Recession? You Need Free Market Principles.

The many strands of recession

This post comes as a direct response to a ‘conversation’ I had with another person regarding recession, current economic climate and political solutions to Government debt and failings.

My intention is not to appear biased in favour of UK political preferences or experiences. I just want to raise the topics that were initially put to me, and answer with my thought on them. So, here is the basis of the initial conversation:

‘Free Market Principles (*description located at the bottom of the post) will save the US from falling into the same problems as Europe and the UK now face’.

I have been wondering just how many of these principles, and in what measure, are actually already adopted in countries all over the globe? Could it be that countries already going through recession ignored these principles and therefore floundered? Could these principles alone be the answer to and solution for future recessions? Are a set of inflexible principles capable of such a feat? Are reasons for recession so ‘cut and dry’?

Well, the person who argued the merits of Free Market Principles used certain failings as a measuring tool to highlight what had brought about recession; unemployment, Government debt, taxing the rich, ‘big Government’ as opposed to limited Government, and the over reliance on grand scale public welfare or social welfare policies classed as the ‘Nanny State’.

Now there are issues which can be debated.

Those of you, who may read my blog, you might be already familiar with my take on the UK Government and welfare system – NHS and state benefits. See below for further links:
Poverty In The UK
The UK Welfare State
The Declining Health Of The NHS

These systems are not perfect, and I will be the first to admit that, but like anything there is more to the issues than may initially appear. That is why no issues which any country or Government face at the moment can be so easily deemed a failure or because of recession. The background information for that failure should be first discussed first.

Let me also add, no country is perfect and neither are ANY Governments. There are many mistakes made, and many issues then created as a result of bad policies or decisions.

On to my thoughts:

I am not going to break down exactly how Free Market Principles apply or should apply. As I mentioned earlier I want to see behind the reasons for failures, to talk about the ‘tools’ used as a measure of failure.

Government Debt:

Initially I question the sweeping generalisation of Government debt as a simple cause for recession. Some nations like the UK for example have had to have debt to survive 2 world wars. Without debt the country would never have scraped through such detrimental hardships brought about by the wars.

Factors that lead to any Government debt are a ‘chicken and an egg’ scenario; many issues, like those the UK faced in the war eras have been running on since that time without being fixed. Deep flaws in policies and decisions have occurred as Government has grown and changed its form over the years. The welfare State for example has its very origins in the aftermath of the 2nd World War, and since then it has out grown its initial remit, but this change has never been fully represented in the entity it has now become (I will discuss this later). Hence, issues linking to failure.

In most countries there will be hidden issues, plastered over cracks that once recession hits them, they become highlighted and exasperated; these cracks then become huge holes, for example issues with unemployment. These issues may have been left lingering until a recession hits; when a country or Government is under the most scrutiny, then the issues have to be seen to be dealt with, then they gain attention.

Factors for unemployment do include going through a recession:

Yes, but other factors can lead to the final breaking point. Rapid changes in technology, disability, changes in business, changes in supply and demand, attitude towards employers, willingness to work, immigration, climate change, migration, perception of employees, employee values, discriminating factors in the place of work (may include discrimination on the basis of age, class, ethnicity, colour and race) and ability to look for employment all effect the figures initially before any recession begins.

Taxation is never a favourable topic:

Raising taxes is not especially popular either, and when the wealthy of the country are going to be effected, then that is seen as damn right outrageous. I will bring in France here: French Prime Minister has said there will be a 75% tax rate for people earning more than 1m Euros.

Now I don’t necessarily agree with the tax level France is opting for, but people should be taxed according to what they earn. Wealthier people shouldn’t have a free pass just because they bring ‘wealth’ into the country, because so does everyone who works and contributes to the economy of the country. It is merely that the wealthy have more money to be taxed or contribute to a country with, but they are part of the country too. The ordinary working person is affected more by fluctuations in tax during recession; on their salary and goods, and it is them who are generally Struggling To Make Ends Meet

Perhaps France opted for this tax increase for the wealthy as they didn’t wish to impose harsh cuts on public services that would affect the whole country. Look at the UK and the ‘Geddes Axe’; recommended slashing government spending in precisely the way today’s believers in ‘expansionary austerity’ recommend in time of rescission. Did it work for the UK in the 1920’s, no and consequently this spiralled UK’s debt levels. Pre First World War debt levels weren’t attained again until 1990. So cutting Government public spending isn’t always the answer.

Public services are a drain in times of recession though:

Well they have been a drain for years and why, well there are complex reasons. Let me concentrate on the UK’s NHS. This system has evolved over the years; peoples changing lifestyles, higher populations, larger catchment areas, more diagnoses of illnesses before unrecognised, Doctors running National Health and Private surgeries which clash, not enough medical staff, privatisation of the 1980’s, rising wages, Primary Care Trusts and the amount of ‘pen pushing’ bureaucrats hampering Government money being spent where it needs to be. In the UK ‘big Government’ as opposed to the limited version is not to blame for the failings, but rather that Government hasn’t enough of a hold and control over proceedings. They haven’t a clue what is going, and therefore the whole system has become lax, un-scrutinized and out of control. It is a lack of grasping the changes and implementing a policy that reflects this that causes the trouble, not recession.

The NHS is not perfect, but again neither is for example the US system, and the US isn’t in a recession like the UK. People in the US can’t afford insurance (30 million of them to be precise). So, how can limited Government eradicate any of these issues for any country?

OK let’s talk about who likes Free Market Principles.

Well, the conservatives who claim to have a profound love of them have no use for them; professing fealty to the markets is only a rhetorical strategy. Some would say they favour policies that distort the market in such a way that income and wealth flows to those at the top, but given that most people who cast votes in elections are not among that rarefied few, they have no desire to defend those policies on their merits. So, do they have a place in a society where the majority struggle to live??

But big Government ruins the countries wealth:

I feel a Government needs to know what is going on in their country, not be blind to it (I argue they are blind enough). It is a Governments duty to ensure its citizens when in need, receive help in the form of public services. They are there to respond to needs or why else do we elect them? What is the need for Government per se if they have no role in the country they govern?

I think everyone should be ensured they have a slice of the cake in the 21st century, even if it is a small slice, better than starving to death under the premise of ‘we can’t intervene we are a limited Government’.

People should not be allowed to flounder and disappear just like dust under a carpet; just because they aren’t a member of the ‘select committee’ (the wealthy) in society.

Boom and bust is worse under principles advocating intervention:

Well maybe, but then under a limited Government where there is no intervention is anything truly invested in; anything other than protecting and encouraging wealth? Pursuit of wealth above public needs can be detrimental to a flourishing society, as it reflects and encourages only a certain percentage of people and people’s lives. Not everyone can be wealthy, not everyone’s lives run smoothly.
I for one don’t want a return to a Dickensian way of life, I think I prefer intervention.

*Free Market Principles:
Individual Rights, Limited Government, Equal Justice Under Law, Spontaneous Order, Private Ownership, Subsidiary and the Golden Rule of honesty. Yet I am not going to focus on whether or not these principles, word for word, do impact and can solve recession. Instead I am going to think about reasons

Another Day Another Strike

‘Se Vende’ or For Sale – pertinent sign to denote how staff feel about proposals

Regional Government in Madrid performed an unexpected back track on their plans to reform the structure and function of La Princesa hospital in the capital.

On October 31, regional Popular Party (PP) premier Ignacio González announced that the pioneering research hospital, which has stood for more than 150 years, would be turned into a specialist centre for the treatment of over 75’s only.

This was a shock, considering La Princesa is my local hospital. Also upon visiting there I couldn’t quite believe how busy the place was; it is not as though the services it provides the community aren’t sorely needed. Without treating adults of all ages, where else would the patients go? Surely another hospital couldn’t cope with stresses and strains of extra people to attend to, not to mention to services that would be lost to the community if La Princesa was made ‘redundant’ of its current functions.

The reason for La Princesa’s importance in my local area is that it offers the community 40 specialist treatments, which include; brain surgery, facial reconstruction surgery, and thoracic and cardiac treatments. Also, the population it serves exceeds a quarter of a million (just within its catchment area).

La Princesa is an important piece of the public service jigsaw. A large ‘player’ to try and maim without backlash.

This Government has proposed health cuts previously, and they didn’t go down well with the populace either; so what were they thinking? Well, they they haven’t been obviously as it seems a panicked move to quickly ‘save money’. A false economy in the long run though, with more people unemployed, less health care, more illness and strained services; kind of like cutting of your nose to spite your face.

If the Government had listened at all to the messages of the previous strikes and protests, they would have realised and taken seriously how their electorate felt about such cuts. Yet, they haven’t. So, on the 16th November I was out and about in the evening, and managed to witness another massive protest carried out by the staff and patients of La Princesa. It was moving to watch.

The people were obviously frightened that the hospital would close; losing the services it provides and lose staff. Health care is a vital public services, and public services in any recession are essential for the life blood of the country and the Government. To meddle without good cause will create havoc in the community, and soon make any political party unfavourable. It seems ridiculous to merely chop away in such a careless fashion at a service much required.

Crying for La Princesa

There has even been a petition gained of over 200,000 signatures, one signatory was Madrid’s Mayor Ana Botella. Showing how far the discontent reaches with Government proposals.

From the retaliation of the community, and the hospital staff, PP representatives of the Madrid region’s health department met with The Hospital Workers’ Committee. Funnily enough after this there was a backtrack on the original scheme to curtail La Princesa’s range of services. A concord was reached that the hospital will retain its current status, and continue to treat adults of all ages, and the teaching and investigation it performs too.

Labour unions however remain sceptical and continue to accuse the regional government of acquiescing to private businesses. Allowing private companies free rein to manage the hospitals, although the buildings are being constructed with public money.

These fears have credence as premier Ignacio González proposals already highlight; administration of six recently built hospitals will be soon tendered out to the private sector. More saving money, yes, that and more cuts to the budget. Planned healthcare spending in the region for next year has been cut by seven percent (which is roughly 45% of the budget for health for next year). So this is indeed another attempt to save money, and repay Spanish debt; but at a cost to health and well-being.

Though there has been a Government opinion ‘turn around’ on La Princesa, protests will continue. The people want this ‘turn around’ to be presented formally and documented in writing.

Does that denote a severe lack of distrust for this ‘Popular Party’ Government (ironic name)? Yes, I think so. I suppose their track record already supersedes their words.

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© Bex Houghagen and The Savvy Senorita, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Bex Houghagen and The Savvy Senorita with appropriate and specific direction to the original content.

Poverty In The UK

Child poverty on the increase in the UK

‘Family breakdown, drug addiction, debt and education results are among the factors that could be used to measure child poverty in future, UK Government ministers say’ BBC News.

This reality check comes after the findings of The Institute for Fiscal Studies released their two year projection for how child poverty in the UK will rise by 400,000.

Work and Pensions Secretary Iain Duncan Smith responded by saying that the current income-based method of measuring poverty is too simple, therefore new indicators have to be agreed upon to measure this thoroughly.

Wow, is all I can say; and it took a UK Government how long exactly to realise that the measures relied upon to indicate poverty were failing? Where have they been hiding all these decades? Oh, of course, behind the curtain of their lives of privilege. Doesn’t this highlight just how out of touch these ‘leaders’ are with their own electorate?

Salary alone means nothing to poverty indicators; nothing is so ‘cut and dry’. I have mentioned this before; Poverty In The 21st Century

People can be working full time, and still drop below the poverty line because of; general household bills, unemployment, benefit reliance, family breakdown, increase in food prices, increase in travel prices and fuel, debt, house repayments, childcare, how large the family is, so on and so on.

At the moment a child in the UK is considered to be living in poverty if the household income is £251 per week or less. This then equates to 2.3 million children living in poverty. Now considering that as a fact which stands alone, too many children are in poverty; but now add that to the other indicators above, which are currently not being included in the poverty measures. Now I’d say that 2.3 million is looking severely under estimated as a figure; so low in fact I doubt any Government would like to consider the reality of the poverty that blights the UK!

All in all it is a nice figure to dwell upon, considering the UK is supposed to be a ‘developed’ country, wealthy and upwardly mobile! Seems to me that propaganda has never been so alive and well in Politics. It is just a question of whose faith Government ministers are trying to maintain; their electorates or their own?

Children in Poverty

Many decisions have been criticised as increasing child poverty, but one factor has been blamed as highly significant; freezing child benefit. The Labour Party have now warned that by 2020 the UK would return to “sky-high levels of child poverty” unless the Government made changes to this and other areas. Yet, with or without child benefit people would be poor. Child benefit is hardly enough to compensate for dire wages, high levels of debt, rising living costs and all the other things that make a person/family poor!!!!! Benefits are not the answer to the root of the problems.

So, I wonder what has finally brought the issue of poverty to the table of plenty. Well, the Labour Party’s ‘picking’ at the current Conservative/Liberal Democrat Government no doubt has provided some encouragement. Shadow Employment minister Stephen Timms has been also blowing the trumpet of his own Labour Party Government; reminding the electorate of what a mistake they made in not re-electing them, laugh out loud!

Mr Timms has said that there had been a; “Big reduction of over a million in the number of children below the poverty line” when Labour held Government, and since the new Government gained power; “that number is now going up”.

Yet, what has any Government really done to improve the people’s lives? What one policy really has impacted on decreasing poverty in all its formats; from homelessness to child poverty? Answer, nothing substantial. They are good at bickering amongst themselves, blaming one another and scoring points; but facing the facts and dealing with then once in power, well, that is another story altogether! It doesn’t matter what Government is in power, things don’t significantly change for the people.
The major changes which are now creating significant impacts in policies, and reflecting poorly upon the UK Government is the economic crisis and austerity measures. Who knew this could be a positive thing?! This ‘series of unfortunate events’ has been a real kick in their rear; yet, people are still suffering, and not even the economic crisis has motivated the Government enough, well, yet anyway.
What will it take to make the Government change things??? How dire must it become for people, their people??

OK, so the Government has plans to carry out a consultation to consider what other factors need to be included to measure poverty. Yet, this is merely more time and money wasted, while people still live in poverty!

Even ‘The Child Poverty Action Group’ have raised concerns over this consultation, and proposed additions to the current salary measurement. They have questioned whether further indicators to mark poverty would only make defining it too broad and non specific (we all know the Government don’t deal with complicated very well). This too broad and non specific could only grant a free pass to any Government; they would then not be held accountable for any failings which could occur in this area. It would then be merely life in general to blame, not Government polices and taxation. A Government can’t interfere with life, the ‘free market’, capitalism or whatever else they can use as an excuse.

Anyway, while the Government bicker and decide to decide, poverty continues as it always has. A grim reminder that life isn’t all peaches and cream.

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© Bex Houghagen and The Savvy Senorita, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Bex Houghagen and The Savvy Senorita with appropriate and specific direction to the original content.

The Welfare State or a Scroungers Paradise?

At the moment there has been plenty of media coverage about ‘Social Security’ and ‘Welfare’. It seems if it isn’t the UK, it is Spain or the US that are fighting for more or less of the ‘Nanny State’.

The ‘Nanny State’ is a complex, and often antiquated system founded upon a set of ideals, which works to maintain the status quo of welfare, so it is available for everyone to access; but is it still doing its job and is it this enough in the modern world? Could a radical shake-up of the system be justified? How radical a change would be called for or tolerated to help to reform or re-create the system? Especially a system which might have served a country for so long, it is difficult to imagine being without it.

Welfare in the form of unemployment, sickness and disability benefits have changed lives; brought people out of poverty, saved people from poverty, and helped to support millions. Yet, there are always a number of individuals who spoil the system, flouting the premise of welfare rules just to con the country out money for nothing. This is where the negative begins to impact upon welfare, and soon the rot sets in to unravel any good that was ever done by it.

It is common knowledge in the UK that there are people claiming a benefit under false pretenses, Hell, I should know I have worked with said people! I know the scams and I know they are completed successfully as the system has no safe guard to prevent such fraudulent actions. Consequently, the amount of tax payer’s money leaking from the system every year is unquantifiable. Reasons being are that fraud is difficult to prove, and the evidence alone can take time and yet again money to pursue. So, how can this misuse of time, money and services be prevented?

It seems there is no answer, no Government has found one anyway, or maybe they are unwilling to do what is necessary to stop this. Maybe it would be too radical a step, but then what would be worse; continue pouring billions down a never-ending drain every year, or, fix the problem once and for all so those who truly need help get it!

The fact that there is help available for all, as long as people meet the eligibility criteria for a benefit, is a great thing, but therein lies the parody. A 24-year-old who is physically fit and able, can in theory and practice, claim unemployment benefit in the UK forever. The whole world seems to know this too, as there are many who come to the UK in search of work, and then they too end up claiming benefits. There was a case in the ‘Daily Mail’ recently regarding a Latvian woman, with 10 children, claiming every benefit available to her and still; demanding more. Now, there are people working in the UK, barely scraping by, what with the economy being as dire as it is; but yet they are not eligible for any help, why, because they work and are deemed wealthy enough. Yet, someone who has never worked, and there is no reason that they can’t, is eligible to take from a pot they have never paid into. The contradictions in the system go on and on to the point where people are beginning to question; what is the welfare system truly there for? Is it for those who genuinely need its help or is it just for those who want to scam the system?

I have met so many people who don’t claim what is rightfully theirs, because they feel ashamed, don’t understand the process or don’t know they are eligible; and then I have met others who milk it dry. I have met young men and women who could secure work, and even turn down jobs just to stay on benefits. I have met men of 45 made redundant having worked since the ages of 14 and 15, and they are told they can only claim a benefit for 6 months, and their mortgage payments won’t be covered by the welfare system. Yet, I have seen people claiming they live alone, when they have a partner with them, and they are receiving housing benefits for houses they don’t even live in! I have met people with extreme physical disabilities who get refused benefits, and some who don’t even think to try to claim anything as they just go to work; whilst a person with psoriasis is deemed disabled! Aren’t these the very contradictions which prove the system isn’t working as it should be? That the help isn’t being received by those who truly need it?

Oh, and one final thought: during my time working in the unemployment sector, one specific case stuck with me, and it wasn’t as unusual as it might sound. It was of a man in his late 30’s (physically fit and healthy), married with 5 children; he and his wife had been claiming benefits for many years. He said himself it wasn’t worthwhile him working, though he had been offered jobs, because the salary was so little compared with what benefits he received. Between unemployment benefit, tax credits, child benefits, housing and council tax benefits the man’s income for a month was £2000. That is equivalent to somebody’s monthly salary, and they wouldn’t be eligible to receive any benefits.

So, is it worthwhile maintaining a welfare system that perpetuates unemployment, because it provides more stability and income than an actual job, or, is it about time there were more restraints, and checks to ensure that only the truly in need received the help? Maybe a sliding scale of benefit payments, which could be assessed and based on individual needs, so that not everyone receives the same amounts? Or, is it time to bin the system and start all over again?

What do you think? What is the welfare system like where you live? Have you experience of the system? Do you think it works or is it failing? Do you think welfare doesn’t go far enough, and people need more, not less?

Leave comments below, thanks!

Copy Right Notice:
© Bex Houghagen and The Savvy Senorita, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Bex Houghagen and The Savvy Senorita with appropriate and specific direction to the original content.