George Osborne, leader of the Wrecking Crew mk2

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I think we should be explicit… George Osborne is using neoclassical economic theory as a ‘blind’, in order to push through an ideological agenda.  It has nothing to do with creating an economic recovery.  Osborne wants to lock-in irreversible changes to the social and employment fabric of the UK.  He and his ilk, are not Conservatives in the classic sense of desiring to preserve the connections between the past and the present.  They are deliberately wrecking the UK economy (any new government will be faced with a shortfall in output of approximately 20% of GDP or £250+bn) but of course, any crisis is a money-making opportunity for the financial speculators, the corporations and the super-rich 0.003%.

If you want to know where, and what model, Osborne, Letwin, Maude et al are following.. look across the Atlantic at the US.  Osborne is known to be obsessed with American politics.  The Independent’s Steve Richards agrees that Osborne’s ‘philosophical’ position is to the right of the Republicans.

‘The Wrecking Crew’ is the description Thomas Frank gives to the economic/political strategy of the Republicans (in his 2008 book) but the same features have become all too familiar in the UK:

“Fantastic misgovernment of the kind we have seen is not an accident, nor is it the work of a few bad individuals. It is the consequence of triumph by a particular philosophy of government, by a movement that understands the liberal state as a perversion and considers the market the ideal nexus of human society. This movement is friendly to industry not just by force of campaign contributions but by conviction.”

The goal of the Republicans (Osborne et al) was/is to actually erase liberalism (social democracy, democratic socialism, the left)… an ‘end of history’ in which taxes and onerous regulation will never again be allowed to threaten the fortunes that private individuals make for themselves.  This is what Karl Rove meant by creating a ‘permanent majority’, and by Margaret Thatcher who said “Economics are the method, the object is to change the soul’.

‘Casting back to the early days of the conservative revolution, Frank describes the rise of a ruling coalition dedicated to dismantling government.  But rather than cutting down the big government they claim to hate, conservatives have simply sold it off, turning public policy into a private sector bidding war …

It is no coincidence.. that the same politicians who guffaw at the idea of effective government have installed a regime in which incompetence is the rule.  Nor will the country easily shake off the consequences of deliberate misgovernment through the usual democratic remedies.  Obsessed with achieving a lasting victory, conservatives have taken pains to enshrine the free market as the permanent creed of state.’

This ‘economic’ strategy is described in more detail by Thom Hartmann.  Essentially, the Republicans deliberately aim to run up huge deficits by cutting taxes for the rich (whilst keeping on spending).. a deficit which is then inherited by the Democrats. As Frank explains.. ‘the main reason conservative administrations run up as large a deficit as possible – is that deficits defund the left’ and prevent them from implementing their social programmes when they return to government.  

What is George Osborne playing at?

‘AUSTERITY’ IS THE CONTROLLED DEMOLITION OF THE WELFARE STATE

Robert Reich, former labor secretary to Clinton, commented on the Republican approach:

‘If the public thinks government is wasteful [useless], that’s fine.  That reduces public faith in government, which is precisely what the Republicans [Osborne] want.’

A major factor in the success of this strategy is that the right can play dirty (very dirty) but intrinsically, the left cannot. Furthermore, the mainstream political commentators constantly give the right’s lies and spurious rationales an undeserved credence, often in the name of impartiality.  The narrative… regardless of the facts… is all.

So what is to be done?

The current Labour leadership seems to be falling into the trap of accepting the ‘lack of funding’ caused by Osborne’s mismanagement of the economy.  Crazily, Ed Balls has even suggested adopting Osborne’s spending limits for the first year if they form the government in 2015.  However, his economic approach, Neo-Keynesianism, is a horrible, contradictory synthesis of Keynesianism and Neoclassical economics, which makes no sense to the post-keynesians (Modern Monetary Theorists) and Steve Keen.

Like heterodox economists, Semmelweis was ignored…

These heterodox economists are the natural inheritors of Minsky and Kalecki’s work which pinpoints the significance of private debt levels, and the need for full employment.  Professor Bill Mitchell writes of Osborne’s economic deception in the UK:

None of this austerity is remotely justifiable. The state budgets collapsed largely because of the automatic stabilisers which are like canaries in the mind – they tell you that the real economy is in trouble. The fiscal aggregates (budget deficit etc) are just like thermometers – they send signals about how the economy is going.

You do not cure a failing real economy by cutting spending. That is like curing a cut leg with amputation and then leaving the wound open. It is madness.

There are workers ready and willing to work. People are pessimistic. They need to feel secure and confident. Keynes knew that well. You don’t give people hope by worsening their circumstances. Desperation does not lead to positive responses.

The people are rebelling in the Middle East as an expression of their recognition that their governments have failed to represent their best interests.

It is clear to me that the British government and the US governments (and many state governments in the US) are no longer serving public interest. They are punishing innocent and disadvantaged citizens to satisfy the ideological (religious) beliefs of a monied elite.

I think people don’t tolerate that forever.

http://bilbo.economicoutlook.net/blog/?p=13576

Ed Balls should step out of the Tory trap and align the Labour Party with a commitment to full employment, a job’s guarantee for all who want, and are able to work.  By offering the alternative of a job or benefits, a Labour government could raise the wages of the private sector worker because employers would have to at least match the ‘government’ jobs in order to get staff.

Increased employment and increasing wages and benefits, would automatically create the demand…  the lack of which is the real problem beseting the UK economy.

What sort of government jobs?

Quite apart from replacing those removed by this government from nursing, the police and social care etc, we need a mass building programme of new affordable ‘council’ (democratically-owned) housing, and retrofitting of the existing housing stock with insulation and energy-conservation measures.  The UK has an abundance of renewable energy opportunities and could be a net exporter of energy.  Developing those resources could create the new manufacturing and apprenticeships in the non-South-East UK.  Scotland is leading the way but is still suffering from a lack of political will from Westminster.  Under this government, ‘Green’ capitalism has been shown comprehensively to have failed.

We need a New Green Deal.  If government can create £350bn of Quantitative Easing for the banks, they could easily do the same for the real economy and real people.  But do not expect to get such a solution from Osborne and the Tory/LD coalition.

The FT, Hedgehogs and the scale of the crisis

Has George Osborne been taking Trans-Atlantic lessons from Jude Wanniski and the Republicans?

What is George Osborne playing at?

The conservative agenda is becoming more transparent

Buffer stocks and price stability – Part 1

 

Is Ed Davey’s energy bill really turning Blue, Green?

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Open letter to Ed Davey on Draft Energy Bill

Open letter from SGR to Ed Davey, Secretary of State for Energy and Climate Change, on the Draft Energy Bill and wider UK energy policy. The letter makes four main criticisms: insufficient curbs on greenhouse gas emissions of fossil fuel plants; favouritism towards the nuclear industry; inadequate support for the renewable energy industry; and failure to prioritise energy conservation.

First posted on 19 July 2012

Rt. Hon. Edward Davey, Secretary of State
Department for Energy and Climate Change
London

Dear Sir

Open letter on Draft Energy Bill and wider energy policy

We write on behalf of Scientists for Global Responsibility (SGR), a UK organisation with 1000 members drawn from across the science, design and technology professions, and with a concern for peace, social justice and environmental sustainability.

We wish to add our voice to the widespread criticism of the Draft Energy Bill, published in May, and also highlight our broader concerns about current UK energy policy. In summary, our concerns are the following.

• Insufficient curbs on greenhouse gas emissions of fossil fuel plants. We note with considerable disappointment that the Bill has set an Emissions Performance Standard for new electricity generating plant at the unambitious level of 450 g/kWh, and that such power stations would be subject to the level until 2045 (Section 36). We are also very concerned by loose wording regarding exemptions for projects intending to use Carbon Capture and Storage technology (Section 37), which we firmly believe could be used to side-step restrictions for new unabated coal-fired plant. Both these factors are highly likely to undermine attempts to meet carbon reduction targets under the Climate Change Act. As the Committee on Climate Change (CCC) has recently noted,1 such shortcomings could be remedied by including an explicit target for a reduction in carbon intensity in the electricity sector – of no more than 50 g/kWh by 2030. We strongly urge you to insert such a target in the Bill.

• Favouritism towards the nuclear industry. The system of proposed incentives for building new low carbon plant is, in our view, strongly geared towards supporting new nuclear power over renewable energy technologies, and creating ways to side-step the commitment not to subsidise nuclear power. We have numerous concerns about nuclear power, but perhaps the most pertinent to the current situation is the poor progress being made with current new nuclear plant construction in Western countries – specifically, Olkiluoto in Finland and Flamanville in France (both many years behind schedule and massively over-budget) – coupled with spiralling estimates of build costs, more generally.2 Government cost estimates – and indeed those quoted by the CCC – do not seem to reflect such real world experience and we strongly urge the government to reconsider such support mechanisms. The key problem in our view is the current proposal for Feed-in Tariff with Contracts for Difference (FiT-CfDs). While a strong case may be made for support mechanisms for new technologies as they move towards commercialisation, to use such a mechanism for established technologies such as nuclear power seems deeply illogical – as well as being a clear breach of the coalition government’s commitment not to subsidise nuclear power. And for these mechanisms to lock the consumer into supporting such technologies for as much as 25 years (compared with only 15 years for renewable energy projects) is high risk. Coupled with numerous other measures which benefit only the nuclear industry – not least favourable insurance conditions and fixed unit pricing for radioactive waste disposal – this mechanism as currently planned has, in our view, little to justify it. We therefore call on the government to exclude nuclear power from the FiT-CfD system.

 Inadequate support for the renewable energy industry. There is a distinct lack of ambition shown by the government for the expansion of renewable energy in the UK. We have an enormous indigenous resource base – especially wind and marine – and costs are falling rapidly – especially in technologies such as onshore wind and solar photovoltaics. Employment opportunities in these areas are large and growing. The government is aware of all of these factors and yet has responded recently with over-zealous and poorly organised cuts to solar energy tariffs and with such lukewarm support for wind power that Vestas has cancelled its plans for a wind turbine factory in Kent which would have employed nearly 2,000 people. In general, the control framework set up for DECC spending on renewables is too restrictive3 – especially when compared with the generosity shown to the nuclear industry. Given the transitional nature of the financial support needed as these technologies move towards a more competitive position – unlike that for nuclear power – we strongly urge the government to shift its position and provide significantly more financial support to key renewable energy industries.

• Failure to prioritise energy conservation. We have been very disappointed by the government’s proposed Green Deal, which in our view is also unambitious. While improvements have been made recently, it still seems very unlikely to exploit the enormous potential for reducing domestic energy demand in the UK. Indeed, compared with existing energy efficiency schemes, analysis suggests that it will be markedly less effective.4 Two key flaws in our view are a low level for the ECO subsidies, and a lack of timeliness in issuing documentation to allow the businesses expected to deliver the scheme to forward plan. However, we believe that the problems with policy on energy conservation run much deeper. Here we wish to endorse the call from a recent WWF-co-ordinated study5 that argued that energy conservation be put at the heart of UK energy policy, rather than added as an afterthought. Only a fundamental shift of this nature will, in our view, deliver the combined goals of providing energy security, reducing greenhouse gas emissions and tackling fuel poverty.

In summary, we do not understand the government’s position. The development of a low carbon economy offers the UK a real opportunity to create long term jobs through sustainable improvements of households and businesses across the UK. Government support and stronger regulation would drive a strong regeneration of the economy. In our view, there is a powerful argument to use what would amount to a small proportion of the sums for quantitative easing (which currently stand at £375bn) for direct support of a large-scale UK-wide insulation and business premises upgrade programme. Recent studies show that such a programme would pay for itself at commercial interest rates, provided funding of the order of £5-10bn can be secured for major city regions such as Leeds, and that this activity could be scaled up across the UK.6 We are aware that such proposals have been put directly to government by both CCC expert advisors in the economic sphere, and by other senior advisors to government, and we think that this is an opportunity that should be grasped for the benefit of the UK economy, our world standing as a climate change leader and would have support of the public.

Sincerely

Dr Stuart Parkinson, Executive Director
Dr Philip Webber, Chair

Cc:
Rt. Hon. Charles Hendry, Minister of State, Department for Energy and Climate Change
Rt. Hon. Gregory Barker, Minister of State, Department for Energy and Climate Change
References

1. CCC (2012). Meeting the Carbon Budgets: 2012 progress report to parliament. http://theccc.org.uk/reports/2012-progress-report
2. For example:
The Times (2012). May 7. http://www.thetimes.co.uk/tto/business/industries/utilities/article3406852.ece
Toke D (2012). May 5 (updated June 21). http://realfeed-intariffs.blogspot.co.uk/2012/05/edfs-nuclear-plans-are-more-expensive.html 
Toke D (2012). July 16. http://realfeed-intariffs.blogspot.co.uk/2012_07_01_archive.html
3. DECC (2012). Control Framework for DECC levy-funded spending. http://www.decc.gov.uk/assets/decc/11/funding-support/fuel-poverty/3290-control-fwork-decc-levyfunded-spending.pdf
4. For example:
Goodall C (2011). http://www.carboncommentary.com/2012/01/03/2230
5. WWF et al (2012). Securing the UK’s power supplies.http://www.wwf.org.uk/research_centre/research_centre_results.cfm?uNewsID=6074
6. Gouldson et al (2012). The Economics of Low Carbon Cities. University of Leeds.http://www.cccep.ac.uk/Events/Past/2012/April/EconomicsLowCarbonCities-mini-stern-review.pdf

About Scientists for Global Responsibility: 

Unlike the ‘technological optimists’ SGR recognises that science, design and technology are indeed part of the problem; but, unlike those who are indifferent or even hostile to science, SGR also recognises the enormous contributions that science, design and technology make to our civilisation and wellbeing. The new problems, as well as those that have always been with us, such as starvation, drought and illness, require a combination of new scientific, economic and political solutions.

If social justice, care for the other species of this planet, and a concern for future generations have their rightful place as fundamental values, then science, design and technology can be much more part of the solution than part of the problem. Here are just a few programmes that deserve much more science, design and technology funding …

  • the clean, sustainable production of energy, and its efficient use
  • the development and application of biological and medical knowledge to the benefit of all
  • the study of social and economic affairs with the aim of improving the lot of all
  • the development of clean, efficient transport systems, in a social setting which provides needed transport for all but inhibits unnecessary travel and freight-miles
  • the use of information technology to increase energy efficiency, reduce the need for transportation, eliminate unnecessary labour, and promote access for all to humanity’s pool of knowledge
  • the design and construction of energy efficient and zero energy building.

Lobbyists are destroying the democratic process.

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As each new lobbying scandal is revealed, it becomes clearer and clearer that much of our so-called ‘democratic’ process is distorted by their hidden and insidious influence.  There should be general outrage at the manner in which vested ‘for profit’ interests are allowed to play such a large part in determining policies which have such potentially damaging, even life-threatening, consequences.  The conflict of interest in the energy companies’ hold over government, juxtaposed to peak oil production and dangerous global climate change, takes the activity of lobbyists into a different league of global nihilism.

Three months before last year’s election, David Cameron described commercial lobbying as the “next big scandal waiting to happen”. He said it had “tainted our politics for too long” and “exposes the far-too-cosy relationship between politics, government, business and money”.

But in spite of David Cameron’s assertion, there have been many extremely troubling disclosures about lobbying over the last 18 months….  private health providers being deeply involved with Andrew Lansley’s NHS reforms, employment protection insurer, Unum’s help in constructing the Welfare reform bill (1); Atlantic Bridge, Werrity, Liam Fox; and now the boasts of easy access to top Conservatives by PR company, Bell-Pottinger (The Independent 5.12.11).

Freedom of Information requests by Caroline Lucas MP, have also made public the disturbing links between the Department of Energy and Climate Change, and the big energy providers (2):

http://www.guardian.co.uk/business/2011/dec/05/energy-companies-lend-staff-government?intcmp=239

At least 50 employees of companies including EDF Energy, npower and Centrica have been placed within government to work on energy issues in the past four years, the Guardian can reveal. The staff is provided free of charge and work within the departments for secondments of up to two years.

… Consultancies with major energy practices also supplied expertise, including KPMG and Ernst & Young.

In a bi-lateral manner, civil servants are similarly seconded into energy industries, such as Shell and Horizon Nuclear Power (whose aim is to build nuclear power stations in the UK)… but notably not into the Renewable industries.

“Companies such as the big six energy firms do not lend their staff to government for nothing – they expect a certain degree of influence, insider knowledge and preferential treatment in return,” said Caroline Lucas, the Green party MP. “At such a pivotal time in the UK’s energy and climate change policy, as ministers must get to grips with the realities of climate change, rising costs and energy insecurity, the strong presence of vested interests is a real cause for concern.”

This is of particular currency, given Osborne’s catastrophic Autumn Budget Statement, which provoked a flurry of letters to the Observer (4.12.11) from a broad alliance of countryside campaigners, wildlife groups and green activists.  They accuse George Osborne of a “stunning disregard” for the environment (3).

Osborne told the Commons last Tuesday: “We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers. All we will be doing is exporting valuable jobs out of Britain.” … he wanted to ensure that “gold plating of EU rules on things like habitats” was not putting “ridiculous costs” on firms…..

 

With the government outlining cuts in solar energy subsidies, reforming planning regulations and introducing tax support for energy-intensive industries, the chancellor’s rhetoric has infuriated the green lobby. “Following the chancellor’s autumn statement, we can say that the coalition is on a path to becoming the most environmentally destructive government to hold power in this country since the modern environmental movement was born,” states one letter, signed by the green campaigners George Monbiot, Tony Juniper, Jonathon Porritt, Caroline Lucas, leader of the Green Party, and others.

A second letter, from the heads of the RSPB, Greenpeace and others, says: “The stunning disregard shown for the value of the natural environment not only flies in the face of popular opinion but goes against everything the government said in June, when it launched two major pieces of environmental policy – the natural environment white paper and the England biodiversity strategy.”

http://www.guardian.co.uk/uk/2011/dec/03/new-green-alliance-savages-osborne

That the Conservative Party has again revealed itself to be the ‘nasty party’ only interested in profitability, over-exploitation of natural resources and the ‘redistribution of wealth upward… and offshore’, is of little surprise.

However, that it has such total disregard for the findings of climate change scientists is nothing short of homicidal, particularly for those populations dwelling in the climate-vulnerable low lying countries.

New data revealed at the UN climate talks in Durban, show that carbon dioxide levels have increased by 49% since 1990, and this significantly reduces the world’s chance of avoiding dangerous climate change.

Prof Corinne Le Quéré, director of the Tyndall Centre for Climate Change Research said (4):

“We need to do something about the 80% of energy that still comes from burning fossil fuels.”

She said the problem was urgent, as the chances of holding global temperature rises to less than 2C above pre-industrial levels (which scientists regard as the limit of safety) beyond which climate change becomes catastrophic and irreversible, were dependent on emissions peaking by 2020 at the latest.

However, far from abandoning fossil fuels, it is clear that the Tory-LDs are intent on expanding our reliance on gas fired power stations, and ‘crowding out’ renewable energy sources.

‘The construction of new renewable energy generation capacity has fallen dramatically, as the big six energy suppliers pursue a “dash for gas” policy that could put the UK’s climate change targets out of reach and leave households with higher bills.

The number of new wind turbines built this year is down by half on last year….

The pipeline of new projects has also stagnated – this year, 2,058MW of windfarms were submitted for planning permission, compared with 2,080MW in 2010, and the number approved dropped markedly, from 1,366MW in 2010 to 920MW.

This contrasts with the 30GW of new gas-fired power stations that are at planning stage. These will require tens of billions of pounds of investment, coming mostly from the big six energy suppliers.

Although gas is cheaper than renewables at present, the cost of renewables is steadily coming down, and over-reliance on gas is one of the key factors behind high energy bills, according to the government. About 60% of rises in the past year have been the result of the higher cost of fuel imports.’ (5)

This seems to be under the direct influence of gas lobbyists, supported by research from Tony Blair’s favourite consultancy , McKinsey, who argue that ‘gas is green’ because it produces about 50% of CO2 that results from burning coal.  Needless, to say that after installation, renewable energy production of carbon dioxide is virtually zero.  Furthermore, renewable energy poses no security risks, and even with the huge government subsidies given to fossil fuels, it is estimated that they will quickly become cheaper even than coal.(6)

As Michael Meacher writes (7):

And now we learn that nuclear is crowding out renewables.   Total investment in UK renewable energy fell last year by 70%, the £200bn needed to create a low-carbon UK energy sector by 2020 is nowhere to be seen, and fossil-fuel gas-fired power stations are being given the go-ahead everywhere.   The addiction to fossil fuels, so far from being broken, is actually tightening, even though over-dependence on gas exposes Britain to big energy bill rises from high and unpredictable world market prices.

http://www.michaelmeacher.info/weblog/2011/12/greenest-government-ever-this-lot-are-deepest-brown/

Julia Steinberger, lecturer in ecological economics at the Sustainability Research Institute, University of Leeds, said (4):

“The economic crisis should have been an opportunity to invest in low-carbon infrastructure for the 21st century. Instead, we fostered a lose-lose situation: carbon emissions rocketing to unprecedented levels, alongside increases in joblessness, energy costs and income disparities. Surely the transition to a green economy has never seemed more appealing.”

And she could have added the one in four living in fuel poverty to her list. 

Next week on 13 December the European Commission will release its 2050 Energy Roadmap that sets up the signposts and the routes that are meant to lead Europe to a decarbonised future. EER’s Brussels correspondent Sonja van Renssen concludes ‘Despite all the modelling, it is the decisions taken by policymakers that will determine what our energy future will look like.’ (8)

And how do politicians determine their policies?  At least part of the answer is given by the journalist behind the Independent’s news story about Bell-Pottnger (9).

‘Although the PR industry claims that it is simply participating in the democratic process and contributing to the public debate it has to conceal most of its activities from public view if it wants to manipulate public opinion and government policy.’

 ‘The most important point is the behind-the-scenes influence. If PR companies are altering Wikipedia pages, manipulating search results to ‘drown out’ negative coverage, setting up fake blogs, writing addresses to the United Nations, that’s disturbing; if they have cosy, unpublicised access to politicians, that’s a scandal.’

For there to be a democratic process in government, there needs to be transparency, and to remove the lobbyists, the transnational consultancies, and the industry placements, completely or at least, much further away from government policy making.

The big six energy providers have government over a barrel, and they do not want to see their profits or power disappear with de-centralised micro-generation of renewable energy;  Hence, Exxons funding of climate deniers discrediting climate scientists; Hence, misinformation about the capacity and security of renewable energy production; Hence, the inflated claims for CCS (carbon, capture and storage).

The Centre for Alternative Technology have developed fully researched blueprints for rapidly de-carbonising the UK by 2030 but they are largely ignored by the political process (10).  ZCB 2030 demonstrates that nuclear, gas-fired power stations, oil and expansion of coal mining are simply not necessary, and, furthermore, are not financially justifiable.

The only purpose that continued use of fossil fuels, serves is in creating profits for, and maintaining the political power base of those, who pay the PR consultancies and lobbyists.

Green capitalism just ‘isn’t working’.. and it is certainly ‘hurting’ the global biosphere. We desperately need politicians who put the needs of people and the environment before the profits of vested interests.

(1)  https://think-left.org/2011/11/22/welfare-reform-and-the-us-insurance-giant-unum/

(2)  http://www.guardian.co.uk/business/2011/dec/05/energy-companies-lend-staff-government?intcmp=239

(3)  http://www.guardian.co.uk/uk/2011/dec/03/new-green-alliance-savages-osborne 

(4)  http://www.guardian.co.uk/environment/2011/dec/05/carbon-dioxide-emissions-biggest-jump

(5)  http://www.guardian.co.uk/environment/2011/dec/04/renewableenergy-energy-industry

(6)  https://think-left.org/2011/10/03/‘clean-coal’-another-financial-device-for-the-city-2/

(7)  http://www.michaelmeacher.info/weblog/2011/12/greenest-government-ever-this-lot-are-deepest-brown/

(8)  http://www.europeanenergyreview.eu/site/pagina.php?id=3400

(9)  http://www.thethunderer.org.uk/2011/12/06/bell-pottinger-and-the-bureau/

(10)  https://think-left.org/2011/07/27/the-feasibility-of-renewable-energy-with-specific-reference-to-the-establishment-of-hvdc-power-grids/

https://think-left.org/2011/10/21/bring-me-sunshine-the-photovoltaic-phenomenon/

https://think-left.org/2011/09/25/the-black-stuff-was-our-heritage-green-is-our-future/

Postscript:  With all the sophisticated ‘smoke and mirrors’ that constitutes current political practice, it is little wonder that a psychiatrist in Ireland has suggested putting Lithium in the water supply to cheer us all up.  http://www.guardian.co.uk/environment/shortcuts/2011/dec/05/should-we-put-lithium-in-water