Vodafone, Boots

Tim Worstall, a far right blogger, has a piece here claiming to debunk UKUncut's case on tax.

He begins with Vodafone, claiming that they had not been avoiding £6 (or is it £8) billions in tax on an £18 billion deal, because they had paid tax already in Germany, and anyway the UK law on Controlled Foreign Companies (CFC law) was overridden by EU law.

Normally we would expect Tim Worstofall to rail against the EU law, because he is a UKIP activist (or was. Dwell time in UKIP is short). However, his love of corporate tax avoidance clearly overrides his hatred of all things EU, and in this clash he sides with EU law.

HMRC (the taxman) took Vodafone through three courts. All ruled that Vodafone had nothing to pay because the CFC was overridden by EU tax. However the Appeal Court, although finding for Voda, mentioned that if the subsidiary in question, Vodafone Investments Luxembourg (VIL) had been set up as a tax dodge, they might be liable for tax.

VIL was set up in 2000, after they bought Mannesmann. This might have been a bit of a clue for the judge, but evidently he just couldn't be assed to get his enormous legal brain around that one.

HMRC chickened out of taking it to the Supreme Court, partly because if they lost, a dam of tax claims might have burst on their heads. Though with the above fact, they should have won.

Also, I cannot find Vodafone Investments Luxembourg on this list. Maybe now its job is done, it has been wound up. Or maybe renamed Vodafone Finance Luxembourg., which is there.

Vodafone settled out of court for £1.25 billion.

Worstofall claims: "Vodafone had paid the relevant tax required in the countries in which the subsidiaries were operating".

But had they?

We find in the Economist in 2004: "POLITICIANS of all stripes reacted angrily this week to news that the German subsidiary of Vodafone could deprive the government of up to €20 billion ($21 billion) through tax write-offs"

Barclays RED phone conversation with Paul Tucker

Click on the text for full-size

The rather excellent @cathynewman, Presenter for Channel 4 News, tweets a link to the above, with a comment, "This is dynamite". It is heavily retweeted.

RED, presumably, is Robert Edward Diamond, ex- (as of this morning) CEO of Barclays.

Paul Tucker in now Deputy Governor of the Bank of England (BoE).

It seems from the note that both the BoE and Bob Diamond were aware, in 2008, that some fiddling of Libor rates was going on.

What does it all mean? Here is the excellent Paul Mason.

Austerity or Stimulus?

What is the best way to extract the global economy from the present serious debt crisis? This is the question posed by every news comment programme, and it is very clear that the experts do not have any answers.

Austerity is the orthodox prescription. It is a simple concept:

Government spending more than it is receiving in taxes?
Then Government must spend less.

This hits the poor, by reducing services and adding to the ranks of the unemployed, and it hits the economy by damaging private firms who service the public sector, and therefore reducing total tax take. By widening the rich poor gap, we compound the social problems and lay up more demonstrations, riots and strikes in the future.

So austerity  is simple, but worse than useless.

It is like a mediaeval physician who tries to cure anaemia with a course of bloodletting. 

So what is the alternative to austerity?

The first principle is Keynesian stimulus. In 2011 this means Green Keynesian stimulus, primarily centred on energy conservation and renewable energy. This has the attraction of taking people out of fuel poverty, securing our energy needs, blunting the malign effects of Peak Oil, and addressing climate change - a very attractive set of attractions.

But how can the stimulus be paid for? Conservatives argue very strongly that we cannot borrow our way out of debt.

There are three interlocking answers to this challenge.

First, Green Wage Subsidy is an ultra-low cost way of getting people off benefit and into good, constructive green work without any compulsion.

Second, getting the rich to pay their fair share of taxation will overcome the deficit and bring in enough to pay for any stimulus.

Third, by terminating the monopoly of private financial corporations on the creation of money, Government, acting in the interests of the people, can escape the ever deepening circle of debt, and can create money to provide the necessary stimulus.

Should Greens back the Merkozy Plan for Europe?

As I see it (and I may be wrong, and certainly not telling the whole story) Merkozy are following an impeccable logic.

To preserve the Euro, while at the same time guaranteeing failing economies within the Eurozone (EZ), it is necesary to bring about fiscal union, as in common tax laws.

Failure to preserve the Euro would bring about the end of the world as we know it.

Therefore fiscal union it is.

That's the logic, like it or not.

We can confidently expect that the mighty Eurosceptic Right are not going to like it.
So in that case, they are just going to have to lump it, because the the alternative, as far as I know, is global economic malaise. Global recession. A Great Depression.

Maybe I'm being a wishy-washy bleeding heart soft headed liberal treehugger greenie here, but I think this is an outcome to be avoided.

Maybe we should welcome the downfall of Capitalism (whatever that is), and join Nigel Farage in calling for its immediate death through doing whatever we can to disrupt closer European Union as a response to the economic crisis.

Unfortunately, I see a big economic crash as causing huge pain, chiefly manifested as unemployent, but with risks of crime, conflict, social disquiet, riots, attempted revolutions, international quarrels, wars and even, God forbid, nuclear war.

This tips me personally towards trying to fix the present system, by rapid introduction of reforms, as follows:

1. Global Financial Transaction Tax Agreement
2. Global closure of tax havens
3. Trans-National corporations acounts transparency
4. Stimulus not Austerity as the way to renew broken economies

Austerity measures are toxic in a depression. It is necessary to stimulate the economy, but the block to this approach is that we are up to our necks in debt, so we need a very low cost approach to stimulus. It would ideally work equally for both public and private employers. It must be an investment in the future, since we have got to hand on something other than debt to our children.

That is a tough set of specifications. Hmm...Ah yes. The Green Wage Subsidy.


There are many other measure to be added, from controlling TNCs to living on a low income, but I can't cover everything in one posting.

So, on balance I reckon that we should back the Merkozy Plan, but insist that it is followed by radical reforms to terminate the haemorrhage of wealth from the pockets of the 99% into the accounts of the 1%.

I could be wrong, but it feels right to me.

Banking crisis in 100 words

The people are the ultimate source of power. 

We delegate our power to Government to provide services for us. 

Government delegates the power of money creation to banks, while guaranteeing banks if they foul up. 

Which they do. 

Fair enough, we're all human, anyone can make a mistake*.  Though banks, unlike the rest of humans, escape adverse consequences.

But when the financial markets come back at Government saying:


"You've got too much debt, you must cut services to the people"


That is not a "fair enough" situation. 
That is completely unacceptable. 

So that is why I back the #Occupy movement.

Tobin Tax stalled by the Coalition: what now?

To David Gauke
Exchequer Secretary to the Treasury
HM Treasury
1 Horse Guards Parade
London SW1A 2HQ

11.11.11

Dear David Gauke

Thank you for your letter of 21 October about tax avoidance.

I am pleased to learn that the Government is concerned about tax avoidance and evasion, and is strongly committed to increasing tax transparency. I welcome the call from the recent G20 for progress on non-cooperative jurisdictions and tax havens.

However, I am very concerned that the UK has opposed the installation of a Financial Transactions Tax within the EU on the grounds that the traders would (a) pass it on to the general economy, and would (b) move their operations to more lax jurisdictions.

It can be argued that this is an exaggeration of the actual risks.
But the Treasury's position makes a stronger argument for these measures to be brought in on a global basis.

In a globalised economy, it makes sense to have a globalised tax system.

The tax take from the FTT could then be used as Tobin intended it, as a fund for helping impoverished countries.

We are all painfully aware that there is a global financial crisis in operation. It makes absolutely no sense to impose austerity measures on country after country, measures that exacerbate low growth and/or recession, while vast amounts of national wealth are being siphoned out of national economies into tax havens.

In the UK, a full tax take on the richest 1% could neutralise the deficit, and the same would apply in countries like Greece, Italy and Spain.

You will be aware that several billionaires, starting with Warren Buffet, have put on record that some of their income streams are taxed at a lower rate than the average worker.

Global tax measures would be complex and difficult to bring in, but if the political will were present, it could be arranged to be ratified at the next G20. And the desperate global economic condition should supply that political will. It is a pity that the UK did not agree to the EU bringing in a FTT, since it would have motivated the UK to lead the world in bringing these tax measures in on a global basis.

I would be grateful if you would give this proposal serious examination, and hope that you will agree that it makes excellent economic sense.

Sincerely

Dr Richard Lawson
cc John Penrose MP

Global economy: definitely on the slide

The markets are about to do a massive stinky  whoopsie on the carpet, and we need to take a historical view of the global financial situation.

Doug Short has an interesting graph here, showing the trend of the stock markets for 150 years. The trend is clearly upwards, but performance shows a clear swing above and below the trend line.
We have been above the trend since 1990, way above.
It is reasonable to expect and plan for a deep and prolonged swing the other way - in other words, a depression.

Green Parties would be wise to put in contingencies for this. There is plenty to be done -  setting up supportive local economies, and campaigning for the Green New Deal and Green Wage Subsidy, steadily advocating the necessary measures to alleviate the symptoms of depression.

Those Occupy Demands in Full

The media know - or should now - what the #Occupy movement is against: Poverty, cuts, inequality, the lack of opportunity, the scandalous bonuses and immunity from prosecution for the banksters who wrecked the economy, the overweening power of the corporations, environmental degradation and 1001 other gripes.

The media want to know what solutions the protest wants. The protesters say they are working on it. The media want answers now - despite the fact that it is blatantly obvious that the Governments do not have any answers.

I offer here my own solutions, derived mainly from Green Party policy. The Green Party has been working for the past 30 years on the precise problems that move the protesters.

So here are my personal solutions. I cannot claim to speak on behalf of the #Occupy movemnt, nor even fully for the Green Party, but believe that the measures here capture the aims and aspirations of both. They do not claim to be complete, but they are a reasonable start, and hopefully will form the nucleus of an emergent Manifesto for the Occupy movement.

The aim of these changes is (a) to fill the hole in the finances not just of the UK, but of all nations, (b) to pull the economy out of recession in a Green way, and (c) to bring about more equal and sustainably prosperous economic and social conditions.





1. Close all tax havens & loopholes, globally.

We live in a globalised economy, and if follows that therefore should be a global tax structure. This will not be uniform, to allow countries to adjust rates to suit local conditions, within set limits.


The aim here is to stop the perennial threat made by big corporations in response to taxation by one country to relocate to a country with a more lax tax regime.This will enable us to roll out change #2:




2. Tax the rich


The richest 1% are taxed at far lower rates than the lowest 99%. They siphon the wealth out of the nations in which they operate into tax havens and offshore accounts. Richard Murphy of Tax Research UK estimates that in the UK these total £120 billion lost from the economy, and the Compass report In Place of Cuts proposes specific changes that will net £40 million a year - enough to pay off the interest payments on the National Debt.

Greg Philo proposes a one-off 20% wealth tax on the richest UK citizens which could offset the National Debt entirely. Radical, but radical problems ask for radical solutions.

Note that taxing the rich solves two problems: the deficit and national Debt, and also inequality, which causes many expensive social problems, as shown in Spirit Level.


3. Future Quantitative Easing to go preferentially to the Green Bank.

QE is necessary when banks are failing to make loans, but the first two bouts of QE have been ineffective in their aim of getting banks to lend again, because they have been paid into the banks, who have used it to try to fill the enormous vacuum in their accounts caused by the credit crunch and sovereign debt crisis, and to pay themselves bonuses.

By directing QE to the green investment bank, the new money will stimulate energy conservation and renewable energy generation through the Green New Deal.

the effect will be:

1. job creation 
2. taking households out of fuel poverty 
3. reducing our energy imports, thus reducing the budget deficit 
4. assist in achieving our CO2 reduction targets 

4. Introduce a Green Wage Subsidy


This allows organisations operating in the green sector of the economy (i.e. those whose effect is to benefit society or environment) to take on new employees from the Job Centres without those new employees losing their benefit. It transforms the benefit into a subsidy for the green sector. This stimulus to the economy comes cost-free, because the benefits would have been paid in any case. It acts as a precursor to the introduction of Citizen's Income.

5 . End private banking's monopoly on issuing money through debt.

It is no wonder that the UK and the world is drowning in debt, since money is created through debt.

Positive Money has set out a plan to remove this monopoly from private corporations and make money creation work to the benefit of the people. They even provide a draft Parliamentary Bill to bring this about.


6. Rein in the multi-national corporations.

Multinationals have more economic pswer and influence than many countries. At present they have many privileges in law, including legal personhood and limited liability for shareholders. This post shows how their wings can be clipped.

7. Regulate the money markets.

The present crisis can be traced to the deregulation of the financial markets, and the growth of a totally unregulated and uncontrolled derivatives market, parts of which are nothing more than Ponzi schemes according to the economist Minsky.

The first change is to separate retail and investment banking.

A comprehensive review of the derivatives market is required.

8. Impose a Tobin Tax on financial transactions, and earmark it for poverty projects.

Tobin, Robin Hood, or Financial Transaction tax is a tiny levy on each currency transaction that will both put a brake on destabilising currency transactions, and also generate huge sums in revenue that should be directed to poverty reducing schemes.

9. Cap donations to political parties

Since it is by massive donations that wealthy corporations buy influence with political parties and distort the democratic process by having more influence on elected politicians than the people who elected them. Instead, parties whose aims are consistent with law and open democracy must be funded out of general taxation in respect of their service to democracy


10. Impose limits on salary ratio of lowest/highest remuneration.
This ratio represents an immediate measure of income inequality. It can be controlled, and the Coalition Government has taken steps to introduce it in the public, but not the private sector.

11 Reform the credit ratings agencies.

These tiny organisations have a disproportionate influence on the economy. They failed to spot the causes of the sub-prime mortgage crisis, and some of their operatives appear to have indulged in insider dealing during the US downgrade.


12. Cancel Trident and reduce military spending worldwide.
In a global economic recession, there is an increased risk of war, as happened in the Great Depression of the 1930's. At the same time, all governments need to reduce spending. There is a choice available to avoid the risk of war, and to save money.

13. Provide enough affordable housing
Housing is a basic human need, and in providing housing, the government is relieving stress and ill-health in a more cost-effective way than putting homeless families in temporary accomodation. In doing so, it will be stimulating the building industry.

14. Stimulate local economies and communities.
In practicing community living and co-operation, the #Occupy movement is pioneering local community living and - dare I say it - realising Cameron's Big Society. Many organisations, notably the Transition movement, are working to the same end.

15 Stimulate the formation of Co-operative enterprises.

I repeat that these 12 measures are not complete, nor can they ever be complete. But these are a few necessary changes to bring about a more healthy, happy and equitable society and economy.

What are the demands of the #Occupy Movement?

Richard Wilkinson, co-author of  Spirit Level, spoke at Bristol last Wednesday. His case is that the more unequal a society is, the more social problems it faces. There is a mass of evidence to back up this thesis, although as is to be expected, there is criticism from the usual quarters, the far right neo-con ideologists.

Hearing Richard again reawakened a question that has been gestating in my mind for many months -  why should it be that we are happier and healthier in a more equal society?

The answer may lie in our history. Homo "Sapiens" emerged roughly 200,000 years ago. The earliest known urban civilisation dates back to around 12,000 years ago, and development in the Fertile Crescent, the cradle of civilisation can be traced back 5000 years before present.

However, apart from the rise and fall of the occasional city-state, the majority of non-urbanised humans lived as tribes, and indeed, many at present still do live in tribal and village settings.  Homo "sapiens" has evolved to live in tribal groups. Only for about 2.5% of our time on earth have we built cities.


From Wikipedia;

Anthropologist Elman Service presented a system of classification for societies in all human cultures based on the evolution of social inequality and the role of the state. This system of classification contains four categories:

1. Gatherer-hunter bands, which are generally egalitarian.
2. Tribal societies in which there are some limited instances of social rank and prestige (see Chiefdom).
3. Stratified tribal societies led by chieftains.
4. Civilizations, with complex social hierarchies and organized, institutional governments.

This has implications for human behaviour.  Tribal living is radically different from urban living. Note that at the most basic level, the group is egalitarian. The tribe lives by co-operation: the men co-operate in hunting or fishing, the women co-operate in gathering and cooking, and the children co-operate in caring for younger children.

Now, a thought experiment: imagine a tribal group that is functioning well, food is plentiful, life is good. Now imagine that they look to the horizon, and see a far larger, more powerful people approaching. This is a threat situation; adrenaline is released, and efforts (hopeless efforts) may be made to fight. The village is taken over by the more powerful tribe, who now have second class status. They have low status, low self esteem, and low self-determination. They live in an unequal society and economy. It is a stressful stimulation, and they can be expected to display social and physiological symptoms of stress.  Wilkinson and Pickett's research confirms this pattern.

So we have a plausible explanation for the case that inequality leads to social and even physiological dysfunction.  We are social animals designed for functioning in small social groups. We can adapt to urban living, but if that urban living is marred by gross inequality, things will not go well.

Now let us put the Occupy movement into that framework.

What we are seeing is the emergence of a kind of tribal living in the centre of 1,000 cities worldwide, as a spontaneous movement of people who fundamentally disagree with the way our society and economy is being run.

The movement is focussed on forming these strange camps in the middle of cities. There are several reasons for this.
First, as the anti-Iraq War demonstrations proved, Government and media can choose to ignore large peaceful demonstrations which disperse at tea-time.
They find it more difficult to ignore violent demonstrations, but the police can fairly easily out-violence even the most violent demonstration, and media can deconstruct and demonise violent demonstrations fairly easily. The Occupy movement is solving this problem by having a non-violent demonstration that does not go away.

So they form camps. And what happens in camps is that people learn co-operative living again. This happened in Tahrir Square, where people soon evolved consensus decision making, with all the talking and negotiation that is involved with that. They evolved the leaderless structure that is being replicated worldwide. True, social media help to propagate the model, but it is reasonable to suppose that we are witnessing a spontaneous recrudescence of egalitarian tribalism in response to the grotesque inhumanity of the Behemoth of the modern Corporate State.

This would explain the common complaint of the media - "The protesters won't say what they want, they just say they don't like the way things are".  Which is true to some extent. The formation camps, of functioning co-operative micro-economies in the centre of cities is to some extent a statement in practical terms of what the protesters want - a cooperative economy, the kind of society that humans are designed to live in.

As Marshall McLuhan said - The Medium is the Message.

The camps are in process of evolving an more detailed answer to the media's question - What do you want?

The camps are evolving a more detailed answer, but this will take time. There are not many economists in the camps, nor all that many academics, and it is unreasonable to expect people who spend much of their day deciding the best way of providing for their basic security to come up with an quick answer to the economic problems which are so baffling the world's top economists.

However, there is another group within the global society, the Green Parties of the world, who have been working on exactly the same problems of sustainability and equality for some thirty years. Greens cannot speak for the #Occupy movement - #OccupyWallStreet have made it very clear that they will resist any attempt to be co-opted - but the fact remains that the Green Party agenda is the answer that the journalists  say they are so desperate to hear.

The Green Party in England and Wales has the distinction of being the party that has spent the longest time excluded from the political process, and we have used that time to develop a massive (too massive) body of reformational aspirations in exactly the same leaderless way that the Occupy movement is setting out to do.

To spare my readers the task of wading through the Policies for a Sustainable Society, here is a condensed list of reforms designed to bring about a more equal, and therefore more happy and healthy society. It is not a complete list, nor is it all endorsed by the Green Party, let alone the #Occupy movement, but it is a start:

1. Tax the rich. 
2. Close all tax havens & loopholes, worldwide. 
3. Quantitative Easing to go preferentially  to the Green Bank. 
4. End the private banks' monopoly on issuing money through debt. 
5. Rein in the corporations. 
6. Regulate the money markets. 
7. Impose a Tobin Tax on financial transactions, and earmark it for poverty projects.
8. Question the credit ratings agencies. 
9. Cap donations to political parties
10. Impose limits on salary ratio of lowest/highest remuneration.
11. Introduce a Green Wage Subsidy
12. Cancel Trident and reduce military spending worldwide.
13. Provide enough affordable housing
14. Facilitate the development of local economies

These demands are expanded here.

So there we have it. Unequal societies are unhappy societies. The #Occupy movement is a physical expression of dissent, and a symbolic affirmation of the virtues of a more equal society. There are a set of alternatives to the abuse of the economy by the rich which have been developed, among others, by the Greens. If the journalists sincerely want answers to their question of  what the alternative is, they should look at the Green agenda.

Occupy Bristol - bridging the gap between the nitty-gritty and macroeconomics

Just to give a flavour of the #OccupyBristol group meetings on Day 3 (Monday).

The meeting was very open and welcoming, but tended to be a bit unstructured, because most people (and that includes people who sleep in warm beds) do not know the difference between a decision-oriented meeting and a conversation, but I have been in more chaotic meetings in the NHS.

Most items discussed related to the nitty-gritty of setting up a camp in a city. Offers of water access from a local shopholder; site safety (random drunks had staggered on site in the middle of the previous night, causing trouble), how to protect the grass from turning to mud, whether to declare it an alcohol free site, what to do about people who wanted to play music all night, what to do about toilet and washing facilities; the usual, but interspersed with discussion of what message we could put out to those who asked what our agenda was.

Hurwitt - http://www.hurwittgraphics.com/homepage.htm

After the main meeting there was a sub-group on media. We asked people to say why they were there. A wide variety of expressions of  what we felt was wrong came out, deeply held, and related to immediate personal experience:

Poverty, food and energy prices, being thrown on the scrapheap, people are not valued, mega-capitalism overriding democracy. We have had ENOUGH!


What are we for?
Fairness, honesty, justice, the right just to be, opportunity.

Reference was made to the statements of other occupations.Here is the #OccupyLSX statement.

Detractors major on the lack of precise political agenda. This is unjust criticism. The majority of protesters are ordinary people who have been struggling along until things have now gotten so bad they have said 

ENOUGH! 

In the main, they are not economists or academics or politicos. It is up to us who are to provide a clear, pragmatic political programme as an alternative to the disastrous economic policies being visited upon us by the Coalition Government.

It's not rocket science - just a  bewilderingly diverse set of changes - ranging from high finance to community structure. It is in fact what the Green Party has been toiling over for the past three decades. The results of our labour is here, in the massive document that form Policies for a Sustainable Future. 

But in answer to the question that the Paxmen will want to put, "OK, how specifically do you want to change the present system, given that we have a massive global financial crisis?", here are 10 changes that need to be carried out to get the economy working for people :

1. Tax the rich. 
2. Close all tax havens & loopholes, worldwide. 
3. Quantitative Easing to go preferentially  to the Green Bank. 
4. End the private banks' monopoly on issuing money through debt. 
5. Rein in the corporations. 
6. Regulate the money markets. 
7. Impose a Tobin Tax on financial transactions, and earmark it for poverty projects.
8. Cap donations to political parties
9. Reform the credit ratings agencies. 
10. Impose limits on salary ratio of lowest/highest remuneration.
11. Introduce a Green Wage Subsidy
12. Cancel Trident and reduce military spending worldwide.
13. Provide enough affordable housing

Of course, there are many other changes that need to be made at community level also. The answers to the one question branch out into many areas, but these are some of the central reforms necessary to get the world economy started again, down a new path where people matter more than profit.

What is an #Occupy site actually like? What's it about?

Taken Monday 17th October

Welcome sign

Having been in to support the #OccupyBristol site on College Green today and yesterday, I can tell you.

It is tidy. No mud - yet. The people are very welcoming, and there is a good, purposeful buzz. These are early days - I was there for days three and four, to be exact. I brought stuff in, as per their wish list folding chairs, firewood, saws, pipe, and hazel poles. For a bender. 

Au urban camp is a strange space. Here's the city of Bristol going about its frenetic rush from home to work to coffee shop eatery and back again, and here are a bunch of people who are camping, talking, and (sometimes) singing. 

 Why?  What's the point? How is camping in the middle of the city going to change anything? 

Exactly the same questions were being in Cairo asked eight months ago. How will a bunch of young people camping in Tahrir Square change anything? Do they seriously think that they will be able to topple Mubarak by occupying space in the city?

But they did succeed, because of their persistence, and the fact that they were physically expressing the rejection of the majority of the Egyptian people.

Now I have been on many demonstrations since 1969. I always try to talk to passers-by, and am used to finding only a minority of support. #Occupy is different. 

People are walking in, bearing gifts of food. 

Everyone is sick of politicians and banksters and corporations and the Daily Mail. Except not the Daily Mail. They're still buying that. 

Which will probably lead to the Mail and Sun giving us a bad press. I heard today that the Bristol Evening Post belongs to Dacre and that he owns 50% of the local press.  Please tell me its not true.

But I digress. As in Egypt, so throughout the world. Obviously Cameron is no Mubarak. We could topple Cameron, but would probably wake up to find Liam Fox. Our struggle is not with a single dictator, but with the multinationals who have bought our politicians. 

It is a high mountain to climb. There are hardships ahead, right across the globe. And right across the globe, people of all types, shapes, sizes, ages, and colours are standing up and saying -

Enough! That's enough poverty and powerlessness for us, the 99%, when the 1% has so much wealth they do not know what to do with it.

These are ordinary people saying the system is broken. Back come the critics, asking what they offer to put  in its place. And they laugh because these are not economists or politicians, but ordinary (or extraordinary) people. They are not economists or politicians. They just want (as one activist said) to be.

It is up to us, the bloggers and writers, to work out the changes necessary to fix the system.

It'll take a bit of work, but we owe it to our brothers and sisters sleeping (or not sleeping) when their canvas is shaken by rain, wind, or drunks. We, the bloggers and tweeters and writers and thinkers, owe it to the activists to draw up a clear, pragmatic programme designed to remedy our broken economic system.

There are many such operations in progress, right across the web, but if you feel like staying on this blog, there is a starter right here on the Ma'blog, so you don't have to go flying around all over the Web.

PS here's an account of a #Occupyakland, in the USA. 

OK, Wall St is occupied - Now for the 10 Point Plan

Wall Street is occupied by protestors. After trying to ignore it for two weeks, the corporate media are forced to report on this fact. Police use mace on non-violent demonstrators,  kettle and arrest them, possibly after enticing them into an arrestable position.

The protesters' basic position is that  "We Are The 99% that will no longer tolerate the greed and corruption of the 1%". 

Critics of the protesters assert that they have no coherent program. This is only partially true.

The Declaration of the Occupation says:

• that the future of the human race requires the cooperation of its members
• that our system must protect our rights, and upon corruption of that system, it is up to individuals to protect their own rights, and those of their neighbors
• a democratic government derives its just power from the people 
•  corporations do not seek consent to extract wealth from the people and the Earth 
• no true democracy is attainable when the process is determined by economic power. 
• corporations,  place profit over people, self-interest over justice, and oppression over equality,
• Corporations run our governments. 
• We have peaceably assembled here, as is our right, to let these facts be known.

They go on to detail the many injustices of the economic system that exists in the US, and they end with this call:

Create a process to address the problems we face, and generate solutions accessible to everyone.

The US protest is not alone. One year ago, the UK Coalition of Resistance was set up in response to the UK Government's austerity programme. You can sign their declaration here, and it sums up the basic injustice of the situation, where the banks foul up, and the people have to bail them out and then get punished because the nation is in debt.

The activists have a correct diagnosis on the problem; the system is rotten. It is unreasonable to expect them to have a detailed, definitive treatment plan. But we do need such a plan. 

Indeed, George Soros is doing the same with his Institute for New Economic Thinking (INET) which was created to "broaden and accelerate the development of new economic thinking that can lead to solutions for the great challenges of the 21st century".

The global economic system is manifestly sick. It is overburdened with debt.
There are several reasons for this.

1. Governments overspend on useless and destructive things like arms and wars, as well as necessary things like administration,  health and welfare.
2. Even in necessary spending, Government tends to be inefficient. This can be addressed by the Suggestion Box* System.
3. Crucially, money is created through debt, so as money increases, debt must also increase. Bank loans are not the only way to create new money.
4. Wealth is haemorrhaging out of national economies as the rich 1% avoid tax by exploiting loopholes and using tax havens. This can and must be stopped on a global basis.

There are four headings for economic reformers to get their teeth into.

Clearly there are an endless numbers of other reforms that are necessary. The Green Party's Policies for a Sustainable Society has been in formation over the last 30 years, built essentially on crowd sourcing from a ordinary people united in the knowledge that our lives depend on ecology.

 I hope that #Occupywallst does not settle down to trying to re-invent the wheel in exquisite detail. At this stage we need just the headlines, and clearly, these are:

1. Tax the rich. 
2. Close all tax havens & loopholes, worldwide. 
3. Quantitative Easing to go preferentially  to the Green Bank. 
4. End the private banks' monopoly on issuing money through debt. 
5. Rein in the corporations. 
6. Regulate the money markets. 
7. Impose a Tobin Tax on financial transactions, and earmark it for poverty projects.
8. Question the credit ratings agencies. 
9. Cap donations to political parties
10. Impose limits on salary ratio of lowest/highest remuneration.
11. Introduce a Green Wage Subsidy
12. Cancel Trident and reduce military spending worldwide.
Provide enough affordable housing

There we have it - a coherent 10 point plan. Not difficult was it?


*workers at the sharp end can put forward suggestions to improve efficiency, said workers to be incentivised by receiving a percentage of the money saved by their improvement. This would increase their health too, asMarmot finds that disempowerment is the cause of much illness in his long-term study of the health of the civil service.

Greek economy: ease up on the blame, the prospects are not all that bad

images

What have the Greeks ever done for us ? I mean apart from philosophy, democracy, humanism, mathematics, geometry, literature music and culture? Not to mention Greek hospitality, seafood, bazouki, dancing, retsina, sunset, song, laughter, dancing, friendship and warmth.

Greece is in a serious economic mess, for a variety of reasons.
But all is not lost, and for the above reasons we should be happy to help them out.

Here are a few relevant facts:

It is true that the previous Greek Government indulged in shifty accounting, and that the Greeks avoided taxation, a practice that many libertarians (yes, I'm looking at you, @OldHolborn  and @Guido_Fawkes) would approve of.

However, there are other items in the equation, not least the fact that accession to the EU caused large capital inflows which were suddenly halted. So it is not just the fault of government profligacy in Greece, Portugal, Spain and Ireland, there is an EU aspect too.

German taxpayers are understandably unhappy at bailing out the care-free Greeks. However, there is a moral obligation at work here, as there is a claim that Germany has not paid war reparations to Greece.

Greece, like the rest of us, needs to staunch the flow of wealth from the national economy by taxing the rich, and closing down tax havens and loopholes on a global basis.

The hysteria about unsustainable debt is unwarranted, given that money is created through debt, so as money supply increases, so also debt must increase.

The credit rating agencies which are sitting in judgment on sovereign debt, missed the signs of the 2009 credit crunch, and one of them, Standard & Poor, is under investigation by the US financial authorities for insider trading during the US downgrade.

Finally, and most contentiously, Greece has modest reserves of oil, and undersea exploration is underway. It must be significant, because Turkey is making growling noises over exploration near Cyprus.

Clearly, from a rational point of view, all oil deposits should be left in the ground, but given that politics and economics is not yet rational, the prospects for the Greek economy are not that bad.

What Can Government Do About Unemployment?

This is my third Huffington Post blog, which can be viewed in all its glory here. But without links. Here there be links.
If for any reason you feel moved to comment, please do it on the HuffPo site, because that will score points with HuffPo.
Sorry about the wobbly formatting in the middle. I tried to tidy it up but ran into HTML difficulties.
 

Unemployment is a serious social malady that must be addressed directly by Government. It has risen in the UK by 80,000 over three months, taking the total to 2.51 million, 7.9% of the workforce, with youth taking the worst hit. This is bad news not just for the jobless, for their families and communities, but for the whole of society. Unemployment brings mental and physical ill-health to individuals (leading to an increased burden on the NHS), poverty to their neighbourhoods, falling tax revenues to the Treasury, and the danger of alienation, crime and civil unrest to  our nation.

The IPPR think-tank has said: "Promoting a speedy return to full employment in the UK should be a priority for the Government”.

The Economist suggests seven general adjustments to economic policy to reduce unemployment including “incentives that cut the cost of hiring, particularly for extra new workers”.

To be fair, Ian Duncan Smith’s reforms at the Department for Work and Pensions (DWP) of the welfare system are trying to do this. It is well known that the present benefit system creates an unemployment trap, where low-skilled workers on benefits find themselves worse off when they take up work. IDS plans to taper off the sudden cut in benefits. Although sensible, his reforms are too slow to make a difference in the coming recession-blighted years.

Serious problems require radical solutions. The Government should take the DWP reforms one step further, and transform benefits into a stimulus to the green sector of the economy.

It is not difficult. First, local authorities will set up tribunals with a remit to judge whether any enterprise, public or private, is acting to benefit society or environment. Organisations that are accredited by the tribunal will then  be able to go to the local Job Centre and take on workers. These workers will be allowed to continue receiving all their benefits while working in the approved organisation. The employer will top the benefits up to match the going rate for the job. There would be a simple, in-built feedback mechanism to prevent employers from displacing existing employees with the new subsidised intake.

This scheme is called the Green Wage Subsidy (GWS), or Work Stimulus Scheme.

The GWS produces multiple wins: individuals win by getting work that improves their finances, businesses win from increased productivity and the local community benefits from environmental and social services. The national economy benefits from the increased tax take, decreased NHS and criminal justice costs and from improved social integration and national happiness.

In Bills of Health I estimated that 1-2 million new jobs could be created in the green sector of the economy.

Pride of place would go to energy conservation, especially insulating homes.

This scheme has already been developed by the Green New Deal group.

The effect of energy conservation is to take people out of fuel poverty, and  to reduce imports of natural gas, which will help the UK balance of payments. It also helps to achieve the Government’s vital CO2 reduction targets.

Renewable energy technologies and manufacturers of energy efficient goods will be able to benefit, along with pollution control technology, waste minimisation and water management.

Small and medium enterprises who carry out repair and recycling will be able to apply, as will those engaged in sustainable agriculture, forestry, timber use and countryside management. Traditional crafts such as coppicing, hedge-laying and thatching would flourish.

Then there is the housing industry. New building will benefit as well as repair and refurbishment of existing properties.

The deal will extend to anything that results in improvements to the visual environment, since there is a great deal of evidence that this will result in improved general happiness.

Public transport will prosper, and the list goes on: education and training, counselling, caring and healing, community work, leisure and tourism,
innovation, research and development.

It must be emphasised that there is no element of compulsion in this scheme. Participation of both employers and employees will be voluntary. It is also a non-time limited scheme, at least for as long as the economic recession lasts. At that time we can have a mature national discussion on the merits of Citizen’s Income, which is very close in effect to the GWS.

The crowning glory of this scheme is that it comes at no cost to the Treasury. The benefits would be paid anyway, but grudgingly, as a dead dole paid on condition that the recipients spend their whole time in the dispiriting task of searching for jobs that do not exist.

With the Green Wage Subsidy, that same money is transformed into a stimulus for a vibrant and positive sector of the economy that benefits society and environment.

How can we prevent a recurrence of the 2011 English riots?

Phew. 
The English Riots 2011 are over. 
Sound the All Clear, and back to Business As Usual (BAU), now with added repression. 


Economists love formulae. Here's one
BAU = RGRPCGTH
The rich get richer, and the poor can go to hell.


Or...call me naive if you wish, but I personally think it would be a good idea to bring in a few modest, cost effective reforms designed to reduce the probability of a recurrence of the rioting. They are based on this post on the causes of the riots.  

Outline reforms to promote social cohesion in the UK


1 Provide parenting skills to parents that need help.

Effective counselling and education programmes are available. GPs, schools and other agencies could make referrals when they become aware of a child that is in danger of going out of control.

2 Provide for community leaders and community space in any neighbourhood that requests them. 

The leaders can be drawn from the local community, or if appropriate, they could come from outside. The effectiveness of this provision has a sound evidence base. Go here, click on Impact of Social Conditions on Health, and scroll down to "Stimulating the sense of community)

3 Take action to limit the influence of gang culture 

There are things that can be done.
Including the re-opening of Youth Clubs. Height of stupidity to close them as part of Osborne's cuts.

4 Stop the cuts in public services that make the lives of the poor more bearable

'Nuff said.

5 Faclilitate access of unemployed to good work

Let them take their benefit in to socially and environmentally useful work.

6 Tax the Rich

There is sound evidence to show that more unequal societies (i.e. those with larger divergence between rich and poor) have more social problems.

So, close tax avoidance loopholes, close tax havens on a global basis. 

Globalisation of the economy clearly requires a global tax regime - not the same percentages for each country, but a regime that stops super-rich corporations and individuals from threatening to move their business away from any country that tries to tax them meaningfully.

It is claimed that corporations create wealth which then "trickles down" to the whole country. This trickle down is a prostatic dribble, insignificant in comparison to the Niagra-like roar of money being siphoned off into tax havens. By closing off this loss, national economies throughout the world (193 out of 198 countries are in debt) will be able to reduce/pay off their deficits.

Oh, and the increased tax revenues will provide funding for items 1-5 above.

As I say, call me naive if you wish.


PS:  This post does not address the problem of policing, because it is a huge topic in its own right, covering shootings, dealing with complaints, the incomprehensible disjunction between their heavy handedness in dealing with peaceful demonstrators and soft touch with violent looters, &c.

What is the cause of the London Riots?

http://www.heart.co.uk/london/news/local/london-riots/london-riots-10/

The riots are criminal and thug behaviour with no political purpose.

But that is the first word, not the last.



Just as it is impossible to have a baby without a pregnancy, so it is impossible to have a riot without a cause - or in this case, causes. The 2011 UK riots are the result of systemic failure, a product of many causative factors.

Let's be clear: to understand the causes of a riot is not to try to excuse the actions of the rioters. They are human, so they are responsible, and have to face the consequences of their destructive actions.

Politicians are trying to fit it into their own categories : Conservatives are trying to pin it on "pure criminality".  Criminality is involved, certainly, but as an effect, not as the sole cause. Labour seems to be trying to link the riots to the cuts in public services, but they are hardly enough (yet - give it time) to cause builidings to be set on fire. We have to look deeper, at the wider picture. Riots are a social action, where many items are thrown into the melting pot, and lie there simmering, until a trigger event causes the pot to boil over.

We know that the original Tottenham outburst was precipitated by the shooting by police of Mark Duggan. It seems he was carrying a replica handgun that had been modified to shoot, but that he was killed while it was still in its cover (a sock, allegedly). This killing re-activated community memories of Cynthia Jarrett's death (possibly form a heart attack caused by her son's arrest) in the locality in 1985, which kicked off a riot in which PC Blakelock was beaten to death.

A peaceful deputation to protest against Mark Duggan's killing outside the police station was ignored by the police for several hours, and so turned into a riot, which triggered riots and disturbances in many other areas of London, (Ealing, Wood Green, Clapham, Dalston ) and some other towns in the UK (Liverpool, Birmingham, Leeds, Bristol). Here is an interactive map of all known sites of trouble.

What we can say for certain is that the riots are an expression of anger and alienation. The looting demonstrates a consumerist (or possibly, to keep the academics happy, post-consumerist) motive. Random smashing of cars and looting for trainers, clothes and electronic goods (but not, as many tweeps noted, bookstores) shows  opportunism at work. They smashed because they could. They realised that with the police occupied elsewhere, their chances of getting caught were low.

Alienation is the absence of a sense of being in a productive relationship with one's physical and social environment, a belief that it does nothing for you, and that you owe it nothing. This is a false belief, built on the perception of "I" in a hostile or indifferent world, rather than "we" living in a world that sustains us, an environment that we should nurture and care for.

In short, alienation is a belief that can be expressed in the phrase "There is no such thing as society".

The alienation has many causes. Sub-prime pararenting is undoubtedly one cause. Community breakdown is another.

Here's a third: the prevailing celebrity culture. Surveys have shown that if you ask a schoolkid what s/he wants to be when they s/he grows up, chances are they will say "a celebrity" or "a football star's wife". So we have a gulf between aspiration and probability. This gap leads to depression and resentment. The culture is fostered by tabloid and TV content, and is paralleled by advertising and consumerist culture, where possession is portrayed as 9/10ths of success. This culture needs to change.

There may be an underlying loss of respect (to the extent that there was any respect previously) for authority because of the cumulative effect of the banking crisis, the MP expenses scandal, and the News International scandal, in which the Metropolitan Police are implicated.

The rioters are multiracial, but in that Afro-Caribbeans are involved, their experience is relevant.
Darcus Howe has been emphasising the resentment of young black kids who are continually harrassed by cops who stop and search them. It has to be accepted that, despite Darcus' deficiencies in the parental responsibility department, S&S  is a significant cause for alienation of black and Asian youth.

Which leads on to the general distrust, dislike and even hatred of the Police. Middle class participants in demonstrations calling for peace and social justice have been sometimes disturbed at some police attitudes and actions. This happens to them maybe once or twice a year. Imagine what it is like to live immersed in an ongoing matrix of police contact.

One aspect of the rioters was their young age. Some appeared to be around the 14 year mark. Again, there may be many reasons for this, but one factor must be the student demonstrations of 2010. There is still massive resentment against the withdrawal of the Educational Maintenance Allowance (EMA). The youngsters will have seen students a year or two above them on TV in demonstrations that police tactics helped to become violent, and they may well be living in families with older brothers who are unemployed.

Youth unemployment is an important component of disengagement and alienation. It is a feature of all the action in Arab Spring countries. Not that I am for a moment suggesting that these riots have any political component. One popular tweet from @MsLuluRose summed it up: The Youth of the Middle East rise up for basic freedoms.The Youth of London rise up for a HD ready 42" Plasma TV.

Confirmation of the unemployment factor comes from Dr Paul Bagguley of the University of Leeds, who researches the sociology of protest.He told Channel 4 News: "They did research in the riots in America in the 1960s and the only statistically significant thing was simply being availableThere's been a sense of watching a slow train crash ever since the credit crunch... people often have different reasons for rioting but one of the main factors sending them out was very simple: because they were doing nothing else" he said.


Unemployment provides availability. And anger.

Camilla Batmanghelidjh, the excellent worker with young people, authoritatively confirms the problem of alienation of young people. It crystallises out into gangsta culture, and it is the gangstas who seem to be providing the lead for the looting, using, so it seems, BBM, Blackberry Messaging, because of its closed communication system. Clearly Blackberry should be opening all of these accounts to the police.


The anger of the rioters has provoked anger in commentators. Calls on Twitter for the Army to be brought in were very common, and I was angrily condemned by @PolleeTickle for drawing attention to the fact that the Bullingdon Club (of which Dave Cameron and Boris Johnson were members) was heavily into criminal vandalism. However, unlike the youth of today, they were able to pay for their destructiveness in high denomination notes.

The positive stories to emerge from this sorry affair are where communities take responsibility for their own protection. Turkish communities united to keep the rioters out of their streets - demonstrating the power of community action. This, although welcome, is a double edged sword, since untrained vigilantes can be riotous in their defence of their own space.

Image below: Turkish residents in Dalston defending

 their streets from rioters. by Yassin

Here, too, is an amazing vid of a fearless black mother haranguing the rioters.

The other positive thing is the spontaneous community cleanup initiated by tweeter @riotcleanup.



The causes listed above are just a few of the many aspects that feed in to the systemic failure that has erupted in the current riots. I predict that since they do not have any specific political objective, they will subside in a few days or less.

If it is systemic failure, we now have to look at the system as a whole. Instead of being a cohesive, collaborative, healthily interactive system, the UK is a radically divided society, with immense disparities between the haves and the have-nots, the wealthy and the alienated. The riots are consistent with the thesis of Wilkinson and Pickett - that unequal societies are unhealthy societies.

The short term answer that will be rolled out is only too obvious: Clampdown. More police and possibly army on the streets, possibly a curfew, mass arrests, an increase in the prison population, leading to more resentment and more alienation.

The real long term answer is many headed, including real action to strengthen community cohesion, but the thing I would major on is radical reform to the benefit system, facilitating people's entry into work that is beneficial to environment and society, together with a restructuring of the economy aimed to produce convergence towards, rather than away from, a median income.

Systemic failure demands systemic reforms. 6 steps to preventing a repeat occurrence.
-----------------

[this post has been updated]

Why is debt breaking the world economy?

Even the most complex problems have simplicity at their heart.

The world economy looks as if it is about to collapse under its weight of debt.

193 out of 198 countries are in debt.  (Source - CIA)
Here is the same list on Wikipedia, kindly arranged so you can play around with the list per capita and as % of GDP.

From this, we learn that the debt is not owed by one country to another (otherwise it would be 50/50, wouldn't it?). The debt is owed by 193/198 countries to the banksters.

This is all down to the way money is created. Make no mistake, money is being created. World money supply is increasing. It had a doubling time of 10 years in the last decade of the 20th century. Which means that someone is creating new money. That someone is the banks, who make the vast majority of new money. (Governments get to make a tiny amount of new money as notes and coins: in the UK that is 3% of the total).
Banks create money by issuing loans, in the following way:

1. They issue money to the borrower's account, and sets up an equal and opposite sum in their own accounts.
2. The borrower goes away and earns (in the real economy) money to pay off first the interest on her loan, and then the original capital sum. 
3. When the capital sum is finally paid off, the two accounts cancel each other out.
4. In this process, the bank has acquired an extra amount of money, the interest, which varies with the terms of the loan. For example, a straight loan of $10,000 at 5% over 10 years will earn interest of $2,728.
5. That $2,728 has gone from the real economy into the bank.
6. Either the real economy has lost $2,728 to the bank, or other people have borrowed it from banks, creating more debt. 
7. If it had been withdrawn from the economy, it would be deflating, which it isn't (generally). Therefore it is being borrowed, repeating the whole cycle.
8. Therefore all money in the economy has its origins in debt - the capital sums borrowed (which will be annihilated when repaid) and the interest, which represents other monies borrowed into existence.
9. Therefore debt increases inexorably in the system, until a critical point is reached when it is realised that debt becomes unpayable.

The whole economic system is based on debt. We are in a vicious circle, working to pay off debt. If money is growing, debt must grow. Money has grown, debt has grown, and now it is crunch time.

Clearly, this is a vast oversimplification. There are a multitude of other factors at work, but this is the logical and necessary core of the problem, despite all the obfuscation that will no doubt ensue in the comments below.

I hope that helps. 

My advice: dig up your lawn and plant vegetables.