Public Policy Conjectures

Strategies 3,4 and 5 of the 10 Strategies

Having outlined the Vision and identified extra resources to make it happen, I wish in this third essay, to propose 3 strategies to help achieve the Vision through private and public investment. I will also make further proposals on public investment in Strategy 9.

Our starting point is the 10 strategies repeated again here:

1    Economic modelling of this proposed programme

2    A 20 year programme of redeploying wasted resources

3    Responding to climate change and tackling plastics

4    Establish a North/South divide and Southern restraint policy

5    Private sector investment

6    A 20 year programme of raising wages and incomes

7    A 20 year programme of reducing benefits

8    A 20 year programme to create a society where food and housing are paid from the income of each person and family, and pensions and social care in old age are paid from their savings

9    Public sector investment and day to day spending

10  Continuing to promote high tech etc

Strategy 3 Climate change and Plastics

The strategies for combatting climate change and adapting to it need no repetition here.

But we are not doing enough and not fast enough. Freeing up resources as suggested above is critical to boost action.  We need every resource we can muster, including wasted workers’ hours and lives, NEETS and labour freed by A.I.

Instead of that we are back-pedalling, talking oil, giving loans, not making grants, mealy-mouthed and having recourse to self congratulation for our wonderful achievements so far—world beating they are, of course.

Rather we need to recognise that our world-wide responsibilities for climate change demand more, not less action, more, not fewer resources.

They probably involve a lot more immigration.  There will be huge numbers of migrants when climate change hits low-lying areas, storm-prone areas (Fiji and probably other countries are already hit), drought areas, wildfire and maybe other disaster areas.  Welcoming more immigrants may be the best way we can take more of the burden of combatting climate change—which we in the West began and continue to create.  We have a huge debt to the rest of the world to repay.  The White Man’s Burden, which we carried so haughtily, but so lightly, in the 19th and 20th centuries, will become a real burden in the 21st.

And the OECD says spending on climate change promotes economic growth.  I thought we  all wanted economic growth.  So why don’t we double what we are spending on climate change?  That’s a serious proposal—especially as I link it later to tackling the North/South Divide as well as to economic growth.

What we also neglect at out peril are plastics.  This, rather than climate change, seems to be the existential threat to the planet, as well as to humanity. There are solutions to climate change, and they are within man’s capacity.  But plastics are truly frightening.

There seem to be no comprehensive scientific explanations for its effects, consequences and how to manage it.  Plastics seem now to be everywhere: in the air, in food and water, in our bodies, our brains, even in plants. Is plastic inert?  How will it affect living cells?  Will it even affect the process of photo-synthesis, the whole basis of life?

At the very least, we need–and the world needs–major research into the effects of plastics plus hugely increased action on remedies already agreed.

This now seems to be the Number 2 Priority after climate change—or the Number 1 Priority before climate change.

Strategy 4 The North/South divide and Southern Restraint

The North/South divide has been a government concern since at least 1945.  For example to my knowledge, various factory buildings in northern Cumbria were subsidised by the Labour Government. The Jarrow March in 1933 had brought home to the nation just how bad things were in the north.  But concern was no doubt widespread well before then.  Indeed, problems had emerged in the 1880’s in Lancashire, as Indian manufacture and competition forced cotton mills to close. There were no immediate opportunities for employment for those laid off.

Throughout my life, reviving industry, employment, incomes and wealth outside the south-east has been a continual issue.  Indeed we purposefully moved to Liverpool in 1968 and to Teesside in 1971 for me to work in local government to play my small part in renewal and development in those places. We spent 8 and a half years in the north.

In my lifetime there have been a whole string of government initiatives to assist areas outside the south-east that have been struggling one way or another.  Some businesses have taken similar initiatives or have been subsidised or helped by government so to do: IBM in Peterlee in Durham, Ford in Speke, Liverpool and Nissan in Sunderland are but examples.

Various rail schemes have been similarly promoted or even, dare I say it, undertaken—-HS2 being the latest example.

But there has never been a national strategy as such for the north nor for the further west nor for Scotland.  And most importantly, there has never been a strategy for managing or rebalancing the North/South divide—and other divides from the South.

If we are to address other major issues, then this one must be added and integrated into the wider action. And it should also deal with the adverse development pressures in the south, which are serious and growing.

We all vaguely know what is needed in the north or elsewhere, as it is commonly discussed —albeit vaguely and with little action.  But the problems in the south have not been adequately rehearsed.  They are big and growing and can be managed and halted if we divert resources and development elsewhere.  That is, to where they are really needed.

So what are the problems in the south? And what can be done to alleviate them for the benefit of the nation as a whole?

The south is over-crowded with people and cars and lorries. It is so congested it is very difficult to get about, except locally in the least populated areas. It is relatively highly polluted. Long term water supply is a problem. Flooding in the Thames Basin is a long term problem of climate change. There is considerable pressure on the countryside and coast. Development of any kind is difficult without impinging significantly on existing local settlements.  Countryside solar energy installations on any scale are very intrusive for large numbers of people.  Many settlements are linear and when extended or expanded create bigger urban barriers between areas of countryside. The proposal for a new town at Micheldever, north of Winchester, begins to fill the substantial countryside gap between Winchester and Basingstoke.  It strengthens the line of settlement from Clacton and Southend through London to Bournemouth and Poole in Dorset . It helps build up the barrier between the counties of the south-east and the rest of England.  There are also many historic towns and villages in the south east, like Winchester, the ancient capital of England, that do not wish and should not be merged physically with other places in the next 50 or 100 years.  That would be their fate if the last 100 years of strategically unplanned development continues. There is no regional strategy, leave alone plan, to stop 50 or 100 years of future muddling through to greater and greater development.

So managing the south is completely consistent with aiding the north.  Indeed it greatly helps aid to the north and elsewhere, because there is huge pressure for development in the south.  New and expanding international businesses generally prefer the south for a variety of well-known reasons. Medium-sized UK businesses aspiring to grandeur or international business will no doubt feel much the same. Because London is the focus of internal UK transport, it is also a huge  attraction for any regional or national business. It is the UK centre for international travel. The south-east is also the main focus of private health care and any business with similarly rich customers. Indeed, it is probably the case that any business that is not purely local or requires a particular location (e.g. quarrying) will be attracted to the south.

Diverting the expansion of all this business outside the south will both help elsewhere and help the south.

So what can be diverted? The third runway at Heathrow is an example, by creating a major international airport at least as far north as the north midlands.  Building new towns outside the south. (The Labour government is expanding mainly southern towns and building only one new town—in the south!—well near Bristol ). We need to consider the north east from Teesside to Newcastle as a major area of alternative development to the south—it is the only such area that I can identify in England.  It includes large former areas of mining and industry, including Tony Blair’s constituency!  Why not a high-tech area from Durham University to Peterlee (assuming IBM can be persuaded to go back!)  I do not suggest that either Teesside or Newcastle themselves should be substantially expanded.  I just hope local people, of whom I was one for 5 years, are not offended by this suggestion!  Getting the promised railways built and getting junctions improved to enable a proper cross-country services to be provided. (Britain does not have a rail network, despite Robert Stephenson’s ardent wish in the 1850’s—only London radial routes, and a few east-west routes that trip over these radial routes.)

But why should development not be in Scotland?—or in other places in need of it? With climate change, places north of London will be more attractive for most people who do not wish to have extremely hot summers, where working conditions become very difficult.

Incidentally, a proper freight railway line from the Midlands to Southampton would be an improvement on the last 200 years.

To promote development outside the south, a range of restrictions on development there will be needed, and encouragement, subsidy etc will be needed to develop elsewhere.  Skills training, relocation support, publicity and education and other similar support will also be needed.  Relocation from London of some public services may also be worthwhile. But moving big central departments or quangos may simply cause operating problems and increase silo-working in the public sector.

A substantial number of exceptions and special support will be needed, e.g. for seaside towns in the south, brownland and some established employment.  So-called affordable housing everywhere is a big issue. Probably there are other important exceptions.  Special attention is needed for the south-west.

It will be crucial also to restrict development into East Anglia as this will out-compete the north.  Because much of it is low-lying, it will also be more affected by sea-level rise and flooding.  The discussed 1 million population settlement south-east of Cambridge should not be permitted.

Besides the south-west, other regions or sub-regions outside the south have low-income, low employment problems and these should also be addressed.

I have already mentioned one possible alternative to development in the North East of England: development in Scotland. The concentration already of development in South Wales and Welsh geography, seems to me to preclude further major development in Wales.  Northern Ireland is of course part of the island of Ireland: its future lies there, not with the UK.   Unification is only a matter of time.  It is already 900 years overdue.

Climate change is a huge new factor.  This year, in particular, with heat waves from May to September, there are very powerful reasons to focus future development on what are now becoming the more hospitable regions of the country: the North.  Very hot summers are not conducive to energy, enterprise and get up and go.  The south is far more vulnerable than the north to the problems of the much higher temperatures: to transport; to supermarket freezers; to insulation and air-conditioning; to water supply; and to many other features of modern living.

The nation desperately needs a workable strategy for the north/south divide, both for the north and for the south. Now there are a few ideas on the table.

So let’s bring three strategies together

Strategy 2 above brings the first tranche of money: from the redeployment of real resources.  Strategy 3 brings the second tranche: action on climate change.  Strategy 4, this  strategy on remedying huge regional imbalances, brings another big impetus. Let’s bring these three together and give a big boost to economic growth–which is just what everyone says the nation needs! Let’s get on and do it! Why ever not?

Strategy 5 Private Sector Investment

In my earlier essay on “too many prime ministers”,  I said that the third reason why it is so difficult to solve our national problems, especially by spending money, is the abject failure of most of the private sector to grasp the opportunities of Thatcherism; and by some of the greedy private sector to indeed grab it wholly selfishly and avariciously. 

The high tech world has invested and expanded at astonishing rates, and other worthy parts of the private sector such as tourism have also.  But generally, industrial production has declined and new technologies have been under-exploited.  But crucially, huge resources have been poured into financial services, many of which, probably most of which, simply move financial assets and land and property from one person to another.  They also waste huge amounts of labour and waste human lives.  (For an exposition of the same point by a couple of learned economists, see Mariana Mazzucato and Adam Smith: The Value of Everything.)  Professor Mazzucato also pointed out to Jeremy Hunt on BBC radio that around 80% of City investment seems to go into financial services. It also amazes me that too many key parts of the UK private sector are owned by foreign businesses, equity funds etc, rather than by one of the top financial centres of the entire world, the City of London.  The steel industry is now owned by India, the jewel in the Victorian Crown, and by the Chinese and soon by Labour; much of the car industry by the Japanese, losers in the last war; and some dubious tax-evading financial wallah, owns H.M. Treasury in Whitehall. Our banks have spent £50 billion on compensating their customers for the banks’ financial fraud, and, with help from this Labour Government, are avoiding paying much of the £30 billion compensation due to customers for another fraud upon them. And the Labour Government of 2008 had to rescue the entire private sector and the nation as a whole from the incompetence of the bankers.  The private sector was bailed out by the despised public sector!  And by Socialism at that!

If the private sector has failed all governments so badly, but particularly the Tory governments of their own mates, including the Blessed Margaret, then no wonder we have no economic growth.

Over the course of history, economic growth has come first from agricultural surplus.  Egypt was exporting corn even in the Bronze Age.  But with civilisation, living in cities, growth also came from manufacture: bronze and iron itself and metal products, also wooden and animal products. Jewellery and other luxury goods began to be produced and traded.  Slaves were also key commodities.  So were services like skilled architects and engineers, musicians and actors, painters and decorators. And then financial and other professional services. King Alfred engaged management consultants—Irish monks, rich from experience in Charlemagne’s court.  (These management consultants are the earliest I’ve ever identified in history! )

These forms of economic activity and growth— and decline— continued right up till the industrial revolution and of course continue to this day.

When trade, rather than manufacture, dominated economies, discovery of new products, such as spices, or new markets, dominated the business and the economy. Invention was not a major factor, though it was always important. Indeed trading was pretty difficult without the invention of the wheel.

But then came the world of rapid invention, dramatic inventions, rapid advance in technology —the world of the industrial revolution, of a torrent of new products and cheaper and better ones.

But why were there suddenly so many inventions in such a short space of time?  Why hadn’t this happened before?  Why did Newcomen invent the first commercial steam engine? Because he knew and understood the pump idea. He had a new design, he could see commercial use in mines—where Savery’s pump had been used for a number of years.  So it was a mixture of curiosity, knowledge, expertise, imagination, and commercial acumen .  It also required spare labour.  This was only available as the industrial revolution got under way, because of the huge improvements in agricultural methods and productivity.  There was also indeed an Agrarian Revolution.  Beside that, a lot of work had been put in from time to time over the last 2000 years since vacuum and steam power were mentioned by the Greek Cstesibius around 250 BC and Vitruvius between 30 and 15 BC.  In particular very significant developments took place in the 17th century to produce Papin’s and Savery’s engines. Meanwhile chemists had worked on materials and lubricants and other necessary materials for producing better quality iron and making machines actually work and not break down.

The steam engine in particular, motivated, inspired, drove inventors, businessmen, travellers, people, the press, the arts, indeed the whole world into a raging torrent of invention and expansion and economic growth—an explosion of energy and achievement never before seen in the whole history of the world.  And since that Big Bang, the Universe of innovation and economic growth has continued to expand.  There is still no expectation of even a steady state theory—though the rate of expansion may well be slowing, especially in the West.  

For these pioneers it seems to me that risk was not and still is not an issue.  It’s the excitement of the technology, the adventure, the ambition and energy of the participants that drives it all.  I can’t imagine Jobs and Musk were ever much obsessed by risk. They probably didn’t even notice it. Only later, with new entrants to the market and when the market and the suppliers are mature does risk get much attention.  It is a sign of conservatism that we are all obsessed by risk now.  The whole nation is risk assessment mad.  Even charities.  As a consequence, I think the entire nation is risk averse.

Privatisation it seems to me transfers risk from the private sector to the public sector.  It’s supposed to do the opposite. But the private sector for some reason swarms round public sector customers like bees round a honeypot. And the Private Finance Initiative (PFI) schemes do seem to have been low risk for the private sector.  Current NHS scandals do suggest that private clinics are having a good financial ride.

After the pioneers, what then seems to happen is that others jump on the bandwagon.  They seem to be of two types.

Other inventors who come up with other ideas, better ideas, cheaper ways of doing it.  James Watt is a good example, with Newcomen’s engine. The other are those motivated by money: here’s a super new way of bettering themselves by getting rich and then spending well-earned gains.  And then there are the rogues or criminals like Hudson, the Railway King.

Finally, there are the plain copycats who may eventually flood the market with suppliers and eventually go bust along with those who were earlier in the business.  The best examples are Winchester tile and shoe shops, and probably soon, Winchester cafés and restaurants. The sad thing is that the whole market then faces ruin, because there are too many suppliers and not enough customers for anybody.

Warren Buffet has a justified reputation for becoming the richest man in the world by investing long-term.  And simply looking at the short-term does not help a nation very much.  It does not grow the economy.  BBC Radio News reported the other day that big businesses owning UK agriculture land are going for shorter farming tenancies, say 5 years, as this is more profitable. Great! But what tenant farmer will invest in a reservoir to combat climate change or even a barn, on a 5-year tenancy? It sounds like a brilliant recipe for further private investment failure.

Trump’s transactional approach is not conducive to long-term business.  And of course, estate agents and developers like Trump and Witsoff are not in it for the long term anyway.  But the short-term, in-out, transactional approach is a key feature of US business.  It seems quite at odds with Japanese or East Asian practice, which is now dominating the world. And Muslim finance seems also to me to work only or mainly in a long-term manner.

Of course, not all US business is transactional and short-term. The oil, automobile and computer chip industries are long term.  Indeed, the US is rushing to replace Taiwanese chip technology and production with American.  And computing and now A.I are anything but short-term in US business.

Economic growth and capitalism is a complex matter.  It is not simply a matter of surviving the nastiness of Sugar’s tutelage and becoming a slick entrepreneurial apprentice.  And a quick millionaire.  Nor does it seem that reducing crowding out by the public sector has boosted the private sector.  It seems simply to have replaced the lost economic activity, rather than grown more.

So why are Americans and the Japanese, Chinese and Indian businessmen much more dynamic?  And why do the Swiss thrive?—and until very recently, the Germans-despite losing the war?

British businessmen are not backward in financial services. Or tourism and leisure services.  But they do seem to be more so in other fields.  However, as I have demonstrated, many of the financial services do not add value.  They do not improve our standard of living. They do not provide more and better goodies.

It seems to me that a lot of business skill and acumen needs to be diverted from financial services and other parts and inspired to invest in real things, not dots on computer screens.

This can only happen voluntarily and it hasn’t happened up till now.

We seem to be bereft of ideas as to how to change things.  Ideas need to come from business, from the private sector.  I can supply wild and different ideas, but not necessarily ones that will work or make money.

So maybe a new dynamism in the private sector can come from a national vision to which most of us can commit.  But that commitment can only come if the vision contains some clear and attractive business targets: climate change investment, regional re-balancing, confidence in house building, public action to make this a high-wage, bigger market economy, good pensions, public investment in infrastructure that clearly supports the vision, long term plans and commitment.  This Vision tries to do this, and to do it in a coherent, corporate  way—not in silo politics manner. Then business perhaps can invest in business that increases productivity, growing the economy

But business has to rise to the occasion. To see the state as community, not the enemy. To see the state contributes to wealth creation with infrastructure, health care and education and is not just the gift of the private sector.  To see taxation as a means to achieve common goals and to distribute wealth and incomes to make poorer people richer, so they can spend more in the private sector market.  To realise nations and economies have always thrived throughout history where public and private works together in some form of partnership—recognising mutual value in their endeavours.

The private sector is its own master.  That’s one of its huge strengths.   If it chooses not to invest,  or invests in mainly financial or other poor value services, then it won’t be effective, and outsiders can’t make it do so. Lack of investment has  been our history for years.  I believe it’s been our history since around the 1880’s.  If the private sector doesn’t change that, then all the wealth the public sector creates will be in vain.

I hope the private sector can see possibilities in combining investment in climate change and radically transforming regional unbalance to achieve greater economic growth. And see economic growth as producing bigger markets peopled with richer customers, buying more goodies. And also see better pensions, even promoted by the state, as a way to maintain and even expand the retirement market.  What I seek is synergy from this combination—the sum being greater than the parts.

A vision to raise private sector investment and dynamism has to inspire.  If this Vision does not inspire, it will not change people, it will not change business and it will not turn the economy of the nation round.

But somebody else could have a better vision, now, couldn’t they?  I don’t mind. But let’s have one! It’s what the nation needs!

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