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news, views and issues around Greenwich, Charlton, Blackheath and Woolwich, south-east London – what you won't read in Greenwich Time

Can People Before Profit prosper in Greenwich borough?

with 44 comments

Tonight, Greenwich Council’s cabinet will vote to hive off its library service to Greenwich Leisure Limited. If you’ve no Valentine’s Day date, you could always pop along to watch proceedings (7pm, Woolwich Town Hall). Don’t go expecting heated debate or considered arguments, though – this is a decision that Greenwich resolved to come to long ago.

The Unite union, which represents library staff who face being transfered to GLL, is furious, accusing the council of a “sham consultation” and will be lobbying councillors from 6pm. (See its lengthy response to the council’s proposals here.)

Indeed, whether or not the decision is a wise one is not for this blog to determine. What can be said, though, is that once again a big decision is being forced through without much in the way of input from the public or, indeed, other councillors. Not, of course, that the Tories would object or that any Labour members would even mutter a murmur of dissent in public. Apparently there were some public meetings about this – well, I didn’t see anything, but one kind correspondent did get in touch at the weekend…

Around 25 people attended a “public information” meeting about the proposed transfer of Greenwich Libraries to Greenwich Leisure Ltd last night at West Greenwich Library. Surprising there were so many as it was barely advertised – a line or 2 in “Greenwich Time” (sorry “Royal Greenwich Time”) this week and a notice in the library a few days earlier. Apparently as there will be “no material change” in the library service, no public consultation is required. Apart from 2 “Friends” meetings, other library users have had no information. The audience were generally angry and suspicious at the lack of consultation.

It’s fair to say we have a problem in Greenwich. Sorry, “Royal Greenwich”. The council can force through more or less what it likes with only the slightest veneer of any scrutiny. Even if the Tories were to refer the decision through a formal scrutiny process, it’d get rejected by a Labour-dominated panel anyway. All the Tories can do is slightly embarrass the leadership in meetings that are barely reported outside. They don’t say prayers at Woolwich Town Hall – but we all know they’re on their knees to the Labour leadership, anyway.

Any opposition or scrutiny, therefore, has to come from outside the council. But even that’s faltered.

Councillors merrily shut down meetings to go and toast themselves, ignoring demonstrators and pressing local issues. Local newspapers ignore council meetings, while even pain-in-the-arse bloggers can’t spend all week sat in the town hall without earning a crust.

Last year’s council cuts passed without a murmur of protest, while trade union demos tend to appear motivated more by self-interest (which, of course is their job, to represent members) than by a desire to see the borough’s people served well.

Which is why I’m finding the establishment of Greenwich People Before Profit an interesting development. PBP’s long had a fairly high profile in Lewisham borough politics, including standing candidates in elections.

It even runs a cafe, Come The Revolution, at the Deptford end of New Cross Road.

Now it’s moving east, with a meeting tomorrow at Rose’s pub on Hare Street, Woolwich (7.30pm). It is “dedicated to combatting the privatisation of public services through actively involving people in opposing the Con-Dem coalition’s policies and the Labour lackeys in the council chamber who implement them in Greenwich”. Ouch.

In 2010, when I was involved in the Green Party, I did a bit of delivering around the Telegraph Hill/ Nunhead boundary and was struck by the number of PBP posters in windows. It’s fair to say the other parties aren’t particularly fond of them, and there was a bit of a squabble between them and the Greens for the lefty-we-don’t-really-like-Labour vote.

Indeed, PBP’s best known as a thorn in the side of established parties, and particularly Lewisham’s elected mayor Sir Steve Bullock. Last year I went to a Ken Livingstone campaign event in Deptford, and watched a PBP representative take great pleasure in asking wannabe London mayor Ken questions that would compliment him but condemn Lewisham mayor Steve, who was sat right in front of me. The mostly-Labour audience shuffled uncomfortably in their seats as housing sales and library closures were criticised from the floor.

PBP’s also involved in direct action – yesterday squatting five Lewisham Council houses in Deptford and Lee Green that were due to be sold at auction – and offering to do them up themselves, using local labour to provide homes for local people.

Lewisham’s long had a tradition of more diverse politics than Greenwich, and spikier protests – although that doesn’t always go down too well, as the activist who took over a public meeting at Blackheath Bluecoat school last autumn found.

But the boroughs are largely similar in nature (Greenwich is a tad more suburban) and while Lewisham has an all-powerful elected mayor in Steve Bullock, I don’t think anyone would dispute that Chris Roberts holds at least as much power as his neighbour.

Can PBP make an impact in Greenwich, where others have failed? It’ll be interesting to watch. If they get their way, though, local politics could become a bit more interesting. Whether or not you agree with them, something that whips up a bit of debate might not be such a bad thing.

44 Responses

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  1. It’s not true that I took “great pleasure in asking wannabe London mayor Ken questions that would compliment him but condemn Lewisham mayor Steve” at that meeting in Deptford last year.

    Livingstone promised a raft of measures that were in total contradiction to the actions of our Labour Mayor Steve Bullock.

    At one point Livingstone encouraged the audience to put up their hand s if they wanted local authorities to “start building council houses again”. Everybody in the room raised their hands except for at small group at the front around Steve Bullock

    I found the irony of the situation excruciating.

    Any pleasure you may have seen in my face was just an outward appearance that masked the pain in my heart.

    George Hallam

    14 February, 2012 at 10:16 am

  2. I could not agree More. Whatb Lewisham People before profit has been doing in Lewisham is awsome, I have never seen a group that so reflects the Community it serves.. The Come the revolution Cafe and the huge community stuff it does is awsome.. Get down there. and greenwich Voters, joing up.. This group is going places, because they get things done.

    Margaret Smith

    14 February, 2012 at 10:24 am

  3. Yes , Trade Unions look after members interests , especially in difficult times , but members are also borough residents and users of public services with an interest in the quality of the provision of those services.
    With that in mind the union Unite have started a community membership –
    “Unite’s community membership scheme brings together people from across our society. Those not in employment are welcomed into the union family, adding another dimension to our strength in thousands of workplaces across the UK”
    http://www.unitetheunion.org/community
    Greenwich Unite
    http://www.facebook.com/Greenwich.Unite

    Hopefully those behind People Before Profit can work together productively with all sections of the community including those behind Greenwich Save Our Services – http://greenwichsos.blogspot.com/ – in the best interests of the local community and not in both their own political self-interests ….selling their papers and trying to build their own political parties in competition with each other.

    Chris Guthrie

    14 February, 2012 at 12:30 pm

  4. Thank you for,yet another thought provoking piece. I now find myself logging on to the site before breakfast. Is this sad or what. This prompted me to go to the People before Profit Website which added little to the debate. I wish the organisation well if it helps to campaign against the Government who are determined to starve public services of resources to meet public need.

    I see no evidence that those organisations campaigning to preserve public services are spending much time in attacking Government. The loss of £63m brings serious pressures on services in Greenwich. This continues to impact on key services. What are we to do?. Some would argue,such as the Socialist Party that we should refuse to cut our budgets. The alternative would be for Government to take over in Greenwich and carry out the cuts anyway.

    The decision to transfer libraries to a not for profit organisation is the right one. This decision,despite the criticism was not taking lightly or quickly. As in the early nineties we have taken steps to remove a cherished service from the clutches f Givernment and protected jobs at the same time. That is the reality which is not ccepted by those who mix their politics with their trade union duties.

    However I do accept that we should have discussed this proposal more with residents . Lesson learned. From my own point of view I believe we must get out of th Town Hall more,communicate more with residents and not allow the disaffection of residents to be filled by groups like People for Profit. If this organisation is trying to be serious,where would they make the cuts. Shouting from the sidelines will not do.

    John Fahy

    15 February, 2012 at 8:03 am

  5. I would love to live in the alternative reality which groups such as this inhabit. The country is in debt to the international bond markets. We have no choice but to cut our budget deficit. Academic studies show that the most effective method of doing this, that is the way which will promote growth, is to cut spending more than raising taxes. It isnt pretty but it nees to be done. Same old Tories always having to clean up the mess left by Labour.

    Richard

    15 February, 2012 at 9:44 am

  6. [...] 853 wonders whether Greenwich is ready for People Before Profit. [...]

    Wednesday’s London Links

    15 February, 2012 at 10:20 am

  7. Oh dear Richard. “Academic studies show that the most effective method of [cutting the deficit], that is the way which will promote growth, is to cut spending more than raising taxes.” Which academic studies are these, exactly? If that’s the case, why are the bond markets threatening to take away the AAA rating, and why is the deficit not shrinking while unemployment soars?

    Same old Tories always auctioning off public property to their financial backers and screwing the rest of us.

    As for PBP, I agree with with many of their aims, but don’t think that forming a separate political party is the best way to achieve them.

    Aidan

    15 February, 2012 at 11:34 am

  8. Aiden, Reinhart and Rogoff have written about this in conjunction with their studies into what happens to GDP growth is greater than 90%. The bond market cannot apply a rating to a sovereign bond. Unemployment isnt soaring (its rising certainly).

    Richard

    15 February, 2012 at 1:03 pm

  9. Hear hear Aidan!

    Richard – I think you’ll find that economists (what write “academic studies”) are divided on the appropriate fiscal response to prolonged economic downturn. Very generally, the Keynesians advocate deficit-financed fiscal stimulus in times of economic crisis; they are opposed by the neoclassical theorists and the Austrian school, who advocate fiscal consolidation to fund deficit reduction and lower taxes to stimulate private sector growth. The intellectual foundations of both schools of thought are intimately tied to their backers’ political orientations, and neither is universally “correct”. However, the increasing divergence of outcomes between the stimulus-based approach being applied in the US – which is supporting growth – and fiscal consolidation in the UK – which is not stimulating growth and is increasingly seen as undermining it – suggests that the Keynesians are probably right this time.

    Franklin

    15 February, 2012 at 1:09 pm

  10. Franklin I suggest you read the General Theory and reconsider your response. For a start Keynes is hardly ‘of the left’. To suggest that Keynes always supported deficit financing by the government to respond to private sector demand short falls is simply not true. I cant remember the chapter when he suggested you should trash your bond market for instance.

    As for the US are they not achieving a fiscal expandion via extension of the Bush era tax cuts? Moreover as printer of the World’s only reserve currency comparing the choices their government can make to those available in the UK is somewhat facile. Basically China has to buy US Treasuries regardless of what the the US government does. In any case the US household sector was never as leveraged as the UK consumer during the boom. Given this stimulus they are still growing a couple of per cent below trend, at this stage in prevoius cycles you would expect GDP to be expanding a couple of per cent above trend

    But back to Keynes if you accept that a govenrment should correct demand deficits in a recession surely they should do the opposite during a boom (run a counter cyclical policy). What went wrong??!!

    Politicians should spend less time offering false choices to the electorate and spell out how bad our situation is and how difficult the next 5 or maybe 10 years will be.

    Richard

    15 February, 2012 at 2:12 pm

  11. The British Goverment is following the Japanese economic model, that has failed badly over the past 10 years, even Economists on News Night, say the Cuts are wrong.. How can it make any sense to keep millions of people on Benefit, instead of in work, paying tax, and spending money?. Lewisham People before profit, has a very clear agenda, unlike some groups that attack the Goverment or the new Right wing Labour party, they put forward real alternative solutions, they are not the Old Political Class, but a new breed of Community activists, that put the community, the people, before big political and business interests.They are correct to attack Labour in Lewisham for spending last year £6.5 Million on consultant fees, whilst closing New Cross library to save £108.000. Are they wrong to challenge the Council this week, for failing to secure the best deal for all local Tax payers?, when Lewisham Labour Council was set to sell of huge 3/4 bedroom family homes for as little as £130.000, Done up these homes fetch £400.000, just check on line, Who will benifit from this? certainly not the tax payer, or the 17,000 people on the boroughs housing List.. what do LPBP plan?, use local people to refurbish the homes, to get people off benefit and into work.. what do they want to do once refurbished? give back to families on the Councils waiting list in urgent need, and paying rent.. Labour abandoned these homes as it has the poor years ago.. it is far cheaper to spend £20./£40.000 once to bring back a family home into use, than to leave it empty for years, it costs on average £40.000 a year to keep just 1 family in hostal/B&B accommadation.. So clearly it is how we spend money and what we do with it?. They also propose to scrap the Labour Mayor in Lewisham, to save £250.000 plus a year, they also want to seek a cap on Top managers pay..As a resident and Tax payer, i am clear. the best Economic policy in Action is Lewisham People before profit.. And if you want to see them in Action, just take the time to go to the communty cafe they run.. Come the Revolution at 467 New Cross Road Deptford. open 8am-5pm Monday to friday and 11am-4pm weekends, Night time it holds community events, the stuff it does here and the projects under way will blow you away..These are not Politicians.. They are real People Heroes..join them. Vote for Them… Get every one to talk about them..Blog them..Praise them.. the greens once changed the way politics was done.. Lewisham People before profit, is the Only real alterrnative principled votes can support,,, or have your readers already forgotton the Labour Years.. PFI. Start of tutuion fees, Privatisation of the Health Service, Corruption on an epic Scale, 7 wars including Iraq.. with Blair in charge.?.

    Margaret Smith

    15 February, 2012 at 2:44 pm

  12. Margaret – that would be the same Japanese who embarked on the largest fiscal expansion the World has ever seen and have pushed their debt/GDP to over 200%?

    Richard

    15 February, 2012 at 2:49 pm

  13. Oh dear. Where to start?

    1. I didn’t say Keynes was ‘of the left’. I said that all major schools of economic thought – including Keynesianism, neoclassicism and the Austrian school – were shaped by the political orientations of their founders and key proponents.

    2. Keynes did advocate fiscal expansionism during periods of economic downturn, if necessary by borrowing on domestic or international markets, particularly when unemployment is persistently above the non-accelerating inflation rate of unemployment.

    3. It is misleading to suggest that deficit-financed fiscal expansionism will necessarily “trash your bond markets”. There is a Pareto optimum between fiscal policy that supports growth, on the one hand, and deficit reduction, on the other. It’s actually easier to grow yourself out of debt, particularly in an inflationary environment, than it is to amortise debt in a low growth, low inflation context. Of course you have to have a credible medium-term deficit reduction programme to staunch market concerns and contain spreads, but that credibility is conditional as much on expectations of future growth as on the depth and speed at which the deficit is reduced.

    4. The US is decidedly not financing its deficit spending from Bush era tax cuts. The US is financing its deficit spending from borrowing. US debt/GDP has increased from 60% to 80% in the past 30 months. Moreover, to suggest that it is possible to finance deficit spending from revenue cuts in a zero growth environment betrays a fundamental lack of understanding of economics.

    5. The USD is not the world’s only reserve currency. EUR, CHF and GBP are all reserve currencies.

    6. US and UK households were about equally leveraged before the crisis: 98% of GDP in the US versus 102% of GDP in the UK.

    What went wrong? In the UK? Successive governments, the regulators, the banks and households all failed to recognise the risk that the rapid accumulation of debt would pose in the event of the 100-year flood.

    Finally, you don’t strengthen your argument with statements like “I suggest you read the General Theory and reconsider your response”. In fact, it makes you sound like a twat. I suggest that you remain civil and stick to arguing the facts.

    Franklin

    15 February, 2012 at 3:59 pm

  14. Franklin.
    1. I dont disagree. Keynes has been hijacked by the left.
    2. Keynes was dead when Lerner discussed a NAIRU.
    3. I dont disagree in normal circumstances. In the context of a post bubble economy this will not work since the private sector is deleveraging and the state sector is constrained by its ability to borrow. As Japan illustrates the government cannot generate growth in such an environment.
    4. You misread what I wrote. I said the US are expanding fiscal policy via tax cuts. I made no mention of how they are financing this.
    5. The USD is the only reserve currency in the world. 55% of total reserves are held in USD. Try and buy some oil in GBP. China pegs to the USD and the middle east bills for oil in USD.
    6. UK household leverage was closer to 150%. On a par with Spain.

    “Moreover, to suggest that it is possible to finance deficit spending from revenue cuts in a zero growth environment betrays a fundamental lack of understanding of economics”. Name one economy who have succeeded in generating growth in a post bubble economy using an expansionary fiscal policy. There are plenty who have succeeded by slashing spending and running a very loose monetary policy. Sweden, Canada, Ireland etc etc.

    Richard

    15 February, 2012 at 4:15 pm

  15. Richard.. You are not listerning.. i am stateing that this Goverment, Our Goverment, is following a policy that does not work, will never work, and most sane people will find it hard to understand why we are following a policy that has as you have clearly pointed out, does not, and has not worked.. The only way out, is to Invest in Capital projects such as a major House building Programme, as clearly stated by Lewisham people before profit.., to build us out of the crises, caused by years of mismanagement, and a clear failure by Bill Clinton and Tony Blair to fully regulate the Financial sector.. most readers will be alarmed at the fact, that most of these Bankers are presently in full time employment as Key Advisors to Obama and our Goverment.Bonus In Tact, No prison sentence looming, no pension worrys and not even a slap on the wrist…i am not surprised that 60% of the population do not vote..For to vote Labour, Tory or Lib Dem.. just keeps filling the bank accounts of these crooks.., and when we kick them out, the old boy network, just sends them to the House of Lords, or some city directors boards..

    Margaret Smith

    15 February, 2012 at 5:09 pm

  16. Margaret. Name me any country that has ‘built its way’ out of a post bubble crash. The government is pursuing 100% the correct policy. Reduce the deficit and run a very loose monetary policy. Its will work, it has worked before.

    Economic growth in the UK will be shocking for the next 10 years. Its what happens in a post bubble world. Spending more money to solve a debt crisis will not work. Go to Japan they have been building (bullet trains, bridges they have even concreted river beds) for 20 years and in that time they have had no real GDP growth.

    In the case of the UK you missed out Gordon Brown’s role running a demented pro cyclical fiscal policy in his deluded attempt to feed his client state.

    Richard

    15 February, 2012 at 5:25 pm

  17. Richard

    Glad to see that we appear to be narrowing the field of disagreement to just two issues:

    1. Can counter-cyclical fiscal policy work in a post-bubble recession economy? Provide examples.

    The question is problematic because it depends on the definition of a “bubble”. If we define “a bubble” as simply a period of growth followed by a recession, there are innumerable examples of expansionary fiscal policy succeeding. Several East Asian economies adopted expansionary fiscal polices in the wake of the 1997 crisis, for example.

    Of course we only have two examples of global “post bubble” recession – the Great Depression and now – and we have evidence of expansionary fiscal policy working in both cases.

    The New Deal is the most obvious example: after four years of economic contraction (i.e., depression) and rising unemployment, the adoption of an essentially Keynesian fiscal stance in the US in 1933 led to the resumption of economic growth and a rapid increase in employment. This happened in the context of a sustained global recession. It took another six years for output and employment to return to their pre-crisis peak , but the New Deal clearly brought the US economy out of depression.

    I would also argue – and I think most economists agree – that the relatively rapid return of global growth in 2010, following just one year of recession in the advanced economies, was largely the result of expansionary fiscal and monetary policies across the OECD countries in 2009. In other words, it would have been a lot worse if governments hadn’t borrowed to spend.

    2. “The US are expanding fiscal policy via tax cuts. I made no mention of how they are financing this.”

    You simply cannot increase expenditure (“expanding fiscal policy”) by reducing revenues (“tax cuts”). You can in theory stimulate growth by reducing taxes, which in turn increases aggregate revenues. However, that has not happened in the US in this case. The growth stimulus has come from debt-financed expansionary fiscal policy, not from tax cuts.

    Franklin

    15 February, 2012 at 5:36 pm

  18. People have short Memory.. Norway after the second world War and Germany.. Brazil..and Much more in South America..are doing this TODAY…You may not be aware, but so is Iran..England at the end of the Second world War…

    Margaret Smith

    15 February, 2012 at 5:56 pm

  19. On the library privatisation, the simple truth is this – the Unite trade union, unlike the Council, has been out talking with people for the last five weeks. The vast majority who responded to our survey cards opposed the proposal. The Council did all it could to prevent public debate. It set up then cancelled public meetings. It promised an on line survey that never happened. It has not carried one article in Greenwich Time. That is not an oversight. Its a deliberate policy. The Council is aware that the proposal is deeply unpopular yet chose to go ahead. Our campaign has won huge public support. We will now consider what action to take next, we certainly do not accept that this is the end. If Councillor Fahy believes that representing workers, opposing cuts and giving the public a chance to have a say represents mixing personal politics with trade union duties I am happy to continue mixing.

    onay kasab

    15 February, 2012 at 6:40 pm

  20. “The government is pursuing 100% the correct policy.”

    Evidence from the IMF indicates that this is not the case. A September 2011 article in the IMF’s research publication “Finance & Development” finds that:

    “A 1 percent of GDP fiscal consolidation reduces real private consumption by 0.75 percent within two years, while real GDP declines by 0.62 percent.”

    “A fiscal consolidation of 1 percent of GDP reduces inflation-adjusted incomes by about 0.6 percent and raises the unemployment rate by almost 0.5 percentage points.”

    “Fiscal contractions raise both short-term and long-term unemployment… but the impact is much greater on the latter. … Moreover, within three years the rise in short-term unemployment due to fiscal consolidation comes to an end, but long-term unemployment remains higher even after five years.”

    Steering back toward topic of People before Profits: the overriding concern that many people have is about the growth of income and wealth inequality. The IMF article has particularly damning findings on the impact of fiscal consolidation on inequality:

    “How does fiscal consolidation affect the distribution of income between wage-earners and others? The research shows the pain is not borne equally. Fiscal consolidation reduces the slice of the pie going to wage-earners. For every 1 percent of GDP of fiscal consolidation, inflation-adjusted wage income typically shrinks by 0.9 percent, while inflation-adjusted profit and rents fall by only 0.3 percent. Also, while the decline in wage income persists over time, the decline in profits and rents is short-lived.”

    So, cutting public expenditure hurts the poor and long-term unemployed much more than it does the rich. That is not a recipe for sustainable long-term growth – and is particularly troubling when the source of the debt in the first place was the taxpayer-funded bailout of the banks.

    Franklin

    15 February, 2012 at 6:49 pm

  21. Oh dear where to start.

    The obvious answer is the US New Deal. Again the historical evidence is just not supportive. Growth returned to the US when the Fed loosened policy and then slumped again when they tightened too early. Growt only resumed when the US left the Gold standard and monetary policy was suitably loosened. In the case of South East Asia again it was loose monetary policy that worked, they pegged their currencies at a low level to the global reserve currency and have accumulated reserves ever since.

    “You simply cannot increase expenditure (“expanding fiscal policy”) by reducing revenues (“tax cuts”). You can in theory stimulate growth by reducing taxes, which in turn increases aggregate revenues. However, that has not happened in the US in this case. The growth stimulus has come from debt-financed expansionary fiscal policy, not from tax cuts” Errrr????

    You run an expansionary fiscal policy by reducing revenues or increasing expenditure its the same thing. You hope this increases aggregate demand. How it is financed depends entirely on the starting point of the government in question’s fiscal position. The US has done this by extending the Bush tax cuts. Fiscal policy would tighten by 2.5% of GDP for the next 2 years unless congress extends them, which they have just done for another year.

    Richard

    15 February, 2012 at 7:05 pm

  22. Ummm – while i appreciate all this finance talk is relevant and important …. I had hoped this might develop into an interesting discussion on the respective practicalities and ethics of privatisation, municipalisation, mutualisation and/or whatever – and how the public interest is best served, and even what the public interest is……………..

    Mary

    15 February, 2012 at 9:03 pm

  23. I agree with Mary above ^^^^
    Although the wider economic debate is necessary and intriguing for those who can follow it and ultimately relevant to local situation.
    I wonder if Cllr Fahy is aware of the history of the recently appointed head of GLL’s new Library division , Diana Edmonds – whose company Instant Library first privatised Haringey Libraries , which she then sold to Tribal Group….
    “Tribal`s business strategy is to develop a group of specialist businesses that provide services to the local government and education sectors. This is being achieved through an aggressive acquisition strategy…………Tribal Group is seizing an excellent commercial opportunity to grow in this relatively immature market. Gresham supports Tribal’s strategy of development by acquisition.”
    Part of an aggressive global trend of the private sector acquiring public services by stealth.
    http://www.greshampe.com/Tribal-Group-Instant-Library.htm

    Chris Guthrie

    15 February, 2012 at 9:52 pm

  24. “Richard” is not a fool and he is justifiably proud of his grasp of mainstream economic theory.

    Unfortunately, mainstream economic theory has failed comprehensively, publically and to the great cost of the majority of the population.

    Mainstream economics not only failed to predict the current crisis it provided the intellectual justification for the whole line of development that caused it.

    Strip away the rhetoric and mainstream economics has only three things to offer us.

    Austerity
    Privatisation
    Deregulation

    These all feed on one another. We all know the script:

    The only way to motivate the rich is to give the ever-increasing amounts of money. This means cutting taxes. So to avoid a deficit we have to cut public services. We “have to” cut spending because a deficit will upset “the markets” aka bankers and financiers (a very small group of people who happen to be rich).

    But, hey, cutting public services is not as bad as it sounds. In fact it’s a good thing because the other thing we “know” is that the only way to motivate the poor is to cut their income.

    So it’s austerity all round.

    The problem with this policy trinity is that it causes enormous imbalances not just economically but also geographically (between counties and regions) and socially.

    Think it through: how sustainable is it to have these massive and growing social inequalities. Remember the riots? Woolwich had riots didn’t it?

    An economics that fails to address the issue of social cohesion is worse than irrelevant, it’s a public danger.

    George Hallam

    16 February, 2012 at 10:43 am

  25. For another view of economics try the following from Michal Kalecki:

    “Under a laissez-faire system the level of employment depends to a great extent on the so-called state of confidence…This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis. But once the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness… The social function of the doctrine of ‘sound finance’ is to make the level of employment dependent on the state of confidence….

    “‘Discipline in the factories’ and ‘political stability’ are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system.”

    Political Aspects of Full Employmet (1943)

    George Hallam

    16 February, 2012 at 11:05 am

  26. Hooray For George Hallan…clear to the Point, and 100% Right.

    Margaret Smith

    16 February, 2012 at 11:20 am

  27. Dont forget free trade George. How many people has free trade lifted out of poverty in the last decade. You can answer to the nearest 100 million if you like.

    Richard

    16 February, 2012 at 3:58 pm

  28. How could anyone forget free trade.

    It great, so long as you remember that:

    a) it isn’t free and
    b) when counting the how many people has free trade lifted out of poverty you take into account the numbers that it has pushed into poverty.

    George Hallam

    16 February, 2012 at 5:01 pm

  29. Dont forget free trade George.

    Richard, please don’t change the subject.

    Mainstream economics not only failed to predict the current crisis it provided the intellectual justification for the whole line of development that caused it.

    George Hallam

    16 February, 2012 at 5:09 pm

  30. “Don’t change the subject” ?
    The original subject was about local issues to Greenwich ( & Lewisham )

    Apart from a couple of the comments , most comments have been dealing with bigger global economic issues , which as I said before have some relevance , but most of the contributions have totally ignored the local issues that most local people are concerned about.

    As for anybody claiming to be 100% right – it always reminds me of religious and political sects , and their claims to be our self-appointed saviours leading us to salvation and the promised land.

    If this is typical of People before Profit and the sect from which they originate , I don’t hold too much hope for their prospects.

    Chris Guthrie

    16 February, 2012 at 6:42 pm

  31. # Chris Guthrie

    sticks and stones. Note that the first post on this thread was about the need to start building council houses again (note the name of the author) and the hypocrisy of the Labour Party.

    What unites People before Profit is a concern to get concrete measures to tackle the very real problems that we face in South East London. We are the very antithesis of a sect: it is very broad grouping.

    We need real jobs in the area. We need to keep money in the area and not let it be siphoned off by big companies to off-shore tax havens. That means encouraging small business. It also means stopping privatisation and out-sourcing by local and central government.

    Opponents of these very sensible policies have no alternative. Instead they raise objections to doing anything based on an economics that has demonstrably failed. It is perfectly valid to point out that this position is intellectually bankrupt.

    If what we are suggesting seems like a “promised land” it is only so because of the bleakness of the desert that the main political parties are leading us deeping and deeper into over that last thirty years or so.

    George Hallam

    16 February, 2012 at 11:23 pm

  32. # Chris Guthrie

    I’ve just read your earlier post and I think I can see what you’re getting at.

    “Hopefully those behind People Before Profit can work together productively with all sections of the community including those behind Greenwich Save Our Services – http://greenwichsos.blogspot.com/ – in the best interests of the local community and not in both their own political self-interests ….selling their papers and trying to build their own political parties in competition with each other.”

    I agree with this.

    People Before Profit is a campaigning organisation and we have always tried to work in the broadest way possible, for example the Lewisham Carnival Against Cuts was one of our initiatives.

    If you watch the video you won’t see a People Before Profit banner because we were so busy organising and stewarding that we didn’t bring one along. That didn’t matter because the Carnival involved over 600 people (a figure based on a careful count – not the usual double-vision exaggeration) many of whom had never been involved in any protest before. Yes, there were some ‘paper sellers’ but they weren’t involved in PBP.

    We registered Lewisham People Before Profit as a political party in 2010, two years after it was formed. We did this to allow us the contest elections as an identifiable group. We don’t see elections as the be all and end all of politics but rather as an opportunity to engage with people.

    George Hallam

    17 February, 2012 at 7:52 am

  33. “If you watch the video you won’t see a People Before Profit banner because we were so busy organising and stewarding that we didn’t bring one along. That didn’t matter because the Carnival involved over 600 people (a figure based on a careful count – not the usual double-vision exaggeration) many of whom had never been involved in any protest before. Yes, there were some ‘paper sellers’ but they weren’t involved in PBP.”

    Beyond parody. Anyway best of luck with your non reality based politics. The sad thisng is that there is a real debate which needs to be had here which is clouded by either a narrow focus on very local issues in isolation from very global issues or vice versa. Many of the problems that people quite rightly flag such as reduced services for local people, increased wealth disparities (especially between corporate balance sheets and household balance sheets) and youth unemployemt are caused to a certain degree by shifts in the global economy. Globalization has clearly been a huge positive for most people around the globe as a cursery glance at per capital GDP figures demonstrate. There have been relative losers from this process and most of these losers live in developed economies and tend to be young and poorly educated. Essentially their skills are worth less and they are not mobile enough to follow the money.

    If we were to follow George’s (and presumably the People Before Profit) ideas of more locally focussed businesses and a crackdown on large multinationals and be extension a back away from the move to a more global economy then this would hurt the very same people that they purport to wish to help. Prices would rise, growth would fall and public sector vested interests would kill enterprise.

    Richard

    17 February, 2012 at 10:39 am

  34. “Globalization has clearly been a huge positive for most people around the globe as a cursery glance at per capital GDP figures demonstrate.”

    Yes, if you only take cursery glance at per capital GDP figures you may think this. However, if you take a more critical look you find that things have not been hugely positive.

    George Hallam

    17 February, 2012 at 1:41 pm

  35. “If we were to follow George’s (and presumably the People Before Profit) ideas of more locally focussed businesses and a crackdown on large multinationals and be extension a back away from the move to a more global economy then this would hurt the very same people that they purport to wish to help. Prices would rise, growth would fall and public sector vested interests would kill enterprise.

    Easy to say: but you haven’t made a case.

    “Prices would rise” Currently, a high proportion of young people are spending more than 50 percent of their income in rent.

    A return to council houses would reduce housing costs at the same time as improving standards. This would make an enormous difference to peoples’ finances.

    “growth would fall” You mean the situation would remain as it is now? Measured by GDP the economy is about four percent smaller than it was in 2007.
    I think we can do better than that.

    “public sector vested interests would kill enterprise”
    You would rather that we left that job to the banks and the large multinationals? I see your point: they do it so well.
    As you may know, prior to the current recession, over 5 per cent of businesses in the UK economy as a whole went under every year. With new small enterprises the failure rates can be anything from 20-30% within the first year. And this is in the good times. The causes are well understood: difficulty in raising second round financing, poor market research and lack of financial planning. It is all a terrible waste.

    Lewisham PBP policy is to establish a local council-backed investment bank. This would provide long-term finance and advice on marketing and financial planning for SME’s.

    The aim would not be to maximise profits (you do that through high-interest, short-term loans and overdrafts) but to establish viable businesses that would increase employment in the area.

    As these enterprises will be mostly small it would be expected that the owners would live fairly locally and so spend their hard-earned income locally, thus providing a secondary boost for the economy.

    George Hallam

    17 February, 2012 at 1:51 pm

  36. “Easy to say: but you haven’t made a case.”

    Close down Tesco and prices for food would rise. Unless you dismiss economies of scale as a useful concept?

    “A return to council houses would reduce housing costs at the same time as improving standards. This would make an enormous difference to peoples’ finances.”

    You dont make the case. For a start costs would be reduced for some but presumably rise for others (ie those who have to pay to build the houses out of taxation). Is there any evidence that houses built by the states is of a better quality than private housing?

    Lots of new businesses fail as their ideas are rubbish. Lots of large businesses fail as their products become out of date and new rivals produce better products. Its called human development. Its called risk. How are councils going to efficiently alloacte capital to new firms? How will they ensure that they do not allocate capital to their cronies? How would you fund your bank? Via bond issuance, without profits how would you pay the coupons on your bonds?

    I am still trying to figure out how to look more critically at per capita GDP figures. Are you saying that people in the developing World were happy when they were dependent on aid? Were they better off being the noble rural poor?

    Richard

    17 February, 2012 at 3:45 pm

  37. “costs would be reduced for some but presumably rise for others (ie those who have to pay to build the houses out of taxation).”
    Lewisham has 1,000 families are in temporary accommodation including 350 in hostels and 50 families in Bed & Breakfast accommodation.
    Keeping a family in a B & B can cost anything from £400 to £800 per week i.e. up to £40,000 a year.
    Of course you can’t buy a house for this in London. That is because of land prices (a surplus payment). The cost of building a standard three-bedroom house is not much more than £80,000.

    Even an economist can see that, for from being a burden on the community, building council houses would save money.

    George Hallam

    17 February, 2012 at 5:22 pm

  38. “Is there any evidence that houses built by the states is of a better quality than private housing?”

    Yes, plenty.

    For example, Birmingham’s first council houses were built in Ryder Street and Lawrence Street in 1890. They were spacious and solidly built, unlike the squalid slums they replaced. The brickwork had some nice details, tessellated floors in entrance halls and tiled walls.
    They were demolished in the 1960′s to make way for the extension of Aston University.
    For more evidence try asking an architectural historian or a housing officer.

    George Hallam

    17 February, 2012 at 5:24 pm

  39. “I am still trying to figure out how to look more critically at per capita GDP figures. ”

    The best of luck.

    Hint: check the correlation between per capita GDP and infant mortality. Then see if you can find better predictors of infant mortality.

    George Hallam

    17 February, 2012 at 5:27 pm

  40. So infant mortality is postively correlated with per capita GDP? Hint I would ask your IT department how to use Excel them maybe you could move onto some basic econometric packages.

    So your whole movement seems to be based on a few anecdotes (some council houses built in 1890 were better than the stock they replaced – my God something more modern being better than something old!!) and some very flawed economics and a large dose of impractical aspirations. You are incapable of actually answering a question with any hard facts or evidence and seem happy to promise council sponsored banks with no idea of how you would run them in practice.

    Best of luck.

    Richard

    17 February, 2012 at 6:25 pm

  41. “So infant mortality is postively correlated with per capita GDP?”

    Please read my post. If you look you will find that there are better predictors than GDP.

    “So your whole movement seems to be based on a few anecdotes (some council houses built in 1890 were better than the stock they replaced – my God something more modern being better than something old!!)”

    I thought it maight be possible to have an interesting discussion. However, you seem to prefer debating tricks.

    There was more to council houses superiority than their age. They were better managed. There is a vast literature in this field.

    George Hallam

    17 February, 2012 at 8:03 pm

  42. I find it quiet staggering that richard has such a narrow view of economics, George and Lewisham People before Profit, idea for a Local Bank, is not a New Idea, before the deregulation of the Financial sector Under Clinton and Blair, Councils had local banks, loaning money to residents and local small business operations, it worked well, however deregulation was all about greed and the economics of the rich and the establishment getting ever richer on the backs of cheap labour and high interest rates..At present even Lottery winners these days seem to win more money than the total cash reserves of some small states. How money is spent, its distribution and what you do with it and how you use it, is the key.. Richard clearly has such a narrow view, he cannot see in Georges comments the answer, which i and every one with a clear and open mind understands,, it is this clear thick head view that has caused greed to have lead to the mess some countrys are in, but clearly not all….

    Margaret Smith

    18 February, 2012 at 9:45 am

  43. Slightly off topic, but also slightly historically pertinent, my first ever mortgage was given to me by the GLC. It was called an Option Mortgage. Without the GLC I wouldn’t have been able to get onto the so-called housing ladder. It was 1973 I was self-employed. I had been living in a council flat. Whatever happened to these social services?

    David Porter

    19 February, 2012 at 11:15 pm

  44. [...] formation of Greenwich People Before Profit was discussed here earlier this year – although over in Lewisham, their cafe has closed in curious circumstances. One to watch, [...]


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