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Thursday, 19 September 2013

The CBI slings some mindless economic stats at the Government

Yesterday the Confederation of British Industry (CBI) stated what could be taken – by some – to be the obvious when it said that the government must push ahead with big building projects. Apparently, these projects are essential for economic recovery.

The first assumption here is that it's automatically the government's job to be the 'main man' when it comes to big building projects. Perhaps it is. But in order to finance these projects, taxes may need to be increased or spending cut. If things were OK as they stood, financially speaking, then the government presumably would already be pushing ahead with big building projects. Nonetheless, you wouldn't expect the CBI to be calling for tax rises in order to achieve what they want. So perhaps they have other answers or ways in mind.

The other assumption is that big building projects are essential for economic recovery. Isn't that the sort of mentality that Stalin had in the 1920s, 30s and 40s when he built massive dams, factories and labour camps in the Urals, the Caucasus and Siberia? Isn't it also the sort of thing both Franklin Delano Roosevelt and Adolf Hitler did in the 1930s?

Indeed you could construct buildings that won't be used just as there were 'unemployment schemes' in the 1980s in which the long-term unemployed dug up holes in the roads and then ... filled them in again. Anything to make a noise or to make the voters think something is being done.

The CBI bolsters its campaign for big spending with loads of pointless and meaningless statistics, as most stats are (which is not to say they are false).

Apparently – and I bet you didn't know this (I bet you don't care either) – only 35% out of 526 firms backed the government's strategy. I wonder what sort of firms these are. Ice-cream sellers on council estates or big banks on the high street? Football fanzine vendors or investment companies?

What is the government's 'strategy' any road? Do governments actually have general economic strategies or do they only have a large collection of different policies which may or may not have some connections to each other at their edges?

Then we have this stat: 65% of firms said that government policies have no tangible effect, or even make things worse. However – and thank God for this – 35% said that these policies would make a difference.
The vagueness of all this is mind-boggling. Perhaps it can't be anything else but vague because economics is both the dreary science and a highly complex science too.

Likewise, when the CBI and the government are making comments about the general economic situation of the nation, it's deemed important that the language used is simplistic. If it's not, it will have no political or emotional effect on the voters. The inanity is partly intentional, as in much party-political talk.

In any case, all government economic – and other – policies must have at least some effect – and not just by making things better or worse. As with the hole-digging example earlier, a government sometimes changes things just for the sake of changing them. It changes things because it can change them. It has the power to do so and power is such a lovely thing.

The CBI manages to be more specific with some stats on regional transport and energy. According to the Confederation, 73% of respondents reported what they took to be a "deterioration" of road networks. Is this something the government should automatically deal with, rather than private companies and businesses? Adolf Hitler took over the road-building project of Germany in the 1930s with his famous autobahns. He also brought about a zero unemployment rate; many jobs were created and not all of them were in the arms industry. Nonetheless, it was all at enormous cost, both economic and political. Hitler, in fact, ran a largely Keynesian economy. In addition, despite the leftist hype about 'Hitler and his capitalist friends', in 1930s Germany the tax rate was very high. (Between 1934 and 1938, the gross taxable income of German businessmen increased by 148 percent.)

Time for yet another pretty vacuous stat. The CBI now tells us that 77% of those surveyed said that they weren't confident in the improvements in energy infrastructure over the next five years. Now that's a very specific and technical point – improvements in the energy infrastructure over the next five years. It makes you wonder if the CBI surveyed professional economists and members of the CBI itself. Why and how five years? And can a government base its economic policy on the psychological 'confidence' of those whom the CBI surveys? We cannot talk about energy in the abstract anyway because there are big political and moral issues around nuclear power, solar energy, Arab oil, North Sea gas or mountains of combustible dung (the Green option).

The Age of Austerity hits Hull.
As you'd expect, a member of the Labour Opposition has chipped in with her very own mindless stat. Rachel Reeves MP, Labour's Shadow Chief Secretary to the Treasury, agrees with the CBI on the necessity of big investment projects (never!) and said:  

"Just seven out of 576 projects in the government's infrastructure pipeline have been completed and 80% haven't even started."

What the hell? What's the government doing with a massive 567 infrastructure projects? It's no surprise that it has only completed seven out of the 567. I presume that if the Labour Party were in power ("under Labour ..."), 576 of those 576 projects would have been completed. Actually, no, 1000 of 1000 projects would have been completed: anything from an 'infrastructure' which secures 'community cohesion' and 'diversity' to one which supplies free heating for all recent jihadist immigrants.

As for the 80% of infrastructure projects which haven't even started, perhaps they haven't even started because they were bullshit projects – unworkable, or counterproductive, or too expensive, or silly or wasteful. So that's a good thing, then. The Labour Party, were it in power, would have carried them out regardless. Of course it would.

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