Thursday 16 March 2023

A "nothing changes" budget

The Chancellor, Jeremy Hunt, finished his speech on an upbeat note: “Inflation down, debt falling, growth up.” Well, that’s certainly world-beating perception management. It’s all true, but fails to mention that inflation at the end of the year will still be at 2.9%, nearly half as much again as the 2% target level, [government] debt is predicted to fall, but will still be 30% above the acceptable level, and growth, at a predicted 0.2%, is the lowest in the G7 and a tiny fraction of the 3% the politicians would like to see. It is hard to see how the budget is likey to do anything to make the UK a happier place. We have three major social/economic problems in Britain, inequality, poverty and low productivity. The budget does little or nothing to alleviate any of them. In fact, inequality and poverty are likely to become worse Our level of inequality is unacceptable because it is so demonstratively unfair. People on average incomes and below, however comfortable in absolute terms their lifestyles might be, cannot be expected to be satisfied with their lot if the people at the top are creaming off shedloads. Examples abound. According to figures in last November’s “Prospect” magazine Lloyds Banking Group pays its CEO £8.9m a year, 255 times the average pay (£28, 005) of the lower quartile of employees. For Greggs its £2m, 98 time £19, 824. In 2022 the UK the median household (not individual, household) income was £32 300. An income sufficient to allow them to increase their annual pension pot contribution from £40 000 to £60 000, as permitted by this budget, would be beyond their wildest dreams in a different world. While assisting the well-off to become even better off, the budget does little or nothing to reduce the levels of poverty of which this rich country should be deeply ashamed. The cruel bedroom tax persists, as does the cutting off of benefits to the third and any subsequent children. Benefits, already inadequate, will receive only below-inflation increases. About 1 in 5 households are forced to exist below the poverty line (eg having to chose between eating and heating), over 4m children live in poverty, more than half of them in households where at least one parent is in work. Although the UK is a rich country (still sixth in the world) we would be even richer if, instead of stagnating, our economy grew at the same rate as comparable countries. The budget attempts to tackle the problem by increasing the number of workers. The availability of child care is to be vastly extended in the hope of tempting more parents into paid employment. Hence, the economy gets two for the price of one. Every sixth-former who studies economics learns that if a householder does his/her own cleaning or car repairs nothing is added to GDP. However if he/she employs a cleaner or a garage, then the cleaner’s or mechanic’s wages are added to GDP, which therefore grows. The additional child-care employee’s wages are added to GDP as are the wages of the former home-maker if he/she takes to opportunity to go out for paid employment, or, in this day and age, works from home without the distraction of keeping an eye on toddler. Surely this is the wrong tack? We have enough “stuff” and there’s enough to satisfy everyone if we leaned to share it properly. What would improve our quality of life is more leisure, more family time (including nurturing the children), more enjoying friendships, more walking in the countryside, more playing games,more time to appreciate the wonders of the world we live in. Not more work, but more productive work in less time. To achieve this we need investment. The budget’s exemption from tax for profits invested may achieve this, but what we really need is a change in the culture: to encourage those with spare money to use it for long-term investment rather that a short-term pitch in the markets.

6 comments:

  1. You are implying we need a 4 day week. Productivity within the 4 days and more time for leisure equals happier people

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    1. Not necessarily: it depends on the job. Mine, as a teacher, required me to be "in" every day, but, on the whole, I believe we should be aiming at "growth" in happiness rather than growth in "more stuff." This can be achieved by fewer working hours and more leisure where everybody's "basic necessities" can be met, and this can be done easily in a rich society like ours with more equitable sharing.

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    2. on the whole, I believe we should be aiming at "growth" in happiness rather than growth in "more stuff."

      Why? Happiness is a mere subjective feeling. It is unimportant. We should be aiming at achievement and excellence, not just a pointless feeling like ‘happiness’

      (Achievement may bring satisfaction, which is a kind of happiness — the best kind, because it is deserved — but it’s a side-effect of the achievement, not the object of pursuing it.)

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  2. We have enough “stuff” and there’s enough to satisfy everyone if we leaned to share it properly.

    Among this cavalcade of nonsense, I would like to pick out this particular point for ridicule. This is basically the prediction of Keynes (hence, I guess, the title of this 'blog) that by 2030 people would be working a 15-hour week. This prediction was based on exactly the same idea that there was enough 'stuff' to go around; but the prediction was made in 1930 and based on the 1930 idea of what was 'enough stuff'.

    I would like to ask the author, would you be happy to live with the technology, energy consumption, and life expectancy of someone in 1930?

    If — as I suspect — the answer is 'no', then why do you think you are any more right than Keynes was that we have 'enough stuff'?

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  3. It is true that a lot of very welcome “stuff” has become more universally available since the 1930s. I would highlight indoor baths and lavatories, washing machines, cookers, fridges, TVs, cars, telephones and computers. I have access to them all and very much appreciate them.

    I would like to see a world in which everyone has access to the basic needs appropriate to their climate and circumstances. That is why I deplore our “beyond awful” government’s cut in the aid bill which was designed to help countries in the “global south” to reach this state.

    In the rich North we have reached a level where the overwhelming majority have enough “stuff” and additional purchases (another winter coat, a new fitted kitchen) don’t generate much extra satisfaction for long. I don’t rule out the possibility that scientists will invent something as yet unsuspected (as the internet was for most of us in the 1930s) and, presuming it doesn’t pollute the planet or dangerously deplete its scare resources, I shall welcome it. But the opportunity to acquire more “stuff” just because I’m bored with what I’ve already got – No!

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    1. In the rich North we have reached a level where the overwhelming majority have enough “stuff” and additional purchases (another winter coat, a new fitted kitchen) don’t generate much extra satisfaction for long.

      Which is exactly what Keynes thought in the 1930s. Yet you think you are right while admitting that he was wrong.

      So again: have you any reason for thinking you’re right when Keynes was wrong? Or are you just exhibiting the same failure of imagination Keynes was?

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