VIDEO: "United Kingdom" of Austerity?

Sometimes the most powerful words are those set to music. And occasionally they come from the most unexpected of places.

ABC were a Sheffield-based 1980's music group who had a string of hits such as "The Look of Love", "All of my Heart" and "When Smokey Sings". Lead singer Martin Fry was well-known for his lame suits and powerful voice, and the songs were moving but optimistic, in spite of the atmosphere of the times, but they were by no means vacuously devoid of meaning or intent.

In their second album, "Beauty Stab" released in 1983, they evoked some haunting themes about society at the time. And to my mind the most powerful of these was the amazingly dark song "United Kingdom", which closed the album. Fry says he wrote it on returning to Sheffield from tours to the USA and after he was so struck by the devastation to the city from the closure of the steel industry and the general recession and austerity of Thatcher's Britain. I remember hearing "United Kingdom" at the time in my student days, his deep gravelly voice conveying the bleakness of the era, while a piano leads a slow melody that quickens only to emphasise the repressive nature of a state set against its own people. Even today, its resonance makes the hairs rise on my neck.

There's never been a video for this song, so I've set some more contemporary pictures to its evocative sounds and present it here. Its lyrics remain tellingly familiar. Maybe history moves in circles, maybe each wave will push us slowly towards some sea-change: but for now, just as 1980s music enjoys something of a revival, the politics of the 1980s seems very close again too...

NB, this video is not publicly listed on Youtube. Please share from this page.
(And thanks, I think, to Seany Mac for the cracking picture of George Osborne halfway through...)

Housing - the Benefit of Mutuals

Hidden as a footnote in the BBC business news today is the report from the mutual Building Societies Association that in 2011, approved lending in this not-for-profit sector rose by a substantial 15% overall, with a massive 49% increase in mortgage lending. At the same time, the corporate banking sector saw a small decline in overall lending in spite of the increasingly desperate efforts of the Con Dem Government to get the "Masters of the Universe" as the financial PLC sector used to refer to themselves to lend cash to get the economy out of the doldrums.

Mutuals have long been advocated by many in the socialist and green movements as a key part of the solution to a free market economy based on speculation and accumulation. Formed out of mutual aid friendly societies as long as the late 18th century, British building societies have always worked on the basis of sufficiency - never lending more than came in and limiting what members could take at any one time; and, critically, not seeking profits for any purpose other than reinvesting in the business. There are no shareholders, no owners and no money taken out.

The result was that by the late 1980s, the sector was large and healthy, and at that stage still relatively diverse in spite of a trend of mergers. But the Thatcherite era saw an infusion of new possibilities for financial mutuals first of all to diversify their services and then to "go public" - become publicly listed companies making profits for shareholders. In other words, to become banks. Key to this was the 1986 Building Societies Act, as Thatcherite a piece of legislation as you could possibly find, which paved the way for the cash-grab of the bankers.

I briefly worked for the Bradford-based National & Provincial Building Society in its last days as a mutual. As its Board tilted towards de-mutualisation, scores of high paid executives were imported from the banking sector in a veritable frenzy of backslapping bonus-sharing as they strove to find ways to become a bank. In just three years, the number of Directors increased from six to over 60. Many staff in what had been a major local employer and a means of fostering modest home ownership and savings became uncomfortable about the sponsorship of a culture of greed and pie-in-the-sky notions that, in future, N&P as it became, might sell anything at all - "even hamburgers!" one over-excited director declared.

The vanishing mutual: N&P's Bradford city centre branch, long since empty..

As it was, a couple of years after I left, the first big housing recession kicked in and their plans came to nothing. Instead of sailing their way into corporate supremacy, the financial wizards had to settle for being swallowed up first by Abby National PLC before in turn vanishing into the giant Santander PLC. The headquarters, a large building in Bradford city centre that appeared to have been architecturally inspired by lego windows, was symbolically dynamited as hordes of locals looked on, uncertain how to react other than run up the hill when the dust clouds billowed out much further than anticipated.

The intervening decade and a half up to 2008 saw the bankers egotistical bubble inflate and stretch horrendously. Old shibboleths that limited lending went by the wayside. Anything could be borrowed and repaid. Buy-to-let mortgages, where people could borrow to purchase property to rent out, were introduced after decades of being illegal - causing massive inflation in the first-time buyers sector and pricing many younger people out of the housing market for good. Mortgage limits, once pegged at 80% of house value, rose to 120% and beyond as the poison of overlending reached everywhere.

The banks have failed and failed comprehensively. Nearly four years on from the crash of 2008, most remain in hoc to the Government, which in turn is punishing ordinary people through higher taxes and reduced services, grinding the whole economy to a halt. The housing market is flatter than flat, with unscrupulous private landlords the sole beneficiaries. In spite of repeated demands from the government, small businesses especially complain that it is nigh impossible to get loans for vital investment in their businesses. Stagnation results, with unemployment and low wages driving the consequent cycle ever down.

In all, with offers of a few hundred pounds in shares to members, ten building societies took the crooked path from mutuals to plcs. Read the list now, and they have virtually all vanished or, in the case of Bradford & Bingley and the pisspoor Northern Rock, were nationalised after collapsing only for their profitable sections to be sold off to the private sector once more.

The Green New Deal, proposed just before the last election by a range of green economists and politicians, including GPEW leader Caroline Lucas, argued for the hastily nationalised banks to be broken up and re-mutualised rather than sold off. In this way, the link with the need to make profits would be broken and they could focus again on building communities and local businesses and co-operatives.

But the Government is not listening. The profitable bits of RBS are being sold off to Santander, all of which will go firmly back into the private banking sector, in spite of all the signs that it has not learnt its lessons from the avaricious mess it has got itself and all the rest of us into. 

But of course, the building societies don't make donations to the Conservative Party - perhaps the one investment that does still count these days.  

IF YOU WOULD LIKE TO STOP BANKING WITH BANKS, LINK TO THE NEW MUTUALS CAMPAIGN TO VOTE WITH YOUR CASH - MOVEYOURMONEY.ORG.UK

Private Sector Efficiency? Tell me another one...

There is an oft repeated assumption, not only among the neoliberal right, but among many in the centre and Nu-labour infected centre-left, that two legs good, four legs bad. Or should I say "public sector waste, private sector efficient."?

The theory goes that, if maximising profit from your activities is your main focus and sole objective, you will find ways to become ever more "efficient" and "effective". At what precisely? In the final analysis, at extracting as much excess cash from your customers as possible over the actual cost of producing the service or goods you are selling. It's not exactly a particularly edifying or trustworthy nostrum, nor does it in fact follow that you will provide the best conceivable service - rather you will provide the one that gives you the best financial advantage.

The Tories' willingness to embrace this goes without saying. But why have even many of those who supposedly believe in public service been seduced into turning to the private sector to find ways to improve services to taxpayers? Whether in the form of the huge contracting companies like PWC and Crapita, which have ripped hundreds of billions of pounds from the public sector in return for poorer services (including abandoning one contracted-out Education Authority mid-contract); or in the form of consultants charging massive fees to identify savings; or whether in the form of the new owners of privatised state industries requiring ongoing government subsidies to carry out their role, as in the case of the nuclear power industry, private enterprise has in fact very little to recommend it as a guru of efficiency. Somehow, however, private effectiveness is taken as fact, in spite of the very substantial lack of evidence.

British-owned private companies on average take far more out of their profits as shareholder/owner dividends than almost any other major economy - fifty per cent more on average than US companies and nearly three times the rate of Japanese firms. meaning that other countries regularly re-invest more and consequently outperform us. In spite of poor business performance, British Boardroom salaries have rocketed to phenomenal amounts, with bonuses proliferating far beyond the banking sector alone, just as ordinary workers have been told to tighten their belts. Greed is good, it seems, if you've already supped greedily enough.

The railway industry is a case in point. By the end of the second world war, the private rail companies that ran the British rail system were more or less bankrupt, with tens of millions of pounds in accumulated debts. In 1946, the Labour Government nationalised them and turned them into British Rail, but, critically, made this new state company liable for the ongoing debts of its private predecessors. Consequently, although BR ran at an operating profit from 1947 to 1962, its requirement to pay the debts of the old owners meant it ended up making losses which had to be subsidised by the Government. After a while, with investment in new rail held back because of this, BR ended up requiring constant, ongoing public subsidies.

In spite of this, an integrated, modern, electric rail network was created. By the 1980s, a steady decline in passengers had reversed and massive investment began in the Channel Tunnel project, which was completed just before BR was split into 24 regional and network franchises and sold off to the private sector in 1994. The Conservative Government claimed that by doing this, the magic wands of the profit-seekers would drive forward ever-better rail services and cut costs, so that the taxpayer would no longer be out of pocket (albeit because of the original losses of the private sector way back in the 1940s).

But nothing could be further from the truth - rail services are no more efficient that before privatisation. Customer satisfaction has declined although transport requirements mean more people have to use the service. Our fares are among the highest in Europe. And the public subsidy at today's prices has risen from £2.3 billions in the last year of BR to £5.2 billions in 2008/9 - an increase of 126%. This has been cut in the current financial year, but will still stand at nearly 110% more than the cost of BR to the public purse.

So, with the Tories eying up more private involvement in the NHS even after the revision of the health bill, as well as seeking to widen private contracts in government as some sort of panacea for every problem, the Left need to reassert that it is not just on the basis of ethics and ideology that we want to see the state running our public services; it is also because keeping things in the public sector makes plain good business sense.

London to Wakefield service last week: nearly 20 years and £48 billions in taxpayer-funded subsidies after privatisation, East Coast railways and their rivals are still using decades old British Rail rolling stock.

Shares with No Value on Offer from Politician with No Values

You couldn't make it up! But trust (if you dare) Nick Clegg to do just that.

Eying his party's rock bottom poll share, our unloved Deputy Prime Minister has come up with a wheeze he obviously thinks will curry favour with recession-hit voters. He wants the State to divest itself of the two fully owned state banks - Lloyds and RBS - by giving shares to every adult in the UK free of charge, which they can sell once they reach the price the State originally paid for them back in 2008/2009. This would be 50p per share in RBS and 73p in Lloyds and we would all get 1,450 and 450 shares in each bank respectively. BUT, the rub is that you could only sell the shares for the excess over the price paid by the State, so that the Government can recoup the cost of its original purchase of the banks.

Nick's big giveaway works like this: if your RBS shares reach 60p each, you can sell them and you get exactly 10p per share (60p sales price less the original 50p which goes back to the State). So  that would leave you with as much as £145 minus tax of £29 and sales commission of maybe £8 leaves £108. It is always something I guess, but......at the moment, the shares are actually worth less than the State paid for them - 45p for RBS and 37p for Lloyds.

So the Great Plan is to give the citizens of the UK approximately £15 billions of debt in these banks. Not really an even vaguely attractive prospect, but somehow very apt for the hapless Deputy PM and, of course, his ever chippy sidekick Vince Cable, the eminence incapable of the Coalition.

Clegg's model was used to sell off Soviet industry to the Russian mafia

With the Lib Dems standing at just 1% of the vote in the latest poll for London Mayor (and outpolled by 13 to 1 by the Greens among 18 to 24 year olds), offering the public something that has absolutely no value at all seems to summarise their prospectus and prospects more eloquently than anything any of their opponents could possibly dream up.

A pity though, that these soulless men, shorn of any tattered shred of Keynesian Liberal principle, should squander the golden opportunity they have to transform the banking sector from a focus of greed into a genuinely mutual or co-operative sector, funding sustainable recovery. The nationalised banks could have been precisely the right vehicles to create a network of community banks, supporting prudent investment in social enterprises and co-operatives, helping individuals and communities to restore their fortunes.

Certainly that was the sort of approach the old Liberals argued for that back when the financial sector still had a large mutual segment in the form of the building societies. They opposed the Tories' sale of state-owned Girobank in 1989 (ultimately to be part of Santander) and an SDP peer, Lord Taylor of Gryffe, led the opposition to the theft of the Trustees Savings Bank from its depositors and its subsequent sale to the private sector (ironically ultimately to Lloyds) by the Thatcher Government. These days are clearly long gone.

By contrast, the model proposed by Clegg is one first widely used in the former Soviet Union in the 1990s, where it was known as Voucher privatisation.  There, state assets were stripped and given away to all citizens in the form of low value share vouchers (at the behest of the ever eager advisers sent out there by the Margaret Thatcher Foundation). The Russian mafia made a (financial) killing as desperate people sold their shares off cheap to grab a few roubles - much as many would do with the pittance offered by Thatcherite Nick's sale of the century in recessionary Britain.

Desperate men employing desperate measures; but at a huge cost of missed opportunities and squandered assets which could have been employed so much better for the Common Wealth.

Limits to Growth = Limits to Wealth

(Right -The Desert of Capitalism: on the left in this satellite picture is Haiti, whose Government has permitted full-scale exploitation of the forests by big business. On the right, the Government of the Dominican republic has poured public funds into Eco-tourism and conservation - the results are plain to see.)

The mainstream of politics often combines its reluctant nod to the need for environmental protection with a hasty assurance that capitalism can yet deliver "green growth". Like latter day alchemists, they claim a synthesis of the free market with modern technology, and a healthy dose of genetic engineering for good measure, will somehow deliver a nirvana of never-ending increases in production and consumption and, of course, profit in a sustainable way.

This, of course, is the underlying folly of capitalism - that limitless demand can somehow be met ultimately with limitless supply. In any other realm of human activity, under any other title, the concept would be laughed out as fantasy at best, dangerous delusions at worst. But for our planet, its species mired in an unchallenged liberal economy now for over twenty years, if not much longer, capitalism is as essential as the air we breathe (or even more essential, given the damage capitalism is permitted to inflict on our air). Since Fukyama declared the end of history with the fall of the Berlin Wall, we have been left with a received wisdom and socio-political consensus that there is only one way forward: free markets, deregulated as far as possible. And through the 1990s and the start of this decade, enough crumbs fell to enough people from the Masters' tables to maintain the illusion that somehow everyone would benefit. The suffering of hundreds of millions of the poorest in all societies, their poverty - both relative and absolute - was effectively shut out of the media as effectively as the thousands of "gated communities" that have sprung up throughout the western world have physically shut out the offending sight of poor from the eyes of the rich.

Of course, we now see this Neverland unravelling before our eyes with the banking crisis and the recession. But how has it been dealt with? After all the wringing of hands, the denunciation of "greedy" bankers (as if somehow there were some who were not) and the declaration that such things could never be allowed to happen again, what do we find? A handful of bankers have departed their well-paid jobs, in nearly all cases with handsome pay offs and swollen pension pots. Even Fred Goodwin, who captained the Royal Bank to ruin, continues to pick up a pension of £342,500 plus pa, along with a seven figure lump sum, while 9,000 of his former employees have lost their jobs. At least he will be able to get the scratches on his car fixed. His worst penalty? "Blackballed" allegedly by the membership committee of Saint Andrews Golf Club - now that's capital regulating itself!

Now this past week, we are told the bankers are now returning to their old habits. Kept afloat with the hard earned money of taxpayers, after spending years themselves doing their utmost to avoid paying their personal income tax and their organisations' corporate taxes, they now feel ready to carry on as normal.

No surprise. The capitalist system has an inherent driver - it is to maximise your return for the minimum investment of effort: You want something I have. My intention becomes to find what is the absolute greatest level of value that you will surrender to me for it. There are no ethical considerations. No long term planning. No morality other than how do I extract the most wealth from you, for me. Now.

So it is little wonder that, with some signs the current downturn has flattened out, that capitalists seek to assert their normal behaviours. They have always done so in the past - why would they not now? It is, we are told, the "natural" way of doing things, so why would their nature suddenly change?
http://www.independent.co.uk/news/business/news/banks-are-forgetting-lessons-of-crisis-already-warns-turner-1716001.html

The corollary of all this though is that the concept of a "return to normal" IS unrealistic - the imbalance in wealth, globally and in the UK, is at a historic high. The gap between rich and poor has never been wider. Tiny numbers of people hold vast quantities of wealth while resources grow tight and environmental degradation impoverishes hundreds of millions - both developments driven by the voracious need of capitalism to feed the pockets of shareholders rather than the bellies of hungry children.
http://www.guardian.co.uk/money/2008/aug/04/workandcareers.executivesalaries

It is not sustainable, which is why a return to normal ways can only be a temporary phenomenon. Capitalism is driving the planet and our species to the edge. Any recovery may last a while - a year, two years, a decade even, but soon enough, the impact of passing not just peak oil but peak carbon fuel production will kick in with a thump that will bring whole economies crashing down, banks and governments with them, and social unrest, disorder, violence and war may well be the most obvious result.
http://www.guardian.co.uk/commentisfree/2008/aug/08/kingsnorthclimatecamp.climatechange
There is another future: a Green one, offering redistribution of wealth, fairer societies, banks and enterprises focussed on mutual protection and community need rather than shareholder dividends and private profit. A sustainable future that has plans for the next 50 and 100 years, not the next 3 to 5 years which fit the common corporate business plans of most capitalist companies. This way recognises that there are limits to growth, there is only so much that can be extracted without needing to replenish. And this in turn leads to the point that if there are limits to growth, there need also to be limits to wealth: that a sustainable society seeking the common good has, by virtue our human condition and our planet's limits, to set a maximum level of wealth that an individual can hold, in income and in wealth. Any other way can only lead to the chaos and collapse of the capitalist scenario.

We face a choice: green and growth cannot be intertwined indefinitely; we need to learn that there are limits - to what we can have, to what we can take. Instead, we have to find how we can do more with what we have - and all the evidence points to those people who already do so have happier and healthier lives than those who are tied in, emotionally, psychologically, financial and physically, to the capitalist treadmill. If this can be translated to the whole community, if it can become the zeitgeist, the underpinning ethic of society, a transformation can begin - but it will involve hard choices and political action.

It won't be an easy option or a soft choice: I am not arguing for a touchy-feely hippy revolution.

But I AM arguing for a revolution.