Friday, August 01, 2008

Labour Lemmings Sell Lemons

Labour Lemmings should Follow Washington Reverse
Tribune 1st August
Ian Williams

The ordinary average lemming has an excuse for following everyone else off the cliff, but what kind of lemming keeps on running when it sees the guys in front peeling off before the precipice? Well a New Labour lemming would be one such.

In the US, the high tide of laisser-faire is receding rapidly as even Republicans can see what Wall Street unrestrained has wrought. In the UK, New Labour ministers are thinking of even more privatizations, more ways to get the City’s greedy snouts firmly planted into the public trough.

New Labour’s views on these issues came from a combination of the shared awe of Gordon Brown and Tony Blair for American enterprise – and the latter’s puppy love for Margaret Thatcher.

Margaret Thatcher was not that much of an economic ideologue. For example, she had never quibbled about comprehensive schools when she was Education Minister, and drew back from privatising railways. However, she was determined to break the back of the Labour Party, and she knew that the unions were essential to it (an apercu that escaped her admiring successor Tony Blair).

Her dissolution of state industries to break the back of their unions, together with the distribution of discount shares to consumers of utilities and the sale of council houses was intended to create a whole new property-owning conservative constituency while breaking Labour’s foundations.

Keith Joseph added the ideological veneer, invoking Milton Friedman and the Chicago School of Economics, which also succeeded in usurping the international financial institutions.

The expat Labour Party branch in New York used to write regularly to the New York Times to challenge their epithet machine that regularly described Thatcher as the “British Prime Minister who privatised the loss-making state industries.” Unavailingly, we pointed out that the companies she sold off, cheaply to her friends in the City, were in fact making loads of money. BP, British Gas and the rest were profitable and well-run businesses. In fact, studies showed that they actually had better earnings in the public domain than they did when their Executives started looting them for outrageous salaries and stock options.

We should remember the other pressures. This month, I was remembering the old Clause 4, and its invocation of the “best obtainable system of popular administration and control” of industry. As an old customer of the mutually owned Bradford and Bingley Building Society, I voted against its conversion to a company, but took the shares when offered. They are now trading down at one sixth their price, giving me wry thoughts on the vaunted superiority of corporate management.

I used to be on the executive of what is now the RMT, and I cannot put my hand on my heart and declare that state ownership, per se, was idyllic. The Treasury, traditionally the bane of any long term public enterprise, used the state-owned industries to regulate wages, and switched major capital expenditure plans on or off as a regulator for the economy at large.

On the other hand, while BR managers had their faults, but most of them had a public service ethos. If they had had access to the grants that flow to the privately owned rail companies, they would have done a much better job, much more cheaply, and with fares that are far more reasonable. The rail companies get almost six times more government money than British Rail.

No more than rail passengers faced with another weekend without service console themselves with the thought that at least the shareholders are making a mint, British customers of privatised water faced with escalating prices and erratic quality may not consider public ownership automatically bad,

“Market forces” translated to paying the former managements of state enterprise huge bonuses and salary rises to run the same business when taken private. They dictated that workers are best kept in line with the stick while the asses who lead need fat juicy carrots.

In fact, New York City, whose water supply is still municipally-owned, has spent billions since 1970 on a fifty-year tunnelling project that few if any companies would consider. If I go to Washington, I go on federally owned Amtrak. The buses and trains of New York and most metropolitan regions are firmly in public hands, and the Port Authority of New York and New Jersey, running one of the biggest ports in the world is in public ownership – if barely under public control.

In reaction to collateralised mortgage bonds, Enron, the rescue of Bear Sterns and other debacles, there is a growing demand in the US for stronger state direction. Socialism for big corporations is to be extended to citizens. If the freewheeling financial entrepreneurs demand that the tax-payers cough up to rescue them from their own folly, they can hardly cry foul when the government decides to regulate their affairs more closely.

Even in the heartland of capitalism, politicians are calling time on the depredations of naked greed. The once globally dominant “Washington Consensus”, is clearly failing. Chancellor Brown had the excuse of needing to stroke the bankers to keep the ship of state stable in the open seas of the global economy. Prime Minister Brown has no need. He really must show how he can go with the change of the tide in his American model and articulate the vision that lurks, euphemised, even in Tony Blair’s anodyne rephrasing of Clause 4.

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