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UK strike wave fights a desperate decline
Workers punished in the empire’s final days
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When British historians revisit 2022, they will probably remember it as the end of Elizabeth II’s reign and the beginning of an unprecedented economic collapse for what used to be one of the world’s most powerful countries. Inflation is at 12% and expected to shoot up past 18% in early 2023, according to Citi. Gas and electricity bills are up 86% and have become impossible for many people to pay. Malnutrition has become a serious threat for potentially millions.
Labor unions have responded with a wave of strikes demanding that the nation’s most important employers pay more to keep up with soaring prices. But you can’t squeeze blood from a rock, and Britain’s problems have everything to do with the hubris of an empire in its final stages of decline.
The National Health Service (NHS) is the UK’s biggest public institution, and nurses staged a one-day walkout last Thursday, the largest strike in the Service’s history. Health workers have planned another round of walkouts on Jan. 18-19. Paramedics and ambulance drivers will strike on Jan. 11, leading the British government to prepare the military to drive ambulances.
Then there are industrial actions by rail workers and train drivers during the Christmas holiday, shutting down routes all over the country. The National Union of Rail, Maritime and Transport Workers (RMT) are preparing for more strikes in the coming weeks, all part of a broader campaign of labor action that the right-wing Tory government has tried to characterize as helping Russian Pres. Vladimir Putin. Left unsaid is that Britain’s rail system is already unreliable from years of cutbacks since privatization in the 1990s – and prohibitively expensive.
"The union remains available for talks to resolve this dispute,” RMT Pres. Mike Lynch said. "But until the government gives the rail industry a mandate to come to a negotiated settlement on job security, pay and condition of work, our industrial campaign will continue into the new year, if necessary.”
The austerity that’s robbed the rail system extends to every area of U.K. society since the 2008 financial crisis – with sharper cuts to public expenditures and services than in previous rounds of austerity in the 1930s and early 1980s. This left public services ill-equipped to deal with a shrinkage in the workforce from COVID mass deaths and over-50s leaving their jobs. There are more than 500,000 fewer people working today than in 2019.
Those cuts fell heavily on the NHS which has entered a brutal feedback loop: understaffing leads to inadequate care which means people get sicker, which makes COVID worse, leading exhausted, underpaid nurses to quit their jobs at higher rates, speeding up the healthcare system’s collapse. Politicians can then take advantage for further austerity, closing down more hospitals and making the problem worse.
Overall, these approaches have left British workers on average £128 poorer in real wages than they were before 2008. It’s now common to read stories of British poverty materializing in long lines at food banks, and Victorian-era diseases such as gout, scurvy and tuberculosis are making a comeback.
This austerity isn’t just Tory meanness run amok -- it’s the consequence of how Britain has tried to keep its empire alive by riding the coattails of its heir, the United States. For one, the country’s subordination to U.S. economic priorities means that it is dealing with the same anti-China de-globalization that is underlying inflation everywhere right now, as we’ve covered.
It also means that the United Kingdom can’t say very much about the inflation forced upon it by U.S. monetary policy. The United States is “exporting inflation” with its own credit austerity coming from the Federal Reserve. In the past, U.K. policymakers could pursue a similar policy of passing the buck (or the quid), but when micro-Prime Minister Liz Truss announced a debt-financed tax cut for business and the rich in September, investors dumped their pounds for dollars.
This is precisely the kind of discipline markets typically impose on “developing” economies, but now the Brits are tasting their own historic medicine. New PM Rishi Sunak is promising more stinginess -- doing the same thing again and hoping the outcomes change.
And topping all of it, of course, is Brexit -- the cynical attempt by Sunak and others on the right wing of the Conservative Party to tap resentment from all this austerity that went haywire when voters took them at their word. Trade barriers now affect 40% of the country’s exports, another accelerant for the economy’s decline.
The results: Britain’s economy will shrink by 1.4% in 2023, worse than even Germany, which is reeling from the withdrawal of industrial inputs from Russia. The United Kingdom is the only G7 GDP which hasn’t fully recovered from the COVID recession.
For centuries, Great Britain stayed well-fed on resources it extracted from colonies around the world. After the Soviet Union saved it in the Second World War, the Brits had to formally honor independence demands from many of these countries, but the City of London found new ways to exploit them as junior partner to the United States.
The internal struggle between those dominant financial interests and the bitter masses accustomed to imperial glut has created a political basketcase that has undermined its own position, even as the Americans question what use Britain serves in the first place. They offer less political benefit than Poland and have much fewer resources and industry -- why shouldn’t they be significantly poorer?
The answer: they will be. Perhaps their only hope is the labor uprising happening right now that can realign the country’s priorities in a radical way. As the country creeps towards a general strike, look for the people that caused this calamity to double down in tanking conditions for millions yet again.
Our only investment advice: Logan got this one right.
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