Wednesday , September 19 2018
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It’s time to nail these neoliberal lies

Image: quixotic54

Have you noticed that children are looking scruffier these days?  You may, perhaps, have kept this observation to yourself.  After all, kids are supposed to run around getting dirty, right? But your first impression turns out to be correct.  Children are a lot dirtier and a lot smellier than they were a decade ago; and for a very material reason.

Eighteen months ago I wrote about a gathering economic trend in the sale of personal hygiene products like shampoo.  People across the income scale had been trading down – turning away from expensive branded soaps and shampoos in favour of cheaper own-brand labels:

“Nearly a decade of austerity cuts has served to usher in a new economic structure in which only the top 20 percent have enjoyed an increase in living standards.  Forty-percent have just about maintained their standard of living, while the bottom 40 percent has seen their living standards plummet.  In an economy that grew up around mass consumption, this leads to marginal shifts in discretionary spending patterns; like the amount of soap, shampoo and deodorant that we buy.

“It is not that poor and middle class people stop washing.  Rather, they shift to cheaper products and/or use them less frequently.  For example, those who work from home may economise by going an extra day before washing their hair.  When they do, they may opt for the cheaper shampoo sold by the discount retailer in preference to the expensive top of the range brand.”

Eighteen months on and things have gone from bad to worse.  The fall in the value of the pound – which brought about the collapse of the Poundland discount chain – and the continuing squeeze on incomes and benefits have pushed large numbers of families into choosing between feeding their kids and washing their kids.  As Sally Weale reported in the Guardian last month:

“Primary school children are arriving for their lessons unwashed and in dirty clothes because their parents cannot afford to buy washing powder, soap or shampoo, according to a survey by a UK charity.

“More than four in 10 parents (43%) who took part in the survey said they have had to go without basic hygiene or cleaning products because they can’t afford them, while almost one in five (18%) admit their child wears the same underwear at least two days in a row.”

The charity – In-Kind – found that:

“Eight in ten primary school teachers say that, worryingly, they’ve seen a rise in the numbers of children coming to school unwashed or not looking presentable in the last five years and have found themselves intervening at an increasing rate.

“Half of British primary school teachers have to provide pupils with essential items like soap, washing powder and shampoo on a weekly basis because of family hygiene poverty issues…”

The report was dismissed by the usual suspects in the media as evidence of feckless parents choosing to spend money of booze, fags and satellite TV rather than take care of their children.  However, as with the 4 million visits to foodbanks last year, when a trend is this big, it simply cannot be dismissed in that way.  This trend is telling us that we are witnessing mass poverty on a scale that tends to be followed by open revolt and revolution – Brexit, Trump, and the rise of the European right are merely the early warning signs.

Even the economic cheerleaders at the BBC have been forced to acknowledge that Britain has a poverty problem.  Economics Editor Kamal Ahmed reports that:

“Millions of ‘just about managing’ families are no better off today than those in 2003… The remarkable income stagnation for so many reveals that the economy has been failing to generate income for people over many years despite record levels of people in work.

“In 2003, households on the lower half of incomes typically earned £14,900. In 2016/17 that figure had fallen to £14,800.”

In a separate report, the BBC informs us that:

“More than half of families living in temporary accommodation in England are in employment ‘working every hour they can’, says housing charity Shelter.  Its analysis suggests 55% of families (33,000) living in temporary digs were also working in 2017 – up 73% on 2013.

“The charity blames a mix of expensive private rents, a housing benefit freeze and a chronic lack of social housing.”

Notably, this is occurring at a time when official unemployment is at its lowest point since the early 1970s (although it was measured differently in those days).  And what this tells us is that two of the central articles of faith of neoliberal economics are simply wrong.

According to the neoliberals, employment is the route out of poverty.  And for those who do not have jobs, training and education is the route into employment.  And so, government policy for decades has involved expanding education and training while reorganising social security and health policy to focus on returning people to employment.

As I have said in several posts, these articles of faith were born out of the extremely unusual and impossible to repeat economic conditions that prevailed in the two decades 1953 to 1973; during which the rate of energy use per capita grew exponentially.  This allowed us to develop a growing number of high-paid/high-tech jobs; each of which required several years of education and training on entry.

UK net energy per capita

In Britain, energy per capita slumped in the mid-1970s; triggering the stagflation that propelled Thatcher to prominence (the USA’s per capita energy trajectory is similar).  Following the crushing self-inflicted recession in the early 1980s – which also saw a slump in energy per capita – Thatcher’s debt-fuelled boom, accompanied by North Sea oil and gas, propelled energy use per capita back to where it had been on the eve of the first (1973) oil shock.  For a moment during the Blair years it was possible to imagine a high-tech “cool Britannia” emerging onto the world stage.

It was an illusion, of course, the North Sea, along with the North Alaskan Slope, was the final large deposit of (relatively) cheap and easy oil.  Following its peak in 1999 Britain has seen its energy situation implode.  Both oil and gas recovery is running at 60 percent less than at peak.  In 2004, Britain became a net oil importer; and in 2005 a net gas importer.  In the decade since the crash of 2008, per capita energy use has fallen off a cliff, as the cost of energy has increased by more than 300 percent.

In these circumstances, work is no longer a certain means of escaping poverty, and education is no longer necessarily a route into employment.  As Rebecca Wilson at the Chartered Institute for Personnel Development reports:

The graduate employment gap: expectations versus reality shows that just half (52%) of graduates secure a graduate-level job six months after they finish their course. The Government’s official figure is inflated to 77% by including ‘associate professional and technical occupations’ such as dancers, choreographers, fitness instructors, youth and community workers, despite the ONS stating that these jobs ‘do not require a degree’…

“The report also shows that the continued focus on boosting graduate qualification rates in the UK appears to have had little effect on productivity, with the UK languishing in sixteenth place in GDP per hour among OECD countries, despite having the fifth highest proportion of residents educated to degree level.”

Adding to the pool of graduates in a falling per capita energy environment means creating a generation of discontented graduates who will never find work in their chosen field.  This is particularly true for graduates in the STEM subjects.  As Wilson notes:

“The research also reveals that, despite a strong government focus on boosting science, technology, engineering and mathematics (STEM) subjects, STEM graduates are more likely to be unemployed six months after graduation than graduates from other disciplines. Compared to a national unemployment rate of 4.9%, STEM graduate unemployment rates are: 8.6% for computer science graduates; 6.5% for physical science graduates; 6% for engineering and technology graduates; 6.5% for mathematical science graduates…

“The Government has continually focused on boosting STEM skills, and encouraging graduates to pursue those subjects at university, but that investment doesn’t appear to be translating into better graduate outcomes.”

Nor are things any better at the bottom end of the employment ladder, where various types of on-the-job training was supposed to shift Britain’s idling workforce back into work.  Five years ago even the Tory government supporting Telegraph was forced to concede that the flagship “Work Programme” produced worse employment results than doing nothing:

“A total of 130,000 of the 1.2million people who have joined the Work Programme since June 2011 are now in employment.

“Despite significant improvements, the scheme has missed every target which the government set for getting people into jobs.

“In half the areas where the scheme is being run, people would have been more likely to get a job if they hadn’t taken part in the programme.

“Other figures showed that just one in 20 people on sickness benefit who were on the programme found work. The target was one in six.”

In the end, the Work Programme was ditched; and an updated scheme for young workers looks to be going the same way.  However, changes to social security – most notably the fast-failing Universal Credit reform – are rooted in the erroneous belief that employment is a route out of poverty.  The result is the growing mismatch between real life and the fantasies that exist in the heads of economists and government ministers.  In the real world, poverty is growing and families are going unwashed and unfed precisely because for millions of families work no longer pays.

The problem we face at this point is that both economic theory and political practice are based on the assumption that the period 1953-73 was “normal” and that any time soon, that normality is going to reappear.  As a result, we are continuing to educate and train people for a high-energy/high-tech/high-paid economy that really is a thing of the past.  We see this in decisions like investing in a third runway at Heathrow in the expectation that commercial air travel will continue to grow forever.  Virgin Trains made a similar assumption about rail travel; with the result that they have been forced to hand back their franchise because of the losses they incurred.

The reality is that most of the jobs being created are low-energy/low-tech/low-paid; in sectors like hospitality and social care.  The shrinking, collective, wage pool that those employees have to spend at the end of the month is increasingly taken up – and often not fully funding – essential living costs like housing, food and energy.  We see this reflected on a weekly basis in the gathering “retail apocalypse” that is unfolding as discretionary income falls through the floor.

With energy prices increasing along with interest rates, and with the state needing to bring in additional tax revenue to maintain its debt and current account payments, the collapse in discretionary spending across the economy can only accelerate.  That means that any large asset project – like HS2 or the Heathrow runway – will soon be stranded like a beached whale.  This is because our direction of travel is not back to the sunny uplands of the 1950s and 1960s, but to a re-localised future in which we all operate at levels of material poverty last seen in the nineteenth century.

There is, of course, a route back to the high-tech/high-paid future that neoliberal economists and government ministers dream about.  It is in the exploitation of a new energy source even more energy-dense (so not renewables) than the fossil fuels we have been using.  By unlocking this new energy source, we can drive energy per capita use to even greater heights than those reached in the 1970s when we could send humans to the Moon and operate commercial supersonic flight.  The only problem is that this new source of high-density energy turns out to be just like the Urban Spaceman.

As you made it to the end…

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