Tom Kilcourse – Balanced Societies

Tom Kilcourse Balanced Societies Live Encounters Magazine 2016

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Balanced Societies by Tom Kilcourse, Author. He has been a garage hand, a coal miner and a bus driver, before gaining a trade union scholarship to study at Ruskin College, Oxford. He later gained a State Scholarship to read economics at Hull University.

Emmanuel Macron, a French politician who is believed to be planning to stand in the next presidential election, is alleged to favour the reform of the welfare state in France. If that is true, he would be well advised to think again. During my lifetime I have witnessed the effects that ideologically driven governments can have on societies. The most startling examples perhaps were provided by the Soviet Union and communist China, in which private enterprise was virtually eliminated. The eventual outcome is now a matter of historical record, but what lessons have been drawn? In some western countries it appears that people have concluded that the state has little part to play in a country’s development. The pendulum has swung to an equally extreme position, and an equally fallacious one.

Today’s prevailing ideology suggests that the state has no significant role in the economy, other than the facilitation and promotion of private enterprise. Social and philosophical matters are ignored or subordinated to economics, by which they mean market forces.  These forces have been virtually deified, with consideration of other factors in life being thought largely irrational. The world is suddenly one, a global entity whose direction can be safely left to free market forces. Pride in, or love of, one’s nation or culture is identified as racism or xenophobia. The market alone merits the bended knee.

This distorted view of ‘economics’ is an Anglo-American construct, though it is no longer confined to the UK and USA. Adam Smith spoke only of ‘political-economy’ with good reason, a fact ignored or forgotten by many who use his name in justification of their policies. The political upheaval experienced in America and the UK has its roots in the economic philosophy prevailing in those two countries. Abandonment to market forces deprives people of a reasonable standard of living, but it does not deprive them of the vote. Belief that their vote will achieve nothing prevents many from using it, especially when it is clear that the two main parties differ only marginally, but that perception can change. We saw this in Britain when the referendum on EU membership was held. This presented people with an opportunity to influence events without having to choose between the two traditional parties of government. In America, the emergence of Donald Trump kick started a similar phenomenon.

In America and Britain alike the two main political parties have been committed to the same economic philosophy: free-market globalisation, the exclusive province of private enterprise. In my country we saw the privatisation of public services begin under the Conservative Prime minister, Margaret Thatcher, while a Labour government under Tony Blair began outsourcing those services for which it remained responsible. Those policies continue today, despite all the evidence that the change has not delivered the promised benefits. Pressure for these policies came not from the people, but from those businesses that were set to benefit financially, even when failing to deliver a better service.

A classic example has been the privatisation of British Rail under John Major’s government. That BR left room for improvement is evident, but the break-up of the system and the flogging off of the fragments was an example of political vandalism. It is no surprise that not a single country has followed Britain’s approach. The cost to successive governments has been enormous, while significant improvement has not been forthcoming. Indeed, we have clear evidence that the continuation of this policy is driven by dogma rather than effectiveness. When the East-coast main line was abandoned by two private businesses, the government handed the task of running it to publicly owned Directly Operated Railways. DOR operated the line efficiently, customer satisfaction was high, and at a significant profit with funds going to the Treasury. Nevertheless, when the time came to re-franchise the line, DOR was not allowed to bid, despite that performance. More than 60% of the people in Britain now support the re-nationalisation of the rail system, but it is almost certain that the wish will be ignored.

The privatisation of other services in Britain has also been largely disappointing. Although the most efficient bus service in the country is run by a municipality, we shall not see the road passenger transport industry returned to public ownership anytime soon. As for energy, British households and companies face the highest energy bills in western Europe, while many householders feel that the opportunity to switch providers offers little reward. In both transport and energy, a significant proportion of the service is owned by foreign organisations.

When Tony Blair came to power he changed the moderately socialist Labour Party to what became known as ‘Tory Light’ in pursuit of votes from ‘middle England’. His government began to outsource services that his predecessors had failed to privatise. Whitehall was suddenly the playground of consultants seeking ‘efficiency’. Given the mindset that private enterprise is invariably more efficient that public sector operation, the outcome was inevitable. We now have large areas of public service outsourced to privately owned companies, some of which have been created to take advantage of Blair’s policy. There have been many failures, yet companies behind those failures continue to tender for the operation of services. Despite some well publicised cock-ups, they continue to be considered for ever greater areas of service. Why?

In September, ‘Private Eye’, Britain’s satirical magazine, published a very revealing piece on the close relationship between some of those companies, the politicians that we elect and the civil servants we employ. The companies tendering for chunks of the public sector are in the habit of hiring both politicians and civil servants when they quit their day job. It seems to me to be a system inviting a conflict of interest, if not downright corruption.

This narrow pursuit of ‘economic’ efficiency, even when failing in its own terms, inevitably carries with it social and political consequences, in that order. The social consequences have been apparent for some time, most notably the commodification of labour, and people. The notion of public service with which the public sector was imbued, however imperfectly, has been largely destroyed. Publicly owned monopolies have given way to privately owned oligopolies motivated more by profit than by sense of service. Outsourced ‘services’ are run for profit gained by squeezing the labour ‘commodity’.

It is no coincidence that the notion of job security has largely disappeared as increasing numbers of people are employed on zero-hours contracts, or are listed as ‘self-employed’. We have chosen to pursue a myth of economic efficiency at the cost of social disintegration. We no longer have a sense of one society, or any sense of community. Rather, it is everyone for themselves, and damned the hindmost. These are the social consequences of our political stupidity.

The political consequences are just emerging. Conflict in the Labour Party between residual ‘new labourites’ and those who wish to return to a more socialist conviction. The Lib-Dems destroyed as a political force, and dangers of conflict in the Conservative Party.

France would be foolish to follow Britain’s example.

What we require is a political leadership that understands economics, and appreciates the importance of externalities. Having high cost energy supplies, roads choked with traffic because of low investment in improvements, etc. are negative externalities to companies operating in Britain. Economics, politics and society are separate entities only on campus. Elsewhere, isolated consideration makes sense to accountants, perhaps, but not to economists. We need leaders capable of taking a balanced view across the whole spectrum. This is why I would caution Monsieur Macron. Having lived in France for fifteen years, I can say that it is a much better balanced society than is Britain. Critics always point to the high unemployment level, but the economy is more diverse there and better balanced. In my view, there is also a better balance between economic and social considerations.

© Tom Kilcourse


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