LENIN'S TOMB

Saturday, April 25, 2009

How to fill the 'black hole' posted by Richard Seymour

The IFS estimates that the Treasury has a £45bn black hole in its finances. Today, we learn that the 1,000 richest people in the UK have experienced a dramatic decline in their wealth due to the credit crunch, from £413bn to £258bn. £258bn is still too much dough for such a small amount of people. I expect they could comfortably survive on a mere million each (fewer ivory backscratchers, I admit, but we all have to make sacrifices in these difficult times). If you applied a windfall tax on their wealth, leaving each with a million quid to live on, you would still be raking in £257bn. That would cover the 'black hole', and pay for the TUC's proposed £25bn stimulus and leave £187bn left to spend or redistribute. Failing that, there is one other option: it has been noticed that the shortfall is roughly equivalent to the annual 'defence' budget. The obvious solution is to stop spending so much money on wars of conquest, arms development, nuclear weapons and all of the other means of mass destruction that the British state is so fond of. Lenin's Tomb will return soon with more attractively simple solutions to the world's most complex problems.

Labels: alistair darling, budget, capitalism, credit crunch, imperialism, new labour, recession, treasury

Reasons to be cheerless posted by Richard Seymour

I mentioned the unrealistic growth expectations built into Alistair Darling's budget the other day, but no one expected these to be so rapidly and comprehensively mocked by reality within a matter of days. But so much for reality. Yesterday's report that the Brtish economy shrank by 1.9% in the first quarter of 2009, the fastest rate of contraction since 1979 has produced a stunningly inept response from Darling, to the effect that he holds form to his prediction of a 3.5% contraction throughout this year followed by a recovery next year. The Left Banker points out that the UK economy is actually on course to contract by 6% over this year and enter into technical depression next year. The basis of Darling's optimism, however, is that the government has "put a lot of money and a lot of support into the economy fiscally, in terms of lower interest rates and credit easing. We have underpinned the banking system." The trouble is that this very strategy of underpinning the banking and credit system in part depends on the government's insanely optimistic growth predictions. As Paul Mason points out, if investors don't believe the government's predictions, then they'll push down the price of gilts, thus increasing the real interest rate that the government pays on them and undermine the whole 'quantitative easing' strategy. Moreover, as Larry Elliot adds, even if the stimulus being implemented for this year (the last year of stimulus before austerity kicks in) were sufficient to bring about a recovery by the end of 2009, the idea of 3.5% growth from 2011 onward is "for the birds". Even in the most optimistic circumstances, in order to pay off the deficit any future government will ransack the public sector, slashing spending and selling off assets. They will also have to raise taxes, and probably not greatly on the rich or on corporate profits, thus eating further into consumption at a time of rising unemployment. Things can only get grimmer.

Labels: alistair darling, capitalism, neoliberalism, new labour, recession

Monday, November 24, 2008

I Want To Make You Happy, Darling posted by Richard Seymour

How to respond to such a serenade? Even as his colleague Jack Straw is busily pandering to our primitive passion for punishment, and while Blears is patronising the 'white working class', Chancellor Darling promises he will cut taxes for the poor and raise them for the rich. VAT will supposedly be cut from 17.5% to 15% and income tax on those earning £150k or more will be raised from 40% to 45%. These are not huge shifts, but I must advise the Chancellor that he risks being associated with the dread word, 'redistribution'. It is, as Nick Robinson of the BBC says, of "huge symbolic importance". Listen to me, Darling. New Labour's pact with the rich was that it would not touch their property. For a decade, it has stuck with that promise, freezing higher rate incomes taxes, slashing corporation taxes and cutting inheritance taxes. It has contained trade union pressure and implemented a public sector pay freeze. It threw tens of billions at Northern Rock in a desperate bid to maintain the institution as the private property of rich investors. Even when the government nationalised the bank, it appointed business managers to run it down, cut jobs and prepare it to be returned to the private sector. And now you tell us that you intend to cast prudence aside and embrace a minimal meliorist agenda comparable to that of, say, the Liberal Democrats or Barack Obama. What could possibly be motivating this minute shift away from kapitalist realism?

One thing this government appears to have lacked for the last year was the elemental instinct for survival. It seemed there was not a challenge it could not fluff, not a 'heartland' it could not lose, and no limit to its prevarication and deer-caught-in-the-headlights inaction in response to the economic crisis. Yet, of late, it has been rising in the polls. Labour appears to have recovered at least 5% of its vote since the Summer, and the Tory lead is no longer in double figures [pdf]. Compared to September, when the Tory lead was a whopping 24%, today's 5% looks manageable (see tracker poll [pdf]). In a recent poll taken just before Cameron abandoned his promise to match Labour's spending commitments, Mori put the Tories just 3 points ahead. Brown's personal rating has increased from 17% in May to 41% today [pdf]. And they managed to retain Glenrothes, in part because the collapse of Scottish banks necessitated a bail-out for London, which rather undermined Salmond's claim that Scotland could be part of an arc of prosperity alongside (whoops) Iceland. The government's psephological advisors have presumably recognised that the economic crisis that was killing the them last year is now redounding to their benefit. The hopeless flailing that characterised the initial response to the crisis, and the desperate clinging to neoliberal orthodoxies that even a right-wing Republican administration discarded without hesitation, were replaced after the collapse of Lehman Brothers by what looked like a far more decisive set of interventions including part-nationalisations and some curbs on the City's extravagant pay and bonuses. These were still basically pro-business policies, and they still transferred money from the public sector to the rich, but it looked far better than the Northern Jelly episode. And unlike in the US bail-out, the government insisted on voting rights in exchange for the money invested. Meanwhile, David Cameron's promises of tax cuts for businesses and big public spending cuts are probably not resonating far beyond the rabid Tory base.

Whatever is announced today is unlikely to be equal to the crisis. It will be a heavily politicised budget, however, sending out signals in advance of a 2009/10 election. A few tax cuts targeted at the poor will not substantially improve consumer spending ahead of Christmas, and the tax increases proposed for the wealthy will not raise much money, but an overall package of moderate wealth redistribution means that Darling is betting on a political realignment. And that is an interesting story in itself: it shows that the government, in its weakened state, is highly susceptible to public pressure. It shows that now is no time to relent on struggles for decent public sector pay, for better pensions, for an emergency house-building and debt-relief programe, and for public investment to protect jobs. Now is the time to push aggressively and confidently for a radical alternative programme.

Labels: alistair darling, david cameron, economy, gordon brown, hazel blears, jack straw, jobs, neoliberalism, new labour, public sector pay, redistribution, tories

Wednesday, September 10, 2008

Gordon Brown triangulates. posted by Richard Seymour

Brown and Harman are talking about class. Harriet Harman has conceded that social class is by far the biggest determinant of one's life prospects, and has been allowed to put together a committee to investigate the matter. Kindly contain your excitement. And this is what Gordon Brown has written: "We need to be honest with ourselves: while poverty has been reduced [false] and the rise in inequality halted [false], social mobility has not improved in Britain as we would have wanted [half-truth - it has remained stagnant and, in some areas, has got worse]". This feckless drivel is intended, presumably, to placate the trade union bureaucracy in advance of a difficult speech to the TUC conference. If it signals a substantial change in rhetoric, it does not signal a serious change in policy.

Alistair Darling yesterday told the TUC that workers would just have to lump it, while assuring delegates - in contrast to his recent claim that the crisis would be the worst for sixty years - that Britain was 'well-placed' to ride out the credit crunch (the precise opposite of the truth). Though he accepted that inflation was not being driven by workers wages, he insisted that workers would nevertheless have to bear the burden. He and Gordon Brown have, meanwhile, utterly refused to apply any restrictions to the consumption of the rich - no profit tax, no income tax, no windfall tax. The TUC conference has voted to support a windfall tax, but it's not going to happen unless someone places a metaphorical pistol to Gordon Brown's temple (a real pistol would just get you arrested). As Alex Callinicos writes, not only is Brown's ideological commitment to the market preventing him from taking even this modest step, his weakness is such that the ruling class is just not going to help him out of this bind with some half-way measures. Darling's speech took a swipe at the excessive pay awards of City executives, but it is as meaningless and hypocritical as the government's admission that there remains a huge class divide - an admission that, as Polly Toynbee pointed out yesterday, sits uneasily alongside its record (although she will undoubtedly be calling for a Labour vote come 2010).

But there is a chance to make something meaningful of this rhetoric. The TUC has voted unanimously for coordinated strike action and protests, to defend our living standards. There isn't a person in the country who isn't affected by the surging cost of fuel and food, by the credit crunch, and by the government's timid obeisance to the business class in responding to the crisis. Not all of us can join in the strikes when they happen, but we can certainly support them. And when the national demonstration takes place in central London this Autumn, we need it to be massive. We have yet to see what this co-ordinated action will mean in practise, but it certainly constitutes an escalation beyond the disjointed one day strikes we have been seeing. These have highly successful in terms of achieving maximum solidarity and demonstrating the ability of the workers to shut down key infrastructure, but it has not been enough to force the government to back down. So let's be realistic: if the organised working class of this country takes on the government in a serious way, the government will lose. This is a pathetically weak and uninspired administration, weaker than ever before. As ideologically rigid as it is, it does not have the horses for a big fight with the trade union movement, especially as it depends increasingly on the union bureaucracy for funding. If trade unionists are wise to this, they will throw out any half-hearted shambolic face-saving deal for Brown and reject any attempt to turn this coordinated action into a symbolic, demonstrative affair designed to 'send a message'.

Labels: alistair darling, class, gordon brown, neoliberalism, new labour, trade unions