18/09/2021 taxresearch.org.uk  5 min 🇬🇧 #195303

The economy we had has gone: the systems that underpinned it are no longer sustainable

As I suggested I would be, I have been reflecting this week. Some has been personal reflection. Empty nesting without even having a dog around the house will take some getting used to.

I have also been considering work that needs doing. I seem to have a long list of issues that I would love to give attention to.

Maybe more important was the time to think about the bigger picture. Much concerns me here.

I hardly need to provide evidence of the growing chaos in our economy.

Food shortages are very apparent, and the logistics issues that are creating that problem appear to be getting worse, and not better.

We have short term price pressure because of Brexit, Covid and climate change, but when iron ore prices can fall by 20% in a week, as they gave done in the last week, this can be seen as the price of disrupted markets and not the consequence of any underlying monetary trend that can be tackled by central banks.

Then we have chaos on Covid. The Westminster government's supposed winter plan for this refused to accept any responsibility for containment of this disease, passing the whole burden on to individuals. No effective protection has been provided in schools or universities. Noises are now being made about the cost of testing becoming an individual responsibility. Most legal measures to tackle the pandemic are being relaxed. It is as if we must go through another winter of excess deaths just to prove that the lessons of last winter have not been learned, or are being deliberately ignored.

The government's response to the economy is as confused. They are also open all on those on lower pay.

And whilst there remain reasonable concerns that no one still has much idea what the Labour Party is proposing the reality is that the government is very much more confused with no one having a clue what 'Build Back Better' or 'Levelling Up' actually means, including (I am sure) all those in new ministerial offices this week.

The question is, what to make of all this? My suggestion is that what we might be witnessing is the breakdown in systems. Much of this is deliberate. Brexit was chosen, after all. So too were the politics of austerity that laid the foundation for the crises in the NHS, social care, education, justice and other systems over the last decade, all of which are teetering on collapse. The attitude, all too apparent in Westminster and in other populist governments, that this crisis has nothing to do with anything government can do, is also chosen. But, put indifference, lacked of preparedness, unplanned stress from both chosen and externally imposed change, and a lack of direction together and the recipe for chaos is created.

It has been true for a some time that society has been increasingly finely tuned to just about deliver, with some degree of failure having been tacitly accepted, at great cost to those who have suffered as a result. What has been eliminated from the economy that has underpinned that society has been slack. In the pursuit of growth there has been a desire to increase productivity. Every margin possible has been eliminated as a result. But as anyone who knows anything about design of just about any system knows, you can only do that for so long.

There were undoubtedly some gains to be made in society from the situation we were in during the 1970s, when tolerances were too high. But the reality is that the relentless pursuit of financial gains has now driven society to the polar opposite position: there is now almost no slack at all. Margins for error have disappeared. At the same time the pressure on systems - and more importantly, the people working those systems - has grown so significantly that the risk of error and outright failure has grown. That's not least because those working those systems can no longer face the stress of doing so.

The biggest stress to the NHS is not a shortage of beds or blood sample bottles this winter, although both appear to be acute; it is instead that those working in the NHS will simply not be able to stand the pressure of another winter and will themselves be sick, or simply leave.

The same is true in education. And care. And social services. And the justice system. And so on, and on.

When the humanity is taken out of the demands made on people systems can collapse.

When people can no longer see why they are being asked to deliver what is demanded of them by a government that so obviously has no plans at all, but which is more than willing to financially punish many of those from whom demand is made, then the likelihood of failure grows.

That is where we are. And it's not just in public services, of course. Truck drivers tell the same story, for example. When employers have put almost impossible demands on them, and ceased to care about their wellbeing, those who can have left that occupation. Just in time is failing as a result, unsurprisingly.

Worryingly, it is happening when there is great need. The Covid crisis is far from over. The stresses from Brexit have still hardly begun, and the political ramifications are only going to grow. Rishi Sunak and the Treasury, probably backed by the Treasury, are intent on imposing austerity. And then there is climate change to address. The tipping points have all arrived, seemingly simultaneously.

Of course, it could just be said that this is the inevitable outcome of neoliberalism. If financialisation is the model then leveraging by gearing business and downgrading government until, and beyond, breaking point in search of returns for a few is what was always going to happen, and that is where we have arrived. But whilst I think that is the case that provides little comfort, because this is not some academic exercise. This is a matter of having to live through this.

What is the way forward? With this post already 1,000 words long this is not the moment to address that in detail. But there is one over-riding message, which is that nothing will change until it is accepted that what we have had is broken, irreparably. Whilst we hanker for what was, and the idea that we can 'get back to normal' remains a dominant narrative, we remain in trouble.

What was has, I rather strongly suspect, gone. What we have to do now is build what comes next. It does not matter whether we want to or not. We have no option. The way we were was not sustainable in any sense, whether politically, economically or socially. When that is recognised we can move forward. My big concern is that I doubt that we are there yet. At the same time, I also think that awareness is coming. And that's my basis for hope.