tag:blogger.com,1999:blog-58890267697611330732024-03-13T14:47:09.044+00:00Gaian EconomicsAll other green campaigns become futile without tackling the economic system and its ideological defenders. Economics is only dismal because there are not enough of us making it our own. Read on and become empowered!Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.comBlogger722125tag:blogger.com,1999:blog-5889026769761133073.post-9797908466898262272014-08-25T12:52:00.002+01:002014-08-25T12:53:31.434+01:00Sovereign and Sovereignty<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-Yyq4Rb3EI0o/U_sjfRB55iI/AAAAAAAACUA/apcx2meYOsg/s1600/blackadder3.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-Yyq4Rb3EI0o/U_sjfRB55iI/AAAAAAAACUA/apcx2meYOsg/s1600/blackadder3.jpg" /></a></div>
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I am wondering whether I can persuade the cast of Blackadder to assemble
for one last hurrah. The plot will revolve around the growth of greed in Regency
England. It can make refer askance to the South Sea Bubble. The century is
entirely wrong but who will care?</div>
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Blackadder has become caught up in speculative frenzy. Being immoral but
not irrational he is not a very successful trader. He either cannot understand
or cannot accept that liabilities are actually assets and this weakens his
ability to trade effectively. Baldrick, by contrast, is making money hand over
fist trading turnips, night soil, the future value of Prince George's sock
collection, and so on.</div>
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Cut to Mrs Miggins's pie shop which is abuzz with talk of the positions her
customers are taking. Everybody has abandoned their trade in favour of
speculation. Suddenly Shelley, in his big girl's blouse, leaps onto the table to
decry the 'irrefragable injustice' of the national debt. He is pelted with old
pie crusts.</div>
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Conversation moves to gossip about new schemes, with a crescendo of
excitement around the potential of investments in a mosquito-infested swamp in South America. Shares
are increasing rapidly in value. Baldrick has abandoned his current investments
to put all his money into this new colony. Nobody is sure who is behind the
scheme but nobody can afford to be left behind. Eventually, Blackadder persuades
Prince George to trade the national debt for a share of the swampy settlement.</div>
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The inevitable happens and the mosquito coast is revealed to be worthless
and everybody loses their shirt, including all the Romantic poets who had not
been able to resist a flutter. Baldrick is philosophical about his losses, since
he is left with more turnips than he knows what to do with. Prince George has
transferred his debts to his subjects and still has plenty of socks. Blackadder
is revealed as the eminence grise behind the scheme but can no longer be found
in London.</div>
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The point of the plot is not complex but then neither is the fraud we have
all been subject to. What can we propose in terms of a happy ending? Baldrick
sets up his own currency based on root vegetables? The people storm the Bank of
England to demand direct money creation? Blackadder is tired for treason and his
flat in Cheyne Walk is confiscated? Sadly, this is the point where Prince George
wakes up and realises is was all a dream.</div>
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. </div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com1tag:blogger.com,1999:blog-5889026769761133073.post-35505605556507280582014-03-19T07:40:00.000+00:002014-03-19T07:40:26.094+00:00Garden of Eden Accessible by High Speed Rail<div class="M j Qj Ej " role=" " style="-webkit-user-select: text; padding: 0px 15px 15px; text-shadow: none !important;" tabindex="0">
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<span style="background-color: rgba(255, 255, 255, 0);">Q. When is a garden not a garden</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">A.</span><span style="background-color: rgba(255, 255, 255, 0);"> </span><span style="background-color: rgba(255, 255, 255, 0);"> </span><span style="background-color: rgba(255, 255, 255, 0);">When it's a quarry</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">In spite of Kent's claim to be the Garden of England, one might not have automatically thought of Ebbsfleet as the most likely site for the country's new garden city. So how would we assess Chancellor George Osborne’s claims to the visionary nature of his proposal for a development of 15,000 houses in an old quarry site near the high-speed line to Paris? Would Ebeneezer Howard have recognised him as a soulmate?</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">The Chancellor is an educated man but you do feel he might not have read that deeply on the garden city movement. Scepticism about his choice of location was fended off with the response that '<span lang="EN-US">there is the land </span>available' and that Ebbsfleet has a high-speed line nearby. Surely the vision for a 21st-century garden city should be focused more on sustainable communities than speedy commuting? I would certainly have expected to see plans for food-growing emphasised rather than transport infrastructure.</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">But the heart of Osborne's disagreement with the original garden city movement lies in the issue of the ownership of land and the value that comes from it. Howard's ideas were about liberating people from oppressive landlords and financiers to become genuine owners of their own homes and communities. It is clear from Osborne's statement that the houses at Ebbsfleet will be built by '<span lang="EN-US">an urban development corporation’ and</span> that the business model, like the model for the new town itself, are actually part of the same busted-flush economy of profit extraction for the enrichment of a wealthy minority.</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">The call for garden cities grew out of the appalling conditions in the smoky Victorian slums. A breath of fresh air and a reconnection with the countryside was part of the vision but it was matched by the idea of capturing the value of land once it had housing built on it and channelling this money into public services, cultural activities and high-quality social housing. If the value developers usually receive in return for planning permission was socialised rather than privatised we could expect to see well-designed, energy-efficient homes, built of top-quality materials and with large gardens.</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">The vision of the garden city runs alongside the idea of the greenbelt, an area around urban settlement that would allow people access to nature and would prevent urban sprawl. It is exactly this approach to planning that has been threatened by this government’s planning policies, with their centralised determination of appropriate housing numbers for local communities and the presumption in favour of ‘sustainable development’, which has meant that local planning authorities’ attempts to refuse housing on unsuitable land are being repeatedly overturned by the Planning Inspectorate.</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">The announcement of a 'garden city' is a clear attempt to divert attention from the rebellion underway in the Conservative Party of its disastrous planning policy and the rebarbative Communities Secretary who is imposing it on unwilling local communities. Pickles's junior, Planning Minister Nick Boles, is taking stick from Tory councillors who are outraged by the way the changes to planning mean that they have lost control of local spaces, with the 'presumption in favour of sustainable development' allowing construction corporations to ride roughshod over local wishes and local plans.</span></div>
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<span style="background-color: rgba(255, 255, 255, 0);">I have several friends who stopped volunteering when the Conservatives made political claims to ownership of the Big Society. Why should their goodwill be used for corrupt political motives?, they asked. I fear that the Chancellor's cheap political use of the idea of a 'garden city' may have the same destructive impact on the creative wish to build one's own home that has been stirred by the likes of Kevin McCloud. A true garden city is a place of inspiration and liberation; the proposal for 15,000 houses in an old quarry in Kent is an insult to the memory of the pioneers of the movement.</span></div>
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Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com1tag:blogger.com,1999:blog-5889026769761133073.post-78059095276647919822014-02-03T12:19:00.001+00:002014-02-03T12:20:20.112+00:00A Common European Home<!--[if gte mso 9]><xml>
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<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-HFLG9OhDHY0/Uu-JWEyL3gI/AAAAAAAACS4/DTZNj9f48hM/s1600/Bershka_on_Unirea_Shopping_Center_Bucharest_2010.JPG" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-HFLG9OhDHY0/Uu-JWEyL3gI/AAAAAAAACS4/DTZNj9f48hM/s1600/Bershka_on_Unirea_Shopping_Center_Bucharest_2010.JPG" height="240" width="320" /></a></div>
<div class="Body">
Cameron's meeting with Hollande last week underlined again our isolation from the central European debates, while last month's vote European Parliament indicates the strong majority in favour of total free movement within Europe. While it would be wrong to suggest that there is anything like consensus over this issue, since there are already many anti-immigration members of the Parliament and their numbers are likely to swell after May's elections, there is a centre of gravity around the idea that once within the Europen home, citizens are free to seek better lives in other member states.</div>
<div class="Body">
<br /></div>
<div class="Body">
The moral commitment supporting this position, although often
unstated, is that everybody within the European Union has an equal right to a
certain standard of living, usually measured in purely material terms. This position has been driven particularly by
German members who extended their own sense of responsibility for their
brothers and sisters in the East to make this a Europe-wide understanding that
the countries of Central and Eastern Europe deserved a lifestyle similar to
those in the West. After the fall of the Soviet Bloc it seemed churlish not to
welcome Czechs, Bulgarians and others who had escaped communist domination into
the wealthy and free culture of western Europe.</div>
<div class="Body">
<br /></div>
<div class="Body">
At an ideological level this position is fine, noble even; the
problem arises when it runs up against the limits of political economy. We are
being asked to share the wealth of Europe more equally between citizens who begin
with wildly different levels of income. Yet this is not to be a managed process
it is to be a process determined by ambitious individuals who follow their
dreams in a random process. Aside from the financial transfers through the
European Convergence mechanism, what was the policy to ensure and equalisation
of incomes? Perhaps equally important, where was the questioning about quality of life, and about what the accession countries might be losing in their headlong rush to consumerism?</div>
<div class="Body">
<br /></div>
<div class="Body">
It adds to the complexity that the movement to equalise standards
of living between very different societies has taken place against a backdrop
of increasing corporate power, as trade unions have been attacked and
governments have retreated from strong regulation. In this context the
Enlargement made available to global corporations a skilled and yet poorly paid
workforce, and whether these people arrived in our countries or stay in their
own countries it is hard to argue that they do not put downward pressure on
wages and cause jobs to move eastwards. Given that at the time of Enlargement
many western democracies had socialist leaders, it is quite extraordinary that
they did not include in the deal some requirements for minimum wages, even the
transition towards an EU minimum wage. If the assumption behind policy-making
is really that we seek a Europe where citizens are equal in civil rights and
also in standards of living then such a policy was always essential.</div>
<div class="Body">
<br /></div>
<div class="Body">
The vision of Europe we were sold was one where our cousins to
the east would rise upwards to meet us in our halcyon luxurious lifestyles. Yet
such a vision always required rapid economic growth across the European
economy, for without it equality was bound to mean those in the pre-2003 EU
states facing a lower standard of living. Any growth that Europe experienced in
the past decade was largely credit driven, and now that the bubble has burst
growth is hard to come by and hence the pressure for equalisation has become a
downward pressure on living standards in EU member states.</div>
<div class="Body">
<br /></div>
<div class="Body">
As a Green Economist I am entirely committed to equality but I
must also recognise the limits of the ecological system on which we depend. I
cannot share the irrational exuberance of a socialist politician I once
discussed this with who told me 'I'm an old fashioned socialist: I believe
everybody should have a Ferrari'. The widespread and growing evidence that we
have reached the ecological limits, whether we are thinking about climate
change or biodiversity loss, suggests that the earth simply cannot sustain
Ferraris for all. The choice for European citizens is whether we follow the
Nationalists in keeping our Ferraris and leaving the Romanians with Ladas,
or whether we accept an egalitarian future even if it might mean rehabilitating the bicycle.</div>
<div class="Body">
. </div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com1tag:blogger.com,1999:blog-5889026769761133073.post-88213621650468389492014-02-01T09:25:00.002+00:002014-02-01T09:25:34.693+00:00Chronicle of a Crisis Foretold<a href="http://2.bp.blogspot.com/-H1W1TYUl6vw/Uuy9UX07vxI/AAAAAAAACSk/rh9CWju-S18/s1600/banco_Nacion.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a><i>A guest post by Paola Raffaelli, who is an expert in the Argentinian social economy and is studying for a PhD at Roehampton University</i><br />
<br />
<a href="http://1.bp.blogspot.com/-HqSIuaUTMy0/Uuy9aJxMMZI/AAAAAAAACSo/ETLIwc1RwzY/s1600/banco_Nacion.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-HqSIuaUTMy0/Uuy9aJxMMZI/AAAAAAAACSo/ETLIwc1RwzY/s1600/banco_Nacion.jpg" height="247" width="320" /></a>The crisis that occurred last week in Argentina is the unleashing of a cycle that began 40 years ago with the onset of neoliberal policies. This was exacerbated by a complex domestic and international situation. These factors that converged this time will be analysed, not losing sight of the structural perspective.<br />
<br />
This most recent crisis in Argentina is part of an economic cycle that has recurred frequently during the last 40 years: cycles of currency appreciation, currency flight, devaluation and financial strangulation. The reason lies in the national productive structure of the country: the agricultural sector dominates Argentina's exports but only provides a low level of employment whereas the industrial sector requires imports and but generates high levels of employment. Therefore, from the early 20th century onwards, productive (and Peronist) national models faced recurring crises caused by the limitation on obtaining the necessary dollars for the industrial sector to continue producing. The agricultural sector, that was advantaged by the 2002 devaluation but lost in economic terms during the last five years, has been pushing for a currency devaluation since 2008.<br />
<br />
The relationship with the dollar also has a social component. During these 40 years, Argentina’s economy has depended on the dollar, including the 10 years in which it was de facto dollarised as a result of the convertibility Law. Major purchases such as property are always made in dollars which helps to explain why Argentina is the country with the most dollars per capita after the US (around U$S1600 per person).<br />
<br />
Economic growth during the 10 years after the 2001 crisis averaged around 7% per year. But growth in a country that does not have its own energy resources (hence the motivatation for the the renationalization of YPF oil company) and with an outdated productive infrastructure is severely constrained. In turn, the lack of control over inflation, which was around 40% in 2013, and lack of trust in the government led to a currency flight of 20 billion pesos during the last 3 years.<br />
<br />
In order to wriggle out of a crisis that appeared inevitable, Cristina Fernandez de Kirchner’s government has, since April 2012, implemented restrictive measures to prevent currency flight. These began with the inability of withdraw cash outside the country and deepened to reach a 35% tax on purchases made abroad. Such measures are as impossible to understand for someone who is not Argentine as the despair we have about saving in dollars. These restrictions created a black market for dollars, called the 'blue dollar'. The escalation in the price of ‘blue dollar’ and the inflation increase in recent months could only lead to one outcome. Even if the government had tried to hold the price of the dollar in the last week there was a devaluation of nearly 20%, which adds up to 50% in the last six months (32% of devaluation and 15% increase in the purchase tax).<br />
<br />
What is driving the speculation is expectations. Speculation in the agricultural sector, where farmers hoarded their crops in expectation of the dollar increase (it is estimated there are crops stockpiled in silos worth about US$4bn). Speculation among importers, who due to an increase in the dollar, accelerated their purchases in order to reduce costs. Speculation of international companies waiting for a devaluation that would allow them reduce labour costs. From the most important communication media, government opponent since 2008, propaganda emerged during these five years in favour of devaluation and increased inflation. Thus, society as a whole acts according to a self-fulfilling prophecy.<br />
<br />
In turn, these crises that are brewing gradually take place within a conducive international framework. In recent times, the fall in commodity prices affected the inflow of dollars to Argentina, and the increase in energy imports to supply production further damaged the national current account. The crisis also occurred at the time when the US was withdrawing stimulus dollars for emerging economies such as India, Turkey and Brazil, Argentina's main trading partner. Finally, the Minister of Finance himself linked the outbreak of the crisis with international pressure, denouncing Shell for having withdrawn capital last week and trying to increase the dollar price.<br />
<br />
This crisis is the result of a distributive struggle among different actors, both internal and external, which play a role in Argentina's economy. And government by 'market pressure', which we can equate with the agricultural sector, international companies, domestic inflation and social pressure of banning the purchase of dollars within a more difficult international context than in previous months the months before, finally led to the devaluation.<br />
<br />
Argentina has a difficult scenario for 2014 with union claims of around 30%, 40% inflation and national currency reserves of less than US$30bn. Undoubtedly, Cristina Kirchner’s government faces its most difficult year and will have to find answers within heterodox economics if they do not want to betray their principles.<br />
. Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-35493842601706498642014-01-31T09:09:00.000+00:002014-01-31T09:09:23.544+00:00US Monetary Selfishness is Devastating for 'RoW'<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-iPkCYJVE0fw/Uutnu-cVOYI/AAAAAAAACSQ/PyQNfv6-OqA/s1600/bernanke.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://3.bp.blogspot.com/-iPkCYJVE0fw/Uutnu-cVOYI/AAAAAAAACSQ/PyQNfv6-OqA/s1600/bernanke.jpg" height="264" width="320" /></a></div>
Remember the World Series? The naming of this League has always struck me as an interesting insight into how the US sees the rest of the world. In reality only US teams play in the league, implying that the US is the world. Their economic and monetary policy has always adopted a similar worldview.<br />
<br />
The phrase 'the world is your oyster' has really described the approach the US has been able to take to global markets since the agreement at Bretton Woods in 1944 that dollars would become the fundamental backstop of all global value. This role used to be played by gold, which we all had a fighting chance of digging out of othe ground and so had some degree of neutrality. Since 1944 it has been paper money, under the control of the US bank the Federal Reserve.<br />
<br />
The agreement also stated that the US had to hold enough gold in Fort Knox to back the dollars it issued. But Nixon unilaterally abandoned that agreement in 1971 and since then the US has been able to create money at whim, and import goods from the world in exchange. This extraordinary and deeply unfair situation has funded excessive consumption and an impossible deficit at home, and left foreign countries - particularly China - holding vast quantities of US debt.<br />
<br />
Since the 2008 crisis, the US has used this unfair avantage to pour money into its economy to prevent it suffering the sorts of recessions we have seen in Europe - around $85bn. per month have been shovelled out through buying treasury bills back from financial institutions, in other words a massive amount of value being created and given to banks. Now the US has decided recovery is sufficiently secure to reduce or 'taper' this policy, but the financial institutions are objecting and the stock market has fallen radically as a consequence.<br />
<br />
You can see this <a href="http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=11403">discussed </a>in a useful video called The Epstein Report. It is also explains why this will lead to an increase in US interest rates. If you think of interest rates as the price of money it makes sense that, as the cheap or actually free money will be reduced, the price of money will tend to rise.<br />
<br />
But the consequences of such an interest-rate rise in the US are small beer compared to the devastating consequence of this policy to other economies across the world. US monetary selfishness has led to a financial collapse in Argentina and devaluation of currencies in Brazil and Turkey as the US, in the <a href="http://www.bbc.co.uk/news/business-25959096">words </a>of the Brazilian central bank governer, hoovers out of 'emerging markets' the money it is no longer injecting into its markets at home. Decades of openness in global finance, forced on the world's economies by the IMF, have left them completely vulnerable to this US policy, as there are no controls on capital movement and they cannot now establish barriers.<br />
<br />
Never has the US's selfishness been more clearly demonstrated. And never has the need for a global settlement on finance, agreed by all parties rather than imposed by the US, been more clear.Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com1tag:blogger.com,1999:blog-5889026769761133073.post-74880074555677913862014-01-24T09:28:00.001+00:002014-01-24T09:28:23.754+00:00Reclaiming the Economy<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-eA_WI3msg24/UuIyIuXcvXI/AAAAAAAACR4/LGycNwPxTHc/s1600/davos+2014.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-eA_WI3msg24/UuIyIuXcvXI/AAAAAAAACR4/LGycNwPxTHc/s1600/davos+2014.jpg" height="221" width="400" /> </a></div>
<div class="separator" style="clear: both; text-align: center;">
Davos 2014: Who is Wearing the Trousers?</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<span style="font-size: small;"><span style="font-family: inherit;">Surely one of the important roles the media plays in our modern society is framing the narrative, determining the parameters within which we understand reality. This week the world's media is doing an important job in normalising a situation where politicians who should be representing us are instead subjugating themselves to the elites who gather annually at Davos.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">In my recollection the role of the journalist at this point would be to challenge a situation where the most important decisions about how our economy will evolve over the next few years are being made by a group of self-selected wealthy people inside a ring of steel in a Swiss ski resort. But times have changed and journalists no longer see their role as having anything to do with speaking truth to power or working for the common good. In the reality they are normalising through their breathless broadcasts their role is to rush about the expensive venue seeking out the most important, rich, or famous person that they can find so that we will be gratefully able to hear their views.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">This morning, for example, I discovered that Matt Damon found himself surprised by the youth of the Finnish Prime Minister. Thanks for that helpful insight into the leading issues of the day. It's not that I don't like Matt Damon or that I'm not interested in his opinions, it's just that in my version of reality he belongs in Entertainment just as Michael Schumacher belongs in the Sports section of the broadcast, and the weather belongs in, well the weather. When I pay my TV licence I think the news I am paying for should be about important significant events and how those who we have elected to run the country on our behalf are going to tackle them.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">Which brings me to David Cameron, who is making a speech at Davos today. You might ask why he is making a speech in Switzerland rather than Scunthorpe or Swansea or somewhere in this country where people have the chance to vote for him and people are expecting him to represent them. The answer is very clear: he does not believe that the economy is any longer subject to any sort of democratic control. He has gone to Davos to offer the services of the working people of Britain to a corporate boss and what he is offering is cheap labour with poor conditions and cheap energy with wasted environments. If the Davos elites need fracking we'll give them fracking.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">Surely even Tory voters are horrified by this lack of self-respect in our country and our citizens. Are we so desperate that we have to send our politicians to Switzerland with a begging bowl to rattle in front of the corrupt and exploitative corporate elites? But our current politicians are working hand in glove with the corporations where they will take up well-paid non-executive positions when they retire, having worked for them undercover during their time in office. This unhealthy relationship has seen our resources privatised, our public services destroyed, and now our creative energies being sold off to the lowest bidder.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">It is this process of undermining democracy through the use of economic power that I would like to see dissected by decent journalists working to challenge power rather than rushing about through marbled halls sycophantically seeking it out.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;">. </span></span><br />
<br />Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com2tag:blogger.com,1999:blog-5889026769761133073.post-37051316505481789892014-01-08T11:35:00.000+00:002014-01-08T11:35:10.653+00:00Wafer thin MINT theory<!--[if gte mso 9]><xml>
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<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-GvWdi5AjOOg/Us03qGmFjLI/AAAAAAAACRo/DQSD9f-v-Ds/s1600/Jim_O_Neill__Goldm_2462209a.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-GvWdi5AjOOg/Us03qGmFjLI/AAAAAAAACRo/DQSD9f-v-Ds/s1600/Jim_O_Neill__Goldm_2462209a.jpg" height="200" width="320" /></a></div>
<div class="Body">
Ever since I first heard the idea of grouping together a number
of countries under the heading BRIC I began to wonder what on earth was going
on and what these countries might have in common. The first and admittedly
shallow question I asked myself was whether countries with the initial letter I
were being included in these groupings simply to make the acronym work. The
disgraceful dismissal of the Mediterranean economies as PIGS is a case in
point. Ireland's economy was certainly in trouble as a result of a housing boom
but otherwise had no place in this group. Could its usefulness in having an
initial 'I' actually have exacerbated speculative attack against its national
debt?</div>
<div class="Body">
<br /></div>
<div class="Body">
In recent days, and largely because he has a new <a href="http://www.bbc.co.uk/news/magazine-25548060">series </a>on Radio
4, the man who invented the acronym BRIC, Jim O'Neill, has emerged from the
shadows to claim his laurels. It is remarkable in economics how often a person
can be remembered for simply one phrase or concept, no matter how shallow, so
long as it supports a move that benefits the global economic elite. Jim O'Neill
it transpires is a Goldman Sachs man, part of the international club that
bankrupted the global economy: so why on earth is he being allowed to frame the
future direction of that economy on prime-time national radio funded by myself
and other British citizens?</div>
<br />
<br />
But let's return to my initial question about whether the idea of
the BRICs has any theoretical merit. The four countries involved have wildly
different cultural backgrounds, motivations, and religious orientations. India and China
being by far the most populous countries on earth are clearly very influential,
but their economic trajectories have been utterly different in recent years.
Brazil sits in the US's backyard, which has Left an indelible mark on its
political economy, while Russia has emerged during the past 20 years from
several generations of communism into a form of oligopolistic capitalism.<br />
<br />
<div class="Body">
<br /></div>
<div class="Body">
On considering this question more deeply it becomes obvious that
I am crediting the idea with much greater sophistication than it deserves or
claims. The answer to my question 'What do all these countries have in common?'
is a simple one: they have natural and human resources that can be exploited to
generate value for the global elites. They represent the most likely site for
the expropriation of value. Hence the term BRIC implicitly demonstrates how
globalisation works and the mindset of those who are driving it.</div>
<div class="Body">
<br /></div>
<div class="Body">
Which brings us to Jim O'Neill's new radio series and his
exciting new acronym MINT. (Incidentally his Wikipedia <a href="http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)">entry </a>tells us that he
previously included Korea in this list but has substituted Nigeria either for
theoretical reasons or simply to make a more attractive word.) The four
countries whose initial letters are combined to create the word MINT--Mexico,
Indonesia, Nigeria, and Turkey--again appear to have little in common other
than natural resources and willing governments.</div>
<br />
<br />
I accidentally caught five minutes of the programme on Mexico and
was shocked by the shallow application of crude theory, such as O'Neill's
dismissal of the thousand-year-old market in Mexico City as inefficient. His
level of analysis was frankly embarrassing and I questioned who could have
allowed him onto the BBC. But of course the program is not commissioned for its
insight but rather as an advert to those who are seeking new territories for
their investment. For this reason perhaps countries whose initial letter is a
vowel might think urgently about changing their names.<br />
<div class="Body">
. </div>
<div class="Body">
. </div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com1tag:blogger.com,1999:blog-5889026769761133073.post-85733517815543877872014-01-03T09:11:00.001+00:002014-01-03T09:11:38.461+00:00Secular Stagnation or Spiritual Growth?<!--[if gte mso 9]><xml>
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<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-IpTKRSyriIU/UsZ-mSQMARI/AAAAAAAACRY/-BgqxjYT-vg/s1600/vulture.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="213" src="http://3.bp.blogspot.com/-IpTKRSyriIU/UsZ-mSQMARI/AAAAAAAACRY/-BgqxjYT-vg/s320/vulture.jpg" width="320" /></a></div>
<div class="Body">
One of the techniques that economists use to control the global
economy and corner its value is to create concepts that constrain our thinking
about what is possible and how much change we may be able to achieve. Think
about the way the word 'stagflation' was used to influence the politics of the
1970s. The economic hypothesis that it was impossible to have high unemployment
and high inflation simultaneously was proved to be nonsense. Rather than
admitting their theories were wrong economists simply created the concept of
stagflation and blamed the power of labour for the 'failure' of the economy to
grow.</div>
<div class="Body">
<br /></div>
<div class="Body">
It seems that following the success of their bullying concept of
austerity economists have now moved on to the idea of 'secular stagnation' to
explain or constrain what is happening in the global economy. See, for example,
an article <a href="http://www.ft.com/cms/s/2/87cb15ea-5d1a-11e3-a558-00144feabdc0.html#axzz2pJmIyshM">published </a>in the FT by Larry Summers last month which includes the
phrase 'the implication of these thoughts is that the presumption that normal
economic and policy conditions will return at some point cannot be maintained.'</div>
<div class="Body">
<br /></div>
<div class="Body">
My interpretation of this article is that following the crisis of
2008 capitalism-as-usual can no longer be maintained. Capitalism is evolving
into a new form and Summers is trying to influence the form the new economy
will take. Of course the priority for global elites is to maintain a system
that enables their excessive wealth and power to continue. Austerity has done
this very effectively in the short term but in the longer term levels of
discontent will rise and Summers appears to be proposing an alternative
characterisation of future trajectory of our economy, for which he is using the
phrase 'secular stagnation'.</div>
<div class="Body">
<br /></div>
<div class="Body">
I have to say that I agree with Summers that the rules of the
game have changed: 30 years of politically unconstrained economic activity
ruled by market forces have resulted in a vast build-up of debt and widespread
ecological destruction, to say nothing of the huge and increasing levels of
inequality. Debt appears to have been the only viable stimulus outside the USA
which, because of the particular and illegitimate power of the dollar, can
simply create enough money to keep the economy growing.</div>
<div class="Body">
<br /></div>
<div class="Body">
Japan was the first country to move beyond economic growth and is
used by Summers as an example of secular stagnation in practice. The response
in the Japanese case was <a href="http://www.ft.com/cms/s/0/c26bc078-673d-11e3-a5f9-00144feabdc0.html?siteedition=uk#axzz2pJmIyshM">Abenomics</a>, a concept created by journalists to
describe the policies of Japan's prime minister Shinzo Abe over the past year
that have been focused on stimulating demand to end Japan's 'stagnant' decades.
The <a href="http://gaianeconomics.blogspot.co.uk/2013/05/growing-yen-for-truce-in-currency-wars.html">policy </a>menu has included dramatic increases in monetary stimulus at home,
combined with attempts at competitive devaluation of the Yen to encourage
exports. To address the lowering of domestic demand employers are encouraged to
increase wage rates and workers are <a href="http://www.bbc.co.uk/news/business-25395949">encouraged </a>to stay in the labour-market
longer; immigration by young productive workers is also encouraged.</div>
<div class="Body">
<br /></div>
<div class="Body">
Perhaps I should have pointed out earlier that to economists the
word 'secular' has nothing to do with religion but means a trend that persists
beyond the short and medium terms. So we might explain the phrase 'secular
stagnation' by saying that economists have concluded that the lack of growth is
now a defining characteristic of the global economy rather than a temporary
phenomenon. This is perhaps the most pernicious implication of the phrase: its
inherent suggestion that growth is good and that a stable economy is
stagnating. It is typical of the frenetic, perhaps adolescent, character of
capitalism that it must consider stability to be equivalent to stagnation.</div>
<div class="Body">
<br /></div>
<div class="Body">
Given my work with the Green House think-tank and our <a href="http://www.greenhousethinktank.org/page.php?pageid=postgrowth">Post-Growth Project</a> it is interesting and important to me to consider the political power
of countering the phrase 'secular stagnation'. We are in the process of
thinking through what the post-growth economy might imply in terms of political
engagement, the funding of public services, and the manipulation or otherwise
of consumer demand. But the most important first step we must all take is to
challenge the hegemonic nature of growth amongst economic commentators, of
which the concept of secular stagnation is merely the latest emanation.
Summers' suggestion that 'stagnation might prove to be the new normal' is
designed to be greeted with horror by orthodox economists; but the earth and her
defenders would greet it with a sigh of relief.</div>
<div class="Body">
. </div>
<br />Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-80526032473149427452013-12-16T08:21:00.002+00:002013-12-16T08:23:51.701+00:00If Ireland Represents a Success then the Model is Broken<!--[if gte mso 9]><xml>
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<div class="Body">
<span style="font-family: inherit;">Whatever your position on the Eurozone crisis it is an important
day for Ireland. Today the country <a href="http://www.bbc.co.uk/news/business-25339066">returns </a>to being a democratic sovereign
state after three years during which power was held by unaccountable
technocrats working in the interests of global finance. The fact that Ireland
can once again borrow in the finance markets is being heralded as a success for
austerity, but that rather depends on your perspective.</span></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-fYuqeOyh8cA/Uq6361thb1I/AAAAAAAACRE/uqzNQIXlwG8/s1600/irish+unemployment.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="218" src="http://4.bp.blogspot.com/-fYuqeOyh8cA/Uq6361thb1I/AAAAAAAACRE/uqzNQIXlwG8/s320/irish+unemployment.jpg" width="320" /></a></div>
<div class="Body">
<span style="font-family: inherit;">If Ireland's problem was that it had borrowed excessively then
this has certainly not been solved. The country's debt <a href="http://www.france24.com/en/20131213-ireland-becomes-first-euro-zone-state-end-bailout/">represents </a>124% of its
GDP, meaning that its people are working harder to pay money to absent
shareholders of foreign banks. The unemployment rate of 13.5% (see the <a href="http://www.google.co.uk/publicdata/explore?ds=z8o7pt6rd5uqa6_&met_y=unemployment_rate&hl=en&dl=en&idim=country:ie:uk:se">graphic</a>, left) is an
artificially low figure because of the high rate of outward migration, a
process that threatens the country's future by removing the most talented young
people. Meanwhile cuts in a range of social benefits and government programmes will
deepen and continue.</span><br />
<br />
<span style="font-family: inherit;">We should also be questioning how Ireland found itself holding
unpayable debts: what is its story as one victim of the msiguided Eurozone project. Because
the single currency area required a uniform interest rate for countries in
vastly different economic situations it was bound to destabilise particularly
the smaller economies. In Ireland's case the low Euro interest rates provoked
an absurdly euphoric boom in construction. The later <a href="http://gaianeconomics.blogspot.co.uk/2013/07/drop-debt-dublin-style.html">bailout </a>of the corrupt and
disreputable Anglo-Irish Bank at a cost of<span style="mso-spacerun: yes;">
</span>€440bn was the final straw for the Irish economy, which
became effectively bankrupt.</span><br />
<br />
<span style="font-family: inherit;">Ireland's political establishment chose to repay the country's debts and to
win the favour of financial elites, rejecting routes such as default, deflation,
or the repudiation of the debts as odious. This decision has come at a truly
hideous price for the people of Ireland. At the time of Ireland's latest budget
in September, the EU troika that was then effectively running the country
required Joan Burton, minister for social protection, to cut €440m
or just over 2% from the 2014 budget. Seamus Coffey of University College Cork
<a href="http://www.finfacts.ie/irishfinancenews/article_1026476.shtml">points out</a> the impact that the debt restructuring will have on future generations as 'excluding
interest costs and sovereign bank support, the total deficit in the six-year
period 2008-2013, will put debt of nearly €60bn more on us in services and
transfers than is [collected] from us in taxes and charges.'</span><br />
<br />
<span style="font-family: inherit;">The European authorities have decided to allow Ireland to keep
its extremely low corporate tax rate, allowing it to generate cash to pay to its creditors. This means that we, as Ireland's economic
neighbour, are also suffering as a result of the deal. US corporations,
particularly those in the high-tech sector including Apple and Google, set up
in Ireland where they are only <a href="http://www.npr.org/blogs/alltechconsidered/2013/12/12/250305565/amid-cuts-and-tax-hikes-tech-companies-get-love-in-ireland">required </a>to pay 12.5% tax rather than in the UK.
This also justifies George Osborne's decision to cut corporate tax rates here on the basis of the need for us to be competitive.
While Ireland's time with the bailout programme has turned it into a beggar
its route out of the crisis is also beggaring its neighbour.</span><br />
<br />
<span style="font-family: inherit;">This sort of competition between countries should be cooperating for mutual benefit
is an inevitable consequence of globalisation. It is the very system itself,
with the free movement of capital and lax regulation of corporate activity, that
is enabling capitalists and particularly financiers to benefit at the expense of
the citizens of the world.</span></div>
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<![endif]-->.Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-61997426909420326532013-12-14T09:07:00.001+00:002013-12-14T09:07:29.283+00:00Bursting the Bubble of Carbon Finance<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-Utr1Kn6M05E/Uqwfw6l4peI/AAAAAAAACQ0/6Cq6ZKv_JxU/s1600/coal-divestment.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="188" src="http://4.bp.blogspot.com/-Utr1Kn6M05E/Uqwfw6l4peI/AAAAAAAACQ0/6Cq6ZKv_JxU/s400/coal-divestment.jpg" width="400" /></a></div>
<span style="font-family: inherit;"><span style="font-size: small;">The idea of a carbon bubble first came to my attention when I was
researching a <a href="http://www.greenhousethinktank.org/page.php?pageid=responses">submission </a>to the Environmental Audit Committee's Inquiry into
Green Finance on behalf of the Green House thinktank. Anmongst other questions they asked:
</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;">
</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;">'How effective are the financial markets in matching available finance to
the required investment in renewable energy and other green projects? To what
extent is a potential “carbon bubble” a real risk?'</span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;">
</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;">
</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;">They referred those providing evidence to a <a href="http://www.carbontracker.org/wastedcapital">page </a>from the seemingly well
funded Carbon Tracker project which seeks to quantify the over-valuation of what
they refer to as 'stranded assets'. The project seeks to put a value on the carbon-related assets that cannot be realised if we seriously address the issue of
climate change. Once we introduce rigorous carbon limits the fuel their value relies on becomes unburnable and therefore the value is lost. Carbon
Tracker reports frighteningly large numbers of potentially stranded assets: they
take a value of $4trillion in 2012 that is used servicing $1.27trillion in
outstanding corporate debt.</span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;">
</span></span><div>
<span style="font-family: inherit;"></span><span style="font-family: inherit;"></span></div>
<span style="font-family: inherit;"><span style="font-size: small;"></span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;">
</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;">The frightening way of framing of this discussion is that once the over-valuation
is recognised it could precipitats another collapse in financial markets and
another financial crisis. This always seemed to me hugely naive suggesting that
the rich and powerful who control these assets would permit political decisions
on climate change to destroy their value. It was in this vein that I responded
to the EAC inquiry:</span></span></div>
<div>
<span style="font-family: inherit;"><span style="font-size: small;"> </span></span></div>
<div>
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</xml><![endif]--><span style="font-family: inherit;"><span style="font-size: small;">'The idea of a "carbon
bubble" assumes that legislation passed in the wake of concern about climate
change to limit carbon dioxide emissions is more powerful than the political
influence of fossil-fuel companies. While we would like to believe that this is
the case we suggest that it is a rather naive position. Is it not more likely
that, if energy companies find themselves with quantities of fuel that cannot
be burned within existing carbon limits, they lobby to have those limits
changed rather than allowing their investments to be diminished? We suggest
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<span style="font-family: inherit;"><span style="font-size: small;">Then I simply forgot about the debate. What brought it to my attention again was the machinations of self
publicist MP Jacob Rees-Mogg and the internal Tory party debates about green
crap and green levies. As I <a href="http://gaianeconomics.blogspot.co.uk/2013/11/tories-attack-on-green-levies-to-defend.html">blogged </a>earlier, it seems fairly apparent that the
concern of Tory grandees is for their own assets and not shivering
pensioners. Here we see the playing out of the political end-game of climate change. The post-fossil world is one of community-owned energy and economic liberation, so there is no surprise that climate change is a battle based in political economy rather than science.</span></span></div>
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</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;">The discussion about the carbon bubble issue has become a dialogue of the deaf
between holders of carbon-related assets and those who are fearful about The
Financial Crisis round II. How refreshing it was, therefore, to be at the Compass Youth <a href="http://www.compassonline.org.uk/events/carbon-bubble-the-next-economic-crisis-in-the-making/">meeting </a>on this issue at Portcullis House last week. Although the meeting itself was
advertised in a fairly scary way, through debating the issue we discovered that
in reality we may not be facing a catastrophic economic collapse but an orderly transition to a post-fossil future matched by a gradual reduction in the value of carbon-related assets.</span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;"></span></span><span style="font-family: inherit;"><span style="font-size: small;"></span></span><div>
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<span style="font-family: inherit;"><span style="font-size: small;">
</span></span><div>
<span style="font-family: inherit;"><span style="font-size: small;">In a strange way it is even encouraging that Bloomberg recently <a href="http://www.bloomberg.com/now/2013-12-05/introducing-our-carbon-risk-valuation-tool/">launched </a>their carbon risk valuation tool. Investors and those who serve them seem unconvinced by the Tories' dinosaur protection plans and appear to see the wind is
blowing in the direction of renewables. And we can all play our part here by
encouraging those who hold our assets, whether our pension funds, universities, or local
authorities, to <a href="http://www.huffingtonpost.com/tim-brennan/climate-change-divestment_b_2768852.html">divest </a>from carbon assets just as they have or should have divested from assets relating to tobacco, alcohol and arms.</span></span></div>
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Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com1tag:blogger.com,1999:blog-5889026769761133073.post-30113158387421953022013-12-02T13:43:00.000+00:002013-12-02T13:43:32.594+00:00Smile: It's a Co-operative Bank<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-UzopwiBPquo/UpyOfBefT8I/AAAAAAAACQk/H_z2HnioDRM/s1600/paul+flowers2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="240" src="http://2.bp.blogspot.com/-UzopwiBPquo/UpyOfBefT8I/AAAAAAAACQk/H_z2HnioDRM/s320/paul+flowers2.jpg" width="320" /></a></div>
It's been a challenging few weeks for those of us who hold an ideology to the left of the political spectrum. I don't know whether I was more astonished to discover that the road to serfdom goes via the Brixton Maoist Centre or that my apparently ethical bank was actually being run by the 'crystal methodist'. I'm only waiting to discover that Shelley was an incestuous just peadophile for my despair to be complete.<br />
<br />
I would hazard a guess that you shared my frustration after the financial crisis to hear from many economists and their media supporters that the answer to the disaster was not fewer markets but more markets. So I hope you will forgive me if I will paraphrase this response and argue that the answer to the crisis in the co-operative sector is more mutualism not less.<br />
<br />
Ed Mayo, Director of Cooperatives-UK has been <a href="http://edmayo.wordpress.com/2013/11/23/after-a-bone-shaker-of-a-week-3-things-to-remember/">quoting </a>the Financial Times's comment that the problem with the Co-operative Bank was not that it was a co-operative but that it was a bank. I would take issue with this comment on the basis that the Co-operative Bank a co-operative in the sense in which I understand that term. It was the bank of the Cooperative Group but it was never a membership organisation and I could never influence it policy although I have had my account there for years.<br />
<br />
As an earlier guest post on this blog <a href="http://gaianeconomics.blogspot.co.uk/2013/06/what-is-going-on-at-co-operative-bank_18.html">demonstrates </a>the bank was following its market competitors by engaging in a whole range of activities that I feel its customers and members would never have sanctions have they been offered a choice. The contrast between the activity of the Co-operative Bank and the Nationwide Building Society, a large but none the less mutual organisation, is instructive. The Nationwide, a genuine mutual which has more than doubled its 'profits' this year, is <a href="http://www.bbc.co.uk/news/business-24953026">anxious </a>that it is not tarnished by the problems at the non-co-op Co-operative Bank.<br />
<br />
For me the principles of co-operation are not challenged by the antics of Mr Flowers. Businesses run by the members for the benefit of the members and that do not deliver services to external shareholders are still the ideal form of economic organisation in my book. I have an account with the Co-operative Bank because it was part of the movement that subscribes to these values; I was always disappointed that it was not a genuine cooperative.<br />
<br />
The problems for the co-operative movement is that it appears to have lost it sense of purpose and its ethical stance is now under challenge. To save its reputation it needs to divorce itself from those who would influence it, whether market players or Labour Party insiders. We need the cooperative to become truly ours. It is our job to wrest control back from those who would use it in their sectional interest and to make it the truly mutual business sector it has always promised to be.<br />
.Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com2tag:blogger.com,1999:blog-5889026769761133073.post-1841126816274356252013-11-25T08:01:00.001+00:002013-11-25T08:01:48.289+00:00Royal Bank of Scandal Reaches New Low<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-KkfUGpgz4QU/UpMDtDyv9fI/AAAAAAAACQU/Q14SxwMQwR0/s1600/calbe-and-tomlinso_2744291b.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="200" src="http://4.bp.blogspot.com/-KkfUGpgz4QU/UpMDtDyv9fI/AAAAAAAACQU/Q14SxwMQwR0/s320/calbe-and-tomlinso_2744291b.jpg" width="320" /></a></div>
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The Tomlinson Report into the practices at the Royal Bank of Scotland, compiled under instruction from Vince Cable's Business Department, has been passed to the Financial Conduct Authority we <a href="http://www.independent.co.uk/news/uk/politics/rbs-drove-businesses-to-collapse-before-stripping-their-assets-8960879.html">read </a>this morning. It will apparently demonstrate that the bank that we saved and which we own, had gone beyond being parasitical on the businesses of this country to actively working to destroy them and profit from their demise. It has long been clear that the financial sector in this country is sucking the lifeblood out of our economy, but the fraudulent nature of RBS's business activity takes us to a new level of revulsion.</div>
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Since the crisis of 2008 banks have found it more difficult to generate huge profits that were possible at that time. They have looked for ever more ingenious ways to exploit their customers which has given rise to a continuing tale of scandalous mis-selling, first selling insurance against potential redundancy to employees who did not need it, then selling financial products known as swaps to small businesses who had no need for them or understanding of them.</div>
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But the latest scandal to be revealed in the Tomlinson report is another step down the ladder into the slough of public opprobrium. It relates to one part of the bank known as the Global Restructuring Group (GRG). RBS's customers who got into difficulties paying back their loans were sent to this part of the bank apparently to receive help with turning their businesses around. Instead they were deliberately charged high fees so that they would become bankrupt, enabling the bank which had inside information to be the first on the scene to pick up their assets cheap. This is a shocking allegation that will now be investigated by the Financial Conduct Authority that has received a detailed report on the activity from the Business Innovation and Skills Department.</div>
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It has been clear for years that the banking sector in the UK is pernicious and not serving the real economy, but to find that it is actively working to destroy the small businesses that we need for our economy to thrive is another shock. It undermines yet again the suggestion that what we need is a change of culture in banking. What we actually need is significant structural reform and a much stronger role to be played by politicians in controlling what is possible in this most important sector in a capitalist economy.</div>
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Here is a simple idea which I have suggested before but which seems particularly relevant today: the Royal Bank of Scotland should be broken up and turned into a system of local community banks on the model of the German banking system which has done so much to support their Mittelstand - the layer of small and medium-sized enterprises that is the engine of the German economy. Each local bank could include local business people and others with an understanding of local economic needs on its board. It could still lend at interest but do so in a way that served its local economy and built its resilience rather than actively destroying businesses.</div>
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That a bank would work to undermine its customers for its own advantage is shocking and probably fraudulent, but that this activity would be undertaken by a bank that owes its existence to public support and is 80% <a href="http://www.investors.rbs.com/equity_statistics">owned </a>by the public is, quite frankly, unbelievable. Of all the politicians who have been in a position to act on the disasters of the British banking system, Vince Cable has been the most disappointing. He clearly has the knowledge about how to do the right thing so we can only assume that he does not have the power within the coalition. Let us hope that this latest and most shocking scandal gives him the authority to take the action our small businesses so desperately need.</div>
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Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-7542494309009692612013-11-15T07:56:00.002+00:002013-11-15T08:00:12.473+00:00Living off Our Children<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-uHrU5u6s8CA/UoXRAGwk8TI/AAAAAAAACQE/AVLDZHpiEq4/s1600/student+debt.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="308" src="http://4.bp.blogspot.com/-uHrU5u6s8CA/UoXRAGwk8TI/AAAAAAAACQE/AVLDZHpiEq4/s400/student+debt.jpg" width="400" /></a></div>
On Wednesday next week, 20th November, students across the country will
unite under the banner of the Student Assembly Against Austerity to
protest the planned privatisation of the Student Loan Company. The
outrage of pushing young people into debt before they even understand
the implications lay at the heart of the protests against the increase
in student fees two years ago. But the sell-off of the Student Loan Company
to fill a hole in the public finances pushes students not just into debt but into the clutches
of private finance companies.<br />
<br />
The students have a <a href="https://www.facebook.com/events/234623673369439/?fref=ts">Facebook </a>page to publicise events.It
shows that across the country from Aberystwyth to Essex students will
be demonstrating against their use as a cash cow for cash-strapped
government. In Liverpool students will be running a<span style="background-color: rgba(255, 255, 255, 0);"> ‘student debt obstacle
course’ and collecting signatures on a petition to send to local MPs. In York they will be having a more traditional rally with speakers. We need to lend them our support wherever and whenever we can to resist what is a mechanism to allow us to feed off their future earnings.</span><br />
<br />
The reason that the student loans are attractive to finance companies
is that they are prime material for securitisation - the process of
financial alchemy that turns an illiquid asset into something that can
be bought and sold and used for speculation. It
was exactly this process, with sub-prime mortgages, that lay behind the
financial bubble and then bust back in 2007/8. The original asset, the
loan to a student, generates a slow although dependable income as
repayments are made. But once bundled together and turned into a
security these debts can be bought and sold in secondary markets where
much greater speculative earnings can be made. This explains the appeal
of the Student Loan Company to financial sharks.<br />
<br />
My <a href="http://www.greenhousethinktank.org/files/greenhouse/home/Universities_inside.pdf">report </a>for the Green House identified the problems generated by a university financing model based on debt. It demonstrated that this is a political choice, in my view based as much on the desire to create docile citizens and willing workers as to save pressure on the public finances. I argued that the privatisation of student debt as part of the plan from the start:<br />
<br />
<div data-angle="0" data-canvas-width="24.752" data-font-name="g_font_50_0" dir="ltr" style="left: 420.16px; top: 462.72px; transform-origin: 0% 0% 0px; transform: rotate(0deg) scale(0.945334, 1);">
<span style="font-family: inherit;"><span style="font-size: small;">'This determination to sell student debt was partially confirmed in the 2010 Budget in which the government said it would in the next 12 months 'announce its decision on selling part of the student loan portfolio, including looking at the options for early repayment for individuals, in light ofLord Browne’s review of higher education finance. (Budget 2010, pg 44)'</span></span></div>
<br />
<span style="font-size: small;"><span style="font-family: inherit;">The report quotes data from a study by Grant Thornton that demonstrates how the debt system of finance will exacerbate inequality between students and work against social mobility. The research calculates that those who
will lose most are those on high but not
excessively high incomes. In their
comparison of three representative
workers, all of whom graduate with a
debt of £40,000, the journalist who
never achieves a high income has the
vast majority of her interest written off
because she does not earn enough to
repay it. The barrister (a representative
high earner) repays his loan together
with £28,000 of interest. The loser is
the civil servant who, although he
makes rapid career progression, does
not earn enough to pay off his loan
rapidly, and so incurs interest of
£58,000 as well as his loan of £40,000.
These are staggering sums of money,
and indicate that the students of the
future will be funding those financial
companies to whom the government
will sell on student debt handsomely. </span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: inherit;">I end the report by suggesting radical egalitarian models for funding higher education arising from an open debate about the
ownership and division of the product
of academic labour, which in
other sectors i sometimes addressed
by the creation of a mutual structure. Under the supervision of Professor Rebecca Boden we have a student exploring options for a co-operative university at Roehampton. The discussion will also be taken forward at a meeting called Time for a Co-operative University? at the Institute of Education, Thursday 12 December 2013, 5.30-7.30pm, Room 804 </span></span><br />
.<br />
<br />
<br />Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-23870722830488795292013-11-04T08:36:00.002+00:002013-11-04T11:04:36.519+00:00A New Carbon Budgeting Tool<div>
<div>
<span style="font-family: inherit;"><i>A guest post from Aubrey Meyer of the Global Commons Institute</i></span></div>
<div>
<span style="font-family: inherit;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-pAY35WVRcvM/Undb0pFh_oI/AAAAAAAACPs/4FmRAugWgYc/s1600/CBAT.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="206" src="http://4.bp.blogspot.com/-pAY35WVRcvM/Undb0pFh_oI/AAAAAAAACPs/4FmRAugWgYc/s320/CBAT.png" width="320" /></a></div>
<div>
<span style="font-family: inherit;">In the light of the positive
attention to 'Contraction and Convergence' shown by the Gaian Economics blog, please may I introduce you to
CBAT, the 'Carbon Budget Analysis Tool'.
</span></div>
<div>
<span style="font-family: inherit;"><br /></span></div>
<div>
<span style="font-family: inherit;"><a href="http://www.gci.org.uk/cbat-domains/Domains.swf">CBAT </a>is
the latest phase of C&C development: and</span><span style="font-family: inherit;"> is intended to be useful now that - following the IPCC's Fifth Progress <a href="http://www.ipcc-wg2.gov/AR5/ar5.html">Report </a>(AR5) - 'carbon-budgeting' seems finally to be on the agenda.</span></div>
</div>
<div>
<span style="font-family: inherit;"><br /></span></div>
<div>
<div>
<span style="font-family: inherit;">For example, the analysis tool quickly <a href="http://www.gci.org.uk/CBAT1_i-5a.html">shows </a>the IPCC AR5 Contraction-to-Concentrations results as a result of the UK
Climate Act (UKCA). </span><span style="font-family: inherit;">This particular
piece of analysis shows the emissions-budget-integral in the UK Climate Act is
either: -</span></div>
<blockquote dir="ltr" style="margin-right: 0px;">
<div>
<span style="font-family: inherit;">[a] <i>twice</i> too much (and that's without the feedbacks) or</span></div>
<div>
<span style="font-family: inherit;">[b] just a third too much
or </span></div>
<div>
<span style="font-family: inherit;">[c] just
right</span></div>
</blockquote>
<div>
<span style="font-family: inherit;">This really gives one something
to chew on over regarding IPCC's stated '1,000 Gt C' maximum for two degrees!</span></div>
<div>
<span style="font-family: inherit;"><br />Its also interesting to see/play that combined that with
contraction-convergence-rates CBAT Domain Two. </span><span style="font-family: inherit;">CBAT Domain Two perhaps
<a href="http://www.gci.org.uk/CBAT1_i-6a.html">explains </a>why the prescribed global convergence date of 2050 in the UKCA was so
inflammatory at COP-15. </span><span style="font-family: inherit;">The convergence
to equality by 2050 in the UKCA was something of a fig-leaf and using CBAT D2
animation quickly shows that. </span><span style="font-family: inherit;">Its quite an eye-opener i.e. convergence by the time 80% of the budget has
been used up makes no real difference at all.</span></div>
<div>
<span style="font-family: inherit;"><br /></span></div>
<div>
</div>
<div>
<span style="font-family: inherit;">GCI has always modelled that convergence for any rate of global emissions
contraction should be at a negotiated in the light of 'historic
responsibilities'. </span><span style="font-family: inherit;">Subject to the UNFCCC-compliance rates of Contraction and Concentrations in
D1, the animation D2 clearly shows the maths sub-division of this.</span></div>
<div>
<span style="font-family: inherit;"><br /></span></div>
<div>
<span style="font-family: inherit;">The CBAT is open to consultation and amendment so please take some </span><span style="font-family: inherit;">time to look at it and comment
on it. </span><span style="font-family: inherit;">So far some others have and said supportive
things, which is encouraging which are available on our <a href="http://www.gci.org.uk/Responses_to_CBAT.html">website</a>.</span></div>
<div>
<div>
.</div>
</div>
</div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-71112214424888320392013-11-01T08:39:00.002+00:002013-11-01T08:43:23.616+00:00Tories Attack Green Levies to Defend their Carbon Interests<div class="separator" style="clear: both; text-align: center;">
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<div class="MsoNormal">
For a Green who came into the movement more because of
social justice than environmental concerns it is heartening for me to see the
opposition to equality and to environmental protection beginning to coalesce
into one mass of odious opposition to a just and sustainable future. The
specific example of this in recent days has been the active lobbying by Tory
squires from the shires against the green levies on energy bills.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Nafeez Ahmed, who writes for the Guardian on matters of
energy, has provided some excellent forensic analysis of the real interests
that lie behind the faux concern for pensioner fuel poverty of parliamentarians
like Jacob Rees-Mogg, MP for North Somerset. As well as being a prominent
controversialist, Mogg is frequently to be heard issuing windy rhetoric about
the dangers of environmentalism and the problems with renewables. In his world,
coal is still king and the market should be allowed to reign supreme.<br />
</div>
<span lang="EN" style="mso-ansi-language: EN;">We might dismiss this as a lot of
hot air were it not for the fact that the hot air is issued for a very specific
purpose: to keep inflated the <a href="http://www.theguardian.com/environment/2013/nov/01/gore-warns-carbon-bubble">carbon
bubble</a> that many argue is more of a risk to our futures than the financial
bubble that led to the 2007/8 financial crisis. The concern about the ‘carbon
bubble’ is that the world has a vast overhang in terms of the value of fossil-fuel-related
assets. As policies to tackle climate change are introduced this value will be
suddenly undermined, leading to a collapse in energy commodity prices and the finance
that is tied to them.</span><br />
<br />
<div class="MsoNormal">
<span lang="EN" style="mso-ansi-language: EN;">I have always
found this a somewhat naïve argument: since it is the world’s richest and most powerful
people who own the assets, fossil and financial, they are hardly likely to see
the value of those assets eroded without a fight. Much more likely that they will launch a full-scale assault
on the political consensus around pro-climate policies, which appears to be exactly
what we are seeing in the antics of Mogg and his ilk. </span>Their insidious
attempts to undermine the scientifically evidence about the anthropogenic
origin of climate change and the urgent need to address the issue flies in the
face of the public interest but is very much in their own private interest.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As Ahmed writes:<br />
</div>
<span lang="EN" style="mso-ansi-language: EN;">‘Rees-Mogg is a founding partner
at Somerset Capital Management (SCM), a global asset management fund where he <a href="http://www.theyworkforyou.com/mp/24926/jacob_rees-mogg/north_east_somerset">currently
works</a> as a macro specialist while also being an MP. Among its many
investments, SCM specialises in emerging markets, including in the energy
industry. Its <a href="http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=DTFN1">largest
holdings</a> include oil majors such as the China National Offshore Oil
Corporation (CNOOC) - which for instance is spearheading <a href="http://www.rigzone.com/news/oil_gas/a/124625/CNOOC_Completes_Nexen_Buy_News_Follows_SinopecChesapeake_Deal">multibillion
dollar deals</a> to access the <a href="http://www.reuters.com/article/2011/01/31/cnooc-chesapeake-idUKN3017000120110131">North
American shale gas market</a> - and Russia's OJSC Rosneft Oil Company. ’</span><br />
<br />
<span lang="EN" style="mso-ansi-language: EN;">The wealthy who have unfortunately
been elected to run our country hold their wealth in exactly the sort of assets
whose value would be undermined if we were to introduce the sorts of policies that
tackling climate change urgently demands. Even the small steps along the road to
subsidising renewables, not to mention full-scale community ownership of generation
on the Danish or German model, would seriously threaten their profitability. So
while the Tories who attack green levies may speak of the poor pensioner in a cold
house their real interests lie much closer to home.</span><br />
<span lang="EN" style="mso-ansi-language: EN;">. </span><br />
<div class="MsoNormal">
<br /></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-15609887858935511182013-10-25T14:59:00.000+01:002013-10-25T14:59:00.665+01:00Street School Economics<div class="MsoNormal">
<i><span style="font-family: inherit;">A guest post from Dr Gail Bradbrook, an activist based in Stroud who is active in the Transition
and Tax Justice movements and sees economic literacy work as a way to
pull these concerns together</span></i></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">A few years ago I began my own journey towards economic
literacy. I’ve long been concerned about enabling a more equal, sustainable world
and yet how that related to changing the economy was a mystery. I had a pile of
vague words and notions in my head, sound bites and ideas, half of them myths.
They didn’t connect. </span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">With that comes a sense of disempowerment. Perhaps my
longings for justice were just silly in the face of basic economic theory.
Perhaps the economy emerged from our human nature and wanting it to be
different is an exercise in naivety. It’s certainly convenient if lots of us
feel like that and if we remain so cloudy in our understanding. Perhaps it’s no
accident that many of us do?</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">Street School Economics was borne of a personal desire to
understand more. Dozens of books, hours of videos and courses later, I have
pulled together information and sources on: the Street School <a href="http://www.streetschooleconomics.wordpress.com/">website</a>.</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">As well as looking at some of the basics in economics, such
as markets, wealth and money, it also covers some key ideas such as debt, the
limits to growth and inequality. A whole raft of solutions are offered, from
the actions individuals and communities can take, to the policy solutions that
are waiting to be actioned. I hope it’s a resource that people will find
useful.</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-muOuNtPurek/Umkogeqa7yI/AAAAAAAACOE/h5KcbK3wK3w/s1600/street_school.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="240" src="http://1.bp.blogspot.com/-muOuNtPurek/Umkogeqa7yI/AAAAAAAACOE/h5KcbK3wK3w/s320/street_school.jpg" width="320" /></a></div>
<div class="MsoNormal">
<span style="font-family: inherit;">So the idea is to take economics on the streets, to listen
to people’s thoughts and give information. So far we have begun to create some
kind of ‘art presence’ that will catch the eye. We’ve just decorated a
marketing stand we had, but you could use other structures. The presence has
contained words which might reflect the kinds of ideas, queries and blockages
that a person may have in their mind already, for example: ‘Why not let the
banks go bankrupt?’ or ‘I’d rather keep my head in the sand’ or ‘We can deal
with debt by giving everyone some money’.</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<span style="font-size: 11pt;"><span style="font-family: inherit;">We let people browse and if they
want a conversation you can ask what they know about economics. Consider what
is the one thing you’d like them to take away? For me it is that this economy
has been chosen and there are different types available . . . we might
chose an economy that has the goal of maximising happiness and minimising harm.
You can have a table with 'mini lessons' on – we laminated the pages from the
Prezi on the site. We had leaflets to hand out and also
include leaflets from relevant campaigns or local initiatives. <o:p></o:p></span></span><br />
<span style="font-size: 11pt;"><span style="font-family: inherit;"><br /></span></span>
<br />
<div class="MsoNormal">
<span style="font-family: inherit;">Obviously the idea of this work is to give people enough
knowledge to demand something better. There are other ways to promote economic
literacy and we are just starting to pull a network together of those
interested in spreading this thinking- be in touch if you want more information
(gail.bradbrook AT btinternet.com). We could demonstrate outside economics
departments, others have run cafe economiques and lecture series. What else
should we try, how do we build a movement?</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">.</span></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-74702784022480906572013-10-24T14:51:00.001+01:002013-10-24T14:51:56.014+01:00Does the Hinkley Deal Involve Subsidy?<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-FzLukL83DAY/UmklxYR7G3I/AAAAAAAACN8/7t32xlx6WBM/s1600/hinkley.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="http://2.bp.blogspot.com/-FzLukL83DAY/UmklxYR7G3I/AAAAAAAACN8/7t32xlx6WBM/s320/hinkley.jpg" width="320" /></a></div>
<span style="font-family: inherit;">There has been some confusion since Ed Davey’s announcement
of the details of the plan for building a reactor at Hinkley C in Somerset, and
some of this confusion may not be accidental.</span><br />
<span style="font-family: inherit;"><br /></span>
<div class="MsoNormal">
<span style="font-family: inherit;">First, we have the issue of whether the government is in a
position to make this decision. In fact, it is not. Any arrangement that
involves explicit or implicit subsidies needs to be investigated under the EU’s
state aid rules which are ‘<span lang="EN">forms of
assistance from a public body, or publicly-funded body, given to selected
undertakings (any entity which puts goods or services on the given market),
which has the potential to distort competition and affect trade between member
states of the European Union’ (definition from the BIS <a href="https://www.gov.uk/state-aid">website</a>)</span></span><span style="font-family: inherit;">.</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">During parliamentary questions on 15 May to Michael Fallon,
Minister of State for Business and Enterprise, Martin Horwood, MP for
Cheltenham, asked the minister ‘<span lang="EN">how
he proposes to comply with the standstill obligation in EU state aid law if he
enters into an investment contract or sets a strike price before the European
Commission has decided whether to approve such measures’. Fallon replied that
‘Any investment contract, if offered, will contain a condition dependent on a
state aid decision from the European Commission’ (</span></span><a href="http://bit.ly/183pGPj">Hansard</a>, 15 May 2013<span style="font-family: inherit;">).</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span lang="EN"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN"><span style="font-family: inherit;">The minister’s
clear view is that the setting of a strike price for energy will require a
consideration by the EU Commission in terms of its compliance with competition
law, law that relates specifically to the granting of state subsidies that may
distort competition. Hence we can infer that the minister himself believed that
this arrangement amounted to a public subsidy.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN"><span style="font-family: inherit;">This appears to
contradict the statement made on Monday by Ed Davey that ‘For the first time, a
nuclear power station in this country will be built without money from the
British taxpayer’. This is a carefully phrased statement, since the strike
price is an implicit guarantee while the insurance against increasing costs are
a risk on the public, which is to say nothing of the responsibility for
disposing of the waste the plant generates.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span lang="EN">While Davey is
nervous about breaking his previous <a href="http://www.libdemvoice.org/there-will-be-no-public-subsidy-for-nuclear-28150.html">pledge </a>that there would be no subsidies for
nuclear, South-West Liberal Democrat MEP Graham Watson is not. As <a href="http://bit.ly/16pO5Ss">reported </a>back in April </span>he told the somewhat 'Business Green' that he
supports subsidies for nuclear power in the South-West. <a href="http://bit.ly/YtbUiI">Watson</a>'defended the UK government's right to offer hefty state aid support for new
nuclear reactors'.</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><sup><br /></sup></span></div>
<div class="MsoNormal">
<span lang="EN"><span style="font-family: inherit;">Specifically in
relation to Hinkley C, back in May the minister was asked by Paul Flynn at what
stage the negotiations with EDF had reached. The minister replied that ‘in the
case of Hinkley Point C, the Government have committed to provide summaries of
reports from external advisers and analysis on the value for money of any
contract agreed’. These reports were not forthcoming on Monday and I would be
interested to see them if anybody knows where to track them down.</span></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<span style="font-family: Times New Roman, serif;">.</span></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-59037508900865070522013-10-21T09:55:00.000+01:002013-10-21T09:55:00.038+01:00 Deconstructing Austerity II. Jobs<!--[if gte mso 9]><xml>
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<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-9XfvRA9v0HY/UmJHUVyXA4I/AAAAAAAACNs/KAQFZ-qofGs/s1600/evil_osborne2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="291" src="http://2.bp.blogspot.com/-9XfvRA9v0HY/UmJHUVyXA4I/AAAAAAAACNs/KAQFZ-qofGs/s400/evil_osborne2.jpg" width="400" /></a></div>
<div class="Body1">
<span style="font-family: inherit;">Aside from fallacious claims about reducing the national
debt, the Conservatives' second claim to economic success--the creation of
millions of private sector jobs--is also requires exploration. The well-rehearsed
argument goes that massive cuts to public spending are not problematic since the private
sector will take up the slack and create jobs to replace those lost in the public sector. There are several sleights of
hand say that require unpicking in this part of the austerity narrative.</span></div>
<span style="font-family: inherit;">
</span><div class="Body1">
<br /></div>
<span style="font-family: inherit;">
</span><div class="Body1">
<span style="font-family: inherit;">First it is important to note that the statistics tell us
something about the quantity of jobs but nothing about the quality of those
jobs, an argument made <a href="http://www.bbc.co.uk/news/business-23311502">cogently </a>by the TUC. A job as a nurse or an administrator in a public-sector setting is likely
to be a unionised job with a nationally negotiated rate of pay and decent terms and conditions.
The sort of job being generated in the private sector is much more likely to be
an unskilled, poor-quality job with low pay. These jobs will do nothing to
help with the standard-of-living crisis and will also not contribute to
rebuilding a flourishing economy even in conventional terms.</span></div>
<span style="font-family: inherit;">
</span><div class="Body1">
<br /></div>
<span style="font-family: inherit;">
</span><div class="Body1">
<span style="font-family: inherit;">The political narrative behind these arguments about the substitution of private for public jobs is the
inability of the public sector to create wealth: an important part of the
Conservative attack on the public sector (and devastatingly <a href="http://gaianeconomics.blogspot.co.uk/2009/09/tale-of-two-sectors.html">critiqued </a>in an earlier blog!). So it is important to realise that
many of the 'new' private sector jobs are actually simply redefined
public-sector jobs. My job is a good example. Two years ago I worked in the
public sector but now I work in the private sector. Because universities were
privatised and are no longer funded from taxation, my job is now one that creates
value whereas previously I was a parasite on the taxpayer. The same also
applies to those who work in privatised sections of the health service or in
services that are increasingly being outsourced from public sector employers
such as schools and hospitals. (The Guardian has carried out some preliminary <a href="http://www.theguardian.com/politics/reality-check/2012/oct/10/conservative-conference-2012-davidcameron">work </a>unpicking this tissue of statistical manipulation.)</span></div>
<span style="font-family: inherit;">
</span><div class="Body1">
<br /></div>
<span style="font-family: inherit;">
</span><div class="Body1">
<span style="font-family: inherit;">Finally, we need to ask what is a job? The data are most
often used by Tories in claiming credit for this economic miracle are
aggregated data based on everything that counts as a job. Incredibly even
people working on zero-hours contracts are <a href="http://www.newstatesman.com/economics/2013/08/how-zero-hours-contracts-hide-real-unemployment">included </a>in these figures as are
those who are on any type of work scheme. So you don't actually have to be
working to be counted in the government's jobs figures. Any government
spokesman who presents data on increases in jobs without relating these two
full-time equivalent jobs is, if not a liar, at least being very economical
with the truth.</span></div>
<div class="Body1">
<span style="font-family: inherit;">. </span><span style="font-family: "Times New Roman","serif";"></span></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-32608168771369876062013-10-19T09:42:00.000+01:002013-10-20T13:59:48.517+01:00 Deconstructing Austerity I. Money<span style="font-family: inherit;">The narrative of austerity as proposed by Osborne and his
cronies is that our huge national debt is the responsibility of feckless Labour
politicians and their uncontrolled spending. An examination of the data from
the Debt Management Office shows clearly that this is nonsense (this is shown in the graphic and </span><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2071675" style="font-family: inherit;">discussed </a><span style="font-family: inherit;">in more detail in my paper 'Who Owes Whom?'). The many
billions that were spent as an emergency to prop up failing banks and prevent the
financial system from crashing are the real explanation for the huge increase in
the public debt. Osborne is a liar by omission because he will not discuss
whether he would seriously have refused to invest this money and allow cashpoints to
seize up.</span><br />
<div class="Body1">
<span style="font-family: inherit;"><a href="http://4.bp.blogspot.com/-mD0kTCFn_Wo/UmJEM3blfOI/AAAAAAAACNc/1sH_Hju0_hM/s1600/deconstruct.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="288" src="http://4.bp.blogspot.com/-mD0kTCFn_Wo/UmJEM3blfOI/AAAAAAAACNc/1sH_Hju0_hM/s640/deconstruct.jpg" width="640" /></a> </span></div>
<div class="Body1">
<span style="font-family: inherit;"><span style="mso-hansi-font-family: "Arial Unicode MS";">The reality is that under Osborne far more money has been
poured into preventing the cardiac arrest of the economy that results from a
lack of circulating money. This is the money created through quantitative
easing and the difference between it and what was spent by Darling during the
crisis is that the QE money was direct credit creation whereas the money
spent by Darling was generated through the sale of bonds and hence features in
our national debt.</span></span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;"><span style="mso-hansi-font-family: "Arial Unicode MS";">Since 2009 </span><span style="mso-ascii-font-family: "Times New Roman"; mso-bidi-font-family: "Times New Roman";">£</span><span style="mso-hansi-font-family: "Arial Unicode MS";">375
billion has been created directly by the Bank of England and poured into
financial institutions. They have greedily hoovered up this money and paid it
to shareholders as well as improving their balance sheet position. They have
barely loaned any of it to businesses or invested it in the economy, although the government could have used it for such direct investment, as I <a href="http://gaianeconomics.blogspot.co.uk/2009/11/queasy-come-queasy-go.html">argued </a>at the time. This explains why
the wealthy and those with interests in finance are flourishing while the rest
of us are suffering austerity. The </span><span style="mso-ascii-font-family: "Times New Roman"; mso-bidi-font-family: "Times New Roman";">£</span><span style="mso-hansi-font-family: "Arial Unicode MS";">80
billion created for Funding for Lending has similarly not resulted in an
increase in debt and has also been kidnapped by the banks rather than being fed
into the real economy.</span></span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;"><span style="mso-hansi-font-family: "Arial Unicode MS";">The Treasury bonds that were bought during the quantitative
easing programme are still sitting inside the Bank of England presumably with a
big label saying 'do not touch'. If they were to be cancelled, which they could
be since they are IOUs issued on our behalf, nearly a third of our national
debt would be wiped out in an instant. What a marvellous way of reducing the
burden of austerity - or not depending on your political objectives.</span></span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: inherit;"><a href="http://3.bp.blogspot.com/-x9wUa2D0dFs/UmJFeQUVygI/AAAAAAAACNk/2E6KtS1z8mY/s1600/PSND2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="241" src="http://3.bp.blogspot.com/-x9wUa2D0dFs/UmJFeQUVygI/AAAAAAAACNk/2E6KtS1z8mY/s320/PSND2.png" width="320" /></a></span></div>
<div class="Body1">
<span style="font-family: inherit;"><span style="mso-hansi-font-family: "Arial Unicode MS";">These are political choices and hence the narrative of
austerity politics that there is no alternative is simply a lie. Darling could
have created money directly to save the banks; Osborne could create money
directly now for investment in a renewable energy transition. Darling's unwillingness
to resort to direct credit creation in the early days is hard to fathom and
perhaps resulted from a failure of understanding. Osborne's refusal now to
engage in any type of monetary policy that would assist the real economy is a
consequence of his desire to use the financial crisis to achieve his long-term
policy goal of destroying the public sector.</span></span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;"><span style="mso-hansi-font-family: "Arial Unicode MS";">Almost without challenge Osborne portrays himself as the
saviour of the economy while Cameron claims <a href="http://blogs.spectator.co.uk/coffeehouse/2013/01/david-cameron-tells-porkies-about-britains-national-debt/">deceitfully </a>to have reduced the
debt. The national debt is of course still increasing (see the <i>Spectator</i> graphic) and while the deficit is
slightly decreasing we're way off Osborne's original projections. However, this
is all smoke and mirrors since the Conservatives have no intention and no
desire of reducing the national debt: it's far too useful to them politically.</span></span></div>
<div class="Body1">
<span style="font-family: inherit;"><span style="mso-hansi-font-family: "Arial Unicode MS";">. </span></span></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com2tag:blogger.com,1999:blog-5889026769761133073.post-20394684164918006462013-10-14T08:50:00.002+01:002013-10-14T09:07:14.578+01:00Owen Paterson: The Badger Bites Back<a href="http://1.bp.blogspot.com/-NGbIo1Q4uog/UluiTn5V0oI/AAAAAAAACMk/QX41-aNvSiE/s1600/paterson.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="250" src="http://1.bp.blogspot.com/-NGbIo1Q4uog/UluiTn5V0oI/AAAAAAAACMk/QX41-aNvSiE/s400/paterson.jpg" width="400" /></a><span style="font-family: inherit;">Since I was
given the opportunity to <a href="http://www.express.co.uk/news/uk/426933/Anti-fracking-campaigners-are-scaremongering-claims-Environment-Secretary">respond </a>to his inane remarks about fracking back in
the summer I have taken an increasing interest in the escapades of Environment
Secretary Owen Paterson, whose suggestion that his failed badger cull was the
fault of the badgers has brought him greater public attention recently. When
asked for that comment I had just eaten a particularly dreadful railway burger
and so was feeling irritated before I even read his remarks, hence my
suggestion that he was only a so-called environment secretary.</span><br />
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;">With the
benefit of some reflection I actually feel my comment was well aimed, since the
problem I have with Paterson is about what he thinks the environment means and therefore
what it means to be the minister for it. Paterson is clearly taking a definition
of ‘environment’ that is diametrically opposed to my own and one that exposes him
out as a classic representative of the man-in-dominion approach to the natural
world. This comes easily to those who have grown up owning large stretches of
countryside and seeing it as a playground for them to cavort in and a place to shoot
any creatures that might make their home there. A Green environment secretary
would take the perspective of humans as part of that environment not an external,
colonising force. Shifting from the view of land belonging to humans to the
view of people belonging to the land was an important step in my ecological
evolution.</span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;">Paterson’s
increasingly strident attacks on the opponents of fracking, those who attempt
to defend badgers, and to protect our environment against genetically modified
crops have made it clear that Patterson has been Crosbied. Lynton Crosby's main
influence on the government has been to persuade them to abandon any pretence
of basing policy on scientific evidence or even to debate with their opponents
at all. Instead the strategy is to go for full frontal assault on people who do
not share their view, calling them wicked and <a href="http://www.independent.co.uk/news/uk/politics/owen-paterson-animal-groups-are-condemning-badgersto-a-long-unpleasant-death-it-is-shameful-8877593.html">shameful </a>and suggesting that they <a href="http://www.bbc.co.uk/news/uk-politics-24515938">revel </a>in
childhood blindness or the slow death of soft fluffy animals.</span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;">Paterson was
clearly chosen for this role because of his fondness for seeing the
environment as something to be exploited and a ‘wholly owned subsidiary’ of UK
plc, rather than understanding that the economy is entirely dependent on the
environment, as Herman Dally suggested an ecological approach to economics
requires. Hence the NPPF (the coalition government's planning policy), with its presumption in favour of growth and an
undebated and unrestrained support for fracking no matter what the
environmental and social cost.</span></div>
<div class="Body1">
<span style="font-family: inherit;"><br /></span></div>
<div class="Body1">
<span style="font-family: inherit;">Paterson's
suggestion that the badgers moved the goalposts was greeted with hilarity but
is in fact one of his more sensible suggestions. If he could only begin to see
parts of non-human nature as having agency and deserving respect we might see
some improvement in his hitherto dire performance in protecting the
environment.</span></div>
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<span style="font-family: inherit;">. </span></div>
<span style="font-size: small;"><span style="font-family: "Arial","sans-serif";"></span></span><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-ansi-language: #0400; mso-bidi-language: X-NONE; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: #0400;"></span>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-39363910417544084332013-10-09T11:40:00.000+01:002013-10-10T11:34:07.214+01:00The Troika, the US Hedge Funds and the Diversion of Taxpayers' Money<i>A guest post by Stephan Lindner</i><br />
<br />
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<a href="http://1.bp.blogspot.com/-4Vmd3G5ApSE/UlaCaGsEf3I/AAAAAAAACMQ/Gs2LDrpPUHk/s1600/greek_nat_bank.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://1.bp.blogspot.com/-4Vmd3G5ApSE/UlaCaGsEf3I/AAAAAAAACMQ/Gs2LDrpPUHk/s320/greek_nat_bank.jpg" width="240" /></a></div>
Do you remember John Paulson? In 2007 he became famous for having the highest income of all hedge fund managers on Wall Street, because he bet against the US housing market. Not all of his deals were fair, to say it politely. Later the SEC investigated a deal called ABACUS 2007-AC1, for which Paulson <a href="http://www.reuters.com/article/2010/04/16/us-goldmansachs-abacus-factbox-idUSTRE63F5CZ20100416">told </a>Goldman Sachs to create a CDO with bad subprime mortgages, so that he could bet against it. Goldman Sachs agreed 2010 to pay $550 million to settle with the SEC and a former vice president of Goldman Sachs, who was responsible for the deal inside of Goldman Sachs was <a href="http://www.reuters.com/article/2013/08/01/us-sec-goldman-tourre-idUSBRE96G19720130801">found</a> liable for fraud in front of a jury. With that single deal Paulson earned around $1 billion and never had to justify himself in front of a court. And now he <a href="http://www.reuters.com/article/2013/10/07/uk-greece-banks-funds-idUSLNE99600520131007">tells </a>the whole world, that he owns shares in two Greek banks, Piraeus Bank and Alpha bank. Reuters cites from a statement: ‘They have good management and we think the Greek economy is improving, which should benefit the banking sector.' <br />
<br />
<br />
What does this management looks like? In Greece after the haircut the banks are more or less bankrupt and need to be recapitalized. Officially they are solvent thanks to the $50bn. they received from the troika, but most experts still estimate that the non-performing loans are still higher than the injected capital. Normally nobody would like to give capital to such banks. Here is the explanation the owner of Piraeus bank found for this situation: Reuters reported in summer 2012, that he used credit in his own bank to buy shares of his bank (read the full story <a href="http://www.reuters.com/article/2012/07/16/us-greece-banks-idUSBRE86F0CL20120716">here</a>). In this New York Times <a href="http://www.nytimes.com/2013/06/11/business/global/a-wily-banker-reaches-the-top-in-greece.html?pagewanted=2&pagewanted=all">article </a>from June you can read even more of what the president of Piraeus bank did to make his bank grow during the crisis to become the biggest bank in Greece:<br />
<br />
<br />
If you think you get into trouble if someone finds out about such business practices, you are wrong. Mr Salinas is still the President of Piraeus bank and the Greek Central Bank, which investigated all allegations, could find no evidence of wrongdoing. And they have the ideal informant: the president of the Greek central bank is a former vice president of Piraeus bank. So what <a href="http://yanisvaroufakis.eu/2013/04/19/greek-banksters-in-action-on-the-latest-twist-in-the-story-of-mafia-style-terror-spreading-through-the-greek-polity/">happens </a>to people who report about such practices in Greece? It isn’t pretty.<br />
<br />
We might also ask how the troika did everything possible to make the buying shares of Greek banks as lucrative as possible? For each Euro someone invests in banks like Piraeus the troika pays an additional nine Euros, and if the share price aises to a certain level, the investor gets the right to buy this additional 90 per cent of shares, not for the then actual much higher price, but for the low price at which they made their first investment. Hurrah for the troika for making such lucrative deals with taxpayers’ money. Read the full explanation of the Paulson deal in todays <a href="http://yanisvaroufakis.eu/2013/10/07/johnny-paulson-got-his-gun-and-is-aiming-at-some-grim-greek-pickings/">blogpost </a>of Yanis Varoufakis.<br />
<br />Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-34446928574852030892013-10-07T08:55:00.001+01:002013-10-07T08:55:16.170+01:00Get a Life not just a Living Wage<div class="Body1">
I spent Saturday at a conference on the living
wage organised by the regional TUC. It seems sad that you need to campaign for
the right to earn enough money to live on but this is the reality of
the living wage campaign. It was easy for me to agree with it since the Green
party's policy is to raise the minimum wage to living wage of 60% of average earnings (currently around £8.10 per hour). The representatives from the Conservative and Labour parties present
similarly supported and the living wage, although their parties do not have it
as part of their national policy platform.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
The idea
that paying workers reasonably is good for everybody in the economy is neither
new nor radical. It was the idea that enabled Ford's Detroit workers to buy the
cars they were manufacturing, and forgetting this important lesson about
capitalism is part of the explanation for the disastrous state of Detroit
today.</div>
<div class="Body1">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-NrdJfpnRhUQ/UlJnoyC5NuI/AAAAAAAACLo/v0ij3Vb5Rdg/s1600/dorling+gap.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="229" src="http://1.bp.blogspot.com/-NrdJfpnRhUQ/UlJnoyC5NuI/AAAAAAAACLo/v0ij3Vb5Rdg/s320/dorling+gap.gif" width="320" /></a></div>
<div class="Body1">
My own
presentation was focused on the living wage as a first step towards the end of wage
slavery and needless to say I ranged rather more widely than the idea of
bringing wages up to a liveable minimum. The beginning of my story was the way
the Empire of Capitalism struck back at the end of the 1970s and the huge
impact this had on the income dispersion. This is illustrated in the graphic
taken from the work of Danny Dorling, which shows the share of total income
going to the richest 1% of people between 1918 and 2005. The impact of trade-union activism and increased worker expectations is clear, as is the counter-effect of the Thatcherite ideology and attacks on union power.</div>
<div class="Body1">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-xs-gr4phmSk/UlJoU9OA48I/AAAAAAAACL4/JnIZYpf72LI/s1600/comp+gap.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="218" src="http://2.bp.blogspot.com/-xs-gr4phmSk/UlJoU9OA48I/AAAAAAAACL4/JnIZYpf72LI/s320/comp+gap.jpg" width="320" /></a></div>
<div class="Body1">
My next
graphic, based on ILO data, demonstrates clearly the importance of the Tina
narrative in persuading workers not to ask for higher pay. It shows the clear
indication of productivity increases on a global basis and the fact that the
value generated by these workers working harder has been paid in profits rather
than in wages. The argument around globalisation was used to persuade workers
that they must compete with those in the lowest-paid economies in the world, and that asking for higher wages would destroy their
own jobs. The inevitability of a race to the bottom when this ideology is
played out is illustrated clearly in the graphic showing wage rates in
different countries.</div>
<div class="Body1">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-rtznVBxNuaM/UlJoj8jlcqI/AAAAAAAACMA/qYfW6l950kI/s1600/global+wages.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="188" src="http://4.bp.blogspot.com/-rtznVBxNuaM/UlJoj8jlcqI/AAAAAAAACMA/qYfW6l950kI/s320/global+wages.jpg" width="320" /></a></div>
<div class="Body1">
The great
disparity of wages across EU countries which are part of the same single market
is surely an issue that requires political debate. Why do we accept the very
low pay offered to workers in central and eastern Europe? The deal we are offered is cheap goods rather than well-paid jobs, encouraging us to focus on our role as consumers rather than producers. The political economy
underpinning this is not discussed but should surely be open for democratic
debate.</div>
<div class="Body1">
<br /></div>
<br />
<div class="Body1">
The gains
in wages illustrated in the earlier graphic were the result of solidarity
across industries within a market. Globalisation undermined this but if we are
to return to international solidarity in a globalised economy then surely a
global minimum wage must be our ultimate demand, rather than a low wage, even
if a living wage, subsidised by corporate welfare in the form of tax credits.</div>
<div class="Body1">
. <span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 10.0pt; mso-ansi-language: #0400; mso-bidi-language: X-NONE; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: #0400;"><o:p></o:p></span></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-86243923024926012342013-09-30T10:43:00.000+01:002013-10-01T08:27:24.063+01:00How Rising House Prices Serve George's Friends in the City<div class="Body1">
There is
a lot of controversy about the potential of the Help to Buy scheme to restart
the housing bubble. I must say that I share this concern and am disturbed by the
thought that Osborne may be deliberately reflating the value of the housing
market to enable himself to portray the government as having tackled the
problem of the deficit. To portray this policy as one of compassion for the
homeless, and to encourage homeowners to celebrate rising house prices, as
Cameron did on the Andrew Marr show yesterday, is disingenuous.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
The
PM may sanguinely say people can afford
these high-proportion mortgages but how much do interest rates need to rise
until this is no longer the case? Cameron used the example of two people
earning <span style="font-family: "Arial Unicode MS","sans-serif"; mso-ascii-font-family: Helvetica; mso-bidi-font-family: "Times New Roman";">£</span>20,000 or <span style="font-family: "Arial Unicode MS","sans-serif"; mso-ascii-font-family: Helvetica; mso-bidi-font-family: "Times New Roman";">£</span>25,000 per year and an average house price of <span style="font-family: "Arial Unicode MS","sans-serif"; mso-ascii-font-family: Helvetica; mso-bidi-font-family: "Times New Roman";">£</span>200,000. Leaving aside the 5% deposit to make the maths
simple, the BBC mortgage calculator indicates that if interest rates rise to
only 3% this couple will now be paying nearly <span style="font-family: "Arial Unicode MS","sans-serif"; mso-ascii-font-family: Helvetica; mso-bidi-font-family: "Times New Roman";">£</span>1000
a month to fund their mortgage.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
Clearly
the Tories think that offering young people homes financed through large
amounts of debt will be politically popular, but the historic pattern in
Britain of high and rising house prices and high rates of home ownership
financed through a mortgage actually serves the financial sector much more than
it serves British citizens. The explanation is simple: if your house costs
twice as much you pay the bank twice as much in interest.</div>
<div class="Body1">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-drxdAtj6avk/UklHZx5DaFI/AAAAAAAACLY/shYImTuFFuI/s1600/house_price_earnings.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="193" src="http://3.bp.blogspot.com/-drxdAtj6avk/UklHZx5DaFI/AAAAAAAACLY/shYImTuFFuI/s320/house_price_earnings.jpg" width="320" /></a></div>
<div class="Body1">
Useful
<a href="http://www.landregistry.gov.uk/public/house-prices-and-sales/search-the-index">data </a>from the land registry indicates that the house price index has risen to
more than 250 compared with January 1995 (the graphic indicates the ratio of prices to earnings during this period). At its peak before the crash the index reached nearly 300, which means that prices had undergone a threefold increase
net of price inflation. As I teach my students, because of the compounding nature of interest, you are likely to pay back something like double the
principal when you take out a loan over 25 years. This means that when house prices double, twice as much is paid back to financial corporations in interest. No wonder
that those with friends in the City encourage us to celebrate house price
rises.</div>
<br />
<div class="Body1">
House
price inflation serves financiers and those who welcome the increasing value
of their home as though it were an asset are missing the point. Those who still
have mortgages are simply celebrating an increase in their housing costs; if
their house is a home then they have no greater value from it even if its
financial value has doubled. As it turns out in Britain the house is not a
machine for living in, as Le Corbusier once suggested, but rather a machine for
increasing bank profits.<span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 10.0pt; mso-ansi-language: #0400; mso-bidi-language: X-NONE; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: #0400;"><o:p></o:p></span></div>
<div class="Body1">
.</div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-45954534705268940312013-09-28T09:50:00.001+01:002013-09-28T09:50:33.421+01:00How Public is Public Money?<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-RZF4OaLfV3M/UkaWwWk0m_I/AAAAAAAACK8/-VFtx-9U0Ts/s1600/Heseltine_stone.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="234" src="http://2.bp.blogspot.com/-RZF4OaLfV3M/UkaWwWk0m_I/AAAAAAAACK8/-VFtx-9U0Ts/s320/Heseltine_stone.jpg" width="320" /></a></div>
<div class="Body1">
Of the
many deceitful slogans which the Conservatives used when they came to power the
'bonfire of the quangos' has perhaps had the least justification in practice. A
whole range of boards and partnerships are creeping back into existence,
responsible for public money, but with no clear sense of how the public view
will be represented or how they will be accountable to the public.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
My own
particular source of concern is the Local Enterprise Partnership. These were
first mooted some 18 months ago, at which point they had no clearly defined
powers and there was apparently no funding to accompany the establishment of
such bodies. I remember thinking how unlikely it was that anybody would take on
the challenge of local economic regeneration without any financial support. How
foolish I was, and how cunning others were, because over time large amounts of
public money have been promised to these bodies that those with foresight or
perhaps inside information made their own.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
The GLEPs
are supposed to represent the country's 'natural economic areas', although
there is no theoretical consideration about how such economic areas might be
defined. The work that the LEPs might undertake is limited by the narrow and
pro-growth conceptualisation of the problem we face according to the government
rubric:</div>
<div class="Body1">
<br /></div>
<div class="Body1">
'Our
economy is currently too dependent on a narrow range of industry sectors. We
need an economy driven by private sector growth, with business opportunities
evenly balanced across the country and between industries. We also need to
reduce burdens for businesses, particularly in terms of lower tax levels,
planning and other administrative burdens.'</div>
<div class="Body1">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-svHSVV0hPaw/UkaX4SJM8gI/AAAAAAAACLI/IlOd6RgrtMc/s1600/LEPs.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://2.bp.blogspot.com/-svHSVV0hPaw/UkaX4SJM8gI/AAAAAAAACLI/IlOd6RgrtMc/s320/LEPs.jpg" width="278" /></a></div>
<div class="Body1">
While
this is the rhetoric, the reality is that those who have always had their snouts
in the trough of government subsidy to business have created structures to
funnel public money in their direction, resulting in a <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229400/121115_Enterprise_Zones_map.pdf">map </a>of meaningless and
unplanned areas on the government website.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
In
Gloucestershire our LEP is called G1st LEP, G1st being an unsuccessful regional
development company that has already received large amounts of money from the
county but with no clear evidence of its having created jobs or brought
prosperity. But it cleverly included the letters LEP in its name, built a new
website, and was accepted by the Business Secretary as being the regeneration
body for the whole of our county. At this stage, remember, there was no
indication that money was coming and so it had no serious competitors.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
But money
has certainly followed and with increasing speed since the publication of the
Heseltine report No Stone Unturned--In Pursuit of Growth, a report which has
only proved that under those stones lurk a regiment of people who have made a
career of parroting the same pro-growth, pro-business catechism without the
need for a track-record of success. All money to be invested in regeneration by central government, or <span style="font-family: 'Arial Unicode MS', sans-serif;">£</span>2 billion of it in 2015-16, will now be funneled through
these bodies. Yet there has been no opportunity for the public to become
involved in discussions about how they might like to see regeneration happen,
whether economic growth is in fact beneficial for local communities, whether we
might focus on resilience and sustainability instead, or whether bioregions
might be better natural economic areas than the curious regions illustrated in
the map.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
In Stroud
we are particularly angry that money which was originally our money is now to
be sent to the LEP, to be controlled by people with no democratic authority
over this money, and we have to make a case to have some of it spent in our
area. When the government cut our central funding grant they told us that in
future we would receive money through a New Homes Bonus, already requiring us
to build new houses in order to be properly funded. But now 40% of this New
Homes Bonus will go to the LEP directly and we will not see any of it back
unless we subscribe to the sort of view of economic development that this unaccountable
body dictates. There is also talk of funding for further education institutions
similarly passing through the LEP before being received by them.</div>
<div class="Body1">
<br /></div>
<div class="Body1">
Martin
Whiteside, one of our district councillors here in Stroud, has referred to the
birth of the GLEP as the immaculate reconception of the quango and, while we
feel the parentage of our county body is particularly unclear, the
accountability of these bodies that will use public money according to their
own political priorities and without proper accountability should be questioned
everywhere that LEPs lurk.</div>
<br />
<div class="Body1">
<o:p> .</o:p></div>
Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0tag:blogger.com,1999:blog-5889026769761133073.post-64065395877592230522013-09-23T14:09:00.001+01:002013-09-23T14:59:24.489+01:00What Price Democracy?<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-TazibmiGM9s/UkA9W9VQjAI/AAAAAAAACKs/oo626euvJik/s1600/demonstratorshardesthitmarchprotestagainstvbp3omye3oyl.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="266" src="http://2.bp.blogspot.com/-TazibmiGM9s/UkA9W9VQjAI/AAAAAAAACKs/oo626euvJik/s400/demonstratorshardesthitmarchprotestagainstvbp3omye3oyl.jpg" width="400" /></a></div>
<br />
The politics of austerity has many political objectives but an important one you learn about quickly as a local councillor is its use as a mantra to incapacitate you. Anything you might want to do cannot be done, you are told, because we are living in a time of austerity and nothing can be afforded. With many Tory councillors in Stroud this appears to extend to democracy, which itself must be undermined and diminished because it is just too expensive.<br />
<br />
In Stroud we are presently being subjected to a boundary review, triggered because one of our wards had slightly more than the 10% above the average number of voters per representative that is considered acceptable. So the Local Government Boundary Commission for England has fallen on our heads to undertake a review (curiously there is no problem with funding their work in spite of the austerity we hear of daily). While you might expect them to begin their work with objectives such as improving local democracy, enhancing citizen participation, or making representatives more accountable, in fact they have one aim: to reduce the number of councillors.<br />
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This caused me to question how well we are represented compared to our European neighbours: how much do we, as the home of democracy and children of the mother of parliaments, invest in our elected representatives? You will be shocked to read the comparisons in a <a href="http://www.lgbce.org.uk/__documents/lgbce/guidance-policy-and-publications/guidance/councilsizefinalreport_18229-13470__e__.pdf">report </a>carried out recently by academics at Birmingham University. In France there are 118 citizens per elected member, which rises to around 600 in Italy and Spain, and 1075 in Greence. In the UK it is 2603: the largest number of any EU country. We are the least well represented of all, and yet the politics of austerity is being used to reduce our representation even further.<br />
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Anecdotally I have also received a lot of evidence about the disastrous levels of connection between citizens and their councils in some of the vast new unitary authorities that have been introduced under the Tory aegis. In both Wiltshire and Cornwall people report that they have no idea who to contact about local services and that the geographical areas they are supposed to identify with make no sense to them. The mantra of austerity is matched by the chorus of complaints about the quality of politicians, yet how can local politicians perform well when the areas they represent make no sense and are too vast to be comprehended?<br />
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I have reached a point of fury in debates over the cost of democracy when I have to bite my tongue to stop myself pointing out that Mussolini may have appeared cheap but the less-than-immediate costs were rather higher. The fact that this thought even occurs suggests the desperate state of our democracy and the way the politics of austerity is being used to undermine it further.<br />
.Mollyhttp://www.blogger.com/profile/12845612174674783187noreply@blogger.com0