The case for a programme of publicly funded works

I thought I would share some thoughts about the case for a programme of publicly funded works that I think would be part of the answer for Double Dip Britain:

There is nothing economically unsound in increasing temporarily and artificially the demand for labour during a period of temporary and artificial contraction. There is a plain need of some averaging machinery to regulate and even out the general course of the labour market, in the same way as the Bank of England, by its base rate, regulates and corrects the flow of business enterprise. When the extent of the depression is foreseen, the extent of the relief should also be determined.

There ought to be in permanent existence certain recognised industries of a useful, but uncompetitive character, like, we will say, reforestation, managed by public departments, and capable of being expanded or contracted according to the needs of the labour market, just as easily as you can pull out the stops or work the pedals of an organ.

I sometimes fear the increasing evil of casual labour. We talk a great deal about the unemployed, but the evil of the underemployed is the tap-root of unemployment. There is a tendency many trades, almost all trades, you have a fringe of casual labour on hand, available as a surplus whenever there is a boom, flung back into the pool whenever there is a slump.

I can almost see Paul Perrin spilling his warm milk as he reads this nonsense about public works. But don’t have a go at me, Mr Perrin, paragraphs 2, 3 and 4 above are the words of that well-known radical, Winston Churchill writing in ‘The People’s Rights’, first published in 1909.  It is a powerful plea for ‘a great policy of social reconstruction and reorganisation’.  He was at the time, of course, a Liberal. Whatever became of that great radical party …?

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The Greens propose a remarkable budget that exceeds all expectations

I don’t think I have ever seen anything quite like this. The biggest challenge to date for the administration, and what some said would be the end of the City’s love affair with the Green Party, is the UK’s first-ever Green budget.

The budget, difficult though the measures are, is a work of genius, with Jason Kitcat deserving most of the praise. The Greens claim, quite rightly, that their budget is the first to:
• Cover two years, encouraging longer term thinking
Involve all parties in the ‘star chamber’ process of evaluating proposals
Be published early and in so much detail.

The budget, the Greens say, is based on principles aimed:
• To prioritise services for the young, elderly and vulnerable
• To promote efficient use of public money
• To support partnership working with public, private and third sector organisations

The Tories, inevitably, attacked the Greens for the 3.5% rise in Council tax. Tory Leader, Geoffrey Theobald said: “This budget is an out and out attack on the core frontline services that the hard-working residents of this city rely upon. When we were in Administration we were always at pains to prioritise services that made this a city we could all be proud of and the Greens are now putting all that at risk.”

This is a bit churlish coming from the spokesperson of the party that is imposing the most severe cuts in living memory, and the party that is eroding living standards at the fastest rate in history.

The approach to setting the budget is extraordinary, a genuinely open approach, with Labour and Tory councillors being invited to participate at all stages in a process that one senior Council officer said is unlike anything he has ever witnessed in Brighton and Hove or elsewhere, for that matter.

An area where the Tories have attacked the Greens is commercial parking charges, but the Greens have demonstrated that the charges in Brighton, which are going up from £175 to £400 compares favourably to Eastbourne at £420 and Lewes at £1,000.

The use of tables is effective, not least in defending the 3.5% council tax rise. The table shows that this increase is only the second time since 1998/99 that the increase has been below CPI, the third lowest since 1998/99, and lower than anything that Labour implemented. The Tories implemented two lower rises in the past 3 years, including one increase freeze.

The Green budget will be attacked from the left, even from within the Green, where some are asking whether there should be any cuts at all. Jason Kitcat responds: “Some may ask why we need to accept these Government cuts. We don’t accept them, but by law if councillors don’t set the budget, then civil servants will set it for us. We believe that it is better for democratically elected representatives to set the budget in line with their manifesto than let appointed commissioners take control.”

He continues: “We stated in our local manifesto that we would “resist, to the greatest extent possible, the service cuts and privatisation imposed [on us]” and that is what this budget does. By finding a fair balance between efficiencies, reducing services in the most sensitive ways possible and increasing income we are seeking to set a fair, values-led budget.”

You can read the Green’s budget announcement here

The Human Cost of Job Losses

We are all bracing ourselves for the result of the Comprehensive Spending Review when we will know the scale of the cuts e are facing.  Workers in the public sector will, initially, be in the firing line.  But those in the private sector should be equally concerned.  For every job lost locally, there will be one person less spending in local shops, using buses and taxis, and using local leisure facilities.  And with local government cuts, the amount spent in the local economy falls. 

All this results in more job losses and a vicious cycle gather pace.  But that is just the financial fall-out.  The human cost is so much greater.

Michael Moore, in his depressing, yet excellent book Downsize This! refers to research carried out by economists at the University of Utah, that for every 1% rise in the number unemployed, homicides increase by 6.7%, violent crime by 3.4%, property crime 2.4%, and deaths by heart disease and strokes rise by 5.6% and 3.1%, respectively.

VAT is a mildly progressive form of taxation claims Vince Cable as supporters abandon the Lib Dems in droves

According to a poll published today, 48% of Lib Dem voters are now less inclined to back that party, and they  say that their change is as a direct result of the VAT increase.  How has Principled Vince responded.  He writes “No decision to raise tax is taken lightly, but VAT is more contentious than most. One reason is that VAT is often denounced as if it were the most regressive tax of all. However, the truth is more nuanced. As a proportion of expenditure, it is in fact mildly progressive”.

Yesterday I wrote of Cable: “The sight of Vince Cable bumbling and stuttering through feeble and half-hearted defences of his party’s total sell-out of his policies, his sound economic analysis and his principled stand on the banks, is pitiful.  Actually it is beneath contempt”.

Appearing on the Andrew Marr programme, as I write this, Cable dismissed the VAT Bombsell allegation made by the Lib Dems against the Tories “That was during the election campaign” and that the Lib Dems are now in coalition.

I wonder how Cable will justify the latest analysis of the ConDemNation budget.  It shows that the measures will hit the poorest six times harder than the rich.  The poorest 10%, those with an annual income of less than £14,200 will experience a 21.7% cut.  The richest, those with an annual income of over £49,700, with experience just a 3.6% cut.

How could someone who was so right about the banking crisis become so wrong about the impact of cuts on ordinary people?

“No Shock Doctrine for Britain” – a must read blog

There is a great blog “No Shock Doctrine for Britain” that I strongly urge you to follow.  A post on 24th May forcast the shock doctrine of Cameron and Clegg, quotin my favourite economist, David Blanchflower:”

“Top economist David Blanchflower described the announcement of £6.2 billion of cuts as ‘a dreadful day for British people’ – and said they are ‘driven by dogma not by sound economics.’

“Unlike most economists, David Blanchflower – a former member of the Monetary Policy Committee – actually predicted this recession, and called for measures which would have helped prevent it.

“He’s not alone. Bill Clinton’s chief economist (and Nobel Winner) Joseph Stiglitz, recently said: “the economics is clear: reducing government spending is a risk not worth taking.”

“David Laws and his Tory friends have always wanted to dismantle much of the welfare state. And now they are relishing an opportunity to do so.”

Please read the blog and sign the petition to Lib Dem ministers.

Equality of sacrifice? No chance. Cameron, Osborne and Clegg as true class warriors will look after the rich.

David Cameron says that there will be “difficult decisions” on pay, pensions and benefits.  He says that there will be “painful” cuts ahead, but that in dealing with the deficit “our whole way of life” will be affected but not in a way that hits the vulnerable or “divides the country”.  Pull the other one, Dave.  Already cuts are being announced in services for vulnerable people in Brighton and in East Sussex.  Council funding from central government has been cut.  These cuts are being passed on to the poor and vulnerable.

I haven’t used illustrations in this blog before (other than the almost photographic likeness of me).  But this cartoon from the Great Depression, reflects to a certain extent what I think will happen over the next few years.  The mantra will be that there will be ‘pain for everyone’,  ‘We will all be in this together’. and that ‘There must be equality of sacrifice’.

My only disagreement with this cartoon (apart from the gender limitations – in my last post I said low paid women will suffer the most) is that I think the rich and the very rich will benefit from the shock and awe approach planned by Cameron, Osborne and Clegg.  They are true class warriors, disciples of Milton Friedman, and they will look after their own, the rich and the very rich.

Did Lib Dems really vote for cuts that will hurt the poor and benefit the rich?

David Cameron has said, predictably, that the UK’s economic problems are “even worse than we thought” and that painful cuts to tackle the deficit would affect “our whole way of life”.

This is straight from the Milton Friedman approach to crisis response. First the shock – a financial crisis that requires painful action; and then the awe – cuts that affect our whole way of life.

So what should we expect now? First, massive cuts in public expenditure, far more extreme than the cuts in the Thatcher era. Then wholesale privatisation, a token amount to the voluntary sector, but mainly to the private sector where huge profits, made fo by the tax payer, will be made.  And there will be tax cuts to “incentivise” private sector investment.

This will produce a redistribution of wealth from the public sector to the rich and the very rich.

Anyone who objects will be ridiculed by the media, particularly the media controlled by Murdoch and Desmond. They will ignore or dismiss alternatives to cuts.  For example, why does the government not first begin with the £40 billion of uncollected taxes?  Because it is their friends who would be required to pay what they owe.

Instead there will be cuts to the “welfare bills”, public sector pay, and funding to the voluntary sector.

Just wait and see: there will be new tax exemptions allowing further billions of tax revenues to go uncollected, and it will be the rich and the very rich who will benefit, the friends of Cameron, Osborne and Clegg.

If Cameron is purely motivated by society’s well-being, he should ensure that those with the greatest ability to pay, do so.  And those who struggle even at the best of times, be spared. But no, everyone will pay, and the pain will be felt most by low paid men and women.  And given that low pay affects women more, it will be women who will be most adversely affected.

Is this what those who voted Lib Dem thought that they were voting for?