting best value for money from some contracts, listed here. There is more on unsafe PFI hospitals and collapsing PFI schools here.

Should PFI schemes and outsourcing be ended under Labour? There is a substantial body of opinion that, though much of the criticism of PFI is justified, and relevant to the debate on outsourcing, this would be a mistake.  

The FT points put that the big driver of PFI has long been the desire to keep debt off the government’s balance sheet. A correspondent agrees with this: “Certainly, otherwise Tony Blair and Gordon Brown would have been accused of profligacy, whereas using PFI allowed them to be popular in the short term whilst transferring the problem to future generations”.

The civil service, according to the FT, is often very bad at specifying what it wants and managing contracts – our correspondent adds: “Because they change their minds part way through!!” 

Both agree that the processes for assessing the value of PFI projects, monitoring projects and evaluating PFI’s overall performance must become more rigorous.

Reports from the National Audit Office and the Public Accounts Select Committee indicate that successive governments have indeed been accepting unrealistically low bids, leading to inadequate levels of staffing. The Times this week quoted from a report issued by Balfour Beatty that in future it needs to move away from the position where fixed-price contracts, risk transfer and lowest-cost tendering are the norm.

Should hospitals, schools, prisons etc be built with cheap and flexible funding from the Public Works Loan Board? This arm of the Treasury has been helping to finance capital spending by local government since 1793. Its interest rates, linked to those in the gilt-edged market, have been at exceptionally low levels since the financial crisis of 2007-08.

Our correspondent responds: “Very good idea – but still needs a proper project managing organisation”.

 

o

Rebuild the local economy: prioritise labour-intensive sectors, difficult to automate, impossible to relocate abroad

Colin Hines, convenor of the UK Green New Deal Group, comments on the Guardian’s recent editorial on productivity and robots which ‘repeated the cliché that automation does cost jobs, but more are created’.

He says that the problem with this is that the new jobs are frequently in different places from where they are lost and require very different skills, hence exacerbating the problems for the “left behind”.

Also unmentioned was that just as automation is starting to really bite, the world faces a strong possibility of another serious credit-induced economic downturn, from China to the UK and a perfect storm of domestic unemployment soaring and export markets falling, as happened after the 2008 economic slump.

The answer to these problems has to be a shift of emphasis to rebuilding the local economy by prioritising labour-intensive sectors that are difficult to automate and impossible to relocate abroad.

Two sectors are key:

  • face-to-face caring from medicine, education and elderly care
  • carbon-reducing national infrastructural renewal.

This should range from making the UK’s 30m buildings energy efficient, constructing new low-carbon dwellings and rebuilding local public transport links.

Funding could come from fairer taxes, local authority bonds in which all could invest, green ISAs and a massive new green infrastructure QE programme.

This approach should become central to all political parties, set out in their next election manifestos because “jobs in absolutely every constituency” is the crucial vote-winning mantra.

 

n

Green quantitative easing – good sense

j

Richard Murphy and Colin Hines published the Green QE report, which is summarised below.

In March 2009 the Bank of England began a programme of quantitative easing in the UK – in effect, the Bank of England granted the Treasury an overdraft but to keep the European Union happy had to do so by buying Government gilts issued by the Treasury from UK commercial banks, pension funds and other financial institutions.

There were three reasons for doing this:

  1. To keep interest rates low;
  2. To provide banks with the money they needed to lend to business and others to keep the economy going.
  3. To make sure there was enough money in the economy to prevent deflation happening

No one was sure whether quantitative easing would work, and as we note, no one is sure for certain whether it has worked.

We do however suggest in this report that several things did happen:

  • The banks profited enormously from the programme, which is why they bounced back into profit so soon after the crash– and bankers’ bonuses never went away;
  • The entire government deficit in 2009/10 of £155 billion was basically paid for by the quantitative easing programme. If you wanted to know how the government met its costs, now you do; There was a shortage of gilts available for investment purposes as a result of the Bank of England buying so many in the market. Large quantities of funds were invested instead in other financial assets including the stock market and commodities such as food stuffs and metals.
  • The USA also undertook quantitative easing at the same time as the UK, which meant that despite near recessionary conditions commodity prices for coffee and basic metals such as copper have risen enormously. This has impacted on inflation, which has stayed above the Bank of England target rate;
  • Deflation has been avoided, although the relative role of quantitative easing in this versus the previous government’s reflation policies is unclear;
  • Interest rates have remained low.

However, one thing has not happened, and that is that the funds made available have not resulted in new bank lending. In fact bank lending has declined almost steadily since the quantitative easing programme began.

there is an urgent need for action to stimulate the economy by investing in the new jobs, infrastructure, products and services we need in this country and there is no sign that this will happen without government intervention.

For that reason we propose a new round of quantitative easing –or Green QE2 as we call it.

Green QE2 would do three things. First it would deliver the Green New Deal – the innovative programme for investment in the new economy the UK needs as outlined by the Green New Deal group in its reports for the New Economics Foundation. This would require three actions:

  1. The government would need to invest directly in new infrastructure for the UK.
  2. The government needs to invest in the UK economy, in conjunction with the private sector, working through a new National Investment Bank;
  3. The government must liberate local authorities to partner with the private sector to green their local economies for the benefit of their own communities, and it can do this by providing a capital fund for them to use in the form of equity that bears the residual risks in such projects.

A second round of quantitative easing should involve direct expenditure on new infrastructure projects in the UK.

For example there is a desperate need for new energy efficient social housing in this country, for adequate investment in railways, not to mention a reinstatement of the schools rebuilding programme. Undertaking these activities would give the economy and immediate shot in the arm as well as providing infrastructure of lasting use which would more than repay any debt incurred in the course of its creation.

This is the result of the ‘Keynesian multiplier’ effect. This is the phenomenon that occurs when government borrowing to fund investment takes place during a time of unemployment.

That borrowing directly funds employment.

That new employment does four things.

First it reduces the obligation to pay benefits.

Second, it means that the person in that new employment pays tax.

Third, it means their employer pays tax on profits they make.

And finally the person in employment can then save, which means that they help fund the government borrowing which has created their own employment.

As Martin Wolf, the eminent Financial Times columnist has said in this FT video: “Borrowing is no sin, provided we use the funds to ensure that we bequeath a better infrastructure to the future”.

This is what we believe the programme we recommend would do and this is precisely why it is appropriate to do it now when the cost of government borrowing is so low, a point Wolf and Skidelsky also make.

Borrowing now to spend into the economy is the basis for the first stage of Green QE2 – and of the Green New Deal.

Read the whole report here: http://openaccess.city.ac.uk/16569/1/GreenQuEasing.pdf

 

 

 

t

Doreen Massey: government policy has been to acquiesce in and feed London’s voracious growth. Is this what we want?

Looking back through a Facebook page I saw with great regret that Professor Doreen Massey had died in 2016. After hearing her speak on Radio 4, I read her book, World City, Polity, 2007, and we corresponded by email several times. I think this photograph shows her warm and lively personality.

Yesterday, following input about ‘shrinking cities’ on WMNEG’s website, and as a belated tribute, some points made in that book will now be shared, selected from five pages of notes made at the time. Several references are relevant to the Grenfell Tower disaster. 

Extracts

In the world as a whole big cities are increasingly dominant and central to globalisation: the shining spectacular projects and the juxtaposi­tion of greed and need reflect their market dynamics.

The World Bank, one of the institutions whose policies have contributed to this massive flow of people into cities, has argued that it is through competitive cities that nations as a whole can develop.

Global cities are defined by their elite – the rest are invisible.

London is a political, institu­tional, economic and cultural power. Its influences and its effects spread nationally and globally but it increasingly overshadows everywhere else. National government policy accepts and also feeds its voracious growth.

Forces in the financial City took the lead in advocating and developing the deregulation that lies at the heart of globalisation; it is a command centre, place of orchestration, and significant beneficiary of its continuing operation.

Despite talk of `national sovereignty’, the first thing Margaret Thatcher did on coming to power in 1979 was to lift restrictions on for­eign currency exchange, to be followed in the mid-1980s by the deregulation of the City (the so-called Big Bang). A whole gamut of deregulatory and commercialisation policies, in pensions, housing, health care and education consid­erably increased the market for City activities.

Thatcherite policies benefited the private sector, financial services, the middle classes, London and the South East at the expense of the public sector, manufacturing, the old industrial regions and the working classes.

The colonisation by private capital of industries and services formerly provided by government – the utilities under Thatcher and Major, signifi­cant parts of the welfare state, especially health and education, under Blair – led to London’s reinvention and resurgence.

Policies of competitive individualism and individual self-reliance have been promoted –  people have been encouraged/required to take much greater financial responsibility for their own housing, pen­sions, health care and education. Previous notions of mutuality have been abandoned and the idea of the public good has been system­atically undermined.

The world’s biggest interna­tional financial centre

From the mid-1960s the City took advantage of an offshore status manufactured by British taxation policy . . . and became an off­shore extension of New York, creating a major market in eurodollars which now makes it the world’s biggest interna­tional financial centre. It has been a lucrative subservience, for some: out of this that the new elite has been born.

The emergence of the new elite includes those involved in business services as well as finance: real estate, renting and business activities. Advertising, research and development, accounting, auditing and taxation, legal serv­ices, market research and consultancy, personnel recruit­ment, renting of machinery and technical consulting, investigation and security have grown rapidly as part of London-global-city.

For the ultra-rich few, this country is now a vir­tual tax haven and princes, tycoons and oligarchs are making it their home. Others are attracted by the lucrative opportunities in the City – more than one in 10 professional staff in the City of London come from coun­tries outside the EU and the US, including the plunderers of Eastern Europe and the old Soviet Union. A report on French people working in the UK found 69% of them in London and half of those are working in finan­cial services in the City.

 The pattern of British chief executives’ pay is now openly modelled on the American lead

Directors paid 113 times more than the average UK worker in 2005 are awarding each other their increments. Over the last five years the average salary of a chief executive in Britain’s leading companies, including bonuses, has more than doubled, just as American remuneration has grown – bearing little relationship to company performance. This has resulted in levels of inequality far higher than in the major economies of continental Europe.

Such high salaries make London the most unequal city, and London and the South-East the most unequal region in the UK.This inequality of the extremes is character­istic of the `Anglo-Saxon’ version of neoliberalism and it is growing.

The exuberant, champagne-swilling claim of the success of London’s reinvention is, however, almost always hedged about with a regretful caveat – `but there is “still” poverty too’. The success and the poverty of London are the com­bined outcome of politico-economic strategies, establishing a two-tier society, corporate greed and the privatisation of need in the capital and at national level.

Some facts are indisputable. Inequality between rich and poor, the glaring starkness of class difference, is more marked in London than anywhere else in the country

  • Unemployment in Inner London is higher than in any other subregion in England, while Outer London hovers around the national average; on almost any index there is an enormous geographical variation between boroughs.
  • London has the highest incidence of child poverty, after housing costs have been taken into account, of any region in Great Britain.
  • The gender pay gap is wider in London than in Great Britain. London has local authority areas with both the highest and the lowest rates of means-tested benefit receipt in the country.
  • Nearly a quarter of London’s children (24 %) are living in households dependent on Income Support’ whilst the rate for Great Britain as whole is 16 %, and London’s rate is the highest of any region.
  • Poverty is common among pensioners, too; in Inner London, a quarter of people aged sixty and over are on Income Support  – only 15 % in Outer London and in Great Britain.
  • Homelessness and overcrowding are higher in London than elsewhere. The differ­ence in life expectancy, is stark even between the boroughs of London.
  • On average, women in Kensington and Chelsea live nearly six years longer than women in Newham; and men in Kensington and Chelsea (again) live nearly six years longer than men in Southwark .

People are trapped in poverty because of the high cost of living, and the cost of getting to work Those currently dependent on benefit find that loss of entitlement to benefits, particu­larly housing benefits can com­pletely erode gains from entering employment.  The higher cost of housing, transport and childcare are important factors in explaining the pattern of disadvan­tage in the city.

Within the UK the old ‘North-South divide’ has widened and has increasingly taken the form of an ever-­expanding London versus the rest of the country

The New Labour government & London-centred private capital share an understanding of London/the South-East as the golden goose of the national economy – the `single driver’ of the national economy – which lays golden eggs for everyone.

There is an insistence that encouragement to `the regions’ must in no way be allowed to challenge, question, or in any way restrain the growth in London and the South ­East of England. Her Majesty’s Treasury, in a joint document with the Department of Trade and Industry, argued that `attempts to address regional differentials must be done by a process of levelling-up, not levelling down … whilst regional economic policy must aim to strengthen the indigenous growth potential of all regions, the focus should be on the weakest regions, without constraining growth in the strongest’ .

Brain drain

London’s growth over recent years and as planned for the future, requires labour with degree-level qualifications. It is demand for this kind of labour that dominates the net increase in employ­ment in the capital. London does not provide all of this and in consequence draws in professional people from abroad and from the rest of the country.

Many workers come from Eastern Europe and the global South. London is dependent, for instance, on nurses from Asia and Africa. These countries can ill-afford to lose such workers, and they have paid for their training. So India, Sri Lanka, Ghana, South Africa are subsidizing the reproduction of London. It is a perverse sub­sidy, flowing from poor to rich. It is, moreover, a flow that is both fuelled and more difficult to address as a result of the increasing commercialisation/privatisation of  health services.

It is a brain drain that has a double effect. In London the dominance of demand for this kind of labour makes it more difficult for Londoners without those qualifications to find work and, through the influx of higher ­paid workers, increases the pressure on prices and therefore inequality within the capital. From the regions and nations of the North and West it drains a stra­tum of the population that could be significant to their eco­nomic growth.

(Yet) Gordon Brown has told the regions that their regeneration should be led by the knowledge economy and Alan Johnson, when minister for manufacturing, repeated the refrain that low skills are part of the regions’ problems. In other words, the regions are blamed for the losses they incur through feeding London’s demand.

Arguments that London is a ‘successful’ region which must not in any way be chal­lenged rest on a crucial assumption. This is that London has achieved its present position through its own efforts. As the hegemonic terminology has it:  to do anything to disturb London’s trajectory would be to buck market forces.

London’s transnational financing and service-providing roles have not, however, been the main driver underlying the city’s growth since the 1980s, nor do these functions represent the major ele­ment of London’s export base. London’s main export market is in fact the `rest of the UK’ (RUK) which takes 28.5 % of all London’s exports, compared with 12.33 % going abroad. For financial services, the comparable percentages are RUK 39.88 % and interna­tional 31.46 % and, for business services, RUK 32.89 % and international 12.08 %.

This data contradicts the notion that London, in eco­nomic terms, is floating free from the rest of the UK econ­omy into an international arena of its own. It directly contradicts the conclusion that in a globalised economy London does not need the markets of northern Britain. As a London School of Economics study puts it, `the London economy is still closely integrated with the overall UK econ­omy’.

Despite the facts, however  . . . there is also some resentment: an argument that London has been subsidising the rest of the country and can afford to do so to the same extent, voiced in a report for the London Chamber of Commerce and Industry (LCCI) entitled The London deficit – a business perspective provides an example:

The London economy is the largest and most successful regional economy in the UK. It has often been suggested that its success has been to the detriment of other UK regions, drawing highly skilled people away from other areas. The reality is more complex. As will be seen from this report, the UK’s progressive taxation structure ensures that London contributes a greater proportion of total income raised from taxation in the UK than any other region. In short, London subsidises the rest of the UK, enabling the nation as a whole to benefit from the capital’s success. 

The fig­ures for London, however, usually include expenditure on the bulk of the national Civil Service. But this service operates over the country as a whole and should not appear on London’s balance sheet. The presence of so many Civil Service jobs and functions within London also contributes significantly to London’s economic growth and helps to influence the drawing up of national economic policy.

From Doreen Massey’s conclusion: “In the United Kingdom, London increasingly overshadows everywhere else and government policy has been to acquiesce in and feed its voracious growth. Is this what we want? The question is rarely heard in democratic debate”.

This book followed her pamphlet advocating Decentering the Nation: a radical approach to regional inequality, written with Ash Amin and Nigel Thrift, Catalyst 2003, on which notes also were made.

 

 

 

d

 

 

 

 

 

 

Universal basic income (UBI)

Amazon has revealed its latest plan to automate American workers out of existence with its futuristic machine controlled grocery store.

According to a study by Ball State University’s Center for Business and Economic Research, the use of robots and other manufacturing efficiencies was responsible for 88% of the 7 million factory jobs lost in the United States since peak employment in 1979.

The Economic Security Project (ESP) – a coalition of over 100 technologists, investors, and activists – has announced that it is committing $10 million over the next two years to explore how a “universal basic income” (UBI) could ensure economic opportunities for all.

Elon Musk, the iconic Silicon Valley futurist, predicts “There is a pretty good chance we end up with a universal basic income or something like that, due to automation.”

With political uncertainty across the Western world highlighting rising levels of economic inequality, many others across the political spectrum are considering adopting UBI in the future, giving everyone a guaranteed minimum payment. In the 21st century to date there have been pilot projects in America, Canada, Namibia, Uganda, Kenya, Brazil, Holland, Finland, Italy and Scotland, described briefly in Wikipedia.

UBI – one of three main economic reforms?

James Robertson shared news (scroll down to 4.The Practical Reforms) of a meeting of the North American Basic Income Guarantee Congress at which there was co-operation between supporters of two of the three main reforms in total money system reform – land value taxation and basic income. Alanna Hartzok, General Secretary of the International Union for Land Value Taxation, expressed a hope for future meetings at which supporters of all three policy proposals could discuss the relationship between reform of the money supply, introduction of land value taxation and the replacement of welfare payments by a citizen’s income.

UBI – life enhancing?

Just as Green parties everywhere have said for many years, Elon Musk expects that UBI will enhance life with ‘ownwork’: “People will have time to do other things, more complex things, more interesting things and certainly have more leisure time.” Others, however, believe that without the need to pay for rent and basic necessities, people will not be motivated to work and will not make good use of their basic income and free time. Cynics will – and do – dismiss ‘the happiness agenda’ (Layard, Norberg-Hodge) and the recent Landmark study which found that most human misery in the Western world is due to failed relationships or ill-health rather than money problems and poverty.

If accompanied by a more comprehensive education?

The findings indicate the need for a broader education, giving some concept of good marital and parental relationships, an understanding of the country’s social and taxation systems and the development of expertise (until the Plain English Campaign succeeds) in interpreting official forms and negotiating online applications.

Increasing apprenticeships and retraining for those who become redundant is worthwhile but far more input is needed. The Sure Start focus involving parents and children from the earliest days was working very well until funding was cut by the coalition government in 2011, instead of building on its success.

Harrow mothers campaigning after 4 Sure Start centres had been given notice to quit

There are now 1,240 fewer designated Sure Start centres than when David Cameron took office – a fall of 34 % according to figures obtained by the Labour Party in a Freedom of Information request. The North East and London have seen the biggest fall in numbers, with over 40% of centres closing. The closure rate is increasing countrywide and councils have listed other centres which may well have to go this year.

Compensating for the cost of UBI

A total audit would balance the expense of an enhanced Sure Start programme and the cost of UBI over time, by quantifying:

  • reduced expenditure on the NHS and prison service due to the improvement in mental and physical health
  • and lower expenditure on policing and social services due to less stressful household and neighbourhoods, diminishing the intake of legal and illegal drugs and reducing crime.

So, in the foreseeable future, will 3D printers and robots take care of the necessities? And will basic income lead people to begin to improve relationships with each other and the rest of the natural world?

 

 

 

h

Basic income

Readers who are unaware of the basic income concept can find an outline here.

As Ontario, Canada’s largest province, became the latest to announce a universal basic income three year trial (read on here), we read that a privately-funded, short-term pilot program is being run by this Silicon Valley accelerator, Y Combinator, in California.

The goal is to see how people react in the U.S., says Sam Altman, President, Y Combinator Group. The program gives “unconditional” payments to selected residents of Oakland. The administrators write, “we hope basic income promotes freedom, and we want to see how people experience that freedom.” If it is successful, the plan is to follow up the pilot with a larger, longer-term program”.

Altman says: “50 years from now, I think it will seem ridiculous that we used fear of not being able to eat as a way to motivate people.”

The Dutch universal basic income proposal is for UBI to replace other social security benefits. It would be paid for with revenue from a number of taxes, including a 30% tax on business profits, tax on air pollution, and a higher tax on “big fortunes,” according to Johan Luijendijk, co-founder of the Basisinkomen 2018 advocacy group, which argues that UBI would be affordable because it would replace other government support programmes.

Replacement or supplement?

Over the years in Britain the writer had always heard of UBI as a replacement proposal – but now she reads Professor Karl Widerquist, founder of Basic Income News, describing the Dutch proposal as unique.

The Basic Income European Network (BIEN) agreed at its general assembly in Seoul (in 2016) that universal basic income should not be a replacement of other social services or entitlements, but instead should work in combination with other services. Widerquist in an email with CNBC, is reported to have said universal basic income “is not ‘generally considered’ as a replacement for the rest of the social safety net. Some see it primarily as a replacement. Others see it as a supplement, filling in the cracks.”

The Swiss campaign for the basic income referendum

Earlier this year, a draft report, tabled by a Member of the European Parliament, Mady Delvaux-Stehres, warned that preparations must be made for what it describes as the “technological revolution” currently taking place, including provisions for the “possible effects on the labour market of robotics”. The report which urges member states to consider a general basic income in preparation for robots taking over people’s jobs passed by 17 votes to two.

Ms Delvaux-Stehres said: “We ask the commission to look at what kind of jobs — or more precisely what kind of tasks — will be taken over by robots. There needs to be a discussion about whether we need to change our social security systems. And even whether we have to think about universal revenue, because if there are so many unemployed people, we need nevertheless to insure that they can have a decent life”. 

However the recommendation to “seriously consider” basic income was rejected for inclusion in the final report, with 328 MEPs voting against the recommendation, 286 MEPs voting in favour, and eight abstaining from the vote.

A study by Oxford University’s Carl Frey and Michael Osborne estimates that 47% of U.S. jobs will potentially be replaced by robots and automated technology in the next 10 to 20 years. Those individuals working in transportation, logistics, office management and production are likely to be the first to lose their jobs to robots; according to the report universal basic income may be necessary.