Tag Archives: Economic growth

Let’s Talk About: Economic Growth

Images like this mean nothing to Dan Hannan. who prefers to deal with fictional characters than real people and their complicated lives.

Economic growth or just ‘growth’ is the holy grail of career politicians, neoliberal economists and their hangers on in the media. We’re often told how important it is to have ‘growth’ in our economy and it is only then that everyone will see the benefit. The trouble with this notion is that those who continually spout this rubbish aren’t the ones who need to worry. They’re already comfortable. The ones for whom these pronouncements mean little, if nothing at all, are the poor and the low waged. They continue to see their income squeezed, while the cost of living continues to rise. But the media and the government will have none of it.

A few weeks ago, the BBC’s economic editor, Robert Peston, was crowing over low oil prices. He told the nation’s viewers that “everyone” would now feel “richer” because of the continued fall in petrol prices. This is not only misleading; it’s also dishonest. The only people who can feel “richer”, by definition, are the rich themselves. If you are poor, you cannot be “rich”, it’s an absurdity. Yet this does not stop the likes of Daniel Hannan repeating this meaningless tosh. In Thursday’s blog for CapX, he repeated Peston’s bogus claim that “The rich are getting richer and the poor are… getting richer”. This is a measure of how out-of-touch our media and politicians are in relation to the people they purport to serve. We can also draw the conclusion that the mainstream media, the Westminster politicians and economic cults like the Adam Smith Institute and the Institute for Economic Affairs are in a cosy conspiratorial relationship with one another. The relationship between these institutions and ordinary people themselves is one of power. They consider themselves to be the voices of authority and we must listen and obey… or so they think. So when they tell us that “things are getting better” we are expected to believe them. But I no more believe them than I believe in the existence of God, the tooth fairy or Father Christmas. I see no improvement and neither do millions of other people.

The problem with those who constantly talk about ‘growth’ is that they can only speak the language of statistics and mathematics, and can only view the world through the lens of their social status. They are incapable of relating their nutty ideas about economics to the average person because what they’re saying bears no relation to everyday life. Trickle down, for example, is one economic fallacy that is repeated ad infinitum by economic cultists and held up as a model for ‘growth’ and economic well-being. But not even right-wingers like George HW Bush believed it and derided trickle down as “voodoo economics”. Yet the Hannans and Osbornes of this world cleave so tightly to it like men at sea clinging to any bit of flotsam that comes their way.

A couple of months ago, the Labour leadership claimed that if the Tories were re-elected, they would take public spending back to the levels of the 1930s. This was enough to get all manner of right-wing economic cultists into a lather. Hannan was one of those. In this blog, he does his best to claim how the 1930s was a “time of growth”. It’s a risible misrepresentation of a decade that’s become synonymous with economic hardship.

Well, here’s a fact that may surprise you. The 1930s saw more economic growth than any other decade in British history. It’s true that there were patches of deprivation. As in all times of economic transition, some industries declined while others rose. The poverty of the Jarrow Marchers was genuine: theirs had been a ship-building town, devastated by the collapse of international orders.

Sophistry, damned sophistry. For the millions of working class people who struggled to survive the decade, this is an insult to their memory. My mum’s family was Liverpool working class and I can remember her telling me what life was like in the Thirties: if you were poor or low-waged, you had no access to affordable or decent healthcare, because there was no National Health Service (the Tories will abolish it if they are re-elected). There was very little work on Merseyside in the 1930s, so people lived a hand-to-mouth existence.

Hannan continues his fantasy tour of his romanticized past:

Yet these were golden years for new industries such as electrical appliances and aviation and cars, the years when Morris, Humber and Austin became household names. The 1930s also saw an unprecedented boom in construction, as the comfortable suburbs of Betjeman’s Metroland spread across England. The Battersea Power Station raised its minarets over the capital, a symbol of self-confidence in architecture.

Here, Hannan waxes floridly about a world that only those with the economic means could take part. The appliances and cars that he talks about were beyond the means of my family and many others. No working class people owned cars, let alone possessed household appliances. My grandmother was still using a boiler and a mangle well into the 1970s. As for Metroland, the houses that were built there were for sale. Only those with nice, middle class incomes could afford a mortgage.

Here, Hannan slaps more gloss onto his fantasy.

 Britain responded to the 1929 crash by cutting spending drastically and, in consequence, soon saw a return to growth. The United States, by contrast, expanded government activity unprecedentedly under the New Deal, and so prolonged the recession by seven years. Yes, seven years. Here is the conclusion of a major study published in 2004 by two economists at the UCLA, Harold L Cole and Lee A Ohanian:

Cole and Ohanian are comprehensively defenestrated in this blog. Hannan isn’t interested in reality and like all right-wingers of his ilk, he exists in the hermetically-sealed space of privilege. The material of history is bent and twisted to shrink-fit a weak narrative. Like many of his fellow Tea Partiers, he makes the same feeble argument for cuts.

Contrasting the American and British experiences, we are left with an inescapable conclusion. Cuts work, and trying to spend your way out of recession doesn’t.

Let’s put it this way, if a company doesn’t borrow or spend money to invest when it is doing badly, it will go under. Cuts only work for the already wealthy. They are also a means by which the powerful punish the poor for being poor. Hannan makes clear his hatred of FDR and the New Deal. This is the same position held by the economic cultists at the Ludwig von Mises Institute as well as his fellow Randists.

This is perhaps the greatest fallacy of all:

Still, if only for the record, let me set down the real lesson of the 1930. The best way to recover from a crash, not least for low earners, is to bring spending back under control. Growth follows, jobs are created, and the people taking those jobs thereby gain the most secure route out of poverty.

It’s easy for those who have never personally experienced poverty to claim that “the most secure route out of  poverty” is work. Low-paid and zero hours contract jobs actually lock people into poverty. Hannan is not only a fool, he’s a dangerous fool. Leaving people to fend for themselves without a safety net will lead to greater social problems. Hannan is unmoved by such concerns. Yet he would be the first to complain that shanty towns are an “eyesore”. This is the man who calls himself a “Whig”.

Talking about economic growth when people are struggling to survive is deeply offensive. Talking about GDP is meaningless because not only is it a poor way of measuring economic performance, it means nothing to ordinary people. For all his claims of how cutting public spending will improve economic performance, Hannan has never had to suffer the privations of working in a low-paid job. Like all of his pals in Westminster and beyond, he is a bully, who talks a good talk but when his words are unpacked, they reveal the true horrors of the current political system.

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The engineering of happiness

The word “happiness” is notoriously difficult to define. The Oxford English Dictionary defines “happy”  as:

1 feeling or showing pleasure; pleased

Or

2 giving or causing pleasure

Or

3 if you wish somebody a Happy Birthday, Happy New Year, etc. you mean that you hope they have a pleasant celebration

Or

4 satisfied that something is good or right; not anxious

Or

5 happy to do something (formal) willing or pleased to do something

Or

6 lucky; successful

Or

7 (formal) (of words, ideas or behaviour) suitable and appropriate for a particular situation

Other words that are synonymous with happy are “glad”, “pleased”, “delighted”, “proud”, “thrilled” and “relieved”.  Happiness is a vague word that means many things to many people. It is a word that relies on context; without which, it means little or nothing at all.

This government’s interest in our happiness is nothing new. The last government had similar ideas. It even published “happiness indices”. We were often told that the Iraqi people were “happier” that Saddam Hussein had been toppled because of factors x, y and z. But the criteria that was used to measure happiness ignored a great many things like the ruined infrastructure and the lack of a properly functioning government. The current government’s interest in our ‘happiness’ has some very Bernaysian overtones to it, not least because David Cameron is a former PR man. When he became leader of the Conservative Party, he rebranded the party and even gave it a new logo.

Tory logo

The logo is simple enough to deconstruct and even an ‘A’ level media studies student can see what they were trying to do with this logo. By choosing this logo the Tories unconsciously tell us that for all the green rhetoric, they are still blue underneath; the green foliage is merely superficial. The fact that it also appears to be hand-designed tells us that they want to come over as friendly, a bit informal and a bit arty.

Edward Bernays, the founding father of the PR industry and nephew of the psychoanalyst Sigmund Freud, was determined to pacify the masses with distractions because he believed that people could be engineered en masse to behave in the way politicians wanted them to.  This is a mild version of technocracy, which regards human as machines.

In the last 15 years or so, I’ve noticed how the media has become fond of telling us how the human body is a “wonderful machine”. The problematic with this idea of the body-as-a-machine is that it does not consider the fact that the body is actually an organism. This position ignores the vagaries of human beings, their dreams, their hopes, their lives and treat humans as mechanical devices that input/output data. Machines are not sentient and they cannot learn things; they must be given commands in order to perform a single given task. Humans can rebel, be crotchety, smile, frown, get sick, answer back and think for themselves. Machines can do none of these things, yet many politicians and others will persist with this notion that we are machines or, conversely, irrational beings that act in our own interests. When the Luddites smashed mechanical looms in the early 19th century, they did so because they feared that machines would take the jobs of humans. What they never could have dreamt in all their wildest imaginations was how politicians and others would come to regard the human being, not as a person, but as a machine.

The Tory-led government, like the New Labour government before it, is determined to socially engineer the country to behave in ways that are in line with its vision of a nation that is er, happy?  But what is happiness and can it be manufactured or even conscripted to serve ideology? It’s a shaky foundation on which to build a political edifice and the result could be catastrophic.  Happiness is subjective and is often occurs in a moment. No one is 100% happy all of the time. It simply isn’t possible. A good mood may last a day but it only takes one thing to upset that mood. Perhaps mood enhancement or alteration is what the government is aiming for? No, that would be sci-fi… too Philip K. Dick a la Do Androids Dream of Electric Sheep?

The media has also jumped on the bandwagon, as if to suggest that they are working with the government, to get the message out. The BBC has been one of the worst offenders. In 2006, in a moment of sheer prescience, they even put together a happiness test. The BBC tells us

Psychologists say it is possible to measure your happiness.

This test designed by psychologist Professor Ed Diener from the University of Illinois, takes just a minute to complete.

Well, if psychologists tell us it’s possible, then surely we should believe them? No. Discovering what makes people happy isn’t necessarily a bad thing. You may want to do something to make your partner, parents or children happy. When governments or corporations strive to understand our happiness or lack of it, they do it for other reasons and those reasons have nothing to do with improving our standard of living or anything like it.

I’ve recently encountered Action for Happiness, a group that is part of the Young Foundation. The foundation was named after Michael Young, the father of the Hon Tobes. Action for Happiness tell us that

For fifty years we’ve aimed relentlessly at higher incomes. But despite being much wealthier, we’re no happier than we were five decades ago. At the same time we’ve seen an increase in wider social issues, including a worrying rise in anxiety and depression in young people. It’s time for a positive change in what we mean by progress.

A couple of things came to mind when I read this: first, it ignores wage stagnation and makes the claim that as a nation “we are wealthier”. Who is this “we”? What they base this notion on is anyone’s guess. Second, it presumes to have some intimate understanding of the word “happiness”. Third, it presumes that happiness can be generated by helping others. This is a fallacy and what those, including the government, who speak of happiness in such terms are actually trying to create is a culture of volunteerism. But this presumes that many people don’t volunteer already. Not many people have the time, after working some of the longest hours in Europe to volunteer after a hard day of work.

This Guardian article moves away from the word “happiness” and claims that the government wants to measure our wellbeing instead. Quoting the Institute of Economic Development’s study it says,

“There is a considerable body of research, both on how to measure wellbeing and on the implications that adopting this measurement could have for policy,” writes Seaford, author of the paper and head of the Centre for Wellbeing at the New Economics Foundation (Nef).

This should be seen for what it is:  an attempt at social engineering. The government’s concern for our wellbeing and our happiness indicates a disturbing lack of substance at the heart of this government’s policy-making. Instead of creating jobs and alleviating poverty it is more concerned with fleeting notions of happiness. This focus on happiness can also be viewed as a diversionary tactic to draw attention away from the massive cuts in public spending, all of which may make people less content and more vulnerable.

This Guardian article warns of the problem of attaching the concepts of happiness and wellbeing to economic growth and material wealth.

But what does all this mean for the way we measure social and personal wellbeing? We are repeatedly told that consumer spending is all-important for the economy; that without enough of it, confidence will “wilt”, retailers “slump” and the Bank of England will have to perform some sort of “difficult balancing act”, as if running some kind of miserable circus sideshow.

This is the underlying discourse contained within the happiness message coming from politicians: happiness is congruent with economic growth. It is, perhaps, another way of trying to sell us things that we don’t need.

Since it was decreed a few decades ago that capitalism would have to expand by selling people things they didn’t need, rather than have them replace things when they wore out, we have been coerced into thinking about quality of life in terms of owning and accumulating more things. And even if housing bubbles and credit card debt end up punishing those people who can afford it least, the ruling and financial classes (too often the same thing) can turn round and say “well, it was your fault, your choice, no one made you take out one (or many) loans/mortgages/overdrafts”.

Happiness? It means nothing.

Here’s The Smiths.

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The myth of economic growth

Certain politicians are fond of telling us how ‘important’ economic growth is. Some will use growth as a means of defining themselves culturally and some will try and claim that it is the alpha and omega of a healthy economy.  In neoliberal discourse,  growth is essential to create wealth; the wealth is created at the top and ‘trickles down to the lowest on the income scale’ at least, this is what they want us to believe. What these economists (often presented by news channels as ‘experts’) fail to tell us is who really benefits from economic growth: the already wealthy.

Here is a classic example of how politicians use economic growth to make the puerile claim that ‘we’ are better than ‘them’ because of ‘our’ rate of growth is ‘superior’. It is an excuse to attack, in this case France, for having a better organized labour movement. Here GDP is held up as the means by which a nation’s growth is calculated but GDP is a flawed method of measurement because the parameters of its remit have been deliberately constricted to favour one set of economic arguments over another.

David Korten, author of When Corporations Rule the World wrote that there are 6 economic myths,

  • The myth that growth in GNP is a valid measure of human well-being and progress.
  • The myth that free unregulated markets efficiently allocate a society’s resources.
  • The myth that growth in trade benefits ordinary people.
  • The myth that economic globalization is inevitable.
  • The myth that global corporations are benevolent institutions that if freed from governmental interference will provide a clean environment for all and good jobs for the poor.
  • The myth that absentee investors create local prosperity.

Those who defend the current  economic model promote the idea of growth as necessary for happiness; people will buy more consumer goods and thus become happier human beings. But this is a facile argument that relies on the specious notion that the consumption of meaningless objects equates to happiness which is, itself, notoriously difficult to measure – though they will try. Even war-torn Iraq has a ‘happiness index’; which was used to present a picture to the world of a country ‘turning the corner’. The real picture was much more horrific. This is the political economy of the sign where a set of signs is presented as a form of truth that is based entirely on representations. In this case, it is the representation of happiness being used to inform the world that Iraq is ‘normal’. Neoliberals trust in signs and have no concept of reality.

Growth provides justification for the arguments of the wealthy who have little idea of how the poor and the low-waged live. For them, anyone who is unemployed is a serious ‘drain on the economy’; they are referred to as being ‘economically unproductive’ and those who are ‘economically productive, that is to say, those who have the disposable income to buy the latest consumer items, are held up as model citizens. This perversion is redolent of a Heinleinian world where only those who serve in the military are offered full citizenship. Indeed those who are unemployed are considered less than full citizens by the policy wonks of Whitehall and the ‘scholars’ who work for the various think-tanks.

Growth is also seen as a measure of progress; the Republic of Ireland was depicted as a Celtic Tiger; a powerhouse of economic growth. But this growth occurred on the back of speculation; there was no real wealth being created; the country had no manufacturing base to speak of and remains a service economy that is heavily reliant on tourism. The money people that had in their pockets was loaned to them or came from a credit card.

4 days ago, the BBC ran this story of how Britain’s economic growth was “slowing”. The key to this slowing was identified by the British Retail Consortium as a lack of ‘consumer confidence’,

“We’ve now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future,”

Because mainstream politicians have no original ideas on how to advance society, they have become over-reliant on the words of economic sages. To whit, they are in hock to the finance houses and the money men who operate them: the money men receive tax breaks for providing certain economic conditions and when they fail, they are given a slap on the wrist and told off. The banks after having been given their slap are now paying themselves bigger bonuses and higher wages while the rest of us are told to take pay cuts. Why? Because they tell us that they are ‘creating wealth’. Well, yes, they are creating wealth – for themselves.

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