Sam Wilkin (2015) Wealth Secrets of the 1%. How the Super Rich Made Their Way to the Top.

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Roll up. Roll up. You too could become one of the super-rich. The kind of person that if they won a couple of million on the National Lottery would hand the winnings to their son or daughter and advise their child to buy lunch and keep the change, but don’t give any to some poor bastard, because they’ll probably spend it  on drink and drugs.

SECRET #1. DON’T BE THE BEST. BE THE ONLY.

I’ve been reading the Sunday Mail’s sly propaganda campaign against Abellio who run the train network in Scotland. It has focused on things that many of us would be familiar with from the days of British Rail. Trains overcrowded and late. The use of rolling stock that is antiquated and dirty. A relatively recent innovation has been to criticise the pay the director running such service gets (I can’t be bothered googling who that is, and does it really matter?) British Rail was a monopoly. Scot Rail a branch of that monopoly had to put its operations out to tender. Are we any better off? The answer is no. And my concern isn’t solely with our poor, dilapidated, rail network. James Meek Private Island: Why Britain Now Belongs to Someone Else shows that in rail, we subsidize other nation’s taxpayers, in this case Holland. Energy companies, water companies, postal services and council housing there has been that old cliché winners and losers. The winners have been the rich and losers the poor, with a regressive tax system taking away the institutions we built and giving them to the rich. Then taxing us again, because they aren’t efficient enough.  The big beast (or elephant) in the room is our NHS. Scotland and England have different systems but both use around a third of our taxation budget to fund the NHS. This is a beneficent monopoly system under siege. And as Nicholas Timmins a biographer of the welfare state observes, post-war America used to come over here looking for ideas on how to run a health service. We’ve flipped that now and look increasingly likely to sell out in the interest or dogma of efficiency savings, that mantra of the rich that penalises the poor and blames them for being poor.

For every Rockefeller rolling up and eating up competition as with Standard Oil in a series of horizontal and vertical acquisitions and mergers there’s a Carlos Slim, who won the right to operate a monopoly in fixed-line telephone services. That might not sound that great. Certainly nowhere near the value of our NHS, but a 2012 OECD report suggested he was the richest man in the world. How did this happen? Simple. Meek touched on it. We can do it or we can let someone else do it for us. Think of the stupidity of not building schools, letting someone else do it, paying them economic rent over an extended period, then complaining later because the walls to schools fall down.   Like cheap and nasty food we always pay more in the long run. Someone eats for free.

 

SECRET #2. BIGGER IS STILL BETTER. The argument goes that diseconomies of scale set in when a business, such as healthcare gets too big. Or the US military, the biggest user of oil in the world. Nobody much argues with the US military. Or Amazon. Or Walmart. Or Microsoft. This reminded me of Philip Green, that former -or is he still-  darling of the Conservative Party. Green whom they asked for advice, gave him a knighthood. Green notorious diddler of  pensioners, whom like everyone else, he ripped off to fund his extravagant life style in a tax haven. Try this trick at home.  One of his regular suppliers was told she was getting x price, then when she fulfilled her quota was taken aside and told she’d need to take y price. Why? Because Green, like Walmart, Amazon or the US military has the big stick, or leverage. A valid argument here is that the NHS, for example, doesn’t use its leverage to ensure profits for drug companies are not excessive. But for the super wealthy, there’s no such thing as excessive.

SECRET #3. THE WORST PLACE TO DO BUSINESS IS REALLY THE BEST. Perhaps not North Korea. But perhaps soon it may be. Bill Browder Red Notice showed that after the fall of the Berlin Wall, when the USSR economy contracted by 50% and the average return on capital was 5% his company, Hermitage Capital, generated returns of 1500%. What’s not to like? Hans Chung’s mantra that economics is politics applies here. The workshop of the world is China, but he reminds us that like his country, South Korea, these used to be considered economic basket cases. The African continent would be a good bet, but with the moron’s moron as President of the richest country in the world and the likelihood of nuclear war ratcheted up, if fallout doesn’t get us, global warming will. Place your bets.

SECRET #4. WHEN LENDERS CAN’T LOSE. YOU WIN.

That old favourite if we give you money we must have a reasonable expectation that we will get it back ( a return on our investment). Unless of course, you’re a too-big-to-fail bank. Let me put that into perspective. Royal Bank of Scotland (RBS) losses since 2008, £50 billion. RBS loss this financial year, around £7 billion. Chancellor of Exchequer Philip Hammond’s budget giveaway to Scotland under the Barnett formula, £350 million, a figure disputed by the Scottish National Party. That’s one bank. Rich people don’t get punished for not paying their way.

 

SECRET #5. YOU’VE GOT TO OWN IT, BABY, OWN IT.

If you live in a council house you are scum. If you rent your house from someone else you’re a sucker, throwing away good money after bad. If you own your own house, outright, you’ve got a revenue stream and money to burn, or borrow. But, of course, to be truly rich you don’t just own property. For example, only around 130 of the 1600 fortunes listed in Forbes Global Rich List are in real estate. You own a portfolio of wealth because you own the people on the land and they create wealth for you. In the post-Soviet collapse billionaires mushroomed overnight.

SECRET #6. SPIN LAWS INTO GOLD.

Britain is a good place to live if you’re rich. It’s a county that keeps giving. The United States advisers, such as Steve Bannon’s aim is, like Lenin’s, to destroy the state. A simple formula: give money to the rich in tax breaks and it will trickle down. It doesn’t. Get rid of red tape. That sounds great. What it means is displacing costs onto the poor for things like health care and to everyone else for necessities such as clean air and water. Simple solutions to complex problems always work for the rich. To borrow a phrase it’s ‘dictatorship by tedium’. Nobody pays much attention to Phil Hammond’s budget speech. We’ve heard it all before. Yawn, more tax on whisky. I don’t drink whisky. Less welfare spending. Serves them right.

SECRET #7. IF YOU WANT TO SUCCEED IN BUSINESS, NETWORK, NETWORK, NETWORK.

Sam Wilkes uses the example of Cornelus Vanderbilt in the 1860s taking over the New York & Harlem Railroad. The incestuous banking network J.P. Morgan created described in a report to U.S Supreme Court sounds very Putinish or indeed Trumpish, or both together:

J.P. Morgan (or a partner), a director of the New York, New Haven and Hartford Railroad, causes the company to sell to J.P.Morgan and Company an issue of bonds. J.P.Morgan and Company borrow the money to pay the bonds from the Guarantee Trust Company, of which Mr Morgan (or a partner) is a director. The New Haven spends the proceeds of the bonds in purchasing steel rails from the United States Steel Corporation, of which Mr Morgan (or a partner) is a director. United States Steel Corporation spends the proceeds of the rails in purchasing electrical supplies from the General Electric Company of which Mr Morgan (or partner) is a director…[and so on].

Good luck making those billions. Just remember to love money more than your friends, because you won’t have any. Not really. You’ll have servants and shape-shifting alliances. I could quote Jimmy Reid’s rat-race polemic here, it still stands true. http://www.independent.co.uk/news/uk/politics/still-irresistible-a-working-class-heros-finest-speech-2051285.html

I’m not with the rats. I’m with the common working man. We find secrets in strange place and, funnily enough, I’m quoting here from a character in another Scottish writer, William McIlvanney’s ‘Laidlaw’ novel, Strange Loyalties:

Any social contract is a two-way agreement. It’s one thing to make the people serve the economy. But the economy must also serve the people. If we disadvantage the present of one section of society, we disadvantage the future of all society. The children of the well-off will not just inherit the wealth of their parents. They will also inherit the poverty of the parents of others. Even self-interest, if it is wise, will concern itself with the welfare of all. Not just the poor will inherit the bad places. All of us will.

One in five children in Scotland are classified as living in poverty. My loyalty is with these people, not the pampered rich, super-rich or mega-rich. Whatever way you want to put it, they haven’t been paying their way. The problem is ours.  Rat race. You better believe it.

Daniel Murphy (2014) Schooling Scotland: Education, equity and community.

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The kids are back at school. You know what that means, the school run, clogged streets and roads. Banners hung outside school gates warning parents that ‘Parking here is dangerous and selfish’, but some park there anyway, because it doesn’t apply to them, they’ll just be a minute and the people that are dangerous and selfish are the ones without cars, because their poor wee Daren might get wet and catch cold. My response isn’t two fingers in a V-sign, but two legs, try walking.  Daniel Murphy is an optimist. He started teaching in 1974, when we still had the belt to enforce discipline, and teaching was something ‘done to’ you, whether you liked it or not. He was  headteacher in a number of schools and was one of the dreaded school inspectors that searched for continued excellence. He envisages a participatory model, something ‘done with’ pupils, schools being a learning hub, part of the learning community, within walking or cycling distance. The aphorism: It takes all Scotland to raise a child, is a philosophy that is hard to argue with, not that I’d want to.

But unlike Murphy, I’m a pessimist, but I support his belief in continuous evolution: ‘Schools are reservoirs of stability and hope in a changing world’. My starting point was my own prejudices. Murphy makes a distinction between two kind of people and two different career trajectories based not so much on their self-worth, but their parents worth or wealth.  He gives them pseudonyms, but it’s perhaps better to look at Upworthy’s cartoon version of Richard and Paula that perfectly illustrates the direction our school system is taking us ‘on a plate’ : http://www.upworthy.com/a-short-comic-gives-the-simplest-most-perfect-explanation-of-privilege-ive-ever-seen?g=2&c=tpstream

Murphy acknowledges that the education system mirrors society and it’s a rigged system and an unequal adult society. His checklist of doom and gloom could have been written and has been written by ‘Futurologists’ (that’s a made-up word) like me.

  • Overpopulation
  • Resource wars
  • Environmental catastrophe
  • Global warming
  • Poor diet
  • Obesity
  • All powerful globalisation market
  • Less job security
  • Spendthrift baby boomers will demand more care resources

I’d argue and have argued that global warming is a game changer. It’s not hyperbole to suggest the third world war has begun. The richest nations recently failed to meet the 1.5 degrees Celsius warming threshold and with less water and more water in the wrong places and less food there’s going to be tens of millions, perhaps hundreds of millions, on the march. I believe that. And no one can argue that spendthrift baby boomers will demand more care resources. Like global warming, it’s already happening. There are more sixty-five year olds than fifteen-year olds in Britain. If education is for life, less job security doesn’t give you much of a chance. What kind of jobs have we created?

Take my mate Archie. He drives a bin lorry for Edinburgh Council and he’s been there for about four months. He asks for a day off to attend his pals wedding, where he’s the best man. Gives them advance warning, but is told if he takes the day off he’s sacked. Edinburgh Council doesn’t sack him, of course. They pay an agency to sack him. Job flexibility comes at a cost and the worker keeps paying. That’s one of the biggest changes in society since Murphy was teaching in 1974. Privatising and using agencies as a buffer to employ people, indirectly, and take away their rights to have a pension, to be sick and to have a paid holiday. NHS caring is outsourced, as it local authority caring and based on such a model. There’s been a propaganda war and we lost and this is reflected in the schools we have created and the life chances of those that attend them. I’m with the Ragged Trousered Philanthropist and  Jimmy Reid on this one.

A rat race is for rats. We’re not rats. We’re human beings. Reject the insidious pressures in society that would blunt your critical faculties to all that is happening around you, that would caution silence in the face of injustice lest you jeopardise your chances of promotion and self-advancement.  It entails the loss of your dignity and human spirit.  This is how it starts, and, before you know where you are, you’re a fully paid-up member of the rat pack. The price is too high.  Or as Christ puts it:  ‘What does it profit a man if he gains the whole world suffer the loss of  his soul?’

‘What is Scotland willing to pay?’ asks Daniel Murphy. The answer is whatever it takes for mine and a grudging pittance for thine. I support Murphy’s assertion: ‘Scotland should move towards a system where the accountability of a school is evenly weighted between national and local authority expectations and the views of the parents and pupils.’ Of course, I support it. But I see no evidence that it will happen. Tory rule for the next two parliaments will destroy the NHS and create academies, all for the betterment of poor, poor kids. Aye, belter.