View previous stories
	When the rich are born to rule, the results can be fatal by Faiza Shaheen, George Monbiot United Kingdom   15 March 2013   London is already one of the world’s most unequal cities, so why is Boris Johnson proposing a flat rate of tax, asks Faiza Shaheen, Researcher on economic inequality at the New Economics Foundation.   The London Mayor is increasingly out of step with public opinion on the issue of economic inequality.   In terms of economic inequality, this week has been one of highs and lows. On Wednesday we successfully held our first event exploring the issue, with audience and panel alike clearly articulating why inequality is an economic, social and environmental problem.   Contrast this, then, with Parliament’s vote against a mansion tax and now, Mayor of London Boris Johnson’s proposals for a flat tax rate.   From an equality perspective, there is so much wrong with a flat tax rate that it’s hard to know where to start. Progressive tax systems are vital to tackling inequality – one only needs to look at the statistics on the difference between before tax and after tax disposable income inequality across OECD countries to see the importance it plays. All high incomes countries rely on redistribution to combat the inequality being produced by the markets – although some more than others. The UK’s gini coefficient (a common measure of inequality) would be similar levels to Mozambique without intervention.   Boris also assumes that such a move would help create jobs. We should know by now that the rich are often not the wealth creators, but wealth hoarders.   It is difficult to not feel angry about Boris’s proposal when I’ve spent much of this week talking to a range of London residents about life during austerity. To be proposing a tax cut for the wealthiest while the poorest in the city are facing eviction and growing queues at food banks is highly offensive.   I suppose I shouldn’t be surprised that Boris has overlooked the distributional impacts of a flat tax rate. He protects the city and encourages the wealthy global elite to settle and hide their riches in London. That he doesn’t realise that part of the reason we have a housing problem in London is because of obscene wealth feeding through the housing market shows his ignorance.   Why economic inequality is so important, and what we can do to tackle it.   We are holding an event at the British Library bringing together experts working across the economy, environment and society to properly start a debate on economic inequality, and how we can tackle it.   Why is economic inequality so important? The thinking behind the event rests on the rather complex looking ‘interdependence constellation’ see link below. It is taken from the World Economic Forum Global Risks 2013 report. 1000 important people in government, business and civil society were asked to twin the global risks that they thought were most connected. The constellation illustrates the connections that were made. Severe income disparities was the second most connected issue – thought to be related to the risks of global governance failure, pervasive corruption, a backlash against globalisation, terrorism and much much more.   http://reports.weforum.org/global-risks-2013/section-seven-online-only-content/data-explorer/   To us at the New Economics Foundation these interconnections are obvious. We work across society, economy and the environment so are constantly running into the different ways inequality is important.   We see inequality affecting well-being, our banking system and we hear directly about how it affects people’s lives. We summarised the top ten reasons to care about economic inequality in a short briefing.   We are also growingly aware that because of the multi-dimensional nature of inequality a bonus cap will not be enough to reverse trends given the complexity of the inequality challenge we face – we advocate a pre-distributive and life cycle approach.   Our event is bringing the giant issue of inequality alive by asking a variety of other experts – from Greenpeace UK, the OECD, the UN working on issues from housing to the banking system – to share their perspectives on why inequality is important and what needs to be done about it.   Our hope is that by making inequality an issue for all of us we will build the support and strength needed to tackle the privilege and profit that produces and maintains high levels of inequality.   http://www.neweconomics.org/blog/2013/03/13/why-economic-inequality-is-so-important-and-what-we-can-do-to-tackle-it   Jan 2013   Neoliberal dogma forbids the intervention required to stop climate change, writes George Monbiot.   Humankind"s greatest crisis coincides with the rise of an ideology that makes it impossible to address. By the late 1980s, when it became clear that man-made climate change endangered the living planet and its people, the world was in the grip of an extreme political doctrine whose tenets forbid the kind of intervention required to arrest it. Neoliberalism, also known as market fundamentalism or laissez-faire economics, purports to liberate the market from political interference.   The state, it asserts, should do little but defend the realm, protect private property and remove barriers to business. In practice it looks nothing like this. What neoliberal theorists call shrinking the state looks more like shrinking democracy: reducing the means by which citizens can restrain the power of the elite. What they call "the market" looks more like the interests of corporations and the ultra-rich. Neoliberalism appears to be little more than a justification for plutocracy.   The doctrine was first applied in Chile in 1973, as former students of the University of Chicago, schooled in Milton Friedman"s extreme prescriptions and funded by the CIA, worked alongside General Pinochet to impose a programme that would have been impossible in a democratic state. The result was an economic catastrophe, but one in which the rich – who took over Chile"s privatised industries and unprotected natural resources – prospered exceedingly.   The creed was taken up by Margaret Thatcher and Ronald Reagan. It was forced upon the poor world by the IMF and the World Bank. By the time James Hansen presented the first detailed attempt to model future temperature rises to the US Senate in 1988, the doctrine was being implanted everywhere.   As we saw in 2007 and 2008 (when neoliberal governments were forced to abandon their principles to bail out the banks), there could scarcely be a worse set of circumstances for addressing a crisis of any kind. Until it has no choice, the self-hating state will not intervene, however acute the crisis or grave the consequences. Neoliberalism protects the interests of the elite against all-comers.   Preventing climate breakdown – the four, five or six degrees of warming now predicted for this century by green extremists like, er, the World Bank, the International Energy Agency and PriceWaterhouseCoopers – means confronting the oil, gas and coal industries. It means forcing those industries to abandon the four-fifths or more of fossil fuel reserves that we cannot afford to burn. It means cancelling the prospecting and development of new reserves – what"s the point if we can"t use current stocks? – and reversing the expansion of any infrastructure (such as airports) that cannot be run without them.   But the self-hating state cannot act. Captured by interests that democracy is supposed to restrain, it can only sit on the road, ears pricked and whiskers twitching, as the truck thunders towards it. Confrontation is forbidden, action is a mortal sin. You may, perhaps, disperse some money for new energy; you may not legislate against the old.   So Barack Obama pursues what he calls an "all of the above" policy: promoting wind, solar, oil and gas. Ed Davey, the British climate change secretary, launched an energy bill in the House of Commons last week whose purpose was to decarbonise the energy supply. In the same debate he also promised that he would "maximise the potential" of oil and gas production in the North Sea and other offshore fields.   Lord Stern described climate change as "the greatest and widest-ranging market failure ever seen". The useless Earth summit in June; the feeble measures now being debated in Doha; the energy bill and electricity-demand-reduction paper launched in Britain last week (better than they might have been, but unmatched to the scale of the problem) – all expose the greatest and widest-ranging failure of market fundamentalism: its incapacity to address our existential crisis.   The 1,000-year legacy of current carbon emissions is long enough to smash anything resembling human civilisation into splinters. Complex societies have sometimes survived the rise and fall of empires, plagues, wars and famines. They won"t survive six degrees of climate change, sustained for a millennium. In return for 150 years of explosive consumption, much of which does nothing to advance human welfare, we are atomising the natural world and the human systems that depend on it.   The climate summit (or foothill) in Doha and the sound and fury of the British government"s new measures probe the current limits of political action. Go further and you break your covenant with power, a covenant both disguised and validated by the neoliberal creed.   Neoliberalism is not the root of the problem: it is the ideology used, often retrospectively, to justify a global grab of power, public assets and natural resources by an unrestrained elite. But the problem cannot be addressed until the doctrine is challenged by effective political alternatives.   In other words, the struggle against climate change – and all the crises that now beset both human beings and the natural world – cannot be won without a wider political fight: a democratic mobilisation against plutocracy. This should start with an effort to reform campaign finance – the means by which corporations and the very rich buy policies and politicians.   We must start to articulate a new politics, one that sees intervention as legitimate, that contains a higher purpose than corporate emancipation disguised as market freedom, that puts the survival of people and the living world above the survival of a few favoured industries. In other words, a politics that belongs to us, not just the super-rich..   If the world does not fit your worldview, you either shore up your worldview with selectivity and denial, or (if you have power) you try to bend the world to fit the shape it takes in your mind. Much of the effort of conservative columnists and editors, and of certain politicians and historians, appears to be devoted to these tasks.   In the Origins of Totalitarianism, Hannah Arendt explains that the nobles of pre-revolutionary France "did not regard themselves as representative of the nation, but as a separate ruling caste which might have much more in common with a foreign people of the same society and condition than with its compatriots".   Last year the former Republican staffer Mike Lofgren wrote something very similar about the dominant classes of the US: "the rich elites of this country have far more in common with their counterparts in London, Paris, and Tokyo than with their fellow American citizens … the rich disconnect themselves from the civic life of the nation and from any concern about its well being except as a place to extract loot. Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it."   Secession from the concerns and norms of the rest of society characterises any well established elite. Our own ruling caste in Britian, schooled separately, brought up to believe in justifying fairytales, lives in a world of its own, from which it can project power without understanding or even noticing the consequences. A removal from the life of the rest of the nation is no barrier to the desire to dominate it. In fact, it appears to be associated with a powerful sense of entitlement.   So if you have wondered how the current government can blithely engage in the wholesale transfer of wealth from the poor to the rich, how its frontbench can rock with laughter as it truncates the livelihoods of the poorest people of this country, why it commits troops to ever more pointless post-colonial wars, here, I think, is part of the answer.   Many of those who govern us do not in their hearts belong here. They belong to a different culture, a different world, which knows as little of its own acts as it knows of those who suffer them.   February 2013   Billionaires are hiding behind a network of “independent” groups, who manipulate politics on their behalf.   Conspiracies against the public don’t get much uglier than this. As the Guardian revealed last week, two secretive organisations working for US billionaires have spent $118m to ensure that no action is taken to prevent manmade climate change. While inflicting untold suffering on the world’s people, their funders have used these opaque structures to ensure that their identities are never exposed.   The two organisations – the Donors’ Trust and the Donors’ Capital Fund – were set up as political funding channels for people handing over $1m or more. They have financed 102 organisations which either dismiss climate science or downplay the need to take action. The large number of recipients creates the impression that there are many independent voices challenging climate science. These groups, working through the media, mobilising gullible voters and lobbying politicians, helped to derail Obama’s cap and trade bill and the climate talks at Copenhagen. Now they’re seeking to prevent the US president from trying again.   This covers only part of the funding. In total, between 2002 and 2010 the two identity-laundering groups paid $311m to 480 organisations, most of which take positions of interest to the ultra-rich and the corporations they run: less tax, less regulation, a smaller public sector. Around a quarter of the money received by the rightwing opinion swarm comes from the two foundations. If this funding were not effective, it wouldn’t exist: the ultra-rich didn’t get that way by throwing their money around randomly. The organisations they support are those which advance their interests.   A small number of the funders have been exposed by researchers trawling through tax records. They include the billionaire Koch brothers (paying into the two groups through their Knowledge and Progress Fund) and the DeVos family (the billionaire owners of Amway). More significantly, we now know a little more about the recipients. Many describe themselves as free market or conservative think tanks.   Among them are the American Enterprise Institute, the American Legislative Exchange Council, the Hudson Institute, Competitive Enterprise Institute, Reason Foundation, Heritage Foundation, Americans for Prosperity, Mont Pelerin Society and the Discovery Institute. All of them pose as learned societies, earnestly trying to determine the best interests of the public. The exposure of this funding reinforces the claim by David Frum, formerly a fellow of the American Enterprise Institute, that such groups “increasingly function as public-relations agencies”.   One name in particular jumped out at me: American Friends of the IEA. The Institute of Economic Affairs is a British group which, like all the others, calls itself a free market thinktank. Scarcely a day goes by on which its staff are not interviewed in the broadcast media, promoting the dreary old billionaires’ agenda: less tax for the rich, less help for the poor, less spending by the state, less regulation for business. In the first 13 days of February, its people were on the BBC ten times.   Never have I heard its claim to be an independent thinktank challenged by the BBC. When, in 2007, I called the institute a business lobby group, its then director-general responded, in a letter to the Guardian, that “we are independent of all business interests”. Oh yes?   The database, published by the Canadian site desmogblog.com, shows that American Friends of the IEA has received (up to 2010) $215,000 from the two secretive funds. When I spoke to the IEA’s fundraising manager, she confirmed that the sole purpose of American Friends is to raise money for the organisation in London. She agreed that the IEA has never disclosed the Donors’ Trust money it has received. She denied that the institute is a sockpuppet organisation: purporting to be independent while working for some very powerful US interests.   Would the BBC allow someone from Bell Pottinger to discuss an issue of concern to its sponsors without revealing the sponsors’ identity? No. So what’s the difference? What distinguishes an acknowledged public relations company taking money from a corporation or a billionaire from a so-called thinktank, funded by the same source to promote the same agenda?   The IEA is registered with the Charity Commission as an educational charity(12). The same goes for Nigel Lawson’s climate misinformation campaign (the Global Warming Policy Foundation) and a host of other dubious “thinktanks”. I’ve said it before and I’ll say it again: it is outrageous that the Charity Commission allows organisations which engage in political lobbying and refuse to reveal their major funders to claim charitable status.   This is the new political frontier. Corporations and their owners have learnt not to show their hands. They tend to avoid the media, aware that they will damage their brands by being seen to promote the brutal agenda that furthers their interests. So they have learnt from the tobacco companies: stay hidden and pay other people to do it for you.   They need a network of independent-looking organisations which can produce plausible arguments in defence of their positions. Once the arguments have been developed, projecting them is easy. Most of the media are owned by billionaires, who are happy to promote the work of people funded by the same class. One of the few outlets they don’t own – the BBC – has been disgracefully incurious about the identity of those to whom it gives a platform.   By these means the ultra-rich come to dominate the political conversation, without declaring themselves. Those they employ are clever and well-trained. They have money their opponents can only dream of. They are skilled at rechannelling the public anger which might otherwise have been directed at their funders: the people who have tanked the economy, who use the living planet as their dustbin, who won’t pay their taxes and who demand that the poor must pay for the mistakes of the rich. Anger, thanks to the work of these hired hands, is instead aimed at the victims or opponents of the billionaires: people on benefits, the trade unions, Greenpeace, the American Civil Liberties Union.   The answer, as ever, is transparency. As the so-called thinktanks come to play an ever more important role in politics, we need to know who they are working for. Any group – whether the Institute of Economic Affairs or Friends of the Earth – which attempts to influence public life should declare all donations greater than £1000. We’ve had a glimpse of who’s paying. Now we need to see the rest of the story.   http://www.monbiot.com/ http://www.guardian.co.uk/profile/georgemonbiot
	Austerity Policy and the European Social Model by Social Journal Europe & agencies   Mar 2013   Euro Crisis, Austerity Policy and the European Social Model, by Klaus Busch.   The harsh austerity measures that, according to official policy, are supposed to overcome the euro crisis have once again plunged Europe into recession in 2012.   Austerity policy has proved – in Greece, Italy, Portugal and Spain (GIPS) – to be primarily an attack on wages, social services and public ownership.   The analysis of a new paper by myself, Hermann, Hinrichs and Schulten shows that, in the course of the Euro-crisis, the EU has developed a new form of wage policy interventionism – "Euro Plus Pact, Six Pack" – which has led to far-reaching consequences in GIPS states. The principles of collective bargaining systems have been decentralised and undermined.   In the public sector, as a result of the austerity policy, wages have been frozen or cut. Greece (–20 per cent) and Portugal (–10 per cent) have been at the forefront of cuts in real wages throughout the economy. Spain (–5.9 per cent) and Italy (–2.6 per cent) have also experienced above-average real wage losses during this period. This represents a significant change in comparison to the situation before the crisis of 2008/2009.   Pension policy in Portugal, Greece, Italy and Spain have all raised the retirement age, toughened conditions for early retirement, abolished job-specific differences, increased the number of insurance years for standard pensions, changing in indexation methods – have been adjusted in such a way that the rise in pension costs in relation to GDP by 2040 has been slowed down significantly. Relative pension levels – measured in terms of wage replacement rates – will fall drastically in the GIPS states by 2040.   The pension reforms that have been implemented will have long-term negative consequences, especially for the incomes of those future pensioner generations who have more unfavourable employment biographies. Longer periods of unemployment and so-called "atypical" employment conditions entail gaps in social insurance contributions and thus lower pension levels.   Privatisation policy has taken on new impetus in the GIPS states because of the Euro-crisis and the accompanying austerity policy. In Greece and Portugal, the granting of loans by the EU states was linked to extensive privatisation. Spain and Italy, under pressure from the ECB and international institutions, have announced far-reaching privatisations. Among the GIPS states, Greece has been most affected and plans a veritable fire sale of state property.   Regarding the European Social Model we draw the following conclusions:   The weakening of the social flank in Southern Europe in fact has repercussions for western and eastern Europe, putting the left - trade unions and left-wing parties under further pressure. In the market states system wage and social dumping processes are thus even more pronounced. This is not a linear process, in which "the South" catches up with the reforms that "the West" and "the East" have often already implemented.   The abovementioned interventions in southern Europe mean that the liberalisation of the European Social Model will be implemented in the EU as a whole. If the path of economic austerity, despite all opposition, is maintained until 2014/2015, such the policy prescriptions pose a disaster for European social democracy.   * Klaus Busch is emeritus Professor of European Studies at the University of Osnabrück. Visit the link below to access the report.   Feb 2013   Spain is Different, by David Lizoain.   A massive party financing scandal rocked the Partido Popular last week. El País published documents purporting to show that senior party figures, up to and including Mariano Rajoy, systematically accepted payments over a prolonged period of time from a secret party slush fund. The overwhelming documentary evidence has been met with a flat out denial on the part of the PP and the government.   The revelations have prompted a wave of outrage. Faced with a double scandal – a party-financing scandal (supposedly confined to the past) and the government’s scandalous non-response in the present – most popular attention has centred on the issue of political corruption. In other countries the Rajoy government would have already fallen, yet here he hangs on; Spain, as they say, is different.   So how, exactly, is Spain different? I don’t think it’s just a question of political financing. Party financing scandals are nothing new across the advanced economies of the world. Italian and French politics are replete with historic examples of graft. In the UK lordships are practically up for auction.   Even Angela Merkel rose to the top in the CDU by pushing out the old guard over a donations scandal. Over in the United States, they have solved this problem by privatizing their political system in its entirety. Their financing system itself is the scandal.   The mix of private money and politics is inherently risky. Permissiveness when it comes to allowing corporate political donations is something of a norm across Europe. This is not a minor issue. In the Spanish case, the sums being talked about (7.5 million euros over a few decades for construction firms later awarded lucrative contracts) are puny for a trillion-dollar economy.   It is worrying to think how about how cheap of a price tag might be placed on democracy. If politics is to regain its supremacy over the financial markets, it first must be inoculated against the possibility of being a tool of the wealthiest donors.   What clearly differentiates Spain from its neighbours is how the Rajoy government has responded: through a total denial and a refusal to answer any questions from journalists. The PP has dismissed the entire incident as a conspiracy designed to weaken them and to weaken Spain. Rajoy’s blustering response is not compatible with an advanced democracy, but his modus operandi is unfortunately congenital to today’s Spain.   This episode clearly demonstrates how a culture of impunity has been built into Spain’s democracy. This impunity is endemic to the current political system because the current political system was built on the back of impunity.   During the Transition, Samuel Huntington’s “torturer problem” was dealt with by letting the dictator’s agents go unpunished. A 1977 amnesty law blocked the prosecution of the Franco era’s crimes. The men with the guns suggested to the democrats that it would be better to forget.   For a long time, this seemed a convenient bargain. Now, we are cursed with the toxic combination of an unreconstructed judiciary and a government acting as though it were above the law.   If this age of impunity is to come to an end, it will not be on account of a demonstration of guilt. Rajoy will have to be shamed out of office, through a mix of domestic and external actors.   It is key to know what the rest of Europe will do about this situation. Can anyone afford to be photographed with the Spanish president any longer? Or are governments only toppled if they do not carry out austerity with sufficient gusto?   Is the Spanish difference tolerable? The man who made “Spain is different” famous was Manuel Fraga, Franco’s Minister of Tourism. He went on to found the Partido Popular and was its honourary president during the years of its alleged regularities.   In the best-case scenario, the European right will turn to the PP and say: it’s fine for you to have been fascists but not alright for you to be a mafia. In the worst-case scenario, they will say nothing at all.   http://www.social-europe.eu/2013/02/spain-is-different/ Visit the related web page
	View more stories