By John Charles Dyer, UK Correspondent
What is one to do when Inconvenient Fact won’t accept its proper "place"? What do you do when the facts just stubbornly refuse to bow to convenient and conventional policy, driven by focus group and ideology? These questions beleaguer international leadership today, no where more so than in Europe and the United Kingdom.
Troubling facts ignored for happy headlines
17 Sep 2012, BBC announced a 50,000 person reduction in “unemployment.” BBC commentators celebrated the highest number of persons “in employment” in the history of records.
Prime Minister Cameron trumpeted it from the dispatch box during Prime Minister’s Questions. Cameron argued it proof Coalition “welfare” policy works.
BBC commentators openly opined it would be difficult for Labour to do anything to sully the moment for the Prime Minister.
Somehow Labour managed. Labour leader Ed Milliband pointed out the uncomfortably inconvenient fact that long term unemployment is at its highest level since the last terrible time in British economic history.
Awkward. Bad Labour.
But Labour could have pointed out much more
As the day went on BBC allowed -- albeit buried in the detail -- the unsettling facts that half the increase in employment consisted of “part time” employees, some of whom under government programmes earn no wage at all. “Independent Contractors” are the largest growth factor for “in employment.”
BBC glossed over this inconvenient fact, mentioning on the run as it were “some” economists question the usefulness of the employment figure. BBC summed by repeating the puzzlement BBC expressed with the last release of “rosy” employment figures, to wit, how can an economy that is in recession nevertheless grow employment.
It isn’t a puzzle.
As “some” economists pointed out last time, an inconvenient set of facts underly the headline figure. Taken together the statistics represent a shift from moderate-to-high earning, full time employment to low paying, part time hourly or “catch-is-catch-can” independent contractor “employment.” Anecdotally, this form of “employment” sometimes proves to be just a change in category without any change to the earnings of the individual. In simple acts of desperation an unemployed person without prospects sets up his or her own business.
The net result is aggregate national income falls while the numbers categorized as “employed” rise.
These facts seem to have a mind of their own. They won’t go away. And they are fundamentally inconsistent with the government’s convenient conclusions, BBC’s convenient headlines, and the nuclear policies of “austerity,” “rebalancing,” “competitiveness,” “privatization” and “make work pay.”
These policies were and are fueled by focus group prejudice. They are driven by an ideological commitment to “liberalized free markets.”
But the more the government pursues them, the more their negative impacts pull down the UK economy.
Another inconvenient fact is rising energy tariffs.
British Gas recently sparked controversy, announcing an increase in the tariff it charges its customers. The Prime Minister, under pressure to do something, announced 17 September he considers legislation to force energy companies to limit tariffs to all customers to the lowest tariff charged any. The announcement, which appears to have been spur of the moment, touched off its own controversy. By 18 September no Minister would repeat the Prime Minister’s pledge. Ministers all-too-apparently scrambled to compensate for the Prime Minister’s spontaneous policy making. By day's end the Prime Minister reaffirmed only a watered down version.
Meanwhile, Angela Merkel continues to insist on austerity in Europe as the European economy -- and indeed economies across the globe -- implode with more or less speed. Even China’s vaunted growth appears to have stalled.
The bottom line?
Those rebellious little inconvenient facts just aren't going to conveniently conform to ideology.
All the globe’s leadership have this in common. That which was supposed to happen didn’t. That which was supposed not to happen did. Nothing panned out as advertised. The experts were wrong. Doesn’t matter if your name is Obama, Merkel, Cameron or Xie Xuren (or Mitt Romney or Paul Ryan for that matter).
Time to reopen the dialogue, shelve the shibboleths, bin the ready answers.
Neo-liberalism is today's predominant framework for economic policy. It has been since the coincidence of neo-liberals coming to power in the persons of Reagan and Thatcher with the fall of the Soviet Union as a global influence.
Neo-liberalism replaced “pluralism” in the USA and “socialism” in the UK. Neo-liberalism relies on free trade in the unfettered free market and the private delivery of services. Pluralism relies on using “the right tool” in an economic “tool kit.” Pluralism argues for private delivery of some services and products, public for others. Pluralism argues for regulation of the “playing field” for the delivery of private services and products, for government intervention into the private marketplace.
Pluralism would have no issue with Prime Minister Cameron’s pledge to cap energy tariff rises to the lowest tariff charged a customer. For that mater, Pluralism would embrace limiting tariffs to the lowest price charged in Europe or to an average of tariffs charged in 2011.
At one time, even Richard Nixon would have done so. Nixon famously proclaimed, "we're all Keynesians now." It seems a long time ago.
Global leadership should reconsider the merits of pragmatic Pluralism.
Pluralism was associated with the greatest period of general prosperity in human history during the post WWII era. Neo- liberalism, by contrast, has been associated with significant declines in general living standards and yet another great economic “bust.” Since 2010, it has delivered only a “race to the bottom” in Europe and the UK.
The challenges today are more difficult. Population intensity, resource decline (including "underdeveloped" land), environmental degradation, globalization, and the institutional degradation itself wrought by neo-liberalism make the challenges very tough indeed.
But it should now be clear by now even to George Osborne, David Cameron, Mitt Romney and Paul Ryan, that neo-liberalism is “hurting, but it isn’t working.” Time to “try something, do something, fix it, just do it.”
The inconvenient facts just aren’t going to go away.