Tuesday, September 14, 2010

Cuba Libre

Being particularly fond of Cuba, Hemingway et al, I picked up on Guido Fawkes today that Cuba has announced that it will slash at least half-a-million state workers by early next year and reduce restrictions on free enterprise to help them find new jobs – Cuba's official work force is 5.1 million – meaning nearly 10% of all employees could soon be out of a government job. Which makes Chancellor, George Osborne's deficit reduction plans less radical than Castro's plans. The country's healthcare system is being reorganised as well. There is no money left and that's without any help from Gordon Brown either!

According to a statement from the Communist Party controlled Cuban Workers Federation – the only legal union in Cuba – this is "in support of Socialism" and will "make the Cuban production model more efficient." There is nothing progressive about a budget deficit…

Watching the RMT's Bob Crowe on the BBC's Andrew Marr show on Sunday, I was struck by how the political rhetoric of the Trades Union movement omits thirteen years of mismanagement by the last Labour government and focuses on 'Banker Bashing' as the source of all our problems. To be sure, a greater part of the responsibility for the global financial crisis lies at the feet of the financial institutions but a significant proportion of the responsibility lies with leaders, such as Gordon Brown, in allowing unrestrained 'Carpet-bagging' by the banks.

In the simplistic language of the demagogue represented by Mr. Crowe, the solution is to tax the banks until they bleed and deny the harsher reality of the new globalism, as described in the 'New Barbarian Manifesto' , written before the crisis, by Professor Ian Angell at the London School of Economics.

The broader problem that the Trade Union movement has yet to recognize involves not only immigration but automation as well. If you think of a pyramid, with the highly paid and highly specialized jobs in the economy at the apex and trades and skilled-jobs at the base, the greater part is taken up with public sector and service/manufacturing economy jobs. The latter are being steadily outsourced to cheaper locations, such as the Philippines for my BT customer service centre and the former has been used over the last fifteen years to conceal the loss of many thousands of jobs in the private sector, in banks, call centres, factories and elsewhere.

Once you realize this, then you also see that the skilled jobs two thirds of the way up the pyramid, for example computer programmers and software engineers are steadily being automated out of existence by increasingly advanced systems. This then leaves people I know either to try and 'Skill-up' even further in a competitive market to survive or look towards taking up a niche 'trade' at the bottom of the pyramid.

The really bad news facing our economy however is that both the apex and the base require a certain critical mass of everyday service, public sector and manufacturing jobs in combination to keep the economy rolling and healthy. Instead, what has happened over time is that this has tipped dramatically towards the public sector, much like a ship taking on water and the economy that powers the pumps, can't operate fast enough to keep her from the threat of capsizing, which has of course happened in Greece.

The BBC's Robert Peston, reporting from Liverpool today, said "The city has been experiencing a bit of a renaissance over the last fifteen years with employment up by 40%" He added however, that "While public sector jobs accounted for most of that 40% there was a simultaneous decline in manufacturing and private sector jobs by 40%, which means that Liverpool will be particularly hard hit by cuts in the public sector budget."

So all the dramatic, posturing, huffing and puffing by Mr. Crowe, the TUC and Harriet Harman avoids the reality that a huge public sector has to be paid for by a healthy, growing economy which can afford it. The UK largely floats on the income from the City of London and as much as we resent wealthy bankers taking huge bonuses, we simply can't afford to drive them out; in much the same way as King Richard I parked them on the Goodwin Sands and left them to the incoming tide in the 12th century.

Losing the election allowed Labour to escape without offering any real solutions to escape the consequences of their administration. The coalition government is forced to make decisions that it hopes will achieve a result but it can't be certain that the medicine will work as planned. For the rest of us, the real pain is yet to come and industrial action will only return us to the anarchy and misery of the seventies and early eighties with absolutely nothing achieved but prolonged agony for the UK economy.


ascu75 aka Don said...

Simon Love the article but we are just at the beginning. Industrial action wont achieve a thing, we can moan all we like about Bankers Previous Governments etc. The past is the past what and how will TDC help LOCAL shops and Jobs?

DrM. said...


It may seem trite but councils have to protect essential 'front-line' services and encourage the local economy where their remit allows. However most of the instruments for such lie outside local council control and involve the levers of the economy and central government combined.

Anonymous said...

The trade unions just don't grasp the situation do they? The sooner we start paying back our debts, the sooner we can finish paying them. The last thing we need are 70s style sympathy strikes and picket lines - both of which are, quite sensibly, illegal, springing up around the place.

They don't help anybody - other than keep trade unionists in work, don't forget - and the agony is just prolonged.

One wonders how effective any major strikes would be - many of those in work have big debts to pay back on mortgages or credit cards after all. It's no fun losing a job -and I'm about to go there myself -
but reality has to kick in sometime.