We are facing a major crisis - our economy is as damaged as our society. But social rupture and economic dislocation occur together and must be addressed together. To save one, we must rescue the other. Outside of the Tory high command, neither left nor right seems to grasp this truth.
Economically, Labour privileged the City of London through the boom years and, in my opinion, largely ignored the country beyond the capital. The British state became addicted to tax receipts from the City and sought to create the most advantageous environment for financial exchange possible. This backfired, with the state having to underwrite the banks to the tune of £1.2trn, with a net cost to the taxpayer, according to the IMF, of £130bn. Indeed, any net cost calculation is a dubious estimate, because we do not know the true value of the assets underwritten by the public purse.
Many of those assets and trades have nothing to do with the UK. Nonetheless, the sovereignty of British taxpayers has been hugely compromised: about 60 per cent of the banks' liabilities that we guaranteed were foreign contracts, with no British counterpart. It is one thing to be a centre of investment banking, quite another to use your domestic tax base to underwrite the global trade and international contracts of that business model. This can't happen again. Yet nationally we still have not got to grips with the intertwining of global and national economies and who is responsible for what and where and when.
According to Danny Dorling, professor of human geography at Sheffield University, our society is fragmenting at a faster rate than has occurred in generations, and clustering in ever smaller and more self-referential groups. I used to think that British society was like an hourglass, coming together in the middle and spreading out at the bottom and the top, but it now appears, according to Professor Dorling, that every level of our social strata is accelerating away from every other. It is as if the rungs on the social ladder are getting ever wider apart, keeping people where they are and reducing engagement and advancement. A lack of mobility and social fragmentation is debilitating when coupled with poverty, especially for those at the bottom, who over the past 30 years have seen their income diminish, have lost most of their savings in trying to make ends meet, and have seen family and communal stability corrode and collapse before their eyes.
Friday, October 30, 2009
Phillip Blond, Poverty impoverishes us all