We don’t need Robin Hood, funny though…

Here is a brain tickler: How best to even out wealth inequality in the UK? In a letter posted in yesterday’s Guardian, spurred on by an article written by one Polly Toynbee, several high-profile folks champion the idea of a fairer tax system, a process which might just save those swingeing cuts from the public sector. The think-tank Compass have also issued a report detailing what a fairer tax system might look like, with an 8-point plan of measures that include

1. 50% Income Tax band at £100,000 2.3
2. Uncap NICs and make payable on investment income 9.1
3. Minimum income tax bands 14.9
4. Reintroduce 10p basic rate -10.5
5. Higher Council Tax bands 1.7
6. Abolish tax havens for ‘non doms’ 10.0
7. Financial transaction tax 4.2
8. Cost cutting measures e.g. Trident, ID cards, 15.1
£46.8 bn

(The full report is available to download here)

This, as well as the high pay commission (also of Compass), are attempts to look from a different agenda to the current one in the UK, of curbing both wealth excess and huge great gaps, including details on fair taxation of small businesses and the existence of non-domiciles, elements so crucial to an egalitarian society.

Orthodox opinion on maintaining a rich country and providing for the needy before the crash was to allow the finance system relative freedom to do as they wish (although some bankers, namely Sir David Walker, “a former Morgan Stanley grandee ” now refuse the freedom to name his millionaire staff and cap excessive bonuses, as one article in the Guardian today suggests). Risk, for example, was once convincingly (I say with my tongue in my cheek) argued by some to be both necessary and beneficial to the rest of the economy, but now across the political spectrum opinions have changed. Banks, still, however, are not the site of challenges to wealth inequality.

Certainly the results yesterday testify as much, that overdraft charges are legitimate simply serve to show that arbitrary figures (“in some cases fining £25 a month, plus £25 each time the overdraft increases, plus £35 for every bounced payment” says Dan Roberts of the Guardian) match up with gaps between rich and poor. To suggest, as the Telegraph did yesterday, that bank charges are the impetus needed for utilising freedom of choice, and in this sense are a benefit to free systems, is absurd beyond belief.

Further, to justify the banks win as a way to maintain free banking for those who would never go into the red is lunacy. The notion that banks should dip in as they wish without having to justify their behaviour to the Office of Fair Trading, is the only way for individuals to keep current accounts without paying to open and maintain them, makes my skin crawl so much, it’s any wonder I’m not a walking, ever-decreasing mantle of evaporating red curd (and this was opined in a piece in today’s Guardian, not some rightist rag of filth).

To believe that the way finance capital is organised today is anywhere near the hallmark of freedom and equality, humours the realistically minded as much as German banker who robbed from rich accounts to provide for poor clients should humour the sane. To be sure, this is the only Robin Hood anywhere near the appropriate buttons (she avoided jail luckily), who is using distributionist methods for the poor. Methods of distributionism are nothing new for the rich, and in fact the overdraft charge is the very prop used to keep these customers happy. As Dan Roberts so elequently put, “all big banks openly and routinely use this [charge] to subsidise the cost of providing banking services for better-off clients [and it] flies in the face of natural justice”. What happens if there is a particularly low period of charge productivity, how then do these banks keep their high earner clients happy? Who knows? Who even wants to guess?

But should it really take this illegal action to spur on an agenda of change? No. Then when, and from whom? What does our compass say?

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In support of the High Pay Campaign

Listening to the Jeremy Vine show today, I heard a debate between a woman whose husband works for an overpaid CEO, who had been seen wearing – by her own admission – a watch that cost more than the wages of the department manager, and a man who thinks that people who complain about the superich are just jealous.

The latter chap mentioned that if some people were not paid vast amounts of money, even in a recession, then who would buy all the private jets, top of the range sports cars, expenseive watches etc. In other words, how would the companies that make these things manage to stay afloat? Its almost an absurd characature of an argument, formerly espoused by the new monied in the 80’s. But the chap admitted to not earning much himself, though he (of course) wasn’t jealous, he was jealous of nobody.

He used an often heard argument, that the top CEO’s didn’t leave school being paid top whack, they’ve had to work for it, and who can fault this argument (or rather, who can prove it right or wrong, I don’t really know how hard one has to work to be a top CEO). But it does need a bit more explanation, namely that internships into influential roles still favour higher level earners, and the issue of low-income students to college and university has only very recently been addressed. Further, what does this line of argument suggest about those who both work hard and earn minimum wages for example. All in all, this mode of argument lacks clarity, and leaves a lot open to criticism.

The Compass high pay campaign begins today, and the beginning of their opening statement reads;

The crisis we find ourselves in is one significantly caused by greed. The salaries of those at the top raced away while the median wage stagnated. Inequality grew, and an economic crisis ensued. The unjust rewards of a few hundred ‘masters of the universe’ exacerbated the risks we were all exposed to many times over. Banking and executive remuneration packages have reached excessive levels. We believe now is the time for government to take decisive action.

The line of argument that suggests that curbing excessive levels of pay, of especial danger in times of recession, would do more damage to the economy – namely that it doesn’t please big business, and that will walk away, hence being in a constant state of blackmail with them, whether fair or not – forget that excess is to blame for the economic meltdown.

To suggest greed is bad might once have been limited to the left, but it is increasingly becoming the establishment view. Even the shadow chancellor agrees.

Another figure given in the opening statement reads;

an employee working a 40 hour week earning the minimum wage would have to work for around 226 years to receive the same remuneration as a FTSE 100 CEO does in just one year.

This is not suggestive that hard work is limited to those high earners, but rather the gap between rich and poor has been exasperated by a greed is good attitude.

The statement continues;

In 1997 a ‘Low Pay Commission’ was set up to advise on the implementation of the Minimum Wage – a policy which has ensured greater fairness and economic stability. We need a ‘High Pay Commission’ to launch a wide-ranging review of pay at the top. It should consider proposals to restrict excessive remuneration such as maximum wage ratios and bonus taxation to provide the just society and sustainable economy we all want.

The proposal to set up a commission to regulate the excesses of top level wages will surely add some stability to the economy in general. But although the Tories have said they oppose bankers greed, it should be interesting to see whether they agree to set out a maximum wage. George Osborne said to John Harris in an interview with the Guardian over the weekend to a question relating to how the city, from which a lot of Tory money comes from, will react to Osborne’s anti-greed sentiment;

“The fact that people in the City give us money, even though we are promising tougher regulation, is a sign that many people in the City understand that there needs to be change,”

It should be remembered that this is a victory for the left that a Tory is saying this, but replacing one regulatory system (FSA) with another is not as decisive as setting maximum wages and caps, resting upon the proof that greed is what harms an economy, not what harnesses one.

On the topic of that other progressive conservative turn, Red Toryism, Philip Blond, the driver of this project, has said that “liberalism [often] produces the very thing it seeks to avoid.” In this he means that if ones starting point is to create a pure liberalism, a partial or complete disassociation of the individual from the determinate force (i.e. state, police etc) this can often end in “anarchic individualism that requires a surveillance state”. This has been the usual practice viz the economy, that the less it is determined (or planned) the more freedom emerges, but that of course has had damaging effects to the economy. Perhaps international politics has learned that liberalisation (of the markets) does not necessarily lead to liberty, as Blond has suggested. Its a pity his version of communitarianism is too dependent on investment and not welfare, for investment vouchers does not come close to ending the problems that comes with financial imbalences.

We can act on Conservative vulnerability

On Sunday morning I thought everything would be OK.

I’d started to read the Observer and on the inlay page saw that Nobel Prize winner Paul Krugman had told Will Hutton in an interview that the UK economy was the best in Europe, and that not only are we seeing off the last dregs of the financial crisis, but we may well have beaten the city anaylists predicitions.

Well, I thought, aren’t we glad that the rebels bailed out last minute, that Blears apologised for leaving the way she did, that Miliband had a change of heart 9 days previous, and that despite all its talk, Compass effectively did nothing to start a ruck with the right wing of the Labour Party.

For that moment I thought we on the left were wrong, and for that moment it was a good thing we accepted GB in our lives.

That is until today, a most eventful day.

Virtually nobody has supported the decision to hold the Iraq inquiry in secret, from bloggers to the left (Sunder Katwala), to bloggers on the right (plenty to choose from, but I will stick with Iain Dale), from David Cameron and his call for openness, to Richard Norton-Taylor calling it ‘Another Whitehall whitewash‘.

The decision by Brown – though good in itself as Katwala remembers to credit – to hold the inquiry in public is allowing too much space for Cameron to manoeuvre, just like the public spending divide in the party has allowed space for George Osborne to appear on top of things, despite his expenses claims – which news of just disappeared into thin air – and his party’s plans to cut spending on public services anyway.

Of course as it is quite clear, the Tories cannot win on strategy – Osborne only has the Labour Party’s indecision making as ammunition, spending cuts are unpopular – but they can shout us down on competence – and we should not allow it any more (especially given the extension to their lead in the latest ICM poll).

But the – currently disavowed – battle between right and left in the Labour Party, over spending, and party direction – is not the same as the “in-fighting” John Prescott was moaning about at the weekend.

He mentioned;

“[I]magine my surprise when I was walking through Portcullis House in the House of Commons on Thursday and stumbled upon a meeting held by Charles Clarke, John Reid, Alan Milburn and a few others, huddled together in intense discussion.

I went over and offered to be the secretary for their little club. With nervous laughter, my offer was turned down.”

I’m pretty sure it isn’t the same anyway, and if it should happen to be the same, then Prezza is wrong. But I interpreted his remarks as this; currently there exists childish banter between frontbenchers that is only earning them media coverage – say for example, Miliband’s pointless revelation on Sunday – and it is obfuscating any real discussion on party direction, something that all in the party can agree is creating a massive void for the Tories to fill, at a time when their in-fighting is just as striking as ours.

And on that very subject, it should not be seen as unimportant the words uttered by Kenneth Clarke today: “If the Irish referendum endorses the treaty and ratification comes into effect, then our settled policy is quite clear that the treaty will not be reopened.”

This spurred on

“Bill Cash, the Eurosceptic backbench Tory MP, [who] demanded to know if Mr Clarke’s comments were sanctioned by the party leadership.

He said it was essential that Britain held a referendum on Lisbon, irrespective of the Irish vote. He added: “It appears that Kenneth Clarke has reinvented unilaterally Conservative Party policy on the whole of the Lisbon Treaty and European policy.”

This in-fighting has caught the attention of two main bloggers, firstly the Archbishop has said (in third person, of course);

“But Cranmer is puzzled by something further. Mr Clarke said that he decided to re-join the Conservative front bench because the Party is ‘less Eurosceptic than it was’.

When? Under which leader?”

And Bob Piper has said about it;

“It always amazes me how many Conservatives think of the Party as being eurosceptic. They are not. They know the public are though, and therefore, in opposition, they have consistently played the eurosceptic card.”

Overall, the Labour Party with a bit more punch, a bit more direction, and a lot less media curtsying could challenge a presently vulnerable Tory party. And it shouldn’t wait another second to attempt it.

Update: A concrete direction with regard to public services can now achieve two things: firstly it can dampen the blow of, and try to recitfy quickly, the TUC prediction that job losses in the public sector are inevitable. And second it will enable commitment over the Tories; “the party of cuts“.

Will Gordon Brown ruin Labour forever?

The rebels failed to amount to anything at the Parliamentary Labour Party meeting; the reshuffle has settled the shifts; Mandy is happy, the Miliband’s are happy; Polly Toynbee is furious; the James Purnell story on Guido Fawkes is probably bollocks; he probably helped keep Brown from drowning; Alan Johnson has not ruined his chances of being leader by looking like he wants it too much, and Brown lives to see another day.

So we rebels who hoped Compass would help direct Brown to the door have to ask ourselves the question; is the question of leadership change big enough to collapse the party (see David Aaronovitch’s intervention) or will the party suffer as a consequence of rebel silence?

In other words, should the rebels bite their lips to save the party, or will this complacency lead to defeat beyond repair.

Nick Cohen offered up some scary details at the weekend, and though rather exaggerated, do outline the very worst case scenrio for the Labour Party if the wrong decision is to be taken. He says;

“The banking crash led to recession, which led to a popular fury at the often minor, but still telling, corruptions of MPs who were fiddling expenses while the financial system boomed and bust. That anger has now concentrated on the shattered Brown administration, whose manifest failings could destroy Labour’s chances of winning another election – maybe forever, if the Liberal Democrats and Greens take over what remains of the centre-left.”

Roy Hattersley reminded us elsewhere that Labour should re-deliver its social democracy promises, just as Europe reminded us that the left’s chance to prosper (during an economic crisis) had failed.

But this is by far not a call for the left to give up, and I back Hattersley’s sentiment. The point remains; is Gordon Brown doing the right thing for the greater good by staying, if the worst that could happen come next election is that Labour slip into fourth place, behind the BNP, forever more?

The consequences of Brown staying on are far greater than an election defeat in 2010, and so the question is on: will the (definitely disavowed gesture of) silence by the rebels be a gesture that returns to haunt them in the future?