The private sector is evading its taxes, failing to pay workers a living wage, and becoming a burden on the tax payer for subsidies and bailouts. At what point to we stop calling them wealth creators and start calling them parasites?
Neoliberal democracies around the globe have been using taxpayer money to underwrite and directly pay off phantom debts made by the banking sector.
According to the National Audit Office, The UK National Debt rose by £1.5trn as a result of the Bank Bailout. This is twice the nation’s total annual budget. For this amount, the UK could have funded the health service (£106.7bn a year) for fourteen years , the entire education system for forty years(£42bn a year) or over three hundred years of Job Seekers Allowance (£4.9bn a year).
According to the Special Investigator General for the Troubled Asset Relief Program’s (SIGTARP) quarterly reports, the US government’s total layout in bailouts was $3.3trn whilst guaranteeing $16.9trn of future protections. The GDP of the US currently stands at just $14.99trn, meaning the tax payer has guaranteed toxic bank debts to the value of 113% of their total annual earning capacity. This is equivalent to ten years of total federal spending ($6.3trn a year), sixteen years of pension payments ($1.1trn a year), twenty one years of total education spending ($0.8trn a year) or a whole twenty eight years of the entire welfare system ($0.6trn a year).
Most recently, the people of Cyprus have had the Eurogroup and the IMF place conditions on their bailout of the Cypriot Banking sector requiring Cypriot depositors (people holding their money in the banks) rather than bondholders (people investing in the banks). This is the first time that the bailout of the banks by the public has been made in such an explicit way. The total sum required from Cyprus’ population of just 1.1 million people, is 5.8bn Euros.
One might argue the changes made to the Cyprus bailout have made it more egalitarian than those in the US and UK, given that all deposits under 100,000 Euros will be left untouched, whilst those over 100k could see up to 40% of their wealth confiscated in return for shares in the banks (worthless). The approach in the US, UK and wider Europe has been to fund the bailouts through catastrophic ‘austerity’ measures that have seen the eurozone economies stall, public services cut drastically, and mass unemployment.
However, the precedent of the EU and IMF creating the legal framework and the technical capacity to flick a switch and transfer money directly from the bank accounts of citizens to central banks cannot be overlooked.
Not a single banker has been tried or jailed for their undisputed responsibility for the financial crisis. Not one piece of additional regulation has been agreed for the derivatives market which the crisis emanated from, and the market continues unabated. Today, there is $700trn in derivatives debt just waiting to kick off the next financial crisis.
The poor and middle classes of Europe and the US are being asked to make life limiting cuts to their standards of living, wages and public services; meanwhile, there is no such thing as austerity for the 1%.
Taxes Are for the Little People
It was revealed recently that only one in four of the UK’s top companies pay their taxes, meanwhile they receive tax credits to the tune of hundreds of millions of pounds funded by people who did pay their taxes.
Corporation Tax is lower today than at any time in its history. UK Corporation Tax in 1984 was 52%. By 1986 it was 36%. In 1999 it dropped to 30% and in the most recent budget it was cut to 20%.
Corporations have never had it so good.
The result of these tax changes is that tax receipts are lower today than in 1963. Worse still, the composition of those taxes have changed so that the burden is greatest for those with the least ability to pay.
Between 1979 (the launch of Thatcherite Neoliberalism) and 2012 the top rate of income tax was cut from 98% for unearned income and 83% on earnings to a flat 45%. At the same time, VAT, which applies to almost everything your regular person might buy, rose from 8% to 20%. National Insurance has almost double, from 6.5% to 12%. In short, the total tax bill of the average waged earner has increased to attempt to cover the shortfall of a great tax break for the wealthiest.
We, the 99%, are the wealth creators (of any wealth that is shared, not hoarded). We pay the lion’s share of the taxes in the country and our taxes have gone up to compensate for the taxes of the 1% going down.
Whatever Happened to the Living Wage?
Wages are stagnating or falling for most of the 99%. In the US, the earnings of so called ‘High School drop outs’ have dropped 66% since 1969, and people with some college education – the median education level in the US – have seen their wages drop by a third.
Outside of the US and UK, the outlook isn’t much better for the global 99% either. Global wage rises have slowed to the point of stagnation and are rising below the rate of inflation. Wages rose 3% in 2007, down to just 1.2% in 2011 (0.2% if you remove China from calculations).
Contrary to the language of workers versus shirkers in the UK, and the language of Mitt Romney’s ill
Research by the International Labour Organisation demonstrates that the rise in Labour Productivity has outstripped wage inflation at an ever increasing rate in recent decades. Between 1999 and 2011 labour productivity (the output of workers time and efforts) increased at double the rate of wages. In Germany, labour productivity surged by almost a quarter over the two decades to 2013, while real monthly wages remained flat.
The reality the world over is that people are working harder, for longer, for less and that work is more unlikely to see them move out of their social strata than at any time in the last five hundred years.
Don’t Even Talk to Me about Debt
It is no surprise that with wages flat or falling and the cost of living (inflation) rising, that a rapid loosening of rules on personal ‘credit’ (debt) in the nineties created a personal debt boom as people fought to live the dream they were being sold.
In the ten years between 1999 and 2009, the annual salary rose 13.6%. During the same period, house prices went up 130%, a loaf of bread went up 147%, a litre of petrol went up 42%. Easy access to credit created consumer demand, which concealed the gap between wage and cost of living inflation. The consequence: Personal debt rose during this period by 158%.
Yet the most condemning verdict on neoliberalism during the period from Thatcher/Reagan to Cameron/Obama has been the explosion not of personal debt but of public debt. By 1980, the national debt of the UK had fallen from a post World War II high of 225% of GDP to just 45% of GDP.
Debt not only did not fall, it trebled. The national debt of the UK now stands at 138% of GDP.
We Are Masters Dressed as Servants
Personal and public debt have been used to mask the failures of capitalism and, to be specific, its neoliberal variant (the system we live in). For decades wages have fallen, social mobility has seized up and wealth and income inequality have grown inexorably. This decade, we are bearing witness to the mounting horrors of neoliberalism’s chickens coming home to roost, and it’s the 99% who are being handed the shovels to clean up the mess.
Those with more than a vested interest in maintaining the status quo are rolling out familiar scapegoats from crises past…the poor become scroungers, and so do the old, the disabled and the immigrants. According to the political classes and a large portion of the mainstream media, we could all be living in the lap of luxury if it weren’t for these cretinous interlopers.
If, given our unprecedented access to information through the internet and the lessons we have learned in history, we are foolish and spiteful enough to fall for this again, we only have ourselves to blame.
The reality is, we could create a world that works for everyone on this blue-green planet. But first we must recognise the parasites leeching our collective industry and consign them to the dustbin of history.