Monday, May 03, 2010

"New Age of Austerity" - but not for some!

"LET'S ALL STEP DOWN ONE RUNG", says man at top in this 1930s Labour poster. Ironically, the ideas it satirised are now those 'New Labour' might advocate. Except, this time round the very rich have been getting even richer.

"WE are entering a new age of austerity", says Tory leader David Cameron. "Within months we will be the most unpopular government since the war," promises his shadow Chancellor of the Exchequer, George Osbourne. "This is an era of hard choices," admits Gordon Brown, while Chancellor Alastair Darling says we must expect bigger cuts in public spending than were made under Margaret Thatcher.

Well, there is a recession. We must all expect to make sacrifices. Oh yeah? Whenever I hear a political leader or big boss grandly including us all in that little word "we", I remember a departmental "consultation" meeting in the hospital where I worked, when a management person who had been telling us how we must all achieve greater efficiency, to meet Tory "reforms" in the way the NHS was run (having just acquired Trust status) asked for any questions. A youngish guy whom I hadn't heard speak before, a plumber's mate, said he had just one question: "Who is 'we'?"

"All of us", they replied unconvincingly. One of our engineers, an ex-Navy man who had not been there long but was quite well-liked and respected by the workers, now felt emboldened to ask whether by greater "efficiency" they meant doing a better job, or making it cheaper? They claimed both. Meanwhile a new manager, expert on efficiency, arrived, preceded by new expensive furniture and carpets as his new office expanded to dwarf the workshop. Also preceded by rumours about his achievement in getting rid of people at his previous hospital. Some of the work we had done began getting outsourced, and some of the workers were encouraged to take early retirement or made redundant. That engineer, the only one, who had asked a question about "efficiency", found he was no longer required for permanency.

But I digress. I'm sure what I saw before I left was only the beginning of things to come, and nothing compared to what is now coming. Only, that word "we" to suggest that everyone is feeling the pinch has become frankly ridiculous.

It's not just the bankers who have carried on trousering huge bonuses even when their institutions had to be bailed out by the taxpayer.

The UK's super-rich, who were seeing their fortunes rise a couple of years ago, have come through the credit-crunch and recession and done quite well for themselves, thank you. The Sunday Times Rich List estimates that the wealth of the top 1,000 has risen by 30 per cent in the past year, to £333.5 billion. The number of billionaires which fell last year from 75 to 43 is back up again, to 53.

Topping the list is steel magnate Lakshmi Mittal, who owns Arcelor Mittal. Britain's steel industry may have shrunk, but Mittal's fortune doubled from £10.8bn to £22.45bn as the global steel industry recovered from the recession. Roman Abramovich is at second place with a £7.4 billion fortune, while the Duke of Westminster seems to have survived worries over the property market to come in third, his wealth increasing from £250 million to $6.75 billion. No fears about negative equity or repos there then.

Of course, the list deals with visible wealth such as real estate, so may not tell us everything about bank accounts, particularly of those whose money keeps one jump away from the tax person. We all know about Lord Ashcroft, who provided £10 million to the Conservative Party. Taken all together, we can say government policy of putting money into the economy seems to have benefitted some. While unemployment and the threat of it helped keep wages down, some even taking cuts, the rich have been getting richer.

As for the bankers, though the row over MP's expense fiddles proved a well-timed diversion for public anger, we have seen their big bonuses continue, subsidised by the same public with whose savings they gambled. Goldman Sachs is being questioned in the United States over the revelation that it used a subsidiary to sell useless shares and in effect gambled on its own losses.

But here in Britain, where we are told we must accept cuts to pay the cost of Lehman Bros $600 billion Wall Street collapse, the politicians are not being nasty to the poor Lehman's directors or making them feel unwanted. Four of then have been allowed to show their generous side with donations to the Tory party, totalling over a quarter of a million.

Aidan Clegg was Lehman Brothers' London managing director until the bank turned belly up. He has made a £25,000 gift to the Tories recently, and joined the party "Treasurer's Group". Others whose money has been welcome include former Lehman bankers Roger Nagioff, Jeremy Isaacs, and Chris Gent. Still we must not single out individuals, who are just a few of the Tories' wealthy backers.

As for Labour, though it still relies on unions like mine to cough up funding - nothing like the amount flowing into the Tories' election fund, - it remains much more timid than the US authorities in tackling the bankers' excesses. Last month, as City standards authorities looked at Goldman Sachs in the wake of the US investigations, Gordon Brown described the firm as "morally bankrupt" – before it announced it had spent $5.49 billion (about £3.5bn) on pay and bonuses to employees in the first quarter, including the trader at the centre of the fraud inquiry, Fabrice Tourre.

But he refused to consider withdrawing Mr Tourre's licence to trade in London, and Alistair Darling rejected demands to suspend Goldman Sachs as an adviser. Currently the government is employing the bank as an adviser on issues including privatising the Tote and the future of Northern Rock.

It looks like whoever wins on Thursday, the bankers and the rich will not be the ones to lose. But remembering how, during the British Airways dispute, David Cameron and the Tories made such an issue of Unite union funding for Labour (something many of us in the union criticised for quite opposite reasons!), as though this huge union is some kind of sinister conspiracy, perhaps it would not be too much to look at who is funding the Tory party. The bankers might have been careless with our money, but they are not likely to be spending their own without expecting to reap a good return on the investment.

On the Rich getting Richer, see also:

Lehman Bros and Tories, see:

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At 10:01 AM, Blogger Chris Hall said...

Normally when I read articles like this about the machinations of capitalism I get filled with a righteous anger, but your article contains so much to be angry about I think I've slid over into despair!

Great poster, wonder if Gordon remembers it?

Great article as well.

At 3:26 AM, Blogger JaneDerbyshire said...

Of course, the women are already submerged.


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