(YEP IT’S A MANDOS POST)
Hardly a week ever goes by when I am not alerted to the increasingly absurd cruelty of the social welfare services of the UK. I’ve lived in economically below-average, minority-populated parts of the US, off and on, and the US has a bad reputation for social welfare—mostly due to its absence—but in all that time, I never heard of the kind of sheer, deliberate twist-the-knife cruelty that is apparently daily life for some of the UK’s most vulnerable citizens. I’m starting to think that no welfare is better than evil welfare. Which I suppose was the entire point of the exercise.
The very same people who advocated for this cruelty and have had years to make it worse are the people now in charge of making Brexit happen in the UK. And everyone knows they’re making a mess of it—predictably, with the same twist-the-knife cruelty that is certainly no ward against incompetence. As I have written before, even if they were to run the Brexit show well, what they want from Brexit contains no redeeming value whatsoever. They’re still proud of their austerity and are only at best grudgingly willing to restrain it when it looks like they might lose a critical handful of voters here and there. Yes, even such a debased character as the British Tory voter can show rue where his drivers, on their own, cannot. The British Tory voter, however, will still let his leaders guide him into the sewage lagoon of the tax paradise which they are chomping at the bit to build.
A Brexit with less dislocation was possible, give or take an Irish peace accord or two. That Brexit requires a Britain that did not stake its economic foundation on being local banker to a currency union it didn’t join. This would require a Britain that, long before the Brexit referendum, had not gone down the neoliberal route in the first place, had not succumbed to the ideology of austerity, and had not perfected welfare cruelty.
But therein lies the paradox of Brexit. Brexit was only going to come after a referendum for it. But the conditions to reach the “Yes” vote are precisely these conditions of frustrated failure, if you are inclined, as many are, to see the phenomenon fundamentally through an economic-stress lens. In a non-austerian, non-neoliberal political alternate history—one that, I emphasize, has always mostly been within the UK’s power to execute, despite EU membership—a “Yes” vote would probably have been unachievable. That is why you could never really have a good Brexit, and why, when Brexit really takes place for good, a possible future Corbyn government is going to be left holding a nasty bag of failure that will likely preclude any major reforms in a left-wing direction.
From a progressive/left-wing/whatever perspective, from the perspective of a humane political economy, the flaw in anti-EU/pro-Brexit thinking is one of “dictionary-definition” conservatism. I was mostly opposed to the pro-globalization policies for goods and capital on the whole. But now that it has occurred, it’s a reactionary mistake to attempt to roll it back, rather than assess where the world is now and consider new ways of creating a humane economy in the future. That reactionary mistake plays into the hands of the Rees-Moggs and Boris Johnsons of the world, and worse.
Synoia
The Tories behavior is true to their history.
Utter contempt for people who are not “one of us.”
That include the New-Labor Tony Blair.
bruce wilder
Who is the reactionary when you are letting Boris Johnson set the agenda?
bruce wilder
Re: American Social Welfare. From McClatchy news services:
“Temperatures were freezing, and 81-year-old Albert Bivins and his 55-year-old daughter Patricia Bivins had a broken furnace.
“So the pair visited the Ferry Street Resource Center in Niles, Michigan, to see if someone could fix it for them, according to the South Bend Tribune. The paper reported that temperatures were fluctuating between the high teens and below zero during the period the Bivins visited the non-profit social service agency.
“But it wouldn’t be an easy fix, WNDU reported. They had to get three repair estimates and fill out papers for a program within the Michigan Department of Health and Human Services before someone from that program could fix it.
“That program can help those who meet certain qualifications with funding a furnace repair, according to the Tribune.
“Police conducted a welfare check at the behest of worried neighbors, and the Bivins were found dead in their home on Jan. 3, a week after meeting with Nasstrom, WSBT reported. The cause of death is still being determined by autopsy.
“The temperature in the house was far below [freezing] when their bodies were discovered, according to WNDU, and six of the seven days after the Bivins visited the agency had temperatures dip below zero.
“Timmothy Bivins told ABC57 his father Albert had dementia and his sister Patricia had special needs. Now Bivins wrote on a GoFundMe page that he is hoping “to give them a wonderful going away Funeral.” ”
So, there you have American social welfare: Party on, dudes and dudettes!
Peter
@Bruce
This is a strange and sad story but I wonder why these poor people went to the welfare office first not last. Why not call a repairman and fix their own heating problem directly. If they were unable to pay for repairs and the repairman couldn’t make payment deal there was still the son, other family, friends and others who might help.
I wonder what the son was doing during the time his dad and sister were freezing and if he knew about the heating crisis. He knew about their mental conditions and should have been monitoring their physical conditions or had someone else check on them. A few electric heaters would have provided a safe warm room while they waited for the furnace repair
Welfare bureaucracy is designed to run slow and generate paperwork which cripples any ability it might have to respond rapidly to immediate crisis.
someofparts
The poor should have the decency to die quietly and poetically like the rest of the biosphere.
John Poynton
Unfortunately, Mandos, you never take in a word I write! Here is a copy of a letter I am writing to every member of the House of Lords.
THE ECONOMIC CASE FOR BREXIT
I should be grateful if you would spare a few moments of your time checking out the economic case for Brexit which I set out below. This has scarcely been examined in any detail in public and we face the terrifying prospect of members of both Houses taking momentous decisions about the future of our country without the benefit of a full and proper briefing. There is no need to depend on the type of bland assertions, lazy assumptions, dodgy forecasts and personal opinions with which the establishment has bombarded us. Hard facts and logic are available and compelling.
I start by attaching two graphs, which I have complied from data downloaded from the Office for National Statistics’ website. You can easily reproduce them yourself with the aid of a spreadsheet. The first shows a 25% decline in our standards of living over the past thirty years (GDP divided by population and adjusted for inflation), and the second an increase in our trade deficit by some 4% of GDP over the past twenty years. This coincides with the onset of globalisation and our joining the EU Single Market. The EU been responsible for our trading affairs over this period of time and is thus guilty of monumental failure. That alone should be sufficient to sack them.
But let’s look at the first graph more closely. You may be tempted to ascribe the fall to the bust at the end of the 80’s and to the banking crisis of 2008, and certainly these events are reflected. However we are now experiencing near full employment once again so the opening figure is comparable to the closing one; what goes on in between is a distraction. There are only two possible causes for this decline, namely high immigration (note the secondary peak occurs in 2004 when our borders were opened) and the increasing trade deficit, both of which can only be addressed through Brexit.
The link between trade and economic growth
I am not talking here about the correlation between global growth and free trade, which is well supported by research. A closer look at that research however shows that it is only the surplus countries, like Germany, Japan and China, which benefit, while deficit countries like the UK and US have missed out and declined. There has in fact been a transfer of existing wealth from the deficit countries to the surplus countries as well as growth in the recipient ones.
A deficit is like having a hole in the bottom of our economy. If nothing were done about it unemployment would go through the roof. Fortunately the Bank of England has been able to put its finger in the dyke using Quantitative Easing. This works by reducing interest rates thereby encouraging people to borrow more, save less and use up their existing savings. As Mervyn King put it in his recent book, The End of Alchemy, people are now spending their future earnings today. This, he goes on, cannot continue for long because sooner or later tomorrow becomes today and they cannot borrow any more. They will also have used up existing savings. The low interest rates also have the effect of limiting saving, which starves the banks of money to lend to business for investment in new technology and productivity growth. The productivity gap has been well documented as you know, though curiously the obvious cause ignored. This does lead me to suppose that the establishment is only showing us the side of the coin it wants us to see.
It is therefore imperative that we end QE to increase interest rates by balancing our trade before a new financial crisis hits us and to re-establish savings and growth. There are only two ways this can be achieved; though devaluation and by increasing our import tariffs. We have already had some benefit from devaluation following the referendum, but its size is determined by the markets. That just leaves import tariffs as a direct instrument of government.
Whilst a no-deal Brexit will be a substantial step in the right direction, there is no guarantee it will be enough. We must therefore retain the flexibility after Brexit to set our import tariffs at a level which will balance our trade. This may mean delaying re-joining the WTO. Conversely any attempt to do a trade deal with the EU, or anyone else for that matter, will limit that flexibility, whilst remaining in the Single Market will lock us into the £70bn deficit we currently have. We would then be completely stymied and helpless. Please note that the Government’s enthusiasm about the opportunities for doing trade deals around the world is misplaced, at least until we have established a balance. Indeed this is also the principal reason why the Doha round of global trade talks collapsed; the precondition of balance was not met.
Jobs
We all want to see the creation of more jobs, particularly in the manufacturing sector outside London and the South East, and I am not surprised the Labour Party have recently made this their priority. Their tragedy is that they have got the argument completely back-to-front, by concluding it requires us to remain in the EU customs union and single market when the very reverse is the case.
Even though the above graphs show clearly what a disaster EU membership has been for trade, employment and growth in the UK, the following logic demonstrates it further. We have this massive trade deficit with the EU. That means our imports are greater than our exports. Suppose now we place import tariffs on both sides of the channel, which is what a no-deal Brexit would involve. The result will obviously be a reduction in the volume of trade. Assuming the tariffs are at the same percentage level on both sides, the reduction in percentage trade volumes will be similar. But that means that the absolute reduction in imports will be greater than the absolute reduction in exports since we start with a deficit. This in turn means that the number of new jobs created from import substitution will be greater than the number lost to export substitution, ie a net increase. In short it is the balance of trade that matters, not the volume.
Inward Investment
One of the more amusing spectacles in recent weeks has been that of the Japanese ambassador claiming that Brexit would discourage investment into this country. Now that really is trying to have your cake and eat it! UK manufacturers have already had a competitive boost of about 12% from devaluation, so the 10% cost of EU vehicle import tariffs will still leave them better off. The two go together.
There has also been much talk about supply chains. These will chop and change as a matter of course anyway, but any disruption could be minimised by not charging tariffs on components and spare parts. This would have the added advantage of encouraging all vehicle manufacturers to do their final assembly here in the UK.
The Brexit Fiscal Dividend
Much has already been written about the savings from EU budget payments and I don’t propose to go over old ground here. I trust it is fair to say that a net saving of £10bn a year is not controversial. It is other savings that have been overlooked.
First there is the matter of import tariff revenues on imports from outside the EU. These amount to about 60% of all imports of some £625bn a year, on which the EU customs union currently collects just over 4% as import tariffs, ie about £15bn. We pay 80% of these, £12bn, over to Brussels. Clearly after Brexit we will continue to collect this money. Nor will it cause any inflation to do so as it is already in force. All that will change is that we will keep the £12bn for ourselves! Funny how nobody ever mentions that. So that now gives a total dividend of £22bn.
But that is not all. We will of course also start to collect tariffs on our imports from the EU, another £10bn, total now £32bn. There will be some price increases from this, but spread over the whole economy they will contribute only about half a percent to inflation on a once off basis. Big deal.
There is more. A few months ago the Bruges Group produced a paper calculating savings from welfare payments to immigrants and non-residents in the order of £35bn. I have not been able to verify these figures myself so to be safe let’s just accrue half, £18bn. That gives a total annual Brexit dividend of £50bn a year, FIVE TIMES the number that was bandied about during the referendum campaign.
How could any government in its right mind even think of throwing this sort of money away for nothing? Yet that is precisely what the Remainian camp are proposing to do. We need that money.
The Economic and Political cycles
Do not be lulled by the latest indications of a fiscal surplus. This is just a cyclical anomaly caused by the combination of loose monetary policy and tight fiscal policy. Neither is sustainable, the former economically as I have explained above, and the latter politically. Before long politically irresistible calls for tax cuts from the Right and/or expenditure increases from the Left will destroy the balance just as the former did in the late 1980s resulting in the boom and bust.
Brexit offers us a way out by enabling us to tighten monetary policy to increase interest rates as the trade deficit is reduced, at the same time as loosening fiscal policy using the Brexit dividend to assuage political pressures, thereby keeping the two in balance. Carpe diem.
Your support
The European Union (Withdrawal) Bill after completing the House of Commons is now progressing through the House of Lords. Your support for this will be greatly appreciated by millions of voters including myself. Whilst most voters will not understand the economic technicalities I have described above, they most certainly feel the results, and they are angry. The problem is exacerbated by the widening income and regional gaps so that Remainers on their massive metropolitan salaries are insulated from the consequences and do not feel them. This is a recipe for conflict which will only increase without a no-deal Brexit.
During the referendum, the Government-produced booklet declared: -‘This is your decision; the government will implement what you decide.’ In the course of the debate, the Government stated that leaving the EU meant leaving the single market. Pursuing this will allow for the mandate set by the referendum to be fulfilled.
The EU should not be led to believe that the UK will settle for anything less than a full institutional exit from the European Union. Please avoid weakening the hands of our negotiators by pushing for another referendum; and please do not break faith with the democratic result. The referendum of 23rd June 2016 should be the final say on this issue.
I ask you to conclude the European Union (Withdrawal) Bill’s passage through the House of Lords without opposing it or seeking to water down Brexit. And above all else without stipulating that there should be a further and thoroughly unnecessary second referendum. Nor should there be an opportunity for the decision to leave to be overturned.
Our exit from the European Union has not only been approved by the referendum, but also through the overwhelming support which the European Union (Notification of Withdrawal) Act received from both Houses of Parliament. Not to mention the recent general election where the MPs from all the main parties were elected on a manifesto commitment to take the UK out of the EU.
As a democrat I earnestly hope that in accordance with the referendum, the general election, and the EU (Notification of Withdrawal) Act, you will also approve the European Union (Withdrawal) Bill.
Please keep faith with the electorate and help restore our economy.
John Poynton FCA
5th March 2018
John
I suspect dementia and special needs might be a factor in this appalling story. It’s amazing they still had a house rather than a cardboard box under the freeway. The lack of US mental health service is inexcusable. Of course they simply followed Republican neo liberal health care policy…if anything is wrong, “go die”
Mandos
(Just as an aside, I, Mandos, am able to moderate comments on my own posts, but not on any other posts. So if posts appear here while you’re waiting for moderation on the other threads, know that it is probably only because I got to moderating my thread before Ian or another guest author got to moderating other threads.)
Mandos
Bruce: my point was not to praise the US system or downplay its general patchwork of awful.
Re: Boris Johnson. It’s not about letting Boris Johnson “set the agenda.” It’s that some choices play into the hands of the far right with little intermediary or redeeming benefit. Brexit only has plausible benefits from a left-wing perspective, even an economic perspective, when it starts from the correct grounding and is stage-managed by well-intentioned and competent people. These do not hold, and the point is, the strategy of rollback *is* reactionary and only works for the right. You don’t attempt to undo the flaws of early capitalism by trying to roll back to feudalism. You don’t attempt to under the harm of neoliberalism by trying to roll back to mid 20th-century social democracy.
Mandos
JP: I *have* read what you’ve written, usually every word of it. However, I don’t agree with its underlying premises, its arrangement of cause and effect, and its understanding of how the European institutions work. I don’t, however, have time to deconstruct your long missives point by point. For starters, while I agree that globalization was the driver of a decline in worker living standards, backing out of the EU via Brexit or rectifying the trade deficit via the re-establishment of tariffs will not lead to a restoration of worker living standards on a term that is sustainable relative to the political cycles that are required to maintain the necessary policies. And there will be no Brexit dividend in the short run — your whole argument on this front is based on selective reasoning and unicorns. But most devastatingly, even if you were right about any of that, your reasoning still requires the government to adopt a very specific economic program that it is not going to adopt.
If something seems too good to be true, it is.
ponderer
As a total outsider (USian) I’ve always thought of Brexit like Trumps election. They only gave us the choice because they never thought we’d go for it. It turns out there are a lot of people who would prefer we all suffer together instead of (quietly) by ourselves. They put together the perfect storm for a protest vote and now just can’t understand why anyone would want to hurt themselves by supporting such a crazy measure. It’s the only good thing to come from “11th dimensional chess”, watching them hoisted on their own petards and all.
VietnamVet
The Italian election, Brexit and Donald Trump all have the same root cause. The Elite’s fear of the Bolshevik Revolution left living memory. The Plutocrats have gone back to doing what they do best, hording wealth and exploitation. The current “winner takes all” system will keep going until it doesn’t. Unfortunately, globalism is incompatible with democracy. Brexit is futile. For a decent society in a finite world; labor and resources must be shared equitably. Bad Debt written done. The insanity of scapegoating Russia for the collapsing American Empire indicates that the ruling oligarchs prefer negating democratic elections, fracking, and forever wars rather than a sustainable peace even if they destroy the earth.
Willy
I saw a documentary with many Brexit voters interviewed. That Brexit might not actually accomplish their ends seemed known to them. It was mostly a protest vote against a PTB which doesn’t care, which only rationalizes.
bruce wilder
@ Peter. “Welfare bureaucracy is designed to run slow and generate paperwork which cripples any ability it might have to respond rapidly to immediate crisis.”
Indeed, it is.
The cruelty of its design is a feature, not a bug, as they say. Whose design? And, why has it evolved to be that way?
Design for living is the base political issue, it seems to me. Part of any workable theory of politics is how does one deal with complexity, diverse points of view and interest, and the certainty of effective opposition.
A lot of soi disant leftists have no practical theory of politics or any real concern with either practical policy design (which is design for society) or coalition building and maintenance. Their answers to problems is purity of intent and their critique of practical success is to impune purity of motivation.
The success of mid-20th century New Deal and social democracy political programs is scorned. There are reasons that success might not be repeatable, but unlike feudalism, it at least is something desirable.
There can be no democracy without self-government by a self-conscious “people” acting collectively. I am not in Britain, but I can see some sense in a left affection for Brexit as creating the necessary preconditions for democracy, which preconditions have been removed by the pure, shiny candy of the four freedoms of EU idealism.
Mandos
I absolutely agree with this, which is why I find your writing on this subject so odd. Left-wing Brexitism (keep in mind that I think Brexit should happen now that it has been voted on in a referendum!) etc is precisely about purity of intent and mostly inimical to coalition building, maintenance, practical policy design, etc etc.
Quite a lot of feudalism is desirable relative to the capitalism that followed it! If one were living at the time of early capitalism and you could feasibly roll it back to feudalism, one definitely should take that opportunity. No such opportunity was available — the rollback attempt would not have resulted in the life that feudalism might once have offered, the genie was out of the bottle, and successful attempts to turn the tide could and did mainly come from reactionary places and not to the benefit of the worker.
In terms of “design for living”, the follow-on/response to early capitalism was either socialism or social democracy/New Dealism that took shape, for practical reasons, in its own time. The response to neoliberalism is not going to be a return to the New Deal or its European counterparts.
The conditions under which how said “people” are “created” matter, very concretely and directly, to who “wins” from the re-establishment of democracy and self-government, who gets to be the “people”, who gets “democracy”, who gets “self-government”. If you think that is “purity of intent,” you are engaging in magical thinking.
A return to the nation-state architecture of yore will not create the necessary preconditions of democracy. Never works. It matters who is waiting to seize the opportunity. Boris Johnson sets the agenda. You may wish to pretend he is not there, but he is.
Mandos
Sehnsucht is not a design for living.
bruce wilder
If reactionaries never overreached, revolutions would never happen. All policy is mistaken and all policy is eventually subverted and all policy eventually goes wrong as it continues after the problem it addressed is solved or metamorphosizes into something else.
Political societies most of the time are barely above the level of a slime mold in their ability to generate conscious intention and control: go and look on YouTube for videos of slime molds reproducing the design of city networks if you do not believe me. We should strive to do better, of course, and “left” sometimes stands for better, more intentional design that makes use of science, etc., but the complaint that we act like we don’t know what we (collectively) are doing, when in fact we do not know what we are doing, seems a bit detached from reality; good intentions without really understanding how to organize politically in a hostile environment, let alone devise an effective policy, can be just virtue-signalling. And, Mandos’s enthusiasm for counter-factual analysis in this case seems like a taste for more virtue-signalling.
Brexit is an act of political, institutional demolition, a clearing of the ground. I can’t see that the motivations or intentions of the perpetrators of demolition are likely to be all that important. Building things is different — there, design clearly matters, particularly when it comes to being able to correct mistakes and to resist the opposition’s subversive “correcting” of mistakes.
Neoliberalism has been wildly successful, because its two poles — Thatcher and Blair — keep politics revolving around a single stable axis: only one kind of policy “mistake” gets “corrected” and all “reform” ends up moving in the same general direction.
If there is hope in Brexit, it is that this is neoliberalism gone aground on the rocks. That the Labour Party has been able to move in the direction of becoming once again a member driven organization able, maybe to shed the careerist model set up by Blair for the PLP, is the kind of thing that gives an old pessimist like me a glimmer. That kind of fundamental organization is the pre-requisite for making democracy work, imho.
Side-note: “Feudalism” is a very imprecise term used variously to refer to many places and times over the course of centuries of European history extending forward and back from the High Middle Ages. Little of it had much to recommend itself as a social and political order, being steeped for the most part in ignorance, superstition, squalor, cruelty and pointless violence. Somewhere, mostly in associated myth, there may have been something attractive at some place and point in time, but I really worry about whether Mandos is serious when he makes sweeping statements in favor of feudalism.