Guy Standing

If there is one area where the Labour Party should come together it is in the strategy to revive the economy of the sea. Under common law, going way back, the sea, the seashore, the seabed and all in the sea belonging to the country are part of the commons, that is, the property that belongs to everybody, equally. Yet the sea has been subject to a greater ‘enclosure’ than land, and has been subject to a process of privatisation and financialisation that nobody who calls themselves a progressive should accept. This will become even more important since the sea is projected to double its contribution to global GDP to over 10%.

Consider a few facts. Since 1982, the UK owns four million square miles of sea under what is called its Exclusive Economic Zone. That part adjoining Britain is three times its total land area. But successive governments have overseen the privatisation of the blue economy and given vast subsidies to corporations, costing taxpayers billions of pounds and enhancing the profits of foreign capital and financial firms.

Take the seabed. It has always been accepted as a commons, with the government and monarchy required to act as the Steward, expected to respect what is known as the Public Trust Doctrine, that is, to act in such ways as to ensure the commons is kept intact and in good condition. So, why has the left kept quiet while the Crown Estate has been auctioning off thousands of square miles of our seabed, earning an income flow estimated to be £9 billion, while selling rights to multinational capital? More auctions are planned. Details are given in my book, The Blue Commons: Rescuing the Economy of the Sea. Labour should make it clear that it will block further privatisation of our seabed.

Then there is fishing. Starting in 1967, the government operates a complex system by which it hands over what are private property rights as ‘fish quota’ to selected fishing companies. A trick played was that the amount of quota given to companies was based on recorded past catches. Until quite recently, small-scale fishers were not required to keep records of how much they caught.

So, when the current system came into effect, they were excluded from the main ‘pool’ of quota. A result is that today just 25 firms own over two-thirds of all the quota, and five families, all on the Sunday Times Rich List, own 29%. They are given virtual ownership of the fish, denying all small-scale fishermen the right to catch much at all. This was not the fault of the EU’s Common Fisheries Policy; the Leave Campaign lied that it was.

Making the situation worse, the government hands out £120 million a year in subsidies, most going to the corporates. And they have treated the law with contempt. Thirteen of the top 25 firms were caught clandestinely breaking the quota rules, catching 170,000 tonnes of illegal excess fish worth £63 million. They received fines but nobody was imprisoned because under British law it is merely a civil offence, not criminal. And they were allowed to keep their quota. The book gives later cases.

The government slashed the budget of the Marine Management Organisation, the body responsible for policing what happens at sea. And there are just 12 coastguard vessels to monitor 773,000 square kilometres – one for every 64,000. This is de facto deregulation. It should be seen in the context of one fact. Because economic growth has been given precedence over preservation of the commons, subsidies have helped fisheries become more ‘efficient’, meaning more fish are taken than is sustainable. As a result, the hourly catch today is just 6% of what it was a century ago. At current rates, our children will have no British sea fish to eat.             

Then there is aquaculture. Over half the seafood we eat today comes from onshore and offshore fish farming. This is another sphere where foreign capital has come to dominate. It is a form of enclosure. Giant fish farms are doing ecological damage, and big companies, most notably the Norwegian Mowi, only bear half the production costs. In Norway, the government is imposing a 40% levy on the cash-flow of such firms. Labour should match that.  

Then there are our ports and harbours. Thatcher privatised all ports, and most have fallen into the hands of foreign capital, much of it Chinese and much controlled by private equity, a form of finance notorious for seeking short-term profit maximisation, asset stripping and ecological disdain. At the time of writing, there is a scandal in the Teeside, where local fishermen have had their livelihoods destroyed by the port owners dredging and dumping 250,000 tonnes of sediment in the sea, killing off crabs, lobsters and other crustaceans. The port and the river authority are run by the subsidiary of a Canadian private equity company. All ports should be nationalised or at least mutualised.   

Then there are the giant cruise ships and container ships. They use the most polluting ‘bunker diesel’ and keep their engines going all the time they are in port. They cause more pollution than all the cars on our roads. Yet they are allowed to do it. A study showed that throat cancer and other ailments linked to their pollution mean that around Europe these boats are responsible for 50,000 premature deaths each year.

Then there are what will be two big ‘blue growth’ areas. Mining in the sea is very profitable and deep sea mining for minerals needed for electric batteries and much more is about to take off on a major scale in 2023, for reasons outlined in the book. Marine scientists are acutely concerned. But mining companies and big finance investing in them are lobbying effectively.

Here is a predicament Labour must address. Under the United Nations’ Convention on the Law of the Sea, adopted in 1982, the International Seabed Authority was to draw up a Mining Code and regulate what happens in the Deep Sea. The ISA was set up in 1994, but after 28 years it still has not drawn up the Code. This is significant, because the Code is meant to ensure that income from the deep sea is shared by all humanity, so that capital is not the sole beneficiary. Powerful interests have ensured the Code does not exist. Labour should demand it be drawn up without further delay.

Perhaps above all, the development of intellectual property rights in the sea should cause all of us alarm, as it relates to what will become a huge part of the global economy. There are already 13,000 patents in ‘marine genetic resources’, vital for future medicines among others, guaranteeing their owners monopoly profits for 20 years. Over 47% of the patents are possessed by one corporation, the German chemical giant BASF; 76% are possessed by three countries, Germany, the USA and Japan. Britain is nowhere. Labour must have a policy to redress that.

Finally, Labour should develop a strategy that combines revival of the blue commons with a shift to what could be called eco-fiscal policy, by raising revenue from levies on profits from activities that use and deplete common resources. The proceeds should be channelled into a Blue Commons Capital Fund, along lines of what has been done in Norway. From the Fund, Common Dividends could be paid out, as a form of common property right, a basic income by another name. It can be done.      

picture credit : Ed Dunens flickr      

Guy Standing is Professorial Research Fellow, SOAS University of London and a Council member of the Progressive Economy Forum. He is author of various books, including The Precariat: The New Dangerous Class and The Corruption of Capitalism: Why Rentiers thrive and Work does not pay.

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PEF Council member Prof. Stephany Griffiths-Jones is a member of Chilean President Gabriel Boric’s group of economic advisors. With Boric winning a resounding victory in the Chilean Presidential elections, we reproduce here a translation of Stephany’s recent interview for CTIX magazine Chile. Conducted before the second round of the election, Stephany discusses the left’s economic programme for the country, and the challenges a new President is likely to face.

Interview conducted by Andy Robinson. Original (in Spanish).

Stephany Griffith-Jones, one of the most eloquent promoters of the role of the state and public banks in the equitable development of South American economies, joined a group of advisers to Gabriel Boric, Chile’s presidential candidate, before the start of his second round campaign for the Presidency. The decision to appoint Griffith-Jones – a professor at the University of Sussex and collaborator with Nobel Laureate Joseph Stiglitz at Columbia University in New York – is proof that Boric build on not only ideas from the 2019 protest movement, but also experts close to Concertación and Nueva Mayoría, who led the centre-left governments of Chile’s slow transition from dictatorship.

It is also proof that, at the age of 35, Boric is aware of the importance of working with experienced economists such as Griffith Jones, Born in Prague in 1947, great-niece of Franz Kafka, and whose family emigrated to Chile the following year, we spoke about Boric’s dilemmas in needing to both respond to the demand for change in Chile, and to stabilise the economy.

It seems that Gabriel Boric is facing a problem. He is a candidate for change, a movement that has taken to the streets of Santiago to protest the neo-liberal model. But if he wins, he will come to power in a difficult budget situation that leaves little room for progressive budget policy…

Yes. At the moment the budgetary situation is very difficult. The fiscal deficit is already at 13% of GDP… Piñera went from one extreme to another in his response to the pandemic. He did nothing at first, and a lot of low-income people were in real trouble. This is where the first withdrawals from pension funds were introduced, to help low-income people in great difficulty. [Chile’s Congress authorised raids on the country’s privatised pension funds during covid, turning them into a “piggy-bank”, with about $50bn or 25% of their value withdrawn to date.] But then, in 2021, Piñera went to the other extreme. He gave generous support, perhaps too much, to many, even people who were not so poor. And consumption skyrocketed. Chilean GDP will grow this year between 11% and 12%. The economy is totally overheated.

What should be done?

Boric has committed himself to significantly reducing the budget deficit in one year and respecting the budget already approved by Parliament. It is a sign of his moderation. In the coming years, he wants to raise taxes gradually and increase the collection of existing taxes – higher direct taxes, and lower indirect taxes. Indirect taxes, such as value added tax, account for more than 50% of Chile’s total tax revenue, well above the OECD average. There is also a commitment to combat tax evasion, which in Chile is twice the OECD average, but this requires more tax inspectors.

The problem is more general. Latin America is experiencing a moment of polarization. It is necessary to break a model that was very unpopular, but the economic reality of countries like Brazil or Chile leaves very little space, and both Lula and Boric have moved closer to the centre.

Yes, at first many people thought that Boric would be too radical. But now perhaps the greatest fear is that he can not do enough.

Despite this, he is portrayed as radical in many media …

It’s true. The media talk about far right and far left. We must reject this false dichotomy, because Boric is a Social Democrat. [Right-wing candidate Jose Antonio] Kast is an extremist. In economics, he is quite radical; to reduce taxes when the deficit is 13% of GDP is downright daring. In politics, he is even more extreme. One of his deputies said that women should never have had the right to vote. Unbelievable. Kast proposed restricting the right to abortion, even for women who were raped, and forgiving Pinochet-era torturers.

But Boric is a European-style Social Democrat. I met him first at a conference to discuss the Scandinavian model of government. He has been more on the left, but he is aware of the current budget problems and is very open to discussions with all sides. That said, he is very committed to the need for redistribution.

Given the polarity and rejection of the system, do you think it can be a double-edged sword to enjoy the support of the main political figures from Concertación?

No. That’s very positive for Boric. Leftists will vote for him anyway. The problem is attracting the votes of most of those in the middle. Although the most important thing is to attract young people who demonstrate, but sometimes do not vote. Participation in the first round was very low. In the past, the center and the left always won when they merged. It can be expected to be the same this time. Boric acknowledged the contribution of the Christian Democrats (PDC) and it was a very good move. He met Ricardo Lagos [centre-left president from 2000 to 2006] and Michelle Bachelet [centre-left President from 2006 to 2010, and from 2014 to 2018]. They were wonderful to him. Much of the center and left have already joined the campaign. And the Christian Democrats support him even though they say they would not enter government with him. It is also true that the fact that Kast is percieved as disastrous made the reunion easier.

It is strange to compare the victory of the left in the Constituent Assembly with the results of November in the parliamentary elections. How did this happen?

Yes, 78% of voters voted [on 25 October 2020] in favor of a new constitution. Voting in the Constituent Assembly [over 15 and 16 May 2021] was a great victory for the left. But then, just a year after the referendum, the same voters voted for a parliament that was divided between left and right. There is therefore a lack of consistency. If Boric wins, he will have problems with Congress, which will likely try to block proposals such as the budget and tax reform.

Will there be more leeway afterwards?

I think so, after the first year. Boric and his supporters are very committed to the ecological transition. Chile is lucky because it has lithium, which is essential for batteries, and copper, which is essential for the energy transition. In addition, there is great potential for further development of solar and wind energy. It is necessary to give priority to certain sectors for that transition, supporting their development, and Kast does not understand this. Development banks must be mobilized for the green transition. And financial regulation can be used to incentivize commercial bank loans to companies with low-carbon investments.

Public investment is key. For example, Boric wants to invest heavily in building an extensive rail network. Then there is hydrogen. Hydrogen can be produced sustainably in Chile because there are many ways to generate renewable energy. We can use green hydrogen in mining to have green copper.

Is there not a risk that the energy transition will create demand for metals and lead to more extraction and dependence on the export of raw materials?

The idea would be to move up the value chain. Manufacture batteries, incorporate more technology and knowledge. Scandinavian economies, which in the past were like Chile, dependent on exports of raw materials such as wood, managed to move up the value chain and develop rapidly. So it is necessary, for example, to produced more refined copper, to manufacture higher value-added cables.

Why would the left do it better than the right?

Because public investment and the development bank are essential for the green transition, and then catalyzing private investment in this sector is key. Kast doesn’t understand this. He caricatures the state as a dark and negative force, but those are the ideas of the past.

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Edited by PEF Chair Patrick Allen and council members Suzanne Konzelmann and Jan Toporowski

Publication Date 29th April 2021. Agenda Publishing

40 years of neoliberalism has failed to provide prosperity or stability to the UK economy. Instead it has led to low growth, turbulence, grotesque inequality , poverty and ill health for millions . This is the outcome of damaging economic polices driven by free market dogma, rentier capitalism and ideology. It’s time for a change.

This book contains 18 essays by PEF council members and academics who outline the essential features of a progressive economy dealing with the five massive challenges of our times to the economy – Covid-19, austerity, Brexit , inequality and climate change.

PEF calls for bold public intervention. Shrinking the state and weakening our public institutions has undermined social and community resilience and promoted an out-of-control, value-sapping and high-inequality model of capitalism. 

The authors say the resources of the state must build a fairer and more dynamic post-Covid society, using a mix of regional and industrial policy and investment to revolutionise our public health, housing and social services. A progressive new society should construct a new income floor and new measures to spread wealth and give everyone an equal stake in the economy. 

The financial crash of 2008 proved that only the state can rescue the economy when all else fails including the biggest banks. Covid has shown how only the state can rescue us from death and the collapse of the economy during a devastating pandemic. Only the state can steer the economy and deliver the investment needed to cope with climate change

The 2008 crash showed the breathtaking incompetence of the private financial sector. Now Covid has once again laid bare the myth than private is best – outsourcing to companies the job of track and trace at a cost of £37bn has so far failed to show any discernible benefit say the Public Accounts Committee.

By contrast, the selfless work of millions of NHS workers and volunteers has delivered one of the most outstanding vaccination programmes which has been the envy of the world. This has been done at modest cost and was only possible with a national health service drawing on the vocational drive of its workers for the common good.

The Biden adminstration is today showing the mighty power of the US State with Biden’s Covid and infrastructure bills. The results are expected to cut child poverty in half. The UK government should follow this lead and bring in new models of public intervention to deliver a pandemic-resistant, green economy which works for all citizens.

For an outline , list of chapters and authors and to order a copy go to this webpage

You can obtain a 25% discount on the cover price by entering code AGENDA25 on the Agenda page here

Launch event on Zoom – Wednesday 19th May 2021 at 11am . Joining details to follow.

The launch will be chaired Miatta Fahnbulleh , CEO of NEF and attended by Ed Miliband, Shadow Secretary of State for Business, Energy and Industrial Strategy . Martin Sandbu of the FT will attend as commentator.

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The UK government claims that saving lives and the NHS have been its priorities in this pandemic, but until mid-April when it proposed badges for carers, it seemed to have forgotten about social care. It gave neither care homes nor home care any special attention, putting them low down the queue for its provision of Personal Protective Equipment (PPE), effectively leaving them to fend for themselves. And once enough tests were available for use beyond hospitals, rather than ensuring that care workers had easy access, testing was immediately opened it up to all key workers, so that many care workers still couldn’t get test results when they needed them.  

In many European countries almost half of all Covid related deaths have been in care homes, but there is good reason why those figures may end up being particularly bad in the UK. The 1990 National Health Service and Community Care Act mandated that that 85% of local authority funding for social care should be for the purchase of care services from the private sector.

More than 400,000 residents are now looked after in 15,517 homes run by more than 5,000 different providers, at least 80% of which are private for-profit companies, generally using debt laden business models.   Many of the 26 big care home providers use complex company structures to maximise leakage and hide profit extraction going to owners, investors, and related companies some of which are offshore tax avoiders. Many are effectively property speculation companies. Home care is also privatised with around 9,000 regulated providers trying to support more than 600,000 people in their own homes.

Funding to Local Authorities has been reduced by over £7bn since 2010, despite an aging population. Thresholds for assistance have shot up so the numbers receiving support fell by 26% between 2010 and 2016, leaving one and a quarter million people with unmet care needs even before the current pandemic.

Care provision is particularly unsuited to privatisation. Providers facing local authority cutbacks in payments per recipient can cut costs in care only by employing fewer people, or by employing less well-qualified staff who can be paid less – inevitably leading to lower quality care. Difficulties associated with doing either of these in the public sector was one of the main drivers for privatisation. Privatisation was supposed to harness consumer choice and competition to improve quality but, given the impossibility of achieving the intended cost reductions in any other way, has in practice both lowered care quality and workers’ working conditions and pay. This has meant care workers on zero-hours contracts, insufficiently trained and badly paid, moving from one vulnerable person to another, often working in many different care homes. Although austerity intensified it, this process of squeezing profit out of worsening working conditions was going on well before the financial crash and continues to this day.   

Competition between private providers also produces its own inefficiencies, so that in domiciliary care, for example, services may be provided by many different providers within the same street, while care workers may have long journeys between their clients. Although reducing the number of clients visited by each care worker would have helped reduce the infection rate of Covid-19, a care system built on competition rather than co-operation was not able to provide that rationalisation. Indeed, one reason why the infection rate in care homes in the UK has been so high is that care workers without appropriate PPE work across different care homes.

Private sector providers would in normal circumstances be expected to provide protection for their own workers, including their own PPE. But with profit in mind why would they prepare for a pandemic? In emergencies the state is expected to step in to rescue the private sector, but a state that has run itself down to the bare minimum cannot respond well to emergencies. With austerity ensuring that stockpiles were reduced, the easily predictable worldwide shortage in PPE seemed to catch the government unaware.

The government says that its priorities have been to save lives and protect the NHS. Sensibly there have been few claims of success in the first of these, but the government does say it has succeeded in its second priority. The NHS, it claims, has not been overwhelmed. But how has it achieved that? By encouraging the virus to spread to the most vulnerable by discharging potentially infected untested patients to care homes and, until recently, not even counting the deaths that occurred there? By discouraging patients from contacting the NHS, potentially thereby causing thousands of excess deaths – and then claiming this was the public’s fault for not realising that the NHS would still treat them? By failing to recognise that the number of hospital admissions whose decrease it claims as a success is a policy variable and that more lives might have been saved if that number had been higher?

Has the NHS been saved? Not if this  means that  its principles have been protected, nor if it means that the population as a whole has been shielded as well as it could have been, nor if it means that that  the  health and social care workforce have been protected in the ways they have a right to expect.

A different approach is that adopted in British Columbia where the provincial government effectively nationalised its care home staffing system to improve workers’ pay and hours and provide PPE. But a privatised care system, especially with many staff on contracts that deny them a living wage from a single job, cannot hope to remove poor contracts and multiple employers as a source of infection.

The social care sector in the UK has been so badly hit by Covid-19 because it was in crisis already. Emergency measures are needed now to protect care recipients, care workers and unpaid carers. But at the same time thought must be given as to how we can build a new care system that does not leave people so vulnerable another time, provides good quality care, well integrated with health services at every level, and treats workers and carers with respect and dignity. This would not be a private sector care service. Instead we need a public sector led National Care Service nationally funded, but locally delivered, operating with decent working conditions alongside the NHS providing support for all who need it free at the point of use.

Image credit: Flickr – Don Barrett

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Leave aside the striking parallels  which will convince all Jehovah’s Witnesses, religious fundamentalists  and omnes gentes that it’s ‘all in the Bible’.   Leave aside also one big difference, which is that so far at any rate the corona virus is much more forgiving that the biblical deity. Most of us will survive this particular flood of germs.

Nevertheless, the Noah’s Ark problem arises whenever rising demand presses on a fixed supply. In the biblical story the shortage was in the supply of salvation, which was strictly limited to the righteous Noah and his family.  

In today’s secular version, there is a fixed (in the short run)  supply of  medical goods, notably protective clothing, tests, ventilators, hospital beds, and so on. So these items have to be rationed.

On what principle? The free market solution is to ration by price. The price of goods in short supply goes up, leaving only the rich able to afford them. If we had a free market in health care, they would be able to buy up  the lion’s share of  scarce medical goods. Eventually the quantity of medical goods would rise to meet the increased demand, but in the meantime the poor would have to do without.  

The socialist solution is ration books or queueing. In the first case everyone is allocated an equal share of the scarce resource; the second works on a ‘first come first served basis’:  the people at the heard of the queue get what’s in the shop, and the rest get nothing. Long queues with nothing in the shops to buy was a well-known feature of late communism.

But as soon as we think of the problem in terms of life-threatening viruses and medicines, we see that neither the free market nor socialist solution can be made to work.

Any attempt to apply the free market  solution would lead straight to revolution. Socialism has severe problems too. Some medical supplies, like masks, can be successfully rationed, with everyone getting a fixed number. But hospital treatment can’t be rationed like, say, meat  and eggs  were in the war,  because it  can’t be divided up into individual portions. For example, it would make no sense to allocate a tenth of ventilator to everyone. The bottom line here is that though testing can be done on a random basis, treatment cannot be random.  

Evidently some different principle of selection  is needed. This takes us back to the biblical story.  God saved the virtuous; we have decided to prioritise the economically useful.  The old, the sick, the infirm, those with ‘underlying health issues’, will be left to live or die as they may under conditions of lock-up; the giant share of scarce  medical supplies will go to those with a viable future. Utility  replaces virtue as the highest value.

Given that we have got ourselves into this particular shortage trap, it is hard to see what other principle of selection is available. Allocating scarce medical supplies to the medically and  economically useful  is clearly the only sensible thing to do.

But it sits very uncomfortably with another principle to which the liberal world   is committed: that each life is of equal value.  It is in the name of equal rights to ‘life, liberty, and happiness’  that we ban all kinds of discrimination against particular individuals and groups.  But in the situation we face today, someone is going to have to decide that some lives are more valuable than others. Some people will be selected for the Ark, and others will be left to face the future as best they can till we develop a vaccine or  the virus has done its work.

The conclusion seems clear enough. Given that we have no ethically accepted principle of choosing between who is to live and who to die, we should take exceptional pains to ensure that we do not face acute shortages of life-preserving equipment.  It is a scandal that the developed world was caught so short of tools to deal with the latest pandemic, some countries more than others. For this there are a number of reasons.

The first is the policy of austerity, which now shines forth in its full wickedness. The evidence is strong that ‘pandemic planning became a casualty of the austerity years’. (Sunday Times, Coronavirus/Insight 19/04/39). As a result our government faced a very poor trade-off between medical intervention  and ‘herd immunity’. It may even be worse than we think as recent research has questioned the degree of immunity, so there may be more deaths than expected. Broadly speaking, the shorter we are of medical resources, the more drastic lock-up will need to be.

But austerity is by no means the only culprit. A second, and more fundamental, explanation for our lack of preparedness, is the business philosophy of ‘just in time’. As health expert Alanna Shaikh, put it:  ‘Just in time ordering systems are great when things are going well. But in a time of crisis it means we don’t have any reserves. If a hospital or a country runs out of face masks or PPE equipment, there’s no big  warehouse full of boxes that we can go to, to get more. We have to order more from a supplier, we have to wait for them to produce it, and have to wait for them to ship it, mainly from China’.

This criticism applies to much more than medical procurement. It challenges the just-in-time orthodoxy generally prevalent in business.  Reserves, the argument goes, cost money. Efficient markets don’t require firms to have inventories, just to have  enough ‘stock’  to satisfy the consumer at the point of demand.  To hold financial reserves against a rainy day is also wasteful. In efficient markets there are no rainy days. So firms should be leveraged up to the hilt!

This is fine, provided there are no unexpected events. Come a ‘shock’ like the banking crash of 2008, and the whole efficient market model collapses, and with it the economy. Something like this has been happening to our medical services today. Bed occupancy is as high as 98% in our marketised NHS, meaning there is no longer a reserve, and we are not self-sufficient in doctors and nurses and expect other countries to train them for our use.

We need to restore what used to be called ‘the precautionary principle’. In all those situations in which we can rationally anticipate a severe  life-threatening event, ‘just in time’ thinking needs to be replaced by ‘just in case’ thinking. 

But this is not all. A major fault lies in the attitude of  neo-classical economists and their political followers to ‘innovation’. The general idea is that nothing will be invented unless companies are given extended monopoly rights (patents) over the invention to enable them to recoup their investment. This is not only historically wrong (most innovation has been done or financed by government), but can have the effect of keeping life-saving inventions off the market.  Dr. Shamel Azmeh points out that it would have been perfectly possible to develop ventilators  ‘simple enough to be stockpiled and quickly deployed’, but  a prototype of such a ventilator commissioned by the US government was aborted in 2012, after the private  company concerned  was acquired by a large producer of ‘expensive, immobile, highly technical, difficult to use’ ventilators suitable  for a rich-country market.  This kind of suppression of useful medical tools   is little short of criminal.  (Project Syndicate, The Perverse Economics of Ventilators, 16 April)

A final cause of unnecessary shortage is our dogmatic reliance on global supply chains. It is obviously more ‘efficient’ to get something produced in a cheap labour location than by our more expensive labour. But what happens when supplies from China are interrupted, because of a sudden increased demand for them in China, as apparently happened with surgical masks?

The Noah’s Ark problem can never be entirely avoided because extreme unexpected events will continue to happen. But we can at least be better prepared for the next pandemic.  The fact that COVI-19 was unexpected, should not stop us taking precautions against this class of disaster.

1. Stockpiling. Billions of dollars are spent in stockpiling weapons of mass destruction. The same logic should be applied to stockpiling weapons of mass salvation. For example, a World Authority  could be tasked with maintaining  a Strategic Reserve of medical supplies  needed to support  the life of everyone on earth for three months – in the face of a limited range of drastic events. It should  be financed by taxes levied on national states  in proportion to their national incomes. Such stockpiling can also be done nationally or regionally: the EU would be an ideal place to start. If this was accompanied by agreed disarmament, it might even be possible to reduce taxes.
2. No patent laws should apply to medical innovation. Public contracts and prizes should be the only incentive.
3. Countries which can afford to should retain enough spare domestic capacity to scale up medical production rapidly if needed.  This would be in addition to stockpiling. Part of this spare capacity should be automatically available to counter  medical crises in the developing world. The logic of globalisation does not apply to ‘essential’ services.

Key measures would be:

A final thought: we don’t know how to increase the supply  of virtue, but we do know how to increase the supply of ventilators. (1637)

Photo credit: Flickr/Jim Forest

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What should concern objective commentators and voters is that under the Coalition Government of Conservatives and Liberal Democrats and under the Conservatives since 2015, there has been extensive privatisation – real evidence of intentions, as documented in my recent book, Plunder of the Commons. Although it began under New Labour, privatisation was substantially accelerated by the Health and Social Care Act of 2012, which in all but name abolished the government’s obligation to provide a comprehensive health service beyond emergency care and ambulances and which opened up NHS contracts to unlimited privatisation.

Even excluding the partial privatisation of GP work, dentistry and community pharmacy, the NHS now contracts out over £9 billion a year (8% of the NHS budget) – a figure rising steadily – to private companies, much to US multinationals and their subsidiaries, the most conspicuous being Optum, which now provides services and medication management inside the NHS. Since 2015, Optum’s owner company, United Health (the biggest healthcare company in the USA and world), has been on the NHS Committee overseeing the award of contracts to private firms. The chief of NHS England, appointed by David Cameron, was previously Vice President of United Health. All of this is legal, but surely does not look good.

Under the Conservatives, Aspen Healthcare, acquired by US Tenet Healthcare in 2015, has been bidding successfully for NHS contracts. US insurance company, Kaiser Permanente, has been given lavish contracts to provide management services to the NHS. And Health Corporation America is running private medical services from NHS hospitals. These are just examples.

Boris Johnson has consistently voted for the policies that has produced this privatisation. As a journalist, he was dismissed for making up stories. Perhaps we should start looking out for the Loch Ness monster.   

Photo credit: Flickr/Paolo Margari.

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Rethinking Britain is not only for the many – it’s also written by the many. As a result, it doesn’t set out the vision of one or two people, but instead offers the assessment of a wide range of experts, who are working in or studying the areas we cover. We not only set out the problems and suggest policy solutions to address them. Our aim is to help improve life for people living in today’s Britain. Between each set of policy ideas, you’ll also find interludes.  These draw upon real-life stories of people in Britain who are experiencing unresolved difficulties that should be considered unacceptable in any developed economy or civilised society – and we suggest how these problems could be solved, too.

Although some depressing situations are described, our overall approach is extremely positive. Instead of denying that there are problems – or ignoring them, as many politicians have done – we take a much more “can do” approach to building the society that most of us would want to live in. That leads to another significant point: Whilst Attlee’s 1945 government put people and society at the centre of its policy ideas, less than forty years later, Thatcher’s administration reversed this, focusing on the individual, privatization and the wealthy. This raises the question: “In whose interests should the economy be run”?

The shift to individualism, private profit maximization and an obsession with “free” markets resulted in serious wealth for the few – and runaway inequality and poverty for the many. It’s therefore not hard to guess where those contributing to Rethinking Britain are coming from!  We strongly believe that a society that produces healthy, well educated, strongly motivated people – who have, or can realistically hope for, a good standard of living – will also help to generate a powerful and dynamic economy.

The post-1979 dogma – that the British government should play as small a part in the economy as possible – is also misguided. Far too much capital is being used for short-term, speculative purposes, whilst not enough is finding its way into the development of sustainable businesses that provide long term employment and pay decent wages – not the hand to mouth existence of a zero hours contract. In other words, the economy should work for the many, not just the few.

Another theme that runs through Rethinking Britain is the concept of citizenship – where sets of rights and obligations mean that you are indeed part of something bigger than yourself. This is the polar opposite of Thatcher’s point of view, that there is “no such thing as society”. Many of her policy ideas were developed in the context of the Cold War – which came to an end thirty years ago; and it’s time for her policy ideas to do the same.

By investing in Britain’s people, we can build a stronger, more cohesive society – which will underpin a more vibrant economy. Rethinking Britain shows how.

Photo credit: Flickr/Christian Reimer.

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Labour’s policy for buses is a key part of reversing the impact of neoliberalism on transport since the 1980s. It is redistributive: it helps those who cannot afford to drive to work. Nearly half of all bus journeys are taken by those who have no car, and two-thirds of those who travel on buses have an annual income below £25,000 per annum. But it is also a brave policy. By far the most popular mode of transport is by car (or van), and the policy will be portrayed by opponents as putting road building at risk.

The money recently promised by Labour will mainly go to undoing another impact of austerity. Outside London fares on commercial routes are set by bus operators. Local authorities can provide subsidies for routes that are socially important but not commercially viable. Local authority-supported services outside London have halved in vehicle mileage since 2009 as austerity has squeezed local authority budgets.

But Labour also plan to change the way buses are run outside London. Bus operation was privatised by Mrs Thatcher in 1986. Yet privatisation has in most cases failed to bring the benefits of competition. Largely as a result of a long-term process of consolidation through merger and acquisition, the UK bus industry is highly concentrated with three businesses (Arriva, FirstGroup, and Stagecoach) dominating the sector. Head-to-head competition between operators is uncommon, producing what is effectively a monopoly.

The market failure in this case may be the ability of a large bus operator to stifle any competition by temporarily cutting prices or increasing frequency. That makes the routes unprofitable for a time for the large bus company, but it is also unprofitable for the new entrant. As the financial resources available to the big company are much greater, they have the ability to kill off or take over any competition. There is no regulator preventing this kind of unfair competition.

With new entry unlikely to happen because of the possibility of such threats, the large bus companies can do what every unregulated monopoly does: raise fares and reduce services. That is good for profits and dividends, but bad for passengers. The large bus companies make good profits, and the passenger gets a more expensive or less frequent service. Since 2009, for example, the average price of riding a bus has increased in real terms by over 15%, while the cost of using a car in real terms has hardly changed.

There is a vicious circle here. The cost of running a bus is largely independent of how many people use it, so if usage declines firms put prices up, which in turn discourages passengers. But one important area has seen bus use rise rather than decline, and that is London.

The system in London is rather different from the rest of the country. Contrary to common belief, Transport for London does not own its buses. What it can do that local authorities elsewhere cannot is set routes and fares, with private companies bidding to run each route. That avoids the high fares that come from monopoly, and it also makes it easy to establish a common ticketing system which is absent in places like Manchester. The system used in many European countries for their bus services is similar to London. An important advantage London has is that there is effective competition between bus companies to bid for tenders on routes, which helps keep costs down and maintains efficiency that might be lost in a completely nationalised system.

The success of London compared to most other areas of the country suggests the neoliberal ideal of a bus system free from government ‘interference’ does not work, and local control over routes and fares can provide a better service. It is a classic example of where economics, which recognises the social costs of monopoly, beats a neoliberal ideology that is often blind to the dangers of monopoly. This is why Labour also plan to encourage areas outside London to re-regulate bus services, and support the creation of municipal bus companies that are publicly run.

While a comparison between London and elsewhere shows the dangers of private monopolies charging too high a price for services, is there not a danger that if local government can set fares it will tend to set fares too low? I don’t think this is likely to be a major issue because of two other problems (what economists call externalities) with a profit-based bus service. If people use many cars rather than a single bus this increases congestion and pollution.

Anyone familiar with large towns and cities during rush hour will know what a nightmare congestion can be. Buses can reduce congestion by persuading people not to use their cars. Basic economics tells us that the congestion externality justifies subsidising bus travel or taxing cars. Exactly the same point applies to CO2 emissions and pollution. In this respect underpricing bus travel can be advantageous.

Unfortunately, the experience of UK cities suggests that cheap fares alone may not be enough to prevent congestion. In addition congestion outside London may be having a serious impact on the productivity of our cities, as well as increasing pollution and CO2 emissions.

Tom Forth writes about a recent study that starts with a puzzle. In many countries, large cities tend to be more productive than small cities, and economists explain this by talking about agglomeration effects. However, this pattern does not seem to be true for the UK if you exclude London. Another way of putting the same point is that UK cities outside London are not as productive as they should be.

The study then looks at transport times to the centre of Birmingham, where the transport system is mainly based on buses. At peak times, when congestion is high, bus journey times into work can double on bad days, and anyone using a bus route has to plan for bad days. So if we think about the effective size of Birmingham in terms of a reasonable time to get to the centre, the city shrinks substantially.

This study shows that as long as cars are free to come into the centre those travelling on buses also suffer. Birmingham is using this study to target investment in bus lanes, which provides a partial answer. Park and ride schemes can help too. Another approach is to again follow London and introduce a congestion charge, but this will only be politically feasible if alternatives are easy, cheap, frequent and reliable.

If we look at cities in France, the big difference with UK cities is metros. Lyon has 4 lines, while Lille and Marseille have two lines each. Birmingham and Manchester have none. Last week I visited the French city of Rennes, population 215,000, that has one metro and is building another. Manchester has a good tram network similar to Lyon, but Birmingham has just one and Leeds none (compared to three in Marseille and two in Lille).

In short, cities outside London lack the transport infrastructure that can make them work productively, but also in a way that reduces CO2 emissions and other forms of pollution. One difference with France is how money is provided. In France, every city larger than 100,000 people has a ten-year transport plan, with significant national investment in five-year allocations with ten-year strategies. In the UK cities are good at the strategies and visions but cannot secure funding to realise them.

Once you have well-functioning cities you need to provide easy connections to nearby towns. Towns flourish when they are well connected to dynamic cities. Many will argue that this kind of local investment is money better spent than HS2, but I don’t think we should think of these as alternatives. Cities that link quickly to other cities are likely to be more productive, and France’s TGV network puts the UK to shame. The UK has underinvested in non-road transport infrastructure outside London for decades, and we need to make up for this quickly to create a more prosperous and greener future.

This piece was cross-posted from Simon Wren-Lewis’ blog MainlyMacro. Photo credit: Flickr / Dun.can.

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Public sector bodies have been under pressure from central government to sell off land. Such pressure is not entirely new. It has existed to one degree or another since the beginning of the 1980s.

What’s new is the intensity of this pressure and the emphasis on a hitherto marginal rationale. Land is being sold off to raise income specifically to reduce the budget deficit. This is the perverse logic of austerity.

Pressure has been especially intense on local authorities, who have sold more than 12,000 sites just since 2014-15. And, as they have disposed of their landholdings, councils have struggled to satisfactorily provide a number of services that have historically been at the core of their operations. This includes youth centres, leisure facilities, allotments, farm tenancies and, last but not least, social housing – all of which need land.

Manchester City Council sold off 673 public properties between April 2014 and July 2018. This included a large amount of social housing, as well as community centres, care homes and schools. While this is the most extreme example of sell-offs, it’s a similar story for many councils around the country.

The madness of austerity

Meanwhile, local authorities have increasingly been buying other types of land. Not the same kinds of property they can use to provide important services for the community. But rather commercial investment property – most notably, shopping centres. This is all about austerity, too – and in two key respects.

First, austerity explains why councils have been doing this: to raise (rental) income in order to continue to be able to fund the provision of local services that have been imperilled by savage cuts in grants from central government as the latter has devolved austerity to the local level.

Second, austerity explains how councils have been doing this. As is now widely recognised, austerity in Britain has ushered in a lost decade of stunted growth. The Bank of England has accordingly maintained interest rates at historically low levels and local authorities have benefited from the availability of unprecedentedly cheap debt. They have borrowed prodigiously to finance their commercial property investment spree, with annual borrowing rocketing to £10 billion in 2017-18 from £4.4 billion four years earlier.

You don’t have to be particularly radical to believe that this state of affairs – councils selling land crucial to what they should be doing (such as providing social housing) while pursuing a land acquisition strategy well beyond their central remit (speculative investment in commercial property) – is absurd.

In 2016 alone, local councils spent more than £1 billion on business parks and shopping centres. Spelthorne Borough Council in Surrey, for example, spent £360m buying an office complex from BP, while Canterbury City Council in Kent made the first of two payments towards the £155m acquisition of a shopping centre.

This may be the new normal but these are bizarre decisions for local authorities. As FT journalist John Plender writes, it makes Spelthorne council more of “a property company with a sideline in providing local government services”. To paraphrase academic and author David Harvey, who has written of the madness that underpins a lot of mainstream economic reasoning, we might say that this is the madness of austerity reason writ large.

Reintroducing sanity

As a first step to reintroducing some sanity, the government should halt the austerity-augmented privatisation of public land. Not only is the income generated by disposal a one-off, non-recurring source of income. But it often removes a source of recurring public-sector income, as was the case with the privatisation of Network Rail’s commercial property portfolio.

Furthermore, there is growing evidence that public land acquired by the private sector is frequently hoarded rather than being used in a productive way – such as for the construction of truly affordable housing. And even where such land is put to use, there is zero evidence that this use leads to economic growth.

If Britain is to chart a navigable and fair route out of austerity, plotting a better path for the ownership and allocation of the ground beneath the nation’s feet is quite simply a political and strategic necessity.

This article has also been published on The Conversation. Photo credit from previous page: SomeDriftwood / Flickr

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