With neither map nor compass
After a fortnight of establishment media wishful thinking, yesterday’s monetary policy committee meeting brought forth disappointment. The committee voted 7 to 2 not to raise interest rates after all.
Insofar as global shortages, broken supply chains and rising energy costs are not the result of people borrowing currency, the decision is surely correct; since the last time they raised interest rates in response to these types of supply-side price increases, they successfully created the biggest financial crash since the Great Depression.
With a raft of tax increases and benefit cuts still to work through the economy, with the ending of the furlough scheme last month, and with the worst of the energy price rises still to hit domestic consumers, there is good reason to hold back before adding increased debt-servicing costs to our economic woes.
The disconnect between the desires of the metropolitan elites – as expressed via the establishment media – and the broader economy point to a much broader political struggle over who is going to pay the bill for the response to the pandemic. The vast majority, who draw their income from wages need low interest rates if they are to offset rising prices and increased taxes. But the wealthy minority, whose income is derived from investment, need increased interest rates to offset rising costs. Meanwhile, the central bank will be painfully aware that raising interest rates too high and too quickly risks a wave of business and household debt defaults which would trigger a financial crisis at least as big as the 2008 crash.
Former monetary policy committee member Danny Blanchflower gives a more honest appraisal of the central bank’s current problems:
“’We have no historical precedent for what’s happened,’ he said. ‘We’ve never seen a shock of this kind and the big thing we are seeing at the moment is the furlough scheme is coming off, there is going to be an increase in taxes on National Insurance [and] universal credit was just cut.
“’So, the central bank really hasn’t a lot of clue what is going on’.”
Yanis Varoufakis goes further, arguing that measures taken in response to the 2008 crash have caused capitalism to morph into a new Technofeudalism in which none of the prescriptions in the economics textbooks work anymore. It is not just that central bankers don’t know what to do… they can’t know what to do. And one false move at this point could bring the entire structure down.
Taxi firms are the latest to experience labour shortages according to Rebecca Wearn at the BBC:
“More than half of licensed taxi drivers have not returned to the trade since the pandemic, the organisation representing the industry has said.
“The Licensed Private Hire Car Association (LPHCA) estimates the industry is short of 160,000 of the previously 300,000-strong workforce.
“Many drivers left the industry during lockdowns as demand plummeted.”
The causes are similar to those underlying the shortage of HGV drivers. Poor pay and conditions, European drivers leaving and not returning; and a host of industry regulations which eat into drivers’ incomes. And the growth in online sales mean that delivering parcels and groceries can be better paid, without the risk of violence or the prospect of drunks throwing up in the back of the car.
As with HGV driver shortages, the problem has been compounded by the collapse of official bureaucracy during the pandemic. As Wearn notes:
“A backlog in costly licensing and registration of vehicles, as well as criminal and medical checks for drivers, have led to what the LPHCA have called ‘a perfect storm’.
“A taxi driver must apply to their local council for a licence, which can cost up to £600 a year. Drivers must also obtain a criminal record and full medical check, as well as the famous ‘Knowledge’ examination in some cases.”
As with labour shortages across the UK, driving has been a baby-boomer occupation, as in recent decades, fewer young people have seen driving a lorry or a cab as a serious career. What the pandemic appears to have done is to cause a large part of the remaining working-age boomers to cut their losses and take early retirement… even if this requires a cut to their incomes.
So there you have it
Just last week, I explained why the British Labour Party would never support electoral reform. This did not go down well with those who understand that for the foreseeable future, there is no means by which Labour can form a government within the current electoral system. It is, just, theoretically possible that a Labour-SNP-LibDem-Plaid Cymru-Green coalition could garner enough seats to overturn the Tories’ majority. But even this would require so radical a shift in Labour practice to make it all but impossible.
As if to prove the point, consider the response to corrupt Tory MP Owen Paterson’s resignation yesterday. Paterson’s vacated North Shropshire constituency is among the safest Tory seats in Britain. And so, no matter how much the voters might disapprove of Paterson’s actions, and no matter how far these are believed to reflect a general undercurrent of sleaze within the ruling party, in a straight contest, Paterson’s Tory replacement is going to win the seat.
One – not entirely original – option would be for the opposition parties to agree to stand aside to allow a neutral, “anti-corruption” candidate to run against the Tories. In theory, this would allow people who ordinarily vote Tory to express their disapproval of sleaze without having to support an opposition party. This, at least, would provide a means to unseat the Tories and to send a message to the government… But, as with electoral reform, it depends upon each of the opposition parties being prepared to compromise.
Predictably, the Labour Party has shown yet again that it would rather see another Tory elected than enter into a pact with the other opposition parties. As the BBC reported just hours after Paterson’s resignation:
“Labour has ruled out standing aside in favour of a cross-party “anti-sleaze” candidate in the by-election to replace Tory MP Owen Paterson…
“Labour held talks with the Lib Dems and Greens about whether to get behind an independent candidate in the by-election to replace him. But the party says it will stand.”
For those activists who cling onto the fantasy of electoral reform, the lesson here ought to be clear. There are only two realistic choices available to us here. Either we have to reinvent a Labour Party that is neither Blairite nor woke, in order to win under the present system; or we have to cast Labour into the dustbin of history to make way for a new opposition Party which can win under the present system. All else is no more than idle hopium.
Briefly roused from deep slumber
One thing the Owen Paterson saga did achieve, was to rouse the opposition party from its cryogenic slumber. For the first time since December 2019, it has found an issue on which it could attack the government without vindicating the Corbynite left. Sleaze, it seems, is something even the Blairites can oppose… at least when they are not in government.
The sudden outrage over an MP being caught with his hands in the proverbial till, serves to highlight the appalling lack of outrage over systematic attacks on the poor, the destruction of public services and the Tories’ woeful mishandling of the Covid pandemic.
Indeed, I cannot be alone in thinking that instead of cutting benefits, MP’s could have saved a good deal of money by replacing the supposed opposition MPs with a banner proclaiming:
“We’d do the same as the Tories… only more of it… and better.”
As you made it to the end…
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