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The ‘rent’ economy is enslaving us all, creating money for nothing for the ‘asset rich’ and progressively extending poverty to all the ‘paying poor’

December 28, 2017 Leave a comment

download (10)Every day we are hearing and reading stories about wage stagnation, price escalation, homelessness of the kind where young people can’t afford their own place, spiralling personal debt and a whole range of stories which relate to the cost of living. Stories that are repeatedly telling us that maintaining a basic life in the UK is very quickly becoming a luxury that many of us simply cannot or will not be able to afford.

Alone, each tale told can and often is attributed to a range of causes which are nonetheless real, but also overlook a common theme throughout all of these issues. The commonality between them all is the economic concept of ‘rent’. The impact of third parties taking ownership of all or part of a product, the delivery of a service, or some other form of purchase at some point in the process from where it originated to where we use or in consume it in some way.

Rent is of course a term we use in daily life to describe paying to use something which belongs to someone else. The most common usage is that of renting of a house, where instead of there being a simple relationship between an owner occupier and their house or property, the occupant rents the property from the owner, essentially increasing a basic two part relationship into three.

In just this example alone, we can take it one stage further and add a bank or mortgage owner of a buy-to-let property (1) which is rented by the occupant (2) from the owner (3) who borrows the money and pays interest to the bank (4), which may itself have borrowed that money from another bank (5).

Whilst we would normally think of just the transaction between the occupier and the property owner as being ‘rent’, in economic terms, any additional party taking something from an overall transaction or supply chain between its origin and use who isn’t essential to the core process is receiving rent of some kind. They in turn may split their role between themselves and others, each adding their own profit as they do every time it happens. Ultimately each additional participant in the chain raises the price of whatever we as users or consumers will be expected to pay.

Sometimes, a number of stages appear necessary. For instance the food we eat might have to be grown by a farmer (1), which is bought by a manufacturer (2) who pays a haulier (3) to transport it to where they will process it. The manufacturer then sells the prepared food to a wholesaler(4) and pays another haulier (5) to deliver it to their warehouse. The wholesaler then sells it to a supermarket (6) and pays another haulier (7) to take it to their distribution centre. The supermarket then pays another haulier (8) to deliver the product to its store, where it sells the finished product to us (9). Do believe me when I say that the chains are usually much more convoluted than that!

Of course, we are all guilty of falling into the trap of forgetting how complex the process is which brings us our food and most of the items that we consume or the services we buy, because for us the process seems to be so very easy. But look closer and we will soon see that even a supply chain of this size may involve unnecessary parts and people taking ‘rent’.

So what does this all this talk of rent really have to do with the cost of living?

The real problem with the provision of goods and services is that the UK operates within what is called a ‘free market’ environment, which it has been since at least the time of the Thatcher Government (1979-90). Within this free market, reduced levels of regulation and influence from the government – who we expect to guard and protect our best interests – provides the opportunity for additional 3rd parties and in fact many more of them to involve or add themselves to the chain of many of our daily transactions. By doing so, they can make significant profits from what in some cases will be as simple for them as a click to buy and another to sell.

Whether it is food, clothing, fuel and oil, transport, communications, borrowing money, or just about anything we can imagine that we can buy, there are now speculators buying and selling products and services, sub contracting responsibilities to others, all of them taking additional profit by taking ‘rent’ which there is no practical reason for anyone needing to pay. They indirectly inflate the prices we pay for the end product, increasingly making those things which should really be quite affordable, simply too expensive for us to buy.

These speculators do this because they can. There are no real rules to stop them, and they are making as much money as they can without any consideration for the impact of their actions on the end users – that’s us. And they have little concern that they will have to stop doing so, because the banks simply continue to lend money to the people who have been forced by this process to borrow – if indeed possible – in order to survive.

Think about what really caused the 2007-08 Financial Crisis, which was the sale, resale and resale again of financial products or debts which became so complex, even the financiers themselves didn’t really know what they were buying and selling on.

Bankers were making massive amounts of money – all because nobody was monitoring exactly what they were doing, whilst their own ‘success’ blinded them to how value was being created by lending to people at one end of this elaborate chain who simply didn’t have the ability to pay back what they had been lent.

The Bankers didn’t care before it happened and they don’t care now. They are still not regulated in the way that they should be, and were actually saved from going under in 2008 by the Labour Government at the time by giving them Billions of Pounds of money in bailouts and rescue funds that the Government itself borrowed, and which we are still paying for through the accumulation of public debt.

These are people, banks and companies who are quite literally making money for nothing, and its all at our expense.

The ‘rent’ economy has been evolving as the reality in which we live for many years now. But it is only as more and more products and services have come under the control of those with the money and unrestricted influence to speculate, whether it has been through privatisation, the development of near monopolies or money simply being placed within unscrupulous hands, that the real impact of ‘farming everything for profit’ has began to become fully clear.

 

 

 

Keeping it real has become the key ingredient of electoral success and Capitalism vs Socialism is a battle which no longer has meaning

Capitalism vs Socialism 2

If you keep an eye on enough of the different news and commentary outlets, it will have been easy to pick up that one of the latest themes amongst those supporting the Government and Conservative Party, is to talk up the righteousness and benefits of Capitalism in comparison to the Socialist agenda of the Labour Party and the wider ‘progressive’ left, which we can be assured will be making the same arguments somewhere completely in reverse.

The backdrop of a General Election Result which has wrecked the confidence of a Party that thought it was safely assured of probably more than a decade in power has indeed set many injured cats amongst the electoral pigeons. On the other hand, it has also elevated the levels of chutzpah employed across the Left to a level which simply defies the true dynamic of their electoral return, in a race decided by factors which sit way beyond the control or influence of either of the political ideologies that either the Tories or Labour would like us to believe they pin their hats on.

What people were quietly thinking to themselves as they entered the Polling Booths across the UK on the 8th of June will long be debated. But you can rest assured that for most it will not have been either the manifestation of Marxist policies or the benefits from implementing the works of Hayek or Freidman.

No. The ideas that will have meant most to those voters who really made the difference to the fortunes of Theresa May and Jeremy Corbyn will have been far more aligned with imagining the difference that one Party in power vs the other could make in Pounds and Pence to them on an individual level, rather than upon some high powered economic idea which all of the political parties seem destined to believe will get us all ‘there’.

Whilst it would be a lot less painful to be able to confine these ‘isms’ to being no more than the ideological myths that they perhaps should be – being the ideas and musings of a few ‘great thinkers’ that they actually are, the horrid reality is that the Twentieth Century saw misguided politicians and activists implement nearly all, with benefits to all but the relative few being very hard to find, whether those concerned have become substantially wealthy or alternatively live the life of a despot or their ‘chosen few’ within non-democratic regimes like North Korea as a result.

In itself, the travesty of one set of politicians romanticising over socialism when it has been tried, tested and demonstrated to be the flawed ideal for any wider population that it actually is, whilst another set continue to believe that markets ruled by money will consciously cater for every not-for-profit need of the wider population upon which its rapidly growing financial wealth is almost certainly now farmed, is simply too significant an injustice to put into words.

Yet the bright young things, the think tanks and the party leaderships of all political persuasions remain fixated on the idea that clever, confusing and complicated ideas can always win, never accounting for the reality that ideas are themselves developed on perspectives, which when created looking upon a destination from the benefit of distance are never the same once we have completed the journey to get there.

Socialism, Capitalism and the forms in which they are delivered are all based upon subjective but nonetheless real truths. Truths which are themselves prerequisite in order for any follower or exponent to believe in or more likely identify with in terms of their own life experience, in order for an ‘ism’ to become a ‘movement’ of any kind.

But these specific or myopic truths are far from all encompassing. They do not make allowance for the nuances of change and they certainly do not make account for the rules of (mis)interpretation, which for the roll out of any idea through the process of transformation to their practical form or policy, present a very real and all too often realised form of serious danger.

In uncertain times like those in which we live, the smallest self-serving truth shared between many through the process of group-think can be enough to eclipse the many others which should for us all have far more meaning, and it is here that any ideological fights between right, left and anywhere in-between should really be seen in their true perspective as the journey and outcome that they ultimately are and guarantee to be.

Socialism can only succeed by forcing the masses to behave as if they are all the same, whilst Capitalism relies on allowing the few to believe that they are fundamentally different.

Objectively, neither philosophy or pathway is genuinely truthful and both are for those ‘selling’ them as self-serving in purpose as the other.

The void created by the long absence of original thought in British politics over a number of decades and through Governments constituted by politicians of all sides does not need to be filled by ideas drawn from text books and the bookshelves of old.

Yes, history needs to be fully regarded for ALL of the lessons that it can teach us, and amongst this, the thoughts of the economic ‘giants’ should be gleaned for the value from each and every perspective, whilst we maintain a healthy regard for the fact that in the case of all these widely lauded ideas, individual perspective is exactly what they are.

What all of the political parties can no longer escape – should they genuinely wish to ensure their long-term-electability, is that the war of ideologies has long since been lost. The electorate may indulge ideas when to them there is no possibility of personal cost, but will always look for the policies which are going to make a positive impact upon their own experience of life in the ‘right now’.

Whether it was the European Referendum or the General Election in June of this year, ‘keeping it real’ – whether policy is perceived to be good or bad – has become the key ingredient of contemporary electoral success.

Capitalism can only work for all if it becomes responsible and reflective of consequence, whilst the Socialist ideas which are genuinely on the side of right can only do real good for all if there is an acceptance that idealism has to be kept in practical check and be considerate with the ideas, hopes and fears of each and every individual too.

 

 

 

 

Cameron names his nemesis populism, but the Westminster set still refuses to accept that it was a rejection of self interest which was the key to Brexit

December 13, 2016 1 comment

imagesAs I stepped into the polling booth at a local church hall on the evening of 23rd of June and looked at the voting slip in my hands, the feeling that crossed my mind couldn’t have been further from the thought of being part of something populist, even if I had been confident that my No vote would contribute to an unscripted win.

I know that I am not alone, and whilst the bizarre polarity which now exists between Remainers and Leavers has reached the level that you will find friendships broken and even online dating profiles telling would-be suitors not to waste their time if they voted the other way, it is certain that David Cameron continues to do a great disservice to all voters by now suggesting that such a momentous decision could be made under the influence of a populist cause.

It isn’t cool to be a Leaver for the same reasons that our former Prime Minister came to draw that very conclusion.

Labelling and the use of umbrella terms to cover a multitude of different interpretations make life easy for politicians and the media alike. But they mean different things to different people. They provide an ill-considered opportunity to stereotype, and there is a very dangerous assumption that everyone who voted one way or the other did so purely on the basis that it was a populist choice and that we therefore think alike.

We don’t.

One of the most significant errors being made by politicians from across our range of political parties and even the USA beyond, is to believe that workable solutions to the root causes of the problems which have created these inappropriately labelled ‘populist’ votes can be narrowed down to focusing upon or addressing these tent-like terms such as ‘immigration’. Indeed, as we now progress forward from the Referendum they believe it sensible to use the newly coined ‘soft’ or ‘hard’ Brexit with the inherent suggestion that there is again some kind of black and white choice which still provides an ‘in/out choice’.

It doesn’t.

Not only are these terms misrepresentative and wholly misleading about the life-experiences which people are having across the Country, they are exacerbating the level of confusion that the mishmash of issues surrounding our relationship with Europe actually presents. And that’s the end of the story only if you are prepared to accept that the Referendum result was itself only ever about Europe.

People are neither one thing nor the other as leave or remain has been darkly painted suggest. The majority of people are in the most part probably sat somewhere in between.

But even ‘somewhere in between’  would be far too specific a way to try and position the basis of a debate or the questions which support it, when the European question relates so differently to so many people, depending upon just how the plethora of issues involved may have impacted upon their own lives on perhaps a very meaningful basis.

The European Referendum arrived at the front of what we will perhaps look back upon as the beginning of a perfect storm. One which has been created in no small part by many years of neoliberalism in its ascendancy, and the evolution of a political and governmental culture of self-interest. A self-contained entity which has seen decisions and policy making made within bubbles of understanding about the life experience of others and a narrative of the world outside which in relative terms operates no differently to the insular online realities that so many disenfranchised people feel falsely empowered by, and as such enjoy.

Many voters do not themselves understand the true complexity of the issues at hand, such as the role of Globalisation in freedom of movement, nor the impact that new and improving technology is having on the decimation of well-paid jobs which are disappearing rather than being awarded to some foreigner who is always guaranteed to do the job for less. They certainly do not consider the unrecognisable role of the taxpayer in subsidising low paid jobs through the benefits systems for the corporate businesses that could afford to pay more along with the impact on small ones whose owners would genuinely like to do so.

It is correct that we should all be able to expect those who have been elected to represent us would properly do so. Not only should they understand fully the issues before them, we also have the right to expect that they would legislate with balance, fairness and the full reach of consequence in mind.

Regrettably there is scant evidence that they do, and with the secret now open that political parties work only towards the delivery of a beneficial result in the next election, Westminster should be in no way surprised by the fact that continuing to do things the same way that they always have, will continue to yield results which beat to a different drum.

No. Many people voted ‘No’ through the feelings of isolation which our political establishment has dealt us over many years and Governments, and it is the frustration building up inside which in one way or another to each of us said ‘No, I can no longer go with what I see as this hollow and populist status quo’.

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