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We need a government that dares to think big and be more ambitious in its strategy to set our economy on a more sustainable and equitable pathway.

Man begging with sign that says "homeless and broke, please help if you can"Photo by Vincent Albanese

“The difficulty lies not so much in developing new ideas as in escaping the old ones.”
― 
John Maynard Keynes

When the world is facing one of the worst public health and economic crises since the Great Depression in the 1920s, Rishi Sunak excelled himself this week with his summer statement. Not in a good way one has to say. To put it bluntly, we have gone from Boris Johnson’s ‘New Deal’ pretensions to Rishi Sunak’s ‘meal deal’ as so neatly coined this week by the Labour party. At a time when unemployment has soared globally with projections that it will rise still higher, Sunak’s intervention could be said to be less than even a damp squib which fails to deal with the very real threats that the UK faces right now as domestic and worldwide demand plummets and people hunker down in uncertainty both for their jobs and their financial security.

That the Chancellor thought a ‘eat out to help’ scheme would help those 3.7 million key workers struggling to survive on less than £10 an hour shows where his head is firmly planted – in the sand. As Garry Lemon from the Trussell Trust noted ‘encouraging people to eat out is one thing but ensuring people can afford to eat at all must come first’. Ten years of austerity has left essential public services on the edge of collapse and people in insecure work on low incomes both in the private and public sector. Whilst giving a dining out discount to the already well-off it is quite simply a slap in the face for working people who have already borne the brunt of years of government cuts to public spending and yet who have proven their value to society in these last few months as key workers keeping the important services going as the nation locked down. The clear downside of his meal deal voucher is that you’ve still got to have the means to pay the other half of the bill when many are simply struggling to put food on the table!

And the bad news did not stop there, as government showed yet again who is to benefit from increased government spending. The proposed Job Retention scheme, which will replace the Furlough scheme ending in October, is just another mechanism for supporting businesses instead of working people and as the TUC commented it will do little to reduce unemployment. It will quite simply represent just more of the same corporate ‘welfare’ which has underpinned government policies for decades, whether bailouts for banks and businesses or employment legislation honed to serve private sector needs.

And then, to cap it all, a £1bn giveaway to second home-owners and landlords in the form of a reduction in stamp duty which once again favours the wealthier amongst us and does nothing for renters or indeed anyone purchasing a house in areas where prices are lower out of London.

Just how Sunak viewed these proposals as a mechanism to kickstart the economy is anyone’s guess, when there are already vast numbers of people struggling as a result of the combined consequences of government austerity and the economic consequences of Covid-19 with more hardship to come as the OECD projections make clear. The words of Marie Antoinette who was reputed to have said when there was no bread ‘Let them eat cake’ sums up the government’s response very simply as a complete denial of the extent of the poverty and inequality that exists which has been caused by a pernicious economic theory which has been used to justify greed and selfishness and put private over collective good.

Bread or cake, either way it’s just crumbs, when the strategy should be far bigger in terms of spending to alleviate the human cost to society and the economy and indeed dealing with the next big challenge bearing down over humanity – climate change. His plans do nothing to address the structural poverty which exists in the UK where food banks, homelessness and families living in temporary accommodation have become the norm and an accepted part of the way things are, as has blaming and shaming.

His plans do nothing either to reverse the cuts to public spending which have done so much damage to our essential public and social infrastructure, the consequences of which have been so much in evidence these last few months. After weeks of people clapping key workers on the doorsteps of their homes and politicians jumping on the goodwill bandwagon to give the false impression that we are all in it together, little has been said about the who is to blame for the worsening condition of our public services and what comes next. Johnson passing the buck for the care home crisis onto staff, along with his criticism of NHS England, Public Health England and SAGE’s responses to the pandemic should be a clue to where the government intend to shift the blame. Just more smoke and mirrors to distract from the consequences of government policies.

The fine words and expressions of solidarity with the working people of this country by Rishi Sunak are no replacement for real action to deal with the threats that face us. In the event that a second wave of Covid-19 can be avoided, unemployment is likely to rise to 11.7% by the end of the year but should we experience a second wave that could, according to the OECD, rocket up to almost 15% of the working population. The scourge of unemployment threatens young people in particular who stand to lose out as the labour market contracts.

So far, we have seen the government relying on the private sector to dig us out of this mess, whether it’s a Job Retention Bonus or the proposed apprenticeship scheme. It fails to acknowledge that continuing economic uncertainty will not bring about confidence, either for businesses to invest or consumers to spend. Furthermore, a £10 meal voucher or a reduction in VAT will do nothing to restore confidence when people are fearful for their jobs and their future income. It’s all sticking plasters and simply perpetuates the lie that it is only the private sector that can create the wealth in the end.

As Josh Ryan Collins wrote in a UCL IIPP blog on Medium ‘The pandemic has raised the level of uncertainty in the economy to an all-time high. As John Maynard Keynes emphasised, at such times it is natural for firms and households to retrench. Under such conditions – and with foreign demand also crippled – the domestic government is the only actor able to stimulate the economy and prevent unemployment and recession’.  

The action needed to avert an economic crisis and address climate change is on a scale far greater than the one on offer by the Conservatives, who are picking and choosing the recipients of their spending based on a flawed economic model which puts the private sector as the wealth creator and denies the power of the state and its money issuing powers to address the serious challenges to come.

Government needs to restore its role as employer of last resort and focus its efforts on full employment through job creation – not as a temporary measure but as a permanent feature of public policy. At the end of the day, whether you are on the right or the left of the political spectrum, a mechanism for providing paid work at a living wage which supports the health and well-being of local communities in difficult economic conditions and at the same time keeps money in people’s pockets which then, in turn, flows through the economy and keeps prices stable surely should be the goal of any government?

But how could this be achieved? In two ways:

Firstly, with the introduction of a public sector Job Guarantee to provide employment for those who have been made involuntarily unemployed either as a consequence of Covid-19 or as part of a Just Transition towards a green economy as old carbon-based jobs become redundant and new green ones take their place. With a living wage and training, it would offer a stepping-stone into private sector work as economic conditions improved, would set a wage floor below which private employers could not offer employment and would serve local communities by providing worthwhile and useful public service work.

And secondly, with an expansion of the public sector, which hitherto has been shrunk to a shadow of its former self and is also short of hundreds and thousands of staff particularly in social care and health. As GIMMS has said many times before, the public sector provides the foundations for a healthy economy and any government of any political shade would do well to recognise that public service which serves the economy should not be in the hands of profit-hungry companies which are more interested in cutting costs than improving lives.

Not only do we need to rebuild the public infrastructure that has been shattered by the austerity policies and neoliberal narratives of small government, but we also need to recognise the real and tangible value of public sector work to the economic and social infrastructure.

Of course, without doubt, the next question will be ‘how will it be paid for’? Over recent weeks the debt scaremongers have been much in evidence from various media outlets to public institutions and public finance experts who show scepticism that even the current round of additional spending can be funded without taxing or borrowing more. They put the fear of God into the public consciousness that at some unspecified time in the future someone will have to pay and that someone will be the taxpayer.

Even the Daily Mirror this week helped to spin the lie to its readers that the government has to borrow to fund its deficit, that it will take decades to pay off the debt that has been accumulated as a result of the additional spending, and that the Chancellor will have to impose higher taxes eventually to pay it back. None of this is true and it is shameful that such lies continue to create such fear and uncertainty in the minds of the public.

By all means carry on with this nonsense but such beliefs will, by their nature, constrain any government’s capacity to serve the best interests of its citizens and the economy as a whole if people lose confidence and fear the consequences of such spending on their own future income. Instead of listening to the likes of the Daily Mirror, Rishi Sunak, successive shadow chancellors and other economic pundits not to mention the IFS which regularly trots out analyses of the public accounts as if it were a household budget, we should be challenging these false notions wherever they come from.

And then, when the National Audit Office adds its concerns about the increasing cost of rolling out universal credit and the rising impact of Covid-19 on job losses and Rishi Sunak announces that the number of work coaches in jobcentres would double next year to cope with rising numbers of unemployed people signing on, if you have even the most limited knowledge of how governments spend then you have to scratch your head in puzzlement.

The first thing to note is that the monetary cost of any programme is an irrelevancy for a government like the UK’s that issues its own currency. Secondly, it is not the monetary cost of unemployment or underemployment that is important, it is the social and economic cost to individuals and the economy as a whole that matters. And thirdly it won’t matter how many job coaches you put in Jobcentres – as Warren Mosler so aptly pointed out using the analogy of dogs and bones – if you’ve only got 95 bones and 100 dogs it won’t solve the problem of unemployment. Suggesting that the onus lies with the individual to shape up and be responsible for his or her own fate is a neoliberal narrative to blame and shame.

We need the state to recognise its responsibility as the employer of last resort during the economic cycle and we need a Job Guarantee, not a system of individual censure and humiliation.

The government needs to think big and be more ambitious in its strategy to help reset our economy on a more sustainable and equitable pathway. Whether it will, is an entirely different matter.

 

 

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The post We need a government that dares to think big and be more ambitious in its strategy to set our economy on a more sustainable and equitable pathway. appeared first on The Gower Initiative for Modern Money Studies.

‘I’ Newspaper: Universal Credit Appeals Almost Double

Published by Anonymous (not verified) on Tue, 07/07/2020 - 8:08pm in

Here’s another story from yesterday’s I for Monday, 6th June 2020. Written by Richard Vaughan, it reports that the number of appeals against Universal Credit increased by 96 per cent in the first three months of this year. The article runs

The number of universal credit appeals almost doubled in the first three months of this year, official figures reveal.

Statistics published by the Ministry of Justice show that in the period between January and March, the number of appeals to tribunals in relation to universal credit soared by 96 per cent to more than 7,300.

It highlights the issue with the benefits system, which critics warn can lead to sanctions against the most vulnerable, leaving them with their payments being cut or stopped.

The Liberal Democrat MP Layla Moran said: “Time and time again we are told by ministers that universal credit is working but these figures would suggest otherwise.”

The increase in appeals comes as Work and Pensions Secretary Therese Coffey announced the Government would not be extending the three months suspension of sanctions introduced for benefit claimants at the start of the Covid-19 pandemic. Ms Coffey told MPs last week that Jobcentres would fully reopen in July. The DWP was approached for comment.

Universal Credit has been a malignant shambles causing nothing but misery and poverty ever since it was introduced by Iain Duncan Smith. I think the sanctions regime was introduced by the grinning Blair and New Labour, but it’s been very strongly supported by IDS and his vile successors. Only a few days ago Mike put up an official report that stated that benefit sanctions are really only good for increasing misery and anxiety. Jeremy Corbyn included in Labour’s manifesto the commitment to ending and properly reforming the benefits system. But this was scrapped and replaced with something much more anodyne by Keir Starmer.

This is no doubt one of the very many reasons people have for leaving the Labour Party. It is disgraceful that the quote criticizing Universal Credit came from a Lib Dem MP. I am fully aware that the I is very much biased against Labour, as is shown by its pushing of the anti-Semitism smears. It’s possible that there are also Labour critics of Universal Credit – indeed, I am absolutely sure there  are – but the I ignored them to promote the Lib Dems.

One the other hand, it may also be that they were silenced by Starmer, keen to continue Tory policies in the New Labour strategy of winning over Conservative voters at the expense of working people.

Rishi Sunak Goes Social Credit

Zelo Street put up another piece yesterday showing the glaring hypocrisy of the Tory party and their lapdog press. According to the Absurder, the Resolution Foundation had been in talks with chancellor Rishi Sunak to give everyone in Britain vouchers to spend in shops and businesses. Adults would receive vouchers worth £500, while children would get half the amount, £250. Sunak was being urged to accept the scheme as it would stimulate the economy, which has been badly hit by the lockdown. The Tory papers the Heil and the Scum also reported this, and thought it was a great idea.

This contrasts very strongly with their attitude last May, when Jeremy Corbyn also floated the idea of giving the British people free money in UBI – Universal Basic Income. The Scum claimed that if everyone was given £70 a week, then this would raise the welfare bill from £188 billion to £288 billion a year. The Heil reported that when the scheme was tried out in Finland, it made people happier but didn’t improve employment levels and would prove ‘unsustainable’.

But it isn’t just Finland that is experimenting with UBI. It was introduced in Spain a few weeks ago as Mike reported on his blog. Spain is a poorer country than Britain, but their willingness to try it contradicts the government’s excuse for not doing so, which is that Britain can’t afford it.

But now Rishi Sunak is considering it, and the Tory papers are praising him for it, whereas they vilified Corbyn. Zelo Street commented

‘Clearly, since May last year, a “free money” handout has stopped being a ghastly socialist aberration, and is now an excellent wheeze. Cos Rishi will be doing it.

The press will do anything to flog more papers. Including a little socialism.’

https://zelo-street.blogspot.com/2020/07/government-handouts-yeah-but-no-but.html

Of course, the reason the right-wing press are supporting Sunak whereas they condemned Corbyn, is because the two men have very different reasons for recommending it. In Corbyn’s case it was a desire to help empower ordinary people and stop the poverty the Tories have inflicted on them through low wages, job insecurity and the murderous system of benefit cuts and sanctions. The Tories, by contrast, heartily despise the poor. In the interest of maintaining healthy profits, they have always pursued low wages and punishing the poor, the sick, the disabled and the unemployed with minimal state welfare provision. This is now for many people below the amount needed to keep body and soul together. Where it is available at all, that is. That’s if people are able to get it after waiting five weeks for their first payment, and not getting sanctioned for the flimsiest excuse. This is all done to reduce the tax bill for the 1 per cent. Those able to work must be kept poor and desperate so that they will accept any job and won’t be able to demand higher wages. As for the long-term unemployed and the disabled, they are biologically inferior ‘useless eaters’, exactly as the Nazis viewed them, who should be allowed to starve to death.

Sunak’s motive for embracing UBI is so that the proles can spend it, thus keeping businesses afloat and maintaining or boosting profits. It’s socialism for the rich, as modern corporatism has been described. Just as welfare benefits are cut or completely removed for working people and the poor, so corporatism rewards business, and particularly big business, through a system of subsidies and tax breaks. It’s why one book attacking this system was titled Take the Rich Off Welfare.

Sunak’s version of UBI also harks back to a similar scheme founded in the 1920s by the British officer, Major C.H. Douglas. Aware of the widespread poverty of his day, Douglas argued that it was ‘poverty in the midst of plenty’. The goods were available to satisfy people’s needs, but they were unable to afford them. He therefore recommended that the government should issue vouchers to solve this problem and enable people to buy the goods they desperately needed.

The idea has never really taken off. It was included among the policies Oswald Mosley adopted for his New Party after it split from Labour in the late ’20s and early ’30s. There was also a Social Credit party in British Columbia in Canada, though I believe that’s an extreme right-wing, anti-immigrant party for Anglophone Whites which doesn’t actually support the Social Credit economic policy.

I’ve also seen something extremely similar to Social Credit used as the basis for an SF story. In Frederick Pohl 1950’s novella, ‘The Midas Plague’, the poor are bombarded with expensive goods and services which they must use and consume. They are punished if they don’t. As a result, in terms of material conditions the position of rich and poor is reversed: the poor live opulent lives, while the rich, who have to own their own possessions, live much more austerely. The whole point of this is to keep the economy booming and industry expanding.

We haven’t yet got to that point, and I don’t we ever will, if only because the wealthy ruling class, on whose behalf the Tories govern, are so against letting the poor get anything for free. Even when they need and deserve it. But unemployment is set to increase due to automation in the workplace. It’s been forecast that over the next 20 years about a 1/3 of jobs will be lost. 21st century Britain, and indeed much of the rest of the Developed World, could look like Judge Dredd’s MegaCity 1, where over 95 per cent of the population is unemployed and lives on welfare.

If that ever happens, then the government will need to implement something like Social Credit in order to give people both enough to live on and support business and industry.

Not that Sunak need go that far just yet. One of the reasons F.D. Roosevelt introduced state unemployment insurance for Americans as part of his New Deal was also to support industry. He, and liberal and socialist economists in Britain realized that if you give people money to support themselves during a recession, they will spend their way out of it. Both the poor, the unemployed and industry benefits. We could do the same now, by giving people a genuine living wage, raising unemployment and other benefits up to a level so that people can actually live on them and abolish the five-week waiting period and the sanctions system so that people don’t have to rely on food banks to save them from starvation.

But this would contradict the Tories’ favoured policies of keeping working people and the poor hungry and desperate.

‘In these difficult days [we] must and shall choose the path of social justice … the path of faith, the path of hope, and the path of love toward our fellow man.’ Franklin D Roosevelt.

Published by Anonymous (not verified) on Sun, 05/07/2020 - 10:06pm in

Construction worker or engineer in newly-built railway tunnelPhoto by Ricardo Gomez Angel on Unsplash

From Boris Johnson’s earlier reincarnation as Churchill in the pre-Brexit era, he has now been reborn as FDR, or at least likes to think so. According to the Conservative website, taking on FDR’s mantle Johnson has set out his plans to put jobs, skills and infrastructure investment at the heart of the UK’s economic recovery post-coronavirus. He claimed in his speech that his plans were ‘positively Rooseveltian’ and suggested that ‘It sounds like a new deal. All I can say is that if so then that is how it is meant to sound and to be because that is what the times demand. A government that is powerful and determined and that puts its arms around people at a time of crisis.’

As a speech, much of it sounded just like many speeches politicians make, just more rhetoric designed to carry the populace along but with little backbone to the words. Certainly, once dissected, it shows little evidence of truthfulness or desire for real change. And ‘putting its arms around the people’ seems just a tad overdone given the last 10 years, even if the spending taps have now been turned on.

Whilst the Times hailed it as a ‘spending spree’ that was as ‘bold as Franklin Roosevelt’s New Deal,’ in the post-analysis phase it has become clear that the speech’s promises were anything but and indeed were not only less than truthful but also a signal that it’s back to the usual Tory business. As pointed out by a political commentator ‘not much of the announcement was new and it wasn’t much of a deal’.

The promised paltry £600bn turned out to be worth £5bn, as much of the spending had already been announced by the Chancellor. That equates to less than £100 per capita across the UK or 0.2% of GDP. In fact, Roosevelt’s New Deal investment amounted to 40% of US GDP at that time, which was 200 times larger than Johnson’s.

It will prove nowhere near enough to dig the UK out of the economic hole it has in fact been excavating since 2010 through unnecessary cuts to public sector spending which have left our public and social infrastructure in tatters and least prepared to deal with the coming economic fallout as a result of Covid-19. Neither will it be enough to deal with the coming climate disaster that faces us without an even bigger spending programme designed to stabilise the climate and deliver a more sustainable world. The closest Johnson got in his speech was planting more trees! It’s going to need a lot more than that!

We need to examine who the real beneficiaries of this spending will be although the clues are already staring us right in the face.

As an article in Open Democracy described it this week, it is nothing but a ‘new deal for rentiers’. It noted that Roosevelt, in his first inaugural address in 1933, had declared the cause of unemployment and economic distress was not scarcity but rather that ‘the rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetency’ (although the word incompetency might be disputed in today’s world).

Roosevelt made it clear that his political enemies were ‘business and financial monopoly, speculation and reckless banking’ (much as they are ours still today). The article also makes the point that the New Deal was not just about investing to create jobs, it was about rebalancing power away from rentier capital and towards working people

With just a quick read through Johnson’s speech, it becomes clear that his modus operandi for bouncing back is just more of the same. He emphasised that ‘levelling up’ did not mean ‘launching some punitive raid on the wealth creators’ and added that ‘yes, of course, we clap for our NHS, but under this government, we also applaud those who make our NHS possible: our innovators, our wealth creators, our capitalists and financiers; because in the end, it is their willingness to take risks with their own money that will be crucial to our future success.’

Those few words indicate very clearly which path the government is intending to follow as it continues to peddle the myths about how we owe a successful economy to the wealth creators, when the truth is that it is exactly the opposite. It has been generally accepted that the wealth creators, through their efforts, generate tax payments which then fund public services without which difficult decisions would have to be made about their continuing affordability. Indeed, that ruse has been used by politicians on numerous occasions to justify punitive cuts to spending.

Thus, in economic downturns, as tax revenues become smaller it proves the perfect opportunity to sell the narrative that we need to downsize public services or outsource or sell them off to private profit on the basis that they will be more efficient and provide better value for taxpayers. Or so the story goes. Except that it is not true.

As GIMMS has pointed out many times before, our NHS or other public services are not dependent on a healthy economy. They are instead dependent on a well-functioning public and social infrastructure upon which the businesses and corporations depend, in turn, for their success. This includes such things as education and health, public transport networks and good national and local governance.

It is also vital to challenge the notion that the government needs that tax before it can spend. It categorically doesn’t. In making affordability a key demand, it is in truth less about whether the government has the money (which it always does) and more about delivering political ideology related to who should run public services.

As we have seen, vast sums of public money have already been shovelled into private profit to deliver public services with no sign of abating. Indeed, under cover of Covid-19, the process seems to have speeded up and we have seen a huge rise in the number of contracts being dished out by government even to companies that have no assets or employees as revealed only this week.

The power of the nation-state to direct the economy in the nation’s interests has been much undervalued in recent years as global interests have dominated public policy. But with the power of the public purse, the government can determine who will be the beneficiaries of its policies and spending. As we have seen over the last decade, instead of focusing on promoting the well-being of the nation which should be its primary goal, the government has focused on lining the pockets of corporations with public money and thus ensuring their own wealth and security through the revolving door. At a huge cost to working people’s lives and the public services on which they depend.

Johnson’s claim this week that government had overseen a reduction in child poverty and that 400,000 fewer families were living in poverty now than there were in 2010 was called out this week by the Office of the Children’s Commissioner for England. His claim is symptomatic of the massaging of data by the government which, like snakes, try to slither their way through the lies and dissimulation to present a positive view of their economic record.

A quick look at this week’s news is instructive and demonstrates that all is not as it seems or as it has been promised. It was revealed that half of school leaders still have not received the promised laptops for disadvantaged children. Whilst government clattered on about the importance of getting disadvantaged children back to school, it has failed to do the very thing that would have helped those children while in lockdown. It has failed over a decade to improve the life chances of poorer children by addressing the fundamentals – decent housing, well-paying jobs and access to decent services – all of which are in a state of decay.

And, as Johnson invites people to spend, spend, spend and talks about a grand ‘new deal’ many people can barely afford to eat. Over this decade and more the nation has accepted the presence of food banks as a necessary feature of British life, as if somehow the government could not have avoided that growth through its own policy and spending decisions.

According to food bank providers during the Covid-19 crisis, there has been a surge in demand in some areas of around 300%. As Marcus Rashford so clearly highlighted in his campaign to force the government to continue providing funding for free school meals over the summer holidays, over the coming months the need will grow. Do we really want to see children going hungry when the government could avoid that scenario with a simple instruction to the central bank to spend the money into existence to alleviate the temporary disruption?

And yet that is only half the story.

The combination of the damaging consequences of existing low incomes, precarious employment, a benefit system which is not fit for purpose and years of austerity with the damaging economic fallout from Covid-19 which is likely to get much worse in the coming months should provoke outrage. That the government, instead of addressing the fallout of their previous policies, think that shovelling more money into the pockets of the ‘wealth creators’ and reinforcing a rotten political and economic system is the way forward. They dress their speeches with soothing words about compassion and levelling up and then act to enable the maintenance of the status quo.

Much is revealed by the government’s approach to hunger. Instead of dealing with the fundamental reasons why children are hungry, it chooses to fund food banks and other organisations to deal with the consequences rather than through its policies. The charitable sector and volunteering are replacing government provision.

Government has the tools to ensure that no child goes hungry, by setting the rules and supporting employment policies designed to ensure full employment as prerequisite, through the implementation of a job guarantee offering public service work at a living wage, which in turn drives good wages and security in the private sector.

That is what will make the difference between an economy on its knees and one which prospers. Instead, it has given in to global pressures to compete and denied its power to address these issues. It has shifted the responsibility downwards praising the role of the charitable sector and voluntary organisations in the delivery of public services.

The main thrust of Johnson’s spending plans is a capital infrastructure programme. However, this was as Chris Packham, the naturalist and campaigner, rightly noted not about building a green economy but building more roads and more concrete to continue with a carbon-based future. The one small concession he observed was planting more trees and a miserly £40m towards kickstarting a greener economy. Not exactly radical and not nearly enough.

No mention was made either of the need to invest in better public services or to ensure that there is a pool of well-trained labour to service that infrastructure programme. More hospitals and schools are all very well but without the nurses and doctors to work in them, such construction could become an enormous white elephant. Capital and day to day spending are intimately connected, not stand-alones.  It seems that it’s all money for their business friends but no substantial investment in the things that count and make people’s lives better.  An opportunity squandered.

Instead of telling people to ‘spend, spend, spend (which in the current economic uncertainty is unlikely to stimulate the required response and anyway do we really want to continue along the path of mindless consumption?) the better mantra would be ‘jobs, jobs, jobs but not any old jobs. A job guarantee would not only provide public service jobs creating real value to society, a liveable income and security for the coming days as employment rises but could also assist in enabling a just transition towards a more sustainable world, as old jobs become redundant and new ones develop to take their place.

Whilst it is true that currently there doesn’t seem to be any desire by the established powers to embrace a new economic paradigm, it is vitally important that we keep the fires burning for change and raise public awareness of what an understanding of modern monetary reality could do in terms of delivering a fairer distribution of wealth and to address the key challenges we face.  We have as a nation to decide what we want. To continue as we are and all that implies for the future, or take a different route to a fairer and more sustainable planet? What shall it be?

You can find out more here:

https://gimms.org.uk/mmtbasics/

https://gimms.org.uk/job-guarantee/

 

 

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The post ‘In these difficult days [we] must and shall choose the path of social justice … the path of faith, the path of hope, and the path of love toward our fellow man.’ Franklin D Roosevelt. appeared first on The Gower Initiative for Modern Money Studies.

Boris Johnson Is Not the New, British FD Roosevelt

It’s the first of July, the beginning of a new month, and a new set of lies, falsehoods, spin and propaganda from our clownish and murderous government. Yesterday, BoJob announced he was going to spend his way out of the recession caused by the Coronavirus lockdown. £5 billion would be spent on public services. Michael Gove hailed this as a ‘New Deal’, like F.D. Roosevelt’s for ’30s America.

No. No, it isn’t. Mike and Zelo Street have both published articles tearing great, bloody holes in this latest piece of monstrous spin. Zelo Street’s concentrates on the failings of Roosevelt’s original New Deal. Apparently it didn’t really begin to pay off until Roosevelt’s second term, because the great president was himself too committed to the economic orthodoxy of the time. This was to reduce government spending during a recession. Mike’s article, from what I’ve seen of it, dismantles Johnson’s promises. How much can we really trust them? Remember those forty hospitals Johnson told us the Tories were going to build. They weren’t, and aren’t. It was more lies and the number that were actually going to built was much, much lower. I think about six. The rest were going to be additions to existing hospitals, that had already been planned. And the numbers that were going to be built were far lower than those which were to be closed, either wholly or partially.

Everything says that this latest announcement of Johnson’s is exactly the same. More lies, and more promises that are going to be quietly broken later on.

And then there’s the matter of the amount Boris has said he intends to spend. £5 billion is an enormous amount, but Johnson has proudly boasted of spending such sums before. Like when he announced he was going to splurge out on renovating the country’s rail network. Zelo Street then put up an analysis of the figures and how much actually building new stations would actually cost, and the amount fell far, far short of what Johnson was actually claiming. I suspect that the £5 billion Johnson is now trying to get us all to believe he intends to spend is similar. It’s an impressive amount, but in reality much, much less than what’s actually needed.

And you can also bet it’s going to be lower than what our former partners in the EU are spending to get their economies started again. Recently, Private Eye published a piece attacking the Tories’ previous claim that leaving the EU would allow us to spend more on our economy. They compared what our government was spending with what France, Germany and some others were. They’re actually spending more than we are, which also demolishes the Tories’ claim that it was EU legislation that was preventing the government from spending more on the economy. No surprise there. The Tories have consistently lied about the European Union being the source of the country’s ills when the reverse has been true, and they themselves are responsible for the disastrous policies that have decimated our country and its people.

And when a right-wing British politico starts shouting about a ‘New Deal’, it’s always bad news.

Tony Blair similarly announced his new deal to tackle unemployment at the beginning of his government. He was going to introduce new reforms to encourage firms to take on workers. In fact, this was the wretched ‘welfare to work’ or ‘workfare’ policy, in which the unemployed would be sent to work for corporate giants like the supermarkets in return for the Jobseeker’s Allowance. If they didn’t go, no unemployment relief. As was documented by Private Eye, inter alia, the scheme does not help anyone get jobs. In fact, in the case of a geography graduate it actually stopped her getting the job she wanted. She was looking for work in a museum and had something in that line arranged as voluntary work. But the DWP insisted she work stacking shelves for Tesco or Sainsbury’s or whoever instead. It’s actually been found that if you’re unemployed, you are far more likely to get a job through your own efforts rather than through workfare.

And there’s another huge difference between the Tories and F.D. Roosevelt:

Roosevelt laid the foundations of an American welfare state. The Tories are destroying ours.

Roosevelt introduced some basic welfare reforms, like state unemployment relief. It wasn’t extensive, but it was something. The Republicans in America and the Tories over here hate the welfare state with a passion. It’s supposed to be subsidizing idleness and responsible for cross-generational pockets in which whole communities haven’t worked. The libertarianism which entered the American Republican party with the victory of Ronald Reagan was at heart concerned with reversing Roosevelt’s welfare reforms. Although it’s very carefully obscured now, it’s why the Libertarian’s magazine, Reason, in the mid-70s devoted an entire issue to denying the Holocaust. This featured articles by genuine neo-Nazis. This was vile in itself, but it was motivated by an underlying desire to undo Roosevelt’s legacy. FDR had been the president, who took America into the Second World War. This is seen as a good war, because of Nazis’ horrific genocide of the Jewish people, as well as others, though they rarely get a mention these days. If the Libertarians and their Nazi allies could prove that the Holocaust didn’t happen, it would discredit America’s entry into the War and make further attacks on Roosevelt and the New Deal plausible.

One of the reasons why he introduced unemployment benefit, such as it was, was because if you give money to workers during a recession, their spending will stimulate the economy.

But the Tories hate the idea of unemployment benefit and the workers actually having any money. They are the party of low wages, conditionality and benefit sanctions. Thatcher viewed the Victorians’ attitude that conditions should be made as hard as possible for the poor to encourage them not to rely on state assistance and agree to take work no matter how poor the wages and conditions as a ‘virtue’. It was one of her wretched ‘Victorian values’. During her reign, you couldn’t get away from her and the rest of her scummy party prating on about rolling back the frontiers of the state and the need to abolish the welfare state. The rhetoric has since quietened down and been modified, so that instead of abolishing the welfare state they talk about reforming it to target those who are genuinely in need. But the ideology hasn’t changed.

As a result, the British welfare state is in tatters. One organisation dealing with poverty and hunger in this country has stated that they’ve torn such great holes in it that it no longer functions. You can see this by the way unemployment has shot up so that one in four people is now claiming Universal Credit.

This isn’t just due to the Coronavirus. It’s due to the forty-year long Tory assault on the welfare state.

Johnson isn’t the new FDR. He’s the exact opposite – the destroyer of unemployment benefit and killer of those who need it.

See: https://zelo-street.blogspot.com/2020/06/bozo-is-not-franklin-roosevelt.html

New deal? No deal! We can’t accept a plan for the future from the failed PM who deliberately wrecked it

Defunding the Police Leaves Communities Vulnerable to Real Vicious Criminals

Published by Anonymous (not verified) on Wed, 01/07/2020 - 7:58pm in

Mike put up a video yesterday of Keir Starmer speaking. This illustrated the present Labour leader’s dismissive attitude to the Black Lives Matter movement. He said that it should be regarded as a moment, and rather than causing people to ask questions about the police and racism, it should make us reflect on the death of George Floyd. It’s clear Starmer regards it as transient phenomenon which will eventually pass. And he doesn’t want to confront the issues it has raised.

The Labour Party is losing Black and ethnic minority support thanks to Starmer’s indifference to calls to improve conditions and opportunities for them. And Mike put up a series of tweets from people saying they were leaving the party because of his attitude, including Whites, who were fed up of people, who didn’t come from marginalized communities, raving about what a wonderful job he was doing.

But I did find myself agreeing with something he said in the video. It started with Starmer arguing very strongly that we shouldn’t disarm the police. He’s right. Unfortunately many Black communities in Britain and America are plagued by extremely violent, dangerous criminals. And sometimes armed police have to be deployed to protect the residents.

I am not arguing that drugs and violent crime are unique to Black communities. I am very much aware that long before there was mass Black and Asian immigration to this country, we had violent White crims terrorizing their neighbourhoods. And these gangs are still about. But it also affects Black communities, who may be particularly vulnerable because of their greater poverty and unemployment.

Bristol’s St. Paul’s is a case in point. It was one of the areas which rioted against the police in ’81/82, along with Toxteth in Liverpool and Brixton in London. It had a reputation for drugs, prostitution and violent crime. One of my uncles was a cop, and there was a Black gang there out to kill him. Don’t read too much into this – my uncle wasn’t racist. He had Black friends, and I never heard him utter a racial slur. I’ve also heard similar stories of other cops being threatened and seriously wounded whilst they were serving in the area. And on the other side, as it were, I had Black college friends, one of whom was a Sunday school teacher at the time the riots broke out. He was training to be a teacher, and told me how extremely upset he was that the young children in his class told him they were going to the riots. ‘I felt like crying,’ he said. he was adamant that the riots weren’t racially motivated, and there were Whites trying to stir up trouble. I’ve mentioned before that I was at school during the riots. At the end of one day during the rioting, as we were leaving there was a White guy with a long grey beard and a megaphone perched by one of the trees just outside the school steps. He was haranguing us, shouting ‘Do you hate the teachers? Do they make you wear school uniform? Well if you do, come down to the riot in St. Paul’s tomorrow!’ I didn’t know it at the time, but he was probably one a member of one of the Marxist sects, like the Socialist Workers’ Party. They were notorious for joining protest movements and trying to take them over and make the worse. I heard from my Black friend that they were Whites from outside the area also joining the riots, which showed to him that there were people in it just for some kind of malicious kicks.

And in the ’90s and first decade of this century, Stapleton Road was on the front line in a turf war between two drug gangs. There was an incident reported on the local news, in which two young women had been left seriously wounded when the car they were in was shot up. One of them was hit in the skull.

I can remember going up Stapleton Road on the bus c. 2003/4, and looking out the window and seeing armed police in high-viz jackets with submachine guns. This was at the time when there was gang violence in the area, and particularly on that street. One of the organisations that was particularly under threat was a women’s charity, which I think helped mostly immigrants and asylum. One of its staff appeared on the local news and stated that nearly every day they had an incident where a man with a gun walked into their premises and they had to warn their co-workers. One Christmas during these years, seven people were murdered in a fight that broke out in a pub, including a man who tried to stop it and calm the situation down.

As I said, rioting and violent crime aren’t unique to Black areas. Hartcliffe in south Bristol is mostly White, but it too had a problem with crime and unemployment. It was also hit by rioting in the early ’90s, which caused some people to move away from it if they could. Knowle West was also a rough area. It’s now quite racially mixed, and there were some Black people living there when I was at school. But again, it has a problem with unemployment and drugs and in the ’80s at least there was a skinhead gang there causing trouble.

I realize that many Black people distrust the police, and have good reason to do so. Black people are afraid that they are excessively punished for crimes, which are taken more leniently in the case of Whites. But not everyone in these communities is an innocent victim of police racism. I am very much aware that the police have shot and killed people unnecessarily and it looks less like law enforcement and more like a murder or execution. But I’m also very much aware that the cops are also trained to deescalate dangerous situations before the violence breaks out. I was talking to a chap a little while ago, whose wife was a senior cop in one of the forces around the country. She’d been called out to deal with several situations where people were threatening to kill someone with a weapon. She’d been successful, and managed to calm the situation down and disarm and nab the offender before he attacked and killed anybody. I heard that her attitude was that an important part of her job was to make sure nobody died. If what I heard was true, then obviously she was a brilliant cop and we need more like her.

At the moment our cops are under threat. BoJob has cut their numbers to disastrous levels. There’s been a drop in certain types of crime due to the lockdown, but I believe this will start rising again as it’s lifted. I don’t know what you can do about police racism, except increase anti-racism and racial sensitivity training as well as initiatives to strengthen community relations with the cops. All of which are being done already. It obviously would help to recruit more Black and Asian rozzers and give them the same career prospects as their White colleagues.

But for heaven’s sake, don’t defund the police. If that happens, it will leave the way clear for the real violent gangs to terrorize poor communities regardless of their colour. And that also means Blacks.

Radio 4 Programme Next Week Claiming Universal Credit during Lockdown

Published by Anonymous (not verified) on Thu, 25/06/2020 - 8:18pm in

According to next week’s Radio Times, for 27th June – 3rd July 2020, Radio 4 is broadcasting a programme next Monday, 29th June 2020, on Universal Credit claimants and their experience of having to wait five weeks for their first payment during lockdown. The programme’s title is Your Call Is Important to Us, and the blurb for it simply says

The personal stories of people claiming Universal Credit for the first time during lockdown, waiting in isolation for up to five weeks for their first payment to arrive. (p. 119).

The addition piece on it by Tom Goulding on the previous page, 118, runs

In times of prosperity, it is easy to feel detached from the conversation surrounding benefits. But with around three million applying for Universal Credit since the start of the coronavirus lockdown, more people are finding themselves at the sharp end of the process, made all the more torturous by weeks of isolation. This programme delves into some of these individual stories, including a warehouse manager who has been forced to shield and saxophonist who has moved back in with his parents. For balance, we also hear from staff of the Works and Pensions department on how they have coped in the crisis.

I think part of Tory policy towards the poor, the disabled and the unemployed was always about keeping the numbers below a certain level so that they voting base wouldn’t become too alarmed and start to wonder if it would happen to them. If it did, then some of them might actually catch on to the fact that they really aren’t doing anything to help people, just punishing and victimising them for being poor and daring to be a burden on society, or rather, the super-rich. This strategy is obviously threatened when a significant part of the workforce is suddenly thrown out of work, or furloughed, as has happened during lockdown.

Labour should have been protecting these people and holding Johnson and his gang of thugs and profiteers responsible for their continuing persecution of the unemployed and the disabled. Despite everything, the Tories have continued with their dreadful, murderous policy of austerity. But Starmer has said zip about all of this.

As for the DWP and its staff, I dare say some are genuinely conscientious people, who care about their clients. But those are not the qualities desired or encouraged by the Department’s chiefs, like the odious Iain Duncan Smith. Their concern is simply to get people off benefit. If they can’t find them work, then they invent utterly fake, spurious reasons to sanction them, all to provide the tax breaks the Tories give to the 1 per cent. When questioned about their policies, the Tories simply lie, and I have no doubt that is exactly what many of the staff interviewed on the programme will do in order to justify what is frankly unjustifiable.

The programme’s on at 11.00 am, if you want to listen to it.

To rephrase Mahatma Gandhi ‘The future will depend on what we do today.’

Statue of seven children using a lever to move the world“Together for Peace and Justice” by Xavier de Fraissinette, Parc de la Tête-d’Or, Lyon. Image by Ben Kerckx from Pixabay

Just a brief look at the news headlines in the last few weeks should be enough to set the alarm bells ringing. We are watching as the nation suffers a train crash of epic proportions.

The Institute for Employment Studies reported in May that the number of people claiming benefits principally because of being unemployed had risen by 860,000 in the month to 9th April to just over 2 million, and that not since February 1947, the year of the big snow, had unemployment figures risen so steeply. It went on to say that that that figure was now likely to be in the region of 3 million, the highest since the 1980s, and that it will take years, not months, to repair the damage.

According to figures released by the Office for National Statistics (ONS), 600,000 jobs have already disappeared and many face redundancy over the next few months as economic uncertainty continues and employers begin to make plans to reduce their workforce as the furlough scheme is phased out later this summer. The ONS also noted that that there had been a record fall in job vacancies between March and May and hinted at worse to come. Jonathan Athow, from the ONS, commented that ‘the slowdown in the economy is now visibly hitting the labour market’

The consequences of Covid-19 on the economy, and let’s not forget the impact of 10 years of cuts to public spending and welfare entitlements, are affecting every aspect of our lives.  Thousands of children have been plunged into poverty and UK food banks are facing record demand with more than 100,000 carers forced to use a food bank in the UK lockdown. Two-thirds of families on universal credit have been pushed into debt, having had to borrow money including using payday loans or credit cards to keep their heads above the water. Put bluntly, that means people struggling to put food on the table, money in the electric meter or pay their rent, not to mention the impact on the mental health of parents trying to provide the basics or educate their children at home for three months without adequate access to the internet or computers.

The Joseph Rowntree Foundation, in partnership with Save The Children, are shining a light on the experiences of families and children in poverty; calling on the government to ensure that families are supported, not just during this lockdown period but also beyond it, to prevent increasing numbers of children being pulled into poverty. It points out that too many children are going without, due to income losses and the pressure that the lockdown has put on already overstretched budgets.

Whilst one must commend those who have performed extraordinary acts of public service during this pandemic, those who have raised money for the NHS and charities and this week like Mark Rashford who through a steadfast public campaign shamed the government into continuing its vouchers for free school meals during the summer holidays, we now urgently need a frank national conversation about where we go from here.  Not just about the sort of society we want to live in now or in the future, but whether we even want to protect our children’s children from the devastating effects of climate change; the threat of which is hanging like a tsunami over our heads while we queue outside Primark or Nike Town!

We are a nation that has been divided by a toxic ideology which has, until recently, ripped to shreds any sense of collective responsibility. We cannot stick our heads in the sand and return to the normal many are hankering for. Too much is at stake.

The pandemic has revealed the shocking state of the Social Care system which is in a state of collapse, an NHS battered by 10 years of cuts to its spending with reductions in staffing, beds and facilities, a social security system which has removed the support pillars and left people in dire poverty and children hungry, living sometimes in temporary accommodation with no sense of security.

The greatest achievements of the post-war world are being dismantled or outsourced to profit and are being replaced by the so-called big society which ironically is also collapsing due to cuts government cuts. As previously reported by GIMMS, Covid-19 has left one in ten charities facing bankruptcy this year and many struggling to provide services in an economic environment which has its roots in austerity.

Instead of state involvement in the provision of the fundamental structures that form the basis of a healthy economy and society which benefits everyone (even if those structures are not perfect), we are being prepared through constant propaganda and messaging to accept a reset. One in which the state continues to pour public money into private profit but at the same time claims there is no money for publicly paid for and managed services and an adequately funded social security system.

Our society is being impoverished, not just financially but in terms of its public and social infrastructure, culturally and the safety net which protects people when through no fault of their own the economy tanks. All on the basis of claimed unaffordability. The monetary largesse of these last few months is already in question and we face a return to more cuts to public spending.

Just this week it was reported that Leeds Council is considering closing its museums and libraries as it can no longer afford to pay for them. This is not just a localised problem; across the country libraries and museums have already closed or rely on volunteers to staff them. The pandemic is revealing the brutal cost of previous cuts to government spending that have left local and regional councils, particularly in the north and south-west, impoverished and with insufficient infrastructure to even deal with the consequences of Covid-19.

Aside from the valuable input to GDP (which ministers seem to conveniently forget), our cultural life is under threat as our museums and libraries face more closures as local councils try to balance their books. Our national and local theatres, art galleries, orchestras and all those things we value in terms of human enrichment and education face if not oblivion, then severe retrenchment.

While public money finds its way easily into private profit at the blink of an eye to provide public services in the name of the lie of market efficiency, our society is being prepared to accept a reset in which charities, public donation and volunteering, not to mention the philanthropy of the Victorian poor law boards, decide who gets what.

Is that the sort of society we really want to live in?

To recognise the alternatives, we have to understand how an alternative vision can be paid for, as that is the perennial question always asked by the public and politicians alike. If we fail to do so the future looks pretty bleak for us all now and for future generations who will be paying not the financial cost but the very real human cost.

We need to start with a basic understanding of how the UK government as the currency issuer spends. It is regrettable that across the piece left and right-wing economists, along with politicians and institutions are still stuck in the household budget narrative of how governments spend. For the right, the constraints lie in a scarcity of money (which they use to justify their political agenda) and on the left the answer is getting the rich to pay through their taxes or borrowing at low rates of interest to fund our public services, pay for public infrastructure or fund a green new deal.

Only this week the ONS focused its report on the public finances on the through-the-roof borrowing figures and, shock horror, it is apparently £173.2bn higher than it was a year ago at £1.95 trillion and the UK’s debt-to-GDP ratio has pushed above 100%. Such focus is designed to put fear into the hearts of people who don’t understand the working of the economy and the public finances and it is likely to enable the government to justify further austerity at some point in the future.

Indeed, the Chancellor Rishi Sunak it has been reported is preparing to scrap the triple-lock on the state pension on the basis that the already high cost of the Covid-19 pandemic could make it unaffordable. Officials have claimed that a temporary suspension would be unavoidable if the government is not to be faced with paying a massive bill next year.  The Pensions Policy Institute has already warned, quite rightly, that such a move would have serious implications for already existing and future pensioner poverty and the amount spent on other means-tested benefits such as housing benefit, caring credits and disability premiums. It would also impact on low earners who would have to put in an extra £540 a year to avoid poverty in retirement. How would punishing people even further help the economy or indeed serve its already beleaguered citizens?

Torsten Bell from the IFS in an article in the Guardian claimed that a survey of economists had proved that they were not keen on cuts or more austerity to reduce the deficit, but favoured tax rises instead. He further claimed that economists were turning into a bunch of radical lefties these days. However, whilst their support for austerity has dwindled perhaps, they still see the public accounts as a household budget whereby taxing and borrowing (at low rates of interest) form the basis for government spending. That cannot be considered radical in any shape or form and unless they can get to grips with how a modern monetary system actually works and reject the notion that spending now will create financial burdens on future generations, then sadly we will see more of the same orthodoxy rearing its ugly head.

To put it bluntly, in an economy that is facing wipe-out and serious future economic consequences, the idea that paying more taxes to pay for government spending which will do yet more harm to the economy as it takes money out of the economy is nonsensical, especially when you know that government doesn’t need those taxes before it can spend.

We need to ditch this narrative if we are to make a better, fairer world which also puts the environment as a top priority. Indeed, at the beginning of this week, the leaders of some of Britain’s top charities wrote to the Prime Minister to demand as a priority a green recovery and urged him to use economic rescue packages to build low-carbon infrastructure and stimulate the creation of long-term green jobs.

However, if we allow that sticky question of monetary affordability to dominate the debate, any future actions will always at some point in time constrain a government’s spending decisions.

We don’t have to be economists either to understand monetary realities or challenge the current false narratives which pervade the discourse.

There are just a few things we need to know or consider:

  • The UK government is the currency issuer.
  • It neither needs to tax in order to spend, or to borrow to cover its deficit
  • Such a government whilst not being financially constrained does face real resource constraints when deciding its spending policies. These include the human beings that do the jobs and the physical resources needed to provide goods and services.
  • If the nation decides ultimately that it wants the government to take a greater role in public provision of services to serve the best interests of citizens, it will have to accept that the government will have to procure those resources and thus may have to deprive the private sector of some of those resources in order to do so.
  • A Job Guarantee is fundamental to this understanding of monetary realities. It not only provides an essential automatic stabiliser in the economy ensuring that people are not left abandoned on the unemployment scrap heap during its cyclical ups and downs and values their contribution to making a more stable society but also plays a vital role in controlling inflationary pressures.

In the coming years, with the growing threat to climate change, it will also provide an essential mechanism to implement a just transition as jobs are lost in polluting industries and we move towards a sustainable economy.

In such an environment we will have to entirely rethink and redefine what work is and what our societal values should be. We need to ensure that we can offer our young people a future with good, non-exploitative employment which pays good wages and offers decent terms and conditions within the context of creating that sustainable economy.

Let’s not leave the future in the hands of the neoliberal orthodoxy which has done so much damage, created so much poverty, inequality and societal division. We do have choices. We don’t have to accept more of the same.

 

 

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The post To rephrase Mahatma Gandhi ‘The future will depend on what we do today.’ appeared first on The Gower Initiative for Modern Money Studies.

Americans Embrace Pioneer Roots as Food Supply Falters

Published by Anonymous (not verified) on Fri, 19/06/2020 - 3:25am in

As the COVID-19 pandemic exposes another area of vulnerability — the U.S. food supply, Americans find innovative ways to keep themselves and their communities fed. Continue reading

The post Americans Embrace Pioneer Roots as Food Supply Falters appeared first on BillMoyers.com.

Finally, Some Signs of Improvement in the Regional Economy

Published by Anonymous (not verified) on Tue, 16/06/2020 - 10:30pm in

Jaison R. Abel, Jason Bram, Richard Deitz, and Benjamin G. Hyman

LSE_2020_jr-econ-improvement_deitz_460

The Federal Reserve Bank of New York’s June business surveys show some signs of improvement in the regional economy. Following two months of unprecedented decline due to the coronavirus pandemic, indicators of business activity point to a slower pace of contraction in the service sector and signs of a rebound in the manufacturing sector. Even more encouraging, as the regional economy has begun to reopen, many businesses have started to recall workers who were laid off or put on furlough since the start of the pandemic. Some have even hired new workers. Moreover, businesses expect to recall even more workers over the next month. Looking ahead, firms have become increasingly optimistic that conditions will improve in the coming months.

The Free Fall Has Stopped

After a period of sharp deterioration that began in early March, business conditions finally appear to be firming in June, according to respondents of our Business Leaders Survey, which covers service firms in the New York-Northern New Jersey region, and our Empire State Manufacturing Survey, which covers manufacturing firms in New York State. The headline index for the Business Leaders Survey climbed 36 points but remained well below zero, indicating ongoing decline in the service sector, though at a much slower pace than over the past few months. Declines continue to be particularly widespread in the transportation and warehousing, leisure and hospitality, and finance sectors. Despite these declines, roughly one in five service firms noted a increase in business in June, most prominently among respondents in the information and retail sectors. The headline index for the Empire Survey increased nearly 50 points to near zero, indicating activity stabilized in the region’s manufacturing sector.

Employment Has Turned the Corner

Perhaps more encouraging, employment in the region appears to have begun to improve. In supplemental questions, we asked businesses about their employment levels in February (before the pandemic), at their low point during the current downturn, and presently. Nearly half of all businesses reduced their workforce during the pandemic, though these cuts were substantially more prevalent in the hard-hit leisure and hospitality and retail sectors. Across all firms, our survey suggests that employment declined by 18 percent in the service sector and 15 percent in the manufacturing sector at the lowest point of the downturn.

With the gradual reopening of more nonessential businesses throughout the region over the past month, a number of firms have started to recall workers who were let go and some have hired new workers. Indeed, about two-thirds of businesses that reduced their workforce indicate that employment has picked up since hitting its low point. Thus far, however, service firms have only recalled about 15 percent of their laid-off workers, while manufacturers have recalled almost half.

A small number of new workers have been added to payroll in both sectors. New hires were strongest among administrative support firms, while businesses in that industry, as well as in wholesale trade and construction, reported the strongest degree of recalls. Although progress has been made, employment in the region remains well below pre-pandemic levels even with the job growth that has occurred thus far. Fortunately, businesses in both sectors plan to recall additional workers, with firms expecting to have rehired more than half of the workers who were let go since the start of the pandemic over the next month.

The Outlook Has Improved

Looking ahead, businesses in the region expressed optimism that conditions would improve over the next six months, though from extremely low levels. The Business Leaders Survey’s index for future business conditions climbed well into positive territory, led by retail, leisure and hospitality, and transportation and warehousing—which were some of the hardest-hit sectors—as well as real estate. Similarly, the comparable index for the Empire Survey jumped to its highest level in more than a decade. With businesses starting to bring back workers, and more hires expected in the months ahead, there are signs that the regional economy is headed in a positive direction after plunging during the depths of the pandemic. We will continue to monitor economic conditions in the region, and provide timely updates as additional data and information become available. You can visit our Regional Economy website for more information useful in tracking the region’s recovery from the coronavirus pandemic.

Jaison R. AbelJaison R. Abel is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Jason BramJason Bram is a research officer in the Bank’s Research and Statistics Group.

Richard DeitzRichard Deitz is an assistant vice president in the Bank’s Research and Statistics Group.

Benjamin G. Hyman

Benjamin G. Hyman is an economist in the Bank’s Research and Statistics Group.

Related Reading

The Coronavirus Shock Looks More like a Natural Disaster than a Cyclical Downturn

How to cite this post:

Jaison R. Abel, Jason Bram, Richard Deitz, and Benjamin G. Hyman, “Finally, Some Signs of Improvement in the Regional Economy,” Federal Reserve Bank of New York Liberty Street Economics, June 16, 2020, https://libertystreeteconomics.newyorkfed.org/2020/06/finally-some-signs....




Disclaimer

The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

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