Nottingham's Economy - the Debt and Fuel Crises
Two things should be worrying the city's managaerial elite - a credit crunch and permanently rising oil prices. The city economy already suffering from the long run decline of manufacturing employment could be highly vulnerable to both. The city elite has put a lot of emphasis on making Nottingham the shopping centre of the East Midlands. This could be vulnerable to falling house prices, which puts a stop to credit based sales, as well as the boom in oil prices which, leading to more expenditure on petrol, would leave less for local shops.
Of the two influences the rise in oil prices is by probably the most far reaching in its effects - but a "credit crunch" in Nottingham would not be very nice and deserves a few words in its own right. This is particularly so because Nottingham appears to be highly in debt. Much of the recent increase in the retail market in Nottingham, as elsewhere, has been fed on credit purchases. The city elite have been encouraging a city centre bonanza, one of the major local employers is a credit card company, and the city is full of students who are saddled with debt right from the start of their working lives. To that one should add the fact that the council house tenants owe their landlord on average £500 each - a total of £16m plus. (Part of that is due to late payments of housing benefit of course). Everywhere you look in Nottingham there is debt. If demand is fed by a credit boom that's wonderful for sales while it happens, but in a "credit crunch" the situation could turn round. It could all end rather unpleasantly.
People have been prepared to spend- spend- spend, partly because because those who do own houses have seen house prices rising. They have felt themselves to be sitting on top of a valuable asset. People even re-mortgage their houses to pay for their holidays....However there has been a lot of speculation lately that interest rates could rise, house prices could level off and then fall. This would leave people with high interest payments and their houses, there as collateral, falling in value. It would not be spend spend spend any more. And the golden times of a city centre shopping bonanza would come to an abrupt and painful end.
So that's one thing to worry about. But there could be something else too - the rise in oil prices that is currently occurring turns out to be more than a temporary price hitch.
The title page of the recent magazine National Geographic says it - "The End of Cheap Oil." Rising demand from China and India, the fears for Saudi Arabia, the decline of Iraqi oil production as a result of the situation there - and behind them the depletion of many oil fields that cannot be easily replaced. All these mean that high oil prices might be here to stay.
If there is an end to cheap oil then this will hit the retail sector with a double whammy. The supermarket economy is fed by cheap oil prices - that's what gets you your cheap green beans from Kenya and your electronic gizmos made in Taiwan. Air and shipping costs are low. But an end to cheap oil will mean transport costs to bring goods to the shops will rise, while customers, hit by rising petrol prices, will have less to spend on them because more of the money will have gone at the petrol pumps.
Would this be a disaster? It depends how you look at it, and how well the resulting crisis is managed. It would be wrong to take a short term view on the current fuel price increase and see it as wholely bad. The fuel crisis was in all probability going to happen anyway. If it is handled properly by policy makers, the fuel crisis could help make some ecological, economic and social adjustments that would be thoroughly worthwhile - like discouraging greenhouse gas emissions, for example - or encouraging people to get on their bikes and helping resolve that obesity crisis that's been in the news.
In the longer term - a permanent shortage of fuel might help resolve in the current shortage of manual employment that has occurred in Nottingham when the manufacturing industries declined.
To understand the current crisis of manual employment it is, perhaps helpful to make a few sweeping generalisation, as long as one realises that all generalisation are simplifications that should be treated with caution. 200 years ago Nottingham and other British cities got caught up in industrialisation that applied fuel power to machinery used in the productive process. Handworkers who used only their own labour power could not compete against fuel powered machines. The period, at the beginning of the 19th century, was one of great brutality and lawlessness. Bread riots were common and this was the time of the early clandestine trade unions, of Luddism and of Chartism - troops were brought into Nottingham from time to time.
That crisis did not last. As the 19th century proceeded machine powered production in Nottingham and other industrial cities in Britain, boomed. British factories outcompeted people in other countries and markets opened up at the expense of those who could not compete - including in the Third World that was opening up to the British empire, accessable via railways and steam ships. So there were plenty of jobs in Nottingham in the textile mills and then in the bicycle factory and so on. The losers were the hand workers in other countries. That's a vast oversimplication because there were other processes happening too - for example, technological change generated new jobs out of the new kind of products that were invented in this process - as at Boots. Also the wealth that was concentrated in Britain created new industries and arrangements like a powerful finance and banking sector. Add to that the fact that the conflicts inherent in this process led to local and global wars with their own economic consequences - one local employer was the Royal Ordance Factory.
Now, however, the situation has come round full circle. The global transport network that has been opened up is so cheap that a host of production processes are now more cheaply done in the countries of the South. The labour force there, after two centuries of colonialism and neo-colonialism are used to working for a lot less. Goodbye textile production - its gone to India. Goodbye bicycle production - that's gone to China.
Not only that - whereas the fuel power machines of the early 19 century still had to be tended by factory labour, modern production processes have been further automated. They are electronically controlled. So even in the high tech industries there are far fewer manual jobs. This has led, in Nottingham to the decomposition of communities based on manual labour in the factories. The international trade in drugs, also aided by the ease of global travel, has speeded the decomposition.
If that were the end of the story then we could expect only the 21st century variant of the disintegrative tendencies visible in the early 19th century. (In the early 19th century there was a drug problem too - the misery of the working class then was partly self medicated with laudanum - opium dissolved in alcohol).
However the entire two hundred years development that I have been describing has been based on cheap fuels - including cheap oil. An ever greater application of fuels to the productive process occurred in agriculture, chemicals and transport. In the 19the century the revolution was centred around steam power based on coal. In the 20th century oil, gas and nuclear power - has been the key power source - delivered to your home and office partly as electricity.
This has had the consequences of a veritable flood of toxic effects in the bio-sphere in the form of climate change. There has been a devastation of other species (bio-diversity) through the 'side effects' of the coal and oil based chemicals swilling through our homes and factories. The environment has become a toxic rubbish tip.
This is now so severe that our very existence life on the Planet is threatened by the process - although most of us would prefer to look the other way and go shopping, seduced by the siren calls of the money junkies who govern us - broadcast to us courtesy of very creative but ethically small minded morons of the marketing industry. And, it should be said, aided and abetted by Nottingham city's managers whose recipe for economic success is to make Nottingham shopping capital of the East Midlands, floating on and encouraged by a mountain of debt.
It is noteable that in all the calls for cheaper oil - how the greenhouse effect and environment get instantaneously forgotten. Our economy and society is money and oil addicted.
The 200 year process that I have described has been fueled, as I have said, by coal and uranium but above all in the last century by oil and gas. Oil is the life blood of the world economy and now there are signs that is it may soon start going into depletion. It is to be hoped that it does in time before catastrophic climate change sets in - if it does the depletion of oil supplies may turn out to be a blessing in disguise.
Hopefully, that's not the only blessing in disguise. The forthcoming energy shocks may also be the triggers for a series of economic, social and political processes that could connect up to a regeneration of the low income communities. That's because permanently expensive oil could lead to far reaching changes in agriculture and the food economy, as well as in housing and general life styles that could generate more manual jobs to replace the ones lost in manufacturing. However, if the coming shocks are not understood and handled properly they could equally well intensify and therefore accelerate the destruction of Nottingham's working low income communities. High fuel costs in a cold winter could kill a lot of elderly people, for example.
At the moment just a few of the cities managers have a small idea about what is necessary. Projects like NECTAR (Nottingham Environmental Construction Training for All), the Food Initiatives Group and the Garden to Plate initiative to turn the city's green spaces into productive land growing food in projects that draw in disadvantaged people are working in the right direction. This is because they would save energy in food production and at home and they point to new economic activities - like growing local organic food or insulating houses. But such activities require a hell of a lot more support and work than at the moment - and they may get it as the energy situation changes.
If energy and hence transport costs continue to rise this will undermine distance-sourced food supplies as well as increasing the costs of the petroleum based inputs for chemical agriculture in favour of organic farming. It will also undermine the meat based economy - because meat production is extremely energy intensive. For example, to rear a pound of beef steak requires 3/4 of a gallon of oil. A steer weighing 1,250 pounds takes 283 gallons of oil - for example in the cornfields to the machinery in the farm. Vegetarianism will soon have a price advantage.
With life style changes, principly in food, transport and building energy, it ought to be possible to cope with less oil - but the question is: will these changes be understood and taken in - or will there be a refusal to accept the changing world reality in regard to energy and a turn, instead, to more and more wars for oil - e.g. an occupation of the Saudi oilfields and a growing world war between the western and Muslim worlds...
Further changes will also be necessary as energy becomes more expensive - for example, there are local developers of wind energy systems who, for the last few years have been struggling against indifference and a lack of finance to develop their product. People like this may be developing the manufacturing jobs of the future. There are also jobs that will be needed in the manufacture and installation of passive solar systems, again with new forms of manual employment.
A further discussion of these ideas can be found on http://www.esf2004.net/wakka/GreenNottingham
Of course, we do not yet know how severe the energy crises will be. They may be partly offset by new technologies of energy supplies, for a time at least, by substitution of natural gas and, some would argue, nuclear power, before gas and then uranium supplies go into depletion a few years yet further down the line. That said it seems prudent for society to look to ways for the need to use less energy - either for reasons of climate or for reasons of depletion - in ways that share the burden fairly. That means sharing the sacrifices and looking to means to save and pool resources - it means a new kind of politics is necessary nationally and internationally.
© BRIAN DAVEY