24 September 2008

Fair shares?

It has been refreshing to hear the calls for nationalisation coming from union leaders in Manchester this week - quite like old times! Even those with no interest at all in socialism must be beginning to see that crucial public institutions such as banks, transport and utility companies, even telecomms and housing, would be better off outside the risky culture of the marketplace.

But we can't have security for our most basic services because it is too expensive. So the argument runs, but let's look at the numbers. In 2007/8 total government spending was £589 billion (see the government's account here). Last Friday alone the Bank of England 'made available' $40bn, which we can guess is around £20bn and the same day the Guardian reported that the banks controlling the world's reserve currencies had together 'injected' $550bn. into the money markets that week. Given an exchange rate of around 2:1 that is equivalent to half of UK public spending in just one week!

Sums like this are beyond the wildest imaginings of the union members running hospitals and schools. They couldn't be trusted to act responsibly with such vast sums. Much safer in the hand of bankers like Sir John Gieve, deputy governer of the Bank of England, who has particular responsibility for financial stability. Back in May he reassured us that 'London's troubled money markets could soon recover' from the disastrous squeeze on credit. 'The most likely path ahead', he said 'is that confidence and risk appetite will return gradually in the coming months.' I'm so glad my money is in the hands of such a prescient economic actor.

It is capitalism's way to privatise the benefits and publicise the costs of the economy. So in the good times corporation taxes remained low for them who paid them at all, and personal taxation of those on moderate incomes paid for public services. Now the bust has come, companies are rushing into the public-sector fold, demanding our money to keep their bonuses paid.

How many people are going to accept this and just carrying on shelling out for those much wealthier than themselves? How many bags of chips do you have to fill to afford a Maserati? As taxes rise over the coming years will the meek of the earth simply run ever harder on the work treadmill to keep capitalism turning?

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