My wife finds it hard to believe, but basically I think I’m an optimist at heart. Despite all the setbacks, humankind will get gradually wiser and we will learn how to make the future better than the past. Over the long term, of course.
I occasionally spot news items which seem to confirm, or deny, this belief. Here’s a couple from last month, on both sides of the argument.
A report from the Office of National Statistics states that there has been a 30% drop in the UK’s consumption of “stuff” between 2001 and 2013. By “stuff” they mean items such as food, fuel, metals and building materials. Some at least of this drop is because we have become cleverer and / or frugal in manufacturing items. For example, much less metal is now used in building a washing machine. Music downloads have replaced vinyl LPs and CDs.
The optimist’s view is that, perhaps, as western consumer societies mature, we choose to buy fewer “things” and instead spend our money on less tangible leisure activities. If this is so, there is a better potential for the sustainability of our lifestyles and more hope for the future of our finite planet. Environmentalist critics say that the ONS figures are flawed as they do not properly take into account how we, as a country, import our environmental damage, for example through imports of manufactured goods from China. Nevertheless, there is at least some evidence of a glimmer of hope for the future.
Beyond Our Means?
To temper my optimism was another story from the same day’s newspaper. The Bank of England reported the biggest rise in consumer borrowing for a decade. Borrowing rose by 9.1% in the 12 months to January. Whilst this has a positive impact on economic activity in the short term, the medium-term implications are more troublesome. A consumer debt spokesman forecast a 17% rise in unsecured debt defaults by 2020. A professional economic forecaster said mortgage-to-income ratios are at record levels. The outlook, when interest rates eventually start to rise, looks decidedly dodgy.
My principal concern is more basic. We Brits are currently living beyond our means. We are repeating the circumstances which led to the 2007-8 crash – only more so. It was excessive consumer debt which got us into this mess in the first place. The resultant bad debts threatened banks and so the government bailed them out, effectively “nationalising” the debt. Britain is uniquely vulnerable to the next global crash. We have an exceptionally lopsided economy. We have too much dependence on financial services – spectacularly so – and too little in other sectors, especially manufacturing. Osborne has done nothing in the last 6 years to correct this imbalance. His policies have, if anything, made matters worse.
Think of the tower in a game of Jenga. If the size of the base represents the size of the national annual economy, our speculative trading in the City would be a tower nearly 160 bricks high. Osborne is ideologically committed to removing as much regulation as possible – like removing the lower bricks, one by one, in Jenga. One small nudge (financial shock) and the whole teetering pile crashes to the ground.
So the good news is that we may have taken the first few steps towards a more sustainable future, at least as far as the world’s resources are concerned. But we’re saddled with a government that encourages a “Jenga economy”. Keep smiling…. through gritted teeth!