Poverty in Profile

Let's paint a picture of the stereotypical person below the poverty line in the UK. No job, on the dole, poor education, overweight, teenage parents, prior convictions etc etc.

The fact is that many of these just aren't true. The real picture is something like this: multiple jobs, grew up in an area with a lack of schools, supporting a family, socially excluded. Many of those in poverty in the UK are being portrayed as feckless or work-shy when this simply isn't the case.

What is poverty?

Well in the context of a 'developed nation' like the UK we have to look at relative poverty so this doesn't mean that someone has to be living in a shack with a corrugated roof to be in poverty. The definition given by the Joseph Rowntree Foundation is

‘When a person’s resources (mainly their material resources) are not sufficient to meet their minimum needs (including social participation).’

Why are they in poverty?

Many people have been plunged into poverty for the following increases:

• The cost of living
• Rent
• Fuel cost
• Job insecurity
• Cost of childcare

The media and electoral pressures

The media constantly can be accused of creating sensationalist propaganda against those most vulnerable in society. Some of you may think that this is hyperbole on my part but there is a constant war against those who claim benefits. For these articles the papers and wider media select the most outrageous stories and present them as commonplace. This has created a stereotype for those in poverty which couldn't further from the truth.

Another effect of this is the reluctance of politicians to speak out about these issues in fear of electoral backlash. Of course, who would want more of these 'vile products' of the welfare state? Many voters don't know the benefits of helping those at the bottom of society and close the inequality gap.

The truth:

1. They want to work- 8/9 people out of work are looking for a job or feel as though they can't because of their circumstances.
2. The cost of living has gone up faster than the minimum wage and average wage during the financial crisis
3. The benefits given out have gone down in real terms. Although the figure itself has increased, the value in terms of what can be bought with it has gone down

The solution:

1. Match the minimum wage to the living wage (£7.85)
• This would make the UK population as a whole better off and help to alleviate some of the strain on the budget deficit by increasing tax revenue and possibly decreasing the welfare bill.  
2. Extend free childcare to all 1 and 2 year olds 
• This would allow parents to better manage the costs of having a child. In addition it removes one of the barriers to work. 
3. Increase the amount at which people need to start paying National Insurance contributions

• This will arguably help those in poverty more than increasing the tax threshold. This is because 65p will be lost from every £1 gained from a tax cut, for example if I earn £500 from a tax cut, I will lose £325 of benefits 
4. Don't just help people get jobs
• Help them move from low paid jobs to higher paid jobs
5. Tackle the gap in educational attainment
• Close the gap between those in privileged areas and those in poorer areas where schools aren't as good
• 97% of mothers want their new born children to attend university which shows that people share aspirations across society, not just in the middle classes

Some interesting links:
Measuring poverty when inflation varies
A UK without poverty
Monitoring poverty and social exclusion

Bourgeois of Britain Unite!

Inequality. Inequality. Inequality.

We may see a charismatic leader standing on a podium emulating Thatcher in the not too distant future. But they'll be preaching a message which is the polar opposite to our 'Aunty Margaret'. Now I'm not saying that she got everything completely wrong; she did some much needed modernising and restructuring. However when she said that she was 'rolling back the frontiers of the state' she didn't know how far to go. Her deregulatory policy made it much easier for large corporations to restructure the market. They made it so that instead of the market serving us (the masses), we serve the market.

Karl Marx observed that history is defined by class struggle, he stated that there is a constant battle between the Petit Bourgeois (average middle class), Bourgeois (upper middle class) and the Proletariat (working class). However I would argue that this model doesn't really apply anymore. It is broadly accepted that we've got a system where we don't have the traditional working class. But we have a mobile middle class and then a large jump up to the super-elite at the top of the food chain. Plato stated the ratio between the highest earners to lowest earners in society should be no more than 6:1 and in 1923 JP Morgan stated it should be 20:1. Income inequality is at the point where those with the highest wages (the Bourgeois) are paid up to between 100 -1000 times more than the average wage. This is in one word: unsustainable.

 

We may not see it now when we are able to afford Sky subscriptions and can buy iPhones and other cheap consumer goods. But the storm is coming. It may take until the illusion of growing wealth ceases to have an effect. People may take this as mere hyperbole but I kid you not, this is a very real problem.

1. The richest 10% of households own 850 times the wealth of the poorest 10%
2. UK inequality has risen by 42% since 1977 (according to the Gini Coefficient, the standard measure of inequality) 
3. The wealthiest 100 people in the UK have as much as the poorest 18 million people
4. I don't really like this one but: it costs the UK £31-33 billion per annum in productivity and tax losses (why don't the Tories care more?!)

Some of you reading may think "hang on, I (or my parents) make almost double the average wage and way more than the poorest 10% so how does it effect me?". Well it effects you because eventually either you or your parents will be experiencing the same difficulties that the poor are. What will the breaking point be? When couples with a combined salary of £40,000 a year are unable to get onto the property ladder? When the goods and services which we actually need start to become unaffordable for many? Will it come when we finally accept that we have gone back to a Marxist hierarchy with the definitions for each class are redefined? 

We can see that the 'horse and sparrow' economics  doesn't work. If it did, the statistics above wouldn't exist. The idea that if we feed the horse oats (money), then some of the seed will eventually pass down to the sparrows is inherently flawed. In reality, we the sparrows are left eating horse s*** with no oats in sight. By the time we end up getting whatever oats we can they've lost their nutrients. The money which we get has lost it's purchasing power therefore, we need to borrow money in order to buy the goods that we want and need and that is when the black hole of debt starts to form. 

It is only a matter of time before we start to realise that we're being cheated and manipulated by those of a 'higher order'. This may seem like conspiracy but it really isn't. It can be observed that throughout history great empires must end, and this empire of neoliberal capitalism needs to end. I'm not proposing a return to Keynesian Collectivism (public ownership) or a Marxist State. I'm calling for a government by the people, for the people and with the people not just for big business; and an economic market which serves the masses and not just the select few. 

Sources:

The Telegraph

The Guardian

The New Economics Foundation

Four Horsemen

Oxfam Report

Let's keep feeding the fat man...

At the moment the world economy is like a fat man who keeps being fed. Governments worldwide seem to have one thing at the heart of their economics; the target of economic growth. In another introductory post I will outline some key issues which I'll go further into at a later time.

If we work on the assumption that: 1. resources are finite and 2. world population will stop growing at around 10 billion people (when the birth rate plateaus at 2 children per woman); then it seems hard to understand why every economic action which governments take is to facilitate growth.

The first rule of economics is that human's have infinite wants and needs and that the world has finite resources. The assumption of endless growth therefore relies on an infinite supply of energy. We could give the fat man some green renewable energy to calm his rumbling stomach but that stuff costs money. Large energy corporations don't want to properly invest in it... but what's a couple hundred million when they make billions in profit? The governments know this as well but why would they, in a time of austerity want to lose a lucrative income stream in the form of fuel duty.
It's not as if the oil companies are completely blind to this reality either.

In its energy scenario, Shell outlines two outcomes: Scramble and Blueprints.

Scramble is essentially, as the name suggests a 'scramble' for energy:

• The focus here by legislators and decision makers is to make their energy supply in the short term secure. Bilateral agreements see the rise of local development incentives. 
• Politicians give into the electoral imperative. They use supply side policy because stunting energy demand and therefore indirectly limiting economic growth is simply too unpopular.
• Lack of cooperation means that governments aren't united. This leads to a number of local initiatives which aren't effective. 
• They don't want to damage their economic growth...
• The bilateral nature of these deals means that there is competition between governments to get good deals with energy companies
• As a result the resource holders become the rule makers

• Developing nations scramble for energy to try and 'climb the economic ladder'
• On the other hand rich countries don't manage their energy plans in an effort to sustain their lifestyles
• However, economic development globally doesn't change much because of the switch from oil to coal...kind of like switching to KFC when McDonald's closes down

• All the while there is the same old rhetoric being put out by those in power saying that they need to combat climate change. 
• The reality is that they wait until supply of these fuels is low until they start to develop policy which addresses demand. 
• Nothing really happens in terms of environmental regulation until 'major climate events' take place. 
• This causes volatility in the energy market and a decrease in economic growth (surprise surprise).

In short, governments and economies favour growth over initiatives that actually solve problems.

Blueprint is the opposite is essentially where governments cooperate and form legislation together to combat this insatiable appetite for energy.

Shell have said that of the two, Scramble is the likelier scenario. We must stop offsetting the problem so that we don't go down the route of Scramble. It shows the need for a change in mentality of the law makers to stop with the short sighted aim of economic growth at all costs.

To find out more info about Blueprints and Scramble watch the video:

Or read them for yourself:
Shell Energy Scenario

This time for Africa and the Global South- an intro into new aid and intermediate technology

As Shakira said four years ago "People are raising their expectations go on and feed them this is your moment no hesitation" The whole continent was bustling with World Cup fever and expectations were indeed raised, but what happened to Africa? Well the short answer is nothing much. It is still full of expectation and potential which is yet to be realised. Of course there has been innovation, there have been success stories but not enough for this blogger's liking. The global south as a whole do need our help and I feel that we owe it to them. Not because we are superior in any way, shape or form, but rather to the contrary. Our efforts to modernise and westernise these 'backwards natives' has completely failed. We need to fix it.

To do this, I think we need to do two things, stop chucking money at them, and stop telling them that our way is the right way, because it really isn't. Clearly our way hasn't been working and our financial situation is still in a mess despite what the mainstream media have to say about it (have a look at http://rt.com/shows/keiser-report/175580-episode-max-keiser-632/).

We need to realise that money, or at least the money which is being spent now, is completely misused. Intentionally or unintentionally. The average guy in the village ends up losing out. The wealthy and fairly well educated guy in the city ends up winning. That is the harsh reality in many countries and is just plain wrong. 40 years ago E.F. Schumacher said much the same thing. We as the West go to less 'developed' countries and focus all of our energy on the more wealthy parts of a country, the ones which are easier to develop. We provide them with high precision, high maintenance and highly complicated tools. The factory owners who already had the land prosper, the few who are qualified enough to work at the factory prosper (in many cases foreign workers are imported)...and the average person on the farm; well, they 'didn't want to' take our help. The average man is left to work his farm with a limited market. He cannot match the lower prices, output or uniformity which the factory provides and what is demanded by the foreign market which he must now compete in. He is essentially jobless. In the worst, but not uncommon scenario he will join a militia group promising food for his family and an end to the white man taking what is rightfully his, a happy and peaceful life. The man could also move to the city with his family, where he is faced with the problem of a lack of housing and lack of jobs. Again, devoid of a happy life.

Imagine if this money had been spent differently and invested in educating the man rather than ruining his livelihood which his ancestors had most probably enjoyed for centuries before him. This is why I'm calling for an increase in intermediate technology. Where the machinery is simple enough for the man to be taught how to use it. Where the output would be affordable for the local community and contribute to its flourishing rather than its demise. Where jobs are created instead of lost and where people do not have to take a blind trip into the unknown by moving to a city. Another idea that springs to mind is the Barefoot College (http://www.barefootcollege.org/). An initiative which is simple, easy to transfer and costs next to nothing. It offers a basic education in what the people in the towns and cities need to know. It allows for them to develop by themselves, independent of continual cash injections from foreign aid. No matter what the lads say, bigger is not always better. This is just one example of a decentralised approach to aid and development which treats the people as if they actually mattered in a way which they can understand.

That's my rambling done and if you made it this far I thank you for reading. Please feel free to comment and share your opinions.

What's the deal with TTIP?! (Pt 2)

As discussed in the earlier post, which you should read if you already haven't. I'm going to outline only 5 of the many things wrong with TTIP.

1.       Undemocratic

TTIP has been undemocratic since its inception, the whole negotiation process was never meant to be scrutinised publicly with both parties wanting to get this agreement finalised as soon as possible.  It is not ‘transparent’ as has been claimed and it has been confirmed that the European Commission will block any public access to documents about TTIP and has asked MEPs to maintain confidentiality over proceedings. Stateside, Congress won’t be allowed to see draft negotiations; so legislators can’t actually do their jobs because of blocks to their access and the public are unable to scrutinise the treaty for themselves even though it will undoubtedly affect them. The commission are however granting access to businesses. MEP Helmut Scholz writing for EurActiv.com says that ‘the public interest is vastly under-represented’ and that businesses have been given ‘intimate access to EU negotiators’. With the lack of public representation how can this be seen as rule of the people, by the people, for the people-democratic?

2.       ISDS

The Australian government  unveiled plans to standardise cigarette packaging which showed graphic images of the effects of smoking, this will obviously hit the sales and therefore the profits of cigarette companies. The cigarette company then sues the government for billions on account of these lost profits. Well what does this have to do with ISDS and TTIP? This example of what may happen in the near future in the UK and in Europe. This clause would weaken the legislative power of US and EU member states meaning companies could stop legislation going through if it negatively affected them. Plus, these cases would not be brought into court but instead use arbitrators meaning that there is no appeal mechanism for decisions and so no transparency in these dealings. Furthermore arbitrators are much more likely to rule in favour of business as they themselves are corporate lawyers. Some examples of past rulings are:

●       Philip Morris vs. Australian government (as described above)

●       AbitbibiBowater vs. Canadian government for $122 million over water and timber rights

●       Cases against the Argentinian government, many of which were because of the decision to unlink its currency from the US Dollar for  over $500 million

●       Vattenfall vs. German government for  €3.7 billion because of Germany’s  decision to stop using nuclear energy  

There are many more examples, but I think you get the gist. This clause in the agreement could be potentially devastating and would definitely hand more power to the businesses.

3.       Threat to Jobs

With the ‘€100 billion’ growth and ‘0.5%’ growth in EU output by 2027 as a result of TTIP you may think that on face value that this means more jobs. In fact free trade deals often result in job losses. Also when looking at our new trading partner we see that operating costs are cheaper which would mean higher unemployment in the EU as more work is outsourced. There is also the fact that trade unions have very limited power meaning work standards are generally lower which is unethical. The EU’s answer to the concern of mass unemployment is for governments to dip into funds set aside for welfare.

4.       Deregulation

When the cat’s away, the mice will play. TTIP would deregulate food safety which includes the use of growth hormones, controlling of harmful substances (e.g., pesticides) and general animal welfare standards. This is because the US has far lower standards than that in the EU; the US has also specified food regulation as a target in TTIP.  This part of the agreement would mean that the EU would be unable to remove food from the market which it suspects is dangerous freely as it does now. At the moment, it is a company’s responsibility to show that its product is safe for consumption, and not the consumer to show that it’s dangerous. However this would be reversed if TTIP is finalised.

Environmental regulations would also be removed with a chance of significant consumption of natural resources and a reduction in biodiversity. There would also be an increase in the amount of CO₂ which would go against the commitments made by the EU in the Kyoto Protocol. Similar to what is described above, safety from chemicals would also be reduced. Currently companies have to show that their chemical is safe before being sold on the market but this could change under TTIP with consumers having to show it is unsafe. An example of this is that only 6/84,000 chemicals are controlled by the US Environmental Protection Agency. 

5.       The NHS (and other public services)

Karel De Gucht, member of the EU Commission is ‘confident’ that the NHS will be exempt from TTIP, but I’m sure Roy Hodgson was also confident he’d win at least one group match at the World Cup. Confidence doesn’t guarantee anything. TTIP would aim to decentralise public services and open them up to the free market, in an effort to break up any government monopolies. It is very likely that TTIP introduces the right to bid on public sector contracts.  Supposing that privatisation did take place, if the government wanted to reverse this later on (remember no Parliament can bind its successor), it would be open to legal action from the private companies which will make a loss from the re-nationalisation. As a result of lobbying from the financial sectors of the UK, US and influential EU member states, TTIP would also remove some of the regulation introduced after the Credit Crunch making the sector prone to another collapse. If public services are privatised it would resemble the US with extortionate hospital and doctor’s bills and lack of access for the average person. 

Check out these links below to find out more:

www.waronwant.org

www.nottip.org.uk

www.wdm.org.uk/trade

What's the deal with TTIP?! (Pt 1)

What is TTIP?

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed treaty between the EU and US which effectively creates a single market. If passed it would undoubtedly be the largest free trade deal in history. The treaty itself would cover all areas of the economy including health care, finance and industry. It would dramatically change the way which the EU trades with the US. 

Key features:

1.       Undemocratic

2.       Investor-state dispute settlement (ISDS)

3.       Threat to jobs

4.       Deregulation

5.       NHS (and other public services)

It claims to overcome ‘bureaucratic hurdles’ and help small businesses, instead it would do the opposite. TTIP hands more power to big business and would help US Mega Companies breach the EU market which used to be protected. The EU claims that the following agreement would put ‘€500’ into the pockets of the average EU citizen per year. But, this figure is questionable and has been calculated by dividing the ‘€119 billion’ by the number of citizens in the EU...so whether this agreement would have any positive effects on the average person is still up in the air. TTIP would also deregulate the market meaning that the ‘invisible hand’ would run freely without any interruption from governments.

Read the next blog post to find out more information on those 5 areas.

 

 Check out these links below to find out more:

www.waronwant.org

www.nottip.org.uk

www.wdm.org.uk/trade