Achieving the Common Good (Part 2)

Within a context of overall fairness taxation, and policy on official interest rates and money supply, should foster sustainable, expanding and balanced demand. Wider policies should involve major capital projects supplied by domestic sources and where employment and on-the-job training of younger people is to the fore.
An example would be the construction of a Severn barrage that has once again been allowed to fall through but which would satisfy 7% or more of the nation’s electricity demand. This, and other estuarial schemes, should have received government support long ago in place of useless tax cuts, always less trouble to do, the main results of which have been to benefit the rich and suck in yet more imports.
If, despite rational arguments against, government cuts are still thought to be necessary there are some prime areas where these could be made without diminishing the common good. For example, slashing the widespread government use of private sector consultants and contractors, putting an end to costly PFI-like contracts, eliminating hare-brained and extravagant government IT schemes, reducing the number of nuclear-armed submarines and cutting the number of senior civil servants and political officers to name but a few.
The Keynesian concept of the ‘balanced budget multiplier’ should also be put to use. This means that if the taxation of richer people is increased and there is a corresponding reduction in taxes of less well off people, then overall demand increases (because people on lower incomes spend a higher proportion of any additional income). This results in an economic stimulus and an improvement in tax revenues as the knock-on consequences of the extra spend work through.
As we know, the ‘quantitative easing’ (the printing of money) so beloved of the Bank of England, the Chancellor and the Treasury is of little use in getting funds to productive sectors of the economy such as manufacturing industry. Mostly soaked up by those wretched banks, it is nowhere near as effective as major capital projects on a national scale.
But governments have become doctrinally opposed to, or simply frightened of, direct engagement in infrastructure investment and construction. High speed rail (and its pumped up benefits to business travellers) is a partial exception, but one can think of much more productive ways to invest the colossal sum involved to the benefit of the economy and the betterment of the common good. This could be either within the transport sector outside of London, particularly in the Midlands, or in other engineering projects in the Midlands and the North.
The direct effects on manufacturing and engineering investment of low official interest rates have always been exaggerated. They are damped and lagged at best. It is demand and profitability that matter most to businesses, although lower interest rates should eventually result in some increase in industrial investment if the conditions of lending are right. But as smaller firms know only too well, this is not the case. And lower interest rates mean less income for savers, thus lowering demand.
To this can be added appropriate overall levels and forms of taxation and public spending - I deliberately use the term ‘appropriate’ rather than ‘low’. For example in the case of deductions from income, the present irrational structure of National Insurance contributions should be replaced with a flat rate covering all income levels – without the exceptions for the rich that we have at present. This would mean a top rate of deductions from income of around 56% once the 50% income tax rate is restored, so it would still be below the euphorically greeted 60% mentioned in Part 1 and would also result in a useful balanced budget multiplier effect.
A pro-active environmental policy far from hobbling industry could be constructed to provide economic stimulation and other benefits as, for example, with determined and properly resourced drives on home insulation and flood protection and direct support for companies making environmental products.
It is false economy to make cuts in environmental protection as the recent inundation of the Somerset Levels and elsewhere and the extensive coastal damage clearly demonstrates. Furthermore, environmental standards that are achieved in advance of other countries but crucially, which are likely to be followed, would give domestic suppliers a competitive edge.
The Government should help to make (rather than just pick) industrial winners and widen support in productive areas where this country still has an edge. I hesitate to use the economists’ term 'comparative advantage', a dubious concept that has been abused by self-interested parties to justify retreat from manufacturing.
The view that the ‘winners’, all too often ‘services’, we happen to be left with at some point should determine our future is both passive and flawed. Comparative advantage was once thought of in terms of physical endowments such as land and natural resources, but it’s now been linked to less tangible things such as exchange rates, regulatory regimes, skills, language, time zones and commitment to long term investment.
Trade in manufactures is far from free, a fact that benefits our commercial rivals more than us. We still seem to be the only country with leaders still reading those discredited economic theory textbooks while other countries with more common sense continue to tilt the ‘playing field’ in their own favour. ‘Free trade’ also benefits tax dodging globalised corporations and their political friends at home and abroad. There is a fundamental distinction to be made between globalisation and its many ills and the daydream of ‘free trade’.
Good government also involves an active and properly resourced Local Government. Local Government financing has long been dominated by doctrinaire prejudice and grant levels and formulae that at best were fudged and at worst, as we now see to an intolerable extent, driven by partisan spite. It’s no wonder that things don’t always seem to work very well. The City of Birmingham and other core cities have extensive local knowledge and should be allowed to compete with the supposedly superior private sector and provide services to the public (such as the much needed simple and trustworthy banking), adjacent local authorities, and to not-for-profit and voluntary enterprises.
Local Government should be allowed to introduce two extra tiers of Council Tax. There is enormous scope for increasingly essential local authority house building and central government’s artificial constraints on this should be lifted. The big cities could direct their considerable purchasing power more locally (giving a multiplier effect of four) and be resourced for pro-action complementary to existing initiatives.
A government for the common good also requires a fit-for-purpose democratic system that is less easily manipulated by rich and powerful vested interests. This would contrast sharply with the dysfunctional, unrepresentative and biased model that we have had to put up with for so long and which is so deeply indebted to party donors and the policies that they cause to be introduced for their own advantage and to the country’s detriment.
It is also as well to be aware of strategies that will not work. For example, continued over-reliance on the services sector and the policy of trying to shift the economy towards ever higher ‘value added' activities, as if these were somehow protected and inaccessible to the countries that have been gifted so much of the rest of our industry. We can be sure that these supposedly superior activities will sooner rather than later go the same way as their 'lower value added' predecessors if this country continues on its present course. To imagine otherwise is at best wishful thinking or at worst smacks of an unsavoury and ignorant prejudice.
Furthermore, the proponents of this approach of trying to escape the pursuit of those countries who have already taken so much of our industry by moving up a hypothetical line, seem to assume that this is an ever-rising and straight line. But what is actually involved here is a rising curve but of declining slope - and it is also one that is likely to be finite in length. So the future consequences of this attempted 'moving up the curve' approach – in other words retreat - are all too clear.
Steps need to be taken nationally and internationally to retrieve industry that has already been lost. It’s not sufficient to passively welcome the odd bit of self-interested ‘re-shoring’. The country's manufacturing and engineering sectors must be comprehensively rebuilt - they, along with agriculture, fisheries and mining, represent the productive base of our economy. In the austerity-induced struggles of the Euro, it is notable that those countries that have done relatively well, manufacture. Those that have abandoned production have suffered accordingly.
In economic policy the simple truths must be realised that in the absence of demand, there will not be production and in the absence of production there won’t be the creation of worthwhile jobs and the self respect that goes with them. It should also be understood that the true meaning of the word 'economise' is not ‘to make minimum use of a resource’ but to make the best use of it.
The advancement of the common good requires the provision of good public services. It also requires the provision of simple and trustworthy other services that have been given over to, and monopolised by, the private sector to their own advantage, the worst of many instances being banking.
There is a role, indeed an enhanced one, for services such as these to be provided by the public sector, as many of them once were, or at the very least by not-for-profit organisations that operate with public service values. Movement between public and private sectors should be a two way street. And it would do little good to ‘break up’ energy suppliers if the same rip-off, tax dodging and anti-social mindsets still prevail in the broken up bits. Still, perhaps I’m forgetting about ‘competition’.
Economic actions on a robust and active Keynesian basis should bring early positive results and will help enormously in the enhancement of the common good. The much needed ethical changes will take a lot longer to bring about but they are equally important if we are not to revisit, time after time, the recent near catastrophes.
Is all of this an impossible dream? Certainly not. It is just a very different prospect from what we have been told we must endure these decades past and to which, we continue to be told, ‘there is no alternative’. Well, there is. It is rather like the situation with climate change where there is an abundance of evidence and the science is clear, but where there is a sprinkling of influential and self-interested right wing deniers.
Some of these measures (and many more besides) will take considerable time to have their full effect but it is none the less urgent to begin them very soon and the consequences of never taking such action will be severe and unjust. The country is faced with choices that we do not want but if, in the longer term, we want to put an end to austerity, grotesque inequality, corporate greed and megalomania and restore national, personal and community self-esteem, then this is the path that we must take.
Achieving economic, social and political systems that are fit for the purpose of advancing the common good will require a completely new vision of our society and economy and radical action over a generational timescale. Are we up for it? Given all that the country went through in the last century and the societal changes that got us through, I for one believe that we are.

Achieving the Common Good (Part 1)

Achieving an economy fit for the purpose of advancing the common good will require a completely new vision of society and economy and radical action over a generational timescale. It took a decade or more to destroy manufacturing industry and throw away the country’s engineering heritage of centuries. It will take a similar length of time to restore this fundamentally important sector. But this restoration and much else could be done if the will and commitment were there and a stop was put to the kow-towing to plutocratic interests and lobbyists.
What the country is now left with is the direst version of extractive capitalism and the ethical vacuum and greed that are integral to it. This is the dysfunctional economy that bore its most poisoned fruit in the banking disaster and the subsequent punishment of austerity that has been imposed with callous unfairness by a government of similar persuasion. So what should future (hypothetical) governments of principle do to move towards a system that will further the common good?
First, such governments must undertake a pro-active, comprehensive and long-range economic policy that will regenerate manufacturing industry, engineering and the industrial sector more widely. In the restoration of a major manufacturing sector the focus should not simply be on final assembly but on rebuilding the all-important supply chain too. As part of the policy, there must also be increased and sustained investment in scientific, engineering and medical research.
This emphasis is not only to benefit the economy as a whole, but also to generate full time jobs worth doing for the forsaken young people throughout the country, but particularly in the formerly industrial Midlands and the shattered North. London and the South East should not be given so much favour nor allowed to continue drawing off so much investment and hoovering up most of the job opportunities that are going.
The foundations of this economic policy should be resolutely and pro-actively Keynesian. This means that major projects would be established - and often delivered - by government. It should also involve setting up public sector ‘exemplar institutions’ with a service rather than a profit ethos, such as municipal banks, to introduce some real competition and force recalcitrant elements in the private sector to reform their ways. This applies most strongly to banking where we are about a year away from the next banking scandal, having already experienced at least three.
Governments must escape the thrall of so-called ‘markets’ and establish these exemplary public service institutions wherever they are needed – such as in rail transport and energy supply as possible steps towards the preferable option of renationalisation. Such a policy will also introduce two-way traffic instead of the dead end one way system where movement is only possible from public sector to private sector. In future there must also be exemplary and inspirational conduct by national leaders, both political and business, whether private or public. If they can’t deliver this, they’re not fit to lead either country or company.
Corporate governance should be comprehensively reformed to deal once and for all with the gross executive excesses and there should be employee representation on company boards. The government should also set up programmes to bring about the crucial ethical re-education needed, particularly in finance and business. Don’t go on about ‘human nature’, it’s what we make it. There needs also to be re-education as to what constitutes desirable professions for young people to aspire to - with an enhanced status for engineering careers and less siphoning off of young talent into the banking and finance morass.
Voluntary organisations with the common good at heart need encouragement and re-stored levels of resource rather than year after year of cutbacks. Political parties should become much less tribalistic and knockabout, but confident in having bold and constructive alternatives, including furtherance of the common good, presented to the electorate.
Young people, who are yet to be shorn of their ideals and much less ingrained in their ways could take the lead in this, taking full advantage of modern technology with its freedoms and demonstrated possibilities for organisation. Citizenship programmes should be expanded and recast in terms of enhancing the common good – again with a major input from young people. All this and more, to be sustained for many years.
In the reduction of the fiscal deficit, the timescale should be revised as the benefits of sustainable and balanced economic growth are realised. This will allow further productive investment and active economic management. If this is done, the present cuts dominated timescale could be improved upon and austerity ditched. More emphasis should be placed on taxation and less on cutting expenditure, leaving room for industrial investment. There are several reasons for this.
Reducing public expenditure on capital projects directly reduces employment, income tax, National Insurance, VAT and other tax receipts. It also increases government expenditure under different heads of account - such as unemployment benefit. In Keynesian terms the cuts will also produce a depressing reverse multiplier effect - the knock on negative consequences of people having less to spend.
The bulk of the burden of present government policies is born by young people and those who are less well off either seeking work, in work of some sort or unable to work. This is wrong both morally and in economic terms. There should be a mandatory living wage that is not also a maximum wage. The introduction of this will also give a positive multiplier effect. Zero hours contracts should be abolished - except possibly in the boardroom. Why do companies need a CEO on hand all the time? Just bring them in for an hour or two to make a couple of decisions when needed.
The gaping loopholes deliberately left in the tax system by governments and their advisers invite and encourage tax dodging and should be closed and ‘tax havens’ close to home and further afield should be shut down. Those who can afford to pay more in direct taxation should do so. Socially responsible rich individuals here and abroad have already declared their willingness to contribute more in this way. This contrasts with the partisan picture that’s been painted of a mass executive exodus and a decline in entrepreneurial activity. These are just repeated and self-interested cries of 'wolf!' We can scrape along with fewer executives on bloated salaries, bonuses, golden hellos and padded out retirement packages.
We should encourage public-spirited attitudes in corporations and begin a return to loyalty to country and community. There is little or no historic correlation between entrepreneurial activity and taxation of income at higher levels. Perceptions dependent on the direction of travel fade over time - there was unrestrained joy at the introduction of a 60% income tax rate when this was reduced from 83% in the 1980s.
In any case, most of those paying the highest rate of income tax are internal promotions in large companies and not entrepreneurs, whose motivation is not driven solely by money. Ordinary people in their day to day consumption should be enabled to choose products made in this country and not be constantly deceived by false labelling as to contents or origins.
A future responsible government should work towards the introduction of a financial transactions tax rather than dodge it and frustrate the efforts of other countries as the present government has done. A government for the common good should also take the lead on a revised international approach to the foundations of trade. Globalisation is not free trade - far from it.
There should be an inter-governmental push to close down those tax havens and rein in globalised corporations and their tax dodging, grasping, unprincipled and hypocritical owners. There should be less willingness to accept excuses from these self-serving commercial outfits or from countries with unfair and unsavoury economic and social practices. The common good should come before mountainous private profits. The sooner this process is started the sooner will we have a more societies both at home and internationally.

In praise of two way streets

In a journey it’s often the case that getting to your desired destination can be made difficult by the presence of a one way street. And the country’s economic journey to a destination that benefits society as a whole, rather than just a section of it, can also be made difficult to impossible by one way traffic.
The government appointee to the headship of the ‘Care Quality Commission’ recently added his voice to the strident right wing chorus calling for yet more private sector involvement in the National Health Service. He spoke of the need for ‘serious change’, ‘more competition to drive up standards’ and ‘more entrants into the market’. ‘Market’? So that’s what it now is? But let that pass. I couldn’t disagree with this individual more as regards the NHS but let’s suppose there are parts of what remains of the public sector that would benefit from more private sector involvement. Can’t quite think of many but let that pass too.
But all this of course is seen by the government, the right wing press and businesses seeking more profit as one way traffic. But could it just possibly be that there are parts of the private sector that are less than perfect? And could it just be that the way to improve them is through greater involvement of the public sector?
Let’s revisit the words of the CQC boss: ‘the need for serious change’, ‘more competition to drive up standards’ and ‘more entrants into the market’ and apply them to, well, say banking. They couldn’t fit better. Those characters in what passes for banking today show little sign of changing. Witness the city-wide contempt for one senior banker who, sensing the public mood, forewent his bonus. Are these casino and bonus addicts fit and proper persons to take charge of the modest savings of ordinary, and often vulnerable people? And it’s not as if there isn’t a very good public sector model available.
I admit I’ve said this before – I refer of course to municipal banks. There are elderly people who even today have still got their passbooks for the late lamented Birmingham Municipal Bank. They cherish the memory of a bank that was utterly reliable, honest, straightforward and which would not exploit them or sell them phoney financial or insurance ‘products’. This wonderful institution was of course by successive degrees privatised.
And what about water? You’ll have noticed the size of your bills. You will have heard of the tax dodging by water companies, many foreign owned, and their attempts to make the taxpayer pay for major investment projects. You may also recall the time when Birmingham invested to create its own water supply. An ecologically friendly (gravity operated) system to supply water to the city. Also handed over to the private sector.
And what about transport? You may recall when Birmingham ran its own buses and the railways did not have deliberately complex and super-inflating prices, companies abandoning concessions and when commuter trains were, in some parts of the country, less like cattle trucks. And what about the phoney ‘markets’ for energy supply and boardroom appointments.
I could go on, and no doubt you could too. My point is this. Some things are better run by the public sector or at the very least with a public sector system of values. It’s clearly better to have a two way street when it comes to moving parts of the economy towards better performance in the public interest. I’m fed up with one way traffic. Let’s do all we can to ensure that economic traffic moves both ways.

A Economy for the Common Good

The national economy should be a benign system that functions in the interests of society as a whole. And it should be an honour system. Trust, respect and regard for those without power are the foundations of an economy operating for the common good.
It is one in which individuals, private companies, a re-energised and active public sector, charitable institutions and government have developed a shared vision of the good of the nation and its citizens, present and future and seek to operate with the common good in mind.
This need not exclude other interests including strictly personal benefit. No particular form of economic organisation is required although ruled out, amongst much else, would be extractive pseudo monopolies, consumption driven wastefulness, rank inefficiency, cartels, tax dodging, corrupt financing of political parties and gross economic imbalance.
The key to a better future is a shared vision and a 'citizenry of good intent'. This, and a perception of how decent values are imbued and sustained. Clearly, given the state we’re in, it will be no small task to bring this about - and the changes must start at the top. But one good sign is the realisation by ordinary people that contentment involves the rediscovery of older values.
An economy for the common good will ensure that the 'external effects' (aka collateral damage) of corporate decisions (such as factory closures and the impact on supply chains, the off-shoring of jobs, tax avoidance and the sending abroad of manufacturing equipment) weigh heavily. There is no more effective mechanism to ensure this than the moral principles of the decision makers involved.
An economy for the common good seeks self-sufficiency where this is possible. In this it recognises that the accountants' current 'bottom line' and the common good are rarely in accord. This is so since the common good will attach positive value to self respect, sustainability and the command of resources.
Presently, commercial sales and the extraction of ever more profit dominate all else. We have a greedy, debt laden and wasteful economy - and it should be no surprise that people are unhappy as a result.
Sales promotion is designed to create a mood of restless dissatisfaction with the material goods we’ve already got. We need a completely different vision of what constitutes ‘the good life’ where social values and consideration for other people rather than commodities are at the heart.
Never-ending geometric economic growth cannot be sustained - as we should have known. ‘Markets’ are not part of the natural order - they are an entirely human concept run in the interests of those who influence them.
An economy for the common good is one where individuals or groups such as companies, public bodies and charities act to give good answers to these questions:

What is the effect of corporate or governmental actions and policies (or the lack of them) on individuals as human beings rather than exploitable economic units?

What are the effects on those with little economic or political power?

What are the effects of policies and decisions on future generations?

What would be the effects, positive and negative, on community and country?

What are the effects of commercial decisions on the natural environment?

What is the effect on the quality of life and the common good of all citizens?

Organisations in an economy for the common good do not engage in excessive risk taking or usurious money lending. Rather, the emphasises is on balance, respect, fairness and sustainable futures. Self-reliance is encouraged both in terms of individuals, the things we depend on and productive sectors such as manufacturing, mining, agriculture and fishing.
An economy for the common good will have flat pay structures and an absence of privileged and outrageous executive payment schemes. Equality of opportunity amongst citizens and the benefits from this cannot be achieved where there are grotesque imbalances between resources available to individuals.
Thus for example, all employees of a profit making company should be paid according to the same scheme, including profit sharing and pensions, differing only in the scale of remuneration. In all of this, the value of co-operatives and not-for-profit enterprises should also be underlined.
The desired economy is one where the concept of the common good as well as that of the current driver of private gain (since the two are not always inconsistent) is embedded in economic activity.
An economy for the common good is one where there is a pervasive morality and where there is respect for individuals not just within organisations but also to those interacting from outside as customers and traders.
It is one that is not dependent on personal greed as the sole driver in economic behaviour. There is a fundamental distinction between self-interest and selfishness. Genuine self-interest is a much wider concept than the desire for money. It embraces respect for others, self respect and the benefits of living within the realm of the common good.
It is one where there is concern for the national interest in the longer term - for example by having industry, agriculture and meaningful jobs available at all levels and for all ages and where jobs and equipment are not shipped overseas.
An economy for the common good would assess public well being and proper employment rather than obsess about questionable measures such as GDP. There are absurdities in the measure of GDP. For example, flooding or mass illness increase GDP due to the activities undertaken to combat them. The common good should be evaluated rather than the transient glow of consumerism.
Measures of natural wealth would stand alongside financial measures. Natural capital and population well being would be emphasised. Failure to do this further impoverishes the poor and loses current and future benefits. The goal should be to bring about a joint understanding to secure the common good and the best interests of the nation as a whole.
National economic policy should reflect these objectives and take steps internationally to make sure that countries such as China observe basic rules of fairness in competition and respect for people, environment and law. Equally important is the necessity of private corporations ceasing to cash in by using China to further increase their own profits.
China’s exchange rates should be set on the same basis as for the countries from which they take work. There should be comparable anti-pollution requirements, similar work safety regulations, respect for copyright and international trade agreements and the withdrawal of export subsidies.
In material terms there is a case for supporting a genuine free and fair trade system – balanced and reciprocal free trade that is. This is something sharply distinguished from the current excesses of laissez-faire globalisation with its plundering of natural resources, human exploitation and extractive profiteering. An economy for the common good would not adopt the doctrine of free trade fundamentalism that has clearly not served the interests of the country or the common good.
'Markets', where nothing better can be devised, should operate as social markets. A capitalist model will only operate in the general interest if, as Keynes pointed out, it is governed by 'gentlemanly codes of behaviour' rather than the attitudes of the Greed and Gecko moral ghetto that some have recently sought to praise. Plutocratic richness should not be an end in itself. The end, as Keynes expressed it, is to live 'wisely, agreeably and well' - qualities which are consistent with the common good.
'The Market' must not be bowed down to. ‘Market forces’ are not sovereign unless governments choose to make them so. At best they reflect the transient, self-seeking and short-termist views of the untrammelled herd. More often, they are dysfunctional, manipulated and frequently an excuse for excess. Much of what are passed off as 'market forces' - for example in the attempted justification of grossly excessive executive pay and bonus awards - are nothing of the kind. The contexts involved are self-serving and nowhere near competitive. They bear more resemblance to an exclusive club than a human resources bazaar.
The restoration of trust is key. People need to be confident they are being served by the economic system rather than being under threat of exploitation or exclusion. An economy for the common good would ensure that all citizens have equal value if not equal incomes.
The commercial banks are a notorious example of a defective 'market'. Competition between the banks exists in financial casinos and to the extent of how much they can extract from ordinary people who, in the absence of public service alternatives, have no recourse but to make use of one or other such dodgy outfit.
This is because this so called 'industry', along with others such as fuel and power, acts as a 'cartel by convention' exploiting customers and ensuring that whatever penalties are meted out or whatever speculative losses are made, it will be ordinary people, the taxpayer and the junior employees who will pay the price.
Statutory regulation on its own has no chance of changing this ingrained anti-social behaviour. One possibility that would bring genuine and valuable change and offer real choice and security would be to create 'exemplar institutions' with public service values that would break the cartel and force changes in corporate behaviour.
One example would be the re-establishment of municipal banks. There were branches of the Birmingham Municipal Bank throughout the city and a culture of thrift was encouraged. Mottoes such as: 'Thrift radiates happiness' expressed the ethos this bank for the common good and its watchwords, 'Security with Interest' got the priorities right.
And there is wide scope for exemplar institutions outside the financial sector, for example in energy where exploitative abuse of consumers has also been unchecked, in rail transport (a prime candidate for nationalisation) and in housing.
All this, and much more, could and should be carried out until we have an economy that operates for the common good. Until then we will remain a land of lost content and a society of forsaken futures.