The “red tape” challenge

So, I’m sitting in my local cafe at lunchtime talking to my local property developer-landlord. So, I ask him, do you think there will be worsening economic conditions this year ? And will there be more unemployment ?

He takes a pretty dismal line – things are becoming more and more squeezed – landlords are finding that their properties are unoccupied, or the rents are being forced downwards, and there is no spare finance capacity to do renovations, the banks won’t lend, and there’s no certainty of being able to sell properties if the business becomes uneconomic. He’s had to sack people he was formerly able to employ.


He finds that increasing numbers of tenants are unemployed, which brings its own problems to the renting relationship. He knows of areas where, for mile after mile, nobody is employed. He suggests that immigrants might be taking all the available jobs, a very common assertion that is not necessarily based on facts :-

http://www.guardian.co.uk/news/datablog/2010/jun/26/non-eu-immigration-uk-statistics
http://www.newstatesman.com/2011/04/immigration-british-visas-work

So, I ask him, do you want people that live on “unemployment estates” Up North to leave home to get work ? They couldn’t afford London rents. And, what do you say to the statistics that indicates that there are five people competing for every new job that gets created ? What’s going to happen as another 500,000 jobs get axed from the public sector ? Is the private sector in a position to create new jobs to employ them ?

My conversation partner then starts on a new line of reason very emphatically. He says that the UK Government should have kept the shipbuilding and car manufacturing industries in this country, so that there could still be jobs for people to go to.

But, I argue, as you well know, globalisation has outsourced things like steelmaking, shipbuilding and car manufacture to countries where labour costs are cheaper. There are laws, at the national, European and international level, to guarantee that a business can operate in any country that it likes.

I said, what you’re basically arguing for is “grand” socialism – the protection of national industry and job creation – and re-nationalisation of important manufacture and utilities. If the country is going to be able to afford to create new jobs, it needs to lower some sort of floodgates, stopping business and industry leaching wealth out.

I ask my lunch buddy, how would you go about doing that, when globalised transnational businesses are busy arguing for less protectionism, less regulation, less “red tape” ? He suggested that China is starting to suffer problems from its own economic growth : demands for higher wages, demands for more goods and services, and that if the situation goes on, it might all turn around and international business might want to start employing good value, well-educated labour in the UK.

The Coalition Conservative and Liberal-Democrat Government in the UK have taken it upon themselves to set out very business-friendly conditions, with lower taxes and less regulatory intrusion on accounting matters, allegedly to try to attract new corporate activity into the UK. They seem to hope that this environment will be so conducive to international capital that jobs will start to pop up like mushrooms on a rainy morning, and that unemployment can start to properly fall. It’s a kind of cross-your-fingers approach. Far from adopting this responsibility, most businesses are trimming their labour budget and frontline services.

And beyond the social responsibility angle, there’s the environmental responsibility angle. Cutting “red tape” to try to stimulate job creation isn’t working. In the case of environmental protection, cutting “red tape” is positively insane. Having fought and won numerous arguments about ecological and enviroinmental protection, especially since it underpins natural wealth on which all business depends, now it seems that every environmental regulation is open to adjustment :-

http://www.guardian.co.uk/environment/blog/2011/apr/19/climate-change-act-green-coalition

If it can be claimed that an environmental law is “goldplated”, overdone, too expensive to meet the need, then it is open to being trimmed. Of all things, this includes the Climate Change Act 2008. Theoretically this could mean abandonment of the Carbon Budgets if they become “too expensive” to meet.

So, once more, the environment becomes a hostage to wealth creation. Not that the wealth will be enjoyed by the vast majority of the citizens :-

http://www.barclayswealth.com/insights/uk-wealth-map.htm
http://www.havingtheircake.com

In addition, the Coalition Government is taking steps to plunder the social purse in order to avoid allowing various banks and other “vital” business interests to disappear into thin air along with their Government shares, purchased via bailout, to stop them going under in the credit crunch.

There has to be a better way.

If it doesn’t go under the “red tape” knife, the Energy Security and Green Economy Bill could offer a way forward out of this conundrum, using a Green Investment Bank vehicle to stimulate new jobs and lower the nation’s energy bills, creating a social welfare advantage, a virtuous circle for higher quality of life, economic participation and higher tax revenues to go to fund public services :-

http://www.telegraph.co.uk/earth/8401936/Budget-Green-bank-and-carbon-levy-not-enough-to-tackle-climate-change.html
http://www.guardian.co.uk/politics/2011/mar/18/green-revolution-hit-curbs-bank

If we don’t have the Green Deal supported by green finance we could face an economic implosion, a contraction or de-growth that will push UK standards of living back to the 1940s, or worse.

Lesson 1 : “free” markets do not create social wellbeing. There is no “trickle down” effect. The machine of wealth creation turns its gears and the rich get richer, and the poor get poorer, by the same differential effect.

We live in a “mixed economy”. If the UK Government cares about social stability, it has to be time to bring out the public works programmes that saved us in the 20th Century.

Put the nation to work and let us make something of ourselves !

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