The Labour Government’s stumbling start can be excused by lack of experience, or nativity. Why on earth announce the perfectly justifiable ending of the universal winter fuel allowance for pensioners as a "one off" so that the hostile media can heap opprobrium on it, rather an mix it in with plenty of other distractions in the budget? Why allow the purpose of the abolition of inheritance tax on land, to stop a convenient means of tax avoidance the rich, to be obscured by not inserting an "active farmer" clause to show that genuine farmers would be able to keep their farms intact?
Surely they will hone their perception management skills soon.
However, Sir Keir Starmer’s "measurable milestone "of "the highest sustained growth in the G7,” announced last December, and Rachel Reeves's somewhat desperate emphasis on growth, growth, growth . . . in her speech earlier this week show that the Labour Party is aiming to move in a profoundly mistaken direction.
The relevant literature is well entrenched.
It is over half a century ago (1972) that the Club of Rome published ""The Limits to Growth" pointing out that the planet's resources were not infinite, and not all the world could continue to grow at the current pace for ever.
More recently Kate Raworth has illustrated the predicament with the concept of "Do-nut Economics," (2017) Economies in the empty middle of the ring need to grow to reach the inner part of the do-nut ring in order to enable their citizens to enjoy a minimally decent quality of life. For those economies on the other edge of the do-nut, further growth will damage the planet and exhaust scarce resources without really improving their people’s quality of life.
My favourite title is Trebeck and Williams’s " The Economics of Arrival." (2019) We in the developed world have made it. We have arrived. We are here. We have not just defeated "chill penury" but have enough material wealth for all of us to live exceptionally comfortable and fulfilling lives. There is no need for further growth: all we need do is share what we have more equitably.
The Financial Times summarises Daniel Susskind's "Growth: a Reckoning" ( 2024) as follows:
"Over the past two centuries, economic growth has freed billions from poverty and made our lives far healthier and longer. As a result, the unfettered pursuit of growth defines economic life around the world. Yet this prosperity has come at an enormous price: deepening inequalities, destabilizing technologies, environmental destruction and climate change."
M/s Reeves claims a high level of economic literacy and experience. She must know this. Other members of her team know this. The Treasury officials know this. Umpteen MPs of all parties know this. The freak weather experiences in numerous parts of the world demonstrate that the third sentence of the summary is not fantasy: it is happening.
So, to take one of M/s Reeves's most striking proposals, where does a third runway at Heathrow fit into this scenario?
Where is sustainability in Labour's economic thinking? What I expected from a Labour government, (preferably with an injection of Liberal Democrat input) are active measures for us all to share fully in the prosperity we already have: not make ourselves miserable desperately chasing after a goal which we don’t realise we've already reached.
We have arrived. We are here. We have not just defeated "chill penury" but have enough material wealth for all of us to live exceptionally comfortable and fulfilling lives
ReplyDeleteSo you think we should no longer be doing any medical research? We’ve cured enough cancers; we should stop trying to cure any more? And if you happen to be unlucky enough to get one of the ones that are still quickly fatal, that’s just tough — you just should pop along to your local National Suicide Service clinic for a painless assisted death?
Also you think we shouldn’t be researching ways to halt or reverse dementia?
Because ending growth means ending technological progress (that’s what growth is). And ending technological progress means we stick with the current level of medicine… for ever.
Yes, you're right. Although I haven't read it yet I understand that that is what Susskind, in "Growth, a Reckoning" advocates - not old-style "industrial" growth which uses up scarce non-renewable resources and damages the planet, but "technological" innovation. not just in health, but communication, energy production, entertainment, and anything which adds to our quality of life without damaging the earth's ability to sustain us (including our fellow creatures such as bats and newts). My fear is that Labour are so constrained by the promises they felt it necessary to make in order to win the election that, for M/ Reeves, any sort of growth will do. Let's hope the Liberal Democrats and Greens have enough influence to guide them onto sustainable paths.
ReplyDeleteYes, I admit that construction could be place on the original post. I should have qualified the sentence, “There is no need for further growth. . .” with “ . . to afford everyone a minimally decent standard of living.” My point is that there is no need for he Labour government government to wait for further growth in order to restore the sadly depleted resources of our public services: we can already afford it. (ie We’ve arrived!) All we need to do is share more equitably the high level of national income we already have.
ReplyDeleteYou are wrong, however, to claim that "all growth adds to our quality of life." Surely growth which damages or pollutes the environment or frivolously depletes scarce resources should be avoided.
Equally we need a better measure of well-being that crude GDP measures. For example an increase in burglaries promotes growth in that the burgled have to buy replacements, more policemen have to be employed to try to catch the burglars, and if they are caught and convicted, prisons have got to be built, warders employed to keep them in, teachers, counsellors and chaplains counsellors to teach them better ways and probation officers employed to keep them on the straight and narrow when they are released.
We need a “Quality of Life” index which measures not just GDP per head, but its distribution (the Gini coefficient?), stability of relationships (divorce rate ?), availably of doctors and hospital beds, numbers in prison, working hours and holidays, air quality, homelessness. . . .”
DeleteI should have qualified the sentence, “There is no need for further growth. . .” with “ . . to afford everyone a minimally decent standard of living.”
So you think people should be satisfied with ‘a minimally decent standard of living’, do you? What a meagre, impoverished view of human potential you have if that’s the greatest goal you can imagine. I reject such defeatism utterly.
You are wrong, however, to claim that "all growth adds to our quality of life." Surely growth which damages or pollutes the environment or frivolously depletes scarce resources should be avoided.
No, I am not wrong. All growth does improve our quality of life. However all improvements in our quality of life also come at a cost. That is life. Nothing comes for free. So we have to decide whether the improvement is worth the cost: look not just at one side of the ledger but at the net benefit. Some improvements will be worth the use of resources or the pollution they create; some will not. And some may not be worthwhile now but would be if there were a more efficient way of providing them that used less resources or produced less pollution, so we should keep researching to find those more efficient ways.
For example an increase in burglaries promotes growth in that the burgled have to buy replacements,
This is just the glazier’s fallacy, and had long been debunked; that is not real growth because it fails to take opportunity costs into account. See https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window
We need a “Quality of Life” index which measures not just GDP per head, but its distribution (the Gini coefficient?), stability of relationships (divorce rate ?), availably of doctors and hospital beds, numbers in prison, working hours and holidays, air quality, homelessness. . . .”
While that might sound, superficially, like a good idea, the problem would be that it almost immediately becomes intensely political and controversial in the choice of what measures to include. You and I might both agree, for example, that a high divorce rate is bad. But I would also say that a high rate of children born out of wedlock is bad, and nowadays that is a very controversial position. So do we include that or not? Either way you are making a value judgement about how people ought to be living.
Or how about inequality. You think it’s bad, I don’t, for the following reason: imagine society A, where the life expectancy for everyone is 77; and society B, when even the poorest can be pretty sure of reaching 90 in good health, but the rich regularly live into their 160s and beyond. Obviously society B is much more unequal, but would you also not agree that society B, other things being equal, is much better than society A? Therefore inequality is not a bad thing. We should judge societies by how will the poorest in them live, not by the gap between the richest and poorest.
Therefore, in order to avoid being dragged into political controversies and in order to provide unbiased data, economists should avoid trying to come up with measures of how ‘good’ life is — for people will never agree on what the ‘good’ life means — and should stick to things that can be objectively measured.
In your "glazier's fallacy" there is no growth because the money spent on repairing the window would have been spent on something else. In my burglary analogy the victims would not have bought replacements if their property had not been stolen. therefore their expenditure adds to growth.
ReplyDeleteRe the "quality of life" index we have one (or had, it may be out of date now) called the Human Development Index, (HDI) for less developed countries. It included things like under five mortality rate and literacy levels. It is/was a much more useful indication of the quality of life than raw GDP data. We could construct something similar for developed countries. Of course not everyone would agree with the items included, or the weighting, but an acceptable consensus could be achieved.
As to the minimal standard of living, between a fifth and a quarter of our households in the UK are below it, and a horrendous number of our children are living in poverty. We need to sort that out before we enable the comfortably off to pollute the skies with their third annual overseas holiday.
DeleteIn your "glazier's fallacy" there is no growth because the money spent on repairing the window would have been spent on something else. In my burglary analogy the victims would not have bought replacements if their property had not been stolen. therefore their expenditure adds to growth.
No, if they purport had not been stolen they would have spent the money on something else instead because they wouldn’t have had to buy replacements. It’s exactly the same situation: whether the money is wasted on replacement glass or replacements for stolen property, either way there is no growth because the money which could have gone to improve the victim’s lifestyle instead has to go to restoring them back to where they were.
Of course not everyone would agree with the items included, or the weighting, but an acceptable consensus could be achieved.
No, it couldn’t. What to include and how to measure it would be intensely politically controversial. There is no chance of achieving a consensus unless you simply decree that you will only listen to people whose values already align with yours (and that’s probably what you’d do).
As to the minimal standard of living, between a fifth and a quarter of our households in the UK are below it, and a horrendous number of our children are living in poverty.
Only by a very stupid measure of ‘relative poverty’. I obviously wouldn’t argue that everything is perfect in Britain but we do not have children starving in the streets.
We need to sort that out before we enable the comfortably off to pollute the skies with their third annual overseas holiday.
This is the argument of the dog in the manger: nobody should get any improvements until everybody gets improvements. It is disgusting and anti-human and based in envy (a mortal sin) and I reject it utterly.
Growth: Assume the insurance companies paid for the replacement of the stolen goods and the sufferers continue spending the rest of their income as normal.
ReplyDeleteQuality of Life Index: Those who didn't like the items measure or the weighting in one index could produce an alternative. We would see which gained general acceptance.
Poverty: I see you stick with your "alternative fact.".
DeleteGrowth: Assume the insurance companies paid for the replacement of the stolen goods and the sufferers continue spending the rest of their income as normal.
Then everybody’s insurance premiums go up to cover the cost of the replacement goods, and so the money that people would have spent on improving their quality of life they now have to spend on the more expensive premiums, again losing growth.
Quality of Life Index: Those who didn't like the items measure or the weighting in one index could produce an alternative. We would see which gained general acceptance.
None would gain ‘general acceptance’. Each would gain acceptance only among those who agree with its particular political bias. Which indeed is what we see in the real world with the multiple competing ones you mention, where people have made up new ones accusing to their own political positions.
Far better to just stick to measurable objective facts.
Poverty: I see you stick with your "alternative fact.".
Which ‘alternative fact’? You think there are children in Britain starving to death in the streets? If so, provide some evidence.
As per: https://cpag.org.uk/child-poverty/poverty-facts-and-figures
A child is said to be living in poverty if they live in a household with income below 60 per cent of the national average (median) income
This is a stupid definition which is specifically designed for a political purpose of being high numbers of ‘children in poverty’.
That is the currently accepted definition, so yours is an "alternative fact." You don't have to be actually starving to be poor, tough many teachers claim that lots of children come to school too hungry to learn.
DeleteThat is the currently accepted definition,
DeleteOnly accepted by those whose political bias it fits, like you.
so yours is an "alternative fact."
As the definition has no basis in fact — it’s just a political position — then there’s no ‘fact’ for mine to be alternative to.
You don't have to be actually starving to be poor,
Then give an alternative, non-stupid definition of poverty.
tough many teachers claim that lots of children come to school too hungry to learn.
Yes, but not because of poverty — because their parents are neglectful wasters.
I see that the HDI I mentioned in the comment above (created 1990) has been supplemented by two more versions IHDI and SHDI in response to the sort of criticisms you suggest. Read all about it on https://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index
ReplyDeleteI've just noticed a funny thing: HDI basically just is GDP. Have a look at the graph on https://ourworldindata.org/grapher/human-development-index-vs-gdp-per-capita
DeleteThe correlation is almost exact.
So, hey, carry on using HDI — you're really just measuring GDP anyway!