Tag Archives: economy

Doughnut Economics – A Review

 

Kate Raworth’s book on economics is a very readable and useful text. The odds are, if you’re reading this blog that you are the sort of person to question conventional economics. You’ve likely noticed that the constant growth model doesn’t make any sense and that GDP doesn’t measure anything useful. But now what?

The Doughnut, is the safe space for humans that meets everyone’s basic needs without compromising the planet.

In Doughnut Economics, Kate Raworth lays out the history of the subject, explaining how we got to this current set of beliefs about the role and functioning of money. There is nothing natural or inevitable about where we are and it is not underpinned by any real laws. What has happened, is that the people making policy and working with money have adopted the stories of economists and to some degree, made them true. That’s not the same as making them work. The exciting thing in all of this is that economic stories can change, which in turn would change our relationships with each other and the planet.

What’s particularly good about this book, is that it doesn’t just offer top-down solutions for fixing things. There’s a lot here we can take onboard as individuals and within small community groups. For anyone who wants to be part of changing our collective story about economics, there are tools here for your kit box.

This is an excellent book to read alongside Ecolinguists (which I reviewed here – ecolinguistcs-a-review ) because the stories we tell about money, finance, taxes, and the economy are both economics issues and ecolinguistic issues. How we are influenced by the language of these is really important. There is power in understanding that language – firstly the power to step out of the story and see yourself differently. Secondly we have the power to influence each other through the economic stories we tell and the language we use to tell them.

And if that doesn’t make your bardic heart beat a little faster, or swell with hope and possibility…

More about Doughnut Economics here – https://www.kateraworth.com/doughnut/

 

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Zero Growth Economy

One of the beliefs holding modern economic and political life together is the idea that growth is good. It is through economic growth that we will create benefits and improve quality of life. It sounds plausible. However, it is worth asking what the process of eternal growth means in practice.

To have economic growth, people this year have to buy more than they did last year and next year they will need to buy even more. Where what is bought is largely experiential, this can be feasible. Mostly, growth is not about experience though. It is about the use and consumption of consumable goods. To have economic growth, we have to use ever more resources. We have finite resources in terms of land, minerals, clean water and food supplies. Time is also a finite resource and when you need to earn ever more money to buy ever more things, your time should be factored in as a consideration.

A few weeks ago I listened to MEP Molly Scott Cato explaining how the desire for profit above all else affects chickens in Europe. Chickens and chicken meat travel all over the EU, to wherever someone can make a bit of a profit from them. Never mind that fuel is a finite substance, and that chickens eaten close to where they are reared are much more sustainable, profit comes first. Never mind the road traffic from the lorries moving the chickens about, either. Molly also pointed out that eternal growth depends on obsolescence. If possessions were made to last, they would make less profit for producers. So by building in a cause of death, creating fractionally different ‘new and improved’ versions, or changing the ‘fashion’, that which could have lasted for years is thrown away.

Growth economy is all about waste. It’s about getting you to chuck out last year’s tired, old-fashioned things to by the new shiny things. Again. It’s about not being able to get replacement parts when things wear out. It’s about time wasted making things that will shortly wind up in landfill or driving chickens across Europe. How many jobs exist to create things people really don’t need, in order to make a profit so that the growth of the economy continues? How many valuable and needed things don’t happen, because we are only interested in making a profit?

You get to a zero growth economy by a number of means, and it’s about changing our ideas first and letting work and business choices flow from that change. First, imagine that quality of life is not solely about bank balance. How we spend our hours could be considered important. If we start to value life, the idea of using up someone’s precious time needlessly taxing unfortunate chickens over hundreds of miles starts to look like insanity. We change our attitude to work and stop assuming that productivity is a virtue. That moves us towards ditching jobs that only exist to move round things of no use and value. Instead we’d want to spend less time in the first place on effectively making things that last and have value, so that we can get on with using and enjoying them and living, rather than producing and consuming. Imagine if we were all working modest hours doing what was needed for everyone to be happy.

It may well be a fallacy that growth drives progress and delivers innovation. If we were more interested in improving the quality of our lives than in increasing the bank balances of shareholders, why wouldn’t we spend time innovating? We’d have more time and energy to spend on true progress if less time and energy went into creating rubbish.

Let’s face it, if hard work was really a blessing and a moral virtue, those with power would want as much of it as they could get, and there would be no desire to share that lovely thing with those who couldn’t force a claim on it. It’s money that we hold as a good and a thing not to share with others. If you start treating your time, and your life as more precious than money, everything changes.


Insanity mathematics

When you want to expand a business, you invest, and do something new, or do more of something you had established was working. Your put profits back in, to pay for development, or you borrow some money against anticipated future returns. No one attempts to grow a company by taking money out of it, cutting staff, and doing less. No one sane, at any rate. Sure, you might do a bit of economising now and then, efficiency drives are good, but in a company that is, and will be thriving, the economy drive is there to free up time and resources for more productive things. You don’t just cut back and assume that will achieve something all by itself.

I’m not an accountant, or an economist, I have a GCSE in maths. I have worked as a self-employed person for a lot of years now and I know a lot of others who do the same. I’ve seen the working end of a number of businesses and I pay attention to things. No company grows by cutting back on everything. Maybe some strategic cutting back, but nothing more. Companies grow on investment, of time, money, ideas. I’ve talked before about working more effectively by doing less and picking carefully. That’s a strategy. It’s about using my resources to maximum effect to get the best return I can. All businesses do that sort of thing.

Here in the UK, we’re still in recession. Austerity has not delivered a reduction of national debt. There is a lot of poverty out there, a lot of unemployment, a lot of punishing the poor. The government were explicit in their assumption that if they cut public sector funding and jobs, the private sector would just magically fill the breach, do the work, hire the workers. Using all those magic spells and supernatural powers we in the private sector are known to possess. Sorry Mr Osborn, but economics don’t even work that way in Harry Potter stories. Of course it hasn’t happened, because to expand a private sector you need to invest.

We’ve been taking money out of higher education and research, which we could have invested in, to encourage the private sector. We’ve missed out on much of the potential for growth in new green technologies. The government could have led the way there. Much noise has been made about infrastructure, but no action. Do we need high speed trains? Not really. We could really use a bus network capable of getting people to and from jobs affordably, and delivering customers to our ailing high streets. We could use everyone being on broadband to stimulate the online economy. No government input there. We could use not having VAT on ebooks, crippling British writers and publishers. Our publishing industry is one of the few areas growing, not shrinking, you’d think a helping hand to keep that going would be an obvious call to make. How about investing in us as a cultural and tourism destination? No, we’re taking money out of the arts industries as well. How about supporting our valuable film industry? No.

The lunatics in power seem to believe that you can grow a country, and economy by taking money out of it. Your average five year old could work out there’s something wrong with the maths here. Mind you, if Mr Gove gets his way, we probably won’t have to worry for much longer about our five year olds being better trained to think than our politicians.

We could be investing in the good stuff: Green technology, creative industry, scientific research, and innovation. We could treat our people as a valuable resource, not as scroungers. We could be a great country to live in. The epic failure of courage and imagination is depressing, and I am heartily sick of being told this is the only way. There always were other ways.


Why poverty is so expensive

We hear a lot from politicians at the moment about how much the poor cost society. So, I thought that could stand a closer consideration. Money is paid from the public purse to support people who are in desperate circumstances, but this is not the only way in which poverty costs money, and the other ways need thinking about too.

1) Poverty often leads to poor diets, in turn causing obesity, malnutrition, and weakened immune systems. These contribute to ill health. Sickness costs the economy in terms of lost work days, and people needing health care.

2) Poor people are known to be at higher risk of depression as stress and anxiety are causes of mental illness. An inadequate diet increases the risk of poor mental health. (Prisoners given vitamin supplements are less likely to reoffend.) Again, loss of days from work due to ill heath, cost to health services in terms of anti-depressants, and counselling. Huge knock on costs of suicide and attempted suicide.

3) Poverty is a motivation to commit crime. The more desperate people are, the more justifiable crime seems, including robbery, violent crime and rioting. Police, courts and prisons are all very expensive.

4) People with no disposable incomes cannot invest in their children’s education. No extra curricular activities or lerning resourecs at home. Under fed children are less able to concentrate in school, leading to a knock on problem of lost talent and economic potential.

5) Poor people have no disposable income with which to support the high street. Money for leisure tourism, entertainment, and luxuries are non existent, reducing available cash flow for large sectors of the economy. The more people are poor, the more these sectors are starved of cash. See HMV, for a recent example.

6) Heating costs money. Damp, unheated and cold homes can be very unhealthy. Being cold all the time is exhausting. This contributes to ill health and hypothermia can kill the sick and elderly. More costs in terms of lost working days and stresses on the health service.

7) Poor people don’t necessarily have spare cash for running shoes, gyms, swimming pools etc and if undernourished won’t have the energy for exercise. Absence of exercise in the lifestyle contributes to poor physical health and poor mental health, costs as described above.

8) Desperate, depressed and disadvantaged people are known to console themselves with drink and drugs, which can lead to violence. The cost to wider family, knock on effects on crime, with its attendant costs, impact on children, cost of social services interventions etc.

9) Bored teens with no prospects and no means of entertaining themselves are the most likely source of vandalism and antisocial behaviour. Repair costs, police costs, damage to communities as fear keeps people indoors.

10) People who have no hope eventually give up. If you don’t believe there’s any chance things can get better, what on earth is the point of trying? The harder things get for people in poverty, the more incentive they have, not to find work (as the government mistakenly imagines), but to fall into despair and apathy, with suicide an ever more tempting option.

Forgive the lack of detailed referencing to sources, please, but I’ve not drawn on anything wild or obscure here, and a lot of it I would like to think is common sense. My point is that none of the costs of poverty outlined above can be reduced by making poor people even worse off. I think there is every probability that short term cuts to the welfare budget will result in elevated long term costs on the health bill, social services, police, courts and prisons. We are storing up problems for the future.

There are economic arguments for not punishing the poor as a solution to recession. Point 5 should be the most evident. Take money out of the bottom of the system and business suffers. If you want economic growth, money in the hands of poor people moves. So what if they spend it on booze, or fags? If what you care about is GDP, someone made a profit there, some business benefitted, and will pay tax and maybe get to hire more staff. Economies depend on the flow of money. What we’re doing at the moment is reducing the flow.


Gratitude and fortune

I am lucky. When my life fell apart I had enough inherited cash that I did not have to seek social housing. I can earn some money, even though I’ve been ill, and thanks to self-employment have been able to stay out of sickness related benefits. I do get some help from the government – you can get support alongside quite decent incomes, if you have children. But on the whole, I’m not as dependent on the system as many people are, and that’s pure, blind luck.

It was sheer luck that the bad choices in my history did not leave me in a mental health hospital, or out on the streets. It was pure chance that set me up in life with a decent genetic intelligence and some good teachers. Not everyone gets that. I’ve been able to roll with changes and challenges, survive setbacks and find ways round problems because I am fortunate enough to be passably bright and pretty well educated. Not everyone gets those breaks.

It’s all too easy to look at the successes in our lives, and put those down to how good we are. We deserve our winnings, our paychecks, our comfy homes, good health. Of course we want to believe that because it gives us an illusion of control. If we made it and earned it, then we ought to be able to keep it. This is just an illusion. Bad luck, an accident, a folding company, ill health, a run on your bank, a tree root undermining your house. The lucky amongst us are seldom more than a couple of missing payments away from total disaster. Should that happen, much depends on how lucky we are in our friends and family, and how much support we get.

Blaming those who get into trouble is a way of reassuring ourselves that it won’t happen to us. We’re too smart. We work too hard. We’re too together to have a mental health problem. We jog, so we aren’t going to get sick. No matter how hard you try, one mistake with a car can take all of that way from you in a space of minutes. We want the people at the bottom to be lazy scroungers, so that we don’t have to be afraid of that happening to us. Well, we should be afraid, and we should see our illusions of security for what they really are. Bad luck strikes randomly, and does not pay much attention to how clever, hard working or health conscious you are. There’s only so much you can ward off by doing the right things, and only so far a clever mind will carry you. I’ve seen it happen to plenty of people. There are lots of folk on narrowboats who got here because they were too smart to entirely go under. Businesses ruined by supermarkets. Lives ruined by violence and abuse. People plagued by ill health, or who lost everything in a messy divorce. But people who had enough left and enough imagination to take up boating, and survive. Not everyone has the inner strength to keep getting up when they’ve been knocked down more times than they can count.

Some of what pushes people to the bottom of the pile is not pure bad luck. It’s deliberate abuse by others. Unlucky to get a dose of that, but not wholly accidental. Robbed, raped, beaten, bullied, intimidated, forced out, mistreated, conned… there but for the grace of… go any of us. These things destroy mental health, destroy financial success, demolish lives. If we’ve avoided one of those disasters, it may not be because we’re too smart, it may just be we were lucky. Sometimes people fall because they are ignorant, or naïve, or gullible, or too willing to forgive, or not mean enough to take advantage of others. Are these things we really think others should be punished for?

If we recognise that luck, it’s a lot easier to stop assuming the poor are at the bottom of the heap because they can’t be bothered to arrange anything better. It’s easier to find some compassion, and not to judge everyone without knowing any of their details. As the job market dwindles, more and more people are pushed, wholly against their will, into poverty and dependence. People who want to work if they could, who would gladly take on anything. Why burden them further by stigmatising them for things beyond their control? So that we can hang on to the belief that we deserve what we have and it won’t be taken away. And because it suits the government as they take yet more money out of the welfare system.

When it is taken away, when you find life spiralling out of control, and you desperately need help and someone to pick up the pieces, there’s much to be said for finding yourself in a kind and compassionate system. Because the alternative is to believe that you deserved the fall as well, that it represents a failure to work hard enough or be good enough. You are a failure, then. Or the alternative is no safety net, and destitution, and no second chances.

Picture yourself (if you’ve not been here) suddenly out of a job, and unable to pay the bills, with the mortgage company threatening to take the house, and your relationship falling apart under the strain, and the anxiety making you feel so sick you can’t get out of bed in the morning, and crying for no reason sometimes and wanting to die. Picture yourself there, and then ask how helpful you’d find it to have the government treating you like a lazy scrounger who is destroying the economy.

We’re long overdue a culture shift on this one.


A Druid economy

Of course these days as a Druid you do not get to talk sense to those in charge in any kind of structured way, so I’m just going to vent theories on the blog.

Austerity. It doesn’t work. The UK is still borrowing a lot of money and not paying off its debts, and at the same time the poorest are suffering. Apparently millionaires are poised to get tax breaks, because we all know how much those folks are hurting… (gah). Now, the poorest people in the UK are not just unemployed or too ill to work, but also include a lot of people in part time and low paid employment. Rising rents and council tax, rising fuel costs and amenities (while companies make profits) put the squeeze on incomes that are not rising. People pay for the essentials, and they buy cheap because they have to, in order to survive. The more pressure you put on the poorest in society, the less economically active they become. Oddly enough, high streets are increasingly dominated by pound stores and charity shops, while big chains close an average of 20 stores a day across the country. Every store closed represents more job losses, more people needing a hand, and having less money. And so the squeeze extends.

The way things are set up, economies depend on movement of money. GDP is simply a measure of movement. The faster the money moves the more everybody appears to have. It’s a funny old world. However, reduce the incomes of the poorest, and they stop buying those luxuries like books and music. They stop going down the pub, for a night out. When enough people stop doing that, pubs close, and ooh look, HMV has just folded. (Music, for anyone unfamiliar with them.) In this climate, only bargain basement stores selling dodgy horse burgers are going to thrive.

There’s no political will to cap rents. We hear a lot about how people on benefits are scrounging off the state, and nothing at all about how much public money ultimately finds its way into the pockets of private landlords. So run that past me again about who is scrounging here? People in work get tax benefits because in the current climate, the minimum wage is not enough to live on. We’re not talking heady luxuries, we’re talking bare essentials. No one is talking about how private employers ought to be paying workers a living wage rather than the state picking up the tab. Remind me about who the scroungers are, please. In the last decade or so the private sector has not invested in growth or jobs. It’s just paid fat dividends to shareholders and ever more obscene bonuses to management while the people who do the work struggle on a not-living wage. Then, thanks to that lack of investment, business in the UK does not thrive, jobs move overseas, businesses fail to pay their fair share of taxes. The rich underpay the poor, decline to pay their own taxes, pay themselves huge bonuses… Meanwhile those with no hope, no prospects, no opportunities and no money sink into despair, and when the government notices the total apathy out there, they ascribe it not to depression or futility but to laziness.

If we had a level playing field and all you needed to do was work hard and you’d succeed, then berating the poor for not making an effort would be fair enough. That’s not the score. But it’s not at all clever, because the more money you take out of the pockets of the poor, the less money you have moving around. Those people sat on huge wads of cash are not spending it to drive the economy. Squeezing the poor does not make for a healthy economy. How about paying a living wage, providing work opportunities, having business invest in business rather than creaming off the profits all the time… we could have something that works passably well.

Perhaps David Cameron wants to bring back feudalism, picturing himself as mighty ruler of Great Britain. The trouble is Mr Cameron, go on this way and you will have total power over all your serfs, but all you’ll get is to be King of a pile of dirt, dressed in a ragged and filthy robe of state, with a crown made out of rusty spoons. We got rid of feudalism for a reason – we were tired of the Dark Ages. Go back there if you want to, get into re-enactment or something, but for pity’s sake, stop trying to take the rest of us with you.


In a poo economy

There was a wonderful article in New Scientist this week, about algae that can produce fuel. The overall affect of the algae fuel would be to reduce rather than add to CO2, which is monumentally exciting. The algae themselves need feeding, and using human waste and farm waste would be the way to go, which solves additional problems. Post-algae-munching you get something that can be put on the land as fertilizer. I think its win all round.
The more I think about the implications of a poo based economy, the more excited I get. Oil is owned and controlled by the few but shit is the property of the masses. In a poo economy, we all get to be producers. I rather imagine that when it is locally sourced poo and not shipped in oil that makes your economy tick, the producers will have a different status. In such a reality, there would be no reason to stigmatise poor people as ‘scroungers’. Instead, every last one of them is a valuable producer. So much else would change off the back of that.
We all shit. It’s a fundamental human process. Ill people shit. Disabled people shit. People of all skin colours and religions shit in the same ways. If shit was a valuable commodity with a distinct application, how much would change? So much of the ‘logic’ of our cultures is economically based, and has everything to do with assumptions about money equating to value and worth. If shit is what makes the world go round, everyone has an economic value.
I rather think that if shit was the power source, then we would easily get a better consciousness of output in relation to power use. Most of us have no idea how much shit we produce, or really what happens to it. What if you needed to balance that personally against the fuel that goes in your car? A revolution in awareness is almost inevitable.
And, to finish on an amusing thought… we might finally get some real value for money out of the political classes, because after all, when it comes down to the issue of being full of shit… Who better than a politician to serve the needs of the many?