Monday, September 17, 2012

If you want a Future in the UK, March for it! 20 October 2012

UK Demonstration We’ve had enough! The trade union movement is mobilizing for “a future that works” this autumn. It is the sheer hard work of our nations that is keeping this country afloat. And what thanks do working people get? Slagged off as lazy by Tory backbenchers who have no idea in their well paid sinecures what it is to struggle.

The “lump” is back with millions having to give up entitlements to holidays, pensions and fair wages by declaring themselves “self-employed” to get work. The answer to getting the economy out of its government-induced coma is to transfuse some of the stashed £billions out of bank vaults and where they should be, in our factories, on to our high streets and into building homes.

Even the government’s former allies agree their cuts policy is causing harm. Those who supported cuts two years ago, having seen the effects of austerity are calling for a change. The policy is hurting but not working. In fact, rather than repaying £2 billion in the summer the government had to borrow another £600,000. The chancellor is clueless.

Young people who have done everything asked of them, schooling—a university degree while amassing choking debts, volunteering to get experience—find themselves on workfare, stacking shelves just to keep their job seeker’s allowance. Either that or penniless having to depend on parents or friends, sleeping on their sofa or carpet. Others in work are assailed by the falling pay, the rising cost of food, and the rising cost of simply getting to work. Public services that many people rely on are just closed down and the people running them dismissed.

UK Anti-government Demonstration

We have all been accused of spending too much, but many trades unionists report they are now having to borrow each month just to get through it. They survive but deeper in debt while those £billions remain in the vaults. While workers’ pay fell in real terms by 1 percent in the latest year, the rich paid themselves 8.5 percent more!

These are reasons to march with the trades unions on 20 October. What we are marching for is the future of our country. The government is impoverishing the nation, economically and socially. We must stand up against it. We must be counted. We cannot stay silent watching our TVs. History has led us here because of the values our grandparents and their parents fought for, and we value, decency, fairness, seeking to end poverty, security. These timeless ideals are being trodden down by privileges buffoons. Will you watch them do it and simply shrug? Your response will decide our future. Note down 20 October in your diary, and find the nearest coach taking people from near you. Mark it with the words, “no More”.

Len McCluskey, General Secretary, Unite (lightly edited)

Saturday, September 15, 2012

The UK People's Charter

Click the graphic to download the People's Charter pdf:

The People's Charter

How It Will Be Done! The Struggle for Socialism

A United Response

The ferocious and intensifying attack by the rich men’s party on the people who actually do the work needs an united response—by us! Yet we remain in a deplorable state of hesitation, disunity and confusion. Plenty of organizations and people online on various lists, forums and Facebook grumble away together discontentedly, but with no sound, agreed analysis of what is going on, though that is what is needed. The difficulty is that it is hard to get unity when the government is supported by the millions of issues of propaganda printed daily by the capitalist media, and the almost identical, selective “news” presented by the TV channels.

Yet we have one daily newspaper in the UK that is consistently in favor of the interests of ordinary people, the Morning Star. This paper is not run by capitalists, but millions who are discontent with the mass media still choose capitalist newspapers with their anti-worker agenda instead of a newspaper that suits us in our struggle against bank induced austerity, and for decent jobs, pay, conditions and benefits when we are ill or have fallen into unemployment, situations that are far from unusual but can be disastrous for families in starkly capitalist countries like the USA, the model for Cameron’s party here in the UK.

The satisfaction of these demands is impossible in the present dire capitalist crisis, which will only be settled within the system when wages are forced down by mass unemployment and enforced suffering. That is the nature of the capitalist system.

We can be sure that as soon as people start reading the progressive daily paper, and thereby begin to co-ordinate their opinions and efforts that the police will find excuses for arresting those leading and co-ordinated the protests. Protesters will be described in the capitalist media as “rentacrowd”, “anarchists”, “conspirators”, “rioters” and “hooligans”, with the aim of painting the leading protestors as extremists or louts, and magistrates will issue them with punitive fines or terms of penal servitude, the basis for all this having been set by the heavy punishments imposed on youths even for trivial misdemeanors following the riots of August 2011. That when a government minister, Stephen Laws, who stole £40,000 in false expenses was let off then taken back into government!

Such happenings must anger us all the more, and stir us to greater protest until it becomes a mass protest that simply cannot be handled by the authorities in that unjust and bullying manner, and the ones incarcerated have to be released. Not being willing to act will yield the ground to the capitalist agents posing as a democratically elected government—the ConDems, the Conservative and Liberal Democratic coalition.

Who Overspent?

Protesting Against the Crisis

But although being that determined can beat back ConDem assaults against our persons, we need an alternative programme, and so far the Parliamentary opposition has not been adequately opposing the ConDems because New Labour has essentially the same outlook and motivation as the Tories and the Liberals. New Labour under its leader Ed Miliband remains the New Labour of Tony Blair, an alternative capitalist party. There is nothing socialist in the principle that only the private sector can run the economy, and that is the core of New Labour.

It was the Labour party when in power, that gave away to the bankers and their rich owners the contents of the British Treasury—money that the government took from us ostensibly to provide us with common services. Now the Treasury is empty because we have overspent. The TV stations are good at finding worthy but ignorant people, often pensioners and the unemployed with no means of overspending anything, to say on camera, no doubt for a modest incentive, "we have overspent, so we have to tighten our belts". We did not overspend, as the media propaganda has it, but it illustrates the power the capitalist media have over us, the confusion it generates, and the reason we need to read our own newspaper. That alone would help to get rid of the learned helplessness, apathy and inertia workers currently feel.

The government we elected to manage the country on our behalf gave to the rich the money we had put into the exchequer to give us health benefits, work and a pleasant environment to live in. The rich had gambled on junk stocks consisting of mortgage debt packaged for resale to permit the spreading among many buyers of the risk of lending money on inadequate security. So long as the housing boom continued, the value of a house would increase and eventually would equal and exceed the mortgage, leaving the debt secured and the bonds safe and yielding riches from mortgage repayments for decades into the future. The housing boom did not continue!

The banks that had devised the bonds and the greedy rich who had bought them were left broke, holding a load of nigh on worthless junk, and many banks were technically bankrupt. A run on any of them in that condition would have ended them. That is why national governments had to fill the void in the banks’ vaults by emptying the national treasuries. The greedy gamble of the rich was so bad and the banks so involved by their laying off individual risks with each other, just like bookies, that £trillions had to be given to banks in every western country to secure the ruling rich class from going bust! It was none of our business to bail them out. Governments elected to look after the interests of all of the people essentially protected the sole interest of the super rich one per cent, at the cost of the middle class and the poor worker.

With treasuries virtually empty, the national governments had to cut the services they were meant to supply via taxation, so civil servants and other public servants had to be cut. Ordinary people therefore were sold the lie that we had been overspending and a period of austerity—job losses especially from public services, and wage and benefit reductions—was needed to get us back on track. Meanwhile the rich are not even asked to pay back in taxes any of the £trillions they have ungratefully received from the taxpayer as a gift.

Determination Will Succeed

Leading the People

The economic leadership of working people in capitalism has always been the ones willing to step forward and lead the trades unions—activists and shop stewards. But these trades unionists realized they needed a political branch and set up the Labour Party, which remains to this day the party for most working people. Regrettably, though, the trades unions did not use the financial power they had over the Labour Party as the source of its funds to make it stick to its principles, particularly the important one of the socialization of the means of production, distribution and exchange, or Clause 4 as it was called.

The Labour Party has been controlled hitherto by trades unionists closest in ideology to the ruling class, those who were careeristic and opportunistic in outlook and willing to compromise with capital to maintain what they perceived as an advantageous position in the social hierarchy. Ultimately, the Labour party abandoned any pretense of socialism, but despite that, being able still to rely on the support of leading trades unionists who had grown indifferent to the question of socialism. Yet a concerted movement and campaign within the trades unions for a firm line on the Labour Party would be immensely beneficial to the effectiveness of working people in countering the pressing powers of wealth and the undemocratic European Community.

Now New Labour is all things to all men, including many working people who mistakenly believe it is still what it was. So long as that is the case, activists ought to do their utmost to bring it back into the fold, via trades union pressure and demands from the membership.

Here we have to convince substantial numbers of workers who believe themselves to be middle class and natural Tory voters—white collar workers like office workers, technicians, scientists, foremen and charge hands, or lower management generally, and small business people like small sole proprietorships! They wrongly identify themselves with the capitalist class even though they do not have enough capital to live off without working—they must work to live, yet deny that they are working class. Their interests are those of workers, not those of monopolists and financiers, yet they wilfully support the parties and policies of their class enemy, thereby giving their enemies the rope to hang them.

Of course, the capitalist media try to encourage readers and viewers to support the free-and-easy Labour Party of unprincipled political opportunists. With a capitalist Labour Party as well as a capitalist party, the UK has got closer to the American system of two alternating rich man’s parties, and no alternative policies. It is a system that holds no fears for the ruling rich class. What the rich do not want is the Labour Party to respond to trades union pressure and adopt anew the socialist principles it once has, at least in name.

So the media keep up their pressure for the Labour Party to stay in the “political center” of a scale that is constantly redefined as excluding the “extreme left”, meaning anyone on the left, socialist, communists, anarchist, or any other leftist view, eventually even liberal! So the political center creeps continuously to the right. The assumption of the media seems to be that voters have fixed political views, and parties have to change their policies to attract a greater spread of voters. So they all go for a broad enough spread to encompass the center, and end up overlapping substantially leaving little choice in practice.

Building Socialist Unity

  1. Political Struggle. The working class must not be diverted from the political struggle and instead be persuaded to settle for an endless economic war against the employers and their governments which leaves the employers wealth and power intact. To do so simply leaves working people at the capitalist’s mercy. The capitalist class simply regroup for another bash at the people—to restrict their conditions and freedom at a later date. That is not to say that an economic battle does not accomplish the political war. It does! After all, peoples’ immediate concerns are their economic welfare, but the political angle comes with the realization and acceptance that the capitalists and capitalism must be replaced by socialism if the class war is to end with the victory of the general good. For exploitation to be ended, capitalism must be ended. That is the object of the political struggle.

  2. Eschewing Capitalist Media. Given that the capitalists control the mass media, the mass of the working class is too confused to be relied upon to spontaneously find the correct reply to the attacks made upon it by the government of the rich. It is too easy for the mass media to pick on easy scapegoats in society and direct reactionary elements among the workers who are seeking easy targets, to put the blame onto them rather than the class enemy. Easy scapegoats must be easily recognized, so racialism is the first preferred distraction used by the media, currently black and Moslem immigrants. Events will not spontaneously take the right course. It is too easy to blame an accessible scapegoat when the real enemy is well hidden and protected by the state.

    People need principled leadership, and a principled party to do it, and the practical leadership of that party will be publicized and explained through the socialist newspaper. Wealth can always be converted into weapons for use against the workers whether by hand or by brain—the rich have the advantage in the age of capital. But the working people have the power through their co-ordinated ability to stop working and bring the economy to a halt, hitting the rich where they feel it most—in their wallets. Whatever the rich try to do, with the working people sufficiently determined and united, synchronized rolling strikes or a steadfast general strike can stop it. Building that degree of unity in the face of the capitalist media is essential, and is the reason why every socialist should eschew financing capitalist propaganda while the socialist news organ is undersubscribed and underfunded… and therefore of limited effect.

  3. Socialist consciousness. Equally, spontaneity implies and requires a widespread socialist consciousness and politico-economic understanding that takes a lot of practical experience and considerable devotion to Marxist study to gain. As most people will not have that sort of understanding without a proper journal to provide it, to imagine ordinary people will spontaneously do the right thing is likely to be a serious error, denigrating also the efforts of those who have tried to decipher the political signs. Moreover, it yields to those elements who will use any local crisis as an opportunity to get the reputation as a leader without adequate preparation, or to police agents provocateurs who use such situations to lead people astray and into traps.

    Marxism offers the proper framework for interpreting the crises and opportunities that arise in the struggle against capitalist exploitation. No two situations are alike, so Marxism is no crystal ball, at least in the sense of giving high definition answers, but it suggests the conditions and limits for successful action, and so is an essential guide to it. The active working class leader needs both theory and practice—often called praxis—understanding of both Marxist theory and practical experience in class struggle.

  4. Marxism. Those who press for a purely spontaneous rising against the oppression of the ruling class base their stance on the importance within capitalism of the economic struggle for fair wages and, decent conditions, and jobs. One might call these people “economicists” because they restrict the class struggle to one bounded by capitalist economics and social conditions. The “economicists” assume the capitalist system and cannot transcend it.

    Many active workers in trades unions, including too many of their leaders, are “economicists”, but more than economics is needed if the class struggle is to go further and have some prospects of ending in an ultimate victory for the class of working people. Indeed, some do go further, seek to inform themselves of Marxism despite the widespread disdain for it propagated by capitalist politicians, academics and media, and especially since the collapse of the Soviet Union. So they prepared themselves better for the full scale assault we are now experiencing.

    Marxism preceded the Soviet Union and cannot rationally be rubbished by reference to the failings of its leaders. Marx’s analysis of capitalism remains sound, as the events of the financial collapse since 2007 prove, and capitalism’s reason for demeaning Marxism is not that the capitalists want to relieve simple people of a mistaken attitude, but because they know it remains sound and so is dangerous for them. By wrecking the belief workers’ leaders had in Marxism, capitalist agents are seeking to assist capitalism, not to educate the people.

    A worker conscious of economic unfairness and injustice under capitalism has two choices, a capitalist or a socialist ideology. To belittle socialist ideology—Marxism—is to strengthen capitalism. It explains why our society spends so much money and effort on mocking trades unions, working people’s practical workplace organizations, and socialism and communism, and their theoretical outlook, Marxism.

  5. New Labour. For the same reason the Labour party, which began as an umbrella organization for left wing groups some of which were Marxist, by degrees expelled the Marxists until, under the leadership of Tony Blair, it got rid of all pretense of socialism and established itself as another capitalist party—New Labour, though “Not Labour” would have been more appropriate. This party, however, still has the loyalty of many workers, despite its record, and still has the loyalty and uncritical financial support of significant leaders of large trades unions. It is, though, the party of the “economicists”, having ditched “Clause 4” as an objective, as we saw, this being the clause which required the socialization of the means of production, distribution and exchange. So now New Labour, at best, stands for modest social reforms within an eternally present capitalism, thereby necessarily helping capitalism to remain stable and profitable. Reform, needless to say, leaves the economic system itself unaltered, so New Labour is never going to change society for the better.

    It is not socialist, but it remains the focus of working class aspirations because working class understanding is moulded by the capitalist media. Moreover, it still has good socialists in its ranks, and conceivably, if the trades unions that fund New Labour used their financial power to change the rules and the selection of parliamentary candidates, the Labour party could be reborn as a class party capable of fighting back against the ConDem assault on us. Class conscious workers therefore must use their influence in the trades unions to move Labour towards the left.

    Morning Star

    Fortunately, besides the Labour Party, a variety of smaller left wing parties and campaign groups exist, but unfortunately they tend to be sectarian and particular, and so resistant to campaigning in unison. The natural principled party of the left is the Communist Party, but over a long period of time in the 1970s and 1980s, the party was infiltrated and destroyed from within, disbanding itself in 1991. Its successor, the CPB, remains small but with the important role of supporting and expanding the newspaper of the working people, the Morning Star, and promoting a socialist stand in the trades unions. It recognizes the centrality in the history of British socialism and working class thinking of the Labour Party, which it wishes also to return to its foundational principles and away from class collaboration and delusions of managing capitalism for the capitalists.

    The main point about the CPB is that it is guided by Marxism—it has principles and a method of applying them. The New Labour Party now has none, having abandoned them to fulfil the ambitions of careerists like Kinnock, Blair and Brown whose only principle was winning elections at any price, even abandoning socialism and selling the UK to Rupert Murdoch.

  6. The Working Class. Emphatically “economicism” is a result of capitalist media spreading confusion and negative propaganda about socialism among the working people. It is a tactic that has succeeded remarkably well. It has turned the working class against its own interests at a time when exploitation by an egregiously greedy capitalist class was hurting more than for eighty years. As noted, working people even blame themselves for overspending when it was the bankers and their rich clients who had done it. The perpetual money making machine they thought they had inevitably failed, proving their greed and stupidity, but still nothing has been done to curtail it.

    Offered inadequately secured loans by the banks, people accepted them in all innocence, believing the propaganda from co-conspirator with Tony Blair to destroy the Labour party, Gordon Brown, that “boom and bust” had ended, and that bankers knew what they were doing. They did not, and Gordon Brown gave away the contents of the national exchequer to save the greedy rich and their bankers from suffering catastrophic losses. The governments of most major capitalists countries followed Brown’s lead.

    We suffer today because the national treasuries are empty, and services we need, provided traditionally by public and civil servants cannot be provided, unless the government cuts staff to cut costs, and borrows money to pay the wages of those who remain in post, and the benefits of those cast out of work. Who does the government borrow from? Who else but the banks! They have been given all our taxation money, and they are now lending it back at interest! We are having to pay interest to borrow our own money. Meanwhile, the beneficiaries are not even taxed, but the workers and middle class have to economize, “tighten their belts” and suffer unemployment not seen in a lifetime. We are most definitely not “all in it together”.

Democratic Choice

Democracy is meant to be a system where candidates have principles to let voters choose a representative whom they consider represents them. They have clear choices. The same should apply even in a party system. Parties should be formed to offer a set of policies implementing principles that the voters can choose from. When party leaders change their policies to make their candidates more electable, they are abandoning some of their principles, so that others who voted for those very principles are now being tricked or have no party to represent them.

An example is what happened at the end of the 18 years of Tory rule under Thatcher and Major. People were sick of Thatcherite Toryism, and wanted the distinct change they thought Labour would offer. But under Blair Labour had become New Labour, the face of which was the cloying charm of the sociopathic Blair himself, and his compact with the media devil, Murdoch. The ultra right wing media baron, Murdoch would never have entered into any compact with a socialist, and many of the leading Labour party activists knew Blair had changed his spots. He was the first Labour Prime Minister to “sell out” even before he took power. Blair was voted in only to apply with his co-conspirators, Brown and Mandelson, another thirteen years of Thatcherism, made possible by his pact with the devil, and the demoralization of the Tories and their own disunity.

It demonstrates how important it is to have an alternative socialist newspaper, and how it ought to be used to clear the confusion spread among voters by the capitalist media. Working people need not be helpless in the face of the austerity assault of the government. Otherwise we have little alternative to the incessant beat of capitalist propaganda, and no prospect of rebutting by socialist principles what is presented as unarguable norms of capitalist economics.

Nor will there be much prospect of moving people from their apathy into the consistent activity needed to bring down the system we live under of lies, injustice and unfairness. Only when a significant portion of the employed public and those left unemployed to keep wages down get their information from a daily newspaper committed to the interests of ordinary people and the poor will there be any chance of them acting sufficiently coherently to make a difference. Then people will be able to organize their efforts in unison, to unite their thinking ideologically, rather than being distracted one way and another by divisive issues like the intolerance and racism spread by the capitalist media. And whereas the capitalist media deliberately ignore or misrepresent working class protests, the socialist newspaper reports them and publicizes them to maximize awareness and response.

In the UK, the Morning Star is that newspaper—in the USA, the People’s World. There are many single issue organizations with news sheets, albeit not daily, and perhaps websites, and they help in raising awareness, but it is piecemeal. A political theory to unite the single issues and offer a consistent explanation is vital. That is Marxism, and the vehicle for presenting that view is the revolutionary newspaper, allowing people to see how single issues have a common explanation in the class struggle.

Friday, September 14, 2012

Fracking for Shale Gas Proposed in the NE Somerset Coalfield

Cycle path at old coal mining town, Radstock, where the railway used to be

A proposal to fracture coal reserves near Keynsham has revived concerns about fracking—a risky technology. Fears about earthquakes and contaminated water have been raised by those questioning the sense of the technology. A detailed report by the Royal Academy of Engineers agrees that fracking can cause earthquakes, albeit normally small ones. The report claims they are smaller even than those caused by coal mining operations, based on the assumption that the voids left where the coal seams were cause earthquakes when they collapse, but the voids caused by fracking are small.

The point of coal mining, though is not to fracture the surrounding rocks but to keep them intact to avoid rock falls. The whole point of fracking is to fracture the rock causing cracks for the gas to escape. Consequently much larger volumes of rock are left weakened and compromised, and at some stage, as the gas leaks out, they could settle into a more stable state, there being already plenty of old coal mining seams abandoned in the coalfield. That would be likely to be a significant earthquake. Moreover, the epicenter of them will be shallow, not deep as it is for most naturally occurring earthquakes, so the energy released at the surface capable of causing damage will be proportionally greater.

The report notes that the contamination of water in Pavillion, Wyoming, caused by fracking was because of improper practices. Water wells in areas where fracking may be possible often have a high level of methane seeping naturally from the shale rock. Deliberately cracking the rock will obviously release much more methane—that is its point—so even more will end up in well and tap water. And what guarantees that good practices will always be followed when the aim is to make fast bucks? The academy recommends careful regulation and monitoring to minimize risks but who will enforce any legal rules in the insane era of “the bonfires of the regulations”.

Equally, the report did not find water wells contaminated by chemicals used in the process where shale gas fracking was being carried out. That may be so in the studies done so far, but the venture is new, the chemicals might leach out too slowly to have yet been detectable, or might leach into water reservoirs far below rather than into the surface water table. Deep water pollution is a hazard to people generations ahead, and, as such deep water takes millennia to replenish, they may be rendered useless for all practical purposes generations in the future. Moreover, the pressure and temperature below ground can cause reactions that might change the chemicals into something innocuous or something far worse!

Reuters reports that the UK has 60 years of onshore reserves and 300 years offshore—a huge 1,000 trillion cubic feet. Methane is a stronger greenhouse gas than carbon dioxide by far. That portion of it that is captured will be burnt to produce carbon dioxide polluting the air and causing global temperature to rise. Imagine what 1000 trillion cubic feet of burnt methane will do for the air. But fracking is inefficient, allowing much of the methane to escape through fractures that do not lead into the capturing system, the unburnt methane will be more harmful per unit than the carbon dioxide.

This primitive procedure is being sold as a way of creating jobs in North East Somerset, and reducing heating bills, but will utterly negate the control of carbon emissions into the air. Taking the costs of climate damage into account must mean this whole procedure is just a profit making scam. It will cost far more than anything it saves, but it will be our children who bear the ultimate cost

Steamy Roman Baths, Bath. Will the steam be inflammable with the nearby fracking?

Tuesday, September 11, 2012

Tax the Rich!

US Taxation 1960-2004

The 1960 federal tax system was progressive even within the top percentile, progressing from an average tax rate of around 35 percent in the bottom half of the top percentile to over 70 percent in the top 0.01 percent. The super rich were heavily taxed, yet post-war the economy was booming. How was that possible when taxation of the rich, we are told, stops them investing in job creating ventures?

Well, the greater progressivity of federal taxes in 1960 compared with 2004 comes from reducing corporate income tax and estate tax. Corporate tax (taxation of capital income) collected about 6.5 percent of total personal income in 1960 but only around 2.5 percent today. Taxation of capital hit the top income groups because capital is concentrated in that tiny fraction of the population. Estate tax also decreased, from 0.8 percent of total personal income in 1960 to about 0.35 percent today. The decline in these two taxes has given the wealthy percentiles of the population a big boost over the forty years being considered.

Knowing that their capital income was being taxed meant it paid the wealthy in the long run to reinvest in the firm rather than taking income, but building for the future. Taxing the rich is better even for the capitalist. It makes them do what they are supposed to do—invest! Investment creates jobs!

Saturday, September 8, 2012

So this is US Democracy!

A very short video with a shocking message. Why no one should believe the slogan, “My Country Right or Wrong”, and instead believe, “No Justice, No Peace”.

Friday, September 7, 2012

Democracy at the Crossroads: Class Warfare and the 2012 Elections

Democracy at the Crossroads
How did the vast wealth of our country end up in the hands of a tiny group of billionaires? What caused the economic meltdown of 2008? Why has right-wing extremism become such a threat to our democracy? Why is the 2012 election decisive for the future of our country?

Check out's new pamphlet "Democracy at the Crossroads: Class Warfare and the 2012 Elections."

Available as a PDF, or you can order in quantity. More info here:

Its analysis is applicable to most western capitalist countries, not just the USA.

New Labour Thinking? More Bull from the USA, No Socialism!

Ed Miliband, New Labour Leader

Stock Exchange Speech: So, this is Miliband’s “new thinking”:

A responsible capitalism is a resilient capitalism… Predistribution is about saying that we cannot allow ourselves to be stuck with permanently being a low-wage economy. Our aim must be to transform our economy so it is a much higher skill, higher wage economy. Think about somebody working in a call centre, a supermarket or in an old people’s home. Redistribution offers a top-up to their wages. Predistribution seeks to offer them more. Higher skills, with higher wages, and an economy that works for working people.

We've heard all that baloney about a high wage, high skill society 30 years ago. He added that “the move toward a more responsible capitalism is actually being led by many business people”. The Labour leader is importing US jargon that baffles most people in Britain. What do predistribution, the squeezed middle, and responsible capitalism mean?

Predistribution was dreamed up by US academic James Hacker. It actually means no more than that people would not need benefits (redistribution) if they were paid a decent wage (predistribution)! Who are the “squeezed middle”? Despite the sound of it, it means the working people are the ones who are squeezed. US politicians speak of the “middle class” when they mean the working class to kid workers into thinking they are not the bottom rung of society.

Responsible capitalism? To whom is it responsible? Business leaders are responsible only to shareholders, the people who get the dividends if any profit is made, or handouts from our taxes otherwise! Have we already forgotten the banking crisis? Capitalists have only one interest—themselves.

Miliband’s speech at the Stock Exchange confirmed that New Labour remains the New Labour of Tony Blair, an alternative capitalist party to the Tories and Lib Dems. There can be nothing socialist in the principle that only the private sector can run the economy. Miliband has noted that ConDem ministers have been loudly booed in public, but still does not get it. He should pledge to expand public ownership.

The English Revolution 1653

What we need today is what we had then—an Oliver Cromwell!

How to dissolve Parliament, by Oliver Cromwell

Wednesday, September 5, 2012

Some Benefits of Women in the Boardroom

Women on the Board

Professor Renee B Adams of the university of New South Wales (Women in the Boardroom and Their Impact on Governance and Performance) says that of the many reasons put forward to promote gender diversity in workplaces, a call for general fairness is one of the more effective and is easily understood. Female directors have a significant impact on board inputs and firm outcomes. In a sample of US firms, female directors brought several benefits to boards:

  • they are more conscientious than men, having better attendance records than male directors
  • they promote better corporate governance and performance accountability, promoting more compensation based on equity for directors
  • they are tougher monitors of management, are more likely to join monitoring committees and so promote monitoring—a CEO will be more likely to get fired if performance goes down when more women are on the board
  • women on boards are less bound by tradition, and less averse to risk than men, so they may facilitate innovation
  • men on the board show up for more meetings when there are more women present on it! (Madmen, maybe?)

There’s support across the globe for increased female participation at leadership levels. In Norway, it’s a legislative requirement that at least 40% of the board members of listed companies are women. Spain, Italy, Belgium and The Netherlands also have mandated quotas. Firms and organisations in other countries, including Australia, are voluntarily adopting gender targets. But while it is obvious that a good female director is better than a poor male one, Professor Adams thinks the substitution of a woman for a man on a board cannot make any significant difference in general, it simply being a random change of one set of abilities for another. Scientifically speaking a direct swap of some men for some women directors randomly is unlikely to make a difference. So, some companies may do better with more women, but others may not.

Tuesday, September 4, 2012

Failure to Register to Vote Leaves Latinos and Asians Less Democratic Say

Voting by Ethnic Group

A University of California, Davis, study finds that Latinos and Asians make up half of California's population—in 2010, 38 percent of the state’s population was Latino and 13 percent was Asian—but a smaller proportion register to vote than the general population. The voter registration gap means that these ethnic groups have proportionately less say in the electoral process compared to the average citizen.

Yet between 2002 and 2010, voter registration for Latinos increased 40 percent raising their proportion of the general registered electorate to 21.2 percent, while Asian registration increased by 39.4 percent to 8 percent of the registered electorate. Overall voting registration level recorded in the 2010 election was 77.5 percent up by only 14 percent from 2002 to 2010. An additional 520,000 Latinos and 800,000 Asians would need to register to vote to raise the registration rates of these groups to the overall registration level.

The study breaks down registration by county:

  • the gap in the Latino percentage of general registered voters and their proportion of the general population is highest in Los Angeles, Riverside and San Bernardino counties
  • the Asian population has the largest gap in the Bay Area counties of San Francisco, San Mateo and Alameda, and Sacramento County.

Saturday, September 1, 2012

New Actors Can Challenge Austerity With Equality: Lessons from the Fawcett Society Legal Challenge

Fawcett Society Protesting Against Unfair Austerity Measures

A study by Dr Hazel Conley, from the School of Business and Management at Queen Mary College, University of London and a member of the Centre for Research in Equality and Diversity (CRED) analyses the 2010 Fawcett Case. It finds the UK government has failed to apply laws that protect working women in the wake of the economic crisis. The paper also shows that equality legislation has created opportunities for women’s rights groups besides trades unions to influence industrial relations.

A legal challenge to the 2010 emergency budget was made by the Fawcett Society—an old established feminist organization which campaigns and lobbies for equality for women—on the grounds that it would have a disproportionately negative impact on them. It attempted to get a judicial review of the ConDem coalition’s new austerity drive.

It argued that 72 per cent of public sector cuts announced would be met from women’s income, as would £6bn of the £8bn savings generated in one year. Dr Conley explains:

In addition to these measures on public sector employees, the majority of whom are women, child welfare benefits were frozen, Sure Start maternity grants limited to one child and child tax credits significantly reduced. Poor mothers and women from black and ethnic minorities were the main financial losers.

The overlapping roles of the state as legislator, employer and paymaster, all seem to have had a bearing on the Fawcett Society challenge and its outcome. Before the budget was unveiled, gender equality duties were introduced as part of the Equality Act 2006. These duties were regulations that required public authorities actively to remove unlawful discrimination and inequality from their practices and processes. Failure to enforce could have resulted in a judicial review.

The article draws on documentary evidence, including the Fawcett case judgment produced by the Royal Courts. In the transcript’s opening sections there is a government admission that it had not undertaken the duties’ legally required equality impact assessment of the budget. Despite this legal compliance failure, the Fawcett challenge did not secure a judicial review. Dr Conley says:

The state is the UK’s largest single employer and the judiciary is not class-neutral. Being armed with reflexive equality legislation did not provide Fawcett with any additional powers to challenge the state machinery. The enactment of equality duties and the provisions for enforcement would seem to suggest the government’s commitment to change. In the aftermath of the banking crisis, however, the coalition unleashed a political zeal for economic austerity that has been unrelenting since it took office. If the Fawcett challenge had succeeded the impact would have been momentous. The emergency budget would have been declared unlawful and the new and fragile coalition government would have been rendered virtually paralysed. The government and the judiciary appear to have moved to protect the interests of capital at the expense of working women. There is a clear gap between rhetoric and compliance in this specific but crucial case.

In spite of the High Court ruling, the Fawcett challenge fuelled an intense media debate on the inequality of the budget, particularly in relation to the loss of jobs in the public sector and the ensuing impact on women’s working lives. One tangible outcome of the challenge was that the government produced an equality impact assessment of sorts for the 2011 comprehensive spending review and budget. Another is that, because the Fawcett case failed, the problem is being pushed down to local government and, as the public sector budget cuts continue to bite, equality groups are applying for judicial reviews against several local authorities axing services.

The actions of the Fawcett Society, says Dr Conley, provide empirical evidence that challenging the loss of thousands of public sector jobs need not lie solely with trade unions. Although in the Fawcett case this is likely to complement rather than compete with the role of the unions in industrial relations. Dr Conley warned that equality duties have opened up important ways for “new actors” such as Fawcett to use the law to challenge inequality at work, but “they do not meet their potential if the enforcement mechanisms can be undermined and weakened to suit political and economic objectives”.

The Thirty Year Assault on the Middle Classes

Changes in the Middle Class 1983-2010

A national Pew Research Center survey has found that, since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some of its characteristic faith in the future. Interviews with 1,287 adults, describing themselves as middle class—adults whose annual household income is two thirds to double the national median, ie $39,418 to $118,255 in 2011 dollars, incomes adjusted for household size and scaled to a three person household—were combined with with data from the US Census Bureau and Federal Reserve Board of Governors.

85% of these middle class people say it is more difficult now than it was a decade ago for them to maintain their standard of living. Of this 85%, 62% say much of the blame lies with Congress, 54% say it is with banks and financial institutions, 47% say it is with large corporations, 44% with the Bush administration, 39% with foreign competition and 34% with the Obama administration. Just 8% say a lot of the blame is with the middle class itself.

For the first time since the end of World War II, in the decade 2000-2010, mean American family incomes in all income levels declined. But this middle income level is the only one that also shrunk in size, a trend that has continued over the past four decades:

  • in 2011, it included 51% of all adults
  • in 1971, it included 61%.

The fall in this level of the middle class was by some getting richer, and some by them getting poorer.

The higher income level:

  • in 2011, was 20% of adults
  • in 1971, it was 14%.

The lower income level:

  • in 2011, was 29% of adults
  • in 1971, it was 25%.

But in this 40 year interval, only the higher income level increased its share of national household income. It now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.

For the middle income level of the middle class, their loss of wealth is worse than their loss of income. The median income of the middle income level fell 5%, but median wealth (assets minus debt) declined by 28%, to $93,150 from $129,582. During this period, the median wealth of the upper income level was essentially unchanged. It rose by 1%, to $574,788 from $569,905. Meantime, the wealth of the lower income level plunged by 45%, albeit from a much smaller base, to $10,151 from $18,421.

These figures plainly show that most of those considering themselves middle class are being conned by the state, academia and the media. Frankly, they are poor! Even what is the middle level of the middle class is not really well off, and that wealth is declining, leaving only the truly middle class, those who are well off by any standards, albeit not in the megarich class, are getting richer.

The reason is plain in this figure from the Pew Survey with some annotations.

40 Year Class War of the Rich on the Middle Class and the Poor