How do we wrestle fairness from a rigged economic system?

The problem in a nutshell - and this cartoon was drawn in 1972! [Image: Alan Hardman]

The problem in a nutshell – and this cartoon was drawn in 1972! [Image: Alan Hardman]

It’s terrific when an article makes you think.

Why Capitalism needs unemployment, by Cheltenham & Gloucester Against Cuts, tells us that unemployment is used as a weapon against the workers – with the threat of it used to force pay cuts on employees, while we are told to fear inflation if unemployment falls.

So fatcat company bosses win either way, it seems.

The article commented on Margaret Thatcher’s ideological mentor, Milton Friedman, who “understood that low levels of unemployment give confidence to workers, who can fight for better pay and conditions. When they’re successful, the profit margins of capitalists are reduced, causing them to put their prices up in response“.

We know this happens; we have seen it many times. Some may argue that it is different from cases in which shortages of particular commodities push up their prices and the prices of products that are made from them – but, with fuel prices as the only notable exception, have you ever seen prices drop after these shortages end?

The system is rigged to ensure that working people stay poor, either through pay cuts during high unemployment or inflation in low unemployment; meanwhile the employers and shareholders ensure that they stay rich, by sharing out extra profits gained by keeping pay low or by putting up prices.

What do they do with this money?

The answer, it seems, is nothing. They bank it in offshore tax havens and leave it there. This is why, we are told, Britain’s richest citizens have more than £20 trillion banked offshore at the moment.

That’s more than £20,000,000,000,000! Enough to pay off this country’s national debt 18,000 times over and still have plenty to spare. Enough to solve the problems of the world, forever. It is, in fact, more money than we can comfortably imagine.

It is doing nothing.

Faced with this knowledge, there can only be one logical question: Why?

Why rig the system so that ever-larger sums of money pour into these offshore accounts, if nothing is to be done with it? Where is the sense in that?

The only logical answer appears to relate to its effect on workers: Keeping the profits of their work away from the workforce means they are kept in misery and servitude to the ruling classes – the parasitical board members and shareholders.

There are knock-on effects. Taxpayers are hit twice – not only are they forced to grapple with ever-more-hostile pay offers, but their taxes pay for in-work benefits that subsidise corporate-imposed pay levels; they support people who have been forced into unemployment unnecessarily and the silly make-work schemes that are forced on those people by the Department for Work and Pensions, under threat of sanction.

It’s a protection racket. There should be a law against it. And this begs the next question: Why isn’t there a law against it? How can this corrupt system be dismantled and what should replace it?

That’s a very good question, because the other cosh being held over our collective heads is the possibility that firms will move abroad if new laws in this country threaten their massive profits. This is where an international agreement between nations or groups of nations would be very useful, if it was carried out in the right way – a Transatlantic, or Trans-pacific, Trade and Investment Partnership, perhaps.

And what do we see? Plans for such agreements have been put together and they do the exact opposite of what they should – tying the workers into ever-worsening conditions. This is why the TTIP, currently being pushed on the European Union, must be rejected – and why bosses will do anything to ensure it succeeds.

This is the situation. It seems clear that nothing will change it for the better until somebody has the courage to stand up to these manipulators (who were probably schoolyard bullies back in the day) and say enough is enough; change is coming – do what you will.

Tax evasion and avoidance is already a huge issue here in the UK; perhaps we need to make a criminal offence of manipulating the economy – with prison sentences for bosses who put their prices up purely to retain high profit margins when their salaries are already dozens of times higher than those of their workers.

But what else is needed? How can such a mechanism be brought in without scaring off business? Or should we let them go, and put something fairer in their place? Ban them from trading in the UK unless they conform to the new model?

These are ideas that need exploration – by many people, not just a few.

What do you think should happen?

Follow me on Twitter: @MidWalesMike

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  1. ellie guest May 12, 2014 at 8:48 am - Reply

    V4vendetta time

  2. hstorm May 12, 2014 at 8:54 am - Reply

    Another advantage for the fat cats when there is high unemployment is that Trade Union membership tends to decline – if you’re not in a job, you can’t pay your membership fee. So organised opposition to the movers-and-shakers becomes weaker.

    Fear-of-inflation is a phantom in more than one respect. It’s not just that it is no inevitability in times of low unemployment, but also, inflation *isn’t* all bad news when it happens. Inflation, so long as it goes hand-in-hand with a responsive minimum wage, does have a positive effect, which is that it forces rich people to spend more money and to hoard less of it. The more money moves around the system, and the less is sat on or lost to capital-flight, the healthier the economy tends to be, and rising prices will force the rich to spend more to keep their lifestyles ticking over at a standard to which they are accustomed.

    It is only when there is no responsive minimum wage, or a very stingey minimum wage as tends to be imposed in this country, that inflation becomes a major problem for people lower down the order.

  3. Jon Maiden May 12, 2014 at 8:55 am - Reply

    Introduction of an Unconditional Basic Income could be the single most effective, and simplest, means to correct the colossal failings of the labour market. It would give power back to the employees to source meaningful work, rather than simply be forced to accept any job under threat of destitution. It would also help to address a number of interlinked problems: overwork, unemployment, over-consumption, low well-being and the lack of time to live sustainably, care for each other and enjoy life. And would help to create a steady state, rather than a growth-dependent economy.

    • Ulysses May 12, 2014 at 9:47 pm - Reply

      Here here

  4. sdbast May 12, 2014 at 8:56 am - Reply

    Reblogged this on sdbast.

  5. Johannah Buchan May 12, 2014 at 9:02 am - Reply

    You’ve asked all the right questions but we’re bedeviled by a bunch of gutless politicians. They’ve either got their noses in the trough or they’ve got no cojones. I despair of the Labour Party. Terrified they’ll miss a wide open goal next year & terrified they won’t DO anything if they get in. The older I get the more I’m convinced we need an upheaval, a revolution even, something drastic to bring people to their senses. We need real leadership before it’s too late. Of course if Scotland vote for Independence I could always go home but then I’d feel like I was deserting my English friends – & that’s a weird feeling for a Scot Nat Republican!!

    • Allan j May 12, 2014 at 10:50 am - Reply

      The older I get the more I’m convinced we need an upheaval, a revolution even, something drastic to bring people to their senses.

      i have lost count of how many times and places i have posted similar to this,
      the sooner the people revolt the sooner something ill happen, hopefully it will be for the better and cause a complete turn around to how things are run, ie a total new system

    • Ian D Denyer May 12, 2014 at 8:16 pm - Reply

      The problem with the (frankly naive) “revolution/revolt” argument is that one has no idea – and no control – over what one will end up with….

      Meanwhile, we have a system that DOES allow for an alternative to the “nothing to chose between them” professional politician parties. The problem is that seemingly nearly all of those on Left who are disillusioned with said parties are happy to indulge in feelgood moaning, unthinking dogmatism and “comfort blanket” talk of “revolt” but haven’t the spirit, or the motivation/willingness to work to actually change anything via the ballot Box and establish party that actually represents their views…. Even the (God bless us) flash-in-the-pan UKIP dinosaurs have managed to do more to upset the Whitehall Village and had more influence on the political debate in this country in the last 5 years than all the “ain’t it awful” sirens, wannabe-Guevaras and Internet Warriors have over two decades…… If you seriously want to change things mobilise, organise, work together and convince people of your arguments. Without the commitment to do that all the web-posting in the world is just hot air….

      • Mike Sivier May 12, 2014 at 8:23 pm - Reply

        I’ll happily agree with most, if not all, of that.

      • Ulysses May 12, 2014 at 10:04 pm - Reply

        Me too Mike, violence will ultimately solve nothing

  6. hstorm May 12, 2014 at 9:08 am - Reply

    (Can I just make a quiet quibble, by the way? It drives me up the wall when people misuse the term, “Beg the question”. It *doesn’t* mean “To vehemently demand an answer to”. It means a recursion fallacy – to evade a question by providing a supporting argument which depends on its initial premise. E.g. “Das Kapital must be a definitive vision of the future, because Karl Marx said it was”. The assertion that Capital is reliable is made by the person who wrote it, so the conclusion that his word is reliable is itself based on his word.)

    • Mike Sivier May 12, 2014 at 9:09 am - Reply

      No, you can’t!
      (Oh, all right. I suppose I really do learn something new every day.)

      • hstorm May 12, 2014 at 9:10 am - Reply

        Oh all right, I’ll keep my mouth shut then. :-P

  7. beastrabban May 12, 2014 at 10:57 am - Reply

    Reblogged this on Beastrabban’s Weblog.

  8. jaypot2012 May 12, 2014 at 11:05 am - Reply

    I’m hoping for Independence – that’s the only way we are ever going to get away from Westminster!

  9. traveller47 May 12, 2014 at 11:24 am - Reply

    Think this is a bit simplistic. You make it sound as if “bosses” have some sort of conspiracy against workers. Surely what you are experiencing is that these bosses have a duty to ensure that the company survives and are trying to find ways of doing that. What we should be aiming at, in my humble opinion is that bosses (hate that word) and workers (also dislike that term) sit down and discuss together in an INTELLIGENT way methods of ensuring the best for all parts. If so called capitilists and socialists continue to blame each other for percieved wrongs we will never move forward. As far as tax dodging is concerened demand change to the antiquated laws, don’t blame those who use them.

    • Mike Sivier May 12, 2014 at 5:12 pm - Reply

      No, I don’t think bosses are trying to find ways of ensuring their company survives – not with the kind of inflation-busting wage increases they’ve been giving themselves. Their firms are NOT in any danger of going under at the moment, thank you very much!
      One way of dealing with tax avoidance laws would be to form organisations dedicated to taking advantage of them, in the same way the very rich do. Once working-class people start paying tax at just one per cent, the government might have a change of heart and change the laws. The disadvantage is that tax revenues would drop and services would be lost as a result.

  10. Jim Round May 12, 2014 at 1:40 pm - Reply

    Not going to happen anytime soon.
    Can you see most people doing without mobiles/ipads/tablets/TV’s etc…..
    All produced and provided by large corporations. Using Apple as a rough example, headquarters in the US but their goods produced in China, van you see them ever producing in the US or Western Europe?
    Going back to days of yore, it is (right or wrong) that the likes of Red Robbo and his fellow union barons opposed progression and had ridiculous and unworkable demands.
    They also saw former communist and socialist countries move towards the free market with some citizens prosperity getting better.
    The soloutotion could be a halfway house maybe.
    But I am still of the opinion that the very rich and big business will up sticks and leave if squeezed too much (Where are most of the UK billionaires domiciled, pretty sure it’s not the UK)

    • Mike Sivier May 12, 2014 at 5:08 pm - Reply

      Why not let them go, but tell them once they’re out, they can’t sell here? That would make a huge difference to their profitability.

      • Jim Round May 12, 2014 at 6:12 pm - Reply

        Can’t see that happening either Mike, can you see people doing without Branson’s Vitgin offerings, Mittal’s steel or the Oligarchs gas?
        Anoother point is that in many areas (Mid Wales especially) there are few megacorps (execpt for the likes of McDonalds) it is mainly SME’s that provide jobs outside the public sector, and few of those are well off, they need sensible incetives, whether that be through tax or something else.
        Coal mining and major manufacturing are not going come back, so who can provide the people of Llandod for example with good and well paid jobs?

        • Mike Sivier May 12, 2014 at 7:16 pm - Reply

          There’s a rumour going around that we might have a windfall in the area of environmentally-friendly transport (although I have no idea whether it’s well-founded or not).
          Nature abhors a vacuum. If the bigshots get told to sling their hook it’ll leave room for someone else to take their place.
          History tells us that the biggest obstacle to progress is unwillingness.

      • Jim Round May 13, 2014 at 8:52 am - Reply

        Society has gone to far down the consumerism route for protectionism, even Cuba has let the likes Starbucks set up shop.
        Do you remember the queues outside the first McDonalds in Russia?
        I’d also say it’s impossible to have everything we consume made here.
        What’s needed is realisation that the country is not just the South East and there is life beyond Watford Gap, taking the example of Nissan etc…
        Something is definately needed for the likes of The Valleys, parts of Yorkshire and places like them, what that something is, is another debate.

      • Jim Round May 13, 2014 at 6:28 pm - Reply

        I meant by another debate that it would fill many pages, too many words for this comment box.

      • Jim Round May 13, 2014 at 7:40 pm - Reply

        Can write a guest post on it if you like.

        • Mike Sivier May 13, 2014 at 9:03 pm - Reply

          I’d certainly look at it with a view to publishing.

    • Ulysses May 12, 2014 at 9:56 pm - Reply

      Yeah, yeah i can see Apple, for example, building a factory here in the UK
      If it aint built here, it cant be sold here. Flight of fancy, granted, but bring in legislation for that and the factories would rise

  11. amnesiaclinic May 12, 2014 at 3:43 pm - Reply

    Reblogged this on amnesiaclinic and commented:
    Very useful analysis by Mike Sivier with some interesting comments on ways to stop the corporate banksters from creaming off all the profits and sitting on them. A financial tax of 1% would mean we could pay no taxes and have a basic income of £7000pa. See Reset.

  12. LAWRENCE S. ROBERTS May 12, 2014 at 7:29 pm - Reply

    Significantly, most of The Super-rich increased the wealth gap with the G.F.C. of 2007-8. It almost looked engineered or at least taken into the calculation.

  13. maynon2013 May 12, 2014 at 8:01 pm - Reply

    its to do with shares..investors demand ever increasing returns which means pressure on keeping wages low compared to prices.the only way to beat them is create your own system,dont use the corporations,buy and sell in communities ,make your own income needs enough people to boycott them and let them know we want fair wages and help for those who need it,not this cruel agenda

  14. prayerwarriorpsychicnot May 15, 2014 at 11:30 pm - Reply

    Reblogged this on Citizens, not serfs.

  15. prayerwarriorpsychicnot May 15, 2014 at 11:46 pm - Reply

    Whatever happened to the Monopolies Commission? Wasn’t it dissolved yonks ago and then – not replaced by anything – just when something like it, was needed more than ever. Along similar lines, consumer protection was a very strong idea in the fifties, and then just fizzled out and completely forgotten it seems. At some point our political establishment seem to have decided they were no longer going to try to do what was best for the country, but only vested interests. And now in Western countries that seems to be the norm, and when ordinary people object and argue that govt should represent all of us and not a tiny elite, you are treated like you have got two heads. Was Thatcher the cultural turning point?

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