A couple of nights ago I was chatting to someone who had just lost her job.
Like so many other people she worked as a professional in the public sector. Her department was being reorganised and jobs redefined. Professional posts were being regraded downwards, and people were being invited to apply for posts below their qualification and experience.
Understandably, she felt angry; the jobs still needed doing, her skills would become out of date unless she got a new job fairly soon and their household income would suffer a severe cut. She was also angry that so many of the current round of job losses are hitting women harder than men. Her husband is in work, but she doesn’t want to be beholden to him. Our fragile steps towards gender equality are being set back.
And I agree.
Is it really cheaper to have people unemployed and claiming benefits than employed doing something for others in society? And if so, why? I don’t have the whole answer (who does?) but it has got me thinking about it a bit differently.
Look at the big picture; the whole country picture. Money going round from one person to another (salary, tax, buying, selling, etc.) is all staying within the country, so is no net cost overall. When someone needs different clothes or uses materials at work that they don’t at home, or if they use energy to travel to, or when they are at, work which they wouldn’t at home, then this is a real extra cost. And it will need to be affordable. But how, and by whom?
If the energy/materials come from within the UK, then it is still no net cost to the UK. The problem comes because our current challenge is not to worsen our borrowing from outside this economic island. And so much of what we use does come from ‘outside’.
The biggest element of this cost, that I see, coming from outside is energy. Most of our coal, oil and gas – and even some of our electricity is imported. How much energy is ’embedded’ in all we do, buy and make?
Building materials and clothing, a bus journey and a cinema show, sending an email and posting a letter – they all take energy.
It’s also our use of materials. Paper and fabric, copper and steel, plastics and wood – much of this also comes from abroad. We use it, and too much is binned. We need to deal with it better.
So my suggestion to get us out of our lack of jobs and improve our balance of payments is twofold:
First – protect those jobs that have very little or no external costs – such as many in teaching and caring.
Second – invest in jobs that result in greater UK independence for materials and energy, such as renewable energy and recycling.
Would it work? What do you think?
And if it isn’t what the government is doing, is there an even bigger picture that they are working within? If so, what is it?
*Lucy Care is a former councillor and PPC in Derby and is a current member of the Federal Policy and Conference Committees
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21 Comments
Heaven forbid people being financially dependent upon their working spouse!
In all serious though it shows a funny attitude to marriage and that it’s been forgotten that the situation could easily have been the other way around. For several years after my parents married my mum actually earned more than my dad. It wasn’t until he was earning enough for her to be able to leave employment that they started a family. Very uncool and un-PC I know.
The driving force behind your argument seems to be that the public sector cuts are unnecessary, or would be unnecessary if we could only become more self sufficient as an island economy. The problem with this is that it doesn’t address the problem that for every £1 spent in the public sector a £1 needs to be taken from the private sector in the form of taxation. That means that the private sector has to earn perhaps £2 for every £1 spent in the in the public sector.
This means that there is a limit in size imposed on the public sector by what the the private sector can sustain. In effect it doesn’t matter how wealthy or large the country and economy becomes, if the public sector has an unsustainable level of employment or spending as a share of the population and economy, then it’s unsustainable.
Considering currently levels of employment in the public sector, and fact that wages are higher and come with comparatively large pension liabilities then it’s easily conceivable that the public sector is just too large for our economy to sustain.
“Is it really cheaper to have people unemployed and claiming benefits than employed doing something for others in society? And if so, why?”
Because all public sector workers are net recipients of taxpayer funds.
Let Milton explain:
What Andrew said.
Creating public sector jobs is only affordable if there are enough private sector workers paying tax to fund them.
The tax a teacher pays is just returning a bit of other taxpayers’ money to the Treasury.
So unless they get paid more in benefits than they did in salary, it costs the state less for them to be on the dole than in work.
But I’m confused about the rest of your post.
We’ve exported millions of jobs to countries like China and India, in return for £25 microwaves and lower costs for firms employing call centres.
How can we produce a £5 toaster here? Unless we can, we will rely heavily on imports (not just of energy and raw materials, but finished goods).
We haven’t found a replacement for the jobs we’ve lost in heavy industries.
I don’t think South Wales has ever got back anything like the number of jobs it lost when the pits shut and since then, the steelworks have largely gone the same way.
The UK did ok in the ‘boom years’ from the housing bubble and financial services and some people having money in their pockets then to pay for things like manicures (nail bar opening up on every street corner!!).
But now that’s crashed, as anyone with an ounce of common sense could have seen it had to.
Kind of hard to see where new jobs of any kind will come from.
The only ones created these days seem to be in supermarkets (at the expense of small shops). And that’s another bubble that surely has to burst at some point?
How many Tescos does any one town need?!
There are no, zero, nada, jobs that have no external costs.
Especially not teaching.
One of the principle costs of doing anything is opportunity cost. Someone as senior on various party committees really should know that. Anyone employed doing one thing is therefore not employed doing something else. If their time is being used for one thing, it’s not being used for something else. If money is being paid to them for one thing, it’s not being used for something else.
This is economics 101 and it’s vital that everyone trying to work within public policy understands it. This entire article clearly doesn’t, and as it doesn’t address a key fundamental that applies within any economic system it is fatally flawed.
Mat GB is spot on, for jobs. Nevertheless, were we to reduce energy imports (by being more efficient), more money would stay in the UK (lower leakages, in circular flow of income jargon). One way to do that would be to raise the price of petrol. People drive more slowly, and the buy more fuel efficient cars. The cost of driving per mile does not rise (in the medium term), but the proportion of the price that stays in the UK rises (the tax share of the cost per mile) and the proportion that goes abroad falls (the cost of the oil itself). So the idea makes a lot of sense – but politically it is a nightmare!!!!!!!
The sorts of things I would look at would be the things that we should be doing already, but the decision making is too short term, or its fragmented down to the point where there is no economy of scale for individual decision makers to benefit from, but where a larger scheme could benefit.
Insulation materials are relatively cheap. Unskilled labour is relatively cheap versus the dole and the opportunity cost argument is less critical the less the job pays. We’re a net importer of oil and gas and it is increasingly expensive and we have seen in the past that we are at the end of the supply chain for gas and could run out if their is another international dispute.
A large proportion of our energy needs are in heating. We could employ low skilled labour to retrofit insulation to some of our civic buildings, plus any other low hanging fruit like council housing blocks etc. There is no point relying on new building regs as very few new buildings are built here. If we built this industry up to a decent level then it would probably move onto private dwellings of its own accord. I’ve seen this kind of retrofitting happening in other European countries.
We could also employ skilled people to construct gas storage so that we can increase our Gas reserves closer to the kind of levels (in terms of days use) that Germany and France store, which strategically would be good for everyone from hospital patients to industry that depends on a reliable electricity supply.
We could employ large numbers of relatively low skilled people to provide next generation broadband cabling, especially the “last mile” which is most labour intensive but not that skilled.
We could create some national software writing competitions to produce software to enable some council services to be provided more efficiently – whether that is scheduling/transport planning software to create schedules that match carers up with patients in their homes in an efficient way, or collect automated reports of potholes from people with smartphones containing accelerometers and pass the locations to councils automatically.
There are lots of things we could do, some would cost very little, but I don’t think this Tory led government has much imagination which is a terrible shame.
I am inclined to agree with Lucy Care, but to implement her suggestions should also include taking on bord Huber & Robinson’s ‘Real Money’ principles.
Real money would allow the government via the caentral bank to inject money into the economy free of interest and without repayment; i.e it could take up much of the unemployment that we are delibertely creating in our nonsensical ‘efficiency’ measures.
Those wedded to Capitalism As WE Know It (CAWKI) will not understand this, but CAWKI is inefficient, unfair and unworkable. It is not a system designed for use by ever changing and imperfect Human Beings. CAWKI is not a ‘natural’ system, it has simply evolved on the same basis as Darwinian Natural Selection and is riddled with weaknesses that we need to think ourselves out of!
Sorry! Far too philosophical perhaps
I believe we should be building up the ‘social’ sector as the basis of our economy and allowing the ‘private’ sector to draw upon the staffing of that sector as it needs to expand. Yes of course we would have to keep an eye on trade balances and that would be a serious difficulty as we have allowed that aspect to become seriously unbalanced.
This will all sound highly implausible and even socialist without more explanation than is possible here, I however am a committed Liberal Democrat Humanist with a very strong activist background but particularly a Radical, not Lateral. Committed to the Individual as the basis of an ever changing society and not an admirer of conventional thinking.
Being conventional cannot recognise that CAWKI is self defeating and that ‘conventional’ thinking will only return us to te systems that have failed us regularly in the past!
Andrew Tennant,
All workers are the net recipients of other peoples funds. So whilst, in a very narrow sense, your point is true it is also devoid of any meaningful content.
If though, you had replaced “public sector workers” with “benefits recipients” then your point would have meaning but it would also demonstrate your underlying judgement to be false. Unless of course you mean to argue that which your comment implies, i.e. that public sector workers and the jobs that they do are essentially useless; as useless as if they were in fact unemployed.
@Robin
Do I assume from your comment that you don’t believe in evolution then? Only I trained as an evolutionary biologist and I’d be keen to hear your counter proposal for speciation and trait selection…
@JRC
Watch the video and try not to be so hyperbolic
I am sorry to be so pessimistic about this, but next comes:
1) Your friend finds there are no other similar jobs going elsewhere – the same is happening everywhere, any new positions that come up are being filled by redeployment to reduce headline redundancy figures, so those who do lose theirs stand no chance of getting back in.
2) If she goes for posts at a lower level, she will be automatically rejected on the grounds “oh, you’re far too experienced and skilled for this post”. That’s if they have the decency to tell her, mostly they won’t but that’s what they’ll be thinking underneath.
3) If she’s honest in the application about the reason for applying i.e. she needs to earn money and it’s a job and there aren’t any going at a higher level, she’ll be even more likely to be rejected. Who wants to employ someone with that sort of attitude? Sorry, but this seems to be how management thinks.
4) The private sector is not booming with loads of jobs going to soak up public sector redundancies (as we were told it would last year).
5) So after a year or more of unemployment, your friend will find no-one will consider her on the grounds they think something must be wrong with someone who’s been unemployed that long, and that once you’ve been out of work that long you won’t find it easy to get going anyway, so they’ll think.
6) She could do voluntary work. But most of her time will be spent writing job applications in the faint hope one of them will work out. Any application which is just standard instead of carefully tailored to the position will get rejected, so you have to phrase each one in a way that suggests you know everything about the job and it’s your dream job. So there isn’t really time for “Big Society”.
7) In any case, as the government and contributors to this thread keep telling us, as a public sector employee, she’s probably some lazy good-for-nothing with a gold-plated pension, so who in the go-getting private sector we’ll have .. some day .. would employ such a person?
So here we are – what I am saying is based on real life experience form people I know. Skilled people sitting idle, or at least doing nothing useful, and if some of the contributors here are to go by, people who identify themselves as “Liberals” these days think that’s a good thing. What a far cry from the days when William Beveridge listed “idleness” as one of the five Great Evils.
“The driving force behind your argument seems to be that the public sector cuts are unnecessary….. The problem with this is that it doesn’t address the problem that for every £1 spent in the public sector a £1 needs to be taken from the private sector in the form of taxation.”
This is dangerously simplistic. Arguments like this shouldn’t be casually thrown around just so as to squash alternative views. Of course there is some tendency for public spending to depress private spending. However, for example point 1: sacking a teacher only saves the difference between a salary payment and a benefit payment. Point 2: with the salary, the teacher may pay a plumber who pays for copper pipe, etc, causing multiplying private sector activity which doesn’t happen if instead the teacher gets sacked.
George Osborne kidded himself that by cutting state spending he would increase private spending. It didn’t work. Let’s not kid ourselves likewise.
@ Amdrew T
Wow! Wat did I say? I am a total believer in Natural Selection and base all my obscure philosophising on that!
I haven’t had time nor conceit to re read my contribution yet. Think That’s where I shall go next!
@ Andrew T (again)
Did my disenchantment with CAWKI and belief in the imperfections of capitalism lead you to think I thought evolution less than perfecr? It is of course, but that is a discussion in itself! You aren’t suggesting that evolution results in ‘the best selection are you? I would have to challenge that. The obsession with ‘natural is good’ is way out!
I had watched the video and Milton doesn’t agree with you either.
Rather than being hyperbolic I thought i was making a statement of the bleeding obvious in order to point out the inherent hyperbole of your statement, it seems i failed.
A couple of nights ago I was chatting to someone who had just lost her job.
And she thought it was terrible that middle class women who worked for the government like her could be made redundant. Other people being got rid of might be acceptable, but not people like her.
@David Allen
“George Osborne kidded himself that by cutting state spending he would increase private spending. It didn’t work. Let’s not kid ourselves likewise.”
As The West Wing said Post hoc ergo propter hoc.
Surely the key question is whether refusing to cut state spending would have maintained or increased private spending. I don’t think there is any evidence of that.
Charles
The driving force behind your argument seems to be that the public sector cuts are unnecessary, or would be unnecessary if we could only become more self sufficient as an island economy. The problem with this is that it doesn’t address the problem that for every £1 spent in the public sector a £1 needs to be taken from the private sector in the form of taxation.
Yes, just as for every £1 spent to pay a banker’s bonus, a pound has to be taken from someone who did something productive to earn it.
The answer in both cases is that while the people concerned may not have actually dug the turnips and put them on other people’s dinner plates, they are part of society’s infrastructure which ensures turnips are dug and people have food on their dinner plates.
The extent to which any sort of administrative structure is necessary and how well rewarded the people involved in it should be is an open question. Personally I think much of the “finance industry” is a vastly bloated and overpaid bureaucracy which could be done just as well by many fewer people on much smaller earnings. The people who work in it take pots of money only because they have jobs – quite often really rather mundame ones – passing big sums of money from here to there, and if that’s your job, taking a bit of what you pass from here to there makes you a lot more rich than taking a bit of what you pass on if your job is passing turnips from here to there.
@Matthew Huntbach
“The driving force behind your argument seems to be that the public sector cuts are unnecessary, or would be unnecessary if we could only become more self sufficient as an island economy. The problem with this is that it doesn’t address the problem that for every £1 spent in the public sector a £1 needs to be taken from the private sector in the form of taxation.
Yes, just as for every £1 spent to pay a banker’s bonus, a pound has to be taken from someone who did something productive to earn it. ”
I think this is where you, and CAWKI go wrong. Your observation may be correct where we have full employment and are transferring effort from one ‘sector’ to another, but it shouldn’t apply where efficient growth is involved.
Growth is where greater production occurs. where unemployed labour becomes productively employed as Lucy describes. That implies that greater expenditure is required. i.e. new/additional money is needed. Very broadly this comes about when real efficiencies or additional inputs of labour are introduced.
Where Lucy’s comments about the public sector become relevantis that if new money is injected willy nilly that flows into all sectors of trading including imports and exports. Such new injections need to be more controlled. The public sector is more controlled in that its consumption is at least aimed at the internal economy and provided injections are matched by taxation should mean improved services internally, with minimum leakage.
The problem we have is that we have become accostomed to borrowing in order to provide these injections. Thus we also add repaymnet and interest charges to the costs of employment. Using Huber’s ‘real money’ system with no repayment or interest charges helps to remove that problem at the same time as massively improving the internal welfare level!
Transfers between the public and the private sector can be managed to keep the balance intrade; another issue!
Robin Martlew
I think this is where you, and CAWKI go wrong. Your observation may be correct where we have full employment and are transferring effort from one ‘sector’ to another, but it shouldn’t apply where efficient growth is involved
You are writing as if we exist to serve money, rather than the other way round. Money is a social construct which mostly has served us well, but there are signs it is not serving us as well as it used to.
I would certainly say there is something very wrong with highly skilled people being left unemployed for years on end, and that is what we are talking about. If that is considered “efficient” them maybe we should reconsider our definition of efficiency. I note also that our country is not short of jobs that need doing, and people who don’t have jobs and want them. It seems to me to be very odd that we cannot put them together. Again, it seems very odd that them not being put together is regarded as “efficiency”. An obvious example is the thousands upon thousands of elderly people without proper care – in some cases dying because there food is put in front of them but there’s no-one to put it in their mouths. But there’s thousands upon thousands of unemployed people who want jobs. This isn’t a hugely difficult job that requires special people and years of training to do, so why can’t we get the needs matched?
The huge amounts of money a small number of people are getting for what are actually quite mundane and only semi-skilled jobs just because those jobs involve passing around large amounts of money suggest to me something has gone wrong with the system – it is not working as well to regard effort and penalise indolence as it used.
Well, that started quite a discussion!
I observe that no one has mentioned a larger picture that the Government is working within – just a presumption that current economics is what we have to work to – and this is really what I was challenging.
Alistair mentions a range of investment opportunities, and Robin Martlew identifies how these might be funded (directed quantitative easing?).
Cassie’s point about how we can become more independent is a challenging one. While we have such an advantageous exchange rate (that values UK hours’ worked more highly that those in many other countries) it’s only the transport cost that provides any scope to even out the difference in cost of manufacturing. But Germany is still managing that equation against China, India, etc. so it is possible… Investing to reduce our dependence on global markets would help.
I like Matthew Huntbach’s desire to get money working for people again. I’m reminded of the power that Local Exchange Trading Systems (LETS) and local currencies can have to enable people without mainstream money to contribute to communtiy well-being. Perhaps there could be a similar parallel scheme for some people who (it appears) will soon be having to do community work in exchange for benefits. http://www.guardian.co.uk/society/2011/dec/12/westminster-council-means-test-housing
The Government is still spending money – we do still have a public sector – and my reading is that further cuts are likely, whatever my personal view is on their appropriateness. However, the cuts main purpose is to make our international debt affordable. So cutting areas that add most to that debt (ie activities that cause direct and indirect imports) could mean that we can protect some of the areas that have least impact internationally.
There appears to be some consensus that spending on public services contributes to economic well being. There is little consensus or even understanding about how this might be achieved.
I suppose Lucy that ‘Quantitative Easing’ describes one part of my suggestions, but the important part is that this should not be achieved via borrowing but by creating ‘new money’! Money is or should be information. Money is created by goods and services that people value being created. It then becomes information stored nowadays in computers.
Growth is when there is an increase in the supply of goods and services; which should be reflected in the records. but of course a reduction in goods and services must also be recorded. The money supply should be adjusted to reflect the volumes of goods and services available. That in my opinion is the tricky bit!
I believe it needs a totally different approach from the speculative approach used by bankers and money being used as a tradable commodity! I don’t think we have been right to ‘blame the Bankers’. They have been doing what is expected of them under the present system. It is just that this system has little relationship to reality and is very vulnerable to speculation and fraud!
The financial Sector is immensely powerful and will resist any attempt to remove its privileged position; wouldn’t you with rewards like that? Neither would it now be very straight forward as the sort of changes needed would be extensive and not easy for people to understand. Convention takes a great deal of shifting and the conventions of Capitalism are now as ingrained and extensive as those of religions!
Huber and Robertson wrote a paper on ‘Real Money’ which advocated a different approach to money supply which they branded ‘Real Money’. I would use that system to fund growth in the public sector, create and maintain full employment and protect the private sector from uncompetitive inflationary pressures This would need measures for allowing the private sector to transfer effort from the Public Sector controlled by the Central Bank and with democratic approval.
I believe that this would result in a Partnership Society based on negotiated working conditions; with People having greater choice in work, working hours etc and conditions; and a much more cooperative and less pressured life style
I dream!