Cable admits economy is screwed. Where’s his vision?
Vince Cable has finally admitted the extent to which the UK economy is screwed. In an interview with the Guardian, he outlines the fact that we depended far too much on financial services, the scale of global inflation, and the rapidly increasing role of China in setting prices and outcompeting us.
Politicians have failed, he says, to prepare us for the rocky ride ahead.
Well, I can go half way there with him. Our economy is in serious trouble, and all of the reasons he outlines are contributing factors. But, here’s my question: What’s his plan. Other than running around the country shouting ‘WE’RE ALL DOOMED’ what does he mean to do about this? He is, after all, Business Secretary.
As I’ve written before, the government’s economic plan seems to have 3 strands – export led growth, privitisation and de-regulation, and re-inflating the financial bubble.
Essentially, Cable today seems to be saying that these won’t work. I agree. They won’t. To whom, precicely, are we supposed to export? As Vince Cable outlines, this strategy is clearly going to fail as the seas of the global economy fail to calm. Privitisation doesn’t deliver real wealth, only the pyhrric joy of a stock market high. There is little evidence that de-regulaiton helps at all – we had much faster growth rates both in the UK and around the world in the era when things were much more regulated. Re-inflating the financial bubble will end with another pop.
I’m glad that the Business Secretary has realised this. I’m glad he can see far enough to realise that the course on which his government has set us is disastrous. But being able to see a long way is not the same as having vision. And it is this vision that Cable lacks.
Becuase decline in quality of life is not intrinsic to our situation. We are one of the richest countries on earth. We have remaining a fantastic education system, and the resources with which people can build a better economy. But that will require a government willing to invest. That will need a government willing to take risks.
What Cable expressed today is the sentiment of the whole of Europe’s failed liberal centrists – politicians left floundering in the wake of an economic storm they didn’t understand and in which they have failed to get a grip.
Because the truth is that Cable is right. As Peter McColl has put it, the credit crunch removed the velvet glove from the iron fist of neo-liberal capitalism that has been asset stripping and gutting our economy for the last 30 years. The strategy of the centrist liberals – try to collect the wealth of neo-liberalism and redistribute it through the welfare state – this strategy has failed. Cutting back public sercies is simply an attempt to dig our way out of this hole.
And so now is a time for new ideas. Now is a time for people to take the rocks left lying around after the explosion of the credit crunch, and to build something new, something better. We need an economy in which wealth doesn’t fly from continent to continent, chasing the ‘winner’ of the race to the bottom. And that means it must be rooted in communities, not controlled by a Lear Jet elite. We need an economy based on new ideas and creativity. And that means mass investment in education, arts and science. And we need an economy based on people doing for each other those things that we value. That means we need to re-look at how we measure value in our national economy.
Cable complains of the volatility of oil markets. Where is his mass investment in renewables? He complains of over-financialisation. Where is his industrial plan? He complains about inflation. Where is his global treaty to control speculation?
We are 3 years now from the credit crunch. The time for moaning has passed. Now is the time to build something new. The crisis in finance has been mirrored by a crisis in imagination. Now is the time to imagine tomorrow.
Yes – I was just thinking that the other day….. about 5th century Athens – and also the Scottish Enlightenment producing so many brilliant people in one fairly poor country. I think this has implications for the Scottish Independence debate – on which I am still undecided. One important thing to remember is that 5 million people is quite enough for a great country – provided their genius is nurtured. (There may be a whole lot of other problems – but I don’t think size is a problem in itself).
I think that there are two important background myths to get rid of here. First, it is a myth that the only thing people work hard for is money (beyond a certain point of material sufficiency, of course). To the contrary, research shows that people mostly work hard for the respect of their peers. Only if respect from one’s peers is measured in one’s financial success does money become the main issue. The second myth is that the world contains only a handful of ultra brilliant people and that if one exhausts one’s stock of them, then one has lost one’s most important resource. Fifth century Athens, for example, produced in one generation some of the most important thinkers and writers of all time, geniuses like Plato and Euripides and Aristophanes. At the time, the population of the whole of Attica (most of whom were illiterate, of course), was about the same as present day Lowestoft. Humanity is swarming with geniuses. What matters is creating the circumstances to nurture them.
Hi Ioan,
we need to build an economy that isn’t dependent on the financial sector. If we don’t do so, we’ll just have another credit crunch. If we do, and they all go to New York, then New York is just taking the risk of having them, and that’s probably no bad thing for us.
Adam
Thank you Adam for replying to my post. I agree with your suggestion of co-ops as a force for good.
I assume that when you talk about “very high wages” you are pointing at the financial sector (unless there are other high-paid jobs out there?) How do you combat the claim that reducing the wages and bonuses of the highest-paid bankers (ad other professions) would incentivise them to find work elsewhere, e.g. New York?
Ioan, well, this is one of the big challenges of our age, so I won’t pretend I have all the answers. However, much more democratic ownership of assets and servcies would help – mutuals, co-ops, etc. The government could support these through changes to regulations, changes to procurement, etc. Similarly, income inequality drives capital mobility. So disincentivising companies from paying very high wages or bonuses would help. Ultimately, more state, municipal and democratically owned industries and more community controlled assets would be a start.
Imagining tomorrow is all well and good, but what’s your genuine plan to build this new economy? How do you prevent wealth “[flying] from continent to continent, chasing the ‘winner’ of the race to the bottom” by rooting it in communities? As a concept it sounds rather nice, but it’s awfully vague.