Archive for the ‘The economy’ Category

It’s an old line but it keeps coming up: public sector strikes against pension reform are unfair to the taxpayer. It came up again on this week’s edition of Question Time  (BBC1, 3 November) in answer to the first question of the night: ‘Is it right for the public sector workers to strike when they have been offered a better deal?’ The question referred to a last-minute concession in the government’s plans to restructure public sector pensions this week, designed to head off a mass public sector day of action scheduled for 30 November. However, it hasn’t been enough to prevent a vote in favour of strike action among members of the biggest public sector union, UNISON.

Step up Home Secretary Theresa May to predictably say, no it’s not right for public sector workers to strike in these circumstances and that it’s not fair on ‘the taxpayer’:

What I think is fair is that we have an arrangement for public sector pensions that gives public sector workers…a decent pension in their retirement but also is a fair deal for the taxpayer…And remember it’s people in the private sector who have seen their pensions devastated in recent years – the taxpayers – who are paying for the public sector pensions’.

Do you see what she did there? Twice, she presents the public sector worker and the taxpayer as mutually exclusive categories and drives the usual wedge between workers in the public and private sectors, a very important tactic in Tory strategy to divide and conquer public opinion about their disastrous fiscal and economic policies. The fact that co-panellist Shirley Williams spoke directly afterwards in support of Theresa May says it all about the shameful role of the Lib Dems as junior allies in this war against jobs and pensions.

Of course, public sector workers are taxpayers too. And just like average-earning taxpayers in the private sector, they are bearing the brunt of having to bail out the banks, subsidize corporate tax evasion and the refusal of government to fairly tax the super-rich, maintain ‘public-private partnerships’ in which private companies run public services for massive profits thanks to ‘the taxpayer’ and fund dubious military adventures abroad (the drums are beating louder for war against Iran now!)

We have to resist this Tory lie and insist again and again that the public and private sectors depend on each other and that hundreds of thousands of workers across this artificial divide are underpaid, work in poor conditions and are victims of one of the most inequitable tax regimes in Europe.

But we also have to build some solidarity. Public sector unions have to speak for the thousands of private sector workers who are forbidden to be part of a union and have no recourse to employment rights. And workers in the private sector have to accept that their counterparts in the public sector are not the enemy here, that they are not the cause of their difficulties.

So is it right to strike? Bloody right it is!  The so-called concession the government offered public sector workers ahead of their strike ballot this week was, again, designed to divide and rule, promising that those within ten years of retirement from 1 April next year would not see a reduction to their pension (Note the date!)  It may even have worked to an extent. The UNISON ballot returned a 78% majority in favour of strike action but that was on the basis of a 29% turnout.

On the other hand, Shadow Chancellor of Exchequer, Ed Balls, also a panellist on the same edition of Question Time, suggests that the government’s last minute offer was calibrated for rejection. An unpopular public sector strike is just what the Tories want – a fig leaf with which to push through further cuts to public sector jobs, pensions and services.

No, comrades!  We have to stand up against this and shout a bit louder – together!


To paraphrase Karl Marx, a frightening spectre is stalking Europe: it is the age of the credit rating agency.  Although they have a long history, operating with a very low profile only now have their names etched themselves on the public consciousness. Denise Finney sums up their role thus:

“Credit ratings provide individual and institutional investors with information that assists them in determining whether issuers of debt obligations and fixed-income securities will be able to meet their obligations with respect to those securities. Credit rating agencies provide investors with objective analyses and independent assessments of companies and countries that issue such securities […]

“[…] The analyses and assessments provided by various credit rating agencies provide investors with information and insight that facilitates their ability to examine and understand the risks and opportunities associated with various investment environments. With this insight, investors can make informed decisions as to the countries, industries and classes of securities in which they choose to invest.” (Investopedia).

All rather benign and mundane isn’t it?  Yet, since the financial crash in 2007/08, agencies such as Standard and Poors, Moody’s and Fitch (formally, the Fitch Group) have gone a bit further than just provide “information and insight” for investors.  Between them, they have been holding a gun to the head of democratically elected governments and threatening to pull the trigger if they don’t do what they’re told. They have been disseminating what S&P call “market sensitive information” that has caused chaos on the world’s stock markets, shaken the foundations of global financial regulation and subverted sovereign governments. Normally, that kind of activity would be labelled “economic terrorism” and the perpetrators hunted down. But in the Alice in Wonderland of the global economy, it’s called “free market economics”.

It appears that the IMF or the World bank, controversial organizations at the best of times but at least accountable to the elected governments that ultimately bankroll them, no longer call the shots; it’s the CRAs. They have taken a map of the world and divided countries up according to investment grade or non-investment grade economies. The former category includes economies with the best quality companies and financial instruments and thus the safest bet for investors while the latter includes those likely to default on their existing obligations and are to be avoided like the plague. As we have seen only recently, not even the US is safe from the CRAs – it has lost its Triple A rating for the first time in the history of this kind of credit rating. The US is still a good bet for investors but the impact of that readjustment was immediate and frightening. “Nightmare on Wall St”, was the headline on MSNBC. “Dow takes 635-point tumble after S&P downgrades US credit” (8 August). And the contagion of fear has spread as fast as a London riot, with stock markets all over the world suffering record plunges.

But this isn’t a matter of abstract numbers and graphs. It threatens another global recession or even depression and thus ultimately affects us all. So why is it allowed to happen?  So far, only the Italian courts have investigated CRAs (specifically S&P and Moody’s) on suspicion of “criminal practices” such as insider trading and market manipulation. The CRAs concerned have denied it, of course, and I’d be very surprised to see any convictions.

No. There needs to be a concerted, worldwide effort to bring these agencies to account and to regulate their activities. But more importantly, we’re going to have to recognize that the financial chaos they have partly caused and on which the stock market gamblers have profited by billions is the direct result of neo-liberalism gone mad.

Time then to dig a big hole and bury this disgusting ideology for good.

This comes courtesy of Rab at Media Studies is Shit.

(Created by Myles123. Source: xtranormal)

I came across this gem at The Cedar Lounge Revolution.  Priceless.

(Created by Myles123. Source: xtranormal)

The Irish Congress of Trade Unions (ICTU) have organised a protest march in Dublin today and it’s just setting off on its way from Wood Quay to the GPO on O’Connell St. The demo is a protest against the government’s four-year austerity plan to raise €15 billion from the people to give it to the banks. ICTU general secretary, David Beggs, said it will be a good-humoured and well-organised event and he’s not the only one.  Queen of Irish radio, Marian Finucane, had a wee chat down the line to someone at the march, a nurse who was fed up with the whole situation after having to cancel her subscription to Sky and make other painful savings in anticipation of inevitable cuts to her income. “Is it a good-humoured event there?” Marian asked her. “Oh yes, very good-humoured!” says the nurse. “Oh good!” sighs a relieved Marian. “I hope it stays that way!”  Although she did give out about the whistles used by the protesters – a bit like those vuvuzela thingies at the last World Cup. A good-humoured, silent protest is what she wants.

No doubt Marian was mindful of smaller protests outside Leinster House earlier in the week, which were a good deal less good humoured. Tut tut. In fact, people were very angry and there was a bit of pushing and shoving with the boys in blue. We can’t be having any of that, can we?

You see, it’s really important that when the government robs the people blind on behalf of the banks and destroy the livelihoods of so many , that we maintain our sense of humour. There is no place at all for grumpiness or anger and let’s face it, the Labour Party’s Pat Rabitte really let himself down last week on RTE Primetime (Thursday, 18 November). Imagine shouting live on TV at hapless government minister, Pat Carey!

Anyway, the idea that the people should go out and protest on the streets and make their voice heard appears to bring out the reactionary instincts of the mainstream media better than no other issue.  People power and popular protest is grand when’s it’s in Burma or Thailand but not the thing to be doing in a democracy. Although, fair play to Fintan O’Toole of the Irish Times, who is giving the key-note address to the demo today – “a strange thing for a newspaper columnist to be doing” according to RTE’s man on the spot who rather sarcastically labelled him “Saint Fintan”.

And this is the thing. It seems that the media establishment in Ireland reserve the right to speak for the people in these dark days and offer us “reasonable” interpretations of events. They police the debate and determine what’s sayable and what’s not sayable, what’s doable and not doable, what’s credible and not credible. The remarkable thing, however, is that these “reasonable” interpretations are sourced to the establishment and the bond marketeers who wrecked the country in the first place. Counter it with an alternative explanation and the newscaster interjects with that Irish media cliché de jour, “Ah now, we are where we are. Let’s focus on where we go from here!”  But as Roisin Shorthall (Irish Labour Party) pointed out on radio today, “We need to understand how we got here to know why we are where we are” (RTE Radio 1, Lunchtime News, 27 November). Needless to say, she was cut short due to time constraints.

So, there’s the media lesson for the ICTU protest.  In the midst of this national crisis, the people must put on the green jersey and pull together. They must be good-humoured and reasonable, especially if they take to the streets in protest. It makes it easier to ignore or minimize. The revolution will not be televised.

See my post on what happened to Argentina at the hands of IMF in 2002. It has eerie echoes of what’s happening to Ireland right now.

Also see Rab’s take on media coverage of the student protests in England.

So there we have it.  After months of speculation, CamClegg Inc has revealed the details of the Comprehensive Spending Review and would you believe it? The proposed cuts will hit the poorest and the public sector hardest, with half a million workers likely to lose their jobs in the next four years.  It was what BBC journalist John Pienaar described as a piece of “carefully crafted brutality” (BBC Radio Five Live, 20 October). Interestingly, though, the BBC’s special spending review website doesn’t even headline the full extent of likely job losses; I had to dig a bit deeper for it until finding it on Nick Robinson’s blog.

This may be down to how well the government has spun the Review, breaking the proposed cuts down into small, digestible chunks.  Initially, Osborne preferred to outline annual rather than cumulative figures for job losses. But then along came the Chief Secretary of the Treasury, Danny Alexander (Lib Dem) to “accidentally” reveal (leak) the four-year figure of 490,000 as estimated by the Office of Budget Responsibility.

The government could surely round it up to the half million mark without a sweat but they won’t because it’s psychological – like the pricing we see in shops: £19.99 rather than £20.  You have to wonder, though what’s going on behind the scenes at the Treasury? Was Alexander’s leak an act of subversion, a refusal to whitewash the true extent of these cuts? Or is it an Alexander-Osborne good cop-bad cop act? There are no clues yet of turmoil behind closed doors so I suspect it’s the latter.

I will leave in-depth analysis of the Review to the experts but surely it is not the solution to the national debt crisis? In fact, it may trigger the dreaded double-dip recession we’ve been warned about over and over. As pointed out on Irish television, the pound has declined, not bounced, on the currency markets since the review was announced (Primetime, RTE1, 21 October). If that turns into a long-term trend, the market speculators may craft some brutality of their own.

The truth is that, when it comes to cuts, this divide between public and private sectors is totally bogus. They are mutually dependent and that very dependence is crucial to economic growth. No growth, no confidence means no spending, no revenue.

So what is the government’s real agenda? Justifying the projected £80 billion cuts, the Secretary of Transport, Philip Hammond, repeated on television the propaganda line that there is “no alternative” because Britain has the highest national debt to GDP ratio among the G20 nations. He’s either lying to us or he doesn’t know his facts because Britain is actually mid-league table with Germany (about 65%), a good deal less indebted than Japan (over 200%) and the US (94%). In any case, comparisons like this are difficult to sustain and sometimes meaningless because debt levels have to be offset against a whole range of economic variables, nationally and globally. They certainly shouldn’t be used as an excuse to lay waste to the Welfare state. No, as Polly Toynbee argues, what we’re witnessing is nothing less than an ideological project to shrink the welfare state for its own sake (Question Time, BBC1, 21 October) while presenting it as being in the national interest.

So against the backdrop of public protests, strikes and riots across Europe, we wait with bated breath to see how the stoic Brits will react to the review. And that’s where the idea of “carefully crafted brutality” comes into play because the true pain and damage they will eventually wreak on the economy and society will not be felt all at once or across all classes of society. Cam-Clegg Inc has been very careful to spin the cuts in advance to neutralise opposition from within and manipulate public expectations. Now it will calibrate the cuts so that they roll out bit by bit over a four year period in the hope that it will offset any possibility of concerted protest and class solidarity in the run up to the next election. If that happens, we’ll only see the wreckage when it’s far too late to put it right.





The War on Jobs 4:The Philo Tax

Posted: September 14, 2010 in The economy

Greg Philo, director of the Glasgow Media Group, was interviewed on the Jeremy Vine Show, BBC Radio 2, recently (14 September) to propose an alternative to the current war on jobs and the poor in Britain. His proposal sounds very reasonable: to impose a one-off tax on the top 20% of the British population that owns 62% of the country’s wealth. This, he argues, would more than repay Britain’s £927bn of national debt.  Read all about it here at the Media Group’s website, which includes a specially commissioned YouGov opinion poll and hard figures from the National Statistics office.

It’s a good idea and one I strongly support but it has largely been ignored. I challenge you to find it reported on the BBC’s dedicated website on the impending Spending Review. But what interests me here, though, is the reaction in the media the few times it is considered on air. Philo’s public opinion research suggests widespread approval among the general population: 44% of the sample strongly supported the proposals, while another 30% expressed a tendency to support them. Yet one would think to listen to the pundits that it was an exercise in lunacy that no rational person could consider. 

Opposing Philo on the programme was Vanetia Thompson, an ex-City of London trader and author of Gross Misconduct: My Year of Excess in the City. Outraged, she was! And the fact that Philo took it all in good humour and calmly stated his case just seemed to make it worse for her. This was “the tyranny of the many over the few!” she complained. (Heaven forbid we should have majority rule in a democracy, Venetia! ) “It’s extorting the rich on an ad hoc basis”, she went on, “which is not only unprincipled but grossly unfair!”  Ah bless. But as Greg Philo pointed out, the wealthy have been extorting the less well off for decades to the point where a large section of British society is now in negative wealth, or what’s commonly termed the ‘poverty trap’. 

Venetia was also mindful of the practical problems of putting the plan into effect. Philo’s idea is that the assets of the top 10% or 20% would be valued and taxed by, say, 20%. Venetia wondered how a diamond or a painting could be valued and then taken away from some poor unfortunate in Highgrove or somewhere. Valuers and big lorries, Venetia! The rich use valuers all the time when they need to liquidise some assets for ready cash. And when they put that big Carravagio up on the wall, they do it in such a way that it can be easily taken down again to dust off or sell on. It’s not complicated.

The valuers arrive for a look at Venetia's assets


The thing is, though, Philo is not proposing anything objectively unfair and he’s certainly not advocating evictions or repossession. It’s not revolution yet the argument is always that increasing tax on the wealthiest people damages wealth creation, not that the wealthiest 10%  have a moral responsibility to share wealth more equally via a fair and humane taxation regime. After all, they benefit from the labour of working people and from the perks of wealth in British society including universal welfare benefits. But our Vanetia was having none of it. “You can’t be going round taxing the wealthy for the sake of it!” she protested. Honestly! The next thing, she said, Philo will be wanting to turn Britain into North Korea or  Cuba!

Artist's impression of Venetia after the Philo Tax


And this is the thing. Isn’t it remarkable how a perfectly rational alternative to the impending cuts is regarded by vested interests as irrational, unthinkable and a threat to the national wealth while the current plans to tax the poor and shrink the public sector is accepted without question as the only way?  It’s a classic insight into the very neo-liberal ideology that brought us to the current crisis in the first place and which underpins Cameron’s Big Society.