The current UK economic model can never work
I suppose there will have been much oohing, aahing and shaming during PMQs yesterday, although I don’t know because I never watch it any more. The hear-hears, cheers, brickbats and bouquets (if any) probably concerned the new set of unemployment figures.
“Dire” would be most people’s one-word judgement: fewer jobs, fewer full time jobs, and fewer young people’s jobs.
“And fewer claimants!” the more loony young Tories will exclaim. Except that the figures show more movement towards part-time work ‘because I can’t find full-time work’; and with the mid 1940s baby boom coming heavily on stream now, many are simply passing from working to retired – or ‘given up bothering’.
“We told you so!” the more loony old Labourites will exclaim. But what’s happening started long, long before they left office. The latest figures merely confirm the big story behind the short-term changes: too many people chasing too few jobs on a small island – and a capitalist form which isn’t generating enough new businesses.
“On yer bike” may have made sense as advice thirty years ago, but it doesn’t today. Forget the ‘unemployment’ figures and vacancies nationally: only 76% of men and 65% of women of working age are ‘eonomically active’. This is Whitehall politesse for ‘they don’t do a job’. No job of any kind. They’re not even Long Term Unemployed. They just don’t work.
The (rounded) figures from the ONS are these: 21 million people work full-time, 8 million work part-time, 8.7 million do nothing, and around 6 million are retired.
But from other ONS reports, we can see that there are just 475,000 UK job vacancies. That isn’t going to make much of a dent in 2.5 million.
As you’d expect, this figure has been dropping since 2007; but the total fall since 2002 has been 22%. Almost a quarter of all job vacancies have gone.
Arcane as this may seem, I would ask you to take a brief trip with me through the highlights of the last 160 years. There is a point to this, so be patient.
A history of squeezing more from less
In 1850 – even though Britain’s industrial revolution was miles ahead of the rest of the world – 20% of total GDP consisted of agricultural produce. By 2009, this had fallen to 0.6% – itself a drop of a quarter on the 2000 statistic.
It is estimated that some 8 million people were directly or indirectly employed in agriculture in 1850, and that virtually no everyday food was imported (by definition).
The 1871 census shows ‘a large majority of working class girls in service‘. Even twenty years later, the census shows over two million people working as servants.
All those jobs farm and household occupations have disappeared. And most of the girls in service now have ‘economic’ jobs – a trend that has impacted dramatically on employment over the last 40 years.
In 1908, under 4% of the workforce was employed by the Government. Today, estimates vary depending on agenda, but the median figure is around 40%. Only 3 in 10 UK citizens of working age today do an economically productive job.
The total UK population increase since 1911 has been around 20 million. Some 1.7 million were killed in the world wars. At 2 kids per family and average longevity, they would’ve added circa 6.4 million.
Immigration into the UK was counterbalanced by indigenous emigration until 1983, since when it has been in the region of 1.3 million net. There are around 3 million people less than there would’ve been without those wars.
In 1935, a majority of children left school at 14. Today, 44% don’t look for work until they are 21.
But capitalism as currently structured still employs a lower precentage than it did 90 years ago.
In the 1950s middle years, we had full employment. Today we have 9 million people doing nothing. Without the two massacres, the figure would be 12 million.
The bottom line is that our current economic structure cannot satisfy the employment needs of our people. So the Government pays quite a lot of people to be reasonably happy about doing nothing.
Why there are fewer jobs
1. There are more of us. 4 million people not born in the UK are employed in our economy today.
2. Mechanisation and a shift away from manual jobs. Since 1948, productivity per head of employee has risen by just over 200%. That is 6 times the figure from 1900-1948. (Put another way, far fewer employees are required to get things done today).
3. Since 1960, 4.5 million manufacturing jobs have disappeared. In 1960, 36% of us made or sold manufactured stuff. Today just 14% of us do. The killer fact here is that the fall curve becomes a steep cliff after 1980. The shift from manufacturing to financial and marketing services has killed millions of semi-skilled vacancies
4. An appalling physical exports performance which has seen our share fall in every single major world market with the exception of some hitech and financial service niches.
5. Working women. 13.5 million women work full or part-time in the British economy.
Why we are not economically viable any more
1. A vast increase in work-related welfare and HS&E requirements: paid-for maternity and paternity leave, job seekers allowance, holiday entitlements, special equipment and other ‘must haves’ dictated by quangos with no proper commercial perspective.
2. An ageing population requiring State pensions, and living longer to require care home help.
3. A massive bailout of the banking system which replaced much of lost manufacturing, added to which was the acceptance of bank debt as a taxpayer liability. This has added roughly 40% to the National Debt since 2007.
3. A huge (and unlegislated) rise in the Civil Service pension liabilities since 2006 – estimated last year at £1.1 trillion.
4. For several decades now, a growing proportion of the population below 65 contributing nothing.
5. Latterly, rising unemployment benefits.
6. Latterly, rising import costs – thanks to a falling Pound…thanks to the bank bailout. And also, it has to be said, the rise of multiple supermarkets supplying a rising desire for overseas food…..and the gradual neglect of our agricultural base.
7. Latterly, rising borrowing costs – thanks to the size of our debt rising….thanks to the bank bailout.
8. Since the mid-1970s, the increasing cost of EU membership. All up this totalled £118 billion in 2010, and yet we have a trade gap with our European partners.
We aren’t exactly helping ourselves
Fewer jobs and rising expenses might seem to be the story of the last few months, but the truth is it’s been the recurrent theme of the last five decades. However, the pace of change in an entirely negative direction started accelerating after 1980, and coincided with the mass hypnotic delusion otherwise known as Thatcherite free-market Josephism.
Under this entirely crazy view of economics, social care is eroded and education neglected. Infrastructure is sold off into private hands, or contracted out. Shareholders and machines come before citizens. And inequities of wealth soar…although the very poor are technically wealthier than they were before – which must be a great comfort to them, given that 0 x 2 equals 0.
By 2009, everyone and everything were being supported economically by about a sixth of the population….and as the real economy shrank and a world recession loomed, it seemed obvious that the only recourse was to:
reduce dependence rapidly upon financial services,
stop all immigration immediately,
get out of the EU,
force the banks to lend to smaller businesses,
stop paying bankers preposterous bonuses,
stop selling land to community-destroying multiple supermarkets,
invest more in agriculture and increase the acreage used for it.
But the Government is doing none of these things. And that’s the first point of significance to take out of today’s ONS unemployment statistics.
The second point is much bigger: given the physical living space we have, the role afforded to government, the potential cost and doubtful returns of risk banking, and the falling Pound, only a manufacturing and agriculture led drive to pay our way out of this stands even the ghost of a chance of success.
If we reduced the role of government, of course, things would get a lot easier. But the Coalition isn’t doing that either (at least, not with any success) and if they tried to, the Mandarins would have them shot by MI6.
Anyone with the energy and ambition to do something about this thus has a colossal job on their hands; and bear in mind, this analysis only looks at the economic and demographic problems. To achieve the goal of national regeneration, events have to re-educate a massive number of hopelessly dependent people, and a whole new political Establishment has to emerge from somewhere. This new elite would then have to devolve power, break up the banks, reform the economy and pay off the debt.
If one is realistic about this, nothing short of a massive econo-fiscal crash – which winds up questioning every polemic and most of our values – is going to create the environment in which it can happen. I remain firmly convinced that Crash 2 is coming, chiefly because there is not the urgency, intelligence or motivation to stop it: the financial and governmental oligarchies are now so out of touch, intertwined and mutually dependent, they have become an ancien regime which sees the rest of us as irritating sans culottes getting in the way.
It is this sort of outlook which makes me, to say the least, equivocal about the Coalition. I’d like to see them succeed, because I have a learned fear of anything that involves Year Zero. But the complacency of the Government (and the uncaring amorality of financiers) have created a highly combustible catalyst. It’s hard to see a way in which it can be rendered safe.
Apologies for the length of the post today. If the problem was simpler, I’d have made it much shorter.