Jun 262016
 

Come the hour, comes the man – or woman, but it’s not as snappy a proverb. The fallout from the Brexit vote to leave the European Union looks like it is only just starting to gather strength. The latest overnight news is that Jeremy Corbyn, leader of the Labour Party, has sacked the shadow foreign secretary, Hillary Benn, because he was plotting to revolt against his leadership.

With Boris Johnson aiming to lead the Conservative Party, and become the next Prime Minister, after David Cameron’s resignation, the other proverb that comes to mind, but perhaps one that is less welcome, is: ‘may you be blessed to live in interesting times.’

There are underlying fault-lines that have become apparent in this maelstrom of claim and counter-claim. And while those on the right would frame this as a debate about personal liberty or national pride, and those on the left might frame this as a debate about capitalism’s time running out, there are other forces at hand that also need to be considered.

I’ve discussed in a previous post how this is a debate about the old and the young. There is a clear rift in the expectations of those over forty and those under forty. Those that remember life before Thatcherism, and those that have only ever lived with the European outlook.

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Geographic Divisions of Brexit

There is also the divide between the so-called ‘heartlands’ and the urban areas. The vote to remain was embedded in Scotland obviously, but also in the cities of England. While the vote to leave was founded in the shires and counties, the smaller towns of England that are furthest away from the urban lifestyles of the emerging urban economies.

The Observer’s editorial today’s asks:

So what about globalisation? How have free markets benefited the steel worker put out of work by the EU-sanctioned dumping of cheap Chinese products? Seen from Wearside or the Welsh valleys, booming London and the south-east, with its Monopoly money property prices and £70 a head restaurants, resembles Goldrush City, a foreign and hostile land.”

The last time I was in central London I hated it – to use a phrase I thought it was full of arrogant and self-entitled chancers. So these anxieties are being felt elsewhere and have been deeply engrained as form of indignation and resentment for some time.

I wonder, perhaps, if there is another divide, one that is less visible, but one that has shaped and formed these outlooks? Is this a divide between those who use traditional media to keep themselves informed of what’s happening in the world, and those who use social and emerging media to find out what is happening in the world?

The tradition of mass media has not disappeared, despite what Facebook, YouTube and Twitter might want us to think. Newspapers, television, and to a much lesser extent radio, still play an essential role in framing the debates and conversations that we have about our national identity and our place in the world. Often framed by the bias of the newspaper proprietors who are themselves pursuing an agenda of their own interest.

Alternatively, the users of social media have a more flexible approach to information, with sources and feeds being exchanged and shared from many different media organisations as well as individuals. The downside is the jam-jar approach, in which the hornets of opinion furiously echo each-others views and don’t interact with those of different mind-sets.

This is counter-balanced, however, by the ability to look wider afield and to interact with people who are not geographically defined in our localities, or set within our networks of social class, gender and sexual identity, views on faith or otherwise. Social media allows people to spread their network wider than the fixed world of mass mediated politics allows.

Perhaps a good example of the hollowing out of local identities is the way that radio in the United Kingdom has become a centralised, national set of brands and formats that reflect a narrow commercial interest, but which don’t give a flavour to local lives and circumstances. It’s no surprise that BBC Local Radio is designed to appeal to the over fifty-fives. Has this played through into people’s perceptions of a hollowed-out sense of community?

Likewise, we’ve seen a massive decline in local newspapers, local reporting about politics, local information and discussion about civic and local government issues in the press, because the press has been decimated by speculation and commercial interests.

So in a way, the Brexit debate is an argument about changing local identities and emerging social identities. Our collective and social identities are now being formed in different ways, and how we cope with that and respond to it is very important.

Screen Shot 2016-06-26 at 08.14.39On the one-hand people are strongly patriotic and have a clear need for a locally defined image of themselves. While on the other hand there is a great source of energy that comes from rejecting these more traditional forms of identity and instead seeking common cause with people who are of a like-mind globally. Look at the response to the Orlando shootings for a sense of common-cause between LGBT people.

This is patriotism and localism versus freedom of movement and social association. Who you have most in common with is no longer set by where you live, but increasingly by who you link with on social media. This might account in some way for the generational divide that became evident in the outcome of the referendum vote. Do people under forty embrace the globalised social identity afforded through social media more easily than those who are over forty?

This is not clear cut and set in stone. My mum is an avid remain supporter and uses social media to follow the debates and to talk to other people about it. She is seventy-three years old and doesn’t regard herself as nostalgic about the past. Whereas many of her peers feel that they have ‘got their country back’, as if they are reclaiming the glory of Britain in the 1950s, prior to the Windrush.

The challenge, then, is to choose the political side that you think best represents the future? Should we embrace independence because it makes us feel that we are getting something back that was lost? A sense of local identity that was ripped apart by deindustrialisation, the rise of the consumer economy and the Thatcherite experiment in speculative capitalism?

Or should we focus on the requirements of the future economy that is based on knowledge, information, social networks and progressive civic freedoms that enable people to work internationally, absorbing and sharing different cultural traditions and practices?

The Labour Party is in the most difficult position of all parties in this debate, as it tries to figure out if this should be a process of managed decline and localism, or if this reflects ideas that are more relevant to the ongoing process of globalisation and integration?

Labour MP Yvette Cooper is arguing that Labour needs to adopt an approach that listens to the concerns of the heartlands, and takes on board the concerns that people have about immigration and globalisation. This is a widespread, and on the surface a sensible view, but it is also a mistaken view that fails in terms of political leadership.

Political parties can be very effective sounding boards for grievances and complaints. As social change makes people uncomfortable there is an inevitable role for the politics of indignation. However, this doesn’t move people on, and it doesn’t set out the realities that the world has changed and will continue to change.

Political leadership is about challenging the expectations of your supporters and taking them on a journey to a more promising future. In the United Kingdom this promise was high-jacked in what I can only describe as a right-wing coup, organised by about eighty members of the Conservative party and the backers of UKIP.

The economic and social realities haven’t changed, however, so the need to manage people’s expectations about what kind of future is possible needs to be urgent and blunt if it is to be achieved fairly and in a progressive and socially democratic manner.

Everything that we know about social and economic life in the United Kingdom is about to be torn up. If the Brexit supporters think that this will result in form of ‘glorious isolation’ then they are mistaken. The world is still going to change around them and they run the risk of being left behind. Fine, choose that if you wish, but understand the consequences.

This is why we need a broad alliance of the 48% to make the positive case for a progressive and socially responsible future, that incorporates and builds on globalisation, the challenge of technology, and the promise of diverse, mixed and integrated communities.

Britain’s cities hold the key for the future prosperity of the United Kingdom because they are forward looking, multi-ethnic, creative, young. They are finally breaking free from the autocratic control of national government and are being recognised as ‘powerhouses’ of future prosperity.

If the swathes of the country outside of the urban areas can’t grasp that, then they must remain content to work for managed decline and diminished incomes. Economic gains from future technologies are going to slip away from what’s left of the United Kingdom, as technology and digital companies relocate to more welcoming countries.

I don’t think the Brexit voters realise the lasting damage that scratching the itch of indignation is going to cause.

May 102015
 

In June 2014 I spent some time in Loughborough on election day for the European Election with the Labour Candidates Rory Palmer, Khalid Hadadi and Matthew O’Callaghan, who was standing in the Westminster seat. I was able to get some photos as I went around with them.

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May 082015
 

This is a post I’ve held back from writing because I didn’t want it to sound tetchy and add a siren voice to the election campaign. But now that the result of the general election is history, I can say what I think more openly. Like that’s ever really bothered me you might rightly add!

I left the Labour Party last year and joined the Greens because I didn’t have any hope that the policy ideas being offered by Ed Miliband where adding up to a winning platform for Labour for the election.

While I hoped that Labour would come-up with the goods, I continually felt I wasn’t going to be satisfied. Instead, every time I looked at statements being made by the Green Party I found myself agreeing not only with the sentiment and the way it was expressed, but also the practical reality of what was being put forward. There was no prevarication, no coded messages, no empty aspirational gestures.

Instead, the policies of the Green Party were clear and forthright. I kept asking myself when would a policy I agreed with come out of the Labour Party? When would I see a distinctive campaign be launched that I could get behind and know that it would make a difference?

It never came.

What confirmed my decision to leave Labour was hearing Ed Miliband welcoming delegates at the Labour Party Conference and Manchester, by declaring the city a ‘Tory and Lib-Dem free zone.’ It was at that point that I knew that Ed Miliband was only going to try to appeal to the core vote of the Labour Party and wouldn’t bother to try to reach out to Conservative or Liberal Democrat voters.

I’d been disillusioned with Ed Balls for some time also, and for two reasons. Firstly he spent more time learning to play the piano and running marathons while he was shadow chancellor than he did crusading against the evils of inequality and for social justice; and secondly, as William Keegan in the Observer noted, Ed Balls u-turn on attacking austerity was a huge error.

As Keegan wrote in June 2013 “We now seem to be witnessing a collective failure of nerve. At just the moment when even the International Monetary Fund is owning up to having got it wrong, Labour, fearful of entering the next election campaign being pilloried as the spending party, gives the impression of being trapped in the headlights. And just for good measure, those highly respected independent thinktanks, the Institute for Fiscal Studies and the Institute for Government, have lamely accepted that it is going to be a case of “austerity, austerity, austerity” for the remainder of the decade.”

What was perfect ground for a coherent and clear economic policy, against austerity, instead got crowded out by an over-projection of personality and spin. As the result, as yesterday’s election proves, people saw right through Labour’s lack of policy.

There’s no point in opting for austerity-lite under Labour when you have George Osborne on hand to offer you a full-strength glug of masochistic austerity-max!

The Green Party is clear. Austerity sucks.

I’ve been a bystander in this election, the first time in twenty years of being politically active, as I need to finish off my PhD thesis, but once that is out of the way I’ll be stepping-up my support for Greens in Leicester and their rejection of this stupid form of economic flagellation.

By the way, when I was in the Labour Party I voted for the other Miliband – I bet a lot of people are now wishing they had as well.

Nov 282013
 

So Boris Johnson has caused a kerfuffle with his jibe “The harder you shake the pack the easier it will be for some cornflakes to get to the top.” According to The Guardian “Johnson mocked the 16% ‘of our species’ with an IQ below 85 as he called for more to be done to help the 2% of the population who have an IQ above 130.” Johnson’s intention, according to The Independent was a call to “a new generation of Brits to embrace greed and snobbery as a ‘valuable spur to economic activity’ during a speech where the London Mayor paid tribute to Thatcherism.”

In Johnson’s rambunctious manner, not only did he put his finger on the direction of future political schisms in terms of ideology, but he also set the battle-lines for a geographic tussle that could split the nation along a north-south divide, or more specifically a South East and the rest-of-us-divide. Big stuff, you might say, but then an antagonistic case has to be made as an alternative to Boris’ essentialisation of inequality and the moral and geographic determinism on which it is founded. The Telegraph quotes Johnson as saying “I don’t believe that economic equality is possible; indeed, some measure of inequality is essential for the spirit of envy and keeping up with the Joneses and so on that it is a valuable spur to economic activity.”

Let me point to a couple of features of this discussion that might lend them to the response that needs to be articulated in opposing this latest salvo of the ideology of muscular liberalism that Johnson represents. The Spirit Level argument is one notable starting point, based as it is on the proposition that the more unequal a society is, the worse it does in terms of economic performance. The recent OECD report into levels of literacy in the developed world, highlights the correlation between degraded levels of equality and the reduced levels of performance in basic skills. Put bluntly, the more unequal the resources of society are shared, the less likely that people will achieve the requisite levels of capability that will enable them to play a role in an economically dynamic economy, thus making us all poorer.

Johnson’s belief is founded on a moral fundamentalism that sits at the heart of muscular liberal thinking. It was expressed bluntly by Boris, and runs along the lines that it is each individual’s strength of aspiration and the extent to which they are willing to strive in the marketplace which justifies the rewards that they receive. This is an a priori worldview in which the moral virtue of the striver goes without challenge. The wealth creators get where they do, not because of luck, privilege, bias and the platform that was put in place from which they can operate, but instead because they are de facto morally superior and therefore deserve the rewards they get. The winners in our society get the wealth they have because they are due the reward for being better people than the rest, is the argument. They are, as Johnson describes, the ‘cornflakes’ who are capable of rising to the top of the box, and they deserve to be there.

What this argument ignores, though, is the fact that the cornflakes box is riddled with bias, hurdles and barriers that keep the lower cornflakes in their place, and enable the cornflakes that start off from a higher vantage point to maintain their differential place. The undeserving cornflakes, by contrast, can only expect to remain in the lower part of the box because they are accordingly held to be morally inferior. In Johnson view those at the bottom of the cornflakes box lack the ambition and the moral drive that the strivers possess, and so they must know their relatively subordinate place and keep within the segregated layers that suit their status in life. All the lower cornflakes can do is watch with envy as the morally superior cornflakes enjoy the rewards and opulence that comes with their inherent moral value.

Except, the conditions in which the cornflakes that rise to the top are not so clear-cut. As a philosophical mind-game I can see the sense in arguing that those who are capable of rising to the top are able to do so, but only if those who are at the top are equally capable of losing their foothold and falling to the bottom. This would be a virtuous cycle of replenishment based on merit, but I don’t think Boris is actually arguing for that to happen, is he? How radically Thatcherite it would be if Johnson argued for a dismantling of the mechanisms of wealth perpetuation? If Johnson was arguing that we should take apart the infrastructure of privilege and pre-selection that is inherent in the British social and economic system, then I might be willing to accept his argument as a worthy challenge to the prevailing social order. One that many other radicals could support.

Rather than calling for the expansion of the selection process in education and the widespread return of the grammar school system, Johnson would instead, if he was genuinely Thatcherite, argue for the removal of all forms of selection based on social bias. He would introduce lotteries and the redistribution of resources so that those with the innate IQ (if such a thing is possible), wherever they are found, could realise their potential based on an equal ability to compete based on merit. This is not a world in which who your parents are would make any difference. Nor would the connections your family have in the professions make any difference. Nor would your ability to pay for additional tutoring, or to go to private schools, or to receive any financial and status benefits that the state offers in terms of tax breaks above those of the average. Without sounding like a communist, Johnson’s moral economic radicalism would call into question the structural protection of property rights and the reinforcement of inheritance regimes.

But Johnson is calling for none of these things. Instead he is pandering to the South East mind-set in which those people who live in one part of the country that have benefited from the post-war, mid-twentieth century, geo-political realignment. Johnson is their champion and wants them to continue to benefit. Before World War Two the wealth of the UK was created in its Northern and Western industrial regions. Coal mining, steel, textiles, wool, manufacturing and shipping, was focussed on Manchester, Newcastle, Glasgow, Cardiff, Liverpool. The South East was essentially an agrarian bread-basket. London was a port and a centre of banking. The latter half of the Twentieth Century saw a reversal of these fortunes, with London primed as a service industry hotspot by Thatcher and Blair. The shift in geo-political power was due to the closer integration of Europe and the development of information based technology services. The rest of the United Kingdom was left to fend for itself. Industrial policies were restricted. Regional policies were emasculated. The independence of our once mighty northern cities was curtailed. No wonder the Scots are voting for independence!

If you owned land or property in the South East of England its value increased in the post-war period purely by a coincidence of geography and economic realignment. This increase in value had nothing to do with the individual appetite of people to strive, or the moral virtues held by the people who had ownership of these lucky assets. It was a lottery win. Purely a chance win in the lottery of life. Being in the right place at the right time. But Boris Johnson doesn’t want you to think about this. In Boris’ world the wealth was created by people who wanted it more, and who would do anything to maintain their relative differential with fellow citizens. This political and economic difference could be magically wished away, because they could more readily be reduced to a moral justification that maintained the relative structural differentials whatever the cost.

This greed is good mentality is based on ensuring that other people can’t compete,being cut off from a fair distribution (pre- and post-) of resources. Usually taking the form of admonishment, people are berated for not pulling their socks-up, getting on their bikes or being skivers, despite the fact that relative effort does not receive a proportional outcome. Employment displaced people aside, many people under this system are able to work less and still receive more, regardless of the the relative moral status of their claim.

The legions of Borisbots who invest in the South East of England do so because the tax breaks are generous. The Council Tax remains unreformed, despite the gross unfairness of the ratings system and the fact that there hasn’t been a market re-evaluation since it was introduced in 1992. As a property tax this scandalously takes money and demand away from the diminished north and further pump-primes the south-east. Likewise inheritance tax remains unchallenged and is shot-full with so many loopholes that money cascades from one generation to another with barely a murmur. Our judiciary and senior positions in the civil service remain full of people drawn from private schools. The elite universities continue to be stuffed with people from privileged backgrounds. You can see where I am going.

Yet if you are bright and from a modest background, your chances are squeezed. Paying for tuition fees, the removal of Educational Maintenance Allowances, the Bed Room Tax, hikes in public transport costs, the increase in under-employment, temporary contracts, a hire-and-fire attitude with no protection and little access to law and redress. Credit has fuelled the feel-good factor. Property speculation is being driven up to further boost economic activity in the South East. The Bank of England is slamming on the breaks in the hope of stopping the bubble bursting. Michael White of The Guardian warns Watch out, Boris. You are playing with fire – fire that may be tempted to burn down Eton just to prove it’s on the people’s side.”

So less of the lectures about the moral virtue of greed please Boris. If you really want to be a radical you will have to challenge the sacred-cows of conservative England, and the perpetuation and retention of wealth and opportunity by a diminishing super-elite. The level of inequality that we have in the United Kingdom is unsustainable and will lead to the social bonds being stretched to the point of no return. This is not a way to build a sustainable economy and it is not the way to justify what are otherwise morally reprehensible, deterministic and borderline fascistic comments about the individual capabilities of our fellow citizens. No doubt Boris can relate this to ancient Greece or Rome better than I can, all I would say is that we must be beware polybian demagogues!

[Update] Andrew Rawnsley has followed this story in his column in The Observer, in which he points out that Boris is repeating a well established trope – one played out in Aldous Huxley’s A Brave New World. Rawnsley points out that  “the real problem here is with the implied conclusion that the poor are poor because they are born stupid, the rich are rich because they spring from the womb destined to be that way, and there’s nothing much anyone can do about it except to urge the wealthy not to be too “heartless” and let a few of the talented poor into the elite.”

Oct 132013
 

Politics, it is often said, is a battle between ideas and the conditions for living. Political idealists believe that they can secure power by articulating an ideology of one sort or another, or a sense of general optimism that tomorrow will be a better day. Political pragmatists, however, are more inclined to assume that voters will only give credit and political power to the representatives who are seen to keep the buses running, the hospitals queues down and the pavements free from obstruction.

Following this second adage there is certainly clear grounds for political opportunists to fight a pragmatic campaign in Leicester’s West End about the state of the pavements around here. In the time I’ve been living back in Leicester,  just over a year, I’ve resolved to try to shop locally, supporting local businesses and traders. But even my patience is severely tested in the torrential rain we had this weekend. The pavements along Narborough Road are impassable in places, and are sever trip hazards in others.

There is also the plethora of signs and pavement displays that one has to negotiate, along with the usual wide variety of street furniture and cars parked erratically. The challenge of walking along Narborough Road doesn’t seem to get any easier. I wonder what any forthcoming local election campaign would make of this?

Aug 122013
 

Only in the topsy-turvy world of Neo-Liberal economics can the further decline in Greek Gross Domestic Output (GDP) be called a triumph. And yet, that is what economically conservative newspapers like the Daily Telegraph are saying about the latest batch of figures that show that Greece is in recession for the twentieth consecutive quarter.

According to the Daily Telegraph “Excluding the borrowing costs on its massive debt burden, the Greek government is now raising more money than it spends.” What the Telegraph isn’t reporting is that this has been achieved by massive lay-offs of civil servants, a relaxation of the minimum wage and a punitive property tax that will only be exempt for those living below 6000 euros a year.

Obviously, the most simple economics lesson from history has not been heeded. When in a slump, the only way out is to stimulate demand in the economy. As Simon Jenkins in The Guardian has rightly pointed out for some years now, the best way to do this is to give the money directly to people to spend, rather than to bankers in the form of Quantitate Easing and the purchase of bonds. How much QE money has been salted away in tax havens and used to keep share prices high?

Instead of the stimulus money going into the Greek economy to ensure that it can grow it’s way out of debt, the austerity nutters are continuing to bleed the Greek economy dry while expecting a miracle. No wonder the politics of fear and uncertainty are taking hold in Greece.

The Greek unemployment rate is now at a staggering twenty-seven per cent, with no sign that it is coming down. All those people out of work, dependent on squeezed state benefits and charity hand-outs. Before long we have to start asking what will be left of the Greek economy, because at this rate there is going to be very little to work with afterwards to restore growth.

As Zygmunt Bauman points out “The fraudulence of the promised ‘trickle-down’ effect of opulence at the top has now been laid bare – for everybody to watch helplessly and bewail – but the ‘collateral casualties’ of the grand deception are here to stay for a long time to come. The foundations of social solidarity and communal responsibility have been sapped, the idea of social justice compromised, the shame and social condemnation attached to greed, rapacity and ostentatious consumption have been wiped away and they have been recycled into objects of public admiration and celebrity cult”.

It is not the ordinary people of Greece who brought this about, but the international financiers in London and around the world who have inflicted this burden on the Greek people. I can only utter my indignation – twenty quarters of recession! Surely someone might have got the idea by now that this isn’t working? Imagine how much it is going to cost to repair the damage and sort out the cost to Greek society once this wicked experiment is over?

Aug 042013
 

There’s a very good book by David Stuckler & Sanjay Basu ‘The Body Economic – Why Austerity Kills‘. Rather than attacking the problems of the Great Recession from a business or a moral point of view, the authors instead drawn on their expertise as healthcare statistical analysis experts. They provide examples of different recessions at different points in recent economic history and compare the impact of austerity policies on the health of the people who are affected by them. Russia as a post-Soviet experiment when it attempted to ‘Shock’ capitalism into the former state controlled economic system. Thailand following the Asian Economic Crisis of the 1990s, and America, Europe and Iceland following the great crash of 2008.

They come to a pretty stark conclusion, that “Ultimately austerity has failed because it is unsupported by sound logic or data. It is an economic ideology. It stems from the belief that small government and free markets are always better than state intervention. It is a socially constructed myth – a convenient belief among politicians taken advantage of by those who have a vested interest in shrinking the role of the state, in privitising social welfare systems for personal gain. It does great harm – punishing the most vulnerable, rather than those who caused recession”.

Read this book and then ask yourself how social democrats in the United Kingdom can better challenge the austerity-nutters who are running the British economy and ripping-up our social provision, and leaving more people to fend for themselves.

Jul 142013
 
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Matthew O’Callaghan

There’s a lot of debate within the Labour Party these days about the best way to engage voters and communities. As the traditional allegiances of paid-up members of all mainstream political parties becomes less defined, the challenge is to think of new ways to excite people about political issues.

Politically active citizen’s are now likely to take to social media to get their voices heard, and to hear its echo from the people that they follow and debate with online, rather than attending formal political meetings or joining branches or chapters of civic organisation.

There is less of a desire, it seems, for people to get together in the same room and to try to work through the grind of managing a traditional organisation or feeding a traditional political machine. Many constituencies have ageing members and struggle to bring in new-blood. It’s a problem across all parties, and Labour isn’t immune from its challenges.

The talk within the Labour Party is to ‘reconnect’ with communities and individuals by re-developing the tried and tested skills of community activism. This idea of community activism is given credence from its origins in Barack Obama’s presidential campaign strategy, derived from the work of Arnie Graf. But it is largely nothing new.

The Labour Party has been embedded in working communities for decades. In its new form it’s essentially being rediscovered by the centralised marketing and strategy teams that now dominate all political parties.

One person who is rooted in this sense of community activism is Labour’s prospective parliamentary candidate in Loughborough, Matthew O’Callaghan. I’ve known Matthew for over ten years from my time in Melton Mowbray. Matthew transformed Labour Party politics in Melton, taking it from a solid Tory borough council, to one that ended-up with Labour in control following the rising tide of the 1997 general election.

Make no mistake, Melton is a tough place for Labour to get a voice, and against the odds Matthew was able to establish a base for Labour in the town by speaking up for the people who are so often forgotten. As the national fortunes for Labour fell, the task became harder in Melton, but Matthew never let go. Seeing off the Liberal Democrats and the British National Party, have been major achievements.

Matthew’s politics are firmly rooted in a strong sense of community. Although he is careful not to bring these things into his political activities, he deserves recognition for his work with the Melton Mowbray Pork Pie association, the East Midlands Food Festival and as the driving force behind the Artisan Cheese Fair. Each of these play a major role in supporting the economy of Melton Mowbray.

These are non-party political, and it is a testament to Matthew’s skills and forbearance that he has championed the needs of small producers and businesses while also working with major producers and government agencies who have the clout to export our local products internationally.

As a county councillor until 2009, Matthew was consistent in his commitment to running regular residents groups meetings. I’ve joined Matthew out on the stump, posting leaflets and canvasing from early in the morning until late at night. I always wondered where he got his energy from to be out and about with people in the town.

There was hardly an issue of the Melton Times when a quote from Matthew wasn’t published, and he can hardly walk through the town without someone stopping him to say hello or thank him for the work he has being doing.

Melton’s loss is certainly going to be Loughborough’s gain, as Matthew is aiming to regain the seat for Labour at the 2015 general election. The early signs are that Matthew will be doing this by embedding himself in the life of Loughborough, getting to know the shop keepers and businesses, the schools and the community groups, both in the town and in the surrounding villages.

It would be worth checking out Matthew’s blog to find out what he’s up to, and how he’s bringing his form of community politics to Loughborough, and how it can win for Labour.

Aug 072012
 
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Demand Management?

Given the current crisis of capitalism there are many commentators who are arguing that the left, or progressive side of politics, need to return to an over-arching counter-theory to capitalism. Indeed, the shock of the present crisis is leading to a fundamental re-evaluation of the very form of capitalism itself. Not only is the crisis allowing for a reappraisal of the long-standing economic views, it is also generating considerable rethinking on all sides of the political/idealogical spectrum as well. In some cases this reappraisal is allowing us to look again at writers and thinkers who have previously been shunned and written-off. The irony of this crisis is that a re-reading Marx throws-up insightful historical challenges and allows us to find pertinent resonances with today’s political economy. This must be giving many on the left a tingling sense schadenfreude.

As with Karl Marx, so it is with John Meynard-Keynes. I’ve just finished reading Robert Skidelsky’s Return of the Master, a brief account of the relevance of Keynesian economics as a response to the present economic crisis. Originally published in 2009, at the point when the shock of the crisis was being tentatively dealt with, Skidelsky outlines the key ideas of Keynes and how they might be applied in order to ensure that there was no return to recession. Obviously, economic events have continued to zig-zag since Skidelsky put pen to paper, and the early opportunity he describes to embed recovery now seems to have been squandered with the self-defeating drive for austerity. Given the circumstances, then, these are timely ideas that are rightly enhanced rather than diminished, and need to be more fully explored.

Robert Skidelsky argues that Keynes would have said that this ongoing crisis is based on three flaws. The first flaw has been institutional, with the governing and regulatory authorities being unprepared to deal with the high level of uncertainty that the global economy is now struggling with. Secondly, Skidelsky points out, has been a significant flaw in intellectual thinking that has been embedded around economic theory since the mid-1970s. This thinking says that we are all independent, rational economic agents that are capable of always making an optimum decision about our well-being, as long as government doesn’t interfere. Finally, there has been a collapse of moral thinking, where bankers have gambled shareholders and taxpayers money without incurring any personal loss or accountability themselves.

While many have argued that the present crisis is a problem of debt, Skidelsky argues that if we employ Keynesian insights into the origin and management of the crisis we might see the cause and the solution in a different light. Rather than thinking of this financial crisis as a problem of debt, Keynes’ insight is to see this as a problem of excessive saving. Rather than looking at the individual countries that are facing crisis we should, according to Keynes, take a step back and look at the level of aggregate demand in the global economy. If we did step back we would see that there are considerable amounts of capital looking for investment opportunities. The problem is that there is so much uncertainty that investors are not investing and instead are looking for safe-havens in which to hoard their liquid assets, either as cash or bonds. Everyone is battling-down-the-hatches for an imagined on-going storm, and as Keynes points out, the herd mentality takes over leaving the financial system to run dry of lubricating credit and finance.

This is not a crisis of debt, argues Skidelsky, it is a crisis of thrift and hoarding. Overall there is more than enough capital in the international financial system, it’s just that much of it is being locked away. The levels of capital investment by both private companies and by individuals has dropped considerably, and continues to be depressed. In this scenario it is left to the investor of last resort to step-in and provide support for investment until private investment returns to sustainable levels. That’s government acting on our behalf. It will only be when private investment is functioning in a more balanced way that governments can begin to deal with their accumulated budget deficits and start to manage their debt overhangs. This, of course, will take time and effort to achieve, but as Keynes points out, we have to make an assessment about the future anyway, the question is do we have sufficient confidence in that future? Governments role, therefore, is to enhance certainty in the financial system so that investors can make their plans for the future, knowing that they are likely to get a reasonable return. It is this confidence in the future that only government can provide in these circumstances, and which has been so clearly blown away in the present responses of governments around the world, some who have followed the heard and set unrealistic short-term targets and made irresponsible analogies with national credit-cards and household debts.

Ironically personal debt is being paid off at record levels, but as Paul Krugman points out, ‘Your spending is my income, and my spending is your income’, so demand is being further depressed because of the ongoing lack of confidence. Promoting and directing demand, therefore, is the number one priority for governments in these circumstances. Since the 1980s demand in the UK economy has been stoked by privatising debt. The rise in home ownership, personal loans, credit cards, tuition fees, and so on, have given many the sense that their relative economic position has improved. However, there is good evidence, suggests Skidelsky, that overall growth rates have been lower following the Reagan-Thatcher period than in the previous Keynesian, demand-management period. It is going to be difficult, therefore, for the UK and US economies to be rebalanced on the basis of the expansion of conspicuous consumer activity. Instead, the expansion of the economy is going to have to be directed through investment in collective and shared resources, manufacturing, transport and energy services. The time to worry about debt, argues Keynes, is not in the slump but in the boom.

In the meantime we have an opportunity to renew much of our crumbling infrastructure on the basis of the long-term loans that Britain has access to on the markets at record low rates. How we prevent the hoarding of resources that could otherwise be invested is going to be the greatest political challenge of our recovery. How do we ensure that the resources we direct into the economy are going to have any effect? Well, the £350 billion that has gone into the banks as part of the quantitative easing programme run by the Bank of England doesn’t seem to have had any impact in the real economy. The banks are hoarding this cash as insurance against uncertainty. It’s not being invested directly. The job of government in these circumstances is to focus this investment directly and urgently into the economy. Many argue that there is nothing worse than leaving our children with our debts. There is something far more pernicious though, and that is keeping them in poverty now and depriving them of the resources to make a difference in the future. As Keynes is often quoted saying, in the long run we are all dead anyway, so why deprive yourself something that you need now?

So what can be done? Are we past the point in which the standard approach to stimulus packages can be effective? Tinkering at the edges is not going to solve this problem. Instead, government is going to have to take charge of developing a full, extensive and considerable investment plan for the economy. It is essential that a national investment bank is established that has the capital to lend directly to businesses at favourable rates, and can support local government and other state institutions to renew our social infrastructure. We have to avoid a return to consumer credit bubbles, but cash needs to be flowing in the economy. Wages have to rises, benefits have to rises and charges for daily activity – such as transport and media – have to be slashed. Our transport network is patchy at best, so a long-term boost will be welcome by millions. Our rail services need major investment. Our cities are in desperate need of integrated, modern transport infrastructure; our town and city centres need to be refocussed to priorities urban life. Families have to be able to live in city centres, free from excessive and oppressive traffic, anti-social behaviour and crime. Our communication and IT networks need boosting significantly just to keep pace with investment in emerging economies. Sustainable development and green technology needs to be rolled-out and embedded everywhere. Support for knowledge creation and learning is a lynch-pin priority. Our healthcare and social care services need continuing improvement.

There is so much to do to even out the collective share of our national wealth. This is just a start, there are many more services and resources that need to be developed, but rather than thinking that this has to be done privately, the emphasis has to be on high-quality collective provision. We need to be bold about our working lives as well. The French have got some things right. The cap on hours worked each week, the ‘Tobin’ tax on finical transactions, increases in the top rates of tax, increases in inheritance tax and death duties. To balance the rises in inheritance duties we can cut national insurance taxes and income taxes. End the tax subsidies on second homes. Tax rental income for landlords of residential and business properties, but balance these with tax-breaks on investment in these properties that renew the physical infrastructure.

These are radical actions that are aimed to shifting investment out of the vaults and the savings accounts and into peoples pockets. There is no point locking-up savings while living in poverty now. What virtue does that serve? Anywhere that wealth pools, collects and is hoarded should be taxed to avoid usury, exploitation and gate-keeping. This alternative approach should have one primary purpose, to get wealth flowing and circulating around the economy. One of the great lessons from capitalism, which underlines the importance of getting this process right, is that it is not necessarily the amount of wealth that people have per-se, but the extent to which this wealth is creatively deployed, recycled and recirculated – invested in other words – in things that matter. This is the time to invest in our public services for the good of all. In doing so we will enrich us all. In doing so we will moderate the vast extremes of income and wealth accumulation that has done so much damage to our country. And in doing so our towns and cities will become, as Keynes wanted, more harmonious places to live.