Category: banking

From the abstract to the concrete: urban design as a mechanism of behaviour change and social exclusion

Shopping malls are unforgiving, soulless and unfriendly places. For many people, frequenting the modern shopping mall is a deeply alienating and physically damaging experience. It brings with it a recognition of how some groups of people are being coerced and physically situated in the world – how citizens think and act is increasingly being determined by ‘choice architecture’ –  which is all-pervasive: it’s situated at a political, economic, cultural, social and material level. Hostile architecture – in all of its forms – is both a historic and contemporary leitmotif of hegemony.

Architecture, in both the abstract and the concrete, has become a mechanism of asymmetrically changing citizens’ perceptions, senses, choices and behaviours – ultimately it is being used as a means of defining and targeting politically defined others, enforcing social exclusion and imposing an extremely authoritarian regime of social control.

Citizens targeted by a range of ‘choice architecture’ as a means of fulfiling a neoliberal ‘behavioural change’ agenda (aimed at fulfiling politically defined neoliberal ‘outcomes’) are those who are already profoundly disempowered and, not by coincidence, among the poorest social groups. The phrase choice architecture implies a range of offered options, with the most ‘optimal’ (defined as being in our ‘best interest’) highlighted or being ‘incentivised’ in some way. However, increasingly, choice architecture is being used to limit the choices of those who already experience heavy socioeconomic and political constraints on their available decision-making options.

Urbanomics and the cutting edge of social exclusion: what is ‘defensive architecture’ defending?

Social exclusion exists on multiple levels. The distribution of wealth and power, access to citizenship rights and freedoms, political influence and consideration are a few expressions of inclusion or exclusion. It also exists and operates in time and space – in places.

Our towns and cities have also increasingly become spaces that communicate to us who ‘belongs’ and who isn’t welcome. From gated communities and the rise of private policing, surveillance and security to retail spaces designed to fulfil pure profiteering over human need, our urban spaces have become extremely anticommunal; they are now places where an exclusive social-spatial order is being defined and enforced. That order reflects and contains the social-economic order.

Retail spaces are places of increasing psychological and sensual manipulation and control. Hostile architecture is designed and installed to protect the private interests of the wealthy, propertied class in upmarket residential areas and to protect the private profiteering interests of the corporate sector in retail complexes.

The very design of our contemporary cities reflects, directs and amplifies political and social prejudices, discrimination and hostility toward marginalised social groups. Hostile architectural forms prevent people from seeking refuge and comfort in public spaces. Places that once reflected human coexistence are being encroached upon, restrictions are placed on access and limits to its commercial usage, demarcating public and private property and permitting an unrestrained commodification of urban spaces and property.

In 2014, widespread public outrage arose when a luxury London apartment building installed anti-homeless spikes to prevent people from sleeping in an alcove near the front door. The spikes, which were later removed following the public outcry, drew public attention to the broader urban phenomenon of hostile architecture.

Anti-homeless spikes in London

Dehumanising ‘defensive architecture’ – ranging from benches in parks and bus stations that you can’t actually sit on, to railings that look like the inside of iron maidens, to metal spikes that shriek ‘this is our private space, go away’ – is transforming urban landscapes into a brutal battleground for the haves and socioeconomically excluded have-nots. The buildings and spaces are designed to convey often subtle messages about who is welcome and who is not.

Hostile architecture is a form of urban design that aims to prevent people from lingering in public spaces. The anti-homeless spikes here, for example, were installed to deter beggars and those sleeping rough.

Hostile architecture is designed and installed to target, frustrate deter and ultimately exclude citizens who fall within ‘unwanted’ demographics.

Although many hostile architecture designs target homeless people, there are also a number of exclusion strategies aimed at deterring congregating young people, many of these are less physical or obvious than impossibly uncomfortable seating, which is primarily designed and installed to prevent homeless people from finding a space to sleep or rest. However, the seating also excludes others who may need to rest more frequently, from sitting comfortably – from pregnant women, nursing mothers with babies and young children to those who are ill, elderly and disabled citizens.

Image result for defensive architecture seating

When the purpose of public seating isn’t taking the weight off your feet and providing rest.

Some businesses play classical music as a deterrent – based on an assumption that young people don’t like it. Other sound-based strategies include the use of high-frequency sonic buzz generators (the ‘mosquito device’) meant to be audible only to young people under the age of 25.

Some housing estates in the UK have also installed pink lighting, aimed at highlighting teenage blemishes, and deterring young males, who, it is assumed, regard pink ‘calming’ light as ‘uncool’. There is little data to show how well these remarkably oppressive strategies actually work. Nor is anyone monitoring the potential harm they may cause to people’s health and wellbeing. Furthermore, no-one seems to care about the psychological impact such oppressive strategies have on the targeted demographics –  the intended and unintended consequences for the sighted populations, and those who aren’t being targeted.

Hostile architecture isn’t a recent phenomenon

Charles Pierre Baudelaire wrote a lot about the transformation of Paris in the 1850s and 1860s. For example, The Eyes of the Poor captures a whole series of themes and social conflicts that accompanied the radical re-design of Paris under Georges-Eugène Haussmann‘s controversial programme of urban planning interventions.

Baron Haussmann was considered an arrogant, autocratic vandal by many, regarded as a sinister man who ripped the historic heart out of Paris, driving his boulevards through the city’s slums to help the French army crush popular uprisings. Republican opponents criticised the brutality of the work. They saw his avenues as imperialist tools to neuter fermenting civil unrest in working-class areas, allowing troops to be rapidly deployed to quell revolt. Haussmann was also accused of social engineering by destroying the economically mixed areas where rich and poor rubbed shoulders, instead creating distinct wealthy arrondissements.

Baudelaire opens the prose by asking his lover if she understands why it is that he suddenly hates her. Throughout the whole day, he says, they had shared their thoughts and feelings in the utmost intimacy, almost as if they were one. And then:

“That evening, feeling a little tired, you wanted to sit down in front of a new cafe forming the corner of a new boulevard still littered with rubbish but that already displayed proudly its unfinished splendors. The cafe was dazzling. Even the gas burned with all the ardor of a debut, and lighted with all its might the blinding whiteness of the walls, the expanse of mirrors, the gold cornices and moldings…..nymphs and goddesses bearing on their heads piles of fruits, pates and game…..all history and all mythology pandering to gluttony.

On the street directly in front of us, a worthy man of about forty, with tired face and greying beard, was standing holding a small boy by the hand and carrying on his arm another little thing, still too weak to walk. He was playing nurse-maid, taking the children for an evening stroll. They were in rags. The three faces were extraordinarily serious, and those six eyes stared fixedly at the new cafe with admiration, equal in degree but differing in kind according to their ages.

The eyes of the father said: “How beautiful it is! How beautiful it is! All the gold of the poor world must have found its way onto those walls.”

The eyes of the little boy: “How beautiful it is! How beautiful it is! But it is a house where only people who are not like us can go.”

As for the baby, he was much too fascinated to express anything but joy – utterly stupid and profound. 

Song writers say that pleasure ennobles the soul and softens the heart. The song was right that evening as far as I was concerned. Not only was I touched by this family of eyes, but I was even a little ashamed of our glasses and decanters, too big for our thirst. I turned my eyes to look into yours, dear love, to read my thoughts in them; and as I plunged my eyes into your eyes, so beautiful and so curiously soft, into those green eyes, home of Caprice and governed by the Moon, you said:

“Those people are insufferable with their great saucer eyes. Can’t you tell the proprietor
to send them away?”

So you see how difficult it is to understand one another, my dear angel, how incommunicable thought is, even between two people in love.”

I like David Harvey‘s observations on this piece. He says “What is so remarkable about this prose poem is not only the way in which it depicts the contested character of public space and the inherent porosity of the boundary between the public and the private (the latter even including a lover’s thoughts provoking a lover’s quarrel), but how it generates a sense of space where ambiguities of proprietorship, of aesthetics, of social relations (class and gender in particular) and the political economy of everyday life collide.”  

The parallels here are concerning the right to occupy a public space, which is contested by the author’s lover who wants someone to assert proprietorship over it and control its uses.

The cafe is not exactly a private space either; it is a space within which a selective public is allowed for commercial and consumption purposes.

There is no safe space – the unrelenting message of hostile architecture

What message do hostile architectural features send out to those they target? Young people are being intentionally excluded from their own communities, for example, leaving them with significantly fewer safe spaces to meet and socialise. At the same time, youth provision has been radically reduced under the Conservative neoliberal austerity programme – youth services were cut by at least £387m from April 2010 to 2016. I know from my own experience as a youth and community worker that there is a positive correlation between inclusive, co-designed, needs-led youth work interventions and significantly lower levels of antisocial behaviour. The message to young people from society is that they don’t belong in public spaces and communities. Young people nowadays should be neither seen nor heard.

It seems that the creation of hostile environments – operating simultaneously at a physical, behavioural, cognitive, emotional, psychological and subliminal level – is being used to replace public services – traditional support mechanisms and provisions – in order to cut public spending and pander to the neoliberal ideal of austerity and ‘rolling back the state’.

It also serves to normalise prejudice, discrimination and exclusion that is political- in its origin. Neoliberalism fosters prejudice, discrimination and it seems it is incompatible with basic humanism, human rights, inclusion and democracy.

The government are no longer investing in more appropriate, sustainable and humane responses to the social problems created by ideologically-driven decision-making, anti-public policies and subsequently arising structural inequalities – the direct result of a totalising neoliberal socioeconomic organisation.

For example, homeless people and increasingly disenfranchised and alienated young people would benefit from the traditional provision of shelters, safe spaces, support and public services. Instead both groups are being driven from the formerly safe urban enclaves they inhabited into socioeconomic wastelands and exclaves – places of exile that hide them from public visibility and place further distance between them and wider society.

Homelessness, poverty, inequality, disempowerment and alienation continue but those affected are being exiled to publicly invisible spaces so that these processes do not disturb the activities and comfort of urban consumers or offend the sensibilities of the corporate sector and property owners. After all, nothing is more important that profit. Least of all human need.

Homelessness as political, economic and public exile

Last year, when interviewed by the national homelessness charity Crisisrough sleepers reported being brutally hosed with water by security guards to make them move on, and an increase in the use of other ‘deterrent’ measures. More than 450 people were surveyed in homelessness services across England and Wales. 6 in 10 reported an increase over the past year in ‘defensive architecture’ to keep homeless people away, making sitting or lying down impossible – including hostile spikes and railings, curved or segregated, deliberately uncomfortable benches and gated doorways.

Others said they had experienced deliberate ‘noise pollution’, such as loud music or recorded birdsong and traffic sounds, making it hard or impossible to sleep. Almost two-thirds of respondents said there had been an increase in the number of wardens and security guards in public spaces, who were regularly moving people on in the middle of the night, sometimes by washing down spaces where people were attempting to rest or sleep. Others reported noise being played over loudspeakers in tunnels and outside buildings.

Crisis chief executive Jon Sparkes said he had been shocked by the findings. He said: “It’s dehumanising people. If people have chosen the safest, driest spot they can find, your moving them along is making life more dangerous. 

“The rise of hostile measures is a sad indictment of how we treat the most vulnerable in our society. Having to sleep rough is devastating enough, and we need to acknowledge that homelessness is rising and work together to end it. We should be helping people off the streets to rebuild their lives – not just hurting them or throwing water on them.”

‘Defensive architecture’ is a violent gesture and a symbol of a profound social and cultural unkindness. It is considered, calculated, designed, approved, funded and installed with the intention to dehumanise and to communicate exclusion. It reveals how a corporate oligarchy has prioritised a hardened, superficial style and profit motive over human need, diversity, complexity and inclusion.

Hostile architecture is covert in its capacity to exclude – designed so that those deemed ‘legitimate’ users of urban public space may enjoy a seemingly open, comfortable and inclusive urban environment, uninterrupted by the sight of the casualities of the same socioeconomic system that they derive benefit from. Superficially, dysfunctional benches and spikes appear as an ‘arty’ type of urban design. Visible surveillance technologies make people feel safe.

It’s not a society that everyone experiences in the same way, nor one which everyone feels comfortable and safe in, however.

The article above is an edited extract from the blog of writer and human rights activist, Kitty S Jones. 

The original article can be found athttps://kittysjones.wordpress.com/2018/01/03/from-the-abstract-to-the-concrete-urban-design-as-a-mechanism-of-behaviour-change-and-social-exclusion/

Please support Ms Jones’ research and writing of informative, insightful and independent articles, by making a small donation on her website. Thank you.

In whose hands is the system safer -Corbyn or May? The views of a venture capitalist might surprise you

By Daniel Margrain

hanauer copy

“Inequality and the rise of a super rich elite is undermining the foundations of capitalism. The trappings of capitalism could be swept away by the pitchfork of revolution unless capitalism is fundamentally re-imagined”, so says American venture capitalist Nick Hanauer,

In a BBC interview with journalist Stephen Sakur in front of a live audience as part of the Hard Talk series of programmes (since removed from the BBCs i player service), one of America’s wealthiest individuals argues that capitalism, as currently configured, is not working. The thing that is said to drive Hanauer on is status not money:

“I’m not driven by money but by the need to be king of the hill. If capitalism doesn’t change fundamentally, it will destroy itself. If you allow wealth to concentrate in fewer and fewer hands over time, in the end it cannot be good for anybody, particularly people like me”, he says. “You show me a highly unequal society and I’ll show you a police state or a revolution.”

According to Hanauer, there is truth in the notion that in ‘go get’ societies like the U.S people are able to crawl out of the clutches of poverty. However, there are limits: “Aspiration is a good thing”, he says, “But aspiration in the absence of opportunity creates resentment, anger and violence. The idea that if the disenfranchised are given more incentives, they would magically become software engineers or Wall Street executives isn’t true.”

Fundamental

For Hanauer, the problems are more fundamental: “If we don’t get inequality under control then it’s likely to lead to war – a similar pattern that followed the last period of massive inequality between 1925 and 1940. The most capitalist thing you can do to prevent war is to build up the middle class. From a capitalists perspective, although it may seem a good idea in the short-term to impoverish the typical family, in the long-term it’s a catastrophe.”

Although Hanaeur posits that as an economic system capitalism has been beneficial to millions of people and “is the greatest system ever produced for lifting people out of poverty”, he nevertheless accepts it’s flaws. It fails, for example, to sufficiently “knit together agreements” thereby undermining the potential for a more equitable and sustainable distribution of the wealth that growth brings:

“In my state”, he says, “since 1990, close to 100 per cent of growth has been accrued to just 1 per cent of the top earners. People are beginning to get angry and increasingly less patient with a system that rewards nearly all of the benefits of growth to a tiny minority at the top.”

According to Hanauer, the crisis of capitalism is more acute than ever before and its problems are exacerbated by any lack of purpose which capitalism encourages: “Because we are social creatures, the only thing that gets to define society is our capacity to cooperate. In the absence of a shared purpose, people will not cooperate at which point the society will dissolve”, he says.

Trickle-down

“Trickle down economics – the idea that the money of people who become rich – permeates down to the poor, is nonsense. How can it be anything other than nonsense given the fact that inequality is on the rise and socioeconomic mobility is in reverse? I’m not arguing against capitalism but simply saying that there are ways to optimize it – to make it better for everybody.”

Hanaeur is clear that his argument isn’t intended to be a moral one: “I’m not saying that we capitalists should pay workers more because we feel sorry for them, But the more they get paid, the better it will be for venture capitalists like me. The more money ordinary folks’ make, the greater the opportunity people like me have to innovate, create enterprises and sell them stuff. The better they do, the better I do.”

Hanauer is quick to point out that the converse isn’t true: “A thriving middle class causes growth, not the other way round”, he suggests. “You can’t drive a consumer-based economy – which our economies are based on – with only the extreme wealth of the few. What we need to do is to boost the minimum wage in the U.S to 15 dollars an hour.”

The venture capitalist then goes on to suggest that capitalism needs to be further controlled through a system of planned and coordinated regulation:

“Capitalists have the idea that their things will be bought by everybody else as a result of higher wages paid by other capitalists. But this logic of paying higher wages to staff to help improve business activity more generally, doesn’t seem to apply equally to them since they will insist on paying their own workers next to nothing thereby not absorbing the costs themselves.”

Hanauer continues:

“The simple truth is, if a higher minimum wage was introduced universally, not only would it be affordable, but something like 40 per cent of American’s would be able to buy more products from everybody thus benefiting all capitalists across the board. Business is challenged today because fewer and fewer people are able to buy things.”

In other words, Hanauer is arguing here that the actions of capitalists’ need to be reined-in through a system of planned and coordinated regulation in order that the system be saved from the rapacious actions of competing capitalists who are driven, as Marx put it, by their need to “accumulate for accumulations sake”.

Contradictions

Hanauer’s pragmatic arguments are similar to those being suggested by Labour leader Jeremy Corbyn and shadow chancellor, John McDonnell. What all three understand – but the Tories don’t – is that the ability to accumulate for accumulations sake doesn’t necessarily lead to higher profits. One of the contradictions inherent to capitalism is that the system as a whole needs to spend money to make profits, yet every individual capitalist wants to spend as little as possible. The lengths to which giant companies like Amazon, Google and Starbucks will go in order to avoid paying tax shows how that dilemma is played out.

In theory, insisting employees work 14 or 16 hours a day for peanuts correlates to higher profits for capitalists. But in reality such an approach is very wasteful – like over-exploiting the soil. Accumulating for accumulations sake is concomitant to a deregulated economy in which the absence of relevant legislation means that capitalists will insist their workers are worked to the bone for as little money as possible for fear of the former losing their competitive advantage over their rivals.

What Hanauer and the Labour party under Corbyn are able to grasp is that the introduction of labour and wage regulations that the Tories try their utmost to resist, actually improves productivity, that from the perspective of the capitalist system, is beneficial to everybody.

This brings me back to the wisdom implicit in the Nick Hanauer quote above. Hanaeur’s argument about the necessity of the United States government to substantially increase the legal minimum wage across the board in order to save capitalism from itself, is in principle, no different from the minority of capitalists in 19th century Britain who argued in favour of the introduction of the Factory Acts of the 1830s and 1840s which set down a maximum length for the working day.

Re-think

In reality, an advanced low wage and minimal welfare provision capitalist state like Britain is the modern equivalent of its counterpart during the industrial revolution prior to the introduction of the Factory Acts. What enlightened capitalists like Hanauer, as well as pragmatic socialists like Corbyn and McDonnell grasp, is the necessity to radically re-think the failed neoliberal ‘trickle up’ economic model of austerity – in which, for example, huge subsidies are paid to rich landowners – and instead reconfigure policy towards a Keynesian demand-led strategy which redistributes wealth towards the bottom.

The former is what economist Paul Krugman describes  bluntly as “a con that does nothing but harm the wealth of this nation. It has been discredited everywhere else: only in Britain do we cling to the myth.”

As inequality continues to rise, so does the potential for public disorder. At present, the richest tenth pay 35 per cent of their income in tax, while the poorest tenth pay 43 per cent. Is it too much to ask that those with the deepest pockets pay their way, thus creating the potential for the kind of equitable society in which everybody wins?

This is not pie in the sky stuff but a pragmatic solution to the problems we face. Politicians like Jeremy Corbyn, John McDonnell and Caroline Lucas, as well as economists like Paul Krugman and Joseph Stiglitz – all of whom are ideologically as far apart as its possible to be from venture capitalist Nick Hanauer –  are nevertheless in agreement that the direction of travel the Tories are on is wrong.

As far as the possibility for change in the future is concerned, Hanauer says:

“Most American’s (and by extension, British) have accepted this bankrupt idea of how you create growth in capitalist economies. If you think that wealth trickles down from the top; if you think that the rich are the wealth creators, and if you think that the more rich people you have the more jobs you will create, then the notion that the introduction of a high rate of tax for rich people makes no sense.”

Hanauer adds:

“However, if you reject that false idea of how capitalism works and you accept a more realistic 21st century notion that the more workers earn, the more customers’ businesses have and the greater the level of jobs that will be created, then you will understand that it’s part of a feedback loop in which everybody wins. The battle ahead is to change the parameters of debate around these things. At the moment we are on the wrong track.”

One might reasonably and instinctively assume that the interests of Hanauer, whose wealth runs into hundreds of millions of dollars, would be closely aligned with the right-wing government of Theresa May. But such a notion is counter-intuitive given that politically, he is closer to Labour’s Jeremy Corbyn.

The fact that Hanauer’s political outlook and approach to dealing with the challenges society faces, has more in common with Corbyn than May, completely undermines the arguments of those who smear Corbyn with the communist epithet.

Contrary to popular mythology, Corbynism and capitalism are, in reality, congruous concepts. It’s not only the social aspects like the health service and social care that’s safer in Labour’s hands, but from the perspective of capitalism’s longevity, its the economy too.

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The Office For Budget Irresponsibility

By Daniel Margrain

 Philip HammondBudget giveaway: Philip Hammond’s National Insurance rises have provoked a furious reaction in the Tory grassroots CREDIT: AP

The economic growth model is like a cult that is fetishized by governments’ as if it were a religion. With the aid of mass advertising campaigns, the latest consumption-profit driven craze involves attempts by giant corporations to persuade the British people to purchase new cars, on credit, at ever increasing rates.

The moment these cars leave the showroom they depreciate in value by at least a third. This means that the buyer is in a position where he/she has to service the debt of a rapidly depreciating commodity. In other words, advertisers in a deregulated market, overseen by a Tory government, are encouraging people to spend on depreciating luxury goods like cars they don’t need with money they haven’t got.

As a consequence people whose incomes have largely remained static for a decade or more, are being saddled with unsustainable debts similar in principle to conditions that led to a housing bubble which crashed and caused the 2008 financial crisis. More cars on the roads is also bad for the environment. Pollution levels in London, have breached annual limits just five days into 2017 and often exceed the regulatory amounts recommended by the European Union.

Dystopia

Meanwhile, the elderly are shoved in hospital corridors for hours on end because of government under funding in the NHS and when they are due to leave hospital, there is increasingly unlikely to be any social care provision in place for them to go to. But that’s alright, just as as long as the growth the rich disproportionately benefit from continues to increase, the ‘low-lying fruit’ can wither away and die because there are too many ‘useless mouths’ to feed anyway. The notion that a government strategy of cheque book euthanasia in a society where robots will soon replace the few remaining blue collar jobs that exist, is far from a dystopian fantasy.

The kind of nightmarish scenarios described above are symptoms of an irrational profit-driven system predicated on the Tory governments obsession with a neoliberal economic growth model focused primarily on banking. Chancellor Philip Hammond’s first budget which George Galloway described on twitter as “the most complacent out of touch other-worldly I’ve heard in nearly 50 years”, will result in more preventable deaths. The lie in which the masses were encouraged to believe that wealth trickles down, as opposed to gushing upwards, should finally be laid to rest by Hammond’s budget.

The reason for the continued upward flow of wealth is due to the fact that the public sector is being continually squeezed to the point that it can be squeezed no more, meaning that the road to serfdom will become an increasing reality for many. All the baloney from May about the Tories being the party of the people and the so-called ‘just about managing’ (jams), has, over the last few days, been finally blown into the dustbin of history. If ever proof were needed that the primary function of tax revenue collection is the syphoning of large amounts of cash into the already bulging pockets of those who don’t need it, while the poorest are left on the shelf, then Hammond’s budget was it.

Tax giveaway

The Chancellor’s £70bn tax giveaway to those on the top of the pyramid is contrasted with the £2bn national insurance hike he has lumbered low and middle income earners with. What the Independent described as “Hammond’s tax-raid on the gig economy,” not only cements the Tories reputation as the ‘nasty party’, but what can only be described as the Chancellor’s sociopathic behaviour towards the poor, even outdoes the callousness of his predecessor who, in May 2015, reduced the top rate of tax on the same day as introducing the pernicious bedroom tax which resulted in the widespread social cleansing of working class communities.

It’s almost hard to keep up with Tory shenanigans – from the largely unreported election fraud scandal and Hammond’s unwillingness to reveal his tax returns, through to May’s repeated lies to parliament – it seems that barely a day goes by without some scandal or other entering the public domain. Many of the people Hammond is targeting are the increasing amount of workers on zero hours contracts who have no in-work protections of any kind.

Hammond is not planning to include in his “spreadsheet” an increase in spending in order to address any of these issues, nor to raise spending on social care and the NHS comparable to other major European economies despite the fact that both are in a state of emergency. Instead, the Tories have once again demonstrated that what motivates them is their preoccupation with augmenting the interests of their class. The Tories are clear where their priorities lie. The question is, will a sufficient amount of working class Tory voters shift their support towards a Labour leader who has their best interests at heart at the next General Election?

The rigging of the economy by the Tories that has resulted in six million people earning less than the living wage, and where nearly four million children are in poverty, will get worse as long as this bunch of lying crooks remain in power. Much of the media present the economic policies of the Tories as being somehow inevitable. But of course they are predicated on choice. Their priority is not for a fairer and more inclusive society, but one ridden with hate and division. The poor are to be kept firmly in their place while the rich, including the banking cartels, continue getting richer on the backs of them.

Transfer of wealth

Tory economic policies are geared specifically towards facilitating this transfer of wealth which was what QE was all about. In recent years this has probably been no more evident than under the leadership of Cameron and his Chancellor, Osborne. One of the biggest controversies to have arisen during the Cameron-Osborne era was the former’s offer to China of generous tax breaks to encourage their firms to re-locate to a new property development in Manchester. The same incentives are not, of course, applicable to small British businesses as Hammond’s budget confirms.

Meanwhile, Willem Buiter, chief economist at CitiBank, predicts a hard landing for the global economy that looks set to push the world back into crisis. In the summer of 2015, the Shanghai stock market crashed by 40 per cent within two months, erasing $7 trillion dollars in company valuations in China. The risk is that the countries slow down will drag the rest of the emerging world with it.

The International Monetary Fund (IMF) has estimated that every one percentage point drop in Chinese GDP growth, will wipe 0.3 percentage points from states’ in south east Asia. As emerging markets power 70 per cent of global growth, if China sneezes the rest of the world will almost certainly catch a cold. The problems do little to ally the lack of public confidence in the ability of the UK banking sector to self-regulate itself in order to ameliorate any unease.

Banking cartel

A Competition and Markets Authority (CMA) report found that the market in the UK lacked dynamism, with the four big banks – Lloyds, RBS, Barclays and HSBC – controlling an incredible 80 per cent of personal current accounts and nearly 90 per cent of business accounts. The existence of a private banking cartel and consolidation of power among both the giant banking players and the government, illustrates the inability of the Tories to punish this sector. To paraphrase Mark J Doran, “Just try and imagine a government of multi-millionaires devoted to serving billionaire tax-dodging bankers, challenging these bankers.”

Alasdair Smith the head of the CMA said the body was “reluctant to pursue heavy handed remedies to deal with bankers.” Clearly, this “reluctance” is predicated on May and Hammond’s eagerness to succumb to the power of the banking lobbyists and others. This runs contrary to any notion that the government acts in the public interest. Brexiter’s would be wise to keep this in mind before they next complain about the alleged lack of sovereignty of the UK remaining in the European Union. The problem is, the power the corporate lobbyists command is such that they are able to usurp the democratic and legislative process. In relation to the banks, the Daily Mail of all papers, said this:

“After years of scandals in which the public were mercilessly ripped off, the CMA promised a radical shake up of Britain’s bloated, often money grabbing, high street banks. Yet after an 18 month inquiry, all it produced yesterday was some minor tinkering which consumer groups warned doesn’t go anywhere near far enough to inject genuine competition.”

As inferred above, this is all part of a mutually reciprocal corrupt culture in which highly controversial big business practices and government policy have become increasingly intertwined. Finding bankers guilty of misdeeds in Britain is particularly difficult given the labyrinthine nature of banking in this country. Rather like the structure of the Mafia, the trail of criminality is almost impossible to pin down to specific individuals. This has been exacerbated by the Tory government which back-tracked on its ‘guilty until proven innocent’ rule – regulations that were supposedly intended to bring unscrupulous bankers to account.

Lobbying power

This stipulation was to be the financial regulators most powerful tool in putting senior bankers on the hook for serious wrongdoing, and was a response to the public’s fury that almost no individuals within the banking sector have been seriously punished for a crisis ordinary working people are paying for by way of austerity. The shift in government policy was prompted by concerted lobbying by some of the top foreign banks who threatened to withdraw from Britain if their demands were not attended to. But instead of calling their bluff, the government caved in.

Iceland is one country where a rather different and radical approach has been undertaken in response to the criminality of their bankers. In two separate rulings, the Supreme Court of Iceland, sentenced twenty six top bankers and CEOs to prison for a total of 74 years in relation to financial crimes committed in the lead up to the banking crisis of 2008.

Meanwhile, in Britain not a single banker has been arrested, charged or sentenced. Instead, they are given untold amounts of public money which they use to award themselves with huge bonuses. If you happen to be a criminal British banker, then crime really does pay. The scandal is that it’s the 99 per cent who have to pick up the pieces resulting from this criminality. The message that emerged from Hammond’s budget was that corporate criminality can be tolerated just as long as it’s the poor who continue to suffer.

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The Tories Brexit debacle

By Daniel Margrain

 

Theresa May’s announcement that the decision to trigger Article 50 of the Lisbon Treaty at the end of March at the latest, by-passing parliamentary debate, is a kick in the teeth for all those campaigners who argued that to do so would undermine due legal process in the wake of the passing of the 2015 Referendum Act. As I stated previously, in legal terms, the referendum decision to leave the EU was advisory not mandatory. What happened following the vote was therefore a matter of politics, not law.

However, the governments formal position was that it had no legal obligation to consult parliament on invoking Article 50 which gives Britain a two year period to negotiate the terms of its departure and insisted that every word of its defense had to be kept secret. But on September 23, crowdfunded group People’s Challenge lodged a court application to allow it to publish the governments argument. Six days later, the court ruled that the government must disclose the legal arguments on the procedure of Article 50.

The governments announcement to definitively invoke Article 50 while ignoring the rest of the process that Parliament set in train when it passed the 2015 Referendum Act, seems to be predicated on its ancient (archaic) use of the Royal Prerogative to trigger the process of the UK leaving the EU in the interest of the Government’s sectional and party political interest.

Indeed,  Teaching Fellow in Public Law and Jurisprudence at University College London, Thomas Fairclough concluded“it will be the Government, using the Royal Prerogative, who will decide if/when to trigger the Article 50 mechanism and take the United Kingdom out of the European Union.” By using the Royal Prerogative to trigger Article 50 of the Treaty of Lisbon this Government will be sweeping away rights at a stroke of a pen without the proper scrutiny of and a final decision being made by our Sovereign Parliament.

In announcing her proposed deadline for the triggering of Article 50 now, PM Theresa May said there will be time for preparatory work from all parties involved, which she hopes would lead to a “smoother process of negotiation”. May said that while she was willing to announce key landmarks in the Brexit timeline, she did not plan to continue sharing details during the negotiation process.“There’s a difference between not giving any commentary and giving a running commentary,” she said.

The lack of government transparency is bound to have implications in terms of whether foreign companies decide to invest in the UK. It’s incumbent on the government to be as open and transparent as possible in order to create the necessary conditions to allow companies to make an informed choice as to whether or not to invest in the UK.

According to the Telegraph, bosses of several of America’s banks and corporations have warned May that they will shift operations into Europe unless she can provide early clarity on the future shape of UK-EU relations. If the banks go, there will be virtually nothing left that the UK specializes in other than selling WMDs to whoever is prepared to meet the governments asking price, or making cars to sell to the Germans, Indians and Japanese.

The bad news was delivered to May in New York in a meeting with US investors, presumably intended to calm their nerves. According to an account by the Telegraph, May declined to provide information about how the UK government would approach the Brexit negotiations never mind when they would start. Neither May nor the government appear to have any idea about where the country is going or how long it will take to get their.

Try putting yourself, dear reader, into the shoes of the investors. If you had the best financial interests of your company and shareholders at heart, would you invest in a country that appeared to have no idea where it is going?

Estimates for job losses resulting from a “hard Brexit” range from 40,000 to 80,000 over the next decade. Furthermore, Chancellor, Philip Hammond has said that the retention of passport rights of bankers is highly unlikely given the constant calls from mainly Tory constituents demanding that immigration be curbed at any cost. As financial services are said to generate more than £66bn in tax in the UK, the consequences for society are potentially serious.

Meanwhile, EU leaders continue to harden their stance against the UK saying they will rule out any cherry-picking in relation to accessing the single-market. The negative consequences resulting from the UKs uncertainty surrounding Brexit is already happening. Job vacancies in the UKs financial sector have suffered a sharp decline since Brexit.

According to the Institute of Public Policy Research, for example, job openings in the financial sector have plunged 10 per cent across England, falling in every region during July and August. They attributed the decline to concerns whether the UK will retain its passport rights. London recorded a 13 per cent drop in job adverts.

Investment in infrastructure has also received a set back according to Standard and Poor, the ratings agency. In a note to clients, the agency said that private investment in infrastructural projects was under threat: “The biggest risks for infrastructural companies could be from an extended period potentially running for many years during which the terms of exit and replacement trade treaties with the UKs partners are renegotiated”, they said.

In other words, nobody wants to spend any money in a country where they don’t know where it’s going or how long it takes to get there. On the other hand, infrastructural assets might become cheaper as the pound sterling devalues. So we ought not be surprised if the Tories sell off what little infrastructure we have remaining to the Chinese and Saudi’s for short-term profitable gain.

The incompetence of people like Boris Johnson who led us into this mess and the mainstream media who failed to challenge him, have instead focused their ire on attacking Jeremy Corbyn, who argued in favour of the Remain position. How much longer Theresa May and her Tory government can insulate themselves from media criticism over the Brexit debacle, remains to be seen.

Britain’s high-debt, low-productivity economy spells long-term disaster

By Daniel Margrain

The collapse of the Berlin Wall which was the trigger that brought the totalitarian dictatorships of the former Soviet Union and those of its satellite states to their knees, came to symbolize for many the triumph of capitalist free market democracy over tyranny and oppression. An adviser to the US State Department, Francis Fukuyama, received international acclaim in 1989 when he reiterated this message by declaring, no less, that the collapse of communism was ‘the end of history‘. Great social conflicts and great ideological struggles were said to have been a thing of the past. Numerous newspaper editors and television presenters agreed.

A little over a decade after Fukuyama made his famous declaration, Islamist terrorists attacked the Twin Towers in New York. The attack was, in part, the result of Wahhabism’s ideological opposition to Western imperialist hegemony. Numerous imperial wars have been launched against Muslim countries since. Thus, Fukuyama’s thesis was trounced on a single day back in September 11, 2001. Anthony Giddens, the former director of the London School of Economics and court sociologist to Britain’s then New Labour Prime Minister, Tony Blair, repeated a similar message to that outlined by Fukuyama in his 1998 book, The Third Way.

Giddens  said“We live in a world where there are no alternatives to capitalism.” He was accepting and repeating a widespread but unsustainable assumption. The earliest merchant-form of capitalism began to emerge in the 17th century and industrial forms of capitalist production developed from the late 18th century. The organizing of the whole production of a country by capitalist means is barely three centuries old. It only began to become a dominant feature in terms of the universal dependence on markets some 60 or 70 years ago. Yet modern humans evolved about 200,000 years ago. In other words, what Giddens argued is that a capitalist economic system which represents a tiny fraction of our species’ life-span is set to last for the remainder of it.

Leaving aside the possibility of global catastrophe resulting from climate change or nuclear war, the notion that capitalism will continue to exist indefinitely into the future, is highly improbable. As the saying goes, ‘forever is a long time in history’. In just under two decades following the publication of The Third Way, capitalism has transformed into a finance-based neoliberal variant predicated on a form of systemic corruption underpinned by booms that zap productivity. The reason why financial booms impact on productivity in this way is in part the result of too much capital being mis-allocated to low productivity sectors which crowds out real economic growth.

Company buybacks illustrate this practice. Take Viacom as an example. The company issued debts of £10 billion and then bought back the shares which had subsequently reduced in value by 55 per cent. Similarly, Amazon issued £5 billion of debt prior to announcing they would also engage in this highly unethical practice. Issuing debt in order to buy-back stock implies an inability to grow companies organically. Rather, increasingly, the approach seems to be to boost the stock price artificially by a process of financial engineering. The problem is that levels of industrial production, the latest figures of which indicate a 0.3 per cent fall from the previous month, are not sufficient to support these kinds of debts.

Another illustration of the mis-allocation of capital to a low productivity sector, is in the realm of housing. Essentially, the UK economy is based on speculative-based property booms that are sustained through zero interest rates. This means that banks have access to almost unlimited credit which enables them to finance enterprises risk-free, underwritten by the tax-payer. The Conservative government under PM David Cameron is not investing in the productive parts of the economy but in financial ‘bubbles’ of which housing plays a significant part.

UK Chancellor, Gideon Osborne’s ‘help to buy scheme’ in which the UK tax-payer provides 40 per cent of the deposit for first-time house buyers, is clearly a policy aimed at the potential Tory voter in London. Many of the properties purchased will be used for the rental market as speculative investments thus boosting the housing bubble. Meanwhile, people who are part of the productive economy and make London tick, are steadily being priced-out and socially cleansed from the city. This is contributing to the decline in UK industrial output which has seen its biggest fall since August 2013. More importantly, this has impacted negatively on the UK’s trade deficit figures which are one of the highest, as a percentage of GDP, of any country within the OECD.

To emphasize this point, the UK’s trade gap with the European Union increased to a record high of £8.6 billion. The government’s suppose aim of re-balancing the economy by allegedly supporting its productive parts, is contradicted by its creation of risk-free speculative property bubbles of the kind described. The concept of free-market capitalism is supposed to be predicated on incentives, not state sanctioned socialism for the wealthy as the means to prop-up unsustainable economic bubbles. Yet the corporate controlled media, with their lurid headlines, continuously promote the latter.

The government’s subsidizing of house purchases is unhealthy for the medium to long-term economic well-being of the country as a whole. The subsidized property speculation bubble outlined is part of a centrally-planned Tory policy, no different in principle, to the socialist planned economies of the former Soviet Union and its satellite states that ‘the end of history’ allegedly supplanted. Low productive sectors within the UK have a knock-on effect in terms of the broader economy which is destined to decline as a result. This is because more needs to be produced for the pound sterling in order to counteract the affects of subsidized speculation which adds no value to the economy.

This principle also applies under conditions in which global investors pour money into government bonds which currently result in negative yields to the tune of some $6 trillion and growing. The infusion of greater amounts of subsidized money into the London economy runs counter to the government’s stated argument that they intend to diversify the wider economy by spreading investment throughout the UK as a whole. As a consequence of the Tory policy of socialism for property speculators, house prices in London are the most over-valued of any major city in the world.

Nevertheless, as long as potential property buyers and those already on the ladder in London have a perception that their homes are worth more than is actually the case, they will more likely be inclined to vote for the kinds of politicians who will perpetuate the bubble by continuing to offer some first-time buyers an injection of a huge cash-free gift as part of their deposit. If this was indeed the Tory plan prior to the London Mayoral election in order to assist the Tory candidate, Zac Goldsmith, then the strategy failed miserably. Whether Labour’s newly elected Mayor, Sadiq Khan, will attempt to scupper any moves by Jeremy Corbyn to put a break on the Tory’s high debt-low productivity economy policy, in order to further his broader opportunistic political ambitions, remains to be seen.

Housing crisis created from money produced from thin air

By Daniel Margrain

Switzerland is set to hold a referendum to decide whether to ban commercial banks from creating money. This follows a move by over 110,000 people in that country who signed a petition calling for the central bank to be given the sole power to create money within the financial system. The campaign is designed to limit financial speculation by requiring banks to hold 100 per cent reserves against their deposits.

Banks will no longer be able to create money for themselves (euphemistically termed fractional reserve banking), rather they will only be allowed to lend money that they have accumulated from savers or other banks. Currently banks are able to lend money that they don’t actually have and then command interest on the non-existent money.

This is akin to x offering to loan y a sum of say, £100,000 that the former hasn’t got. The way around this conundrum is for x to then lodge the sum with another financial institution who happens to be in on the scam. Y then pays x interest on the money that x has never been in the position to lend in the first place. Switzerland is now considering whether or not to do something about this fractional reserve banking racket. If successful, the bill will give the Swiss National Bank a monopoly on physical and electronic money creation.

The idea of limiting all money creation to central banks was first touted in the 1930s and supported by renowned US economist Irving Fisher as a way of preventing asset bubbles and curbing reckless spending. It’s the former that most accurately characterizes the current financial system. The rising cost of housing is an example of a major asset bubble underpinned by a Tory government housing policy that is geared towards satisfying the asset diversification needs of the super rich rather than to meet the human need for homes for ordinary people to live in.

So the motivating factor determining the government’s housing policy is not to end the housing crisis but to bolster the investment opportunities of the rich which will make it worse. This is what David Cameron’s announcement yesterday (January 10) regarding the governments’ intention to demolish council homes and replace them with private housing is all about.

This is also the precursor to the newly proposed Housing and Planning Bill (voted on today, January 12) which will force families living in social housing and earning £30,000-£40,000 in London to pay rents nearly as high as those in the private sector. It will also compel local authorities to sell ‘high value’ housing, either by transferring public housing into private hands or giving the land it sits on to property developers.

The 126 MPs who declared that they receive rental income from property, represent over 19 per cent of the house, the vast majority of whom are Conservatives. The voting through of the bill, which almost certainly represents a major conflict of interest, will lead to soaring rents meaning that ordinary people will find it increasingly difficult to afford to live in the capital. As the statement on a flyer that promoted a protest against the bill argued:

It [the bill] takes public funding away from affordable homes for rent and does nothing to improve security or control rents for private renters.

This is turning back the clock, taking away security and pushing up rents. It would force the selloff of council homes on the open market, to pay for housing association ‘right to buy 2’. Councils and housing associations will not be able to build replacement homes for rent.”

The exponential growth in the construction of new tower blocks throughout London and other major cities are not intended for local residents to live in, thereby helping to ameliorate the worst excesses of the housing crisis, rather they are being built for foreign investment funds and billionaires to buy on mass as financial safe havens.

Greenwich Mean Time (GMT), a relatively favourable temperate climate, convenient geographical location, the establishment of law and order, good schools and infrastructure, minimal history of revolution and good transport hubs and networks, means that London is a particularly attractive place for the rich to increase their property investment portfolios.

However, these investments in houses and apartments are essentially made of cards built on sand predicated on a financial illusion of which the Swiss example described is symptomatic. The context of the illusion that the Swiss people are soon to vote on is historically tied the the Swiss National Bank (SNB). Since 1891 when the SNB was established, the bank has had exclusive powers to mint coins and issue Swiss bank notes. But over 90 per cent of money in circulation in Switzerland now exists in the form of electronic cash which is created out of nothing by private banks. In other words, nearly all of the money in Switzerland, and arguably the world, does not in reality exist as a tangible entity.

In modern market economies central banks control the creation of bank notes and coins but not the creation of all money which occurs when a commercial bank offers a line of credit. Iceland, whose bloated banking system collapsed in 2008, has also touted the abolition of private money creation and an end to a practice in which a central bank accepts deposits, makes loans and investments and holds reserves that are a fraction of its deposit liabilities. Fractional banking means the production of money from thin air.

The entire financial system and the laws on which it is governed that many believe to be an exact science is, in reality, based on a gigantic illusion. The fact that Britain’s banks are paying far less in corporation tax than before the crisis, despite their profits improving and global tax payments staying constant, is illustrative of a flawed unscientific system that society has nevertheless hitched itself on to. Rather than the Cameron government investing in a productive based economy in which tangible things are made, bought and sold, it has focused disproportionately on financialization – an abstraction predicated on smoke and mirrors.

The money illusion stems from the Bill of Exchange Act of 1882. Effectively, money is created the moment a loan document from a bank or any other financial institution is signed. Having created a financial instrument as a result of any signature, the bank or financial institution then lends the money created in the form of a bill of exchange which in effect becomes a promissory note. The customer then gives the power of attorney within the signed document to the bank to then lend the said customer the money that has just been created as a result of the signature.

By removing the requirement of the government to insist upon the amount of gold being equal to the amount of currency in circulation (gold exchange), they created a debt based economy (Fiat currency). So by not basing money on anything material whatsoever, central banks are able to create limitless amounts of it effectively by pressing numbers on the keyboard of a computer. The origins of the promissory note stem from the promise to pay a physical sum of silver (subsequently gold) in exchange for the promissory equivalent (sterling was originally based on sterling silver).

The purpose was to prevent individuals from having to carry large sums of silver around with them. A silversmith would simply weigh the silver and give the owner a promissory note which could then be cashed in at a later date to be spent on goods and services. Up until the 1930s, governments’ were required to have in their possession an amount of silver or gold equal in value to the amount of promissory notes issued. This requirement was removed in the 1930s which then gave banks the right to create money out of nothing. This is a legacy that continues today. Will Switzerland be the catalyst for a paradigm shift in this state of affairs?