The Tory Scissors

Submitted by AWL on 10 October, 2018 - 11:13 Author: Editorial
Infographic highlighting the amount produced per worker each year in products and services

Theresa May suggests an “end to austerity” if she gets a workable Brexit deal. First get your deal.

Then even the deftest negotiation is going to do no better than limit the damage from Brexit. And by decisions already made by the Tory government, large further cuts in benefits and social spending are pre-programmed for the coming years.

A new survey has just shown 60% of people in favour of higher taxes (in general, not just higher taxes on the rich, as Solidarity would advocate) to get more money for schools and the NHS. It’s the highest percentage saying that for a long time. In 2010 only 31% said that. We have learned since. May is responding. But it is a feint.

Just since March 2015, tax and benefit changes have lopped 5.5% off the income of the worst-off 10% of households, and substantial percentages off the incomes of all the lower 60% of households. Only the top 40% are (a bit) better off from those changes.

More of the same is pre-programmed.

Child poverty was steady at around 15% of children in the 1960s and 70s. Under the Thatcher Tories it rose to 34% by 1997. Blair and Brown Labour policies did reduce it, though only to 20-odd per cent. Since 2010 it has been rising, up to 33% again.

Why? The big cuts in working-age benefits, plus eroded or stagnant real wages. The very most recent figures show a tiny uptick in real wages, but they are still £12 a week lower, for the average worker, than their peak before 2008.

There are some measures which suggest that inequality has been steady, or even declined a little, since 2008. That they leave out vital dimensions can be see by contrasting the tax-benefits and wage figures with other statistics.

Pay of the CEOs of the 350 top corporations on the stock exchange has gone up 15% since 2009, while overall real wages have fallen.

Profit rates (net rate of return for private non-financial corporations) were at long-term highs before 2008. They dropped to 10% in early 2009. By late 2014 they were back up to 14% (40% higher), and they have been around the same or only a little less since then.

Share prices, measured by the FTSE100 index, have gone up 91%. The tiny minority who own a lot of shares have seen their wealth nearly double.

Those who already own expensive houses, a bigger minority but still very much a minority, have also seen their wealth soar.

Between 1955 and the 1980s, wealth was steady around 2.5 times national income. Today, it’s nearer 7. Wealth, and incomes from wealth, have increased much faster than wages even when wages have risen.

Labour’s 2017 manifesto promised to take £50 billion more in taxes from the rich and well-off — out of the £1,000 billion a year which currently goes to the rich and the very well-off, or to enterprises under their control — and redirect it to the NHS, social care, schools, and some reversal of benefit cuts.

That would leave the dominant position of great wealth largely intact. But it would help. And it might work smoothly in an stable and expanding phase of capitalism.

With Brexit disruption looming, and many signals of a new world capitalist crash not too far away — maybe next year, maybe the year after, we can’t know — it is inadequate.

Activists should fight for Labour to commit to democratic and social ownership and control of the big banks and corporations, the great concentrations of wealth in the economy.

And we cannot afford to wait for or rely exclusively on a Labour government, which may not come until a 2022 election, or even then. A large part of the reason for the relative decline of working-class incomes has been the weakness of unions.

Relatively low unemployment now gives the unions a chance to rebuild and reassert themselves. The union leaders are not using that chance. The rank and file should make them do so.

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