Economics and the art of dog walking.

 

In today's world of harsh economic realities, I have found myself behoven to create an elongated tale to explain to you, the general public, how our officials try and negotiate the world around us so that we may put artisanal lava bread on our expensivley polished oakwood dining furniture. 

All right I am being both patronising and sarcastic but bear with me. 

I was out with my dogs this morning and by the time I arrived home I felt that most walks I have with my canine beauties are of profound allegorical importance and I can extract life affirming lessons that would help the world to gain insight on the world we live in.

Aim high!

So my allegorical tale starts just before the front door . There are only 3 important financial forces (I made that up I just happen to have 3 dogs- just come with me on this).

The first force is the big one. It is the big dog! This one needs a firm hand and a strong leash for if you turn your back on it for one second it will disappear into the woods and run amok. We shall call this dog Inflation. Do you see where I am going with this?

This dog takes a bit of time to get it girdled up in its harness the other 2 dogs, lets call them Growth and Consumer Confidence are less difficult once this has been achieved. Growth is a little bundle of energy that pleases itself, starts fights with bigger and uglier dogs and only chases half the balls you throw for her. Consumer confidence is a shy little rescue dog that has probably been abused in a former life and is now scare of its own shadow, growls at all and sundry and will make a run for cover if any big dogs such as Inflation take any sort of interest in her. 

Once Inflation is shackled the other two dogs come to the lead more oblingly and Consumer Confidence does get excited at the prospect of fresh air and the chance to have go to the toilet. Growth doesnt care as long as it tastes of chicken.

And so our economy bounds down the avenue of possibility until we reach the park of harsh economic reality. Growth and Consumer Confidence can be let off leash soonest and can be trusted to look after themselves but Inflation must only be allowed out if the coast is clear and free from the tyranny of the St Bernard of Depression (Inflation goes to town on that one) and the Shitsu of Authoratative Regulation. A spoilt brat of a dog never let off its lead by its poorly directed owner who then tells you how badly trained all your dogs are. Inflation takes lumps out this one.

How am I doing so far

So Inflation can be let off to run as longas it takes growth with it but always under the control of the squeaky ball of Interest Rates. A few quick squeezes of this ball and Inflation returns to my side. all the while Growth and Consumer Confidence just trot about sniffing and doing all the other things dogs do in parks. 

And so as you meander around the park of harsh economic realities whilst keeping your charges in sight or at least able to respond you can then return home safe in the knowledge that your economy has progressed in a safe and orderly fashion.

Never relax though because you never know when the Staffordshire of chaos will erupt onto the scene. Allowing Inflation a little rough and tumble is all very well but when Inflation pisses off into the woods and Chaos turns its attention to Consumer Confidence you have to act quickly and leash Consumer Confidence because she will just bolt for home and cross the lane of Perpetual Jeopardy without a second thought.

Edging closer to Consumer Confidence with out her running away is quite a trick and might involve telling her that you are headed in a different financial direction and when she finally turns in you direction she can be leashed and brought to safety

Growth, meanwhile doesnt care what its doing as long as it tastes of chicken

However you sometimes have to grab what you can and hope as you run after Consumer Confidence that there is no object propelled to flatten her.

Did I tell you I had 3 cats?

It's at this point that the black cat called Assets decides that it wants to run alongside Inflation, Growth and Consumer Confidence and you must just leap across the Lane of Perpetual Jeoperdy and hope your Assets follow you and remain intact. 

There you have it. Economic and financial activity as seen through eyes of 3 canine lovelies!

Plus ca change - Labour's Early Days

 Let there be light

This summer the UK made  a major change, Just as the rest of the western world seemed to be fighting off right wing idealists from power, The UK dumped its right wing grouping and took up with a more left wing group called the Labour Party. Left wing? Sometimes. This government is hardly distinguishable from it's predecessor however. 

The UK has (in my mind unbelievably) returned not one but 3 Conservative Prime ministers and that doesn't include the the two holders of office who didn't gain their position in a general election. They are good at that the Conservatives, changing governments without managing to go to the people for an opinion.

Anyways...

There was little exuberance upon the election of this government compared to the advent of Blairite versions.  perhaps the world the Labour party exists in today is different to those times. The financial landscape is for definite. Tony Blair had a much better economy than Keir Starmer to play with. but the reason for the lack of enthusiasm was that it isn't very clear exactly what the incumbents philosophy s on how to improve the lives of its subjects. 

we haven't finished paying for the economic crash of 2008/09, Plus Brexit and now Covid.

Heads up, I am a remoaner at heart. I still cannot see what it is that the political Barmy Army of Johnson and Farage thought we would be better off with. All we seem to have done is reopen wounds in Northern Ireland and make it harder for food supplies to reach super market shelves

So what can be done?

Well infrastructure is always a good one. It is deemed acceptable by those that would lend us money to do so on the back of building things. Things like railways, bridges, improved public transport, communication/telecoms/internet. 

As a for instance going North / South in this country is quite good compared with anything that wants to go East/West. Upgrading railways between Manchester, Birmingham and Leeds would be my choice. If money can be found for one line in London (Elizabeth Line) surely the regions could be helped out too.

I am a proponent of hi speed trains but the current plan for the UK is beginning to look like a horse that the infamous committee designed. Not reaching anywhere and not long enough to make much difference to the travel time. The reason costs have escalated is largley down to the dozy Conservatives pandering to the Not in My Backyard Brigade and have had to use a heap more tunnels than was originally envisaged.

I know AI has been talked about. I am afraid I will have to investigate how that will benefit before I engage in pushing it.

Borrowing costs are going up across the world so better make sure it is for stuff we can use 

Governments like a little bit of inflation and a lot of growth. Inflation means that money borrowed becomes less challenging as its relative worth declines and growth means more tax income to pay for it.

So lets see what happens next  

What Happened Next

Rachel Reeves - the current incumbent for Chancellor of the Exchequer for the UK, delivered a speech in late January an analysis of this speech can be found here. It more or less makes my blog entry redundant. There are also links to some BBC articles pointing out the lack of obvious investment in the North East Of England. Also making my blog entry redundant.

So what can I add? 

Not much truth be told

I did do a blog which has links to a phenomenon called Zipfs Law. The law basically states that London is basically too big. Or rather the other cities in the UK are too small. London has become a super massive black hole at the heart of England as it just sucks in ALL resources, finance, agriculture, people - well almost everything.

The danger for the rest of the UK is that the rest of the country will effectively wither and die as London will gravitate EVERYTHING to it. 

It was one of the reasons used for NOT building HS2 as it doesn't bring The North of England closer to London more like the north becomes closer to London. Yes I know it amounts to the same thing but what I am trying to get at is that rather than giving the North access to London it gives better access for London to reach out and usurp local services and facilities and bring the work to London. 

As I said in the earlier blog was that the government is the only organisation in the UK capable of taking the UK in a different direction or at least negating the worst of the black hole effects. Better east west transport links of all kinds is a place where that could be applied. Better rail across the Pennines better communication between Manchester and Leeds. Better public transport provision in Leeds. The last city does not have a Tram Service for instance. These sorts of investments can transform cities if done right. 

I am not sure how Sheffield feels about it Trams. Nottingham works better and Manchester could not cope without their Trams. 

These programs are relatively cheap compared to 3rd runways

Mind you I support the 3rd Runway on the whole. Heathrow is a monster of a business and needs to grow to survive. Schiphol, Charles De Gualle and Frankfurt are all expanding and vying for superiority. To not recognise that Heathrow currently has the edge over the lot of them, it might not always be so if it is starved of investment.

But do not forget that relatively small investments in the North could lead to these areas improving their economic outlook.  

My final point is that Keynsian Theory argues that governments should spend when times are hard and pull back and tax when times are good. To even out the peaks and troughs in economic life so to speak.

What has been happening in the last 15 years is contraction. The governments in that time have sought to limit governmental spending as we borrow too much. But this sort of response is actually recessionary in a time of recession. 

Still what do I know