There is much talk at the moment of using tax cuts to try and ride out the recession. This may seem sensible – but the most likely result is most of the tax cuts being diverted to personal debt. This neither helps employment or the economy. We also need to recognise that the main requirement is to increase standard of living – which does not necessarily directly relate to GDP. There are in fact many actions that can be taken that greatly increase the standard of living with a reduction in GDP.
The main criteria for such spending in a financial crisis/downturn should be –
o It should have an immediate effect on standards of living/perceived wealth
o It should if possible lead to a long term reduction in use of commodities/resources
o It must not be diverted to pay off personal debt
o It must have a positive impact on employment
o It must result in long term economic benefits
o It should improve our balance of payments by reducing the amount of imported commodities and goods.
o It should be reasonably high up the economic food chain – generating economic activity through a chain of businesses and individuals.
1) Insulation and conservation
Currently there is large scale unemployment in the building industry – while at the same time much of our housing stock is of a poor standard. The skills available could be put to good use improving our housing stock. This would produce employment in both the building sector and suppliers. It would also produce balance of payment benefits – reducing our dependency on oil.
The simple and widespread measures include –
o Double glazing
o Loft insulation
o Cavity wall insulation
This could be supported through a combination of grants, subsidies and VAT exemptions.
2) Recycling
Recycling is requires large amounts of unskilled labour – but actual consumes a negative amount of resources. This again would improve our balance of payments whilst generating extra employment and economic activity. Recycling is therefore an ideal way of absorbing unemployment in the lower skilled areas of the population whilst also providing extra employment in the engineering and civil construction arenas. This could be encouraged by increasing land fill tax – and ring-fencing the revenue to re-cycling projects.
3) Alternate Energy
Wind power is now becoming an economically viable technology. It also provides employment for highly skilled engineers, manufacturing and research.
The second technology of tidal and wave power is also now viable – and requires large amounts of civil engineering and semi-skilled labour. This would again provide the correct balance of employment and long term benefits.
Investing in both these areas improves our balance of payments and technology base. One way of supporting this would be to subsidise alternative power in proportion to both the employment and training they provide.
4) Home economics
In our throw-away/fast food three important skills from the past have now all but disappeared. These are cooking, needle work and basic DIY. Re-learning these skills would help us make far better use of the resources we have – and live healthier lives. It would be good for both the environment, our balance of payments – and the improvement of perceived wealth.
Cooking Lessons
There is a general downturn in the hospitality industry – and so plenty of skilled resource and facilities to teach cooking skills. This not only produces health benefits – but also reduces requirements for packaging and decreases the wealth required for everyday living.
The government should provide grants and access to training facilities so that these cooking skills can be learnt and courses provided. This may include making use of facilities within schools during the evening. They should also encourage restaurants to run cooking courses – good marketing for the restaurant – and a good way of encouraging people to cook.
Needlework
Today it is common for clothing to be thrown away because of something as simple as a button falling off, or a seam becoming unsown. Teaching people basic repair skills reduces our reliance on foreign imports and reduces the need for wealth and resources. Again efforts should be made to provide this kind of training for free – maybe by encouraging those currently in retirement to teach such courses. This could also provide a useful secondary income for pensioners.
Basic DIY and Maintenance
There are a large number of public buildings such as schools in desperate need of painting, decorating and basic repairs. What better way to teach people than have a trainer supervise/help them while they do it for real. This could also be used to build a community spirit – with people for example renovating their local school or hall. This would generate work for people in the building industry providing the training and support – whilst providing local activity for suppliers of the materials and services.
To conclude there are a number of ways to target small amounts of revenue into specific areas that will produce a significant positive impact. These are far preferable to general give-aways that rely on market forces. One lesson we should have learned by now is that market forces don’t always push in the right direction. They encourage short term personal gain – and are poor at supporting collective gains and long term stability.