Notes On The News
by Gwydion M Williams
- Thatcherism – Full of False Promises
- Young People Suffering
- Economic Stagnation: Praise the Bankers
- The USA Needs State Power
Remember Trickle-Down? If the state stopped hampering business, business would deliver so much extra wealth that we’d all be much better off. Total nonsense – the 1980s saw much the same rate of growth as the 1970s, despite the vast bonus of North Sea Oil. Things then got worse, with no return to the excellent growth rates Britain had in the 1950s and 1960s.
That’s not to say that Thatcherism failed – not for the people who ran it. Who hired praise-singers to bless it in the ‘free’ press. Who gave nice fat prizes to economists who ignored reality and spun dreams about abstract perfect markets. Wealth for the very rich increased nicely, way ahead of the rest of the society. Britain is not as bad as the USA, where most of the working mainstream are devout believers in ‘rugged individualism’ and are worse off than they were in the 1970s. But if we’d had a genuinely conservative government in the 1980s instead of radical-right Thatcherism, 90% of the population would be distinctly better off in terms of cold cash. Also better off in terms of job security and living in a much nicer society.
Note I say 90% and not 99%. The ‘1%’ got the lion’s share: a majority have lost out. But don’t forget the Intermediate 9%, the rest of the First Decile of wealth. These have broken even, doing quite well and rating themselves superior to the 90%. These are also among the most active, determined and articulate people. They haven’t been gainers from Thatcher’s Radical-Right policies, but economically they have not particularly lost from it. But from a selfish point of view, they are now at risk from the general social strains and demoralisation caused by the 1% sucking up wealth that should have gone to the 90%. The Labour Party will need to appeal to the selfish interests of such people, as well as to a principled minority, to win elections.
Explain also that the ‘1%’ are a More-Than-Millionaire class. To have investible assets worth a mere million wouldn’t quite be an entry ticket to this dominant class. To have that million based on the value of your house or pensions savings would put you comfortably among the Intermediate 9%, but well outside the privileged and flourishing 1%. This must be said, because one survey found that fully a fifth of US citizens believed themselves to be part of the top 1%, with another fifth expecting to end up there. (And 13 out of every ten US citizens can’t do simple arithmetic.) But most people know that they’ll never be millionaires short of winning the lottery. Talked to correctly, they might wise up and vote accordingly.
I’m sure also that far more people would place themselves in the ‘Intermediate 9%’ than actually belong there: that’s human vanity. Allow for it. Emphasise that this middling 9% – the real Middle Class – have gained nothing from seeing their society trashed. Unlike the More-Than-Millionaire class, they can’t cut themselves off from crime and disorder.
Corbyn and the rest of the Labour Party should be hammering these points. Emphasise Thatcher’s false promises. Never mind whether the Tories were lying or just out of their depths. They got elected using all sorts of promises, most of them not met.
The Tories used to be a genuinely conservative party, maintaining organic links in a changing world. A lot of voters still think they are. They too need to be persuaded that the Tory Party is now dominated by people in the grip of a Radical Right delusion. People who react to every setback and failure with more of the same.
Old people are much more likely to vote that young people. Old people are better looked after than in the 1970s, whereas young people are worse looked after. Is it just possible these two facts are connected?
Far too many young people seem proud of not seeing it so. They don’t know what’s wrong with life, but they do know that voting will make no difference. Who do you think gave them that message?
Old people take a different view. Pensions are comfortable, and they have free travel and many other benefits. The sorts of things that have mostly been swept away in the name of ‘efficiency’ by the New Right. But when it was suggested that cheques were a pointless anachronism in the digital age, old people made it clear that this was unacceptable. And indeed, the idea was dropped.
What else has been done to the silly young people who think it is cool and clever not to vote? Mass unemployment, obviously. Unemployment is the norm for an industrial society, but it is not something beyond the power of human wisdom to fix. After World War Two, most people in the West concluded that mass unemployment had caused the spread of both fascism and communism. So for a time, they made sure that there was virtually no unemployment. Thatcherism and Reaganism got support from the ruling class because they noticed that Global Communism was losing popular support and figured that fascism was never going to revive. (Not being smart outside of day-to-day manipulation, they mostly refuse to accept that both the rise of Islamism and populist racism are somehow connected with the unemployment that gives them vast immediate power over their own workforce.)
What else? Remember the ‘property-owning democracy’? Removing controls on rents meant it was often easier to buy – for a while. But this pumped up the prices:
“The number of young working-class households who own their own homes has declined by 20% since David Cameron came to power… The overall number of under-35s who own their homes has fallen by 280,000 households since 2010, with the drop more marked among those who do routine or manual work, or are unemployed.”[A]
“Nine out of 10 Britons on modest incomes under the age of 35 will be frozen out of home ownership within a decade, according to a study from a leading thinktank that lays bare the impact of surging property prices on the young….
“Home ownership was increasingly becoming the preserve of the well-off and the elderly.
“In 1998 more than half of people aged 16-34 living in households with incomes between 10% and 50% of the national average were buying their own homes. The percentage had dropped to 25% in 2013-14 and was on course to be 10% across the UK as a whole by 2025. In London it is forecast to be just 5%.”[B]
That applies to the whole country, except where local industries have closed and houses are practically worthless. London expands as a global financial centre even while Britain’s productive industry withers: this has jacked up the prices. It is a haven for all sorts of dirty money, including money looted from Russia when its economy was being disorganised and shrunk during the 1990s.
Most ordinary people are being priced out of home ownership – but some accidentally acquire wealth they never worked for. I could easily have been one such. I moved out of London because of my job. If I’d stayed there, my modest flat in Hackney would have netted me more than half a million and I’d be part of the very comfortable First Decile of wealth. But really, such a system is absurd.
Capitalism is a system of subversion favoured mostly by right-wing people, who have a foolish belief that the things they cherish will survive it. Marx was the first person to see this from a left-wing and progressive viewpoint. Reactionaries also see the link, and there used to be a large stratum of intelligent conservatives who knew that commerce must be regulated and limited if the things they valued were to survive. Thatcher and Reagan dogmatically believed the opposite, and intelligent conservatism is largely extinct – which may mean that the current success of the New Right is a swansong and it might all suddenly collapse. (Just as the Soviet system collapsed very suddenly after having apparently been rallied and made formidable by Leonid Brezhnev after he crushed the more serious reformers in the late 1960s.)
It is convenient for right-wingers to assume that commercial profit indicates where the wealth has been created, rather than where it happens to emerge. Convenient, except that it is not true. Basic science appears as a cost, but large parts of it are the seed-corn for Applied Science, Technology and often whole industries. Faraday famously predicted to Gladstone that electricity would soon be something to be taxed, at a time when it appeared just as abstract knowledge. Later on, a scientist called Heinrich Hertz spent a lot of effort producing and measuring some invisible rays, for no better purpose than to test a controversial theory about electricity and magnetism. He didn’t see any practical use for them. It was left to Marconi to notice the value of radio waves. (He was also exceptional in being a pioneering inventor who also got rich. And he was a fan of fascism, but that’s another story.)
Education is an even clearer case. It is a wonderful source of wealth, and successful countries fund it generously. Fee-based education leads to bad allocation. Private education gives privileged children better exam results and better access to the good universities: rational selfishness for the parents of those children, but not so good for the society as a whole.
The system is in big trouble, has been from 2008, but seems determined not to change. Surprisingly, they have got away with it so far. But ideas that had already failed once are now failing again. Yet Cameron is wonderful at giving the appearance of smooth confidence, even as everything falls apart. That’s the Public School tradition, you are trained to appear wise and in command, even when ignorant and silly. And get a false view of the world, a leftover from the British Empire, whose ruling class failed to cope with the new world they had brought into existence. They paid far too little attention to science or to non-European cultures. Instead they perfected the mass production of useful human shells that the ruling class can wear to appear wise.
(In some cases, the shell merges with the actual person and they become one. Such characters were always found at various levels, but never at the very top of the system.)
New Labour was unreasonably respectful of Thatcherism. Unable to disentangle the genuinely conservative elements from New-Right fantasy and ignorance. So bad finance was treated as sacred wealth-creation:
“Traditionally, the truly risky activities in finance happened in firms organised as partnerships. Top management were personally liable, meaning that if things went well, managers might get to buy a wonderful extra house – the bonus. But if things went wrong, they might have to sell their house – the malus.
“This system exerted a powerful discipline. Management had every incentive to be on top of what its people were doing, to not let the organisation grow to an unmanageable size and to give lots of power to its risk and compliance officers – those with the task of blocking reckless or illegal plans. There was an equally strong incentive to reward and encourage loyalty: the Thursday after-work celebration to mark staff members’ 15, 20 or 25 years of service was a fixture.
“But in the 80s and 90s waves of deregulation hit. Firms were allowed to list on the stock exchange or be taken over by a publicly listed bank, putting an end to personal liability. Even worse, in this new set-up the bonuses stayed but the risk of being ruined personally when the firm went down was shelved.
“Now risk and compliance staff stopped being the eyes and ears of top management… The ’20 years’ service’ parties have become a thing of the past, as loyalty has been replaced by ‘liquidity’. Within five minutes, and without prior warning, banks can get rid of bankers and do so all the time: ‘executions’, they call this process in the City, or ‘waves’ and ‘culls’. On the other hand, banks know that competitors can poach their people at any time. Zero loyalty cuts both ways.
“This blueprint for short-termism defines the modern, publicly listed megabank. The biggest are global empires with hundreds of thousands of employees, engaged in widely different activities, often of great complexity. The Big Short makes clear that before 2008 the top people had no idea what was really happening down the ranks. And why would they? They were not personally liable and as long as things went well they were cashing in life-changing rewards. At worst they would lose their jobs and stock options. What kind of deterrent is that?”[C]
The start of 2016 saw a wave of stock market falls. Something worse may be coming. But whether anything gets fixed remains moot.
“The only way in which our people can increase their power over the big corporation that does wrong, the only way in which they can protect the working man in his conditions of work and life, the only way in which the people can prevent children working in industry or secure women an eight-hour day in industry, or secure compensation for men killed or crippled in industry, is by extending, instead of limiting, the powers of government.”[D]
That was Theodore Roosevelt in the 1912 Presidential Election, where he came second as Progressive candidate. Woodrow Wilson won in 1912 and again in 1916, promising then to stay out of World War One. In 1917, he took the USA into that war.
Theodore Roosevelt’s entire speech can be found on-line[E] and is worth reading. With a few small changes, it could be delivered today by Bernie Saunders or Jeremy Corbyn.
“The people of the United States have but one instrument which they can efficiently use against the colossal combinations of business—and that instrument is the government of the United States (and of course in the several States the governments of the States where they can be utilized)… It is absolutely impossible to limit the power of these great corporations whose enormous power constitutes so serious a problem in modern industrial life except by extending the power of the government…
“These great corporations rarely want anything from the government except to be let alone and to be permitted to work their will unchecked by the government. All that they really want is that governmental action shall be limited. In every great corporation suit the corporation lawyer will be found protesting against extension of governmental power. Every court decision favoring a corporation takes the form of declaring unconstitutional some extension of governmental power. Every corporation magnate in the country who is not dealing honestly and fairly by his fellows asks nothing better than that … there be stringent limitations of governmental power.”
This last no longer applies. At the start of the 20th century, private corporations could indeed run a successful economy with a relatively small government. That ended with the Wall Street Crash and Great Depression. Nowadays they cluster around a huge state machine and know they need it. The New Right has not shrunk the state and will not. They just divert the benefits from the poor to the rich.
After decades of government by hypocrites and weakling, Saudi Arabia may now be back in the hands of serious Wahhabi Muslims. Heirs of a grand warrior tradition, but for decades they saw themselves as an imperilled outpost that needed the USA to survive. That applied when Saddam Hussein invaded Kuwait. But the world has changed since 1991, with a grand revival of reactionary and right-wing forces after the fall of the Soviet Union.
In the current war in Syria, they are maybe stringing along the USA. Or maybe the USA still sees secular rulers like Assad as the main target.
The dangers are considerable. Sincere Wahhabi Muslims may see a possible End of the World as nothing to worry about: Allah will look after his own.
“South Sudan is on the verge of going bust, its dollar reserves (its only means of buying food and goods from abroad) standing at zero. Now there is an expectation that the International Monetary Fund may be asked to step in…
“So where has the money gone? In neighbouring Kenya and Uganda, property records show some of the best houses in the smartest suburbs are registered under the names of high-profile South Sudanese politicians and bureaucrats. Many such homes are worth more than $1m.”[F]
I said at the time that forcing Sudan to give independence to its rebellious south would produce nothing good.
Don’t compare the current US system to Fascism. Fascists believed in looking after those they defined as ‘their people’, however vicious they were to those they rejected. The military in particular were looked after, up until the time that fascist leaders got over-bold and got them killed in vast numbers. But today’s New Right believe in saving money and privatising.
“From the moment the US launched its campaigns in Afghanistan and Iraq, the Pentagon ordered the use of open-air burn pits to dispose of the wars’ massive volume of waste. The military relied heavily upon these sprawling ditches, which burned around the clock to consume the tens or even hundreds of tons of junk generated daily.
“Among the other hazardous items service members recall being burned are: petroleum, oil, rubber, tires, plastic, styrofoam, batteries, appliances, electrical equipment, pesticides, aerosol cans, oil, explosives, casings, medical waste and animal and human carcasses…
“These materials converged in a toxic plume that hovered over the base, and seeped into soldiers’ sleeping and working quarters, which were often a mile or less away.”[G]
Previous Newsnotes can be found at the Labour Affairs website, https://labouraffairsmagazine.com/past-issues/. And at my own website, https://longrevolution.wordpress.com/newsnotes-historic/.