Economic Prospects for 2017: Andrew Simms – New Economics Foundation

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As John Nightingale who sent the link says, this ‘reads well’: 

Each year the Financial Times conducts a survey of leading economists on the UK’s upcoming prospects. The New Weather Institute is part of that survey and predicts a bumpy ride. A lot of the FT material sits behind a paywall, so for interest here are the answers we gave to their questions (which are themselves interesting in terms of locating mainstream concerns) on issues ranging from economic growth, to Brexit, monetary and fiscal policy, inflation, immigration and, unavoidably, Donald Trump.

Highlights (full text on WM New Economics Group website):

It is time to stop measuring the health of the economy using orthodox economic growth measured by fluctuations in GDP as the primary indicator. By mistaking quantity for quality of economic activity, worse than telling us nothing it can be actively misleading. It tells us nothing about the quality of employment, the intelligence of infrastructure, the economy’s resilience, the environment’s health, or the life satisfaction of the population. As the United Nations Development Programme pointed out (as far back as 1996), you may have growth, but it might be variously jobless, voiceless (denying rights), ruthless (associated with high inequality), rootless (culturally dislocating in the way that fed Brexit, for example) or futureless (as now, based on unsustainable resource use) . . .

. . . tax breaks, subsidies and the way investment portfolios get managed means that money flows cheaply in fossil fuel infrastructure and operations. At the same time, necessary and successful emergent sectors like solar and other renewables can still struggle for affordable, patient capital. The privatisation and weakening of the mission of the Green Investment Bank is deeply concerning in this regard . . . prevalent economic uncertainties seem to be having the effect of putting everyone, the MPC included, on ‘watch’, and unlikely to do anything radically different in the ‘phony war’ period of approaching Brexit negotiations . . .

If anything, far from being downgraded by the Brexit debate, the economic importance of immigration to key UK sectors has been made more acutely obvious, ranging from higher education, to food, retail and a range of other service industries. Importantly, many of the drivers of population movement from inequality to conflict and environmental degradation show no sign of lessening and, if anything, growing worse.  The tone and promise of government policy seems mostly to affect the degree of xenophobia experienced by immigrants rather than significantly changing their numbers. With all these things in mind, I doubt trends in immigration will change much in 2017 and that this will buoy-up a UK economy facing a wide range of threats . . .

There is no reason in principle why QE cannot be used in a more intelligent and focused way. The UK is weighed-down with an aging, creaking, high-carbon infrastructure. The case for public investment as necessary to rebuild the foundations for a modern, clean and efficient economy to underpin our quality of life is overwhelming. The cost of money for conventional borrowing is cheap. And the decision by the Bank of England to expand its quantitative easing (QE) programme from £375 billion to £445 billion in the wake of Brexit, demonstrates that public money creation is also possible when the situation demands it. Up to date, QE has benefited the banks, and the holders of certain assets, with broader economic benefits being questionable. But, as Mark Carney has previously indicated, there is no reason in principle why it cannot be used in a more intelligent and focused way to aid the productive, low carbon economy. I and others have consistently argued that far more good could be done if the same basic mechanism was used, for example, to capitalise a much larger and more ambitious green investment bank via bond purchases. The work subsequently undertaken such as large scale energy efficiency retrofitting of the UK housing stock and the roll out of renewable energy would generate good quality local employment and better prepare Britain for the future. There is no sign yet that the government intend to seize this opportunity and rather too many signs that any borrowing that is undertaken will not be put to as good use . . .

Combined with the sentiments unleashed by Brexit, and the UK government’s active new embrace of industrial strategy, it is possible that the economic pendulum may swing back some degrees from globalisation toward localisation. Done in a purely autarchic way this might be negative. Done with respect to international cooperation and obligations, and to help build a more environmentally sustainable economy, it could snatch success from the jaws of chaotic self-destruction.

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Post-Brexit we need to build an economy for the many

‘Home-grown solutions’

neil mcinroyYesterday, Ann (West Midlands New Economics Group) sent a link to an article by Neil McInroy (right), chief executive of the Centre for Local Economic Strategies. CLES focusses on economic development and regeneration, ‘promoting and implementing new progressive economic activities which create positive environmental, health and social outcomes’.

It was recently published in the New Start magazine under the title given and a few highlights are offered here:

“Framed by austerity, the economic reality behind many voters choosing Brexit was a future of little promise – insecure jobs, insecure public provision, insecure futures. As a result, many leave voters felt that they had little or nothing to lose. On the back of an economic recession eight years ago, insecurity and a social recession has been built . . .

“Maybe the game is up now? Brexit may now consume the energies of Whitehall and the treasury. The rhetoric and promise of more devolution from Whitehall may at best slow, if not stop. We can hope for more and deeper devolution, but I suspect this is a forlorn hope. More importantly, there is a pressing task in reducing the existing pain and hardship and addressing deteriorating community relations and cohesion.

“In this, the local economic development community, local politicians and potential Metro mayoral candidates have a responsibility. They must strive to protect and build progressive economic and social policy. They must look toward home-grown solutions, and radical innovations across public, social and commercial sectors. They must adopt a pro-social approach to local economic development. This is less about treasury-backed local agglomeration policies, boomgoggling promises and trickle down. This is about stimulating local demand, social investment, addressing city-wide inequalities and the economics of social cohesion. Progressive local solutions are out there. We need to be bold in accelerating them.

“I would hope the newly-formed commission on inclusive growth . . . (will) use its influence to broaden its narrow growth-within-austerity remit, and explore how to build a truly democratic, inclusive and resilient economy within fairly-funded public services.

“The Brexit vote was in part prompted by a sense that people felt abandoned by the economy, and the state. This has created a new local economic and political reality, and with it come great dangers. As such we must avoid deepening the social recession and accelerating the divides between the haves and the have-nots. It is imperative that we now build an economy for the many and not just the few”.

Read the whole article here: http://newstartmag.co.uk/your-blogs/post-brexit-need-economy-many/

Localism: a rescue plan for British democracy

A notable omission from Localise West Midlands’ extensive range of articles about, or with references to localism, is a review of a book by Simon Jenkins: Big Bang Localism: a rescue plan for British democracy.

big bang localismIn this book he attributes the decline in British voter interest and participation to the over-centralisation of power in Whitehall, ‘one of the most centralised governments in the West’. As turnouts in elections are dwindling, he notes, many are turning to ad hoc pressure groups and direct action.

Centralisation has not worked well, Jenkins believes; levels of satisfaction with health care, education and policing are lower in Britain than almost anywhere in the developed world. He notes a change in public opinion which once, on the whole, believed that the British government works well and is now shifting to a belief that it needs improving, citing contemporary YouGov polls showing a rise in discontent with public services and health care

Twelve years later the need to heed Jenkins’ pre Corbyn message has never been greater as the established on the political left and right frantically attempt to discredit and unseat a democratically elected party leader.

He noted that Britain’s local councillors are outnumbered three-to-one by 60,000 unelected people serving on roughly 5,200 local quangos, managing various functions that may be local but are no longer under local democratic control. Examples include health service, housing, prisons, training and economic development.

Jenkins points out that, across Europe, countries have spent the past two decades refreshing their local democracy – even traditionally centralised countries like France have devolved. The USA operates the most decentralised system of government and in these countries, public services are delivered more locally than in Britain – and win greater public trust as a result.

He sets out a programme for a ‘democratic Big Bang’, to return power to the local level, including control over health, police and education services, to re-enfranchise the British people:

Counties and cities should run:

  • health services
  • secondary schools
  • policing
  • the prison and probation services
  • youth employment and training
  • planning.

Municipalities and parishes should run whatever gives a community its pride and visual character:

  • primary schools
  • old people’s homes
  • nurseries and day-care centres
  • clinics and surgeries
  • parks and sports centres.

Local services should mostly be funded by local taxation, which should be raised from a combination of:

  • residential property tax
  • business rates
  • local income tax.

Jenkins proposes that central government funding of local services should take the form of a block grant, determined by the Local Democracy Commissioner and paid to local authorities with no strings attached.

The “enemies of localism” are vested interests and the national media, but devolution in Scotland and Wales shows that people prefer decisions about local services to be made locally. Simon Jenkins recommends that the Big Bang should start with a “bonfire of central controls” and an end to targets and official league tables, adding “Big Bang Localism is the answer to the failure of Britain’s public services and the loss of faith in British democracy”.

Update: International Alliance for Localisation

Early in December this blog reported that Local Futures has gathered a cross-cultural, North-South network of thinkers, activists and NGOs – the International Alliance for Localization (IAL). It already has members from over 30 countries and Localise West Midlands is one of the member organisations.

isec report coverIn the wake of the Paris climate talks, Local Futures has released a 16 page action paper entitled Climate Change or System Change? (left).

It argues that globalization – the deregulation of trade and finance through an ongoing series of “free trade” treaties – is the driving force behind climate change.

The climate problem can only be tackled effectively if governments stop subsidising globalisation, and begin pursuing a localisation agenda instead.

A recording of Local Futures’ first webinar, with community economist Michael Shuman and Helena Norberg is now uploaded on YouTube.

Climate Change or System Change? will be the focus of the second international webinar in January, as part of the Global to Local webinar series. More information will follow soon.

Contact via http://www.localfutures.org/contact-us/

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See in more detail: https://britain2020.wordpress.com/2016/01/03/localisation-a-systemic-solution-multiplier-simultaneously-lowering-co2-emissions-restoring-democracy-and-providing-secure-livelihoods-part-1/

Brief extracts from the 16 page action paper entitled Climate Change or System Change? – may be seen here: https://britain2020.wordpress.com/localisation-systemic-solution-multiplier-part-2/

 

Transition town focus

A transition town is a grassroots community project that seeks to build resilience in the face of peak oil, climate destruction and economic instability. Local projects are usually based on the model’s 12 ‘ingredients’. The first initiative to use the name was Transition Town Totnes, founded in 2006.

totnes

Between late 2006 and early 2007 the Transition Network was founded as a UK charity by permaculture educator Rob Hopkins. It trains and supports people involved with Transition initiatives, disseminates the concepts of the transition model and assists the grassroots initiatives to network with one another.

local money coverSome Transition Towns engage with ‘fiscal localism’ – see Dr Peter North’s book, ’Local Money’, which ends by setting out how money that stays in the community can be created – building loyalty between consumers and local traders rather than losing wealth to the corporate chain stores. It charts the development of the first Transition currencies, the Totnes, Lewes, Stroud and Brixton Pounds. Note a sister post about the more recent Bristol pound. It also describes how alternative currencies could work with local banks and credit unions to strengthen the local economy, supporting the local production of necessities such as food and energy while helping to reduce the community’s carbon emissions.

The book draws on the long history of local currencies, from Local Exchange Trading Schemes and ‘time banks’ to paper currencies such as BerkShares, Ithaca ‘Hours’ and German regional currencies, which circulate between local businesses as an alternative to their losing trade to the ‘big box’ retailers.

In 2012 on this site we read about Herefordshire Transition Network’s intention is to develop ‘a thriving, resilient Herefordshire economy’ capable of meeting ‘the challenges of climate change, energy security and economic uncertainty’. The network includes a range of people and organisations across the country, many of whom were represented at a meeting attended by LWM’s Jon Stevens.

State of play now?

transition stourbridge header

Nearer, see news from Stourbridge: http://transitionstourbridge.co.uk/about/  

For news of transition projects around the country, go to http://www.transitionnetwork.org/ and for a list of transition initiatives worldwide, go to https://www.transitionnetwork.org/initiatives

Human-scale, decentralised technologies

small is beautiful latest edition coverIn Lean Logic, the late David Fleming recalls that in in 1995, the Times Literary Supplement placed a book by E.F. Schumacher, the chief economic advisor to the UK Coal Board for two post war decades, among the 100 most influential books published since World War II. Small Is Beautiful: a study of economics as if people mattered has been translated into many languages.

This internationally influential economic thinker, statistician and economist, who advocated human-scale, decentralised and appropriate technologies, would have heartily agreed with Karen Leach’s observation that the global drive for the mega and mega-complex solution is part of the centralisation drive – where decision-makers can’t see the collective potential of small scale technology, now often called ‘appropriate technology’ (AT).

Fleming records that Schumacher deplored the “countless ‘experts’ who cannot conceive the possibility of any industrial production unless all the paraphernalia of the Western way of life are provided in advance. The ‘basis of everything’, they say, is of course electricity, steel, cement, near-perfect organisation, sophisticated accountancy. . . In blind pursuit of [a] highly questionable utopia, these ‘experts’ tend to neglect everything that is realistically possible“.

 Locally designed using local materials

AT is designed to fit the circumstances of the people who are to use it; people who need a solution which is cheap to build, small-scale, made from local materials, easy to operate, simple to maintain and energy-efficient is often. It does not start a sequence of pollution, with clean-up commitments, repairs and costs extending into the future. We suggest example:

  • micro-hydro turbines, long-lasting and low-maintenance provide enough power for a number of houses or a small community. The nearest example is probably the Beeston Weir project in the East Midlands. Practical Action can offer far cheaper turbines than commercial products in this country;
  • off-grid living can include solar which generates electricity for immediate use, with no grid connection; solar panels convert sunlight to energy which charges the battery built into lights, computers and refrigerators;
  • there are several reed beds in the region used for the water treatment of a single house or a small neighbourhood – water is cleaned by micro-organisms living on the root system; probably the nearest small-scale example is at Ryton Organic Garden near Coventry.
  • straw-bale construction, probably the nearest regional example is the next door neighbour of Dragon Orchard in Herefordshire;
  • see also the simple-to-build, cost-effective low environmental impact office in Moseley.

LWM’s Mission statement

Localise West Midlands is a not-for-profit organisation which exists to promote the environmental, social and economic benefits of:

  • Local trading, using local businesses, materials and supply chains
  • Linking local needs to local resources
  • Development of community and local capacity
  • Decentralisation of appropriate democratic and economic power
  • Provision of services tailored to meet local needs.

This localisation approach makes economic development and government systems more sensitive to local autonomy, culture, wellbeing and the responsible use of finite resources, and is growing in popularity with people and organisations all over the world.

For more information about some of these technologies, contact the Renewable Energy Centre in Kenilworth. See also Localise West Midlands Scoping Study: Decentralised Energy for Birmingham (pdf)

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A lesson for Britain: Brazil promotes food security and local food procurement, strengthening family farming

graziano da silvaVested interests replacing the now defunct Flying Matters, a lobby group funded by the aviation industry, vigorously defend the profitable import of food from countries with malnourished people. A better way forward, socially, economically and environmentally is offered by the Director General of the UN’s Food and Agriculture Organization, Jose Graziano da Silva (Extraordinary Minister for Food Security), one of the champions of the Zero Hunger project in Brazil, which raised 28 million people above the poverty line during the 8 years of the Lula administration.

Small-scale family farmers, who accounted for a significant percentage of the agriculture/livestock production in Brazil particularly of staple food items, were usually excluded from agricultural policy discussions. They mobilised and a national program, the Pronaf, was created in 1995, offering the first credit line specifically designed for family farming in Brazil.

Local food procurement, a success in Brazil today

school meal brazilA School Meal Law (Pnae) was passed, requiring 30% of the public food purchases for school meals to be made locally from family farmers. It strengthened local and regional markets, fostered the circulation of profits in the region, recovered regional food habits and promoted the establishment of associations or cooperatives, which play an instrumental role in organizing food production and protecting the economy of the poorest sectors of the population.

Da Silva commented: “This ensures stable markets for farmers and at the same time ensures culturally-acceptable, nutritious and fresh meals for school-going children.

zero hunger coverA Family Agriculture Food Acquisition Program was set up and generates income for poor family farmers (household income not exceeding R$ 110,000) by selling their surplus food produce to the federal government and encouraging the creation or development of marketing channels for family farming products. It also provided a price guarantee tool for part of their produce.

A range of initiatives, included crop insurance and special credit lines were created for young people, women, organic crops, working capital and shares in cooperatives, agroindustrial projects, rural tourism, environmental recovery and semiarid regions.

The farmers’ organizations financed and set up stocks of products of the current harvest, strengthening food security systems and keeping food products in their localities, allowing any surplus to be sold when prices are more rewarding for farmers. Read more here and in the book (right) co-authored by Dr da Silva.

Several countries in Latin America, the Caribbean and Africa are adopting similar approaches.

modi da silva agric

 Dr. Jose Graziano da Silva recently met India’s Prime Minister Narendra Modi in New Delhi and discussed India’s National Food Security Mission. Both agreed that food security comes first and national governments must have the flexibility to put in place suitable mechanisms to achieve it. Modi sought the FAO’s cooperation in designing a campaign for women which would highlight ways to improve families’ nutritional value and food habits. They discussed ways of linking family farming production to school meal programmes by creating local food procurement programmes and increasing the nutritional value of the mid-day meal scheme for school children.

Meanwhile, British farmers are encouraged by their unions and government agencies to produce more food for export, though prices then inevitably fall as supply rises, and the global market consistently rewards only the speculator or the unproductive middleman.

Has Secretary of State (Elizabeth Truss) visited the LWM site?

A Lancashire farmer sends news of a ministerial statement made by the new Secretary of State for Environment, Food and Rural Affairs, Elizabeth Truss.  On 21st July she launched “A Plan for Public Procurement of Food and Catering Services”, which includes an emphasis on Government procurement opening up the public sector market to small and local businesses:

truss plan local procurement“It will allow more locally-sourced food to be served in our public sector organisations, which means more money into the local economy. It is also good for the environment, as the approach supports UK farm production standards and measures to reduce food waste. It will encourage healthier eating, foster a great connection with food, and celebrate local food”.

LWM’s MCED report (links via Mainstreaming Community Economic Development) includes a section on public procurement – ‘Realising the potential of local economic power’, which refers to the consortium approach used in Italy which permits local SMEs and social enterprises to overcome minimum turnover requirements etc in order to bid for major contracts while retaining local identities and maximising local benefits.

It also mentions a Buy for Good non-profit scheme being set up in the city, which awards contracts that “have a positive impact on the local economy’. Does this relate to Birmingham’s Business Charter for Social Responsibility, awarded by the city council?

Follow the link to read about the Charter’s emphasis on creating employment and training opportunities, buying locally when commissioning and contracting, protecting the environment, minimising waste and energy and employing the highest ethical standards in their own operations and those within their supply chain.

The ministerial statement may be read in full here: http://www.theyworkforyou.com/wms/?id=2014-07-21a.107.0

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Relocalisation: an under reported issue in the French elections

 

In the French election, left wing socialist Jean-Luc Melenchon has stressed the need to relocalise Europe’s economy and to do so by limiting imports.

This has brought Melenchon increased votes in a country where 70% of the population favour some form of protection for domestic production from cheaper, lower waged competitors.

Colin guardian picThis French election trend prompts a call for a debate about the need for ‘progressive protectionism’ in the UK and Europe-wide

LWM’s co-founder Colin Hines explains that progressive protectionism rejects the call for open markets and the need to be internationally competitive.

Acceptance of these edicts as inevitable by the three main political parties has consequences:

  • it drives down tax rates,
  • worsens social and environmental conditions
  • kills local jobs
  • and reduces small business opportunities.

Whistling in the dark to keep up the nation’s economic spirits: promising hi tech export-led growth in an era of rising Asian dominance is the last colonial delusion

The alternative is to propose a set of practical measures for protecting and re-diversifying local economies by limiting what goods they let in and what funds they choose to enter or leave the country.

In the process they will wean themselves off of their export dependence. This will allow space for domestic funding and business to meet most of the needs of the majority in society.

Proposing policies that would result in the grounding of manufacturing, money and services here in the UK would enable politicians and activists to call the bluff of relocation-threatening big business and finance, who at present have the whip hand over all politicians who support open markets.

This is the only way to tackle the economic and environmental crises, return local control of the economy to citizens and provide a sense of security and hope for their future. If implemented it could play a crucial role in seeing off the rise of the extreme right, as this invariably flourishes when the sense of insecurity within the majority worsens.

 

Forthcoming book
Forthcoming book

Progressive protectionism can tackle this insecurity far more effectively than any of the policies offered – at present – by parties of any political hue

The money markets would ferociously destabilise the challenge posed to their present dominance of the world economy by introducing progressive protectionism in one country alone. Europe is facing huge threats from the forces of international finance, yet the continent would be a powerful enough bloc to implement a programme of progressive protectionism, particularly if the politically active started to campaign for it.

The time to start the debate is now.

Abridged from the Progressive protectionism website, written by Colin Hines. See another article on the subject here.

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