In New York, the international insurance and financial services organization AIG, whose demise would have plunged the world into a depression that would have made the 1930’s depression look like a walk in the park had they not been rescued in the nick of time by the American tax payer, is now suing the US government. Why? Because AIG consider the interest rate the government charged them was too high! So having saved AIG from the abyss, the US tax payer is being rewarded with jaw-dropping ingratitude and a massive legal bill. What arrogance!
In London last week, Goldman Sachs threatened to change the date they paid bonuses from January to April so that their already over-paid employees could take advantage of the reduction in the top rate of tax from 50% to 45%. It took a nudge emanating from No 10 to get them to change their tune. Goldman Sachs’s lack of sensitivity speaks volumes about the ‘vampire squid’. What arrogance!
Banks who have cheated the nation – and the world – by manipulating the Libor rate are still going to pay bonuses this year. It would be laughable if it wasn’t true. They’re definitely ‘havin’ a larf’ – and the frightening thing is that they don’t care. What arrogance!
But where did this unassailable arrogance stem from? The wealthy ‘elite’ have always displayed arrogance, but this new unassailable arrogance has its roots in 20th century ‘neo-liberalism’.
In Britain it began when Margaret Thatcher turned her back on manufacturing industry. She began the de-industrialisation of Great Britain. In her misguided and ill-informed opinion, the country’s future lay in financial services not manufacturing. Those clever suits in the city had forests of money trees just waiting to be harvested. This was to be the country’s salvation. Why bother with troublesome, grubby Trades Unions and mithering workers: milking assets, not creating new ones, was the way forward.
To the average Joe, the demise of a sound manufacturing base and the lack of any industrial strategy meant that the chance of building a career, of achieving even modest social mobility was snuffed out – not that this consequence was appreciated at the time. Britain was destined to become a nation of white van drivers. Real wages would plummet, the effect of this catastrophe disguised by the availability of easy credit from the money tree forests.
In the subsequent years swarms of private equity firms were allowed, even positively encouraged, to pick over the bones of some of our best companies and dismantle them for personal gain. The ‘carrion classes’: lawyers, accountants and hedge fund managers and their like, have grown fat. New ‘trades’ have appeared: ones that manipulate and gamble with existing assets and collect ‘rents’, commodity speculators. They are trades that extract value but create nothing, as do investment banksters who live in an illusory world created by infinite leverage. And all the while fat banksters sit smiling at the croupiers’ side, their pockets bulging with our money which they’ve confiscated to pay themselves, deliberately ignoring the needs of businesses that create value.
Our great nation, whose creativity and innovation has contributed so much to the world has been castrated by the idiocy of a handful of clever, selfish, but woefully ignorant politicians more interested in the immediate fortunes of their party and their own self-advancement than the future of the country and its citizens.
The inaction of the political class, their wilful ignorance, their unwillingness to recognise and to curb the activities of the wealthy elite has had a massive impact on inequality. A recent paper by the IMF puts the blame of the whole of the British current account deficit, from Thatcher through to today, down to the rise in British inequality. Something to think about!
But here’s the real rub. Here’s what politicians and many commentators have failed to grasp. It is the distinction between profits that are the result of value creation and those that are the result of value extraction. Until this issue is addressed, the wealthy will become wealthier, inequality will increase and we will be staring at a sign pointing to the Third World.
Value extractors are destroying our nation and getting disgustingly wealthy in the process. Their unassailable arrogance exists because they can do what the hell they like. There are no ‘consequences’ for them to confront. They can act with impunity. Why? Because they use and control our politicians, those people we misguidedly think are working in our best interests. They call our politicians their ‘useful idiots’. Useful idiots onside, they are free to practise their self-serving activities unquestioned and unchecked.
Their ‘donations’, personal and party, ensure that what’s in their best interests comes before the best interests of the electorate. They use vast amounts of their money to lobby and influence. These are the people who command the attention of our political class, not us. Their main purpose has been to misinform and marginalise the electorate so that they, the elite, can rule. It’s worked. It’s been very effective. What very useful idiots our politicians have proved to be!
Something has to be done before it’s too late. The question is what – and how?