Posterous theme by Cory Watilo as adapted by Jamie Graham

Filed under: politics

I'm as mad as hell, and I'm not going to take this any more

written on Saturday 3 December 2011 and filed under [food banks] [politics] [so-called 'big society']

It must be really easy to be right wing and reactionary. Toss a subject at a committed Tory and they've got an instant, knee-jerk answer that they didn't even need to think about. Immigrants? Coming over here to do jobs white people aren't prepared to do - send them back! Gays? They're just trying to make their unnatural sodomy as acceptable as my heterosexual sodomy. The poor? Why do they expect handouts - can't they pull themselves up like I did with my free education, free university and free healthcare? Taxes? Why should I pay a portion of the salary I earn in my job in insurance into a system that I probably will never claim from?

Being left wing and progressive is far harder. With every issue, you have to sit down and actually expend mental calories on deciding what the best course of action is, weighing the greater social good against your own upbringing and class. Burkas? Well, I deplore the circumstances that would force them on to women, but I'm loathe to dictate what someone can and can't wear. Overthrowing dictators in far off countries? In principle there's something to be said for not allowing murderous scum to run a country, but in practice overthrowing them always makes life worse for everybody and smacks of colonialism. Religion? I don't have one and I don't appreciate having religion - any religion - thrust down my throat, but if I'm entitled to be an atheist, then others are entitled not to be.

See what I mean?

Today I came face-to-face with one of these dilemmas. As I went into the supermarket, a bunch of holy-looking do-gooders stopped me and pressed a shopping list into my hands. It seems that Wirral has now got a 'foodbank' and they'd quite like me to donate to it. I took the list and spent around half an hour standing in an aisle having a mental debate as to whether this is a good idea or not.

There are several problems with foodbanks. First and foremost, since the Second World War, society and government have agreed that it's the state's responsibility that no one in the UK should ever starve. Successive governments have tried to shake free of this basic, humane commitment but we've never let them. Until now. Now, with the country suffering from the wastrel ways of obscenely rich bankers, we've decided to cut the poorest loose to go hungry and die. This is wrong. But if I donate to a foodbank, am I not doing 'Dave' Cameron's job for him? Shouldn't he be finding the money to prevent people dying of hunger in a first-world nation rather than wasting it on selling nationalised banks at a loss?

Then there's the problem of foodbank schemes being run by churches. There's an element of "sing for your supper" implicit in the leaflet they handed me. If you claim from a foodbank, the church is likely to be highly involved - you go there to collect the food, you have a talk with a god-botherer spouting Jesus, you get pressured to start coming on Sundays and pretending you believe. You may be financially bankrupt, but churchgoers are often the first to believe that others are morally bankrupt as well. Your food is going to come with a side order of Jesus and a desert of condemnation and pity. This type of crap was one of the reasons Attlee's 1945-1951 government took poor relief out of the hands of local vicars and brought it into the machinery of the state - nobody should be forced to pray for their supper, let alone be judged for it as well.

Then there's the taking away of people's choice. Yes, that's a very right wing thing to say, but bear with me. When you get your Family Allowance and Income Support and the other meagre crumbs from the LibCon table, it comes as cash. This lets you choose what you do with it: shoes for little Johnny this week, an extra pint of milk for me tomorrow, a bus ride to his mum's so she can look after the kids for a few hours... all tiny, but all very important. When you're poor - and I've been poor - your world shrinks. The giro is the only thing that expands your horizons, even if only slightly. Instead, we're now routinely leaving the least able to cope with no money at all; they go to a foodbank and they get... a bag full of food. Chosen by a middle-class shopper, handed to them pre-packed by a middle-class do-gooder, that tiny horizon is slapped shut - you'll get what you're given.

Also, I doubted what the middle-class shoppers of the Wirral would choose for their poorer brethren. And I was right: as I left the store, the modest pile of groceries was all "Value" items - inedible "Value" cornflakes, "Value" packet soups so thin can see the bottom of your cup when you've made them, "Value" toilet paper that will tear you a new one. The middle classes of Wirral had spoken: you foodbank users, look at our largess - nasty crap we wouldn't give house room to, awful shite we would never eat ourselves. Gee, how generous of my fellow man.

So, what did I decide? After half an hour standing there, completely unable to decide whether these points outweighed my general humanity, I decided that the socialist thing to do would be to donate to the foodbank and get angry about it later. So I did. And I bought brand names, stuff that I would choose for myself, not stuff I would choose for others, because that idea stinks. Heinz soups; Colgate toothpaste; Lynx shower gel and so forth - stuff that people, that I, would want.

But now I'm angry. I'm very very angry. THIS IS WRONG. Foodbanks shouldn't exist because they shouldn't be necessary. We MUST get these awful, nasty, cruel Liberals and Conservatives out of government next time. And we must send a message to Labour: look to Beveridge. Look to Attlee. It's time to roll back Thatcherism. We're as mad as hell, and we're not going to take this any more.

Let them fail

written on Monday 29 August 2011 and filed under [banks] [politics] [unemployment]

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If you listen to the business news on the Today programme or read the inside pages of the Financial Times, you may have spotted something called "LIBOR".

LIBOR is the interest rate banks charge to each other. Because banks are big and have vaults stuffed with money, it's a low-risk deal to lend money to other banks and the rates are therefore only slightly more than the base rate of the central bank in question. A few years ago the rate rose significantly as the risk of the money a European bank was lending would go to an insolvent US bank increased. It wasn't possible to say with confidence which US bank was insolvent. If I presented you with a bowl of strawberries and said "one of these is rotten but the rest are fine", you'd likely reject the entire bowl. The markets did the same: they stopped lending money to the US banks because one of them was rotten. We called it the "credit crunch", and ultimately it brought down a number of banks and then the economy itself.

This rate has started to rise again, this time propelled from the other direction: the US banks are frightened that a European bank is secretly insolvent. There are a number to pick from: many large multi-purpose banks in France and Germany have heavy investments in Spain, Greece and Italy. If any of those countries defaults or if any banks in those country go bankrupt, there will be a domino effect that eventually will hit the US banks. So the liquidity in the markets starts to dry up again.

Last time round we pumped money into the system. We underwrote the losses of the banks, encouraged weak banks to merge into strong banks, even bought capital in the failing banks to keep them afloat. The reason was stark: the crisis wasn't anticipated. If allowed to play out, the next morning that cash machines would empty and not be refilled. Shops would not get a float delivery from Securicor. People paid in cash would go unpaid. People paid by BACS would be unable to access the money. The world as we knew it would've stopped.

This time, I suggest, things are different. If we see this happen again, we must let the banks fail.

Not, of course, an undisciplined collapse -- more like controlled demolition. It should be easy, with forewarning, to protect the money of ordinary savers and the loans of ordinary mortgage payers. It should be easy to transfer these assets and liabilities to one of the state-owned banks we got last time round. If governments move quickly, they can take the ordinary accounts, the current and mortgage accounts, the savings accounts, the stuff people in the street like us have and move them to a safer place. The remaining sick bank left behind should be allowed to fail and take the bad debts with it.

To a degree we did this last time, especially with Northern Rock, but we made the startling error of taking on the bad debts with the good and leaving that badness on the government's books. We even facilitated Northern Rock taking the most profitable part of its business and moving it off-shore, out of the reach of the government. Last time we paid for the banks' mistakes. This time we must seek to profit from them in some way.

It's odd to hear such words coming from the keyboard of an old-fashioned socialist like me. But as long as the savings and houses of the ordinary people are protected, I don't give a stuff what happens next. The banks and the markets are not the real enemy anyway: the real enemy is and always has been unemployment. Rescuing the banks ruined the economy. This increased unemployment. I'm willing to bet that letting them fail won't be as bad. If it costs nothing to the government and sweeps away a lot of unsound debt, the increase in unemployment should be less than what it would've been with another rescue. It'll also be quicker to bounce back from.

Why is unemployment the enemy? Because unemployment, any unemployment, is a very bad thing. It's bad for the unemployed person, left almost penniless and subject the humiliation of claiming Jobseeker's Allowance. It's bad for the unemployed person's spouse, left working harder or scrimping further. It's bad for the unemployed person's children, left hungry and uncertain. It's bad for the unemployed person's community, as ordinary transactions dry up and more businesses fail leading to more unemployment. It's bad for the unemployed person's region, struggling to get investment as potential employers would rather invest were there is less depravation. It's bad for the the unemployed person's country, because high unemployment goes hand in hand with rich people getting richer and poor people getting poorer; eventually, you have riots and looting.

In a land with total employment, the workers have power. You're difficult to replace; the company wants to keep you and will invest in your skills and raise your wages and generally try to be seen as benevolent to keep you in your job.

In a land with high unemployment, the companies have power. You're easy to replace; the company doesn't care if you leave and can hire someone with skills rather than training you. The company knows you won't ask for high wages because you fear replacement by someone cheaper. They don't have to appear to be benevolent -- they can act like bastards to extract more work from you. If you don't like it: go and be unemployed instead.

Of course, there was a flip-side to this. Full employment in Britain brought real power to the workers and we misused it. We tried to use it to bring down governments (succeeding twice). We tried to use it to screw fantasy money and non-productive jobs out of employers who then went bankrupt. We tried to use it to force the government to buy the failed businesses to keep us in work (and succeeded: think British Leyland). But the answer to this was not what Thatcher did -- deliberately create unemployment, foster it to destroy the workers' power and then stigmatise the unemployed to keep the fear of unemployment high. There were many, many other ways that wouldn't've destroyed so much of urbanised Britain without creating a permanent hard-core of unemployable people, whose children and grandchildren are now on our streets, equally unemployable.

But the idea is still in the minds of economists and politicians. If unemployment is over 2 million, the workers will remain powerless and the corporations will make more money faster. They rescued the banks last time knowing that it would push unemployment up. Next time, they should let the banks fail gracefully, otherwise we're going to keep rescuing them again and again and each time we'll push unemployment up more.