Banker's bonuses: why we are being screwed

In September 2008 after the collapse of Lehman Bros bank it became obvious to economists and senior government officials that the world financial system was in danger of collapse, and that banks would be wiped out in the process. In the UK Gordon Brown's Labour government took action and bailed out Royal Bank of Scotland (RBS) and Halifax Bank of Scotland and pushed through a merger between HBoS and Lloyds TSB. In the process the taxpayer acquired 84% of RBS and 47% of Lloyds TSB. The full cost of the UK bailout taking into account Northern Rock and other banks was a whopping £1.2 trillion. The bailout was repeated in other countries, with the TARP, for example, in the USA, and lead to the stabilisation of the global banking system.

What is critical about this is that if the bailout hadn't happened all the banks would have gone bust - not just those who were directly bailed out by the taxpayer. Since 2008 'free' market apologists have tried to claim that banks such as Barclays and HSBC were always OK, as if they would not have crashed, but this is not the case, the fact is that the global banking system was saved by taxpayers.

Lehman Bros HQ

Up to the collapse of Lehmans a culture of huge bonus payouts had become the norm in banking, and in fact when Lehman's collapsed they were still trying to pay out $6 billion in bonuses. After the bailout the culture of huge bonuses continued even at taxpayer 'owned' banks, much to the dismay of the taxpayers themselves. The banking collapse lead directly to an economic collapse which in turn has lead to a sovereign debt crisis.In the process, the UK economy has contracted by 7%. Having paid for the bailout we are now paying for the crisis with the Coalition government's austerity programme. The cost is increasing unemployment, pay freezes, pension cuts  and an attack on the living standards of all but the wealthiest. Bad as things are in the UK, they are far worse in countries like Greece and Ireland, and the Eurozone is itself in danger of collapse.

What does all this tell us? It shows the power of financial capitalism and that our democracies are dominated not just by financial capitalism but also the other big corporations. In the West, which has been hardest hit, politicians have put the interests of financial capitalism above the rights and interests of their own people. The aim has been to preserve the capitalist system and to continue 'business as usual' at all costs, even though it is obvious that the austerity programme in the UK and elsewhere isn't working, at that it will probably make things worse rather than better.

The latest manifestation of the row about bankers bonuses centres around Stephen Hester who is the CEO of taxpayer 'owned' RBS. He was awarded £963,000 in shares as a bonus this year, despite the fact that RBS is still struggling and 33,000 employees have lost their jobs. David Cameron claims there is nothing the government can do about this but that is clearly not true. The Independent revealed that there is nothing in Hester's contract that would prevent the government denying him a bonus. There have been claims that the RBS board would have resigned but so what? They are not the only people who can run a bank. The fact is that the government is taking sides and its not our side, its the bankers side. They are putting the interests of capitalists above our interests. RBS is clearly not being run in the national interest. The bank should be fully nationalised and turned into a green national investment bank to make the loans that  businesses need to help create jobs. That is something that RBS and the other private sector banks are failing to do.

The most dangerous man in Britain?

Who could this man be? David Cameron? Bob Crow? No. For me, Cameron is certainly number two but the most dangerous man in Britain is a man who was once very well known, and even now he still makes the odd appearance on Newsnight and Radio 4. This man is Nigel Lawson and he is the mouthpiece, or more formally Chair and founder, of something called the Global Warming Policy Foundation (GWPF). The GWPF - very grand title that - sounds like a bunch of concerned academics and citizens who want to spread the word about the dangers of climate change, but its exactly the opposite. It is a cover for heavyweight climate change deniers.

Before I say more about the GWPF lets have a look at Nigel Lawson's track record. His claim to public prominence comes from being Margaret Thatcher's Chancellor of the Exchequer for the period 1983-89, and a former Secretary of State for Energy. He was responsible for the notorious 'Lawson Boom' in the 1980s, substantial tax cuts for the better off, and massive deregulation of the financial sector . Although unemployment fell from a peak of 3 million, the boom lead to crippling interest rates of 15%. So, as deregulator-in-chief of the financial sector in the UK he already has much to answer for in terms of the current economic crisis we face.

The most dangerous man in Britain

But it was his tenure as Secretary of State for Energy which gives us a clue as to his new role as climate change denier-in-chief. The GWPF refuses to admit who its financial backers are but its not hard to imagine that some of them might have interests in energy generation. The GWPFs biggest coup was its involvement in 'climategate', when emails from the University of East Anglia's Climatic Research unit were hacked, and Lawson called for an independent inquiry.

Despite the fact that he has been widely critised and his comments have been described as demonstrably inaccurate, Lawson shows no sign of giving up. In fact I heard him as I was driving to work only the other morning extolling the virtues of fracking, pooh-poohing renewables as uneconomic - though this suggests otherwise -  and once again denying climate change saying "that there has been no global warming whatever so far this century". You can listen to it here.

Nigel Lawson is lucky enough to be nearly 80 years old. He won't be around when global temperatures have risen by 2 degrees to witness the harm that it will cause to people and the planet. He's all right jack, but we won't be, if his antics succeed in delaying the mitigation of climate change. In my view he is probably the most dangerous man in Britain.

The benefits cap is an attack on the victims of austerity

You have to hand it to the political right. They are the real masters of the politics of divide and rule. Recently they have been busy dividing public sector workers and private sector workers over pay and pensions. Now they are dividing those in work against the unemployed over the benefits cap. Cleverly, they have come up with, as they always do, a simple ruse to get the support of those in work, for their attack on the victims of austerity - the so-called benefit scroungers. This is typically simplistic right-wing distortion of the truth and is very effective.

In case you want to jump to any conclusions about my views - I think that people should find work if they can. But the whole issue of work is far more complicated than the media would have you believe.The problem for people in the UK is that they live in a capitalist economic system which creates unemployment, which increases in time of inevitable periodic crises, thus preventing the unemployed  from getting meaningful work. There are three important issues which those who support a benefits cap don't want to discuss, they are;

1. If benefits exceed the average wage, that clearly means the average wage is too low. Low pay has been a chronic problem in the UK for many years. The introduction of a minimum wage under the Labour government helped to redress this problem, but the minimum wage is still not a living wage. If workers were realistically rewarded for the work they do this wouldn't be a problem.

2. Unemployment; the real issue which underlies this whole debate about benefit caps is the unemployment caused by the Coalition's austerity programme. The capitalist economic system has always produced unemployment. It was Marx who identified this problem as the 'reserve army of labour'. We need a government which has the guts and gumption to create jobs, rather than destroying them through austerity. In the Green Party, we explained how this could be done in our manifesto with a call for a Green New Deal to create one million jobs.

3. Housing benefits payments at £20 billion wouldn't be so great if we had enough social housing with controlled rents instead of reliance on the rip-off private sector. Over the past 30 years successive governments have failed to provide social housing on anywhere near the scale needed. The UK has a chronic shortage of homes with many of the poor living in substandard housing because of the market ideology pursued by New Labour and the Tories. Promises to build new homes simply haven't been met.

New Labour and the Tories have sought to hide their neoliberal economic failures by blaming the victims, and dividing the nation, through bashing the unemployed, and now, a benefit cap. What we need is real economic and social change to create a society where jobs are the priority, and hard working families receive the real benefits of the wealth they create. The only political party in the UK which has a costed and coherent programme to bring about that change within the context of the growing threat of climate change is the Green Party. Come and join us in making that change happen.

'Free' market myths no.2: low taxes are good for you

The saying that 'only two things in life are certain, death and taxes' has been attributed to Benjamin Franklin, and taxes are certainly something which has vexed the political right for a very long time. The Republicans in America have set their face against taxes even if it makes economic recovery harder, and for the Tea Party low taxes is an article of faith. Surely they are right? Isn't it a no brainer? Low taxes have to be good for you, don't they? That is what we have been told almost day-in and day-out for the past 30 years, and, in that time, right wing governments have lowered Taxes all over the world. Are we better off because of this? If you take a hard look at what is happening - clearly the answer is no.

Pieter Brueghel the Younger, 'Paying the Tax (The Tax Collector)'

The simple fact is that low taxes only benefit the rich, or the 1% if you prefer, and the politicians who have been telling us that low taxes are good for us are well aware of that fact. In the USA we have seen an ever widening gap between the 1% and the rest of society, as they take a larger slice of the economic cake and pay less in tax. To be fair, some of the richest Americans, like Warren Buffet, have called for the 1% to be taxed more heavily. I'm not that bothered about the super-rich being taxed more heavily. What I want, in a democratic society, is for everyone to be taxed equally, and for workers to get a real share of the wealth they create. I don't want redistribution. Redistribution is only necessary in a capitalist society because the capitalists expropriate wealth from workers through the mechanism of surplus value, as Marx showed us. Everyone should be taxed equally. Full stop. If I earn £10,000 and pay £3,000 tax, you should pay £300,000 tax, to the penny, if you happen to earn £1,000,000. But in capitalist democracies tax regimes don't allow for this. The rich pay less tax on their earnings than the poor. 

We need taxes to pay for the infrastructure and services that we all depend upon. The 99% rely on those taxes to fund education, healthcare and public services that they all need. And it makes perfect sense for all for those services to be paid for collectively for the benefit of everyone. Only the rich can afford to pay for these services themselves, so they have a vested interest in low taxes. Don't be fooled. Low taxes mean diminished public services that most of us can ill afford to live with. Our politicians have betrayed us by promising low taxes and great public services. That can't happen because you only get what you pay for. Taxes, as long as they are fair, are a good thing for the overwhelming majority of citizens in society.

Forced free labour is pure Fascism

What do you call it when someone forces you to work for nothing, and who really benefits? Most people would call it slave labour, and rightly so, although I prefer to call it unwaged-slavery to distinguish it from wage-slavery. The latter occurs when people have to take low paid jobs, and I don't mean minimum wage jobs, because they have no choice. There is plenty of wage-slavery in the world and the beneficiaries are large corporations, many of which are household names. Wage-slavery is the basis of the Chinese 'economic miracle', how else do we get some many value-for-money commodities here in the West?

In the UK, as part of the latest project to humiliate and denigrate the 'benefit scroungers' - i.e. the unemployed - the Tory-led government has instituted a system where the unemployed are forced to work for corporations for no money, otherwise they lose their benefits. This is something I've blogged about in previous posts.  But now one of the victims of unwaged-slavery, Cait Reilly, who was forced to work in Poundland in order to get the princely sum of £54 benefit, has decided to fight back. She has instituted a judicial review of forced free labour and I wish her every success in her attempt to get back some dignity for the unemployed.

Of course, Cait's attempt to get justice for the unemployed in the face of the government's onslaught on the victims of capitalism has aroused to ire of pundits like the highly-paid Jan Moir, right-wing populist and uber-reactionary of this parish. According to Moir:

"........her stance is deeply insulting to those whose jobs actually do entail sweeping floors and stacking shelves. And who do so without complaint to feed their own families and to help to pay Cait Reilly’s benefits allowances. For nobody owes this girl a living. Least of all those who work for a living".

Wrong! Your stance, Ms Moir, is the real insult to all shopworkers, most of whom have to struggle on the minimum wage, which is little better than the £1.33 Cait was being 'paid' for her work. The truth is that unwaged-slavery of this sort can only undermine the conditions and pay for the paid shopworkers you profess to support still further, and the real beneficiaries are the corporations who make profits from this naked exploitation. "work for a living" is a nice way of putting it. Working to survive would be a more accurate description. Forced labour, which was used to such great effect by the Nazis, when an estimated12 million people were forced to work, and trade unionists were crushed, has no place in a civilsed society, it is pure fascism.

"Work sets you free" - the sign used at Nazi forced labour camps, most notoriously at Auschwitz 1

When the Scots leave the UK, we in the North should join them

There's been an awful lot of hoo-ha about Scottish independence in the last couple of weeks. Scottish First Minister Alex Salmond's plan to hold a referendum on independence sometime in 2014 - allegedly at the 700 year anniversary of Bannockburn - has caused a row between UK and Scottish ministers. Prime Minister David Cameron has claimed that it's the UK government's prerogative to decide when the referendum should be held and is insisting it should be in eighteen months time. Many people think that Cameron's intervention will make a vote for Scottish independence more likely, because it is well known that the Scots don't like the Tories and Tory governments. So unpopular are the Tories in Scotland that they now have only one MP out of a possible 59.

The monument at the site of the battle of Bannockburn, Scotland's greatest victory over the English

But here lies a problem for us the rest of the UK, if Scotland were to leave the UK, the biggest political beneficiaries by far would be the Tories. Labour currently have 41 MPs in Scotland. They would lose 41 MPs to the Tories' one. That is 41 MPs out of their current number of 256. Add to this the fact that the highly populated south of England is a Tory stronghold and its not difficult to see that if Scotland left the Union it would be very hard to dislodge the Tories from power in what was left of the UK. For many of the English this is an extremely unpalatable scenario, leaving us with a potential prospect of unending Tory government. So what are the options? If the English had adopted regional government, which was part of the Labour government's devolution plan, things might not be so bad, but they didn't. The no vote in North East in 2004 killed off that idea.

In my view the rejection of regionalism in 2004 was a big mistake, as was the rejection of AV by UK voters in 2011. People were swayed by arguments about the cost and failed to see the bigger picture and take an historic opportunity. Regional government would have been good for the North. For many years those in the North of England have felt that they are losing out to a concentration of power and wealth in the South. The very fact that government is based in London is bound to mean that companies will gravitate to that part of the UK.

If regionalism isn't an option, though some still think it is, maybe those of us who live in the North of England should consider joining the Scots, after all, we have more in common with them and the Welsh than we do with the southern English. Like the Welsh and Scots we have always favoured social democracy over conservatism. Should we remain in an England blighted by privatisation, the destruction of public services, growing inequality, and the dominance of the City? 

My view is that we would be better off without all that and we should leave what's left of the UK. I think it's unlikely the Scots will vote for independence and that 'devo max' is the most likely outcome. Whatever happens the debate about how the UK is structured has now re-opened. For me, the best possible option would be independence from the South, particularly the City of London, and leaving the rest of the UK, to get on with building a better society for Northeners.

Liam Byrne's approach to 'welfare' is reactionary nonsense

Let me start by telling you a story - once upon a time there was a party in the UK called The Labour Party. It arose from the trade unions and working class struggle. Its focus was social justice, and its agenda was about decent healthcare, jobs, housing, worker's rights, and education. After World War II, in 1945, The Labour Party won a spectacular election victory, and came into power with a mandate which produced what became known as the 'Welfare State', the NHS, better (council) housing and educational opportunities for all. It aimed to protect people from the vagaries of the market, and it succeeded. Millions of ordinary UK citizens, like me, were lucky enough to benefit from those changes.

Now, The Labour Party is a hollowed out shell, filled with middle class career politicians and MPs who have been parachuted onto the green benches of parliament, because they are Ed and Tony's cronies, replacing most of the working class antecedents who once filled many of those places. It is a party in thrall to the market, a centre-right party promoting the most reactionary kind of right-wing populism. The last Labour government, which preferred to be called  'New Labour', eagerly adopted the 'benefit scrounger' stance promoted by right-wing propaganda sheets such as the Daily Mail, and Minister James Purnell introduced measures to bash benefit claimants and the unemployed.

Step forward in 2012, Liam Byrne, the Shadow Secretary of State for Work and Pensions, to give us Labour's latest welfare vision. Byrne talks about William Beveridge whose report, published in 1942, paved the way for the Welfare State. Beveridge proposed measures, which I outlined above, to fight the five - "Giant Evils' of Want, Disease, Ignorance, Squalor and Idleness". This was to be achieved by the concept of 'Social Security', in which ordinary people paid National Insurance so that when they became ill or unemployed they could rightly claim benefits from the state.  Those 'benefits' were not 'something for nothing', they were entitlements which people paid for. It was a great system and it worked, especially in the context of governments which aimed to create full employment, as Byrne concedes in his article.

But what Byrne goes on to say is pure 'free' market orthodoxy and a continuation of New Labour's 'benefit scroungers' stance, which is all about blaming the victims of the market for their pitiful situation. It is reactionary nonsense. Those unfortunate enough to be unemployed in an economy where the 'free' market has failed to create anything like full employment are to continue to be battered and forced into some kind of workfare programme, which is simply unwaged-slavery, where people are forced to work for corporations for nothing. I have no doubt that a decent bloke like Beveridge would be horrified by the way in which the concept of Social Security has been deliberately twisted and undermined by neoliberal parties like Labour, the Liberal Democrats, and the Tories, and the shameful way in which the unemployed, disabled and poor are now treated. But what is most shameful is the fact that the Labour Party has helped to destroy what it created, kicking people when they are down, so that the corporations and the rich can benefit from unwaged-slavery and tax cuts.