2007 - 2020

Never have so few benefited so much from the financial sacrifice of so many

This is the Daily Mail, 20th March quoting Boris Johnson speaking at a news conference:

“Mr Johnson said at a press conference last night that he was determined not to repeat the mistakes of the 2008 credit crunch, when the government was seen as rushing to the aid of banks but not helping ‘ordinary people’. ‘This time we’re going to make sure that we look after the people who really suffer from the economic consequences of what we’re asking them to do, and we’ll be directing our support to them, looking after the people first,’ he said”.

There it is: nemesis, borrowed, turned upside down and presented as Conservative salvation. They can’t help it. The world, Truth itself becomes a Conservative sound-bite.

The meaning Johnson is trying to redirect somewhere else is however, quite different, and quite clear. It is not, ‘there is no money’ when the buck stops with Government. Not, “we are all in this together”, when clearly we were not. Not 10 years of Austerity to ensure we fail the people we should have protected. Not, 10 years of Austerity to hollow out our NHS and all the community and public service resources we actually possessed, and had nurtured, only for the Conservatives to ensure we are ill prepared to cope with a serious and unexpected crisis that has nothing to do with the cheap politics of just-in-time, rip-off, shoddy banker, off-balance sheet Conservatism.

But wait! Hasn’t the Chancellor shown that even this Government can change? Three Budgets in nine days. Think about it.

Three Budgets in nine days.

We might think requiring three attempts in little over a week to deliver a Budget is scarcely an indication of a steady hand, even in difficult circumstances; it isn’t of course, but the principal problem is not just three budgets in nine days. The problem is that the Chancellor started in the wrong place; the banks, when the transparently obvious problem was to help people, about to be swallowed up in a personal, unavoidable economic disaster. We have been there before. In 2008 the banks were rescued and given a free pass that allowed them just to by-pass the people altogether and serve their own interests with a free gift; too big to fail, they were rewarded by privatising the profit and transferring the risk to the public sector: leaving the poor, the disabled and our public services, including the NHS to pay through the nose for Austerity. Never have so few benefited so much from the financial sacrifice of so many.

In the end it is people that matter. It always was. Start from there.

The Chancellor is now going to take at least four, perhaps five iterations to find his way to the location from which he should have begun; and that was just to begin. He has therefore misapplied the effort, constructed a Byzantine and probably inefficient, over-priced, sub-optimal, dysfunctional delivery system for his raft of inconsistent, uncoordinated measures, because he simply did not understand what he was trying to do; and changed direction in the middle; twice.

Comments (12)

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  1. Alasdair Macdonald says:

    I think the way in which the UK Government has been responding is indicative of how detached the very wealthy globalised financial group which it serves and of which many of the government are members has become from the lives of the rest of the population, including many Tory voters who consider themselves comfortably off. It simply has no real concept of what the lives of the majority of the population is like.

    Throughout history there are examples of this – “let them eat cake” – and the result was civil strife, rebellion, revolution. Remember the way Nicolai Ceaucescu thought he would tell the Romanian people to ‘just stop it’ and the look of surprise on his face when they didnae dae whit they wur tellt.

    As someone who seems likely to be put under house arrest soon for the crime of being over 70, I am even less predisposed to this government than I ever was — and that was not at all. I think there will be several more attempts at getting ‘the budget’ right. Perhaps even Gordon Brown will be prevailed upon to speak to us about ‘pooling and sharing’.

    1. Daniel Raphael says:

      Hear, hear.

  2. David McGill says:

    John Warren, I’ve been to several lectures on the Basic Income in the last few years and am currently reading Annie Miller’s pamphlet ‘Essentials of Basic Income’.
    Do you think there is now a serious case for implementing something like this?

    1. John S Warren says:

      We construct dysfunctional welfare systems that are under resourced because we fear more that people are malingerers, than we care about helping our fellow citizens in need; although the cost of malingering is far less than is lost from the failure of the Government to provide the resources to pursue tax avoidance or tax evasion because we under resource HMRC already; or simply do not have the will to terminate British tax havens (Britain has more dependencies that are tax havens than any jurisdiction on earth); or we tax not too much or too little, but ineffectively.

      Worse, we insist in devising welfare systems that are essentially suspicious and require expensive policing; then find the policing is more expensive than it is worth; but instead of simplifying the system, we reduce the benefits. The whole system is a nasty, inhuman and unnecessary spiral into the denigration of those who receive benefits, and their abiding resentment for the humiliation.

      Taxes that are not ‘at source’ are invariably expensive, difficult and often ineffective. The lawyers and accountants hired by individuals and companies who legitimately wish to avoid tax in our over-complicated, leaky tax system are typically much more clever than mere Governments (who generally would rather look the other way) can handle. We quite deliberately fail to address the real issues.

      I have heard of Annie Miller, but must confess I have not read her proposal. The general principle of a Basic Income, however which should be universal and simple to apply, in the age – after all – of surveillance capitalism (they know so much about so many), should not be beyond the wit of modern man, if any Government really wanted to do it.

  3. Meg says:

    And still reluctant to recognise how the system does not support hard working self employed …..also if the hand of friendship is extended to the homeless let it not be taken away when normal see ices resume

  4. George S Gordon says:

    To those talking about Universal Basic Income: It’s tempting to think this is a sticking plaster which could be applied now, or that it’s a universal panacea which will solve our economic ills. As for applying it now, Prof Richard Murphy has blogged about that today, and he says it’s an implementation nightmare.

    As to UBI being a solution more generally, it is not. Here’s a brilliant one-liner from Prof Bill Mitchell, which explains why –

    “It is not a progressive position but continues the unemployment regime which suits capital – they get wage suppression from the slack and maintain sales via the UBI.”

    The neoliberal economic position is that a certain level of unemployment, which you may have heard referred to as the NAIRU, is necessary to preserve the preferred rate of price inflation of (say) 2%. By the way, there is no real rationale for the 2%. The proposed level of the necessary NAIRU has varied over the years. Just like the 2% inflation, nobody can really prove what it should be or come up with a substantiated connection with the desired rate of inflation.

    In a nutshell, when there is unemployment (slack), capital (the bosses) can keep the wage claims of the workers at bay. That’s the unemployment regime which suits capital.

    If you combine this with a UBI, the UBI supplies cash to the unemployed workers to maintain the sales of the bosses – job done (for the bosses).

    The real answer is a Job Guarantee (JG), where the state provides funds, to local councils perhaps. They use the funds to hire unemployed people to do whatever jobs are required in the local area. Those could be jobs in the care sector, green jobs, building infrastructure etc. The idea is that everyone who can work, and wants to work, is guaranteed a job by the state at a decent living wage. Appropriate benefits are still available to them, and to anyone not working.

    The private sector doesn’t like hiring unemployed people. The JG scheme will have people who are trained and have shown they are willing to work. When the private sector expands, it can hire “ready-made” workers from the JG scheme.

    There is no coercion, so people who are happy with their job in the JG scheme can stay there. When the private sector wants to attract them it will probably have to offer a higher wage and good terms – so there is a sort of coercion applied to the private sector, which can’t be a bad thing!

    1. John S Warren says:

      I agree with your proposition about the Job Guarantee (Richard Murphy, for example is an advocate, and also Common Weal; see for example https://www.taxresearch.org.uk/Blog/2019/08/11/scotland-can-have-a-job-guarantee-or-the-fiscal-commission-plan-but-not-both/), but at the same time, the critical feature to provide absolute security and basic dignity for people must be by striking a minimum Basic Income as the standard template, at a level which provides a floor to the amount people can be paid. We may expect that local councils would honour such a requirement and only the private sector is ever responsible for taking advantage of a weak labour market; but it was local councils that for decades refused to implement equal pay for women.

      I see the Job Guarantee as the most effective, and the most positive and constructive means of delivering the Basic Income. Furthermore, there may be circumstances where certain people are unable to work for whatever legitimate reason (disablement or mental health just as examples), at which point appeal to a fundamental Basic income, standing on its own must be made. In the current circumstances we face, for example it is only the Basic Income that in many cases of hardship through self-isolation, could be used.

      1. George S Gordon says:

        My impression is that Richard Murphy has been a bit lukewarm on the JG. Perhaps it’s because he’s *not a fan* of Bill Mitchell.
        I agree with your other comments, and a basic income for people unable to work is absolutely a requirement.

        I think Richard Murphy has looked at the Annie Miller proposal, and doesn’t see how it could be applied rapidly in our current predicament.

    2. John S Warren says:

      I should add that you are also right that Richard Murphy has provided a devastating critique of the problems implementing the Basic Income, but I would wish to make two points about that.

      First, his critique is of implementing the Basic Income now, but he is not – as I understand it – dismissing it altogther for the longer term; and clearly the mechanisms for such a proposal do not exist; and connot easily be conjured. whatever is done now with no implementation period is going to be difficult, if we look through all the complicated and difficult cases that arise and do not fit easily standard PAYE; and in the modern economy diversity and complexity and anomaly has become the norm.

      Second, and related to the last point; Richard Murphy’s alternative to the Basic Income was for the self-employed, a category whom he argues persuasively can better be addressed by other means. But that is only one category among many. See above. Also I still think a Basic Income still provides a floor, a template against which any other solution should be measured.

      1. John S Warren says:

        Richard Murphy has today repeated that he does not believe UBI can immediately be implemented for the moment, because of the current complexities, but proposes the supply of universal basic services (like utilities) here: https://www.taxresearch.org.uk/Blog/2020/03/25/the-time-for-universal-basic-services-has-arrived/

    3. Paul Codd says:

      The arguments given against UBI make about as much sense as those given by Ian Duncan Smith. UBI will likely create some upward wage pressure at the bottom of the scale – exactly where it is needed. If it is set at a dignified level of say £1,000/month, it will put an immediate end the vast majority of poverty in this country. Most recipients will continue to work. Some will stay home to care for the young or the elderly. Some people will start businesses or pursue career developments that would be out of reach otherwise. Some will do voluntary work, sports, art, theatre, and some will just doss around, but they probably do that already. There is no scope for any of these activities in your Guaranteed Job scheme, which sounds ominously prescriptive and bordering on Maoist in my opinion. Having said that, if GJs were to co-exist with a UBI it would certainly have the benefits you say, without the Statist conformity, deference and obligation which comes along with it in the way it is proposed.

  5. meg macleod says:

    underlying problem of co-ercion will be a reality …china 1960`s or somewhere back there

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