I’m SO Bored With the USA: Capitalism No Longer Serves the People 

 

 

“ Whoa Whoa ohh we are all we have tonite 

the ones you can’t control” 

 

 

 

Before the main event a quick look at the US; President Trump the self-anointed super negotiator is showing that he’s actually just a bully, and like all bullies, when challenged there’s no substance

 

China and the US have agreed a 90-day pause to the deepening trade war that, with reciprocal tariffs to be lowered by 115%: Chinese duties on US goods will be lowered to 10%, while the US tax on Chinese goods will be lowered to 30%. 

As I predicted in “Carpe Diem”, there was only ever going to be one winner, China, and much of Trump’s economic strategy is in tatters. The much vaunted DOGE has found little in the way of savings, and upset most people in the process. 

Tariffs aren’t going to be the big revenue generator, therefore the promised tax cuts look a long way off. 

Trump completely misunderstood markets. In reaction to his tariffs, the dollar, equities and treasuries all slumped as they feared a trade war. 

America’s reliance on imports was highlighted as shelves starting to empty. Imports from China started to dry-up, falling by 17.6% in April, a trend that was predicted to only get worse. 

Trump focus now appears to be Europe, with treasury secretary, Scott Bessent, comments suggesting the EU is the USA’s new trade enemy. 

 

‘In reaction to his tariffs, the dollar, equities and treasuries all slumped as they feared a trade war’

 

The situation looks somewhat better for the UK, with a “breakthrough” trade deal slashing some of Trump’s tariffs, which, the PM said, would save thousands of British jobs. 

The US agreed to cut the tariff on British steel and aluminium exports from 25% to zero, and reduced tariffs on British cars to 10%, down from the 27.5%.  

In addition, there is the promise of “preferential treatment” to our pharmaceutical industry, which was also threatened with tariffs, and American aerospace manufacturers will receive preferential access to high-quality UK aerospace components. A 10% baseline tariff on most goods remains in place. 

All of this with no reduction in UK food standards, with imports of hormone-treated beef or chlorinated chicken remaining illegal. 

The most amusing reaction to the deal came from the Tories, their leader, Kemi Badenoch, criticised the deal, claiming that the UK has been “shafted” by Trump. However Andrew Griffith, the shadow trade secretary, said the reduction in tariffs would “be welcomed by exporting businesses”. It’s so refreshing to see the shadow cabinet supporting their leader?! 

This backtracking on tariffs exposes Trump’s desperation and political posturing. There is no enormous leverage over other nations, overseas leaders aren’t desperate to “kiss my ass”; the veneer is fast peeling off the President. 

In terms of dealing with Trump, Starmer has made a good start, and we have something on the table as a result, and seemingly having learnt from the farcical Brexit negotiations that “any deal is better than no deal.” 

 

‘backtracking on tariffs exposes Trump’s desperation and political posturing’

 

Moving on from trade and congratulating the government, we turn to immigration and the governments attempt to ingratiate itself with Reform and their band of racists. 

More on this next time, but as I have warned many times, proposals such as this legitimising the subject and therefore Reform. In addition, voters have shown here and elsewhere they will vote for the extremist over the closet ones. 

This step to the right by Starmer isn’t unexpected and only endorses what I wrote in “The Times They Are a Changin’”: “Labour’s problem is that they simply fail to see the problem”. This isn’t quite, “it’s the economy, stupid”, but it’s close. It’s the cost of living, stagnant wages, inflation, poverty, foodbanks, inequality…. 

By comparison, the Big Issue co-founder John Bird, is a breath of fresh air, warning that Labour will not stem the rise of Reform if it fails to tackle poverty, saying: Nigel Farage’s party was “only going places because the major parties have lost their way”. 

“This government, like those who came before, has lost the trust of its supporters by muddling through, caring more for the immediate than ensuring an enduring and better long-term future. Shuffling into the future and carrying poverty with them. 

“The whims of politicians limit the economy’s ability to grow in a way that helps working people, creating poverty faster than any other point in the 21st century. So it is both a moral and a political necessity that Labour take urgent, meaningful action.” 

The latest official figures showed a record 4.5 million children were living in poverty in the UK in the year to April 2024, up 100,000 from the previous year. 

In its general election manifesto, Labour promised an “ambitious strategy to reduce child poverty”, yet they have done nothing about the two-child benefit cap. 

YouGov polling for the Big Issue found that 72% of British people surveyed thought Labour should be doing more to tackle poverty in the UK, a figure that has risen by 18% since September 2024, when 54% of Britons felt the government was not doing enough for people in poverty. 

 

‘72% of British people surveyed thought Labour should be doing more to tackle poverty in the UK’

 

When, in January 2021, the new column “Beginning to see the Light”, was introduced, I wrote an entrée; “Beginning to see the Light – Background”, saying: “the new column would still provide a “commentary on the weeks’ events, highlighting what I believe is the biggest issue facing us, the wealth gap, that has created such an unequal society”. 

In the years since, much of what has happened has only served to enhance my belief that I had identified the prime cause of our problems. 

There is no easy way to deal with this. 

People at the bottom need to be better paid, workers rights should be revisited. There is no need for this to entail the labour unrest that bedevilled the 1970s, but the gig economy, zero-hour contracts belong in the bin. 

Services need to be brought up to standards demanded by the electorate. 

The uber rich need to pay more in the way of taxes. Capitalism, in its current form is skewed heavily in their favour, to the expense and detriment of the masses. 

In a speech in September 2023, António Guterres, the UN’s secretary general, spoke about rising geopolitical tensions such as the war in Ukraine, but the core challenges he cited were more systemic: inequality, rising debt levels, authoritarianism, financial architecture that was “dysfunctional, outdated and unjust”, and “the most immediate threat to our future: our overheating planet”. He concluded, saying that if we don’t tackle these issues quickly there is the prospect of “a great fracture in economic systems and financial systems and trade relations.” 

 

“the most immediate threat to our future: our overheating planet”

 

As I wrote in “Fear and Loathing in …..”, the GFC ended the neoliberal experiment in unrestricted financialisation and globalisation. 

In its place we have the dominance of big tech, an intensifying climate crisis, a global pandemic and a rentiers paradise. 

A 2023 opinion poll found that “almost half of Americans, regardless of generation and race, say that capitalism is headed on the wrong path”.  

In the book “What has happened to capitalism in America?” Oren Cass, a Republican policy analyst who worked on Mitt Romney’s 2008 and 2012 presidential campaigns, wrote in the introduction. “Businesses still pursue profit, yes, but not in ways that advance the public interest … Globalisation crushed domestic industry and employment, leaving collapsed communities in its wake. Financialisation shifted the economy’s centre of gravity from Main Street to Wall Street, fuelling an explosion in corporate profits alongside stagnating wages and declining investment.”   

Trump 2.0 is the worst example of this, a mash-up of populist economic nationalism, Silicon Valley accelerationism and a continuation of Reagan’s feed-the-rich tax policies. Trump has set about enriching himself, as was shown is a recent report by a watchdog group that tracks Trump’s activities, the family’s net worth has risen by $2.9bn during the past six months based on the market value of its various crypto investments.  

 

‘a mash-up of populist economic nationalism, Silicon Valley accelerationism and a continuation of Reagan’s feed-the-rich tax policies’

 

Despite the success of some western governments, and the World Bank, through “green growth”  it remains a pariah for populists, even though there are examples of creating rising GDP by “decoupling” from higher emissions. E.G., the UK cut its carbon emissions in half between 1990 and 2022, even as its inflation-adjusted GDP rose by about 80%, mainly by replacing coal-fired power stations with a combination of renewable sources and natural gas. In April 2024, 59% of Britain’s electricity came from renewables. 

Despite these achievements, net zero is something that populists such as Reform clearly detest. The party’s energy spokesperson, Richard Tice, attacks “net stupid zero” at every opportunity, and its leader, Nigel Farage, has warned council officials who work on climate change to look for new jobs. 

Adding to this is Tony has-been Blair, who wrote: “Voters feel they’re being asked to make financial sacrifices and changes in lifestyle when they know that their impact on global emissions is minimal … any strategy based on either ‘phasing out’ fossil fuels in the short term or limiting consumption is a strategy doomed to fail.” 

Both Reform and Blair are out-of-touch with the electorate: More In Common found that 40% of voters think the UK’s 2050 target is a good policy while only 21% view it as a bad idea. Two-thirds of voters want the government to either maintain its current pace on the policy or go faster. Even those deserting Labour for Reform support for net zero policies. 

 

‘net zero is something that populists such as Reform clearly detest’

 

To better serve the masses we need to consider solution such as “shrinking capitalism”, which Joseph Stiglitz, the American liberal economist, described as: “There must be large parts of the economy that are not and cannot be driven by profits. These include much of the health, education and care sectors, in which the narrow pursuit of profits often leads to perverse results.” 

Within this is the need for “shrinking capitalism” to occupy a “diminished space” where it could do less damage, and its strengths, such as its capacity to spur innovation, would serve the community 

The problem, as always, is cost and priorities. 

Labour’s priority is staying in-power by delivering sufficient change, which won’t be achieved by aping Reform’s ideas. 

As I wrote in “Trump, role model, or yesterday’s model?” immigration can be helpful. Left centrist parties in Spain have shown that embracing immigration, and climate change is a way forward; the country was named the world’s best by the Economist in 2024.  

Our problem is that we have no money, and a government who has boxed themselves in setting self-imposed fiscal rules, ruling out a wealth tax, and potentially relenting on their threatened crackdown on tax-avoiding non-doms. 

Taxing the rich is the only was forward. There is little left to cut and, if there was, it would impact more on the masses increasing poverty. 

 

‘Our problem is that we have no money, and a government who has boxed themselves in setting self-imposed fiscal rules’

 

What mustn’t be overlooked is that the UK has had four black swan events since 2008. The impact of these on the national debt can be seen on the graphic above 

The first was the GFC, the cost of which is somewhat difficult to fully determine. 

The National Audit Office reported in 2016 on the level of financial support given by the government to the Banks since 2009. The headline figure is £456.33bn, down from £612.58bn in March 2010. The peak was £1.162 trillion. The total outstanding support is 31% of March’s GDP. 

 

‘Labour is started to look like a failed government’

 

Actual money is the smallest part: £123.93bn was provided in the form of loans or share purchases, which required a transfer of cash from the Government to the banks. 

The GFC was followed by Brexit. The OBR projects that the UK economy will be 4% smaller than it would have been if it had remained in the EU, equivalent to around £100 billion. Studies suggest that Brexit has shrunk the UK economy by £140 billion, reduced trade by 15%, decreased productivity, and is predicted to cost millions of jobs. 

Next-up was Covid. Current estimates of the total cost of government Covid-19 measures range from about £310 billion to £410 billion, equivalent to £4,600 to £6,100 per person in the UK. Official figures show that spending in 2020/21 was about £179 billion higher than had been planned before the pandemic for that year. 

Last and not least we have the short-lived absurdly expensive Truss budget, which the independent Resolution Foundation puts at £30bn. 

Labour is started to look like a failed government. They seem unable, or unwilling to understand the real problems, let alone embracing the solutions. 

I will leave the last words to their former leader, Jeremy Corby, now sitting as an independent, who, in response to Starmer’s immigrations plans said: 

“The problems in our society are not caused by migrants or refugees. They are caused by an economic system rigged in favour of corporations and billionaires. If the government wanted to improve people’s lives, it would tax the rich and build an economy that works for us all.” 

 

“Well, he hands you a nickel, he hands you a dime
He asks you with a grin if you’re havin’ a good time
Then he fines you every time you slam the door” 

 

‘This week we have another “I told you so” piece.

Trump’s tariffs are in tatters, with only the EU left to reach agreements with.

Others, especially China, have exploited his desperation to do a deal and turned into master negotiators themselves.

As many have said, Trump is just a bully, and when people stand-up to them bullies crumble.

This week he is headed for the Gulf states, where it is hoped by many he uses his influence to talk Israel down from cleansing Gaza of Palestinians.

I had hoped no to get too drawn into Starmer’s immigration mistakes, but it seems comment is necessary as more becomes apparent.

There is much sympathy with the comments of some Labour MP’s, such as Nadia Whittome, who feel that Starmer’s ‘island of strangers’ comment ‘mimics scaremongering of the far right.

She was spot on in saying that “Blaming migrants for a housing crisis and failing public services lets the real culprits off the hook: landlordism, chronic underinvestment and deepening inequality. Labour was elected to tackle those, not parrot Reform’s scapegoating, which will never improve people’s lives.”

Starmer and co. simply can’t or won’t see the real problem, and are continually bogged down trying to fend off Reform by becoming them. I can only assume they are blind and deaf, the Tories tried this and were roundly defeated.

By continually moving to the right, Labour will lose support  to both the LibDems and Greens.

Someone needs to tell him; “It’s all about the economy, stupid”

Lyrically, we start with “We are all prostitutes” by the oft forgotten Pop Group, and finish with “Maggies Farm by Bob Dylan”.

There is still something to enjoy, but more to fear! Philip.’

 

@coldwarsteve

 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

Click on the link to see all Brexit Bulletins: