‘The big education for me is that civilisation is fragile and can be destroyed in a heartbeat' - Jeremy Brade, former peacekeeper in Sarajevo.

Wednesday, June 02, 2021

Come The Revolution

The Daily Mail has been running a series by Richard Kay on ‘vulture capitalists’, i.e. the hedge fund managers who have run out of twisty things to do in futures and options and have turned to buying up real businesses, hoping to continue making stellar profits. The social consequences may hasten the Revolution.

Years ago as an IFA I attended a presentation that explained we were passing peak pensioner prosperity: hordes of companies were closing ‘final salary’ pension schemes and loading the risk onto private individuals through alternative, ‘defined contribution’ arrangements. Ordinary people are now facing a standard of life in retirement that depends on the vagaries of the stock market (so very volatile in recent decades) and annuities (now crippled by ultra-low interest rates as the country’s debts pile up so that we cannot afford to raise bond yields again.)


Like the worm Ouroboros, capitalism has begun to eat itself. Once, a business would increase its profits by attracting more customers through offering a quality product. Also, employers enlightened by Christian values would experiment with better pay and conditions for their workers (I know that other religions urge similar ethics but we are discussing this country as it was, historically.) 

However, in the 1980s, business management began to preach a new doctrine, that of maximising shareholder valueHow to achieve this profit maximisation? By externalising costs – de-risking pension schemes (and grabbing the fund surplus, if any) and downsizing the labour force (to be supported by the public purse); by arbitraging labour and materials costs through globalisation; and even by trying to short-change the customer (think of the cheapening of ingredients in Cadbury’s Fruit and Nut; what happens when you take quality away from a product that sells on quality ? Who cares? This year’s dividend and this year’s executive bonus are all that matter.)


A touchstone for this bottom-line, presbyopic madness is the case of Southern Cross Healthcare, a chain of care homes that saw a management buyout and then a sell-off to an American fund that set up a sell-and-leaseback scheme requiring upwards-only annual rent reviews. This converted the prospective future income stream to immediate capital, and by the time that – inevitably – the concern collapsed financially, the foreign speculators were away, free and clear, leaving the dependent elderly to face the consequences; like Conrad’s Lord Jim jumping ship to leave his passengers heading for the rocks.


This model cannot go on forever. As the rich get richer and the rest poorer, domestic demand and the taxation yield on work are doomed to decline, and the welfare state will need increasing debt financing until it gives out under the strain. Readers will have seen stories about how the elite are conscious of where this is going, and have begun preparing boltholes in faraway places such as New Zealand (though perhaps they will fall foul of the old Pacific tradition of cannibalism – poetic justice, if so.)


It’s not only insane greed that threatens society. For the doctrinaire revolutionary, the suffering of the disadvantaged represents an asset. When John DeLorean set up his car factory in Northern Ireland, thinking locals would be grateful for the chance of employment, he was visited by representatives of the IRA who explained that they wanted it to fail in order to intensify support for their subversive cause. Similarly, in 1965 Labour’s Minister for Education and Science Tony Crosland (educated privately at Highgate School and then Trinity College, Oxford) swore to close every last grammar school  - he was not the only figure on the Left who wanted to block working-class advancement so as to keep hot the fires of resentment.


This takes us right back to Lenin and his 1902 pamphlet, ‘What Is to Be Done?’ As a recent essay about resurgent support for Leninism explains, social democrats wanted ‘to reduce working hours, improve working conditions, and raise wages’ whereas Lenin wanted the workers to revolt, not to be bought off with trades-union-negotiated concessions. Revolution looks for opportunities in chaos, as with the end of the Great War that cursed Russia with a Communist government and powered similar dangerous movements in countries from Austria to Australia.


I was struck by a recently-rescreened episode of the ‘Hairy Bikers’ TV cookery series, in which the motorcyclists visited Russia. A man they met there said he would go back to Communism if he could; people said they used to feel 'supported’ with health treatment, education, housing and so on. We read of the real, horrible tyranny and oppression in Russia and China, but not so much about the millions of peasants whose standard of living improved, and who supported the grisly autocrats.


For now, the British people have been distracted by Covid and their perceived salvation by jab (complications yet to come ?) plus the conversion of the Magic Money Tree that PM May said didn’t exist, into a Niagara of cash. The same narrative is now playing in the USA, even as audiences flock to see the Oscar-winning movie ‘Nomadland’ with its story of multitudes made ‘houseless’, ground by the upper and lower millstones of low pay and soaring rent. Here in the UK, 3.4 million people have never had a paid job; residential owner-occupation by 16-24-year-olds dropped from 25% to 10% in the twenty years after 1996; increasing numbers of young people (aged 15 – 34) are living with their parents.


The fuel load under the trees is increasing, and awaits a spark.

1 comment:

Paddington said...

Excellent piece overall.