The failing state: Conservative Britain

This depressing graph from the ONS shows that UK households’ outgoings have surpassed their income for the first time since 1988 (that year was in fact only just in negative territory). These figures show that in 2017 the average household experienced a £900 shortfall.

Yet nowhere in the media does this have much prominence and nowhere is it pointed out that when the government reduces its spending, then other people in the economy have to borrow to make up for the loss. Nowhere is it pointed out that that is why the economy is in such a parlous state and going nowhere. Building your economic demand on the basis that people will be borrowing an extra £900 in a year is mismanagement on an epic scale – it is dire for the proper functioning of the economy. Which is why, when there is such a diminishing prospect of improved, sustained demand, the UK economy has so little private investment and fails to provide opportunity for most members of society.

Additionally, such spending in the public currency that does take place, is increasingly directed away from the general electorate and instead towards private companies, making a minority much richer at public expense. So now it is theoretically possible for frauds committed by G4S to result in an arrest arranged by G4S to be held in police custody by G4S and upon conviction be sent to a prison run by G4S. Surely I cannot be alone in considering that it would be way more efficient if we cut out the middleman and they ran the judiciary as well?

The Economist points out a further problem“As inequality grows so does the political influence of the rich”:

“Squeezing the top 1% ought to be the most natural thing in the world for politicians seeking to please the masses. Yet, with few exceptions, today’s populist insurgents are more concerned with immigration and sovereignty than with the top rate of income tax…..

But studies of the relation between democracy and levels of inequality point in conflicting directions. Mr Acemoglu and Mr Robinson tackle the question in another paper, co-written with Suresh Naidu and Pascual Restrepo. They conclude that democracies raise more taxes than non-democracies do. But this does not translate reliably into lower levels of income inequality.”

Interesting that democracies seem to raise more in tax – that suggests that they been captured by the tax and spend ‘misunderstanding’. We can also see how successful the diversionary methods of identity politics have been. It’s anti-semitism or your immigrant Polish neighbour which is the problem, never Mr 1% prosperously installed somewhere off Park Lane, hobnobbing with the powerful in return for a comfortable contribution to Conservative coffers.  It is gang violence from the underclass that is the problem, not the cutting away of social and financial support to the areas where gang violence seems now to occur.

The article concludes:

“The evidence that concentrated wealth contributes to concentrated power is troubling….If political leaders tried it, they might well find that redistribution is a winner at the ballot box.”

They might indeed, but getting that message across with the state of British media and with the simultaneously clouding and toxic activity of Brexit is proving remarkably difficult.

The state it seems to me, is certainly failing, but there are meanwhile, so many useful diversionary tactics to explore properly first.




  1. A. Pessimist -

    Peter, I too was taken with that Economist article. I’m puzzled as to what to make of it. This is a newspaper that has consistently promoted “monetarism”, the shrinking of the state and the “Free Markets” that have brought about both the increase in inequality and the political influence of the rich that it describes. It is surely an influential protagonist of the tax and spend “misunderstanding” as you call it, which leads to the TINA argument. I have always seen it as likely reading for the 1%, and the people controlling the levers of power.

    The thrust of this article reflects what has been being written on your website and TRUK and other “progressive” outlets for years.

    I wonder what might have brought this on, and what the editors might think they are up to? For example, perhaps recognising the dangers of the populism that has resulted from their preferred policies, they might be thinking it is time for change? Who are they addressing? From a UK perspective, a Tory party that is self-destructing and obsessessed with Brexit? The people who influence those politicians? We can but hope!

    1. Charles Adams -

      Economists always knew that capitalism is unstable with the 1% taking a gradually increasing share of wealth and income unless balanced by extremely progressive taxation (as per les trente glorieuses from ’45-75). Over the last decade, economists at the World Bank, OECD, and IMF have all written about the problem of increasing inequality.

      However, still the voices of wealth are loud and powerful and tell us that our problems are not the rich but rather immigration, regulations and the power of the state.

      Everyone knows that the writing is on the wall and the party is not going to last. The neoliberals are trying the squeeze the last juices out of the people before they run for hills. I guess the journalists at The Economist would like to think of themselves as ahead of the curve.

      1. Peter May -

        I do hope that the writing is indeed on the wall. If the people at the Economist are ahead of the curve there is certainly a distinct chink of hope!

  2. Peter May -

    That, Charles, is pure gold.

  3. A. Pessimist -

    Thanks very much for that link. Momentarily I thought I might have to change my pseudonym, but Prof. Dorling is suggesting it could be a rocky road ahead. My struggle is always with the feeling of my own impotence, and the way that the majority of the people who inhabit the bubble in which I live are so ill-informed about these issues, and seem to prefer it that way.

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