from MWHITE (Guardian CIF)
… global capitalism has created a transnational, corporate welfare state which transfers wealth from taxpayers to a kleptocratic elite. It works like this:
Method 1: Taxpayers pay for not only the infrastructure on which the private sector depends, but also the state-funded research carried out by the military and public universities to develop technology such as the jet engine, the desktop computer, the internet, nuclear power and GPS. This technology gets handed over to the private sector, which proceeds to make vast profits from it. Then, even though the last 30 years have seen drastic and worldwide reductions in corporation tax and the top rates of income tax, the corporate kleptocracy evades taxes by hiding offshore up to £20 trillion of its profits (an amount equivalent to almost a third of annual global GDP), whilst governments cut spending and charities open food banks to provide for the victims of this criminality.
Method 2: Until their private sectors are able to compete globally, capitalist economies such as the US (from the 1830s till the 1940s) and Britain (from the 1720s till the 1850s), reject the free market and develop their economies through state intervention, using protectionism, subsidies and capital controls. The ruling elites in countries such as Japan, Singapore, Taiwan, France, Austria and Finland follow the lead of the world’s two biggest economies. Then, as soon as they have gained a competitive advantage, these beneficiaries of corporate welfare inflict market liberalisation on developing countries with disastrous effects. Thus, having increased by 37% between 1960 and 1980 as a result of interventionist economic policies, the GDP per capita of sub-Saharan Africa fell by 7% in the years 1980-2000, as countries which borrowed from the IMF were forced to cut spending, privatise their state-owned industries, deregulate their financial sectors and remove trade barriers. And at the same time that they were wreaking havoc in Africa, the free market prescriptions of the Washington Consensus were also failing in the developed countries, where average, annual GDP per capita growth fell from 3.1% during the 30 years before 1975 to 2.1% during the 30 years of neo-liberalism which followed.
But slowing GDP growth and stagnating median incomes didn’t stop wealth from being shovelled upwards ever more quickly. In the US for example, the 18 years preceding the 2008 financial crash was one of only two periods in the country’s history when the share of total income of the top 1% exceeded one fifth. The other was the 8 years before the Great Depression.
Method 3: Governments have to subsidise employers who don’t pay their employees a living wage. In the UK, for example, the government spends £23 billion per year on the tax credits it pays to working families. Then there’s the £4 billion per year in housing benefit given to households with at least one person employed. And, to keep wages low and its workforce compliant and insecure, the private sector needs an army of unemployed – again financed by the taxpayer. As Margaret Thatcher’s chief economic adviser in the 1980s, Alan Budd, admitted to The Observer in 1992:
“….......... the 1980’s policies of attacking inflation by squeezing the economy and public spending were a cover to bash the workers. Raising unemployment was a very desirable way of reducing the strength of the working class. What was engineered – in Marxist terms-was a crisis of capitalism which re-created a reserve army of labour, and has allowed the capitalists to make high profits ever since...........”
Method 4: Instead of retaining monopoly control of the money supply, governments allow private banks to create money, which is conjured up on a computer screen and used to speculate, fuel asset price inflation, pay bankers’ bonuses and create an endless debt spiral as more and more money has to be printed to enable the repayment of interest. Then, when the asset bubble finally bursts, governments have to spend trillions of pounds of taxpayers’ money to prevent the financial system from imploding and national economies from disintegrating. Finally, to add insult to injury, governments have to borrow what should be their own money back from the same banks to which they have given the power to create money out of nothing – and pay high interest rates because of an economic crisis which the banks themselves have caused.
And worst of all, whilst the beneficiaries of the corporate welfare state drain the global economy at the expense of taxpayers, the media organisations and politicians they own lecture the poor and unemployed, endlessly moralising about their fecklessness and lack of responsibility. In doing so, they only confirm what most people already know – that capitalist democracies really are the best that money can buy.
5 MYTHS about welfare peddled by the right-wing newspapers, the Bullingdon Broadcasting Corporation and the useful idiots of Tory Middle England:
Myth 1: “Benefit claimants are idlers and parasites.” Wrong. The majority of those who claim benefits are in work, including nearly 90% of those who claim housing benefit.
Myth 2: “Unemployment is a lifestyle choice for those who wish to live comfortably without working.” Wrong again. Firstly, there are between 4 and 5 million people looking for work but only half a million job vacancies. Secondly, only 5000 people, 0.017% of a UK workforce of 30 million, have been claiming Jobseekers’ Allowance for more than 5 years. And thirdly, according to the CPAG, after housing costs have been deducted, the UK poverty threshold is £124 for a single person with no children, £214 for a couple with no children and £348 for a couple with two children. JSA amounts to £67 per week for a single person with no children and £106 per week for a couple with no children. A couple with two children would receive an extra £34 per week in child benefit and a maximum of £109 per week in child tax credit – a total of £249 and nearly £100 below the poverty level.
Myth 3: “The massive welfare bill is crippling the economy and needs to be cut.” But in 1997 welfare spending as a % of GDP was 7.76%. In 2010 it was 7.26% (www.ukpublicspending.co.uk). And unemployment benefits in the UK are amongst the lowest in Europe, having fallen from 17% of average earnings in 1976 to 10% in 2011. As for the proposed housing benefit cap, this will save £290 million per year, a minuscule 0.5% of the £53 billion per year in welfare payments given to those in the top half of the income scale.
Myth 4: “The UK is being bankrupted by benefit fraud.” More nonsense. Benefit fraud has been declining for years and now accounts for less than 0.5% of the welfare budget (£1.1 billion). Compare this to the £16 billion of benefits which go unclaimed every year and the annual £20 billion plus which is lost through tax avoidance and evasion.
Myth 5: “Welfare saps the will to work.” In which case how come post-war unemployment was at its lowest in the 1950s, when unemployment benefits were at their highest in relation to pay?
So The Great Tory Welfare Lie will be parroted ad nauseam in order facilitate a further transfer of wealth from poor to rich and to distract voters from the disastrous effects of the government’s NHS reforms and the monumental incompetence of George Osborne’s economic policies. After all, demonising the unemployed sells millions of copies of the Daily Mail, is guaranteed to improve the Tories’ opinion poll ratings and is the easiest way to divide and rule.