scratchsurface4415The sound of politicians scratching the wrong surface

The history behind the coming step-change

All major political, economic and scientific advances change society, and almost all are a mixed blessing. But at the time, they usually have so much apparently to offer – victory in war, an easier life, a health cure, personal independence, greater efficiency, and of course vastly increased profits for those engaged in marketing them – they are assumed to be ‘progress’.

For what we still call ‘the working class’ – those doomed to be selling their labour to all-powerful capital – most of the changes brought about by business-lobbied political decisions in the last 30-35 years in the West have meant not progress, but a disaster of shattered living standards and self-esteem for 80+% of those “who work” as employees…ie, most of us.

In some cases, greed brought Damocles’s sword down on their own heads: greedy wage claims, greed for power among the tiny Stalinist minority, closed shops restricting the labour available, overmanning in the press sector, a lust for constitutional power via the Labour Party, and envy-driven disputes based entirely on the fact that train drivers were paid more than conductors.

But the price paid by the majority for the actions of ideologues like Scargill and McGahey in Britain far outweighs whatever crime they may have committed. Just as science is sold as ‘progress’, so too a massive shift in the power balance is called ‘reform’. (Troika2 still gaily refers to the systematic pauperisation of the Greeks as ‘reform’.)

The ‘reforms’ brought in by Reagan and Thatcher (and then left alone by Clinton and Blair) had seven main results for the vast majority of those with a job: shorter hours, lower wages, less job satisfaction, vastly increased wealth inequality, housing booms in which they were left behind, the deregulation of wealth accrual further up the social scale, and last but far from least, the destruction of communities such as those found around the centres of the coal mining, iron trades, and food manufacturing industries.

There is still a widespread belief (because it suits both Labour and Conservative to promote it) that the electoral choice in May 2015 will very clear indeed: “more socially and financially destructive neoliberalism, versus The Better Plan – minimum wage levels, higher taxes for the rich, regulation of bankers and government help for SMEs to create new businesses etc”…the Labour mantra. Or from the horse’s arse of Grant Shapps, “fast-growing gdp creating more jobs and more security with austerity to ensure we pay back the debts we owe and become a world class economic force again versus Spend, spend, spend by Labour, higher taxes for all, and far too many interfering regulators etc”.

In fact, both versions are so at variance with the empirical reality, they render the election pointless in both the broader and domestic context. I find it vaguely amusing but also terrifying that in reality what we are probably going to get after the election is a weird melange of how Labour sees the Tories, and how the Tories see Labour. That is to say, “uncosted spending proposals and higher taxes to pay for bureaucratic waste and the shocking rise in National Debt leading to more austerity, shorter hours, lower wages, and the confused distraction of political point-scoring so likely to follow a new Coalition”.

I say this because things beyond our control are going to change the landscape: the effective breakdown of the United Kingdom as a serious entity, the economic flatlining and euro bankruptcy of our closest trading partner, the continuing slowdown in China and corruption backlash there, and the clash between the US and those with old oil and new currency ideas.

So in fact, all the election on May 7th really represents is a massive distraction from The Big Issue: the enormous shift of political and financial power away from labour towards capital, and the gigantic global debt that has created.

Chronic blind-eye syndrome

Both Left and Right these days hide behind words like ‘progressive’, reform, neoliberalism and Keynes v Friedman. They do so in order to set up The Big Fight between right and wrong. I think Friedman was a useful idiot employed to excuse anti-social wealth obsession, and Keynes is about as relevant to the post-digital world as Marx. But the truth is, we don’t have neoliberalism – we have globalist monopolism. George Soros, Rupert Murdoch, Jamie Dimon, and Bill Gates built their fabulous wealth on the backs of misfortune and highly questionable tactics to destroy the competition. These men detest the very idea of an open anything, least of all an open market: they blackmail retailers, stab currencies in the front, plot to undermine competitor credibility, and force choice down to one option – theirs.

But as the line blurs between these sick gargoyles and the States they bankroll, globalist monopolism is fast morphing into corporate colonialism. Those who get in the way – the Swiss franc, Russia, Iran, Greece, Ukraine, or Hungary – find their banks, leaders, ideas and values trashed, their economies boycotted, and their liquidity threatened.

Now before delving into the consequences in more detail, I think it necessary briefly to return to a point I made a week ago at The Slog, which is this: none of the Big Five Parties in Britain have the slightest intention of changing the globalist monopolism which has brought us to this sorry place. To be more precise, nobody – nobody – in the Tory, Labour, Ukip, LibDem or SNP ranks will so much as criticise it in public, let alone ponder plans to be rid of it root and branch.

Why should they be doing so?

The consequences of technology, investment banking and globalist monopolism

The current majority form of capitalism needs three things to survive: universal credit debt, massive consumption levels, and rapid rates of repurchase. A reasonably bright eight year old could extrapolate from this construct that consumer insolvency compounded by job loss and welfare cuts mean the system is doomed to eat itself.

The economic model beneath which most of the planet (in one form or another) now labours has produced one good result: an increase in the standard of living of a sizeable minority of those who live in Asia. But their salaries, working conditions and housing are 14th century in nature, their welfare and health provision almost completely absent, their access to water severely restricted. The net consequence for these unfortunates has been a rise from desperate near-starvation to bare survival. It’s not much of a journey, all told.

Technology has produced very clear negative consequences: decimation of factory jobs, the extinction of independent souls engaged in the craft of repair, massive losses in the construction sector, and huge layoffs in the car industry. The internet alone has destroyed almost every media, retail and broadcasting business model on the planet, with the medium-term knock-on effects of both retail and construction staff struggling to find regular work, and communal shopping ‘centres’ disappearing in favour of out-of-town mega-malls….which now themselves find it impossible to compete with an explosion in direct selling where no physical distribution is involved.

Such drastic change has been apparent throughout modern history: the Luddites of the 18th century chose the indiscriminate destruction of weaving machines as a direct strategy, but by and large their reward for this was Australian citizenship. However, from the late 19th century onwards, sensible, functional banking (peaking in the 1950s but now extinct) often stepped in to back entrepreneurs with new ideas requiring a new kind of worker.

Investment Banking didn’t step up to plate this time…and that’s part of the problem.

The big difference in our era is that this isn’t happening, because – having engaged in an orgy of inter-competitor selling of no use to the real economy whatsoever – the investment wing of the banks rendered themselves either technically insolvent, or so exposed to bad derivative bets they dared not reduce their liquidity further.

Western States compounded the loss of diversification backing for SMEs by helping the banks out with Zirp….which left the biggest age demographic in history without interest rates upon which to live….and decimated their consumption power. (In the long run, perhaps, killing more banks than it cures.)

And QE of course – the wonder drug that saved the world – meant richer investors and big companies could continue getting even richer and more highly valued without any entrepreneuralism at all beyond bankrupting the odd ten thousand SMEs via fraud here and there.

Floods of liquidity and free money may keep the accountants, Bourses and multinationals happy: but they produce stagnation when it comes to the sort of R&D that creates real jobs with long-term potential….and of course, make it easier for them to sell loss-leaders that strangle the smaller competition.

But to gauge one key negative impact of inward-facing bank practices, you need only look up its apologists and see where they protest the most about ‘false accusations’ against bankers. This ‘defence’ spin centres almost entirely around how much the bailouts actually cost the States concerned.

The CIA (of all people) estimates that globally, by the end of 2012, the bailout of the banking systems had cost some $23 trillion. Defenders of the banks say this doesn’t tally with the actual bailout monies expended in, say, the US. That’s because they quite knowingly ignore our old friend the contingent liability. Add that little item in, and the UK’s banking cock-up doubled the national liability.

Whether they like it or not, whoever winds up running Britain after May 2015 is going to have to get real about the debt…and either inflate it away, or get much higher taxes from the citizens. A rise of just 2.2% in borrowing rates, by the way, would render Britain insolvent by, at the very latest, Spring 2017.

Finally, nobody should underestimate the effect of blatant central banking interference in and manipulation of many investment basics: the Dollar price, the gold price, the oil price, the Libor rate, the insane levels of the bourses, the ruinously low interest rates and the false liquidity disaster of QE: tried now fifteen times around the world, failed thirteen times, jury out on the other two.

Not only is all this pumping the cancer patient full of addictive painkillers, it is also breeding a generation of humans who no longer have a steer on what the real, natural ‘known value’ of any investment mechanism might be. Speed of light deep liquidity trading is bad enough, and fiat currencies make things worse. But when a system claiming to let the market decide pulls this range of stunts to keep the ship afloat, you can be sure that the seabed beckons in the end.

Globalist monopolism in turn has chosen, faced with this mess, to follow three strategies: look for the lowest cost supplier/employee, cut jobs to keep the stock price up, and cut every manufacturing cost imaginable in order to tempt in the victims unable to buy real quality. (They have also used free QE money to mechanise to the maximum while demanding higher output efficiencies from the workforce).

This is why everything today breaks within anything from ten minutes for a ballpoint pen to nine months for a power tool, or eight days after the guarantee runs out on a washing machine. It keeps up the repurchase levels, but in the medium term costs the consumer more money and hassle.

It also leads, inevitably, to a lower quality of job satisfaction for the worker. Craft skills build self-esteem: but thanks to New Labour’s pro-globalist education target nonsense, Britain is now a nation of unemployable media studies graduates, and no plumbers or woodworkers.

Globalism sells itself on three main bases: we’re becoming a global village anyway, it saves on administration/marketing costs, and there will always be room (on such a diverse planet full of economic variation) such that importing and exporting will result in the greatest number of winners.

As you’ve probably already worked out from that brief paragraph, the theory originally developed by Ted Levitt (another useful idiot) is contradictory: we have infinite cultural variation, but we’re also all the same really. First up, the Global Village is provable tosh; second of all, multinationals spend miles more in admin and marketing than small independent businesses; and finally, far from producing many winners, it has resulted in the sort of aggressive mercantilism which, in several areas of the world (notably in the Middle East and Sino-Japanese relations) could easily lead to a major-league hot war at some point in the next decade.

In fact, Globalism and Supranationalism work hand in hand because all they care about is Big Process.

But the world of the future is going to need the big ideas that come from mould-breakers, and the low costs that come from small communities. This wave – and it is coming, be in no doubt – is being prefaced already by the formation of more and more mutual businesses – which became three years ago the fastest growing sector of business construct…and is now being adopted on a bigger and bigger scale by the Conservative Party. A major shock, but a welcome one.

Looking at Europe offers more grounds for my prediction. Spain is dividing up, so is Britain, the European Union is split on four irreparable dimensions, eastern and South-Eastern Europe is looking east for protection (but not invasion), and some fourteen US States (the last time I looked) were insolvent.

Big is not efficient: it is slow, corrupt, lazy, expensive, unproductive, amoral and above all soul-destroying for a tribal pack-species.

Have you heard any politician in the UK election airing these realities?

For me, the answer would be “no” (or even “non”) but then I haven’t taken a great deal of interest beyond the manifestos. An American tweeter garnered much praise this week by referring to the Maypole dancing thus far as “parochial”, but I think that is much too lenient.

I would rather say that the issues raised in the election to date are barely scratching the wrong surface….no more that that. We are in the state we are as a nation because our Establishments have this decidedly odd habit of insisting that we need to be global and European, but then spending 95% of the time ignoring the moral, fiscal and economic consequences.

Because Nigel Guffawage wants to extract us from the EU, he is seen by many as the only one worthy of a vote…and in a tactical sense, they may well be right. But Nigel isn’t going to change the face of British political life or economic direction. He used to be an investment banker. He is an ineluctable (and hopefully unelectable) part of the Establishment’s Upstairs Downstairs soap. He merely wants promotion to the post of Head Butler.

The downsize to commercial communitarianism is coming. It will be an inevitable rejection, in the end, of a hopelessly failed experiment in trying to prove the baseless tenets of Theodore Levitt. The people you are about to aid and abet on May 7th are simply in the way of this process. That’s why – I repeat – they don’t deserve your support in any shape or form.