Opinion: Three blind men and the UK economy

In Indian folklore there’s a tale that goes a little something as follows:

Three blind men are confronted with an obstacle in their path. Stretching out a hand, each grabs a part and describes what’s in front of them. “My word,” says the first man, “we’re faced with some trees – so strong and thick.” Quoth the second man, “You are mistaken, for we face a snake – thin and wriggly.” Disagreeing with them both, the third man says, “You fools! It’s a wall we must scale – the size of a house.” Passing by, a sighted man takes in the scene, and realises the moral of the story – that taking in only a part of the picture, just a leg or a tail, a blind man will fail to grasp that he is confronted with an elephant.

George Osborne, Danny Alexander and Ed Balls – three men who might be the blind men in our story, fumbling around the UK economy and describing what they each see – none of them seeing the bigger picture.

Osborne might seize on GDP growth and feel his strategy of austerity-plus-cheap- money-for-banks is vindicated. Alexander might try to take credit for the million or so private sector jobs created under the Coalition. And Balls might continue to lament the cuts to public services his government somehow found so easy to fund.

All three might have an element of truth, but all three miss the bigger picture. Fuelled by consumer spending, driven not by rising wages but by lower household savings and personal debt, it doesn’t take an elephantine memory to figure out how illusory growth can be. The supposedly buoyant jobs market, with far less unemployment than models predicted, is no fun if you’re one of the million or more people on zero-hours contracts, or can’t afford your rent, or once wider under-employment is taken into account.

As for Labour – if only cutting spending more slowly would in itself solve the underlying economic malaise, the seeds of which were sowed by their laissez-faire light-touch City-driven relaxed-about-inequality administration. ‘Boom Britain‘ seems like an alternative universe to that in which most people live, where the fruits of growth are less and less likely to accrue to them, adding to the State’s responsibility to make up for the labour market’s failings.

The bigger picture here, the elephant in the room, if you will, is that the opportunity to genuinely rebalance the British economy narrows with every small distance travelled on the road back to house price bubbles and cheap credit topping up inadequate wages. The fault lines underpinning the catastrophic financial crisis remain largely unresolved, with the UK’s financial ecosystem still far too concentrated and uncompetitive to encourage investment and spread prosperity. Business investment remains desperately low and monetary policy is disappointingly unambitious. The government’s cloth-eared insistence on balancing its own books by a set date despite persistent imbalance in the wider economy hinders a return to investment-driven, innovative, sustainable growth.

The theory that today’s growth, no matter where it comes from, will trickle down to create tomorrow’s prosperity holds little water. Without a radical reassessment of the nature of ownership, democracy and power in the economy, the solitary swallows of positive data will do little to restore the productive capacity lost since before the financial crash, far less turn into a summer of brighter economic prospects.

For social liberals, one of the only positives to come out of the crash was an opportunity to create a fairer, more sustainable economy. If the blind continue to lead the blind, we’ll find ourselves back where we started in no time.

* Prateek Buch is Director of the Social Liberal Forum and serves on the Liberal Democrat Federal Policy Committee

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13 Comments

  • Clear Thinker 13th Aug '13 - 5:32pm

    No quick fix then?

  • Helen Dudden 13th Aug '13 - 7:57pm

    having been without my sight for sometime, I think that I could say the above does not seem factual. I could see daylight, there are some blind people, who see things that are central to their vision.

    Being blind is like nothing else, this Government is blind in their thinking, and their ideals that could include disability.

    Having regained some sight, I have had both, and I would like to say, it seems a little lacking in sensitivity to use an impairment in the context of the above.

  • Jonathan Brown 14th Aug '13 - 12:01am

    Depressing, but I fear you’re right. It looks like there’s a new housing bubble inflating already, and very little reform of the economy despite all the pain. Glasgow’s debate (and vote!) should be interesting!

  • Simon McGrath 14th Aug '13 - 8:35am

    I’m a bit confused. Back in March you told us “the health of the UK economy is deteriorating”. That clearly wasnt correct but now you appear to be saying it is getting better but in some way the million extra jobs don’t count.

    http://www.libdemvoice.org/opinion-the-road-to-2015-its-the-economy-stupid-33565.html

  • Great article Teek.

  • Dear Prateek … none of the main parties seem to offer a coherent or exciting or even appropriate policy mix … all varieties of watered-down insipid vanilla sorbets! We have never addressed adequately the underlying problems in the financial sector. Although I feel that I am now very barnacle-encrusted as an economist, I do think that some of the key elements would be – our science policy (approved in Brighton last September … we need to do far better in converting our excellence in pure science into cutting-edge high tech industry), apprenticeships (rebalancing our education system away from an overly academic and inflexible 3-year university course addiction), massive programme of public housing (and I would add in flood defences to mitigate rising seas and extreme weather events – please not HS2 (topic of other discussion) and a concerted public effort (low cost) to complete Britain’s coastal pathway, thereby promoting fitness, tourism and an appreciation of our beautiful islands), democracy in the workplace. Well a few building blocks here. We must pursue and promote excellence … and in my view we really do have to tackle the benefits system (including pensions) – where we are currently is unsustainable, our emphasis should be on preparing people for employment, facilitating employment, ensuring employment pays and not overburden our youth with excessive burdens to finance a welfare state..

  • Helen Dudden 14th Aug '13 - 9:04am

    Last night I was making comments in the Chronicle in Bath on the subject of how the bedroom tax is causing distress to those who are disabled. One person stores his medical equipment in a spare room. The property has been specially equipped to cope with the disability, he suffers every day. Either he pays, or is thrown out of his home.

    I was totally blind until I finally did have surgery. I saw nothing, only the difference between light and darkness, I even got lost in my kitchen, not even knowing it was a kitchen. I keep my sight with prescribed drugs, of course I do not have perfect sight, but at least I have some.

    It is of course up to you how you view a blind person, and we are not all the same, as with disability, it covers many things.

    At present I am trying to get another group of disable people in our city to make comments on what we feel needs to happen, after the pulled funding by BANES.

    Any disability is not to be taken lightly, I remember with sincere compassion, those who have less than I have.

    There is one comment that I wish to add, there is none so blind as those who will not see.

    Perhaps you should have this context, three politicians who care only for their own interests were walking round a corner, they saw only what they wished.

  • John Carlisle 14th Aug '13 - 10:38am

    John Innes
    What massive programme of public housing? I have not seen one. Where is an integrated housing plan? Over 1.7 million households are currently waiting for social housing, and are over a million empty houses. What are we doing about that?
    Three years in government and we are building fewer houses than Macmillan did in the fifties (165,00 p.a.) in a country that was still on rationing.
    This is wilful incompetence, and neither party in the coalition can do anything else except hang their heads in shame.

  • Matthew Huntbach 14th Aug '13 - 11:20am

    Progress will be made in this country when rising house prices are treated by media commentators as a bad thing rather than a good thing.

  • I think of the big error as being what is now ‘conventional Economics’ – “Neoliberal”, “Chicago”, etc. This effectively asserts that “The Economy” is only what is done for money. Hence that the only “growth” is of trading firms – “bodies corporate” (which are for profit rather than ethics). I think the economics used should start from that the main input to this planet is sunlight, and that the main way in which it is harnessed for life is ‘growing plants on land’ (plus the phytoplankton in the sea).

    James Robertson, in his book Future Money, Green Books 2012, puts one major proposal – stop the banks creating money (as debt), the Central Banks take over this function, with the government or people spending the money created into circulation. Plus his earlier proposals, eg the Tax Shift. Take taxes off labour, shifting them onto natural resources being used (often used up). Present governments guide firms, by taxes, to reduce jobs, and use more natural resources. He includes, in “work”, work that is done for “subsistance”, not for money. GDP excludes it.

    I have grown food for the household I was in, and others, since 1938: but it is not counted in “Production”, not in GDP, and so not in the “growth” that so many are fixated on. The Governement did promote it in the 1940s, as “Dig for Victory”. But is seems that Economics, Defra, etc, exclude it from “production”, from “work”. I recommend an economics, policies and practice that increases work done by households for households; allows firms to do less. One policy objective being to get people doing work that is useful to people; as distinct from doing paid work for firms.

  • I would echo John Innes comments above and endorse his view that “our emphasis should be on preparing people for employment, facilitating employment, ensuring employment pays and not overburden our youth with excessive burdens to finance a welfare state..”.

    In doing so I would advocate ramping-up investment in school leaver training programmes and a minimum wage job guarantee program aimed at eliminating involuntary unemployment, that in combination with a basic citizens income replaces a significant element of the benefits sysytem.

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