May 31st, 2010
The real lesson of the unravelling Gulf of Mexico fiasco is that the mega-corporations abuse their power, if given half a chance by light-touch regulation, just like the banks. And the costs of dealing with that abuse of power can well run into hundreds of billions of pounds.
Why did the Deepwater Horizon disaster happen? Because the health and safety regulations for BP (and of course for the other oil majors) have been whittled down to a point of almost complete ineffectiveness. The safety standards on the exploded rig, owned by Transocean but leased to BP, were the responsibility of the Marshall Islands in the north Pacific becase all 35 Transocean rigs were registered there under the flag of convenience. The aim was to scrimp on safety inspections. As a US Congressman has just noted: “Coastguard inspection of a US-flagged mobile offshore drilling unit takes 2-3 weeks, but the safety examination of a foreign flag offshore offshore drilling unit takes 3-4 hours”. (more…)
May 30th, 2010
The economic skies have rarely looked darker. The determination of the coalition government to press ahead with major spending cuts this year (assuming that the appointment of the inexperienced Danny Alexander as Chief Secretary doesn’t change the direction of policy) looks more dangerous by the day, given how the international economic environment is steadily worsening.
The growing contagion in the Eurozone directly threatens the UK recovery even though (thankfully) we are not members of it. Some 60% of UK exports go to the EU, including 50% to the Eurozone. If the Eurozone breaks up – an increasing likelihood – the Tory Little Englanders won’t get the economic common market of their dreams, but a collapsing system of debt default, competitive devaluations, and widespread stagnation. A significant loss of UK export markets would undermine bond-holders’ confidence that the UK, locked in recession, could soon escape the vicious spiral when caught between rising debt charges and deepening recession. (more…)
May 29th, 2010
Why such fuss about the BP oil disaster in the Gulf of Mexico? True, the leakage is large, but still nowhere near the size of previous oil spills. So far at least 60,000 tons have leaked from the Deepwater Horizon explosion, but the Gulf War oil spill (1991) involved 1.4 m tons, the Atlantic Empress tanker (Trinidad & Tobago, 1979) 287,000 tons, Fergana Valley (Uzbekistan, 1992) 285,000 tons, the nowruz oil field (Persian Gulf, 1983) 260,000 tons, and Amoco Cadiz (Brittany, France, 1978) 223,000 tons. The Exxon Valdez spill off Alaska with which the current Gulf of Mexico is being compared amounted to some 34,000 tons. So what’s so special this time? Answer: because it directly impacts on the US.
No matter that 2,000 major spillages in the Niger Delta has never been cleaned up by Shell, or that rivers and wellls in at least 7 African countries have been badly polluted, or that huge stretches of 3 Latin American countries have been ruined by spillages, blowouts and toxic dumping, or that at least 4 of the 7 ugly Oil Sisters currently confront dozens, even hundreds, of lawsuits even up to $30bn a time (Ecuador). All this can be spun out, got rid of modestly out of court, or brazenly faced down. But not when America is involved and the US President himself takes up the issue. That cannot be right. (more…)
May 28th, 2010
So the Tory flagship policy of so-called ‘free schools’ has just been launched down the slipway. It has been sold as increasing choice, breaking free from the oppressive control of local authorities, and allowing parents and the local community to set up and run schools in the way they wish. The real motive is perhaps rather less elevated or honourable. It is to escape disorderly inner city schools with poor teaching and worse discipline, full of disruptive working class kids and too many immigrants.
Of course Michael Gove will argue that it allows opting out in the spirit of the distinctive and superior grant-maintained schoolds and city technology schools of the 1980s or even a throwback to the prized pre-1944 grammar schools. Opting out has always been the preferred way both of Tories and New Labour, backed by higher pay or knighthoods to bribe their backers. But where is the evidence that such experiments have ever succeeded? Independent assessment of academies’ performance have presented a very mixded picture, their sponsors rarely contribute even the £2 million subscription, whilst often acting as purveyors of intellectual eccentricities. (more…)
May 27th, 2010
So Ian Duncan Smith, the new welfare system czar, is going to solve the problem of the dole queues and the £100bn-plus social welfare budget which has defeated successive governments? He clearly has sincerity and commitment, and we certainly shouldn’t write him off as the ex-Scots Guard officer merely trumpeting the traditional mantra of the Tory Right. However, this is an immensely complex and sensitive area pitted with intractable problems just below the surface rhetoric. In particular, if he is to be taken seriously, he needs to answer several critical questions:
1 He says it doesn’t pay to go from dole into work if the job pays £15,000 or less. Actually it’s worse than that: a person on the minimum wage of £5.83 an hour gets just £218 a week or £11,368 a year, and that’s before tax. So is he going to raise the national minimum wage (which seems unlikely, by any significant amount at least) or is he going to cut benefits by some substantial amount? (more…)
May 26th, 2010
Neither the coalition agreement nor the Queen’s Speech said anything about it. They were about deficit reduction, not poverty reduction. But the latter must be one of the key tests by which we measure its performance. Thatcher tripled child poverty and by 1997 it had reached 3.4 million (i.e. there were nearly 3 1/2 million children living in households where the income before housing costs was less than 60% of the national median). Labour brought that down to 2.7 million by 2005, though still not half-way to meeting its target of halving child poverty by 2010. The policy then collapsed. Child poverty actually rose over the next two years back up to 2.9 million before falling again to 2.8 million in 2008-9. That still left 22% of children in poverty households.
What effect can we expect from the coalition’s announced policies? The Tory aim is to tackle poverty via strengthening marriage (tax reliefs), improving education (pupil premium for poorer children), incentives to work (cutting benefit, though JSA at £51 a week is already at rock-bottom), and sorting out the economy (with a trickle-down to the poor). The LibDem policy is to introduce £10,000 personal tax allowances which would certainly increase the incomes of many of the poorest families, but only the first very modest tranche is being brought in this year. The real problem however is that the size of the spending cuts to be announced in the spending review in October, let alone in the Budget in 4 weeks time, is likely to swamp any minor reduction in the poverty numbers that these indiect policies might have.
What makes this all the more galling is that Britain has become a hugely richer country over the last decade – for the elite. New Labour has been a golden age for the super-rich. The wealth of the 1,000 richest multi-millionaires has nearly quadrupled since 1997, and rose last year alone by £77bn to no less than £335bn. Just 100 persons in the UK now have wealth valued at £183bn, that is 54% of all the wealth in the country.
These rich-poor inequalities are now staggering. Yet all the talk, in a financial crisis brought about directly by many of these richest 1,000 individuals, is that between 100,000 and 300,000 public sector workers will now lose their jobs, most low-paid, to cut the deficit for which they bear no responsibility whatsoever. Why is there no talk instead of imposing a 10% super-tax on this hyper-elite to raise some £35bn which is after all less than half of the amount by which their wealth increased last year?
May 25th, 2010
My lords, ladies, etc., etc., I’m pleased to present the first legislative programme of this new experimental coalition government – though I wish that their security was a bit tighter so that my speech, written by others, wasn’t also already leaked by others.
My government has made clear that their aim is the transformation of Britain. They have therefore decided that their highest priority is to rein in the City of London whose poorly regulated malpractices so nearly caused a national financial and economic collapse. They will therefore bring in a Banking Reform Bill to break up the banks so that they are no longer too big to fail, shrink the City so that it doesn’t crowd out our industrial and manufacturing sectors, prohibit banking involvement in hedge funds and private equity, and require all derivative financial products to be sanctioned by a revamped FSA before they can be traded.
My government will bring in a real Constitutional Reform Bill which will not only protect and enhance civil liberties – which is welcome though hardly transformative – but will also confront the gross inequality of power in Britain today. It will tackle the excessive power of the media (where balance, diversity and redress are urgently needed), the security services (where the ISC oversight committee is feeble and non-independent), the financial markets (where a Financial Activities Tax will be introduced), and the industrial sector (where a partnership framework for industrial relations will be introduced). (more…)
May 24th, 2010
Very few people will have heard of Pavan Sukhdev or of the book he’s written and just published with the rather off-putting title ‘The Economics of Ecosystems and Biodiversity’, published by the UN. It’s actually one of the most important books available on the really ultimate issues like the nature of the human race, its role on this planet and its place in the universe. I would like to say that my recently published book ‘Destination of the Species: the Riddle of Human Existance’, published by 0-books, is another, but that’s for others to judge. But by any standards Sukhdev’s book is sensational.
His theme Saving species should be ‘more powerful than climate change’ has enormous implications for the post-neoliberal world economy. It is a systematic expose’ of how the human race is bringing about the sixth mass extinction of life on Earth, all the previous convulsions having been caused by natural forces and only this one being driven by living beings themselves. Biodiversity (the range of all living creatures on this planet) is being currently destroyed between 100 and 1,000 times faster than the usual rate of extinction in all previous history. Does it matter? (more…)
May 23rd, 2010
The more important the catastrophe, the less likely there is to be a public inquiry into it. In the case of the Iraq War, it took 15 months before a debate was held on it in the Commons, and almost 7 years before a proper public inquiry was set up. On the banking crisis, arguably the biggest convulsion in the capitalist system for nearly a century, there still hasn’t been a public inquiry, or even a sniff of one. Why? Because inquiries into public catastrophes invariably focus on government failures, and since the Prime Minister monopolises the right to set up such inquiries, he or she will pull every string they can to avoid it – another reason why Parliament as part of its renewal should now demand – and take – the right to set up its own Commissions of Inquiry (just as the Victorian parliament did).
Yet banking reform is the key defining issue for the new Government just as finding an alternative economic model to replace neoliberalism is the key defining task for the Labour Opposition. It’s true that the Cons and Libs have agreed to set up a Review into whether the speculative arms of investment banks should be spun off from the traditional retail function, but that’s driven by differences in political philosophy, not by the need for fundamental reform.
A public inquiry into banking reform should concentrate on several structural issues which are now pressing: (more…)
May 22nd, 2010
The turmoil in the Eurozone markets just one week after the Euro750bn bail-out was announced is ominous. Having transferred gargantuan private debts from over-indebted consumers and over-leveraged banks to the public sector in massive bail-outs, anxiety is beginning to spread through the markets as to how this colossal sovereign debt can now be repaid by countries afflicted by low growth. This is no longer just about the potential knock-on effects of a Greek default or debt restructuring, this is now about whether the Eurozone can survive at all, holding together disparate economies within a single economic discipline dictated by the strongest powers, without major structural change.
Even that concern is now being crowded out by worries about the fragility of global growth prospects. China is still roaring ahead and the US economy is beginning to pick up, but elsewhere the mood is sombre. Hitherto the financial markets have been demanding early and substantial cuts in the over-large budget deficits, but the fear is growing that over-enthusiastic budget-cutting could indeed engineer the long-feared double-dip recession. (more…)
May 21st, 2010
Who would have thought that the stresses and tensions between the Cons and the Libs would have been exposed so mercilessly so quickly? Angela Merkel, having to expend on behalf of Germany 20% (Euro 150bn) of the colossal Euro 750bn ($1 trillion) Greek bail-out, understandably is now demanding that there should be quite fundamental changes in the Lisbon Treaty to ensure that fiscal irresponsibility by one State cannot in future drag down the whole of the Eurozone.
Germany has already tabled a 9-point plan rewriting the Euro regime so as to embed legally sanctioned budget deficit ceilings in all the 16 member Eurozone States. At the heart of this is a new enforceable Stability and Growth Pact which is designed to achieve budgetary rigour to prevent any State exceeding certain deficit ceilings. This has of course been tried before to ensure that the more easy-going budgetary practices of the South of Europe were kept more in line with the stricter rules of the North – only to fall apart when both Germany and France exceeded the limits, but then because of their political muscle went unpunished. It’s a fair question whether this newer version will fare any better. But there’s a sting in the tail. (more…)
May 20th, 2010
After Clegg’s absurd hyperbolic puff about his (welcome) civil liberties reforms being the most radical programme since the Great Reform Act of 1832, the Cons-LibDems are now facing reality on several fronts – three in particular.
First, the Eurozone nightmare is ominously beginning to lap round the shores of the UK. Having defenestrated Greece, the bond markets are now prowling round their next potential victims – Spain, Portugal, Ireland, UK. Within a year or two the UK could well have the largest public deficit as a proportion of GDP in the EU. The bond markets are assessing, not the rhetoric of ‘savage cuts’, but what the coalition actually delivers – where exactly they draw the line between cutting the short-term cost of debt to restore market confidence whilst not putting economic recovery at risk. They will be looking at UK growth prospects where Government forecasts of 3.5% are widely seen as uproariously optimistic. They will be judging whether the Eurozone can survive without either greater fiscal harmonisation or much closer moves to political union to safeguard the currency, and how an alternative new Stability and Growth Pact might impact on UK economic prospects. (more…)
May 19th, 2010
This phoney atmosphere of happy-clappy coalition is rapidly coming to an end. The real problem is not contrasting political philosophies – a relatively soft matter – it’s rather as Macmillan so pointedly put it: ‘Events dear boy, events’. And one has already struck hard, even before we get to impasse over massive public spending cuts on 22 June.
Teresa May was left tongue-tied this morning on Radio 4 Today trying to explain why two suspected terrorists, Abid Naseer and Ahmed Faraz Khan, were not being deported back to Pakistan. It is alleged they were planning a bomb attack in Manchester a year ago, and the judge ruled that they posed a serious threat to national security; yet they couldn’t be deported under Human Rights Act rules because they were likely to face torture or execution in their home country. This immediately raises three issues that sharply divide the Tories and the LibDems. (more…)
May 18th, 2010
The High Court judgement to prohibit the BA strike because Unite had failed to notify all eligible voters that there were 11 spoiled ballot papers brings the law into utter disrepute and reduces the judicial process to farce. How would politicians feel if their election was disallowed because the number of spoiled ballot papers had not been notified to all their eligible voters?
Ever since the Taff Vale decision of 1906 the law has been repeatedly manipulated to make it virtually impossible for the unions to operate effectively. That was the aim of the 6 Thatcher anti-trade union Acts, and this latest episode sharply highlights New Labour’s failure to reverse the grossly unjust tilt in the laws in favour of the employer. That is yet another reason why Labour must now renew itself in its proper role of defending social and industrial justice.
The judge also stopped industrial action because in his view the cost of not blocking it would have been far greater for BA and its passengers. Since when were judges authorised to make personal assessments about the impact of industrial action as opposed to whether or not it accorded with the law?
Of course nobody wants strikes, not least the strikers themselves. But what redress is open to a union and its members if management is gung-ho on taking unilateral decisions that affect their jobs and pay if the last resort option of industrial action is denied them? ACAS is clearly the best alternative, but if that fails and if pendulum arbitration is denied, the right to strike must remain a fundamental bulwark of a free society.
Of course some will still argue that the price of a strike is too high. In that case the only real alternative, if the right to strike in certain circumstances is to be suspended, is for the management prerogative – the overriding right to manage – to be suspended as well, and the two sides would then argue their case before an arbitration tribunal whose decision would be final and binding. I suspect that, like Solomon threatening to cut the baby in two to divide equally between the two claimant mothers, we would soon discover that the owners and controllers of capital weren’t actually in favour of a fair and balanced system of conflict resolution which avoided the costs of a strike, but only of a system which guaranteed the right to manage unfettered combined with the use of the law and the media to browbeat the unions into submission.
May 17th, 2010
One little noticed aspect of the new Tory parliamentary party is that it is stuffed with adherents of Christian fundamentalism, perhaps as many as 15% of the total. This has gained some prominence from the activities of Philippa Stroud, the Tory candidate for Sutton and Cheam who failed partly because of her well-publicised homophobic views to win her seat, but has still been rewarded by being brought in to the government network as adviser to Ian Duncan Smith, another adherent. But the numbers go far wider.
This is no sudden adventitious trend. Mrs. Thatcher transformed modern Toryism from a party bound together only by its belief in its natural right to rule into an intensively ideological vehicle driven by factions (Dries versus Wets) constantly ready to spot betrayals at every turn – not unlike Old Labour. The ‘nasty party’, as Teresa May so memorably portrayed it, no longer castigated as ‘too clever by half’ as Lord Salisbury notably put it, has found it de rigeur to establish its own ideological niche. ‘Big Society’ rather than Big State may be a thinly veiled cover for massive retrenchment of public services, and hysterical claims of ‘broken Britain’ grossly overdo the slippage from ‘traditional values’, but the trend to more prescriptive values in government is unmistakeable. (more…)