- No civilized society could leave people destitute. It was not morally right
- The same principle Keynes advocated applied to them too. Give them money, they will spend it out of necessity, and that will help to keep the factories running.
Friday, May 15, 2009
Governments have given trillions of dollars to banks in the last few months, yet our economies are still shrinking. The banks are not lending the money, they are using it to cover the bad debts—the so-called toxic loans—they set up in vast numbers to reward themselves with outlandish bonuses. The idea of governments giving away money is supposed to be Keynesianism, the idea had by John Maynard Keynes that only by getting people back to work by large government spending projects would the long depression of the twenties and thirties be overcome. US President F D Rooseveldt tried the policy with the New Deal, and it worked. People got a job, spent the earnings they previously did not have, so shopkeepers sold their goods, and factories had to start making them again. It was a multiplier effect! Adolf Hitler also tried the policy in severely depressed pre War Germany by pouring government money into military projects in preparation for the second world war, and he also found it worked. Unemployed workers were building roads, aeroplanes and ships, spending their money in shops who wanted supplies, and so factories outside the military had to resume full production. Keynesianism works! But it depends on ordinary workmen being employed by the money the government spends. The government money has to go to people to employ them. Merely giving it to banks who then keep the money to cover for their own ineptitude does not employ anybody except the incompetents whose greed created the problem in the first place. Governments should not have given money to banks at all, but directly to the poor. Favouring the rich, just convinces us at the grass roots that governments are there to bail out the dolts and nincompoops using our money to make themselves richer, when their get rich quick schemes fall flat. Rooseveldt called the bankers “banksters” to imply they were “banking gangsters”, and if one of the few great presidents thought bankers were gangsters then it even more true now. In the UK, the Brown, supposedly Labour—that is as in labourer!—government has been bringing in a mass of repressive legislation similar to the Patriots Acts in the US, allegedly directed at terrorists, but ready to be used against anyone they choose to label as a terrorist, like anyone rioting because they are unemployed and forced on to workfare—another oppressive British law in the new welfare reform act. It shows the unscrupulous class nature of the New Labour Party. Keynes realized that not everyone could work! Always some people were too ill, disabled, unskilled or too simple, and some were always unwilling to work for whatever psychological reason, yet these people could not be left unprovided for. There were two reasons for it:
The ongoing economic turmoil and the meltdown in the financial world have revealed the negative effect of the excessive “compensation” packages for bosses, Fred Goodwin CEO of RBS being the most infamous of them. All the main political parties talk about having better regulation of a corporate sector that paid itself vast bonuses for destroying the financial system. A few thousand—not enough!—protestors angrily descended on the bank of England, but British Trades Unionists lobbied Parliament for a higher minimum wage. In Britain, on All Fools Day, 1 April, we celebrated ten years of a legal minimum wage, set up by the New Labour government in one of its few sensible and useful policies. Yet, the minimum wage always remains too low to live on adequately. Set a minimum wage and the spread of wages above it simply extends, they rise to match. One way to counter it is to set the minimum as a proportion of the wage bill, instead of a fixed amount. Thus the Council of Europe set its decency threshold at 60% of net earnings. So increasing the range automatically raises the minimum. There is a danger then of a self sustaining wage inflation setting in. But this suited Blair. It kept the labouring classes silent while Blair occupied himself with bigger schemes in partnership with his neocon chum, Bush. What is needed now is a maximum wage! This is professor Gregor Gall’s proposal. He explains the notion of maximum wages is based on the idea that no matter what job a person does and no matter how many hours they work, no one’s skill, expertise, intelligence or experience can justify the payment of 100, 200, 300 or even 400 times the wages of the lowest paid worker in any organization. The only way executives’ astronomical salaries can be explained is that those who receive them steal from those that end up being the low paid of the organization. In February, President Obama floated the idea of a national cap on US executive salaries at $500,000 where state bailout money has been taken. In Britain, it would plainly mean the banks, but it should mean all organizations that receive public money—bosses of train operating companies, defense contract companies, local authorities, national health trusts, universities and so on. Such reformed executive salaries could also be tied to genuine performance measures under which an executive is only entitled to the full salary by performing above a certain line. Maximum wages would be based on a ratio of around 1:4 to 1:10, where the multiplier would be based on the lowest paid in the organization. These could be determined by law. By fixing a wage range, senior managers who want to increase their own pay, have to increase that of lower paid employees automatically to fit the rules. Ordinary people who can see the injustice of the unlimited managers’ salaries can see how this reform would deal with it. But if it was only maximum wages, bonuses would not be included, and if it was just salary, then other items like expenses would be exempt. We’d soon find greedy executives awarding themselves perks and benefits on top of their wages. Such creativity as they had would be devoted to devising endless avoidance schemes, just as these people find “legitimate” tax avoidance schemes. So the notion of maximum wages needs to cover all forms of remuneration. But there’d also be a need for transparency to make sure that the rules set by law were being adhered to. It would mean everything in the books must be open, so that employees as well as shareholders could understand fully the company's finances. So, trades unions ought to press for policies along the lines of a maximum wage, knowing that most people would see it as fair. It does not stop genuine talent, merit or success being rewarded, but transparently and not excessively though regulation. It also gives people at all levels a real incentive to achieve and do better, because they cannot just steamroller self indulgent packages to the detriment of others in the company and the nation simply to feed their own greed. No one therefore need feel hard done by. The rules apply to everyone equally. A salary range from a minimum to a maximum linked in some fixed ratio means financial reward comes from the position people achieve in the range, and that has to be worked for.
Thursday, May 14, 2009
Dear A, As I said when we met at the Artisan's Fair last month, there is much in what David Icke says that I can agree with. He sees the injustice in the world, and the apparent mess that politicians always seem to make of it. I see it as evidence of the class distinctions we preserve in society, but he fantasises about a real and important social issue. I cannot see how these fantasies help the situation at all. When the ruling class were scared of the prospect of a communist revolution, they distracted large numbers of worthy people by inventing left wing communism. The actual communists working for the improvement of the oppressed and the poorest in society were classified as right wing communists. They were not communistic enough. So many young people who otherwise might have been active in opposing right wing policies were distracted into attacking those who opposed the right wing in practical ways. Fine. Perhaps the left wing communists were right. After all, the Soviet Union was a failure, and China seems more capitalist than the capitalists. So the ultra left were right. The future is theirs! Except that they disappeared as soon as communism collapsed. They no longer had a purpose in life because their purpose was not to oppose the right but to oppose the left! And what happened to them. Well, in the US, they emerged a few years later as the front runners of the neocon movement, the crypto fascist movement behind the Republicans and good ole President Bush. I see what Icke is doing as something similar. His fantasies distract people from the real issues which have been well demonstrated in recent weeks and months with the corruption in Parliament, all encouraged by Blair to keep his New Labourite yuppy types sweet, and voting for his vast fascistic enlargement of oppressive law (mentioned quite rightly by Icke), and indulging in the even vaster corruption of the financial system. I cannot see how a load of ignorant nonsense about words like courtship, citizenship and so on have anything to do with any supposed mystical maritime law, or anything else other than their origins in Old English and Anglo-Saxon. In any class society, the law is designed to favour the top class, not the hewers and heavers. Fantastic pseudology does not help anyone to understand it. We need people to teach that the recent troubles are classical examples of Marxian theory. Marx did not know everything any more than anyone else does, but he pointed us in the right direction, and that is why he is villified by the ruling class along with more down to earth lefties, commies, socialists and even some liberals who realise that we are social animals and cannot live without society. Icke, or his source, is right on this too. All our modern institutions have their origin in primitive human society, which was tribal, from religion through drama, sport, culture to lawcourts and king's courts -- all social variants on the meetings of the whole tribe for its purposes -- the preservation of the tribe -- of society -- being the main one. The chief was doubtless marginally better off than the rest of the tribe but from the honour he had as a man able to do what others could not. Any power he had was the power of the tribe, and if he abused it, he was out. The same applied to everyone. The cause of modern problems is not that we have been infiltrated by aliens, but society has grown too big to manage directly, and now we have a parasitic class of plain human beings trying to get more than their fair share out of society. Their aim is not to preserve society but themselves at the expense of others. Since the amalgamation of tribes into nations, it has always been so, and the result is always the eventual collapse of society -- "the mutual destruction of the contending classes". Society then has to rebuild itself somehow, usually by new people taking over without the same preconceptions of their predecessors. But they then build up a new class society, and the process repeats itself. We can try to stop it, and encourage our rulers not to be greedy, but it is hard, and facts not fantasy to back direct action are what is needed to succeed -- if we ever can. I have nothing against intelligent reptiles. I wrote a book about them (the anthroposaurs!). I would rather be ruled by just and fair reptiles than unjust and greedy human beings. Best wishes, AW!