The Wealth of the Poor

John Maxwell

It starts, as everything does, in the slums. These are high-class English slums, though, where Mrs Thatcher and her acolytes have been able to prove that when the state abandons its responsibilities there is indeed, no such thing as ‘Society”

 Despite this, judges are still willing to sentence teenagers to jail sentences longer than they have been alive, and to denounce said teenagers for their “brutality and cowardice and lack of discipline, training and honour”. In an exquisitely oxymoronic Thatcherism, people deprived of their rights and their dignity by the state are to be punished by the state for their depravity.

In Britain, in Liverpool this week an 18 year old boy, disturbed, dysfunctional and the product of a dysfunctional social and economic background, was sentenced to 22 years in jail for murder. The teenager had been trying to shoot one of his teenage  enemies and hit an 11 year old innocent in error.

Fortunately, it was not Jamaica, or we would have had street-dancing to celebrate another death sentence.

The Poverty of the Rich

At this moment the British and other capitalist realists are abandoning the welfare state,  in order to encourage self reliance among the working class; they are, simultaneously seizing the commanding heights of the economy in a programme of nationalisation designed to calm, revitalise and recapitalise the failed capitalist economy.

What is good for the rich is not good for the poor.

Except that some formerly rich are now, due to their own efforts, not so rich anymore. In New York, a week ago, a friendly gentleman with the face of a kindly gnome and unknown to most people rich or poor, confessed that he had managed to obliterate wealth the equivalent of the GDP of Cuba or Luxembourg. This  man known  previously only to a close and select circle of very rich people, , disclosed that he, singlehanded, had struck a grievous blow against capitalism, destroying fortunes, wiping out whole charitable foundations and leaving a great many people, many of them his friends wondering exactly what had hit them.

Mr Bernard Madoff, a quiet unassuming securities broker, had managed, over the last 20 years or so, to transform himself from a mere broker to a high-class money manager, a safe pair of hands for delicate funds requiring rapid multiplication. Mr Madoff was the soul of discretion. He didn’t take money from just anyone. You had to be recommended, to be a member of one of his golf clubs or possibly, a patron of the hairdressing salon where Mr Madoff got $65 haircuts and $50 pedicures. The super-rich begged to be allowed to meet him.

Mr Madoff  it is now apparent, took a lot of people to the cleaners, among them, his nearest and dearest friends and even his own family. He damaged several banks in France, Spain and England, wrecked a number of hedge funds  and charitable foundations, and has managed to generate an enormous amount of distrust among the growing gaggle of millionaires and billionaires who cannot abide the thought that their excess riches are not somehow, generating even more excess, pullulating like spirogyra in  a stagnant swimming pool..

The Madoff swindle is a classic Ponzi scheme, such as some we have had here , where investors are paid ‘dividends’ from the investments of people who come into the scheme later. Basically, it is another version of the privatisation of development. In this scenario, governments are forbidden to borrow from their own people’s resources. This was called printing money. Governments  must be forced to borrow from private usurers whose resources come out of the same consumers (erstwhile taxpayers) from  whom the government is forbidden to  borrow. Since these resources come out of the surplus value created by the consumers themselves in the form of profit margins, they (consumers/taxpayers)  have no claim on any share of it as they would have, were their taxes being used.  Capitalist democracy means that in Jamaica, 35% of our taxes go to the government and  65% goes to the usurers. In the privatisation scenario, the government taxes, which would have gone straight into bridges and social security are instead diverted to be sanitised by the banking system and then lent back to the government at greatly increased cost because of course, the private sector must get its proper tribute.

This process, the so called financial system resembles a multilayered casino, in which several different forms of gambling take place depending on the taste and affluence of the gamblers. At the beginning of the Bush administration the world was startled by what was then the world’s greatest corporate bankruptcy, the Enron disaster. In this boondoggle the Enron geniuses devised a whole slew of so called financial ‘vehicles’ – basically different  forms of scratch and win multimillion dollar  bets. In the process Enron managed to steal billions from the citizens of California  by cornering the market in energy and forcing the Californians to pay extortionate prices for electricity.

In the latest crisis of capitalism now wracking the world, the prime suckers were the poor and underprivileged of the United States. It was suddenly realised that no matter how poor these people were, if you got enough of them together in the same corral, you could get important money out of them. People who had been denied housing loans because of their race or income were suddenly eligible, and -whether they could or could not pay for a whole house, were able to pay for at least several months. This was fine. When the mortgage was foreclosed the process would begin again and again. Except that as more and more people ‘bought’ houses, the prices of houses rose, and soon, more and more of the mortgages were for overvalued housing bought by people who could not pay. The avalanche of foreclosures made the situation even worse, as people were now paying for  houses worth much less than they were supposed to be.

In the meantime, bundles of these mortgages were being packaged and sold as ‘securities’  — debentures — rock solid investments.  As soon as the foreclosures began the bubble burst.

In the Enron catastrophe, in the toxic mortgage disaster and recession and in the Madoff debacle, there is one constant. The regulators, the overseers, the auditors, the protectors of the public interest were at all material times, non-functional. This of course means that the ‘system’ is an unsupervised racket.

The Paupers Pay

Transparency International and other NGOs whose purpose is to back up the usury of the International Financial Institutions, have very little to say about these catastrophic failures of private sector governance. This is so despite the fact that these recent  failures have cost us more than all the government failures in history.

The double standard is crude and easily recognisable. In the US, the taxpayer is seen to have a duty to rescue the financial industry and its grossly overpaid minions. The taxpayer, according to the Republican party, has no business rescuing the auto industry, because the workers in that industry are unionised and earn too much.

Nobody appears to have noticed that the securitisation of the sub-prime mortgages in the US was an almost exact analogue to the privatisation of Third World debt a few years earlier.

And that is why the current recession will become a global depression and why all of us need to do some serious emergency thinking, mainly about growing food and achieving food security.

Mr Bartlett, the Minister for Tourism, apparently believes it is unpatriotic or shameful to anticipate hard times ahead for tourism or for the coutnry as a whole. I would ask him to consider this: The collapse of bauxite is part of the general collapse of the commodities market which is a part of the general economic malaise precipitated by the collapse of the big financial institutions, the disappearance of credit and the collapse of the stock market. Embedded in this are other factors such as the collapse of the general housing market, hedge funds and widespread unemployment,  expecially in the financial industries.

Where in that scenario does Mr Bartlett discern hope for a vibrant tourism industry and a sparkling economy?

Copyright 2008© John Maxwell

jankunnu@gmail.com