A rising economy is no longer a guarantee that standards of living will also rise
Robin McAlpine is Head of Strategic Development at the Common Weal think-tank in Scotland.
Cross-posted from Common Weal
Can you think without using words? This has been one of the biggest debates in the field of neurolinguistics and remains contested, so I’ll leave you to that rabbit hole if you’re interested. But let me make a more specific claim; you can’t think about politics and policy without words – because there are no absolutes, only choices.
And the words you use to think about politics will shape how that thinking goes. Someone who thinks wildfires are about ‘forest management’ does different things than someone who thinks its ‘delinquent wild campers’. Words shape our understanding of everything.
So what happens when there is a word missing? Or in this case a phrase? It is a phrase that used to be used all the time. It was one of the most consistently used expressions in politics and was a key battleground in election after election – and then it disappeared. We’ve been thinking without the phrase ever since, and it shows.
The phrase is Standard of Living and its disappearance has caused politicians to get very, very confused about the public. Fixing this means looking at how we lost the phrase and why what replaced it doesn’t work properly.
So how did we lose it? This, as with so much, was a dynamic created by Thatcher but executed by Blair. The problem for neoliberal capitalism is that what is good for free market capitalists is simply not good for everyone else. Which is to say the operation of globalised free-market capitalism is bad for people’s standard of living. So, driven by the priests of free market economics, we replaced that concept with proxies.
Those proxies all had a common feature – they were all numbers rather than words. They broke up the consistent and unified concept of ‘what standard of life am I living?’ and turned it into fragmented concepts like income, inflation, wellbeing, spending power, avoidable and unavoidable costs, interest rates and so on. These always existed, but not at the expense of their cumulative effect.
And then those were managed via other proxies. For example, we didn’t really waste time measuring income or talking about it much. Instead we saw income as a function of ‘economic growth’ (which it isn’t). And we saw the cost of living as only function of inflation (which it isn’t either).
Put really simply, the concept of a politics which was focussed on the question of the nature and experience of the lives we are living was replaced by a politics which saw standard of living as a direct function of macroeconomic statistics based on how much we could consume. Or, to put it another way, the quality of your life was replaced with the quality of life for corporations as the measure of our national success.
It was part of the Blairite assault on language. I remember being taken aside in 1997 and being told that there were no ‘problems’ any more, only ‘challenges’. Oh how I laughed – for about ten minutes until I realised what it meant. Next to go was ‘poverty’ (which was about money) replaced with ‘social inclusion’ (which was about everything except money).
Standard of living wasn’t ever really officially killed off. Blair just decided we were ‘all consumers now’ and so measured our consumption as the measure of life quality. And it has sent politics up a world of blind alleys. Because ‘number go up’ theory means that when all the numbers chosen by free market economists go up, politicians think that’s that sorted.
But strange things have been happening, because before the end of Blair’s decade in power, the banking system started to wobble and then collapsed. It caused everything to change. Have a glance at this week’s graph of the week and you’ll see an example, but it is only one of dozens. Effectively the old measures stopped measuring what they were supposed to be measuring.
Or to put it another way, there was a ‘great decoupling’ of statistics and how they were meant to relate to each other and to us. This happened slowly after the financial crisis – and then really, really quickly after the pandemic.
So for example, now rising GDP makes unemployment worse. That is all reverso – it’s meant to do the opposite. But after a decade and a half of unprecedented ‘socialism for the rich’ (who got massive government bailouts twice and used it to inflate asset values where they hold most of their wealth), economics doesn’t work like it used to.
To give you another example, rising consumer spending means very different things in an era when 50 per cent of all spending is by the richest ten per cent (in the US). Likewise, if you don’t count interest rates in inflation then you are actually underestimating a cost of living crisis. Another example is giving discretionary and non-discretionary spending equal weight. Cheaper video doorbells don’t offset rising rents…
This stuff is pretty dense to dig through. There is a world of ‘economic rent’ and ‘hidden fees that act like taxes’ and much more that corporations now use routinely which are invisible to the statistics but hit citizens hard. I mean, is television cheaper now than it was ten years ago?… [Checks number of streaming subscriptions… no, no it is not.]
And its not just costs, it’s much more. Housing is a massive issue and our houses are getting smaller and smaller and unavailable to an entire generation. Rent is more expensive than a mortgage, so again, if people are pushed into renting, that is more hidden inflation. This article here is a pretty good primer on a lot of this.
It says we’re in a ‘boomcession’, a period in economic history where the statistics say things are going really pretty well but the public doesn’t agree because they don’t feel it. The numbers go up but our experience of our standard of living is falling. And we’re not happy about it.
The way to reverse this is comparatively simple – at least the first step is. We need to resurrect the idea of living standards. Not proxies for living standards, not ‘cost of living’, not GDP – a conversation about whether lives are getting better and why. It changes the perspective instantly. If houses are getting smaller that is positive in GDP terms but bad for living standards.
If you build new houses in out-of-town estates, people can’t get anywhere without a car. GDP doesn’t care, but you do. Fewer than one in five people in Britain has any desire to live in one of those ‘white boxes in a field’ developments that planning officers seem to love so much.
The point is that standard of life is complicated and narrative. You can’t put a value on everything, no matter how much your spreadsheet demands it. So where is the metric for ‘my house is a shoebox and I feel trapped’?. Where is the metric for ‘fuck me, two hours with an AI chatbot and I’m no further forward’?
How does fraud feature in inflation figures? Keeping up with advice on fraud feels like a university degree these days. What about public services? Why do they keep saying that growth will fix them? Growth to what? Just bigger? How much bigger? When do we get there?
Here’s another example – food got cheaper. But it got cheaper by not really being food any more. It is making us ill and that is making us miserable, but the statistics say otherwise. Is gambling a good thing or a bad thing? We measure it almost wholly as a good thing. That in itself is strange; the same economic arguments would apply to heroin. Drug dealers are clearly worse lobbyists…
It’s that thing about four blind men trying to work out what an elephant is by touching separate parts of it each. Every individual part makes sense – it’s a big snake up two tree that is attached to a tall cow.
So new statistics? Yes – and no. I argue often that we’re counting the wrong things, but perhaps that gives you the idea that if you count the right things problems go away. That is just a different version of the same misunderstanding. Go on, describe the colour yellow to me using only numbers in a way that has any meaning to me.
Some of this is just binary – either you can feed the kids and heat the house or you can’t. Some is intangible – you either feel that you matter to politicians or you don’t. Some of it is too complex – try and describe why some neighbourhoods are desirable and others aren’t and you start to find that lots and lots of numbers come and go but don’t really add up to an answer.
Until we stop using proxies for people’s experience and find another way to think about it we will just keep doing this. That is why standard of living is such a helpful concept, because it can really only be defined by the citizens themselves. You might think that I’m happy that my heating bill has come down where I might know that I’ve been turning the heating off ‘cos I’m skint and now I’m freezing.
There used to be a means of doing this, of working out what people actually wanted. It was a rich and diverse civic culture (churches, trade unions, tenant’s associations) giving active real-world feedback linked to grassroots knowledge, higher participation in politics and (can’t stress this one enough) the assumption that the interests of big business and of citizens are in tension. Most of what I describe above is a straightforward sign of the abuse of corporate power.
Perhaps above all, the idea of regulation has been distorted. Regulations are measures to protect the public from the powerful. For 40 years they have been presented as anything but that. In fact in my adult life not a single politician in power has not talked about regulations as the enemy of the public good.
I would really like to describe the alternative now, but the shift in concepts here has been so extensive that it really does take some explaining to show why what you have been trained to believe is ‘rational politics’ is in fact anything but. It is producing outcomes it knows are counterproductive, and it is doing it because no-one is looking at this from a citizens’ perspective.
Your quality of life is not assured by numbers going up but by your experience of the world getting better. That can’t be put into simple numbers. The number-obsessed turn politics has taken is simply a limited set of politicians desperately pretending they can manage complexity if they just ignore it and manage something else instead.
Put as simply as it can be put, a rising economy is no longer a guarantee that standards of living will also rise and until we accept that and start focussing on the latter, this political disconnect will just keep getting bigger and bigger – with all the harm that comes with it.
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