Friday, 15 July 2016

Keeping the Con in ‘e-CON-omics’

Brexit, as predicted by all experts that ‘Leave’ campaigners urged us to ignore, is pushing the UK into another recession and intensifying financial uncertainty all round.

What was not predicted, but should not come as too much of a surprise, is that the establishment has come out to ensure that in or out of the EU, it is the wealthy elite who will be protected, and everyone else (having been told we would “get our country back”) will bear the consequence.

The priority as ever is to help the banks make money, and promises for more deregulation have quickly been made to enable them to lend more money profitably – allegedly to revive the economy. But in the same speech in which he announced this move, the Governor of the Bank of England remarked that there was already too much debt around. It’s inescapable that when people have borrowed too much money and cannot pay it back, it will lead to a major banking crisis – as happened in 2008, and before that in the 1930s. In fact, it was because of the irresponsibility of the banking sector that was exposed in the 1930s that prompted subsequent banking regulation to stop banks over-lending to borrowers who could not pay the money back. In the 1980s, the banking sector, with the help of free market ideologues, rolled back these regulatory constraints and was able once again to use savers’ money as leverage in lending out to unreliable borrowers. When bad debts piled up, the banks asked governments to bail them out. And now we’re in for more deregulation, more bad debts, and before long, another banking fiasco.

The real reason the economy is stalling has little to do with lending. A mass production-consumption process can only be sustained if there are lots of people producing goods and services, and getting paid enough to purchase those goods and services. When more and more people are not getting paid work, only getting it at below-subsistence rates, or are ‘in work’ in name only because they are made redundant and told to register as ‘self-employed’, then there is a growing surplus of goods and services without the funded demand to match them. Recession thus ensues.

If only the people running corporations will pay their workers better, and support public investment that creates jobs and improves society’s infrastructure, then there will be more commercial transactions and prosperity will be generally enhanced. Unfortunately, most firms think they can leave others to pay workers enough to maintain the demand side. The end result is that the ‘efficiency’ drive of each comes together as the impoverishment of all.

Governments need to step in when individuals pursue options that undermine society. And the new UK Prime Minister, Theresa May, has spoken about her intention to pursue an inclusive approach reminiscent of that of the former Labour leader, Ed Miliband, namely, to run the country “not for the privileged few, but for every one of us”. But we’re all familiar with how politicians on the right use progressive language to mask their divisive policies. It would be a belated, but nonetheless welcome, change if May should prove genuine in seeking to curb corporate powers and put workers on the boards of businesses.

In the meantime, amidst the economic chaos that has been unleashed, we can only assume that when the goings get tough, the con will just keep going.

Friday, 1 July 2016

Dis-United Kingdom: 10 issues to watch

So by 52% to 48% the voters in UK have opted to withdraw from the European Union. The Prime Minister has resigned, shares and sterling are plummeting, and uncertainty spreads across every sector. But between the euphoria of those who think they have taken ‘their’ country back, and the despair of those who feel Britain has lost its way, there are a number of critical issues that should be closely scrutinised in the aftermath of this referendum:

[1] Relationship with the EU
In case anyone thinks the EU blame game is now over, it is only actually just beginning. EU-bashing has served the uber-right (see Note 1) well, and the attention will now shift to attacking the unhelpful ‘Eurocrats’ for refusing to agree to the perfectly reasonable exit terms that would enable the UK to have all the benefits of an EU member state and none of the responsibilities. Furthermore, unsavoury alliances will be developed with far right parties across Europe which want to build on UK’s referendum outcome to break up the EU and foment nationalistic extremism.

[2] Immigration
Many people voted for ‘Leave’ because they believed there were too many immigrants in the UK, and leaving the EU would help to reduce numbers significantly. But since the xenophobia that distorts the perception of what is good or bad about immigrants won’t go away any time soon, the uber-right will continue to fuel and exploit it. Instead of finding a workable balance between the need for EU workers and the inclination amongst some to keep those workers away, the rhetoric will turn to the problem with immigrants from outside the EU: how those numbers must be drastically cut, and even ‘options’ for repatriation may raise their ugly heads.

[3] Transnational Institutions

Will withdrawal from the EU be sufficient for Britons to “take our country back” – away from all ties that make us a part of wider transnational institutions? What about NATO, UN, G7, the Commonwealth, OECD? Will anyone bring up the connections between any of these organisations and the potential movement of foreigners to the UK? After all, once EU migration is ‘blocked’, Commonwealth migration will become the next obvious target. NATO, of course, is also a driver of asylum seeking through its bombing campaigns which generate vast numbers of refugees. But since refugees are useful scapegoats, having more of them to turn away may be tacitly welcome.

[4] TTIP (Transatlantic Trade & Investment Partnership)
Uber-right campaigners belatedly acknowledged that the proposed TTIP agreement would rob the British Parliament of its sovereign right to legislate (since under the terms of TTIP, any corporation with enough financial muscle can sue any government for passing laws that allegedly infringe on their profit-making), and argued that leaving the EU would ensure the UK is not part of the TTIP negotiated between the EU and the US. But since uber-right politicians generally favour private trade and profit over public interest legislation, it is possible that a government under their influence will come up with its own trade & investment partnership with the US, that will concede even more to big business and utterly undermine national sovereignty.

[5] Future of the NHS
Handing more, if not all, of the NHS to the private sector has been a consistent theme amongst uber-right politicians. That did not hold them back during the EU referendum campaign to claim that hundreds of millions of pounds ‘saved’ from leaving the EU would be available to invest in the NHS. Many people believed this. But instead of getting more funding support, the NHS could be heading for even more drastic cuts. When the NHS is unable to continue despite the best efforts of its staff, its wholescale dismantling will come to the top of the agenda, and private healthcare firms, having donated to parties on the right, will be invited to cherry pick the parts with the greatest profit-making potential, and leave the rest to rot.

[6] Worker Rights
Right wing politicians have long resented the EU-wide agreement to set minimum standards for protecting all workers from the worst possible terms and conditions. Without EU protection, a right wing government will be able to strip away worker rights, legislate against trade unions until they can never contest any edicts by employers, and do away with the minimum wage. When ever greater insecurity grips working people, they will be told that the problem is that there are still too many immigrants working in the UK.

[7] Social Justice
Some people are shocked that large numbers of Labour supporters voted for ‘Leave’, but they overlook the fact that many of these voters think of ‘Leave’ advocates as not standing at the uber-right end of the political spectrum, but to the left of the Labour Party. The Labour Party failed to link uber-right politicians to policies that have, for example, brought in surcharges for families with disabled members renting public housing (aka ‘Bedroom Tax’), decimated Sure Start support for children, and terminated the vital Education Maintenance Allowance for young people from low income families. The success of the ‘Leave’ campaigners is indeed bringing a change of government, but it is not a government to the left of Cameron, but one decidedly comprising many who are much further to the right of him.

[8] The Financial Sector

When the banking crisis broke out in 2008 as a direct consequence of Thatcher’s deregulation of the financial sector (compounded by Labour’s reluctance in the intervening years to bring back better controls), the Conservatives claimed that more effective regulation must be brought back. Once they were back in government, however, they held back from any substantial reform of the banks. They argued that the UK banking sector could be at a disadvantage if the UK acted alone without similar legislation being introduced across the EU. When the rest of EU agreed on limiting bankers’ bonuses, the UK Conservative Government sought to challenge that agreement in order to protect banking interests in the UK. With the UK pulling out of the EU altogether, politicians on the right can once again invoke the excuse that they could not do anything to regulate the financial sector when there would be no guarantee that EU countries would do the same. Thus another banking crisis looms.

[9] Scotland and Northern Ireland
While England and Wales voted for ‘Leave’, the people of Scotland and Northern Ireland voted to remain in the EU. The Scottish Independence Referendum was previously settled in favour of remaining with the UK on the basis that the UK would in turn remain in the EU. The prospect of the UK dragging Scotland out of the EU against the wishes of the Scottish people means that another independence referendum will almost certainly take place in Scotland, with the vote decidedly swinging towards independence this time round. As for Northern Ireland, the common EU framework it has shared with the Republic of Ireland up to now has helped normalize relations between the two nations. If Northern Ireland is to be pulled out of the EU, that will undoubtedly create serious problems. ‘Leave’ campaigners have insisted that there would be no border controls put in between Northern Ireland and the Republic of Ireland, but if that were to be the case, then the whole argument about regaining the UK’s own borders would be hollow, since EU citizens could freely travel to Ireland (an EU country), and then just walk over to the Northern Ireland part of the UK.

[10] The Use of Referenda

One thing this referendum has proven is that it makes no sense to use such a device to decide highly complex political issues. To discern the pros and cons of EU membership requires expert analysis. Yet whenever there is a consensus of expert opinions on, for example, the negative economic impact of leaving the EU, they are dismissed as the voice of the establishment, or worse, accused of acting like stooges of a Nazi regime (an accusation made by Michael Gove, MP). Many people voted primarily on the basis that there were too many unwanted immigrants in the UK, and leaving the EU would deal with that problem. In a jury trial, the judge can guide the jurors, and rule out misdirection and false statements, but in a referendum on this scale, lies were perpetrated continuously, and just occasionally retracted quietly. It can only be hoped that the inherent weaknesses of referenda will become more widely known, and it does not become a handy tool for the uber-right to exploit public anger and frustration.

Whenever warnings are issued about uber-right politics, they are dismissed as exaggerations. It would never happen, we are told. Immigrants would not be demonised and blamed for every ill under the sun. Those who use immigrants as scapegoats at every turn would never go on to secure power and run the country. People would never overlook the real causes of problems in society, and simply cheer the ascendancy of the uber-right. Never say never.

Note 1: ‘Uber-right’ covers those on the radical right within the Conservative Party and those in parties to the right of the Conservatives, e.g., UKIP, all sharing the approach of cutting public services, backing military action, and blaming immigrants and multiculturalism for economic problems caused by the banking sector.

[This article was first posted on 24 June 2016, the day after the UK's referendum on its membership of the EU]