Virus to Johnson. “Feeling lucky…punk?”

The UK economy has been hit worse by the Coronaviris crisis than any other in the developed world. (1) The OECD projects an 11.5% drop in economic activity.

Under the impact of this economic pressure, the government is compounding its problems by trying to unlock the economy before the virus is contained and without adequate systems for containing it; which sets us up for chaos.

The measures announced by the Chancellor on July 8th are hopelessly tactical, lack any strategic vision capable of mobilising people behind it; and amount to little more than a set of minor bungs to Conservative supporting sectors – the stamp duty holiday primarily benefiting private landlords, the £1000 retention bonus just a top up for firms that are secure enough to retain their workers until January.

The decisive question for any economic recovery is investment. If the government and/or companies invest, the economy is stimulated, work is done, goods are made and services provided, income is generated, tax revenue comes in, workers are hired and so on, in a virtuous cycle.

The problem we have is that we have a government which believes that the purpose of economic activity is not “the greatest happiness of the greatest number”, nor the most efficient use of available resources to enrich the lives of the people, or address deep rooted threats to our civilisation like poverty or ignorance, let alone the degradation of the environment we live in and the breakdown of the climactic conditions we need to survive. They believe that the purpose of the economy, and society come to that, is to produce profits. All else flows from that.

That’s why they are not committed to state led investment to put as many solar panels as possible on as many roofs as we can find and wind farms in all the potential places, to retrofit our housing and public building stock to reduce energy demand and bills, to strategically invest in urban mini forests and rewild swathes of the countryside, to electrify our remaining railways – to mention just four initiatives that could generate jobs while cutting carbon emissions as drastically as we need to. Instead, they are giving tiny nudges to the private sector in the hope that they will invest – in anything, they are not fussed about what – instead.

The problem with that is that they won’t. The private sector is risk averse and will only invest if it thinks a profit can be turned on the investment. If the experience of ten years of austerity – in which this approach was tried to death – isn’t enough to convince, a recent survey of company finance directors by Deloitte should be enough to administer the coup de grace. Sixty five percent of the companies surveyed said that they will be cutting investment in the next three years.

The Private Sector is not going to invest.

That is because eighty percent of them expect their revenues to decrease in the next year.

80% also believe that their business faces uncertainty – could close – in the next year too.

This is underlined by the latest projection from the Office for Budget Responsibility. And what a reassuringly anal retentive title that is; conjuring images of mean spirited accountants in their counting house, counting out their money, and taking care of the pennies so the pounds can take care of themselves. They project that – left to itself – the economy will not recover until the end of 2022 and unemployment will rise rapidly to 10% in the meantime. One in ten workers having to claim and scrape by on Universal Benefit.

For the government’s approach, there is an even more serious problem. Investment from the private sector is contingent on profitability, and most of the companies in the survey are cutting dividends to share holders and cutting down on share buybacks, which inflate the salaries of top executives. No profits, no “animal spirits”, no investment. Boris Johnson can wave all the Union Jacks he likes; his patriotic verbal bluster does not affect the hard nosed financial calculations currently being made, except, perhaps negatively as the gap between his “global Britain” rhetoric and the reality of what we are heading for at the end of the year is clearly understood in business circles.

Fewer than a quarter of firms are increasing Dividends (profit payments) almost two thirds are paying nothing.

This is overwhelmingly the case for manufacturing, in which 90% cut payments. The Manufacturing and Engineering employers organisation MAKE UK reported on 20 July that only 15% of companies are back to full time working and begged for an extension of the furlough scheme for another six months to help prevent the worst loss of skilled jobs since the 1980s. (2) With the cut off point for the scheme in October, firms are already starting redundancy processes so they can carry out the legally required consultation period before the axes fall. This is on a very large scale in manufacturing, with just over a half of them planning redundancies in the next 6 months. Other hard hit sectors, like hospitality and retail, are not going to be saved by a few half price pizza vouchers for slow days in half of August.

Of those planning redundancies, 8% are looking at between a quarter and a half of their workforce, while a third are looking at a tenth and a quarter. Imagine how it feels to be working in one of these places now.

The Chancellor’s statement that “this is not a time for orthodoxy and ideology” is about to be exposed. Without drastic government action, and direct investment, thousands and thousands of workers are about to lose their jobs, which will prevent any recovery taking place at all and put people all over the country into desperate straits. The ending of the eviction ban this week just as this kicks in adds a whole extra layer of insecurity and threat.

No doubt the government considers this bracing and character building because, instead of investing, they are planning to cut regulation and launch twenty Free Ports, which will suck such investment as there is to zones that don’t pay tax and blight everywhere else. As if what is holding these companies back from the scale of investment that is needed is the “red tape” that holds them to minimally acceptable standards of behavior towards their employees and the environment.

Crucially, this is not what the company finance directors told Deloitte. They did not say they were primarily concerned with regulation. They were very clear about the three factors which inhibited any investment plans.

1. The Coronavirus pandemic.

2. The prospect of a No Deal Brexit.

3. Worsening Geo-political conflicts (for which read Trump’s trade war with China and the fear that worse could follow). (3)

So, the three big issues preventing the private sector from investing are the central plank of the government’s agenda – “get Brexit done”- their willingness to be dragooned into a fight with China by the USA and their failure to get on top of the virus.

The paradox of this is that had a Corbyn Labour government been elected in December neither a supine response to pressure from the USA to engage in a trade war, nor a no deal Brexit would have been on the agenda. Nor is it possible to imagine that such a government would have handled the Coronavirus crisis worse than this one has. Almost without exception, the countries that have performed most catastrophically have been wedded to neo-liberalism. The allegiance of the business class to Conservative rule therefore comes across as a form of self harm, but underlines the essential perception that, for them, economic well being, even of their own firms, comes second to continued control of the economy by their class. If they are prepared to hammer themselves in this way, the harm done to the rest of us is collateral damage that barely registers on their radar.

Faced with the scale of this crisis, the response to all these issues from the Labour opposition should be clearer, louder and sharper and demonstrate the vision that the Conservatives lack.

  1. The Coronavirus pandemic. Its clear from this that squashing the virus down to nothing is a precondition for a serious economic recovery. That’s what was done and is happening in China. And New Zealand. That should be Labour policy. Not hinting that the UK will be “left behind” if it tries to do so. Particularly because the government here is instead hoping that the number of cases will continue to decline, even as they remove the conditions that enabled it to do so. Scientific advice, including from SAGE, is that this is rash and unlikely to come off. Countries in Europe that reopened when their level of infections was lower than the UK are now facing a rebound. While the UK is as yet nowhere near being in the sort of mess the USA is in, with exponentially rising infections and a daily death rate double what it was last month, there’s a sense that Johnson is looking down the barrel of the threat is crossing his fingers, touching wood and feels lucky. Labour has called for the furlough scheme to be maintained in specific sectors, which is a sensible bottom line and the least that could be expected from a half competent government, but to retain jobs we need a far stronger commitment to a jobs guarantee that involves retraining and redeployment from sectors that are going belly up and to actually put the vision and plans for a green transformation right up front as an alternative to the collapse that the Conservatives are about to preside over. A Green Jobs campaign is imperative. The UK commitment to this – £3 billion -is excruciatingly small.
  2. No Deal Brexit. 65% of companies have made no preparation for conditions after 31 December because they don’t know what they are going to be. Here we go, over the cliff. What the wreckage will look like on the beach next year is anyone’s guess. Labour made a mistake in not pushing for a transition extension. We should argue for a unilateral declaration of continuity with existing arrangements until a deal can be made and ask the EU to reciprocate.
  3. Connivance in the growing US Cold War with China. This is already impacting on inward investment. Tik Tok has already shelved plans to build its HQ outside of China in London – losing a potential 5 000 jobs. The removal of Huawei from the 5G network, and proposals to extend this to 4 and 3 G, will both cost directly and cut the efficiency of the broad band service available (because Huawei technology is in advance of any of its competitors). The increasingly aggressive campaign from Ian Duncan Smith and his allies on the right of the Conservative Party to join with the US in breaking the world economy into two spheres of influence will be very damaging for all concerned – even if, as too often happens, trade war does not lead to the real thing as it escalates. A nervousness about this on the part of the government, who have given quite a slow time scale to strip out Huawei technology and hinted to the company that they are doing so under duress and might back off once no longer under Donald Trump’s heel (so much for taking back control), has not been matched by any doubts from Labour’s foriegn policy team, who are trying to prove to the US that they are back to being Atlanticist true believers and have been urging the government on. This is a disastrous policy that should be reversed.

Anneliese Dodd’s comment “If people felt Labour was only criticising and not suggesting solutions, they would question what on earth we’re doing” is quite right, but requires some solutions to actually be put. That would mean

  1. Argue for whatever action is necessary to protect public health and eliminate the virus as the fastest way to be able to regenerate social activity (not just the “economy”).
  2. Put forward a plan for massive state led investment in green transition both as an end in itself and a way of generating the employment we need to avoid economic collapse.
  3. Resist the demands from Trump for the world economy to be broken in two and for the UK to tie itself to the less dynamic half – with the USA projected to account for 3.3% of world growth in the next two years to China’s 51%, according to the IMF, and developing countries, most of which will align with China, accounting for over 40% of the rest.
  4. Argue against a No Deal Brexit and for an extension of current arrangements to prevent even further economic disruption as we go into 2021.
  1. https://www.theguardian.com/business/2020/jun/10/uk-economy-likely-to-suffer-worst-covid-19-damage-says-oecd
  2. https://www.makeuk.org/news-and-events/news/furlough-extension-vital-for-key-industry-sectors-to-prevent-jobs-bloodbath
  3. Figures and quotes from the Guardian 20/7/20. Few signs of optimism in boardrooms as firms cut investment, dividends and jobs.
  4. https://www.wri.org/resources/charts-graphs/green-stimulus-spending-country

The US and UK are standing on thin ice – and have no claim to the moral high ground.

“I tremble for my country, when I reflect that God is just.” Thomas Jefferson.

In Monday’s Commons debate on scrapping the Hong Kong extradition treaty, Conservative MP and former Foreign Office Minister Tobias Ellwood said the following, ” For decades now, we have turned a blind eye to China’s democratic deficit and human rights violations, in the hope that it would mature into a global responsible citizen. That clearly hasn’t happened. Is this now the turning point where we drop the pretence that China shares our values?”

The accusations made against China are grim ones which they strongly deny, but coming from the countries that brought you – just in recent years – waterboarding and other “enhanced interrogation” techniques, Abu Ghraib, Guantanamo Bay, Special Rendition, the Fallujah Free Fire Zone and extra judicial drone assassinations (with 601 casualties in Yemen alone between 2011 and 2017) (1) you have to wonder what human rights values “we” have been modelling; and how China has supposedly diverged from them, by allegedly doing what we have done in plain sight for so many years.

It has to be said that it is a strange sort of “genocide” in which the ethnic group supposedly being targeted is rapidly growing in numbers and proportion of the population, and an odd kind of “cultural/religious suppression” in which the number of Mosques has increased by a factor of ten in the last thirty years. Just over 2000 Mosques in Xinjiang in 1989, over 24 000 now.

Our Values?”

Does Mr Ellwood mean that a tough line with street protests to “dominate the streets or you’ll look like a bunch of jerks”, is way out of line with anything a Western power would contemplate or carry out? (2) If so, he hasn’t been paying much attention lately or, indeed, ever.

Does he mean that mass incarceration is unacceptable? This would be odd, because the USA currently locks up 2.1 million people, 25% of the total global prison population; way above any other country and far more per head than China does; while England and Wales, with 145 prisoners per hundred thousand people, have the highest per capita prison population in Western Europe and Scotland is not far below; all well above China’s 118 per hundred thousand (3).

Land of the free?

Can he mean the exploitation of free, or ludicrously cheap, prison labour to produce goods for well known companies? Again, this would be odd because that’s what US prisons do. McDonalds, Wendys, Wal-Mart, Starbucks, Verizon, Sprint, Victoria’s Secret, JC Penney, KMart, American Airlines and Avis are documented beneficiaries. (4)

He can’t mean interning people without trial who are in rebellion against the state, because that’s what the UK did in Kenya, Malaya, Cyprus and the North of Ireland and the US did with its “strategic hamlets” programme in Vietnam. So, that would be completely in line with “our values”, wouldn’t it?

Nor can he mean that sterilising ethnic minorities is out of line with “our values” , because that’s what the US did throughout the twentieth century at home- 25-50% of native American women in the 1970s, a third of the female population of Puerto Rico between 1938 and 1970, countless Black women given unnecessary and involuntary hysterectomies (Mississippi appendectomies), 150 prisoners in California as recently as 2010 – and to many more abroad throughout Latin America and beyond, including up to 200 000 indigenous women in Peru in the 1990s. (5)

He can’t mean disregarding local democratic rights and imposing an unwanted regime from the outside, because that’s what the United States has done 20 times by invasion and another 56 times by interventions short of that since 1949. Some of these have been very bloody. Two million Vietnamese killed, half a million Indonesian Leftists massacred in 1965, thousands and thousands throughout Latin America for decades. Whatever you think of China, it would take them a long time to catch up with a record like that.

Nor can he mean communities feeling unsafe at the hands of the police force that is meant to “protect and serve” them. The chance of being shot dead in the streets by the police was approximately 2000 times greater in the US than in China in 2019. (6)

The raw figures for 2019. USA 1004, China 2. The US population is a quarter of China’s.

Perhaps he means having a threatening military posture to intimidate other countries? But here again the US posture is far more threatening, both in terms of military expenditure, on which the US spends $4 for every $1 spent by China…

Who is threatening who here exactly?

…and even more starkly in terms of overseas military bases, of which the USA has 800 and China has 3.

Even the UK has 16, more than five times as many as China. If you look hard, you’ll just about see them.

Who isA Global Responsible citizen”…?

A responsible global citizen faces up to the fundamental challenges facing humanity and seeks co-operation to solve them. The gravest threat to all of us is climate breakdown. China is committed to the Paris Agreement, has met its targets early and raised them. The United States under Trump is walking out of the Agreement on the grounds that “we believe that no country should have to sacrifice economic prosperity or energy security in pursuit of environmental sustainability,” Wells Griffith, Trump’s envoy to the Katowice COP 2018. (7) If every country adopted the US approach, we’d have no hope of avoiding the melt down of our civilisation. Its not mature and its not responsible. The unilateral, selfish action they are taking threatens all of us with catastrophe. Mr Ellwood does not appear to have noticed, or, if he has, does not think this to be of any significance.

In the immediate global crisis caused by COVID19, the records of China, the UK and US certainly show a divergence in values. China put public safety first and, despite an initial fumble by local officials, managed to crush the virus and keep domestic deaths down to just over 4600. In the UK and US, by contrast, commercial considerations and half baked libertarianism has led so far to almost twice as many deaths in the US as there were cases in China with the virus well out of control and infections rising exponentially again. The most conservative figure for UK deaths is ten times the Chinese total (and therefore 200 times the rate per capita). A little humility about this on the part of the people responsible for it might not go amiss.

The political effect of this in China has been to boost the standing and legitimacy and standing of Xi Jinping and the Communist Party. (8) This was always far stronger than Western opinion has ever been able to comprehend, but looking out from a society that has been kept largely safe – as well as having risen from extreme poverty in living memory – the mounting casualties and sheer chaos of the “West” shocks and horrifies popular opinion. The first duty of government, after all, is to keep its people safe. Job done there. Not here.

Economically, the Chinese economy is now recovering. It was already larger in purchasing parity terms than that of the United States before COVID hit. The seeming insanity of the efforts by the Trump administration to reopen their economy while cases are rising is explained by their fear of falling further behind. The IMF projects that 51% of world growth in the next two years will be in China. The US, by contrast, will account for just 3.3%.

As the virus spreads exponentially again, pushing the US proportion of global deaths back up to 15%, from a low of 9% last month, employment and economic activity have gone through the fastest collapse in history. This stokes the US political crisis and fuels the Black Lives Matter uprising. This titanic crisis of health, survival and livelihoods – and the Trump adminstration’s callous indifference, bluster, denial and authoritarian incompetence- has revealed to a popular majority that the enemy is at home and in high places.

The controlled response to the virus in China has saved the world many infections and deaths. That of the USA continues to threaten any other country that trades or deals with it.

China has put a moratorium on debt repayments from 66 struggling developing countries. The USA has imposed sanctions on Iran and Venezuela. (9)

China has pledged that any vaccine developed in the country will be a common good for the whole world. President Trump has applied “America First” even to this, cornering the market in available treatments, gazumping other countries supplies, while, with the UK, insisting on patent rights (which puts pharma profits above cheapness and availability). Clearly a divergence in “values” there.

The increasingly delirious accusations being made against China – which in the media are presented as a labyrinth of mirrors, with each story of each allegation being reported as though they were evidence of it – reflect the desperation of a US ruling class who can feel the earth falling away under their feet. The majority of the world, as reflected in UN votes, do not believe this US narrative. Twice as many countries voted with China on both Xinjiang and Hong Kong as voted for “Western” resolutions; which were supported only by wealthy close US allies, the imperial bubble that likes to think of itself as “the global community.”

And the Left?

The dominant current in the UK Labour Movement, the Labour Right, historically gives the US complete credence. Even devotees of an “ethical foreign policy” are usually highly selective about where they look to demonstrate their ethics. I hope that what is written above is enough to convince that this position doesn’t have a leg to stand on – morally or in any other respect. For the right, this is a matter of realpolitik, so whats true doesn’t really come into it. But there are also currents that identify themselves as “far left” and take a militant line on domestic politics, but never saw a US intervention they didn’t like, nor a State Department attack line they are unwilling to shout through a social media megaphone. For all the reasons above, a pro Washington line is the most reactionary position that can be taken and, in current circumstances, will lead those that espouse it down a road towards giving the USA the social support it needs to threaten a war that could kill us all.

Others, more on the left, will have no illusions about the messenger, but will accept part or all of the message; and will consider articles like this too uncritical. The bottom line here is, that whatever critical view is held about China, or actions it is alleged to have taken, these currents do not line up with Washington and are not willing to allow themselves to be used in giving support to the war drive that is already taking place in economic sanctions and aircraft carrier deployments.

It is stopping these that is the imperative. Arguments about other matters will only be able to continue if the gathering momentum towards war and environmental collapse are stopped and the precarious structures of global co-operation are strengthened.

1.https://en.wikipedia.org/wiki/Targeted_killing#/media/File:Graph_of_Average_Casualties_in_US_Drone_Strikes_in_Yemen_2002-present.png

2. https://www.mercurynews.com/2020/06/02/transcript-of-trumps-call-with-governors-dominate-or-youll-look-like-a-bunch-of-jerks/

3. https://en.wikipedia.org/wiki/List_of_countries_by_incarceration_rate

4. http://blackeconomics.co.uk/wp/big-businesses-that-benefit-from-prison-labour/

5. https://www.pbs.org/independentlens/blog/unwanted-sterilization-and-eugenics-programs-in-the-united-states/

6.https://en.wikipedia.org/wiki/Lists_of_killings_by_law_enforcement_officers_in_the_United_States

7. https://www.washingtonpost.com/gdpr-consent/?next_url=https%3a%2f%2fwww.washingtonpost.com%2fworld%2feurope%2fthat-was-awkward–at-worlds-biggest-climate-conference-us-promotes-fossil-fuels%2f2018%2f12%2f10%2faa8600c4-f8ae-11e8-8642-c9718a256cbd_story.html

8. https://www.scmp.com/comment/opinion/article/3093825/beijing-enjoys-greater-legitimacy-any-western-state

9. Petition against these sanctions here. https://docs.google.com/forms/u/0/d/e/1FAIpQLSeX3BVo8lQy2bDBmjcbJkphiP_HI9tnrTnI_DZlKo8DTZFJcw/formResponse