Fat Cat Friday

Trickle down economics

By the 4th of January, the average CEO of a FTSE 100 company had already earned the average yearly wage.

Executive pay rose 11% in a year, while most people’s wages are still lower than ten years ago.

Is this a fair reflection of people’s contributions? Did executives step up their game by 11% and the rest of us slack off for a decade? As Owen Jones says:

we should snap out of thinking that they somehow deserve these vast sums: they don’t. And that forms the basis for arguing that far more of that money should end up in the paypackets of their workforce, reinvested in their companies and invested in the nation’s public services and infrastructure.

The government boasts about high employment, claiming work is the route out of poverty. But when the wealth generated in work is funneled to the top rather than to those who produce it, this is a fantasy. UN Special Rapporteur Philip Alston’s report on poverty in the UK shows the hard truths.

The government told me that there are 3.3 million more people in work than in 2010, that so called “absolute poverty” is falling, and that the social support system is working. An elected official added that there is no extreme poverty in the UK and nothing like the levels of destitution seen in other countries. But there is a striking and almost complete disconnect between what I heard from the government and what I consistently heard from many people directly, across the country.

People I spoke with told me they have to choose between eating and heating their homes, or eating and feeding their children. One person said, “I would rather feed my kids than pay my rent, but that could get us all kicked out.” Children are showing up at school with empty stomachs, and schools are collecting food on an ad hoc basis and sending it home because teachers know that their students will otherwise go hungry. Many families are living paycheck to paycheck. […]

The government says work is the solution to poverty and points to record employment rates as evidence that the country is going in the right direction. But being in employment does not magically overcome poverty. In-work poverty is increasingly common and almost 60% of those in poverty in the UK are in families where someone works. There are 2.8 million people living in poverty in families where all adults work full time. Families with two parents working full time at the national minimum wage are still 11% short of the income needed to raise a child. One person told me “I know people who are working five jobs to make the national minimum wage, which isn’t a living wage.”

Low wages, insecure jobs, and zero hour contracts mean that even at record unemployment there are still 14 million people in poverty. […] Jobs aren’t even a guarantee against people needing food banks. The Trussell Trust told me that one in six people referred to their food banks is in work. One pastor said “The majority of people using our food bank are in work…. Nurses and teachers are accessing food banks.”

This is the context in which Fat Cat Friday is happening. There is a choice to be made: the greed of the few, or the need of the many.

Back when Morgan Stanley called Corbyn a threat, he responded in kind: ‘we’re a threat to a damaging and failed system that’s rigged for the few’.

This prompted pearl-clutching from some quarters: you can’t stand up to these people. Some people who privately feel the same feared that saying so openly was too adversarial.

Let them pay themselves more and the workforce less, cut public services and their taxes, smile to the camera when you open a food bank: ‘pragmatism’. Make even the slightest move to do the opposite: ‘this is class warfare and all the rich people will leave and we’ll be stuffed’.

I do appreciate that, pragmatically, there are limits to what can be done within capitalism. But something must be done. If you actually look into Labour policy it isn’t that radical – it presents no reason to fear catastrophic capital flight. The interests of a tiny group of people shouldn’t hold such sway over our lives and the range of our thoughts that even increasing corporation tax to 2010 levels conjures images of James Dyson sailing away to flee the Leninist vanguard.

It’s like we’re being held to ransom. The insatiable greed of a handful of people is a threat to the most vulnerable people in our society, but we can’t do anything too radical about it for fear of the global race to the bottom kicking in.

The underlying theme here is appeasement. This doesn’t seem like a healthy or sustainable way to have a society run.

Richard D. Wolff points out that, in the US, FDR implemented the New Deal (How many who fear Sanders as a radical think FDR was a great president?) – under the mass pressure of organised labour. It is possible to fight back, to meet the class war of greed with the class war of justice.

There is a point where pragmatism becomes cowardice and capitulation. Hungry children is not an acceptable price for higher executive bonuses. People will not stand for it forever.

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