I was at a conference in Manchester today, organised by the Jubilee Debt Campaign and the World Development Movement. You can currently find the programme for this event here. I wasn’t able to stay for the whole stretch, but the morning and afternoon sessions I attended were truly eye-opening.
Shocking, in fact.
The session which really knocked me for six was titled “Can the 1% save the world?”, was held in the morning and was led by three excellent speakers: Sarah Bracking, from the University of Manchester; Andy Bowman, the Red Pepper economics editor; and Mick Moran, from the Centre for Research on Socio-Cultural Change.
Some statistics from this session and others to be getting on with (please do correct me if I have noted this information down incorrectly; some of the figures were so startling I still can’t believe my ears whilst other concepts, especially the financial ones, are totally alien to my understanding):
- Sarah Bracking explained how 97 percent of all British aid goes straight to private equity funds in tax havens across the world. Here, they are primarily administered for the benefit of their secretive and generally anonymous investors – as well as on behalf of the often very similar corporations which build and profit from the massive infrastructure projects in developing countries. What they don’t tell you is that after five or ten years these private equity funds close down, leaving no historical trail and effectively operating without risk or liability for the aforementioned infrastructure projects … if and when they poison, maim, kill or otherwise negatively affect those who end up living in their shadows;
- it’s calculated that these tax havens lead to $160 billion of lost corporate tax revenues;
- the British CDC (Commonwealth Development Corporation) (I think that’s what it’s called – again, please do correct me if I’m wrong on any detail as I’m currently swimming in an awful sea of ignorance) uses 164 private equity funds to distribute foreign aid but refuses to specify which ones it uses – it’s not, in fact, obliged to. Recent figures showed it made a profit of around 22 percent on its investments using the instrument that is private equity funding, which led a parliamentary oversight committee (I didn’t catch the name of the committee, though wish I had) to urge it to reduce this amount substantially, and fast, before it either caused public offence or – presumably – encouraged the media to start digging further;
- the risk or liability for all these huge and profitable infrastructure projects ends up lying entirely with governments which themselves have no recourse to their creators: within five years, 80 percent of the companies left behind by the private equity funds in the nation states in question go bankrupt;
- this, then, is the ultimate financialisation of society: clever investors elude all responsibility, build huge projects without reference to sustainability or environmental impact, make their profits over five- or ten-year periods, withdraw their funds at the end of this time and then move on – locust like – to the next project they can foist on a struggling democracy;
But this isn’t only happening in the global south. Try Ireland for example (or even the UK, for that matter – re the NHS, Legal Aid, education, the police or any number of what to date have been public services):
- the myth of the Celtic Tiger was, in hindsight, built on an unsustainable basis: a) ephemeral jobs provided by, in the main, American corporations (probably also using tax havens to reduce tax liabilities); and b) a housing bubble;
- after the crash, the Irish government guaranteed all the deposits and bonds, the “crushing liability”, of six private banks – effectively socialising the private mistakes of reckless investors;
- Ireland now suffers 15 percent unemployment; 40,000 people are leaving every year to find work elsewhere; banks are not lending; they’ve had five austerity budgets; and the debt is now worth 200 percent of the national income;
What’s more, the bond holders whose investments the Irish government so foolishly guaranteed are anonymous. There is no obligation for them to reveal their identity. This makes it difficult for campaigners to know where to campaign, as the implications of calling for a debt writedown of one or another bank may be radically different. In the case of just one bank, the Irish people are committed over a twenty-year period to repaying €47 billion back to the reckless investors whose identity cannot be known, just so the bank can finally be closed down. This isn’t just a question of toxic assets: this is a question of radioactive assets! This is, in fact, like decommissioning a nuclear power plant.
And so I come to the question of that first session: “Can the 1% save the world?”
An example given was the Gates Foundation. An apolitical organisation? Hardly. Five percent of their huge annual budget goes to lobbying and advocacy activities. Their mission then? To make the largest possible measurable impact on health in the shortest amount of time possible. All very laudable – but, even so, well within Gates’ own business metrics mindset.
Their political line? Creative capitalism, marrying altruism with self-interest. They subsidise Big Pharma and the seed technology organisations to produce products they wouldn’t otherwise care to produce for countries in need. Nothing wrong with that, you may say. And maybe you’re right. But it doesn’t half seem to me that when you give someone an opportunity to copyright seeds or vaccines, or whatever the silver bullet may be, you’re allowing them to sell cheap first in order to get your farmers, your patients or – God forbid – your Office software users hooked, so that in the not-too-distant future you can jack up the prices to your now captive market and make a killing on your now helpless end-users.
And as Andy Bowman pointed out: “Business is not becoming more charitable but charities and NGOs are becoming more businesslike.” I don’t think he was being particularly complimentary or positive when he said this. The lines are getting very blurred.
The truth of the matter is, as Mick Moran pointed out in his talk, the one percent of the one percent – those who over the past few decades have experienced a fabulous enrichment – no long command public confidence. Social science shows us that this draining away of trust was accelerated by recent crises but was not created by them. The very richest in society have never lacked so much as today the capacity to command support amongst the voters and ordinary citizens.
Still, I am not sure that I am as upbeat as Moran seemed to me to be when he pointed to movements such as Los Indignados and Occupy, and the activism in non-party-political contexts which seems to be the latterday standard for protest. Structure and strategy and the ability to focus and make policy are traditional party-political strengths: I’m not sure if these disparate protest organisations aren’t playing into the hands of the one percent of the one percent.
These individuals have managed, with their corrupt revolving doors, and as ministers become board directors and board directors become ministers, to de-legitimise politics to such an extent that even in the developed world we now begin to despise what we have. It does, in reality, beg the question that if we are so dissatisfied with what transnational big capitalism has brought us, why should we have the right – or, indeed, the urge – to impose it on others?
Just one more thought to add to this rather rambling post, if you’ve followed me thus far: if clever bods who run private equity funds have brought our financial services sector to the brink of disaster; if business metrics have led us to a world where the strengths of collaboration are eliminated by the weight of furious and totally amoral tax-havened competition; and if the ruling elite is so brazenly incapable of reinvesting fairly in economies it would now appear to be stripping for all they’re worth … well, what really is the point of applying such strategies to the developing aid budgets of the world? Is this really a case of Big Tobacco? You get squeezed out of the developed world, so move on – as would the already mentioned biblical plague – to the developing?
Is that all they’re doing? And is that what we’re allowing them to do?
And, finally, can anyone please confirm whether, indeed, 97 percent of all British aid is funnelled through 164 tax havens across the world which bear no risk nor liability for the results of their investments?