If this is a recovery, why is the patient still on the critical list?

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banker, Britain, British, business, Conservative, construction, economy, energy, groceries, income, Labour, manufacturing, recovery, rent, services, Tories, Tory, UK

Time ticks on: We are told the recovery is well under way but have yet to enjoy any of its benefits. Why?

Official figures say the British economy has grown by 0.8 per cent in the last three months.

The Conservatives are rejoicing over this feeble effort, while saying there’s more to be done; an amazing attempt to travel in two directions at once, that should fool nobody.

It seems the recovery is becoming more balanced, with services, manufacturing and construction all registering expansion.

And it is predicted that the economy will recover to the same level as its pre-recession peak by the middle of this year.

But who, exactly, is this recovery helping?

I’m actually worse-off than this time last year. How is it for you?

My income has not increased appreciably since 2007. Meanwhile the rent has gone up and the costs of energy and groceries have skyrocketed.

The Labour Party has calculated that average earners will be more than £2,000 a year worse-off than they were in 2010, by the time of the general election next year.

What conclusions may we draw from this?

Well, we know that the recession did not harm the richest in society at all. Their profits increased massively, even while the economy was flatlining, because that’s what happens in times of hardship; the poorer, more precarious firms go out of business while the larger ‘fat cats’ mop up the trade those competitors would have had.

If the economy is recovering to its pre-crash level, and average people are worse-off by around eight per cent of their pre-crash earnings (if you say the average wage was around £25K per year), then somebody must have benefited – and the most likely candidates are the same rich businesspeople who were never touched by the recession or austerity in the first place. Also the bankers who caused the mess in the first place.

So we have a situation in which the average earner – who, don’t forget, makes the entire economy work (we spend a higher proportion of our earnings than anyone else – by necessity, and this pushes money through the system and creates economic growth; the very rich hoard their massive wealth, usually in offshore banks) facing increasingly hard times, while the richest enjoy all the benefits.

…and the gap between the earnings of the richest and poorest increases massively…

… all engineered by a government of millionaires who have financial interests in big business and whose political party is backed mainly by bankers.

This has all the hallmarks of a conspiracy.

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If the economy is in recovery, why does it still feel like recession?

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BBC, benefit, benefits, bubble, build, Coalition, compassionate, Conservative, construction, corporate, corporation, cost of living, debt, deficit, Department, Department for Work and Pensions, DWP, economy, Ed Balls, evict, financial crisis, food bank, George Osborne, Gideon, government, Graeme Leach, help to buy, house, inflation, Institute of Directors, manufacturing, Mike Sivier, mikesivier, mortgage, national, office, ONS, Pensions, people, politics, production, prosperity, recession, recovery, repossess, retail, services, statistics, tax, tax haven, Tories, Tory, Vox Political, wage, work, Workfare

Path to prosperity? If the economy has been growing for the last nine months, why has food bank use almost tripled during the last year?

No doubt Gideon George Osborne will spend the next few days (if not weeks and months) crowing about the figures from the Office for National Statistics that say the British economy has grown for a third successive quarter.

He has already tweeted, “This shows that Britain’s hard work is paying off & the country is on the path to prosperity.”

The construction industry has grown by 2.5 per cent on the previous quarter, with house builders buoyed up by Gideon’s Help to Buy scheme, which offers (unsupported) mortgage guarantees to buyers and lenders. He has promised to divert £12 million to this, but has not said where he will find the money.

Critics have warned that this is simply creating another housing-fuelled debt bubble that will burst in a couple of years’ time, leaving even more people in debt than after the financial crisis hit us all.

Has this growth generated work for electricians, plumbers, plasterers, roofers? If so, are they being paid fairly? These are the people who will take their disposable income back into the wider economy, for the benefit of other businesses.

Production (including manufacturing) and services are both on the up as well. The BBC report says nothing about retail. But if this good news is true, why is the Department for Work and Pensions determined to expand its Workfare scheme, as laid out in a Conservative conference announcement and by an article reblogged here.

Shadow Chancellor Ed Balls welcomed the signs of growth in the ONS report but warned: “For millions of people across the country still seeing prices rising faster than their wages, this is no recovery at all.”

He is right, of course. Look at the rise and rise of food banks, which have seen a massive rise in attendances from even working people – whose wages simply don’t cover the cost of living. Benefits are, of course, being cut back by our “compassionate” Conservative-led government.

They say there’s no money for it but – if the economy is surging back into growth – where are all the tax receipts from the big corporates that are profiting?

Oh yes – they’re safely closeted in the tax havens that Mr Osborne kindly opened up for them. Ordinary, working, and poor people have to use their own limited funds to pay off a Conservative-run national deficit, presumably because Tories think the rich, who caused the problem, shouldn’t have to pay for services they don’t use.

And the Institute of Directors’ chief economist, Graeme Leach, warned that there are “strong headwinds” restricting the possibility of further growth, including “debt and inflation” which are “rising faster than earnings”.

That’s right. Only yesterday, Yr Obdt Srvt was talking with a gentleman who – despite having a full-time job – has fallen so severely into debt that he has had to cut his expenditure down to nothing but taxes, the vital utility bills (water but not heating), and rent. He has no budget for food and faces the possibility of having his belongings, such as his car, repossessed – and even eviction.

Is he on the path to prosperity, Mr Osborne? Of course not. This report is merely further proof that you were lying when you said, “We’re all in it together” – as you did (again) at the Conservative conference.

It’s prosperity for the greedy few, and austerity for the rest of us.

Maybe you have a different opinion, but ask any average worker on the street and they will tell you that continued wage depression and price inflation, the expansion of the Workfare regime that gives free employment to firms that don’t need it while the workers themselves have to survive on benefits, massive growth in food bank use, and the threat faced by thousands of eviction and the repossession of their belongings are not milestones on the path to prosperity.

UK Treasury changes title to ‘Department of Clutching At Straws’

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'Starve the Beast', agriculture, BBC, budget, construction, David Cameron, debt, deficit, economy, expansionary fiscal contraction, fund, George Osborne, Gideon, growth, IMF, international, manufacturing, Michael Meacher, Mike Sivier, mikesivier, Monetary, national, NHS, OBR, office, ONS, playing field, politics, privatisation, privatise, responsibility, Royal Mail, sell, service, statistics, student loan, Treasury, Vox Political

The economy is growing: The Coalition government will claim credit but there is no reason to believe it has anything to do with current government policy – quite the opposite, in fact.

All right, the Treasury hasn’t really changed its name – but it might as well have, after the joy that greated this week’s meagre growth figures.

The Office for National Statistics is reporting growth in construction, manufacturing, services and agriculture in an estimate based on 44 per cent of actual data on economic activity during the second quarter of 2013 (April-June). That’s less than half of the evidence.

We live in times when the whole of the evidence means a great deal – for example, information on Q1 of 2012 that put growth at a standstill – neither up nor down – meant the UK did not enter a double-dip recession, even though the economy contracted in the periods immediately before and after. In real terms we were backtracking – but on paper, no.

Let’s remember, also, that the organisations that record our economic fortunes are liable to revise their predictions down as well as up – remember when the Office of Budget Irresponsibility changed its mind about the growth figures for 2012? It had predicted growth of 2.5 per cent for that year. In fact, once we iron out the ups and downs, the economy really only bumped along at a roughly steady state.

The International Monetary Fund had predicted a more conservative 1.6 per cent growth for 2012 – but in January of that year revised this down to 0.6 per cent. You get the picture.

The 0.6 per cent figure was in line with market expectations, though – and that is a good sign. But 0.6 per cent is a very fragile figure and the prospects for the rest of the year are “highly uncertain”, as market analyst Richard Driver said in the BBC News website’s report.

We all knew that the economy would start turning upwards again at some point. That it has taken five years to do so indicates the severity of the banker-induced crash – and also the lack of any investment in recovery.

In the past, the upturns arrived comparatively swiftly – but there had been a willingness on the part of both government and businesses to put money into it. The current government has been sucking money out of the economy in the pursuit of Gideon‘s nonsensical “expansionary fiscal contraction” and getting the deficit down – meaning that all the effort has been put into cutting spending and none into actually making a buck or two. Meanwhile, it has been estimated that businesses have been sitting on fortunes totalling six or seven per cent of GDP – around £775 billion, according to Michael Meacher.

In his blog, Mr Meacher said he expected the announcement to be “milked by Cameron-Osborne for all it’s worth” and he was not to be disappointed.

“These figures are better than forecast,” said Osborne in the BBC report – claiming credit for something that had nothing to do with him. “Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend – but there is still a long way to go.”

What will he say if a later revision knocks the figure down again?

Mr Meacher’s blog stated that the growth figures had been inflated “by being talked up by the finance sector”, and stimulated by Osborne’s Help to Buy scheme “which has ploughed taxpayers’ money into mortgages but without increasing the number of houses being built, which can only push up property prices… igniting yet another housing bubble which is the last thing the economy needs”.

He added that the real essentials of recovery are still missing – “an expansion of manufacturing and exports”.

We may have to wait for another government before that happens; the Coalition is too busy exploiting our current economic fragility as an excuse to sell off the family silver – those parts of the NHS it thinks nobody will notice, the Royal Mail, school playing fields, student loans…

I could mention ‘Starve the Beast’ again – but by now you should be on intimate terms with that expression.

(The first Vox Political collection, Strong Words and Hard Times, is now available and may be ordered from this website)

Why we’ll never have full employment – even though we need it

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austerity, banker, Beveridge, construction, consumer, contract, disability, disabled, disposable, economy, employment, full, income, Mike Sivier, mikesivier, multiplier effect, National Health Service, NHS, politician, poor, rich, sick, society, state, unemployment, Vox Political, welfare

Today Vox Political is offering a guest blog, for your edification and education. Graeme Beard wrote the following in response to ‘Millionaire’s government will make paupers of us all’. It’s far too long for me to put in the ‘Comment’ section of that article but far too interesting to let it go unpublished. Therefore I am reproducing it as an article in its own right. If anyone else has anything they want to get off their chests, I’ll happily consider other submissions as well.

Over to Graeme:

OK – well let’s get something rather nasty out of the way first. Austerity for the masses is an extremely efficient and effective macro-economic device. Absolutely counter-productive and even destructive to a consumer based economy it is the best way by far, (apart from slavery) on a macro-economic level to shift money from the pockets of the poor to the pockets of the rich.

Make no mistake, the austerity measures being introduced are moving £Billions ‘upward’. None will come ‘downward’. The national debt will be paid off by the poor and the poorer. It will not, and is not being paid off by the rich and affluent. They are untouched and seem to be untouchable. In fact the rich and affluent are seeing their personal wealth increase at an incredible rate.

The following is a global perspective but it applies just as strongly to the UK. The rich are enjoying a boom time and for this particular conspiracy theorist I am of the opinion that it is a deliberate measure. They want it all.

Secondly, let’s state the ‘bleedin obvious’: We live in a consumer society. Like it or not – want to change it or not – it’s what we got, playmates. To that end we have to play the ‘consumer game’ cards in hand. There is no choice. It is a given.

A consumer society (be it local, national or global) depends almost entirely on consumers having a disposable income. That is, money above and beyond that which they need purely to survive. If they do not have a disposable income over and above that needed to satisfy their basic needs such as food, clothing, utility bills, shelter etc then, in many ways, they become what economists call ‘non-consumers’.

For instance, they can’t spend money on what some would consider to be luxury goods like new or used motor cars, or books, or education, or to replace a cooker or fridge that’s on its way out. They make-do, make-shift and mend. Their ‘extra’ spending on consumer goods (the very goods we need to be purchased by consumers in order for the economy not only to grow, but survive) is dead in the water. If they haven’t got it they can’t spend it. The more that have no – or diminishing – disposable income, the more the economy will contract.

It’s happening now and there’s more to come. Far more. People thrown out of work, because of slowing demand or even a demand crash in consumer goods they make or services they provide, or those that become disabled and draw state benefits, are a prime example. They do little more than survive and become non-consumers above subsistence in double quick time. Ergo they are lost to the consumer society. It is a downward spiral and the Multiplier Effect takes over in negative form. See below.

Now this is not rocket science and can plainly be seen repeatedly with only a cursory glance at macro-economic history. Don’t believe me? Look for yourself! To introduce and pursue measures of austerity for the mass of the population in an attempt to ‘heal’ a consumer economy is like trying to catch hold of the world by the arse and pull it uphill.

These austerity measures are either being pursued in ignorance (which I find very hard to believe) or as a deliberate measure to engorge the rich and affluent at the expense of the poor.

For 35 years, post-Second World War, the UK had full employment. Bankrupted by the conflict and in massive national debt, the population was fully employed; the NHS was introduced; the welfare system proposed by ‘The Report of the Inter-Departmental Committee on Social Insurance and Allied Services.’ (The Beveridge Report) was adopted and applied with vigour. People had jobs with disposable income; they consumed (and in quantity – demand for consumer goods went through the roof); tax incomes to the government went up enormously; numbers of people on benefits were minuscule (they had jobs); the construction industry went off ‘bang!’; etc etc. I’m sure you get the drift. John Maynard Keynes’ ‘Multiplier Effect’ in motion and this time in positive mode.

Bit of a problem though! Full employment came with a terrible cost. It gave those in employment power – mainly the power to withdraw their labour and expertise.

And that’s the reason we will never have full employment in the UK ever again.

It gives people at the bottom power and those at the top really don’t want that. They need the sticks of unemployment and poverty for them to sustain their lifestyles.   People on the breadline and/or in debt or under threat keep their heads down, live smaller and smaller, and consume less and less in the hope it will eventually, by some kind of magic, get better. It rarely does.

In concert with that, and at the very same time, those who feel insecure and threatened but are in decently-paid jobs and who could shut down their spending too and save more and more for their (maybe) ‘rainy day’ are also removed, if only in part, from the consumer society that we all depend on.

So, actually impoverishing consumers – the very consumers who could – and, history shows, would – drag this economy out of the faecal mess that the cretinous politicians and bankers put us in in the first place, means they are unable to do so – because they are struggling with ‘austerity measures’ and seeing their disposable income decrease alarmingly.

Full employment, as dangerous to those ‘above’ as it may be, is good for a consumer society. Taxes are paid alongside National Insurance contributions; welfare payments reduce exponentially because people have jobs; demand for consumer goods increases and, via the ‘multiplier effect’, more jobs come online and more money is made available to spend. It is an upward spiral.

If you want to heal a consumer economy, don’t introduce more disease. Austerity for the masses is exactly that – a disease – to a consumer society. Don’t believe me though – gawd forbid! Look around you, because it’s happening now, and happening just about everywhere apart from the more affluent areas of the UK.

And that, in part, is why our towns as a working example are full of charity shops, pawnbrokers, and people wanting to buy your surplus gold for two and a half buttons so they can get rich and you can eat or heat next week.

As an addendum: http://www.ted.com/talks/richard_wilkinson.html?utm_source=newsletter_weekly_2011-10-25&utm_campaign=newsletter_weekly&utm_medium=email