We should welcome Lynton Crosby's knighthood

The honours system was ever thus.  Originally devised by absolute monarchs as a means of providing for their bastard progeny, and perhaps as compensation for the cuckolded husbands of the passing occupants of the royal bed, peerages have always been a reward for service to the ruling elite.  Knighthoods, too, have generally been bestowed upon those whose activities have served and bolstered the privilege of the ruling elite.

In the years after the Second World War, the façade of democracy was built up through the use of the lower honours – the MBEs, OBEs and BEMs – to reward charity volunteers, lollypop men and dinner ladies, and the host of entertainers and sportspeople who engage in the essential work of distracting the masses from the injustice of the British class system.  Even so, for the most part, the honours system provided rewards for service to the ruling elite.  This has always been most obvious in the honours conferred upon the luminaries of the (centre) left.  Over the years we have witnessed a steady stream of “moderate” trades union leaders famous primarily for shafting their own members, elevated to the peerage or knighted be the monarch of the day.

As with so much of British life, Blair’s New Labour government was responsible for messing things up.  In opposition, New Labour had used a growing voluntary (sic) sector as an alternative civil service; developing many of the policies that the incoming government eventually enacted.  As a reward, New Labour opened up the honours system to people employed in the voluntary sector, together with the special advisors and senior civil servants charged with enacting New Labour’s programme.

The public were involved to the extent that we were all invited to nominate people who had provided public service.  These nominees would be vetted by a new Honours Committee, which would forward their recommended recipients to the Prime Minister.

These Blairite changes served to confuse the public into believing that the honours system was no longer about privilege and class.  However, even under Blair, the charity fundraisers and lollypop men only got the lesser honours.  Peerages and knighthoods continued to be the preserve of the brown-nosers and lackeys of the ruling elite.

This is why we should welcome Lynton Crosby’s knighthood.  It is an honour in keeping with the historical tradition of the honours system.  It is a reward for (cynical and socially divisive) service to the ruling elite.  It highlights exactly what the system is about.  It helps us tear aside the curtain of celebrities and community workers to see the real class divisions of our increasingly inequitable and divided society.

We should recognise that you cannot have a democratic honours system when you do not live in a democracy.  Nor can you expect a grossly inequitable society to produce anything other than a class-ridden system of rewards to those who serve it.

Like statues in public places, knighthoods and peerages are generally a reward for crapping from on high onto the heads of ordinary people.  And like statues in public places, the best we can say is that the pigeons have it about right!

Can we find a better way of naming these storms?

The key benefit of naming storms would seem to be to provide a reference point where regions experience one catastrophe after another.  We can no longer speak of the “Carlisle floods”, since there have been many.  Nor, now, can we simply refer to them by year – there may have been just one in 2007, 2009 and 2012.  But we may well see three in 2015, and several more in January and February of 2016.  So at least by naming the storms responsible for each episode, we have a point of reference for each one.

The trouble is that in true British fashion, the Met Office has opted for the most banal and uncontroversial names they could find.  Yes, I know that the public were invited to send names in.  But it will have been the Met Office PR department that chose the names that were finally allocated.  So what we have ended up with are a series of storms named after everyone’s favourite uncles and aunts – Desmond, Eve and Frank being the most recent.

These soft, cuddly names appear to directly contradict the chaos and damage caused by the storms themselves.  And I cannot believe that the British public lacked the creativity to capture this.  We can be sure, for example, that someone at the Home Office (or perhaps UKIP HQ) will have attempted to link weather to terror by suggesting names like “Atlantic Storm Osama” in an attempt to imply the potential for death, destruction and disruption.  Far more of us will have undoubtedly suggested naming storms after our favourite villains – “Storm Voldemort” or “Deluge Davros”, perhaps – in an attempt to convey the seriousness of these weather events.

There may be copyright issues that prevent the use of fictional bad guys for naming storms.  And there is a deeper reason for not doing so.  The storms that are currently devastating large tracts of Northern England are not a manifestation of evil impacting us from outside.  They are events entirely of our own making.  These storms are a manifestation of climate change – so-called 1 in 100 year events that have been occurring every couple of weeks (and breaking records each time) cannot be viewed as anything but.  We were warned decades ago that global warming would disrupt the jet stream, push more water vapour into the atmosphere, and produce more violent storms – exactly like the weather events we have witnessed for the best part of ten years now – if it walks like, quacks like, and looks like a bird of the genus Anas, it probably is.

However, blaming climate change is a cop out, since the destruction wrought upon the people of Cumbria, Lancashire and Yorkshire (and several less publicised areas of Scotland and Wales) is more a consequence of human action (and inaction) in response to the threat of climate change than to the new climate conditions.  Perhaps least obviously, the abject failure of government land and housing policy has meant that most new housing in the last thirty years has been built on flood plains with the inevitable consequence that further investment in flood defences has been needed.  But, of course, for thirty years, governments have failed to invest in appropriate defences that take climate change into account – there is no point building defences just a few inches higher than the last flood when scientists are warning us of a need to build our defences several metres higher – anything less is just pouring good money after bad.  Not that the current government has been pouring money into flood defences.  Rather, for the past five years they have deliberately cut back on funding for flood defences – a false economy that may well cost the treasury another £1.5 billion (which will presumably be clawed back through cuts to benefits and social care).

Agricultural policy has also played a part in the deluge.  A deliberate policy of cutting down the trees and burning the peat bogs in the upland river catchment areas has dramatically lowered their capacity for storing water upstream.  The result is that when storms like Desmond, Eve and Frank deposit (what we used to think of as) a month’s worth of rain in a single night onto our hillsides, almost all of that water runs directly into the streams that run into the rivers.  Rivers that government policy has caused to have been straightened and dredged, so that all of this additional water runs into the flood defences downstream with vastly greater force.

So I have an alternative suggestion for naming storms in future – one that I am sure most ordinary people will embrace, but that the Met Office would never dare adopt: instead of using our favourite aunts and uncles, let us name our storms after the politicians who failed to plan for them!  It would, after all, be more accurate to say that “Kendal has been ravaged by “Deluge Davey” or that “the business district of Leeds has been demolished by Cyclone Osborne”.  And, of course, many of the poorest and most vulnerable among us will justifiably tremble at the imminent arrival of “Atlantic Storm Duncan Smith”!

Is this the end for Labour?

We may well come to look back at Wednesday 2^nd December as the day when the British Labour Party died.  Not, as the mainstream media would have us believe, because Mr Corbyn’s pacifism makes him unelectable, but because that was the day when a right-wing version of the Militant Tendency emerged to hold the party to ransom.

The schism has been long coming.  All of us have a moment when we finally tore up our Labour Party membership card in disgust.  My moment came the day Anthony Blair successfully removed “Clause 4” of the Party constitution… not because I believed that there was even the remotest prospect of Labour delivering to the people the means of production, distribution and exchange, but because without Clause 4, the Party was ideologically adrift.  Others were prepared to give Blair and New Labour the benefit of the doubt.  On the back of a huge housing boom, fuelled by record levels of private borrowing, fewer people were experiencing the kind of hardship that had been common in the 1980s.  More people were prepared to forgive New Labour its lack of principles so long as they felt better off.

Then came Blair’s Chicago speech:

“This is a just war, based not on any territorial ambitions but on values. We cannot let the evil of ethnic cleansing stand. We must not rest until it is reversed. We have learned twice before in this century that appeasement does not work. If we let an evil dictator range unchallenged, we will have to spill infinitely more blood and treasure to stop him later.”

This most dangerous of positions essentially destroyed the post war settlement and the doctrine of collective security expressed in the United Nations.  In its place was a return to the harsh imperialism of the nineteenth century in which the nation state (or alliance of nation states) with the most powerful military proclaimed the absolute right to shape the world in its own interests.  Once established, the doctrine paved the way for the failed NATO wars in Afghanistan and Iraq, the destruction of Libya and today’s quagmire in Syria… and is likely to be turned back on us as the Western economies falter while Russia and China grow in confidence.

The invasions of Afghanistan and Iraq – which owe more to the American quest to secure and transport oil than any genuine concern about the plight of the people in those benighted lands – led many genuine pacifists to rip up their membership cards.  Others accepted the disgraceful lies that the Taliban were a threat to the West and that Saddam had weapons of mass destruction that could be turned on us at a moments notice.  However, when it became clear that the government had lied, many more party cards were torn up… something that continued as the body count rose.

At home, too, New Labour became more authoritarian and vindictive in its dealings with its traditional supporters.  Even current Tory anti-terrorism legislations falls short of what New Labour would have put in place had they been re-elected in 2010.  And we should never forget that it was New Labour that introduced the hated Work Capacity Assessment test used to deny disabled people benefits, and which is thought to have led to more than 8,000 premature deaths.  Then there were the single issues – Labour being “relaxed about people getting filthy rich”, tuition fees, the authoritarian Mental Health Act, the sight of Ministers cosying up to the likes of Fred “The Shred” Goodwin, etc.  When the economic storm broke on Gordon Brown’s watch, even the claim to economic competence had disappeared – not helped by the ridiculous “there’s no money left” note left by Liam Byrne and joyfully publicised by the incoming ConDem government.

By the time the hapless Ed Miliband arrived, Labour had become an unprincipled shell, supported only by a rag-tag of careerists and die-hards; largely overseen by a caucus of MPs who stood for office as Blairites.  As David Cameron and George Osborne set about doing to working people what Cameron had once done to a dead pig, the best Miliband's Labour party could offer was to do much the same thing... but promise not to enjoy it.

In May 2015, millions of the people who would have previously voted Labour chose instead to stay at home.  Millions more turned in desperation to the Scottish National Party, the Greens and UKIP in an attempt to find a party that would stand up for them.

Labour would have died after the failure in May 2015 if Ed Miliband had put party before personal concerns and stayed on to clean up the mess he had made.  Having a leadership election immediately after such a catastrophic defeat was a tragic mistake.  The party had not had time to evaluate the causes of its defeat; still less to formulate its future policy direction.  The party needed Miliband to stay on while it sorted itself out.  Although whoever emerged as leader would be unable to secure a parliamentary majority in 2020 because of the loss of Scotland coupled to Tory boundary changes.

Calling an early leadership election paved the way for the "Corbyn surge" – although even this could have been stopped in its tracks were it not for Blairite MPs foolishly allowing Corbyn onto the ballot paper.  MPs opposed to Corbyn’s views claimed that they had nominated him solely so that his arguments could be aired (presumably with the intention that they would also be defeated).  However, the underlying concern was that the election of a Blairite would have led labour into permanent decline – no longer able to win in Scotland, and threatened by UKIP and the Greens in England.  Only in Wales, where Labour treats the Assembly as is own fiefdom and the electorate is backward enough to vote for a corpse so long as it is sporting a red rosette, could Labour guarantee a modicum of power.

The doubling of Labour’s membership as thousands of supporters rallied behind Corbyn’s leadership bid had the effect of a blood transfusion to a dying man.  But it was an intervention looked upon with horror by a Blairite parliamentary party that had already decided to hang a “do not resuscitate” notice at the foot of the bed.  

Always embarrassed by the party membership, the Blairites sought a passive electorate, not an active movement. The majority of Labour’s parliamentary party – who are largely the inheritors of Anthony Blair – see their mission not as opposing the Tory government, but of disenfranchising the party membership while making Corbyn a prisoner of a right-of-centre shadow cabinet.  In this they are aided by the fact that Corbyn was a relic – a lonely ghost of Labour’s left wing past – rather than a member of a growing party faction.  Irrespective of his massive support in the party, inside Parliament you can count on one had the number of Labour MPs who would not prefer a different leader.

What happened in the events leading to the vote for war on 2^nd December was the first flexing of muscles of the parliamentary Blairite Tendency.  And it is perhaps fitting that their first public act was to take Britain into a war that promises to be even costlier than Blair’s illegal war in Iraq.  However, the wider point is this:  Corbyn lacked the power to force a party line because his leadership would be fatally undermined by the ensuing rebellion.  On the other hand, his opponents calculate that they are not yet strong enough to overthrow him.  So within parliament we are left with a stalemate that is likely to manifest across a whole range of issues, and will become increasingly embittered the closer we get to the next election.

Corbyn’s real problem is that he can do nothing to remove his opponents.  Certainly he can use his supporter base to change the way the party does business and to make it easier for party members to elect candidates more in line with their own principles.  But none of that can remove a single Blairite MP from parliament.  Barring death or madness, elected MPs stay in place until they are voted out in a general election.  So whether he likes it or not, Corbyn is the leader of a parliamentary party that will increasingly reject his leadership.

Add into this mix the problems that arise when the Tories gerrymander the constituency boundaries and you have a recipe for open civil war.  Most Labour constituencies will be redefined, forcing sitting MPs to face reselection.  At this point, Corbyn’s supporters will get to reap their revenge.  But even deselected MPs remain as MPs.  And they are unlikely to go quietly into oblivion.  Rather, they are likely to follow the path mapped out by “The Gang of Four” in 1981.  However, this time round we could well see a gang of a hundred or more establish their own version of the Social Democratic Party – adding to Labour’s woes in attempting to win seats back from the SNP, Tories and LibDems.  By which time, I imagine most of Corbyn’s supporters will have given up on electoral politics altogether.

The EU? It’s like an argument with a libertarian!

We all know someone with right-wing libertarian views.  The sort of person who will tell you that Osborne’s austerity cuts are only scratching the surface of what needs to be done.  The sort of person who thinks the best outcome for all of us is if we did away with the state altogether.  The sort of person who, presumably, believes that downtown Mogadishu is some kind of free-market paradise.

We know how the argument goes:

“We would be better off without the state…”

“Er… that’s an interesting idea.  But what would stop another country invading us?”

“Well, obviously, you would have to keep an army, navy and air force for defence…”

“What if a fellow citizen decides to beat you up and steal your possessions?”

“Well, obviously, you would need a police force to maintain law and order…”

“Interesting that you should use the word law, doesn’t that imply that we might need to run a system of courts, with lawyers and judges and the like?”

“Well, obviously, you would need courts to uphold the law…”

“And wouldn’t that suggest that you would need an education system of some kind so that if you were to end up before the courts you would be represented by someone with at least half a clue about what he or she was doing?”

“Well, obviously, you would need some education…”

“And some buildings perhaps?  And maybe some roads or railways so you can actually get to court?..”

So it goes on.  The principle is conceded once you acknowledge that you need armed forces for defence.  All else is the slippery slope towards today’s centralised and all-encompassing state bureaucracies.

Crucially, nobody set out to create a centralised bureaucratic state.  Rather, it evolved as the sum total of all of the solutions we put in place to (so we thought) make our economy operate effectively.  Less obvious state functions like public healthcare have a “market” function in maintaining a healthy workforce.  Food standards play a similar role, as does dangerous dogs legislation.  Research and regulatory agencies were created to ensure that corporations do not cheat.  Special branches of law were created to punish those who do cheat while providing redress to those who would otherwise lose out.  One way or another, all administration, bureaucracy and law relates back to market efficiency.

When politicians set out to create a single European market, irrespective of what they may have said to the contrary, what they were ultimately signing up to was a single European state.  There is no alternative direction or halfway-house here.  If you want a functioning free market, then you have to create a single legislative framework, presided over by a single state to police it.  Consider, for example, the current difficulties with corporate tax avoidance.  This stems largely from the fact that we have yet to develop a single European tax system.  Put such a system into place, and corporations could no longer benefit from registering in, say, Luxembourg because of its generous tax regime.  Quite simply, if you want a single market, then you must have a single set of tax rules.

Nor can you pick and choose.  You either have free movement of people, goods and services or you don’t.  It is inconceivable that, for example, within the UK Wales would act to prevent English people coming to live here or, perhaps, from claiming benefits here if they are unable to find work.  That is the point of a single market – everyone gets treated the same.  Lose the principle and you end up with chaos.  If, for example, Britain chose to end the free movement of labour, might not Poland or Rumania opt to end the free market in goods and services by refusing to export to or import from Britain?

The issue becomes even clearer when we look at the single currency – which Britain uniquely seeks to avoid in the long-term.  This was the issue that is believed to have lost the Scots the independence referendum, since it was clear that the Bank of England could not be simultaneously a Bank of Scotland with a single currency but two divergent monetary policies.  The people of Greece (and Spain, Portugal and Ireland) know only too well what happens when governments overspend in the expectation that the non-national central bank will simply print more money for them.  Once Eurozone politicians realise that austerity will not work, inevitably, they will develop a single tax system and a single monetary policy that will determine the Eurozone budget.  At that point, there will be a single European state in all but name.  The only real question is whether British people want to be part of it.

Let me put it starkly, as I would in arguing with a libertarian: if you don’t want the state then you cannot have the market.

This is the key issue of debate over Europe.  If you want a single state, fine.  You should vote to stay in.  If you don’t want a single state, fine.  You should vote to leave.  But if, Canute-like, you wish to stand before the rising tide and wish for some form of business and usual, then you should probably seek a good psychiatrist.  Because only someone whose grasp of reality has seriously slipped would believe that one or two temporary opt-outs – none of which would be enshrined in treaty – are going to halt the inexorable march toward political union.

The Economics that George Osborne wants to hide

How do you make money?  If you are in the majority, then you sell your time over and over to the same employer in exchange for wages.  Some of you will be self-employed, which means that you not only have to sell your time but you must also spend additional time drumming up new business.  A handful will own businesses, in which case you will make or provide goods and services to sell to customers in exchange for money.  You will either sell directly to consumers, or you will sell to other firms.  Either way, if you cannot supply your goods or services at an affordable price and at a high quality, you won’t get paid.

So if you want to spend more money, what must you do?  Well, either you have to work harder/produce more, or you have to cut back on your current spending.  You can borrow money of course, but only within the limits of your current budget – you have to be able to service your debt.   If you fail to do this, you risk being forced into bankruptcy.  So you understand only too well why you need to run a budget surplus when times are good in order to protect yourself when things go wrong.

Buy it on Amazon

So far so good – we are now at the level of understanding of the economy that Osborne and his friends want us to be.  Using the comely image of the small town householder, Osborne would like us to believe that running the government (which, incidentally, is not the same thing as running the economy) is pretty much the same.  “We can’t pay ourselves more than we earn.”

But let us just take a step back for a moment to consider the question we began with.  I did not ask how you obtain money; I asked how you make money.  And the answer (with a small number of exceptions) is that neither you, me nor the organisations that we work for makes money.  We make widgets (all of the goods and services we produce or contribute to in the course of our work).

So who does make money?  Most of us – even politicians and economists – understand that the Royal Mint makes money.  They produce all of the cash in circulation.  Indeed, it is illegal for anyone other than the Royal Mint to make cash.  So most of us – including more than 70 percent of our politicians – believe that the Bank of England (via the Mint) makes all of the money in circulation.  And if you/they believe this, then you/they must also believe that government surpluses are bad for the economy.

To explain this, let me ask another question: what gives money its value?  Most people – again, including most politicians – think that somewhere in a dark bank vault is a pile of gold bars whose value corresponds to the value of all of the money in circulation.  After all, our banknotes still carry the words “I promise to pay the bearer on demand the sum of…” harking back to the days when a One Pound note was equivalent to a pound in weight of Sterling silver.  In fact, Britain ceased to operate a “gold standard” in the 1930s.  In the years 1944 to 1971 we operated on the Bretton Woods system in which the US Dollar was tied to gold, while all other currencies were linked to the US Dollar.  So, by default, our money was – at least in theory – as good as gold.  But the Americans cheated.  They printed vast sums of paper currency to fund their war in Vietnam, their cold war arms industry and projects like NASA’s Apollo Program.  When other countries refused to trade in dollars and demanded gold instead, the Nixon administration simply reneged on the deal.  Since 1971, all currencies have been free-floating and tied to nothing more than the trust people have in the governments concerned.

So what gives money value?  To put it another way, why should we trade in money rather than widgets or even precious metals?  Indeed, why don’t we trade in a whole range of currencies like dollars, yen, euros and yuan?  In our currency system, there are two reasons.  First, we have a law that obliges us all to accept the state currency as legal tender.  Second – and more importantly – we are obliged to pay tax in the state currency.

So, let us return to how most politicians view the economy.  They believe that the Bank of England (through the Royal Mint) creates money.  This money goes to the Treasury, where the Chancellor and his minions choose where to spend it.  It may be used to fund pensions and benefits; it might be made available as grants to organisations; or it may be used to fund public services.  Either way, the recipients of the money will use it to buy widgets in the private sector.  So, this is how (they believe) money moves from government to the firms and households that make up the economy.

Figure 1:  The politicians' view of money and the economy.

So what does running a government surplus involve?  It has to involve some combination of increasing the amount of taxes coming in and/or cutting the amount of money being spent out. 

Figure 2: How austerity would affect the private sector in this model.

As an aside, this is where much of what passes for a political debate occurs.  Broadly, neoliberals (like Osborne) opt for cutting taxes and cutting spending even further, while social democrats (like Corbyn) prefer to increase spending and increase taxes even further.  Either way, in this two sector (public/private) view of money, austerity and/or increased taxation must result in less money circulating in the economy.  And when you have less money in circulation, you also get low or even no growth, deflation, underemployment and unemployment… just like we have had since 2010.

Fortunately, all of this is a myth.  For while it is true that government is the only body legally allowed to create cash it is far from the only body that is allowed to create money.  This is because we live in a three sector economy – public/private/banking.  For more than thirty years, private banks have created almost all of the money in circulation.  This is because almost all of the transactions in the economy today are in the form of electronic transfers between bank computers.

Figure 4: The role of banks in money creation.

The real reason austerity will not work is not because cuts and taxes prevent money getting into the private economy.  Indeed, the austerity cuts made in the early 1980s paved the way for the long economic upswing in the 1990s and early 2000s.  But the reason it worked then – and why Cameron and Osborne are trying to repeat it today – provides us with an insight into why it cannot work today. To understand this, we need to know how a bank creates money.  Most economists and politicians think that banks operate a “loanable funds” model in which money is transferred from savers to borrowers.  Banks act merely as middle men, taking a fee for arranging the transfer.  In practice, however, no money disappears from a saver’s account anywhere in the system when a borrower takes out a loan.  All that happens is that a computer operative in the bank types a series of numbers into the borrower’s account and types the same numbers as an “asset” in the bank’s accounts ledger.  Through the magic of double entry book keeping, new money is created out of thin air.  A recent Bank of England paper explained it this way:

“In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”

This debt-based money now accounts for 97 percent of all of the money in circulation.  And it comes with a big drawback… “Compound interest”.  Imagine for a moment that you were the first person to borrow money into existence by taking out a loan for £100 at an interest rate of 10 percent.  At that moment, there would be just £100 in circulation.  But the total amount of debt in the system would be £110.  Where is the other £10 going to come from?  If you don’t find that extra £10 from somewhere pretty soon, the process of compounding is going to cause it to double up over time.

Figure 5: The massive increase in debt-based money.

The fundamental problem with our currency system is precisely that there is always more debt outstanding than there is money in circulation.  And the only legitimate and politically acceptable way of addressing the problem is to keep borrowing ever more debt-based money into the system.  Might there be a problem with this?

Back in the early 1980s when the Reagan and Thatcher governments brought in the financial deregulation that allowed the current system of fiat currencies to take off, borrowing money into existence was less of a problem.  This was in part because there was plenty of unmet demand for goods and services, and in part because very few people had debts – here you might begin to glimpse what Thatcher’s “home-owning democracy” was really about, and what Osborne’s “Help to Buy” scheme was trying to achieve. 

Neoliberals like Thatcher and Reagan believed that politicians and governments could not be trusted with money creation.  It was all too easy for politicians to make rash promises at election time, and then fraudulently fund them by printing money.  When they did this, the result was always the same – inflation.  Although this was experienced as rising prices, in fact inflation is the devaluation of money.  But if governments could not be trusted with money creation, who could?  Enter the bankers!  In the late 1970s and early 80s, chastised by economic crises, bankers were a highly conservative bunch.  The credit that they were prepared to extend went only to guaranteed winners – those with the very highest credit ratings.  Who better to entrust with the nation’s money supply?  Let the banks decide how much debt-based currency would be created and who it would go to.  What could possibly go wrong?

The trouble is that bankers are no different to you or me in that we all think we are above average.  When bankers loaned new money to sure-fire businesses, their success rate was high.  This, they assumed, was down to their personal abilities rather than to a general upturn in the economy.  So they became emboldened to lend even more money into existence.  But there are only so many guaranteed winners out there.  Once these have borrowed what they need, new borrowing has to come from less credit-worthy firms and households.  Fortunately, though, with the economy booming, house prices rising and consumer demand going stratospheric, even these “sub-prime” loans paid off; further fuelling bankers’ self-confidence.

In the up phases, the problem of the interest outstanding on all of the debt-based money does not look so daunting.  So long as new borrowing is increasing, there is enough money in circulation.  Does this sound a little bit like a Ponzi scheme?  If it does, that is because it is.  A Ponzi scheme is a pyramid scheme that involves drawing in exponentially more investors at each level of the pyramid in order to pay earlier investors.  The trouble is that it eventually reaches the point that there is nobody else left to invest.  At this point the whole scheme collapses.

Debt-based money can only survive so long as there are an increasing number of borrowers prepared to enter into the system.  When we reach the point – as we did in 2008 – when nobody else wants to borrow, the system collapses…  or at least it would have done had governments not chosen to sacrifice the people in order to (temporarily) save the banks.  Today private sector debt is close to 400 percent of GDP – dangerously close to where it was in 2007.

Figure 6: The spectacular rise of UK private sector debt.

So how does Osborne’s attempt to force governments to run surpluses impact on the economy in these circumstances?

In order for austerity to work, the private sector would need to be able to borrow more money from the banking sector than the government takes out of the private sector in taxes and austerity cuts.  As we have seen, this worked in the 1980s because few people had debts.  Today we have the double-whammy of what has been called “peak debt”, where there are not enough borrowers, together with a technically insolvent banking sector that is desperate to reduce borrowing.  We might think of this as “banking austerity”.

Figure 7:  When both government and banks take money out of an indebted private sector, growth falls and the economy stalls.

So the reason that running a government surplus (or even trying to cut the deficit) is a really dumb idea is that it is bound to crash an over-indebted private sector.  It matters not one jot that we are able to produce lots of widgets.  It will avail us of nothing if we all try to work like the Chinese.  With insufficient actual money entering the system, the result is bound to be low or even no growth, deflation, underemployment and unemployment… just like we have had since 2010.

So where does this get us?  I think we are in a similar position to US General Pershing in 1918.  He took the view that in order to win the war, Germany had to be crushed and its people had to know from experience that they had been defeated. By not marching into and occupying Germany, he believed the allies would have to do it all over again at some point in the future.  Sadly, in 1939 his fears came home to roost.  In a similar manner, the proponents of austerity and the nonsense of permanent government surpluses will have to fail and be seen by all of us through direct experience to have failed.  Only when the policies of Osborne and Cameron, and their equivalents in Europe, Japan and the USA finally preside over the destruction of the banks and the writing off of debt that should have occurred in 2008 will we be able to have a sensible debate about the future management of the UK economy.  Until then we are in for something of a bumpy ride.

Tim Watkins' Book, Austerity... will kill the economy!  is available in paperback and Kindle formats

Volkswagen, emissions and diminishing returns

The Volkswagen emissions scandal looks like becoming the car industry equivalent of the Libor and Forex scandals in banking.  According to European campaign group Transport and Environment, cheating on emissions tests is widespread across the car industry and applies to both petrol and diesel engines.  The group claim that there is as much as a 40 percent gap between the emissions during testing and emissions under real road conditions.

At face value, the Volkswagen scandal appears to be just another example in a tediously long list of psychopathic corporations putting short-term profit ahead of long term sustainability.  Indeed, in Volkswagen’s case, there may not be a long-term now that sales are plummeting, record fines are anticipated, and investors seek alternative investments.  When we discover – sadly unsurprisingly – that other car companies have also been fiddling their emissions data, we may simply assume some undocumented cartel-like behaviour in which everyone involved turned a blind eye.

There may, however, be a darker story here.  Why would a trusted company that has led the world in engineering risk everything on a short-term gamble to fiddle the data?  The stock answer is “profits”.  But this doesn’t stack up.  German companies have a track record of investing for the long-term.  They tend not to suffer the British disease of having to put the immediate gains for shareholders and bankers ahead of the long-term development of their companies.  So what else might be going on here?  An alternative answer is “diminishing returns”.

In the late 1970s and early 80s, the internal combustion engine was under threat from two directions.  First, and most painfully, the oil shocks in the 1970s had demonstrated just how vulnerable western countries were to any future shortage of oil on international export markets.  Second, a growing environmental lobby was raising concern about the damage to the atmosphere caused by millions of cars belching out carbon dioxide and other noxious emissions.  With millions of jobs worldwide dependent upon the car industry and the oil industry that feeds it, these concerns threatened a major economic upheaval. 

The absence of an electric car with anything like the performance of petrol or diesel cars undoubtedly saved the internal combustion engine.  Moreover, with the temporary glut of oil coming out of the newly profitable North Sea fields, the crisis seemed less urgent.  But the car industry did not emerge totally unscathed.  In a concession to detractors, the industry had promised that they could cut emissions and improve the fuel efficiency of their cars.

Initial technical improvements to engine design, improved exhaust systems and the use of catalytic converters were simply lying around waiting for someone to deploy them – they had simply been ignored back in the days when performance was considered to be the prime aim of car engineering.  The problem was that environmental and fuel concerns did not go away or even stand still.  The price of fuel continued to rise even as awareness of man-made climate change was spreading.  Having made the initial easy gains, the car industry was obliged to deploy growing teams of scientists and engineers to continually improve fuel efficiency and lower emissions.

As with all such processes, having made the initial gains, each new small increment came at an increasing cost.  More scientists and engineers were needed to work on the problems, while solutions came with an increasingly steep price tag.  Eventually they were doomed to reach a point beyond which improvements would render the vehicles unprofitable.

Of course, both the governments responsible for the emissions tests and the manufacturers themselves had vested interests in maintaining the illusion of progress.  Indeed, since the crash of 2008, exports are one of the few areas where GDP growth can be generated; and cars make up a large proportion of exports.  So both governments, struggling with balance of payments deficits, and manufacturers desperate to maintain market share, were willing to allow lax testing and inflated results.  That they would get caught out in the end was certain.  But as with all things economic in the current depression, kicking the can down the road has become the only workable approach.  Volkswagen undoubtedly hoped that someone else would be caught out first.  However, it appears to have been the high-tech manner in which they fiddled the figures that has singled them out for particular disapproval.  Where other companies have deployed low-tech cheats like sloping the test bed, ensuring batteries are fully charged, and smoothing and hardening the tyres, Volkswagen deployed their software engineers to create an algorithm that could sense when their vehicles were being tested.

The deeper issue here is not that companies cheat or that even world-leading Germany appears to have moved into short-termism.  The real problem is with our understanding of progress itself.

Progress has been the religion of the West since the Second World War.  In those heady days we told ourselves that through the white heat of technology, our road to the stars had been mapped out.  There is, we were assured, no problem that science cannot solve, no technology that our engineers cannot create.  .  In the real world, our economic wellbeing has been falling like a rock.  Middle class families that could once operate comfortably on the income of a single (usually male) earner now struggle to get by with both partners working; and often only then by accumulating mountains of debt based on the illusion that their house earns more than they do.  Working class families do not even enjoy this standard of living, finding that even with both partners working it is impossible to buy their own home.  For several decades now our road to the stars has appeared only in Hollywood’s CGI fantasies.

In truth, the story of human “progress”, like the Volkswagen story, is a tale of diminishing returns.  In every field of human endeavour we find the same story.  Initially, great discoveries and inventions could be made by lone scientists and engineers given enough time to retreat to their laboratories and think… something that did not happen too often prior to the industrial age.  Given sufficient time, a Newton could figure out the movement of the planets while a Darwin could put together the basics of evolution.  Throughout the nineteenth century, great discoveries and inventions could be made by single (mostly) men who enjoyed enough spare time.  But by the twentieth century, fewer inventions and discoveries were made by lone individuals.  More often, small research teams were required to make real breakthroughs.  In the modern – internet enabled – world, thousands of scientists and engineers in teams spread around the planet are employed to make incremental advances in our understanding and our technology.

Medical writer and doctor, Ben Goldacre has made this point well in relation to medicine.  He argues that most of the genuinely new medical breakthroughs came in the years between 1929 – with the synthesis of insulin – and 1969 – with the first transplant surgery.  Since then, we have added detail to what we already knew, and we have engineered improvements to technologies we already have.  But – and this is the point – despite vastly more scientists engaged and exponentially more money deployed, we have made very few genuine breakthroughs.  Physicist Tom Murphy has made the same point in relation to technology more generally:

“[Today] the big deals are: the computer revolution, the internet, mobile phones, GPS navigation, and surely some medical innovations. But I would characterize these as substantial refinements in pre-existing gizmos. It’s more an era of hard work than of inspiration. I’m not discounting the transformative influence of the internet and other such refinements, but instead pointing out that the fundamental technological underpinnings—the big breakthroughs— were in place already.

Murphy asks us to imagine what it would be like to be transported from the world of 1885 to the world of 1950.  What would have been new and not understood?  The list includes cars/trucks, airplanes, helicopters, and rockets; radio, and television (but not, just, the telephone); toasters, blenders, and electric ranges; radar, nuclear fission, and atomic bombs.  What would it be like if we were transported from the 1950’s into the present?

“Most things our eyes land on will be pretty well understood. The big differences are cell phones (which they will understand to be a sort of telephone, albeit with no cord and capable of sending telegram-like communications, but still figuring that it works via radio waves rather than magic), computers (which they will see as interactive televisions), and GPS navigation (okay: that one’s thought to be magic even by today’s folk). They will no doubt be impressed with miniaturization as an evolutionary spectacle, but will tend to have a context for the functional capabilities of our gizmos.”

What about the technologies that we have been promised will solve our most dangerous and conflicting problems – energy insecurity and climate change?

“Solar, wind, hydro/tidal, geothermal, nuclear fission (including thorium), wave, biofuels, fuel cells, etc.: all were demonstrated technologies before I was born. Where are the new faces? It’s not as if we have lacked motivation. Energy crises are not unknown to us, and there have been times of intense interest, effort, and research in my lifetime. Tellingly, the biggest energy innovation in my time is enhanced recovery techniques for fossil fuels: perhaps not the most promising path to the future.”

This brings us back to the Volkswagen scandal, because of its part in the fight against climate change and energy shortages.  What it tells us is that we cannot escape the process of diminishing returns.  For a while, at an increasing cost in resources, energy, capital and labour, we can enjoy some incremental improvements.  But ultimately we reach the point of denial – the point where the only thing left to us is cheating and fiddling the figures.  But when it comes to curbing carbon emissions and deploying clean energy generation, cheating will not do.  Quite simply, if humanity has a future, the lesson here is that we need to invest far more than is currently the case if we are to have even the remotest chance of coming up with a game-changing new technology.  The alternative is that, sooner or later – and probably sooner – much of what we take for granted in our western lifestyle – private motoring, constant electricity, affordable heating, abundant drinking water, free medical care and education, and much more – is going to disappear.

We can cheat for a while – as governments have been doing with their GDP figures, and oil companies have been doing with their reserves – and we can hide in a CGI-generated fog of denial – as we have been doing with climate change.  But we are fast coming up against limits that will not be ignored – we might be able to defy gravity and thermodynamics in a Hollywood movie; but in the real world these hard physical laws result in collapse and decay.

Dear tired old "New" Labour,

I understand that you think you have something to say... and have been all too keen to feed the media with anti-Jeremy Corbyn interviews and soundbites.  But we need to get one thing clear:

You lost!

I don’t mean just that you lost the Labour leadership election this weekend.  In case you hadn’t noticed, you lost the 2015 and 2010 general elections too.  And you only managed to win the 2005 election (on just a third of the vote) by conning people into thinking that Gordon Brown was an alternative to the war criminal Blair.

You managed to lose the Scottish government to a minority SNP administration in 2007, and since 2011 the SNP has governed alone in a Scottish Parliament that was designed to prevent government by any one party – just how useless do you have to be to achieve this? Worse still, your presence alongside Cameron during the independence referendum paved the way for the annihilation of Scottish Labour in May 2015. 

Unless the situation in Scotland can be reversed, Labour cannot form a majority under the first past the post system.  Yet it is far from clear how “appealing to Tory voters” – essentially taking Mr Miliband’s lead in promoting Tory-lite – is going to win back Scotland from the SNP.  To win in 2020, Labour will need to appeal to everyone, not just swing voters in Tory marginals.

This summer you have had every opportunity to present a vision of what a future Blairite Labour government might be like.  Instead, your candidates chose not to campaign at all; preferring instead to attack Jeremy Corbyn – the one candidate who did campaign on policies.  To a man, your ageing Grandees were wheeled out to tell Labour members and supporters that Jeremy Corbyn would be a disaster.  The war criminal Blair was all over the media reminding us of how he and his acolytes used to hand policy edicts down from on high.  Just as during your time in office, you treated the rank and file of your party as donkeys – not to be involved in politics, but merely to turn up to deliver the leaflets during election campaigns. Gordon Brown, Jack Straw, David Blunkett and Charles Clark were wheeled out to tell us why we should not trust Corbyn.  Their pronouncements were all too reminiscent of the war poster published by the discredited Chamberlain government in 1939… “Your courage will bring us victory”.  We – the ordinary people of Britain – must forget about our needs and aspirations so that you – the Westminster elite – can enjoy the privileges of office.  Not one of you offered any kind of vision for the future that ordinary people could rally behind.

Your sitting MPs also threw their rattles out of the pram.  Irrespective of the wishes of the rank and file, they made clear that they were not prepared to work with Corbyn.  It is precisely this contempt for the views of ordinary Labour members and supporters that resulted in your defeat in May.  Thousands of your core "supporters" either stayed at home because they could see no reason to vote for you, or worse still, chose to vote UKIP, SNP, Green and even (one suspects) Tory.  Just prior to the election, despite being aware that you needed every vote you could get, Rachel Reeves – one of your number who refuses to work with Corbyn – told 8 million benefits recipients that “Labour is not the party for you”… with friends like that, who needs enemies?

You accuse Corbyn of wanting to recreate the past.  But it is you who seem to want to recreate the glory days of 1997 (which, in case you hadn’t noticed) was 18 years ago, and we've been through the deepest recession in living memory since then.  

Like all arrogant people, you choose to believe that Labour's success in 1997 was entirely down to you.  You conveniently overlook the fact that by the end of 18 years in office, a tired Tory party had alienated large swathes of the electorate.  The reversal over the Poll tax, the economic debacle over the exchange rate mechanism and the constant squabbles over Europe sealed the Tories' fate.  Rather like your own period after government, the Tory party of 1997 to 2005 was so full of tired old men clinging to the fading memory of power that there had been no room for the new generation of leaders to emerge.  Hague was a joke (albeit often a very funny one); IDS was as disastrous for the Tories as leader as he now is for Britain’s poor; Michael Howard was unpopular beyond the Tory rank and file.  It took the Tories a decade to develop a leadership that could take you on.  And once you were faced with a coherent opposition, you wilted away.  In that light, what political credibility do you really have?

The Labour party rank and file were devastated by the 2010 election result.  More importantly, the ordinary people of Britain, who are now shouldering the burden of your bank bailouts, were devastated. The expectation had been that either Gordon Brown would scrape a small majority together or, at worst; you could form a coalition with an apparently left-leaning Liberal party.  Instead, we got Cameron, Osborne and the hapless Clegg…  and you couldn’t even beat them in 2015!

The truth is that, like the 1979-1997 Tories before you, you steadily alienated your supporter base to the point that they would rather vote for someone else.  Many were alienated by your illegal invasion of Iraq.  Others, myself included, defected over the increasingly authoritarian policies you chose to pursue; policies operated with relish by the incoming ConDem coalition. 

Meanwhile, the insistence of your grey and tired old men than they have some unique insight into how to win elections – a position seriously undermined by your inability to get elected or even to win the party leadership – has served to prevent a new generation of leaders from embarking on the process of rebuilding your party following your defeats.  You are unable to tell us what purpose the Labour party serves (beyond keeping you in a job).

I fully accept Corbyn may not be able to win in 2020.  But that is what they said about Thatcher when she became Tory leader in 1975.  I also believe that given the mountains you will have to climb in Scotland, the north of England and Wales, a Blairite Labour leadership would definitely lose.  Frankly, your "power without principle" proposition means nothing to an electorate that is fed up to the back teeth of the Westminster elite.  We understand all too well what the Tories stand for – privilege, the banking and finance sector Ponzi scheme, and the perpetuation of rule by the elite.  What we don’t know is what Labour stands for.  Nor, clearly, did Yvette Cooper or Liz Kendall.  Late in the day, Andy Burnham appeared to come to the realisation that there was a world beyond Westminster.  But by then it was too late.  The task Corbyn must now perform is to foster a new coalition of trade unions, traditional Labour supporters, Greens, Celtic nationalists and new grassroots movements and campaigns that can provide the Labour party with a reason to exist (beyond getting tired old men – and women – re-elected) like a previous generation did in the run up to 1945.

The Labour party will fight the 2020 election after a decade in opposition, 23 years after Blair was swept into Downing Street, and 17 years after Blair chose to invade Iraq.  In 2020 it will have to be relevant to a new generation or it will lose.  You need to understand that just as the politics of 1983 will not work, nor will the politics of 1997.  The baby boomers that you, and the Tories before you, relied upon to win elections are dying away.  Those who haven’t already died by 2020 will be increasingly frail and out of touch.  At the same time, a new generation of “millennials” will be flexing their political muscles for the first time – we see the beginnings of this to an extent with the high proportion of young people active in the Corbyn campaign.  This generation will have an entirely different agenda to yours.  They will want to address genuinely life and death issues such as climate change, population overshoot, and food and energy security.  They will also have immediate concerns around the housing crisis, student debt, unemployment and underemployment, and falling living standards.  These were all issues that your government chose to leave for a future generation to deal with.  Well that future generation just grew up!

You did some good things in office; particularly in your first term.  Devolution, reform of the House of Lords, and the minimum wage are not to be sniffed at.  But they were largely outweighed by what you did later.  The illegal invasion of Iraq will be a permanent stain on your reputation.  Less obviously, your hated Work Capacity Assessment Test has resulted in the premature deaths of nearly 90,000 of the most vulnerable members of our population.  Your Regulation and Investigatory Powers Act together with various so-called anti-terrorism legislation has left Britain one of the most surveilled countries on Earth, and has helped to create a security service that is out of control.

So dear Blairites, let me finish be repeating the words of Cromwell so devastatingly voiced by Leo Amery in May 1940:

“Somehow or other we must get into the Government men who can match our enemies in fighting spirit, in daring, in resolution and in thirst for victory…  Some 300 years ago, when this House found that its troops were being beaten again and again by the dash and daring of the Cavaliers, by Prince Rupert’s Cavalry, Oliver Cromwell spoke to John Hampden…  ‘Your troops are most of them old, decayed serving men ...’  You must get men of a spirit that are likely to go as far as they will go, or you will be beaten still. It may not be easy to find these men. They can be found only by trial and by ruthlessly discarding all who fail and have their failings discovered.   We are fighting to-day for our life, for our liberty, for our all; we cannot go on being led as we are.  I have quoted certain words of Oliver Cromwell.  I will quote certain other words.  I do it with great reluctance, because I am speaking of those who are old friends and associates of mine, but they are words which, I think, are applicable to the present situation.  This is what Cromwell said to the Long Parliament when he thought it was no longer fit to conduct the affairs of the nation: You have sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go!

”

Two States - One Political Crisis

We tend to view events through the personalities of those involved.  Is George Osborne a bumbling economic illiterate or an evil genius?  Is Iain Duncan Smith a scrounger, a sadist or a full-blown psychopath?  Did Labour elect the wrong Miliband?

In truth, public personas are more often shaped by events and circumstances.  Remember how John Major was doomed by Guardian cartoonist Steve Bell’s portrayal of him as a grey wimp who wore his pants outside his trousers.  Despite being a tall (over six foot) and charismatic man, Major was unable to shake off this image.  Why?  Because he, and his hapless Chancellor had presided over economic crises against the backdrop of a Tory party divided upon itself over Europe.

Occasionally in times of profound crisis, history throws up the same personas to act out the same roles.  Leon Trotsky in his History of the Russian Revolution saw this in the persona of Charles I of England, Louis XVI of France and Nicholas II of Russia as each faced the collapse of their particular established order:

“The historic-psychological contrast… between the Romanovs and the Capets can, by the way, be aptly extended to the British royal pair of the epoch of the first revolution.  Charles I revealed fundamentally the same combination of traits with which memoirists and historians have endowed Louis XVI and Nicholas II.”

The passivity in the face of crisis; the political indecision; military failure; the desperate extraction of income from an increasingly impoverished people; the overbearing foreign wife; and the exalted courtiers giving flawed advice, were there on each occasion, playing their respective roles in leading the regime to the scaffold.

What are the chances of all of these actors being mystically reincarnated time and again to play out the same tragic comedy?  None whatsoever – as Trotsky went on to point out – it was the crisis of the regimes in question that brought forward the personas.  Even the foreign wives were simply a measure of the crises, as royal marriages were used in an attempt to cement friendly relations with stronger powers.  Charles I, Louis XVI and Nicholas II were no more grey impassive wimps than was John Major.  They had simply reached the point in the crises of their respective regimes at which any move they made could only hasten the collapse.  So they locked themselves behind the gates of their palaces and partied like there was no tomorrow… because, for them, there was no tomorrow.

It is in this light that I wish to draw attention to two recent articles by John Michael Greer - The Suicide of the American Left and The War Against Change – that highlight the staggeringly similar political decay in the USA and the UK.  In both articles we can easily substitute the UK for America; the Tories for the GOP; and New Labour for the Democrats.  This implies a crisis that goes much deeper than the individual actors who happen from time to time to take centre stage.

Below, I quote extensively from John Michael Greer's articles to reinforce this point.

Much of the political class in the USA and UK have tended to see 1989 (and the collapse of the Soviet Union) as the point when America emerged as the sole global superpower (Americans dislike the word “empire”).  However, as Immanuel Wallerstein has pointed out, the apex of US power came in 1945.  The real era of greatness for America came in the 1950s and 1960s - when the USA could still win wars and take time out to put men on the moon.  Recession and military defeat in the 1970s served notice that no hegemonic power remains at the top forever.  By 1989 the USA was already well into decline (but less so than its Soviet rival).  This decline is most obviously observed today in the USA’s (and its ever weaker UK ally's) inability to impose its will in its various wars and interventions in the Middle East, Asia and most recently Ukraine in the face of a resurgent Russia and a strong China.

The existential regime crisis for both the USA and the UK plays out in the politics of both states.  Like doomed emperors before them, the political class and their corporate backers have locked themselves in their palaces as they try to keep their party going.  They dare not make fundamental changes because any real change at this point will hasten the coming collapse of the system:

“For the last forty years, mind you, America [and the UK] has been moving steadily along an easily defined trajectory. We’ve moved step by step toward more political and economic inequality, more political corruption, more impoverishment for those outside the narrowing circles of wealth and privilege, more malign neglect toward the national infrastructure, and more environmental disruption, along with a steady decline in literacy and a rolling collapse in public health, among other grim trends.”

Collapse is assured anyway of course.  The US-centred global economy is nothing short of a giant Ponzi scheme in which there is now six times more paper “wealth” (in reality non-redeemable claims on future wealth) than there is real wealth to back it up.  As the world hits the limits to resource extraction on a finite planet, sooner or later an economy based on debt-fueled infinite growth must stop functioning.  The next banking collapse is no more than a couple of years away (maybe sooner).  And this time around the “too big to fail” banks will have become “too big to save”:

 “The political consensus in Washington DC [and Westminster] these days can best be characterized as an increasingly frantic attempt, using increasingly risky means, to maintain business as usual for the political class at a time when “business as usual” in any sense of that phrase is long past its pull date. This, in turn, is largely the product of the increasingly bleak corner into which past policies have backed this country, but it’s also in part the result of a massively important but mostly unrecognized turn of events: by and large, neither the contemporary US [and UK] political class nor anyone else with a significant presence in American [British] public life seems to be able to imagine a future that differs in any meaningful way from what we’ve got right now.”

In the political arena the traditional conservative parties (Republican/Tory) have become the radicals – pursuing any and every attack on their own people in an attempt to maintain the privilege of the elite:

“…the Republicans [and the Tories] decided that they’d never met a foreign entanglement or a government handout they didn’t like—unless, of course, the latter benefited the poor.  An ever more intrusive and metastatic bureaucratic state funneling trillions to corrupt corporate interests, an economic policy made up primarily of dishonest statistics and money-printing operations, and a monomaniacally interventionist foreign policy.”

As this plays out, the party of the left (Democrat/Labour) has morphed into the conservative party:

“Back when the two parties still stood for something, for example, Democrats in Congress  [Labour in Parliament] could be counted on to back organized labor and family farmers against their corporate adversaries and to fight attempts on the part of bankers to get back into the speculation business...

“Nowadays? The Democrats [and Labour] long ago threw their former core constituencies under the bus and ditched the Depression-era [post-1945] legislation that stopped kleptocratic bankers from running the economy into the ground…”

There is no longer an alternative vision of the future, merely an ominous warning about how bad things will get if the other party wins power.

“A movement that defines itself in purely negative terms, though, and attempts solely to prevent someone else’s agenda from being enacted rather than pursuing a concrete agenda of its own, suffers from another massive problem: the best such a movement can hope for is a continuation of the status quo, because the only choice it offers is the one between business as usual and something worse. That’s fine if most people are satisfied with the way things are, and are willing to fling themselves into the struggle for the sake of a set of political, economic, and social arrangements that they consider worth fighting for.”

Does this remind anyone of Ed Miliband’s risible election campaign?  Does this not explain why large sections of the working class defected to UKIP and the SNP? 

We even find similarities in the political personas that have arisen in both States.  The crop of sociopaths and misfits who have come forward as potential Republican presidents seem not dissimilar to the Tory contenders for David Cameron’s job once he has messed up the rashly promised EU renegotiation and referendum.  Is it just me or has anyone else noticed the similarities (not just the hair) between Boris Trump and Donald Johnson?

“…no matter how awful a president [prime minister] he’d be, the logic seems to run, at least he’d be different. When a nation reaches that degree of impatience with a status quo no one with access to power is willing to consider changing, an explosion is not far away.”

On the left too, the actors look similar.  For Hilary Clinton read Liz Kendall:

“It’s pretty much a foregone conclusion that she’ll lose this campaign the way she lost the 2008 race, and for the same reason: neither she nor her handlers seem to have noticed that she’s got to offer the American [British] people some reason to want to vote for her.”

What about Andy Burnham, Yvette Cooper and the now retired Chuka Umunna:

“I frankly doubt that the other candidates have a single noble motive for seeking office among them, but they have at least realized that they have to go through the motions of having convictions and pursuing policies they think are right. Clinton [Kendall] and her advisers apparently didn’t get that memo, and as a result, she’s not even going through the motions.”

Even Jeremy Corbyn – the surprise front-runner for the Labour leadership – finds a parallel in Senator Bernie Sanders:

“… what makes Sanders’[and Corbyn's] talking points stand out among those of his rivals is that he isn’t simply talking about maintaining the status quo; his proposals include steps that would restore a few of the elements of the welfare state that have been dismantled over the last four decades. That’s the extent of his radicalism—and of course it speaks reams about the state of the Democratic [Labour] Party more generally that so modest, even timid, a proposal is fielding shrieks of outrage from the political establishment just now.”

Structurally, the UK is in an even worse place than the USA.  Whereas the US Dollar still has some international traction as the nominal reserve currency – backed up by the facade of military power –the British pound is backed by nothing more than an increasingly insincere government promise that future taxpayers will somehow find the cash to pay back all of the loans that are currently keeping the UK economy above water.  In such circumstances, the doomed austerity policy is the only approach that the political elite can pursue that does not involve their giving up any of their own wealth and privilege.

Nor does the UK enjoy the USA's still massive (albeit rapidly depleting) mineral and energy resources.  The North Sea oil and gas fields peaked in 1999 and have been declining rapidly ever since.  What coal and metal reserves Britain might have enjoyed were largely consumed in the building, administering and losing of a global empire (and in fighting two ruinous world wars).  Indeed, the UK today even depends upon imported food and medical supplies to keep its people alive.  In the (very real and imminent) event of a currency crash, the UK will face the kind of humanitarian crisis that we tend to think of as affecting third world populations. 

In the face of this existential crisis, even Jeremy Corbyn/Bernie Sanders are wedded to the increasingly bankrupt 300-year-old economics of infinite growth on a finite planet.  And while the kind of reforms they are offering might ameliorate some of the worst effects of our economic decline, and may curb some of the worst excesses of the political/corporate elite, they are at best too little too late for a system whose fall is already upon us.