Wealth Perception and Reality

This is a good video on the state of wealth in the USA, comparing people’s perceptions with reality and what they think would be ideal.
I would expect the situation in Britain and Europe to be a bit different, but the broad result to apply. We would like a more equal situation to pertain and not realise how chronically elitist the situation really is.

My own view has long been that we should sequester the rich and use this ‘money’ to pay down household debt and abolish most of financial services beyond ‘boring banking’.
Instead of sensible discussion of wealth, incentive and using the planet’s resources reasonably, the big new option available to us in the UK is UKIP – a little Englander party that plays on immigration and our myopic hatred of the European Union. UKIP are less revolting than any of our standard politicians, but the EU costs each of us about £74 a year – buttons compared with the rich and probable liabilities of the financial sector. A question of ‘its the economy stupid’ – with the proviso we’re too dumb to understand any economics!
I don’t care whether we are in the EU or not – though we should want to be in the trading block. What we’ve needed since I can remember is a decent industrial policy, near full-employment, decent policing and much great equality (though there is no point in expecting a few slogans in this area to lead to anything worthwhile – and the dangers of Soviet Paradise lurk).
The telling point of this video is that argument is pretty hopeless because most of us live in cloud cuckoo land. I’m off down the pub for a drink with Farage. He got my vote as the least of all evils on display.

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Cameron’s White Heat of the Technological Revolution

Cameron said a lot to agree with today, yet one has to doubt whether any of it is worth spit.  I rather like the idea of a private sector that builds our infrastructure through a regulated utility programme – but think here the very system we could do with operating like this is banking.  Leave that as it is and the private companies who come in will do their accounting offshore, evade tax (it’s not avoidance) and we’ll end up paying them economic rents.

He’s right, of course, that we have lacked vision – but why then rely on building a historic myth about the private sector (as big business) on which to build a vision?  We need to build our vision on reality, not a pack of cards.  To get private money one has to compete for it and productive business has been failing in this regard since the 1970s – because money has been allowed to make money in the manner that has led us to the banking collapse and the redirection of tax-payer money to fund what were actually losses.  Presumably, no private sector money is going to come to Britain unless the return on its capital matches or beats what the financial cavaliers offer?

Even Apple, about as “successful” as it gets, has done this through offshore manufacturing and tax evasion made legal.  It is worth more than the total of all US retailing in market capitalisation, and responsible for how many US jobs?  The big problem for the Cameron dream is not the sensible vision of new technology, infrastructure and the rest – it’s the total failure to address how we can get investment in such sensible things without ending-up paying unsustainable rents to companies evading tax, and why such an obvious and rational ‘plan’ (I can remember Wilson’s ‘white heat of the technological revolution’ – which was not dissimilar) isn’t  already built all around us.

The financing of the Channel Tunnel was a disaster – interestingly the private sector couldn’t even manage to finance and run a near-monopoly.  I’m all for a decent private sector, but not one that needs to route its profits and due tax through offshore transfer pricing and obtains these profits through economic rents rather than innovation, continuous improvement, re-investment and the kind of good management John Lewis represents.

Cameron is right we need to encourage investment.  Why then so little focus on how this needs to be structured?  And why are we so dumb as a public we are probably inclined to see his speech as inspirational?  I was so dumb at ten in the days of Wilson I was inspired to go to university to study chemistry.  He saw much of the problem as to do with ‘hot money’ and banks that did not finance the right things in Britain.  Cameron’s speech is just rhetoric to draw our gullible attention away from what really needs fixing.

I wouldn’t actually start with the banking system, though I do believe banking needs to be reduced to a utility that matches savers and borrowers – and probably should also regulate proper accounting.  This is a global problem needing a democratic solution agreed and set by the peoples of the globe.  Government has no place other than administration in this.  It’s pathetic we can’t come up with Cameron’s plan or our version of it and get it funded.  The real first place is ideology and the ease with which politicians manipulate this.

Nationalisation versus privatisation has long been a dead duck except in political manipulation.  What we really need to do is plan and implement investment that pays off for the planet and lives lived on it.  The pathetic assertions of economics and government have clearly failed to do this for at least a century after the point we knew what to do.  The problem is the very competition Cameron assumes in his thinking.  We don’t actually create the conditions for this other than through literature and myth working on mass ignorance.

The answers are pretty clear, but we lack the balls.  I can’t remember Cameron’s politer term today (nerve?).  Most of us live and die within a few miles of the end of our streets, and barely develop understanding beyond that culture, formed through habit.  One has to say such geographic parochialism didn’t stop Kant, but he was a rare bird.  One only has to look to the Internet and its use to see how easily this parochialism transfers to the global.  Pornography and gossip still dominate what is searched for.  Facebook and the rest attract quite brutal “local” behaviour.  The first problem is admitting how bad most of us remain – though I’m a believer in underlying goodness and redemption.

I think a good historical case study of sport might show this up rather well.  I played rugby league in days not long after high tackles moving from being the specialism of some players, to illegality.  To side-step was to risk one’s teeth and jaw and I don’t remember much protection from the referees.  In soccer, ‘Old Firm’ and other derby matches were brutal and I was coached more man-and-ball tackles in that game than in rugby.  No we have the use of technology in decision-making (I crave a retrospective use on tours to Pakistan!) – the drift is towards ruling out cheating, though it’s clear from the tunes played by the merry whistle-blowers and such matters as Thierry Henri’s hand-ball that plenty still goes on.  One ‘games’ the rules – of course.  There’s a story on human nature in this and, importantly, what we can do to change behaviour.  The transparency and technically aided refereeing of sport could transfer to banking and the business of productive investment.

I’ve played in some far away places (including Ellesmere Port!) in unrecorded games of utterly bent refereeing – amazed the bastard concerned had the brass balls to give his decisions in front of us.  I was generally a good sport, but lost it in such circumstances.  The banks want to play without recourse to rules and yet introduce the ‘goals’ scored in the Dark Pool in the game we can watch.  This is akin to Wigan being allowed to claim points scored in an alternate universe next Friday against Warrington, or, if the Wire play as badly as last week, store them up for the next game they find themselves losing in.

I would take the highly elevated pay of today.  But I know most sportsmen would be content with a fair salary cap.  To take lower pay now is to cut off one’s nose to spite one’s face – but all that’s needed is structural and regulatory change – everyone in the dressing room was once on the same match fee contract.  Widen this across all industries and bring about severe taxation on economic rents and a land tax and what do we lose?  Watch the 1978 Rugby League Challenge Cup Final and tell me the lads playing then couldn’t put on a show as good as any now.  That’s from the days when losing pay might equate to the buys fare home.

What we’d lose is the rich – and why would this be a bad thing?  The only excuse they ever give us is that they will desert the country.  They do in time of wars with conscription too.  It’s time we worked out who and what they are from facts and not myth.  Try not to be so stupid you won’t know what an economic rent is until the day you can’t afford to use one of the new toll roads!

Why do we allow institutions to set rates of pay and bonus?  Why do we allow banks to lend money as though the money belongs to them?  What would you think about someone who brought his own Monopoly Money printing press to a game and bought up Mayfair with it?  Why is government money always the alternative to private money – note it’s never ‘yours’?  What really motivates people (we know quite a lot from experiment)?  What happens when  people get so rich they can buy politics (we’ve known for over two millennia)?  Economics proceeds as though none of this matters.

 

There Is No Alternative?

When it comes to history the following is a plausible story.

“WW1 started in 1913 with the British invasion of Iraq.  This followed much jostling with Germany, led by Kaiser Wilhelm, the man who would have been King Of Britain under today’s inheritance rules.  The Imperial powers (roughly Britain, Germany, France, Russia, Japan and USA) all had trade interests supported by big armies and navies and had even engage in joint actions, such as that against China in 1906.  Britain, France and Russia had intended to invade the USA in 1861.  The USA had War Plan Red until WW2, which was concerned with invasion by Britain, and even built some air bases near Canada, fearing invasion through Halifax.

Millions protested before WW1 but could safely be ignored.  This war left Germany with reparations it could never pay.  It’s people were generally poor in comparison with the British, though the country was clearly leading in science and culture.  Money poured in under Hitler, with large investments from the USA and banks such as JP Morgan (who had financed much of UK war effort).  The US and UK continued a policy against Japan, starving it of oil and imposing tariffs on its textiles.  WW2 broke the imperialism of France, Germany, Japan, UK and USSR, with the only victors being the USA – who then prevented Franco/British attempts at a ‘come back’ in 1956.”

I’ve always found the American victory difficult.  One can hardly doubt the spirit of its peoples’ war effort – the questions would concern the extent to which the victory was actually the unfolding of a plan and whose plan this was.

In more recent times, Iraq is invaded again, Saudi is controlled by a freak monarchy under US “control” and the invasion of Iran is only an Israeli away.  Bliar is JP Morgan’s bag man out there, and led us into an illegal, unwanted war that has killed in hundreds of thousands, despite being protested by millions.  The excuses for going into the Iraq war look as ludicrous as those for the War of Jenkin’s Ear.  China is now the eastern power with vast manufacturing capacity and a shortage of oil and other commodities.

I’m fairly sure history is repeating itself.  Both Churchill and Bliar may have been plants in our political system to do American bidding – but I doubt ‘American’ is quite the right term.  The increases in productivity in agriculture, manufacturing and even such matters as domestic cleaning should, by now, have produced a world of material plenty for all and much greater freedom from ‘disciplinary government’ and such sanctions as unemployment and poverty.  Instead, we are on the road to serfdom and find we have no democracy ‘because of global competition’.

I can support this historical version and expand on it.  I remain to be convinced of it myself, but the gist of it seems more likely than not.  I’m well aware of the alternatives and the standard model that has WW1 starting because some toffs were shot at by a guy outside a butty shop, or the irreversible German railway play (AJP Taylor).  One should be able to engage in speculation and I’ll even speculate our view of E = MC2 is wrong.

And this is where we have gone wrong as a society – we can’t engage in practical, speculative, scientific dialogue.  The history above may be wrong – but it isn’t as wrong as the political-economic bullshit that holds us in fealty and which just happens to be the only political-economic bull that holds wages down, makes the rich richer and leads to war and planet burning.  How the fuck did we get this stupid? – it must have taken an awful lot of practice and schooling!

The idea of TINA (there is no alternative) is utterly stupid and passed off by ruthless bastards who would do anything to retain their privilege and the means to get their jollies – whether Thatcher through lapping up the Iron Lady adulation or some bwankster flashing out mega-cash on drugs and prostitutes.  If we can create viable alternatives (at least in narrative) to Churchill as our great hero, we can clearly come up with alternative economic-political propositions on how to change things that aren’t either lunatic rich or lunatic leftie.

I don’t care whether Churchill or Bliar were good guys or the most appalling war criminals working at the behest of foreign interests.  I do care we are so dumb we believe in TINA or even organise public dialogue against it.

 

 

Who Owns Debt?

Most people don’t do ‘economics’ – but actually quite a lot do end up running a budget of some kind – household, departmental and so on.  Of course,we can’t print money to make up for our blunders without the long arm of the law venturing near our shoulders.

The question my partner asks when I go off on one when media coverage sticks in my craw is ‘who owns the debt’?  This is a very Nietzsche-like question, as in the end debt has to be enforceable, and this makes it a police matter, much as one hopes that we don’t have police doing evictions.  The same principles that apply at Dale Farm apply in respect of debt.  If people won’t pay up the final resort is ‘sending the boys round’.

We have never managed to get rid of loan sharks (look at all the ads now for ‘payday loans’ and see if you can spot the interest rate at 2000% plus in the small print).  Their connections with banks are close.  All kinds of “specialists” are players in dodgy debt, including government debt, your debt and pretty much anything that can turn a profit faster than day-to-day business.  At the bottom of it all you will find such in-consequence as the suicide fashion that has killed a quarter of a million Indian farmers in very recent years.  Were they sold suicide insurance as I’ve seen included in Japanese loans?

We may like to think we have rid ourselves of the miserable exploitations found in ‘wog countries’  (what else are they in the mind of those who don’t care about these deaths?) – but they have reached Iceland, and even here credit card and other unsecured lending is being pursued by securitisation against property.

The truth on who owns debt is simple.  It’s owned by whoever can send the police round or the army in.  Britain’s government debt is 35% foreign owned – does this mean the Raving Loonies (who had a policy of selling Britain to the Arabs and giving us equal portions of the cash) got in when we weren’t looking?

We aren’t in the suicide misery of rural India yet.  But have a think about the cost of a reasonable time at university working only vacations is about £50K and in the 5 years of extra study you have lost maybe another £80K – £130K is about a mortgage.  You start paying back on £21K – which would get you a mortgage of about £60K.  We are thus loading many of our kids not only with serious debt by a bigger opportunity cost – and both are bigger than a sensible 30 year mortgage that would not buy a house anywhere in the country.  This system is as broken as the grim Indian farming debt system.