Saturday 8 December 2012

John Redwood 's economic piracy plan

Given their track record in government since 2010, it would be possible to write a volume of books on what the Tory party don't know about economics. I don't have time for that, so this blog post will have to do.

Judging by recent opinion polls, it is clear to the majority of people in the UK that austerity isn't working and that George Osborne is hopelessly out of his depth. However people can't really articulate why, other than by making simple observations about the lack of economic growth, or Osborne's abject failure to meet any of his economic targets. One of the main reasons George Osborne and the Tory party have been able to get away with repeated, brazen examples of economic illiteracy (claiming that the debt and the deficit are the same thing, conflating fiscal policies with monetary outcomes, debt fearmongering...) is that the public really struggle to engage with economics. This is not because economics is a particularly complex subject, but because the "national curriculum" education system doesn't provide the majority of people with basic economic literacy. 

This lack of economic literacy is great for organisations like the major Tory party donors, that have built their lucrative business model on hawking 4,212% APR loans to the economically illiterate. This lack of public economic literacy has been great for successive governments too (Tory, Neo-Labour, Coalition), who have all demonstrated abject economic illiteracy, but managed to get away with it because the public are unable to grasp the scale of their economic mistakes, and because the corporate mainstream press have been unwilling to properly explain it. One could assume that this reluctance to explain is because simplistic tittle-tattle and shallow political rhetoric sell more papers than concerted efforts to explain seemingly complex economic theories to the general public. However there are also the possibilities that the corporate mainstream press are unwilling to explain economic mistakes because they are unwilling to rock the establishment boat or because the majority of journalists are as economically illiterate as the public, and couldn't explain economic ideas in an accessible manner, even if they wanted to.

Take the mainstream media silence over Gordon Brown's PFI economic alchemy schemes. The press gave Neo-Labour a free ride on PFI, with the magazine Private Eye practically the only source of reason on the subject for the best part of a decade. In 2011 the Treasury Select Committee finally got around to admitting the obvious, that PFI is as an "extremely inefficient method of financing [public infrastructure] projects". Even then, the mainstream press failed to run with the scandal, or to question why the Tories insist on maintaining Gordon Brown's accounting trick of hiding PFI debt legacies off the national debt calculations.

There is plenty of evidence that high profile members of Neo-Labour were economically clueless, and that the media just gave them a free ride. However, there is even more evidence that the current Tory led coalition are either startlingly economically illiterate, or that they have such faith that the public are too economically illiterate to understand anything and that the corporate press are unwilling to explain it properly, that they think that they can get away with repeating any old economically absurd cobblers in the hope of creating a convincing narrative to justify their actions.

I've already written articles that demonstrate that the Tories spout economically illiterate gibberish, that they brazenly lie about the economy, that they invent narratives rather than present economic evidence, that they conflate their fiscal policies and the monetary outcomes of the Bank of England's bond market distortion scheme, and now the backbench Tory MP and former candidate for the Tory leadership, John Redwood has provided me yet another opportunity to nail the Tories for their economic illiteracy.

Redwood was speaking on the BBC Radio 4 Today programme on the 8th of December 2012, attempting to defend the immoral tax dodging behaviour of companies like Starbucks, the extremely lax UK tax code that allows such huge scale tax-dodging (98 of the 100 FTSE 100 companies have established tax haven based subsidiaries) and the fact that the HMRC now seem to be operating a "pay what you like" tax regime, where tax-dodging corporations can make a voluntary "token tax" contribution in order to deflect public criticism of their tax dodging activities.

It is hardly surprising that a high profile Tory would defend corporate tax-dodgers and the refusal of any of the establishment political parties to deal with the £30 billion+ annual corporate tax avoidance scandal by closing the loopholes with the kind of legislation I (and many others) have proposed. Neither is it surprising that Redwood used this tax-dodging scandal to promote the familiar Tory agenda of slashing corporation tax and tax rates for the wealthy elite.

The essence of Redwood's message was that "best" way of getting more revenues is by cutting tax, thus encouraging the transfer pricing tax-dodgers to extract their multinational profits in the UK, rather than in Ireland or other corporation tax jurisdictions, as is the case now.

Here are some specific quotes fro the interview:

"The lower the tax rates (which is the way the current government is going) the more income I think will be booked into out country as a result, because there is a competition between the main jurisdictions of the world to be able to tax profits, and obviously countries with the lower rates tend to win because there is quite a lot of scope to switch income around for tax purposes."
He reiterated this stance several times, here are another two examples:
"I'm very happy for our country to try and get more of the tax revenue into the United Kingdom by cutting the [Corporation Tax] rate"
"The single thing a country can do to win is to have lower rates"
These statements are outright admission that Redwood favours the "race to the bottom" strategy of enticing multinational tax dodgers with super-low corporation tax rates. However they've got a lot more slashing to do if they are going to compete with the extremely low rates in Ireland, Switzerland, Canada and Hungary, or to undercut the corporation tax rate of 0% in the Bahamas.

Redwood then tried to defend multinational transfer pricing arrangements that allow companies to extract hundreds of millions of pounds from the UK economy by creating the legal fiction that all their £billions of international profits were generated by a subsidiary in Ireland with just a few dozen workers, or by a tax haven based shell company based in a building that hosts dozens (or even hundreds) of other tax-dodging shell companies. here's what he said:
"They don't avoid profit tax completely, because the profit has to come out somewhere."
Redwood's intention is that the UK slash corporation tax rates to such low levels that the global tax-dodging corporatocracy decide to extract their profits in the UK. He wants the UK to behave as the economic pirates of the global economy, soaking up the tax revenues on profits that were generated elsewhere in the world. That senior Tories openly enthuse about winning the "race to the bottom" in order to hoover up dodged tax revenues from elsewhere in the world is bad enough, but there are some gaping economic flaws in this ideology too.

The first objection relates to the Laffer Curve; the theory that there is an optimum amount of tax to be levied to maximise tax returns. The idea that tax cuts always increase tax revenues is theoretically flawed. This is easy to see. If corporation tax was set at 0%, tax avoidance could be eliminated, but at the cost of eliminating all corporation tax revenues too. The same goes for setting tax rates at 100%, nobody would even bother to go to work if the government enforced a 100% tax rate. The optimum point obviously lies somewhere between. What is certain is that the more the tax rate is slashed, the more likely it is that the revenues are going to "fall off" on the left side of the Laffer Curve.

The next objection is the sheer scale of tax cuts that would be needed to lure companies into engineering their profits to appear in the UK. Given that several other European economies are running 10% Corporation Tax rates, the UK would need to halve their corporation tax rate in order to compete in the transfer pricing piracy game. I'm not sure that the public would approve of the slashing of corporation tax at this time of "austerity" for everyone else.

The last, and most important objection is the fact that Osborne's decision to slash Corporation Tax rates from 28% to 24% since 2010 has actually led to a huge fall in tax revenues, even though corporate profits are soaring. In July 2012 it was announced that Corporation Tax receipts have fallen by nearly 20%. What is Osborne's answer to this fall in revenues? Cut the rate even further to 21%, ensuring that even more revenues are eliminated. It is quite clear from the economic evidence that Osborne's corporation tax cuts are pushing the tax rate further down the left slope of the Laffer curve, and that the benefits of winning the "race to the bottom" wont be felt until corporation tax rates fall well below 15%. Even then it is debatable whether the transfer pricing revenues from the global corporate tax-dodger brigade would ever exceed the more than halving of tax revenues from within the UK economy.

Not only is there strong economic evidence (from the IMF and the OBR) that Osborne's ideological austerity experiment harming the UK economy by destroying strong fiscal multipliers, his corporation tax cuts have further reducing government revenues and forced him to miss his hugely over-optimistic borrowing targets. It has been estimated that in 2013 Osborne will have to borrow at least double the £60 billion that his department projected in 2010. In any other walk of life, such a spectacular miscalculation would surely be punished, but Osborne is left free to continue the same policies of tax cuts for corporations and the wealthy establishment elite and austerity for everyone else. Exactly the policies that have forced him to row back on his deficit reduction plan.

It is quite clear that Osborne and the Tories are intent on cashing in on the transfer pricing windfall by winning the "race to the bottom", rather than expending any real effort on ensuring that profits generated in the UK are not "magicked away" through complex tax-dodging scams. Not only is this stance immoral, it is also extremely dubious that their stated goal of turning the UK into a tax-haven for tax-dodging corporations to extract their profits would ever generate as much revenue as simply ensuring that profits made in the UK are taxed in the UK.

See Also

Friday 7 December 2012

Starbucks & the HMRC voluntary tax regime

After a couple of months of extremely bad press about their corporation tax avoiding activities, Starbucks finally caved into massive public pressure and declared that they intend to pay £20 million in UK corporation tax over the next two years.

There are positives and negatives to take from this story. I'll start by noting that this voluntary tax contribution would never have been achieved without massive public pressure. Had UK Uncut not targeted Starbucks and had bloggers and social media activists not spread the word about Starbucks elaborate tax dodging scams, the company would never have offered to cough up a token tax contribution. This is absolutely clear evidence that public activism works. If Starbucks weren't looking at severe damage to their "brand identity" and massive revenue reductions due to the Boycott Starbucks campaign, they would certainly never have voluntarily offered to reduce the scale of their tax-dodging operations.

This brings us to the negative aspects. The offer to pay a predetermined "token tax" contribution is quite obviously nothing but a desperate attempt to stop the savaging of the Starbucks brand. Starbucks bean-counters have realised that if the Boycott Starbucks campaign continues, they'll loose £millions in revenues. Their solution is to slash labour conditions and paid benefits such as sick pay, maternity pay and paid lunch breaks to make some savings and then offer those savings up as their voluntary "token tax" contribution. Staff have been told to sign revised employment contracts or face dismissal. Starbucks have claimed that the new contracts being forced on their staff have nothing to do with their tax arrangements, however the fact that staff are being made to sign new contracts in the week that Starbucks have announced their "token tax" contribution looks extremely suspicious.

The next negative aspect of Starbucks' voluntary tax contribution is that the rules that allow such huge tax avoidance arrangements that provoked the Boycott Starbucks campaign remain completely unchanged. The Tory led government keep insisting that no new anti-avoidance legislation is necessary and that their "race to the bottom" cuts in corporation tax rates are the "best" way of reducing tax avoidance. HMRC are no better, they seem absolutely intent on maintaining their cosy relationships with major corporate tax avoiders.

The Boycott Starbucks campaign has been relatively successful, in that the company have decided to make a "token tax" contribution in order to mitigate the damage, however, the rules that allow multinational corporate tax-dodging remain in place. Without government intervention and an end to HMRC's "kid gloves" approach to major tax-dodging corporations, the scale of tax-dodging won't be reduced, especially given that 98 of the 100 FTSE 100 companies maintain offshore subsidiaries for tax dodging purposes.

The reason the Boycott Starbucks campaign has achieved a relative level of success in relation to other major tax-dodgers is that it is much easier to boycott a visible high-street chain, than it is to boycott a major online presence like Google or government service providers like Mapeley (the Bermuda based tax-dodgers that have a lucrative contract to run the HMRC property portfolio!).

The UK shouldn't be reliant upon public pressure driving large corporations to make voluntary tax donations as a response. The nation needs government intervention and a major simplification of the tax code. Here are my two suggestions:
1. A Ban on taxpayer funding of tax avoiding companies. There is absolutely no justification for allowing taxpayer generated funds to be provided to tax-dodging companies (in the form of subsidies, outsourcing contracts, R&D loans, procurement contracts, health contracts, IT contracts, training schemes, PFI deals...)*. If an enterprise won't demonstrate that they are a British based company (or registered subsidiary) that pay their fair share of taxes, they mustn't get a penny from the government. They should also have to demonstrate that all employees are paid in a tax transparent way, with no personal service companies, offshore dividends and the like.

2. A blanket ban on all tax avoidance schemes. After the government spending regulations have been brought into effect, a simple change to the tax code should be made to legislate that if a scheme is designed for the explicit purpose of avoiding tax, then it is by definition a criminal activity.
* More details on why tax-dodging is harmful to the UK economy can be found on the Economic Case Against Tax-Dodging article.
The obvious problem with these proposals is that the Tory party receives donations from a number of tax-dodgers, and are led by a man that inherited £300,000 from his father's offshore tax-dodging empire. Despite all of their rhetoric on combating tax-dodging, the Tory party have actually been opening up even more tax loopholes for the benefit of multinational tax-dodging corporations. Expecting the Tory party to actually clamp down on tax-dodging is like expecting UKIP to endorse the UK's membership of the EU.

Given that the current Tory led government have a number of vested interests in keeping the UK tax regime as soft as possible, and that they have a demonstrable track record of actually opening up new tax-dodging loopholes, it seems that the most pragmatic course would seem to be to put pressure on the Labour party to include some explicit anti-tax-dodging proposals in their next manifesto.

Despite the fact that a move to end taxation asymmetry between the multinational corporations and Britain's small and medium enterprises would be extremely popular with the taxpaying public, it actually seems unlikely that Neo-Labour would do anything significant to combat tax-dodging, especially given the deep involvement of tax avoidance specialists like KPMG within the Labour party (secondment of staff, sponsorship of conference events and direct political donations). Another reason to be suspicious of Neo-Labour's willingness to clamp down on tax avoidance is the fact that they were the ones that actually introduced the Limited Liability Partnerships that have been widely used in tax-dodging scams such as the Icebreaker LLP that was used in the Jimmy Carr tax-dodging scandal and the Sloane Robinson LLP that was used to facilitate the tax-dodging activities of the major Tory donor George Robinson.

However sceptical we are that any of the three establishment political parties would be prepared to offer anything but empty rhetoric on tax-dodging, the pressure must be maintained, so that they know that if they do choose to take a genuine tough stance on multinational corporate tax-dodging, there would be millions of votes from hard pressed taxpayers and the owners of Britain's taxpaying small and medium enterprises in it for them.

See Also

Wednesday 5 December 2012

Why the Tories are opposing the Leveson report

After many months of delving into the murky world of the UK press (phone hacking, corruption, bribes, invasion of privacy, criminality, misrepresentations, lack of accountability, political interference, hate campaigns and other abuses) Brian Henry Leveson finally published his report on press standards.

The two headline proposals from Leveson's mammoth 1,987 page report should have been these:
1. The creation of an independent press regulator, free from interference from media owners and politicians alike.

2. The creation of a legal duty on the government to protect the freedom of the press.
However, if you hadn't bothered to read the report and just relied upon the right wing press and political shills like David Cameron and William Hague to [mis]interpret Leveson's proposals for you, you would be left with the impression that Leveson is proposing unprecedented government interference in the media and an outright attack on freedom of the press, a position that relies on maintaining the fictional narrative that the Leveson proposals are precisely the opposite of what they actually are.

It is quite easy to see why the tabloid press would be opposed to the introduction of an independent press regulator to replace the cosy and ineffective media controlled Press Complaints Commission. The phone hacking scandal and the Metropolitan Police bribery scandal are just two of the myriad examples of how the PCC voluntary self-regulation regime has utterly failed to maintain anything approaching decent press standards, and that is why the tabloid press oppose change. They want to keep their voluntary, media dominated talking shop, without the means or the will to inflict punishment on severe transgressions. They don't want an independent regulatory regime with the means and the obligation to punish severe press transgressions. By opposing Leveson they are simply expressing their own self-interest, nobody would expect anything else from the Murdoch press and the Daily Mail.

The Tory position, of briefing against Leveson before the report was even published, and then attacking, all guns blazing once the report came out is a little harder to fathom. I mean the opinion polls show that, of those that care about such things, the majority of voters would like to see independent statutory regulation of the press, rather than the continuation of the farcical PCC & PressBoF voluntary regulation regime, via a simple rebranding process.

Taking the side of the powerful press barons that oversaw the hacking of a dead teenager's mobile phone and the bribery of police officers and medical staff, rather than taking the side of the victims doesn't look like a particularly intelligent strategic play. However, even if the Tory attempt to crash the Leveson proposals fails, David Cameron must be banking on this demonstration of loyalty to the corporate press in the hope that the favour will be repaid in the run-up to the 2015 General Election, where his desperately unpopular party will need as much help from the corporate press as possible.

Another factor to consider in the Tory opposition to the Leveson proposals is that implementation would actually diminish Tory control over the press. Remember Leveson's proposal that the new independent press regulator should be "free of interference from the government", well that would end the situation where a Tory peer gets to choose someone from within the Tory party to run the press regulator, as is the case now! The man in charge of the PCC is the unelected Tory peer David Hunt, who was selected as head of the PCC by the unelected Tory peer Guy Black in his role of Chairman of the Press Standards Board of Finance, a man who also happens to be the Executive Director of the Telegraph Group of newspapers. The third key role in the voluntary shambles of a regulatory regime is Paul Dacre, who is editor of the Daily Mail. It is inconceivable that any of these three would be able to keep their positions within the regulatory authorities if the Leveson recommendations are adopted.

It is hardly surprising that the Conservative party that has their members in two of the three most important regulatory roles under the current system oppose the creation of a new regulatory body that explicitly forbids political interference.

Hunt and Black attempted to torpedo the Leveson report by drawing up an alternative "reform" to preempt Leveson, in which the current self-regulatory regime is simply rebranded with new names, allowing the powerful media interests and Tory party peers to keep their roles at the heart of the press regulatory regime. They have also devised a number of other reforms which, upon closer inspection turn out to be nothing more than outright attacks on press freedom, including mandatory Press Cards, to be distributed by the (corporate media and Tory party controlled) regulatory regime, without which, journalists would be forbidden from interviewing politicians, civil servants, the police, health workers and the like.

Another of Hunt and Black's proposed alternative reforms is a crackdown on Internet journalism; on bloggers like me. It is quite extraordinary that these opportunists are trying to use a vast corruption scandal in the mainstream corporate press, to crack down on the independent press. Let me be clear, I have never hacked a telephone, intercepted private messages, bribed the police, formed cosy inappropriate relationships with politicians, deliberately misrepresented people's statements, committed perjury or falsified evidence. However, because the corporate media have done these things, the Tory peers and corporate media representatives that run the press regulatory system are planning to use these crimes as an excuse to crack down on me!

Here is a damning critique of the Hunt/Black proposals from the Media Standards Trust.

So it is absolutely clear that the corporate media organisations and the Conservative party are opposed to Leveson because it would strip them of their ability to interfere in the press regulatory regime. What makes this stance so shocking is that the Tories and the corporate media are dressing up their defence of their own vested interests as a defence of "the freedom of the press". Take Tory Foreign Secretary William Hague's statement that the introduction of the Leveson reforms would be an attack on the freedom of the press which would "undermine Britain" on the World stage. It seems that the Tory definition of "freedom of the press" is wildly divergent from what most people would recognise. The average person might accept the definition of a "free press" to be a press free from government control, or control by an oligopoly of "press barons", whilst the definition David Cameron and William Hague seem to be defending is freedom of the Tory party and powerful corporate interests to dominate regulation of the press.

In fact, the Tory stance, as so often is the case these days, relies on a near complete reversal of reality. They falsely characterise the Leveson proposals as attacks on the freedom of the press, whilst the actual proposal looks more like an attack on Tory subversion of the press. If the Leveson reforms are passed, then the placement of two Tory peers in the two most high-profile regulatory positions would be absolutely inconceivable. Aside from defending vested corporate interests in the hope of some much needed pre-election propaganda, the Tories are also playing a desperate defence of their position of influence over the press regulation regime.

Thursday 29 November 2012

Tory Debt Fearmongering

One of the most commonly heard justification narratives trotted out to defend Tory policies such as George Osborne's self-defeating ideological austerity experiment and Iain Duncan Smith's brutal attacks on the welfare system is the argument that "the country is broke". There are so many examples of this crude propaganda it would be impossible to list them all, but there are several common themes. The most regular of which are the ideas that the national debt is "too high" and that Labour "wasted too much money". I'm fairly confident that everyone has heard these kinds of argument on a regular basis and it is the objective here to demonstrate these debt fearmongering arguments are both completely false, and also nothing but a crude narrative to justify elements of Tory ideological policy.

To give a specific example of debt fearmongering: On the 8th of November the Tory Police and Criminal Justice minister Damian Green appeared on the BBC show Question Time, where he was confronted with the accusation that debt fearmongering has a harmful effect on the economy. The accusation was made by David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, a guy I disagree with when it comes to monetary policy, but who made a strong argument that debt fearmongering harms confidence ("animal spirits") within the economy. Green's response to the accusation that Tory debt fearmongering has been damaging the economy was absolutely stunning, he retorted with brazen display of  inaccurate Tory debt fearmongering! Here's what he said:
"The reason that the 'animal spirit' of the economy was destroyed was that we had the worst debt of any G20 country, because the previous government spent money like water and left us bankrupt"
The use of the word "bankrupt" to describe the state of the UK economy in early 2010 is clearly inaccurate fearmongering for many reasons, not least of which is the fact that the Coalition government have continued deficit spending (adding to the national debt), meaning that if the UK was "bankrupt" in 2010, it would have been liquidated and sold off for pennies in the pound by now!

The next observation must be that his assertion that the UK economy had the worst national debt of any G20 country is an outright lie whichever way you look at it. checking the 2009 figures reveals that five of the G20 nations had significantly higher debts that the UK (68.5%) as a proportion of GDP behind Japan (192.1%), Italy (115.2%), France (79.7%), Germany (77.2%) and Canada (72.3%). In real terms the claim is just as false; the UK national debt ($2.183 trillion) was significantly smaller than the United States ($14.256 trillion), Japan ($5.068 trillion), China (4.909 trillion), Germany (3.352 trillion) and France (2.675 trillion).

If we examine the tribalistic dig at Labour for "spending money like water", it is also clear that this is a pretty spectacular misrepresentation. Until the global economic crisis hit, the national debt under Labour had never exceeded the 41.9% GDP debt they inherited from their Tory predecessors. Even after the spectacular financial sector meltdown in 2007-08, the debt under Labour rose to 52.1% which is significantly lower than the average debt in either the 19th or the 20th Centuries (the average debt throughout the 20th Century was 89.5% of GDP). In fact, even after two and a half years of catastrophically self-defeating ideological austerity and Tory economic stagnation, the UK national debt has still not even passed the 20th Century average, and is absolutely nowhere near the 1948 peak of 237% of GDP.

Given that the UK suffered the effects of the worst banking crisis in the modern capitalist era during the previous Labour administration, a resultant spike in government borrowing must be expected. Before the crisis hit Neo-Labour never exceeded 42% (lets call it 57% if we include all of Gordon Brown's dodgy PFI scams that were, and still are, misleadingly kept off the national balance sheet). This is quite high compared to the Thatcher years of industrial decline, social unrest and mass unemployment, but compared to virtually any other period in the last 200 years it is actually low.

Once the economic crisis hit, the economy contracted sharply, meaning that simply maintaining government spending plans that had been drawn up without foreknowledge of the impending crisis would mean adding to the debt. Although Labour can be blamed for intensifying the effect of the global economic crisis with their disastrous financial sector deregulations (which were supported by the Tories, but criticised for not going far enough!), their decision to abandon Gordon Brown's stupid and arbitrary 40% of GDP "golden rule", to stick to their government spending plans in order to avoid further "shocking" the economy and to attempt to stimulate the economy with policies such as the VAT cut were actually reasonably sensible. On the other hand, the decision to bail out the recklessly over-leveraged banks, (a plan which was enthusiastically supported by the Tories) was abject lunacy, but we'll gloss over that idiotic short-termist blunder for the sake of the argument.

Labour's decision to stimulate the economy by cutting VAT and not ruthlessly slashing spending, actually produced some half-decent results. After five consecutive quarters of economic contraction at the height of the global financial sector crisis, the UK returned to weak economic growth between Q3 2009 and the general election.

As you can see, this is far from a glowing review of Neo-Labour's economic record, but in comparison to the ideologically driven lunacy built upon a foundation of debt fearmongering lies and the consequent double-dip recession and vast trade deficits that have followed, it actually begins to look like reasonably competent stuff.

So to return to the subject of debt fearmongering, simply through the analysis of one specific example of Tory debt fearmongering, the premises that the debt is "too high" and that "Labour spent too much money" have been blasted to bits as the lies and misrepresentations they are.

Another factor that must be considered when we're talking about the national debt, is the fact that the Bank of England's manipulations of the government bond market with £375 billion in freshly invented money have resulted in the lowest cost of UK government borrowing since records began! If there is ever a time when more government borrowing could be justified, it is when the rate of interest on government borrowing is significantly lower than the rate of inflation. A situation where risk averse lenders are actually prepared to incur real terms losses in order to stash their money in the relative safety of the UK bond market. Obviously it would be important to spend the borrowed money wisely, on things that stimulate economic growth (fiscal multipliers such as infrastructure investment, education, science, R&D, social housing construction, welfare payments...) however, what the Tories are doing is cutting spending on all kinds of fiscal multipliers, whilst deficit spending in order to hand out ever greater sums to the wealthy (via tax cuts and the dreation of tax loopholes) and to a host of parasitic outsourcing companies and pseudo-charitable organisations that have built their business models on soaking up taxpayers' cash.

Not only are the Tories failing to cut the national debt they are fearmongering about, they are deficit spending on an absurd range of utterly wasteful corporate welfare scams and tax cuts for the wealthy instead of targeting the cheap money they have at their disposal at things that actually promote long-term economic growth (infrastructure projects, affordable housing construction, direct loans to small and medium enterprises, scientific research, education..). In fact they are not only failing to spend on proven fiscal multipliers that drive economic growth, they are actually deliberately targeting them with their ideological spending cuts.

Tory debt fearmongering is an obvious propaganda campaign aimed at duping the public into supporting their drastic ideological policies, whilst government largess continues apace when it comes to drawing up insane schemes aimed at directly distributing taxpayers cash to private sector interests to run all kinds of services including the NHS, frontline police, ridiculously inefficient welfare programmes, thousands of secondary schools, farcical Olympic security operations and even Britiain's arsenal of nuclear weapons.

The debt fearmongering narrative is built upon a foundation of transparent lies, and the policies it is intended to justify are actually adding to the nation's indebtedness by slashing investment in proven fiscal multipliers. What is even worse, is that the whole narrative of deficit reduction and spending cuts is completely thrown out of the window every time a Tory minister signs another absurdly one-sided contract to distribute ever greater cash mountains to unaccountable private sector interests.

Monday 26 November 2012

Tim Minchin & atheist pseudo-philosophy

As the Another Angry Voice Facebook page has grown in popularity, more and more other pages have dropped by to promote their work by posting links and images on my wall. I don't mind this at all, it is one of the techniques I have used to promote my page, so it would be utterly hypocritical to block others from using my page to do the same now that it is becoming reasonably popular. in fact much of the things that are posted are brilliant and enlightening stuff.

One thing I do mind is when people post things that are completely at odds with the ethos of informed critical analysis I've tried to foster on the AAV page. One such item was this quotation by the Australian comedian Tim Minchin.

In a similar way to the fact that my political stance is nuanced and difficult to define, so too is my stance on God and religion. An awful lot of harms have been caused by organised religion, however it would take a huge amount of confirmation bias to maintain that an a lot of good hasn't come of it too. I am perfectly happy to see informed criticism of religious dogma, however I am fundamentally opposed to the modern trend of generalisation ridden militant atheist pseudo-philosophy, which to me is as intolerant as many of the faiths the atheist ranter brigade are attempting to criticise. This Facebook meme that was posted to my page seems to be a classic example of this kind of over-simplified anti-theist propaganda.

That there are so many very strong arguments to be made against the specific crimes and abuses of specific religions, makes this kind of pathetic anti-religious generalisation all the worse.

Instead of criticising the Catholi
c paedophilia cover-up, Islamist fanatics, religiously inspired child genital mutilation, the absurd melding of the CoE and the UK state, homophobia in Africa, Israeli Zionist apartheid, Hindu fascism, widespread religious indoctrination, the complicity of the Catholic church with Nazi Germany, countless examples of religious hypocrisy or any one of hundreds of other specific examples of religious crime and intolerance, this kind of lazy pseudo-philosophical generalisation simply lumps all religious moderates and all religious extremists together as the same.

If you agree with Minchin's glib pseudo-philosophical analysis, perhaps you could tell me:

Which aspects of reality are "denied" when a Quaker maintains faith that there is that of good within every person that should be sought out and nurtured?

What element of the Buddhist philosophy, that contemplation is the key to inner peace and enlightenment, relies on "the denial of observation"?

How about the deist position (that reason and observation of the natural world are sufficient to determine the existence of a creator, accompanied with the rejection of revelation and authority as a source of religious knowledge). How is that a denial of reality? It actually seems to be an ideology based on the empirical examination of reality in order to prove a hypothesis, which is pretty damn close to the "philosophy of science".
Yes blind adherence to many faiths has lead to many terrible consequences, but the tarring of all faiths as "irrational" in order to appeal to the reactionary atheist mob is just lazy divisive bigotry. Unless of course it is a joke (he is a stand-up comedian after all) in which case it is an excellent satire of the unthinking reactionary atheist position and I commend him for it.

See Also

Saturday 24 November 2012

Iain Duncan Smith's callous contempt for the dead

I pretty much always attempt to write about politics in objective journalistic style. I feel that I engage more readers with this style of presenting facts, conducting rational analysis, and attempting to restrict my own personal opinion. However, in this case, I'm going to say what I really think without self-censoring the anger and bad language.

Just take a look at the embedded video below, which is a clip from Question Time on 22nd November 2012. In the clip, the panel are discussing the question of government welfare policy and the author Owen Jones (who wrote Chavs: The Demonisation of the Working Class) tried to confront Iain Duncan Smith with the names and circumstances of death of just two (of the thousands) of severely disabled/terminally ill people that have died having been declared "fit for work" by the Tory - DWP -Atos "disability denial factory".

Iain Duncan Smith's response to these details of people's deaths was a palpable demonstration of the man's utter lack of human decency.

Here's a transcript of the discussion:

Owen Jones: "There is a point that has to be made about the treatment of disabled people in this country. There's two names I want to give Iain ... Brian McArdle, 57 years old, paralyzed down one side, blind in one eye, he couldn't speak. He died one day after being found "fit for work" by Atos. Another example, Karen Sherlock..."

Iain Duncan Smith: [interrupts angrily] "Hang on a minute, we've heard a lot from you..."

So there you have it, Iain Duncan Smith cares so little about the suffering and death of actual, real, named people that he would disrespectfully interrupt the description of the circumstances of their death with an angry political tirade.

Viewers never even got to find out the circumstances of Karen Sherlock's death, thanks to Iain Duncan Smith's interruption and David Dimbleby's cowardly decision to shut down the debate (instead of chastising Iain Duncan Smith for interrupting so disrespectfully, or intervening to allow Owen to complete his point - as any decent moderator would surely have done).

For those of you that are interested in the circumstances of Karen's death, here are a couple of heartbreaking links detailing the appalling suffering of this poor woman, much of it directly attributable to Iain Duncan Smith's Welfare regime. (RIP Karen Sherlock, Karen's story - pieced together from her own words). Seriously, I challenge you to read either of these articles and remain completely unmoved by her suffering. If you do remain completely unmoved it must be that you, like Iain Duncan Smith, lack a single shred of empathy or basic human decency.

Anyone with a shred of decency would have waited for Owen to finish speaking of the dead, then offer condolences to the families of the dead before attempting a counter-argument, but not callous Iain. He clearly couldn't care less about the families of the deceased.

So there you have it; in video and in writing. Iain Duncan Smith has no respect for the dead, or for the families of the dead. In fact, hearing about the dead actually inspires him to launch into angry and defensive political tirades. One of the most shocking things for me, was the fact that Iain Duncan Smith's revolting display of disrespect for the dead actually elicited a round of applause from the crowd. I'm not normally one to blame the collective for the actions of individuals within the collective, however, as British people we should all hang our heads in shame that people amongst us would actually applaud such a revolting display of callous disrespect for the dead.

Lets try a simple thought experiment: Say a Question Time panellist is detailing the tragic circumstances of death of some British soldiers in Afghanistan, when he is angrily interrupted by another panelist who happens to be a Muslim. She points her finger and shouts "hang on a minute, we've heard a lot from you..." followed by a tirade against Britain's foreign policy. Even if the criticisms of British foreign policy made by our hypothetical Muslim panelist are entirely accurate, would you expect her to get a round of applause from the audience after disrespecting the dead? I hardly think so. In fact, I'm fairly sure that our hypothetical Muslim panelist would be booed by the audience and then be rapidly transformed into a national hate figure by the right-wing press for her display of contempt for the dead.

I really don't know what else to say. If you're a tribalist Tory voter, you'll continue to vote for grotesque people like Iain Duncan Smith, no matter what they say or do. If it is wearing a blue rosette, it doesn't matter whether it is a donkey or despot, you'll vote for it. No matter how demonstrably revolting the Tory regime becomes, and no matter how much evidence people like me will present to you, you'll still jump to Iain's defence because you're so mired in confirmation bias, that you will continue to swallow every feeble Tory justification narrative and remain steadfastly incapable of even acknowledging any alternative side to the debate.

You lot are such die-hard Tories that you'd even applaud Iain's callous disrespect for the dead! you sicken me almost as much as he does, but your saving grace is your ignorance.

Iain Duncan Smith is an cunning man that knows exactly how harmful his disability scapegoating campaign has been: You are perhaps too intellectually challenged to accept the reality that thousands of people are dying after being declared "fit for work", 100,000s more are suffering unimaginable stress, the Tories and the right-wing press are deliberately  orchestrating a disability witch-hunt and, there has been a massive rise in disability hate crime and unprovoked violent attacks against the disabled.

Even if all of that doesn't bother you, surely you can't approve of the vast waste of public money as 10,000s of absurd "fit for work" rulings are expensively overturned in court, at the expense of the taxpayer (at no cost to Atos, the company that made the often appallingly bad decisions to find so many terribly disabled and even terminally ill people "fit for work" in the first place). Perhaps, despite all this evidence you still side with Iain and prefer to continue blaming the victim.

I know I won't convince people like you with my usual strategy of explaining things clearly, presenting evidence and conducting rational analysis, so just this once I'll allow myself to express my feelings instead.

Iain Duncan Smith is a callous, disrespectful, self-serving monstrous shit of a man. It sickens me that a man with such a demonstrable lack of basic human decency could have risen so high in British politics. He is odious and obnoxious and vile. He is so malicious he sorely tests my pacifist stance. I sincerely believe that violence begets violence and almost always worsens any given circumstance. Despite this, I imagine that I'd find it extremely difficult to resist the urge to smack this guy hard in the mouth. If a nefarious cretin like Iain Duncan Smith can work himself into a rage when confronted with the names of dead people (real people with actual lives that have been lost, and actual families that mourn for them) then I think I can be excused for allowing myself, for a moment, to express my feelings of revulsion at this odious moral vacuum of a man in emotional (rather than objective) language:
Iain Duncan Smith is an odious shit.

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Friday 23 November 2012

Lord Freud: Risks, Corpses and Slums

In November 2012 the Tory Minister for Welfare Reform David Anthony Freud hit the headlines with a number of outrageous statements about welfare and welfare recipients. I'll go through some of the stuff that attracted criticism and then highlight some other equally bad comments that passed by without so much as a whisper of criticism in the mainstream media.

Firstly I'll give a brief biography of this "Lord Freud", or to give him his proper name, David Anthony Freud. David Anthony, the great-grandson of Sigmund Freud, was born in 1950, had an elite private school education. He then studied Politics Philosophy and Economics (PPE) at Oxford (people with PPE qualifications at Oxford, Cambridge or LSE are the most spectacularly over-represented group amongst the political classes). After working as a journalist and as an investment banker he eventually found his way into the political classes at the invitation of Tony Blair, who charged him with reviewing the Welfare to Work scheme. The recommendations he came up with were a massive increase in private sector involvement in the welfare system and schemes to incentivise/force disabled people back into the workplace. The reforms were adopted, but when Gordon Brown became Prime Minister, some of the reforms were dropped and others were deliberately slowed down.

In 2009 David Anthony Freud joined the Conservative party and was immediately handed a seat in the unelected House of Lords. After the Tories came to power (with the backing of the Lib-Dems) Freud was appointed as a Parliamentary Under Secretary of State for Work and Pensions, with the title of Minister for Welfare Reform. He has been the man responsible for pushing the Tory policy of combining numerous benefits payments into a single Universal Credit which is due to be rolled out in 2013. He describes this reform as "This is a huge, huge change. It’s the biggest change in our welfare system that it has ever seen. I’m not sure you could find very many other examples around the rest of the world".

Critics of the scheme, including a Parliamentary select committee have expressed grave concerns about "whether there will be sufficient time for the Government to learn from its pilots and whether it is desirable or necessary to implement so many changes at once" and stated that they also have "serious concerns about how more vulnerable people will cope with the changes". For more analysis on the specific findings of the Parliamentary Select Committee you can check out Mike Sivier's excellent blog post here.

Here are Freud's comments in House Magazine (like a Parliamentary "sixth form magazine") that attracted so much criticism across the social mediascape and from elements of the mainstream press too.
"It's a very basic statement around fairness, the welfare system is not there as a lifestyle choice" 
This kind of statement is absolutely indicative of the Tory mentality. That benefits claimants can be treated as a vast homogeneous cohort and demonised as scroungers. It is a great (if completely immoral) tactic because this kind of simplistic narrative plays into one of the strongest emotional responses, that of unfairness. The fact that this is the thinking behind Freud's claims about the benefits lifestyle is illustrated by the fact that he prefaced it with an invocation of "fairness".

The problem is that this kind of demonisation is completely inaccurate nonsense. The reason that there are so many long-term unemployed is not that the unemployed are determined to laze around enjoying "a lifestyle" at the taxpayers' expense, it is because there are significantly fewer jobs than available workers.

People are not unemployed because they love the unemployed lifestyle as Freud is implying, they are unemployed because there are simply not enough jobs to go around. This jobs shortfall isn't a sad incidental fact either, it is a fundamental element of neoliberal economic theory. Neoliberals believe that one of the most effective ways of driving down wages and labour rights is through maintaining a standing army of unemployed. The best way to confront unemployment is to confront the policy promoted by successive orthodox neoliberal governments that high unemployment is necessary, once the economy returns to near full employment, then by all means start whining about the small minority of unemployed that continue to refuse to work, but whilst there are not enough jobs to go around, this kind of whining is actually "scapegoating" and transferring the blame from the private sector and the political classes that deliberately maintain high unemployment in order to drive down wages, to the people that actually suffer the consequences of these policies; a perfect example of the "blame the victim" fallacy.

"People who are poorer should be prepared to take the biggest risks; they’ve got least to lose" 

This statement is a clear demonstration of the kind of economic illiteracy that can be expected from an investment banker turned Tory welfare reformer. The key word here is risk. Freud doesn't mean risk in the everyday sense, although one often gets the impression that Tories believe that the nation would be better off if the disabled and unemployed did take "the biggest risks", like perhaps, walking (or wheeling their wheelchairs) blindfolded across a busy motorway. What Freud actually means when he claims that the unemployed should take the biggest risks, is that they should gamble economically. There are two things that are fundamentally wrong with this idea.

Firstly, in order to take speculative economic risk, you must first have capital. Without capital to invest in speculative ventures, you have nothing to offer but your labour, thus you are ripe for exploitation. The idea that the poorest should take more risk because they have the least to lose is completely mitigated by the fact that in capital (and often in terms of labour skills) they have the least to stake too, meaning that therefore they have the least to gain.

Secondly, the idea that people should be encouraged/forced to take economic risk is barkingly insane given the causes of the global financial meltdown. Whichever way you look at it the global financial meltdown, it was caused by excessive risk taking. Foolish people that lied on their self-certification mortgages to buy houses they couldn't afford based on the fallacy that "house prices will always go up". Reckless mortgage lenders that handed out £billions worth of these self-certification (liar loan) and 125% (idiot loan) mortgages. Reckless financial sector organisations that bought up $billions worth of these loans after they had been packaged up as Collateralised Debt Obligations and stamped with AAA ratings by the Credit Ratings Oligopoly, without ever actually bothering to do the slightest investigation into the toxic assets they were splurging so much cash on. Reckless financial insurance giants like AIG that insured $ trillions worth of these toxic mortgage backed securities with Credit Default Swaps without even investigating what exactly they were insuring: And last but not least, reckless governments and financial sector regulators that allowed this massive risk riddled property Ponzi scheme to inflate out of control despite repeated risk warnings from people like Nouriel Roubini, Paul Krugman, Brooksley Born, Steve Keen, Karl Levin, Joseph Stiglitz, Paul Moore, Jeffrey Sachs, Robert Gnaizda...

The whole credit crunch scenario has been created by excessive risk being followed up by severe risk aversion as capital has flowed away from risky high yield investments into extremely low yield investments like government bonds that are considered low risk. The idea that in the wake of the largest economic crisis ever, which was caused by excessive risk taking, the poorest and most vulnerable should be incentivised/forced to take more risk is absurd. Additionally the idea that the poorest elements in society should be forced to take risks, whilst the super-rich and the comfortably-rich hoard their cash and avoid risk at all cost is frankly revolting.

The next comment is the one that attracted the bulk of the criticism. In response to the idea that welfare ministers like himself should perhaps spend a week living on benefits to get an idea what it is really like he had this to say:
 "I have thought of the issue, the trouble is, it’s a stunt when someone like me does it because you do it for a week. That’s not the point. I think you don’t have to be the corpse to go to a funeral"
 Making a corpse based analogy with welfare claimants would be bad enough, but coming from a guy that preceded it with a load of inaccurate nonsense about welfare being a "lifestyle choice" it's awful. Either welfare recipients are choosing to be unemployed for the "lifestyle" as Freud implied or they have no choice in the matter. One generally does not have a choice to stop being a corpse.

Another factor that makes this statement so damned offensive is that it has been calculated that an average of 73 people a week are becoming corpses after having been found "fit for work" by welfare Work Capacity Assessments. The fact that so many people are dying after being found "fit for work" is a grave indictment of Tory welfare reforms, and the fact that Freud would talk so glibly about corpses when the policies of his own department are causing a scandal so outrageous that even the Daily Mail and their online readership are criticising it, demonstrates how completely out of touch with reality this man actually is.

Seeing as Freud started this hyperbolic and offensive analogy game, I'd like to offer my own alternative offensive analogy relating to welfare reform - "Perhaps the concentration camp guard is not the best qualified person to judge the morality of the Holocaust".

In the same article he then went on to whine about his relationship with Gordon Brown:
"[Gordon Brown] thought he could soften me up and then dump me in with his officials and I would just capitulate, which I thought was a pretty demeaning thing for a chancellor and prime minister-to-be, to think that was his role."
 This statement shows a quite remarkable lack of self-awareness. The man complains that he felt demeaned after Gordon Brown tried to derail his welfare reforms, yet is prepared to demean millions of welfare recipients by publicly comparing them to corpses.

So there are the main points of criticism about this revolting article, however there are grounds for many more, such as Freud's statement that he'd "be enormously pleased and gratified if my reforms were thought of in the same way as the Beveridge Report" alongside an admission that he hadn't even bothered to read it ("I have to confess... I didn’t read it all, it’s so fat") and his absurd suggestion that "It’s quite nice in a way that [these reforms are being pushed through by a "Government, which has got a strong Liberal Democrat presence" despite the fact that a tearful Liberal Democrat Sarah Teather had only days earlier described the reforms as "immoral", "deeply socially divisive" "horrible", "devastating" and "traumatic" and slammed the ministers involved as engaging in "a deliberate attempt to denigrate those who cannot find work".

Before I conclude I'd like to draw your attention to some other comments by Freud that received almost no press coverage, but reveal much about the man's true motivations. These remarks were made by Freud as he addressed the National Landlords Association conference. The NLA are an organisation that work to "support and protect the private residential landlord" - basically a lobby group for parasitic buy-to-let slumlords and the like. The most striking thing that he actually opened his address by thanking the private rental sector for playing a "remarkable role", providing the many extra homes that the social-rented sector was not able to offer.

He actually thanked the private landlords for enriching themselves at the expense of people that have been locked out of social housing by devastating attacks on the social housing sector by successive orthodox neoliberal governments. After a deliberate three decade long run-down of the social housing sector the private rental sector are soaking up an enormous proportion of the £23 billion a year in housing benefits payments, and instead of this mountain of cash going back to government as it does when housing benefits are used to pay social housing rents, the cash is being soaked away in profits for the idle rentier class.

Another quote demonstrates Freud's true priorities in forcing through "Universal Credit". He reassured the crowd of rentiers that:

"I am not expecting landlords to suffer sudden loss of income as a result of Universal Credit"

This statement perfectly sums up his objectives. He has absolutely no intention of clawing back the £billions in taxpayers cash that is used to prop up the parasitic private rental sector. This kind of taxpayer funded welfare is something that he absolutely intends to protect.

The cuts are going to be made to the living standards of the most desperate and vulnerable in order to force them into work, whether there are jobs to be had or not. He intends to collectively punish the weak and vulnerable recipients of taxpayer funded welfare whilst striving to protect the interests of the wealthy  recipients of taxpayer funded welfare.

After his address, landlords were allowed to ask questions of Lord Freud, one landlord asked a very important question about tenant migration from London to cheaper communities, putting huge pressure on local landlords, schools and healthcare in these areas (the "send them to Coventry" scenario). Freud's response to this question was quite remarkable, he "recognised that this needs to be researched". Freud has implicitly admitted that vast socio-economic consequences such as mass migration out of London and other wealthy cities has not even been researched yet. A breathtaking demonstration of the Tory contempt for the concept of evidence based analysis. Freud has basically said that "we'll analyse the adverse socio-economic consequences of this scheme as we implement it at the national scale"!

Another landlord question related to Article 4 Directions which limit the amount of Houses of Multiple Occupation (HMOs) in any given area. Basically the guy was asking whether limitations on the number of bedsits and massively overcrowded slum dwellings would be rescinded so that landlords could make more cash out of welfare recipients that are to be driven deep into poverty by the introduction of Universal Credit. Freud's response was even more mind-boggling than his promise to protect state subsidies for the private rental sector or his admission that the Universal Credit plans have been drawn up without conducting evidence based analysis; he said that he would look into rescinding Article 4 because:

"Article 4 seems to contradict the ethos of Universal Credit"

So there you have it, straight from the horse's mouth: The "ethos of Universal Credit" is to force desperate and vulnerable people into high occupancy dwellings like bedsits and overcrowded buy-to-let slums.

To conclude, Freud is a ruthless and insensitive individual, a man determined to have his own way no matter what the evidence or the opposition, a charlatan and a severe hypocrite. All the guff he talks about "looking after the most vulnerable" is a smokescreen. He perpetuates the myth that welfare is a lucrative "lifestyle choice" for the recipients, whilst promising to protect the vast taxpayer funded welfare payments that idle private landlords siphon out of the system: He whines pathetically about feeling demeaned when he came across someone that actually dared to stand up to him, yet makes corpse based analogies that demean millions of people that are, or have ever relied upon welfare: He demands that that economic risk should be forced upon the poorest in society "because they have the least to lose" and that the means to force them to take risk should be collective punishment: He openly admits that his department haven't even bothered to research negative socio-economic consequences that are so obvious that even private landlords that look set to gain from mass migration to their communities have raised concerns (not to mention dozens of politicians and journalists and hundreds of bloggers such as myself who have raised similar concerns): And he lets slip that the "ethos" of his reforms is to drive desperate people into the lowest possible quality of housing.

So look out for the lucrative private sector "Freud ethos slum" coming to an unemployment blackspot near you soon. I'm not so sure that the architect of the Welfare State, William Beveridge would be proud to have his name invoked as part of the justification narrative for this  ghettofication process under the guise of "welfare reform".

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