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James Brockett

James Brockett

24 Mar 2009 | 16:47

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I’ve just finished reading an excellent book on economics: The Affluent Society by John Kenneth Galbraith. Putting aside the fact that I only withdrew it from the library because his other well-known book, The Great Crash, was unavailable (it’s quite in vogue at the moment), I thought he had some interesting points that could be relevant to the current economic situation.

His main line of argument is that nowadays most of the goods we produce in the West are non-essential. Because the vast majority of our basic needs (such as food and clothes) are in ample supply, the economy has only been able to continue to grow by producing more and more superfluous products – products that, were it not for the efforts of the advertising industry, there would be no demand for.

Despite this, economists continue to view production as all-important to the economy – think of all the stats about GDP and the worrying caused by the economy shrinking. However, here’s the most important point: as most of what is produced is non-essential, why do we care if production goes down? In fact, Galbraith argues, what people in an affluent society really care about is employment and unemployment: they don’t mind what is produced, as long as they can be paid for producing it and enjoy a good standard of living.

But if we accept that employment and job security are our goals rather than production and efficiency, it challenges a lot of widely-held assumptions, many very pertinent today. Why promote efficiency in our public services if it is going to have a huge human cost? Why permit massive mergers or acquisitions in the name of efficiency if it’s going to put thousands out of work?

There is a lot of muddled thinking about this among our political leaders. On the one hand the government professes to be concerned about unemployment but, on the other, it looks to privatise the Royal Mail in the name of efficiency. It spends billions propping up the banks but when it comes to the civil service and local government it insists on reductions in headcount. The media don’t help either with articles banging on about “non-jobs” in councils; if those people weren’t doing their non-jobs, they’d be in the dole queue and the taxpayer would be paying for them anyway.

The carmakers that have implemented three-day weeks and reduced hoursare perhaps showing the way forward: they are showing that in tough times, and perhaps in all times, keeping people employed is a goal in itself and not everything should be sacrificed for efficiency and the bottom line.
 
 

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It’s untenable to have a normal retirement age in public-sector schemes that is significantly different from the state retirement age

Brian Bailey, Director of pensions, West Midlands Pension Fund and member of High Pay Commission