The neo-liberal trilogy of illogical economic ideals

"Capitalism doesn't work without capital." Brilliantly simple quote from Max Keiser a year or two ago. If everyone is in debt and nobody has anything to spend, then capitalism can't work. Ok, some people have money. But they either live in Russia or the oil-rich Arab states, or they hide it in offshore tax havens.

Here's an idea: share the wealth. It's a very old, very simple idea that those with wealth and those in power dismiss immediately, laughing, scoffing, puking up their expensive (possibly subsidised) breakfast onto the Times, Telegraph or FT (I'm not suggesting for a second that any of those papers might promote the merits of wealth distribution; this is a hypothetical scenario where someone within earshot of a wealthy/powerful person makes this suggestion).

Why should they consider it? Because they'll all be better off. It's obvious but worth repeating: if people can afford to spend money, they'll spend it and the rich will make bigger profits. And surely capitalism needs consumers with capital? As things stand, instead of making money from sales, they have to squeeze their outgoings by reducing the amount they spend on staff wages (by freezing or reducing salaries, making redundancies, reducing hours or moving to contracted or self-employed staff with no rights) and avoiding tax where they can (which at the moment, is in many places and many ways).

That brings me on to the second factor in this doomed (yet somehow still perpetual) neo-liberal capitalist model, and that is low tax revenues. The rich, those on the right and most of those in the centre ground of politics (Labour and Lib Dems are included in that) have been promoting, begging for (or rather, wining and dining and yachting in aid of) and implementing the low-tax policies of the anti-socialist movement for decades. The country does not generate enough tax revenue to supplement the incomes of those being paid peanuts by their employers. But because they're being paid so little, we have a large benefits bill which subsidises wages so people stand a chance of eating three meals a day and having a roof over their heads. And this is only going to get worse if the Tories stay in power (or if the Lib Dems get in - which they won't) because they will raise the income tax threshold to a level which means that almost anyone on the minimum wage will pay no income tax whatsoever. Why not increase the minimum wage to make sure they have the same amount left at the end of the month? The reasons why they won't raise the minimum wage to a living wage are lurking in think-tanks and restaurants around Westminster, lobbying from within on behalf of their private-sector employers.

The third and final factor is the idiotic and irresponsible ways that governments try to force perpetual growth. Economic growth has mostly been able to continue despite huge national and personal debts. This can't go on in economies where tax revenue and personal wealth are both low because debts will just grow and grow: despite their claims, the current UK government are increasing the national debt. They may be reducing the 'deficit' but only thanks to massive cuts to public spending (deficit is basically income minus expenditure). If their claims about rising employment were having an effect on the economy, you'd see a two-fold improvement because there would also be more tax revenue helping to "pay down the debt" (I hate that phrase). In fact, when you look at the figures, although the huge bail out of the banks during the last parliament should have been a one-off (albeit in stages over the course of a year or so), the state of the economy under the current government has meant that even the deficit has reduced gradually despite the huge cuts.

I disagree fundamentally with the pursuit of low taxes and a smaller state. We would all benefit - including the richest few - if we are all paid a decent wage and all paid into the taxes that we need to run the country. Low tax, low pay (for the vast majority) and the pursuit of growth together simply cannot create economic prosperity. And those who claim that it is are lying to you.

Tories' economic plans makes lies of their claims to "represent" those on low incomes

We know the Tories hate tax and want to see a minuscule state with as little tax as possible. So their plans to increase the 40% tax threshold to £50,000 (thus taking some people on good salaries out of the top rate) and take the lower tax level to £12,500 (thus taking anyone working 30 hours or less on minimum wage out of income tax altogether) is not surprising. I'm just sick of hearing lies.

The party's claims that they are helping people on low incomes are utterly false. They are reducing benefits to 'encourage' people into work and raising income tax for those earning minimum wage to make it slightly more worthwhile having a minimum wage job. But this totally goes against their claims that they're giving people the opportunity to earn a living rather than relying on handouts. A tax cut IS a handout. Surely if people on low incomes were earning a wage that they could afford to live on and contributing to the costs of the services they use by paying income tax, THAT would be more likely to make them feel as though they were valued and making a valuable contribution?!

The Tories' solution is a quadruple win for them:

1) They feel that doing this means they don't have to tackle the problems of the rising cost of living and poverty wages
2) Which is great for the big private businesses flogging their staff whilst creaming massive profits off the top
3) They are also lowering taxes which is a permanent Tory policy
4) The fall in tax revenue allows them to show figures suggesting that further spending cuts are necessary

In fact, it's a quintuple win:

5) Keeping people on low incomes tied to government policy rather than being able to afford to exist because they're earning a decent salary keeps the plebs in line and stops them feeling like they might be say, half as important as a tax-dodging hedge fund manager.

Of course this only works if you believe them. How to make people believe them? Get the majority of the media onside.

Oh.

And where is the money for these tax cuts going to come from? They're going to tell us later.

Great.

Maybe Scotland leaving the union will be the change that England needs too.

Past election results don't quite prove that no Scotland means Tories forever in England, but it will be very difficult to get rid of them with the Labour party in its current form.*

*I actually don't mind Ed Milliband. I think his real beliefs are probably quite similar to my own; unfortunately there are still too many powerful Blairites in the party and a dominant right-wing press ready to crush any socialist ideas he might want to put into practice. 

But maybe this is what England needs to shake things up.

For years, English politics have been stuck in post-Thatcher mode: pro-greed, anti-Union, low tax and overly suspicious. Thatcher really was a massive success. I'm sure that others in the Conservative party of the late 70s and 80s share a lot of credit too but between them, they gave the country 10 new commandments:

1. Kick, punch, trample and bribe your way to the top! 
2. Keep grabbing as much as you can before someone else does! 
3. Cheating the system means you're brilliantly talented and deserve your ill-gotten gains! 
4. Unions are only there to steal from the vulnerable rich people and need to be squashed! 
5. Anyone who considers the fortunes of others before their own is a communist and will destroy us all!
6. Poor people only have themselves to blame and don't deserve anyone's help!
7. Tax is a con to help the poor; rich people shouldn't have to pay for things they don't use!
8. Tax is optional; wealth in offshore accounts or in fiendishly clever avoidance schemes doesn't count!
9. If you can pay your staff less, you're paying them too much!
10. Publicly-owned organisations are only used by the poor; these need to be harvested for private profit!

In their pursuit of power, the Blairite, Tory-lite New Labour party seemed only too happy to accept this and yet were still seen as the party of the left. Political commentators conceded that they might be 'centre-left'. But in truth, they were bang in the centre at best. New Labour weren't all bad, but they left us without a proper alternative to the City-hugging, privatising, greed-cheering, corporate lobbyist-loving Tories. And that's what really needs to change.

Of course it's difficult. The public in England seem convinced enough by most of the Thatcherite ideals even whilst cheering the news of her demise that the opposition are too scared of upsetting the status quo by being more radical. And frustratingly, the Labour party don't realise that playing around with minor changes to the Tory manifesto (scrapping the bedroom tax, reversing the privatisation of the NHS that they themselves started) is not enough. They would be far more popular if they gave voters a proper alternative.

As I've said before, given the option of choosing a temporarily poorer but fairer and more equal place to live, I would take it. I don't agree that most of the questions surrounding an independent Scotland have been answered. And I really don't like a lot of the shouty YES attitudes: many people are far too aggressive and unwilling to even listen to counter arguments. But I can't get over the feeling that although I would prefer the UK to stay the same, I think they should go for it.

Get out while you can Scotland (but take your first opportunity to appoint an effective leader)

As I've said on this blog before, I hope the people of Scotland vote no. My wife’s family are all from Scotland and I've lived there too. I have a great affection for the country and did contemplate living there permanently. We still might reconsider that later in life. However, I've also said that if I, as someone living and brought up in the north of England, could vote to separate from Westminster, I would probably take it.

There’s this idea that London has all of the money. It’s mostly true. But why and how? There’s also the idea that we don’t make anything any more; we have no industry. This is also broadly true. But why? The answer to both of these is mostly by Government design.

Don’t let anyone convince you that our manufacturing ceased to become commercially viable. If that was the case, we wouldn't have Japanese manufacturers producing cars in this country. I would also point out that if Germany can be home to some of the most successful car manufacturing plants in the world in Volkswagen, Audi, BMW and others, then we can too. 

I wouldn't claim that it is a massive conspiracy to keep all of the money in the City of London but the fight for job security and better pay and conditions by unions in the 1970s didn't exactly endear them to the Tories. I would stand with them of course, but as soon as Thatcher came into power, she saw them as a nuisance to be put in their place. Why would any right-wing government help out a struggling industry whose employees might strike again the next time their pay was frozen or colleagues made redundant? Instead all of the country’s finances were focused on the ‘big bang’ in the city. De-regulation entrusted wheelers and dealers to gamble safely and if they wanted to line their own pockets at the same time, more power to them (literally). Government assistance via tax breaks and infrastructure investment fuelled the boom. Publicly-owned organisations one by one became commodities to be bought cheaply and sold handsomely. 

Engineering and manufacturing never received that kind of help and for the most part, was left to crumble. We still, despite everything, have quite a strong aerospace industry (according to Wikipedia, it is the second or third largest in the world, depending on the method of measurement). Just imagine what it could have been with a fraction the sort of special treatment the precious financiers are constantly given.

Those with money donate to the powerful and the powerful reciprocate with special allowances and policies that suit their trade in cash-grabbing. It’s a happy, pin-striped partnership all served by a gloved hand on a silver-platter with glasses of champagne and expensive canapés. The City is the favourite child, doted on and lavished with presents and praise while other sectors are the runts, fighting for scraps on the floor, getting kicked should they get in the way.  

No wonder the Scots want out. I do too.

I hope, though, that if Scotland votes for independence, the country takes its first opportunity to elect leaders who will get on with the job of running the country. Alex Salmond has done a fine job of getting Scottish people more for their money and then convincing them that, despite this, they need to be independent. He hopes to go down in history as the man who gave this to Scotland but he will not go down in history as a great Scottish Prime Minister. Once this is over, his job is done. He will want to stay in power but I don't get the impression that he can deliver on the promises he’s made. And I don’t know much about the party as a whole but I wouldn't put money on Nicola Sturgeon being able to make their rhetoric a reality either. Someone will need to deal with the realities of the Scottish economy and although I feel it is within their grasp to at least continue to enjoy the standard of living they currently have, it will require realism and professionalism as well as vision.

I'm a socialist. Amongst other things, that means that I think of the greater good rather than what would be best for me. And for that reason, I think if they do really want it, Scotland should take this chance.

The pig-headedness of the climate change sceptic

Anyone with a financial interest in maintaining the status quo with regards to energy usage and pollution will go to great lengths to deny strong scientific evidence. On their side are all of the other people who don't have a financial interest in fossil fuels or energy but like to keep their heating and/or air conditioning on, like to drive their large cars everywhere, fly regularly, leave the lights on to save the effort of flicking a switch and believe that greener energy will cost them significantly more.

Let's just forget the environment and consider costs.

Admittedly, building newer, greener energy systems will initially cost money. But the continuing efforts to plunder the planet's natural resources does too. Take drilling for oil. As supplies that we're already guzzling reduce, not only does it become more expensive to buy, it also becomes more difficult and thus more expensive to find the next source. Deeper drilling means hotter temperatures and that requires more money spent on the research into and the production of materials that can withstand these temperatures and still do the job. Then there are areas where the materials used are subject to incredibly acidic, corrosive environments which requires different research and different materials. And this cycle will keep on going, costing ever more money in research and development until eventually, we've used every drop of oil or gas the planet can give us.

So instead of investing in harnessing renewable energy such as tidal power - to take one example - energy companies are spending money on chasing the next source of oil or gas. Tidal power is a very interesting source. For one thing, unlike wind and solar, we can predict exactly when and where power can be harnessed. For an island like the UK, it should also be possible to establish a constant system - where different tide times from around the UK are used to balance out the wave power being harnessed (where one tide goes out, another is coming in) and thus, ensure that there are no peaks and troughs. I say "should": research is already under way into the best ways of doing this. Once tidal power systems are in place, the only certain costs will be upkeep (although of course, improvements will be made from time to time).

Failing to adequately fund new energy is not only short-sighted, it makes no economic sense in the short-term. The sector is already employing more people in the UK than teaching and there is a huge capacity for growth. Employment means people earning and paying tax back into the economy. In the UK, where our earning power in energy is not the greatest (we have little oil and gas and much of the energy work undertaken in the UK is by non-UK companies who pay their taxes elsewhere - what little taxes they pay, that is), the benefits to our economy of growth in this area would be huge..

The constant denial from the right has echoes of the fight to recognise the dangers of smoking. Common sense won that battle in the end; we just need to keep going.

British Rail: the naysayer’s favourite story of state failure

I’ve been trying to find out what really went wrong with British Rail. I failed to find anything. I then turned to finding out information from the time to support the modern idea that it was badly run. I haven’t been able to find that out either. (If anyone can point me in the direction of any real information from the time that supports either of the above, do let me know – I’m always willing to see the other argument).

What I did learn is how the idea of privatising the railways came to be: and I was surprised to learn that it wasn’t some grand plan with widespread support, not by any stretch of the imagination.

Thatcher, the original queen of state-stripping (now of course totally out-classed by the current mob), didn’t see it as worth pursuing. There was no evidence that it would appeal to the private sector and there was little interest in the conservative front bench, or ministers and peers who had previously been involved with transport. Not only did the opposition and the Unions opposite it, so did the majority of the Tory party – with many voicing fears that it would destroy the railways. A leaked proposal to hike up prices by 16% in the South East, with further rises to follow (the intention being to make it appear more profitable to potential private buyers), caused outcry. The idea was killed off.

But then Thatcher was ousted and John Major, elected with only the proposition of electoral defeat ahead of him, needed policies. Rail privatisation was thrown into the mix and seemed to fit the bill. With a policy like that, the government could show they weren’t afraid of bold ideas and the right wing press, always happy to help by a spot of state-bashing, got stuck into British Rail.

The public can be easily convinced that something is wrong with a public service and scared that they were losing money to a failing state-owned system, privatisation didn’t seem like such a bad idea.

I still don’t think it would have been this policy that caused the shock victory but whatever it was, somehow, the Tories stayed in power. With a narrow mandate, they needed to make their promises stick and so the privatisation of British Rail was on. Inner discussions considered a few ways of going about it and the party and its private backers settled on the model of regional franchises and between 1994 and 1997, British Rail was pulled apart and sold off.

Fast-forward 20 years and we now have a good model to use in arguments against the privatisation of large public sector organisations.

The rail franchise which is the most cost-efficient to the taxpayer and the most highly-regarded by passengers is the only one which is not privately-owned: East Coast. East Coast put profits from fares back into the business and pays for improvements to the rolling stock and the service they provide. And there are no shareholders to satisfy. East Coast has paid almost £800 million to the treasury in less than five years. That is more than Virgin have paid in 15 years.

As a result of privatisation, our railways are now more expensive to passengers, more expensive to tax payers and less reliable. It should be impossible to believe that privatisation is now going ahead in the NHS. Yet we’re under Tory rule and pretty much anything which takes taxpayers money and puts it into the hands of the wealthy is to be expected.

Short-termism drags us back to the 1900s.

We need our own home. Sadly, we're unable to buy one simply because of our age: we're the mid-30s of the mid 2010s.

We just missed out on being in the slightly older bracket of late 30s-early 40s. If we were a few years older, we'd have been ok: we'd have bought a long-term home just before the crash. But we bought a flat; a reasonably-priced one at that.

The area has improved since we bought it. There's new employment locally, new public transport and so many nice shops and cafe bars that BBC Breakfast can be there about once a week, asking the contented, cultured, middle-class residents the lifestyle question of the day without anyone realising it's the same small area every time. So why can't we sell it?

Whilst we're trying to find a buyer for our flat, houses are getting further and further out of reach, even though we're looking at areas that are considerably more affordable than the affluent, sought-after area we live in now. The economic crash robbed us of the income that had enabled us to get on the property ladder and we've only just now caught up to where we were 7 or 8 years ago. But despite all of the local improvements (and some improvements to the flat itself), our flat has been on the market for four months and nobody is willing to pay the amount we need to raise enough deposit to buy a house. And the longer it takes, the more expensive houses get.

Short-termism is an every-parliament problem. Why would a government invest in the future so that the next reaps the rewards? And can you imagine a government minister, or the media for that matter, letting a member of the shadow cabinet claim credit for an improving economy, or improving Schools, or an easing of the housing crisis? The opposition don't have a voice. And even if they did, the majority of the electorate wouldn't be listening and when they're fine with how things are, they either don't vote, or vote for the status quo. So no party in power would ever make short-term losses, and in doing so risk being seen as a failure, and let their successors claim the credit.

But this government have got short-termism in their blood; it's like an addiction. Scrapping green levies that were intended to pay for greener and cleaner energy in the future to bring bills down now. Cutting income tax and cutting spending on infrastructure that will mean more critical need and higher costs at a later date. Cutting benefits and care for people who need it now and ignoring the longer term costs of doing so.

This government is only too happy to let house prices spiral up and up and up again, boosting the economy in the short term, gambling that in the next parliament, the fall-out won't be their problem. What is happening now is putting people with quite healthy incomes in situations similar to how quite low income families would have been 100 years ago. We're faced with cramming our future into a scruffy two-up two-down with only a yard for any children we might have to play in. And even a property like that would be pushing the limits of our finances.

We should be able to afford a family home. But many people like us are putting off having children because we just can't.