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In a previous entry I questioned the concept of unending “economic growth” in a society that is increasing in age whilst decreasing in fertility. Sure, the UK because of mass immigration from the EU and beyond, is growing in population because immigrants are more ‘fertile’ than the natives but, whilst many may well become permanent UK residents, many will also move on or “back home” and particularly if UK growth declines and “back home” wages/opportunities grow.

The key problem lies in the fact that most metrics of “growth” are spurious and often only really cover market share by one company rather than actual growth in the market a classic case being mobile phones. Yes the Apple iPhone may generate sales for O2 at the expense of its competitors but the reality is that the UK mobile phone market has reached saturation, it is novelty and replacement only with precious little opportunity for any real growth.

Although Government statistics invariably become lost in the “fog of war” when it suits them, examination of the extra growth generated by the sudden influx from Poland and other places would seem to indicate that two thirds of the “new jobs/growth” have gone to these very people and the remainder, filling in skills shortages in the building trade. It will be interesting to look back at the figures in 6-10 years time to determine whether the result was positive, neutral or negative for the UK economy.

Even in the City of London, long praised as an engine for UK growth, there has been a question mark for some time where deal making and especially mega-deals exist only to generate activity in the market so that people can earn bonuses and, are unrelated to any concept of “real value” to the owner of the businesses involved that are being bought and sold.

British American Tobacco

Going back to the 1980′s, I can remember a lot of pressure from the “City” on BATs – British American Tobacco, to divest itself of various non-core businesses because as they were rolled into a central entity, the shareholders it was said, were being deprived of realising the full value of their holdings in BATs. The group owned (if memory serves me right), a number of significant non-tobacco businesses such as Life Assurance and General Insurance companies plus the retailer Argos and so on.

The point being made was that whilst BAT had acquired these “alternative” businesses quite properly as the management defending the shareholders from any decline in earnings and value in the tobacco industry because the “health grind” was well under way then in the USA. Subsequently these businesses being both successful and profitable in their own right, should be “set free” because the danger was that hidden within the BATs balance sheet, not only did their profitability not “shine” but also these earnings might prop it up and disguise any deterioration within the “tobacco business” therefore preventing remedial actions being taken in a timely fashion.

Now in these few paragraphs, I am not pretending to detail the whole story of BATs during those days, just outline the broad parameters. However, the point that I am trying to make is actually very simple; regardless of whether you look at the Board and Management of BAT or, the “City” and the major stakeholders in that business, nobody was acting incorrectly, each part of the equation acted according to not just the ‘rules’ but more importantly also, ‘the spirit and reason’ of who and what they were employed to do.

Moving On

Perhaps the question that I’m posing has less to do with any specific walk of life and more to do with the nature of our society as it goes through substantial change. Although some things are still made in this country, manufacturing as a whole has declined steadily as a percentage of UK economic activity. This is not of itself a bad thing, exporting such jobs to emerging economies has had the twin effect of keeping retail prices down in the UK whilst improving the economic and often the political climates in those countries because these are “proper jobs”.

However, the concept that a country of 60 million people that lacks land mass and vast mineral resources can somehow make an equivalent ‘living’ by sitting back, designing things, having them manufactured abroad and then imported to the UK is not a sound idea and it is starting to show. No matter where you look from the quality or lack of it in secondary and university education, industry, the City and Government, we are living in a sales based economy where there is an over abundance of people in most walks of life plus a lack of real new resources the consequence of which is a “Spiv” society and one where taxation will rise inevitably and regardless of the political party in power.

To demonstrate that further, consider housing in the UK and the astounding inflation seen in house prices plus the major disconnect between earnings and those prices. If prices are seen as a market mechanism that winnows the wheat from the chaff, then the impact has been major and the result is a totally polarized society dividing the “Haves from the Have Nots” on a scale not seen in the UK for generations. Also because of its rather ‘accidental’ nature, requiring no skill just geography, there is no merit to be seen in the gains achieved and therefore no security for whether by inflation, economic slump or a mixture of both, the gains will become eroded – “The King’s magic suit of clothes.”

The House of Commons

Consider the number of MPs for example, around 640 which means that we have one MP for about every 90,000 people. Compare this to the USA with five times our population, there are 535 national politicians – in fact less because 100 are from the Senate and I haven’t included any House of Lords members in the UK count. In the US you have roughly one national politician for every 250,000 and in our case, if you roll in the members of the House of Lords, Welsh Assembly, Stormont, the Scottish Parliament and MEPs, the whole thing becomes a bit of a bad joke as well as an expensive one. One suspects that in parts of Wales, The Peaks and the Scottish Highlands, even the sheep have a national representative.

However, what makes the whole situation worse is the fact that MPs are supposed to represent the interests of their constituents and regardless of whether or not they voted for them, in other words, a local voice at the national level. In a Parliament where greedy Members are only interested in their personal income and political careers and see their constituents only as voting fodder – in a safe or marginal seat, a major disconnect has taken place between what they are supposed to do and what the actually are doing.

If you heap on top of this the fact that 80% of legislation now originates in Brussels, it must surely be time for a major cull of the numbers of MPs which needs to go hand in hand with a major restructuring of Parliament so that it becomes more responsive to the electorate. I note David Cameron’s idea of using petitions to force debates on specific issues within Parliament which is a good idea but to be honest, too little and too late. Parliament now needs to bend its knee before the people, it’s very arrogance of some “Divine Right to Rule” needs to be expunged and it will not do it itself because Turkeys don’t vote for Christmas.