Saturday, 19 February 2011

Who has the power to change things?

The finger-pointing game in our economic woes took an interesting step upwards today.

We've been hear a great deal about benefit scroungers and have done for as long as I can remember. Immigrants who've fled tyranny; Laura and Dud and Pete who are too sick to work; so on so forth. I think certain powers that be, not to mention the tabloids, would have us all believe that anyone who claims benefits is like "Mick" whose phone in became one of the BBC's most popular stories.

The article appeals to the angry and powerless. "It's free money, I love it," this chap is quoted as saying. What society gives to him is actually tiny compared to what it gives to the banks - but this is a small, sorry target you can hate and perhaps attack. And this is not someone powerful. This is scrouging we might have a hope of stopping.

For the record, no, I don't think what he's doing is right at all. But I think he reveals some rather wider problems:

"All my family have worked all their lives - they worked down pits, in the steelworks, and they've all died from illnesses related to that. And they've had nothing to show for it at the end of it. All that money they've paid in, they've paid out again to the bankers . . . The people who are working today - they're paying for the bankers, their million-pound bonuses every month."

He also remarks that neither he nor his friends can see any future for themselves. Is this simple laziness or is it a problem with education and society that we can work together to address? Maybe some of each.

(On a completely unrelated note, these new cuts and laws to "make work pay" and make it harder for people like Mick to remain on benefits look to me as if they are already firmly in existence. When, after months of unsuccessful job-searching, I finally caved in and applied for jobseeker's allowance, I was made to feel like a criminal: it was difficult, humiliating, protracted, soul-destroying and time-consuming - getting a job would have been a breeze by comparison; and when I finally found one, it was! They even managed to mishear my National Insurance Number over the phone once and use this as an excuse to try and close my claim down. I heard about a young man who tried to hand an employment application form into a shop well before the closing date but was turned away because they'd already had so many - and lost his benefits for three months for "turning down an opportunity". I was also given to understand that my benefits would last less than a year, after which time I would just have to sink or swim. So how does this Mick spend 18 years on them? Does he apply for jobs but not take them? I have no idea. I suspect every Job Centre's system and strictness is different. But that's a question for another time, and probably someone other than me to answer.)

We're warned not to over-tax or rather "punish" the large corporations and the rich, for they are "wealth generators" who will benefit the whole country. If we do not give them everything they want, they will set up their businesses abroad - and that will be wealth gone from Britain, presumably benefitting nasty beardy terrorists and setting up ever more infuriating, obstructionist and expensive call centres who make us want to throw our goddamn mobiles out of the window, except that we need them not only to grab the odd happy minute with a friend but to chase up job after job.

Well, I'm no economist, and I'm prepared to be proved wrong - but I don't think these "wealth generators" are doing quite what they're cracked up to do.

What they've done instead is generate massive inequality. It's so great that many people don't see any point in even attempting to get somewhere. The fact that some (and I would like to know what percentage) are taking advantage of the welfare state does not mean that the welfare state is to blame for society's problems.

Returning to the original subject of problems and blame, today UK Uncut are spending this weekend staging mass protest against Barclays Bank, which have paid a tiny £113 million in tax whilst earning profits of £11.6 billion, £1.5 billion of which went to bonuses - and whose chief Bob Diamond says that "the time for remorse is over" and that banks should, it seems, continue exactly as they have been doing. (If my economics are right, your average taxpayer pays maybe 20% tax, while Barclays pays 1%; and Bob Diamond's pay package this year is over 1000 times what Mick gets, including rent.)

It's quite an imaginative style of protest: "‘teams of UK Uncut volunteers will be entering the banks, occupying them and transforming them into something that people need, but will be cut’. In central London, hundreds are expected to set up a live stand-up comedy show, libraries, and a mothers' breakfast club, all inside different branches of Barclays". As I write, I hear reports that around 40 branches of Barclays have closed. (Update: 50 now - from the Guardian.)

But is all this simply the banks' fault? Not entirely. Because none of what they are doing is against the law. As David Allen Green points out, this campaign is asking for a "voluntary tax". (Although David Cameron demands that charities prop up society and people work for free, bankers are exempt; how other than by offering them high salaries could we expect talented people to stay and do such an important job?)

"This campaign is misconceived to the very point of daftness," writes David Allen Green:

Tax avoidance and minimisation can be addressed by better tax legislation and policy. It really is that simple.

The HMRC is under-resourced, especially compared with the access multinationals have to expert legal and accountancy advice. The UKUncut protesters should campaign for more funding for HMRC and improved tax legislation. If they should be protesting anywhere on a miserable day like today, it should be outside the Treasury.

You can hardly argue with this - but there are complications. In fact, I'm going to be a coward and say that both parties are right.

For one thing, it doesn't seem to me that protesting directly to the treasury or government would do much, other than get the protestors kettled by police (plus someone hot-headed to lose the point and disgrace the entire movement). As Robert Peel said when he repealed the Corn Laws, politics is largely about perception. The government and the banks work together so closely that they've become seen as a single entity. To picket one means to annoy the other.

LatentExistence explains: "Shouting at politicians achieves nothing . . . Making life hard for big business, on the other hand, makes things happen . . . Protesting in high street shops has made more happen than tens of thousands gathering in parliament square has." And you should go and read PatoBlog's post right now. He points out that big businesses have the ear of the government (as we know) and have a special powers to have a voice in laws that affect them. The public are increasingly aware of this - "Tax avoidance is on the public radar to an unprecedented extent, and that's a good thing" - but unaware of what companies and the government do behind closed doors. On the other hand, companies have to compete in a way the government does not. They do rely on "consumer choice", and all the consumers threatening to go somewhere else will have to have some effect. It may be misconceived, ignorant and entirely decorative, but I can't help but feel pleased that I do not have a mobile phone account with Vodafone . . .

One of the commentors on David Allen Green's blogpost states the depressing, well-known mantra: "UKUncut really are stupid. They are campaigning for a company to pay more tax. So to pay that increase in tax the company will raise it prices. So who pays for the tax in the end - the public."

Does that have to be the case? Are the bonuses and the top few salaries always static, out of some immutable law? It would be very difficult to change that, yes. But if we did, profit could be shared more equally among the workforce, for example, so that Mick's point about his family having subsidised the rich need no longer be an uncomfortable possibility.

And some of it could even be used to pay tax. Then the rich really would be wealth generators.

I've said before that the most difficult option of all might end up being the right one. It's wrong to scrounge benefits, but it's also wrong to let a few siphon off a huge percentage of the profits while ordering the poor to run the country for nothing. To challenge this very well-protected system is not easy and I don't even know where to start, but I'm eternally optimistic.

Of course, this post might be riddled with errors - business and economics never were my strong point. But at least curiosity is a start. Thoughts, anybody?

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