I’m So Bored With the USA: The real question is, who governs? 

 

“And to the voice that told her when and where to act 

She said, “I’ve lost control again” 

 

 

This week, I was determined to start on a positive note. 

 

So, big-up’s to Brian Eno for overseeing “Together for Palestine”, which brings together British and Palestinian artists at the 12,500-capacity Wembley Arena, to raise funds for Choose Love, a British charity working with 23 partner organisations in Gaza to deliver food, medical supplies and other support. 

Unfortunately, that’s the end of the good news….Israel’s security cabinet has approved a plan to take over Gaza City, marking a new low in the crisis that has killed tens of thousands of Palestinians, destroyed most of Gaza and pushed the territory into famine. 

The plan, which is scheduled to be completed by 7 October. would force approximately 1 million Palestinians in Gaza City and other areas into evacuation areas in the southern part of the Gaza Strip.  

PM Starmer, said Israel‘s decision was wrong and urged them to reconsider: “This action will do nothing to bring an end to this conflict or to help secure the release of the hostages. It will only bring more bloodshed.”  

The leader of the Liberal Democrats, Ed Davey, said it was increasingly clear that Netanyahu’s goal was “ethnic cleansing” in Gaza. He urged Starmer to cease all arms exports to Israel and sanction Netanyahu and his cabinet. 

Ed might soon find himself being arrested as, it appears, supporting Palestine makes you a terrorist. A pro-Palestine march this weekend saw the Met arrest 532 people. 

 

‘Israel’s security cabinet has approved a plan to take over Gaza City, marking a new low in the crisis that has killed tens of thousands’

 

In addition, 200 more have been arrested in recent weeks, including 81-yr old Deborah Hinton, a former British magistrate; Jon Farley, a retired school principal; Marianne Sorrell, another former teacher now aged 80; and the Rev Sue Parfitt, an 83-year-old retired priest, 

Looking at the pictures, there isn’t a suicide vest or AK47 to be seen, most seem retired or close to it, and more of a danger to themselves. 

There is a bigger, more sinister picture here, one that leads me to question who runs the country. We do have a PM,  confused of Downing St, who, before entering politics, was a human rights lawyer. Today, he seems happy to support and export to a country that, under the legal definition, is practising genocide. 

Starmer is notionally in control, the real power lays with the media, Daily Mail, Telegraph and Times who do far more to shape public opinion.  

Their narrative is simple and was decided at the outset of the crisis. We support Israel, anyone dissenting is antisemitic.  

I cant help but think that for many of their readers who suffer Islamophobia, that they are happy for Isreal to do their dirty work for them.   

 

‘We support Israel, anyone dissenting is antisemitic’

 

Domestically, storm clouds are gathering for an unappetising autumn. 

The right-wing media doomsters are hard at work, suggesting that the country is, or will be – they don’t seem sure which – bankrupt. 

The cause; all these poor people, living on benefits, many of whom work but unfortunately earn too little, primarily due to the gig economy, which, from what my research shows, found prominence after the GFC. 

The Times is usually more restrained than some of the other rags, but Matthew Parris really went for it: “Rip up the benefits system and start again”. The welfare state is “in danger of toppling the whole economy”. Unsustainable numbers of claimants are “joining the bandwagon as it careers towards the abyss”. 

Hyperbole, perhaps, but bulletins from the Conservative-Lib Dem creation, the Office for Budget Responsibility (“OBR”) support his comments: “The UK’s public finances have emerged from a series of major global economic shocks in a relatively vulnerable position”;  “Underlying public debt is now at its highest level since the early 1960s and is projected to rise further … An ageing population and rising costs of healthcare and other age-related expenditures are … projected to push … debt above 270% of GDP by the early 2070s.”  

At this point, I want to pause and consider priorities. As I wrote in “Big Business Very Wise”, the government managed to find funds to increase defence spending; does this mean that rockets and guns for wars we likely never fight are more important than alleviating poverty? 

Of course, we shouldn’t forget other priorities, such as bailing out banks led by clueless grandees, which we will likely revisit when Chancellor Reeves deregulates the City. Then there is the ever increasing grant for a royal family that already has highly profitable estates. 

This is just another example of big fucks small. Governments from both main parties have, and continue to show a callous disregard for those with the least. 

 

‘This is just another example of big fucks small. Governments from both main parties have, and continue to show a callous disregard for those with the least’

 

None of these doomsters stop to question the impact and affordability of low taxes for the rich, and they conveniently overlook the impact of continually cutting public services, and the knock-on effect on productivity, social relations and public health.  

We must remember that these are the children of Thatcherism who once said: “..And no government can do anything except through people, and people must look to themselves first…” 

 

Source: https://iea.org.uk/blog/there-is-no-such-thing-as-society 

 

Their solution was, and still is less government support not more. 

Looking back, Labour governments have run into similar problems far too often; 1931, 1976 and 2010. Each time, their solution was to propose cuts. I always suspect that the Tory medias branding of Labour as “tax and spend” is designed to goad them to doing the opposite, as they try to show they can manage an economy.  

This week, the respected National Institute of Social and Economic Research summer up the situation, thus: “the chancellor cannot simultaneously meet her fiscal rules, fulfil spending commitments and uphold manifesto promises to avoid tax rises for working people. At least one of these will need to be dropped.”  

It appears that chancellor Reeves will endeavour to avoid increasing income tax, national insurance or VAT, but a rise in gambling levies seems nailed-on as part of the package of tax rises. 

Stickier than expected inflation is another major concern, with soaring food prices linked to Labour’s tax increases threaten to drive inflation to 4% this year, limiting the scope for further cuts in interest rates. 

The BoE, when announcing the rate cut, pointed to “material” rises in employment costs and new charges for recycling packaging, both driven by the government, that were being passed on to shoppers by UK supermarkets. 

These were, “In addition to global agricultural commodity prices, domestic labour costs are currently an important driver of food price inflation,” the Bank said. 

Much to my surprise, the government seems still to be unclear on the causes of our low economic growth and productivity. There does, however, seem to be a realisation that we now face serious choices on growth and productivity, and the need to rebut the charges that the poor state of the economy is down to individual tax and spend choices, instead it is a sign of the economy’s weak fundamentals. 

One of the key fundamentals is a lack of investment at levels; from government, personal saving, and investors.  

Back in the day, the City of London was the world’s banker, our stock exchange was worth as much as the New York and Paris exchanges combined.  Funding two world wars did much to neuter this, and today, the stock market is shrinking at its fastest rate since 2010, with companies increasingly ditching London for  Europe and the US. 

Governments, no matter what chancellors might wish for, cannot make investors invest. As a result our moribund stock market is both a cause and consequence of stubbornly low business investment and a broken growth model. 

Today, the stock exchange isn’t providing enough access to capital, and listed companies aren’t investing to boost growth. Pension funds, traditionally one of the largest investors, are increasingly focussing their into gilts, or to the more exciting US to benefit from the tech boom. “In 1997, UK pension schemes allocated 53% of their assets to UK equities; today, that figure just is 6%.” 

 

“In 1997, UK pension schemes allocated 53% of their assets to UK equities; today, that figure just is 6%.” 

 

This lack of investment has stymied the growth of businesses, and this has been exacerbated by shareholder demand for dividends, producing a toxic spiral of stagnant growth and diminishing prosperity.  

Dividend payments grew nearly 6x faster than real wages between 2000 and 2019, and British companies now spend less on research and development than their European equivalents. The dividend yield is about twice as high for UK shares as it is for US stocks. 

The beneficiaries are rentiers, which further increases the upward flow of wealth, whilst the economy struggles due to our poor productivity. 

Firms listed in Britain are consequently vulnerable to foreign and private equity takeovers, while successful companies are heading overseas to raise money. Arm, the semiconductor firm, is a classic example; bought by Japan’s Softbank in 2016 when it was valued at $24bn. Despite lobbying from politicians, the UK-based company listed on Nasdaq, and has since gained approximately £85bn in value, most of which accrued to investors overseas. 

Everyone has their solutions; the CBI wants the chancellor to persuade pension funds to invest more in British businesses.  

Greater public investment would help; government-backed regional banks could lend money to start-up’s outside London. The major banks could also help, but they are really only interested in property lending, especially residential property. 

At the heart of the problem is rentiers and wealth extraction. Property is now seen as an asset class, increasing dividends are demanded, and, if there is any excess capital, it is used for share buybacks, which increases the value of the reduced outstanding shares. 

Again, much of this could be fixed by an imaginative proper Labour government, unfortunately we have a timid, ersatz version 

At government level, investment is local councils is being shaken-up, as they try to redistribute cash away from wealthy areas. However, for some strange reason, deprived inner-city London councils stand to lose millions of pounds under the changes according to the Institute for Fiscal Studies (“IFS”). 

Other losers include South Tyneside, Sunderland, Gateshead and Wigan, all economically deprived northern areas, with high child poverty levels. 

The IFS said it was “surprised” the government’s proposed funding formula changes were not more strongly geared towards deprivation – and warned that some areas with traditionally high needs associated with poverty would lose millions of pounds: “Despite … an expectation that deprived and urban areas would win at the expense of more affluent and rural areas, the government’s baseline funding reform proposals are not particularly redistributive to poor, urban areas of England.” 

Overall, about one in four councils would have a real-terms fall in funding over the next three years, with 30 facing cuts of 11-12%, the IFS estimates. At the other end of the scale about 25% of authorities would have funding increases of 12% or more. 

 

‘Is it the elected Labour, or the right-wing media who set the narrative?: “Whoever controls the media, controls the mind.”’ 

 

Regionally, the biggest losers would be London (-7%),  SE (-2%) SW (-1%). The big regional winners are the East Midlands (+6%) and Yorkshire and the Humber (+4%). 

Claire Holland, the chair of London Councils, said: “This would have major implications for our most vulnerable groups of residents: London has the highest rate of poverty in the country once housing costs are factored in, and one in 50 Londoners is homeless and living in temporary accommodation.” 

They believe that the proposed formula underplays London’s extreme housing costs and high levels of overcrowding and fails to capture high levels of poverty and demand for children’s social services, with fears that the capital could lose £1.5bn under the children’s services funding formula alone. 

Is it the elected Labour, or the right-wing media who set the narrative?: “Whoever controls the media, controls the mind.”   

 

 

“Of our elaborate plans, the end 

Of everything that stands, the end’

This article is all about control, or rather who is in control.

Since 1980 we have seen a succession of market friendly, neoliberal governments. The result of this is one of great upward redistributions of wealth since the 1900s.

For voters aged 60 or less we have never known anything other than small government and reduced personal taxes. Albeit, there has been an increase in stealth taxes.

This is reflected in the media, who today are more right-wing than ever. They are keeping the Tory torch burning more than the party.

Their readers are the rentiers, boomers enjoying huge property value increases, fully superannuated, and able to invest, who have benefitted from the financialization of the economy.

They invest in the stock market, but they want income, dividends. This fixation stops companies investing their profits to expand their business, leaving the economy in tatters, with no research, and low productivity.

Labour appear so terrified of the media’s “tax and spend” accusation, that they have become a Tory tribute act, meaning nothing is ever done to halt the downward spiral.

The media are the doomsters, but they are also the cause.

The same can be said of Israel’s action in Palestine. The right-wing media suffer from Islamophobia. Yes, they tut-tut at the IDFs actions, the starving genocide that is being carried out, but nothing more. Do they really care? Somehow, I doubt it.

The narrative is all about Israel, criticise them and you are antisemitic and a terrorist.

A final word on Ukraine whose fate might be sealed when Putin and Trump sit down to carve the country up. Will PM Stamer object to Russia winning despite acting illegally, or will be kowtow to Trump? Where’s Hugh Grant when you need him?

Lyrically, we start with Joy Division and “She’s Lost Control”, and we finish with “The End” by the Doors.

Much to enjoy if you’re a rentier! 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

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