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