On radio the other day I was treated to a clear explanation of ConDem economic theory. (I can't remember the name of the speaker, who I think was an economist). He said "It's only the private sector that creates wealth". i.e. the public sector doesn't; the public sector consumes wealth. So in order to get us out of the enormous hole in the country's wealth that, er, the private sector has created, we've got to swing an axe through the public sector and stop it consuming so much.
The private sector, you see, is good (according to the ConDems) because it produces all the things that people want (like cars and gadgets and entertainment) and is subject to the honest discipline of the market which makes sure that companies make the maximum profit for their shareholders who can award enormous bonuses to the bosses (for them to bank offshore to avoid paying taxes) whilst at the same time keeping prices competitive by employing as few people in this country as they possibly can and paying producers the least they can get away with.
The public sector is bad (say the ConDems) because it takes people's money away against their will to produce all the things they don't want (like health care and social services, roads infrastructure, schools, rubbish collection, oh - and benefits for all the people the private sector doesn't feel it needs any more). And of course the public sector is so undermining of freedom, isn't it? : Whereas in the private sector you can rejoice in the freedom to choose from fifty different brands of yoghourt in your supermarket (but don't worry your little heads about who is appointed to run the company or at what salary, or whether the company trades ethically, uses its weight to crush other small businesses or any of that 'do-gooder' stuff) the nasty public sector just takes your money away and you have no choice. Don't worry about citizen rights or voting or anything like that - "they're all as bad as each other", your vote is worthless. (Anyone who finds themselves agreeing with that has just swallowed the big lie).
So here's a brilliant idea for getting us out of the deficit. Take the city council's leisure facilities, say, and privatise them (as Oxford has done). At a stroke, a £700,000 "saving" in that nasty public sector spending (except that, being no fools, the private company refused to take responsibility for those leisure centres that the council had failed to maintain properly - so the council tax payer is left to pick up the 'toxic assets'). At a stroke, the leisure service is now creating £700,000 of wealth rather than consuming it. That's a net swing of £1,400,000 to the country's wealth for doing nothing except passing the buck. Yay! Brilliant!
But hang on a minute, the company is 'non-profit'! Doesn't that mean it isn't generating any wealth? Now I'm getting confused.
Oh well, it's still £700,000 shifted off the council's books, isn't it? It still means the country isn't spending £700,000 that it was before. Doesn't it . . ?
No it doesn't. The whole idea that only the private sector produces wealth is utter rubbish. Worse, it's a lie told to justify passing on the costs of gargantuan failure in the spoiled and unaccountable upper echelons of the private sector to the most vulnerable in society by way of cuts to essential services. "Firm but fair", Mr Cleggeron? It's morally, spiritually, economically bankrupt. It's a lie propagated by most of the mainstream media, including the BBC. It's a lie that most of the population has been manipulated to believe. There is plenty of actual wealth in this country, most of it generated by the public sector, on which the upper echelons of the private sector are nothing more than a parasite. It's that parasite that needs cutting out. Never mind selling off Oxford City Council assets : I wonder what those buildings in the City of London are worth?
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I suspect he meant wealth in the immediate sense of the word (i.e. money). In that scenario I suppose it would be true that the private sector does, by and large, increase the amount of money floating around. You're right though - this is not true wealth.
ReplyDeleteI think the 'amount of money' floating around is controlled/fixed. Like the oil in a car, it keeps the engine from seizing but you need the right amount. Both public and private sector can shape where what money there is flows, and the argument is actually an ideological one about whether a supposedly 'free' market should be the 'engine', or whether government should control everything (as in communism).
ReplyDeleteThe big problems we have are, I think, because the Labour government gave the banks the power to decide how much money was needed in the system, and they put it into the system in the form of debt. We 've reached a situation where most people and organisations - governments included - all except a very few mega-capitalist enterprises - are massively in debt.
In the boom years (for some) of Thatcher it used to be said by entrepreneurs "Never spend your own money - that's not clever. You make yourself rich by using other people's money (borrowed) to make more money for yourself". Great while the good times roll. But when they don't, debt becomes a form of slavery, and the ones sitting on the money become the slave masters. Even governments are afraid to challenge them.