Category Archives: Capitalism

The Great Unravelling: a system in meltdown, Part 1

Part 1: economic ramifications, food security and pandemic bonds

Many of the points highlighted in this article are summarised below. It is published in full here.

Alan Simpson opened: “The delusions of neoliberalism stand at the edge of an implosion just waiting to happen. But, as with the emperor’s new clothes, global leaders are too fearful to say that their economic model has been stripped naked”.

The last week has seen that – following the wild weather – coronavirus and tumbling stock markets are ganging up to form an economic “perfect storm.” It will only get worse.

Initially, the industrial world had only a passing interest in the coronavirus outbreak in China: stupid Chinese, eating the wrong stuff it thought — good job that an authoritarian state could turn a city of millions into a quarantine zone.

Then markets began to panic and central banks are having to intervene

But now Italy has followed suit. In a dramatic, middle of the night statement, the Prime Minister announced the quarantining of a whole region of northern Italy, affecting 16 million people around Milan and Venice. Even this may be too late. The ramifications are massive. Start with China.

  • Its output accounts for around a quarter of global manufacturing,
  • huge quantities of which are currently stored up in containers that cannot get out of Chinese ports.
  • accounts for one quarter of global automotive production
  • provides 8% of global exports of automotive components for other manufacturers, many of whom rely on just-in-time assembly processes.
  • The same applies to steel and plastics, chemicals and high-tech telecoms.
  • Tankers arriving now set off before China went into lockdown. The real shortages will start to kick in this month.

The ripple effect of these logjams is running through the entire industrial economy, including a shortage of available containers themselves.

And when goods don’t flow, nor do payments associated with them. First-world firms struggle to work out how to pay bills (and workers) in the same way that China is having to pay workers to stay at home in quarantined areas.

Food security

The UK Treasury official who has just advised that agriculture is unimportant to the UK economy could barely have been more mistaken. Real alarm bells should be ringing all around Parliament about the amount of crops that will rot in the ground of waterlogged fields around the land. How are we to feed the public throughout the coronavirus crisis?

Weather related problems, including flood, drought and fire will throw food production systems crisis, with no globalised supply lines to step in as the safety net. But food security is an issue Parliament has barely touched on.

Why are political leaders reluctant to call what we are facing “a pandemic”?

(WHO) definition of a pandemic is relatively clear. It is “an epidemic or actively spreading disease that affects two or more regions worldwide.” This clearly describes today’s geographical spread of the highly contagious novel coronavirus and its significant clusters of cases far from China; principally in Italy and Iran. Countries closer to China, like South Korea, have also experienced an explosion in novel coronavirus infections. And Europe and the US are rapidly catching up.

The World Bank has launched a $12bn fund to help developing nations deal with “the epidemic.” But this is where the politics turns ugly. Behind the scenes, casino spivs stand to lose lots of money if we call this a “pandemic” not an “epidemic.” It all goes back to

“Pandemic Bonds”

In June 2017, the World Bank announced the creation of “specialised bonds” that would fund the previously created Pandemic Emergency Financing Facility (PEFF) in the event of an officially recognised (ie WHO-recognised) pandemic. The high-yield bonds were sold under the premise that those who invested would lose their money if any of six deadly pandemics (including coronavirus) occurred. If a pandemic did not occur before the bonds mature on July 15, 2020, investors would receive what they had originally paid for the bonds along with generous interest and premium payments.

This is why Trump has gone out of his way to pooh-pooh use of the word “pandemic.” If we don’t call it out until after July 15 speculators get paid and it’s the public who then pick up the bills.

The first “pandemic bond” raised $225 million, at an interest rate of around 7%. Payouts are suspended if there is an outbreak of new influenza viruses or coronaviridae (SARS, MERS). The second, riskier bond raised $95 million at an interest rate of more than 11%. This bond keeps investors’ money if there is an outbreak of filovirus, coronavirus, lassa fever, rift valley fever, and/or Crimean Congo haemorrhagic fever. The World Bank also issued $105 million in swap derivatives that work in a similar way.

In 2017, $425 million of these “pandemic bonds” were issued, with sales reportedly 200% oversubscribed. For many, they looked more like “a structured derivative time bomb” — one that could upend financial markets if a pandemic was declared by the WHO.

He adds, “And that’s where we are now. Call it a crisis. Call it an emergency. But whatever you do, don’t use the word “pandemic” because it might kill the market”. Concluding that there is no way to magic this crisis away, he says we must manage our way through it as best we can, adding, “But calling a pandemic a pandemic would at least treat countries and communities as human entities, not just chips in casino capitalism”.

 

Alan Simpson

8 March 2020

 

 

 

 

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Wry smile? Michael Rosen’s 10-point Guide to Labour Leadership Candidates

A gift from Robert Kornreich, a Kings Heath reader; emphasis added.

1. The Economy: if you’re asked about why ‘Labour crashed the economy’ – concede everything. Apologise profusely. Say, ‘Yes we did.’ Smile weakly. Agree if the interviewer makes out ‘there was no money left.’ Agree that it was ‘necessary’ to ‘get things right’ and ‘tough decisions had to be made’ and perhaps ‘we were in the wrong place to put them right at the time.’

Don’t ever point out that in fact it wasn’t the ‘economy’ (in the sense  of the government’s finances) that had ‘crashed’. It was the bankers’ who wouldn’t or couldn’t lend money any more.

Never point out that the UK is a currency-issuing economy. Never point out that the government has been issuing billions of what they call ‘quantitative easing’ which has the net effect of making the super-rich richer by increasing the value of their assets.

Don’t make a big deal out of ‘inequality’. Instead, cite the misleading statistics on the inequality of pay. These ignore the inequality of wealth which factors in ‘assets’ e.g. property.

Never mention trade unions. It has been shown that a unionised workforce is able to squeeze a little bit more wages out of the system, alongside better work safety, guaranteed breaks, improvements of working conditions. Never ever mention this. Let interviewers talk about ‘union barons’ and smile weakly.

Never mention ‘nationalisation’. Give that up. All of it. Right away. If power firms, railway companies, water companies, the postal service or any other part of the economy is doing a rubbish job and ripping off people, on no account suggest that nationalisation might be a possible solution. Keep talking about ‘responsible business’ or some cack about ‘a new kind of capitalist’.

The amount of national debt in proportion to the GDP is worrying some economists. You can mention this but if anyone says that you talking about this is ‘damaging confidence’, clam up and smile weakly.  

The amount of private debt created by the Tories in order to make up for weak demand is getting to a point where some in the financial community are getting a teensy bit worried that the old domino effect could strike again: a bank in some part of the world system might shut its doors and then another and another and we’re back in 2008. The fact that this is finance capitalism being finance capitalism must never be mentioned by you. You must keep up the pretence that this is some kind of present difficulty in what is really a perfect system. Talk about ‘regulation’ and ‘responsible banking’ as if that could or would solve anything.

If the whole financial system collapses, blame Russia, China, Iran and Jeremy Corbyn. 

2. Foreign policy. You are just allowed to say that perhaps the Iraq War was not ideal (don’t mention the millions of deaths, rise and rise of terrorist groups)  but there are no other wars that you can say were wrong. 

You should talk as if ‘Britain’ (never say ‘UK’) has to ‘help sort out’ anything going on anywhere so long as the US thinks it’s right to do so. Clearly, Iran needs to be ‘sorted out’ next, so say so. Never question the right of ‘Britain’ to do so.

When the media machine gets going explaining why some country (any country) is the greatest threat the world has ever known, agree with this. Smile weakly. Point out that this is ‘patriotic’.

Talk about something called ‘Britain’s standing in the world’ as if you’re talking about Queen Victoria being crowned Empress of India.  Talking of Queens, always say the Queen is wonderful. And so is the Royal Family. Nick Boris Johnson’s phrase ‘beyond reproach’. Mention that your mother loves Prince William.

3. The Election defeat. Make absolutely clear that there was only one cause for this: Corbyn. Never admit that any move over Brexit that he put forward came as a result of something your group pushed him into. On no account let anyone make comparisons of the popular vote: Brown (less than Corbyn), Miliband (less than Corbyn). Never make the point that the Labour Party hasn’t actually disappeared and that 10 million people voted for a Corbyn-led Labour Party this time and 12 million last time.

Keep saying the manifesto was a mistake. Don’t go into details. Begin sentences with, ‘I just think that…’

43 out of the 59 constituencies that went from Labour to Tory were in Leave seats. On no account mention this. Don’t mention the fact that probably, once Johnson came back with a deal, the game was up for Labour.

What you have to keep saying is ‘we’re listening to people’s concerns’. Be very clear that this isn’t anything to do with poverty caused deliberately by the Tories. That’s much too confrontational. ‘Listening to people’s concerns’ means you visiting somewhere for the TV and  letting people on camera or on the radio ramble on at you for hours about how they aren’t racist but the trouble is that immigrants have cut their wages, getting council houses, putting pressure on the national health and talking loudly on buses.

On no account point out that poverty, housing shortage and an under-funded NHS were created by the Tory government through austerity as a deliberate part of cutting the role of the state and them (not immigrants) trying to create a cheaper labour force. You must never ever say this. 

4. Antisemitism. You will be asked about ‘antisemitism in the Labour Party’. This is good. You will not be asked about ‘antisemitism in society’, or ‘antisemitism in the Tory Party’, so you must not mention these either. There is only ‘antisemitism in the Labour Party’. Concede everything.

On no account question whether any report or account was in any way exaggerated, distorted. You must not mention the fact that when Johnson was elected as leader of the Tory Party, every journalist in every newspaper knew that he had been editor of the Spectator and had edited ‘Taki’ who regularly poured out antisemitic jibes in his column for Johnson or on his own blog or other publications. Don’t mention that not a single one of these journalists mentioned this. Don’t say that you are in any way concerned by Rees-Mogg and his antisemitic jibes about ‘illuminati’ and Soros, his retweeting of a tweet from the Alternativ für Deutschland or that he has hung out with far right groups.

Don’t on any account mention the links between the Tory MEPs and far-right groups in Europe. Don’t mention that Boris and Orban (antisemite) appear to get along very nicely. On no account dig up anything on the way that Dominic Cummings talks about Goldman Sachs – it’s almost identical to the way antisemites used to talk about Rothschild.

Just keep saying sorry for ‘antisemitism in the Labour Party’ as if it’s the first, last and only presence of antisemitism in the UK today.

Always refer to ‘the Jewish community’ as if it is one monolithic entity all thinking and living in more or less the same way, even though it’s a teeny bit antisemitic to say so. It’s the kind of antisemitism that no one notices so it doesn’t matter.

5. Israel.  Remember Ed Miliband – he suggested that one way to get the ‘Peace Process’ going again was for the UK to recognise a Palestinian state before negations. He was immediately vilified, Maureen Lipman left the Labour Party and, apparently, thousands of Jews followed her. Miliband was, according to the Jewish Chronicle ‘toxic’. On no account repeat Ed’s proposal.

Talk about the ‘peace process’ as if it’s a real thing. You can frown in a caring sort of a way about the West Bank and Gaza but on no account propose anything concrete or useful. Accept that all problems in Israel, the West Bank, and Gaza are caused by Palestinians. 

6. Brexit. You’re stuffed. There will either be a very hard Brexit or a very very hard no-deal Brexit. Remember, no one understands trade deals, nor do you. Keep saying phrases like ‘the very best for Britain’. It doesn’t mean anything because something can be, say, the very best for bankers and it’s absolutely no good for working people. The advantage of keeping going on about ‘Britain’ is that it feeds into people’s sense of entitlement and special status as Brits in the world.

7. Education. Don’t disagree with the academy and free schools programme. Don’t make a fuss about unaccountable academy management siphoning off millions. On no account oppose grammar schools. These offer the illusion that they are good for the poor because a tiny percentage of poor people go to them. Never describe the schools that are not grammar schools as  ‘Sec Mods’. Keep calling them High Schools and do the ‘progressive’ bit by saying that there are teachers in High Schools who are doing a fantastic job. This has the advantage of being both patronising and unnecessary and completely misses the point that the people you will call the ‘disadvantaged’ are disadvantaged by grammar schools.

8. Social mobility. This is going to be one of your big ones. Keep going on about social mobility. On no account mention the fact that there are 3 key motors that prevent social mobility: inherited wealth, private education and inherited wealth. To mention these is class war. Don’t do it.

In fact, social mobility also accepts the idea that there must be and will always have to be the very poor, not quite so poor, the fairly poor, the not poor, the quite well off, the very well off and the eyewatering obscenely super-rich. All we can hope for, you point out, is that a few people might move up from one of these layers to another. On no account mention that someone must move down for someone else to move up – assuming the numbers stay the same. In other words, social mobility means society immobility. No change. Keep going on about social mobility as if it’s a really progressive alternative radical idea. Mention the fact that your grandfather was poor, you are not and it’s all down to ‘social mobility’. Never mention the role of the expansion of the economy over the last 100 years as a factor.

9. Immigration.  The best plan here is to agree with everything that the Tories do. They will probably fill the airwaves with anti-immigrant rhetoric mixed with how wonderful certain individual migrants have been. Just copy this.

They will say that they’re going to follow the Australian system, so you should either agree or find another country – Canada or New Zealand (somewhere with a largely white government and English-speaking) – and say that we could follow what they do. The election has shown that not challenging anti-immigrant rhetoric leads many people to think that immigrants have caused their poverty which then in turn leads them to vote for the very people who have made them poor.  You must not make this point.

10. Housing. The last Labour Governments could have created a fantastic legacy of social housing. Gordon Brown muttered as much himself as he was leaving office. You could try to say one or two things about social housing but it generally reeks of ‘old socialism’, so avoid it.  In order to sound modern and forward looking, you need to say things like ‘we’re looking into exciting forms of shared partnerships’ or ‘we’re talking with business about how to get more affordable homes on to the market’. The great thing about the word ‘affordable’ is that it sounds like anyone and everyone can ‘afford’ the housing that’s ‘affordable’. They can’t. It’s complete nonsense but you must go on using the word anyway.

 

PS That’s all for now. Come back to me for more in a few days time.

Tuesday, 17 December 2019

http://michaelrosenblog.blogspot.com/2019/12/my-media-10-point-guide-to-labour.html

 

 

 

 

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Is it ‘a myth’ that the ‘left behind’ have been neglected?

 

Today, Times columnist Clare Foges, a former member of Boris Johnson’s mayoral team and then David Cameron’s speech writer, challenges the narrative that Brexit is down, in large part, to a high-handed and callous establishment’s neglect of the “left behind”, deploring the belief that:

”Those in poor northern constituencies and bleak coastal towns were left trailing in the gold-flecked dust thrown up by the golden chariots that bore the wealthy, the Londoners, the elite onwards — throwing back their heads to laugh heartily and pour some more Bolly down their gullets while failing to give a monkey’s about those in their wake”.

Truly, those in poor northern constituencies and bleak coastal towns were and are left trailing – but the elite do not spend time laughing at them – those people are neglected because they are simply of no interest.

She asserts that the deindustrialised towns have suffered because of globalisation or automation, not because those in government sat on their hands.

But the elite constructed, fostered and continue to be enriched by globalisation and automation – the system which impoverishes many is necessary to their lifestyle. Clare admits that “When you know that you are on the lower rungs of a socio-economic ladder that reaches, at its heights, into the realm of millionaires and sports cars and Maldivian holidays, you may well feel resentful. It must be profoundly demoralising to see swathes of your countrymen and women enjoying seemingly easy success while you struggle”.

She also concedes, “Of course there is serious poverty and inequality in our country, but over the past 20 years in particular governments have tried a thousand different policies to reduce them” but fails to mention the ways – under recent Conservative governments – in which people on low incomes and those in poor health have been harassed, ‘sanctioned’ and deprived of their due allowances, in order to make derisory savings. She adds:

“I don’t deny that the Brexit vote may have been driven in part by resentment. Yet here is the crucial point: just because people have felt cruelly neglected by the powers that be, it doesn’t mean that they actually were . . .  Let us not mistake a failure to revive left-behind areas with wilful neglect. For the most part the much-traduced “establishment” has been well-meaning and hardworking in pursuit of a fairer country.”

Yes, wilful neglect does imply a degree of awareness – the correct term is indifference; ‘left-behind’ people are simply not on the radar of the affluent, preoccupied by “sports cars and Maldivian holidays”. She ends with more burlesque:

“With a more benign and interventionist establishment at the helm, the taxes of rich people could be spread thickly all over the country with no fear that wealth will flee; billions could be borrowed for major infrastructure projects with no damage to our economy; the streets of Grimsby and Oldham would be paved with gold. By giving this impression, we are inviting people to vote for Jeremy Corbyn and his fantasy economics”.

But would those in government circles – who benefit from corporate sinecures, stock exchange speculation and commodity trading – be willing to change the globalised system for one in which government invests in strengthening the economy through regional production and supply chains? Or will they oppose such changes with all their might, to maintain their current privileges?

 

 

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Gove ‘pledges’ cheaper, unlabelled, gene-edited food in his Brave New World

At a time when apprehensions about low-quality food entering the country post Brexit are rising, the Times reports that Michael Gove, the environment secretary has announced that “Britain will lead an agricultural revolution with the use of gene editing”.

In July, after hearing scientific evidence that gene editing “causes many profound mutations and DNA damage”, the European Court of Justice ruled that food resulting from genome editing would be regarded as genetically modified, which is outlawed in Europe.

The Country Land and Business Association (CLA) is underwhelmed

Disregarding this science-based evidence, Gove pledged, at yesterday’s CLA meeting in Westminster, that scientists and farmers would be freed from this European court ruling. The first report seen however, makes no reference to this exciting prospect, whatsoever.

Genome editing, or genome engineering is a type of genetic engineering in which DNA is inserted, deleted, modified or replaced in a specific location in the genome (genetic material) of a living organism, unlike early genetic engineering techniques that randomly insert genetic material into a host genome.

Support from vested interests

Scientists in the industry, like the Biotechnology and Biological Sciences Research Council, funded by the government’s Department of Business believe that the technique will lead to crops and animals with higher yields, resistance to disease and the ability to cope with the effects of climate change.

Emma Hockridge, head of policy at the Soil Association, urged the government to keep the UK aligned with the European court: “Scientific research has long shown that these new gene-editing technologies give rise to similar uncertainties and risks as GM always has. We have always been clear that these new plant breeding techniques are GMOs [genetically modified organisms] and therefore are banned in organic farming and food”.

Bloomberg reports that under the Trump administration, gene-edited foods don’t need to be labelled or regulated and that Zach Luttrell, a principal at industry consultant StraightRow LLC, sees gene-editing as a way to continue lowering costs. 

 

 

 

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Only one group in Britain is acting on the danger to the country’s food security

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Nationally and internationally eminent researchers and commentators are focusing on the damage done to damage the environment and human health by agriculture (example).

This, in a country whose manufacturing industry was the first to pollute its air, water and soil and whose armaments industry continues the process (see a recent study of pollution caused by war activity, during development and testing of hardware, weapon systems and procedures, war operations and subsequent reconstruction).

A country which could and should provide its own staple food is becoming increasingly dependent on imports because their family farmers have been grossly underpaid for many years by middlemen and large retailers. According to the NFU (2015), the number of dairy farmers in England and Wales has halved since 2002 – cause and effect.

As family farmers leave in droves each year we must assume that the country’s environment and human health will improve by leaps and bounds. Not so, their land will be bought by those largescale investors who have reaped the benefit of EU subsidies for so many years.

William Taylor and other leaders of Northern Ireland’s farming organisations have been actively lobbying politicians from all parties and none. Their August press release ended:

Farming families traditionally were charity givers, now 25%+ are living below the poverty line, therefore, denoting complete current Government policy failure. FFA therefore call on the Westminster Government to implement legislation on farm gate prices which would return farmers a minimum of the cost of production plus a margin inflation linked forthwith across the staples throughout the UK to force fairness into the food chain for farmers immediately. 

There is now proof from University College Dublin that in the farming industry every new job on a farm would create 4 down the line and whilst farming is not viewed by Westminster as the biggest UK industry in money terms (partly the fault of the food corporates) it is the largest UK industry by tonnage handled, 60%+ of all commercial road vehicles haul food or food related products to give but one example. 

If legislation on farm gate prices is not forthcoming from Westminster, such as that being sought at Stormont when it re-sits to sort the UK’s farm gate price crisis, then it will confirm what we all suspect, the large food retailers are out of control with their influence in ‘Democratic’ Westminster, the limited powers of the supermarket Ombudsman’s Office a case in point!

 

 

 

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Could the Stroud formula could rescue Broken Britain? Or will tribalism rule?

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For years Stroud District Council has been led by a cooperative alliance of the Labour, Green and Liberal Democrat parties – a ‘rainbow alliance’ (below).

Last May. Gloucestershire County Council’s agenda and minutes post recorded that Cllr Lesley Williams and Cllr Rachel Smith advised that the Labour and Green members had formed a political group called the Labour and Green Cooperative Alliance.  They explained that under the arrangement the Labour and Green members would work cooperatively but would continue to look at issues on an individual basis.

Professor John Curtice summarised the electoral maths: almost half the nation voted for broadly progressive parties in 2015 (49% backed Labour, the LibDems, Greens, SNP or Plaid Cymru, while 51% chose the Tories or Ukip). He considers the impact of a coalition with even one ‘minor party’.

Labour MP Clive Lewis and Green MP Caroline Lucas noted that in the 2017 general election more than 40 local alliances were formed, where almost exclusively Greens put the national interest before that of their party.

It had a huge impact on the vote – more than doubling the average swing away from the Tories.

 

They pointed out the challenges we face:

  • markets that are too free
  • a state that can be too remote,
  • a democracy that still leaves so many voices unheard
  • and climate change on a scale our people and our planet simply can’t cope with. 

Continuing: “It will take a politics that is social, liberal and green to overcome these challenges. No single party or movement has all the answers. We are going to have to learn to cooperate as well as compete to build the society of which we dream. And we are going to have to recognise that the future is not a two-party system but one in which smaller parties grow – both in influence and in their electoral representation”.

They point out that the millions of young people who voted live in a world of social media in which their identities and allegiances are permanently in flux. They like and they share. They flock to one idea, group or party and then another. A politics that is purposeful but also responsive, open and collaborative is needed.

The case for an alliance between ‘progressive’ parties, has been described by Simon Jenkins (above right) as unanswerable:

“In 2015, 49% of voters went for broadly progressive parties, including Labour, the Lib Dems and nationalists. But at elections they fight each other as rivals. As a result, 40 to 50 seats that might have gone to a single left-wing candidate went Tory.

Then, as now, Westminster tribalism won. Machismo required Labour “to contest every seat in the land”. That is apparently more important than denying the Tories a strong majority – let alone winning elections.

MPs Lewis and Lucas end:

“We are from different parties and different political traditions – and we celebrate that because, while we share so much, we can learn much more from each other. If we work together there is nothing progressives can’t achieve.

“The limits of the old politics are there for everyone to see – the limitlessness of the new we are just starting to explore.

Information sought:

People on the mailing list of this website are drawn from many areas of Britain and visitors come from several countries (opposite: eleven in May), the overwhelming majority from America.

British readers, expats and other well-informed readers are asked to send, via comments, any other examples of an effective co-operative alliance within councils and parliaments.

 

 

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Broken Britain 18: captured by corporate interests?

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George Monbiot recently pointed out that the Commons report on the Carillion fiasco is one of the most damning assessments of corporate behaviour parliament has ever published. It trounces the company’s executives and board and laments the weakness of the regulators.

But, as Prem Sikka said in his April article, it scarcely touches the structural causes that make gluttony a perennial feature of corporate life.

Both agree that the problem begins with an issue the report does not once mention: the extreme nature of limited liability. Sikka points out that this system, under which executives are only financially accountable for the value of their investment, has also benefited frauds and led to the self-enrichment of executives at the expense of workers, consumers, creditors, pensioners and citizens.

Monbiot adds that the current model of limited liability allowed the directors and executives of Carillion to rack up a pension deficit of £2.6 billion, leaving the 27,000 members of its schemes to be rescued by the state fund (which is financed by a levy on your pension – if you have one). The owners of the company were permitted to walk away from the £2 billion owed to its suppliers and subcontractors. (Left: the former Carillion chief executive Keith Cochrane in Westminster after appearing before the Commons work and pensions select committee)

Monbiot continues: “There is no way that fossil fuel companies could pay for the climate breakdown they cause. There is no way that car companies could meet the health costs of air pollution. Their business models rely on dumping their costs on other people. Were they not protected by the extreme form of limited liability that prevails today, they would be obliged to switch to clean technologies”.

So what is to be done?

Prem Sikka (right) proposes that the bearers of unlimited risks and liabilities should be given rights to control the day-to-day governance and direction of companies.

He advocates including employees and citizen/consumers on company boards – because both ultimately have to bear the financial, health, social and psychological costs associated with environmental damage, pollution, poor products, industrial accidents, loss of jobs, pensions and savings. Through seats on company boards, they could secure a fairer distribution of income, challenge discrimination, curb asset-stripping and influence investment, training and innovation.

Across the 28 European Union countries (plus Norway), most have a statutory requirement for employee representation on company boards – unlike the UK, Belgium, Bulgaria, Cyprus, Estonia, Italy, Latvia, Malta and Romania.

George Monbiot proposes a radical reassessment of limited liability.

He points out that a recent paper by the US law professor Michael Simkovic proposes that companies should pay a fee for this indemnity, calibrated to the level of risk they impose on society. He adds, significantly, that as numerous leaks show, companies tend to be far more aware of the risks they inflict than either governments or the rest of society. Various estimates put the cost that businesses dump on society at somewhere between 4% and 20% of GDP

His own ‘tentative’ and ingenious proposal is that any manager earning more than a certain amount – say £200,000 – would have half their total remuneration placed in an escrow account, which is controlled not by the company but by an external agency. The deferred half of their income would not become payable until the agency judged that the company had met the targets it set on pension provision, workers’ pay, the treatment of suppliers and contractors and wider social and environmental performance. This judgement should draw on mandatory social and environmental reporting, assessed by independent auditors.

If they miss their targets, the executives would lose part or all of the deferred sum. In other words, they would pay for any disasters they impose on others. To ensure it isn’t captured by corporate interests, the agency would be funded by the income it confiscates.

Monbiot then says “I know that, at best, they address only part of the problem” and asks, “Are these the right solutions?

  • support them,
  • oppose them
  • or suggest better ideas.

He ends: “Should corporations in their current form exist at all? Is capitalism compatible with life on earth?”

 

 

 

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Broken Britain 16: HMRC refuses to investigate money-laundering and tax fraud charges by largest Conservative donor

Three classes of British looting: which is the most culpable?

Professor Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex, draws attention to the case of the UK telecoms giant Lycamobile, the biggest donor to the Conservative Party, which has accepted £2.2m in donations since 2011.

Her Majesty’s Revenue and Customs (HMRC) has refused to assist the French authorities and raid Lycamobile’s UK premises in order to investigate suspected money laundering and tax fraud.

Economia, the publication for members of the Institute of Chartered Accountants in England and Wales (ICAEW) which covers news and analysis on the essential issues in business, finance and accountancy, reports:

Following an initial denial (left, Financial Times), Economia confirmed that in an official response to the French government dated 30 March 2017,  a HMRC official noted that Lycamobile is “a large multinational company” with “vast assets at their disposal” and would be “extremely unlikely to agree to having their premises searched”, said the report.

The letter from HMRC to the French government added, “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012”.

This is an ongoing saga: in 2016 Economia noted: “The Tories have come under fire for continuing to accept donations of more than £870,000 from Lycamobile since December, while it was being investigated for tax fraud and money laundering”.

In 2016 In May it emerged that KPMG’s audit of Lycamobile was limited due to the complex nature of the company’s accounts. Later, KPMG resigned saying it was unable to obtain “all the information and explanations from the company that we consider necessary for the purpose of our audit”.

HMRC: “has become a state within a state”.

Prem Sikka (right) continues, “The House of Commons Treasury Committee is demanding answers to the Lycamobile episode – but HMRC is unlikely to prove amenable”.

In recent years, the Public Accounts Committee has conducted hearings into tax avoidance by giant global corporations such as Microsoft, Amazon, Google, Starbucks, Shire and others. The hearings have not been followed by HMRC test cases.

The Public Accounts Committee has also held hearings into the role of the large accountancy firms in designing and marketing avoidance schemes and exposed their predatory culture. In a telling rebuke to PricewaterhouseCoopers, the Committee chair said: “You are offering schemes to your clients—knowingly marketing these schemes—where you have judged there is a 75% risk of it then being deemed unlawful. That is a shocking finding for me to be told by one of your tax officials.”

Despite the above and numerous court judgments declaring the tax avoidance schemes marketed by accountancy firms to be unlawful, not a single firm has been investigated, fined or prosecuted.

There are real concerns that HMRC is too sympathetic to large companies and wealthy elites.

A major reason for that is the ‘revolving door’, the colonisation of HMRC by big business and its discourses: its current board members include non-executive directors connected with British Airways, Mondi, Anglo American, Aviva, PricewaterhouseCoopers and Rolls Royce.

After a stint at HMRC many of the non-execs return to big business. Corporate sympathies are therefore not counterbalanced by the presence of ordinary taxpayers or individuals from SMEs and civil society.

Sikka ends: “In such an environment, it is all too easy to turn a Nelsonian eye on corporate abuses and shower concessions on companies and wealthy individuals”. Read more here.

 

Why should we care?

Because tax revenue pays for the services used by all except the richest, the education health, transport and social services, increasingly impoverished by funding cuts imposed by the last two British governments.

The Shadow Chancellor has twice called for more rigorous examination and tightening of processes at HMRC to ensure that corporations and wealthy individuals are free from political corruption and pay fair rates of taxes.

Will the next government elected be for the many, not the few?

 

 

 

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British-American democracy hijacked: Professor Luis Suarez-Villa

Professor Luis Suarez-Villa (Social Ecology and of Planning, Policy and Design at the University of California, Irvine) wrote in the FT recently:

American democracy was hijacked long ago by money and powerful interests, turning it into what amounts to a system of legalised corruption.

Lobbying, political action committees (super-pacs), myriad forms of campaign contributions and patronage are at the core of this phenomenon.

By comparison, the so-called Russian meddling in the 2016 election seems amateurish at best, and perhaps (more seriously) a way for the political establishment to divert the attention of the American people from the real problems of a corrupt system of public governance, whose patrons and beneficiaries want the rest of the world to think it is democratic.

A review of his book Corporate Power, Oligopolies, and the Crisis of the State (2015) expands his argument:

“The largest, wealthiest corporations have gained unprecedented power and influence in contemporary life.

“From cradle to grave the decisions made by these entities have an enormous impact on how we live and work, what we eat, our physical and psychological health, what we know or believe, whom we elect, and how we deal with one another and with the natural world around us.

“At the same time, government seems ever more subservient to the power of these oligopolies, providing numerous forms of corporate welfare—tax breaks, subsidies, guarantees, and bailouts—while neglecting the most basic needs of the population.

“In Corporate Power, Oligopolies, and the Crisis of the State, Luis Suarez-Villa employs a multidisciplinary perspective to provide unprecedented documentation of a growing crisis of governance, marked by a massive transfer of risk from the private sector to the state, skyrocketing debt, great inequality and economic insecurity, along with an alignment of the interests of politicians and a new, minuscule but immensely wealthy and influential corporate elite.

“Thanks to this dysfunctional environment, Suarez-Villa argues, stagnation and a vanishing public trust have become the hallmarks of our time”.

His charges apply just as accurately to the British scene: British democracy has also been hijacked by money and powerful interests, turning it into what amounts to a system of legalised corruption.

 

 

Emeritus Professor Luis Suarez-Villa is the author of several other books, including Globalization and Technocapitalism: The Political Economy of Corporate Power and Technological Domination and Technocapitalism: A Critical Perspective on Technological Innovation and Corporatism.

 

 

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Carillion provokes MP’s broadside: “taxpayer-funded services should be conducted in an ethos of public service rather than for private advantage”

Major banks and credit insurers are calling on the government to ‘step in’, as Carillion’s debts soar and ‘huge write-downs’ are announced on the value of several old contracts.

Some – according to the Financial Times – are seeking a taxpayer guarantee for the company’s debt and assurances that Carillion will be allowed to compete for future contracts, despite the company’s troubled state. Oliver Dowden, newly promoted to the frontbench, says that the government is making contingency plans for Carillion folding.

If Carillion goes under, writes MP Jon Trickett, “We would effectively be paying for these services twice. This government has socialised the risk but privatised years’ worth of profit for shareholders . . . it is allowing firms with public contracts to pay millions to private shareholders as the public suffers from cuts to disability benefits, schools and the NHS”. He adds:

“They are in debt to the tune of £1.5bn, while being valued at less than £100m and are being investigated by the Financial Conduct Authority over financial statements issued in the run-up to July’s profit warning . . .and if they fold, Britain could face a huge bailout so that our schools, hospitals and train lines keep running”.

Will the 99% bail Carillion out?

The government now relies on this contractor for a wide range of services. The Financial Times lists Carillion’s major contracts in the transport, defence/security and health sectors and points out that Labour’s Shadow Business Secretary has asked why ministers continued to sign off major contracts with the company even after it issued a profit warning in July 2017.

Theresa May’s new Cabinet ministers have – nevertheless – confirmed that they still intend to continue with the privatisation and outsourcing of public services to private firms which then make a profit at the expense of the taxpayer.

Some politicians and party members have, through directorships, shareholdings or the employment of family and friends, a vested interest in these companies, many of which donate to Conservative party funds, hoping to ensure another Conservative government.

MP Jon Trickett, shadow minister for the cabinet office, whose principled political life is outlined here, presents the view of ‘Corbyn Labour’, that taxpayer-funded services should be conducted in an ethos of public service rather than for private advantage: “Whether that’s to run welfare payments to those receiving universal credit, running hospitals or administrating schools in huge academy chains . . . “

He points out that when these firms cannot make good on their obligations under these contracts the British public picks up the bill, citing the termination of Virgin’s contracts on the East Coast main line.

The MP adds: “I represent a former mining area, which hasn’t seen meaningful private investment in decades, and little public investment since the 2010 election. Some of the poorest people in the country, with some of the worst prospects due to years of Tory government, live there. They have seen private firms make profit out of their benefits, their schools and crisis-stricken NHS services”. He ends by giving an assurance:

“Labour would reverse the presumption in favour of outsourcing and provide more cost-effective services, treating workers better by running many services in-house”.

Jon Trickett’s article: https://labourlist.org/2018/01/jon-trickett-crisis-at-carillion-reveals-the-risks-in-tory-outsourcing-dogma/

 

 

 

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