Monday, 26 January 2009

Maybe Not Broke, But Still Broken

Despite the hints of Mr.Cameron Britain's not going broke it seems. Or at least not unless everyone else does, according to the much quoted and seemingly sensible Flip-Chart Fairy Tales. So that's alright then.

Except, of course, it isn't alright. Countries don't actually go broke in the same way as companies. They don't get put into receivership and then get closed down/broken up/sold off to the highest bidder. Even if the IMF suits did arrive to take over the direction of the Treasury their first thought wouldn't be "...let's see if we can interest the Germans in annexing Middlesbrough 'cos they've got a chemical industry as well" or " ..hmm, there's no alternative but to simply close down Rotherham because no one in their right mind would want them as a colony..." or " ..I think we should turn down this proposed management buy-out from Guildford because they're not offering enough money - we'd get a better price flogging the town to the Saudis..."

What we're really talking about is the degree to which the current financial and economic crisis will impact on the county's political and financial autonomy and on the living standards of our people. Whether or not the IMF will arrive - as in Iceland - is a matter that those of us who know the depth of our own economic ignorance are best advised to leave to the experts. (You know, those people who did so well in warning us all this was coming over the horizon...).

But one thing seems clear to me: the 'national business model' is broken. That is to say our heavy dependence on the financial sector is unlikely to be restored to its previous degree of viability. We - and the States - simply haven't saved or invested enough compared to the emerging economies, and particularly China, as John Ross relentlessly points out. So we're going to get poorer and have less national political autonomy. This is the big point. We've got to find a different balance of things to do as a nation - and probably pay ourselves less for doing it. (Well, I say 'ourselves', but I really mean pay the boss class less ......)

The question of how much poorer and how much less political autonomy is wrapped up in the technical language of economists that so few of us really grasp. Is it to be a crisis of 'early nineties' scale? Or are we talking of something akin to the the post 1976 crisis that led to - and was made worse by - Mrs.Thatcher? Or even the Big One - a Depression, 1930s style ? I don't know and, to be frank, I don't really believe anyone else does either.


  1. Thanks for the link Charlie.

    In my post I wasn't trying to say that everything is OK. It clearly isn't. I'm just saying that talk of the country going bakrupt is hystericaland irresponsible scaremongering.

    That said, as you say, we are in for a rough ride and I agree that, if we are to get out of this, we will need to apply ourselves to something other than financial services.

    As for the boss class, I'd love to see them bear some of the pain but they've already buggered off with their payoffs and bonuses to sit out the recession in their tax havens.

  2. Thanks for dropping by Rick. I like your blog - even though you are clearly working in a different part of the forest to me* - and I thought the article I linked too was well judged in content and tone.

    Tax haven sanctuaries? Well, Richard Murphy might have a thing or too to suggest on that front.... and perhaps even Obama.

    * Given that one strength of your blog is in debunking such language, it seems appropriate to use a management cliche....

  3. "Different parts of the forest."

    That's a new one on me.

    If I can keep a straight face for long enough, I'll try and work it into the next meeting I'm at and see if anyone notices.

  4. I was once assured by a cynical friend that it is actually a sanitized version of
    " different parts of the 100 acre wood.." but that the original made it too clear to everyone else in the room that you really thought they playing the parts of Pooh, eeyore, piglet etc.