29 September 2016
14 September 2016
10 September 2016
Private Property and Neoliberal Religion
I'm still slowly reading and thinking about The Communist Manifesto.
Doing away with private property mainly affects the bourgeoisie because they have appropriated nine-tenths of the property. Those who work for a living, especially in the mid-19th Century had very little to lose from this policy.
Since then I think things have shifted. The 1% have encouraged the middle-classes to aspire to climb the social ladder, to climb the housing ladder, and so. The idea is that if one only climbs the ladder it becomes a stairway to heaven - one can retire to the 1%. The narrative is striking religious in tone. It imitates elements of the Egyptian Book of the Dead for example and of course Christianity. The major difference is that whereas religion encourages people to accumulate good deeds as defined by some divine code, the Neoliberal religion encourages and rewards the accumulation of wealth. Wealth is the modern measure of morality. And one only becomes wealthy by appropriating the products of the labour of others. As such the supposed stairway to heaven becomes a highway to Hell for most people.
As immoral as they might be by other standards, the 1% are deemed good by their own lights simply because they have accumulate much wealth. Wealth is the measure. The wealthier a person is, the more moral they must be. This is the essence of Neoliberal morality. This is why no modern government has been interested in perusing tax reforms or chasing tax reforms. The 1% see taxation as theft of their rightly acquired wealth by people who have not earned it. They believe that "unearned wealth" cannot be spent wisely. No government can spend wisely.
The internal contradictions of this narrative about wealth and accumulation are not apparent to those who live by the Neoliberal creed. But even in 1848 Marx and Engels saw the incoherence of this worldview. As they say "bourgeois society ought long ago to have gone to the dogs through sheer idleness". The wealth of the 1% is not earned. At best it is acquired. But the fact is that wealth is accumulated by the appropriation of the products of other people's labour. In other words, as French anarchist Pierre-Joseph Proudhon said, property is theft (this was in 1840, a bit before the Manifesto).
It would not be so bad if the 1% were not so obviously stupid and incompetent. If they were some kind of benevolent tyranny that cared for the people and the environment they would be a lot less objectionable. Instead we see consistent mismanagement of the world by the 1%.
It is now clear that if we do not put the breaks on and change direction, we will be facing environmental catastrophe on several fronts: toxic, mutagenic, and carcinogenic pollutants, warming, flooding, extreme weather events, species deaths (bees are a particular concern), and so on. This is not because the 1% are doing such a great job of managing things. It's because they are stupid and incompetent. They behave like monomaniacal psychopaths. And really, we should treat them like psychopaths.
"You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence is solely due to its non-existence in the hands of those nine-tenths."
"Communism deprives no man of the power to appropriate the products of society; all that it does is to deprive him of the power to subjugate the labour of others by means of such appropriation."
"It has been objected that upon the abolition of private property all work will cease, and universal laziness will overtake us.
According to this, bourgeois society ought long ago to have gone to the dogs through sheer idleness; for those of its members who work acquire nothing; and those who acquire anything, so not work."
The Communist Manifesto. 1848.This narrative is not unfamiliar, though again it is striking how pertinent this social analysis is 150 years later. Its clear that mainstream ideas of private property are constructed by and for what we would now call the 1%. Oxfam said in January 2016 that the wealth of the 1% was now equal to that of the 99%. They wish to protect that they have; but what they have comes from the exploitation of the labour of others. They appropriate all the products of society and dole out a minimal amount to workers. Too much, they argue will allow the inherent laziness of workers to manifest.
Doing away with private property mainly affects the bourgeoisie because they have appropriated nine-tenths of the property. Those who work for a living, especially in the mid-19th Century had very little to lose from this policy.
Since then I think things have shifted. The 1% have encouraged the middle-classes to aspire to climb the social ladder, to climb the housing ladder, and so. The idea is that if one only climbs the ladder it becomes a stairway to heaven - one can retire to the 1%. The narrative is striking religious in tone. It imitates elements of the Egyptian Book of the Dead for example and of course Christianity. The major difference is that whereas religion encourages people to accumulate good deeds as defined by some divine code, the Neoliberal religion encourages and rewards the accumulation of wealth. Wealth is the modern measure of morality. And one only becomes wealthy by appropriating the products of the labour of others. As such the supposed stairway to heaven becomes a highway to Hell for most people.
As immoral as they might be by other standards, the 1% are deemed good by their own lights simply because they have accumulate much wealth. Wealth is the measure. The wealthier a person is, the more moral they must be. This is the essence of Neoliberal morality. This is why no modern government has been interested in perusing tax reforms or chasing tax reforms. The 1% see taxation as theft of their rightly acquired wealth by people who have not earned it. They believe that "unearned wealth" cannot be spent wisely. No government can spend wisely.
The internal contradictions of this narrative about wealth and accumulation are not apparent to those who live by the Neoliberal creed. But even in 1848 Marx and Engels saw the incoherence of this worldview. As they say "bourgeois society ought long ago to have gone to the dogs through sheer idleness". The wealth of the 1% is not earned. At best it is acquired. But the fact is that wealth is accumulated by the appropriation of the products of other people's labour. In other words, as French anarchist Pierre-Joseph Proudhon said, property is theft (this was in 1840, a bit before the Manifesto).
It would not be so bad if the 1% were not so obviously stupid and incompetent. If they were some kind of benevolent tyranny that cared for the people and the environment they would be a lot less objectionable. Instead we see consistent mismanagement of the world by the 1%.
It is now clear that if we do not put the breaks on and change direction, we will be facing environmental catastrophe on several fronts: toxic, mutagenic, and carcinogenic pollutants, warming, flooding, extreme weather events, species deaths (bees are a particular concern), and so on. This is not because the 1% are doing such a great job of managing things. It's because they are stupid and incompetent. They behave like monomaniacal psychopaths. And really, we should treat them like psychopaths.
09 September 2016
Capital as a Social Power
"Capital is a collective product, and only by the united action of many members, nay, in the last resort, only by the united action of all members of society, can it be set in motion". The Communist Manifesto. 1848.This comes from the justification for the abolition of private property in the Manifesto. I found I was shocked by the bald statement: "the theory of the Communists may be summed up in the single sentence: Abolition of private property".
What Marx & Engels are getting at, it seems, is that without the concerted effort of workers, capital would never increase. One person working alone can seldom produce much in the way of surplus and so their capital grows slowly if at all. Capitalists exploit the labour of many workers to make their own capital grow, while the capital of the workers themselves does not grow. In many cases it shrinks. This is especially so in the developed world post-2008 financial crisis. We've seen wages falling, conditions of employment being undermined, at the same time as corporate profits rise, shareholder dividends rise, and CEO salaries rise. And yet those same people whose capital continues to grow while the capital of the workers shrink, refuse to pay their taxes. And workers are further enticed into debt slavery to the banks - UK household debt is 150% of income and rising.
Personally I don't think the abolition of private property is a viable solution. Where it has been tried it is simply replaced by other forms of tyranny and exploitation that are at least as bad as, and have frequently been worse than, capitalism.
One potential model is the John Lewis Group one of giving employees shares in the company. This allows workers a greater share in the profits, when there are profits. Of course this assumes that profits are declared rather than hidden. It would not work in the multinationals who routinely hide profits in order to avoid paying taxes (e.g. Apple. Amazon, Starbucks, Google, etc.)
At the very least we need to acknowledge that if someone has got rich, it is by taking more than their fair share of the profits or by inheriting land (and all that land implies in the production of wealth). No one person working alone can become a billionaire. For every billionaire there are thousands of hard-working people, who just get by. The products of their labour are taken and mostly redistributed to the rich, who then hoard it or indulge in conspicuous consumption. This is exploitation. In a better world everyone would benefit from their labour. If employers paid their employees the full value of their labour, there would be no billionaires.
No one who works full-time should struggle to pay their rent, food, and utility bills. At present many such people in the UK require "in work benefits" to get by. And this is insane, because it means that tax payers are subsidising supposedly free-market capitalists to keep prices above what is affordable. Landlords, who are largely the same as property developers, can partly do this by deliberately ensuring that the demand for housing outstrips the supply and claiming that high rents are simply a matter "supply and demand" as though it is nothing to do with them, but is just the market operating freely. Meanwhile the world's kleptocrats and drug-lords are laundering money by buying up property in Mayfair and Parklane and forcing property prices to rise at ten times the inflation rate, while wages continue to fall. And the Southern Rail company provides an appalling service, but still receives £25 million in government subsidies and declares a profit of £100 million which goes to private sector shareholders who probably don't pay tax in the UK! Why are we subsidising foreign shareholders with UK taxes while getting lousy service? Why are we not investing in the local economy?
Capitalists say that they deserve the lion's share of the profit that labour generates because they are risking their capital. There is something to this. Risking one's capital ought to bring rewards, if only because investment creates jobs for workers. The relationship is in fact symbiotic. The capitalist who takes all the profits and leaves nothing for workers destroys their own capital because the workers are soon unable to work. The only way for capital to produce profit, is through the application of labour by many workers. Or as the Manifesto says, through the whole community acting together in a concerted way. If there is profit then, necessarily, the community should benefit.
Unfortunately it has been the policy of the merchantilist thinkers, who have shaped the industrialised world's economic policies for six centuries, to try to ensure that wages did not rise above subsistence level. This was supposed to ensure that workers did not succumb to the laziness and moral turpitude that was assumed to be their natural condition. That it happened to make capitalists phenomenally wealthy was just taken as further proof of their moral superiority. That workers are poor is not seen as a result of centuries of deliberately pursued policies, but instead of the moral inferiority of the workers. The double standard is hardly even remarked on in the mainstream. Instead of arguing over whether workers deserve to be adequately compensated by employers, the debate is over whether poorly paid workers deserve government handouts.
The whole system is fucked up.
07 September 2016
Bankers Who Don't Understand Banking
Today Ann Pettifor Tweeted a quote from the Financial Times:
Why is the CFO of a major UK bank confused about fundamentals of banking more than 300 years after modern banking was established? He probably learned economics at university. What universities teach about banking, loans, and deposits is the complete opposite of reality. They get loads of other things wrong as well. But whole generations of economists, journalists, and crucially, politicians, have been taught this stuff.
One of the chief problems with Neoliberalism is exactly this kind of disconnect between theory and reality. Neoliberalism is dangerous because the economic theories involved are unrelated to the real world. The theories do not work in practice. The standard undergraduate textbooks of economics contain no real-world examples whatever. Examples have to be strictly tailored to illustrate the theory, because the real-world does not behave in the way that the theory says it does. So to use a real-world would almost certainly disprove the theory. Apparently economics undergraduates aren't ready for the truth. The graduate texts are not much better. They might acknowledge that the theory is unrelated to reality, but they will argue that it doesn't matter because the models work. But the models don't work or they would have predicted the financial crash of 2008 - the biggest single perturbation of the world's economy since the Great Depression. No mainstream economist, journalist or politician saw it coming.They all assumed that the economic "miracle" wrought by the deregulation of credit would produce a never ending boom. Wired Magazine literally called it the Long Boom in 1997 - watch out they ban ad-blockers.
For more on this see for example Professor Steve Keen: Neoclassical economists don’t understand neoclassical economics.
So we get this seemingly never ending stream of politicians, bankers, financiers, and journalists who don't understand economics, don't understand economic policy, and don't understand the consequences of not understanding. They don't even understand that they don't understand.
RBS chief finance officer quoted in full: "Every banking group uses deposits to fund loans. It is the basic premise of banking"{face palm} This is completely wrong. No banking group does this. Banks create loans which then attract deposits. This is how the Bank of England put it:
"Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits." (Money Creation in the Modern Economy, 2014).Of course, when they say "modern economy" they mean, since the founding of the Bank of England in 1694.
Why is the CFO of a major UK bank confused about fundamentals of banking more than 300 years after modern banking was established? He probably learned economics at university. What universities teach about banking, loans, and deposits is the complete opposite of reality. They get loads of other things wrong as well. But whole generations of economists, journalists, and crucially, politicians, have been taught this stuff.
One of the chief problems with Neoliberalism is exactly this kind of disconnect between theory and reality. Neoliberalism is dangerous because the economic theories involved are unrelated to the real world. The theories do not work in practice. The standard undergraduate textbooks of economics contain no real-world examples whatever. Examples have to be strictly tailored to illustrate the theory, because the real-world does not behave in the way that the theory says it does. So to use a real-world would almost certainly disprove the theory. Apparently economics undergraduates aren't ready for the truth. The graduate texts are not much better. They might acknowledge that the theory is unrelated to reality, but they will argue that it doesn't matter because the models work. But the models don't work or they would have predicted the financial crash of 2008 - the biggest single perturbation of the world's economy since the Great Depression. No mainstream economist, journalist or politician saw it coming.They all assumed that the economic "miracle" wrought by the deregulation of credit would produce a never ending boom. Wired Magazine literally called it the Long Boom in 1997 - watch out they ban ad-blockers.
For more on this see for example Professor Steve Keen: Neoclassical economists don’t understand neoclassical economics.
So we get this seemingly never ending stream of politicians, bankers, financiers, and journalists who don't understand economics, don't understand economic policy, and don't understand the consequences of not understanding. They don't even understand that they don't understand.
04 September 2016
Defeating Neoliberalism
I used to think that Monty Python's Life of Brian was a comedy with a vaguely religious theme. Then I moved to Britain and it dawned on me that Life of Brian is a political satire on the political left-wing in Britain (and generally) that has nothing to do with religion. We "the Left" as though it is meaningful, but in fact there is no such entity as "the Left". The so-called left-wing is a fractured and fractious collection of factions with almost no common agenda. They may well hate the "Romans" (we can all guess who the Romans represent in a British political satire), but when it comes down to it they hate the other lefties more.
So yes, fuck Neoliberalism. But fuck those on the left as well. Until they stop hating each other and unite to over-throw Neoliberalism, we are stuck with it.
It's interesting when you watch the video of Simon Springer delivering the lecture that sparked off #fuckneoliberalism; at the end a young man asks with some emotion why Springer talks about society based on reciprocity and mutual aid, but "you don't want to use revolution to get there... you cast aspersions on the idea of the proletariat...so what the hell, dude, why are you leading us down this road that's against Marx?"
Springer's response is to remind the young man that the ideas he's in favour of are socialist rather than communist and that Marx was only one of many theorists of socialism. But he also points out that he [Springer] is not a Marxist, he's an anarchist with no commitment to Marxist ideology. Springer says that he has been writing against the Marxist orthodoxy in his discipline for many years. Then he says:
"Think of [revolution] as an everyday process, rather than something that is an ideal somewhere in the future; something that we can embrace here and now."
Coming back to comedy I was reminded me of a particular response when Russell Brand called for a revolution in Britain in 2013. Simon Evans is older than many comedians you'll see on the BBC, and more to the right than most of them too. Here's his routine, it's a bit under 5 minutes.
Evans hits on something crucial in this routine. His take home message is,
"There was never a generation in any country in the world, ever in the history of mankind, less close to revolution than the British people are right now."In other words, if you are on the political left and you are waiting for the revolution, then you will be waiting a long time.
We have a common enemy in the form of Neoliberalism. Very often a common enemy is enough to draw a divided community together. So why is the political left so divided? One of the reasons is that they think they have to be "in power" to make a difference. It is true that the government of the day make the laws. But I think Springer is right. Revolution is an attitude we can adopt here and now.
Before the last election I tried to get all of my friends to visit their MP and spell out the issues that most concerned them and what they would like to see happen. I suggested we visit as a delegation of our local Buddhist group. The result was that one friend told me he was already regularly writing to our MP and had visited him. No one else responded. I visited my MP alone and told him I thought levels of private debt were disastrous and that the government need to help us clear that debt by giving money to the people with the stipulation that they pay down debt before spending. This idea is called a modern debt jubilee and comes from heterodox economist Professor Steve Keen. One person saying this kind of stuff is a nut. If my whole community got involved, maybe we could have made a difference. I know from social media that my friends sign loads of petitions, but I can't think of the last time a petition made any difference. We have to get out from behind our keyboards and do stuff.
One of the clues to the way forward is in the numbers 1% and 99%. The 99% outnumber the 1% 100:1 (more or less). But then, Britain, where I live, is a nation deeply divided within itself. There are divisions of class, ethnicity, geography, culture, sexuality, gender , etc. And these are ruthlessly exploited by Neoliberals. The recent referendum highlighted that we live in a "post-fact" world where outright lies don't really matter if you can communicate to people that you feel as they do.
There is a lot we could say about this. But for now let's just say that those who are opposed to Neoliberalism are losing the battle at the level of language. We allow the right to frame the public discourse on politics and economics and we use their language to try to defeat them. That will never work. Look at how very weak Neoliberalism was in 2008 when the scale of corruption and malfeasance was exposed in the quintessential Neoliberal enterprise: banking. But this did not result in any revolutionary changes. The solutions tried all drew on Neoliberal ideology! Which leaves us where we are now, with the world's economy teetering and waiting for the trigger of the next financial crisis.
We are also losing the battle on account of not sharing a common vision. The opponents of Neoliberalism comprise capitalists, socialists, Marxists, and anarchists (and presumably adherents to all kinds of -isms). Neoliberalism depends on us arguing amongst ourselves in order to disrupt effective opposition. Neoliberalism depends on us dreaming of revolution rather than embracing it. Rather than waiting for the revolution to sweep Neoliberalism away we need to start living revolutionary lives based on reciprocity and mutual aide. To reconnect with local communities. To get involved in local organisations, particularly political organisations.
We can blame them as much as we like, but they presently have no incentive to change. It's up to us to give them that incentive.
03 September 2016
Multinationals & Tax
This morning in the UK we are treated by the Chancellor of Austria whining to the media that "Amazon and Starbucks 'pay less tax than Austrian sausage stall'". Just to be clear Chancellor is the title of the head of the Austrian government. As head of state he is in charge of the country's legislative program. The buck stops with him. So WTF?
The Neoliberal program has been to deregulate the world of business to allow capitalists to pursue profits with as little hindrance as possible. Governments have enacted laws to make it easier to set up businesses, to do business in their countries, they have lowered tax rates, designed tax laws with plenty of opportunity for tax avoidance, and even handed out subsidies. The fact that the whole developed world pursued this free-market utopia at the same time opened the way for multinationals to avoid paying taxes anywhere. For the smart management accountant, this is like a 10-20% boost in income. This is on top of subsidies and incentives offered by governments to business to come to their country to make up for the fact that internally, Neoliberalism has failed to produce sufficient employment opportunities to keep everyone working. So of course these companies grew rapidly and expanded across the globe. First-world governments like Austria made it happen.
Ireland are currently fighting a court battle in order not to have to accept £11 billion in unpaid taxes from Amazon. They must believe that the benefits of Amazon being head-quartered in Ireland are greater than the lack of £11 billion in tax revenue (and the only other contribution Amazon make is low paid jobs with harsh working conditions). In the UK our government thinks it is so great having Amazon do business here that in 2013 we paid them more in subsidies and incentives than we collected from them in taxes (Telegraph), and we cut the welfare bill for disabled people in order to afford it. One of the largest most profitable businesses in the world needed a fucking subsidy? This week in the UK we also learned that the heavily publicly subsidised rail company, Southern Rail, declared a profit of £100 million, despite having one of the worst records of any rail company in history.
This is what people call socialism for the rich. Neoliberal governments are happy to subsidise the dividends of shareholders in large companies, but continually scold the poor who might get "something for nothing". If you get a modest welfare payment for being inadvertently unemployed, we might make you work for free stacking shelves in a supermarket, so that you are not morally corrupted by getting something for nothing. But if you make profits of £100 million, we'll not only let you get away with providing an appalling bad service in our name, we'll reward you to the tune of £25 million that effectively goes straight into pockets of offshore shareholders (who also pay no tax in the UK). And governments appear to consider that no moral hazard occurs for the companies or their shareholders from this enormous helping of something for nothing (or in Southern Rail's case, something for less than nothing). This is fucked up.
There are three factors of production: land, capital, and labour. Land includes land itself, and anything underneath it. Land produces rent; capital produces profit; Labour produces wages. But of course capital can only produce profit through the application of labour. Land however produces rent even when no effort it made - land value simply goes up these days.
We basically don't tax land in the UK because landowners are too powerful (the major landowners are institutions and families whose roots stretch back to the Norman invasion of 1066). So landowners constantly reap gains in wealth for no effort and pay no tax on it. Nowadays only small to medium businesses pay tax on profit. Large businesses, the multi-nationals effectively pay no tax because they hide their profits in various ways. So the burden of paying for infrastructure, health, social security, and education falls on taxes paid on wages, supplemented by indirect taxation on spending (which falls more heavily on those who spend a greater proportion of their income, i.e. workers). The irony here is that since 2008, Neoliberal economic policies have been forcing wages down in real terms, as well as with respect to low-inflation or even deflation. So the government's tax receipts continue to fall despite small rises in GDP (UK GDP per capita is stagnant, GDP is rising partly because of immigration).
For the past few decades governments have been selling off public assets to foreign investors to try to make up the shortfall. What happens when we run out of assets to sell? Those assets used to generate income as well as having intrinsic value. How long can a govt continue to divert its income streams to foreign companies that pay no tax here? Ironically, there is a flow of capital into the UK still. Millions is being spent by foreign investors on London property. The world's drug cartels and kleptocrats launder their money by buying up flats in Mayfair and Park Lane. In doing so they force up the prices 10 times faster than the consumer price index, and increase their own wealth in the process. The property bubble won't burst as long as corrupt African dictators, Russian oligarchs, Chinese government officials, and Columbian drug lords can keep buying up property. If it does burst the average house-owner will bear the brunt of the collapse.
And all this is how governments have deliberately structured Western economies. It's not the result of an accident, or some sneaky plan by Amazon or Starbucks to take over the world. No. Successive governments of all stripes have drafted, argued for, voted on, and enacted the legislation that makes all this possible. Politicians set this system up after World War II.
So to see the leader of one of these countries whining like a fucking child to the media that Amazon and Starbucks don't pay their fare share of tax is, to say the least, disingenuous. It is farcical. The leader of Austria is perhaps not the only person with power (no doubt he has a finance and/or taxation minister as well), but he is certainly the key figure for changing the situation in his country. It is his job to set the legislative agenda for his country. He needs to change the law so that making a profit in Austria requires any business to pay tax. If he believes he cannot do this alone, because his country is an EU member for example, then he needs to introduce legalisation into the European Parliament. Most member states are suffering the same problem because some members have set up as tax havens. So get together and sort it out.
No amount of crying over spilt milk is going to solve this problem of large multinationals not paying tax. The one and only thing that will make a difference is new tax legislation. That is the role of government. The one and only role of government. It's not for government to cry to the people that things are going wrong. We know already. It's for government to propose and enact solutions to problems. We voted them in for this purpose, not to whine like infants about the situation their class created.
The Neoliberal program has been to deregulate the world of business to allow capitalists to pursue profits with as little hindrance as possible. Governments have enacted laws to make it easier to set up businesses, to do business in their countries, they have lowered tax rates, designed tax laws with plenty of opportunity for tax avoidance, and even handed out subsidies. The fact that the whole developed world pursued this free-market utopia at the same time opened the way for multinationals to avoid paying taxes anywhere. For the smart management accountant, this is like a 10-20% boost in income. This is on top of subsidies and incentives offered by governments to business to come to their country to make up for the fact that internally, Neoliberalism has failed to produce sufficient employment opportunities to keep everyone working. So of course these companies grew rapidly and expanded across the globe. First-world governments like Austria made it happen.
Ireland are currently fighting a court battle in order not to have to accept £11 billion in unpaid taxes from Amazon. They must believe that the benefits of Amazon being head-quartered in Ireland are greater than the lack of £11 billion in tax revenue (and the only other contribution Amazon make is low paid jobs with harsh working conditions). In the UK our government thinks it is so great having Amazon do business here that in 2013 we paid them more in subsidies and incentives than we collected from them in taxes (Telegraph), and we cut the welfare bill for disabled people in order to afford it. One of the largest most profitable businesses in the world needed a fucking subsidy? This week in the UK we also learned that the heavily publicly subsidised rail company, Southern Rail, declared a profit of £100 million, despite having one of the worst records of any rail company in history.
This is what people call socialism for the rich. Neoliberal governments are happy to subsidise the dividends of shareholders in large companies, but continually scold the poor who might get "something for nothing". If you get a modest welfare payment for being inadvertently unemployed, we might make you work for free stacking shelves in a supermarket, so that you are not morally corrupted by getting something for nothing. But if you make profits of £100 million, we'll not only let you get away with providing an appalling bad service in our name, we'll reward you to the tune of £25 million that effectively goes straight into pockets of offshore shareholders (who also pay no tax in the UK). And governments appear to consider that no moral hazard occurs for the companies or their shareholders from this enormous helping of something for nothing (or in Southern Rail's case, something for less than nothing). This is fucked up.
There are three factors of production: land, capital, and labour. Land includes land itself, and anything underneath it. Land produces rent; capital produces profit; Labour produces wages. But of course capital can only produce profit through the application of labour. Land however produces rent even when no effort it made - land value simply goes up these days.
We basically don't tax land in the UK because landowners are too powerful (the major landowners are institutions and families whose roots stretch back to the Norman invasion of 1066). So landowners constantly reap gains in wealth for no effort and pay no tax on it. Nowadays only small to medium businesses pay tax on profit. Large businesses, the multi-nationals effectively pay no tax because they hide their profits in various ways. So the burden of paying for infrastructure, health, social security, and education falls on taxes paid on wages, supplemented by indirect taxation on spending (which falls more heavily on those who spend a greater proportion of their income, i.e. workers). The irony here is that since 2008, Neoliberal economic policies have been forcing wages down in real terms, as well as with respect to low-inflation or even deflation. So the government's tax receipts continue to fall despite small rises in GDP (UK GDP per capita is stagnant, GDP is rising partly because of immigration).
For the past few decades governments have been selling off public assets to foreign investors to try to make up the shortfall. What happens when we run out of assets to sell? Those assets used to generate income as well as having intrinsic value. How long can a govt continue to divert its income streams to foreign companies that pay no tax here? Ironically, there is a flow of capital into the UK still. Millions is being spent by foreign investors on London property. The world's drug cartels and kleptocrats launder their money by buying up flats in Mayfair and Park Lane. In doing so they force up the prices 10 times faster than the consumer price index, and increase their own wealth in the process. The property bubble won't burst as long as corrupt African dictators, Russian oligarchs, Chinese government officials, and Columbian drug lords can keep buying up property. If it does burst the average house-owner will bear the brunt of the collapse.
And all this is how governments have deliberately structured Western economies. It's not the result of an accident, or some sneaky plan by Amazon or Starbucks to take over the world. No. Successive governments of all stripes have drafted, argued for, voted on, and enacted the legislation that makes all this possible. Politicians set this system up after World War II.
So to see the leader of one of these countries whining like a fucking child to the media that Amazon and Starbucks don't pay their fare share of tax is, to say the least, disingenuous. It is farcical. The leader of Austria is perhaps not the only person with power (no doubt he has a finance and/or taxation minister as well), but he is certainly the key figure for changing the situation in his country. It is his job to set the legislative agenda for his country. He needs to change the law so that making a profit in Austria requires any business to pay tax. If he believes he cannot do this alone, because his country is an EU member for example, then he needs to introduce legalisation into the European Parliament. Most member states are suffering the same problem because some members have set up as tax havens. So get together and sort it out.
No amount of crying over spilt milk is going to solve this problem of large multinationals not paying tax. The one and only thing that will make a difference is new tax legislation. That is the role of government. The one and only role of government. It's not for government to cry to the people that things are going wrong. We know already. It's for government to propose and enact solutions to problems. We voted them in for this purpose, not to whine like infants about the situation their class created.
01 September 2016
The Middle Classes and Neoliberalism
"The middle estates, the small manufacturer, the shop keeper, the artisan, the peasant, all these fight against the bourgeoisie, to save from extinction their existence as fractions of the middle class. They are therefore not revolutionary but conservative. Nay more, they are reactionary, for they try to roll back the wheel of history." - The Communist Manifesto, 1848.I think the point here is that the middle-classes resist the 1% only in the interest of preserving their own interests and way of life. They are not interested in over-throwing the 1%. And for Marx and Engels this seems reprehensible. They go on to point out that [in their time] historcial change has been drive by minorities as today it is driven by the 1%. By contrast,
"The proletarian movement is the independent movement of the immense majority, in the interest of the immense majority"Instead of the proletarian movement taking over the running of nations and the world, it was hijacked by tyrants, fell into infighting, or succumbed to apathy. Instead of the revolution envisaged by the Communists, society is run by the 1% in the interest of the 1% (and even as the catastrophic consequences of this become increasingly obvious they are strengthening their grip on power). Nor was it different in notionally communist countries while those existed. The closest we ever got to government by the people for the people was in the small, relatively classless socialist democracies like New Zealand or Scandinavia during the 1960s. The movement was effectively killed off in NZ during the 1980s, by a Labour government who openly adopted Neoliberal economic policies and set about dismantling the socialist state. I think Scandinavia might have fared better, but not by much.
Some of the more radical economists I follow are suggesting that we are seeing the death-throes of Neoliberalism. I'm not convinced about this. The middle-classes here in the UK seem to despise the proletariat, partly because they fear becoming them (either by falling themselves or by the elevation of workers into their class). The middle-class is now thoroughly indoctrinated by Neoliberal propaganda and now react against suggestions that we could do capitalism differently.
Meanwhile the 1% are handing out £billions in subsidies to corporations who avoid taxes and funnel that money to share-holders who also pay little or no tax anywhere in the world, whilst scolding the poor for not working hard enough and accepting "something for nothing".
Revolution starts to look like a good idea.
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