Budge-this

My favourite budget bit so far is “We are also taking the opportunity to rebuild Britain’s reserves, which had fallen to historically low levels. I can confirm our gold holdings have risen in value to £11 billion. This does not include the 400 or so tonnes of gold sold a decade ago for £2 billion, and which would now be worth six times that at over £13 billion pounds.” i.e. Gordon-the-gold-seller-Brown, you are one seriously useless fucktard.

The 7% new stamp duty rate on £2m plus houses combined with the new 15% rate if you bought them through a company is also awfy cute the way it tells Bob Geldof and co they can try and dodge the stamp duty us plebs pay if they want by buying via a company, but it’ll cost em’more if they do.

In the background to this though and the next few budgets is the supposed reality the Fitch rating agency spelled out when they issued the following chat to explain their decision to move Britain to “negative outlook”: “The triggers that would likely prompt a rating downgrade are … : -- Discretionary fiscal easing that resulted in government debt peaking later and higher than currently forecast;” (then 2 other triggers are mentioned, one is “blah blah blah” and the other “ya de ya de ya”).

Now Fitch is very clearly using jargon to mask an assertion of ignorant and very debateable prejudice. Negative outlook? That’d be them saying we think certain factors means that a downgrading of Britain’s credit rating has become a real possibility, which matters because markets respond to changes in outlook as well as actual ratings. And for both a negative move typically sees governments having to hand over more tax payer fivers to cover its debts. Discretionary fiscal easing? Hmm, that’s quite a cute one really; discretionary? That’d be what a budget is. Fiscal policy? That’d be about taxing and spending.

So essentially, Fitch said in the immediate run up to the budget don’t cut taxes or increase/not reduce spending in ways we don’t like or else i.e. it’s an assessment that can be read as a warning that’s open to interpretation as a threat.

Of course a rating agency would never see things like that, they only ever provide independent opinions based on privileged access to company data after all that others are “free” to choose to act upon or not (similarly, shops only sell guns whereas it’s the psychopathic outsiders who actually use them to shoot their classmates). And yet would a more active, discretionary fiscal policy be a bad thing?

Paul Krugman certainly thinks it wouldn’t, similarly John Kay today talked about how increased public spending on construction in its widest sense would “as the National Audit Office recently observed, be likely to reduce public expenditure over the medium term, not to raise it. The weakness of current – necessary – austerity programmes is that they focus on capital projects and expenditure deferrals because these cuts are easy, even though they are precisely the opposite of what is needed to balance the books in the long term. We need to devote much less attention to headline spending totals and much more to the detailed composition of public expenditure.” Heck, even this joker thought this was a good idea in 2009 cos he’s also mindful of how cos counter-cyclical government spending “leaks” in an open economy such as the UK there’s a need to focus on stuff that doesn’t like building shit. Except, these kind of grounded in facts but still – lets be honest – ideological views are effectively being swept aside by chat like Fitch’s, which is a bad thing.

Fitch’s chat illustrates perfectly the kind of dogma and prejudice that continues to define the terrain on which British fiscal policy is now set and its overall direction. This makes it a clear assault on democracy and, in the view of all sorts of bods, one that is actively shitting on the prospects of both the British economy and the livelihoods of hundreds of thousands of people left unemployed as a result.

Am trying to think how to draw this to a close, howzabout: The budget is shit and all the ConDems should be made to dress up like girly shepherdesses. This is cos government passively accepting the undemocratic constraints on its fiscal freedom private companies i.e. rating agencies, are imposing is a very, very bad thing.

Instead the debateable analytical and moral capabilities of the latter and of the "market" more generaly should be recognised. Thereafter, these external bodies should be held up to more and more aggressive public scrutiny and regulated til they squeal like pigs.

We should also have, because we need it, a huge increase in public sector debt funded public spending on construction. Given the Labour response has been to fixate on the tinkering and ignore the overall thrust of fiscal policy, Milliband and Balls should similarly be ordered to dress up as shepherdesses complete with pink gingham bonnets. There.

Private sector efficiencies

A lot of public sector work is labour intensive. In many cases it involves better terms and conditions than you find in the private sector. Public sector trade union bargaining power is in a different league to what you find in the private sector, which makes it harder to cut public sector costs by hacking back public sector Ts&Cs. TUPE aside, when the provision of services is put out to tender its typically easier for a private sector firm to out-compete its public sector equivalent on cost grounds because, as its labour is cheaper, it usually has a lower cost base. And that’s kind of it really.

To give a practical example, public sector social care providers who help people in their homes are often paid for the time spent travelling between clients whereas private sector care providers providing the same service often aren’t. Instead, the latter frequently spend less time with their clients to meet targets, work free over-time, stress out as they skitter across their patch etc.,

None of the above has anything to do with “private sector efficiencies”. Instead it’s simply the private sector provision of public services and privatisation (and/or the tendering out of services previously provided by public sector bodies) as means of accessing cheaper labour i.e. getting people employed on private sector terms and conditions to do public sector work.

Practically, privatisation now involves a piecemeal, cherry-picking approach that affects one national service here and a range of regional activities there, all the while avoiding any head on political conflict. A recent example of this is the chat about farming some police activities out to the private sector. And again it’s worth reiterating, this is hee haw to do with “private sector efficiencies”, rather it is simply about cheap labour.

Nope I don’t think that was clear enough. Privatising services is nothing, NOTHING whatsoever to do with “private sector efficiencies”. What it is about is getting people to do the same jobs you might find public sector bods doing, but for less money.

Now let’s put that in some kind of context; as I understand it every time someone challenges executive pay or investment banker bonuses, the stock response is if you don’t pay top dollar (emphasis on “dollar” given Britain appears the furthest along the US route when it comes to mad pay for the ruling class in a its not so much a global labour market as it is an Anglo-Saxon model of capitalism with all that says about nation specific labour market outcomes) you don’t get the right calibre of labour.

Cool. So lets apply that same logic to public sector privatisation – if you farm out public sector work to the private sector you’ll be farming it out to employers who don’t pay the top dollar needed to recruit the kind of staff that will provide the best social care for the elderly, checks to ensure illegal migrants don’t get into Britain and so on. Cool(?).

For those winning the tenders the rewards can be incredibly sweet as Emma Harrison’s £8.6m dividend proved. Now for starters she got herself that money helping/exploiting the unemployed through a company being investigated for fraud (how terribly private-sector efficient). But, hey ho. For seconders, though, some hypothetical numbers illustrate how she may well have “earned” it; so assuming labour costs account for say 50% of her former company’s staff base, if she ensured they cost say 20% less than their public sector equivalents (by only providing shit pensions, using contract labour wherever possible, avoiding automatic pay increments and recruiting relatively younger staff, etc.,), then she’d have been able to undercut a rival public sector tender by 10% without breaking sweat or wind.

Except, 10% is a bit much, rather I’m guessing a 5% advantage would be enough cos then she could win the contract AND pocket the difference. Or perhaps the actual figure was 5.7% given her £8.6m appears to have largely derived from the £200m worth of government contracts her company was awarded i.e. in a Superman 3-Richard Pryor type scam 4.3p in every taxpayers pound paid to her company went straight into her pocket. And for what? Am guessing for screwing employees and not much else. Clearly, some of us are in this together more than others.

Feargal the perfect cousin Pt. II: Feargal squeezes a balloon

The thing about the FBI going after megaupload etc at the behest of copy right owners is that it attacked a means of distributing/accessing pirated material rather than the demand.

The internet being what it is, when one thing gets closed down people will quickly find other means of meeting/satiating said demand. And lo a cool mate kindly sent me the link to this article about how even before Kim Dotcom gets done "Anonymous, Decentralized and Uncensored File-Sharing is Booming" .

Now just think about that catchy title and what it means: Megaupload? Identifiable individuals uploading stuff and people who download it leaving all sorts of IP trails. Now? Its increasingly anonymous, decentralised and uncensored.

Another thing is that internet locker companies did and do scrutinise, to varying degrees, whatever gets uploaded to their servers. Plus, with people frequently accessing the necessary links via forums, there's an additional layer of policing by downloaders and forum members. Were or are either of these things perfect? Nope. Good? Probably not. A something that was better than nothing? FoSho and definitely better than anything that's anonymous and uncensored.

So does this rapidly developing situation mean megaupload and its ilk should have been left alone? If honest no not really. But, was it bloody obvious beforehand that this would happen? You betcha (e.g. It’d also be quite cool to get a handle on the unintended consequences of going after easy targets/encouraging people to go underground to get pirated material.)

And were the practical consequences anticipated and planned for? Duh! These are Americans we're talking about, so that'll have been shock and awe plus whatever words of "wisdom" dear Feargal had to say on the subject.

Presumably what we'll see in due course are various cat and mouse attempts to use the law to close down the alternative methods that develop. That and businesses still running with a megaupload style model being awful careful about the jurisdictions they keep their shit in.

But, in the meantime, well the media congolomerates appear to have used their influence over democratic and legal processes to get what they wanted; the creation of an enviroment that's now pushing more and more people towards anonymous and decentralised means of distributing uncensored material.

I reckon this is a bad thing because it's pushing ordinary punters wanting to engage in the "relatively" harmless pursuit of downloading a screener of the latest Hollywood blockbuster towards less savoury characters, places and practices. It will also generate more cash for these other people and places as well, one obvious parallel being prohibition in - you guessed it - America.

As for the media conglomerates, they did what they did because their instinctive approach to anything really is predicated on aggresive recourse to law and dictating to consumers; they appear incapable of building credible business models to meet an obvious global demand. They did this because they are dicks.

Dear Sir

Cool letter to the Telegraph the other day

“SIR – Given the state of the British economy, we urge George Osborne, the Chancellor, to consider scrapping the top rate of tax in his forthcoming Budget. The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.”

Wealth creators – that’ll be the borrowed American rhetoric in full effect then (or is it job creators or both?), but to be fair “awkward position” is a wonderfully British response; you can imagine a Titanic passenger describing matters as “awkward” unless, of course, they’d already been shepherded onto a life boat due to their first class ticket. I digress …..

“We believe the richest should help the poorest in society” – there’s lovely, so that’ll be charity then i.e. generosity on terms dictated by the provider with an eye to at least a mention in the New Year’s honours list as opposed to the systematic provision of a welfare state. Back to the letter ….

“One per cent of taxpayers are already responsible for 24 per cent of income taxes” – Crikey, is the distribution of incomes in the UK really that skewed, unfair and unjustifiable? I didn’t realise. And this is presumably the same economic inequality that led to the credit crunch in the first place (see later - 1)? The letter then says ….

“But penalising high earners through an unfair, politically motivated tax puts populist politics before sound economics” – alternatively, this rhetorical flourish displays a profound ignorance as to what economics is, sound or otherwise. See later - 2.

“The 50p tax is set to reduce government income, and damages the economy, the public services and charitable giving” – as the Daily Mash pointed out, according to its critics the 50p tax rate manages to cut revenues i.e. have little if any impact, at the same time as having, well a big impact. Logical inconsistencies eh? Dontcha just hate ‘em

“As business people, we want to see our industries, our economy and the Third Sector thrive. Repealing the 50p tax would demonstrate the Chancellor’s wish to celebrate British entrepreneurialism, stimulate industry and contribute to the Government’s growth agenda” – well that or leave him looking like the toffee nosed upper class shit on us plebs with gay abandon cunt that he is. That and someone profoundly ignorant of politics and political and social forces (again, see later - 3). The letter then finishes with

“The sooner the top rate of tax is repealed, the better” - Huzzah!!!!!

The later bits:

1) An idiotic explanation of the credit crunch is to blame government, whereas government’s actual contribution was to be idiotic. Governments were idiotic because, to varying degrees, they believed the rich and powerful (or R’n’P) people who told them (a) trust us, and (b) give us everything we want, which was things like lax principle based as opposed to conservative rules based financial regulation, a shift away rom redistributive taxation, a tax system like a sieve at its top end and so on. The R’n’P then made themselves fortunes as a result, but unfortunately blew the global financial system and various Western economies up in the process.

This fact has profound implications. Like when a Liam Fox tries to get back into cabinet by positioning himself as a standard bearer of the right by saying “To restore competitiveness we must begin by deregulating the labour market …. (i)t is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical” you’re left gawping at the vicious stupidity of it all. Is he actually claiming there’s an “intellectual” link between the ability of say a Patrick Bryceland, director of Commercial and Industrial Cleaning Services Ltd (who signed the letter to the Telegraph), to hire and fire at will and the US sub-prime debt that triggered the credit crunch in the first place?

Or is he both nasty and dumb enough to be suggesting that giving Mr Bryceland even more discretion via even more “flexible” labour laws will help support our current credit rating given Britain is already an outlier in labour market flexibility terms to the extent that bods have talked for years about an Anglo-Saxon economic model as opposed to say a triple A German one? Like, seriously, is he?

2) Ach, where to begin with this one really. “Economics” as used in the letter to the Telegraph, is simply a rhetorical flourish. The word provides no more than an unthinking reference to one academic discipline's twentieth century methodological turn involving an obviously Comte-like notion of social science as science that became a fixation with clever sums impenetrable to outsiders. This change, the adoption of one approach and one set of methodologies by definition could and can only ever provide a distorted and narrow means of understanding what is better understood as a broader political-economy, a point made obvious by the economist's ceteris paribus caveat (and their failure to spot the credit crunch).

Prefacing “economy” with “political” is more realistic (or “sound”) and a reminder of how the political and the social are integral to economic life. The most obvious example of this are the laws governing property rights that make buying and selling possible. These laws vary over time and between nations because they're the kind of outcomes that illustrate how the political is the means by which an economy is achieved and functions.

3) This follows on from recognising the political nature of the economic. You could read this to get a sense of how economic change can have profound social and political consequences. Alternatively you could simply count the number of recent regieme changes that have taken place across Europe. Clearly, the economy is political and the current econopmic situation is already having massive political effects, something the letter’s dismissive reference to “populist”, by which they presumably mean “bad”, politics, misses at a profound level.

Rather, the 50p tax is about perceptions of fairness. Like Mr Goodwin’s knighthood, it’s the token quid government needs right now to legitimise its pro-quo economic policies. Cutting the 50p tax would undermine the legitimacy and therefore the sustainability of these policies. Without it more people would question and perhaps even start to challenge why they are now living in a new age where they are being forced to work harder for longer for less money while paying more taxes in exchange for fewer public services at the same time as the people who caused it all get away seemingly scot-free. I’m sure even Mr Bryceland would agree that from his perspective – is his a minimum wage, no employment benefits, chock full of Eastern European migrants company I wonder? - such a development makes even less “economic” sense than the 50p tax rate.

Actually hang on a mo, mebbe when you take this broader context into account cutting the rate isn’t such a bad idea after all. And as a fabulous person pointed out why exactly are all these company directors i.e. dividend earners as opposed to PAYE income people, complaining anyhow?