The authoritarian neo-liberal political class together with state and corporate media bombard us daily with the same old lie: CAPITALISM IS GOOD FOR US. It is good for the wealthiest 10%, but it is destructive for the rest of us.
Robin McAlpine is Head of Strategic Development at the Common Weal think-tank in Scotland.
Cross-posted from Common Weal
Does it feel like nothing ever changes and nothing seems to get better? There is a major reason for this right in front of our noses to which we seldom pay attention. It’s that most of the political stories we are told are wrong. If we told the stories the right way round, everything would look different.
These stories are created by people like I used to be – well-paid professionals with lots of resources to create narratives that confuse and mislead people if the true story doesn’t suit the needs of whomever employs them. They push these stories into the media and to politicians using all the financial resources at their disposal, and the terms of debate are then defined in ways that benefit only the person creating the fake story.
Tell the story the other way round and suddenly it becomes clear how daft our political approach to the big problems of the day are. Incidentally you’ll find in almost every occasion below that if you ask the right question, something rich and powerful loses and everyone else gains. Which is to say this stuff is all a trick designed to prevent change. Change the story, change the future.
Housing supply crisis → housing affordability crisis
There’s a housing crisis, right? But what kind of crisis? Everything you hear suggests its a crisis of supply, like we don’t have enough houses. There are about 30,000 homeless people in Scotland, so if we built 30,000 homes the crisis would be over, right?
It isn’t a crisis of housing supply, it’s a crisis of housing affordability. When you hear ’20 per cent of new homes are affordable’ that means 80 per cent are unaffordable. Increasing supply has only made developers richer, it has not brought down the price of houses one little bit. Scotland is filled with empty homes (many above shops) and unused commercial buildings.
Increasingly supply doesn’t reduce cost if every other policy is seeking to increase cost (which they do). Yet the housing developer lobby wants you to believe that more houses will fix the problem alone and it absolutely won’t. Only bringing down the price of houses will help. Always remember its an affordability crisis.
Economic Growth → tax and income growth
Almost everyone seems to agree that economic growth is essential, but why? No-one says ‘to transfer more wealth to corporations and equity funds’ (which is the real reason for economic growth). Instead it’s because ‘growth funds public services and creates wages’.
Well say that like it is – what we need is increased tax take and higher wages. If every proposed step that increased ‘economic growth’ was actually measured against that objective, you’d quickly realise that most of it is of little value whatsoever. Imagine if the national goal was wage and tax growth and corporations had to justify themselves on that basis?
Inward investment → wealth extraction
Inward investment is the holly grail of Scottish economic policy. But most of it isn’t investment but wealth extraction. We’ve shown that Scotland is damn near the worst developed country in the world for handing our wealth to foreign entities who want to buy our assets (land, and trees, and our business, and our intellectual property, and our renewable potential…).
Yet still we persist with this myth that it is good for us and no rational evidence can ever change that lie. It is not investment if they take out more than they put in. And they all take out more than they put in because none of them build factories. It’s just Scottish charity for the super-rich.
Scottish industry → foreign companies based in Scotland
No industry sector based in Scotland doesn’t claim to be Scottish. This is an infringement of trade description. Let’s take whisky – these ‘Scottish’ businesses are Suntory, Asahi and Takara Shuzo (Japan), MHLV, Pernod Ricard and Picard Vins & Spiritueux (French), Diageo and United Brewers (English), Bacardi (Bermuda), CL WorldBrands (Trinidad), Thai Beverages (Thailand), and Fortune Brands (US).
Those businesses that are still Scottish owned? Edrington, William Grant and one independent. Or, to put it another way, of Scotland’s 151 whisky distilleries, eight are owned in Scotland. Between the lot of them they employ 11,000 people but extract billions of pounds in wealth every year and pay most of their tax to London.
Ownership matters and it is massively unclear why boosting the profits of Japanese and French companies who export the wealth is such a priority in Scotland that it twists the rest of our domestic policy. Other nation’s don’t behave like this on behalf of foreign companies who have bought our own national assets. These are foreign companies in Scotland, not a Scottish industry.
Landlords bring investment → landlords steal housing
Landlords are lobbying hard on the basis that they bring investment, except homeowners almost certainly invest more in a house than a landlord does and few landlords increase the housing supply. Buying a flat and renting it to tourists is not an investment, it is stealing a home from a young Scots.
All respectable economist differentiate between productivity and ‘rent seeking’ (using wealth to take assets away from other people and then charging them more to access those assets). Rent seeking is not productive and does not increase the housing stock but does continuously inflate the property market, making homes less and less affordable.
Care crisis → social wellbeing crisis
Why do we have a social care crisis? Everyone focusses on the funding of care services, no-one seems to talk about the demand side. We talk about causes in health a bit (not enough, see below) but not in care. Why is demand for care rising so fast?
The answer is that corporate greed is making us need care. Social media is crucial but so is our food system, the gambling addiction industry, marketing and advertising based on undermining self confidence, poverty wages and insecure work. If we cared about people who need care we’d be calling it a social wellbeing crisis and be taking punitive action against those responsible.
NHS crisis → public health crisis
That goes even more for health. It’s not an NHS crisis, it’s a public health crisis – except no-one will take on the food industry in the way that they wouldn’t take on the tobacco industry for decades either. So it is framed as a problem with a public service when it’s really a problem with the economy and so requires to be fixed through economic regulation.
Running public services → facilitating the delivery of services
Public sector managers do not ‘run’ public services. Public services run because of frontline staff. Those in a public service with no skills or knowledge of that service (health managers who can’t heal, care managers who never meet someone in need…) should either be facilitating the delivery of services or should be made redundant. Frontline professionals don’t need ‘run’, they needs supported.
Inflation → price gouging
I could do loads more of these but I need to draw this to a close. So I will do so with one that really surprised even me. I had absorbed the neoliberal idea that inflation is just an act of nature, something that happens. I was shocked to discover that for hundreds of years the price of bread stayed exactly the same. It’s capitalism that causes inflation, not nature.
This is complicated, but neoliberal market theory says that market competition drives prices down. This is highly misleading; markets can drive prices down if reducing prices increases sales faster than it reduces profit. Markets do not minimise prices, they maximise profits.
If there are very high levels of real competition in a given industry sector, and if to make profits they have to compete with rivals on price, and if no other industry sector is causing cost inputs to rise, then prices will be optimised. That’s a lot of ifs. And it’s certainly not the only way to make profits.
Let’s take the current inflationary picture. Almost all corporate profits have increased as a proportion of costs over this period. That is, almost all big businesses saw high inflation as a cover to take more cash out of customers’ pockets. That’s is price gouging, not inflation. Of course there are legitimate elements of inflation, for example in hospitality where costs are rising.
But the rising costs are energy costs, and that is because of price gouging by energy companies. The cost of extracting oil and gas does not fluctuate, just the ability of oil corporations to sell that oil more expensively. The other rising costs are staff costs, who need a pay rise to pay for price gouging by landlords and housing developers and price gouging by energy companies to heat their house.
Just remember this; almost all the inflation we have suffered is created by markets, not constained by them, and it has all happened because Covid created a bottleneck which mean supply was reduced. That didn’t increase costs, just the ability to mark those costs up to consumers.
Most inflation is you being ripped off, much of it because who you are buying from is being ripped off by someone bigger than them. The idea that recent inflation was caused by price gouging continues to be fiercely rejected by neoliberal economists even as the data shows that profitability is rising and rising in almost all corporations. They call it demand-pull, people wanting things.
It is garbage. People wanting things doesn’t make them more expensive. People who are selling things seeing people wanting those things and increasing prices because they can makes them more expensive. That’s not inflation, that’s price gouging. We should be furious.
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