5 reasons not to hold your breath for UK ‘growth’

High education levels will save the UK they say - at Peking University this idea is being studied closely

So if you were paying attention the other week it was mentioned for a micro-second of the news cycle that the UK is in its longest period of depressed growth for about a hundred years. Many people still think we are in just another downtown and will merrily swing our way out of it soon. I said to someone the other day that probably the best that Spanish young people (over 50% unemployed) can hope for is to get back to the standard of living their parents had, thinking this would be uncontroversial. She frowned and said ‘No, it goes in cycles – I’m sure it will be fine soon.’ But 50% youth unemployment may not be just another dip. It’s scary, and a lot of the European economies are looking in a scary place right now.

In the UK I suspect we may get a little growth within the next few years and it may look like a recovery for a while. But fundamental changes have happened in the UK and in the world. While in the short term growth is not happening because the government is cutting spending in a recession, in the long term the picture is even more grim. Here’s five reasons not to hold your breath for ‘growth':

1. I can’t tell if the politicians are deluded or lying but they ought to know that the ‘high-skilled’ economy to replace lost industry isn’t going to cut it. A friend pointed out last night that it is pretty colonialist to think that Chinese or Indian people are only going to do the grunt work. I heard about a law dept being outsourced the other day. Accountants, designers, programmers, scientists – they can all go. The outsourcing course has been set and if we follow it to the end the only jobs remaining will be those that absolutely require a physical prescence here.

2. I can’t tell if the politicians are deluded or lying but the high-tech innovation-driven economy is not our saviour. Quite the opposite: it is screwing us. It creates a few jobs, yes, but destroys thousands of other jobs as it goes. We can’t just look at the creation of paper value – we have to think about the ratio of ‘value’ creation to job creation. Instagram just sold for a billion dollars. It has 13 employees. At some point we’ll have to accept that our technology is going to make full employment impossible.

3. Meanwhile the price of oil is only going up. We can dig up half of canada if we want but there will never be enough. This is true of other resources too but energy drives everything else. Demand is going up, supply is becoming more difficult. That makes everything else expensive and strangles growth. It is going to do that for the forseeable future.

4. There will be some growth of course but what there is of it will be very unequal, as it has been for the last 30 years. This is to do with how our economy has been structured – by all major political parties in the UK. Most of us will not benefit from growth, and in fact we haven’t for a while. It’s true we got cheaper holidays and better phones but now we need two salaries to buy a house where one would do it before. This structuring of the economy can be changed of course but there is zero political will to do it. Neo-liberalism won and we didn’t.

5. The final problem is that in the absence of productive industries and of internal markets not totally reliant on imports, what growth we do get will probably be bubble growth – either re-inflating a finance bubble (very possible given the rules haven’t been tightened since the last cock-up) or re-inflating the housing bubble. Both of these benefit certain people, some of whom get to have dinner with Dave, and for a time it may look like real growth. In the long run either type of bubble will pop in a spectacular manner and will screw the economy, particularly those of us who don’t get to have dinner with Dave.

This might sound pessimistic and it might seem like I’m being gloomy for the fun of it, but I’m not really down about it and – unlike some people – I think it’s too early to say our civilisation has peaked. This is just the situation we’re in, and the sooner we understand it the sooner we can set about dismantling the ideas and institutions that – largely out of short-term self-interest – brought it about.

Olympics Death March Party!!! Woohoo!!!

Randomly selected photo of party mecca London

Life is sweet! Look at us! The Olympics and everything! Sure the economy isn’t growing but we still know how to party. Not as well as the Chinese it’s true, but it’s doubly important in these troubled times to cut loose a bit! Our leaders told us so! It’s important to keep to our course too! The party is on the move, going in One Direction, and it will never end!

Progress is wonderful! The Shard now looms above London like a symbol of our might. Admittedly it is a symbol of Qatari ruling elite might but it is like a symbol of our might. We are at the top of our game – or someone is – and the view is just amazing!

The party marches on, and we should be so proud of our moving fiesta because we pick our leaders. Not like those savages in…Qatar or China or wherever. We pick our leaders from among those people at the back of the march, driving us on with whips and Tazers, because we know they know the way. They want the same things as the leaders of…Qatar, or China or wherever, which seems odd, but look! We can swap them round! Not like those countries! It is great! The fact they are all the same – and all the same around the world – just proves democracy works! They all take us in the One Direction so that just proves they are right and we all want the same things. We’re all right, we’re alright, and the party will never die – that’s what the Olympics proves: we might be down but we’re not out!!!

I’ll tell you where could do with a party like ours. I’ll tell you who needs a reviving Olympic tonic. Greece! That’s who! Look at them! What’s that you say? Oh sure they’ve had the Olympics but that was thousands of years ago wan’t it? Now they’re so backward! They are finally being marched forward, in the One Direction. It will be good for them, this discovery that they are expendable. It will teach them to put up with the low wages their country needs.

And we need it too! Remember! We must compete with the far east! In wages too! It’s true! No one told us this when we outsourced half our economies but it put us on a one way street to wage competition with China and India. And look, if there’s one thing Greece teaches us, it’s that if we don’t allow ourselves to go down this path we too will be slaughtered like diseased cattle and abandoned by the side of the road. It’s amazing that we can vote and amazing that the joys and liberties of the free market means it makes no difference any more – if your leader does the wrong thing a technocrat can be found! Perhaps we should lose our bank holidays, say our technocrats in waiting. We have been warned! We march onwards! And we party! Towers! Missiles! Stadiums!

This party is who we are people!! We must hate those who try to stop it! We must hate those angry and desperate enough to STOP ROWING RACES!! People trained hard for that party moment!! How dare he interrupt the march!! We can’t see the corpses from here so what’s all the fuss about! I’ll worry when the smell of death hits me as I step out the front door thank you very much! The Olympics is coming and if any killjoy gets in the way our rage will be IMMENSE!! March! Party! Onwards! Prizes will be won!!!*

*But not by us

Heartwarming tales of triumph over adversity: The freeing of the NHS budget

Struggling financiers in full battle regalia at CBI annual dinner

This week readers, I bring you a tale of great heroism, a tale to inspire and refresh the tired heart. The story begins in sadness and suffering among the small percentage of private individuals and organisations who control most of society’s resources. The block of money controlled by the government, that is, the tax take, had always caused them great pain. It is true that the money people take back control of many parts of it – much of the military budget for example, increasingly even the welfare budget. But something was still causing them an enormous amount of distress: the NHS budget.

Because the NHS budget was big. Very big. It was a big pot of gold they had no access to, save for the 10% of it going to pharmaceutical companies. 90% of a big pot of gold out of their reach was an unbelievable, horrendous ordeal for them, a nightmare scenario of a wealth redistribution mechanism that did not favour them.

People, we can barely imagine what they suffered. It’s true that a higher and higher percentage of government budgets was going to the money people through PFI, through outsourcing, through consultancy, and through corrupt and incompetent procurement procedures. This was some small comfort to them, but there was still that big pot of gold, still tempting them, still untouchable. The pain! The agony! How they must have tossed and turned at night! Pray that you never experience such suffering.

But this is a tale of heroism, and I can tell you that those money people did not give up. The odds were stacked against them, but they had a few things on their side: hundreds of millions of pounds with which to buy governments, hundred-thousand-pound-a-year sinecures to offer politicians on retirement, and the global triumph of an ideology that explicitly favoured profit-making over public service. With nothing but these meagre tools the money people fought and fought for their rightful share of the pie – that is to say, all of it. It was hard work, it was slow work, and the public mood was initially against dismantling the NHS, but they did not get downhearted, their lobbyists worked ceaselessly and their PR people fought the NHS through insurgent media organisations who backed them.

One day, after great struggles waged in society’s darkest places – high-end restaurants, politicians bank accounts, the national media, the social network of similarly-minded people who hold most of the wealth and power – the money people finally got what they had longed for through all their long years of suffering: a government whose sole political mission was redistributing money from ordinary people to them. The money that had for so long been distributed through the NHS could now return to the hands of its rightful owners: those who already held most of it.

Against all the odds, the money people and their agents the private health companies had achieved their dream. Their agony was ended. Within months the government began re-organising the NHS as a channel to move taxpayers money into profit-making organisations. So complete was the triumph of the underdogs that no party in the country saw fit to oppose them.

Those who fought this bitter battle, its grimmest days thankfully in the past, have reached some level of contentment now. Their dogged determination in the face of a national consensus on the value of the NHS stands as an inspiration to us all. To anyone else who suffers like they did, they offer humble words of advice: be rich already, know the right people, buy the right people, and one day – however dark things seem right now – everything will go your way.