How do we pay for it all?

The Chancellor has so far earmarked £200bn to bailout business and support individuals. This in in the context of total public expenditure approaching 900bn. There is a comparison with the bailout of the banking system in 2008. I think there is also one with the  two world wars where we paid whatever was needed, to quote the then Chancellor Lloyd George in WW1. We met the cost by increased taxation and borrowing. I explore this further in my blog piece on the comparisons with 1914-18 and 1939-45.
There is a difference. We are now paying people not to work, rather than work in the armed services or in the manufacture of war materiel. It is thus less wasteful. We are not consuming millions of tons of iron and steel in making tanks, ships and aircraft, or brass and explosives in makIng shells..

There remains the question of just how it will be paid for and Philip Inman offers some fascinating thoughts in The Observer. He dismisses yet more austerity and looks toward taxation. Raising taxes on individuals will reduce the amount they can spend and so further depress the economy. He adds this, which to me would seem to be key  :

“Unless, that is, the taxes are applied to households that save more than they spend, or target wealth. This is desirable, though unlikely, even from a free-thinking chancellor. Sunak is still a Tory, after all, and unlikely to sanction any attacks on core constituencies such as wealthy and older voters.”

Military historian and former editor of the Daily Telegraph, Max Hastings, said on Radio 4 that his (our) generation have been extraordinarily lucky. We should put our hands in our pockets rather than leaving it to younger and future generations.

It takes a virus for us to come clean on the shape of the economy

In 1914 government was worried that the war would lead to unemployment. In the event the whole nation came together to produce the munitions the army needed.

In 1939, all parts of British industry met the varied and massive demands of the armed forces. 

In 2020 the economy is largely based on services and, with the coming of Covid-19, consumers are deciding that they don’t need those services and the government is advising against social contact on which many services are based. We therefore face unemployment rather than people working at full tilt. This is totally  different. In parallel with the domestic service economy, there is an economy based on the consumption of largely imported products with deliberately short lives to encourage repeat purchasing.  Will it expose the 21st century economy as a con, or can we return to an economy where we each serve each other but without the manic need for never ending consumption?

The crisis is offering an insight into the actual shape of the economy. In this article in The Guardian, Richard Partington underlines the massive significance of the hospitality industry ‘Britain’s hospitality industry contributes more than £120bn a year to the economy and is worth more than the automotive, pharmaceuticals and aeronautics industries combined. More than 3.2 million people work in pubs, restaurants and other outlets, making it the third-largest sector for employment. A further 2.8 million work in the wider supply chain. In an economy no longer dependent on people making things, we are dependent upon them buying services. When they are told not to, the knock on is dreadful. I have done some analysis of the statistics 

Book Reviews

I was speaking about this year's Lincoln Book Festival and the great authors we have lined up. It made me think as my interviewer asked me about the book I enjoy. In 2008 I wrote a number of book reviews when I was studying for my MA in Professional Writing and I posted them on the blog I now use for my military books. I have now moved them, and subsequent reviews, to this more general blog.
I was struck by two books in particular: Engelby by Sebastian Faulkes, which I thought then and still think was masterly, but also Revolutionary Road. There are already some later reviews on this blog and I plan to write some more reviews in the future. At the end of this blog I have placed links to some of those reviews now over ten years old. Some a very short, and some rough and ready; some perhaps shed light. One is on Middlemarch, which is very brief, and I am intrigued by its link to my own book on William Smith Williams who recognised the genius of Charlotte Bronte. He was friends with George Lewes the partner of George Eliot whose portrait hung on William's office wall.
Here are those links:
Engelby
Revolutionary Road
Middlemarch
In Cold Blood
Notes from an Exhibition
Ordinary Thunderstorms

Concentrated wealth is bad for an economy

The concentration of wealth in the hands of the few is a drag on any economy. Such wealth is saved in the form of nonproductive assets. In contrast, wealth more widely distributed is circulated within the economy to the benefit of most if not quite all.

Quite why I had seen this as a 21st century phenomenon, I don’t really know. It was the case in 19th century Britain, but many of those with wealth then invested it in industry which in turn created employment and, to a degree, distributed wealth. 

In her masterly book, the Team of Rivals, Doris Kearny Goodwin tells of the Southern states of America before the abolition of slavery. ‘Slavery trapped a large portion of the Southern population, preventing upward mobility. Illiteracy rates were high, access to education difficult. While a small planter aristocracy grew rich from holdings in land and slaves, the static Southern economy did not support the creation of a sizeable middle class.’

In contrast of the Northern states, she sees a land ‘teaming with bustling, restless men and women who believed passionately in progress and equated it with growth and  change; the air was filled with the excitement of intellectual ferment and with schemes of entrepreneurs.’

I can’t help seeing a parallel with 21st century Britain, where we are told that employment is at an all time high but so much is part time and low paid, and that wealth is again concentrated in the hands of the few and invested in empty London penthouse apartments. 

Schools in poorer areas, for all the efforts of teachers, are not enabling upward mobility. Our public schools, great educational establishments though they are, are overwhelmingly the preserve of the wealthy whose children go on to Oxbridge and well paid jobs.

Are we so different from pre-civil war USA?