Jubilee: A Shout for Joy

If you’re living in the UK it’s a busy summer.

First we had the Queen’s Diamond Jubilee, then (for the English anyway) the dubious pleasure of cheering on the England football team in the Euros, and in a few weeks we’ll be hosting the London Olympics – all with the added fun and excitement of the traditional British rainy season in June and July!

It’s the first of these I want to ask you to briefly consider: the Jubilee.

Not another debate about the pros and cons of a constitutional monarchy, but the word Jubilee itself.

Originally it meant something very different to celebrating the length of a King’s or Queen’s reign. In the Old Testament it means a year in which debts are cancelled and slaves are freed – etymologically it’s often described as literally meaning shout for joy‘.

Releasing slaves and freeing people from debt, obligation and bondage, is a recurring theme in the Old Testament, which very clearly considered ongoing cycles of debt as a bad thing – something to be avoided wherever possible.

It also contained another piece of economic instruction – a prohibition against something called usury.

Usury is the charging of excessive interest on debt, though some interpretations consider the prohibition to be against the charging of any interest at all. The usual literal translation of usury is ‘a bite’ – relating to the painful process of being charged interest.

Usury is still prohibited under Jewish tradition and Islam – though Christianity largely seems to have stopped being concerned by it centuries ago.

Interesting stuff, but the real question is – what, if anything, does this mean for us today ?

The charging of interest is something so deeply embedded in our economies and culture, that we not only take it for granted, but generally fail to see it for what it is: a mechanism by which money flows from the poor, who need to borrow, to the rich, who can afford to lend.

The charging of interest, therefore, is a powerful driver of inequality – both between the rich and poor of our own societies, and also between rich and poor countries.

Another consequence of an interest based economy is that it requires the economy to continually grow in order to service it – a company borrowing it’s start-up costs at a rate of 7%, will have to grow by 7% the following year to repay the interest.

Needless to say infinite continual growth is simply not possible, due to real-world limits and constraints, and this endless need to deliver growth, many argue, exacerbates resource depletion, environmental degradation and aggressive competition for resources.

Unfortunately our entire banking system is based on the concepts of debt and interest.

If you were the first customer of a brand new bank and were to deposit £100 in the bank, you’d be given a debit card with the ability to withdraw £100 at any time. The bank would have your £100 and you would have a promise from the bank that you could withdraw it at some time in the future.

If you were the second customer of the bank and wanted to borrow some money, the bank might lend you £90 (keeping the required 10% fraction in reserve) and give you a debit card which grants you the ability to withdraw £90 at any time, on the basis that you would then pay it back (plus interest) at some point in the future.

The first customer has £100 available and the second customer has £90 available: £190 is now available to be spent in the real-economy. In effect the bank has created £90 from nothing.

With successive deposits and loans this original £100 of ‘real money’ (what economists call the monetary base or central bank money) can be transformed into several thousand pounds of ‘debt backed money’ (what economists call commercial bank money). Over 95% of the money supply in the UK economy has been created by commercial banks.

This process of money creation through lending and debt creation is referred to as fractional reserve banking,with banks effectively creating money by putting their customers into debt – financing today by endebting the future.

For many, this understanding goes against the grain and can be a little difficult to accept.

The economist John Kenneth Galbraith taught at Harvard for many years and served in the administrations of Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy, and Lyndon B. Johnson, famously said: “The process by which money is created is so simple that the mind is repelled.”

Ninety percent of the world’s population owns just fifteen percent of the wealth.

Or to put it another way ten percent of the world’s population owns eighty five percent.

Perhaps it’s time to reconsider how we organise the world’s money.

 

If you’ve got a couple of hours to spare and want to learn the origins of the words tally and stock – not to mention how the Wizard of Oz was supposedly originally a protest against exploitative banking – watch Bill Still’s fascinating documentary on the left below.

If you’ve only got 7 minutes to spend, the bank run scene from the fantastic It’s a Wonderful Life is there on the right for you :o

 

Photo from digitalworldmoney via Flickr

RELATED ARTICLES – More Equal than Others, The End of Growth and Keeping Out the Giraffes10 Ways to Have Enough Money and Stuff

The End of Growth & Keeping Out the Giraffes

Sometimes we are so focussed on our own here and now, that we can miss the bigger picture.

It’s also sometimes hard to see ourselves as others see us.

In the UK, like the rest of the developed world, we’ve become used to the idea that, on average, our standard of living will rise every year.

We’ve come to expect we will all own more and newer cars, more and better consumer goods, have more choice of food, and take more holidays to ever more exotic locations; not to mention having better health care, better roads and trains and earlier retirements in more comfortable financial circumstances.

It’s understandable – this is the way it was for the last generation, and the one before that, in fact for the majority of the last two hundred years or so, with a few temporary blips due to wars, recessions and a depression. For most of us in the rich world, things have been generally getting better, and as a result we’ve gotten used to the idea of continual economic growth and increased prosperity.

But for the last few years things have been different – stationary or falling wages coupled with increasing energy, transport and food costs are making us worse off. Our jobs are less secure, our retirements will be further away and will be less comfortable than we’d imagined, and we’re also having to come to terms with the cuts in our public services.

While some commentators talk of ‘market corrections’ and ‘U-shaped returns to growth’, increasing numbers take the view that the current financial turmoil is not simply another blip on the long-term path of continued growth, but represents a more fundamental change.

They argue that increasing scarcity of resources, especially cheap oil, coupled with rising aspirations and demand in the developing world, mean the period of continual economic growth for the rich world is over, and that  in fact we’ve been living beyond our means for several decades, building-up huge national and personal debts as a result.

This isn’t an economics blog, and I’m no economist – but I am persuaded by many of the arguments presented in books like Meadows and Rander’s  Limits to Growth and Tim Jackson’s Prosperity Without Growth (which interestingly is also on Ed Milliband’s summer reading list). Tim Jackson’s similarly titled report Prosperity Without Growth, produced for the now axed Sustainable Development Commission is available for free download, and is a very interesting read.

The key argument is simple: growth cannot continue forever – in a world of finite resources there must be limits. Trying to return to ‘business as usual’, isn’t going to work. We need to find a different way of doing things, and change from our current growth-based economic model, to something more sustainable.

For the luckier ones amongst us, who still have jobs, and can keep putting food on the table, it will no doubt mean lowering our expectations for the future – keeping our cars for longer, not doing so much home improvement, fewer gadgets, less exotic holidays, and no-doubt working for longer before our retirement. But there will be others less fortunate, facing real hardship – struggling with bills, debt, unemployment and the loss of support services. In tough times it always seems to be the most vulnerable who suffer even more.

One of the aims of this blog is to encourage us all to consider what action we can take in support those most in need, locally and across the world. We should do what we can to find enough time in our lives, not just to ‘keep out the giraffes’, but to do the simple things to help both ourselves and those around us – from donating a few tins of baked beans to a food bank every week, to offering to run an elderly neighbour somewhere, now that the bus service has been cut.

There’s something else equally important we in the rich world might want to do as well: remind ourselves that even in the current economic situation we’re still rich.

When we look around us, and compare ourselves with our friends, colleagues, neighbours – and especially what we see in the media, we can easily convince ourselves we aren’t that well-off. But our world isn’t the world !

If you earn more than £13,000 a year, you’re one of the 10% of highest earning people on the planet. If you’re lucky enough to earn more than £26,000, you’re in the top 1%! Visit The Global Rich List to check out how your income compares.

(Tim Jackson’s video below explains the giraffes !)

Limits to Growth                        Economic Reality Check           The Exponential Function

Dennis Meadows                        Tim Jackson                              Albert Bartlett

Photo by Ted Murphy via Flickr

RELATED ARTICLES - The Elephant In the Room

Forget About the Price Tag

Anyone thinking that being ‘green and ethical’ is expensive, and only for those who are better off, is kind of missing the point.

It’s really about making better choices, not filling our lives with rubbish, and hopefully being happier as a result. Moving to a ‘greener and more ethical’ lifstyle should cost us all a lot less !

 

SAVE MONEY AT HOME

Even if you don’t feel like wearing a jumper at home to keep warm you can save energy. Turn down your hot water thermostat by a degree or two and bleed your radiators so they work efficiently. Reflective panels, or even silver foil behind them will also help radiate heat back into the room. Only run the washing machine and dishwasher when full and get to grips with the economy cycles and settings. For most washes try turning the temperature down to 30 degrees. If you have cheaper electricity at night (Economy 7) consider running your washing machine and dishwasher then to take advantage. If you have central heating room thermostats make sure they are in the right place, and not set too high. Clean the coils at the back of the fridge to keep them efficient and keeping your freezer full also helps. Close doors and windows properly and hunt out draughts and seal or block them. Use curtains and blinds to keep in heat when cold, or shut out sunlight when hot. Consider turning off the heating in some rooms if they’re barely used for periods.

Get free or subsidised loft or cavity wall insulation. If you own your home and have a south facing roof, consider signing-up for free solar panels – the installer takes the government grant (feed in tariff), but you save the electricity. It goes without saying, but turn lights off when not in use, and use efficient lights and bulbs. Consider using a multi-socket on groups of electrical appliances so you can turn them all off/on easily and avoid leaving things on standby – plugging TV recorders and similar items that need to be left on into a different socket. Consider getting a wireless energy monitor to encourage you to save more electricity, or sign-up to trial a smart meter from your energy company, free of charge.

 

SAVE MONEY IN THE KITCHEN

Many of us could do with eating a little less food full stop, but it’s also true that most of us waste a great deal of what we do buy. Minimise waste by using things before they go off, making use of leftovers in soups/stews/casseroles etc, storing things better (not always in the fridge), and controlling portion size to reduce waste off the plate. You might also be able to minimise wastage, save money and make life easier by buying and cooking in bulk and freezing meals – having something ready to go in the freezer will also reduce the temptation to eat out or get a takeaway when you’re tired or rushed. Some people take part in communal cooking clubs -cooking in bulk then swapping dishes with each other.

Knowing the cost of things when shopping for food helps, as does shopping from a list, and the classic ‘not shopping when hungry’ to limit impulse purchases. Keep a range of healthy (and cheaper) snacks at home, in the car, and at work, to avoid so much splurging on snack foods. Making your own lunches in advance also helps. Avoid routinely buying expensive high street coffee by investing in a flask and making your own. Never buy bottled water – take an empty water bottle with you to fill from the tap. While you’re at it give-up buying paper towels, and simply use washable tea towels again.

Meat is generally an expensive item, and it also has a significantly greater environmental impact than non-meat foods, so consider expanding your range of non-meat cooking and eating a little less. Perhaps consider trying meat-free Mondays.

Try to buy locally produced food that’s in season – it’s often cheaper and keeps your money in the local community. Even better, if you have the space and time, grow your own food. If you grow enough you can always barter your excess with your friends.

Try turning the oven off a few minutes before the end of cooking, the heat will remain, and you’ll save a few minutes of electricity. Afterwards opening the oven door will allow the warm inside to vent and help heat the kitchen, and reduce the length of time the oven fan has to run to cool the oven after turning the oven off. When not in use be sure to turn appliances such as the cooker, dishwasher, washing machine and microwave off, rather than leaving on standby. Use hot cooking water from cooking to scald weeds, but avoid letting too much steam escape into the house – as it presents both a damp and mold hazard, humid air also takes more energy to heat than dry air.

 

SAVE MONEY SHOPPING

Turn mindless shopping into mindful shopping – don’t buy things impulsively, or recreationally. Keep track of what you’re spending, and how much you’ve got left in your budget – credit cards can make us loose touch with the value of money. Consider how many hours you’ve had to work to pay for what you’re spending. Ignore the pressure to overshop – buy one get one free is only good value if you really need two! Allow yourself time for a reflective pause before committing to buying – ask yourself: do I really need this, do I need it now, what if I wait before buying it, where will I put it, can I share someone elses ? If you’re a problem shopper consider self, or group help.

Know the origin of what you’re buying as much as possible. Try to make ethical choices wherever you can, often ethical items are no more expensive than non-ethical items – such as Cadbury’s Dairy Milk, which is now Fairtrade. Ethical Consumer magazine and many other sources give ethical summaries of various products. Check out smaller ethical providers and retailers, who often have no high street presence, but can be found easily online. Wherever possible buying things that will last, or can be repaired or upgraded, will be both cheaper in the long run, and have a lower environmental footprint.

For some items like books, newspapers and magazines, consider whether you really need to buy at all. All newspapers have online editions, most of them free, as do many magazines. Books can be borrowed free from public libraries, many of which now have their catalogues available for online searching. Borrow from a friend, and pass on books of your own that you’ve finished with. There may be a local book swap club or store, or you could investigate online book swapping.

Buy things second hand where you can – charity shops can be variable, but bargain hunters know which ones are best. Car boot sales, jumble sales, or yard sales are other possibilities. Scan local sources, or use Ebay, Amazon or other online retailers who sell second hand items, like computer game, DVD and electronics retailer CEX. You may even be able to get what you want free from Freecycle. Alternatively consider renting rather than buying – easier than ever in the digital age. Try to sell-on or give away your own items when you no longer need, rather than sending them to landfill.

Consider getting more involved in challenging overconsumption, sign-up with Buy Nothing Day, Commercial Alert , the Christian Reclaim Christmas Group Ready-Steady-Slow, or even the very silly Rev Billy.

 

SAVE MONEY TRAVELLING

Minimise the amount of travelling you need to do by grouping tasks and errands together. Make sure your tyres are at the correct pressure, both for safety and economy, and consider your driving habits – if you do enough mileage you might consider getting some eco-driving lessons. Obviously walk, cycle or use public transport where you can, and it might be practical in some circumstances to car share, either for regular communiting, or simply in giving your friends or neighbours a lift from time to time or offering to pick-up some shopping for them if you’re going into town – we often bemoan both the number of cars on the road, and the lack of social contact in society, but sometimes struggle to do much about it.

It’s often more fuel and cost efficient to get shopping delivered, than making a special trip to the store. All major UK supermarkets now do home delivery, with the cost depending upon distance, demand and time of day. Sometimes delivery can be arranged for free.

If you’re able, consider discussing working from home with your employer – to save you both travel time and fuel costs. It might be that you’re able to do without your car at all, saving road tax, maintenance and servicing and depreciation, as well as fuel. It’s always possible to hire a car for holidays and other specific trips, and in some places car share clubs may be available.

Photo by Chris Parker UK