James Meek (2014) Private Island Why Britain Now Belongs to Someone Else.

‘Greed is good’ said Gordon Gekko in Wall Street. But that was in 1987. Even then before banks were bailed out with thousands of trillions of electronic money, dollars or pounds, take your pick, greed was only good for a few. I remember the crash. Nothing changed the next day. I felt the same. I was trying to think of a new word for all the money I’d lost and figured a scudillion was good enough. After selling all my assets I was left with the chewed end of a pencil, but that was enough to write a note to myself not to be downhearted, start a new and innovative business empire.

The problem as Meek shows is there is nothing new for us to salivate over. No new shiny IPhone that does all sorts of things that you don’t need. No new car with shiny exterior and nought to sixty in the time it takes to pick your nose. Just the same old rich people stealing from poor people. How do they do it?

It’s a simple trick. Never own. Rent. Don’t own a company, rent it to the next person that wants to buy it. In the meantime, rent the money you need to buy the company that everybody wants but nobody wants to pay for and charge the person that can least afford to pay it the maximum amount.  In effect, tax the poor for the benefit of the rich.

Meek looks at a number of ‘industries’. Privatised mail. This is an easy in. Somebody somewhere has got to deliver the mail. It’s a statutory duty. Six days a week the mail has to be delivered to its destination. He looks at the Dutch and German models for privatisation. They are looking to come here. TNT pay their workers less and they work longer hours. Seems like a good deal for shareholders. Letters and parcels still get delivered. Postal workers lose out on pensions, working conditions, sick pay all the kind of things you’d expect, but hey, who gives a shit about them? The government hasn’t decided that’s the way to go, the market has and the market is alway right. Right?

In Signal Failure, Meek looks at railways. In particular he looks at the West Coast Line and how it was a scudillion over budget. The latest figure was £10.5 billion, but like most conservatives that was a conservative estimate. How did they get that figure. Well, first they sacked everybody that knew about maintenance of rail tracks. Then they hired in experts that had been watching Star Trek repeats and had magic up a new gadget that put trains in the same place at the same time, but they’re not really there. Then they float that idea on the market. Everybody buys shares. Railtrack goes bankrupt. The government steps in and says we didn’t know. Virgin Trains get paid millions for not running trains. Then they decide after a few folk are killed the signalling devices and tracks dating from the steam-train error is no longer fit for purpose. Start again.

Privatised water. This is interesting because too much water and the system grinds to a halt, too little water and…you’ve guessed it. The one consistent is that those that need it -that’s everybody- pay increased prices when either of these two conditions are met. It’s a regressive tax. There are also two ways of financing infrastructure changes. Selling shares (equity) in the company, which dilutes the price of existing shares and theoretically brings down the dividend or  borrow the money and pay interest on that payment. Borrowing means that in the future that money needs to be paid back, but hey in the meantime we’ve got scuddilions and shareholders can slap each other on the back and pay themselves increased dividends. Whoever heard of a shareholder or directors voting against giving themselves a pay rise? Meek gives us the example of Maquarie a hedge-fund attempting to purchase Thames Water with borrowed money that can be offset against the loss that they make when they start trading. Only poor people pay tax.

Meek does chapters on electricity, the NHS and privatized housing. I’m sure you get the gist of it. The rich get rich, the poor get poorer. That’s not economics, that’s ideology at work in Britain.

 

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