Mr. Osborne, Britain's Chancellor, stood in the House of Commons (August 11, 2011), full of pride, to announce to the nation that "Britain is a safe haven for investors". I, for one, am not impressed, nor do I expect most of the British people are, as they struggle to survive the hardships created by the "moneymen" with their casino-type capitalism.
His plans for the difficult times ahead seem to be lower corporation tax rates, less regulation for small firms, and lower taxes for entrepreneurs. I am no economist but my common sense tells me this is not going to work. How can it work? If people are barely managing to survive, how can they spend any more on these extra goods and services dreamt up by all those clever entrepreneurs (with their lower taxes)? Wouldn't it make more sense to reduce income tax on the very poor (instead of companies and entrepreneurs), where we know every pound gained would be spent, thus generating economic activity? Helping the poor is not only the moral thing to do, but also good for the economy.
The depressed economic activity and the cuts have led to worrying levels of unemployment, in the U.S. and Europe, particularly among the young. The figures for youth unemployment (16 to 24-year-olds) currently are: US 20%, UK 20%, Greece 36%, Spain 44%, Ireland 29%, Portugal 28%, and Italy 29%. An economic model that consigns large numbers of fit young people to the scrapheap is not fit for purpose. The attendant misery and hopelessness will eventually bubble up to the surface to the detriment of the whole of society. Western governments have bought into an economic orthodoxy that does not serve ordinary people. It is a failure of the collective imagination of a nation to believe that there is no alternative to this madness. Successive governments have abdicated their responsibility to serve the people; instead they have faithfully served the moneyed super rich.
The "moneymen" demand that governments cut their spending. The hardships and the misery of such cuts are mainly visited upon the disabled, the vulnerable, the poor, the old and the unemployed. Liberalize your economies, they demand; let us run everything, your care homes, your hospitals... everything. Cut the "red tape", we must be allowed to run things our way. It is in your national interest, they cry, as if the national interest were some abstract concept. If the so-called national interest results in degrading the lives of millions, how can it be "national interest"? And, anyway, aren't we in this mess because we allowed you to run things your way? Ah, they say, if you do not do what we say, we will show you what real austerity is.
We the taxpayers have rescued the "moneymen" from the folly of their actions to the tune of hundreds of billions of pounds, only to see billions of that money paid in bonuses to the very bosses who were the architects of the mess in the first place. Their effrontery is breathtaking.
This government is reduced to begging them to reduce their bonuses and to lend more money to businesses to help them in this economic climate. The Guardian (June23, 2011) reported on a speech made by Vince Cable, the Business Secretary, to an audience of leading city investors in which he said:
"It is actually outrageous that last year median earnings for FTSE 100 chief executives rose 32%, whereas the share index rose only 7% - and average employee pay rose by less than 2%, barely half the rate of inflation."
So what does Mr. Cable propose to do about this voracious greed? His answer: new rules to compel companies to make public the pay packets of top bankers and top executives as a multiple of an average UK employee wage. Get real, Mr. Cable!
Policies by successive governments have led to the creation of levels of inequality in our society of almost developing-world proportions. The Independent on Sunday (May 15, 2011) presented the findings of the High Pay Commission:
"Chief Executives of FTSE 100 companies (top 100 companies in UK) earn on average 145 times the average wage. By 2020 they are expected to be paid 214 times the average wage". Deborah Hargreaves, the chairman of the commission said: "this is the clearest evidence so far that the gap between pay of the general public and the corporate elite is widening rapidly and is out of control". She continues: "If current trends continue, by 2015 the top 0.1% of earners will take home 10% of national income and by 2030 Britain will have sunk back to levels of inequality not seen since Victorian times".
In many countries in the developing world, where a greater wealth gap exists between the ultra rich and the very poor, order is maintained not only by shooting rioters and looters, but also by extending such treatment plus torture to encompass anyone who dares question such tyranny.
The level of inequality and poverty we are now witnessing in Britain is bad for the poor, bad for the middle classes and bad for the ultra rich, in short bad for society. Making Britain a "safe haven for investors" is not the answer. Making it safe for the rest of us is.