Posts Tagged ‘Han-Joon Chang’

Vox Political: Real Wages Fall by Ten Per Cent Under Tories

July 30, 2016

Mike also published a piece last week on a report published on Wednesday by the TUC, which found that while wages had grown in real terms across the EU between 2007 and 2015, they had fallen in Britain by 10.4%. The average rise in wages across the EU was 6.7 per cent. In Poland, wages had risen by 23 per cent. In Germany wages rose by nearly 14 per cent, and in France by 10.5 per cent. The only countries across the OECD which suffered a fall in wages were Portugal, Britain and Greece.

Mike’s article has two illustrations – one is a graph showing the rise in real wages in various countries, while another is a meme showing the massive pay rises enjoyed by other, very privileged groups, in Britain. Like Bankers, whose pay has risen by 35%, directors of FTSE 100 companies, 14%, and MPs, whose pay has gone up by 11%.

Mike makes the point that New Labour must share some of the blame for this, as not only was Peter Mandelson and his chums very relaxed about people making money, they were also extremely relaxed about wages stagnating. He makes the point that the crash his the poorest the hardest, and the austerity launched by the Tories has been punishing and impoverishing the poor to bail out the bankers and the rich. He also makes the point that Owen Smith’s solutions are just cosmetic, and won’t do anything without concrete proposals for the redistribution of the extra money gained through the ‘wealth tax’ he proposes.

See the article: http://voxpoliticalonline.com/2016/07/27/real-wages-in-the-uk-have-fallen-by-more-than-10-per-cent-under-tories/

Mike’s right about New Labour being very relaxed about wages stagnating. In fact, wage restraint has been a major part of the neoliberal consensus ever since Maggie Thatcher took power in 1979. Keynsianism tolerated high inflation – and in the 1970s at times the inflation rate in Britain was truly eye-watering – as it was coupled to an expanding economy. Both Labour and the Tories attempted to keep pay rises within certain boundaries nevertheless. Thatcher’s Monetarism was much harder towards inflation. It saw this it as the major obstacle to economic growth, and so demanded that it be ruthlessly cut, even if this meant shedding jobs on a truly massive scale, accompanied by a fall in real wages, and the dismantlement of various welfare programmes. It also meant abandoning the Keynsian commitment, pursued over 40 years, to full employment.

Robin Ramsay in a piece on his ‘News from the Bridge’ column in Lobster, made the point that when he was studying economics at Uni in the 1970s, Monetarism as an economic theory was so poorly regarded by his lecturers that they left it to the undergrads to work out what was wrong with it. Which shows you it was known even then to be totally rubbish and useless. He argues that it was adopted by the Tory party because it gave them a rationale for doing what they wanted to do on other grounds – destroy organised labour, dismantle the welfare state, including the Health Service, and grind the working class into poverty.

Now a number of economists are pointing out that, despite the emphasis by the Tories on wage restraint and very low inflation rates, the economy is not growing. I think Han Joon Chang is one of these in his 23 Things They Don’t Tell You About Capitalism.

The comparison with Greece is particularly chilling. Greece has been ruthlessly punished by the Troika with very harsh austerity policies, partly because the Greeks dared to defy the Eurozone authorities and elected Syriza, a radical anti-austerity party. Counterpunch has attacked the economic despoliation of the country by mainly German banks as a form of economic warfare. Greece was one of the countries that suffered from the effective collapse of the Eurozone. The result has been grinding mass poverty for its people. One recent programme on the country’s plight showed children picking rubbish off dumps to sale, just as they do in Developing Nations. The presenter looked on, aghast, and made the point that he had never seen this before in what was supposed to be a developed, European country.

Is this what New Labour and the Tories have in store for us? One of the books I found in one of the secondhand bookshops in Cheltenham yesterday was about how Britain would have a ‘third world’ economy by 2014. Clearly the book was written a little while ago, and the timing’s out, but nevertheless, the appearance of third world conditions in Britain is a real possibility. There are already 3.7 million people living in ‘food poverty’, and hundreds of thousands facing off poverty only because of food banks. I also remember how this was predicted on a BBC Horizon programme, entitled, ‘Icon Earth’, twenty years ago. The programme was about how the image of the Earth in space, taken from the Moon by the Apollo astronauts, had affected global religious, political and economic perspectives. That image had stimulated people around the world to realise that everyone on Earth shared a common home. One result of this, so the programme claimed, was globalisation. It discussed the growing campaigns against migration from the developing world with an Indian anti-racism activist. She predicted that as globalisation progressed, pockets of the third world would appear in the first.

She’s right. This has happened with Greece, and it is occurring in Britain, thanks to the Tories and New Labour. But unlike Greece, we cannot blame the EU. We never joined the Eurozone, and the deterioration in wages and conditions will occur because of Brexit. The cause of this stagnation ultimately is three and half decades and more of Thatcherism.

John McConnell Promises National Investment Bank and £500 Billion Credit for UK

July 19, 2016

Mike over at Vox Political has put up another piece today, which reports that Jeremy Corbyn’s deputy, John McConnell, has promised to set up a National Investment Bank, tied in with a network of regional banks, to regenerate Britain’s communities and revive Britain’s industries after years of neglect. The bank is based on the German Development Bank. In addition, he promised £500 billion of investment. This follows Owen Smith’s promise when launching his leadership campaign this week end, to introduce a British ‘New Deal’, and an investment programme of £200 billion.

See Mike’s article: http://voxpoliticalonline.com/2016/07/18/labour-pledges-national-investment-bank-to-mobilise-500bn/

Both McConnell and Smith are right about investment in British firms by the British state being sorely needed. But McConnell is absolutely correct about the necessity of a special British investment bank to channel the money and provide the necessary credit. It’s been needed for decades. The authors of the 1s987 book, Socialist Enterprise, noted that the British financial sector was structured into investing abroad, and recommended the creation of such a bank. Neil Kinnock, in his 1987 book, Making Our Way, recognised the need for it. G.D.H. Cole, in his book, Great Britain in the Post-War World, written as long ago as 1942, recommended a similar radical reform of the banking industry. That should tell you how desperately it’s needed, and why McConnell is right.

Han-Joon Chang, in his book, 23 Things They Don’t Tell You About Capitalism, argues in one of his chapters that it simply isn’t true that we are living in a post-industrial society. Britain still has a manufacturing industry, and it’s still immensely important. It only appears unimportant, because it hasn’t grown as much as the financial sector. It is, however, still of fundamentally vital importance to our economy.

All of this, of course, will be unwelcome news to the Tory party and New Labour. Both of these turned to subsidising and supporting the financial sector as an alternative to, and at the expensive of, manufacturing. One of the functionaries Blair appointed to the Bank of England was an American banker, Deanne Julius, who stated that Britain should give up manufacturing products and leave that to America. As for the Conservatives, half of their funding at the last election came from the City of London. They have no interest and absolutely no desire to aid a British manufacturing revival. Not if it means having to spend government money, rather than rely on a bail-out by a foreign firm.

Way back in the 1970s the late Tony Benn tried something similar. The government set up various zones, and schemes in which firms could receive government grants to renovate and modernise plant and equipment. I don’t think it was taken up, and British firms continued to lag behind their foreign competitors. And the result has been the decimation of British industry in the decades since Thatcher took power.

McConnell and Benn stand for British industry, and investment to create real jobs and economic growth. All Maggie Thatcher did was cut, and hope foreign firms would come in to invest in what was left. All the while favouring the financial sector and her friends in the City. It also shows the hollowness of the Tories’ claim to represent British industry. They don’t. Labour represents industry, and the people who work in it. The Tories simply represent capital and those, who own it. The very people, who seem to enjoy increased bonuses and share options by cutting down to the point of destroying the very firms they manage.

Vox Political On the Bitter Injustice of the BHS Collapse and Philip Green’s Third Yacht

April 26, 2016

Mike over at Vox Political has also put up a piece about the most bitter part of the collapse of BHS: its chairman, Philip Green, was a serial tax avoider, who took £400 million out of the company. He bought himself yet another yacht, to add to the two he owned already. The company collapsed, throwing 11,000 people out of their jobs, and with £571 million black hole in its pension funds.

Mike urges its employees who voted Tory to take a long, hard look at what this says about the treatment of employees under David Cameron. It says that corporate bosses can get away with keeping their wealth, while their workers get nothing.

The bitterest part of the BHS collapse: Philip Green’s third yacht

This isn’t the first company that’s collapsed through lack of investment thanks to free trade economics. There have been others, and the economic thinking behind it is the first target in Han-Joon Chang’s 23 Things They Don’t Tell You About Capitalism.

The Russian Anarchist, Peter Kropotkin, also had a few choice things to say about the businessmen of his time, who deliberately limited production to keep the profits from their products high, which is similar to Green starving his company of funds for his own enrichment. In his essay, ‘Anarchist Communism: Its Basis and Principles’, Kropotkin wrote:

But the figures just mentioned, while showing the real increase of production, give only a faint idea of what our production might be under a more reasonable economical organisation. We know well that the owners of capital, while trying to produce more wares with fewer ‘hands’, are continually endeavouring at the same time to limit the production, in order to sell at higher prices. When the profits of a concern are going down, the owner of the capital limits the production, or totally suspends it, and prefers to engage his capital in foreign loans or shares in Patagonian gold-mines. Just now there are plenty of pitmen in England who ask for nothing better than to be permitted to extract coal and supply with cheap fuel the households where children are shivering before empty chimneys. There are thousands of weavers who ask for nothing better than to weave stuffs in order to replace the ragged dress of the poor with decent clothing. And so in all branches of industry. How can we talk about a want of means of subsistence when thousands of factories lie idle in Great Britain alone; and when there are, just now, thousands and thousands of unemployed in London alone; thousands of men who would consider themselves happy if they were permitted to transform (under the guidance of experienced agriculturists) the clay of Middlesex into a rich soil, and to cover with cornfields and orchards the acres of meadow land which now yields only a few pounds’ worth of hay? But they are prevented from doing so by the owners of the land, or the weaving factory, and of the coal-mine, because capital finds it more advantageous to supply the Khedive with harems and the Russian Government with ‘strategic railways’ and Krupp guns. Of course the maintenance of harems pays: it gives 10 or 15 per cent on the capital, while the extraction of coal does not pay – that is, it brings 3 or 5 per cent – and that is a sufficient reason for limiting the production and permitting would-be economists to indulge in reproaches to the working classes as to their too rapid multiplication! (Peter Kropotkin, ‘Anarchist Communism’, in Nicolas Walter, ed., Anarchism & Anarchist Communism (London: Freedom Press 1987) 34-5).

Kropotkin was appropriated by Cameron’s ideological mentor, Philip Blonde, in his book, Red Tory. It’s not hard to see why. Kropotkin as an Anarchist favoured the elimination of government, and was impressed by the achievements of private organisations, such as the Lifeboats and the international postage and railway systems, which lay outside of an overarching regulatory body. But Kropotkin was also a communist and a bitter critic of the poverty created by modern industrial capitalism. Blonde used his anarchist ideas to provide some kind of left-ish underpinning to Cameron’s idea of the ‘Big Society’. The latter was really only flimsy disguise for traditional Tory privatisation and laissez-faire capitalism. Whatever you think of his anarchism, Kropotkin deserves better.

Three Reforms for the Outsourcing Industry

April 2, 2016

Earlier today I put up a piece about how the members of the Nazis’ industrial advisory had to swear an oath of eternal loyalty to Adolf Hitler, and to use their industries and its profits to building up the Volksgemeinschaft, and so serving the whole community, rather than their own private interests. Well, the Nazis had a kind of outsourcing, in that they appointed the head Allianz, the biggest of the German insurance companies, to head the economics ministry. Hitler also sought the active co-operation of big business, deliberately toning down the anti-capitalist rhetoric and moving to stop the SA and the Nazi ‘left’ wing from doing anything radical like socialising industry.

I do wonder, however, how popular outsourcing would be if the heads of the industries involved had to swear a democratic version of the oath, in which they vowed to serve the democratically elected prime minister and parliament, and to devote their profits and energies to the whole of the British people, conceived on a non-racist basis, rather than on their own corporate profit. To some it probably wouldn’t matter, but I can others complaining at the presumption of having to swear such an oath. Florence in her comment to the post also made the point that, more importantly, the Freedom of Information Act should also be extended to cover them. It’s a good idea, and one many others have made before. It would allow the British public to know what they’re doing, and also allow the firms and sectors we wish to keep nationalised to continue to compete against them. At present the system works in the privatisers’ favour. They can use the FOI to see what the nationalised industries intend, and then try to undercut them. It doesn’t work the other way, of course. If you try to get a peek at what they intend to do, you find it’s prohibited on the grounds of company confidentiality. It’s commercially sensitive information, and so not to be divulged to the public. Even though the nationalised industries have to release it, and the private industries are competing for state business. But nevertheless, that’s how the Tories give work to their paymasters in big business.

I’ve thought about three reforms which might bring about a much needed change in the predatory and exploitative culture of the outsourcing sector.

1. Introduce worker’s representation in the boardroom.

A company’s workforce also have a solid interest in the performance of their company, and can introduce much needed financial stability. Han-Joon Chang points out that businesses in those European countries, Germany and Austria, which have such a system of workers’ representation, are much more stable and profitable financially, than industries which are run exclusively for the profit of the shareholders. Furthermore, for sometime employees in the civil servants had something like this in the Whitley Councils. These were set up during the First World War to compensate workers for the lost of the right to strike. They were dismantled in favour of a less authoritarian system in the rest of British industry after the war, so that they trade unions could carry on bargaining for the workers. Such a system should be revived, and introduced into the outsourcing sector as these have replaced the traditional civil service organs.

2. Boardroom representation of the unemployed ‘clients’ on the boards of workfare companies.

Welfare to work providers exist by exploiting the unemployed as cheap labour, under the guise of retraining workers to help them back into the labour market. However, in order to prevent the gross exploitation of such cheap labour by profiteering companies like Tesco, Sainsbury’s and charities like the Salvation Army, the actual people taken on by these companies to be retrained should also have their interests represented at the management level. This would stop abuses like that Mike covered in Scotland, where one council started a system of fining the people sent to them on the welfare to work course for such trivial offences as tutting, talking back or walking around with your hands in your pockets. Failure to pay the fines could lead you to being thrown off the course, and consequently off benefit. See Mike’s article at: http://voxpoliticalonline.com/2016/04/01/jobseekers-on-council-run-course-face-cash-fines-for-tutting-or-answering-phones/.

3. Part nationalise these companies. As these companies are working on government business, it is right that the state should also have a hand in them to make sure they are properly regulated and managed. Han-Joon Chang has also pointed out that this also has beneficial effect in providing financial stability, as shown by some of the part-nationalised firms in France. Of course, this would also mean streamlining some of the management structure, as private enterprise has many tiers of bureaucracy that is redundant under state management.

Or we could scrap outsourcing altogether.

As an alternative to all the above, we could just get rid of the ludicrously expensive, bureaucratic and profiteering Private Finance Initiative and Public-Private Partnerships, to renationalise those industries and services that should never have been put out to private tender in the first place, like schools, prisons and hospitals. And then we could set up unemployment retraining schemes that would work for the unemployed, not the overpaid heads of the outsourcing companies, like G4S, Serco, Maximus and the other wasters.

Vox Political on the Tories and Tata’s Proposed Sale of British Steel

March 31, 2016

One of the big stories in industry this week is Tata’s proposed sell-off of what remains of the British steel industry. Mike makes the point that while David Cameron is spouting about how the government is doing everything it can, their actions speak much louder than words. And their actions say that they aren’t concerned at all.

Cameron himself is on holiday in Lanzarote. The Business Minister, Sajid Javid, who one of the wags in Private Eye’s ‘Lookalikes’ column suggested looks like the Claw from Thunderbirds, was thousands of miles away Downunder appearing at a business banquet. It was left to Anna Soubry, the Small Business minister, to make a plea for more time. By contrast, Jeremy Corbyn was at one of the steelworks in Port Talbot, and issued a demand to Cameron to recall parliament and take steps to protect the British steel industry.

Mike also points out that other countries have taken steps to protect their iron and steel industries, and that during the financial crisis two banks were nationalised. This raises the question why the government isn’t doing the same for the steel industry.

See Mike’s article at: http://voxpoliticalonline.com/2016/03/31/these-images-show-how-labour-is-standing-up-for-steel-while-the-tories-are-standing-idle/

Cameron did fly back from Lanzarote yesterday. However, while Soubry had made a vague suggestion that the steel industry would be renationalised, Javid ruled this out. Mike, however, makes the point that by ruling out nationalisation, Cameron is most definitely not doing everything he can. See: http://voxpoliticalonline.com/2016/03/31/if-cameron-has-ruled-out-nationalising-tata-steel-hes-not-doing-everything-he-can/

Mike has also posted a further article showing how even the usually solid Torygraph has turned against the Conservatives for this. Osborne’s refusal to rescue the British steel industry seems to be to avoid antagonising the Chinese. He has for years resisted the kind of legislation the Americans have passed to prevent the Chinese dumping cheap steel to the destruction of their own domestic industry. It looks very much Osbo is deliberately sacrificing our steel industry in order to stay in favour with the Chinese, and encourage them to keep investing in Britain.

See: http://voxpoliticalonline.com/2016/03/31/britain-sacrifices-steel-industry-to-curry-favour-with-china/

I’m not surprised by Cameron’s blanket refusal to nationalise the industry. The Tories have been consistently against its nationalisation after it was first done by Clement Atlee’s government. Duncan Sandys, the Minister of Supply, proposed its denationalisation in 1952, claiming that privatisation would restore to the industry ‘independence, initiative and enterprise’ which was not possible under nationalisation. He was opposed by Sir George Strauss in the Labour party, who said that it was ‘indefensible for the control of this industry-on which depends our economy- the fate of townships and the livelihood of hundreds of thousands of employees-to rest in the hands of people with no public responsibility’. It’s a statement that still applies today at Tata’s announcement they want to sell the plant. The iron and steel industry was renationalised by Harold Wilson’s Labour government in 1966. The steel industry itself by that time had recognised the need for reorganisation. Moreover, Labour was in favour of nationalisation because iron and steel was one of the ‘commending heights’ of industry, and so should be occupied by Britain. The Tories started privatising the industry again in the 1980s under Ian MacGregor. Their aim was to cut the cost to the taxpayer, while at the same time they considered that the business of the steel industry should be to make steel, rather than create jobs. Clearly, that attitude has not changed.

The manufacturing industries also suffer from the perception, disseminated by neo-Liberal free-marketeers over the last thirty years, that Britain is now a post-industrial society. Deanne Julius, who was one of the chief wonks in the Bank of England under Blair, took this view, and stated that we should now concentrate on developing the service industries, and leave manufacturing to the rest of the world, and specifically America. This is another idea that Han-Joon Chang shoots down in his book, 23 Things They Don’t Tell You About Capitalism. He makes the point that manufacturing industry is still vitally important. It only looks less important than the service industries, because these have expanded far more and more rapidly than manufacturing. But that certainly does not mean that it’s unimportant.

Except to the Tories. Cameron is not going to renationalise the iron and steel industry, because as a neo-lib he’s devoted to the idea that government should not interfere – market forces and all that gibberish – and that if the industry goes under, well, that’s how it should be. Some how the market will magically correct the situation and another industry will somehow arise to replace it. This seems to me to be the fundamental attitude of the followers of von Hayek and the other Libertarians. He also won’t want to nationalise the industry, because it will mean not only a fundamental contradiction of Neo-Liberal economic doctrine, but also because it’ll mean more state expenditure. Which in turn will mean he won’t be able to give more tax cuts to his big business paymasters.

And lastly, he won’t want to nationalise the industry, because the last thing he wants is a rise in employment, and the revival of an organised and powerful working class, as it was when manufacturing was the dominant industry. Milton Friedman’s wretched Monetarism dictates that there should be a six per cent unemployment rate to keep wages low, and labour affordable.

And finally, there is the issue of class. Whatever Cameron and Ian Duncan Smith spout to the contrary, the Tories are not the policy of ‘working people’. They themselves admit as much. When the issue of the union’s funding of the Labour party came up again a few years ago, Labour made the point that the Tories were being funded by business. The Tories attempted to defend themselves by stating that this was perfectly acceptable, as they were the party of business. And in this case, business does not want state involvement in industry and the creation of nasty, old-style working class jobs that might actually empower the working class.

And also part of it is that the working class simply aren’t considered a concern, in the same way that the Tories are concerned about the upper and middle classes. Cameron’s a toff, as is Osbo and Ian Duncan Smith. The people, who matter to them are the same people as themselves – other toffs and members of the upper middle class. Those are the only people they see personally and interact with, except those they employ. And so ordinary people and their concerns simply don’t register with them in the same way as those of their own class.

And so, while Cameron has come back from Lanzarote, because this is a major issue, it’s not one that he really wants to solve by going back to nationalising the industry. Not when Maggie Thatcher and generations of Tories took so much trouble to privatise it.