Belfast Telegraph

Thursday 25 December 2014

DebateNI home of Northern Ireland politics

We can't afford to go through the Great Crash of 2008 again: We need a new economic model, and we need it today

We need a new economic model, and we need it today...
We need a new economic model, and we need it today...

Anyone listening to Radio 4’s Today Programme on Monday morning would have been able to piece together a pretty good idea of the dominant economic and political model of our times.

We had the news of a report from think-tank Policy Exchange urging the government to ‘save millions’ by cutting benefits to those outside London, and for those with more than four children.

We heard about the government report on the costs and benefits of shale gas mining – where all the bad bits had been blacked out. And we heard from a business-oriented think-tank that, although the recovery was well under way, the benefits were not being seen in higher wages at the bottom ‘because productivity has not gone up’. 

So where have the benefits of growth gone, if not to those at the bottom of the income scale?  The obvious answer – they’ve gone to the relatively wealthy – was as much redacted from the discussion as those inconvenient bad bits in the fracking report.

According to the dominant model, nothing must be allowed to get in the way of increasing profits – not even the facts.  ‘Benefits’ must be cut for those at the bottom; wages haven’t gone up, but how can employers be expected to raise wages when workers just aren’t being productive enough? The side-effects and toxins from fracking? You don’t need to read about them, nothing to see here, move along.

Our dominant economic model works by dumping the toxins ‘elsewhere’.  All you are allowed to see is the price of the goods on display, not the costs paid by others – the low wages, the poor conditions, the effluent in the river, the horsemeat in the burgers – throughout all the processes involved in getting it to the shelf.

Well, there is no ‘elsewhere’.  There is just us and our neighbours.  And no corporation should be able to reap higher profits by off-loading harm onto the neighbours and saying ‘it’s nothing to do with us’.

For too long we’ve been told there is no alternative; but there are many other ways of organising our economy.

In the US, spiritual home of the free-market economy, alternative models are gaining momentum. Some 27 states have passed laws allowing companies to incorporate as ‘benefit corporations’. The directors are given legal protection to consider the interests of all stakeholders rather than just the shareholders. This used to be a common business model; it was ditched in favour of boosting profits, regardless of the cost.

When the Great Crash of 2008 came, it was hard to open a newspaper without reading someone ask ‘Why did no one see this coming’?  The truth is, many did see it coming, and kept raising the alarm about it.  However that is an inconvenient truth for those who simply wish to return to business as usual.

We can’t afford to go through that cycle again. We need a new model, and we need it today.

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