The Slippery Slope to Fascism?

The NHS has been opened up to competition, the modern parlance for privatisation. Mr. Gove, the education secretary, expects the majority of schools to become Academies and given the figure is roughly 40% now, he is clearly not mistaken. Academies are the effective privatisation of education where millions of pounds of public assets are given away to private organisations. Welfare reforms are likely to mean that those under the age of twenty-five are not entitled to housing benefit, and since as a group they are significantly more likely to suffer from unemployment, they have been condemned to destitution. If a person is in this situation, they are then told they must work for free in order to receive any financial assistance at all. So the young people of Britain have the following to look forward to: a life with few prospects since their school will be an Academy, teaching pointless courses in order to make their results look good, while the government bring in a qualification which is not open to them and is the only thing that employers and education providers will take seriously; they will have vastly reduced healthcare should they need it since private companies will not provide that which is not profitable (don’t believe me? 225 previously widely available treatments have already been rationed or withdrawn since the passing of the Health and Social Care Bill due to cost-effectiveness); they will have to live with their parents (or on the streets) until they are at least 25 since housing prices have been inflated by the irresponsible financial sector and they no longer qualify for any kind of help; But more than that, since they don’t qualify for the elitest vision of education or employment on offer they will be forced to work for free. Although, perhaps or government will develop some sort of compund where they can stay and contribute to society? "Work Camps" perhaps?

All of this is apparently justified by our flagging economy which is only flagging because bankers, who did have access to these benefits, wrote too many cheques they couldn’t cash. They created money that didn’t exist and lent it to people that couldn’t pay it back. Why? Because they wanted to improve their share prices and increase their already monstrous bonuses. Our government decided that the banks who had been allowed to grow to gargantuan sizes in a rush of de-regulation since 1979 were so big that their failure would damage our economy beyond repair. Money was poured in to save the ailing institutions (the government has so far borrowed £124bn according to the Guardian) and it is the poor who will be footing the bill. Schemes like Jimmy Carr’s K2 and non-domicile status favoured by Tory donors costs HMRC £70bn annually according to the New Statesman.  Meanwhile the increase in ‘stealth taxes’, such as VAT and duty, hit the poorest disproportionately hard since the extra money on the things they pay for make up a larger percentage of their income. For the same reason it is this group who will be hit hardest by cuts to public services since if they were more affluent they would be able to demand the higher quality provisions on offer to the wealthy few. But even these figures are a distraction, a smoke screen to obscure the true intentions of our ruling elites. Ideologically they are opposed to the idea of a public sector. They are now doing whatever they can to ensure that money that has been earmarked to ensure we all have a minimum basic standard of living ends up in the hands of the wealthy few.

So, what is the economic case for these cuts? Those few will tell us that they are necessary for the prosperity of our nation, and that the prosperity of our nation benefits all of us. The Tories will tell us that the growth of business is critical to kick-starting our stalled economy. Well let’s examine that idea. I have talked in the past about the US where 93% of economic growth feeds only the wealthiest 1% of the population, and indeed record corporate profits of $1.97tn were accompanied by real wage falls and rising unemployment during the third quarter of 2011. In Britain there has been a 21% increase in corporate profits since the third quarter of 2009. “But what about the trickle-down effect?”I hear you say. Frankly, it no longer exists, if it ever did. Unemployment here too has been steadily rising although this is a side issue in that employee compensation only accounts for 54% of GDP (down from 65% in the mid 1970’s) with the rest going to you-know-where. In short, although the situation is getting worse for employees in that their real pay has fallen by approximately 2% since mid 2010 according to the TUC, they haven’t been getting a fair deal since the 70s. Still we are given platitudes, small business growth - the endeavours of entrepreneurs - will save us. Sadly small businesses are currently in decline too, with over 50 failing every day according to the Mail on-line, this is strictly a corporate zone. If the government were genuinely serious about encouraging growth in small businesses it would be using a progressive taxation system where larger businesses pay a higher percentage of tax on their profits so that smaller businesses have more income to invest and develop, instead of the flat rate corporation tax currently in place. This flat rate system benefits the larger organisations - who already have advantages in terms of large scale efficiencies - because of their ability to transfer money beyond the tax system. Some even manage broker deals to avoid paying at all. Vodafone for example, which according to Forbes saw UK profits grow from £1.2bn to £1.3bn while it’s tax bill fell from £140m to zero in the same period.

As further rebuttal to the justifications for austerity , the UK is currently in debt to the tune of 66% of GDP. This sounds a lot until you consider the fact that our national debt was over 100% of GDP [continuously] between 1912 and 1961, a period which saw the birth of our welfare state. Indeed for only 50 of the last 300 years has our national debt been lower as a percentage of GDP than it is today. So then, we are being asked to sacrifice critical services and social mobility in the name of economic problems and promised progress which are at best ill-considered and at worst outright lies. Very quickly we have to start cutting through the spin and propaganda. If your life chances are determined by the economic situation of your parents, you are not free. If you are forced to work for nothing and a company profits from that, you are not free. If the actions of an unelected government acting without a mandate and outside of the written promises upon which its election campaign was based can destroy your life without consultation or remorse, then you are a slave to their whim. This is not hyperbole; 32 people die every week in our country having been declared fit to work. They die from cancer, from heart disease and from any other number of illnesses that our government’s system routinely ignores since it views its citizens only in the light of their value to the economy.

Culturally we are unwilling or unable to oppose this tyranny.  Not because we think it’s fair, and not because we are happy about it. But because we have a proud sense of responsibility and a strong moral compass. Teachers will say they don’t want to harm the prospects of their students, doctors will say any action they take will hurt patients. Private sector employees will not want to harm the companies they work for, and the media will tell us industrial action won’t work because this is the only way out of our economic mess. In response to that I would argue how quickly alternative ideas are generated when the wealth of the elite is threatened, as has been the case in the past. Teachers, your students will be better served by the creation of a fairer society within which they can both contribute and benefit through hard work, rather than being locked out on the day of their birth. Doctors and nurses, how many more people will suffer and die as a result of the stripping of the NHS, one of the most efficient healthcare systems in the world? If we do not do something, that is if we allow this pattern to continue, how many more rights will we lose? How much more will our real wages fall as corporate profits continue to rise? How long will we accept being second class citizens in a society that profits from our toil, before we demand the right to guaranteed reasonable living standards and the opportunity to affect our own futures? How long before we demand to be free and equal members of a democratic society again?

Fascism is defined by the Oxford Dictionary as:

“extreme right-wing, authoritarian, or intolerant views or practices”

This regime is right-wing, authoritarian and intolerant of the needs of the vast majority of our populace. We are clearly short of anything seen in Nazi Germany, but if we do nothing, how long will it take for this creeping elitism to morph into fully fledged fascism. And will we ever manage to change it back?

Exposing the Myth of Economic Growth

Economic growth does not work for the vast majority of us! Yep, you read the right, the fabled solution to all of our problems, our government’s plan to get us out of this mess, leads only to more problems. Never has our economy been so large and yet most people are facing real wage cuts, privatisation of basic tax-payer owned services and unemployment. In the US over the last 15 years, 93% of economic growth has been gorged by less than 1% of the population. Economic growth is a lie foisted upon us to force us to make the sacrifices needed to feed wealthy bank accounts. To really follow this argument you have to accept that money isn’t real. Of course we really have some notes and some coins, but it is worth only the amount of goods or service that we agree it is worth. We have to learn to think of it as separate from the items we buy with it, in that people would still produce things if we decided to change the way that money works.

 There is something called the Philips Curve which demonstrates the relationship between unemployment and inflation. You spend money to curb unemployment and this causes inflation. When prices go up two things happen. Firstly it disproportionately affects the rich, since the proceeds of their ventures are worth less in real terms. However, it immediately affects the poor as prices rise meaning living standards decrease and the poorest do not have the savings to insulate them. Since developed countries will not tolerate hunger and deprivation where it is clear and blameless, we have mechanisms in place to ensure that workers can unite to force their masters to share the spoils of the ever growing cake. This is what happened throughout the 60’s and 70’s, after a massive boom caused by revolutionary public spending where all our living standards improved, the economy came to a juddering halt. Workers, realising that employment was better than low inflation battled for the right to work and refused to accept any attacks on this. When inflation kicked in they battled for higher pay to keep pace or stay ahead and if they didn’t get what they considered a fair deal they downed tools and stopped producing the wealth that fed their financial superiors. Obviously such a course could not be tolerated by the wealthy and so the Philips Curve was disproved (no it wasn’t, but that was the story).

You see, the Philips curve had to be disproved since while that relationship was held to exist, no government would ever be elected by the masses, that favoured policies which threatened employment. Even now, when we talk about changing our system to make sure people can be sacked more easily by their super-rich over-lords we call it “making the labour market more flexible”. The terms here demonstrate how working people have been turned into a commodity, this is backed up if we consider titles such as “Human Resources”. People are bought and sold, but markets take the blame. However, that relationship between unemployment and inflation still very much exists, it has not been disproved but merely hidden. For example, there were over 20 changes to the way that unemployment has been counted between 1979 and 2000. All but one of these has served to reduce the published figure of unemployment. The way we measure inflation too has been altered, the new count (CPI) is disgned to produce a lower figure than its predecessor (RPI). If we still used the 1979 system, unemployment would be considerably over 4,000,000 people, and inflation heading toward double figures. We now count the amount of unemployed in this country not by counting those who claim unemployment benefit, or those that suddenly stop paying income tax or some other sensible method. No, we use a system which is much more simple to manipulate, a survey (seriously, who really believes a survey is going to accurately predict this?). But, this had to be done, you cannot justify rich individuals and organisations treating workers as resources if they are seen to be suffering. You have to demonise the working poor, to hoodwink those lucky enough to have a job into thinking the unemployed are the ones responsible for life’s difficulties. Well, I have never known an unemployed person close an outlet and fire all of its it employees just because they wanted to join a trade union, McDonalds on the other hand…  Nor have I ever known an unemployed person cut tax for the highest earners while indirectly increasing it for the lowest, our government however…  “Benefit cheats” cost us around £1b per year according to even the most ascerbic estimates, while anything between £60b and £100b is lost from the tax avoidance or tax aversion by the richest in our society.

It’s worse than that though, we have actually given the right to some companies to print money! Ladies and gentlemen, I give you then banks. The popular assumption is that a bank receives deposits from savers and then lends that money out, keeping some in reserve to ensure savers can withdraw money if they want to. This is wrong. Criminally wrong. While the rest of us scrape by and deal with job insecurity, pay freezes, loss of rights and loss of democracy, the banks create their own wealth. They do not actually lend out money that has been deposited, in this digital age there is no legal requirement for them to be able to guarantee their debts. Hold on, I’ll walk you through it. If I go into a bank and deposit £2 in a new account, the bank is then legally allowed to create £100 and lend it out. They hold on to my £2 as they have to hold 2% of whatever they lend, but the £100 is new money. Notes and coins are produced by the government, and when they are created the government charges interest to the banks. However in our digital age only 2.4% of money in our economy is actually paper and coin, the rest is numbers in a computer. Banks are free to add these numbers to the computer whenever someone walks in with a deposit, and they are allowed to add 50times the value of that deposit. Incidentally, this is what really caused the financial meltdown. The banks can only create this money if they have someone to lend it to, and so the search was on for ever more lending opportunities until the only way to continue to grow was to lend to people who couldn’t pay it back.

The scam goes deeper however, most people borrow money for big ticket items like houses which require a mortgage. Well, if banks decide they will lend more money in mortgages, despite the fact that there aren’t actually any extra houses all that happens is there is a bidding war which forces prices to go up. No one is materially better off since the money we can borrow is taken up by the inflated cost of living. Even if you choose not to buy a house, you still need somewhere to live and that most likely means renting. If your landlord is forced to borrow more and thus pay back more to secure the property it stands to reason that the rent is going to be higher. What actually happens is the banks create this money, which causes a boom in the economy in the same way that the public spending did after the Second World War. The difference is that the banks are the beneficiaries of the money they lend, since it is then paid into the bank of the person who sold the house, and that bank can now lend 50times what was deposited. But that’s fine because the value of the house will increase so we always have that. Wrong again. Sooner or later as the banks give ever riskier loans to produce the growth in their balance sheets that their shareholders demand, they lend to people who can’t pay it back. Oops, now the banks are in trouble and don’t have enough money to lend meaning house prices fall. Fortunately, they have a safety net in the lender of last resort, enter The Bank of England. Our government did not choose to bail out the banks, it was legally obliged to do so. The Bank of England guarantees all other banks, and thus the money printing, growth grabbing monsters of the private sector are effectively bankrolled by the public sector! We all put money into a pot which is used to guarantee profit making companies as they lend us thin air. We use this thin air to impoverish ourselves and guarantee that we will spend the rest of our lives paying for a home that should be a basic human right. The act of borrowing this thin air and using it to buy the things we need causes these organisations to lend more thin air meaning that more people have more thin air to compete against each other with. In reality there are the same number of houses so the people selling them can sell them for ever more deepening our debt, and deepening our servitude. Now all of a sudden we cannot afford to lose our jobs, and must work ever harder to avoid the arbitrary blade of the axe, since the axe represents the loss of everything we have spent our lives acquiring.

We are slaves. Slaves to a system that we finance and work within. Slaves to a system that we no longer even question. Slaves to a very small number of people with the knowledge and the organisational means to impoverish us if we refuse to bend to their will. Economic growth is an illusion that only tightens our chains. And when economic growth falters we must pay once again, with our jobs and our homes, to repair our crumbling prison.

How to Change Our Country

I was asked recently what we should do to improve our current situation by someone who agrees with the comments I have made throughout this blog. Not being one to shy away from controversy or responsibility, I have tried to set out below some ideas that would allow the UK to become a more egalitarian country; socially, politically and economically. Hopefully these ideas would allow everyone to enjoy the benefits of what is supposed to be a rich economy while encouraging individuals to take personal responsibility and contribute to society in a myriad of ways. Of course these ideas are just a start, perhaps the re-nationalisation of certain key industries will move us forward, or a legislated protectionist role for our national media (assuming we can design appropriate safeguards). The point is we need to move the agenda toward a model which favours us all. Naomi Klein noted the Chicago boys ethos of keeping an idea alive until the politically impossible becomes the politically inevitable. Now it’s our turn to change the landscape.

1.      Legislate to ensure that CEO's, executives and shareholders are not allowed to earn more than 50 times more than their lowest paid employee (pro-rata).

In an article from the Guardian, they note that average UK full time salaries decreased by 3.5% during 2011 and part-time equivalents fell by 11.2% (both in real terms). Meanwhile the article goes on to quote that executive pay increased by 15% and the pay of corporate managers also went up by 7.2% on average. The economic context for these changes were of high (5% on average) CPI inflation, and low economic growth (roughly 0.5%). In short, the article alludes to class war with low skilled workers suffering a reduction in their standards of living, which appears to fund the growth in the salaries of those they are responsible to. Despite the lack of growth in the economy, the managerial classes have been paid far beyond the contributions they have made while low skilled workers suffer by comparison, I guess we’re not all in it together. National Minimum wage increased by 2.5% in 2011 however this reflects an actual wage cut when considered against average inflation of above 4%. Indeed the 22% increase in minimum wage between 1999 and 2010 looks reasonable until we consider that this works out at less than 2% per year. Indeed, in only 3 of twelve years has national minimum wage outstripped RPI inflation or conversely, in nine out of the last twelve years the UK’s lowest paid workers have effectively received wage cuts. Meanwhile, as Ed Miliband noted in his speech to the TUC in September 2011, CEO pay has quadrupled during the same time period.

Even when the economy is growing it is clear that only the already rich are benefitting, and when times are hard the low paid are asked to bear the brunt. This results in a rapidly increasing income gap which has grown faster in the UK since the 1970’s than in any other rich nation. The idea of the movement away from collective bargaining and privatisation since the 1980’s has been that we might all get a smaller slice of the cake, but the cake will be bigger and thus through trickle-down economics we all benefit by getting more overall. This is patently untrue, as Barrack Obama recently noted when he stated that trickle-down economics has stopped working. Fundamentally, we have to ensure that everyone in our economy benefits from growth that we all create. By limiting the pay of the highest earners within an organisation to 50 times that of the lowest earner (pro-rata), maximum pay would be just over an entirely reasonable £500,000 for any business that employs people on minimum wage terms. Currently the average salary of a CEO within a FTSE 100 company is £2.7m, if we limit the salary depending on wage increases for the lowest earners, just watch average pay go up!

2.      Reform political funding to stop business and Trade Union donations. Publicly fund all parties. Let's stop public officials benefitting privately or politically from making public decisions.

Cameron’s [alleged] sale of dinner for £250,000 a time has many things in common with Blair’s [alleged] sale of honours. Both play to the vanity of potential donors, Cameron allowing them access to the PM and Blair’s; titles and possibly office. Both are devices which potentially use the trappings of office to generate money for the incumbent political party and if that had been proven in anything beyond common sense terms, would be deemed illegal. Most importantly however both can provide political power to the unelected. If Blair, gave peerages, he offered donors position directly and with it not inconsiderable power. While Cameron’s [alleged] approach, circumvents the need to provide high profile appointments by giving access to policy central itself. In either case those who can afford to make large donations may have effectively bought the ability to influence political decisions that should be made in the public interest. In short, allowing this situation to endure is undemocratic and corrupt. The money itself we are told – and these are considerable sums - the Conservative Party has received £159,484,285.40 since Cameron became leader according to DR. Eoin Clarke - is needed for political campaigning and the running of the party in general. Much of the money seems to be spent on vulgar ad campaigns however, that inform us through Bill Boards just how incompetent, inefficient or misguided the purchasing party’s competitors actually are. They say very little about the policies that parties plan to implement and even less about how they plan to implement them.

So then, what we probably have is a situation where large donations to political parties are used by those with the means to purchase a seat at the decision makers table and with it a chance to directly affect decisions which should be made in the public interest. The money that this generates for political parties is then used to criticise their competition. This should all be banned. Political parties do not need to campaign negatively, and should not even have the opportunity to allow donors to bypass the democratic process. Therefore, each MP elected should have attached to them a small amount for positive campaigning and administrative expenses. Parties and individuals must be forced to operate within this budget and to ensure that this can happen air-time should be provided for debates in the national free to air broadcasting media. Any donations to political parties should be against the law.

3.      Outlaw negative political campaigning and demand that parties publish manifestoes which explain the measures that will be used to action their policies. Any lies in these documents should lead to a General Election and prosecution.

While we are on the subject of political campaigns, I do not want to know why Cameron thinks I shouldn’t vote for labour, or why Miliband thinks we should boycott the Liberal Democrats. They are obviously biased and thus their thoughts on each other are not a sound basis for any of us to make a decision. The only sound basis in fact for a decision is a clear breakdown of each party’s policies and clear description of how these would be implemented. For example, the Conservative Manifesto unformed us that should they be elected there would be no further ‘Top-Down’ reorganisations of the NHS. I don’t want to know what they won’t do, I wanted them to tell me that they planned to turn the NHS into a franchise where private companies would produce all of their services at a significant profit. I wanted to know that a company (McKinsey) who were already advising the party would benefit substantially from the non-described reforms and yet were being given an architect’s role in devising them.

Of course, had Cameron published the idea clearly, or told us that by “opening up education to competition” he actually meant privatising schools, no one would have voted for him. If we want politicians to be honest about what they are going to do, and then do what we vote for we have to be able to hold them to account. Therefore, all policies should be published - including steps required for implementation - prior to the election. Politicians should only be allowed to discuss their own policies and why they expect them to work during campaigning, making no reference to the competing policies of other parties. If a single policy is changed in substance or implementation once a party has been elected, a new General Election should be triggered, and the full cabinet jailed!

4.      Limit the size of business organisations and make executives and shareholders legally responsible for their actions.

The size of the Royal Bank of Scotland’s balance sheet is estimated at £1.4tn and this is not even close to being one of the world's largest companies. To provide a little context, the size of the UK economy is estimated at £1.4tn, roughly the same size as the RBS balance sheert, and less than the £1.5tn that HSBC commands. Ever wonder why bankers are so powerful? Because they threaten to take their huge businesses elsewhere unless they get the laws they want, the tax breaks they want and the concessions they want. For example HSBC employs almost 170,000 people, Tesco – 240,000. Now these businesses are not just going to move somewhere else, the size of their businesses is down to the effectiveness of the labour they have found in our service based economy. However, each time they lay off employees it causes massive problems for UK governments who have to deal with headlines concerning rising UK unemployment or falling economic growth - thus, they don’t take the chance, nor do they risk losing possible donations from the cash rich organisations. Generally they do as they are told and that is why our banks became too big to fail, it is why 1 in every £8 spent in the UK is spent in Tesco and it is why Nissan get over £50m per year in tax breaks to locate here.

No business should be able to dictate policy to national governments. This is destructive to democracy and contrary to the public good. Therefore, any business with more than 25,000 employees or 15% of a market should be forced to divest parts of itself until it no longer has the ability to dominate its market or the politics of its host country. Unless large businesses accede to these laws they will be forbidden from operating in this country and all of their assets seized by the government. Additionally, we need to force boards of directors and shareholders to take legal accountability for the actions of their corporations and remove the veil of limited liability that “business leaders” hide behind when things go wrong. Wouldn’t it have been nice to see senior bankers go to jail when the deals they made undermined the global economy and lowered all of our standards of living.

5.     Legislate for a maximum 35 hour working week and enforce it.

Despite being the second largest economy in the EU, Britain has the third longest working week (on average 42.7 hours). Before you link this to the “success of our economy please note that we work considerably longer hours than Germany, the EU’s largest economy, but less than Greece, so clearly long working hours are not a pre-requisite for economics success. As ABC News have noted, large corporations are hoarding stockpiles of cash and not recruiting employees for expansion due to the difficult economic times.

Meanwhile, The Office for National Statistics reports that there are over two million single parent families in the UK with 26% of children raised in single parent households. Conversely, only 2.2 million children have the luxury of a stay at home parent according to the BBC meaning three quarters do not have a parent at home to look after them. The UK still has the highest teen pregnancy rates in Europe, knife crime is at epidemic proportions and as the Telegraph notes,  teen drinking in the UK is among the worst in the world. The BBC highlights that children left alone tend to do less homework, drink more alcohol and are more likely to get themselves into inappropriate sexual situations. Let’s give parents the chance to parent, and children the chance to be children with the appropriate role-models, guidance and support. Let’s get more people into jobs and improve the work life balance in the UK. Let’s make sure adults have the opportunity to take an interest and an active role in society. All of this is possible with more stringent and effectively enforced working week rules. Please note, I do not advocate a return to the over idealised 1950’s housewife model. Feminism has been a force for good, but families should have the option to choose a work / family balance that benefits them.

In economic terms this would benefit us as a country since we would be forcing corporations to employ more people reducing unemployment and thereby put more money into the hands of working people. This would increase the demand for goods and services within the economy and lead to a virtuous circle of increasing growth, income and confidence. For example the increase in income tax alone would help to reduce the deficit in the government coffers.

·         Considering the EU

I do not say this lightly, but given European law the UK would need to withdraw from the EU, at least temporarily in order to make the above changes since EU law over-rides UK law. I passionately believe in the philosophy of the social, political and economic integration that the EU represents, however in order to make these reforms stick and protect our economy as they do so, we would need some protectionist policies in place. The EU is a noble experiment, but it assumes that the countries involved are socially, politically and economically ready to homogenise laws and what is good for one will be good for all. This is patently not the case since EU law currently provides a significant barrier to the necessary reforms that have been highlighted above.