• ThumbnailBy Peter Dombi; cross-posted from Our Broken System


    By electing Jeremy Corbyn as its new leader, the Labour Party has finally thrown off the last vestiges of Blair-ism and taken a firm step back towards […]

  • ThumbnailBy Peter Dombi; cross-posted from Our Broken System


    With the demise of Ed Milliband after Labour’s election defeat, the race is now well underway to find a successor. Initially this seemed as if it would […]

  • ThumbnailBy Peter Dombi; cross-posted from Our Broken System


    Over the next few weeks the news will be full of the unfolding Greek tragedy, and if current trends are anything to go by most criticism will be firmly […]

  • ThumbnailBy Peter Dombi; cross-posted from Our Broken System


    This week the Labour Party made a manifesto pledge to abolish the scandalous ‘Non-Dom’ rule, which allows wealthy individuals to avoid paying tax on […]

  • ThumbnailBy Peter Dombi; cross-posted from Our Broken System


    This week we saw yet another scandal involving our banking system, when it turned out that HSBC have not only been facilitating large-scale tax avoidance […]

  • ThumbnailBy Peter Dombi; cross-posted from Our Broken System


    People would have been shocked today to hear of yet another scandal involving our beloved banks*. Apparently they’ve now been caught fixing foreign […]

  • By Peter Dombi; cross-posted from Our Broken System


    Yesterday a post was made on the website of the Centre for Policy Studies*, a right-wing think-tank that was set-up by Keith Joseph in 1974 to promote ‘Economic Liberalism’ – now more frequently called neo-Liberalism or Free Market Capitalism. Also counting Margaret Thatcher as one of its protagonists, this group of course proved to be very successful, and its policies were subsequently adopted by most Western governments and political parties. For many years, from Margaret Thatcher becoming Prime Minister in 1979 until the Banking Crash of 2008, these economic doctrines were pretty much unquestioned  – I myself was an advocate of free markets during that time.

    [caption id="" align="alignleft" width="286"] Margaret Thatcher was Deputy Chairman of the Centre for Policy Studies. Picture © US Govt[/caption]
    However the crash of 2008 changed all that, and many people saw that free markets, far from benefiting everyone, only actually benefit the narrow elite at the top. The privileged few use corporate structures to ensure the wealth that capitalism generates does not trickle down, but instead remains in their hands, which also means that ‘competition’ only really exists at the bottom of society, where workers have to compete for who will work for the lowest wage. Any attempt by the government to redress this wealth imbalance is thwarted by tax avoidance, and in particular hiding money offshore in tax havens. The result is endless grinding poverty at the bottom and ever-increasing wealth at the top. Privatisation of public services of course accelerates the process, and then when you add into the mix the inevitable economic crises (as the financial sector takes greater risks to increase its wealth even further) and the subsequent government bailouts (state funds being use to support private industry) we get to see that, remarkably, Socialism is still alive and well – but only for the wealthy and the world of business. Paid for by yet harsher Austerity, these bailouts serve to accelerate the transfer of wealth from poor to rich, and lead to an ever-more unequal society (hence 500,000 people are now using foodbanks while at the same time Executive Pay soars higher than ever.)
    So, to get back to the post from the Centre for Policy Studies, Matthew Rees was commenting on the recent Occupy protests in Parliament Square, and said that if the protestors really were interested in Civil Liberties they should be supporting Free Trade, not opposing it, and highlighted the forthcoming TTIP treaty as an example of this. This was an extraordinary statement.  The TTIP treaty, if it goes through, will allow corporations to sue governments over anything which causes them financial loss. The possibilities here are terrifying. The government wants to stop the use of genetically modified food? Biochemical companies could sue them for potential ‘lost trade’. We decide we don’t want to take the environmental risk of fracking? Fracking companies could sue us for lost business. The government proposes changes to the NHS? Health companies could sue if they think that will cost them money. The government wants to encourage people to cut down on smoking? Tobacco companies could sue for lost revenue. The welfare of ordinary people will come second to the profits of multinationals, and all these disputes will be settled behind closed doors, with only lawyers and corporate cronies having a say in the outcome.
    If Matthew truly does believe that such legislation serves democracy, civil liberties, and the will of the people (and if he is not being paid to say such things by the corporations who will benefit) then I can only say that he must be so blinded by his own ideology, that he is unable to accept the evidence of how badly society now operates for millions of ordinary people.
    From Peter Dombi’s website: http://ourbrokensystem.com/

  • By Peter Dombi; cross-posted from Our Broken System
    Many people will be aware of the corrupting influence that the private funding of political parties has on our democratic process. The Tory Party gets most of its funding from big business (and over half its funding from the City of London) so it’s no surprise they make policies which benefit the wealthy. However the Labour Party, in its efforts to break away from Trade Union influence, has now fallen into exactly the same trap, and events this week demonstrate the extent to which they too are now totally in the grip of big business.

    [caption id="" align="alignleft" width="280"]File:Ed Miliband (2010).jpg Ed Miliband: He may want to create a fairer, more equal society, but will the party’s donors let him? Picture © Mandate for Change[/caption]
    Firstly, one of their biggest donors, multi-millionaire Assem Allam*, who in recent years has given £210,000 to the party, has openly criticised Ed Milliband’s proposal for a ‘Mansion Tax’.  He also made his overall intentions pretty clear when he criticised proposals to increase other taxes on the wealthy, saying the rich should be looked after and encouraged, as they are the people who drive the economy (strange words for a Labour Party supporter you might think, unless he is clearly exercising some kind of vested interest!) Following on from this, other major Labour Party donors voiced similar concerns about the Mansion Tax, including Lord Noon* who described it as ‘hopeless and desperate’; while the party’s biggest donor, John Mills* – who gave them £1.65m last year – also criticised the tax, saying it would produce ‘all sorts of problems’ (especially for him, presumably, if he has to pay it.)
    Now you may or may not think the Mansion Tax is a good idea, but it’s for parties to put policies in their manifestos, and then for the electorate to vote on them, not for wealthy individuals to use their money and influence to control government policy regardless of what the electorate wants. What will now inevitably happen is that should the Labour Party get elected, Ed Milliband will be leant on, and with the threat of losing crucial funding, the policy will be quietly dropped, or massively watered down. And with pressure mounting on him to backtrack on this tax, you can be pretty sure that similar pressure will also be applied should he make any other suggestions which increase taxes on the wealthiest and most privileged members of society. Instead, all the party’s biggest donors will no doubt be encouraging him to continue with Austerity: freezing public sector wages, cutting public services,  and slashing benefits given to the poorest members of society.
    Many people still no doubt hold to the view that voting Labour is the best way to achieve a fairer and more equitable society, but with Labour now firmly in the grip of big business, that unfortunately is a sad illusion. With both the Labour and the Tory parties offering nothing but endless Austerity, the only way to change things is to vote for someone else at the next election, and hope that a coalition government of some sort will allow alternative ideas to be implemented. And top of those alternative ideas has to be a reform of the entire process of Party Funding, because as long as the wealthy can ‘buy’ the legislation that suits them, the wealth that capitalism generates will stay in the hands of a narrow elite, and millions of ordinary people will be forced to struggle in endless poverty.
    *Refs: http://www.hulldailymail.co.uk/Hull-City-owner-Assem-Allam-criticises-Labour/story-23074774-detail/story.html and http://www.huffingtonpost.co.uk/2014/10/06/ed-miliband-labour-john-mills_n_5926844.html
    From Peter Dombi’s website: http://ourbrokensystem.com/

  • By Peter Dombi; cross-posted from Our Broken System


    Though there are undoubtedly many bitterly disappointed people at the outcome of last night’s referendum on Scottish Independence, I personally am nowhere near so negative, and in many ways think that how things have turned out may actually have been the best possible result for those wanting political and economic reform in this country.

    [caption id="" align="alignleft" width="422"]File:Saltire.jpg Scotland may not get independence, but things are still going to get a whole lot better. Picture © W. L. Tarbert[/caption]

    Firstly lets put the result in some perspective: when the referendum was originally being planned, Alex Salmond and the Scottish Nationalists (SNP) wanted 3 options on the ballot paper: In, Out, and Full Devolution. This was clearly because, at the time, they didn’t feel they’d ever get enough support for full Independence, and a very successful ‘middle-way’ result would have been Devolution. The Westminster parties, not wanting to give up any more power than they had to, didn’t allow the Devolution option on the ballot paper, as they thought they would easily win a straight In/Out vote. Of course things turned out differently, the Yes camp ran a very successful campaign, and in the final two weeks the No camp were panicked into offering Devolution anyway, in their efforts to sustain the Union. Therefore, despite what it may look like, the entire campaign has been a victory for the SNP, who ended up getting what they originally wanted.

    So the question remains: would full independence have been better for Scotland – I have to say I’m dubious. Despite the Yes campaign being lauded by all those wanting Political and Economic reform, the actual outcome may well have been somewhat different. For a start the SNP were intent on either using the Pound or the Euro as their currency, which means the Scottish economy would still have been at the mercy of the bankers in either Westminster or Brussels. One can absolutely guarantee that the outcome of that would have meant Scotland being forced to run a ‘Free Market’ economy – absolutely no different to what they have now. Secondly, those who think the SNP would have been more responsive to the needs of their people should bear in mind the SNP support TTIP, that absolutely evil piece of Free Market legislation coming our way, which makes corporations more powerful than governments.  And finally, in terms of political reform, the SNP are supporters of the Royal Family, which doesn’t really sound particularly reformist to me.

    Also, whatever happened in Scotland, once the pain of the break-up had been completed, I suspect the rest of the UK would have just gone back to ‘business-as-usual’, with the City of London controlling our economy via their political wing, the Tory Party, and the other parties weakened by the loss of their Scottish voters.

    So what do we have instead? The No Campaign’s rushed promises of Devolution have led us to nothing short of constitutional chaos, with not just massive changes in prospect for the way Scotland is run, but also talk of English Devolution (ie an English Parliament, to run alongside the Welsh and Scottish assemblies, and Stormont in Northern Ireland) and perhaps a Federal United Kingdom. People throughout the UK will undoubtedly get really engaged with this process, and in particular debates about what levels of power should reside where. Who knows where all this will lead, but by getting the electorate thinking in this way, there is the very real prospect of more power being passed back to local people, more accountable politicians, less corporate influence, and other profound changes to our rotten corrupt system. Independence for Scotland may have been better for Scotland (and that’s far from certain), but the results of last night’s vote will undoubtedly improve things for all of us.

    From Peter Dombi’s website: http://ourbrokensystem.com/

  • By Peter Dombi; cross-posted from Our Broken System


    The inevitable consequence of Free Market Capitalism is that society becomes ever-more unequal, as the wealth gap between those at the top and those at the bottom gets larger and larger. This happens directly (with salaries diverging, and wealthy people using their assets to generate yet more wealth for themselves), but it also happens indirectly, as  pressure from those at the top to pay less tax forces the government to balance the books by imposing Austerity – the result of which is ever-greater cuts to public services, and so an ever-faster decline in the standard of living of the more disadvantaged members of society.

    [caption id="" align="alignleft" width="277"]File:Met Police Blue Lamp.jpg Cutbacks to policing as a result of Austerity are starting to make our streets less safe. Picture © Canley[/caption]

    This last point took a particularly unpleasant turn today when the Police Inspectorate announced that much criminal activity was now going uninvestigated due to lack of resources, and in some cases the victims of crime were even being asked to do the investigations themselves (including interviewing neighbours, looking for fingerprints, locating CCTV footage or checking eBay for their stolen property.)  The result of this, it said, is that a lot of offences, including criminal damage, car theft and burglaries of property were effectively being decriminalised.*

    Sir Hugh Orde, President of the Police Officers Association made a direct link between this and Austerity, saying ‘The reality of austerity in policing means that forces must ensure that their officers’ time is put to best use and this means prioritising calls.’

    This is of course just the thin end of the wedge, and as Austerity continues to bite more and more of these essential services will be cut back, and our streets will become less and less safe. Anyone who has ever travelled to countries with very divided societies and under-funded police will know where this all ends up. In places like South Africa, and many parts of South America the huge crime levels mean that the wealthy start to barricade themselves in their homes, living behind razor wire, high walls or in secure compounds, and often with private security.  Meanwhile on the streets the less well-off have to make do as best they can, often living in constant fear of the dreadful crime levels. In this country we may be some way off from such awful times yet, but we are undoubtedly taking the first steps in that direction. And as long as those with the reins of power think that their personal wealth is all that matters,  the needs of society are irrelevent, and it’s simply down to every individual to look after themselves, then for sure that is the kind of society we will eventually find ourselves living in.

    * Ref:  http://www.huffingtonpost.co.uk/2014/09/04/police-not-investigating-crimes_n_5763632.html

    As a sad addendum to this piece, last week it was announced that lawyers are setting new records for personal wealth, with more of them than ever before now earning over £1m/year. Could our society be any more dysfunctional, with lawyers raking in so much money, whilst those who actually catch criminals are unable to do so due to lack of funds? http://www.thetimes.co.uk/tto/business/economics/article4192714.ece
    Cross-Posted From Peter Dombi’s website: http://ourbrokensystem.com/

  • By Peter Dombi


    The mainstream media have so far been paying scant attention to a strike in the NHS which has been going on for 7 weeks now, making it one of the longest NHS strikes ever*. However this strike is at the centre of the ideological battle around the policy of privatisating NHS functions, and the dreadful effect it is having on both NHS staff and patients.

    In a nutshell, last September Doncaster took the decision to privatise the facility that provides in-home care for people with severe learning difficulties. (This follows a nationwide trend which has seen the private-sector provision of in-home NHS care rise from 5% in 1993 to 89% today).  The contract went to Care UK (whose ex-chairman is now, surprise surprise, a government minister). Existing staff were transfered from the NHS to Care UK, and the first thing that happened was wages were slashed by up to 35%, while at the same time new staff were taken on at the miserly rate of £7/hour. Hourly rates for when staff work weekends, bank holidays and nights were also reduced.

    [caption id="" align="alignleft" width="421"]File:Loversall Hospital - entrance sign.jpg The systematic privatisation of the NHS is a goldmine for all the private companies winning the contracts. Picture © Gregory Deryckère[/caption]

    Staff are of course appalled at the way they’ve been treated, and it also remains to be seen how long it is before service standards start to drop or the price of the contract increases, as Care UK tries to squeeze as much profit for themselves as they can. What makes the whole thing even more galling though is that Care UK is not even a public company whose profits will at least go back to UK shareholders – they are owned by  Bridgepoint Capital, which is a private equity outfit which uses the tax havens of Luxembourg and the Channel Islands to avoid paying tax. In fact since being taken over by Bridgepoint in 2010, Care UK hasn’t paid any UK corporation tax at all, so the tax payer is getting fleeced every which way by this contract. (On being questioned, a spokesman for Bridgepoint came out with the usual garbage about ‘paying all UK tax that is due’ which roughly translates as – ‘our lawyers have found some loopholes in the law, which means we can quite legally get away without paying any tax, and because we’ve technically broken no rules,  there’s nothing you or anyone else can do about it, so shut up and p**s off’. You can also be quite sure that said loopholes could easily be closed by the government if they wanted to, but companies like Bridgepoint make donations to the main political parties to ensure those loopholes are never closed).

    The trend with privatisations is clear enough for all to see. Private companies drive out the existing service providers with contracts which, on the surface, appear to offer big savings. Initially the companies make their profits by cutting back on pay and conditions for existing staff, which is in itself bad enough, but once they’ve done all they can in that area, they then start to cut back on the quality of service they provide to the public, and finally, they go back to the government and say that due to increased costs and other ‘unforeseen circumstances’ they need more money. After a few years, initial savings have transformed into poorer service for increased cost – all so that company owners can make more profit, paid for by the general public.  (This situation is already clearly apparent in the privatised energy market, where after initial savings we are now in the situation where prices only ever go up, and the hardship this is causing to ordinary people is leading to increasing demands for a price freeze.)

    We desperately need to get away from this idea that privatisation is the answer to everything, as time has revealed that competition and increased efficiency always get overtaken by corporate greed, with the only winners being company bosses and the losers always being ordinary people.

    * http://www.theguardian.com/society/2014/aug/09/former-nhs-carers-intensify-strike-over-pay

    Cross-posted from Peter Dombi’s website: http://ourbrokensystem.com/

  • By Peter Dombi


    Yesterday it was announced that Lloyds Bank was being fined £218m for fiddling interest rates in order to manipulate the market for its own benefit*. The particularly shocking thing about this incident – the latest in a long line of corrupt practices by the banks – is that the offence happened after the crash of 2008, and involved abuse of the very fund the government had set-up to help the banks survive. (The government was providing emergency cash for when banks were in difficulties, and by fiddling interest rates Lloyds was able to reduce the fees it paid to use this cash). This effectively meant Lloyds was stealing money from the government.

    [caption id="" align="alignleft" width="320"]http://upload.wikimedia.org/wikipedia/commons/thumb/0/06/Lloyds_Bank_Newcastle_Haymarket.jpg/320px-Lloyds_Bank_Newcastle_Haymarket.jpg LLoyds – The latest bank to be fined for manipulating the market. Picture © TubularWorld[/caption]

    Mark Carney, the governor of the Bank of England called the offence ‘reprehensible’, and in reply Lord Blackwell, chairman of Lloyds, described it as ‘truly shocking conduct’ (though whether he was referring to the fact they fiddled interest rates, or just the fact they were careless enough to get caught doing it, is of course open to debate). All were agreed that it amounted to criminal conduct for which individuals ‘could’ face prosecution (don’t hold your breath).

    This scandal of course follows other scandals involving Barclays* (fiddling interest rates; fiddling the price of gold;  ‘dark pool’ manipulation); Royal Bank of Scotland* (fiddling interest rates); HSBC* (money laundering); and Standard Chartered* (sanctions violations). There is also an ongoing investigation into the fiddling of foreign exchange rates involving, not surprisingly, Barclays and the Royal Bank of Scotland*.

    After all the events of the last few years, it’s quite clear that Free Market Capitalism is a completely broken system, whose only purpose is to enrich the clever and the unscrupulous at everyone else’s expense. Banking is at the rotten heart of this corrupt system, and rather than providing a service to the rest of society, it has become an enormous leech whose only function is to accrue as much wealth for itself as it can. Greed and selfishness rule, leading to corrupt and frequently criminal activity, which the criminals then either cover up, or if they can’t do that they try to pass the buck in endless circles, so that no one individual is ever held accountable or responsible. It is now obvious to any decent person that if the private finance sector is to continue at all, it should only be under tight regulation, with severe penalties for those who step out of line. Unfortunately there are still people around who believe in ‘light touch’ regulation, and more importantly the banking sector does its damnedest – through lobbying and the financing of political parties – to fight any changes that might diminish its vast wealth and power (the Tory Party gets over half its funding from the City of London). Which is why we must fight the system as hard as we can from the outside, because it will never reform itself from within.

    * Refs: Lloyds: http://www.bbc.co.uk/news/business-28528349 Barclays: http://www.bbc.co.uk/news/business-27536127 http://www.bbc.co.uk/news/business-18671255 http://www.theguardian.com/business/2014/jun/26/barclays-shares-tumble-dark-pool-attorney-general Royal Bank of Scotland: http://www.bbc.co.uk/news/business-21348719 HSBC: http://www.bbc.co.uk/news/business-20673466 Standard Chartered: http://www.bbc.co.uk/news/business-20669650 Foreign Exchange: http://www.bbc.co.uk/news/business-26526905

    Cross-posted from Peter Dombi’s website: http://ourbrokensystem.com/

  • Cross-posted from Peter Dombi’s website Our Broken System


    We like to think that we live in a democratic society, where the laws and conditions that we live under are set by the government, which is in turn elected by us. The reality of course is that we live under a corrupted system, which is fixed to return the same two (incredibly similar) parties, and whose policies are controlled more by their financial backers and corporate lobbyists than they are by any desire to serve the people. However, in this era of globalisation, there is now emerging an even greater threat to the democratic process – the rise of the multinational corporation.

    In this globalised world so much trade is carried out between countries that national legislation is often insufficient to control what’s going on. However there are also great difficulties in achieving any level of international co-operation, and the international bodies that do exist (the UN, the EU, G8, G20 etc) are often incompetent, dysfunctional, corrupt, undemocratic and inspire little confidence among the people. Consequently there  is a huge democratic gap which multinational companies are currently exploiting for all they’re worth.

    [caption id="" align="alignleft" width="363"]File:Dhaka Savar Building Collapse.jpg Bangladesh factory collapse – multinationals will operate wherever is cheapest, regardless of human rights. Picture © Rijans[/caption]
    One way they do is through the use of Regulatory Arbitrage. This is when multinational companies play countries off against each other in order to get the most preferential deals. For example in the area of tax, companies will often offer to set up in whichever country has the lowest rates. Countries will then ‘compete’ to see who will charge the least tax – the so-called ‘race to the bottom’, where the only losers are ordinary people, who have to suffer austerity to make up for the lost tax-revenue. Governments will often say they want to increase tax rates, but claim their hand is being forced by multinationals threatening to move elsewhere if they don’t get the deal they like – a form of corporate blackmail. A similar situation occurs in the area of employee protection and health-and-safety legislation, which is why many corporates like to set-up factories in third world countries where  such legislation is weakest, as it’s cheaper for them. (The welfare of the workers is of course to them irrelevant – profit before people is all that they care about.) Again this puts intense pressure on governments to then cave in and weaken the legislation in order to ‘attract business’. Other areas where corporates will head for whichever jurisdiction benefits them the most include animal welfare, use of dangerous chemicals, anti-pollution legislation, and environmental destruction. Again in all these areas governments are pressured into minimising their legislation in order to attract investment, to the benefit of the multinationals and to the detriment of ordinary people and the world around us.
    However now we are being faced with an even greater threat – the proposed Transatlantic Trade and Investment Partnership (TTIP). This is a free-trade agreement currently being negotiated between the US and the EU, and its implications are truly chilling. While its supporters claim that more free-trade lowers costs and so makes us all wealthier,  the fact that the negotiations are being carried out in secret should set the alarm bells ringing. And not surprisingly – one of its clauses threatens to give multinational corporations vast power over sovereign governments.

    [caption id="" align="alignleft" width="408"] In the interests of the environment Germany stopped nuclear power, and is now being sued. Picture © Avda[/caption]
    The intention is to set up ‘investor-state dispute settlement’, which  would allow businesses to bypass normal courts, and sue governments directly over anything which caused them financial loss. The possibilities here are terrifying. The government wants to stop the use of genetically modified food? Biochemical companies could sue them for potential ‘lost trade’. We decide we don’t want to take the environmental risk of fracking? Fracking companies could sue us for lost business. The government proposes changes to the NHS? Health companies could sue if they think that will cost them money. The government wants to encourage people to cut down on smoking? Tobacco companies could sue for lost revenue. The welfare of ordinary people will come second to the profits of multinationals, and all these disputes will be settled behind closed doors, with only lawyers and corporate cronies having a say in the outcome.
    And if you think this is all scaremongering and conjecture, then just consider that between countries where similar bilateral agreements already exist, such extraordinary cases are already being brought: both Australia and Uruguay are currently being sued by Phillip Morris over anti-tobacco legislation* ; Egypt is being sued by Veolia for increasing the minimum wage*;  Costa Rica is being sued by Infinito Gold for its decision to limit mining activity to protect the environment*; Canada is being sued by Lone Pine Oil over its ban on fracking*; and Germany is being sued by Vattenfall for deciding to abandon nuclear power*.
    What all these cases demonstrate is that if the TTIP, and other agreements like it, go through, we can wave goodbye to any notion that we live in a democracy or the people have any control over their own laws. Multinational corporations will have total power, and corporate executives, lawyers, and no end of faceless men in grey suits will control how we live, what we can and can’t do, and they will use this power to extract ever-more of society’s wealth for themselves at all our cost.
    * Refs: Australia: http://www.ag.gov.au/tobaccoplainpackaging Uruguay: http://www.globalpost.com/dispatch/news/regions/americas/140714/uruguay-v-philip-morris-tobacco-smoking Egypt: http://aftinet.org.au/cms/veolia-vs-egypt-workers-2014 Costa Rica: http://www.ticotimes.net/2014/02/10/infinito-gold-files-lawsuit-against-costa-rica-over-canceled-gold-mining-contract Canada: http://www.canadians.org/media/lone-pine-resources-files-outrageous-nafta-lawsuit-against-fracking-ban Germany: http://www.dw.de/vattenfall-seeks-recompense-for-german-nuclear-phaseout/a-16473507
    See more at: http://ourbrokensystem.com/

  • Cross-posted from Peter Dombi’s website Our Broken System


    This year there has been a flurry of excitement with the release of the book Capital in the Twenty-First Century, written by the French economist Thomas Piketty . In it Piketty explains how the inevitable result of Free Market Capitalism is ever-greater levels of inequality in society – and after a couple of centuries the only reason levels of inequality are not higher now than one might expect, is because two world wars effectively hit the ‘reset’ button on our economic system. However, nearly 70 years after the end of World War II, levels of inequality are now approaching the levels they were prior to the outbreak of World War I.

    Piketty provides plenty of statistical evidence to support his claim – however we only need to look around us to see everything he predicts happening before our very eyes.  So what have we got? The government is currently claiming that the economy is on the up (annual GDP growth of 3.1%), the job market is vibrant (unemployment down to just under 2.2m),  the number of people in poverty is falling, and the booming property market is adding to the (theoretical) wealth of millions of homeowners. Everything is therefore great – except of course it’s not.

    Deepening inequality is not incompatible with a booming economy, it just means the wealth is being ever-more concentrated in the hands of the privileged. The economy growing? Well if the wealthy get wealthier faster than the poor get poorer then of course overall wealth is going up. Job market vibrant? Well 2.2m still don’t have a job, and with 1.4 million people now on zero-hours contracts one has to seriously question the validity of those statistics anyway. Number of people in poverty falling? Well the poverty rate is still near 20% (over 12 million people) and new Food Banks are still opening every week to feed  a need which is growing not diminishing. Booming property market? Yes, great if you’re a home-owner, awful if you’re a renter who is seeing increased property prices once again feeding through into higher rents.

    [caption id="" align="alignleft" width="410"]File:Martin Sorrell DLD 08.jpg Martin Sorrell – one wonders how he can justify paying himself a salary of £30m/year. Picture © Eirik Solheim[/caption]

    We’re a country of two halves, and nowhere is this more apparent than in some of the news items this week. Firstly Freshfields, the law firm, has announced that  last year its partners earned an average salary of an extraordinary £1.5 million each. Even more extraordinary, WPP, the advertising agency, has just announced that its boss, Martin Sorrell, has been given a pay-rise – and he now takes home (I can’t bring myself to say ‘earns’) £30 MILLION per year! And then last week the yacht manufacturing industry gleefully announced that at the luxury end of the market business is once again booming, with a record number of super-yachts on order (presumably as all those ridiculously rich people like Martin Sorrell and the Freshfields lawyers have to decide what to do with all their money.)

    However at the same time as all this is going on, the government has confirmed that there will be no above-inflation pay-rises for public sector workers for the next four years, citing the perilous state of government finances. Coming after several years of pay-freezes, this means that many key workers (eg firefighters, teachers, care-workers etc) have seen a sustained fall in leaving standards since the recession, and are now, on average, £2,245/yr worse off than when the coalition came to power. As a result of this the TUC has called a one-day strike* – and the response of the coalition, rather than address the issues being raised, has been to condemn the strike and confirm further planned tightening of anti-union legislation.

    Anyone with any sort of moral compass whatsoever has to seriously question a system that allows some people to earn many millions of pounds per year, while vast swathes of the population are in poverty and visiting foodbanks. You also have to question what sort of a society it is that justifies inflicting austerity on nurses and teachers, while heaping ever-greater rewards on bankers, lawyers and advertising executives. However as long as we have a system of government where lobbying and party funding mean the levers of power are controlled by those with money, I guess little will change.


    See more at: http://ourbrokensystem.com/

  • Cross-posted from Peter Dombi’s website Our Broken System


    It’s with some hesitation that I write anything on this subject – partly because it’s not really what this website is about, and partly because so much has been written on it already I don’t want to waste time going over well-trodden ground. However there are a few aspects of Iraq’s recent past which are rarely discussed, and I think it worth people considering them when forming an opinion.

    It’s pretty obvious that Iraq is in a right mess just now, and it’s also pretty obvious that not much good came out of the Western military intervention in 2003. What is less clear, in the light of the Arab Spring and recent events in places like Syria, is how much better or worse things would have been if the West had never intervened. Personally I think that question is unanswerable. However it is fairly obvious there would have been a pretty severe uprising, though just how brutal the ensuing conflict would have been is impossible to know. If Syria is anything to go by it would have been pretty bad.

    The Middle East is riven by a massive sectarian divide between the Sunni’s and the Shia’s, a divide that runs from Iran, through Iraq, Syria and the Lebanon, down through Kuwait and Bahrain. This is the source of much ethnic tension, particularly in places like Syria (where a Shia minority rules a Sunni majority) and Iraq (where, under Saddam Hussein, a Sunni minority ruled a Shia majority). Of course ethnic tension doesn’t have to lead to conflict, but the recent history of that part of the world has been a powder-keg of problems.

    [caption id="" align="alignleft" width="326"]File:Iraq map.png Iraq’s borders were negotiated and decided upon by Britain and France after the First World War.[/caption]

    The entire region was part of the Ottoman (Turkish) Empire until the First World War. In the First World War Turkey sided with Germany, and after being defeated, the area came under control of the League of Nations. In 1920 the country of Iraq was created, with France and Britain setting-up rather arbitrary borders which took little account of what the people in that region actually wanted. Full independence came in 1932, and the country was a monarchy until 1958, when there was a military coup, after which it was ruled by a series of dictators. Unfortunately this coincided with the cold war between Russia and the West, which meant that, all over the world, lots of nasty regimes were propped up as allies in a vast geopolitical game. Thus the repressive regime in Syria was supported by Russia, while in Iraq, Saddam Hussein skilfully played off the various factions so that he was at different times supported by both the Soviets and the West, both of whom were happy to turn a blind eye to his appalling human rights record. The net result of this was that the ordinary people of these countries never had the chance to express their will or guide their countries in the way they would have liked, ethnic tensions simmered, and brutality and violence became the norm. Under such circumstances extremism thrives, as ordinary people become ever-more desperate for change, and are ever-more likely to resort to violence as a means to achieve it. History also shows that whenever repressive regimes fall, things invariably get very much worse before they get better (think for example the French Revolution, the Russian Revolution and, more recently, the dreadful genocidal war after the fall of Tito in Yugoslavia).

    Against that backdrop it was pretty inevitable that when the repressive Iraqi military regime fell, all the simmering tensions between the Shia’s and the Sunni’s would burst forth, and bloodshed would be inevitable. Of course the Western Intervention in 2003 brought that moment forward – and any glimmer of hope that transition to a new system of government could be done relatively peacefully, was dashed by the absolutely unforgivable incompetence of Blair and Bush in having no post-invasion plan whatsoever. (They seemed to think that dismantling every organisational structure of Saddam’s regime and simply uttering the word ‘democracy’ would lead to a positive outcome – for that criminally negligent act alone they should stand trial.)

    [caption id="" align="alignleft" width="428"]File:بانو و کودک شهید حلبچه‌ای.jpg Some of the 5,000 Iraqi Kurds gassed by Saddam Hussein during his attack on Halabja in 1988. Picture © نامعلوم[/caption]

    So, in my view, the problems we are witnessing now are not really the result of the 2003 invasion (though it may have made things worse) but the result of decades of Western support for a brutal regime simply because it was seen as a regional ally against Soviet Russia and, later, Iran. (During his 24 years in charge it is estimated that Saddam Hussein murdered some 250,000 of his own people in order to stay in power – and one can only wonder at the psychological effect on the population of having to live so long with such violence, fear and brutality.) If during all those years the people could have expressed themselves properly, things wouldn’t have got so severe that extremist violent views could now become acceptable to such large parts of the population. (It’s also worth noting that even now the same policy is being pursued with Saudi Arabia, where a brutal repressive regime is supported, because the West regards it as a regional ally.)

    So, the people of Iraq are now suffering a catastrophe for which we are, at least partly, responsible.  What can we do about it? The answer now, sadly, is probably very little. The situation is too complex for us to be able to see our way to a solution, and it is highly unlikely that any Western intervention would achieve anything anyway other than to put more lives at risk. It will be painful to watch, but the people in that region have to find their own answers, something which for far too long we’ve stopped them from doing.

    See more at: http://ourbrokensystem.com/

  • ThumbnailCross-posted from Peter Dombi’s website Our Broken System


    Yesterday members of DPAC (Disabled People Against Cuts), Occupy, and UK Uncut staged a protest in the grounds of Westminster Abbey. This was to […]

  • Cross-posted from Peter Dombi’s website Our Broken System


    This week the issue of corporate Tax Avoidance was in the news – again. Firstly it was reported that Thames Water, despite making profits of £259m, will not being paying any tax this year*. (With corporation tax at 20% that’s a loss to the taxpayer of £52m – even more galling when you consider that Thames is intending to pay £100m in dividends to its various shareholders.) Thames has managed to do this by making judicious use of ‘capital allowances’.

    Next up, there were protests outside high-street favourite Boots, following on from a campaign to get the government to investigate the company’s tax affairs. Since being taken private in 2007 it is estimated that the company has avoided about £1.3bn in tax* (enough to cover 3 years of NHS prescription fees) by channeling its profits through Tax Havens and using Limited Liability Partnerships .

    [caption id="" align="alignleft" width="319"]File:UK Uncut protest outside Vodafone, Church Street, Liverpool.jpeg Vodafone: The frequent target of anti-tax-avoidance protestors. Picture © Jonathandeamer[/caption]

    And finally Vodafone were in the frame again, and the subject of a series of protests by UK Uncut about their perpetual tax avoidance tactics. Despite being headquartered in the UK, they  run large amounts of their profits through the tax haven of Luxembourg, the result of which is that, even though the UK is highly profitable for them, they haven’t paid any corporation tax here since 2011. They are also still bearing bad blood after a dodgy tax deal with the Inland Revenue in 2001 let them off £6bn in tax.

    These are of course only the latest in a long series of scandals involving companies such as Starbucks, Google, Amazon, Facebook,  Apple etc – all companies which have extensive operations in this country but claim, incredibly, to make almost no profit here. There are many legal loopholes they can use to avoid tax, the most common of which is Transfer Pricing. However the crucial point is this – although it is very easy to point the finger of blame at these outfits, ultimate responsibility for all this deception lies with the government. Legislation can easily be made to deal with tax loopholes, but the government simply refuses to do it  – in fact, worse, they help facilitate it (for example George Osborne’s recent changes to the Controlled Foreign Companies act has made tax avoidance by UK-based multinationals much easier.) The excuse they give is that the UK must be ‘competitive’ on tax law in order to attract businesses. Competitive on tax of course means competing with other countries to see who can charge the least tax and, by necessity, who can make the largest cutbacks to public services; and as all countries are doing this it becomes nothing other than a  perpetual spiral of decline – the so-called ‘race to the bottom’ – the main tool of which is Austerity. (It’s also worth remembering that with tax avoidance costing the economy £95bn/year, clamping down on that would remove the requirement for austerity completely). In addition, and ironically for those who support the idea of free markets, such practices by  multinationals give them a huge advantage over smaller UK companies who can’t avoid tax, the result of which is that many small UK businesses could be driven into bankruptcy.

    It is obviously unacceptable that large, unaccountable corporations should be able to hold governments to ransom in this way, but they can only do it because governments allow them to, under the guise of being ‘pro-business’. (Helped along with a fair bit of funding for their political parties  and some strong behind-the-scenes lobbying as well.) In this way our whole democratic system has been corrupted by the power of money, and true power now lies with those who control the politicians, not we who elect them. And until people wake up and stop voting for the same old parties, this situation will continue indefinitely, with ever increasing wealth for those at the top, and ever-declining living-standards for those at the bottom.

    * Thames Water: http://www.standard.co.uk/business/business-news/more-taxfree-profits-for-thames-water-as-it-rakes-in-the-cash-9527543.html Boots: http://www.bloomberg.com/news/2014-05-29/u-k-government-urged-to-probe-alliance-boots-over-tax-affairs.html Vodafone: http://www.ukuncut.org.uk/blog/press-release-uk-uncut-set-to-tackle-vodafone-stores-over-tax-avoidance-

    See more at: http://ourbrokensystem.com/

  • Cross-posted from Peter Dombi’s website Our Broken System


    This week it was revealed just how lucrative privatisation contracts have become for the private firms which get them, and by the same measure just how much the general public has been ripped-off by them. This time it  relates to the PFI (Private Finance Initiative) method of privatisation, whereby companies in the private sector are paid to build and run large public infrastructure projects (eg schools, hospitals etc). It turns out that the government, in its eagerness to get these projects away, has frequently under-priced them, and then to compound the problem, rising property prices have delivered further massive windfalls to the developers – windfalls which would have gone to the public if the projects had remained government-owned.

    [caption id="" align="alignleft" width="367"]File:NHS NNUH entrance.jpg Privatisation means that while the NHS struggles financially, the private companies behind it are making vast profits. Picture © Francis Tyers[/caption]

    The contracts have proved so lucrative that many of the companies have been selling them on without even bothering to complete them, instead just pocketing an instant profit. The numbers involved are huge, running into £100’s of millions* (one company alone, Balfour Beatty, has made profits of £189m on government contracts in just a few years). When the PFI contracts were being set up, one of the arguments in favour of them was that any excessive profits would find their way back to the taxpayer, through increased  tax revenue, but that too is failing as many of the companies now running these projects are based in tax havens, and so as well as making vast profits at public expense, they don’t actually pay any tax at all.

    The irony of this of course is that while an essential public service like the NHS is itself under the financial cosh, and struggling to find the money to provide crucial services, the private companies behind it are now awash with public cash.

    And now a further problem has been identified. These PFI contracts are being sold on and ‘traded’ on the financial markets, so that essential services in the UK are ‘owned’ by financial entities in far-flung parts of the globe. This is a very peculiar situation, and worryingly similar to what happened with the sub-prime mortgage crisis which led to the financial crash of 2008. One academic has already flagged it up as a potential threat to the entire financial system.*

    So yet again we see the general public being ripped-off by the corporate sector through the process of privatisation, and yet again we see the financiers playing their games to produce profit for themselves, with little thought for the long-term consequences for everyone else. How much longer must we be forced to go through this before governments stop making policies which benefit their corporate buddies, and instead act in the interests of the ordinary people they’re supposed to serve?

    * Excessive profits:  http://www.independent.co.uk/news/uk/politics/exclusive-how-private-firms-make-quick-killing-from-pfi-9488351.html Financial Risk:  http://www.independent.co.uk/news/business/news/rush-to-buy-big-pfi-contracts-risks-repeat-of-subprime-crisis-9497024.html

    See more at: http://ourbrokensystem.com/

  • Cross-posted from Peter Dombi’s website Our Broken System


    Those of us opposed to the mantra of ‘The Market’ which is forever espoused by devotees of Free Market Capitalism, were pleasantly surprised when the Governor of the Bank of England, Mark Carney, spoke out last week against ‘Free Market Fundamentalism’. He was talking at a conference entitled ‘Inclusive Capitalism’ where he stated that if bankers didn’t give up the “heads-I-win-tails-you-lose” way of doing business, then their industry would collapse*. That someone in such a high position in the City of London should utter such words was really quite extraordinary, and a sign that some at least at the heart of our Free Market system are starting to wake up to its flaws.

    [caption id="" align="alignleft" width="262"]File:Mark Carney World Economic Forum 2013 (2).jpg Mark Carney: The Bank of England governor finally recognises fundamental problems in our Economic System. Picture © World Economic Forum[/caption]

    Many of us are campaigning to build a system and society that provides social and economic justice for all, as well as caring for the planet we live on. The far left Socialist view of tightly planned, highly regulated, state run economies has largely been discredited after the collective failure of Soviet Russia and the old Eastern Bloc. However, in proving that Capitalism was the superior system, we’ve now swung completely the other way, in favour of private ownership of everything with minimal regulation. This directly led to the financial crisis of 2008, and ever greater levels of inequality, with the already-wealthy able to play the system to increase their riches, while the poor are forced to endure falling living standards under Austerity. In addition the endless pursuit of profit means environmental concerns are constantly left by the wayside, threatening the very eco-system we need to survive.

    Unfortunately fundamentalist thinking, in whatever area, is very difficult to shake off once entrenched, and that’s what we’re seeing with those people who have so strongly wedded themselves to the ideals of Free Market Capitalism. Even with all the evidence of how broken a system it is, many still cling to its ideology with an almost religious fervour.

    Capitalism is indeed a powerful, efficient  and effective economic system, but in its pure ‘free market’ form it is utterly devoid of ethics, has no concept of social responsibility, places no value on the environment, and it encourages people to pursue short-term monetary reward over long-term social benefit. Therefore if Capitalism is to continue as our economic system of choice, it must be tightly regulated, with safeguards put in place to ensure it operates for the good of all, not just the few. Many of us have known this for quite some time, and perhaps, at last, some of those in power are starting to get it too.


    See more at: http://ourbrokensystem.com/

  • Cross-posted from Peter Dombi’s website Our Broken System


    The ongoing takeover battle for British Pharmaceutical giant AstraZeneca shows the inherent contradictions in Free-Market Capitalist thinking, and in particular the conflict between what is good for the people, and what is good for the massive corporations that bestride our planet.

    Free Market theory is unequivocal – you let businesses do what they want, and competition will ensure they generate vast wealth which will benefit us all. Except of course it doesn’t work that way, which is why the government is in such a quandary over whether to let the takeover by Pfizer go ahead.

    It is obvious to everyone that the only thing that matters to Pfizer is making money for themselves, and that they will stop at nothing to achieve that. If it benefits them financially then you can guarantee that jobs will be lost, research operations will be closed down or moved abroad, communities will be destroyed, and a major part of the British Pharmaceutical industry decimated. The British government also knows full-well that any guarantee it gets from Pfizer in advance of the takeover won’t be worth the paper it’s written on*. Just as with the takeover of Cadburys by Kraft a few years ago, once the deal is complete they will go ahead and do whatever they want. (And in any case what is the use of a ‘five year’ guarantee – what Pfizer are currently offering – compared to the decades it has taken to build AstraZeneca into the company it is today).

    [caption id="attachment_42508" align="alignnone" width="245"]DCF 1.0 If the takeover goes ahead none of AstraZeneca’s operations will be safe. Picture © Erik031[/caption]

    In addition, Pfizer’s promise to move its headquarters to the UK for tax purposes (as the UK currently has lower corporation tax than the US) will of course only last until another country undercuts our rate of tax, at which point they will be off. (This is the so-called ‘race to the bottom’, where countries compete to offer the lowest tax rate to businesses: with the only winners being the corporations who play countries off against each other, and the losers being ordinary people who see their public services relentlessly cut as a result of the lost tax-revenue).

    So the politicians stutter and prevaricate, unable to admit that the economic philosophy they sell to us is fundamentally flawed, while business leaders rub their hands in glee at the prospect of yet more wealth being transferred into their greedy hands from the impoverished masses . Until we have a political system that truly speaks for the interests of ordinary people, and an economic system that shares wealth equitably, takeovers like this will continue, and the increasing division of our society between the haves and the have-nots will only get worse.

    * http://www.bbc.co.uk/news/business-27403777

    – See more at: http://ourbrokensystem.com/

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