Saturday, 26 November 2011

'Free' market myths no.1: the public sector doesn't create wealth

This is the first in a series of posts which aim to explode the common myths of neoliberal 'free' market propaganda. Something you can read in the Daily Mail, Times, Telegraph, Sun, and Daily Express any day of the week. If you want to find out more about the mythology of the 'free' market right I recommend the excellent '23 Things They Don't Tell You About Capitalism' by the economist Ha-Joon Chang. Its essential reading to understand how modern capitalism portrays itself as dynamic and risk-taking, when it is more often conservative and protectionist:

In the UK, in the past decade or so, and particularly since the big crash of 2008, there have been increasing attacks on the public sector. Neoliberal 'free' market fanatics have been working hard to paint the public sector as a drain on our national resources, something which is an unaffordable luxury populated by workers on fat cat salaries and pensions. We are routinely told that only the private sector can create wealth. This is nonsense, and is demonstrably false. But why is it happening?

The reason is that corporations want to get their hands on public sector assets at knockdown prices, and see providing public services as very easy money. This is because public services are monopolies.  For example, your local council has a waste collection (and disposal) contract with one company. You don't see refuse wagons tearing down your street competing to pick up your bins, do you? Its a monopoly and therefore very easy money compared to the supposed cut-throat world of capitalism, where businesses are supposed to be competing for survival. So, the public sector represents rich and easy pickings for 'free' market 'entrepreneurs'.

Rubbishing the public sector is all about getting the public onside to accept the asset stripping of privatisation, which is based on sacking workers, reducing the conditions for those who remain, and dumping the costs of unemployment and hardship onto wider society. This is the time-honoured 'free' market trick of privatising the profits and nationalising the losses, in other words - a racket.

The reality is that the public sector creates jobs, infrastructure and wealth and a vibrant public sector is essential to a healthy economy. A public sector that is efficient and well run offers much better value for money than the private sector ever could. Why? Its simple, the public sector doesn't have to make a profit and therefore will always provide better value for money than a private sector alternative. That is why the 'free' market fanatics are so desperate to convince you the opposite is true.

Neoliberal 'free' market fanatics don't really understand the concept of wealth anyway. They think in terms of profit, cash and personal gain. But real wealth is not about money, its about much more than that, it's about human need and well-being. The public sector creates wealth in many ways, through health, education and welfare, through infrastructure and creating jobs both in the public and private sector. Without it we would all be at lot worse off. The NHS is the greatest engine of wealth creation in the UK and plays a crucial role in our economy.

 If we allow our public sector to be privatised it will become hollowed out. Do you really want the education of your children to be reduced to the level of a transaction at Tesco or Barclays?  If you privatise these crucial services, you reduce them to the level of a mere commodity, a financial transaction, and you become merely a customer, rather than a stakeholder, an owner. But you can never expect the 'free' market fanatics to understand that level of subtlety, for them humanity is reduced to mere units of consumption. That is your function, to provide them with profits. Their  ideology is ultimately anti-human, like George Orwell's Room 101, and the boot stamping on the human face -  forever.

Wednesday, 23 November 2011

A Tory driven ideological class war attack on British workers won't promote growth

It was bound to happen here, as it did in Wisconsin and other American states. First the capitalist class, or 1% if you prefer,  creates a crisis, a crisis of financial capitalism which nearly brings down the world economy. It does so through its ideology, neoliberalism; which means destruction of public services by privatisation; letting the banks and corporations run riot through deregulation; and the looting of natural assets by corporations through globalisation. Then, using their tame politicians in the UK, USA and Europe, it makes the middle and working classes and unemployed, the 99%, pay to bailout the banks and save the skins of the bankers. This is privatising the gains and nationalising the losses. Socialism for the rich, capitalism for the rest of us.

So the banks get saved but there is still a big problem because much of that debt incurred by the banks has now been transferred to governments and taxpayers leading inevitably to a sovereign debt crisis, which is where we are now. The Eurozone crisis has been triggered by the sovereign debt crisis brought about by the banking crisis. Still with me? We are nearly there.

In response to the sovereign debt crisis governments in the UK and Europe implement austerity programmes, ostensibly to bailout government debt, particularly in Greece and Ireland. But its not the poor old Irish and Greek taxpayers who are being bailed out, the money is being used, once again, to bailout French, German, Spanish and Greek banks. So taxpayers have been shafted twice, first in the bank bailout and secondly by austerity - which is just another bank bailout.

To top all this the right wing politicians who are the friends of the bankers and the 1%, are now using the crisis to try and smash workers rights. In the USA, in Wisconsin, the Tea Party backed Governor Scott Walker has used the deficit to not only slash services but to try to deny unions their collective bargaining rights. Now in the UK today we hear that the government is contemplating undermining workers rights by making them easier to sack and limiting further their already limited rights to an Employment Tribunal. This crude, class war attack on workers is being carried out in the pretence that it will encourage growth.

The real irony is that the rising unemployment, increasing poverty and lack of growth in the UK are a direct result of this government's austerity programme. Economically, this government is already a complete failure and its only to be expected that it should dishonestly try to pin the blame for that failure on working people and the unemployed, that, after all, is what class war is all about.

Sunday, 20 November 2011

Police brutality is being used in an attempt to crush `OccupyUSA

Pepper spray, tear gas and good old fashioned beatings are being dished out by the police in America in an attempt to crush the occupy movement. The past week or so has seen the eviction of the occupywallst camp in Zuccotti park, and attacks on protestors have resulted in serious injuries, including a ruptured spleen suffered by army veteran Kayvan Sabehgi when he was beaten by police officers at occupy Oakland. Some of the most shocking footage I've seen this week is of police using pepper spray against peacefully protesting students at occupy UC Davis - see below.

There is also evidence that the evictions of occupy camps across America were co-ordinated, and that the local authorities were 'advised' and supported by the Department of Homeland Security and the FBI. The former organisation is part of the repressive apparatus put in place by the Bush administration in the wake of 9/11. All this should surprise nobody because the occupy movement is becoming an increasing embarrassment to the capitalist class and their tame politicians, because it is providing a focus for social justice and radical reform, something the ruling class can't contemplate.

This kind of brutality is nothing new. Police were used to crush the student protest movement in the US in the late 1960s, and were used to break the miner's strike in the UK in 1984. I know about the latter because I was there and witnessed it. The USA has a history of brutality and violence used by the capitalist class against popular protest and organised labour. One of the most infamous incidents was the Battle of Blair Mountain in 1921 in which 15,000 armed miners battled with the police for five days, as a result of the brutality of the mine owners' attempts to crush the union, until the army intervened . In the UK we have seen recent moves by the police to intimidate protesters with heavy handed police tactics and plain clothes snatch squads reminiscent of the Stasi in the German Democratic Republic. Before the recent student demo on 9 November the police announced they were to deploy rubber bullets. All this is beginning to look like a police state. Just compare these two videos; the first is of plainclothes police arresting a student in Iran; and the second is plainclothes police arresting a student in London on the 9 November. Spot the difference? There isn't one.

Of course, as the occupiers have pointed out - 'you can't evict an idea'. In the UK Occupy London have responded to an attempt to evict the camp at St Pauls by taking over an empty building owned by bankers USB. They have called this event the "Bank of Ideas", this is a brilliant coup, and one which keeps them one step ahead of the capitalists class's attempts to close them down. That is what the occupy movement will have to do; stay peaceful, stay leaderless, think on its feet and continue to outwit the police and the so-called 'free' press.

What the crackdowns on protest in America have shown us is that there is really very little difference between the ruling class in the USA and in Egypt. The former may prefer to use lawyers and wear suits but they are just as determined to deny people their rights, criminalise protest and use brute force to hang on to power. Teargas and brutality are being used on peaceful protestors by both regimes as I type this. Again, spot the difference.

Saturday, 12 November 2011

So, have we screwed up Planet Earth?

The simple answer is no, the Earth will be around for a long time after we have perished, but it is beginning to look like we may have screwed up the planet as far as humans are concerned. The latest data from the International Energy Authority paints a disturbing picture. It seems that we are in danger of passing the point where we can prevent a global temperature rise of 2oC and damaging climate change, because we are continuing to build fossil fuel power stations, and that we have only five years left to do something about it.

We are always being told that capitalism can do great things and that the market can solve all our problems. But it is clear that the market is responsible for this particular problem. Its not just the demand for energy that is at the root of climate change but the fact that the energy companies are completely wedded to fossil fuel extraction. We could have gone down the renewable energy route years ago, putting ourselves in a much better position now. But what was the energy companies response to a shortage of easy to extract fossil fuels? Go for the harder and much more environmentally damaging fossil fuels like tar sands oil and shale gas from fracking. With capitalism the desire for profit obviously outweighs the desire to prevent irreversible climate change - here is a quote from Oil and Energy Investor:

Shale is no longer "the future" of natural gas... It's now... And fracking is paying-off in high profits for those who know how to take advantage of it. The reason is simple: Old natural gas wells around the globe are running dry, replaced by new shale wells. 
So now we know. It should come as no surprise, because capitalists put profit before people and the environment. But the energy companies are not just behind our addiction to fossil fuels, they are just as keen to discredit alternatives to fossil fuels, and the very idea of climate change itself. In the UK, Nigel Lawson, the former Chancellor of the Exchequer, is the front man for something called the Global Warming Policy Foundation, an energy company funded organisation which is dedicated to casting doubt on man made climate change, activities which were exposed in this article in the Independent. Lawson often speaks out about climate change and was apparently responsible for changing the policy of the Daily Mail against climate change.

On my desk I have a copy of a book called 'Natural Capitalism', which was published in 1996. In this book the authors, Paul Hawken, Amory Lovins and L Hunter Lovins, show how, using resource efficiency, we can create more goods using less materials, and much less energy, and recycle the outputs on closed loops that mimic how nature works. The authors have provided us with a solution to climate change and resource depletion. Any company which uses these methods is bound to be much more efficient and competitive than its rivals. But this hasn't happened, certainly not on any kind of scale that will help the planet. The reason why is that capitalism, far from being dynamic and innovative, is inherently conservative. People stick with what they know works, and what they know is profitable, and they also often have large amounts of capital tied up in plant and machinery which is simply out-of-date. I've posted about this problem before here.

Natural Capitalism in action

So what is the answer? Its simple. Governments bailed out the banks. Now they must make changes happen to prevent climate change. The move to renewables  must go ahead and the energy companies must be made to make that change. If they won't do it they must be nationalised. The solar energy Feed in Tariff (FIT) must be maintained at a reasonable level instead of being cut in half as this government is doing. We also have to make companies use resource efficient methods, both through incentives and regulation. We need a Green New Deal to insulate all our homes and create thousands of jobs. The market has failed us, and will continue to fail us. Its time that democratically elected governments  remembered what they are their for - to represent the interests of the people and the common good - not to bow down to the market.

Sunday, 6 November 2011

God's investment banker still doesnt get it

Nice to hear that the Church of England is beginning to catch up with the protesters at occupylsx. The recent statement by Rowan Williams, the Archbishop of Canterbury, that there is "widespread and deep exasperation with the financial establishment",  is what we should expect from the church - support for the poor against their powerful and rich exploiters - now known as the 1%.

Now, the Bishop of London, he of the chauffeur driven car, has appointed an investment banker to look at solutions to the problems identified by the occupylsx protesters, though you could be forgiven for thinking that a banker is perhaps not the best person to seek advice from, given the problems we have been suffering from since 2008. However, in today's Sunday Telegraph, Ken Costa, Chairman of St Paul's Initiative, has written about markets losing their "moral moorings". He is right of course, but what are his solutions? Well, there is a lot of stuff about civic duty. Essentially we need reform, and we need to get rid of "shareholder value", something I couldn't disagree with, and we need to " reconnect the financial and the moral", and "legislation might help with this", but not yet apparently. Then he goes on to make this telling statement:
"Those in power should understand that governments are incapable of creating new jobs and wealth, that is what a vibrant private sector is for, supported by a vibrant financial services sector. "
I find this statement worrying because it is plain wrong. It is factually incorrect. Of course governments can and do create jobs and wealth. The public sector is essential, not only for delivering services, but it also creates jobs in the private sector as well. What we need is more government intervention to create green jobs in the UK, especially for young people, because the private sector has failed to do so, and is incapable of doing so. What the crash and its aftermath have shown us is that the powers of the private sector are very limited indeed, and that we need governments more than ever to directly create wealth and to help the rest of society to create wealth.

What Costa's article illustrates is that he is trapped in the same 'free' market fantasy as are all neoliberals. Perhaps that's not surprising when we learn from his article that he has been a banker for 30 years. That tells us that he has been part of the problem, and is therefore unlikely to be part of the solution. His pious words about "moral moorings", and patronising comments about the "usual suspects" at occupylsx are a dead giveaway - if we want to get out of this mess we need a radical change of direction, not the tinkering with legislation, appeals to goodness,and papering over of the cracks - however worthy that may be.

Thursday, 3 November 2011

Neoliberalism is threatening to bring down the economies of the USA and the EU

What we are witnessing with the Greek tragedy that is unfolding is something worthy of Euripides, or, in a more contemporary form, Shakespeare. Greece is being torn apart by the Eurocrats, headed by  Sarkozy and Merkel, in their desperate attempts to preserve the Euro-empire. The Greek Prime minister, Georges Papandreou, offered a way out of the situation, by giving the Greeks a chance to vote against the bailout, but the self serving  political class in Greece look like scuppering this appeal to democracy by looking after their own skins and  bending the knee to the Eurocrats and the IMF.

Georges Papandreou

What is so ridiculous about all this is that the EFSF, which is supposed to bailout Greece, and is primarily intended to save French and German banks, is doomed to failure. It cannot work because the more austerity that is imposed upon Greece the less likely it is to be able to repay its debts. The Greek economy has already undergone a 15% contraction, and more austerity can only make this worse. As deficit reduction bites harder, the more it will contract the Greek economy, making the debt ever harder to pay off. The Greek economy is in a death spiral and the actions of the Eurocrats are self-defeating. As the situation gets worse, Greece will become more ungovernable. It may even become a failed state, and the likelihood that other EU members like Italy will begin to slide into the abyss will be increased.

The neoliberal-EU project enshrined in the Lisbon treaty has not only failed, but has seriously damaged the fabric of European societies.  Neoliberalism has wreaked similar havoc in the USA. The result is that once powerful western economies are now going cap in hand to China, which is a totalitarian waged slave-labour state, for financial handouts. The madness is complete, but the Eurocrats are so blinkered and institutionalised that they cannot see they are in danger of destroying the EU altogether.

There is only one solution. Let Greece default and leave the Euro, and then build the reconstruction of Europe through investment in the real economy, in infrastructure, and in jobs, through a Green New Deal. The Icelanders held a referendum which lead to a default, and an exit from debt-slavery, and the Greek people deserve the same chance.  Meanwhile, destructive neoliberalism must be chucked in the dustbin of history - where it belongs.