Tag Archives: redistribution

Bank bailout was the greatest theft of wealth in history. Will Miliband reverse it?

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The money given to UK banks and the amount paid back by October last year – nothing but interest [Image: claritynews.co.uk].

There’s a passage in Russell Brand’s Revolution in which he quotes a chap called Dave Graeber as follows: “During the bailout of Wall Street, $30 trillion in support and subsidies went to the most powerful players… That was the greatest theft of wealth in history.”

Here in the UK, we were part of that. The Brown (Labour) administration paid a fortune into our own banks to keep them solvent because they were also participants in the global economic crisis – it had to, otherwise all of our savings would have disappeared.

We all thought this was reasonable, at the time. Shore up the banks, sure – they’ll pay us back in the long run. Have they paid us back?

Have they heck as like!

(That’s a colloquialism meaning, emphatically, no.)

The Conservative – sorry, Coalition – government has even been helping them steal some more. Look at this RealFare image:

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The bankers involved in the bailout were all on the top rate of tax – bank on it! – so there’s a double tax cut for them, and their employers enjoyed the Corporation Tax cut too. That’s a huge amount of money that the Treasury has given away to people who already owe the nation a huge amount of money!

Meanwhile George Osborne announces more billions of pounds worth of spending cuts, taking money from the poor.

You see – and perhaps this has been obscured lately – government spending involves the redistribution of wealth, and on the face of it this is to make society more equal. What the poorest can’t afford, the state will provide, to ensure a reasonable standard of living for everybody.

But George Osborne, David Cameron and their government have pig-headedly used the financial crisis and the debts created by it to punish the poor and increase inequality.

The bankers have not been asked to give back the money they were given to bail themselves out – that money has been stolen.

The government has withdrawn spending from people who need it and given the money to people who don’t in tax cuts – that money has also been stolen.

Just because it doesn’t appear in the statute books as an act of theft doesn’t make it any less so.

And now it seems another banking crisis is on its way – because the people who caused the last one are still in charge, haven’t learned their lesson (why should they? They were rewarded for the last crisis), and are hell-bent on repeating the calamity because the only people it hurt were too poor to do anything about it – people like yourself.

Look at this, by Michael Meacher MP: “Six years after the financial breakdown in 2008-9 it is therefore disturbing to see the UK’s Financial Conduct Authority seeking public acclaim for the large increase in financial penalties it has imposed on miscreant banks, as though this has changed the culture of hubris that has infected the major banks over the last decade or more.

“The FCA has certainly imposed fines of £1.4bn on the UK banks in this last year, but that is… too modest by comparison with the enormity of their regular annual profits to change the City’s amoral mindset, and above all focused on the banking institutions themselves (the shareholders) rather than on the real perpetrators (the top executives and traders).

“Not a single top executive in the UK financial sector has been convicted and sent to prison, even for such egregious offences as rigging the Libor and forex markets.”

Ed Miliband has promised to reform the banks, “so they support small businesses” – is that enough?

In September 2012, he promised that, if banks did not separate their retail and investment arms, a future Labour government would break them up (with the aim of protecting personal account holders from debts created by the gambling of the so-called ‘casino’ bankers) – is that enough?

What will be enough?

From where this writer is sitting, the banks and financial institutions are sitting on billions – if not trillions – of pounds of money that doesn’t belong to them, while millions suffer and starve.

Going back to Revolution, Russell points out that this kind of money could cancel the debts of everyone, not just an elite; it could create employment and ‘ease’ life for ordinary people, not just an elite.

Ed Miliband could win an election on this. If he said “A Labour government will take your money back from the banks and use it to improve the lives of everyone,” he’d have a landslide on his hands.

How about it, Ed?

Follow me on Twitter: @MidWalesMike

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Income inequality growth means Coalition was either lying or stupid

[Image: Inequality Briefing.]

[Image: Inequality Briefing.]

How nice of the Organisation for Economic Co-operation and Development (OECD) to remind us all, in its new research, that income inequality has a “statistically significant impact” on economic growth!

Perhaps its next report will be entitled “Egg-sucking for grannies”.

It seems that hardly a day goes by without someone telling us this simple fact of life. It isn’t that long since Inequality Briefing told us that a reduction of the gap between the richest and poorest in the UK – to the levels in Denmark or the Netherlands (both of which are roughly on the same level as this country economically) – would put an extra £2,500 in every household’s budget.

That, in turn, would give the economy a major uplift because it boosts spending power. More money would flow through the system and the fiscal multiplier would be higher – meaning the amount of value it creates as it works its way to the Treasury as tax payments would be greater. Then – in a properly-working economy – it would go back into the economy as government investment and the process would start again.

We don’t have a properly-working economy; we have a Tory economy.

That’s why the message has to be repeated constantly, in the same way a teacher might have to repeat a lesson to an uncomprehending child (in this case, George Osborne).

The OECD’s finding that redistribution of wealth via taxes and benefits does not hamper economic growth will fall on deaf ears while George Osborne is the resident of 11 Downing Street. He has been cutting taxes on the rich, and reducing benefits for the poor.

According to the OECD, the gap between rich and poor is at the highest level in 30 years among its 34 members. The richest 10 per cent earn, on average, 9.5 times the poorest whereas – in the 1980s – they earned 7 times as much. Osborne thinks this is a good thing, even though the economy is stuttering on the edge of another precipice.

His policies are designed to increase the income gap: Benefits have been capped to ensure they do not increase in line with inflation – meaning employers are free to pay their workers less, saying that there are plenty of unemployed people who would be happy to take the lower amount. Trade unions are toothless, having had all the fight taken out of them during the first neoliberal Tory government of the 1980s.

The result will be less money flowing through the economy, meaning lower tax income for the Treasury, making it harder to provide public services (as Osborne intends). This provides an excuse for public services to be cut in favour of inferior but more expensive privatised systems that put even more cash into the hands of the rich and starve the economy still further. Debt increases exponentially and the United Kingdom doesn’t just fall over the economic precipice – we leap into the chasm like a lemming in a Disney movie.

The fact is, George Osborne is a Tory. He’ll never accept that his ideas are wrong for the United Kingdom. Whether that means he has been lying to you about his plans, or he is just really, truly stupid, we may never know.

So the OECD’s message isn’t for him at all.

It’s for you – and anybody else who will listen.

The only way to improve our standard of living is to rid the country of Tory neoliberal economic idiocy, by voting them out at the next general election, and taking steps to ensure they can never return on the back of the discredited foolishness they’ve been peddling to us.

The only way that can happen is if we – individually and personally – take responsibility for educating the people around us to understand the faults in Tory ideology and the dangers they represent.

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Party before people – the problem with backbenchers

131221backbencher

Let’s look at my constituency MP, Roger Williams. He is a backbencher, not directly involved in policy matters, but he is also an illustration of what is wrong with the Coalition government.

I have no doubt that Roger genuinely wants to help people. Unfortunately loyalty to his party (the Liberal Democrats) and the Coalition means that something happens whenever he gets into the Commons chamber, and his concern for his constituents gets left at the door or perverted to mean something else.

Look at his performance during the food bank debate. The first thing he said was, “I felt very uneasy that some of the most vulnerable people, such as those I have met in my constituency, were being used as a political football across this Chamber. They would not have wanted that. They often feel a sense of indignity about going to food banks. They feel that it is in some way their own fault, but in many cases it is not their fault at all.”

There are worse things to be than a “political football”, Roger. If you are in serious financial plight because of government decisions, for example, it is far worse to be ignored.

He seemed woefully ignorant of the number of food banks in his Brecon and Radnorshire constituency, naming only the facility established by the New Life Church in Llandrindod Wells (which officially opened last summer but had been running itself in since the early months of the year) and one that is planned in Brecon.  The food bank in Knighton was established in October 2012, and there are others in Hay-on-Wye and Ystradgynlais. I believe Rhayader is covered by a ‘satellite’ of the food bank in Llanidloes, across the Montgomeryshire border. This means almost all the major towns are covered, and I know efforts are being made to bring coverage to as many villages as possible, also.

Rather than discuss how the government could help rid his constituency of the need for food banks, Roger unwisely decided to talk them up as valuable additions to the community: “Before the food bank was established in my constituency, I had no organised place to refer people to… At least now I can direct them to somewhere they will get help.”

That is not the point; they should not be necessary in the world’s seventh-largest economy. There is no less money in the UK now than there was in 2010 – clearly somebody is hogging it all for themselves. Shouldn’t Roger – and his fellow backbenchers – be trying to secure a more equitable redistribution of wealth?

Perhaps he thinks this can be found through work, which he said “is the best way out of poverty”. We all know that, under the Coalition government, this has become a hollow lie – more working families are in poverty than workless or retired households put together, because of the policies of Mr Cameron’s government.

At least he agreed that “work is not always available for people”. This provided him with an opportunity to discuss the benefit system, whose failure is an equal cause (with poorly-paid work) of the need for food banks.

Guess what? Roger thinks his government is “making progress to make it better”. You may find this observation delusional when coupled with his next observation – that “Jobcentre Plus seems to be using different criteria in different towns to impose sanctions on people. Obviously, when sanctions are imposed, people are left in great difficulty.”

These statements are mutually exclusive. The government cannot be improving the benefit system for claimants when its staff are deliberately bending the rules to cut payments for those who need them.

In the final analysis, Mr Williams appears confused and bewildered – a poor representative of his constituency but an excellent example of the Coalition government’s policies.

He acknowledges that people hate having to attend food banks, but welcomes their growth in his constituency – even though he doesn’t know how many are here already.

He follows the party li(n)e that “work is the best way out of poverty”, in the face of all the evidence that his government’s policies are worsening in-work poverty.

And he tells us benefit claimants are getting a better service – then criticises Jobcentre Plus for the arbitrary and underhanded way it removes that service from people who have nothing.

Perhaps he will be better-informed after he meets ministers “to find out why the sanctions in different jobcentres have different criteria; why they have different systems for writing to and contacting people in order to encourage them to attend meetings; and why, if people do not attend those meetings, they get sanctioned”.

But he will probably leave those concerns at the door, next time he enters the House of Commons.