Tuesday, March 23, 2010

A Grumble about UK Economic Policy

Nowhere is the idea of consumer choice more absurd than with schools and hospitals. A choice of schools can only be meaningful if some are "inferior" - and therefore unpalatable; while the idea of choosing a hospital when we are sick presupposes that we are in a position to distinguish between available options - something that would lie beyond the expertise of most of us even when we are not sick. What, I suggest, we would prefer are good schools and good hospitals so that choice is rendered unnecessary.

But these are not the only absurdities of modern capitalist theology. Another is the idea that corporate efficiency is always compatible with national or regional economic efficiency. In fact, the two are different and, in many cases, mutually exclusive. In a capitalist economy it is always efficient for the firm to produce at the lowest possible cost - and its techniques for doing so include maximizing sales, reducing labour costs, and externalizing social costs. But it is not economically efficient at the national level for people to buy superfluities (and create the associated waste), nor for a nation to cope with employment instability, the displacement of small farmers and business-owners by multinationals, the ravages of industrial pollution, and the societal disruptions that accompany extremes of inequality. Inequality itself is arguably a spur to capitalist enterprise, but it is also a charge on the social fabric. Investment banking, and currency and commodity markets can net vast rewards for a few businesses and individuals, but they often do so by devastating vulnerable populations and, as we have recently seen, inflicting significant harm on national economies.

One of the most interesting ways in which companies externalize their costs is by laying them off on their own customers. Banks, for example, have been closing branches not a result of a loss of clientele but as a cost reduction measure; and the direct result can be measured in longer queues and more waiting time for customers. A similar effect can be noticed in the widespread practice of imposing multiple layers of alternative "choices" to customers trying to make a telephone enquiry, at the end of which, as often as not, they are invited to call back because "we are experiencing a large number of calls". Practices such as these are a means of transferring costs from the firm to the customer - making them wait for a service that "efficiency" suggests they should receive well...efficiently.

Recently while waiting in a bank line-up, I made a stab at estimating the value in lost working hours to the UK economy if my own waiting experience were representative of that of bank customers in general. The sum came to £320 million per year based on a modest average labour value of £20 per hour.

A couple of weeks later, I found myself making a similar calculation for time wasted trying to get BT to resolve a broadband issue. In this case I spent a total of just under four hours on the telephone over two days (including time "on hold") and spoke at length to no less than five different people. My estimate of the value of the time lost projected onto the UK population as a whole came to £1.5 billion - not including the cost to BT of having five staff members involved of whom four proved unable to help.

These are tongue-in-cheek calculations, of course. But could they also be food for thought?