A crisis like no other

Tipping or turning: the choice is still ours

We are in a bad place; a really bad place. The IMF predicts that the Covid pandemic will shrink the global economy by 5% this year, with a cumulative loss of around $9 trillion. Britain’s Office for Budget Responsibility (OBR) records a ‘lockdown’ economic collapse of over 20%, and predicts an annual economic contraction of over 12%.

Some 650,000 British workers have already been dropped from official payrolls. 11 million more wait in the wings, on ‘furloughed’ wages that come to an end in August.

As if this weren’t enough, Covid itself shows no signs of disappearing.

Brazil has 2 million recorded Covid cases; running second only to the USA. India has over 1 million. Britain – with the highest death rate in Europe – has put an extra £3bn into the NHS, in preparation for a second/winter spike. And the UN has launched its biggest ever appeal – for $10bn – to avoid 265 million people facing starvation by the end of the year: all down to the impact of Covid-19. But will anyone listen?

The biggest problem is that we are bereft of global leadership. The WHO is barely heeded by ‘pragmatic’ politicians driven by narrow, venal obsessions. So we all end up chasing the last set of missed opportunities.

Covid-19 is not going away any time soon. And if the 2 (apparently unconnected) reported cases of Bubonic plague take off – from the Mongolian border with China and amongst squirrels in Colorado – pandemic issues would suddenly become way, way more complex.

And finally, climate scientists warn that the recent Siberian heatwave – the hottest in recorded history – is a forewarning that some 3 billion people could be heading for summers that are “too hot for humans”.

Led by donkeys

It is against this backcloth that you have to judge the spectacle of Boris Johnson telling people to get back to work, and that Britain will see a “significant return to normality” by Christmas. My backside! No wonder his chief scientists chose to avoid the press conference. Honesty and absurdity do not sit comfortably together.

Britain is saddled with a Prime Minister who inhales Bolsonaro, injects Cummings, and then Trumps. Only those who embrace this as leadership get to share his platforms. It will all end in tears. The real challenge, however, is not just to rage against it but to see beyond it. This is what makes the recent Open Democracy[1] tirade against ‘doomism’ so important.

Open Democracy legitimately challenged the paralysis that can go hand in hand with pessimism. What we have to mobilise instead is transformative (and informative) hope: not a wish-list, but an urgent ‘to do’ set of imperatives.

As things stand, Parliament does not look capable of leading this process. Independent voices on the government benches get trashed and disciplined. ‘Remote’ parliamentary questioning may (sensibly) keep MPs safe, but it prevents them from ganging up to assert the sovereignty of parliament over government. And Opposition benches are still caught up in the immediacy of Johnson’s imbroglio of unending dishonesty. All are a long way from offering an alternative vision. To do so requires a lot of unravelling before you get to re-visioning. And in that sense Extinction Rebellion are right to insist we begin by telling the truth.

Speculative implosions

The Covid pandemic has profoundly changed the way we think about work. Companies (and households) have discovered they can work remotely, without the need for high cost, centralised offices. As lockdowns ease, this may become increasingly attractive. The panic behind Johnson’s crazy measures is that he wants to avoid the crisis in rentier capitalism that would follow.

In every town and every city, swathes of commercial buildings stand empty. They are joined by retail outlets and shopping centres going bust, and half-completed apartment blocks. Many of the current government measures, notionally supporting household abilities to pay rent or mortgages, have actually been about propping up the corporate owners of capital.

Since the 2008 financial crash, institutional investment funds have faced a slow-motion crisis as they chased after comfort zones of steadily rising rents and returns of 5-8 percent. But buildings that are empty and unlettable become liabilities rather than milk-cows. This is the next crisis.

The disinvestment tsunami

In all the talk about public ‘lockdowns’ there’s been virtually no mention of ‘gating’ within rentier capital markets. Half of Britain’s £500bn commercial real estate market is owned by UK and offshore investment funds. Fearing investors would jump-ship, real estate funds imposed an unprecedented lock-in, putting a block on share trading.

But the funds begin trading again in September. This is what scares Johnson. He is desperate to get us back into our old working and shopping habits so as to avoid the millions of pounds of rent arrears turning into a tsunami of disinvestment.

The real answer is not to underwrite private capital but to accept the subsequent transfer of bankrupt assets into the public domain. This would allow localities to re-vision and re-plan their future, around assets they own rather than ones they don’t.

An alternative would be the re-introduction of rent controls, but at the moment Labour seems to have taken the rather silly view that these would breach the Human Rights Act. Other countries disagree. No matter, it’s an obstacle you can easily get around. Simply follow examples from Germany where, in buildings that fail to meet high energy efficiency standards, all the energy costs become the responsibility of the landlord not the tenant. The effect is the same: you shift the balance of supportive intervention from capital to labour, and from high energy consumption to low. Then the urgent public need is for skills programmes that underpin the subsequent re-visioning process.

New lamps and old

As ever, the most important lesson is ‘avoid getting conned’. One look at those queueing up to give evidence to Parliament’s Environmental Audit Committee’s Inquiry into ‘Greening the post-Covid Recovery’, illustrates how desperate big corporate interests are to be the ones who re-define the game. But the real answers require a different politics more than different technologies.

As a starting point, MPs should have a quick read of David Sykes The Energy Onion[2]. Although the focus is on what tomorrow’s energy system should look like, its real value is a template for post-Covid economics. So what does it mean?

Sykes begins by prioritising the need to use less and waste less. Saving energy makes much more sense than endlessly producing more. Generate jobs rather than carbon emissions and waste. Then prioritise self- generation and local consumption rather than more expensive, centralised generating systems. Finally, as in Denmark, run your high voltage Grid on a not-for-profit basis; treating it as a national safety net, not a speculative market.

None of what Sykes argues is anti-technology or anti-innovation. It just puts sustainability and accountability centre-stage in tomorrow’s economy. The model can apply as easily to food, water, air quality, transport and eco-system services. What it requires is both national leadership and radically devolved delivery powers (and duties).

This is also what we are currently learning about Covid-19. It doesn’t matter whether localised ‘spikes’ reappear in Leicester, Blackburn, Liverpool, Manchester or wherever. All localities need full information if they are to tackle the crisis. Then they need the powers to do so. Test and trace systems only work if they can be applied quickly and locally. It is this strengthening of the public realm that presents our most urgent political challenge.

Cronyism and crisis

Parliament’s biggest failure has been its willingness to let cronyism own the crisis. The government has just sold – for £1 – the ownership of all our personal biometric data to Palantir, a data-mining company with million dollar contracts and deep political connections. The scope for manipulative surveillance is massive. If anything makes the case for the public ownership of data, this is surely it. But the deal was done with next to no scrutiny. This is how Britain is being run.

Johnson’s government is murdering democracy. The Party supposedly committed to free markets and open competition is giving ‘pork barrel politics’ a bad name. Under cover of the crisis, billions of pounds have been spent on dodgy contracts, for sub-standard equipment, and to ‘best mates’ companies. The most bizarre one was flagged up by the Financial Times.

PestFix, a pest control company with no manufacturing track record, was given a £32m contract to supply surgical gowns to the NHS. This was despite the fact that some 16,000 actual suppliers also tried bid in, many offering immediate supply. Instead, the government made no attempt to conduct proper tendering, insist on local production or test ability to deliver. Currently, PestFix has delivered only half the surgical gowns. All have come from an external Chinese supplier.

A Labour government would have been savaged for such skulduggery … and rightly so. But Johnson’s cabal gets away with levels of corruption that have become its hallmark.

It won’t get any better. The coming US-UK trade deal will be stripped of agricultural standards, climate protection, transparent tendering, on-shore banking or product labelling obligations. By then, our personal health data will already be in the hands of US corporate healthcare. The rest of the NHS will surreptitiously follow.

If politics (and our prospects) are to be rescued there has to be a leap from the pork barrel to the onion. Meaningful, sustainable democracy has to be rebuilt from the base. Citizens have to be empowered and included. Solidarities that are global must find their roots in the local. What we’re waiting for is leadership.

Alan Simpson

July 2020

  1. Open Democracy, https://www.opendemocracy.net/en/oureconomy/faulty-science-doomism-and-flawed-conclusions-deep-adaptation/
  2. David Sykes, https://medium.com/@david.sykes70/the-energy-onion-a-simple-conceptual-model-for-a-smart-system-3c1f2c5cbd1a

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