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We Care About the Future — Not Short-Term Profits

Tory governments since Margaret Thatcher have starved Britain of investment, fueling inequity and leaving its infrastructure to crumble. It's up to Jeremy Corbyn's Labour Party to rebuild the country and invest in the future.

A Southern Rail train in West Sussex, England. Werner Wittersheim / Flickr

Traveling between Chicago and New York on Amtrak gives you a good indication of what a chronic shortage of investment looks like. The train crawls across the northern part of the United States, rarely exceeding sixty miles per hour, before getting stuck behind a freight train. Most of the carriages are empty for much of the journey, those who aren’t terrified of planes prefer to take domestic flights.

Some like to cast the Amtrak as the victim of inefficient state management, but the problem is far deeper than this. The US rail network used to work well — some of the trains traveled faster in the 1970s than they do today — but it has been allowed to deteriorate, like most of America’s public infrastructure. The free market logic that underpins this deterioration extends beyond public investment: the private freight trains have been given priority over the public services, which is what explains the delays.

Looking out the window, we pass one dilapidated cityscape after another. From the outskirts of Chicago, through Cleveland, Ohio, to Buffalo, New York, I pass some of the poorest places in the entire United States. This is the “Rust Belt” — the once mighty industrial center of the US manufacturing sector, now most famous for delivering President Donald Trump to victory on the back of the votes of its poorer, white former Democrats.

As Tom Hazeldine pointed out in his excellent piece on the subject, the United Kingdom has its own Rust Belt, concentrated in the North and the Midlands. The UK rust belt was first decimated by Thatcher’s assault on the United Kingdom’s industries, and continued to lose its competitiveness through the 1990s and 2000s as sterling appreciated as a result of London’s financial boom. Austerity was the final nail in the coffin, with research showing that already deprived regions in the North of England bearing the brunt of the cuts. After decades of being ignored by Westminster, it was these places that were most likely to vote to leave the European Union.

The British and American rust belts are not peculiarly unproductive places, destined by geography to be unable to compete with the rest of the world. The reason these places are poor is the same reason that America’s trains don’t work as well as they used to — they have been chronically starved of investment.

In fact, public infrastructure in many parts of the United Kingdom have been left to rot, just like Cleveland and Buffalo. IPPR North has been releasing analysis of regional transport investment for the last several years — every year, London has received substantially more investment than the country’s regions. This revelation will not be surprising to anyone who has ever taken one of the “pacer” trains between Liverpool and Manchester. In 2019, IPPR North revealed that, according to the government’s own statistics, this disparity will continue well into the future, with London receiving three times more investment per person than the North over the next fifteen years.

But even the wealthiest parts of the country are starting to suffer as a result of falling investment. Investment in fixed capital — i.e., in the production of real, tangible stuff — has fallen from 25 percent of GDP in the mid-1970s to just 17 percent today. Private investment has fallen as financialized corporations prefer to plow their money into share buybacks, mergers, and acquisitions rather than build new factories and create jobs. But it is public sector investment that has really fallen off a cliff. In 2018, the United Kingdom ranked twenty-fourth out of thirty-two OECD countries, with public investment at 2.6 percent of GDP next to an OECD average of 3.2 percent.

The United Kingdom is not simply short of investment in fixed capital, it is failing to invest in its people. Simon Stevens, the National Health Service’s (NHS) chief executive, has warned that the United Kingdom is underfunding its health services to the tune of £20–30 billion. Funding for social care has been nearly cut in half; education spending has fallen by 25 percent; and local government’s central grant has been cut by a staggering 60 percent. Ultimately, a decade of austerity has led to 120,000 unnecessary deaths.

Insufficient investment doesn’t simply heighten inequality — it reduces productivity, and therefore wages and growth. Research from the New Economics Foundation has shown that the UK economy is up to £100 billion smaller than it would have been without austerity. Crumbling infrastructure, strained public services, and little support for research and development have constrained productivity, which has stagnated for the longest time since the invention of the light bulb.

Ultimately, public investment is what determines the future. A society that fails to invest is one that imagines things will, and should, remain as they are. Corporations — relying on technology, infrastructure, and workforce training provided by the state — may deliver marginal changes but they cannot replace outdated infrastructure, decarbonize the economy, or rebuild entire cities. Public investment is the difference between the Amtrak and high-speed rail; between carbon and renewables; between the world we inhabit and the one we would like to build.

Down in Albany, New York, the train stops for an hour and I jump off to wander around the neighborhood. I get chatting to one of the train workers, Brian, telling him how much I’ve enjoyed travelling on the Amtrak. “It’s been great!” I tell him. He smiles, looks down at the ground and shrugs, “it could be better.”

Brian is absolutely right — the Amtrak could be better. But then again, so could the country it traverses. Politics in the United States and the United Kingdom is alive with talk of a Green New Deal that could reverse the decades-long decline in public investment in both countries. Labour’s plan to invest in a green public transport system, renewable energy, and the development of green technologies would create jobs, reduce regional inequality, and avert climate breakdown. The alternative is more of the same — falling productivity, declining living standards, and mounting environmental chaos.

The Tories will claim such investment is “too expensive.” They know as well as we do that smart investment boosts growth and therefore pays for itself through higher tax revenues — and they know that if we fail to decarbonize, we won’t have an economy left to protect. But that’s not the point. Those on the Right are happy to spend billions on wars, tax cuts, and bank bailouts; their commitment to fiscal rectitude only applies to investment that benefits working people. Elites will never accept the Green New Deal because it is based upon a conviction that they do not share: that another world is possible, and it is up to us to build it.