Posts Tagged ‘Capitalism

31
May
12

Left, Right, Left, Right, Left, Right

Irreverent Car Enthusiast or right wing fascist?

Irreverent Car Enthusiast or Right Wing Fascist?

A friend suggested to me recently that The Left have the best comedians and I agreed though we then had difficulty identifying any right wing comedians. We settleed on Stewart Lee, representing the left, and Jeremy Clarkson, representing the right. It’s debatable whether Clarkson is right wing but then it’s debatable whether Clarkson is a comedian. He is a figure of fun, which might make him a comedian, and he’s sceptical about climate change, owns lots of cars and probably votes Tory which are attributes usually associated with The Right.

Stewart Lee performs material excoriating Jeremy Clarkson for his “politically incorrect opinions which he has for money”. On the Indymedia web site Clarkson is even accused of having a “fascist agenda” though you wouldn’t think it from his dress style. I don’t recall Franco, Mussolini or Hitler sporting brown corduroy trousers.

Stewart Lee - Comedian

Comedian

So (I got here in the end), Clarkson is condemned by The Left as a fascist.

It’s interesting that the left feel it acceptable to brand all and sundry as fascist. Often the reason for branding someone as fascist is that they believe in free markets and small government but it’s worth remembering that the Nazis called themselves National Socialists, which seems almost the antithesis of an ideology based on free markets small government.

It’s also interesting that we go along with the label fascist as derogatory while we never think to yell Commie at those on the left and, if we did, the left would probably not consider it an insult.

Why? European fascism has an appalling reputation due to it’s racist and genocidal activities in the 1930s and 40s but Soviet Communism carried out acts which, if not identical in intent, were equal in ghastliness. One can, of course, argue that the Soviet regime was a corruption of true communism but this is all very well unless you’re one of the poor bastards who suffered under its rule. One may as well argue that Nazism was a corruption of Fascism.

There is a saying in Britain: People in glass houses should not throw stones, and you’d think that the left wing would be more reticent about dragging up the crimes of the second world war yet the communist movement seems to have just shrugged this off.

Why is this? Why is the term fascist used so freely and effectively to abuse those on the right while those on the left act like they hold the moral high ground?

I have been following Real Time World War 2 on twitter and am finding that the day by day reporting has the effect of placing the events in some kind of context.

At the beginning of World War 2 in 1939 (as counted by the British and the French) the Nazis were rounding up Jews and herding them into ghettos or off to concentration camps. Around the same time the Soviets were murdering thousands of captured Polish soldiers and the Soviet regime was paying bonuses to Soviet soldiers who succeeded in murdering the most Polish prisoners.

In the 1930s and 40s in Europe a clash of ideologies took place. Communism on one side and Fascism on the other. Both were totalitarian, ruthless and evil. In reality both were probably a reaction against free market capitalism which had brought about The Wall Street Crash a few years earlier. I’m making this up as I go along but it is starting to fit together. We are even seeing a resurgence of Fascism and Socialism in Greece which is suffering more than most from the failings of free market capitalism.

The inheritance of the Communist/Fascist clash in British politics is a false left/right dichotomy. A dichotomy that never really existed in British politics because Fascism never gained a real foothold in the UK thanks partly to the Communist Party of Great Britain.

In British politics Labour are portrayed as a supporting policies such as redistribution of wealth and state ownership of industry though Labour have now abandoned the latter. The tories are portrayed as advocating capitalism and a meritocracy. But the Tories have also inherited an association with fascism which may be unfair. It’s pointless arguing that many toffs were Fascists because many working class were too. I wonder if the Tories have much in common with Fascism at all.

This is not to say that the British right is beyond criticism but by branding them fascist we incorrectly identify their failings. The failings of Tory policies is not a dislike of immigration. The Tories represent big business and big business loves immigration because it provides cheap labour. To brand the Tories as fascist is a stupid distraction.

The real criticism of the right wing should be it’s economic race to the bottom. It’s survival of the fittest mentality which leaves those less well able to look after themselves behind. It’s constant drive for profit which turns all human interaction into that of producer/consumer. Seller/Customer. An ideology which gradually erodes any gains we may have made under Labour. None of these things have much relationship with Fascism.

Screaming Fascist at a Tory misses the point. The British Tories are not about to don black uniforms and start marching around with flaming torches and they are absolutely opposed to the Fascist ideal of a strong state.

BBC Radio 4 has been retransmitting old episodes of the famous “Desert Island Discs” program where a famous and esteemed person talks to a presenter and, with the conceit of presenting their favourite music, tells something of their lives, frequently revealing some personal aspects of themselves.

Respected historian or amoral ideologue

Respected Historian or Amoral Ideologue

Recently I listened to a rerun of an edition of the program from March 1995 where historian Professor Eric Hobsbawm was interviewed by Sue Lawley.

Professor Hobsbawn is a confirmed Marxist and was so during the 30s and 40s. In his own words he stated that he was deeply and profoundly committed to the great cause (of bringing about a world wide communist utopia) and that there was not anything that was more important in life than the great cause. When asked if he thought it was worth any sacrifice he answered yes. When asked if all the innocents who had been killed by the soviets were justified he replied yes.

I too have left wing sympathies but listened to this man with mounting horror. It strikes me as an example of our deranged political culture that, while irreverent (and irrelevant) TV entertainers like Clarkson are castigated as fascists, men like Professor Hobsbawn are honoured by appearances on Radio 4.

Even after the horrors of the Soviet Union have been revealed to Professor Hobsbawn he was too arrogant to have any empathy with those who suffered under the Soviets. Men like this do not stand out like Adolf Hitler or Idi Amin or Muama Ghadafi. They sit in institutions quietly following their ideologies without thought for the people who may disagree with their over intellectual claptrap. Today these people may be in universities, in banks or in governments. They may be in the police force or in political parties. In Germany in the 1940s they were operating the gas chambers or compiling monthly statistics at Auchwitz.

There is a beautiful scene in the 1983 film Merry Christmas Mr. Lawrence directed by Nagisa Oshima where an English officer visits a Japanese soldier in prison after the allies have occupied mainland Japan. The Japanese soldier has been tried for war crimes and condemned to death.

Sergeant Hara:   “I am ready to die, but I don’t understand, my crime were no different from any other soldiers.”
Lawrence:   “You are the victim of men who think that they’re right. Just as one day, you and Captain Yonoi believed absolutely that you were right; and the truth is, of course, that nobody’s right.”

“Men who think that they’re right.” – It’s a good phrase. Yes, it’s applicable to Hitler but, more than that, it’s applicable to the Hobsbawnes of this world. It’s applicable to the English Defence League shouting abuse at immigrants and it’s applicable to the ignorant left wing zealot screaming “Fascist” at people with whom he disagrees.

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The following is a partial transcript from the March 1995 episode of Desert Island Discs with Professor Eric Hobsbawm.

Sue Lawley (SL):   So your saying that such was your commitment and your dedication that if there was a chance of bring about this communist utopia, which was your dream, it was worth any kind of sacrifice?

Eric Hobsbawm (EH):   Yes I think so.

SL:   Even the sacrifice of millions of lives?

EH:   Well that’s what we felt when we fought world war 2 didn’t we?

SL:   Isn’t there a difference between killing someone in war and killing your own?

EH:   We didn’t know that, dead is dead.

SL:    Let’s have record number 3

Artwork of Nigel Chaloner at Fine Art America

Artwork of Nigel Chaloner at Fine Art America

12
May
12

Glorious Britain

For sale; The British soul

For sale; The British soul

“If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty, you have no brain”. This quote is, possibly mistakenly, attributed to Winston Churchill. In the 21st century perhaps we should swap Labour for Liberal.

I was left wing when I was young. I had ideals of fraternity and equality. As I aged, I veered to the right. I started to understand that economic is real; that the government has no money except the money we give it; that ultimately it is us that pays for everything.

In the early years I agreed with Thatcher’s privatisations. Why should the state own industry? But as Thatcher’s changes gained traction and as New Labour mimicked and exaggerated her ideology I found myself disgusted with the whole hyper-commercial edifice which was Britain. During the Thatcher years I recall seeing a TV play about “the future” where kids sold electricity to their parents. I thought this ridiculous but this can now happen. If one buys one’s electricity and gas from Utility Warehouse one can earn money buy introducing new customers.

Britain has sold its soul for cafe latte and I find myself moving back to the Left. I want my society to have a sense of community. I want my society to look after the poor and infirm. I want the streets to belong to people and not be just an advertising platform for corporations. I want to roll back the privatisation of public space. My culture should be lived not used to sell trinkets to coach loads of tourists.

I return to my left wing ideals but, depressingly, find that the leaders of the left are either shits, idiots or delusional. I have come to the conclusion that the Left in Britain do not really want to raise up the working class. They do not really want to change society. Instead they are content to be the eternal griping dependents of the Tory elite who they claim to despise.

Today I stumbled across the web site of the The Trade Unionist and Socialist Coalition. The strap line on their web site is: “No to Cuts and Privatisation! Make the Bosses pay!”.

“Make the bosses pay”.

Not “let’s take control!”. Not “let’s change the way Britain works”. No, let’s just cadge a bit of lolly off the toffs. They’ll still be in charge but at least we’ll get a couple of pints and a bag of chips. The cardinal attributes of the British left is not empowered leadership. It is not optimistic energy. The cardinal attribute of the British left is a bitter determination to squeeze the rich and a heartless obsession with control.

In the 90s New Labour were content to leave the capitalist system intact, milking it for funds, while planning more and more idiot schemes to micromanage our lives. Some of the schemes favoured by the last Labour government were: the militarisation of the civil servants who man our border control, identity cards, satellite tracking of cars by the state, mass interception of emails, presumed consent to remove organs for transplantation, holding people for 48 days without charge, a DNA database for whole population and ubiquitous CCCTV.

On the 14th April I listened to BBC Radio 4′s Any Questions and someone asked: “Should cigarettes come in plain packets and would it make a health difference?”. The Secretary of State for Justice and former director of British American Tobacco, Ken Clarkek, spoke first (0:38:18) and said “people now understand the dangers” and went on to say “the point at which you so police somebody else’s wellbeing that your are prepared to order them, put penalties on them, if they wont stop doing something which you think they shouldn’t do is a step one should take cautiously”.

When it was Labour MP, Harriet Harman’s turn to speak (0:42:12) she lectured us at length about the dangers of smoking. She explained that it causes heart and lung decease. This patronising tirade epitomised the attitude of left wing politicians. They can talk for hours about stuff that, as Ken Clark pointed out, we already know. They arrogantly assume that they are more informed than we are. They consider that the warn out cliches which they trot out are pearls of wisdom to the ignorant masses. They cannot conceive that we may have heard all of this before yet reached a different conclusion because our values are based on individual liberty.

The root cause of the British political dichotomy is probably the British class system. The toffs are indoctrinated in special schools to have unjustified self confidence. They believe that they are born to rule and so they find ruling easy. They do not have to be competent, they just have appear confident because we, the working class, still have an ingrained and erroneous respect for toffs.

You deny it but you do! We all do. We may hate the middle class middle manager but we love the eccentric old toff. Brigadier Lethbridge-Stewart in Doctor Who, General Mike Jackson in The Balkans. When British troops went into Iraq Colonel Tim Collins gave a speech and said: “…Iraq is steeped in history. It is the site of the Garden of Eden, of the Great Flood and the birthplace of Abraham. Tread lightly there…”. We loved it. We lapped it up. We British are romantics. We listen to these well educated, confident men and we sneer at the egalitarian Americans. We British are content to send our sons to die on the other side of the world as long as we have some Eton educated idiot fill our heads full of romantic nonsense. “Play up! play up! and play the game!” It is our pride and our curse.

Of course the Thatcher years were supposed to change all this. We were told that we were upwardly mobile. The factories were closed and we were sold cheap suits and sent to work in offices. We were now middle class.

Bollocks!

Upwardly Mobile

Upwardly Mobile

Yes, we’ve had a bath and are materially better off but we office wallahs are still working class. We still talk of nothing but football. We still ridicule education, imagination and individuality. “They hate you if your clever and they despise a fool”. We go on Britain’s Got Talent and tell the pundits that we want to express our individuality but we do it by copying every other fucker who wants to express their individuality.

At heart we still respect the toffs and we still need them to tell us what to do. Crucially, we still prefer to swing the lead rather than get off our arses and take control. The toffs are afraid of hard work while the working classes think that being in charge is too difficult and prefer to throw a sicky.

The status quo has existed for centuries and, rather than upsetting it, the left just shout and scream and demands concessions. Rather than reducing the working class to abject poverty the elite throw us a treat now and then to stop us from rising up and doing any real damage.

After a 13 year run by Labour finishing with a plunge into the biggest economic fuck up since World War 2 Labour turned on a sixpence and reverted to demanding that the government stop the cuts. The working class fell for this nonsense and people, who were not politically aware during the Thatcher years, are now expressing hatred of the Tories. Yet where were these hypocrites during the New Labour years? Where were these charlatans when New Labour wanted to introduce super casinos, built by large American corporations, in areas of deprivation with the ludicrous excuse that this would provide jobs?

Ah, but the left attracts idealists and romantics. This week I heard a great old song on the radio: “Letter From America” by The Proclaimers. According to Wikipedia The Proclaimers are socialists and the background for this song is that Thatcher had shut down Scotland and people were all leaving for America. Great song. Great sentiment.

But hang on. Thatcher is blamed for creating mass unemployment right? So the poor Scottish people were forced to emigrate to another country which, presumably, was not run according to a heartless capitalist ideology. Well great. So, which country did they choose? Cuba? Ukraine? North Korea? No, they chose The United States of America. A country which considers universal health care to be communism.

The next British general election is due in May 2015 and I doubt that the economy will have recovered by then and so Labour will probably get back in. Though most of the leaders of New Labour conveniently slipped away before the shit hit the fan there were more than enough lackeys to grasp the reins of power. So when Labour do get in they will doubtless manage the economy as badly as before.

Is the situation hopeless then? Are we British doomed to alternate between Tory and Labour. Are we condemned to eternally stagger from boom to bust? Shat on by Tories, shoveled up by Labour.

There is hope. Other countries manage to combine competent financial and economic management with liberal social polices and they are just a quick hop over the North Sea. Perhaps Scandinavia is a model for Britain’s future?

First we need to ditch the class system which underpins the oscillating nature of British politics and even here the left are too stupid to make progress. When Tony Blair had the chance he botched the House Of Lords reform instead stuffing it full of cronies. Now the Liberals are trying to introduce elections and Labour are using the occasion for political point scoring. They think that parliament is too busy sorting out the debt crisis to worry about reform. Over 600 MPs sitting on their arses all day in the Palace of Westminster can’t handle two things at once? As usual Labour are TALKING BOLLOCKS. Labour should support reform of the House of Lords and once that is out of the way they should start thinking about reducing the power of the monarchy. Notice I don’t suggest abolition as I consider the continuity provided by the monarchy to be useful.

And there is the real problem. We British cling to the past and are not brave enough to strike out for something new. But change is coming. Recent immigrants to Britain don’t fall for this working class romanticism drivel and Scottish independence may be less than a decade away. Perhaps the break up of the United Kingdom will be the kick up the arse that the British need?

Fulking Bonfire

Fulking Bonfire

09
Apr
12

The Lord’s Terms & Conditions

Euroma2

The New Cathedrals?

It seems that, these days, Easter in New York means a hat parade. People walk around in fancy hats admiring each other. This reminds me of a Science Fiction Trilogy by Michael Moorcock entitled The Dancers At The End Of Time (1974).

The trilogy tells of a bunch of people who live at the “end of time”. They inhabit a world in which they have gained complete material power and they manipulate the world using little rings on their fingers. The technology behind this had long been forgotten having been invented millennia in the past. The people have become decadent and spend their days seeking novelty. One day they spend all their time creating flags as this was the “in thing” for the season and one flag was the size of a continent.

Is this a comment on New Yorkers? Well partly I guess but, by extension, the rest of us too. BBC Radio 4 ran a story in the last few days where they were saying that most kids don’t know what Easter is about. Outrage that they know nothing about Christianity and all the rest of it.

I am usually an agnostic and haven’t seen any reason to know about religion but I am now starting to wonder. Given that, as a species, we seem to like to follow rules and do what everyone else does then maybe indoctrinating the population with a lot of myths on which to base the system and, specifically all the punishments, is a good idea. I suspect that the indoctrination would need to include some thing a bit more spiritual than hat parades though.

It has been suggested that shopping malls are modern day cathedrals. Perhaps it’s possible to create a religion based on capitalism, commercialism and materialism (CCM?) Perhaps we have already done this? If so then it may be a good plan to accept that CCM is the new religion and dress it up in a lot of archaic English to give it a more religious feel?

The Lord’s Terms & Conditions

Lord, thine world is full of marvels and wonders,
And I am free to choose,
Thanks be to choice for choice is the root of all good,
Glory be to Madison Avenue for it exalts thy wonders,
Which I may own through my own labour,
Though I am responsible for my situation just as others are responsible for theirs,
I vow to research my purchases thoroughly on comparison web sites prior to purchase,
And repay my debts,
As others debts are repaid to me with interest,
Thanks be to copyright and patent,
For they enable innovation,
And innovation creates yet more products,
Which I must strive to buy,
Blessed are the payment companies for they enable e-comerse,
Blessed is globalisation as it empowers comparative advantage,
Forgive us our debts,
After due bankruptcy procedures,
And sell us this day our daily bread,
Deliver our goods next day,
For our is the kingdom,
The power and the glory
For ever and ever
Amen

I ACCEPT                 I DECLINE

Happy Easter everyone.

Roses

Roses

30
Nov
11

overcrowded Britain

What passes for a kitchen in Hackney

What passes for a kitchen in Hackney

A front page article in the Financial Times (FT) on the 21st November reported that a bunch of “leading economists” had written a letter to the British Chancellor, George Osbourne, urging him to rethink his plans to curb immigration. Mr. Osbourne is planning to limit economic migrants entering the UK from outside the EU and the economists believe that this would be “deeply damaging to the competitiveness of our science and research sectors and the wider economy”.

The UK had 13 years of New Labour during which immigration was used to provide cheap skilled workers to business mitigating the need to properly educate the indigenous workforce. This is obviously not a sustainable policy and will merely store up trouble for the future as British people sit on their arses and let Johnny Foreigner do all the work.

The restrictions to be brought in are for non-EU citizens so British business would still have the entire population of the EU from which to draw its workers. That means the economists believe that the educated percentage of a total population of around 500 million people is not sufficient for the British economy!

What utter tosh!

If 500 million are not enough then why should we believe that a world of 7 billion people is? Perhaps, if we looked hard, we could find an even dafter set of economists who believe that UK business needs the educated population of 10 Earth size planets.

The truth is that large corporations are driven by the need for profit and this means limiting costs. Land and labour are major costs and so it is most efficient for corporations to build mega office complexes and have the entire planet as a pool of potential employees. It’s even more profitable if the workforce are educated at someone else’s expense.

I’m sure the economists are all clever gentlemen but my experience is that bean counters only count beans. By this I mean they only count that which can be counted. However, some resources cannot be quantified and the top of my list is housing. House prices in London have more than tripled in 14 years and are still way over priced as discussed in an article in The Economist in 26th November.

Since a basic tenet of capitalism is that increased demand and fixed supply drives up the price of an asset. The deliberate importing of people into the UK may support corporate profits but it will also provide upward pressure on housing.

Corporations push the idea that capitalism creates wealth for the population and this can sometimes be true. At the moment, in China, capitalism is helping raise many people out of poverty. But read a book like The People Of The Abyss by Jack London and you realise that, at the height of the British Empire, which was powered by capitalism, the lives of the people living in the east end of London were worse than Australian aboriginals on the other side of the world living as hunter-gatherers.

The People Of The Abys shows capitalism at its rawest, un-tempered by socialism or the fears of socialism. It shows that the welfare of a population is not directly related to the profits of business.

Over the past decade or so, while businesses earned fat profits, ordinary people had to endure costs which did not appear on the balance sheets of any businessmen or politician. Unaffordable housing is just one example but the ordinary worker must also endure standing like tinned sardines on Bakerloo Line trains from London Bridge on a Saturday evening. We must sit in traffic jams. We must stand in rush hour queues, not to get on the train, not to get on the platform, not to get on to the escalator but to get into the bloody station!

All this boils down to supply of land and it is possible to argue that the UK should release more land for building to ease congestion and prices. This would be fine were the UK the size of the United States. It isn’t. Open up Google Earth and have a fly over the UK. Most of the land is either farm land or already built upon. There are very few patches of wilderness. Scotland is more thinly populated  and we could just shrug and decide that we will give over the entire UK to human needs. The UK could become the first concrete country.

In 1951 Isaac Asimov published the first of his Foundation series of Science Fiction novels which portrayed a world known as Trantor which was completely covered in metal. The whole planet had been taken up by humans for homes or factories or offices. Food and raw materials were shipped in from other worlds.

I don’t want to live in a country without wilderness. I do not want to live on Trantor!

The pro-immigration lobby scoff and say that it will be centuries before we even approach a situation resembling the planet Trantor. True but then can they give us an indication of when we are going to stop building?

A couple of hundred years ago England was covered in forest and someone argued that we should chop down just this little bit more wilderness and give it over to some landowner to farm. They probably said “…but England is covered in forest, it will be centuries before it is all chopped down….”. They were right; it did take centuries.

But HELLO! here we are centuries later and the forests are gone.

On the 24 November 2011 the BBC reported that annual net migration to the UK hit a record high in 2010 at 252,000 though the figure may have now fallen to something more like 245,000. Growth is often expressed as a percentage but a more enlightening indicator of growth is “doubling period”. i.e. The time it takes for a population to double in size? The UK’s current population stands at about 62 million. If the current population carried on at replacement level and if the population only grew by the current immigration rate then the population would double in about 255 years.

That’s about nine generations if we take a generation as 28 years. By 2265 the UK would have a population of 124,500,000 and our descendants (that’s the grandchildren of our grandchildren’s grandchildren) will look back and wonder what the hell we thought we were doing.

One by one the trees are cut down. Little by little our forests were destroyed. Little by little forest becomes farm. Little by little farms become houses and offices. Little by little we accept smaller seats on buses and no leg room on trains. Little by little we trade space for gadgets. Little by little we are squeezed into chickens runs and little by little the UK becomes grossly overpopulated.

I’m sure that it’s true that adding 10% more workers to London and letting them live like factory hens would make London’s corporations more profitable. Londoners may even acquire more tablet computers and smart phones. Yet our lives would be worse! Already the definition of a kitchen in a flat in Hackney is a line of cupboards down the side of the living room. Just how many times can they divide up these beautiful old houses into smaller and smaller boxes?

The mistake that these economists make is to become totally business centric. Their analysis stops at the profits of business and they fail to follow the process through to ensure that it benefits the population as a whole.

It is notable that the venerable economists who wrote the letter to Mr. Osbourne uttered not a squeak about the corporate profits which are being filched away overseas to avoid paying tax as was reported in the same edition of the FT. Surely that too is “deeply damaging to the competitiveness of our science and research sectors and the wider economy”.

Buy Poppies at Fine Art America

Poppies

25
Sep
11

PEACEFUL FEMALE PROTESTORS PENNED IN THE STREET AND MACED in New York

Read more on this in The Guardian

22
Sep
11

Is this any way to manage your pension money

is this any way to manage your pension money?

is this any way to manage your pension money?

In 1983, at the age of  24, I started working for an investment bank in The City of London. In those days I thought I disagreed with capitalism. Even as the banking industry swirled around me I thought that for every winner there was a loser. I now have more time for capitalism. I no longer believe that investment of spare funds by people trying to save for retirement is wrong or likely to deprive someone else of value. Indeed I can see now how capitalism is merely the free allocation of funds in a free society and that it is a more efficient way of allocating funds than some bureaucrat in Whitehall.

If I have a few thousand pounds saved which I want to invest for retirement it is acceptable to lend that money to an entrepreneur who has a plan to form a company to provide goods or a service which will make a profit. If, after a few years, I consider that my investment has grown sufficiently and I can’t see the guy making much more money or if I see that another guy has a better chance of making money then it is legitimate for me to sell my stake in the first company and buy into the second.

These are fairly standard arguments and, if one believes in freedom of the individual and of individuals to act together as groups, then they are difficult to disagree with. A whole industry has grown up to facilitate these transactions along with information services to allow me to analyse various economic and financial information.

Yes, much of the money washing around the system does belong to pension funds holding capital on behalf of rich and poor alike. From rich bankers to grieving widows.

But not all who take part in the market are equal. The people who run the companies providing the financial transactions and related services realised that they were making a lot of money and that they could make even more money by ploughing their profits back into the system and trading on their own account.

Further, an article  in the Financial Times on June 7th reported that big institutional traders “are winning preferential access to deals because computers used by exchanges are programmed to accept bigger orders first when matching prices”.

So we have a market where the small invester in my initial example is at a considerable disdavantage to large pension funds and banks and as the large organisations may jump in and out of a stock several times within a day we have to ask: Is this investment or gambling?

Another fault that I see in the system is the frenzied nature of professional dealers. In 1986 a wave of deregulation swept through The City in a process known as “Big Bang”. Prior to this trading took place using a process known as open-outcry where traders use hand signals to transfer information. There was a lot of shouting and yelling and things were pretty frenetic. The process is still used by the London Metal Exchange but, after Big Bang, the London Stock Exchange replaced open-outcry by rows of traders sitting at computer screens. Technology went berserk and computers now regularly buy and sell automatically. Volumes have increased and the pace is now extraordinary. A trader will have numerous computer screens displaying graphs and figures and they will need to assimilate this information quickly and then make decisions involving huge amounts of money.

Walking around The City one has to be impressed by the fantastic granite and glass buildings with vast marble entrance halls. One has to be impressed by the frenetic pace of trading activity and by the vigour and determination of the traders but one also has to ask:

Is this any way to invest the funds you are saving for retirement?

Should the various banks be spending your pension money on the most expensive real estate in England? Should they be using your money to build luxurious head offices? Should they be rigging the pay scales of their traders to encourage them to engage in undue risk? Should they be trading in an atmosphere of hysteria?

So what’s to be done? Ban something? Many would argue that you cannot restrict such activity without restricting our fundamental freedoms. They argue that, yes, there are outrageous abuses and failings of the system but that, overall, the system functions better than any other system yet devised. As with the saying about democracy, that it is “the least worst” of all the systems of government.

I read an article recently on the risk assessment process undertaken for nuclear power stations and I recall discussing risk management with an ex-colleague who now works in the oil industry managing the movement of supertankers around the world. In both nuclear power and oil transportation the impact of a failure can be catastrophic and risk management is tasked with analysing and controlling these risks.

It seems to me that the risk management strategies in use by banks and financial institutions are mere fig leaves when compared with the very real risk management which takes place in other industries.

The British government are now making plans to require banks to ring fence their retail banking divisions keeping them at arms length from more risky investment banking. The United States had a similar law known as Glass Steagall requiring separation of high street banking and investment banking. The law was enacted to control speculation following the 1929 Wall Street Crash. However, as the American economy recovered various parts of the law were repealed until the whole thing was dismantled in 1999.

Let’s hope that the British have leaned from the American experience and that the ring fencing legislation currently being discussed will remain in force in bad times and in good.

27
Jan
11

flying fish and the inefficiency of Capitalism

Worth his weight in paper clips

Worth his weight in paper clips

I have started to speculate about the efficiency of Capitalism.

While having sympathy for Socialistic ideals I can see that Socialism is more prone to bureaucracy and autocracy than Capitalism. The reason I say this is that Socialism has no in built mechanism to correct activities that are wasteful, inefficient or detrimental. This is somewhat broad and debatable so an example may help understand my meaning.

In the Soviet Union irrigation of land meant that less and less water flowed into the inland Aral Sea which started to dry up. Leave aside whether this itself was good or bad for the moment and consider the factories on the edge of the Aral Sea which canned the fish for delivery to customers. Of course these factories had less and less work to do. The solution fond by the bureaucrats was to fly in fish from Vladivostok. This was, of course, tremendously wasteful but it didn’t matter in the Soviet Union. Waste was not an issue. Nobody was watching the bottom line.

In a capitalist economy flying in the fish would have been so expensive that the company would have gone bust and that would have been the end to the madness.

This “evolutionary” tendency seems to me to be built into capitalism. It works to eradicate inefficiency and, when working at its best, it works to provide the best goods and services to the consumer. Admittedly there can be detrimental effects to this tendency within capitalism but for the moment let’s leave them aside. I think it is generally accepted that Socialism is less efficient and less adept at modifying its processes to suit the general public.

I had seen this as a feature of Capitalism which made it simpler and more efficient than Socialism but recently I have been wondering about this.

Let us suppose that we tried to create a mechanism within Socialism to provide this feedback. A mechanism which forced factories to adapt to produce what the consumer wanted and to close down wasteful industry. How might it work?

One way it could work would be to employ an army of bureaucrats working for a separate government department to monitor activity. It would be the responsibility of this department to review the workings of industry and to assess whether the desires of the general public were being met.

At a practical level this would mean industries being forced to record information on their work which would be raked over by officials who would then direct them to stop flying in fish and close down the canning factory.

It would also mean thousands of bureaucrats visiting a representative sample of households and interviewing them on their satisfaction with their products. It would mean more officials analysing the statistics.

On the doorstep:

“Are you happy with your television set?”
“When you last purchased a car what colour did you choose?”
“Was your first colour preference available”

In the office:

OK people we have work to do. In brighton the people have started to listen to their radio in the bath so we need to make radios with suckers to attach to the tiles and we need water proof front panels. We also need to produce more red cars.

OK, OK, This is, of course, absurd.

It is the sort of plan that might be dreamt up by silly bureaucratic state officials in the old Soviet Union but in a modern, democratic capitalist country nobody in their right might would try to implement such a scheme.

But hold on.

That is exactly what has happened.

Consider all the activities which we take for granted in a Capitalist economy which provide no basic function but merely exist to enable the workings of the system.

Consider insurance, audit and finance. Consider that Financial Services was the second biggest contributor to the British exchequer in 2008 after oil and gas. Consider the Financial area of London. The City and Docklands. Consider the thousands, if not millions, of people who commute into London every day from the home counties. Consider the advertising industry and the marketing departments. Consider the customer relations people, the complaints departments and the public opinion survey organisation such as Gallup.

And consider that in capitalist economies the people who work for banks and finance institutions are not low skilled bureaucrats but extremely well paid professionals.

Of course I don’t know the figures and I doubt that anyone does but one has to wonder.
With all that activity, with all that money spent on secondary tasks one has to consider whether it might have been more efficient to simply modify socialism a little bit.

I work with a guy from Pakistan. He observes the way we in England spend enormous amounts of time weighing up the pros and cons of every purchase. (Should I buy the Prius because it’s green or the Avensis because it’s got a big boot?) He is amused at this for, as he says, these things are not important. And of course he’s right. A car is a car. Despite what the guy from the finance company says and despite what the advertising industry would have us believe differing models of cars will really not make a difference to our lives.

Efficiency in motion

Efficiency in motion

09
Jul
10

The UK in the red

The uk in the red

The uk in the red

I saw a cartoon in The Independent yesterday which implied that The Tory/Lib Dem coalition are using scare tactics to introduce spending cuts. I’ve also heard the Labour cabinet condemning all the cuts but giving no guide as to how the deficit (and the debt) which New Labour ran up should be brought under control. For those not steeped in financial jargon the debt is how much we owe and the deficit is the shortfall in our annual spending. So by running a deficit we increase the national debt. The talk by the new coalition government so far has concentrated on getting the deficit under control but bare in mind that Gordon Brown ran a deficit even during the boom years as the UK was spending more than the government gained in taxes!

Depressingly but, perhaps predictably, all we hear from everyone who has been asked to make cuts is justification for why their particular budget should not be cut. There was an education official on the radio recently “explaining” that the national debt is not like a credit card and that we can simply roll over the debt. Easy! We’re in debt, no problem, borrow more. It is this daft logic that has lead to the UK national debt of nearly 70% of GDP in 2009.

During the 18th and 19th centuries the United Kingdom became wealthy through empire and the industrial revolution and used that wealth to provide comfy lives for the British elite. Note that the majority of the British people had lives worse than many of those in India or elsewhere in the Empire mainly because of the cold British climate and the appalling working conditions during the industrial revolution. The British elite, however, did very well.

During the two world wars the European powers smashed each other to bits and America and the USSR stepped in as world leaders. The U.S. had ensured that the UK paid for aid during the war but the Marshall Plan got the UK and Western Europe back on their feat. The UK then hung on to it’s place in the world for a while. Our industry and trained workforce gave us “comparative advantage” compared to “developing countries” and so the UK and other European countries remained fairly wealthy and fairly secure. Sure Japan, Taiwan and others developed their own industry but most of the world remained pre-industrial.

Post  World War 2 a Labour government came to power and, dazzled by the apparent success of Socialism in the USSR, started looking after the working class. For the first time ordinary people gained access to clean water, health care and pensions.

We developed a world view roughly as follows: The West leads the world, developing technology and operating industry, the far east copies the West and and performs some production and the “third world” supplies the raw materials but remains poor and dependent on aid.

But the UK was complacent., we became convinced that all our wealth was a natural state of affairs and that it could all be paid for by creative accounting. While we were naval gazing the Soviet Union collapsed, open markets became the vogue, China joined the World Trade Organisation and the rest of the world adopted capitalism and found that they were pretty good at it. Not only were they good at it they were unencumbered by a mature democracy or legislation to protect workers.

Global leadership, industry and power is now shifting from the democratic Western nations to nations who are either dictatorships or corrupt token democracies. As a quick preamble to my next bit of ranting I should explain, for the uninitiated, that the a common measure of a countries wealth is Gross Domestic Product (GDP). This is a measure of the total value of goods and services produced by a country. Because countries vary in populations another common measure is to divide GDP by the population and derive a figure known as GDP per capita. This gives a measure of how much each person, on average, produces.

Time for some figures.

UK GDP is sixth in the world, just above Brazil at 8 and India at 11 and below China at 3.

UK GDP per capita is 22nd just after Italy at 21 and Iceland at 19.

National debt is at 68% of GDP, higher than Ghana at 67.5% or Uganda at 19.3%

The UK’s budget deficit (how much more we spend than we earn) is at 14.2% of GDP, above Sierra Leone at 12.35% and Vietnam at 9.3%

And yet

The UK’s defence budget is 2.5% of GDP, that’s more than above China at 2% and Germany at 1.3%.

The UK’s Education spending is the same as South Africa and Mexico at 5.3% of GDP. That’s above Bhutan at 5.2% but below Fiji at 5.6% and Bolivia at 6.3% and Yemen at 9.5%!

It’s also worth considering that other countries do not have debt, they have surplus! They have saved money and built up substantial wealth in Sovereign Wealth Funds. For example:

United Arab Emirates    627 $Billion
Norway                                443 $Billion
China                                     288.8 $Billion

The UK still has some cards up it sleeve. In 2008 we were the sixth biggest manufacturer after Italy but Russia was at 7 and Brazil at 8.

In recent history the UK has relied on North Sea oil to top up our income. I cannot find any figures on what percentage of our GDP is made up from Oil and Gas but I recall reading that the tax take on Oil and Gas was the largest contributor to the British exchequer followed by Finance. I believe that was before the financial crisis.

But north sea oil is predicted to run out within eight years.

All this is not to say that the United Kingdom is doomed, just that the world is changing and we can’t rely on the UK remaining wealthy by default. British policies today dictate the future of this country and if we continue to run up a debt our nation will decline. It not rocket science. There are younger and fitter countries in the world.

Just today I heard a British politician talking about maintaining British leadership. Our political elite have not yet caught up with the 21st century. Why should Brazil, Taiwan or China be interested in being lead by a mid size debtor nation on the other side of the world?

No nation or empire lasts for ever. Nations and Empires rise and fall. The British Empire has fallen and one day the UK will fall and I suggest that, if we are not careful, people will look back and see that the obvious start was the 21st century due to complacency, vested interests and the inability of a people to make tough decisions..

We are no longer one of the few great industrialised powers in a world populated by uneducated and illiterate farmers. The UK is now just one of many educated and industrialised countries. It is true that we have a more mature system of law and democracy but undemocratic and corrupt governments around the world see this as an encumbrance and not as something to emulate.

We are in massive debt, the oil money is running out. New Labour’s policies of spend and hope have failed. I support the current government’s prescription of large scale cuts but this should be supplemented by informed strategic planning.

We should also reconsider our commitment to allowing foreign entities to buy British assets and industry. Sovereign Wealth Funds referred to above often buy industry and assets from the developed world and this is acceptable if everyone plays by the same rules. However some of the largest of these funds are owned by nations who play by very few rules. Specifically we should be wary of allowing SWFs of single party dictatorships or corrupt regimes owning large stakes in the UK.

Globalisation is all very well while the foreign money is pouring in and funding industry and jobs but once these foreign owners have their feet under the table they often find that it is more efficient to centralise production and transfer the industry abroad. This would be fair enough were it possible for British companies to buy up industry in China, Germany or Japan in the same way but other countries are not as open as the UK.

Last Sunday night there was a TV program enthusing about one industry in the UK which remains cutting edge and world leading. This was British Aerospace and it’s production of Rolls Royce Trent aircraft engines in Derby.

The company was very impressive. What is less impressive are rumours that in order to gain access to the larger and more lucrative U.S. military business British Aerospace is trying to morph into a United States company. Once this is achieved how long will it be able to justify dispersing it’s business over two continents?




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