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Posts Tagged ‘Poverty’

We’re all in this together (Part II)

August 11, 2010 Leave a comment

So this is what societal regression looks like.

Cost of benefit fraud to the UK economy (2008-09): £900m (all figures approximations per annum)

Cost of the tax gap to the UK economy: anything from £40bn to £120bn

Demonising the poor, encouraging widespread cronyism, pursuing a discredited, economically illiterate agenda and ruining any chance of recovery: erm…priceless?

The unequivocally appalling rhetoric emerging from Cameron himself over the weekend is that, rather than challenge the vast amount of potential tax revenue lost through tax avoidance (not a crime, albeit socially irresponsible) and tax evasion (accounting for the overwhelming majority of the tax gap and a criminal act), they would rather attack some of the poorest members of society. Benefit fraud is undoubtedly a (relatively minor) problem but accounts for a minimal amount of the total fraudulent activity in the UK each year. Of the £5bn figure quoted by Cameron, a significant majority is in the form of benefit error, rather than fraud.

This is all illustrated strikingly by the following rather interesting graph from Left Foot Forward, and reinforced by this damning indictment of the Tory’s misguided focus from Richard Murphy at Tax Research UK.

In addition to attempting to denigrate and stigmatise those on low incomes for pretty much their entire duration in office thus far, the Tories have made a further disgraceful decision over the monitoring of this alleged rampant benefit fraud. Through incentivising credit reference agencies to seek out cases of benefit fraud (surely a move that will only encourage individuals to use cash rather than credit), there is a serious risk of accusations been levied at perfectly innocent people. By all accounts, over 80% of current allegations of benefit fraud are found to be malicious – a figure that will only rise under the new system. There is an absolute necessity for regulation of the credit reference agencies within this context, although this will almost certainly not be forthcoming.

It’s also fairly unsurprising to discover that there are vested interests between certain credit reference agencies and the Tory party themselves. Experian, one of the UK’s leading credit reference agencies, already has a contract to inspect housing benefit claimants and, with Michael Spencer as its founder, has a major Tory party donor as one of its leading lights.

It’s ultimately a classic illustration of Tory politics. Attack the most vulnerable in society through protecting the interests of the wealthy, replacing state services with unregulated and incompetent private sector provision, a fair amount of cronyism if not corruption itself, and an outcome which only damages society and the economy further. It really has been remarkable to watch just how low the Tories will sink. New depths are reached with every passing week and the downward trajectory shows little sign of abating. Should they not successfully manage to achieve the most blatant and undemocratic piece of gerrymandering in recent decades, they will incur serious damage to their credibility during this first term of office.

No Sympathy for a Sinking Ship

June 22, 2010 Leave a comment

As the second round of World Cup group games conclude and the UK lies precariously underneath the Damoclean sword of  Osbourne’s ideologically driven, socially divisive “emergency” budget, there are interesting parallels to be made between the relative performance of teams in the world cup and their respective socio-economic models.

In simple terms European teams are not matching their pre-tournament expectations, whilst their South American counterparts are performing beyond the predictions made of them (this blog included). All five South American qualifiers currently sit atop their respective groups and have provided the competition with some of the more fluent and stylish football thus far. Argentina are ridiculously entertaining (both on the field and in the dugout), Brazil appear extraordinarily resilient and defensively strong, Chile attack with such exaggerated verve that their inability to finish is something of a disappointment, whilst Uruguay and Paraguay are talented, adaptable teams that have proved that a nation need not have a large population to create an impressive football team. The contrast with the traditional powers of European football could hardly be more comprehensive. The Netherlands and Germany are perhaps the two Western European teams most immune from criticism. The former were the first team to secure qualification for the second round of the competition, albeit unimpressively, whilst Germany dismantled Australia before succumbing to a particularly incompetent refereeing performance and an underrated Serbian team. Spain are extremely impressive in terms of retaining possession yet look tactically limited and surprisingly toothless. England, France, and Italy have been little more than a disgrace. Failing to achieve a good performance amongst them (and scoring only three goals in six matches!), the unpleasant triumvirate have all been exposed for what they are – overhyped, ageing (in the case of England and Italy in particular), and divided (France and England) squads playing some of the most negative, unimaginative football witnessed at this World Cup. France are almost certainly out, whilst England and Italy sit in precarious (albeit recoverable) positions within their groups. It would be a genuine shame should any of these teams make it through the group stage.

Whilst the relative fortunes of these two region’s football teams are somewhat interesting, it is the socio-economic context to these performances that perhaps offers an insight into a real power shift that extends far beyond football.

Ask any Argentine what they think of austerity measures and the IMF and they’ll most likely bristle at the memory of their country sinking into an economic shambles that was rescued through defaulting on the nation’s debt and, ultimately, telling the IMF where to go. As a case-study into why neoliberal economics and the IMF as a whole are fundamentally flawed concepts and institutions, one only has to look at Argentina. Paul Krugman, Joseph Stiglitz and any other respectable economists, i.e. those not slavishly following the laughably discredited ideas of Milton Friedman et al, all stress the inevitable economic decline precipitated by pursuing an agenda of fiscal-contraction in an economic downturn. Apparently this memo has not yet reached Western Europe. It’s hardly surprising – the greatest casuality of the global financial crisis has been, incredibly, social democracy. In late 2008, when sales of Marx were at their highest in years, and the state became the saviour of the financial system, this idea would have appeared preposterous. Instead we now see daily attacks upon the public sector, upon the ‘unaffordable’ welfare state, and, perhaps most ridiculously, upon the failure of “socialism” (with regards to the ousted Labour party in the UK). What the global financial crisis actually showed us was that 30 years of pursuing a neoliberal agenda and a minimally regulated financial sector were not sustainable. It is not the welfare state that is unaffordable but rather the current global financial system. Remarkably, Europe in general and the UK in particular, have decided that reducing their national budget deficits is the most pressing problem currently facing the region. Whilst financial institutions will always promote such a view, it is incredibly flawed. No real reform was made following the financial downturn and we remain locked within a crisis of capitalism. The Conservative Party’s ideologically driven economic medicine for the UK is to pursue an outdated and unworkable socio-economic system, with an inevitable rise in unemployment, poverty, rapid decline in health, education, and other public services, and an astonishing acceleration of inequality the result. When the next inevitable financial crisis arises this flawed socio-economic agenda will finally be exposed. The state will not be in a position to rescue the financial system and the general populace won’t enjoy the insulation they had from the deepest recession since the 1930s. Western Europe, and Britain in particular, faces an undignified and messy decline. Just as the England football team’s deficiencies have been hidden by an obscenely unbalanced and unsustainable domestic league model, often misguidedly heralded as ‘the best league in the world’, the UK economic system’s flaws were disguised by an obscenely unbalanced and unsustainable dependence upon a financial system beset by incompetence, greed, and panic. The Premier League began to lose a little of its lustre last year as some of its top talents fled to more appealing environments (a process set to continue this summer) and the subsequent decline in quality was notable.

South America has done things differently. The hardship associated with excessive neoliberal policies has shaped the current socio-economic agenda of much of the continent (Columbia is an obvious exception). The utterly reprehensible actions of the US both before but especially throughout the Reagan-era in the region has proved another powerful influence. Where Europe seeks to attack worker’s pay, conditions, and rights in general, Brazil has surged economically whilst led by a former prominent trade unionist in Luiz Inácio Lula da Silva. It could be asserted that many South American nations in general have willingly traded rapid economic (in terms of GDP) growth for a little more social harmony (and Uruguay certainly fits this model), yet their growth has exceeded that of Europe over the past decade (and has improved markedly following the abandonment of nominally neoliberal policies). The upshot of these varying economic trajectories is all too apparent at this year’s World Cup. Neoliberalism has left societies fractured, discontent, and greedy – qualities all too apparent in the play of England and France – whilst the social democratic model of Argentina, Brazil, and other South American nations, has created a unity and equality on and off the pitch. The contrast between the 2012 and 2016 Olympics should prove fascinating. The London games are likely to be held under severe budget restrictions with a demoralised population and the economic deterioration of the country all-too-apparent, whilst Rio de Janeiro should consolidate (following the 2014 World Cup) Brazil’s developing global prominence.