No Money Left, unless....

After the General Election, an unfortunate private joke by Liam Byrne, the outgoing Labour Chief Secretary to the Treasury, was to provide the incoming Con Dem Coalition with all too easy a weapon. On the desk of his successor, the short-lived appointee from the Lib Dems, David Laws, he left a note saying starkly, "Dear Chief Secretary, I am afraid to tell you there's no money left."

In the weeks and months that followed, first Laws and then his own successor Danny Alexander as well as a host of other Ministers repeatedly used this to justify the cuts they proposed to everything from welfare to education funding, jobs creation and transport. The Lib Dems especially cited this as they pleaded not guilty to reneging on their promises to avoid cuts this year and protect services beyond it.

As with much of their project, this was not true. The deficit is lower now than predicted at the start of the year. But the Con Dem propaganda continues apace. Much of the public seems convinced, with a poll taken yesterday showing 49% supporting the cuts to some degree.

But today perhaps changes that and blows away for good the claim that Britain is nearly bankrupt.

Because today, with the Irish economy in turmoil, Eire finally accepted a loan from the EU totalling nearly £80 billion Euros. As a member of the EU, Britain is making a contribution. But then on top, we are making a further bilateral loan, bringing out total commitment to Eire to £7 billions.

Now, there is a lot of sense in this - although at the same time the terms of the loans unnecessarily rob Ireland of its financial and economic independence and seem likely to affect public services rather than the banks. But Britain depends heavily on exports to its smaller neighbour - the average Irish citizen spends £3,500 p.a. on British goods and far outranks anywhere else in the world for purchasing imports from the UK. On top of this, British banks, including state-owned  RBS, are heavily extended in loans to the collapsed Irish construction industry and others - to the tune of £140 billion. So needless to say the total collapse of the Irish economy would damage them further. It is also a loan as opposed to expenditure - one day, it should come back to British coffers.

But how can the Government square this with their claims that we are ourselves pretty much bankrupt? During the election, Nick Clegg, the Lib Dem leader, apparently underwent a secret conversion to massive expenditure cuts when he saw Greece in turmoil and feared that in a few weeks we would be in the same condition. The Tories characterised the closing days of the Brown Government as akin to "bankrupt banana republic" all but out of cash and credit. George Osborne supposedly was ashen faced when as the new Chancellor he went through the books in late May and realised things were far worse than anyone had feared.

The truth of course is that, although our deficit has risen substantially because of having to bail out the banks and pay for the Afghan war, it is far smaller in proportion to Greece's and Portugal's. Moreover, our national debt is barely a third of what it was for the bulk of the post-war period, when Britain's economy expanded and great public services like the NHS were born.

National debt as a share of GDP since its inception in 1692 

The veracity of Mr Osborne's claims has been under strain for several weeks. Now Dublin has blown it apart. Cuts are a political decision driven by Tory ideology for a smaller state. They are not an economic necessity - an investment led recovery along the lines of the Green New Deal could have preserved jobs and developed a sustainable future for our country without such dreadful austerity and the impact it will have on the most vulnerable in society.

Not that that the lie being exposed will change things - nor is it likely that, as we bail Ireland out, the Government might reflect that the Republic has got into this recessionary mess at least in part as a result of following precisely the slash and burn, tight money plans the Con Dems are now merrily enforcing on Britain.

But there again, we're not bankers. We just live here.

"Tolle divitem!" : why abolishing the rich would do us all a favour

"Mankind is divided into three classes - the rich, the poor, and those who have enough...Abolish the rich and you will have no more poor...for it is the few rich who are the cause of the many poor."

Radical words. An extract from Marx's "Das Kapital"? A trade union leader rallying their members against job losses? A motion passed by the last Green Party conference declaring its support for a maximum wage?

It could be any of the above, but in fact its none of them. The words were written by an author known as the "Sicilian Briton" in the first few years of the fifth century. As the Roman Empire was beset by barbarian invasions and usurper Emperors, the plebeian and slave classes began to agitate for a fairer share of the resources of the world's first superstate. While some openly rebelled and established their own states as the bacaudae, the western world's first social revolutionaries, others used parts of the newly established Christian church to demand change - the Sicilian Briton, a monk himself, was one of their spokespeople.

But what happened?

History tells us how the Roman State died, not with a bang but with a whimper - its once mighty body ebbing slowly over three generations or more before it simply faded from view and was lost to history. All through its long demise, its richest citizens clutched onto their possessions, hiding their wealth, claiming all manner of privileges (privi-legium: the law of the individual) to avoid paying taxes or contributing to the common cause. While demanding and receiving continued status as the Optimates, the "best citizens", they continuously connived to abrogate themselves of any obligation to serve their society. When Alaric the Goth stood with his army at the gates of Rome demanding gold to go away, the Senate refused him even although most of its members could have easily met the amount demanded from a modest portion of their own purse. While lamenting the darkness of their times, they willingly sacrificed their City to preserve their own wealth.

Yesterday Rome, tomorrow...?

I quote this passage from an obscure, 15 centuries old source for two reasons - one because of the old saying that if we do not learn from history we are bound to relive it; and second because the parallels between fifth century Rome and our modern world are so striking and relevant.

This week, in the UK, the Government is pledged to undertake massive spending cuts in public services. In spite of a few feints to fairness, the clear story is one of the unremitting gloom of an assault on education, welfare, transport and even aspects of the military. The reason is allegedly because of a national debt described by the Government as "record breaking" in peace time.

Except that this is far from true - indeed, it was higher than it is now every single year from 1916 until 1971. Its actual record high was in 1947, unsurprisingly just after the second world war, when it peaked at 238% of annual gross domestic product (GDP) - over four times its current level of 56%. However, that did not prevent the government in the following year launching the National Health Service. Nor did debt levels well in excess of 100% of GDP prevent the economic boom of the 1950s, with Tory Premier Macmillan boasting to a grateful electorate that "We've never had it so good!"

It was only with the Thatcherite revolution from 1979 onwards, with the Conservatives adopting the monetarist doctrine of American economist Milton Friedman (a doctrine taken up by Reagan's America as well) that it became the orthodoxy that low national debt was essential for prosperity, embraced even by pseudo-social democratic parties like New Labour and Clinton's Democrats. In Britain, public services were cut relentlessly and people thrown out of work until in 1991 national debt stood at just above 25% of GDP.

Parallel to this "tight money" policy, and the true reason for it then and now, Governments also reduced taxes for the better off, with more and more exemptions for the richest of all. Globally, off-shore tax havens have allowed an estimated $250,000,000,000 per annum of tax to be legally evaded by the very wealthiest. Britain is particularly culpable for this trend - 11 out of 40 havens identified by the OECD are British Overseas Territories; with the UK itself now an effective tax haven for "non-domestic" millionaires. Corporation tax is legally avoided by many large companies at a cost of nearly £7 billions per annum to the British Government - almost the same as the planned reduction in spending on social housing.

Even in the last recessionary year the wealth of the richest 100 people in the UK has risen by over 30% to over £355 billion. Internationally, as financial cuts bit hard across the planet, the Forbes Rich List found that 611 of the 1,011 billionaires on the Earth had increased their wealth - only 70 had seen an appreciable reduction. The richest man in the world - the ironically named Carlos Slim Herlu of Mexico weighed in with over £35.7 billion, his wealth greater than the annual GDP of over sixty nation states.

Of course, whichever country we live in, we are told we must indulge these people otherwise they might go somewhere else and we would lose their vital talents. Much better to waive their bill and hope they will stay, graciously permitting their wealth to trickle down to the rest of us in dibs and drabs. Meantime, the rest of us ingrates will need to accept increased taxes and massively reduced services to bailout these geniuses when their schemes collapse around them, as it is predicted will happen again with the British banks in 2011.

In spite of initiatives such as introducing national minimum wages these have not stopped the rise in inequality - one report found Britain to be the fourth most unequal society out of 25 affluent nations studied. Instead, in the absence of any cap on individual or corporate wealth, fantastic fortunes have been amassed by a tiny elite of super-rich people, whose lifestyles and power are ruining the lives of billions and relentlessly driving the planet to resource depletion and environmental disaster.

Professor Greg Philo of the Glasgow University Media Group has recently proposed a one-off tax on the richest 10% of Britons - taxing just 20% of their assets would raise over £800 billions. That would be enough to pay off the entire national debt and massively reduce the deficit. Unfair? Hardly, given that much of that wealth is unearned and in many cases will have been obtained by avoiding tax in the first place. Moreover, as the salaries (as well as the untaxed share options) of top executives have burgeoned to ridiculous levels in recent years, isn't it time to claw back some of that unfairly paid money?

In the years ahead, as our resources become scarcer and billions more mouths have to be fed, we need to share our wealth more equitably - between countries and within them as well. There is still enough to go round to feed and support people fairly and sustainably, but only if it is shared fairly. The capitalist system, with its focus on individuals seeking to maximise their material gain and a theoretical basis of limitless supply, is not fit for purpose for the challenges to come. Rather, left unchecked, it will simply hurry us over the precipice towards not only its own collapse, but of society and human civilisation itself. With a "perfect storm" of competing demands for food, water and fuel predicted to come as early as 2030, time is short.

We may be fifteen centuries late, but we are not too late. Not just yet. But we need a new, radical will and the sense to do us all a favour. Change the politics. As the Romans used to say: "Tolle divitem!" Abolish the rich!