Financial Chincanery Threatens Our Future

While our policy-makers have been striding around their Cotswold estates burning off an excess of Christmas pudding, elsewhere in the world events are occurring that provide further signals that the economic game we have played so effectively for the past two centuries is being superseded.

Do not let your festive white-out blind you from the important decision taken a historic decision to avoid the dollar in their trade relationship. As reported on this blog, for some time China has been arguing for a change in the global terms of trade, a system that has hugely benefited the USA since it was negotiated at Bretton Woods in 1945. The US has refused to negotiate and so China is now taking bilateral action, and Japan appears to be following a similar strategy.

Japan and China have agreed to make direct currency exchanges to settle their external trade balances, rather than negotiate via the dollar. In addition, Japan will buy Chinese government bonds. This shifts the Chinese renminbi towards the status of a reserve currency that China's economic power suggests, although the currency is still controlled entirely by the government, rather than being available for free exchange as the other reserve currencies have been until recently.

The extraordinary fact that the dollar is still the global medium-of-exchange, giving the US completely undeserved and misused global economic advantages, is omitted from discussion of our economic woes. And yet the way that the City operates as the 52nd state leaves us increasingly vulnerable in a world where the powerful economies are those who produce and gain access to resources, rather than those who control currencies.

Another sign of the UK's vulnerability emerges from a report showing that we have been overtaken by Brazil in terms of the global economy league table. As the UK economy shrinks and those of the resource-rich and industrious economies outside the West expand, this is more a shock than a surprise. These economies face another significant advantage over those of Europe: they are able to create their infrastructures in a way not dependent on fossil fuels and hence face significant advantages in terms of a green economic future.
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Time for a Christmas Carol

We are going to have wall to wall Dickens this Christmas. His bicententary has come at an apposite moment: we have never needed his wisdom and his diversion more. He has a strong claim to be our second national writer after Shakespeare, and this must be because we need the moral of his tales as much now as we did when they were written.

Personally I have never got along with Dickens, finding his characters unconvincing and preferring the earthier tales of George Eliot, with the greater depth of relationship and her overwhelming and winning compasion. The ubiquity of Dickens this year has taught me that I was wrong. Dickens's characters are intended to be unreal because his writing is allegorial, not realistic. This is the reason they have daft unconvincing names, but names that tell you immediately what role the character is to play in the morality tale that you are reading (or watching).

The point is most obvious in A Christmas Carol itself, where the unhappy Ebeneezer Scrooge is given the chance to abandon his love affair with his account-book and rejoin the human race. We remember scrooge as a miser, but this is not the role he plays. The Scrooge is actually the businessman driven by the quest for profit rather than people, abandoning love and humanity to commit his time to his enterprise. This book is a tirade against capitalism as powerful as any camp staged outside St. Paul's or any pamphlet from Marx and Engels. It tells how capitalism distorts the human spirit and, most importantly, makes even those who succeed within the narrow and shallow rules of its game, almost as unhappy as it makes the losers. And because capitalism, in its rotten essentials, has not changed, the message is as relevant 200 years on as it was in 1843.

Meanwhile, the characters of Bleak House are fixated by a legal case from which only lawyers gain, the Jarndyce and Jayndyce chancery case standing iconically for the project of any who would dedicate his or her life to the pursuit of financial reward. Many characters in the novel see relationships and health destroyed while they battle for their 'expectations'. The choice of this word throughout the Dickens oeuvre so neatly sums up the way capitalism always offers but never rewards, thereby ensuring a lifetime's unhappy slavery and a perpetual discontent.

At the end of this year during which we saw the 99% who place love and common humanity above profit and power challenge the 1% who are destroying human society and the planet simultaneously, we should congratulate ourselves that this division has been articulated. We must gain in strength as a movement in 2012, but also as individuals we can try to share the Dickensian sense of comfort and joy and remember that both are for life, not just for Christmas.
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The Government that Likes to Say 'Yes'

The parliamentary Communities and Local Government Committee has come out clearly against the plans made by Pickles and his ilk to tear up the Town and Country Planning Act and allow untrammelled development of the countryside. Their report into the National Planning Policy Framework lays bare its fetishisation of simplification and its attempt to prioritise the narrowly 'economic' at the expense of people and planet. As I discuss in a short paper on localism published recently by Green House, this makes a mockery of the government's espoused support for community-led decision-making.

Bizarrely, the original NPPF document relies on the Brundtland definition of sustainable development as 'Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.' I am constantly mystified by the way in which people can spout this without considering at what point development would have to stop. Where between the situation we have now, with species becoming extinct but there still being enough green land to enable breathing, and the future development paradise where every scrap of field and hill is covered with concrete and tarmac, is development supposed to stop? Assuming that future generations will still need air to breathe, there must be a boundary, so how do we know that we have not already reached it? And if not, when will we know we are there?

Gamely, the CLG committee has, in its para. 67, added to this definition of sustainable development to include the concept of limits: 'Policies in plans and decisions on development should be assessed against the principles that the nation and areas within it should live within their environmental limits; should achieve a sustainable economy and should seek to ensure a strong, healthy and just society.' It also requires a locally based and democratic basis to planning: 'The achievement of sustainable development through planning should be based on the responsible use of a sound evidence base and developed through an open and democratic system.'

The presumption in favour of development has nothing to do with national well-being or sustainability: it results from the lobbying undertaken by the big construction companies who dominate Tory policy-making. Note the following quotation from the website of Curtin & Co, who are not only experts in planning but also in 'managing green issues':

‘There is no doubt that the local government and planning landscape will change considerably in the next 12 to 18 months. There are still significant holes in the proposed legislation and Curtin & Co will be monitoring the progress of the bill as well as making representations on its community engagement aspects. Curtin&Co’s founder and chief executive is the author of Managing Green Issues (Macmillan, 2001) which advocates many of the aspirations of the Localism Bill and this is embedded in our methodology.’

On this day which our ancestors celebrated as a festival of hope that life would return after the darkness and cold of the winter season we need to remember that 'there is no wealth but life' and resist the equation of development with progress while utterly rejecting the possibility of future economic growth.
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Make the Rich Pay for their Emissions

An excellent funding programme from the Joseph Rowntree Foundation into the social impacts of policies to address climate change is beginning to bear fruit. They have created a microsite to make the findings available.

As well as the more conventional investigations into the impact on poorer households of rises in energy bills, a research team based in Bristol and Oxford has produced data about how responsibility for CO2 emissions is shared across the socio-economic classes. Put more bluntly, to what extent can we blame the rich for climate change as well as for inequality?

The primary finding is that:

'Mean average CO2 emissions are strongly correlated with income: households within the highest equivalised income decile have mean total CO2 emissions more than twice that of households within the lowest equivalised income decile. Emissions from private road travel and aviation account for a high proportion of this differential: aviation emissions of the highest income decile are more than six times that of the lowest income decile.'

In other words, the concerns that are often raised about alienating those who fly to Ibiza for a summer holiday by introducing aviation taxes are quite misplaced. It is the rich who jet around the world for conferences and business meetings who are most responsible for aviation-related CO2 emissions.

The figure represents mean annual emission of carbon dioxide from all sources across the income deciles. As we move from the lowest 10% to the wealthiest 10% there is a clear increase, class by class, in the amount of CO2 emissions that are produced. More importantly, a larger proportions of the emissions of the richer people in our society are transport related.

The policies implications are clear. Using household energy bills as the focus of increasing the cost of carbon is not only regressive but will also be ineffective:
'if household carbon reduction policies addressed all transport emissions as well as those from household fuel use, there would be far fewer low-income/high-carbon households, and policies which placed a cost on carbon itself would be likely to be more progressive.'
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Carbon Politics Down Under

The final word in my short recent series on the developments in carbon policy in Australia should be given to Clive Spash , who was there on the inside and, as an academic economist of the social-ecological position, in a strong position to analyse the policy outcomes from a planetary perspective.

Spash has produced a paper describing how Julia Gillard was able to depose the previous Prime Minister Kevin Rudd, also of the Labour Party, because of the unpopularity of his carbon emissions trading scheme. The powerful mining sector lobbied strongly against this and the opposition thus generated, most on the basis of untrue claims about the effect on ordinary Australians, allowed Gillard to successfully challenge Rudd and create a new government with support of Green and independent MPs.

Spash describes how the political compromise involved a temporary carbon tax for three years, to be followed up by an ETS very similar to that which had been proposed by Rudd and at considerable political cost:

'That cost extends to allowing major emitters to make guaranteed windfall profits from pollution permits. The emission trading scheme suffers numerous problems, but the issues raised show taxes can also be watered down and made ineffectual through concessions. Taxpayers will get no assets from the billions of dollars to be spent buying-off the coal generators or other polluters. The scheme hopes to stimulate private investors to create an additional 12 percent in renewable electricity generation by 2020.'

Spash sets a much more stringent target of a wholesale shift to 100% renewable energy within a decade, the only proposal he considers 'serious' given the urgent nature of the issue of climate change. His working paper explores the difficulties of implementing meaningful greenhouse gas taxes in Australia.
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Unified Continent not Single Currency

The first time that I was in the uncomfortable position of agreeing with Conservatives was some ten years ago when, on behalf of the Green Party, I joined the national campaign against Britain joining the Euro. The pro-finance and little Englander Tories felt the need for a bit of breadth and so invited Euro-sceptic former foreign minister David Owen, a couple of anti-European Labour MPs and a representative from the Green Party to join them.

Around the same time I published a chapter in a book called Implications of the Euro: A Critical Perspective from the Left. In my chapter I discussed the ways that a single currency would force the pace of political change in a way that the institutions could not follow and would alienate the peoples of the countries involved. This, and the growing tensions between nations that would be created, could threaten the future of the European project as a whole. The self-interest of finance could overwhelm the common interest of peace.

This morning I believe we have seen these predictions come to pass. This is why I believe that David Cameron was right not to join the treaty although, just like the Tories on the anti-Euro committee a decade ago, we could not be further apart in terms of the economic route Britain should follow. Cameron's interest is almost entirely to protect the City and to avoid its spivs and speculators from being forced to consider the social consequences of their actions. However, some in his party are articulating concerns about democracy that I still believe have merit.

It is tempting to believe that the European institutions might impose acceptable standards on the City, just as they have forced us to improve our environmental standards and reduced exploitation at work. But the problem every time has been that we have not had the power to make these decisions democratically. We do not elect people with sufficient power to make decisions at the European level and so these decisions have no more political authority than the current unelected prime ministers of Italy and Greece.

The democratic deficit is more threatening to the aims of the EU than the collapse of the euro. For many years the single market and then the single currency were ambitions driven by business to serve its interests. They have utterly distorted the institutions of Europe and have alienated many of the people of Europe from this organisation that was designed to protect their peace and prosperity. How else can we interpret the huge votes in many of Europe's most loyal members for parties of the nationalist right?

Although the details of the new treaty are as yet unclear we do know that it will involve allowing unelected European officials to set levels of spending and rates of taxation in countries over which they have no democratic mandate. The Euro always constrained monetary policy and therefore reduced the room for manoeuvre in terms of fiscal policy. But as the fiscal straitjacket is imposed, and austerity follows, it is Europe and the other nations that make up the continent that will be blamed by the citizens of the countries who suffer.
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Divided We Fall

It is rather ironic that the main question the media has drawn from the latest publication of Social Attitudes in Britain is whether we are more Thatcherite now than we were in the days of Thatcher. If we were we would certainly not have these data to mull over, since Thatcher was notoriously opposed to social research and abandoned the most valuable tool for the social researcher: the National Child Development Survey, as well as virtually eliminating sociology from our universities.

So having survived the Thatcherite axe the social researchers, though privatised, are still funded to tell us that we care less about each other than we used to and that we have utterly lost faith in our public institutions. While we did hear on the BBC about the fall in support for a government role in redistributing wealth we did not hear about the decline in trust for that institution itself: from 72% to 49%. The politicisation of the BBC has destroyed its role as a public-service broadcaster. The only public institution to have gained trust is the National Health Service. There are no data about the extent to which people's faith in statistics has been undermined by the privatisation of those who seek the data: NatCen (a company limited by guarantee) would have no interest in such a question and its results would not reach a high market value.

This sort of data is, as the Spanish say of history, a field in which all can make hay. I would be interested to see some socio-economic breakdown of the responses to the questions about welfare. It seems that those most vulnerable, including many dependent on benefits themselves, are some of the most vociferous in criticising the dependency culture. This represents another example of the cognitive dissonance that is a necessary skill to survive in late-capitalist Britain.

The media emphasis was on the declining levels of support for redistribution, which was matched by a growing sense of injustice about the unequal way in which hard work is rewarded. This chimes with the findings of another report released this week, by the OECD. Called Divided we Stand it rang alarm bells about the negative social consequences of rising rates of inequality withing societies. Hardly the message one might have expected from the club of the world's richest nations and a traditional cheer-leader for globalisation.

Angel Gurría, OECD secretary-general, is quoted as saying that 'the social contract is unravelling', and this seems to be reflected in the responses to the Social Attitudes Survey as well. The interesting question is why the OECD should suddenly have become interested in the social impact of growing inequality. The real struggle is between the greedy and thoughtless elites and those who realise that capitalism has always relied on the consent of the masses and that without a social contract that consent cannot be guaranteed.
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Poor Standard of Credit Rating

The delight about the rapprochement between Merkel and Sarkozy was short-lived, being undermined almost immediately by a threat from the credit-rating agency Standard and Poors. How are we to interpret these events?

The estrangement in the Franco-German affair was the result of Merkel taking a hard line on monetary policy and refusing to sanction the direct creation of money by the European Central Bank to ease the debt problems of the 16 other Euro members. Apparently yesterday she relented on this, allowing a relaxation of monetary policy in return for a new treaty imposing debt restraint on the Eurozone members.

In response to this a downgrading of the quality of the debt of most Eurozone countries might seem reasonable. But why Germany, which is clearly capable of paying its debts? It appears that this may be more an act of revenge for Merkel's previous insistence that bond-holders must bear some of the cost of their risky investment decisions. The Greek hair-cut was the last stand of a politician who would not accept that the innocent would bear all the pain. Germany will now be punished for the losses this brought to financiers, its own national debt now attracting higher interest rates than the state of its economy demands.

More fundamentally we might question why the US and UK, who are far more debt-ridden and whose economies are struggling much more than that of Germany, are not being threatened in the same way by the markets. The huge money-printing operations of both the Fed and the Bank of England makes investment in these countries far more risky, as does their lack of real production and their low rates of growth, and yet they are not the target of the credit raters. The conclusion is clear: the credit-rating agencies are rating finance-friendly policies, not the strength of national economies and the debt they issue.

More fundamentally the explicit evidence of economic policy being negotiated between politicians and rating agencies makes more urgent the need for politicians to have the courage to articulate an alternative and to co-operate to reclaim the democratic power to determine the direction of their own economies. We need to find a way through this present crisis that is compatible with democracy, not just compatible with the wishes of market investors. If alternative views are not articulated then we will be heading for a political rupture rather than the evolution to a more stable and equitable economic model that our happiness and well-being requires.
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Creating New Economists

I had a very interesting experience over the weekend while attending university open days. I was enquiring from a young woman encouraging people to take economics how pluralist her course was. She really seemed unable to understand my question. She responded that they taught 'normal' economics. I asked her if this meant neoclassical or whether they also had space for classical or Marxist varieties. She was simply unable to answer.

This is the problem the discipline faces: really nice, well-motivated people who have no conception that there might be other ways of thinking about economics than in terms of supply and demand curves and the marginal analysis. To address this problem the Association of Heterodox Economics is running training in alternative methods for economics, beginning with a course of training for researchers.

The postgraduate workshop on research methods will take place at London Metropolitan University on 10th and 11th February next year. It is funded so places are available free for students. Workshop topics will include:

· Reorienting economics to match method with social material

· Open system methodology in Economics

· Grounded theory in Economics

· Mixing quantitative and qualitative data

· Qualitative data analysis

To book a place you need to contact Andrew Mearman: Andrew.Mearman@uwe.ac.uk.
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Carbon Floored

However many cheers we decide to cheer in response to Australia's introduction of a carbon tax , it is an encouraging sign that a country dominated by mining and energy interests and one of the highest carbon polluters is introducing an unpopular policy. What about the UK? Should we be arguing for a carbon tax here? Interestingly, it appears that this discussion is already underway, although in strong contrast to the situation in Australia, it is happening between the government and business, with little or no public debate at all. It is also happening without any mention of the word tax, and yet it is hard to find any other interpretation of the consultation document about a 'carbon price floor' published this March.

The first graphic illustrates the need for such a 'price floor'. It shows the price at which carbon was trading (bear with me on this nonsense) during the first phase of the EU's carbon trading scheme. The collapse in the price in 2007 resulted from the over-issue of a permits as a result of industry lobbying. There were more permits than companies needing to emit CO2, hence no scarcity, hence no price and the market failed.

The second graphic illustrates the government's proposal to use the Climate Change Levy to create a predictable upward trend in the 'price' of carbon to give a clear signal to industries reliant on fossil fuels that they had better increase their efficiency and/or shift their source of energy. This is a purely indicative graphic, with no suggested price, although later the document suggests 'Three illustrative carbon price scenarios for the UK power sector: £20, £30 and £40/tCO2 in 2020 rising to £70/tCO2 in 2030.'

This is one of the major problems with carbon pricing as a solution to climate change: we have no idea what the price should be. Real solutions to the problem of excessive emissions begin with a scientifically determined cap, and then find some way of sharing out the emissions the cap implies. Trading leaves the field wide open for industrial emitters to lobby to increase the number of permits available, and hence fix the market price. We can see from the first graphic that the current carbon price in the EU system appears to be stabilising at around €15 per tonne. As one of my students recently pointed out, given that our individual carbon quotas are around one tonne per year, and our actual emissions are 2.5 times that, he could easily afford to pollute to his heart's content, even on a student income.
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Enclosure 3.0

The role of McKinsey, the US-based management consultants, in spreading the new gospel of corporate capitalism around the world has been widely noted. A new report now makes clear how the creation of the concept of 'ecosystem services' was always, as some of us have long believed, a step towards the commodification and sale of life itself. In spite of the clear evidence that globalisation has resulted in rising rates of inequality and ecological destruction, the report, called Resource Revolution, argues that what the world needs is more capitalism, not less.

Green economists have long been arguing that the two centuries of focus on labour and capital and the sidelining of land has been a mistake. McKinsey have now caught up, concluding that:

'In the 20th century, governments and businesses didn’t have to worry about resource productivity; they could focus on capital and labor. Over the next 20 years, resources must be at the heart of public policy and business strategy.'

The report provides a range of scarey statistics about rising population and increasing demand for resources, but then reassures readers that these offer tremendous opportunities. Unsurprisingly given its source, the opportunities are for businesses to take control of global assets and then organise their distribution. This is justified by the claim that the McKinsey model can offer the necessary increase in resource productivity.

Although couched in 21st century language, this is precisely the same argument made by the 18th-century improvers, who provided the intellectual justification for the theft of land during the Enclosures. Then, as now, the role of politicians was limited to freeing up the market ('unwinding subsidies'), making capital available, guaranteeing property rights. Oh yes, and providing safety-nets for those 'very poor people' who may lose out to deal with change. Perhaps we could ask McKinsey to hold a public meeting to discuss their findings - I'd like to suggest we book the Speenhamland Village Hall.
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High Hopes?

Last week the High Pay Commission reported the results of its detailed survey of the structure and culture of remuneration in some of our largest companies. Yesterday's headline in the Independent ('The rich get richer and the poor get poorer') may result from the decisions about public spending made by the Chancellor, yet the origin of the huge increase in inequality in our society is in the way pay setting takes place in the private sector.

Perhaps it would not be going to far to conclude that while the Tory governments of the 1980s and 1990s liberated the private sector to pay top executives out of all proportion to their performance, it is the current coalition government (which has never had a majority of support) that is undermining the redistributive policies that previously held inequality in check.

The graphic illustrates the differences in pay between teachers (£34,476), cleaners (£7278) and higher level civil servants (£163,000), none of whom come anywhere close to the average pay of the CEOs of FTSE 100 companies, at £4,200,000. Perhaps even more striking is the relative increase in the pay of top executives between 1980 and 2011. The Barclays executives have seen their pay rise by nearly 5000%, while those of BP have received increases of more than 3000%.

The report is a useful source of data that helps inform the debates we are having, in these times when the struggle for value within capitalism is becoming more explicit. The recommendations for change, by contrast, are surprisingly weak. Putting employees on remuneration committees is all very well, but unless they are in a majority they are likely to be intimidated and their views dismissed. Similarly, forcing companies to publish pay ratios will aid transparency, but amongst the shameless people who head our companies it is unlikely to bring any change.

A government really concerned about inequality and the pernicious effects of high pay could easily introduce a tax regime that would make pay above some upper limit, say £1m, meaningless, since it would all be reclaimed for the public purse. But then that sort of government would be unlikely to reach power in our less-than-democratic political system.
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Defending Dissent

In support of the courage of dissenting economists I posted the news that Clive Spash had been forced to resign from his post at Australia's publicly-funded research body CSIRO almost exactly two years ago. The political disagreements over how Australia, one of the greatest carbon emitters per head of population, should address its climate sins, has resulted in the carbon tax also discussed recently on this blog.

The behaviour of CSIRO has now reached the Australian parliament, with questions raised over CEO Megan Clark's involvement with financial organisations involved in carbon trading and the fact that Simon McKeon, executive chairman of Macquarie Bank’s Melbourne office, was appointed as CSIRO’s chairman. In connection with the paper 'The Brave New World of Carbon Trading' that was at the heart of the dispute, Senator Colbeck asked:

'CSIRO’s internal review concluded that the original paper did not report new research or present empirical evidence to support all of the authors’ conclusions. The paper was also viewed as offering opinion on matters of government policy by applying a critique of neoclassical economic theory to the ETS. Therefore it was not approved for publication. Were those issues to have been rectified as CSIRO strived to do with Dr Spash, CSIRO would have supported the publication of that paper and any public comments that related to the papers findings.'

As Peter Earl notes in his post on the Real World Economics blog:

'This organisation apparently rejects institutional analysis, historical analysis, descriptive analysis and policy analysis . . . it is now evident that the fact that [Spash's] critique was levelled against the use of neoclassical economics as foundations for the policy was the heart of the problem. Their statement explicitly supports neoclassical economic theory and rejects anything critical of that theory because it is being used to support carbon emissions trading. According to the CSIRO this was not about the content or politics!'

This is a rare explicit statement of the role that neoclassical theory plays, much more one of catechism than of scientific theory. As the global economy spawned by four decades of neoclassical theory founders between the Scylla of ecological disaster and the Charybdis of the renewed credit freeze, we need thoughtful pragmatic economists like Spash more than ever.
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OMG

The Guardian columnist Simon Rogers has produced a useful graphic, illustrating how the changes to growth forecasts announced by Osborne in the autumn statement affect our national borrowings.

This is truly scarey, especially if you notice how the GDP predictions in the later years have clearly been fixed to keep the borrowing possible in the next couple of years. As the predictions move through time it is clear that they lose contact with reality and are created post facto to make the numbers work inside the Treasury. What we will really be facing in 2014 or 2015 if we carry along the path that Osborne has set does not bear thinking about.
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A Matter of Life and Debt

There has always been something about the nature of pension calculations that is faintly unsavoury and few roles in life can be as unattractive as that of the actuary. While we all take a vague interest in our life expectancy as well as our life expectations, we frequently balance these with superstitious and childlike attempts to ensure our health and well-being, whether these take the form of prayer or sporadic bursts of jogging. For the actuary, the minute calculation of the likelihood of death from a range of causes is the bread-and-butter of life.

On Wednesday we will see millions of the people who ensure that we live long and healthy lives, and that we enjoy high standards of well-being, going on strike to protect their own security in a retirement they hope to live to see and to enjoy. Investing in a pension is itself a gamble, since a significant proportion of people die before reaching the age of 65. As retirement ages increase and the pension funds those working in the public sector have saved become the subject of the acquisitive attention of politicians, the risks can only increase, making the prudential decision to invest for your old age a much less appealing one.

A rational government would applaud the regularity with which those working for the public sector save for their old age, rather than attacking the union officials who encourage them to do this, and then defend the conditions under which those savings are paid back to them in retirement. Such a government would also value the contribution to the life of the nation made by these servants of the public, rather than consistently downplaying it relative to the 'wealth creation' of the private sector.

More typical of private-sector motivation and value-system is today's news that Rolls Royce has agreed a 'longevity swap' with its pension provider, meaning that it is gambling against its employees ability to live a long and healthy retirement. The company has transferred its unwillingness to countenance a large number of retirement years on the part of its former employees to Deutsche Bank financial services. As pension shifts from being a system of care and mutual support to one of risk and financial reward, one cannot help wondering how long it will be before we are offered a cash incentive to do the decent thing, and make away with ourselves before our allotted time. A moral hazard if ever there was one.
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Speaking Truth to Power

I have an exciting day this Wednesday and if any readers of this blog would like to join me for part of it that would be very welcome.

Back in the summer I put together some evidence for the Environmental Audit Committee's Inquiry into the Green Economy on behalf of the environmental thinktank Green House. As a result I have now been asked to give evidence to the committee members, who will ask me questions about how we might move towards a green economy.

This is, frankly, rather daunting, and it doesn't help that the sessions take place in the Thatcher Room of Portcullis House! My job appears to be to sit in the heart of government and tell them that the economic model we are working with is not only unsustainable but unjust and unstable into the bargain! The key target of government policy is entirely misguided.

In preparing for this I have come across a very interesting document called Enabling the Transition to a Green Economy. We can celebrate a small victory in that the draft version of this document was labelled as a Roadmap, something Green House criticised in our evidence. Like the report 'Keeping the Lights on' about energy a few years back, it makes clear the mental barriers to a sustainable future.

This report is not that encouraging, clearly identifying business rather than people as the key partner in the transition to a green economy. It focuses on efficiency and competitiveness, with no mention of the structural problems of a capitalist, growth-based economy. This is my clear task for Wednesday, and in the face of the evidence of the hegemony of business it is no wonder I feel rather daunted.

After the Commons I am moving down river to speak to the Occupy London protestors at their Tent City University. With luck I may be moved into the Bank of Ideas at the newly occupied former UBS building. I am calling my presentation 'The Audit-city of Hope', which doesn't quite work but you know what I mean. I hope to radicalise the demands beyond 'What do we want?' 'Better regulation of the banking sector'; 'When do we want it?', 'Within a reasonable timeframe'. My focus is going to be on building the energy to establish a national audit committee to find out who we owe the debt to and decide what proportion of it can reasonably be repaid.
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Rebalancing, What Rebalancing?

I write this post as a councillor in the local authority that faced the largest cut in its central government funding in the current funding period - a full 28% over this and next financial years. I assume this is a reward for having a Tory council and having just elected a Tory MP, as well as being a debt-free local authority. I have to hope that the good voters of Stroud draw the right conclusions and do something different with their votes next time.

Recent research from Newcastle City Council has made me feel both better and worse. Published in today's Guardian it makes the partisanship of the present government plain to see. Traditional redistribution measures, including the sharing of local authority rents and local business rates, are being abolished, leaving the richer parts of the country free to profit while those in the deindustrialised north in particular struggle. Northern cities and boroughs are losing £150 to £200 per head, while the leafy boroughs and shires of the south lose between nothing and £50 per head.

The inequalities are magnified by the fact that poorer areas are more dependent on public-sector jobs, which are some of the few well-paid jobs in northern cities that once depended on skilled manual jobs. The massive cuts to the public sector will also hit these areas disproportionately hard.

From a macroeconomic point of view this makes plain the massive withdrawal of liquidity from the local economies up and down our country that is taking place. The paradox of thrift is alive and well in Stroud, as councillors and officers alike respond to fear and threats of future austerity by leaving posts unfilled and cutting spending to add money to the growing reserve. The shade of Keynes haunts our council chambers, but nobody is listening.
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Argentina Learns not to Pampa Financiers

As the credit noose tightens, it is not surprising that commentators are seeking examples of countries who found their way out of unrepayable debts - and lived to tell the tale. In the case of Argentina, whose debts at the time of its default in 2001 were $81bn. - a record for the time although dwarfed by current debts - life after debt has proved to be a very positive experience.

The story is told in a couple of podcasts made by Peter Day for his World of Business series on Radio 4. A paper I wrote about Argentina's barter networks introduces this story. Caught in the orbit of the US dollar, Argentina was unable to allow its currency to adjust to the needs of its own economy, much as the smaller economies of the Eurozone are today. This culminated in a financial collapse in 2001, with the loss of huge amounts of savings by the members of Argentina's middle class.

What becomes clear from the podcast is that clever young economists within the Argentinian finance depart and/or central bank were alive to the causes of their crisis and took political control. As a recent report (pp. 58-62) indicates, refusing to pay socially impossible debts was a positive decision both in Argentina and in Russia. Default was the first step, followed by a decision not to become involved in debt again. Similar decisions by other Latin American countries actually threatened the future of the IMF - since without debtors a bank is defunct - until the credit crunch in Europe gave it a new lease of life.

With no possibility of receiving credit Argentina had to live from its own resources, which turned out to be a blessing rather than a handicap. With a massive and fertile land mass, and a popuation of only 40 million well-educated people, Argentina had nothing to fear in its debt-free future. As food and fodder prices have boomed, so has Argentina, with its government benefiting from a 35% export tax on soya production.

Another interesting lesson is the rapid growth in the 'informal' sector, which is a typical feature of many poor economies but less typical of a highly sophisticated economy like Argentina. This may also be a feature of the future of European economies. On the positive side it can be interpreted as self-provisioning and self-reliance, but its shadow side is exploitation and precarity.

The sting in the tale of the story of Argentina is that its economic success has enabled it to seek foreign finance. The credit vultures are circling and seeking their share of the natural wealth of the country. How far will Argentina's politicians remember their lesson and keep control of their national wealth?
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24/7 and Other Fallacies of Modernity

For all our technology and the vertiginous nature of our consumption, we live mean lives. In his last book the great commentator on 20th century life Ivan Illich bemoaned the loss of our senses, by which he did not mean that we had taken leave of our senses—although he might have done—but that we have lost much of the sensory richness our ancestors enjoyed. He gives as an example that 'Dozens of words expressing the nuances of perception have fallen into disused. In terms of the sense of smell, the victims of this process have been enumerated: of the 150 German words that indicated variations on smell that were used by the contemporaries of Durer, only 32 are still in use today.' (p. 197)

And for all our presumption of what Val Plumwood has called a 'mastery over nature' we are still thoroughly dependent on the productivity and cycles on the natural world. We take the phrase 24/7 to be an expression of our hubristic conquest of time, of being a civilisation that never sleeps. In reality, however, it demonstrates precisely the reverse. To choose a week of seven-day weeks and 24-hour days is an attempt to force some kind of uniformity on the free-flowing pattern of seasons. Some calenders still follow years of 13 rather than 12 months, enabling a more equal number of days per month.

The need for an intercalary day ever four years demonstrates the problem of trying to accommodate the cycle of the moon with the cycle of the sun, and provides further evidence of nature's refusal to fit within the rational, orderly systems through which we choose to arrange our lives. And this is to say nothing of the position of Easter, a festival whose ability to retain its meandering pattern through our spring is the most cheering vestige of a time when seasons ruled our lives.

Bioregionalism is the reintroduction of place into political economy: personally it is about learning about place in the world and perhaps the universe. We can see many ways in which the relearning of ourselves in relationship with our local places might impact on the understanding of political economy. How might such a naturally embedded approach to living facilitate the shift from the culture of over-consumption that is threatening our planet?

One thing that the bioregional economy might offer in exchange for the material consumption of the globalised capitalist economy is a strong sense of identity in relationship with our local places and the other people and species we share them with. This should be balanced by a reassertion of our power within the provisioning systems of our contemporary world: a reassertion of the politics within political economy, and a realisation of the need to put the economy in its place.
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The Silent Coup

For some time I have been worried about the political consequences of the social unrest in some of the Mediterranean countries whose history of democracy is limited and whose political cultures are unstable. I had been watching out for action by their militaries to quell street protests or a greater role for the military in political life.

But during the past few days I have realised my foolishness. The coups are happening in an entirely civilised way, carried out by men in suits rather than men in fatigues. An online dictionary defines a coup as 'The sudden overthrow of a government by a usually small group of persons in or previously in positions of authority.' In the case of democracies it can be taken to mean the replacement of one government with another without recourse to elections.

The first evidence that this was becoming the preferred strategy of the financial elites came with the removal of Papandreou when he had the effrontery to announce that such a major decision as subjecting his people to financial rule by the IMF would require their agreement through a referendum. Within 24 hours he had been ousted and today we hear he is to be replaced by Papademos, who is being politely referred to as a 'technocrat' but whose banking credentials are the reason for his appointment.

As a former vice-president of the European Central Bank he is considered a safe pair of hands by the holders of financial assets. Since he is not a member of the socialist party, who won a majority at the last election, he could hardly become the leader of such a government. In Orwellian style, the government is to be titled one of 'national unity'. In an affront to democracy Greece will now be led by a man who has never held elected office.

Italy also seems to be lurching its way towards a 'government of national unity' again headed by an unelected banker. Last evening Mario Monti was made a senator for life by Italy's President, a step seen as preparatory to his taking over as Prime Minister. He is a former politician and was European Commissioner for the single market, which included the finance brief. The total of governments that have fallen as a result of the financial crisis has now risen to five. As the financial elites jostle to protect their ill-gotten assets the main loser appears to be democracy.

The lack of democracy in our own country is blatant and was the real cause of the expenses scandal. Charging to stand in elections and the continuing and growing bias in the media against any views that question the capitalist status quo is a threat to democracy. But in May 2010 voters did have other choices: their refusal to take them is entirely different from citizens who are being prevented from making democratic choices that might cause a loss in the value of assets being held by the elite, as we are seeing in Italy and Greece.
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McKinsey: The Jesuits of Capitalism

Had you been wondering why, for the past decade or so, all developments in the health sector and most developments in the public sector generally were going against the public interest and in favour of corporate interests. The heavy involvement of global management consultancy firm McKinsey begins to explain this failure of democracy in such a crucial area of our lives.

Barbara Panvel has been studying McKinsey's activities for several years now. In a recent post on her Political Clean-up blog she explains the history of infiltration of the Labour Party by these Jesuits of capitalism, with their free-market catechism and their worship of the God of Greed.
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Why is the Euro so Strong?

With chaos in the negotiations with Greece, rumours of potential bankruptcy in Italy, and real concerns about the economies of Portugal and Spain, you would expect the currency that binds all these countries together to be falling through the floor. The graphic indicates that, over the past calamitous year, the range of movement has been between 1.48 and 1.28, and that at the value of the euro is hardly any lower than it was a year ago.

I was stung by a comment on one of my blogs from last week, complaining that I was being incomprehensible and jargonistic, so here I am going to explain simply why I think this is the case. This comes down to a discussion about what I have been calling for several years the 'currency wars'. When faced with hard times countries seek to return to growth and one means of doing this is to increase the volume of exports. Having a weaker currency makes your exports cheaper to the countries who buy them. So countries have been deliberately reducing the value of their currencies.

There are various ways of doing this. Some commentators claim that the US policy of quantitative easing is deliberately designed to achieve this end. Certainly, putting a lot of extra currency into circulation should reduce the inherent value of that currency. A more obvious way is just to lower your interest rates: since interest rates are effectively the price of money, this is an automatic means of making your money cheaper and causing its value relative to other currencies to fall.

To keep some sort of idea of the relative value of different currencies we need a standard, sometimes called the numeraire. In the 19th century gold was used as this standard, but this had all sorts of distorting effects on economic activity - primarily the fact that you couldn't increase economic activity unless bare-chested chaps deep in the bowels of the earth were digging up enough of a golden metal, which was frankly completely irrational, although emotionally appealing.

At Bretton Woods, the conference where the victors in the Second World War negotiated the shape of the world economy in the decades to follow, it was agreed, reluctanctly, to allow the dollar to take this role and to become the world's reserve currency. The consequences were hugely beneficial to the US in terms of imports, but ultimately destroyed its productive economy.

As the power of the dollar wanes, the other currencies that traders consider strong enough to take the role of a global reserve currency - the Japanese Yen, the Swiss Franc, the euro, and even sterling itself - have all become more attractive. This explains why we are not facing the speculative attacks that Greece is, not the performance of George Osborne at international conferences. As each currency becomes attractive to traders seeking a safe haven, the authorities that control its value seek to undermine it, since they do not want to suffer the export problems that result from having a highly valued currency.

In this form of reserve currency, the euro is still an attractive option and its interest rate of 1.5% now seems high by comparison with just 0.5% in the UK and 0.25% in the US. In addition, its competitors in terms of being the currency of last resort would resist its value falling too far, since that would require them to take more of the strain. This has led to the currency wars, which are a form of trade war in disguise. Because such wars cause international tensions, a solution that involves the creation of a neutralreserve currency, run for the benefit of the world's people and not an individual state, has long been my preferred option.
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Economics Students on the Move

How our economy will be organised in the future relies heavily on how our future economists understand the world and its workings, as well as their values. Economics education is obviously, therefore, of fundamental importance. The movements to reform economics education, shifting it from the realm of theology into one of pluralism and genuine debate, have been followed with interest by this blog.

So it is with delight that I heard this morning of the revolt by Greg Mankiw's students. Manikiw is the author of one of the most widely used introductory textbooks, as described by Geofrey Hodgson:

'Gregory Mankiw’s Principles of Economics, in its five versions, has internationally been the dominant basic text for more than a decade. Also its author was chairman of President Bush’s Council of Economic Advisers from 2003 to 2005.'

Here is the letter his students at Harvard, paying $40,000 for the privilege of biased and distorted information, presented to accompany their walkout from his introductory economics class, according to a US blog:

'Dear Professor Mankiw

Today, we are walking out of your class, Economics 10, in order to express our discontent with the bias inherent in this introductory economics course. We are deeply concerned about the way that this bias affects students, the University, and our greater society.

As Harvard undergraduates, we enrolled in Economics 10 hoping to gain a broad and introductory foundation of economic theory that would assist us in our various intellectual pursuits and diverse disciplines, which range from Economics, to Government, to Environmental Sciences and Public Policy, and beyond. Instead, we found a course that espouses a specific—and limited—view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today.

A legitimate academic study of economics must include a critical discussion of both the benefits and flaws of different economic simplifying models. As your class does not include primary sources and rarely features articles from academic journals, we have very little access to alternative approaches to economics. There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory.'

The students undertook this action to express solidarity with the Occupy Wall Street movement.

Mankiw is a populist, using his own blog to blandly reassure about the existing economic model, blithely ignoring its destructive impacts and its lack of connection with reality. The fact that his own students are alive to this and are following the example of students in Paris and Cambridge in calling for an economic education that takes seriously the problems of the world we live in is hugely encouraging.
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Subverting the Agenda

An opportunity has arisen to test the nature of the democracy we live in. The powers that be have magnanimously agreed to allow we mere citizens to set up petitions on the Direct Gov website. It was this process that led to the fiasco of the debate over the European Union. But will the revolting peasants be permitted to enquire into the tax affairs of their betters?

To test what happens when more than 100,000 people sign to require that to happen we need you to sign the that has been launched on that very site. Please sign today and circulate the link far and wide.
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Politicians Paint Themselves into a Market Corner

The shenanigans over the rate of the feed-in tariff is a good example of the way in which politicians have, in accepting the myth of the omnipotent market, limited their room for manoeuvre and made themselves incapable of taking the steps necessary to ensure social and environmental benefit.

We can argue about the appropriateness or otherwise of the 43.3p set by Labour for the rate of the feed-in tariff and whether it was just a deliberate banana-skin for the incoming Tory government, but the broader question of who should pay the cost is what really demands attention. The transfer of money uniformly via energy bills in a market dominated by an informal cartel and from those who can least afford to pay, towards those who have the spare resources to buy solar panels to install and would then receive the tariff was always a questionable scheme.

Imagine a world where the production and distribution of energy was in public hands - local government rather than national, ideally - and where the cost of energy rose as you used more, rather than costing most when you use least. The extra money charged to heavy energy users could be made available via grants to local people, or used to directly fund the installation of solar panels on the roofs of the tenants of social housing, who are least able to pay their energy bills. You have neatly created a just solution and simultaneously generated sustained demand for solar panels, reducing costs and making them available at a lower price to those who can afford to buy their own. This is a political solution, but it is hardly communism.

In the end this decision to set a price to underpin the development of a market for solar in the UK, immediately followed by a reversal, is bad for business too. It gives a mixed message which is exactly the opposite of the clear signal businesses need to make investment decisions. It will have negative knock-on effects in other areas, as managers doubt political commitment to the transition to a green economy.

As the myth of the market itself corners the market in ideas, we see the consequences in terms of inert and impotent politicians, and we all pay the social and ecological price.
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Green Queasing Gathers Support

Last year Colin Hines and Richard Murphy of Finance for a Future called for money to be into businesses helping us make the transition to a sustainable economy, a call which has been by Green MP Caroline Lucas and repeatedly on this blog. If we are to create money it needs to generate truly effective demand, not just disappear into banking black holes.

A recent post to Power Switch, the UK's peak oil discussion forum details how such a scheme might work. Meantime, more rhetorical support was offered by Tim Jackson during his presentation to the Schumacher centenary festivities in Bristol earlier in the month.

Meanwhile a useful piece of research commissioned by WWF indicates another important direction that manufactured money should be directed: towards transforming our energy grid towards sustainability. The report's encouraging conclusion is that:

'This report makes it clear that decarbonising the UK power sector by 2030 in an environmentally sustainable way that avoids reliance on risky nuclear technology and high levels of unabated gas is achievable without compromising the security of the UK’s electricity system.'
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Mammom 1; God 0

The resignation of Giles Fraser, Canon Chancellor of St. Paul's Cathedral, is a clear sign that things may be about to get rather nasty for the economic justice activists claiming the church's sanctuary in the heart of the City of London. From the start he had welcomed their protest and made them welcome inside the church. The church hierarchy decided to to close the church to put pressure on the protestors - a decision that seriously backfired. Once it closed its doors a conflict seemed inevitable and Giles Fraser has been the casualty.

The worrying signs began with a news story, emanating from the cathedral, that it was losing £20,000 per day because of the closure. This immediately raised several questions: how could a house of God be so lucrative? Why had they voluntarily closed their doors to ensure that this income would be lost? And perhaps most important of all: what would Jesus have thought of all this?

Most historic churches now include a 'gift shop' which sells a range of tat to enhance church funds. While live chickens no longer change hands and the trade is always seemly and made in hushed, respectful voices, you still can't help thinking of Jesus overturning the tables of the money-lenders and questioning what should have been a house of prayer becoming a den of thieves.

This is a shame, because the various parts of the Christian church have a wonderful reputation for taking practical steps towards greater social justice. The fair trade movement arose originally from a Christian inspiration and grew up through the sale of coffee and tea on stalls at the back of churches. A more direct attack on Mammon was found in the work of the Jubilee 2000 movement for the cancellation of debt owed by poor countries, as well as the work of the Christian Council for Monetary Justice.

It seems that the final straw for Giles Fraser was a decision by St. Pauls to join in the legal action by the Corporation of the City of London to sue the protestors and achieve their eviction. We can expect ugly scenes in the City and huge damage to the reputation of the church, as those who are standing up for the poor against an oppressive economic system are battered and bruised on the steps of one of the nation's greatest churches.
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The Eurozone Crisis: A Warning from History

I am thinking of creating my own derivative, called a political default swap. This is how it works. We each choose a country and bet against the length of survival of its government as it tries to introduce enough austerity measures to keep the markets happy. It works like a sort of insurance policy, where the riskier the country, in this case the less able its politicians are to bear down on its people and extort their work to pay bankers' debts, the higher the cost of betting on it.

The manoeuvres by EU finance ministers in Brussels today conceal as much as they reveal and demonstrate that power is balanced between politicians and financiers. This is seen most clearly in the negotiation over the extent to which those who made risky investments in Greek debt will lose their shirts (or their hair). The risk seems to be approaching 50:50.

Harder to agree is how the effects of this on Europe's banks will be accommodated. If the banks take the full hit, the financiers argue, they will become bankrupt, leading to Credit Crunch II: Return of Debtonator. So the bank welfare fund has to be massively increased. We have grown tired of billions, yawn the financiers, we need to move into the zone of trillions.

But where is this money to be found? The devastated citizens of Europe, their bodies already straining beyond breaking point to keep the capitalist wheels turning, can offer no more. Eyes turn to the European Central Bank - can it be asked to create money from thin air, the sort of money bankers like best - power without responsibility? The Germans, with their historical fear of inflation, will not accept this option. The most likely outcome is a solution dreamed up by the very 'quants' who created this disastrous situation: a solution that uses a combination of mathematics and conjuring to make the money disappear through time, emerging at some future date enormously swollen in value.

In his masterpiece The Great Transformation, written in 1944 and reflecting on the last great capitalist disaster, Karl Polanyi describes the contortions that Europe's politicians went through in the 1930s to save the Gold Standard. They seem eerily similar to what we are witnessing today. The system must be saved, no matter what the sacrifice in terms of human lives and political stability.

In the 1920s financiers inflated a bubble which burst in 1929, but through the 1930s the economists defended the position of laissez-faire capitalism whose social costs were unacceptable to the people of Europe. The result was political polarisation, economic chaos and the rise of fascism. This crisis has already provoked the collapse of the Slovakian government, the government of Iceland, and the government in Ireland, and the Italian government could soon follow. Somehow the political system is still holding in Greece, but the massive civil unrest leaves it vulnerable. So, will you take my offer of a punt? Which country's political system would you bet on surviving this financial turmoil intact?
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One Cheer for Australia's Carbon Tax?

During our summer of discontent there was a very discontented debate happening on the other side of the globe over whether or not Australia, one of the world's worst carbon offenders in terms of emissions per head of population, was going to be the first member of the OECD to introduce a national carbon tax. In spite of the lobbying, lies and loss of three leading politicians, a carbon tax was introduced. That in itself seems to me to be worth celebrating.

It has also led to the production of some trite but rather useful short videos, made available via the Australian government's website. In typical aussie style, these make the points without any fuss - a far cry from what we could expect from our own DECC. These could be useful to share with friends and colleagues who find the rather abstract idea of 'pricing carbon' difficult to grasp.

The carbon tax is a policy proposal emanating from the Australian Greens, who are celebrating its acceptance by the ruling coalition. The fight over whether to control emissions through a trading system, which effectively gives the value generated by the right to pollute to companies - the sort of system we have in the EU - or through a carbon tax, where the value goes to governments and can be shared with citizens who will pay higher fuel prices, has been a bitter one, with Bob Brown becoming a hate figure amongst Australia's huge mining companies and in the Murdoch press.

Due to the power of this lobby, there are a large number of accommodations and compromises, limiting the effectiveness of the tax. The price of carbon, at around £15 per tonne, if massively too low, and the money raised has been used to buy off both citizens facing higher bills, but also the very companies that are guilty of producing the pollution. The target for emission reductions - at 5% by 2020 - is also totally unrealistic.

But Julia Gillard has looked weak since she knifed her own party's leader PM Kevin Rudd, and in that context this is a significant political victory. It also represents a historic victory for the Australian Greens, who first proposed a carbon tax for their country. We should build on this start and argue for carbon taxes in our own countries.
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Why is it easier to imagine the end of the world, than to imagine the end of capitalism?

This is the title of a new book published in Czech and it encapsulates an important thought given the extraordinary contortions we are witnessing at the G20 and amongst Eurozone leaders. It has been clear for several years that the money created during the banking boom was produced from thin air and could never be repaid, yet those amongst the elite who nominally hold this value are refusing to relinquish it now that their bubble has burst.

Initially, the extorted money from governments to pour into the debt black holes and maintain the value of their assets. This merely had the consequence of threatining the financial stability of the countries involved, in the case of Greece and possibly Portugal and Spain to the extent of bankrupting those countries. Now that more of the debts are coming home to roost the asset-holders are seeking another round of welfare payments from the 99% who are suffering the austerity cuts their profligacy has caused. No wonder that European capitals are filled with angry demonstrators.

The impasse is the result of a struggle amongst capitalist elites. On the one side we have the US, Christine Lagarde, the US puppet at the IMF, and the UK, the traditional US poodle. This group seeks to maintain the power of the dollar in the global financial system. On the other side the rising economies of China, Brazil, India and Russia are proposing a greater role for the IMF, which should no longer respond solely to US dictat.

Without a strengthening of the IMF bailout fund money must be found from the Eurozone countries to provide money to support European banks when their Greek assets are obliterated, some time later this month. Otherwise some, or perhaps all, the European banks and a large number of its countries, will become bankrupt. If European citizens cannot be persuaded to accept the use of public money in this way, then control of European and US financial institutions may have to be ceded to the sovereign wealth funds of the BRIC economies - the only group capable for finding additional money to invest.

Meanwhile the people of the world are calling time on an economic system that maintains the value of the corrupt assets of a tiny elite while the vast majority of the world's people suffer. The inchoate mass of political opposition camped around the world's capitals is waiting for a political leadership with the courage to proposed a new economic system, and for a media prepared to break the strangledhold of its pro-capitalist owners.
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Public Sector Jobs Carnage

Job losses in the public sector are happening much more rapidly than predicted, which will have serious knock-on effects in terms of reducing demand in the economy as a whole, as well as reducing tax payments and increasing the amount of money needed to repay the deficit. This is according to figures from the Chartered Institute of Personal and Development and published by the BBC this morning. Put together with the misguided comments from Cameron about people reducing their credit card debt, which were later pulled from his conference speech last week, this adds to the growing sense that Conservative politicians do not understand how to respond to the second Great Depression which faces us.

An early political move by the New Ricardians was to create the Office for Budget Responsibility - a figleaf to justify their unacceptable policies. Such an Office only has a reason to exist if it can provide informed judgements about the economy that are also genuinely independent. Yet it has repeatedly produced reports to support Conservative policy, and its predictions have been inaccurate to the point of uselessness.

In November 2010 the OBR predicted that the government cuts would lead to 410,000 job losses in the public sector between 2010/11 and 2015/16, a revision downwards from the 610,000 it had predicted that June. The CIPD statisticians indicate that the original figure was correct. So why did the OBR change it? Was this to support the government in difficult political times?

The hard news for the UK economy is that the risk-averse managers in the public sector are cutting jobs more rapidly than their immediate financial situation demands, so that the number of jobs lost since the beginning of this financial year is five times what the OBR predicted. With projections as far out as that, with consequent impacts on deficit management, what is the use of the OBR?

It proves its usefulness to the government by enabling a Treasury spokesman quoted in the article to opine as follows: 'Half a million private sector jobs were created last year and the independent OBR has forecast that there will be 900,000 more jobs created in the private sector than lost in the public sector by 2015'. But if this forecast is as unreliable as the rest then it provides no basis for policy-making, just an opportunity for the spokesman to save the government's face.

It begins to seem increasingly likely that the OBR is a research unit created to provide statistically impressive but factually inaccurate cover for a government bent on its own destructive course. As such, it is itself a waste of money in these days of austeria. It should either be funded from Tory party coffers or abolished.
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The Apple of My i

Much of the debate surrounding the consumerist culture focuses on the way we are sold objects apparently to satisfy a certain need when really they satisfy a deeper and perhaps even subliminal desire. Beautiful women draped over fast cars persuade young men that they will acquire sexual allure as well as a set of wheels. In this way our desires and needs are themselves distorted, ultimately leading us towards lives of dissatisfaction and longing.

It seems to me that excelling in this process was at the heart of what is widely being called the 'genius' of Steve Jobs. Here is Julian Baggini writing in yesterday's Guardian:

'Jobs's success was built firmly on the idea that you should not give consumers what they want because they don't know what they want. No one thought they wanted the first desktop Mac, iPod, iPhone or iPad before they existed. Jobs repeatedly created things that people came to want more than anything else only by not trying to give them what they already wanted. This challenges the idea that consumer culture inevitably means pandering to the conventional, to the lowest common denominator. Markets are not necessarily conservative: truly great innovations can become popular.'

A companion piece focuses on the 'soft-machine aesthetic' that Apple pioneered, making what had seemed geeky and cold appear friendly and cool: 'instead of chilling you out' they 'glow like fireplaces and nuzzle like digital pets'. Jones admits that he writes articlse on an impractical machine that does not facilitate the process of typing because he is 'captivated by the beauty of this piece of technology'. Jones goes so far as to suggest that the way an Apple computer slowly lights up suggests that is it coming alive.

The moment of the death of the God of such distorting desires has left many a lover of technology open in a way few experience probably do. I am grateful to Jones for laying out what I had long suspected to be the case. Many people, and I would hazard that the majority are male, actually love their personal technology. They relate to it with greater intimacy and trust than they relate to their friends.

There is a narcissistic aspect to this relationship with technology, which I can't help finding in the use of the letter 'i' before the name of the products: istuff is not for sharing, it is for relating to intimately, whether in public or private; it is for gloating over. Jones also admits as much when he writes: 'Perhaps the greatest insight of Steve Jobs, when it came to design, was that the most beautiful, marvellous creation on earth is not the computer, but the person using it.' Not the human race, or the people the user loves, or a tree or a real juicy apple or a minah bird, but the individual who has bought the Apple product.

In his 1996 book The Spell of the Sensuous, David Abram described how a relationship with industrial products diminishes us:

‘the mass-produced artifacts of civilization, from milk cartons to washing machines to computers, draw our senses into a dance that endless reiterates itself without variation. To the sensing body these artifacts are, like all phenomena, animate and even alive, but their life is profoundly constrained by the specific “functions” for which they were built. Once our bodies masters these functions, the machine-made objects commonly teach our sense nothing further; they are unable to surprise us, and so we must continually acquire new built objects, new technologies, the latest model of this or that if we wish to stimulate ourselves. (p. 64)

Natural products, with their endless unpredictability and randomness are, by contrast, stimulating and deeply fulfilling.

It would be easy to dismiss my criticisms as coming from a Luddite or a technophobe but I am neither. I just believe in keeping categories clear: computers are to support us in our work; friends and family are to share love with. There is nothing anti-technological in holding fast to the view that you should approach your computer as a tool and not as a lover, and yet I daily watch friends and strangers caressing their phones. The main reason I am still holding on to an ancient Nokia is that I cannot bear to acquire a mobile that I cannot using without stroking it.

In all the panegyrics the phrase that was often repeated was that Steve Jobs changed our world. Leaving aside the questions about the authenticity of somebody who attempts to portray a whole company of intelligent and hard-working individuals in the image of his own ego, should we not also be asking whether he changed the world for better or worse. With evidence of our disembedding from the natural world and its destructive consequences growing every day, and being matched by evidence of our dislocation from each other, this question seems a disturbing omission.
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