Tuesday, 11 September 2007

1977 Anarchy in the UK; 2007 Bankruptcy in the UK

Today's news broadcasts are highlighting statistics from the Citizens' Advice Bureau that they are now getting 6,600 enquiries every day in the UK about problems with debt. Personal bankruptcy has reached an all time high. Whilst we have not returned to the thousands of repossessions of houses as experienced between 1990-3, the number is rising steadily. The house we are renting will be repossessed from the landlord when we leave, for non-payment of the mortgage. This time round this is not meaning cheaper houses coming on to the markets, instead banks sit on the reposessions until they reach a certain level and then sell them so that they do not reduce the ever rising price of houses. Back in the early 1990s at least those who could not afford a house had some chance getting a repossessed one at reduced rate and even that channel has now gone.

So what is to blame for such vast debt in the UK? Are we all simply spendthrift? Well, about a quarter of the problems stem from credit and store cards. The UK, seemingly in sharp contrast to its European neighbours, does seem to have got obsessed with constantly buying. Electrical goods, furniture and DVDs/music seem to be in high demand with people upgrading and upgrading. In France, almost all shops are closed on a Sunday, in Germany many still close at lunchtime on most Saturdays and do not reopen until Monday. In the UK shops are filled every Sunday with people shopping as a hobby. They are not out walking or playing football or sitting reading or even slumped in front of the television, they are walking around looking for things to buy. In Europe the UK is consumer society at its most extreme. Credit is easy to come by, you can get a string of credit cards and advertisements for loans fill the television, newspapers, the radio constantly.

In the UK you are defined by what you own. If you do not own a house you are treated as a second class citizen by letting agents and other people. There is immense pressure, going back to the 1980s on becoming an owner of property and then to start 'buying-to-let' as if it is right that everyone should strive to be a landlord. Of course both these trends keep pushing up house prices which have now not fallen in 15 years; the news media gets jumpy when there is a slow down in the increase, not a fall, as if the constant inflation of house prices is vital for the UK economy. This obsession with owning property and your status in society being defined by it is another unhealthy situation in the UK that adds to debt. It goes into things like cars. You can travel from the UK to France in 35 minutes these days and you see a sharp contrast. British roads are dominated by very large 4x4 cars (SUVs) in France there are very few. In Britain if you do not drive one you are made to feel you are letting down your children and on the road you are hassled by the people who own these vehicles as some kind of annoyance. They are expensive and terribly uneconomical to run and yet not owning one seems to mean you yield up any claim on respect whether actually in it or not.

All business people want to maximise profit, but in the UK it is greed, greed, greed, hence rents being pushed higher and higher. Utility bills make up a third of the sources of problems with debt. I have already commented on how water, sewage, gas, electricity and phone companies keep pressing prices up. Not only that but they lock you in to fixed contracts now (as do landlords) which means you cannot get out of them, are often paying for services in advance and you lose money each time you move house. A small rise in any utility price hits people hard especially when combined with the other rises they face. As I have often commented, I earn 50% higher than the national average salary for the UK, however, in my house we now cannot afford to flush the toilet because the water bills are so high. If any of us urinates we do not flush it as each flush uses 2 gallons (9 litres) and like most people we now have a water meter and we are charged once for that water by the water company and then 95% of the price again by the sewage company (in our town the water and sewage companies are separate, until this year the sewage company charged 108% of the water bill price). If we as a well-off household with two incomes cannot afford to flush our toilet, heaven help anyone poorer.

So consumption is a key problem whether it is voluntarily on luxuries or almost compulsory on rent/mortgage and utilities. (I have not even mentioned again very high train fares which contribute to some people's costs). The situation is exarcebated by the fixed contracts and payment in advance that so many companies insist on. However, all of this is compounded by government policy. The UK government only has one tool with which to manipulate the economy - changing the bank base rate. From this all interest rates are set. The government handed this control over to the independent Bank of England in 1997. No-one in the past forty years has ever bothered trying to alter terms of credit, for example, the minimum you have to pay back each month or to vary tax on items, nor really put effective pressure on utility companies to moderate prices and certainly not on landlords to keep raising rent. The government has not contested the attitude promoted in the Thatcher years (1979-91) that it is your civic obligation to own property and consume as much as you can. The government needs to start sending out very difficult signals about what is important and worthwhile in our society. You may say that is not the role of government but it is them who complains about crime and social problems and has to pick up the pieces. No-one in UK government or in its think-tanks or the civil service has any ideas of how to alter the UK economy and society in a more sustainable direction.

All of these factors mean that consequently the UK economy is constantly overheated with so many baseline costs for the bulk of the population rising all the time. This means that there is always a heavy inflationary pressure no matter what anyone does. Any minor fall in sales is seen as a recession and steps are taken to keep us consuming. The constant inflationary pressure means, as this year, the Bank of England (whose only concern is inflation, nothing about social issues) increases interest rates; in 2007 this has happened five times. This tool cannot reduce that inflationary pressure, only dent it a little, and in fact the heavy rain of this Summer has done a better job at doing that than the Bank of England. Interest rises means everyone pays more and it all comes at once, your rent, your utility bills, your food, all tends to go up together. No wonder so many people are sliding into bankruptcy. All statistics hide human misery and it is those at the bottom who suffer most. Why do people wonder why the drugs trade and armed crime are so high when we are pushing so many families and individuals into a situation where crime is the only way to survive and seems fine as you have no vested interest in a society which defines you simply by your possessions. I was shocked to see a map of the UK showing the highest concentrations of the so-called 'Exclusive Wealthy' apparently these are 'People with so much wealth that they can exclude themselves from the norms of society'. No-one should be permitted to be able to exclude themselves in that way.

Other countries in Europe have problems but they have not created a society that is rushing to burn itself out, that is so obsessed with possessions that no economic approach can succeed without also addressing people's outlook. The UK as a sick society is beginning to outstrip even the USA. The number of murders committed in the UK by children under the age of 10 exceeds even Iraq which is basically a warzone still. 2,840 crimes were committed by children under the age of 10 in 2006 (which is the age of criminal responsibility in the UK these days compared to 16 years old in Anglo-Saxon times) of these half were arson or criminal damage, 66 were sexual crimes committed by the child not to them.

We need to move to a society which values other things beside possessions. I was all for Sunday opening for shops but now I think they just fuel unhealthy consumption. Of course in the age of the internet you can shop all day and all night every day of the year. We need to encourage more hobbies than shopping which is the sole leisure activity of the bulk of the UK population. We need a government which does not adhere to the 'greed is good' rhetoric or at least actually condemns it rather than accepting it passively. We need to restrict utility and transport bill rises to tolerable levels and try to stop the constant pressure on rent and mortgage prices. The government needs some different economic tools and to not be afraid to get in there and interfere with the granting of so much credit. As many countries have demonstrated, you do not need a command economy to get the economy and so society (which is so driven by economic pressures) to move in a healthier direction. If we do not do this the UK will be the first to enter the Cyberpunk dystopia for real with people either beggars on the streets or behind fortified walls being driven from place to place in blacked out, armoured vehicles, with an attitude of 'must have' everything and status only defined by your latest purpose not any actual human attributes. However, I envisage as always the British public will simply keep consuming and fighting to consume freely so digging itself deeper into debt and segregating so much of society into the 'have nots' (always a majority), the 'haves' (who struggle to keep up with the next category) and the 'have-the-latests'.

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