1 May 2011

Age of Austeria

A recent FT article gloating about the 'resilience' of corporate earnings in what we are misguidedly calling 'the age of austerity' is the final straw. In all plethora of abbreviations we have been using in discussing the financial crisis the two letters we should have been focusing on were PR. The greatest success of the financiers has not been their takeover of our political and educational elite, but their ability to convince the working people of this country that the destruction of their public services and loss in incomes is inevitable.

The FT article discusses the latest corporate reporting season with glee: corporate profits are up and shareholders are celebrating. In both the UK and the US the profits of companies are demonstrating an 'extraodinary resilience': 'Companies on both sides of the Atlantic escaped the financial crisis in fine fettle.' The article is called, in a title I cannot help admiring in spite of myself, 'Bulls graze on resilient corporate earnings'.

I have been searching for some time for data that explores the share of productive value in this country which goes to employees and companies. The difficulty of finding such data is evidence in itself of the politically biased nature of research funding and the consequence of the privatisation of the Office for National Statistics, undertaken by Gordon Brown in 2005. Private-sector data gatherers collect the data that the profitable want to know about.

The best data I have been able to find come from a report by the TUC called Unfair to Middling. They show that much more of the value created in our economy is going to owners than to earners. Since the 1970s the share of wages and salaries has dropped from a high point of 65% in 1975 to just above 50% now. By contrast the share of profits has risen to almost half. The burden of taxation falling on individuals went up from around £50bn. in 1990 to £110bn. in 2000 and £150bn by 2009. At the same time the tax on corporate profits, which increased massively during this period, increased more slowly. That is because the taxes on business profits have been cut: during the past decade they have fallen from 32% to 23%.

The conflict of the 1970s is not warmly remembered, but it was that generation's refusal to accept inequality that won a relatively comfortable and prosperous life for working people. On this day of international worker solidarity we should remember that it was solidarity and struggle that brought us some measure of equality, and unless we continue to fight for them, these gains will be lost.

Perhaps it is just about time that we all told Mr Cameron to 'Calm down, dear'. We have had more than we can stomach of his politically motivated whipping up of an atmosphere of austeria which is used to conceal a massive reallocation of wealth within our society.

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