I have published this video this morning. In it, I note that Labour is planning to base all its policies on growth and wealth creation. Neither makes sense, and they're in direct conflict with each other economically. It's as if they have announced in advance that they plan to fail.
The audio version of this video is here:
The transcript is:
We have a new Prime Minister. We have a new government. And it's not going to deliver. Let me tell you why.
Keir Starmer says that his goals are growth and wealth creation. And there are real problems with both of those.
Let's start with growth.
We live on a finite planet. We didn't know that 50-odd years ago. It was first pointed out to me in 1971. And at that time, it was extremely unusual for anyone to talk about this.
Now we know that we have global heating going on.
We know that we have to change the way in which we run our economies or we will not be able to manage the consequences of global heating, with potentially catastrophic consequences.
And we know that it has been the pursuit of economic growth that has burned resources and produced vast amounts of carbon that has created this outcome. And yet Keir Starmer and Rachel Reeves are pinning their hopes on growth. In a world where we know that that is not going to work, I am baffled as to why they want to do that.
It is ridiculous to set out to fail because if that's what they want to deliver, they are going to condemn us to our fate sooner than necessary, where the world might not be sustainable. And I can't forgive them for that in advance. I just hope they will change their mind.
The second part of their policy is to deliver wealth creation. This is also quite absurd. There are two reasons for saying so.
One is that wealth creation always means that the wealthy get wealthier. It has never done anything else. What we have seen over decades is that when wealth creation of the sort that Starmer and Reeves are dedicated to - which is the accumulation of financial power, if we summarise it rather crudely - always means that there is an increased concentration of wealth amongst those who are already wealthy.
Thatcher started this trend in the 1980s when she liberated the City of London, as she saw it, to create financial wealth without limit, as she saw it, and she succeeded in the sense that she massively increased inequality in the UK. Most people did not benefit from her policies. Those who were working in the financial services sector did.
We saw an increase in wealth. We saw an increase in inequality. And we've seen all the problems that have followed on, ever since.
The last Tory government delivered 14 years of increasing inequality. That's why people are fed up with it.
And yet Keir Starmer wants to replicate that policy now.
And why doesn't it work? Look, the theory of wealth creation to which he and Rachel Reeves have subscribed is that if only wealth is increased for the wealthy, then some of that will trickle down to everyone else. The claim that is made is that "a rising tide floats all boats". That is ludicrous. It's wrong. It's nonsense. There is literally not a shred of evidence that that has ever happened.
The only way in which most people can benefit from wealth creation is by taxing those who create the wealth - basically by exploiting the rest of us - very progressively to ensure that the benefit of that wealth creation is redistributed to those who need it.
What is more, that redistribution is also needed because without it you don't get any growth as a consequence of wealth creation because the wealthy don't spend their money. The only people who do are those on lower incomes who need it to increase their well-being.
So, in fact he's actually adopted two policies which are directly in conflict with each other unless he delivers progressive taxation, and he and Rachel Reeves have said they won't do that.
So we have a Labour government setting out to create two foundations for its policy, which are both unacceptable in terms of their implausibility when it comes to growth, and unacceptable with regard to their social consequences when it comes to wealth creation.
That's deeply depressing. It's just so flawed as to logic and so utterly inappropriate when it comes to the needs of this country.
Yes, I'm depressed by that. There are five years for us to find an alternative. In 2029, surely, we cannot have another government that is so out of touch with the needs of the people of the UK.
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Yeah I like to see the tories gone but I’m not holding much hope for any change.
Malthus will have his revenge.
No he won’t
That is the wrong connection.
Neither Malthusians nor Neo-Malthusians have any relevance to 21stC global solutions.
Malthus’s model was where the great unwashed were the perennial underclass. His assumptions on demand for land, rents and propensity for population growth were/are hopelessly flawed.
That the demographic transition model records changing population dynamics is proof.
Yes, there really are planetary boundaries.
https://www.stockholmresilience.org/research/planetary-boundaries.html
Yes, we have already exceeded the planet’s capacity in many areas of resource use, and there is considerable doubt as to whether new equilibria are likely to be favourable to human society in many areas where humans currently live.
In 2024 this has little to do with the Malthusian famine model of geometric progression in human population growth based on an ever increasing underclass living at subsistence levels.
Stating that global human population needs to stabilise and preferably decrease over time is far from being Neo Malthusian. There really are physical limits on a finite planet.
What really needs to decrease is resource use per capita, with a system change in resource conservation, and there are many ways this can be achieved, the main one of which is through reform of capitalism and neo-liberalism, especially away from consumerism.
The GDP growth model and underlying economic assumptions in terms of the sanctitude of the profit motive have to be jettisoned, and the sooner the better.
Such is capitalism, and especially deregulated neoliberalism.
This is the underlying problem that all governments and economies face in 2024. Incremental reforms just will not do.
The current Labour leadership don’t seem to have even a basic understanding of our planet or natural processes, and that is the problem, when we are faced with very urgent problems
If SKS thinking is so narrow he doesn’t understand the suicidal assumptions in the growth model then it is his own grandchildren who will really curse him.
The word “growth” (by LINO) is used too losely.
The UK needs to move to renewables asap if only because they are much cheaper than, e.g. gas. Off-shore (& on-shore) wind with PV on warehouses (the resource is circa 100GW++) is the way forward plus batts & electrolysers/H2. In the case of off-shore wind, needs a new off-shore power network (HVDC) & the UK, oddly, has GEC (Rugby and Stafford) a leader in this area (owned by GE of the USA but still). So in terms of doing something that would improve the UK economy (& use home-grown tech) this is one way forward.
Col Smithers linked to a very fine article which showed that “professional” politicos and the system in which they operate, lack the knowledge of any of this, & those that could tell them are sidelined. One could characterise the above RES actions as “growth” – or…modest re-industrialisation? de-carb and help the UK economy? deliver low cost energy for ever to the UK?
Like you I am against PE – but LINO seems set on that course: one way to discipline these hooligans is to hold beauty constests – let them bid for the right to fund projects – & hold the contest it in the public arena. They would squirm – but greed would win out. Just an idea.
I have subscribed to the Aurelian article – worth the price
Is there any hope that Labour might end the stupid “pay as clear” market for energy? How long do we keep on rewarding cheaper suppliers because gas is more expensive? Would a change require much in the way of public spending?
Do we need to establish a distinction between wealth creation and wealth extraction?
Not a lot
Wealth creation is usually a euphemism for wealth extraction.
“Wealth creation is usually a euphemism for wealth extraction.”
Hmmm out of Old Blighty it would seem:-
https://www.theguardian.com/politics/article/2024/jul/06/hmrc-offshore-tax-avoidance-uk-wealthy
I am all in favour of Wealth Creation.
Good health is wealth
An unpolluted environment is wealth
Well educated fellow citizens is wealth
etc., etc…
Rent extraction is the enemy… and any effort to introduce Private Capital/Equity into public projects is going to do just that.
Starmer tacked left to win the leadership, tacked right to win the election…… the real issue is where now?
I have argued that we need to change “we can only have good public services if we have a strong economy” into “we can’t have a strong economy unless we have good public services”….. I think Starmer has a short window right now where he could make this U turn.
The slogan “Stability is Change” (to emphasise Tory chaos) needs to become “Stability REQUIRES Change”. If we want a stable, peaceful, happy country then we need real CHANGE.
You define wealth correctly
“Starmer tacked left to win the leadership, tacked right to win the election…… the real issue is where now?”
The results of recent elections suggest it was unnecessary for Starmer to tack right to win the election. The way he did it suggests an ideological attachment to centre right policies rather than a tactical move to garner a few more votes.
I could be wrong – the proof of the pudding is in the eating – but it would be quite difficult for him to tack left again without the press calling foul. I do not see him doing so unless enough pressure comes from within his own party and I don’t see that pressure coming from a party full of professional lobbyists.
A rising tide floats all boats – unless at least 20% of them have a short chain attached to an anchor of poverty. Then, the occupants drown.
Well said
Whenever I hear Rachel Reeves bang on about “growth” I want to ask “growth of what”? Growth of numbers of NHS doctors would be good. Growth of workforce wd be good. Growth of renewable electricity too. Growth of farming too. Regrowth of professionally run libraries please. More nebulously, growth in wellbeing & satisfaction of course. But RR &c seem only to talk about growth of economic measures that mean nothing to ordinary people.
Now thereby hangs a tale…
Good growth and Bad growth
More mobile phones but fewer lithium mines
More renewables but fewer 90m electricity pylons
More food production but less use of inorganic nitrogen
And.. nobody is really having those global resource management discussions in detail and applying them at a national level ..
We do not need to reinvent the wheel.
I can only wish that the United Nations Sustainable Development Goals were the template for social and economic planning.
The heavy lifting has already been done …
https://sdgs.un.org/goals
The only growth they are interested in is growth in GDP. Which is hard to measure, includes some imaginary numbers (such about 10% being imputed rent “payable” by owner occupiers), and puts no value on all sorts of other things (if they are not paid for). It takes no account of the environment or wellbeing. And the headline number tells you nothing about distribution.
It is rather pathetic that economists and politicians obsess about this one number to the exclusion of almost everything else.
Agreed, entirely
When he was running for the leadership four years ago, Starmer made a fairly decent speech attacking neoliberalism, saying “we know that trickledown economics is a con”, or words to that effect. What’s really alarming is that he doesn’t seem to believe in anything other than what he thinks his audience at that moment wants to hear.
You’ve quoted Irving Berlin, so I’ll quote Neil Young:
“I never knew a man who could tell so many lies,
He had a different story for every set of eyes –
How could he remember who is talking to?
‘Cause it sure ain’t me, and I hope it isn’t you.”
The song is “Ambulance Blues”, doubly appropriate now that Wes Streeting is Secretary of State for Health.
Thanks
https://www.webmd.com/mental-health/signs-sociopath
I don’t like the use of pseudo-psychological like sociopath. I tend to think of everyone as fundamentally good. The Sanzijing, a Confucian text aimed at educating children opens with:
“All people are born perfect; they only become evil through the acquisition of bad habits.” (my translation)
The article helps explain how people acquire “bad habits.” Darcia Narvaez explains in further extensive detail in her book “Neurobiology and the Development of Human Morality: Evolution, Culture, and Wisdom.” Confucius would be amazed at the erudition!
I like to think of ‘wealth’ not as ‘money’ but rather as the sort of ‘unflashy’ but good quality stuff.
Well built towns and cities, quality public services – trams and buses with the Council or City logo proudly displayed – think Vienna or the towns in The Cotswolds that grew fat on the wool trade. The mindset that made Civic Buildings and infrastructure the best avalible.
A very small positive today, in my view. The appointment of Timpson as Minister of prisons and probation. Seeking support from someone experienced in an area of great concern, and about which, I would believe most MPs have no real knowledge ought to be a Good Thing?
Another peer….
Only another peer because our outdated system does not allow him to be a minister any other way. I don’t know if Timpsons is a national organisation, but here in the north east the owner is deeply admires for his, apparently. successful work in helping ex-convicts.
The company has been widely admired for that.
Other opinions from the company suggested a decidedly Tory alignment.
Timpson is good. But he’s not elected.
Look up the Carltona Principle. Civil Servants are authorised to act “as if they are the Secretary of State” because the SofS cannot make every decision. The Civil Service will be acting as an unelected Minister. It’s called the Civil Service for a reason, the Minister carries the trust of the civil society who elected them, and that society gives the elected Minister the right to direct their Ministry in its name. From whence does the authority of Starmer’s appointees derive?
On a minor note: Not only are they not accountable, but they also block learning opportunities for junior backbenchers. If a better job offer comes along they are free to take it – and Starmer won’t have groomed any replacements.
Regarding delivery… the Rowson cartoon was amusing in the G. Less so the below this line comments, this was amongst the first, showing that the tories by no means have a monopoly on imbeciles, there are a large number contributing their dribbles to the G & LIINO. If Gordon Broon is the answer to delivery – it is clear one has asked the wrong question. Advice,- don’t read the following if eating breakfast – you may choke with laughter.
GaryCross (a “Guardian Pick” for goodness sake)..
“Now the Ming Vase has been delivered, it’s time to get down to the business of delivering their promises.
Starmer and Reeves have one advantage though that I don’t think can be underestimated; instead of clueless SPADs and their little thought experiments, they can call for advice upon a veteran politician of genuine gravitas and experience in both running the economy and the country in Gordon Brown. I hope they both give his number on speed dial, they’re going to need it.”
Truly bizarre