Monday, 21 September 2009

Who pays?

Apparently we saved the banks. Now it's time to face the question of who pays.

The political conferences are full of politicians competing as to who can be the most threatening, though Nick Clegg of the Liberal Democrats, ditched the word "savage" at the last moment and chose instead to talk of "serious cuts."

The Confederation of British Industry, combined with university vice-chancellors, has decided that students should pay for the university through higher fees, higher interest and cuts in grants. Oh yes, and their degrees should do more to train them for work in industry. Leaving aside the question of why students should pay to be moulded in the way employers demand (shouldn't they develop a capacity for original thought that enables them to remake industry and shape the future?), there's clearly a problem in the economics of what the CBI and vice-chancellors suggest. The economy needs money now - the suggestion that students are lent more money from 2010 or 2011 won't bring in any repayments until 2013 at the earliest, even if all graduating students walk straight into well-paid jobs.

It's an uncomfortable time. There are plenty of shrieks of "Not me!" which is to be expected. But there's also a great deal of finger-pointing, usually at individuals and social groups. Comments in newspapers and on-line forums are directed at the usual groups: immigrants, asylum-seekers, single mothers, the poor, the unconventional. "Punish them!" editorials and commentators demand. Facts on how little the poor and needy receive in benefits are no use - anecdotes of luxury are everywhere. Nor does it help to point out that the poor have to spend most of the money they receive, thus returning it to the economy. Spending by the poor is instantly labelled fecklessness.

I don't have a solution - I can't see any way of finding these impossible sums without hurting the economy more and damaging even more individuals. (Withdrawing troops from Afghanistan would save money and lives, but it wouldn't be enough.) Every cut brings its cost. There are bound to be cuts in public servants who include nurses, teachers, ambulance drivers, cleaners, lollipop ladies, and many others on whom we rely. Most will be entitled to redundancy pay and benefits - and in many cases it won't be enough for the rent or the mortgage. The newly unemployed will become the newly desperate. They will cut their spending (savagely, of course) and this will have an effect on all the businesses which depend on selling services and minor luxuries. Lots of small and large businesses are just keeping going. With less money coming in they will first shed more staff - that's even less spending money in the system - and then collapse.

The government has to look for cuts which affect the fewest people and from which the economy can recover most quickly. Logic points to taxing the rich and inherited wealth - money that doesn't circulate in the system. It's not going to happen. There are too many millionaires and too few paupers in government. But even taxing the wealthy won't solve the problems. I don't know if the kind of redistribution and rationing employed in World War II would help. My mum remembers the Second World War as a time of plenty after the scarcity of the 1930s - rationing fed children who were used to going without. But I'd worry about the centralisation and trust in government that requires, particularly when I look at the way the three main parties are funded.

The more I listen to political debates, the more I realise that no-one has a solution. I hear stale rhetoric and the rehearsal of prejudices and realise these are going to influence what happens next. It's going to be nasty. I don't want to speculate any further. I'd rather not think about the future but it's lurking and waiting to hit me in the face.

Note: the illustration is by the street artist Meek. I hope s/he doesn't mind my use of it.

1 comment:

Kate J said...

Socialists used to say "you can't control what you don't own" - an argument for nationalisation. But now the banks are nationalised (well, sort of) and it seems we are still not in control of them. Their lending policies, unreasonable charges, readiness to repossess people's homes, sacking of staff, huge bonuses still being paid, often to the very people who got them into such a mess in the first place... all are far from what I would expect from a "people's bank".
And I don't expect any significant changes, whichever party is in power.