You cannot carry out fundamental change without a certain amount of madness. In this case, it comes from nonconformity, the courage to turn your back on the old formulas, the courage to invent the future.
Thomas Sankara
Quote from ‘The Divide: A Brief Guide to Global Inequality and its Solutions’ by Jason Hickel
Read all about it! It’s the feel-good factor! According to experts, Britain’s economy is forecast to grow at its fastest rate since the second world war, as retail sales jump in response to the partial opening up of the economy. Ian Stuart, the Chief Economist at Deloitte, suggested that the UK was on track for a significant recovery in consumer spending, as the huge savings put aside by wealthy households during the lockdowns enabled higher private consumption.
Reading the media headlines recently you could be forgiven for thinking that we are returning to some sort of normality, even though huge uncertainty and risk remain both domestically and globally. Unemployment may have fallen but many millions remain on furlough, with no certainty as to the future if, as expected, the scheme starts to wind down starting in July. Furthermore, we are not immune from the global economic consequences of the pandemic, which are far from over.
Without wishing to be the spoiler of what might be seen as good news, and goodness knows we need some, welcoming a potential return to growth in the form of consumer spending masks the fact that we are facing some of the greatest environmental challenges ever. It should be a moment to take stock and think about where we are going. Is our behaviour sustainable, and if not, how can we change things for the better?
Growth that serves the sole purpose of profit realisation must be challenged as an objective, given both its real human and planetary cost. There are serious questions we must start asking, even as the UK hosts the COP26:
- Whether such excessive consumption designed to keep the economy going is ecologically sustainable?
- On whose backs has the wealth of developed countries been built?
- What are the consequences of that exploitation? Consequences such as the enormous global inequalities that have created such huge differentials in living standards between the Global North and South, the tremendous damage our reliance on fossil burning fuels is continuing to cause globally, and the devastation both in human and land terms of resource extraction to fuel our way of life.
Domestic considerations can no longer be viewed as distinct from global ones. They are interconnected by two issues; from a negative perspective, a toxic economic system which drives public policy globally and is directed by economists in major institutions such as the IMF and the World Bank; and from a more positive one, the clear interconnected nature of our ecosystems upon which the health of the planet depends, showing, if nothing else, our global interdependency, and of which we must take account when deciding the next course of action.
At the same time as the media lauds the return to growth and consumer spending (after all, good news is better than bad, regardless of whether uncertainty still reigns and whether it might be a short-lived phenomenon) it publishes, in seeming contradiction, headlines which equally clearly show the consequences of hitherto unchecked consumption on the planet, as if somehow the two are distinct from one another.
Week in, week out, there are always yet more indications of the effects of human behaviour on the environment, or evidence-based studies detailing the consequences of our overconsumption and reliance on carbon-based energy sources.
This week, California declared yet another drought following hot on the heels of the last one (2011-2017) which destroyed millions of trees and fuelled extensive wildfires. As the drought has intensified, officials have made moves to stop the global corporation Nestlé from extracting millions of litres of water from California’s San Bernardino Forest. The company bottles and sells its branded water products disregarding, as usual, the environmental damage it causes in resource-stricken areas, and not just in the US.
In the same week, a comprehensive new study by French scientists assessing the behaviour of planetary ice streams has shown that the planet would still lose 10% of glacier ice, even if we sought now to aggressively cut emissions to hit our climate targets. As a result, we face multiple consequences in the next few decades as sea levels rise along coasts, with risk of flooding and inundation as well as a decrease in the stability of river systems which could cause water shortages.
The study backs up one published by Leeds University at the beginning of the year. Andy Shepherd, a professor at Leeds, said that ‘Glacier melting accounts for a quarter of Earth’s ice loss over the satellite era, and the changes taking place are disrupting water supplies for billions of people downstream – especially in years of drought when meltwater becomes a critical source. […] Although the rate of glacier melting has increased steadily, the pace has been dwarfed by the accelerating ice losses from Antarctica and Greenland, and they remain our primary concern for future sea-level rise.”
Also, this week, whilst much concern has been expressed about overfishing, according to experts insufficient attention has been paid to the plastic and chemical pollution which is threatening disaster in our seas and oceans. We will pay an eventual heavy price for our poor planetary stewardship, if David Attenborough’s salutary warnings along with a huge body of scientific evidence backing up the realities of climate change and over-exploitation of resources, are ignored for much longer.
The bottom line is that what we decide to do now will determine what the world will look like in two or three generations’ time. And yet every indication is that politicians hooked on consumer growth and the GDP measure are going to fail to address the challenges we face in terms of reducing carbon emissions, managing vital resources more equably and addressing global inequality. Any proposals, regardless of grand promises, are likely to be watered down if they affect corporate profitability or will be limited by the imaginary boundaries of financial cost.
As the media repeated the IFS’s warning last week that public borrowing had soared to a ‘peacetime record’, an article in the Telegraph suggested that instead of increasing corporation tax (which apparently would only raise £14bn, described as a ‘drop in the ocean’ in terms of paying down the huge public debt) or implementing a wealth tax to raise revenue, all the Chancellor really has to do is ‘sit on his hands and let the growing signs of a surging economy do the hard work as consumers unleash £150bn of lockdown savings’.
Once again, we have the suggestion that private sector spending, rather than public, can get us out of the economic hole we are in, with complete disregard to the effects of such excessive consumption.
Reliance on private spending would, however, only give a short-term economic respite, should government fail to continue to spend sufficiently into the economy, not only to oil its wheels but drive the move towards sustainability and a more equable division of real resources and wealth. The real question should now revolve, not around private consumption to sustain an ailing economy, but around investment in public goods such as healthcare, education and training, research and development and sustainable transport systems, along with a vision for a kinder more sustainable future.
Whether it is President Biden’s idea to raise income and capital taxes to pay for the pandemic and fund his huge spending plans, the prospect of ‘hard choices’ having to be made by the UK Chancellor in the form of more austerity and cuts to public spending to balance the books, or The Telegraph’s solution of getting back to work to get the economy going again and thus increase tax revenues to pay down public debt, wherever you look, the recipe for public and global well-being is always founded on a false analogy of how governments spend. The public perception that public debt is bad and will have to be paid for in the future through higher taxes or that spending will have to be cut on essential public goods to balance the books, is a narrative that does not match reality and yet daily it features in the public discourse.
Indeed, this week, once again the cuts to the foreign aid budget figured heavily in the media as the government announced where the cuts would fall. The former Conservative Foreign Office Minister Liz Sugg described them as ‘difficult to comprehend’ given the global pandemic emergency and the impact of climate change on some of the world’s poorest countries. Experts and NGOs opposing the severe cuts which will affect women and girls’ education, polio eradication, clean water, and sanitation as well as vital research have described them as ‘savage’ and ‘a national shame.’ And so they are.
On the one hand, as hosts of this year’s COP 26, the government claims commitment to addressing climate issues and inequality, but then on the other, removes the very building blocks for change both domestically and internationally. The state of the public finances is never very far away from the discussion and will surely be used as a justification for future cuts to domestic public spending, as they have been already for those planned for International Aid.
The Foreign Commonwealth and Development Office defended its actions saying the ‘tough but necessary decisions’ had to be made because of the fiscal impact of Covid-19. And Conservative MP Andrew Mitchell, whilst opposing the cuts saying that they were ‘balancing the books on the backs of the poorest and most vulnerable people in the world’, was still content to uphold the notion that the state finances resembled a household budget.
Whilst one might have some reservations about the notion of ‘building back better’ in terms of who is likely to benefit in this so-called ‘brave new world’, it might seem to have hit a brick wall if the government continues to fall back on the ingrained perception that its spending policies are constrained by monetary scarcity and that at some point in time tough decisions will have to be taken to rein in expenditure.
Indeed, shockingly some politicians have already expressed concerns about the affordability of saving the planet from environmental chaos and addressing wealth distribution. “Where will the money come from” they opine? If we allow such discourse to continue, we will find ourselves stuck between a rock and a hard place and the concept of steady finances will become an obstacle for change.
This week, MPs from the Public Accounts Committee expressed concerns that the Treasury had yet to explain how the tax system would help the UK to meet its emissions targets and still were to clarify how it would manage the reductions in tax revenues worth £37bn from fossil fuels as the UK shifts towards a clean economy. Whilst of course the tax system can play a vital role in behavioural change, once again we have the false ‘household budget’ analogy taking precedence by asking how the government would fund its spending if its tax revenues declined.
Meg Hillier MP, the Chair of the Public Accounts Committee, emphasising the scale of the challenge said:
“The economic revolution required to abandon fossil fuels and reach net zero must be the greatest co-ordinated ask, of governments around the globe, in history. But the UK government has been blithely issuing ever more ambitious climate targets for years now, with no sign of a roadmap to reach any of them. The departments in charge seem stuck in a bygone era, with little sign of the innovative thinking needed to achieve all this.
Every week brings reports of some climate record disturbingly broken – the hottest year, the hottest decade, warming seas rising faster than we feared, carbon emissions raging back even as the economy takes more faltering steps. Now we are six months from hosting the next major global climate summit and the climate storm is breaking all around us. HMRC and HMT need to catch up fast.”
Her critical words reflect the endless rhetoric emanating from government ministers, who have yet to commit to a strategy for reaching net-zero, and yet they still reiterate the story that government spending is always constrained by tax revenues or market confidence in terms of financing the deficit. It does not bode well.
Whilst of course the realities we face are extraordinarily complex, and the solutions not always clear, there is no financial excuse for not acting. The key surely to effecting change is to start by acknowledging how the government really spends. We have seen the proof over the last year in shovelfuls! But what perhaps until now has gone unnoticed and scarcely recognised on the public radar is that over the last few decades public money has been leaching into private corporations, reaching vast sums over the last year with little transparency or accountability. The NHS, social care and the education system as examples have been sublet to the private sector on the back of public money.
The anathema of state intervention indicated by neoliberal dogma has been more about shifting public funds into corporations and driving privatisation, outsourcing and deregulation to serve corporate interests and the revolving door, rather than the public interest.
Only this week, Professor Eileen Munro, Emeritus Professor at the London School of Economics, commenting on the review of children’s services in England, has stated that the government seemed to be ignoring the role of poverty, poor housing and job insecurity in children’s well-being and development suggesting that it was ‘limiting responsibility to parents instead of how we function as a society.’ She is concerned, along with many others, that it will be used to cap the escalating costs of tackling children’s care (caused by government austerity policies) whilst at the same time will be yet a further step in introducing market-style structures and privatisation to what is a seriously underfunded but still a local authority run system.
Ray Jones, Emeritus Professor of Social Work at Kingston University has commented; ‘After more than 10 years of austerity creating poverty for children and families, it is crucial that this review rises to the challenge of confronting the impact of government policies which have caused so much harm’.
We can see thus how the government has used the idea of monetary scarcity to shift monetary resources from public sector goods into privately run, profit-motivated companies in a sleight of hand way and using the excuse that the private sector is more efficient.
If we care for the future, then we should be shouting from the rooftops that it will not be defined by a budget or monetary affordability, but by the political decisions taken by governments to deliver public purpose objectives, environmental sustainability and wealth and resource equity, or not as the case may be. The only thing that will necessarily check government spending will relate to inflationary pressures resulting from real resource constraints.
Hitherto, the game has been played to the advantage of global, profit-oriented corporations. But there is an alternative, and it starts with rejecting the economic orthodoxy which prevails and gaining an understanding of how government really spends and what possibilities that could offer for a better world.
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