David Cameron’s and George Osborne’s mantra, of the private sector taking up the “slack” of the shrinking public sector, is beginning to look like wishful thinking rather than economic reality. Anyone with a sense of reality, can see that there is absolutely no evidence of this.
The one statistic that is trotted out to convince us that this is the case is the amount of private sector jobs created as compared to public sector jobs lost. At the last count over 500,000 jobs in the past 3 years.
However both the jobs created statistics and the unemployment figures are puzzling. The public sector appear to be losing more jobs than forecast but there are more jobs being created. Yet the output figures seen here, show that productivity is not matching the growth in jobs.
Many of the jobs created in the private sector are “flexible” job creation – either part time or less secure and lower waged. As households move from full time work to part time work this puts a strain on the high street as consumer spending decreases. This movement from quality full time jobs to “flexible” and part time work is a familiar story in the UK. We saw this in the 1980′s. While we have a warning this week of a “repossession Tsunami” if interest rates rise, this is boxing in the options for the chancellor and Bank of England.
Economic data over the last 6 months have been catastrophic. The UK economy has not grown at all; inflation is high while wages are rising at less than half the inflation rate; and standards of living are decreasing at rate not seen since 1977. Over the past few days the reality of an economic policy of austerity and rhetoric of doom and gloom is creating the decimation of the high street.
Purely in economic terms this is fairly disastrous. In many towns and cities, as in Dunstable, a third of commercial units lie empty without any economic activity. Again this is a familiar story that we saw in the 1980′s. I remember doing a survey of industrial estates in the West Midlands in the mid 1980′s where anything up to 50% of the units would be empty at any one time.
This is just the economic perspective, the cultural perspective is perhaps worse as high streets decline and then the local community declines in tandem causing deprivation and a feeling of hopelessness. There are few on either side of the political divide who would have forecast that we would see the likes of Mothercare, Habitat, Thorntons, Odd Bins, Jane Norman, HMV, and T.J.Hughes either go into administration or massively cut back on jobs and retail presence, while today Lloyds Bank have announced a new round of “efficiency savings” aka 15,000 job losses.
As austerity bites and standards of living decrease, the British public are starting to only spend what they really need to and are ruthlessly looking for bargains switching to the internet for their shopping habits. Yet the deflationary public sector cuts and job losses have barely begun. While this sucks money out of the economy, out sourced inflation continues to rise.
Greece yesterday ensured that their economy would remain stagnant without growth for a decade and garner the ego of the IMF by voting through the austerity bill delaying the inevitable default and restructuring of the Euro as they wait for the next Euro Domino to fall.
Further shocks to our economy are inevitable with the prospect of inflation caused by external forces and commodity speculation; the decimation of the Euro as we know it; rising interest rates and the continued erosion of democracy as unelected bodies like the European commission, IMF, World Bank and the Banking Sector have a disproportionate amount of power.
Other symptoms of the mess we are in is the latest public sector strikes. The government rhetoric from both sides of the coalition are attacking the democratic legitimacy of the Unions, while playing the lowest common denominator card.
As with the accusations of “envy” politics of the 1970′s when people were being taxed so much to make them as poor as everyone else, so the right are now playing the same cards. They continually talk about the poor conditions of the “average” member of the private sector, as if those working in the public sector should have their conditions reduced to that level. This is pure envy. Rather than thinking of ways of improving the standards of living of the private sector and securing a better future for all, we are in the blame game and keen to reduce standards of living to a lower acceptable base. While MP’s conveniently have amazing benefits and pensions.
In the article Are we heading for a “Great Recession” , it was discussed how the talk of avoiding a slump is misplaced. Our stagnation as an economy and society is set to continue. There is no prospect of significant growth in our economy for possibly years to come while standards of living continue to erode.
We have taken our eye off the ball, as we follow the ideological path of the IMF, with its concentration of Chicago School economists. If we do not spark growth in the economies of the west we are going to have a bigger deficit (Truth about the UK deficit) in 3 years time than we have today. Growth is the name of the game and we need to find a way of increasing growth in our economy, or we need to fess up to the inherent contradictions in the capitalist economic model and search for an improvement or a different economic model all together.
Should we consider a “Steady State Economy” and abandon the race for growth? This could enable stability and a coherent environmental policy, while concentrating on quality rather than quantity and having a debate on what really is “efficient” in either the economy or society.
With every month that goes by, it seems that the lessons of the financial crisis are not being learnt and we dig a bigger hole to put our heads into the sand. If it were left to the controlling forces of ideology in our society we would race back to the laissez Faire economics of more than 150 years ago, which took a hundred years to evolve into a more civil society.
I for one could not tolerate this, and I am dismayed by the lack of vision by our so called elite as they erode democracy throughout the world.
We need a new vision, a new way forward, and to throw off the shackles of the past. With the current crop of leaders within the UK and the world I don’t see any evidence that this will happen.