I'm sure many of you have been reading in the press recently about the chit-chat regarding whether George (Gideon) Osborne will stay or whether he will go in the next cabinet reshuffle. If you have you'll have read it not from the minds of wishful journalists at the Guardian or the Independent, but in right wing titles, the Daily Telegraph and the Daily Mail.
Glen Owen for the Mail notes that Senior Treasury officials are preparing for life after Osborne, while readers of the Telegraph have voted for George to be the first person culled in the change in David Cameron's ministerial furniture - over Jeremy Hunt of all people.
Unluckily for Osborne, his is the face responsible for the International Monetary Fund's recently downgraded predictions for the UK economy (now more than any developed nation except Spain) slashing growth figures to 0.2 per cent this year and 1.4 per cent for next year.
And Osborne's is the face that the electorate doesn't want to see anyway.
The bad news for all of us is that even if Osborne is plucked, his economic policies will still stay in place. Because it's the face and not the policies that concern this PR-operation government the most.
The coalition have spent so long telling us why we have the grand plan, blaming everything from the wind to the snow when it all goes pear-shaped, that a Plan B now is a u-turn too far to expect from them.
But there is a wider economic game plan here as well, one that has underpinned the economic landscape for the last thirty years. The menace of neoliberalism.
As Stewart Lansley, author of the recent book The Cost of Inequality, points out in his new paper for the Child Action Poverty Group, the theory that has provided the groundwork for capitalism since the late 1970s says that greater inequality would help increase prosperity after post-war equality failed to deliver. That is to say inequality of wealth is the causes of the masses' wellbeing.
What was needed, particularly in the financial world, was a deregulation of the markets from state intereference, which was the mood music for the thinking behind the Big Bang (deregulation of the financial markets in 1986 - a cornerstone of Thatcher's reform programme).
But, contends Lansley, that this benefitted the masses is so much hot air. Inequality in the 1980s and beyond has a far poorer record than in the post-war era. The real question for us is to ask whether there is really a cause and effect between the theory of inequality, via deregulation, and squeezed living standards, limp wage increases and concentration of wealth at the top.
Lansley identifies three further mechanisms to highlight that link:
1)Given that the bulk of the workforce were not benefitting from what fruits of growth there were in this period, purchasing power was stifled. This inequality gave rise to a sustained course of deflation. With the output of labour not being sold because of the squeeze on purchasing power, the solution was to allow for more private debt by way of, for example, credit. Wages are still low compared to inflation (average weekly earnings growth is at 1.4%) but personal debt is on the rise (estimates suggest £2.1 trillion by 2015). The parallels to the rise in private debt during the 1929 Crash are plain to see.
2)What Lansley calls "swollen corporate and personal wealth surpluses" were used in ways that contributed often negatively to the real productive economy, instead "fuelling commodity speculation, financial engineering and hostile corporate raids, activity geared to transferring existing, rather than creating new, wealth and reinforcing the shift towards greater inequality" - again with similar results to swelling surpluses that went into real estate and the stock market triggering the 1929 Crash.
3)This type of economic system has impacted upon power relations in a way that has seen a dramatic concentration - to what Lansley calls 'plutonomies' or "societies in which wealth and economic decision making is heavily concentrated in the hands of a tiny minority."
What this shows is greater inequality means demand deflation, asset appreciation and a long squeeze on the productive economy that will end in economic turmoil. Or, in short, that this type of economy is not working for the majority of the people and it needs to be changed.
Initial discussions on the High Pay Commission had the obvious benefits of putting the notion of wage ratios on the table, as well as bonus pay clawbacks and caps on bonus pay. Recent events with Barclay's former Chief Executive Bob Diamond have seen the voluntary end of guaranteed bonuses - but obviously work needs to be done to see how operable it would be to formally institutionalise ending these guarantees. After all we can't simply rely on this always being voluntary, particularly in cases that haven't received quite so much media attention.
As Lansley has pointed out elsewhere, before the big bang UK merchant banks paid bonuses of around 3-4 per cent of a salary, while some firms' bonuses took the form of a Christmas hamper. In 1997 the city bonus pool hit £1 billion for the first time.
A decade later that figure was £9 billion. It was concentrated to a tiny proportion of the City's 350,000 staff. 4,000 receiving £1 million; a few hundred over £5 million; and twenty-odd over £10 million.
But this is just one part of the problem that permeates our economy. The mantra greed is good was something economists believed in, and it still impresses itself on our economy today, despite collapse and evidence that the inequality theory is wrong.
We can rid ourselves of a Diamond here and a Goodwin there, but the economy itself has to change, not a few rogue fat cats that grab the headlines. Who has the political will to do it though? Which politician can stand up and make the link between city greed, deregulation and an enfeebled economy in Britain. I'm looking at you, Ed.
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