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What's Really Going On

The rich get richer, the rest of us get poorer and no one seems to know what to do about it.

Photo: Images of Money (Creative Commons)


The situation – by a man who knows


Whose analysis is this?


“The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few. Democratic politics, which purports to enrich the many, is actually in the pocket of those bankers, media barons and other moguls who run and own everything.”


It's not some dyed-in-the-wool leftie's analysis, as you probably thought. This is from a 2011 article in the right-wing Daily Telegraph entitled: “I'm starting to think that the Left might actually be right”. It was written by Charles Moore, Margaret Thatcher's official biographer, a former Telegraph editor and one of conservatism/capitalism's most high profile supporters in the UK. The thrust of his argument is that “a system purporting to advance the many [capitalism] has been perverted in order to enrich the few.” If even he has come to this conclusion, perhaps we should pay attention.



How did we get here?


How did this perversion of capitalism come about? A recent article in the Guardian by Ha-Joon Chang, a teacher of economics at Cambridge University, explains one of the main processes clearly and concisely: all around the democratic world, politicians' ability to manage the economy has first been attacked by the right-wing/wealth creators alliance and then removed; economic policy has been put into the hands of unelected officials. (For example, in the UK and Eurozone, interest rates are set by the central banks). This tendency has reached its nadir – so far – in the recent technocratic (i.e. unelected) governments in Italy and Greece, the home of democracy itself. In most of the western world this process has gone hand in hand with the population's increasing unhappiness with, and distrust of, their politicians, together with democracies' decreasing ability to engage their populations, as evidenced by widespread trends of falling voting rates.


None of this would be possible with an informed and knowledgeable population – knowledge is power after all. You need a misinformed or downright ignorant population to vote against its own interests, and that's exactly what we have, at least in the UK and US. In the UK, our main sources of news are papers owned by rich individuals and institutions whose worlds, priorities and values are hugely different from most of ours and, even if you don't read them, their views permeate into our television news and friends and families’ views. For example, we rarely receive any good news about the European Union because this doesn't fit the established narrative of a failing Europe and – in the case of the right-wing press – their owners' business interests. We don't hear about the good jobs that so many of our elected representatives are doing not only, because bad news sells but also, as Ha-Joon Chang explains, “democracy, despite its limitations, is in the end the only way to ensure that policies do not simply benefit the privileged few.” If democracy itself is the ultimate collateral damage of this relentless deluge of stories portraying politicians – and thus politics – in a negative light, the rich and powerful aren't going to be the ones who suffer when it fails, are they?


So the media is a key ingredient in this corruption of capitalism, with the press – as the source so many stories – at the root of this aspect, but we share a huge amount of responsibility too. The British public didn't trust their tabloids to tell the truth even twenty years before the Leveson enquiry but continue to consume them in their millions. Last year Roy Greenslade, professor of journalism at City University, wrote in the Guardian: “In the early 1990s, after some survey or other had discovered that people didn't trust the tabloids, I made a short film segment for BBC2. One part involved me interviewing tabloid buyers as they emerged from an Islington newsagent. After pointing out that the survey said the majority of people didn't trust them, I asked why they went on buying them. Invariably, they replied that it didn't matter because they could tell what was true and what wasn't. Some said they didn't care anyway. I lost count of the people who said: 'It's only a bit of fun after all.' A bit of fun? It was not long after the creation of the Press Complaints Commission in the wake of a Wild West period of Sun [Britain's biggest selling daily] misbehaviour in the late 1980s.”


The problem is, we can't tell what is true and what isn't; we believe whatever panders to our preconceived ideas. Even apparently trustworthy broadsheets report Euromyths as fact and are guilty of lies of omission when telling the truth will affect their owners' – or owners' allies' – interests. (If you don't believe this, look for information about Viscount Rothermere's non-domiciled tax status in the Daily Mail or the Barclay twins offshore tax status in the Telegraph. You'll be looking for a long time.) This is how all sorts of myths about Europe, benefits and more enter our collective consciousness and, as Winston Churchill said, “a lie gets halfway around the world before the truth has a chance to get its pants on”.


There's an Internet  meme that says: Fox News is Rich People Paying Rich People To Tell The Middle Class To Blame The Poor, but it's not just Fox news that is playing this game and, as a result, the level of the public's misinformation is astounding. For example, a YouGov poll released by the Trades Union Congress earlier this year found that:

- On average people think that 41 per cent of the entire welfare budget goes on benefits to unemployed people, while the true figure is 3 per cent.
- On average people think that 27 per cent of the welfare budget is claimed fraudulently, while the government's own figure is 0.7 per cent.

Where do people get these ideas? Almost certainly from the same newspapers that made up stories about the European Union – for if not there, where? But these papers are rather more reticent about publishing the truth about the rich and powerful; for example, it's only recently that corporate tax avoidance has entered the national conversation, though it's been going on for years – the papers have preferred to focus on fraudsters claiming benefits for the sick and the poor than on the fact that the UK deficit could be wiped out if big business actually paid its fair share of tax.



What “We are the 99% actually means


It is in this context of misinformation that, across the indebted West, the gap between rich and poor is growing. According to Nick Cohen, writing in last weekend's Observer, “sensible economists predict that an ordinary family [in the UK] will be living on 15% less in 2020 than in 2008. It's worse in America. The top 1% of earners took home 93% of the growth in incomes in 2010, while those in the middle had lower household incomes, adjusted for inflation, than they did in 1996.” (This is the origin of the Occupy movement's declaration that “We are the 99%”). The BBC reported only this week that “the average middle-income family in Britain is likely to be nearly £1,800 a year worse-off by 2015” according to the Institute for Fiscal Studies.


If you haven't heard the argument that we have socialism for the rich and capitalism for the rest, consider the billions we paid to bail out our banks and the millions they continue to pay their workers in bonuses and compare that with the billions we are cutting from the social security bill. Consider how proportionately little tax Amazon, Apple, Google, Starbucks, Vodafone, Goldman Sachs and the rest pay and how much they benefit from the knowledge and infrastructure the rest of us pay for through our taxes. And then consider how many people you know who are benefiting from our current economic and political set-up and how many you know who are increasingly struggling to pay their bills.


Earlier this year, Joseph E. Stiglitz, the Nobel laureate in economics, argued in the New York Times that rising inequality is 'squelching' the recovery in the US because:

- the middle classes, who have driven economic growth in the past, are seeing their incomes fall; the true figure is 3 per cent.
- falling incomes mean the middle classes are unable to invest in their futures through education and starting or improving businesses;
- the weakness of the middle classes is impacting on tax receipts, especially now the wealthy are so good at avoiding taxes, meaning government can't invest in infrastructure, education, research and health which is vital for long term economic health.

He notes “inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s, the last time inequality of income and wealth in the United States was so high ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven't absorbed the lesson”.



Refocus on what really matters and re-empower ourselves


A basic technique of government and the powerful is to use synthesised debate and manufactured outrage to distract the populace from what's really going on, as everyone with the most rudimentary grasp of politics knows. Sadly it seems few of us are wise to this simple and eternally effective trick.


Whilst we teeter on towards ever increasing poverty we discuss whether we should leave the European Union, and with it our seat at our biggest trading partner's negotiating table, in order to forge new trade links with our former empire – because they love and respect us so much, right? – together with emerging economies such as China and Brazil; we give disproportionate and unhealthy attention to the murderous and media-savvy fanatics responsible for the Boston bombings and Woolwich murder; and we follow our favourite celebrities' and sports teams' triumphs, trials and style decisions as if they're the most important things happening on the planet. They're not – our increasingly threatened collective financial well-being is, and we can no longer rely on the same old media to give us the first weapon we require in our fight-back: accurate information. The press are known as the 'Fourth Estate' because they manage the other three 'estates': religion, army and politics, who in turn manage us. How we get our information – and how trustworthy our sources are – is a huge subject and one we at Impolite Conversation will keep coming back to. Arguably we the people, through the power of new and social media, are the new Fifth Estate.


The worst thing we can do is what so many of us seem to have done: buy into the ideas that what's happening is the result of unstoppable global and market forces, and that we, our politics and politicians are impotent – we're not. We are the ultimate source of power and the decisions we make – where to shop, what to buy, what news to trust and consume and who to hold responsible – either feeds or starves the beast we've helped create.


There's good news on the horizon with respect to increasing taxation from online sales and advertising – the current Private Eye magazine (issue 1341, offline and worth buying) reports on a plan in the US to “tax where the keyboard or smartphone 'click' is made that generates the invoice or provides the potential customers that advertisers desire”. This could raise billions from Google, Apple and Amazon were it to be introduced here but we need to be aware of what's really going on to ensure any of the money raised goes towards improving life for all of us, rather than to improve the lot of the few, as has been the case so often in the recent past.


One thing is for certain though: it's time to get knowledgeable, get annoyed and get organised, before it's too late for all of us. Because let's face it, it's no wonder the powerful don't respect us; by allowing matters to get to the position they have, we haven't been respecting ourselves.

Matthew Wherry

About the Writer

Matthew is Impolite Conversation's editor.


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