No longer selling the Forests ... was this really due to "People Power" ?

Does the Coalition's decision to withdraw its plan to sell off the nation's forests show this Government is really "listening to it's people" ... 

or is it an easy, visible (and cynical) way for them to 'say they listen' ... as a defence for when they are accused of not listening/consulting about anything else ... (n.b. as such plans are arguably rather trivial when compared to planned NHS reforms for example ... which they have little/no intention of listening to anyone about, despite growing concern) ... 

Most of the blogging community appear to be very clear on this one ... and I'm afraid it's the latter.

"People power" will continue to grow ... but this isn't a great example of it ... for the truth is the Government conceded very little by withdrawing this plan. 

It's interesting to see how far more people are willing to stand up against  forests being sold off ... than to fight for the future of healthcare*. Let's see if this changes in coming weeks ... and if real "People Power" arises as a result. 

* Is this a mixture of ignorance and selfishness perhaps, or is it more akin to the fact that most people care about animals more than they do about people ?

Real "People Power" ... will rise up as result of leaders "Abusing Power"

Are we currently seeing the arrival of "Government backed People Power" or a disgraceful "Abuse of Power by the few in Power" ?

Ask yourself if you've had any say in i) how swinging budget cuts are introduced, ii) how tax hikes are implemented (e.g. VAT targeted at the poor), iii) if massive tax cuts should be quietly given to the ultra-rich Tory backers (bankers and those in tax-havens*), and iv) if our precious forests should be sold off ...?

IMHO "People Power" will eventually arrive, but to counter the "Abuse of Power" we are currently witnessing! However what we are also seeing is this Government smokescreen being blown away. What they are trying to do is to devolve responsibility and deflect blame for the cuts onto others (e.g. a great article on this is here) ... and put responsibility on communities for picking up the pieces (via volunteering - or perhaps by compulsion in the future with future welfare reform)!

It is important to note that this Government is also trying to force through NHS reforms, that also 'devolve the axe and deflect blame' onto doctors for the planned £20bn p.a. of efficiency savings ... and 'buying their silence and support' by bribing them for cutting the healthcare they provide to you (e.g. with lucrative contracts and bonuses) ... again without any consultation or support from the electorate (as this radical change was in neither of the Coalition's election manifestos).

Michael Gove, the Secretary of State for Education, has also been accused of an 'abuse of power' by a high court judge for scrapping the Building Schools for the Future programme without proper consultation and consideration ....

There are many more abuses of Power highlighted on this web site too. IMHO Ignorance and Apathy are endemic, but both will reduce as people's lives get far worse ... which they will given current plans!

Roll-on real "People Power"!

* An excellent post in the Guardian exposed this one! Contrast this with the spin from David Cameron ... who tells us he can't afford tax cuts!

'Localism' - a strategy for 'devolving the axe' and 'deflecting blame'

Following on from my last post, I have included extracts from an excellent article written by Polly Toynbee and published in the Guardian on 11th February 2011.

"Holding the Coalition line on cuts is getting harder as 90 Lib Dem councillors and council leaders break silence in a letter of protest to the Times warning of the damage to the economy and the most vulnerable ... and now some Tory councils are joining in. All this is before the great cull of jobs and services begins in earnest in April, when notice periods end and the redundant start to join the unemployment register.

Esoteric ideological debates over "localism" have become pretty meaningless – though the right find it a useful distraction from the brutality of the cuts. The coalition brand of localism means the axe is devolved, along with the blame. Brazen denial, outrageous abuse of figures, and accusations of (Labour) council profligacy are their weapons of choice.

It's easy to bamboozle voters in the impenetrable thickets of local authority funding formulae. Once a minister sinks a Newsnight debate into a row over whether a council is losing 8% or 25%, the hope is viewers give up. How can they know who's right? 

There is just one extraordinary fact everyone needs to know. The cuts have fallen hardest on the most deprived councils, while the richest areas have suffered least. Whichever way the figures are construed, the highest percentage of cuts hit the poorest places hardest: Liverpool worst, followed by Manchester; Knowsley; Blackburn with Darwen; South Tyneside; Hackney; Newham; Hartlepool; Tower Hamlets and so on.

Now look up at the top and some councils actually gain – such as Oliver Letwin's Dorset. Among the least affected in spending power are such places as Vince Cable's Richmond upon Thames, Windsor and Maidenhead, Wokingham, and Michael Gove's Surrey.

The Local Government Chronicle first outed these figures, but this remarkable fact has not percolated into national consciousness. Perhaps it's just too hard to believe that any government could do such a thing so blatantly. Research by the House of Commons library found the political match is near perfect: the more solidly Labour the district, the harsher its cuts; while the more blue Tory the shire, the less it is affected, with the Lib Dems in between.

The official response is always the same: "The government has delivered a tough but fair settlement ensuring the most vulnerable communities are protected. If councils share back-office services, join forces to procure, cut out non-jobs and root out overspends, then they can protect frontline services."

Now consider this: worse is planned, again in the name of "localism". Pickles is planning to return funds from business rates to councils that earn them. Currently they are collected centrally and redistributed according to local need. Any move to keep them in the affluent areas with the most lucrative commerce – mainly in the south-east – may in the long term take even more from the poor areas to give to the rich. But it will sound nicely "localist".

Although local tax is a small fraction of overall revenues, council tax is more hated and more regressive than any other. That's why localists of the small-state right are all for devolving tax-raising powers to councils, knowing how much less could be raised. That's why the localism bill has a trigger for a referendum if a council raises tax more than some 2.5%.

Localism, like the "big society", is the shield for a sizeable redistribution from poor to rich. Sir Michael Marmot's government-funded review pinpointed extreme inequality by council district: in some places, 58% of children fail to reach a good standard of behaviour and understanding by primary school age, destined to fail thereafter. But Sure Starts are stripped bare as the most deprived councils are hit so much harder than councils in lush places.

All this, together with £18bn of welfare cuts, form a turbo-charged programme for accelerating inequality, with an entirely predictable outcome. Margaret Thatcher caused the number of poor children to rise from one in seven to one in three: these figures on the distribution of cuts suggest the coalition will leave an even worse legacy.

But attack is their defence. Labour Manchester, rated "good", is this week's target, one of the first out with grim news that its 25% cut over two years means 2,000 jobs lost, swimming pools, libraries, youth centres and all public toilets but one closed.

Its council leader, Sir Richard Leese, says the less visible cuts are even more painful, in care for the old and mentally ill at home. Grant Shapps, caught fibbing about an imaginary Manchester "Twitter czar", accuses them of deliberately waving bloody stumps for political effect. He compared them with next door (Tory) Trafford, which, he claims, is cutting no jobs through greater efficiency. But he forgets to say Manchester has had a cut 60% deeper than more affluent Trafford.

So beware crude council comparisons as the government tries to shift the blame. First you need to know such things as how many jobs a council has outsourced, hiding job cuts in private or voluntary-sector balance sheets – and exactly which government grants have been cut where. 

Downright dishonesty is a good defence – until found out"

A great article ... but what next ...?  IMHO as dishonesty is exposed (and 'ignorance' is reduced) those deliberately misleading people and abusing power will fall back on their 'second line of defence' - 'apathy' ... as when the majority of people in this country become more aware ... ignorance simply turns into apathy ! 

Hence things will end up getting much worse before this second line of defence is breached!

'Power to the People' ... or 'Abuse of Power by a few People'?

Over the last few days we have started to see beyond the veneer of "the big society".  Cameron is pushing this as the way forward ... but in reality is slashing budgets everywhere which is forcing voluntary organisations to shut-down too  e.g. even the Citizen's Advice Bureau (promoted by the Government as being the type of voluntary organisations able to play a key role in the future) is, despite being inundated with requests (e.g. to help with spiraling debts), having to close drop-in centres due to the withdrawal of support.

Is this the 'big society' or a 'big con' ... a smoke-screen attempting (but failing) to paper over all the cracks created by the cuts, i.e. if we shut something, why don't you get up and run it ... voluntarily ! ... i.e. for free, but perhaps by compulsion once changes to the benefits system are put in place given the increasing number of unemployed! It is certainly an excellent way for the Government to deflect blame i.e. don't blame us ... blame your council, blame yourself or blame everyone else for not doing it for you for free!

The final nail in the coffin for the 'big society' scam has been seen again today, as Michael Gove, the Secretary of State for Education, was accused of an 'abuse of power' by a high court judge when he scrapped the Building Schools for the Future programme without proper consultation ... which follows on from the Government trying to force through radical NHS reforms (that deflect blame for future NHS efficiency savings onto doctors ... and reward them for cutting your care) through without any consultation or support from the electorate (no-one voted for it, as it was in neither of the Coalition's election manifestos), as well as the sell-off of our forests (though they appear to be rethinking this one, unlike the NHS ones)! 

Are these really the actions of a Government committed to giving 'Power to the People' ... or are they an 'Abuse of Power by a few People' ... the high court judge has today made his view known.

Cashback ... for the ultra-rich who bankroll the Conservatives

With more and more people fighting to survive (due to higher taxes and escalating prices) Cameron has told the nation that significant tax cuts are not possible due the level of the deficit and the need to bring Government borrowing down ...

Yet, as my last post highlighted, he has handed out, through a carefully constructed smoke-screen, substantial tax cuts to his ultra-rich friends residing in tax havens and the City.

And by following the money we find out why ... why we are really 'not all in this together' !

Taxing times ... but not for everyone

Extracts of an article written by George Monbiot,  and published in the Guardian 8th February 2011.

In David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy.

“I would love to see tax reductions” David Cameron told an interviewer at the weekend, “but when you’re borrowing 11 per cent of your GDP, it’s not possible to make significant net tax cuts. It just isn’t.”

Oh no? Then how come he’s planning the biggest and crudest corporate tax cut in living memory?

If you’ve heard nothing of it, you’re in good company. The obscure adjustments the government is planning to the tax acts of 1988 and 2009 have been missed by almost everyone. They are, anyway, almost impossible to understand without expert help. But as soon as you grasp the implications, you realise that a kind of corporate coup d’etat is taking place. Like the dismantling of the NHS and the sale of public forests, no one voted for these measures, as they weren’t in the manifestos. While Cameron insists that he occupies the centre ground of British politics, that he shares our burdens and feels our pain, he has quietly been plotting with banks and businesses to engineer the greatest transfer of wealth from the poor and middle to the ultra-rich that this country has seen in a century. Here’s how it works.

At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil PLC pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match the corporate tax rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”: it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”. The main beneficiaries, in other words, will be the banks.

But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate “of any major Western economy”. By the time this government is done, we’ll be lucky if the banks and corporations pay anything at all. 

David Cameron said “what I want is tax revenue from the banks into the Exchequer, so we can help rebuild this economy.” He’s doing just the opposite.

These measures will drain not only wealth but also jobs from the UK. The new legislation will create a powerful incentive to shift business out of this country and into nations with lower corporate tax rates. Any UK business which doesn’t outsource its staff or funnel its earnings through a tax haven will find itself with an extra competitive disadvantage. The new rules also threaten to degrade the tax base everywhere, as companies with headquarters in other countries will demand similar measures from their own governments.

So how did this happen? You don’t have to look far to find out. Almost all the members of the seven committees the government set up “to provide strategic oversight of the development of corporate tax policy” are corporate executives. Among them are representatives of Vodafone, Tesco, BP, British American Tobacco and several of the major banks: HSBC, Santander, Standard Chartered, Citigroup, Schroders, RBS and Barclays.

The world’s tax havens have not, as the OECD claims, been eliminated, but legitimised; with the City of London itself being a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and the Corporation of the City of London effectively dictates to the government, while remaining exempt from democratic control. 

Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn’t have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, insulating them from democratic challenge.

Our political system protects and enriches a fantastically-wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, effectively stolen from poorer countries and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the Lord Mayor’s show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.

And this government? It has learnt the lesson that Thatcher never grasped. If you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth while the rest can go to hell, you don’t declare war on society, you don’t lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us.

Monbiot - another great web site uncovering the truth ... and more about how power is being misused ... for the benefit of the few (i.e. ultra-rich), and at the expense of everyone else.

Reality check - public says we're still in recession!

According to the latest Consumer Confidence Survey by the Nielsen Company and the British Retail Consortium (BRC), one in three people do not have any spare money to spend ... and yet the Government's austerity measures have only just begun!

Yet the most startling revelation in this report was not this, but the fact that their study also found that 82pc of consumers still believed Britain was in recession!  

It also revealed that only 14pc of consumers believed the country would be out of recession in 12 months time!

Stephen Robertson, the BRC's director general, said: “The survey shows mounting worries about household costs, an unshakeable belief that we are still in recession and record numbers with no spare cash. A significant and permanent strengthening of consumer confidence is clearly some way off.”

You can say that again ... as this is yet another reality check from the consumer questioning the reality of the supposed 'recovery' ... will this lead to a self-feeding negative downward spiral ? ... no wonder the Government's looking elsewhere for someone to bail this broken economy out (e.g. business investment, exports) ...

And according to the IMF, they should not be pushing the myth of 'trickle-down' economics and proposing tax cuts for the rich! 

NB Watch out because politicians are experts in spin ... and the Government are lining up to tell us that tax cuts for the rich are essential for creating growth and tackling 'the forces of stagnation' ... what rubbish ... as the rich aren't going to spend it and put it back into the economy, they'll just save it so they can become more rich!

Public confidence collapsing ... a self-feeding downward spiral ?

A ComRes poll for ITV News shows that half the country thinks the Government has lost control of the economy and fear a double dip.

The sixth installment of the Cuts Index, conducted by ComRes, shows that almost half the country (48%) believes that the Government has lost control of the economy. This compares to 29% who believe that the Government is in control of the economy.

Polled after last week's drop in GDP, 52% of the public believe that the UK is on course for another wave of recession, up from 38% when asked the same question in October. In contrast, 17% of country doesn't believe there will be a double dip - compared to 24% in October.

Asked whether they think things are generally heading in the right direction, 48% said no, up from 32% when asked in October. This compares to 28% saying they think things are heading in the right direction, down from 41% in October.

Asked about who they trust to see the UK through the current economic situation, 22% of the public say they trust George Osborne, 33% trust David Cameron and 22% trust Nick Clegg (nb the trust in all three men has fallen by 10-12%).

With so little faith in the Coalition, and even less in the Opposition (they polled only 15%!), it doesn't bode well for the future of Britain ... as a mixture of ignorance and apathy will continue to prevail ... 

for a while longer at least. This won't last forever however ... as a self-feeding negative downward spiral has started, with household incomes dropping (except for the very rich) and unemployment rising (nb we have also learnt this week that a staggering 97% of all new jobs have only been for part-time work) ... and hard-pressed people will start to take more notice, and demand very different things ... 

NB Politicians need to take a look at the recent IMF report, and on the risks of civil war (due to imbalances of Power).

IMF report raises risk of civil wars ... due to the imbalance of Power

As the aftershocks of the financial crisis continue to reverberate through real economies and government budgets (particularly in the West), it is becoming increasingly clear how the gap between the extremely rich and the poor is playing a major role in the crisis. Economists from the International Monetary Fund (IMF) now acknowledge that, while dysfunctional financial markets caused the crisis in an immediate sense, its deeper cause was inequality.

Banks took on financial assets whose risk they had no real way of assessing correctly. At the heart of these assets were mortgages in the so-called 'sub-prime' market – basically high-risk mortgages made to poor people with insecure and low-paid jobs. When these people started to default on their mortgages in large numbers in 2008, the whole complex (and fraudulent) system of securitised risk unravelled very quickly and dramatically.

An underlying question is why the sub-prime market arose in the first place, and the answer in part lies in the stagnation of incomes in the bottom half of the income distribution in the US (and also in the UK) since the early 1980s. A number of factors drove this, including the introduction of new technology. New technology (e.g. IT) has nearly always been targeted at cutting costs and getting rid of manual labour (increasing unemployment and squeezing wages), instead of using it to free up staff and unleash their (untapped) potential to continuously innovate and grow.  (NB the former is a blunt application of Poweromics, whilst the latter is a good example of Leanomics ... it's also worth noting that very few enterprises, or economies, will successfully find they 'cut their way to sustainable success').  

Michael Kumhof and Romain Rancière, the authors of the report Inequality, Leverage and Crises, pick up the theme of stagnant incomes at the bottom, but link these to the huge increase in earnings at the top, which provides the other half of the story. By 2006, the top 1 per cent of taxpayers in the USA received almost one quarter of all income in the US (see chart below). 

The wealthy needed to invest their money somewhere, and in Kumhof and Rancière go on to say: 'The key mechanism is that investors use part of their increased income to purchase additional financial assets backed by loans to workers. By doing so, they allow workers to limit their drop in consumption following their loss of income, but the large and highly persistent rise of workers’ debt-to-income ratios generates financial fragility which eventually can lead to a financial crisis'.

As a consequence the size of the financial sector, as measured by the ratio of banks’ liabilities to GDP, ballooned*, with the crisis characterised by large-scale household debt defaults and an abrupt output contraction (as in the U.S.)

During the build up to the 2008 financial crisis, the worlds of the rich and the poor were connected, but through the need to lend on the one hand and the need to borrow on the other, and IMF paper argues that the extreme gap between rich and poor was an underlying cause of the crisis (with its obvious parallels to the late 1920s - when the Roaring 20's was followed by the Great Depression) - see chart of Male Annual Earnings in the US below.

The paper goes on to explain how 'the crisis is the ultimate result, after a period of decades, of a shock to the relative bargaining powers over income of two groups of households, investors who account for 5% of the population, and whose bargaining power increases, and workers who account for 95% of the population' and argues 'because crises are costly, redistribution policies that prevent excessive household indebtedness and reduce crisis-risk ex-ante can be more desirable from a macroeconomic stabilization point of view than ex-post policies such as bailouts or debt restructurings'.

The paper concludes by suggesting 'Restoration of poor and middle income households’ bargaining power can be very effective, leading to the prospect of a sustained reduction in leverage that should reduce the probability of a further crisis.' and warns of "disastrous consequences" for the world economy if workers do not regain their "bargaining power" against rentiers. 

The International Monetary Fund (IMF) also warns that "dangerous" imbalances have emerged that threaten to derail global recovery and stoke tensions that may ultimately set off civil wars in deeply unequal countries (nb we can see this already starting to play out today**). 

Despite all the rhetoric and spin, in reality the UK (and US) Government chose to bail out the banks with tax payers money (allowing the rich bankers to profit heavily from gambling once again), whilst passing the cost of the bailouts onto poor and middle income households, in the form of job losses, higher taxes and reduced services ... Indeed, worse still, in the UK we have the Tory Government trying to suggest the way out recession is to cut the top rate of income tax to the rich ... and to restrict the rights of ordinary people to strike ... both quite the opposite of what the IMF suggests in its report ... unless they're trying to promote civil war that is!

* The situation was also made worse by Fractional Reserve Banking, with bankers pushing to increase lending in order to profit from money (created out of thin air)!

** With the current unrest in Egypt, it was interesting to hear the potential hypocrisy in which the UK/US told Egypt's leaders to return the internet/mobile communications to its people, and to respect these as basic human rights ... as I understand both Governments' have similar strategies planned if they face similar levels of unrest!