1. Technology for Technology’s Sake
In the small seaside town where I live, there used to be a very simple and almost infallible system for obtaining a repeat prescription from one’s doctor. One went to the surgery, filled in a slip of paper with one’s name and the name of the requested medication and then inserted it into a closed box a bit like a post box. A couple of days later, one would then return to the surgery, pick up the prescription from the receptionist and take it to the pharmacy, where one would be asked whether one wanted to wait or come back later. I usually opted to do a bit of shopping and told the pharmacist I would be back in twenty minutes when the medication would usually be ready for me.
This system was very simple and very cheap in that all it required was some pre-printed slips of paper, a wooden box and a ballpoint pen on a piece of string. It was also more or less infallible in that the person with the greatest interest in ensuring that it worked – the person requesting the repeat prescription – was in control of most of the process and interacted personally with the two other people involved: the surgery receptionist and the pharmacist.
Then, one day, someone decided to modernise the system in such a way that one could now download an app to one’s mobile phone, set up an account on a sever somewhere and request a repeat prescription online. Whether this was a local, regional or national initiative I am not sure but, fortunately for me, my own doctor’s surgery decided to still keep the old post box and slips of paper for those who wanted to continue using them, of whom I was one. This was not only because, being a member of the older generation, I am fairly useless at using my phone for anything other than making phone calls, but also because I reasoned that, if I adopted the new system, I’d not only have to remember yet another user name and password but would have to download the app again every time a got a new phone.
Unfortunately, however, the modernisation of the system didn’t end there. For instead of the patient picking up the prescription from the surgery, it was now sent to the pharmacy electronically, thereby taking control of this part of the process away from the person who has the most interest in ensuring that it works, which, at times, it does not. Even if one waits a week before going to the pharmacy to collect the requested medication, for instance, one may discover that the prescription has still not arrived, necessitating another visit to the surgery to find out why. In my own case, this has happened three times in the last six or seven months: once because my doctor wanted to run some tests before signing off on the prescription – though no one thought to inform me of this – and twice for no reason anyone could explain, although it was strongly suggested that, had I submitted the request electronically, it would not have happened in that it would have automatically been in the system.
Even if everything works properly and the prescription arrives at the pharmacy within the specified period of time, however, the problems do not end there. For instead of looking on the shelves to see whether the medication is ready for collection, the pharmacist’s assistant now has to check her own mobile phone to find out where the prescription is in the system. For even if it has arrived at the pharmacy, because it is not hand delivered by the person making the request, who cannot therefore say whether they are going to wait or come back later, all prescriptions are now dealt with in the order in which they are received, without reference to when the patients might be picking them up, making it a matter of pure chance as to whether the medication is ready when the patient calls in for it.
This fundamental change in the nature of the system was further exacerbated by the fact that, alongside the new system being introduced, the doctors at my local practice stopped issuing prescriptions for two months’ supply of a medication and now only issue them for one month’s supply. This was almost certainly due to the UK National Health Service (NHS) wanting to reduce its expenditure on prescription medications, which a reduction in the quantity prescribed achieves in two ways. Firstly, it halves the amount of working capital tied up in pharmacological products sitting in people’s medicine cabinets, thereby reducing the NHS’s cash flow requirement. Even more importantly, however, it doubles the amount of income the NHS obtains from prescription charges. This is because the amount patients have to pay for each prescription is the same regardless of the quantity of the medication prescribed. By halving the prescribed quantity, therefore, and forcing patients to request another prescription every month rather than every two months, the NHS doubles its prescription income. The problem, however, is that, in addition to increasing the cost to patients, this has also increased the cost to pharmacies, which now have to fill out twice as many prescriptions as was previously the case, thereby requiring them to take on more staff.
At my local pharmacy, for instance, there used to be three members of staff working at any one time: the registered pharmacist and his assistant in the back room filling out prescriptions and one assistant on the counter dealing with customers. These days, in marked contrast, I have counted up to five members of staff in the back room filling out prescriptions. Because there is still only one assistant working on the counter, however, and because there are now twice as many people coming into the pharmacy to collect their medication, this means that long queues tend to build up, which take even longer to service because the name of each patient now has to be entered into the assistant’s mobile phone to find out where their prescription is in the system. If it has been filled out, she then has to go into the back room to find the actual item or items on the now overflowing shelves. If, on the other hand, it has arrived at the pharmacy but has not yet been filled out – which is often the case – she then has little choice but to advise the patient to come back the following day, which means that the patient has wasted fifteen minutes in the queue to no end.
Of course, most of these problems are due to the NHS reducing the amount of medication supplied on each prescription rather than to the introduction of the new online system. But they are both part of a greater malaise. For it is fairly clear that no proper systems analysis was carried out before either aspect of the overall system was changed. Somewhere in the NHS bureaucracy, it was simply decided that, in order to save money, doctors should prescribe smaller quantities of medication without anyone taking into account what this would do to the system’s throughput. What’s more, it’s greatly to be doubted whether they even realised that the additional cost to pharmacies would ultimately flow back to the NHS.
Similarly, it seems likely that someone somewhere simply thought that they could solve the throughput problem by introducing a new online system. Not only did they not take into account the fact that the more complicated a system is, the more likely it is to fail, but they do not seem to have even been aware that when one takes control of a system out of the hands of those who have the greatest interest in making it work, it very often doesn’t.
The question this clearly raises, therefore, is how senior managers in the NHS, who are presumably paid quite handsomely to make such decisions, could get them so wrong. The answer, however, is a little more complicated than one might initially suppose. For it almost certainly has to do with the widespread but fallacious belief that a more advanced technology is always better than a less advanced technology, the fallacy of which is obscured by the fact that, while a superior technology is always going to be more advanced than any technology it supersedes, it supersedes the less advanced technology, not because it is more advanced, but because it is superior.
In 1764, for instance, Lancashire mill owner, James Hargreaves, invented the spinning jenny, which, over the next few decades, gradually replaced more traditional looms, not because it was more advanced, but because it enabled textile workers to produce up to 120 times more cloth than had been possible using the older technology, thereby revolutionising the British textile industry and making Britain the largest manufacturer and exporter of woven fabrics in the world.
That’s not to say, of course, that there isn’t a perfectly understandable reason why we consistently conflate these two concepts. For, throughout most of our history, the attributes of being more advanced and being better did, indeed, tend to go together, with more advanced technologies generally being an improvement on what preceded them. This is because technological development is a lot like evolution in that, under normal economic circumstances, only those technological innovations which appreciably improve efficiency and productivity tend to survive. Technologies which do not work so well – which are slow, cumbersome or prone to failure – are either judiciously abandoned by their inventors or end up bankrupting anyone foolish enough to persevere in trying to make them work.
The problem today, however, is that state funded public services such as the NHS simply cannot go bankrupt. No matter how long they persist in using poorly designed systems, they never have to pay the ultimate price for doing so, with the result that poor technological choices are not weeded out in the way they are in other parts of the economy.
This is partly due, of course, to the fact that, without economic consequences, those responsible for these poor choices are seldom held to account. But it is even more profoundly due to the fact that, if one conflates the two attributes of being more advanced with being better and believes, as a consequence, that a more technologically advanced system is always better than less technologically advanced system, not only is one more likely to choose a more technologically advanced system as a matter of principle, but one is less likely to feel the need to carry out any real technological assessment to determine whether the more advanced technology really is better. After all, how could a temperature controlled room full of servers with blue flickering lights not be better than a wooden box, some pre-printed slips of paper and a ballpoint pen on a piece of string?
To make matters worse, at some point in the development of our current way of thinking, the conflation of these two concepts – that of being more advanced and that of being better – then gave rise to a new moral category: that of ‘progress’, which is always, of course, progress towards something better, even if we do not know what that is. What’s more, being a moral category, the requirement to effect progress always takes precedence over other considerations, especially economic considerations, and can thus be used to justify the expense of a more advanced technology without having to take into account such issues as cost effectiveness or value for money. Indeed, many of those who work in our public services – who often see themselves as having a kind of vocation and want nothing more than to make the world a better place – often regard such economic considerations as a gross impertinence imposed on them by soulless ‘bean-counters’.
The problem, however, is that, without the hard-headed realism provided by both rigorous technological assessment and meticulous cost-benefit analysis, such naïve idealism is not only unlikely to achieve its goals but very often makes things worse, not just in the sense of foisting on people systems which actually make their lives more difficult, but in a wider socio-economic context.
2. Prevention or Cure
This is particularly the case with respect health services, which primarily exist to help people who are ill and are therefore essentially reactive rather proactive in nature. That is to say that, traditionally, doctors only tended to treat people who came to them seeking a remedy for some ailment; they did not, for the most part, wander around the streets of a city looking for sick people. While the world of an individual patient whose illness may have been cured by the ministrations of a doctor could thus be said to have been made substantially better by such treatment, traditional medical practices did not, for the most part, therefore, set out to make the world a better place per se. In order to do that, modern health services consequently have to go beyond merely treating the illnesses of individual patients and focus more of their resources on proactively preventing illness in the population in general.
And this, of course, is what most modern health services now do. And they do it, not just by giving people vaccinations and advising them on diet and healthy living but, primarily, by the early detection of disease through screening and testing. The problem with this, however, is that unlike the task of curing people, which is strictly delimited by the number of people coming forward to be cured, the task of catching diseases early through screening and testing is completely open-ended. In fact, there is no limit to how much screening and testing one can do or, indeed, should do if its saves lives. Not only can this be very expensive, however, it can also become obsessive, irrational and authoritarian.
I mentioned earlier, for instance, that on one of the occasions on which my small town’s repeat prescription service failed, this was due to the fact that my doctor wanted me to undergo some tests. This, it turned out, was because I hadn’t actually seen him for over seven years. I also suspect that the NHS was on another drive to save money by cracking down on doctors who issued repeat prescriptions without regularly checking on patients to see whether the medication was still needed. All well and good, you might say, except for the fact that, in my case, the medication for which I now have to submit monthly requests is allopurinol, the drug standardly prescribed to prevent kidney stones and gout, both of which are caused by the liver producing more uric acid than one’s kidneys can cope with. The result is that the uric acid either crystallises in the kidneys to form kidney stones, which, under certain circumstances, can then pass into the ureter – the narrow tube connecting the kidney to the bladder – causing it to spasm very painfully as it tries to push the stone through, or it remains in the blood stream, where it accumulates at the body’s extremities – principally the fingers and toes – where it again forms crystals which then grind away at the joints, which is again very painful.
The most important thing to know about gout and kidney stones, however, is that the underlying condition – that which causes the excess uric acid – is genetic and cannot therefore be cured. In my case, in fact, I inherited the ‘gouty gene’, as it is sometimes called, from both sides of my family: my father had gout while my mother’s sister suffered from kidney stones. I accordingly suffer from both. I passed my first kidney stone when I was nineteen and suffered my first attack of gout when I was around forty. Without allopurinol, therefore, my life would be almost unbearable. For although uric acid is a by-product of metabolising purines in one’s diet and, in theory, therefore, can be controlled by cutting out purine rich foods such as offal and shellfish, in practice it is a little more difficult, in that most cereals and all forms of sugar also contain purines, with the result that a lot of manufactured foods, from bread to muesli to tomato ketchup and marmalade, also contain them.
For those of us who have the gouty gene, therefore, the development of allopurinol was a godsend, not least because it is very effective. In the thirty-odd years I have been taking it, I have not had a single attack of gout and, although I have passed three more kidney stones during this period, these were almost certainly formed before I started taking the medication. Being out of patent, allopurinol is also very cheap. If one could buy it over the counter, as one can in America, it would cost little more than aspirin.
I make this point because, although I have to take it every day and will have to go on doing so for the rest of my life, I am not, therefore, a significant burden on the NHS. Indeed, the fact that I am now in my seventies and yet, until last year, hadn’t seen a doctor for more than seven years would rather suggest that I am just the kind of patient the NHS should want.
All this begs the question, therefore, as to why my doctor should insist on me undergoing tests before he would write another prescription for a drug that costs virtually nothing and without which I would probably be incapacitated within six months. When I pressed him on this matter, moreover, not only did he dissimulate, making vague comments about his responsibility, he even lied to me. He said that he had to make sure that the dosage I was taking – which is the standard dosage of 300mg a day – was right for me, which we both knew to be untrue. I say this because seven years ago, when I passed my last kidney stone, I distinctly remember drawing his attention to a trial carried out by Dr. Robert Lustig, Professor of Endocrinology at the University of California in San Francisco, who used large doses of allopurinol to treat obesity in children, thereby effectively demonstrating that one cannot overdose on allopurinol at any dosage that any reasonable person would ever take. Given that, if the dosage were too low, I’d be getting gout, it follows, therefore, that the standard dosage is the standard dosage for a reason, being the minimum dosage that generally works.
The only conclusion I can draw from all this, therefore, is that, after thirty-odd years of taking a low cost medication for an incurable condition based purely on my history of suffering from the effects of this condition, NHS guidelines now dictate that I have to be tested, not just now and again, but every year in order to determine whether I still need the medication in question, even though the cost of a year’s supply is almost certainly less than the cost of the tests themselves. This is not, therefore, just an irrational application of inflexible rules, but a complete waste of time and money.
Of course, it could be argued that I may actually benefit from this and that it is not therefore totally pointlessness. After all, the tests may reveal something unexpected and catch an illness in its early stages. But this is precisely my point: that instead of a patient with a problem going to see his doctor to find out what is wrong, and the doctor responding by running tests to arrive at a diagnosis, the health service is now forcing doctors to test patients to find out whether a problem exists, which is not only extremely expensive but actually impairs the quality of service offered. For assuming that increased testing results in increased detection rates, unless these increased detection rates are matched by commensurate increases in resources devoted to treatment, all this does is create yet another throughput problem, resulting in longer waiting lists.
In fact, one can see this quite clearly if one compares the Department of Heath’s own figures for NHS expenditure and patient waiting lists over the last few years. When the current Conservative government came to power in 2010, for instance, total NHS expenditure was £131.8 billion. This has steadily increased over the last thirteen years with the result that in 2022/23, with the worst of Covid pandemic behind us, the figure stood at £181.7 billion, an increase of 38%. Even taking inflation into account, moreover, the increase is still around 23% in real terms. Waiting lists, however, have increased by considerably more. In May 2010, when David Cameron became Prime Minister, the number of patients waiting for consultant-led elective care was 2.6 million; in May 2023, in contrast, it was 7.57 million, an increase of around 192%.
Of course, it will be argued that Covid delayed a lot of treatments, creating a backlog which still hasn’t been cleared. Even by January 2020, however, before the pandemic started, the number of patients waiting for treatment had already nearly doubled to 4.57 million. What’s more, the backlog has continued to grow since pandemic ended, strongly suggesting, therefore, that there is an underlying trend at work here that has nothing to do with Covid. In fact, every way one looks at what has happened over the last twelve to thirteen years, it has all the characteristics of a classic throughput problem, with more illnesses being detected and hence more patients entering the queue for treatment than there are resources available to treat them.
What the numbers do not tell us, however, is the effect this is having on patients. In fact, one can only guess at what it must be like to be told that one has a condition that needs hospital treatment and then have to wait for months or even years for the problem to be resolved, especially if one is asymptomatic. For these are months one could have been enjoying life in blissful ignorance. Instead, one is forced to live in state of low level but constant anxiety which, in itself, will have an effect upon one’s health. In fact, this level of cruelty, inflicted on so many people, would be a national scandal if it were openly discussed. The fact that it is not is almost certainly due, therefore, to the fact that politicians on both sides of the House know that there is nothing they can do about it. For in order to bring resourcing levels up to those required to meet the level of demand for treatment in 2022/23, the NHS’s budget for that year would have had to have been £384.8 billion, more than double its actual budget of £181.7 billion. The only realistic solution, therefore, is for doctors to go back to merely responding to the problems presented to them, which, as long as we remain trapped in the progressive mind-set, of course, is never going to happen.
3. How Online Technology Can Disguise Pointless Exercises
If throughput problems are one of the principal ways in which reality continually thwarts the needs of politicians and bureaucrats to constantly improve things, online systems, on the other hand, are one of the principal ways in which those same politicians and bureaucrats are then able to fool themselves into thinking that, despite reality’s obduracy, they are still actually achieving something.
As I approached my seventieth birthday, for instance, I was told that I had to apply for a new driving licence, which I initially assumed would entail me having to take another driving test in order to prove that I was still competent to drive: a requirement which irritated me almost as much as having to undergo annual tests to determine whether I still need to take allopurinol for my gouty gene. For not only do I resent being judged on my age when I’m perfectly fit and well, but it struck me that the whole business was entirely unnecessary.
I say this because if older drivers really do pose an increased risk to both themselves and other road users, this would surely be reflected in the actuarial tables of insurance companies, who would ramp up their premiums for older drivers accordingly. This, in turn, would make driving more expensive for the elderly, who would therefore be forced to gradually give up their cars. In this way, in fact, the insurance industry would – and presumably does – police road safety far more effectively than bureaucratic control ever could, making state intervention more or less otiose.
One might also pose the question as to who in their right mind would go on driving if they thought they were too physically or cognitively impaired to do so safely, thereby endangering their own lives as well as the lives of others? State intervention is surely only required, therefore, in the case of those who are not in their right minds, being too cognitively impaired to know that they are cognitively impaired, which then raises the question as to how they are still able to drive a car at all. Even assuming that such people exist, moreover, one has to wonder how they are able to function in general without family, friends or carers to look after them: people who would surely tell them that they shouldn’t still be driving and who would take the keys away from them if necessary, making government intervention again seem somewhat heavy-handed.
Despite all these very good arguments as to why reapplying for a driving licence should not have been necessary, the fact was, however, that I was legally required to do so before my seventieth birthday or be banned from driving, leaving me little choice, therefore, but to accept what I also assumed was a fact: that at some point I would have to take another driving test. When the time came to make the application, it was with some considerable relief, therefore, and no small amount of astonishment, that I discovered that all I actually had to do was go online and answer a few questions about my health, most of which I was able to answer more or less truthfully without setting off any alarm bells at the Ministry of Transport. So I filled in the questionnaire as requested and, one week later, my new driving licence duly arrived in the post.
‘Well, that was easy,’ I thought. ‘And totally pointless!’ For even if I’d had some serious disability that should have disqualified me from driving, had I been so minded, I could simply have lied about it. After all, no one checked. So what was the point of making me fill in the questionnaire? In fact, the more I thought about it, the more pointless it seemed, until it suddenly dawned on me that getting me to fill in a questionnaire was not what those who had initiated the scheme had originally had in mind when they decided that something had to be done about elderly drivers. For what I’m fairly sure they originally wanted was, indeed, to make us take another test. At some point in the process of drafting the new regulations, however, someone must have realised that, given the UK’s current demographics, there were probably as many people reaching their seventieth birthday each year as there were eighteen-year-olds applying for a licence for the first time. This meant that, if the government forced all seventy-year-olds to retake the driving test, they were going to have to double the number of driving test examiners. What they were contemplating, in other words, was another massive throughput problem.
Not, I imagine, that they would have been willing to give up there. Their next plan would have almost certainly been to make all seventy-year-old drivers undergo a medical examination, which is actually what happens in some EU countries. The problem with this, however, is that the cost would have fallen on the NHS, to which the Ministry of Health, of course, would have objected strongly. So, eventually, someone must have come up with the idea of a kind of medical self-assessment, a bit like the kind of self-assessment people undertake when filling out their tax returns, except that, in this case, the questions would be medical in nature rather than financial. What would have made this idea even more attractive, moreover, is the fact that those needing to make this self-assessment could do it online, thereby making everyone at the Ministry of Transport extremely happy in that they had not only found a solution but a high tech one.
In fact, it would have been the availability of the technology that made the whole scheme possible. For if all the questionnaires had had to be administered manually, in paper form – an option that is still available for users who prefer it – it would have been very much more expensive and may not, therefore, have gained Treasury approval, especially as the scheme didn’t actually serve any purpose other than to allow the Minister of Transport to stand up in the House of Commons and announce it as one of the many initiatives his department was implementing to improve road safety.
And that, of course, is what this is really all about. Indeed, the sole purpose of many such regulatory changes is merely to give politicians the opportunity to demonstrate how they are continually making the world a safer and better place: something which online technology now makes far easier in that it facilitates the expansion of bureaucratic control in a way that would not have been economically or practically feasible in the past. It also allows politicians to disguise the fact that this is what is actually happening. For if we believe that a proposed set of new regulations will saves lives – as we are usually told they will – and if we believe that we have the technology to implement these regulations without significant cost, then, without even considering whether these new regulations represent a significant expansion of government control – and whether this is actually desirable or even necessary – our default setting is simply allow the government get on with it. After all, making the world a better place is a moral duty and thus takes precedence over all other considerations, especially economic considerations, which, in any case, the use of online technology is supposed to render inconsequential.
Nor am I saying that this is not the case. For while neither the bureaucracy nor the technology required to issue all seventy-year-old drivers with new drivers’ licenses is entirely without cost, it is but a drop in the ocean compared with overall government expenditure. Even if one assumes that there are dozens, if not hundreds of other such totally unnecessary initiatives across all government departments, they would not, in themselves, be the cause of the kind of financial difficulties into which many western governments are now inexorably falling. The problem is rather one of the mind-set which our dual beliefs in the benignity of progressive government and the limitlessness of our technological ingenuity have instilled in us and which leads us to uncritically accept that if we can make the world a better place then, in the immortal words of Captain Picard, we should simply ‘make it so’.
The inevitable result, however, is an inexorable growth in both the size and cost of government which, in the UK, has long since passed the point at which it could be funded purely out of taxation, forcing the Treasury to resort to more and more borrowing which, in itself, has various unintended consequences, some of which may be quite surprising.
4. The Transmogrification of the Banking System
One of these, which will probably surprise most people, is the loss of our high street banks, the surprise being how this could possibly have anything to do with UK government borrowing. To understand the connection, however, one only has to consider how banks traditionally operated and why they no longer operate in this way today.
In the traditional model, banks used to borrow money from their depositors – mostly private citizens with either current or savings accounts – and lend it to their borrowers, mostly businesses, which borrowed money, either in the form of overdrafts to even out highs and lows in their cash flow, or in the form of long term loans to finance new plant and equipment etc. What many people do not fully appreciate about this arrangement, however, is that, traditionally, it was only from their borrowers, who paid interest on their overdrafts and loans, that banks made their money. Their depositors, in contrast, actually cost them money, both in administrative costs and in interest paid on savings accounts. The only reason banks tolerated savers, therefore, was because they needed their savings to lend to their borrowers.
In the traditional banking model, therefore, the art of banking was all about balancing one’s depositors against one’s borrowers, which was done by setting interest rates so as to achieve two objectives. The first objective was to ensure that the difference between the rate at which the bank lent money and the rate at which it borrowed money was sufficient both to cover its administrative costs and make a healthy profit. The second was to set a high enough deposit rate to attract savers while not being forced to set the bank’s loan rate so high that it deterred borrowers. This resulted in a continuous process of rate adjustment. If a bank had too many borrowers and not enough savers, it put up rates to attract savers and deter borrowers, whereas if it had too many savers and not enough borrowers, it reduced rates to deter savers and attract borrowers.
At some point, however, all this changed, the biggest single factor effecting this change being the adoption of Modern Monetary Theory (MMT) by governments and central banks as one of their principal tools for managing the economy. This is done by the central bank lowering its interest rates when economic growth is weak, making it cheaper for both businesses and consumers to borrow money, and by raising them when increases in borrowing by businesses and consumers risks causing inflation. These adjustments in the central bank’s interest rates only have these effects, however, because commercial banks have accounts with the central bank, where they can deposit excess funds when they don’t have enough borrowers, and from which they can borrow money when they have a liquidity shortage, such as when depositors withdraw their savings en masse, thereby causing a ‘run’ on the bank.
The key to understanding how MMT works, therefore, is to understand how adjustments to the central bank’s interest rates affect commercial banks. And, in fact, it is very similar to the way in which adjustments to the commercial banks’ interest rates affect their customers. When the central bank cuts its deposit rate, for instance, commercial banks get less interest when depositing funds with it, which then forces them to cut their borrowing rate so as to attract more borrowers in order to take up these excess funds. When the central bank puts up its lending rate, in contrast, this deters commercial banks from borrowing from it, forcing them to put up their own interest rates, both to attract more savers and to deter borrowers.
The problem, however, is that, over the last thirty years, most western economies have been in decline. It may not have seemed this way because MMT helped disguise the decline by prompting central banks to reduce interest rates – in order to stimulate the economy – far more often than they increased rates to prevent inflation. This, however, had the effect of ratchetting down interest rates lower and lower, a process which was then further accelerated by the financial crash of 2008 when, in order to stop the rot, central banks in many parts of the world reduced both their deposit and lending rates to less than zero, such that commercial banks had to actually pay money to park money with them, while, in some cases, borrowers were actually paid to borrow. The result was that, for more than ten years, money became so cheap that commercial banks could borrow all the funds they needed, either from each other – which increased the money supply by increasing the velocity of its circulation – or from central banks, which, of course, could simply print the money. The overall effect of this, therefore, was that commercial banks no longer needed savers, who, with interest rates so low, were no longer being paid any appreciable interest on their savings and so weren’t leaving money in the bank anyway.
In fact, even by 2008, very few people were saving money at all, preferring instead to buy whatever they needed on their credit cards: a development which also suited the banks in that savers, who had once cost them money, were now transformed into borrowers from whom they could now make money. The only fly in the ointment was that commercial banks still had to administer the current accounts of these people and maintain an expensive bricks-and-mortar infrastructure to service their needs. Given that most transactions were now card based, however – and therefore essentially electronic in nature – it was a fairly simple step to move nearly all their retail banking operations online and close down most of their branches.
Not, of course, that this as yet explains or even demonstrates a connection between the disappearance of high street banks and government borrowing. All it really demonstrates is how the adoption of MMT by central banks caused first a gradual and then a dramatic reduction in interest rates. To suppose that this was unintended, however, is to accept at face value the generally touted view that the sole purpose of MMT is either to stimulate an economy or cool it down, and totally ignores the fact that the constant ratchetting down of interest rates, and the consequent transformation of western economies from savings based to debt based amounts to a kind of economic suicide, which no economist would recommend unless they had some ulterior reason for doing so.
What this strongly suggests, therefore, is that the primary reason for allowing central bankers and other proponents of MMT to constantly ratchet down interest rates was not to stimulate the economy – which thirty years of empirical data would suggest it never does anyway – but rather to make it possible for national governments to hide economic decline behind a semblance of prosperity by allowing them to borrow money to spend on public services and subsidised living standards at ever-reducing interest rates.
In fact, we can see this in the contribution made by the public sector to UK GDP over the last twenty-three years. In the latest year for which I have figures, 2022/23, this contribution stood at 45.6%, which is substantially lower than its peak of 53.1% at the height of the Covid pandemic in 2020/21, when many businesses in the private sector actually shut down, and is also slightly lower than its previous high of 46.3% in 2009/10, after the financial crash of 2008. Otherwise, however, it is the highest it has been during this entire century and demonstrates a clear upward trend, suggesting that, as the non-public sector parts of the economy have declined, mostly as a result of deindustrialisation due to offshoring, successive governments have increased public spending in order to take up the slack, creating more jobs in the public sector by forcing all seventy-year-old drivers, for instance, to reapply for their driving licenses.
The problem with this faux economy, however, is not just that it pads out GDP, making it seem as if we are still living in a prosperous country when we have probably been in a recession since long before Covid, but that it has also increased government borrowing to the point at which the national debt now stands at £2.98 trillion or 108% of GDP. What’s more, the recent higher rates of inflation caused by Covid lockdowns and Russian sanctions have forced the Bank of England to incrementally increase its base rate to its current level of 5.25%, which has meant that the UK Treasury has had to increase the yield on its bonds, with the result that we are now paying around £100 billion a year on the accumulated debt, a figure which will only get worse as older bonds are redeemed and new ones issued.
Eventually, therefore, this whole house of cards must collapse, which consequently raises the question as to why our politicians do nothing about it, to which I think there are two possible answers, both of which may be correct. The first is that that there is nothing they can do about it, at least not politically. For if they were to reduce public expenditure to reduce borrowing, this would also reduce GDP, officially putting us into the recession in which we have actually been for years. Without the veneer of prosperity provided by debt-funded public spending, our economy would thus be revealed as a tired old carthorse which can barely drag itself along let alone bare the weight of an overfed state: a revelation which no government could survive.
The second and not completely incompatible answer, however, is that they just do not understand any of this. They do not understand that paying someone to design and maintain an online system for administering a totally pointless set of regulations is not a valid or meaningful economic activity. Indeed, were this to happen in a commercial enterprise, that enterprise would almost certainly go broke. It is only because governments wrongly think that they can’t go broke that they not only think that they can get away with it, but even seek to justify it in the name of progress.
And it is the same, of course, with the banks. They are not going to tell you that they are closing all their branches because after twenty-odd years of artificially low interests rates, rigged to make successive government look good, they have finally achieved their dream of saver-free banking. No, of course not. Closing down all their bricks-and-mortar branches and putting all their retail banking business online is simply progress, to which only stick-in-the-mud old luddites like me could object. Not only does this particular kind of progress create problems for a great many people, however, it actually represents a significant threat to just about all of us.
5. The Risks Inherent in Our Dependence on Online Systems
To see this, ask yourself what you would do if you could not access your bank account online and did not have a bricks-and-mortar branch of that bank anywhere near your home?
I ask this question because this is something that actually happened to me quite recently. Partly, I have to admit, it was my own fault, because, as I explained earlier, I am very bad at using my mobile phone for anything other than making phone calls. I simply lack the necessary dexterity. In fact, I would say that I’m all thumbs, except that, in this case, that would be an advantage. The point, however, is that although there is mobile phone app available for accessing my bank account online, I don’t use it. Instead, I use a much older system, which involves a hand held device into which one inserts one’s bank card and then enters one’s pin. The device then generates an eight digit code, which one types into the login page of the bank’s website. Unfortunately, after nearly twenty years of usage, this device recently developed a fault which resulted in some of the digits in the display being illegible. This meant that I couldn’t access my account online and couldn’t therefore use my online access to request a replacement device.
In fact, this is a classic systems bind of which most systems designers are well aware and of which many more people will become aware in years to come. This is the problem of needing to access a system in order to solve a problem when the problem is precisely that of not being able to access the system.
A year ago, in my case, I could have solved this problem by simply walking down to my bank’s local branch and asking for a replacement card reader. Unfortunately, my bank closed its local branch about six months ago, with the result that there are now no branches of any bank at all in the small town in which I live or anywhere along this entire stretch of the North Sea coast, from Whitby in the south to Redcar in the north, a distance of around forty kilometres.
The only option I had left, therefore, was to try to phone the bank, which these days, of course, is nowhere near as easy as it sounds. Indeed, it took me a good ten to fifteen minutes to get through the ‘call waiting’ system, listening twice to the various call options available, none of which seemed to even remotely fit what I was calling about. Nor were my problems over when I finally got through to a human being. For we then spent somewhere between five and ten minutes going through the necessary security questions, a number of which I could not answer because I had set up the answers years ago and could not remember what they were. Then, when the operator finally decided that I was who I said I was and asked me what I wanted, he spent another five minutes trying to talk me into downloading the app for my mobile phone, which, he explained, I could use instead of the card reader, giving me the distinct impression that the card readers were being phased out.
I am, of course, slightly exaggerating this whole nightmare for comic effect. After all, it’s what we do to exorcise our terrors. On the other hand, I suspect that, in outline, it is an experience most people will recognise as one that it is becoming ever more prevalent in the world today, making life more difficult, not just for those trapped in this kind of systems bind but for all of us collectively.
A few weeks ago, for instance – on a Saturday of all days – the one supermarket in my small town suffered a partial systems failure, which restricted the number of payment methods that could be used. Although one could still use a credit card – as long as one inserted the card and keyed in the pin – one could not use bank cards or mobile phone apps. One could, of course, still use cash; but with no banks in town and only one ATM, which ran out of cash very quickly, this only served to make people even more anxious.
The situation was then further exacerbated by the fact that there were fewer staff than usual working on that day. Ordinarily, I get the impression that the supermarket employs about seven members of staff on the morning shift: one on a ‘served’ checkout, one supervising the self-service checkouts, one or two in the bakery, one on the kiosk, selling cigarettes and lottery tickets, and two or three replenishing the shelves. That day, however, they appeared to be at least one person short, which meant that, although they could open a second ‘served’ checkout, that was the most they could do. The inevitable result, therefore, was that all the checkouts had long queues and all the staff were clearly stressed.
Being a regular customer, who always uses a ‘served’ checkout whenever possible, not least because I like chatting to the ladies who work there, I couldn’t help feeling for them. None of them, however, were feeling particularly chatty that day. Indeed, it is something I have also noticed at our pharmacy, where the women who used to work the counter were once all middle aged and were nearly always open, therefore, to exchanging a few pleasantries. These days, however, the counter staff are nearly all teenage girls who have the necessary dexterity to use the mobile phone app upon which the pharmacy’s system is now based and are always so busy they have no time to talk.
Indeed, this may be one of the worst ways in which the combination of online systems, increased throughput and reduced staffing are affecting us. It is not just that the world is becoming more dysfunctional, it is also becoming less human and, with it, less helpful. Last year, for instance, my car failed its Ministry of Transport safety test, which left me with a bit of a problem in that the specialist garage to which I always take it was unable to schedule the necessary repairs for over two months. When I asked the manager what I was supposed to do without a car for all that time, however, his singularly unhelpful reply was, ‘Don’t know, mate. Not my problem!’ something one would never have heard forty years ago when the answer would have almost certainly been, ‘Don’t worry, mate. We’ll sort something out’. In fact, forty year ago, no garage or any small business ever worked to such a tight schedule that they could not fit in urgent jobs when necessary. It requires a computer system and, with it, a particular mind-set to be so unrelentingly inhuman.
If conforming to systems designed to make us more efficient – rather than to meet human needs – has made us less human, however, it has also made us less competent to operate within the oldest and most fundamental system of all, that of society, itself, which requires us all to undergo years of social training in order to learn how to read each other’s moods, interpret tacit signals and diffuse difficult situations with just the right gesture. The problem is that, because one has to have been around long enough to compare how things are today with how they were forty years ago, many of us simply do not realise how deficient we have become in this regard and how much less friendly the world has become as a consequence. Indeed, it’s doubtful whether many of us even suspect that the technological changes of which we are aware have been accompanied by social changes of which most of us are entirely oblivious. In fact, most people probably assume that whatever social changes have occurred over the last forty years have been for the better. After all, didn’t people use to be far more racist, sexist and homophobic back then? And aren’t we all now more enlightened and tolerant?
Enlightenment and tolerance, however, are not what makes the world a friendlier place, which is far more accurately measured in terms of the degree to which people are able to relax and not worry. It’s about knowing that if one gets into trouble, there are always people to whom one can turn without having to battle one’s way through a call waiting system only to be told that the earliest available appointment is in two weeks’ time. It’s about not being shut out of an essential service because one has entered the wrong password and cannot now rectify the situation because there are no human beings to whom one can talk in order to fix the problem out. It’s about not having to perform completely pointless tasks because that is what the rules dictate and is therefore how the system has been set up. More than anything else, however, it is about not becoming isolated by the very online technology which is supposed to bring us together but which, as I see it, is increasingly having the opposite effect.
