The Media & Mrs May’s Manifesto Mayhem

It is already apparent the BBC are going soft on the Conservative/Mrs May manifesto.

  • No in depth questioning on what the level of means testing for winter fuel allowance.
  • No in depth grilling on why they’ve basically ditched the Dillnot report on social care funding.
  • No in depth attack over seven years of failed immigration pledges.
  • No mocking of the immigration job tax for those needing employees outside the EU (coz we were supposed to be welcoming these!)
  • No constant questioning as to why students are being included in immigration cap no numbers and promises
  • no dissenting voices over the cuts to pensions.
  • hardly a whimper about cutting free infant lunches.

And!

  • nothing about there being not one single costing in the manifesto whatsoever!!!

Nope. Instead, were hearing a lot about “difficult decisions”, “balancing acts”, “keeping brexit voters happy”, “being bold” and so on.

A little different to how the reporting and interviewing around Labour’s manifesto was conducted.

But then, I’m told I’m just a paranoid lefty for expecting even handed and impartiality from the BBC and media.

The Labour Manifesto and the Myth of “Free Stuff”

I keep hearing and seeing  people saying “Labour just want to give everyone free stuff.” Let’s briefly take a look at this.

• Good Education for all benefits all of us and leads to greater prosperity for everyone;

• well funded health ensure that all of us benefit, being happier, more productive, and living more fulfilled lives. That benefits everyone;

• fairer benefits mean that if sickness, disability and unemployment should come, no one will be left destitute. We all benefit;

• higher minimum wage means more money to spend in the economy. We all benefit by this increase. 100 years ago even Henry Ford knew that if workers are paid more, they buy more of your goods. More jobs;

• mass machine automation is coming: we need to rethink how we structure work, payment and society. These will be in so called middle class jobs too, disrupting everything we know about how work, earnings, profit and reward are understood;

• water companies being owned by the regions means the profits get ploughed straight back in to those communities. Everyone benefits.

And so on.

The phrase “Free stuff” is utter nonsensical term. Everyone pays in one form of another, everyone benefits. If “free stuff” were even a true statement, then how would one describe the situation in Norway, Iceland, Denmark, Sweden, Germany and so on, where tax is higher, public services and ownership so much better provided for, and quality of life, productivity, and satisfaction is very high.

What a basket case.

Labour will enact a Robin Hood Tax on financial transactions

Modern “neoliberal” capitalism requires constantly increasing velocity and atomisation of transactions. A #robinhoodtax at 0.5% is nominal and fair. Capital cannot remain stateless and boarderless.

Consider what VAT is: a regressive tax on the transaction of purchasing goods set at 20% (with exceptions). 0.5% on financial transactions is fair and reasonable, will raise £26bn.

There is already a transaction tax, it’s just the proceeds for this go to the big financial institutions. Every transaction has a cost. That’s how modern capitalism works. 0.5% per transaction is effectively a micro payment. Remember these banks make hundreds of billions, and caused a world wide financial crash. It’s about time we stopped being so deferential to them and make capital contribute to the security of the societies they effectively leech off.

Workers, wealth and tax

Today the Telegraph called those in £80,000 and above “workers.”

Now, whilst many of them do work, the telegraph aren’t trying to invoke any sense of that understanding. What they are doing is a typical right wing “reframing” of language. The “working class” and “working people” has always been understood to include mainly blue collar and lower paid jobs, where as someone on £80k or above would be very comfortably “middle class” and likely to be in mainly high management, directorships, and successfully “entertainment” roles.

The reality is that this group of people have received thousands of pounds in tax cuts over the last 6 years, AND seen their income rise whilst the rest of the population has seen their income frozen and effectively going backwards, losing 10% of their value in the same time.

Taxation is not just about paying for things, it’s also a significant way of balancing an economy, redistributing money and wealth, and by doing so actually works to the benefit of the whole of society.

My First Single Release on Music Streaming Services & For Sale

Newstead Abbey – March for Brass Band

A commission from the City of Nottingham Transport Band for their CD recording ‘Music from the City of Legends’. Now available on all online music streaming and purchasing services, including Amazon Digital Music, iTunes, Spotify, Google Music, and more.

Steel Crises & Tariffs: What is the economic argument?

The ‘conventional’ view of globalisation and low tariffs, is an  assumptive model based on a Ricardian* view of trade and globalisation.

However things are much less clear cut than conventional view admits. In the end, economic theory can prove nothing about whether free trade or some form of restricted trade is best from the point of view of the people living in a particular country. It can provide a framework to help to understand the consequences of alternative policies and to identify who is likely to experience gains and losses. Other ‘non-economic’ considerations may come into play as well, such as national autonomy.

Furthermore, the conventional view slides over a number of important issues concerning globalisation (and anti tariffs). Pervasive externality and informational problems are compounded by inequalities in power, particularly at the national level.

The analysis of tariff removal compares two equilibrium positions. The implicit assumption is that the economy moves instantly and costlessly from one equilibrium to the other. This is not just a simplification for theory purposes, it is common in empirical studies of changes in trade policy. These typically simulate what the economy would look like after a change in trade policy, but only consider the new equilibrium when all adjustments have taken  place. However, we all know that in reality, the economy does not hop from one state to another; and in the mean time there is considerable unemployment which should not be ignore in terms of economic costs.

The economist Driskill wrote that in their enthusiasm for free trade, exponents of its benefits sometimes neglect to note that when tariffs are removed, the relative price of exportable goods must rise. People buying those goods will see their consumer surplus shrink. Whether any particular consumer is better off or worse off depends on the balance between the importable and exportable goods they buy.

Lowering protection against imports makes some people in society worse off, while others become better off. It’s not a clear cut zero sum game. We’re in danger of ignoring the welfare of our workers, the economic impact of letting steel fail, the desperate need to get our balance of payments under control and the tacit implicit cooperation or approval of China’s actions subsidising their steel making by up to 75% and flooding the world market by accepting that the low price is a natural price and a raised price (meaning also the need for firms to look closer to home for steel instead of internationally) would be “harmful”.

*The modern version of the Ricardian model assumes that there are two countries producing two goods using one factor of production, usually labour. The model is a general equilibrium model in which all markets (i.e., goods and factors) are perfectly competitive.

More information on Ricardian Model Assumptions: http://catalog.flatworldknowledge.com/bookhub/reader/28?e=fwk-61960-ch02_s03

Did UK manufacturing exports halve under Labour?

Part of an ongoing “Economic Myths Debunked” series.

I am going to be as brief as possible and use mostly diagrams. All data is from the Office of National Statistics, an independent body operating at arm’s length from Government as a non-ministerial department, directly accountable to Parliament.

UK Balance of Payments under Labour

Balance-of-Trade-in-Goods- under labourThe graph above shows that the UK balance of payments as a proportion of GDP decreasing significantly over the Labour years (red bars), from just over minus three per cent to just under minus seven per cent.  It appears that imports exceeded exports by over twice as much by 2010.

Here is some of that data in monetary terms, and it seems to look even worse:

UK balance of payments in monetary terms

Below is the rest of the balances of payments dataset going back to 1950. The big spike down is 1973 (OPEC 1973 oil crisis) and the big spike up is 1980 (the 1970s North Sea oil discovery exports thanks to 1979 oil crisis) .

Balance-of-Trade-in-Goods-II

I will leave interpretation up to the reader of how the long view of UK exports looks according to the data.

US Balance of Payments

However, the UK was not alone in seeing balance of payments fall over a similar period. Here is the US balance of payments from 1960 as a percentage of their GDP.

US dollar balance of payments

 

The chart bears perhaps a striking resemblance to the UK balance of payments.

UK exports to the EU

UK exports to EU and non EU

The graph shows a stead increase in the value of exports to both EU and Non-EU counties over the Labour years. Not an astonishing amount, but an increase of between 60 and 80 per cent.

UK Manufacturing Output

manufacturing-growth-96-07-500x407

The chart shows that manufacturing output in the UK shrank in six out of the 13 of the Labour years. However, one must take in to account the world wide recession which started after the financial crash in the autumn of 2008.

One must also look at a longer range dataset which goes back from 2012 to 1990 and shows that over all during the 90s manufacturing output had risen to a peak in 200, and effectively stabilised over the 00s until the financial crash. It still hasn’t recovered much above 1990 levels.

industrial-production-index-1990-2012-500x369

UK Imports

pngbricmports_tcm77-326387

The 00s saw the rise of the so-called BRIC economies and the graph above shows, overall, the BRIC countries’ share of total UK imports has increased from 3.3% to 11.6% over the last 15 years (ONS).

However, at an aggregate level, UK exports to the BRIC countries as a percentage of total UK exports have increased from 2.6% to 9.1% over the last 15 years, 6.0 percentage points of this rise having occurred since 2006.

pngbricmports_tcm77-326387

UK balance of trade with China

It is worth looking a little closer at the balance of trade with China over the last 15 years to get a real perspective of how the rise of low cost goods from a rapidly growing economy has effected the UK’s manufacturing industries. From 1997 to 2010, the UK’s monthly trade deficit with China grew from around £100m to an astonishing £2,250m.

uk-bop-balance-of-trade-china-monthly-ons

Summary

The evidence seems to initially suggest that manufacturing exports declined rapidly during the Labour years 1997-2000. However, that is a misleading picture when one takes into account the value of exports in total.

Whilst it is true that manufacturing in the UK saw a small decline in the 00s, the biggest reason for decline was the global financial crash of 2008 which saw output collapse around most of the ‘developed’ world. This was balanced by the BRIC countries whom managed to weather this decline, but likewise our exports to those nations remained stable too from 2008 onwards.

Conclusion

Did UK manufacturing exports halve under Labour? 

On balance it would seem that this is unproven: our exports did rise a little, but our imports rose dramatically.