Black Balled? No, not really…

December 2, 2011 5:38 pm

There’s been an interesting and timely addition to Labour’s much needed economic debate today with “In the black” Labour. In many ways it’s not dissimilar in the arguments it makes to what I said back in May, particularly on the need for “Hard Keynesianism”:

“Keynes didn’t just believe that it was necessary to spend heavily during a recession to stimulate an economy. Such thinking is reckless and lop-sided unless there is a counter-mechanism which can operate when the economy is strong. What Nobel Prize winning economist du jour (and New York Times columnist) Paul Krugman calls “Hard Keynesianism” should be applied by Labour. We should advocate stimulus spending now to get the economy off its knees, but we should be prepared to run a surplus when the economy is in good shape, and invest that money (perhaps in a UK investment bank or stablisation fund) to fund future stimulus spending.”

Some have suggested that the “In the black” pamphlet presages some sort of uber-Blairite revivalist movement, although that’s a simplistic and woefully inaccurate portrait of the people behind this brief but impressive piece of work. Anyone who is familiar with the writing of Anthony Painter or Hopi Sen on these pages, for example, would surely know that pigeon-holing them in such a manner does them a disservice. Yet some see a fight in an empty room, and will rearrange the furniture however they can to ensure that happens. To that end, they set up “In the black” Labour as anti-the Miliband/Balls axis. That’s an analysis that doesn’t fly.

It’s almost cliched to paint Balls as the the crudest of tax and spenders, throwing money at a failed system in a desperate attempt to turn the ship around. To read much of the media coverage around the shadow chancellor (and for that matter, the Labour leader), you’d presume they long for nothing more than another spending binge. Yet tell that to the shadow cabinet, many of whom feel stymied in their attempts to even float potential new policies (nevermind make concrete spending commitments) by the strict control Balls’ office has maintained over even potential spending commitments. Nothing that could even notionally impinge on economic policy is put forward without the explicit say so of the shadow chancellor – a cause for silent frustration for many seeking to make their mark around the shadow cabinet table.

There is much to take from this new piece of work, and it sets the groundwork well for the debates that the party will need to have before returning to government, and in government. Balls and Miliband won’t be able to return to 2005 levels of public spending – even if they wanted to – and that’s going to be a harsh reality that will upset many within the party in 2014/15. Sadly though, Osborne’s mismanagement of deficit reduction means that a 2015 Labour government will still be paying down the debt for years. Whilst “In the black” provides many important questions for Labour, the sad fact is that it’s proposals are for an economy that is sound, and growing. Even if Labour win in 2015, it’s likely to be years before we are confronted with a picture like that.

  • http://twitter.com/CJWallace91 Chris Wallace

    It certainly shouldn’t be seen as an alternative to Balls’ plans, in fact Ed specifically praised ‘In the black Labour’ earlier today - http://twitter.com/#!/edballsmp/status/142551166025347073

  • Anonymous

    Of course key to any application of ‘Hard Keynesianism’ is an appreciation of where we are in the economic cycle, the duration of the cycle and some estimate of where we are above or below the long term mean (eg. the extent of the boom or bust we’re in or face).

    What the current recession has shown is that most economists and governments are not very good at estimating any of those things. There were very few main-stream economists warning of huge bubbles in the banking and housing sectors, of course at the time these things were all driven by the ‘fundamentals’, fundamentals which vanished over-night. Similarly we weren’t predicted the worst post-war recession on record, merely some gentle ‘rebalancing’ or periods of lower growth.

    Estimating where you are in the economic cycle sounds easy but in reality, for most economists it has proven very difficult.

    • Anonymous

      Actually not strictly true about the lack of Cassandra’s prior to boom turning to bust in 2008.

      They were certainly there in the economics field, as anyone familiar with Liam Halligan’s analysis in the UK press, and Niall Ferguson’s.

      The problem was that the people running things like the Davos WEF were not inviting these people and their fellows to attend, let alone speak.

      Why?

      Bloody good question. Because certainly Ferguson at least was lecturing at the next event, after his predictions were found to have been correct.

      The problem with markets, and those of lesser capability supporting them, which always tends to be a majority, is that it is safer to be wrong along with everyone else, that to risk being perceived to be wrong alone. That’s why speculation bubbles build up. A case of positive feedback, because negative feedback is deliberately curtailed, consciously or otherwise.

      As for Euozone crisis. Not a surprise. Predicted at the outside of the Euro that this would happen eventually. But more significantly so utterly predictable that some private global businesses were already changing global sales targets this financial year from measurements of sale volume to market share.

      As a result, I am utterly devoid of sympathy for any politician who has the cheek to say it’s a surprise they couldn’t predict or plan for.

      The company I work for had to face a disaster in it’s Japanese home market, the choas for parts supply resulting still from the Thai floods, and the collapse if confidence in the Euro zone, and we’re still on target to meet all our expansion targets in Europe for this year.

      If a single company can afford to get that type of management and economic advice to support growth at this time, what the hell is GO doing?

      • derek

        @Thomas, It’s really difficult to imagine any company meeting growth projections in this climate, well outside the energy and metal markets but I have a fear the next wave of this financial meltdown will be in the production arena, where forward planning is drowned out by capital lose, I hope I’m wrong but it’s a contagion that started in the banks and will spread to Industry like a locus to a corn field……..Jeez! sounds like the horrible Asp.

      • Anonymous

        Peter Warburtons “Debt and Delusion” published in 1999 is the earliest text I know explicitly warning against the bubble of personal and government debt brewing.
        He is on the “Shadow MPC”.

        It is out of print but can probably be bought on Amazon and Ebay second hand.

        Everything he foretold has happened.

      • http://twitter.com/Newsbot9 Newsbot9

        So after you worked tirelessly to bring down the Euro, you’re now telling the politicians that it wasn’t a good idea? Well, that says a lot more about you than the politicians.

        • Anonymous

          ? You’ll have to explain that one.  I probably have as much influence on these things as my pet dog does.

  • GuyM

    Another responsible article that responds to the need for the left to accept that if you are going to argue for a Keynesian approach then, as you say, it needs to be over the full economic cycle and not just when it suits.

    Balls may well be arguing for control over spending plans now in opposition, but the real test always lies when in government. From 1997 to 2001 Labour ran a largely responsible government budget that moved on key Labour pledges but in a considered and sustainable way.

    From 2002 onwards budgets were unbalanced over the economic cycle as Brown allowed control and restraint to slip.

    If I were being non partisan I’d say the difference between a Tory government now and a hypothetical Labour one is minimal. Neither would threaten the bond rate stability and Labour would be cutting and cutting sharply as well. In opposition though you can pretend otherwise for electoral gain, but then every opposition does that even if it is a damning failure of the political system.

    The question is, will your party accept monetary and fiscal restraint over a full economic cycle when to many (especially on the left of Labour) it feels like Blairism?

  • Anonymous

    I agree with the ‘hard Keynsianism’ described by Mark and most of the ‘In Black’ paper.  I do not agree, however, with the rigid rules and targets that are advocated in the paper.  Governments need flexibility to deal with changing circumstances.

    Realistic targets for Labour would be to eliminate the deficit by 2020 and then achieve surpluses in the 2020s.  I agree with In Black’s authors that growth and jobs will need to take priority over welfare.  Benefits should not be increased in real terms nor decreased.

    The authors do not mention progressive taxation but this should be another part of the next Labour government’s approach.  Cutting VAT and increasing the top rate should be considered. 

  • jaime taurosangastre candelas

    What a wonderfully insightful article Mark, which follows on in the same vein as the “what does Labour stand for when there’s no money left?” article of a month or so ago.

    I can’t link to from here a magazine article from the Economist that talks about the 2020s being “a decade of pain”, due to increasingly high global hydro-carbon energy prices (shortages, running out of conventional sources), and our lack of capacity to utilise alternate sources (left it too late, not enough preceding R&D).  In essence, the article is not apocalyptic, there will be energy for sale, but the costs are going to be very expensive.  I am not knowledgeable about energy supplies, nor specifically convinced about AGW, but if that article’s predictions are true, it is not just the next few years that are going to be challenging, it is the next 20 years.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    I will never agree with fiscal conservatism, and I think the fact that the current government, following this path, have already had to extend the period of austerity for a further two years says it all. Unless they can create jobs, and I don’t believe this will happen unless free market thinking and loss of jobs to cheap labour overseas is stopped, the number of people on benefits will continue to increase.

    Its also just too similar to the Tories. Why vote for what will appear to be a pale imitation?

    Within ten years the party who advocate and implement protectionism will win an election.  Common-sense should want to actually create Fortress Europe and keep out the goods which cheap labour enables the destruction of European manufacturing

    • GuyM

      Protectionism always without fail brings everyone down. I suggest you research the simple economic premise of comparative advantage.

      When you put up barriers to overseas trade, they put up barriers to our exports. If you really think killing trade with the BRIC countries just as they are ni phases of massive economic expansion then you are worse than all the little Englanders of the tory right.

    • derek

      @Mike, I think we are heading toward the protectionism syndrome, the Euro looks like it will go and nations will scramble over trade deals will the emerging economy’s, France and Germany are in a much stronger position then we are, France with it’s agricultural base and Germany with it’s engineering production base, will be looking towards the East to fill the gap created by the Euro bust.
      This new admin sat on it’s hands over this crisis and Europe,it now seems all to little to late as the world is gripped by ultra conservatism, where cheap goods and cheap labor will rule.I believe we missed the boat on Europe and the chance to cement Western values looks dead and gone to the ultra capitalist. Never before in the history of man have so few created such a mess. 

    • jaime taurosangastre candelas

      Mike,

      I’m choosing “fiscal generosity” as a counter-point to fiscal conservatism.  There’s no pejorative sense in that, I hope.

      If you support fiscal generosity, from where is the money coming?  I can understand that in a protectionist UK some taxes would be raised from UK-based manufacturing that is currently done overseas, but everyday prices for everyone would rise.  I bought my daughter some new training shoes last weekend, they were probably made in Vietnam or China, and they cost £18.99.  If they were made in Britain they’d no doubt cost £40.  Given the speed with which she is growing, I don’t want to spend £40 on a set of shoes that she will grow out of in six months.

      I can only imagine you’d make up the difference (between conservatism and generosity) with tax rises, which is fair enough, but is likely to see us (1) haemorrhage people and investment and (2) result in the next Labour Government being a one term Government to be followed by political obscurity for Labour.

      • Chris Cook

        It’s quite simple, Jaime.

        The government can do what they did for hundreds of years until the (then privately owned) Bank of England first privatised the money supply in 1693

        That is, they should issue Stock which is undated and redeemable in payment of taxes.

        Many sovereigns who issued Stock did so in order to finance and fund the creation of productive assets for public use: others pissed it away in fighting wars.

        The fact is that it is not, and never has been, necessary to use Treasury debt sold to private banks who create the money out of thin air to buy the debt.

        The Treasury can and should issue Stock to finance the creation of productive assets and re-finance all existing Treasury debt.

      • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

        Well, it won’t be feasible to expect the Chinese to continue to provide cheap goods given their own likelihood of wishing to consume.  I do think that the current throwaway society we live in does need to be questioned. Those shoes she will grow out of will have plenty of wear left in them – but I bet they won’t be passed on to someone else who could use them!

        Sustainable living will mean far more local production and yes, less choice – but given that there will be mass unemployment otherwise, its something we had better get used to

        • jaime taurosangastre candelas

          Yes, but from where is the money coming to pay for the fiscal generosity?

          Shoes, most clothes etc to the charity shop.  Growing up with parents mostly funded by a charity as the administrators of a Church mission helps make that an easy decision.

          • Anonymous

            I suspect both Labour and the Tories believe that the people they must keep happy are the people with money, I suspect in real life many people have been using charity shops already otherwise they’d close down.

            I know we have used these shops, I have also used the throw way  food, tins which are  out of date but can still be used.

            What a life 2011 and people begging.

      • Anonymous

        Amazing isn’t it? Someone allegedly labour minded advocating a path which would treble product prices for the poor and working classes. You don’t get rich people in primark and yet they always seem busy. Who do you think is buying their cheap clothing manufactured in factories far from Europe?

    • Anonymous

       Then you have to look at helping those at the bottom to afford the good which are not cheap, I’m against cheap/slave  labour but I cannot afford a tee shirt costing £20 or a TV costing £500, but if you want to see slave labour you need not look at Pakistan or China look at Manchester back streets.

    • Anonymous

      Mike, the two great unspoken strands of British politics are protectionism and immigration.
      I am slowly coming to the conclusion that membership of the EU is against the interests of most working people in this country. Globalisation and high levels of immigration don’t seem to be providing much in the way of real wage growth or prosperity for the 99%.

      Paul Hillyard

      • GuyM

        You can’t kill skilled immigration until you do something about the UK education system that turns out too many semi illiterate and work shy youth.

      • http://twitter.com/Newsbot9 Newsbot9

        So you want to cut the base by 80% or more with isolationism, and build from there? Great, and the megadeaths?

        • jaime taurosangastre candelas

          What megadeaths?

      • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

        Paul: I’m in favour of the EU but I think it needs to change dramatically to become a self-supporting unit. I wish we had the Fortress Europe so many talk about!

        • alex williams

          There is a form of tariff which could easily be justified. One in which unless a product can demonstrate certain standards of working conditions, worker pay ratios and worker welfare standards, there is a duty upon it. Thus ‘protecting’ employers from being undercut by those who exploit their workforce. A similar thing could have been brought in with regard to food and animal welfare were it not for the demand for cheap food. I am sure a stronger case could be made against those goods such as cheap clothes, electrical goods and plastic junk are not quite as essential.

      • Anonymous

        Hi Paul, on one of the front pages of newspaper today there was an article stating more immigration was needed in this country to boost the economy in some areas.

        Not sure which one, but it does go against what this govt were advocating about reducing numbers of migrants?

        I sometimes wonder whether policy is made up on the hoof, opportunistically and based on populism rather than real pragmatic and well researched needs?

        I think no nation will be able to stand alone in the future, since we are all interdependent on this global economy, and huge powerful companies dominating markets.

        Your comments sparked off a few thoughts.

        I wish there was a way of stemming the tide of what appears like a massive capitalist ethos, where people are treated like commodities and consumerism 
        is overblown.

        Even in these “austere” times; we are still awash with a glut of choice and unnecessary products, and so much waste.

        It’s like a conveyer belt without a stop button, moving very fast.

        I was walking through one of these giant shopping malls today with a friend;
        the place was packed; but there’s a feeling of unreality being bombarded with an over choice of everything and anything; but much very expensive, and a great deal of “tat.” How people cope on low incomes at Xmas I’ve no idea.

        It’s the same being in a supermarket, surrounded by endless lines of products, probably made in the far East; bombarded with unnecesary choice.
        So much of this stuff must get thrown away- but where?

        I’ve noticed a massive increase in this consumerist market over the past 30 years; and although enjoyable in some ways- I also think it fuels greed and unrealistic expectations; also fosters materialistic values to an extreme extent.
        It’s almost become the cultural norm, replacing religion.

        I do wonder where it will all end; I can’t think it could be sustainable the way economies are falling.

        Young people are very sucked into all this too, is my observation.

        Thanks, Jo

    • Anonymous

      Hmm someone advocates solutions which history proves do not work..

    • Daniel Speight

      Within ten years the party who advocate and implement protectionism will
      win an election.  Common-sense should want to actually create Fortress
      Europe and keep out the goods which cheap labour enables the destruction
      of European manufacturing

      Which was what people voted for in the referendum on being part of the EEC in 1975. Funny how it managed to change so much. Some of the Tory Eurosceptics should remember that it was Thatcher who helped push the EEC along the road to globalization and free trade. Now we seem to have a wholesale adoption of neo-liberal policies in the EU.36 years on, is this where we really want to be?

      • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

        I’d say not, Daniel. I’m pro Europe and pro EU but I think it should be a protectionist bloc, and yes, of course there will be tariffs from outside. That’s the idea. More local production, less trade, more sustainability

        • jaime taurosangastre candelas

          Mike,

          I can see several pitfalls, mostly to do with the climate.

          Are you wearing any cotton clothes?  Cotton is only grown in the EU in Greece and Spain, those countries together account for less than 1% of world cotton production.  See http://www.cotton.org/econ/cropinfo/cropdata/rankings.cfm

          Food consumption in Europe greatly exceeds production.  A big uplift in European agriculture to produce a far larger proportion of our food is going to take time to achieve, result in less available land for other purposes, and less choice of food at European prices, and higher prices for other foods traditionally grown outside of Europe. Europe doesn’t grow much rice for example, no tea, no coffee.  The climate doesn’t suit.

          Asia produces 94% of world rubber supplies.  Rubber is one of the most useful and widespread natural products, used in a multitude of things.

          I’m sure there are lots of other areas of economic activity that also would be affected,  but suffice it to say that Europe is a net consumer of vast amounts of “things” that come from other parts of the world, whether goods or services, and if we start chucking up trade barriers, others will naturally respond, and as net consumers, we are going to lose out significantly, paying significantly more for these fairly basic products that we cannot produce.  At the other end of the equation, coffee and rubber and rice producers around the rest of the world are going to become poorer as well as a huge European marketplace for them collapses.

  • Daniel Speight

    Yet again we are being pushed into the wrong argument. And it’s an argument of the Tories’ choosing. It’s an argument on how much the drop in the standard of living of the majority of Britons should be and for how long that drop will be for.

    There are big economic questions out there where it would great if some of the experts and think tank apparatchiks could help us rather than the Tory argument. All we need to remember is that the historical job of the Labour Party is to reform capitalism to increase equality among British citizens. Let’s start asking a few of those questions now.

    1/ Is it possible to rebuild manufacturing industry in Britain to bring us more into line with industrial mix of France and Germany?

    2/ If not is the financial industry capable of getting back to where it was before the crisis and how long would it take for that industry to pay for the terrible damage it has inflicted on the majority of our citizens?

    3/ What measures can we start planning for to make large corporations become more democratic and spread the wealth accumulated more fairly?

    4/ If the financial industry is not capable of supporting the country as it once did, where do we see the engine of growth coming from?

    5/ Is it time to take a hard look at the taxation system again or do we accept the increasing gap between the rich and the poor?

    6/ And lastly on whose side should the party be taking on the big economic questions, the corporate bosses or the workers?

    • GuyM

      “make large corporations become more democratic”

      err, they are not there to be democratic.

      You don’t decide business strategy by democracy; you don’t appoint or promote staff via democracy; you don’t decide on product development through democracy, you don’t agree a marketing campaign via democracy; you don’t select business software via democracy.

      You decide through delegated authority and individual accountability and responsibility.

      Business is to a large degree autocratic, that’s the way it works, always has and always will.

      I do not want to go in on Monday morning to find a “workers collective” telling me they’ve had a vote and I can’t buy, for example,  Business Objects as they want to have Cognos and after a vote they have the democratic mandate.

      One of the reasons I left politics and am happy in business with no political involvement is I don’t have to do “democracy” anymore. Democracy is absolutely right for politics, it has little place in business.

    • Anonymous

      Very well said Daniel. I think Ed
      M is at least interested in answering some of your questions, unlike virtually all the rest of the mainstream political muppets on the TV. I reckon that the distinction
      between productive and non-productive businesses is important in getting somewhere positive. 

      Housing seems to offer scope for triggering a productive revival but only if land
      prices are axed through handing over huge land banks via
      rezoning, taxing un-productive land /property holdings and compulsory purchase
      where necessary. Combine cheapened development land with strict requirements
      for innovation, low carbon and new technology and you have the potential to
      reignite engineering, building and manufacturing sectors to help with your q1. Of course, this only works if it is
      backed up with joined up investment in skills and related UK manufacturing capacity.
      On q5, I would say the ability of private investers to hold land / property as assets has to be dealt with. Local authorities should police productive
      use of the land and property in their areas, perhaps raising taxes on empty property /
      unused land to fund pump priming and allow these resources back into the hands of new entrepreneurs at affordable rates for productive uses.

      • Daniel Speight

        I hadn’t really thought about land ownership. Historically the labour movement has campaigned on this issue and probably land ownership hasn’t changed that much since the 1930s in that a large proportion of Britain’s land being owned by a small proportion of the population. I remember reading in Gordon Brown’s biography of James Maxton that the Scottish ILP MPs certainly saw it as a major issue back in the 30s.

  • Anonymous

    Ed Balls comes across as smug and arrogant. Labours best economic policy is to replace him.

    • Anonymous

      Sound like you two might just be the same person Do go home  and your self.

      • Anonymous

        The same person arguing with themselves? No I’m a labour supporter who understands the importance of image and perception. Both Ed’s suffer in that respect. I’d be delighted if we didn’t live in such a world, but unfortunately we do.

        • Anonymous

          People have had image, now people want substance and sadly labour has little of that, Nope people want substance not another bunch of images.

          • Anonymous

            It’s not a bunch of images like a photo gallery. Opinions on leadership and competency is strongly influenced by image and perception. You are assuming the electorate is rational which is incorrect. Both Ed’s may have substance but if the electorate don’t see them as leaders then their message won’t get through. Classic example is Nixon vs Kennedy, radio listeners thought Nixon was best and TV viewers supported Kennedy. Substance is still necessary but not everything.

          • Anonymous

            The perception that Brown was not that bright in matters of politics, Blair was about as socialist as Thatcher, you go to America for examples, we have a good one here Thatcher Blair, even better one was Blair Brown.

            Sadly perception will not get labour elected again it will have to be substance people will want to know where labour will go and who will be the losers, right now it the working class.

          • Anonymous

            It’s a combination of both perception and substance. Experiments have shown people can predict the results of overseas elections without knowing the candidates policies based on their photograph. People won’t listen to substance unless they percieve the speaker to be a valid leader. Both Ed’s need to work on it. This is the same in business and many other aspects of life.

          • Anonymous

            I said Thatcher would win, and I said Blair would win, and I said  Brown would lose, and I will say now Miliband will lose as well, how that for an image of perception.

            I nearly forgot I actually said Kinnock would lose as well.

          • Anonymous

            Ah so we are almost in agreement. If personal ratings and trust on the economy don’t improve there’ll need to be change at the top.

          • Anonymous

            possible

          • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

            So who exactly has both ‘substance’ and the shallow qualities preferred by the media? I think those concerned about the latter are always lacking in the former.

          • Anonymous

            Shallow qualities that also influence the electorate too. Dave Miliband, Yvette Cooper, Chuka Umunna and Michael Dugher have image and substance. Although you can research to see who the public prefer. Image and perception account for a lot. I’m not saying thats morally right, its an unfortunate part of life.

  • http://twitter.com/SirTrevSkint who goes home

    “Balls and Miliband won’t be able to return to 2005 levels of public spending “

    You make it sound like the chronic profligacy and uncontrolled state expansion during the Blair/Brown years was some virtuous act for the good of the people instead of the criminal act that it was!

    You were running deficits even during those years of record tax receipts.

    Can you not see that the British public know and expect you to destroy the economy again after this government puts it back on track again, which is why you will not gain power for a generation – thank goodness.

    • Anonymous

      Tories had a higher deficit in the 90′s. They also introduced de regulated banking.

    • http://twitter.com/Newsbot9 Newsbot9

       No, the reason Labour won’t get in is the blatant gerrymandering the Tories are using to turn their minority share of the vote into a perpetual Westminster majority.

      • Anonymous

        Or of course more people voting Tory.

      • mcfly

        same as labour did to keep the tories out

  • Anonymous

    Worked quite well for the South Korean car industry

    • Anonymous

      “Worked quite well for the South Korean car industry”

      That depended upon a start using cheap labour and out of date Japanese designs.. And once established, grew and grew.

      So who is willing to work for £4/hour?

      Who wants to buy a 1993 Toyota Corolla?

      If you are going to quote examples, please try to understand them…

      • http://twitter.com/Newsbot9 Newsbot9

         40p a hour, more like

        • Anonymous

          I did not fell like giving what might seem an exaggerated case  But you are correct.

          Mike H above would not doubt be pressing for a rise in the Minimum Wage with protectionism..

    • GuyM

      As madasafish says Mark, that was limited action designed to allow a nascent national industry a short time to establish itself (which you couldn’t do in a trading block like the EU)

      In the EU the only way to “do” protectionism is for the entire continent to put up trade barriers to the outside. Outside the EU in turn would respond the same way. It would push up costs, take away growth and lose jobs.

      One of the things about the 1930s depression was that it spawned a protectionist reaction across the globe which only made things worse.

      Those of us who actually work in the global marketplace for global companies know it would be nothing short of a disaster to try the same again.

    • Anonymous

      You are absolutely correct , Mark.

      No country and I mean no country, has gone through industrialisation without protective barriers. Britain had the empire and the US was the most protectionist economy in history in its early stages of development.

      Britain and the US only proclaimed the virtues of free trade once they had an advantage over everybody else.

      Free trade is a myth and only works in global capitals advantage, not the 99%. 

      If we are to rebuild our manufacturing sector it will only work behind tariff walls not through free trade.

      Ha-joon Chang, the well known Korean Oxford based professor nails the lie about capitalism in “23 things they don’t tell you about capitalism”. He goes over the growth of the Korean economy in the last 40 years, which was all done through planning and protection.

      • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

        Exactly. And it will happen and be demanded – the madness of out-of-control consumerism and the throwaway society will be seen as a blip, not a permanent way of living. It simply isn’t sustainable

        • Anonymous

          That’s exactly how I feel Mike.

          Many years ago I spent about 3 months living on a kibbutz in Israel, and travelled extensively around the country.
          I remember clearly going into a chemist shop and noticing for most essential goods, there were usually only about 2 choices. Eg sun cream, deodorant, moisturizing creams. 
          Still moderate prices.But people get used to what they live with and are offered.This was a main town on the high street.

          When I returned to England, it was a real culture shock;
          (in the 80′s;)- I noticed for example going into a large supermarket, about 20 choices of deodorants….is that necessary, and how did it come about?

          I think we are all being bombarded with stuff we don’t need; and there must be excessive waste.
          I’d like to see towns, villages, and communities generating their own wealth via home grown commodities, local crafts and expertise etc, not just reliant on huge co orporate businesses imposing themselves and drowning out local business and market trade.

          When we’ve visited France in recent years, they seemed to manage this very well- there’s no reason why we couldn’t adopt a different model here that is far more community focused; and also creates employment opportunities and encourages skills and innovation. 

          Just a few additional thoughts.

          Thanks, Jo.

        • Anonymous

          But of course in Korea of course they did not have Unions, which would strike over the colour of toilet paper, or the wrong washing up liquid in the canteen that saw our car industry  in ruins.

        • GuyM

          And I suppose you’ll be telling people they cant buy bananas, oranges, melons and all sorts of fruits and veg not grown in the UK, or out of season?

          I like “consumerism” thanks and I really don’t think you have any moral or ethical choice forcing your anti modern society ludditism on people.

  • Anonymous

    The Tories, Republicans and Europeans all ran deficits. Do Go Home

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    That is exactly the point. Sustainability means more local production.

    • Anonymous

      Hi Mike, there was a wonderful programme about sustainability of food markets and local produce; examples of great innovation around the country; I think on R4′s Food programme today.
      (Possibly related to the BBC food awards.)

      An example was Bolton market; but also possibly the east side of Oxford, where all kinds of co ops and networking between people people is happening; supporting local farms and artisan skills etc.

      This is all an antitote to what sometimes appears the “deadening hand”
      of top down big business supermarkets upon the diversity of local enterprise and community orientated projects.

      It’s a bit like a post war spirit that has been springing up in places- and I hope it expands massively so that people themselves can reclaim
      ability to shape their lives independently of these huge co orporate giants.

      Meanwhile also public and communty services must be protected from the vagaries of the casino style money markets.

      As you say Mike, sustainability and “people” are the key concepts.

      I would have thought this was bread and butter territory for Labour;
      why don’t they seize the agenda?!

      Jo

  • Anonymous

    This is interesting Mark, but I must admit to not being familar with all the
    intricacies of economic arguments, so find some of this a bit baffling.
    I appreciate others have expertise in this area.
    (Although I’ve not read your links.)

    To be honest, I’m more interested in the fundamental questions
    and philosophical arguments; eg the nature of capitalism, or social effects.

    I have a real sense that some very fundamental questions are not being addressed
    by anyone in the mainsteam political arena.
    For example- examining underlying values or how cultural norms have changed;
    affecting society so deeply.

    What’s concerning me about mainstream politics at the moment is that agendas
     are being set by some sort of closed circle; eg media, politicians, and even celebrities.

    It’s been graphic for me seeing the reactions to public service workers
     taking strike action, and the rhetoric and narratives around that.
    Really abusive language spoken about ordinary working people;
    grossly misleading assumptions being made and propagated.

    In some cases I think it is an abuse of power.

    What hope do any of us have sorting out the big questions,
    when there is such an aggressive agenda towards people and issues
    about social justice and fairness in society?

    I guess it boils down to questions about the nature of democracy,
    how people can effect changes in their lives, and participate/debate.

    It feels like we are all becoming less and less “agents” of our own destinies;
    dictated to by powerful forces beyond our control.

    To some extent, it’s always been like this; but at least in the past,
    people may have felt more “grounded” in their communities and more
    connected to people around them.

    I think things are happening too fast, and certain factors are dominating
    our lives too much.

    I think we all need to get back to the basics, and re examine fundamental values.

    That also includes how money is spent!

    Hope this makes some sense in context.

    Thanks, Jo

    • Anonymous

      I’m just making wider observations Mark, this is no reflection on the work done here.

      Thanks.

    • derek

      @Jo, a lot of good stuff in there Jo and your spot on with this rabid notion that this new admin have been peddling since 2008, we can all look at the borrowing records of GDP and see that up until 2008 our borrowing rates had been lower than the last conservative government.The Tories have used the recession for all the negative arguments and probably believed their own rhetoric that Brown was to blame solely, thus taken their eye off the real problem, that this was indeed a world wide recession that was crying out for a world wide solution, instead it was ignored in favour of ideology that will draw back workers earnings and rights too the 20th century level.History will judge this period as the decade that saved the wealthy and drove the undeserving poor back to obscurity.All the messages coming out of Europe are clear, Merkel, Sarkozy  are slicing up the cake in their favour and Cameron hasn’t got a clue what direction to turn to.Destiny? repeated history and all the wrong moves, can you imagine all the rich nations driving up the food cost and energy cost, while driving down workers rights and pay. 10 years from now? we might just have our own shanty towns in many regions. 

  • Anonymous

    a simple question: will a spending option directly boost short
    and long-term growth and create jobs? This may mean very constrained funding for healthcare,
    pensions and welfare for the foreseeable future. It’s tough, but the alternative is ducking the genuine
    decisions nearly every government of an
    advanced economy currently faces. 

    All I can see are two parties fighting for the same voters.

  • alex williams

    While there are problems in our education system, it is fighting against a wider culture that creates these symptoms. The young people are the mirror of a society, education can only try and lead it cannot manufacture young people.

    • GuyM

      Pardon me but bollocks.

      Trendy lefty educationalists might want to address the problem of some pupils leaving after 11 years (soon to be 13) unable to read, write or add up to basic levels.

      Your waffly answer is just another tired excuse for a failed left wing educationalist dogma. Set academic standards and enforce them so no child can not read or write when they leave school.

      Nuts to touchy feely empathic teaching methids, get the little so and sos to read and write properly. Without that NOTHING else can follow.

      Then get your friendly teaching unions to accept they have to turn out pupils for the world of work, hence they need work relevant skills.

      Or you could waffle on about “culture” and societal “mirrors” etc. and carry no with 25% of the adult population having the maths skills expected of 9-11 year olds.

      I’ve yet to have a job I was recruiting for that was acceptable to take applicants who couldn’t reads, write or add up. Pray tell how you think that works?

    • Anonymous

      Are you a teacher may I ask Alex?

      I think I recall you saying so.

      It can be a very tough job so I’m told;
      with all the curriculum demands; SATS etc;
      also restriction with disciplining over bad behaviour.

      I do think there are issues to be addressed;
      but equally parents have to be motivated and supportive
      of their kids’ education- which many appear to be minimally so.

      I do think teachers themselves should be leading
      practice; not top down government targets etc;
      but also well resourced and suppported.

      Other countries seem to value their education system
      much more highly.

      Jo

  • Anonymous

    Hi Derek,
    I think you’re going to be surprised by Jag LR’s and our performance this year.

    But you’re right, enough head winds could put paid to the best laid of plans, but they’ll certainly scupper anyone without more than a Plan A.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    I don’t actually believe in the global marketplace, Guy, so I’m quite happy to look towards its demise

    • GuyM

      Sadly for you, the millions around the world who not only believe in the global marketplace but whose jobs depend on it disagree.

      Every company I’ve worked in over the last 10 years markets and sells overseas. My last one had offices in China, Australia, Chile, India, USA etc. It simply is unrealistic on your part to think you can dismantle the reality of business life in the 21st century.

      There is absolutely no political movement anywhere for protectionism. You’d reduce choice, push up costs and lower living standards with your idea. No one will have any interest in them at all.

    • Bill Lockhart

      You may be rich enough to buy only British clothes or technological devices. Not everyone is so fortunate.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    Most unemployment is amongst those who would have formerly done manual jobs, until we decided to let the Third World do them instead or decided we didn’t need to manufacture any more

    • alex williams

      Which is where I believe most public sector employment should be. targetted at making our environment and infrastructure better and sustained at a high standard.

      • GuyM

        Or in other words a lot of public sector “non jobs” for the dysfunctional products of the failed comprehensive education system?

        Oh joy, the increased taxation that policy would require…….

  • alex williams

    Ermm they are if they are PLCs. It’s not one man one vote, but it is still a form of democracy. One of the failures of the last 20 years as even Mervyn King has recognised has been the failure of shareholders to play their ‘democratic’ role as bonus and exec wages have grown at a rate well in excess of dividends.

    • Anonymous

      Assuming of course that the shareholders are not perfectly happy with the exe bonuses and wages. It’s entirely possible that for successful companies where the shareholders receive a health dividend they are quite content.

      At the end of the day it is the executives job to run the company for the shareholders. The idea that shareholders as they have the skills and know how to do so.

      • alex williams

        My point unless you failed to read it was that the pay was growing at a rate out of proportion to the dividend. It is the excs job to run the company, it does not mean that they are doing this well or even have the skills or know how to do it. Often their position is more down to cronyism, luck and the fact that having big sums of money to move around often brings some degree of succes (but not always) admittedly most are probably competent but not any where as indispensible as they would like to believe.

        • Anonymous

          And my point, as you seem to have failed to understand it, is that executives will swiftly be replaced if the majority shareholders wish it. And what is a fair wage for these executives is up to these majority shareholders who would soon let the executives know if they felt that the wages or incompetence were eating into their dividends. At the end of the day who exactly is best placed to run these companies profitably if not the executives employed to do so? Companies are not instruments of redistributing wealth or social engineering and they are not democracies. They are simply there to make money.

          • Dave Postles

            Shareholders: executive remuneration
            We’ll soon see.  ABI has issued a letter to the banks about remuneration.  We’ll await the reaction of the banks.  Investment banking has not produced any substantial profits in the last six months of the year.  We’ll see how the banks get round that one in their bonuses.

    • GuyM

      Shareholders are nothing to do with democracy, it is the owners of a business exercising their owners rights. Whether that is one or two owners or many individual and institutional owners.

      They can exert pressure on executive teams and pay levels. But they do not exert influence on day to day operations and strategic implementations.

      Business is autocratic and will rightly stay that way.

  • Anonymous

    Hi Derek, I’m really sorry I didn’t see your reply until just now!

    In fact, to be honest, rather lost the thread of argument from last night;
    will have to re read and think about.

    I think a few of us here are in agreement Derek.

    Hope all is well with you this week.

    Jo

  • Daniel Speight

    Ah but GuyM it doesn’t seem to have hurt German industry having workers representatives on their boards. Come to think of it John Lewis seems to have outlasted some of its rivals.

    And as you say “Business is to a large degree autocratic”. I suspect this was very well shown by Fred Goodwin at RBS.

    • GuyM

      John Lewis is about as far from “democracy” as you could imagine it.

      Don’t imagine that simply because the partners “own” the business that means anything other than a bonus each year and discussions over where to place a water cooler on each floor.

      JLP is an autocratic business structure, as are all successful businesses.

      As my point before Daniel, I get paid to make decisions not listen to “workers collectives” made up of people unable to get to the position to take those decisions in the first place. If faced with something like “worker representatives” I’d simply ignore them.

  • Daniel Speight

    And the success of German industry with workers reps on the board is due to what GuyM?

  • Anonymous

    “Dysfunctional products.”
    Do you mean people?

    99% of the population probably went to a comprehensive school over recent decades;
    there is also great variablity between schools.

  • Anonymous

    Great points, to which I’d add things like high tech supplies: the hard core magnets (neodynium and the like) needed in both medical scanners and computer hard disks tend to come from China, but are commercially available elsewhere except in Europe where it is comparatively rare), and the lithium mined for portable equipment’s batteries is confined to only a handful of places on earth, once again not in Europe.

    Imagine which way our economy would go without access to the parts we needed for our computers or mobile phones if we started a trade war against other economies: Globalism may have its faults, but to argue for protectionism is to underestimate the benefits from which we as a society are now both hopelessly addicted to, and derive so much of our “added value” as a service-based economy.

    • Dave Postles

      ‘Rare earth’ metals have (until very recently) been discovered only in those countries which operate a protectionist policy.  (I’m not a protectionist, but urge preferential purchasing by individuals).

      • Anonymous

        Indeed… and imagine how those protectionist economies would behave if we started banning their exports to us in other commodities…

        I support your preferential purchasing approach, and believe we should campaign for a new “Made in Britain” campaign…

  • Dave Postles

    ‘Business is to a large degree autocratic, that’s the way it works, always has and always will.’
    That may be the practice, but it doesn’t accord with some of the business theory, such as Blake Mouton Managerial Grid, where management style can be situational, but is likely to be more productive if neither autocratic nor ‘country club’, but consultative with devolved, not delegated, responsibility – I believe.

  • alex williams

    On that criteria neither is our own government a democracy.

  • Redshift

    >>an autocratic business structure, as are all successful businesses<<This couldn't be a more utterly stupid statement. As Daniel Speight has pointed out, works councils (and sectoral bargaining for that matter) have proven to lead to massive improvements in the productivity and efficiency of German businesses, as well as improving industrial relations. 

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