Monthly Archives: October 2014

The price of a free market

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As you do, I’ve been thinking about free market economics. So my thoughts turned to the Conservative party, the party of Thatcherism, natural home of free market economics. You’d think. But wait, what’s this? David Cameron wants to stop the free movement of people in the European Union. Well, he can’t have it both ways.

In a free market, prices reach equilibrium between supply and demand – how much they cost to produce and how much people are prepared to pay. This is tied up with the labour market. Wages are determined by supply of and demand for labour, and the cost of wages impacts on the cost of goods. In order for the buying and selling processes of the market to reach a fair price, there should be no barriers to such buying and selling. Otherwise this distorts the true market value. And for prices to reach equilibrium, labour must follow the work, or workers become scarce, wages rise and prices rise. For the market to work, people need to move to where the jobs are in order for supply and demand to keep up with each other. So, we are apparently governed by a party which believes in free market economics but no longer wants the free market to operate in Europe.

I am by no means a defender of free market economics, but if you want a free market, then you need a free market. Restricted movement of people around Europe is not a free market. If you want to intervene in the market, be my guest, I think it’s important that we do. But then you’ve conceded the principle that the market cannot be left to its own devices for the good of society, and it’s no good pretending you haven’t.

And here’s another reason why we can’t leave it to market forces. Openly stated on BBC news last night, in a report about the spread of the Ebola virus in West Africa, the reporter said that, until now, the virus had not affected enough people to make it worthwhile developing a vaccine. He meant financially worthwhile for the pharmaceutical industry, but that doesn’t really matter. In a free market, there must be thousands of people at risk of dying before it’s worth investing any money in order to save them. Because otherwise the company won’t make enough money. Well, that’s business, you cry. But that is precisely my point. What’s good for business and the free market isn’t the same as what’s good for people and society. Developing a vaccine for Ebola should never have been left until it made market sense. This is where public money should be spent for the good of all.

Not all our financial decisions should be left to the processes of free market economics. Some decisions are far too important for that.

 

It’s not fair!

blogactionday I’m posting for Blog Action Day today, when bloggers all over the world are writing about inequality. Inequality is a theme I often return to, but despite thinking about it for weeks, I’ve been wondering where to start. So, instead of having a beautifully crafted post, lovingly edited over several days, I’m actually bouncing off the things I read on Facebook yesterday. To be fair, that’s how I write most of my stuff!

I started with an infographic from http://realbritainindex.org/ . Since 2006, the consumer price index shows prices have risen by 26%. But when this is broken down to reflect what people actually spend their money on at various income levels, prices for the poorest 10% of households have risen by 32% because food and energy prices have risen by 40% and 73% respectively. We’ve all felt the impact of rising prices, but the impact has been greater if you are poor.

Then I came across an article about how Brighthouse is doing so well that it was able to open a new shop every fortnight last year. This is a shop which enables people who can’t get credit elsewhere, often due to very low incomes, can buy large and/or expensive household goods at small weekly payments. “Where a washing machine that costs £399 from Currys ends up costing almost four times that amount from BrightHouse: £1,560.” This is known as the poverty premium – you have less to start with, and then your essentials end up costing more because you can’t get the discounts that people who can pay up front or by direct debit can get. Energy bills and a TV licence are other classic examples. Or try this headline from the Guardian – “Food, clothes, transport, beds, ovens: the aid schools are giving UK pupils”.

I’ve also just been invited to an event in Sheffield which will revisit the report produced by the Sheffield Fairness Commission. This report used the 83 bus route to illustrate inequality in Sheffield. “The bus starts at Millhouses, in Ecclesall ward where female life expectancy is 86.3 years. By the time the bus has travelled down Ecclesall Road and into the city centre, female life expectancy has dropped to 81.6 years, and by the time it makes its way into Burngreave ward just 40 minutes from the start of the journey female life expectancy is only 76.9 years. This means that a baby girl born and who lives her life in one part of the city can expect to live, on average, almost 10 years longer than a similar baby girl born and living her life about four miles away, by virtue of nothing more than the socio-economic circumstances and area she was born in to.”

How did we get to this place? To a place where goods and services actually cost more if you are poor. To a place where the burden of our economic recovery is falling most heavily on the people with the least resources to cope. To a place, not only where families are living in homes without a bed or food, but also to a place where schools are stepping in to fill this gap because society’s safety net has too many holes in it. To a place where I can get on a bus at the bottom of my road, and within 40 minutes be somewhere where the women I meet can expect to die 10 years earlier than me. But more than this, why are we letting it happen?

I’m not asking about which economic policies have led to rising child poverty instead of falling child poverty, though these questions need to be asked. I’m asking every one of us in this country: why are we not all shouting “It’s not fair!” Because it’s not fair. Where is the mass movement to protest against the inequalities which are increasing in Britain? Where is the anger, where is the rage?

I’m left to draw the conclusion that people think it is fair. That we have swallowed the tale that families living off benefits at the expense of those who are working is what is really unfair. That it is fair to say that people get what they deserve because they make bad choices. We have been deceived into believing that this is the way things have to be while our economy recovers while we turn our eyes away from the individual misery and suffering and sheer bloody unfairness of it all.

There’s an old verse to “All Things Bright and Beautiful” that we don’t sing in church anymore “the rich man in his castle, the poor man at his gate, God made them high and lowly, each to his own estate.” We don’t sing it any more because we don’t believe inequality is God-given or in any way inherent or inevitable. It’s not fair, and I’m going to keep saying it until we can find a better way. So I’m glad to add my voice to others calling out the unfairness as part of Blog Action Day.