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666  24 March 2003   

USA could be skint...

That is the impression given by a leading city economist, David Hale of Helix Capital, writing in the Financial Times on 21 March - his analysis raises the fascinating question, "Might the market institutions of America put a block upon the Republicans' imperial military adventurism?"   Now read on...

"What will be the cost to the ID budget deficit and current-account deficit of the country's new international role as superpower acting unilaterally?  The financial markets are concerned about US assertiveness, because they perceive it could be opening the door to a new age of imperialism, with significant economic consequences.  After a great "peace dividend" following the end of the Cold War, US defence spending is now increasing dramatically. 

"During the Cold War, America's allies often helped to shoulder the burden of US military spending.  Germany had a formal offset programme, in which it stockpiled dollars at the Bundesbank in order to offset US defence expenditure.  During the Gulf War of 1991, the US received huge subsidies from Japan, Germany, the Gulf States and Saudi Arabia to pay for the cost of evicting Mr Hussein from Kuwait.  The US will receive no subsidies to pay for the current war.

"If the occupation meets great resistance and proves to be expensive, the US will have to assume all of the costs.  The markets would regard such a development as negative, because of the potential consequences for the fiscal deficit.  In fact. Congress would probably respond to a high-cost war by vetoing George Bush's tax-cut proposals, which were designed to bolster the equity market.

"Many Europeans think that the US hopes to make money from the War by exploiting Iraq's oil reserves - but Iraqi oil production is only worth about £16bn a year, or just 25% of the cost of the projected War.

"Despite enthusiasm for war among neo-conservatives in Washington, it is also unclear if either the US Government or its people are truly prepared for a new imperial mission.  Until 2003, the Government's international affairs budget had been in decline for many years.  The CIA has not been able to recruit the best and brightest from the country's elite Ivy League universities for nearly two generations, and now depends heavily on former Mormon missionaries - because they are the only Americans prepared to learn exotic foreign languages."

I am sorry I cannot put you straight through to the FT - but it is now subscription only, and you would only be presented with a demand for £35 by way of annual subscription.  That's capitalism at work, folks!

This subject is rarely broached, in the Meeja - if you spot  it, will you drop me a line?

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667   24 March 2003  

Retail inequity

Congratulations! This time to Patricia Hewitt...  It is reported that she is "not convinced" by the case for letting market forces rip, in the community pharmacy sector, in spite of the recent recommendations of the Office of Fair Trading.  Her misgivings constitute an early sign of ministerial concern, which could be the tip of a new political iceberg.

Labour has a lot of thinking yet to do, about the assurance to all our people of adequate retail services.  For in a consumer society, equitable access to retail services becomes a key aspect of civil equality.  And as "big stores" come to dominate all retail sectors, problems of "retail inequity" are growing.  These are matters which have conventionally been "left to the market" to resolve, even by the more interventionist socialists.

But the litany of systemic problems is building up, and is likely to demand a political solution.  Powerful retailers continue to stand accused of the abuse of market power, in relation to their suppliers.  The small-shop sector continues to weaken, as more and more of its functions are preempted by big business. The decline of rural retail services, given their low profitability, poses particular problems for rural communities.  The reduction in sub-post-office cover accentuates these problems.  And the problems are not only "rural": many deprived urban areas share them.  Poor public transport services accentuate these systemic difficulties, and no satisfactory solution has been found to the reliable provision of "uneconomic" services.  An innovative social enterprise ViRSA is pioneering new institutional solutions, mobilising cooperative and community resources to strengthen the retail sector, but its national effect is minimal.

The signs are ominous. The indications are that "market systems" are unlikely to meet the legitimate expectations of the population as a whole.  I believe that socialists should begin to formulate new solutions of two kinds -

  • New public bus services  Currently, the provision of rural bus services is in the hands of private companies, heavily cross-subsidised by the State from variable national budgets.  This solution is systemically unreliable.  New forms of public enterprise should be developed, capable of engaging local and regional commitment and resources.  Since Thatcher's infamous privatisation and deregulation of bus services, this has been a no-go area for Labour.
  • New service retainers  The Victorians, always inventive, initiated the Sub-Postmaster system, under which local retailers were paid a standing retainer for the provision of post-office services - given that base income, they were encouraged to develop their own business interests.  That principle was sound.  A new system of public service retainer should be developed, acknowledging the centrality of retail services in the modern consumer economy.
These ideas will take "politics" in new directions, into new sectors of our social and economic system.  Patricia Hewitt, by refusing to withdraw the NHS service-retainer system from community pharmacies, could be firing the first shots in a new political campaign.    

What do you think?  Drop me a line

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