Posts Tagged ‘Financial Crisis’

Vox Political: Eoin Clarke Shows How Labour Will Pay for Its Policies

April 24, 2017

Mike over at Vox Political has reblogged a piece by Eoin Clarke, who’s on Twitter as @LabourEoin, showing how Labour will pay for their reforms. It’s to counter all the critics, who complain that Labour haven’t shown where they’re going to get the money from.

See: http://voxpoliticalonline.com/2017/04/23/sick-of-people-telling-you-the-uk-cant-afford-labours-plans-show-them-this/ and follow the links to Eoin’s original article.

This also answers, in part, a deeper object that you’ll always hear from the Tories: That the country can’t afford Labour’s welfare policies. Of course it can. As Mike has shown ad infinitum, Labour kept well in budget during its time in power. The only period of massive overspending was when Gordon Brown had to pump money into the global economy after the banking crash. This wasn’t Labour’s fault. Labour had contributed to it by following the same ‘light touch’ regulation – in fact continuing the Tories’ deregulation of the financial sector – but the direct cause was the massive speculation and bizarre financial shenanigans of Goldman Sachs et al in Wall Street. I’m not a fan of Gordon Brown. Despite claims that he was ‘Old Labour’, I’ve seen no evidence to suggest that he did not share Blair’s neoliberalism. But Brown did keep us out of the Euro, and he did save the global economy.

What is clear that is the country and its people definitely can’t afford another five years of the Tories.

Thanks to the Tories’ privatisation of essential services, we are paying more for a worse service for everything from the NHS to the railways. We are paying more in subsidies for the rail network than we were when it was nationalised. And contrary to Tory claims, during the last years of British Rail when the network was operating under Operating For Quality, the company offered better value for service than any time since nationalisation or after privatisation. Since then, fares have been raised and services cut.

The same is true of the Tories’ privatisation of the NHS. Private healthcare is actually far more bureaucratic than socialised medicine, as the private healthcare companies charge for advertising and their legal department as well as administration. They also must show a profit for their shareholders. Thus, as the Tories have outsourced NHS services, a process that began with Peter Lilley and the PFI, costs have actually gone up due to the inclusion of private industry.

Not Forgetting the millions of low and unwaged workers, and the unemployed, Cameron and May have created.

There are 8 million people in ‘food insecure’ households, according to the UN. This is because Cameron and May have deliberately kept wages low, and introduced zero hours contracts, among other tricks, in order to keep labour costs down and the workforce frightened. As a result, we’ve seen millions of people forced to rely on food banks for their next meal. These are hardworking people, who have been denied a living wage, all for the profit of big corporations like Sports Direct.

Then there are the millions of unemployed and disabled, who have been thrown off benefits under the absolute flimsiest of pretexts. This has been covered by left-wing bloggers again and again. And tens of thousands have died from poverty and starvation. See the stats and biographies of some of those, who have been murdered by these policies, collected by Stilloaks, Johnny Void, Mike over at Vox Political, Another Angry Voice and so on.

It isn’t a case of Britain being unable to afford Labour. The country cannot afford not to have Labour in power.

Socialist Criticism of the Financial Sector from 1986

February 28, 2014

The present savage cuts to the welfare state by the Tories and their Coalition partners are legitimated by an appeal to the massive debt created by the financial crisis of four years ago. The root cause of this was ultimately the wholesale deregulation of the financial sector by Thatcher’s government, a policy that was carried on by Major’s, Blair’s and Brown’s administrations, and which the Coalition today promotes even further. The conspiracy/ parapolitics magazine, Lobster, has also carried a number of articles showing how the Tories’ preference for the financial sector has severely damaged British manufacturing industry. This was clear from as long ago as 1986, when the book Socialist Enterprise: Reclaiming the Economy, by Diana Gilhespy, Ken Jones, Ton Manwaring, Henry Neuberger, and Adam Sharples, was published. Looking through it recently, I found this passage criticising the rise of the financial sector and the harmful effect it was having on society and the economy:

The continued growth of the finance sector is also highly significant in terms of the distribution of economic power. Industrial companies in this country have behaved as independent and usually competitive organisations, even though they have sometimes acted in alliance. But the finance sector is far more centralised, and serves as an organising focus of class power. The growth of the finance sector reflects the decreasing ability of manufacturing companies to finance investment from their own retained profits. In the era of manufacturing dominance, manufacturing companies used to finance their relatively limited investments from their own substantial profits. Since then, the underlying trend in profitability has been downwards, while the costs of new investment have increased (especially because of higher inflation). As a result, manufacturing and commercial companies have increasingly come to rely on banks for new finance, both for working capital and for fixed investment needs. This often takes the form of short-term finance through overdrafts or leasing arrangements whereby companies hire equipment owned by banks. The effect of the latter is to concentrate the control of a large amount of equipment, at least in principle, in the hands of the banks.

These development have left the banks with considerable power over industry and commerce. But the banks have not developed the same sense of responsibility shown by their German and Japanese counterparts, who have been the source of finance for their industries for much longer. The form in which British banks provide their finance does not encourage them to take a long-term view of the companies and industries in which they are involved. Recently banks have been forced by the economic recession to become more directly involved, but even when acting collectively, as in the case of the Stone Platt engineering company, they have overwhelmingly taken a short-term view.

There have also been changes in the ultimate source of finance, as witnessed by the rise of the pension funds. Thirty years ago rich individuals were the main source of outside finance for industry. But now pension funds have taken over. Some people argue that this has somehow d9ispersed the ownership of property, in a way, which has also increased democratic control. In practice, however, the members of a pension fund have no control over the way in which it is operated, and have no legal rights to challenge its investment policies. The rise of pension funds has simply concentrated even more economic power in the hands of the City institutions which operate and ‘advise’ the pension funds. It has also had the effect of providing them with greater political power: when it comes to defending the rights of property there are 13 million members of pension funds, many of them trade unionists, who can be made to feel they have a stake in the free enterprise economy. (pp. 32-3).

This pessimistic analysis has been born out to a very large extent by history, and particularly by the recklessness of the banks’ policies, which created the crash. It was this, not the Labour government’s welfare spending, that has resulted in the massive budget deficit.