The jobs transfer market

The USA economy lost 500,000 jobs in one just one month (December 2008) and the present unemployment level nationally is set at 10%, with far higher levels in some areas. At the same time, 750 million new jobs are expected to be created in South Asia over the coming decade. More will be generated in China and other parts of Asia and even Africa. This is likely to continue the drain of jobs from the USA and northern Europe where labour and other costs are high. This suggests that the USA and Europe are likely to experience structural unemployment at a high level during coming decades.

Ironically, it can be argued that Americans (and increasingly Europeans)are jobless because of the triumph of US born market capitalism. This has ensured that investment follows the same path as water – downhill, where there is least resistance and easiest returns. That means that US investors, and particularly consumers, have helped create jobs in countries where workers' pay and living conditions are far lower than those demanded in the USA and where profits (for a small elite in the US and elsewhere) can be maximised.

If this proves correct, and social and economic inequality in the West continues at its present extremely high level (bankers bonuses, sink estates, etc) it raises a very interesting question. What actions will be needed to prevent massive social unrest in the US and Europe? Surely some form of redistributive tax system is a real possibility given that the number of voters needing help will far outweigh those with assets to protect. Could Marx's prophecy of the triumph of socialism prove to be correct after all?

Just a thought!

Cynical of Ealing

Following an article by Will Hutton in the Observer newspaper of 03 January, arguing that the economic news was not as bad as some have predicted, the paper was big hearted enough to publish this letter from me the following Sunday, 10 January:

Is Will Hutton applying for a post as Gordon Brown's spin doctor? His claim that the UK economy is not a basket case after all (03.01.10) will no doubt be highly appreciated by New Labour, but is highly selective in the evidence cited. For example, to say that "growth in Britain from the dark days of the 1991 recession to the end of a disastrous 2009 has still averaged a solid 2.1% - higher than any of the big economies in Europe and Japan" could as much indicate how bad the 1991 recession was in the UK as how we have performed since. Similarly, to say that UK industries which have survived the recession are highly competitive is at least partly due to the lower value of sterling. The fact is that levels of public and private debt have increased dramatically under a government which paraded its claims of fiscal prudence and the cost will take many years to repay, probably under another government.

House and fuel price fears!

Bad News! According to press reports, petrol prices are set for a major increase. Really bad news - experts also predict that the housing market is set for a further decline in 2010! Bad news? Really?!
Why are higher fuel prices and lower housing prices both considered bad news?
In fact, both these predictions are good news. After all, oil is a finite resource which will run out in the near future, so increasing the price will encourage everyone to use it more sparingly and help justify investment in alternative, sustainable, energy sources. Increasing the price is seen as a good thing where excessive consumption of other commodities, such as alcohol, is seen to need government intervention, so why not also in petrol?
At the same time, housing seems to be the only commodity for which reduced prices are seen as bad news. Yet lower prices are great news for improving accessibility for the young or poor (or young and poor!). Lower prices also discourage speculation and make it more attractive to
invest in alternative forms of tenure which can provide a more stable and diverse housing market. Another benefit is that it reduces the temptation to get on the housing ladder for reasons of financial gain rather than to have a decent place to live. After all, in the last two decades, house prices rose so fast that returns were greater than going out to work, hardly a good incentive for increasing a work ethic.
So, let's start 2010 by welcoming the prospects of higher fuel prices and lower housing prices!

Climate Change nil, Global Governance nil (half-time score)

So the Copenhagen meeting failed to deliver due to poor teamwork by those on the attack against reactionary, but stubborn, defence.
For many, the star players are in the civil society groups who campaigned tirelessly and whose stamina will need to remain at a high level as the fight continues. The poor performers were the politicans unable to accept national responsibility for getting the pitch into such a mess in the first place.
However, by setting the standard of play at a level consistent with the needs for success - in fact the very survival of the game and the players, there is all to play for in the second half. A good manager now will be urging all concerned to make sure that players and spectators around the world are made fully aware of the statistics involved, so there can be no fudging of the issues or debate about the basis on which the game has to be played. Once the data is absolutely clearcut (a requirement here for the scientists of the game to sort out), then pressure needs to be maintained to get the underperforming players in the political part of the team to deliver. We are at the halfway point in terms of time to get a result and their is everything to play for. In fact we cannot afford to lose.
We need urgently to build the global governance team to beat the climate change challenge so they can then start to address an even bigger challenge - to beat the threat posed by global resource depletion and the need to reduce global poverty and improve the quality of life without economic growth! Now that will really will be a game to watch!

Do we want growth at any price?

On the same day that the Climate Change conference opens in Copenhagen, the British government has announced that it will prevent bankers from receiving vast bonuses and even senior public sector staff from receiving very high salaries.

Just one bank, RBS, has apparently set aside a sum of UK£1.5 billion, (US$2.25 billion) for staff bonuses, even though the bank is 84% owned by the British taxpayer and is therefore actually a public sector entity. Such bonuses are not a reward for success, since the banks would have collapsed due to irresponsible speculation without public funding. The sum compares with US$18.4 billion bonuses awarded to the staff of Goldman Sachs not long after receiving a massive US$10 billion bailout from the US taxpayer. Nice work, if you can get it. However, these bonuses were at a time when unemployment resulting from bank profligacy and inadequate government regulation has combined to increase unemployment throughout the world.

Responsible? Hardly, not just for those receiving the vast sums, but for the expectations it creates among everyone else about what constitutes success and, dare one way it, happiness. For the global economy to continue on this path of unrelenting economic growth and income inflation will simply bring us up against the buffers of the planet’s resource limits even sooner. Yet, the US Congress is unlikely to accept any climate agreement that limits economic growth, despite an historically unprecedented level of GDP. We are consuming as if there is no tomorrow. The simple fact is that the combination of economic growth, income inflation, increased consumption and energy consumption will ensure that there will be no tomorrow.

Isn’t it about time that we asked ourselves how much we need to enjoy a rich quality of life? Once we have a reasonable degree of financial security, surely it’s more important to ask how we want to spend our time and energy in ways that make us more appreciative of the things money cannot buy – friendships, meaningful experiences, adventure and fun, none of which are necessarily dependent on vast incomes. Should we not learn to pity those whose only definition of success or happiness is the size of yacht or the number of houses that they own, or the instant gratification they gain from a chemical high or TV exposure?

Like most of their generation starting a family during the Second World War, my parents struggled financially, but lived lives far richer than many millionaires today. They looked after each other, their neighbours and friends and never needed drugs to be happy. Similarly, Warren Buffet, the richest or second richest man in the world, still lives in the same modest house he bought in the1950s and drives the same car, yet says he is so happy that he tap dances to work.

It’s about time we realised that the price we are exacting for continued growth and consumption will be paid not just by our children and other, innocent, species, but also by ourselves.

Since free market capitalism had to be rescued by old fashioned socialism in the shape of public ownership, it’s time to redirect social and economic policies to encourage more responsible and sustainable ways of living which are not dependent on consumption. In fact, we need to learn to be able to do more with less and reduce consumption. If Gordon Brown is really serious about curbing excessive pay and bonuses, there is an extremely simple way of achieving it that is within the government’s power to impose – progressive taxation on incomes and bonuses. Maybe it’s time for an old fashioned incomes policy which taxes high incomes and bonuses to the point that there is no point in earning them. Then we can start to adopt more sustainable values and lifestyles.

Of course, if the UK goes it alone (or with new-found partner France), those like Fred Goodwin who are bent on financial gain at any price, may relocate to places where the regulatory regime is more indulgent. The real challenge is therefore how to strengthen global governance to protect our common future.

Parenting all over again

She slept through until 7am! - The universal cry of young parents grateful for a full night's sleep and something we are experiencing again after more than thirty years as we now have a 12 week old puppy.

Biboo, named after Rita's nickname when a young girl in Assam, is a black labrador, cute beyond words and the most efficient means of transferring biscuits into energy that I have ever met. Until now, we have had to respond at any time during the night if she moves in case she soils the room, carrying her down into the yard and standing with her in the cold or rain while she performs.

Now, she sleeps through and last night even allowed the cat to sleep in the room. And we don't have to change any nappies!

How to forgive

Yesterday's BBC Radio 4's PM programme (27 November) carried an interview with a man who had been raped and abused from the age of 14 by a Catholic priest.

The interview was one of the most moving and impressive I have heard for a long time. Responding to challenging questions, the interviewee demonstrated incredible eloquence, wisdom and simple humanity regarding how to cope with abuse and abusers and how to apply moral and spiritual values in a secular society.

The interview deserves to be published (I suggested this to the BBC) and is worth litening to on the BBC's i-player system.