I have always enjoyed the occasions when I have worked with Ben Phillips who is now Director of Policy, Research, Advocacy and Campaigns at ActionAid International and also with Oxfam, Save the Children and others in the past. He deserves his role: his thinking is rooted in my opinion. In that case I was pleased to note a new blog from him on the Global Dashboard website. He begins by saying:
My job is to challenge the causes of poverty.
I like the confidence of that statement. I think I have the same job, done in a different way. Perhaps it's why we are kindred spirits.
He adds:
That means that I spend a lot of time highlighting the gross injustices that I have witnessed people face. This can hamper my ability to be fun at parties. “What have you been up to?” a fellow party guest will ask, and I'll reply “I've just come back from spending time with people living next to an open cast mine that has destroyed their health and ruined their land.” And they'll say “Great music, isn't it?”
I recognise that: you trying talking about tax justice at parties. I have developed other lines of conversation.
Ben explores another dilemma:
No one wants to be told that everything is going wrong. It's just so damn depressing. I remember in our early courtship asking my now wife, who grew up in a village in South India, “how come everyone in the most popular Indian movies is so rich and sparkly?” She replied with the characteristic frankness born of experience: “Because we see desperate poverty every day, because we have lived it, no one wants to see any more of it.”
And adds:
Civil society folks tend to respond to this conundrum in two ways. One group's approach is to fib a little, to say that this or that global deal which just passed will transform the lives of billions. “That's not true,” say the second group to the first, “how can you say it if it's not true?” “You have to give people hope,” say the first group. “No,” say the second group, “the truth will set the people free, even if at first it pisses them off.” If it's a choice between prozac and depression, it's a crappy choice.
I know the conundrum. Google was a win this weekend. And a massive new problem, all at the same time. Ban addresses this; I will let him speak:
But what if we can [say] both? What if we can tell the truth and still give hope? What if there are some hopeful truths?
I think there might be several hope-giving truths in the fight against inequality. Here are three:
- The argument that inequality is now excessive and is socially, politically and economically corrosive — once dismissed as Soviet romanticism — is now accepted by, amongst others, the IMF, the OECD and the World Bank, as well as most economists. Those defending current levels of inequality intellectually are a sorry rump reminiscent of the Afrikaner “Bittereinders” or the Japanese soldier found still fighting World War II in a Philippines jungle decades after it was over. Intellectually, we've won. Even the word feminism is now mainstream.
- The argument we could get political leaders to agree to reduce inequality — once dismissed as the height of unrealism by the insider advocacy crowd — has been proved right in the clearest most irrefutable way possible: every single world leader has signed up to “reduce inequality within and between countries” as part of the new UN Sustainable Development Goals.
- The idea that diverse groups civil society would be willing to get behind a shared platform on inequality, indeed that they would be willing to get behind a shared platform on anything — until recently dismissed as wishful thinking in an era of big egos and big logos where everyone has their own cause and their own brand — has also been proved right, as when in the past few days social movements, feminist activists, environmentalists, human rights defenders, NGOs, and faith-based organisations all spoke out for a common vision to fight inequality.
There's no straight road to success in the fight against inequality. It will be amongst the hardest fights that civil society have ever taken on. It's a big agenda that connects women's rights, work, public services and tax, land, and climate change. It's dependent on building up people's power. And it takes on big vested interests. The backlash will get fiercer — but as feminist theory highlights, a backlash is an indicator of progress.
Back in 2013 I wrote, in a post for this site, “It's getting clearer and clearer we're in an inequality crisis — so why am I optimistic? Since then the crisis has got worse, and yet I am more optimistic. This isn't just because I'm keen to be a bit more fun at parties. It's because some very important milestones have been passed.
Of course, of course, governments are not doing nearly enough, and many are flagrantly breaking their pledge; and of course, of course, civil society still needs to do much more to work together and to build power from below; and of course, of course, the intellectual argument about inequality still needs to be reiterated; but my point is not to deny that there is a mountain to climb, it's to celebrate that we've taken the first steps on the journey.
At the UN meetings last year I had to suppress the cynical laughter I felt inside when an official called for “evidence-based excitement”. But on reflection I think he had a point. As Arundhati Roy puts it, “Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.”
A really, really exciting, transformational, proposition is gaining traction. Step by step, vital preconditions for success are being realised. I never thought that we'd make so much progress so fast. We've got further along the road than I had ever dared imagine. We really do have reasons to be cheerful. I can be fun at parties, too.
And as Ben points out, to help achieve this goal on inequality a new alliance has been formed:
Unions, NGOs, environmentalists and civil society working together? That has to be good news. I warmly welcome this.
And good luck with it at parties Ben.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I’m not sure the IMF accepting that global inequality is excessive is a sign of hope-I see it as a smoke screen, for with the other hand it encourages rapine policies that allow whole countries to have their wealth syphoned away and their assets stripped.
The IMF’s words are easy they are not backing it up with systemic change. They are good at ‘restructuring’ the economies of vulnerable countries but won’t entertain restructuring themselves into an utterly different type of organisation.
IMF became an acronym for ‘I’M Fired!’ No doubt Lagarde will be waltzing around Davos eating haute cuisine at jaw-dropping prices whilst millions in Greece can’t get medical care-just about sums up the IMF.
Here is the nub of the challenge for all capitalists (multinationals in particular).
Will they pander to the politicians and NGO’s pleading with them to pay a little more to their workers to help keep the downtrodden in society away from the food banks
OR
will they do what they always do and pay lip service to moral principles while looking for very opportunity to move more jobs overseas, reduce benefits, put more people on zero hour contracts, etc etc etc…..
It seems Sir Christopher knows the real capitalist mentality very well!
http://www.independent.co.uk/news/business/news/george-osborne-warned-his-national-living-wage-will-spark-job-cuts-a6831901.html
“Sir Christopher said he did not think labour productivity would rise sufficiently to offset the negative impact on businesses’ bottom lines, and it was vain to hope they would absorb the hit in the form of lower profits”
Labour productivity in relation to wages has been soaring for decades-he doesn’t address that meaning it’s hardly a ‘hit’ to allow more to go in the direction of Labour. What does these people want-negative wages?
Shareholder Value Maximisation rules.
Precisely – improving labour productivity only benefits the capitalist, not the labourer. As proved by stagnant real wages in most developed economies for 30 years, as a direct result of massive automation, computerisation and offshoring.
It is not possible to squeeze blood from a stone, more hours out of a day, or more sweat from a worker on the verge of physical and mental breakdown.
The productivity puzzle is largely due to the fact technology has not yet taken its next big leap of completely computerising and robotizing (if that’s a word) the bulk of the remaining human work.
But it’s nearly there, and then the s*** really hits the fan for capitalism as most conventional work will no longer be done by humans. So how will people “earn money”? Will we all be low paid service workers, even those who have no talent or inclination for such things? Or artisan and crafts people scraping together a few pounds each week from home based hobbies.
What you can be sure is there will be a few winners and lots of losers from that scenario, unless some fundamental changes to the ownership of the means of production occur – peacefully or not!
And precisely how will capitalists make any more money when no one has sufficient earnings to purchase all the stuff produced by automation? Who is going to buy any goods or services in this brave new world where all the wherewithal has been siphoned off to an ever shrinking minority of half wits who cannot string a coherent argument together and whose appetite for more can never ever be satisfied?
One thing is for sure, when that scenario unfolds the oxygen breathers will still be wittering on like demented minions on steroids blaming the situation on “socialism”, “lefties”, and any other label they can hang their hat on rather than have the bottle to face the truth that they themselves are the empty vessels responsible.
Debt!
That is the only capitalist solution to the contradiction inherent in a system built on wealth and income inequality.
The debt bubbles of the US and UK housing markets are just the tip of the iceberg. The only way consumption can be maintained in a world of dwindling wages is forcing people to “eat more credit”.
That is why the Tories are really pursuing austerity policies and cutting back the welfare state – to force more people into accepting low paid jobs and more importantly to force them to eat more credit.
It is a bankers wet dream and its coming true right now! Why pay people more when you can make them borrow your own money and pay you extortionate interest rates for the privilege.
That is why complete reform of the monetary and banking systems is just the start of stopping this nonsense once and for all.
Great post – heartening indeed.
Thanks.
I particularly think that the 3rd hope giving truth is really important and the key to progress lies there.
Arundhati Roy, what a wonderful quote. Richard,you really are a glass half full person, long may your optimism glow.
To quote the late Terry Pratchett on that specific metaphor:
“My glass was bigger than that and there was more in it.”
The old glass half full analogy is always presented as two alternatives being put forward – you’re one or the other.
For me this is a false premise as the glass is in reality BOTH half full AND half empty.
I take this interpretation to mean that it is good to be optimistic but also that you must never underestimate the task and the consequences of the failure to take the task on. Even optimists must confront reality in order to be effective change-makers.
Optimism and an equal dose of realism is a good mix. Merely deluding yourself as to the reality of a situation but being optimistic is to be Dr Pangloss – all talk and no action.
There is nothing wrong in raising issues, analysing them, looking at worst case scenarios and even getting wound up about them if it sends us in the direction of seeking change and justice – either doing it ourselves or supporting those like Richard who step into the breach on behalf of the weak and ignorant.
The argument over whether a glass is half full or half empty is largely irrelevant as it usually depends on what’s in the glass!!
Sorry WD – if it’s irrelevant to you that’s fine. If it’s relevant to me and others – then that’ also also fine.
Public banking for the public benefit will also fight inequality. Public banks, especially the local public banks like the Sparkasse in Germany, make loans (and create money) to local SME’s and green initiatives rather than to housing and the financial sector. Private bank lending creates inflation of housing and shares, making the rich richer, whereas public bank lending helps the real economy and creates jobs.
But public banking is never talked about in the UK. There is a public banking conference in Manchester on Saturday February 20th with top international speakers including Ellen Brown from the USA and Professor Richard Werner, professor of international banking and leading proponent of local banking
https://www.eventbrite.co.uk/e/public-banking-banking-in-the-public-interest-tickets-20773078838?aff=ebrowse
Richard, could you do a write-up on public banking, especially the German system, where public banking at the local, regional and national level constitute 40% of banking and has been a major cause of the health of the Mittlestand and their progress on green energy?
I am not expert enough on it to do so
Sorry
Fight inequality ? Oh yes and replace it with what? Equality?
Do me a favour, how many well heeled liberal Western lefties are going to reduce their income to match those of most of the world? It’s the doers of this world including capitalists, industrialists, engineers etc who are going to achieve economic growth, not academics, NGO fat cats,union bosses and talking heads.
So who trained them?
Who created most of the ideas they use?
Who holds them to account?
Who ensures rewards are paid – not least to the engineers and others who work for business?
And who regulates them to preserve society?
Grow up Stephen and stop proving yourself to be myopically stupid
Stephen that is exactly the type of emotional response that most people express who have really not thought things through properly. To question prevailing logic is never comfortable and often considered “dangerous” or “radical”. But without it we would all still be forced to believe the world is flat and the sun revolves around the earth!
The issue is not economic growth or improvement or advancement or technology, which are clearly good things in their own right. The issues we face include gross inequality, rampant financial speculation, dangerous power politics and a race to the bottom which will hurt the vast majority of people, not improve their lives.
The do-ers of this world have been do-ing for thousands of years, many of the things done have been good but a large proportion have not. Thought has to come before doing, otherwise we will all return to the jungle where our ancestors came from!
It’s good that you’re questioning but don’t leap to the conclusion that conventional wisdom must be right.
Hi Richard,
But public banking is quite an easy concept to understand, all you need to know is in Ellen Brown’s book “The Public Banking Solution”. It is never going to be talked about in the UK at this rate, and it’s a solution that is already working in many countries. Here is a quick guide
“Public banking is never talked about in the UK, despite it being 25% of banking worldwide and 40% in successful economies such as Germany. The UK banking sector is dominated by four huge private banks and it’s about time we learned of other options successful in many countries. Germany has local, regional and national public banks all motivated for the public benefit, not profit maximisation. These are major lenders into local SME’s, infrastructure and the green sector.
The local public banks, the Sparkasse, lend over 70% of their loans to the local SME’s (small and medium enterprises, less that 250 employees), unlike the massive, national private banks in the UK, that only loan 8% to the productive sector and only a quarter of that, 2% to SMEs. The Sparkasse are also major investors in local green initiatives and co-operatives. We have many problems in the UK and public banks offer a major solution to alleviate them.
They are owned by the local authorities though not operated by politicians, but by public employees proud to work for the public benefit. They can only ever earn salaries as there is no bonus/fees/commission culture in public banks. They offer what Professor Marianna Mazzucato calls “patient, committed” money. Their remit to help the real economy means that public banks do not lend into financial speculation which meant that the Sparkasse did not suffer losses in the crash of 2008, and were happy to continue lending to businesses and to even lend more to nurse their businesses through the recession. Institutions worried that they would lose their deposits in the event of a bank failure caused by the incessant financial speculation of private banks might choose to deposit in public banks, where their money is used for the public benefit.
Each Sparkasse has its own area that it lends into and to where its profits return. The local savers are happy to save to help the local economy as is the local authority itself, benefitting from lower banking costs and a safer institution than unstable private banks.. Local public banks are always willing to look at business plans of the local authority and lend to it for public housing, green intiatives and other projects whose income will pay to service the loan. Local co-operatives are also much more likely to receive funding from a local public bank that does not want local enterprises to close . Local public banking needs be considered by the devolving authorities to help them become more financially independent from London.
It must be remembered that credit unions do not have a banking license, they are intermediaries between savers and borrowers. The difference with a banking license is that banks create money from nothing when they issue loans. When someone borrows from a bank, they sign a promise to pay which becomes an asset to the bank. The bank then must create a matching liability which it does by crediting the borrowers account. This money, however, does not come from savers or from the bank’s reserves, but is created by tapping the keyboard. This capacity of banks to create money was explained by the Bank of England in http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf
So local public banks bring newly-created money into the local economy, supporting local businesses and jobs. It is not inflationary, as the money is matched by new production, unlike the money created by the present private banks that are primarily aimed at the housing and financial sector, creating inflation in these sectors and making asset-holders richer whilst leaving everyone else with debts, thereby increasing inequality. For more information on how banks create money, see Positive Money’s website http://positivemoney.org/ . Only 3% of money is created by the government as cash, the rest is created digitally by the private banks and it is time this immense power was used for the benefit of the public, How much longer can we put up with the private banks litany of wrongdoings?
The conference brings together major thinkers on banking and how it can be reformed to help society including:Â
Ellen Brown from the USA and author of “Web of Debt” http://www.webofdebt.com/ and “The Public Banking Solution” http://www.publicbankinginstitute.org/
Professor Richard Werner, Professor of International Banking at Southampton University. A leading thinker on bank reform, and a leading proponent of local banking
Dr. Thomas Marois, senior development lecturer at SOAS (School of Oriental and African Studies) in London, who has studied the workings and benefits of public banks in developing countries See this report http://bit.ly/1PNuwnD
Frank van Lerven, of Positive Money, as mentioned aboveÂ
Noel Kinahan, a leading local public banking campaigner from Ireland, who will outline how the Sparkasse Outreach Program (SBFIC http://bit.ly/1njreBp ) is helping Ireland plan how to introduce local public banking, which is now on the manifesto of three of Ireland’s political parties in the upcoming election.Â
Duncan McCann of the NEF http://www.neweconomics.org/ talking about how public banking could help financial independence for Scotland
TBC others talking about the possibility of local public banking in the devolving northern citiesÂ
To learn more on public banking, please listen to my interview with Dr Thomas Marois, on my radio show “Why Don’t Economists? “.https://audioboom.com/boos/4075926-why-don-t-economists-13th-january-2016.
Tickets —Â https://www.eventbrite.co.uk/e/public-banking-banking-in-the-public-interest-tickets-20773078838?aff=ebrowseÂ
Thanks
Good post Marie, in my opinion public banking would be a very big step forward for every country.
Firstly, it would save capitalism from its own worst excesses by removing the deposit taking and excessive risk taking banks from the hands of private ownership.
Secondly, it would create a publicly owned alternative for long term investment in public infrastructure (as alternative to and/or in conjunction with the state itself).
It could operate within a mixed economy, leaving capitalists to still risk their own (existing) money as they choose, gain when they win and lose when they fail.
It’s not surprising Ellen Brown and others are fighting against very strong headwinds to get their message across in the US and the UK. There are a lot of very wealthy bankers who do not want people to think long and hard about this!!
I did some work on credit unions when I worked in housing management at the time the Coalition was bringing in Universal Credit (UC).
If the government is going to pay UC directly to claimants the claimants need bank accounts to receive it directly to them instead of it being paid to the landlord.
Many high street banks routinely up sticks and close branches in poorer areas or refuse to offer accounts to people in certain areas of cities based on certain perceptions. So access to traditional bank accounts can be hard for low income families.
In the East Midlands, something like £60 million was offered up by Government to Credit Unions to set up accounts called ‘jam jar accounts’ – where the UC could be deposited and the rent would be paid first and the remaining funds used for other expenses (food, utilities). Transaction costs were low – even after the set up fee (the creation of an account and a card to access it).
Contrast that with the 3 figure sums that offered to engage established online banking providers to offer the same services and the fees these people offer under the guise of ‘choice’ to the low paid.
Many credit unions are very small and ran by volunteers and are stretched as they are. The cost of running them has to be kept low but a properly managed cash injection would have helped plus also led to the modernisation of IT and online systems critical for new business.
In other words the Coalition did not really invest in credit unions despite knowing that their ideas concerning UC would cause hardship and also that the online banking sector was more expensive to people who are already low paid. It was also clear that government policy favoured bigger credit unions and the expectation of mergers of smaller credit unions – leading to a loss of local connection.
Credit Unions who have traditionally offered low cost loans to people whom high street banks would not look at have suffered from austerity too – the number of bad loans even for small amounts in the CU sector has gone up and has even led to some CU ‘s going under or less able to supply loans to people who then go to Wonga (Wronga) or their friendly neighbourhood loan shark instead.
As such, credit unions and credit union capacity will never really be utilised in this country as much as it could be because the Government still wants to pander to the big banks who of course have big investors. This is the same lot who brought the Localism Act 2011 into being – ( or was it the ‘Parochialism Act’) and shows what a shower they really are.
This makes what has happened in Germany concerning public banking even more amazing and sensible.
Only a sustained level of investment into CU ‘s in this country will bring about any change – true some cities have really good CU’s (the last time I looked, Glasgow had a good one) – but there is scope for public investment in local banking for the whole nation. It just needs the will to do it.
I wish credit unions played a much bigger role in the UK
I also regret the passing of the old TSBs
And local Building Socities
Thanks Keith,
But on your point of removing risk-taking banks from private ownership, the Sparkasse outreach people visiting Ireland, have said that it is very difficult to transfer a private bank into public ownership because of the complete change of ethos. The Sparkasse route out money-obsessed, non-empathetic types whereas the private banks promote them, so the management of private banks cannot be transferred across to the public sector.
All stories of problems with public banks can generally be traced to public bank managers being transferred across to make them more “efficient” as in more profitable. Another measure is necessary to measure the effectiveness of banks.
Like the Sparkasse, public banks have to be forbidden to get involved in financial speculation, no matter how profitable it might seem in the short term. Public banks actually end up more profitable over the long term anyway, if you count in the money spent in rescues.
Previous comment had major mistake – this is correct version
Thanks Keith,
But on your point of removing risk-taking banks from private ownership, the Sparkasse outreach people visiting Ireland, have said that it is very difficult to transfer a private bank into public ownership because of the complete change of ethos. The Sparkasse rout out money-obsessed, non-empathetic types whereas the private banks promote them, so the management of private banks cannot be transferred across to the public sector.
All stories of problems with public banks can generally be traced to private bank managers being transferred across to make them more “efficient” as in more profitable. Another measure is necessary to measure the effectiveness of banks.
Like the Sparkasse, public banks have to be forbidden to get involved in financial speculation, no matter how profitable it might seem in the short term. Public banks actually end up more profitable over the long term anyway, if you count in the money spent in rescues.
– See more at: http://www.taxresearch.org.uk/Blog/2016/01/25/reasons-to-be-cheerful-in-the-fight-against-inequality/comment-page-1/#comment-745223
Good idea indeed. There was a similar line taken by the The New Economics Foundation in their report last year:
http://b.3cdn.net/nefoundation/141039750996d1298f_5km6y1sip.pdf
RBS is the obvious contender for public bank status, once the remainder of its toxic assets and overseas operations have been disposed of. That’s if Osborne hasn’t sold it all back to his old chums in the City for a loss by the time the next (or current) financial crisis really bites hard again.
As for Marie’s point about culture, very valid but I’m sure putting all remaining staff on normal public service salaries and benefits will weed out most of the “nice but dims” and Bob Diamond think-a-likes!
The sale of RBS shares was delayed by the Commons motion on November 5th for the government to research other options first, so this is a good time to consider public banking – banking for the public interest.
This is a good report: http://moveyourmoney.org.uk/rbs-debate/
Moveyourmoney will also be speaking at the conference.
I also think that the upcoming city devolutions, particularly Devomancs in Manchester in 2017, would be a great opportunity to start a local public bank and is one reason the conference is in Manchester. If any place could do this, it is Manchester, they have an excellent record of putting together winning bids. I’m determined to at least get this option on the table. Manchester is a proud industrial, manufacturing city and would love to be able to put money into the real economy.
Also Ellen Brown, whilst she is in the UK, is meeting with a number of politicians, and so the time seems ripe to be discussing this option.
I’m hoping this starts getting discussed more….