Smaller Economy = Weaker Public Provision
A spectre is haunting the ageing process in the UK and beyond. The spectre goes by the name of No-Growth-Economics. And the spectre needs a spanking.
In the last few years, it has become a fashion and a toy in blood inside so many think-tanks and academic departments openly to abominate the whole business of economic expansion. There is, our view here, no point in waiting, hoping that this fashion will disappear – just like quinoa, lagom and tantric sex faded, once upon a recent time, from both the Sunday supplements and dinner parties in Holland Park. For its proponents are indeed mounting a long campaign of intellectualised attrition against macroeconomic growth (as conventionally defined as a year-on-year increase in the Gross Domestic Product of a country). They must be contradicted into extinction.
We are ready to identify a number of reasons why No-Growth Economics (NGE) has become hip and unhappily happening.
To these reasons presently. Let’s take a step back.
From roughly 1952 to 2008, the UK economy expanded by an average of 2.5% each year. Thanks to the miracle of compound momentum, this meant that with each generation (of say 25 years) the total amount of income available to the British public doubled. As a direct result, the State was able to enjoy a colossal increase in its fundability – the very emphatic consequence of which was inter alia a richer and more sophisticated NHS, rising pensions, half-decent municipal housing, greatly extended life expectancy….
Let nobody ever utter a nostalgic twinge for the 1950s. (It’s astonishing just how many academics do). At the beginning of that decade life expectancy for men was just 66 and for women 72 – not much chance for a long stretch of grey fun back then. No Rinkli Funstaz a-popping in the pubs. (Source : King’s Fund).
This history in place, consider Britain on the cusp of a new decade. Soon one fifth of the population will be 65+; within 20 years from now, one quarter will be 65+. It is true that employment rates among the over-50s have been increasing and since 1998 both men and women in that category have been delaying their exit from the labour market by 2/3 years. The proportion of over-65s who gainfully work has, it’s true, doubled in the last generation. However, it is still the case that only 10% of over-65s work for a living. Meanwhile, the take-up of the State Pension – a hardly rambunctious £125 per week – is virtually absolute, ie everyone eligible draws it. And that pension makes up £6 in every £10 received by the over-65s in the country. It is, in other words, a/the predominant source of income for that community. Let’s add here that there are ca 12 million people aged over 65 in the UK. (Sources : DWP, Family Resources Survey, ONS).
Not surprisingly, moreover, by mid-decade the Nuffield Trust was estimating that 40% of all NHS spend was being devoted to patients over 65. The spend shoots skyward like the Kingdaka for those over 85. This is, or course, how it should be for a system in which care must follow symptom and pathology. Therefore – the point which follows – we should not want to financially hobble the system without good reason. The system needs cash. More and more cash. That is the never-ending storee.
The Attractions Of A Depression
And now to the obvious (well, not obvious, in fact, to everyone). The economic collapse memorialised by the abrupt megatonic bankruptcy of Lehman Bros in 2008 was a disaster for much of the Western world and especially for all those whose personal wellbeing depended to whatever degree on the financial strength of the State. The UK dived deep into recession in 2009, contracting by ca 4% and has barely made it past 2% for most of the ensuing decade. The golden years of 1952 to 2008 had turned to bronze. Average incomes froze and austerity bit like the Prince of Darkness himself. As we write, global GDP growth has meanwhile slowed to less than 4%; this is a dismal performance implying low chances of economic bounceback for even the more sophisticated economies. For its part, the British economy is not expected to swell much beyond 1% in the near future.
Now. Perversely, there is a body of thought, one enjoying a bizarre hum of respectability, which rejoices in the very absence of growth. The argument usually runs thus:
- We are monstrously over-consuming in the West and certainly the UK
- As a result, the planet is in peril : so much waste, pollution, despoliation
- Increasing incomes do not really make people happy
- We all need to take a more spiritual and less materialistic approach to life, recover the old simplicities of thrift and sharing
- The wisest course is therefore to urge our political leaders to stop pursuing GDP growth as a primary tenet of public policy
- The economy should indeed not expand and social needs, such as they are, should be met through creative redistribution of already accumulated resources
Perhaps this will sound to some like the ideological equivalent of a comforting jam sponge, brought out and lavishly cut just after the annual tax return has been sent to HMRC with 2 hours to spare. It smacks of a rewardingly reassuring solidarity, hope for a better future, the end of tawdry self-absorption. Some may like it for the disciplining of human appetite that is very much implied.
But the prosperity of those entering or already bathing in the Third Age faces no greater threat that this No-Growth Economics. We need to wake up and smell the coffin. All those agencies pressing for better conditions and prospects for all over-65s must stop this rot.
Where to start?
Fun Is Fun But Down With Nonsense
It is a central premise of rinklifunstadom that old age is being culturally and psychologically and benignly transformed. Being septuagenarian is not at all synonymous with being decrepit or inactive or marginalised. No grey generation in history has ever had richer life-chances than the one walking in front of us right now. We call upon that generation to be more entrepreneurial, more hungry for excitement and success, more driven in every one of life’s fun agendas.
That said, a successful Third Age requires a favourably proactive and thoroughly well-resourced state. There is, after all, no redistributive institution or mechanism mightier in scale or in potency than that state. And to do its job and to do right by its older citizens, the government of the day has to raise an appropriate amount of tax – and, of course, spend those receipts wisely. As the economy swells so the reach of the state naturally extends. There is not a septuagenarian in the UK who stands to benefit if GDP growth falters or, like so much anti-Viagra, is artificially reduced.
Now then. It has become popular indeed populist in some quarters to insist that austerity – defined here as a policy of lowering government spending, both programmatic and incidental – is a choice, nothing less than. Some in the political class, it is further argued in this vein, will for ideological reasons welcome any shrinking of the state’s role any diluting of its responsibilities. But this is just not a majoritarian view within the British political class; indeed the members thereof tend to like a rising economy, improved tax receipts and the consequent opportunity to do crowd-pleasing things.
For that class and more importantly for the whole country, the recession precipitated by the Credit Crunch was a disaster. The Government faced a contraction of tax receipts and had to spend spare cash nationalising banks. Every major political party acknowledged – and a history of Alastair Darling’s and subsequently Ed Balls’s own speeches on this theme is specially relevant here – that public spending had to one degree or another to be curtailed. In that sense, austerity was not a choice. The wisdoms by which the policy was enacted over the following decade … well, that is a different matter.
Our point can pivot on the financial records of the NHS. We are grateful once more to the Nuffield Trust for confirming that in real terms the UK will by 2020 be spending 10 times as much on public health as it did in 1950. It would be preposterous to argue that the incidence of sustained macroeconomic growth over this period has no connection with so much compressed morbidity and a life expectancy currently ushering millions into an eighth decade on earth. Let’s mention here that the biggest single spending hike in the NHS’s history (8+% per annum) took place in the period 2000 to 2005 – a time when the UK was enjoying GDP growth in excess of the post-war norm.
More, if average household take-home money in the UK is around £28k per annum (with pensioner householders taking home at best 80% of this sum)… who would describe this state of affairs as proof of a rampant and vulgar consumerism? Let’s keep it real.
Do Sheep Dream Of Electric Greens?
No point in being either evasive or naïve. Certainly you/we are worried about the ecosystem and totally see the need to decarbonise it. Global warming is a real and present danger.
So, like Sully says, can we get serious now?
Only the presence, longevity and activism of thriving social democracies (ie places where the tax take as a proportion of GDP is in excess of one third as well – as where electoral mandates have to be continually renewed) can take the necessary measures to save the planet. Putin’s Russia and China’s Xi Jinping cannot be expected to cut the green mustard. For they see a spoiled ecology as something that the West should fix, especially at an horrific cost to itself, the kind of cost that enfeebles Western democracies on the world stage. The Paris Agreement of 2015, for all the value that it created, was hardly driven into place by democratic centralism or post-stalinist agents-provocateurs. Iran, to take another example, did not endorse the deal. Decarbonise that! Meanwhile, over one third of energy production in Finland is, these days, derived from renewables. (Source : Statistics Finland). We could give more examples here. But let’s save time. This latter point has to be quickly made.
When the economy is growing…
- It is easier to win public support for any changed norms and regulations involving greater ecological sensitivity
- Investment in long-term green projects is more likely to be encouraged
- The State can be liberated to take a more proactive and indeed more daring role in altering consumer-citizen behaviour.
Conversely, it is certainly true that an extended recession will have the effect of reducing pollution, minimising the number of journeys people make for work or leisure, compressing energy consumption in homes…. It is entirely in the logic of NGE activism positively to welcome de-employment and downturn; for its advocates, the deeper the austerity the better. But recession/austerity brings misery to millions – and most emphatically to millions currently residing in the Third Age, especially anyone depending on state benefits or perhaps a small private pension in order to lead any possible version of the good life. We remember too that the incidence of disability is highest among people of state pension age; more, three in five carers in England are 50+ while 20% of people in their 70s can be described as informal carers. (Source : ONS). In these very circumstances , no good cause is seriously helped by artificially turning off the tap of growth.
Yes, we could (well, only in theory) stop the UK economy, let it produce only what it is producing now and let people and governments spend only what they have now and never any more. But the politics of this notion are as impractical as they are cruel. Only the most illiberal form of governance could make it happen. And the poor would not along the way be wealthier and the elderly would not be more secure.
Say NO to No-Growth Economics.