Getting our heads round the economics of ANTI-Austerity.

Several recent media events have featured aggressive debates where some of the pro-austerity parties have tried to attack or rubbish the policies of the Green Party of England and Wales. This in itself is a good sign (because it is a sign that people are beginning to find the popularity of these policies alarming, and to see that they are winning support both here and in other parts of Europe, as most famously in Greece).

The scare tactics deployed by the aggressive interviewer typically include finding bogeys in the Green Party's policies on immigration, religious extremism and drug control. But the one that I want to consider today is the typical response to the anti-austerity policies, such as fully funding the NHS, raising the minimum wage, renationalising the railways, no tuition fees, and providing a welfare system that will enable everyone to live without fear of poverty or destitution.

The standard question is "But how will you fund this?", and the questioner then doesn't wait for an explanation of how the economics of a modern state works, but assumes that it works like a family budget in which there is a set income, and you decide what your priorities are for spending it. Responsible budgeting, they suppose (or they want their viewers to suppose), is like responsible budgeting at home. If you haven't got much money, and you've borrowed some money already, then you need to spend only that and no more. In fact, you should spend less, so as to repay some of your debts. This is the very muddled economic thinking that has encouraged people to vote for austerity, against their own interests and against the interests of the economy. This is what is now being questioned across Europe. And rightly so, because it is stupid.

That muddled economic thinking is what the politics of anti-austerity parties like the Greens is challenging. So the answer to the question "How will you fund this?" need not have an answer of the kind the aggressive interviewer is expecting (e.g. "we shall raise taxes", or "we shall abolish the armed forces", or even "we shall increase the national debt"). Because, actually it is austerity that leads to increased debt, and cuts to the armed forces, and ill-equipped armies, and a shortfall of income in relation to costs for health and welfare and housing. That is the problem, not the solution, so you should not expect an answer in that form to explain how the better welfare system and subsidised transport, and full public health service and education, will be paid for by the Green Party.

For sure, the Green Party does have a few ideas of things that are wasted expenditure, or immoral expenditure, but the reason for making savings there is not really because one must make cuts to cover the costs of the other good things that need money thrown at them. I mean, for sure, it will help not to be spending billions on out of date nuclear weaponry that is about as useful as the crown jewels but more expensive. But if we needed such things, we shouldn't do that instead of having a good railway infrastructure or accident and emergency treatment in hospitals. We should, in that case, have to do it as well.

So how are these things to be funded? How is the new government in Greece going to fund its new anti-austerity policies. How has it been able to restore free health care and give the cleaners a job again? The answer to this question requires you to stop thinking the way the austerity parties have taught you to think. They want you to think it is like a family with a fixed income to spend. But actually it is not like that. It is more like a business which makes an income by engaging in income generating activities, and inviting its citizens to invest their money in those activities and to make things happen. It's when things happen that money flows into the coffers of the state.

In fact there are two ways this happens. One is that when people (especially the poor) have some money they will spend it, often in local businesses such as the pub at the corner, or the betting shop or the hairdressers. The pub is less likely to go out of business, and instead will be paying rates, taxes and duty on the beer sold, and the people in the pub will be socialising and sharing ideas for things to do to, making connections for their businesses (You need a builder? I know one!) and looking after each other's mental health and welfare. The community is better off, there is less strain on the resources of the doctors and social workers, and the money gets back to the government in taxes to be sent out to the poor again. Similarly, if you give the students an income so that they don't have to work to live, they will spend the money they have on many things. The jobs they currently take will go to ordinary working families instead, who will need less support from the state and will pay income tax, council tax and all the rest. All this money goes round and round, because as business gets better (because there is money in the system) every business can afford to employ someone, or do renovations, or send out produce that employs delivery firms and other distribution methods. And every time the money is spent, tax comes in to the state coffers to be used in support of the welfare state. The system is like investing to get a return, not like spending a fixed income. The income is not fixed. It will go down if there is no productive activity going on. Which is what happens if you cut benefits and cut employment in public services, and cut wages and cut research budgets. You end up with nothing.

Where do you get the money to start this virtuous circle, if you have the situation that will be left by this government where the debt has gone up and no one has money to spend (except the very rich who have siphoned it off to tax havens or loopholes and are not spending it here)? Well, the answer is that you invite those who have some savings, and want to invest their savings in a secure scheme and for interest, to invest it in the government's own savings bonds. So the wealthy pop their money into your coffers, and you promise to pay them interest, or the money back when they need to withdraw it. That's fine. They need a place to keep their money, and you, the government, then put it to use on generating this active, healthy, well educated society. In due course, this will pay its dividends, in fuel duty, alcohol duty, income tax, council tax, business rates, VAT and so on. The private individuals' savings will have helped the state to get back onto the ladder of prosperity that can deliver a fully funded welfare state. And the fully funded welfare state is actually what prosperity depends on. Because you need educated healthy citizens, with an appetite for enterprise and a good environment in which they can expect their business to thrive, with a purchasing power sufficient to allow things to happen.

It is no good helping people to start a business by lending them money. Because if no one has any money to spend, the business will fail and you will never recover the investment. That's the wrong way round. Start with the people who need the services, give them money to spend, and then others will be able to start the businesses they need and make a living from them. Then you will get back all the money that went out to them, because it comes back in taxes and profits and increased spending power at every level of society.

The answer then? It should not really be "We plan to make savings here and here to fund this proposal" but rather "You don't understand: we are talking about making money, not spending it. This is the way you make money. Don't believe what they've told you in the past. That was a way of screwing money out of you to give to the rich. We don't do that. We give it to you so that it will come back to us, seven times over for every pound we spend on the poor and the sick and the aged and the disabled and the unemployed."

No controls

Another post on the same kind of theme as the last one. After finding that the lights are not subject to human control in the Bodleian Library, I went to St Anne's College (Oxford) to hold a conference in their smart new building by the front gate. All very swish and the rooms were beautifully equipped for the kind of meeting we were having. But the windows were all sealed, and there appeared to be no air conditioning. When we asked if we could adjust the heat and get some fresh air, we were told that there was no way to adjust the heat or fresh air in the room, apart from opening the two doors marked fire exit (which open onto the garden). Well, fortunately it turned out these were not alarmed, and they could indeed be opened, which we did. But the choice was masses of fresh air from an open door, or two open doors, or none at all. And is it really best to heat the room and then cool it by opening the door? And ought it not to have a supply of fresh air anyway when there are a whole lot of breathing bodies in it? Why was it made with no controls and no air vents at the windows?
It was also impossible to raise the slatted blinds (though you could adjust the angle of the slats). My impression is that they don't want anyone to have any control over anything lest they do it wrong. No one should be permitted to make themselves comfortable. There is one compulsory condition of artificial light, no daylight and no fresh air. If that's not how you like it, don't live in the "state of the art" buildings we build today in this country.

Excessive lighting

The main reading rooms of the old Bodleian Library in Oxford were designed in 1610, and completed around 1624. They have wonderful large windows to let in the daylight so that one can read in comfort. The library had no artificial lighting until 1929, so it used to close at 3 pm in the winter.
I assume therefore that they put in the artificial lighting in order to enable readers to continue their work after dusk. That is, after all, the only time when it is too dark to read by natural light, aside from a few very wet and stormy winter days when the sun scarcely rises and you wouldn't notice if it had.
When I was in Oxford earlier in my career the lights were not normally on. They were also quite gentle. Now they are painfully and glaringly bright, and on all the time. I asked today if they could be turned off, since it is a lovely bright day and there is no shortage of light from the windows. "No" is the answer. They are on a time switch and cannot be turned on or off manually. So we have to suffer aching eyes and glare on the computer screen, and we have to burn electricity unnecessarily all day, for the advantage of whom, exactly?
"They will dim automatically as the brightness increases" she said. Well, you could have fooled me. It doesn't get much brighter than this, and the lights are as bright as any I've ever seen.
What a crazy modern world we live in. Who is in control? Not those whose needs are apparently supposed to be being met.
(By the way it is also too hot. Looking at the room, I would say that they have put in a false ceiling to make the room less high, so that we all breathe each other's stale breath instead of passing it into a good refreshing space above. Another folly of modern design, perhaps for another post).

The last world war

So today begins the war for fuel which will (I predict) end up killing us all. Last one left, switch out the light...

Nuclear power?

No again.
No no no no no no no no.

Did someone say yes? Must be stark raving mad.

(I thought I'd just say this again in case anyone had been inclined not to heed my message in 2008. Perhaps in 2011 you might listen more carefully)

Who is to blame for the oil spill in the Gulf of Mexico?

I'm puzzled and rather irritated by the constant stream of outrage from America, from its president to its ordinary citizens, as though they were not themselves to blame for that fact that some companies are drilling for oil in the seas off the coast of America. I mean, if you want to drive gas-guzzling cars, and fly everywhere from state to state, and use fossil fuels to power your air conditioning and heat your water for your daily shower, this is how your needs are supplied. And if you are demanding that oil be drilled off shore, then you are taking the risk (as with all such enterprises) that there will be accidents that cause this kind of spillage.
So what then? Are you prepared to pay more so that the companies that do the drilling can be already prepared, at great expense, for immediately dealing with any kind of accident no matter how rare and unlikely? How much more are you prepared to pay for your gas and air fuel to have that?
Or are you prepared to convert to wind farms and go by train instead of cars and planes? Who ever heard of wind spillages? (And don't tell me Nuclear is the way, because I can tell you that nuclear spillages are MUCH worse).
It's a matter of lifestyle choices isn't it? If you make the right lifestyle choices those sea birds won't be soaked in oil because no one will be demanding oil from the bottom of the sea. If you don't make the lifestyle choices, then don't blame the company that is working to give you what you are asked for at prices you were prepared to pay. They don't do it for fun. They do it because you pay them to do it.

Don't we live in a mad world?

Our leaders throw away billions (our billions) to "protect us" from non-existent risks ("volcanic ash" "swine flu") that appear to be of their own imagining, and whose effects, even if they were as serious as they wrongly suppose, would be far less damaging than the precautions taken to prevent them, while all the time they are ignoring the elephant in the room.
Why not let people, airlines etc, assess for themselves the level of risk they are prepared to take, when there is a potential danger from what they plan to do? Who are you to tell us whether we can or can't carry on our lives in the normal way and risk our lives (as we do whenever we leave the house)?