And The Money Kept Rolling In (And Out)

PART TWO OF A SERIES.

Corporate (red)washing, jonathan mcintosh, 2007

Some have never had it so good. You might be mistaken for thinking there was an economic crash not four years ago and that we are living in a recession, but that's because you aren't the 1%. As we saw abroad and now domestically, a leaderless movement has now come to prominence. If successful in nothing else, Occupy has brought home the message of wealth inequality through the 'We are the 99%' slogan. The extreme inversion of the scales in the economic clout of the top 1% versus the remaining 99% betrays an uncomfortable truth about our egalitarian and meritocratic societies - that we are actually living in plutocracies. The egalitarian and meritocratic principles of western society are what comprise The American Dream, and yet like a dream we think we're awake. Eisenhower may have warned us about relations between the state and private contractors during the heights of the New Deal society, but Franklin D Roosevelt spoke in 1938 of a more elementary danger that "among us today a concentration of private power without equal in history is growing". If some members of society have greater private power than others then it logically follows that others have less power. This is the very basic fact that underpins the subversion of liberal democracy.

There is no greater demonstration of the seizure of the political process for corporate interests than the bailouts of financial institutions - for now there is no distinction between the good of the nation and the good of the economy. This is because the constituency of the legislatures of the world are no longer the citizenry but the global one percent who are the individuals that together make the corporate person in law. It's very easy to find a prominent politician shilling something under the guise of the public interest, though you'll never know watching the Six O'clock News: David Miliband MP is promoting health service reforms while potential contractors in the sector are paying him for various corporate speeches and lectures (Private Eye issue 1308) and for some time now former MP John Reid has been frequently appearing as an amateur expert on biometrics and cyber-security in the House of Lords whilst coincidentally a board member of security services company G4S (Eye 1306, passim). These are just two recent examples and both from the Labour Party, the supposed party of the working class. I needn't list any Conservative connections here as there are plenty of pages out there that will reveal what goes for Labour goes doubly for the Conservative Party.

In the aftermath of the Great Depression and the Second World War many developed countries instituted various social welfare and security systems. The key to the New Deal society in the US and the 'post-war consensus' in the UK was mutual benefit. Workers would gain political power through unionisation and enjoy secure and well-paid employment and increased living standards, which would generate and promote business by increasing (or inventing) disposable income, all of whom would fund the state to provide those benefits which would ward off the threat of imminent revolution. It would be quite an omission for me as a nominal Marxist not to point out the post-war consensus was not a worker's utopia, but bear in mind this parallel: what distinguished feudalism from slavery was that the lords would defend the realm and in doing so defend the serfs working on their land. In essence the harsher aspects of liberal capitalism would be curbed, thus saving liberal capitalism. Hence, the phrase 'it's the economy, stupid' underpins much of modern political though. The first dent to the Western post-war golden age occurs with a recession in the mid 1970s then immediately attributed to the end of US dollar to gold convertibility and the OPEC oil embargo during the Yom Kippur war.

Far more important historically, though, was the concurrent emergence of the first newly industrialised countries. From the seventies into the eighties the manufacturing and heavy industries set in the West and rose in the East. The de-industrialisation of Western Europe and North America pivoted on the developing world's abundance of cheap labour leading to stagnation or reduction of wages, erosion of employment rights, and the breaking of trade unions; because these were all absent in the developing world. With the Miracle on the Han River the industrial heartlands of America and Europe were turned to rust belts. Locally, the shipyards of the Clyde were decimated five-fold. This is not to denigrate the industrialisation of the developing world, rather I point out it was politically expedient to destroy those areas where unionisation and political activity were strongest and bring about the revenge of liberal capitalism.

The history lesson is to contrast the post-war era with the modern global economy. The idea of co-operation toward the enrichment of society, whether real or imagined after the war, is now long behind us replaced by the dismantling of the state and gearing of society toward the enrichment of the boardroom. It was once recognised that certain services, mostly by virtue of natural monopoly, were necessarily operated by the state: electricity, gas, water, telephony, trains, buses, mail, etc. In the UK in the eighties and nineties these sectors, excepting sole survivor Royal Mail, were turned over to private business. Now there is legislation for the "marketisation" of the National Health Service moving through parliament and tentative plans for the privatisation of elements of the police force. There exists a constant drive toward privatisation under the rubric of efficiency, cost-effectiveness, and competition. Yet at every turn it has turned services into unreliable monopolistic blackholes - no difference some may say, but the distinction is that business makes a lot of money in selling off the infrastructure the state, and therefore you, invested in. There's little advantageous about this for the average citizen. However, in allying themselves with corporate interests, the political class stands to enrich itself greatly.

Barack Obama's election campaign made prominent use of small private donations, but even the millions of dollars from millions of donations were still outdone by the paltry sums a handful of large business could inject. There is plenty of opposition to privatising any part of the police forces of the UK, but there shall be no deviation from the plan. The dance of politics will go on to maintain the illusion of choice; just as the market reforms for the NHS were set in motion by (New) Labour and the Conservatives (and Liberals) will see them through, the moves on all the other sectors will continue whoever is in power. There are plenty of votes to be had in opposing this, but railing against the business agenda will mean less jobs retained domestically to keep the proletariat sedate - simply look at Greece. Still, with the right kind of social management even public disquiet in the dark of recession can by manipulated into bringing about another pro-business government. The question is, what happens when society continues to adhere to actions that benefit the financial services, for recent historical example, at the expense of everyone else and contrary to all common sense? According to Jared Diamond, the Easter Islanders destroyed their prosperous society because the entire socio-economic system became dedicated toward the erecting of more and more large statues (moai). He poses the thought that we might be following their poor lead, and whilst it would be perhaps facetious of me to suggest the Divine Rights of the City of London will lead to the deforestation of the UK and cannibalism, are we setting ourselves on the path toward another crash by insisting on the primacy of Wall Street above everything else?

Had the banks been allowed to fail it would undoubtedly have been one of the harshest depressions since that following the 1929 crash. Yet bailing out the banks for our own good, because they were supposedly too big to fail, has ballooned government deficits which was then used as reason to initiate further roll backs to living standards just as post-war society was attacked in the seventies. That was a missed opportunity. Nevertheless, as the one-percent continue to pursue ludicrous profits through the dismantling of regulations and minimising the state itself they have unwittingly been destroying the very consensus that kept revolution at bay. The inequities will continue to grow as the market must grow, each approaching infinity. In a globalised economy, the dominoes fall a lot faster.

As for ex-Sir Fred Goodwin; though I often write of the sovereign will of the people, in this case it was an example of extra-judicial trial by public opinion. That said, what did he lose? He lost a title. But he's still fantastically rich compared to most people.

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As we all know, only the private sector by virtue of competition can race to the bottom bring prices down. Just how do they go about that?

The UK has a thriving postal market. I know because as an employee of Royal Mail I have the daily privilege of delivering letters with labels from TNT Post, CitiPost, UKMail, DHL, Secured Mail, etc. This is called Downstream Access which is effectively subsidised by Royal Mail because the private companies are free from the strict regulations that RM operates under - for example, six days a week daily collection and delivery for around 99% of the country whereas TNT will only send their van to your business however often the profit of collecting your letters offsets the cost of sending the van. Hence plenty of doctor's letters bear hand-written 'First Class' instructions but have a TNT frank in the corner, which is exactly why missed appointments are one of the leading complaints front-line staff face. A lot of small mail companies now exist operating out of a single unit on an industrial estate precisely because the easiest part of this job is having a machine sort the letters. The public, on the other hand, relies on Royal Mail which has the most difficult element of the job - employing more than a hundred thousand people to  physically attend every door with those letters. The boardroom of Consignia Royal Mail would have you believe that we should be as free to behave like TNT in order to restore profitability. If you want to know why stamp prices are increasing again in April, you need only look to the above listed companies undercutting our service to you.

The greatest scam today is in fact a two-fold operation perpetrated by the biggest supermarkets - their core advantage being economy of scale. Prices are far lower which is why small businesses are the primary losers when a massive supermarket is built. These prices are achieved via two means. Firstly, they pay a pittance to the local farms they source from, who are then reliant on European Union subsidies (the Common Agricultural Policy). The money for those subsidies is funded by member states who pay from general taxation. Secondly, they pay a pittance to their employees who are then reliant on tax credits and other work-benefit schemes, the money for which comes from the government who pay for it from general taxation. The difference between the price as a result of these measures and that had they not occurred is pocketed by the supermarket as profit and divided amongst shareholders and paid out as large bonuses in the boardroom which likely leaves the country headed for an offshore tax haven and the profit is never recouped through corporate taxation. And they did it with a smile on our faces.

Accounting is to mathematics as the John Frum cargo-cult is to engineering. With all these mathematical slights-of-hand why aren't the streetlights of the world decorated with bankers and politicians and CEOs? In a rational world facts will be the axis on which the world revolves, but advertising has taught us this is not that world. It's not the facts that sell a product, it's the image...

[2026;28;4]