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Carillion – The Latest Government Contract to Backfire……

29 Jan

For the past 30 years successive UK Governments have been selling off or contracting out this country’s assets in one form or another.  From Nationalised Industries to the Gold Reserves held by the Bank of England.  Carillion is just another failed initiative in a catalogue or errors…..’

Government’s Bad Planning and Expensive Mistakes for Tax Payers……

Although the underhanded ‘quid pro quo’ dealing of the country’s ‘elite’ is as old as government itself.  The particularly damaging policy of ‘privatisation’ was Mrs. Thatcher’s personal priorities.  We’ll get to the whereabouts of the gold reserves and other costly mistakes later but for now here’s a partial list of some the country’s assets they sold:

  • British Petroleum  – 1979
  • British Aerospace – 1981
  • Cable & Wireless – 1981
  • Amersham International – 1982
  • National Freight Corporation – 1982
  • BritOil – 1982
  • Associated British Ports – 1883
  • Enterprise Oil – 1984
  • Jaguar – 1984
  • British Telecommunications – 1984o
  • British Ship Builders – 1985
  • British Gas – 1986
  • British Airways – 1987
  • Rolls Royce – 1987
  • B.A.A. – 1987
  • British Steel – 1988  
  • Water – 1989
  • Electricity – 1990

The party line was that competition was better for the consumer and released the government from its financial obligations to Nationalised Industries.  The empirical evidence would suggest otherwise.  There is an obvious reason why a public services and business are totally incompatible.  The number one priority of a public service is precisely that, to deliver the best possible service to the public. Whereas, a company’s main priority is to deliver profits for its shareholders, increasing year upon year.  This appears to have worked perfectly.  The level of service and investment has fallen whilst profits have risen…

In some instances there were sectors of publicly run companies which made wholesale privatisation untenable, so they were broken up; the profitable parts sold off, leaving the unprofitable parts in public ownership.  Nowhere is this more apparent than in the nuclear power industry.  Due to the uncertainty and long term nature of decommissioning, cleaning, storage of toxic and radioactive waste, the nuclear industries were put under the umbrella of British Nuclear Fuels in 1971.  However, in 1984 it became British Nuclear Fuels Limited, floated on the stock exchange, under the control of a Government appointed, ‘independent’ regulator

The profitable parts of the industry, such as power generation were given to the privatised electricity companies whilst the ‘hot potatoes’ remain in government hands and have been, you guessed it, contracted out.  The current estimates for cleaning up range from £119 billion to £220 billion over the next 120 years.  In all probability, as solutions to some issues  remain unresolved, the final bill could be 2 or 3 times the current estimate.  I fail to imagine that any company can give an accurate estimate of an as yet undecided way to proceed.  We currently have nowhere to store highly toxic, radioactive waste.  It isn’t only the nuclear power industry that has these problems.  Many of the privatised industries were broken up before sale, leaving a burden on the tax payer……

What Happened to the Country’s Gold…..?

The ‘gold standard’ existed into the 20th Century.  With an internationally agreed price it was a way of standardising currency exchange and demonstrating a country’s wealth.  On a  $10 dollar bill it used to state ‘This $10 bill is redeemable for $10 worth of gold’.  Not anymore.  The whys and wherefores of the gold standard was decided at a large meeting between the US Government, the banking dynasties and major company bosses during the Great Depression.  All of the key players attended:  Goldman Sachs, JP Morgan, Chase, Rockerfella, Rothschild; the list goes on.  Now that gold was no longer a measure of a country’s wealth the ‘Federal’ banks were free to sell gold on the open market.  They also used the country’s financial crisis to buy out smaller banks leaving us with monopoly of banking institutions we are all so familiar with…

Between July ’99 and March ’02 Gordon Brown, the then Chancellor of the Exchequer sold 58% of the Bank of England’s total gold reserves.  Some 395 tonnes of the 715 tonnes in the vault.  Not only did he sell it but he sold it in a depressed market.  Its value increased from the original $256.20 per ounce in July 1999, to $1,780.65 in just over 10 years…


The Private Finance Initiative – The Labour Parties Worst Policy Ideas……

The policy was so bad, as was the burden on UK Tax Payers that it was rebranded the Public Private Partnership, although this did nothing to improve public perception, change policy or lower the cost.  The basic premise of PFI/PPP was simple and sounded almost plausible…

How PFI Works……

The traditional way for the government to build a new piece of infrastructure, such as a hospital, a school, or a new road, was to raise the money in taxes, or borrow it from the Bank of England, and then pay contractors to deliver the project.  The finished project was then handed to the relevant Government department to run.  After that, the public sector would own the asset.  However, under PFI it was the builders who borrowed from private markets.  But how could the builders afford to make loan repayments until the endowment ended.  Simple, if you have the exclusive contract for maintenance… 

The state then pays the builder (or a separate company that buys out the contract) to effectively lease the building or piece of infrastructure over several decades; like an endowment mortgage the asset becomes wholey state owned.
The theoretical justification for PFI is that the private sector is more efficient at delivering and managing infrastructure projects than civil servants. PFI also supposedly transfers the financial risk of a construction project over-running from the public to the private sector.  Another benefit sometimes cited is that PFI financially incentivises builders to improve the quality and speed of their work too, since they will be the ones maintaining the asset after construction.  To top it off the U.K. Tax Payer also has the capital expenditure removed from the Treasury’s accounts.  Giving the impression that the economy is doing well.

Although in principle this seems like a workable idea which places hardly any burden on tax payers it came with one big caveat; the contractors had an exclusive right for the maintanance of the building until it was handed over, and this was to be covered by the tax payer.  It soon became obvious how a company can build and lease it back to the Government whilst turning over big profits for the duration.

Here are just some of the ridiculous bills for one hospitals maintainance:

  • £466 to replace a lightbulb 
  • £242 for a padlock
  • £75 for an air freshener 
  • £13,704 to install 3 new light fittings in a corridor
  • £8,450 installation of a dishwasher
  • £997 for a TV cabinet 
  • £929 to swap a single socket for a double
  • £676 putting up 4 fire assembly point signs
  • £198 to mend a door handle 
  • £112 putting a whiteboard 

And the list goes on.  By the time the 20 year leasing arrangements are completed the cost to the tax payer will be over £20 billion.  Hardlya good deal for UK Tax Payers when you consider the cost of undertaking the work itself…

The Mamoth IT Blunders……

Alongside the many costly policies the Government is well known for its expensive IT blunders that either, didn’t work at all, worked partially or were simply ‘not fit for purpose’.  The cost overruns and time delays are legendary.

An IT scheme designed to integrate the Department for Transport hyping it’s human resources and financial services, and also save the taxpayer £57 million? If this sounds too be true, it’s because that’s what it turned out to be. Far from saving money, the scheme ended up costing £81 million due to management ineptitude described by the Public Accounts Committee as an exhibition of “stupendous incompetence”.

An IT scheme designed to allocate subsidies to farms was originally forecast to cost £155 million, but the programme has ended up costing more like £215 million. The scheme has delayed payments to farmers and incurred increasing penalties from the European Commission.

According to a Public Accounts Committee report, the three key bodies trusted to deliver the programme could not work together effectively. It found that there was a lack of consistent priorities and changes in leadership, which caused havoc and delay. Its focus on developing a digital front-end was “inappropriate for farmers” due to the frequently poor broadband in rural areas.  

The Scottish Parliament Building has been controversial for a host of things, including its location, architect and design – it’s described by one particularly glorious TripAdvisor review as a “grotesque brutalist mess” – but the reason a public enquiry was made into its construction was because of constant delays and its escalating cost. Initially scheduled to inaugurate in 2001, its doors finally opened three years later with an estimated cost of £414million, much higher than its original estimate of £10-40 million. The inquiry found incompetence in the management of the entire project, including fulfilment of cost and the way major design changes were added.

The cost hasn’t stopped there. Figures have revealed that the building’s average repair bill has reached £141,000 per month, five times the figure during the building’s first year. This means that since 2004, maintenance costs have set taxpayers back by £11 million, which of course is higher than some of the initial estimates for the cost of constructing the building itself.

The Greatest NHS IT Blunder…

Instant access to patients records from anywhere.  It sounds like the Shangrilla of vital information. In September 2013, an NHS patient record system that would have been the world’s largest non-military IT system was abandoned, in what could be the most catastrophic IT failure ever seen by the government. The failed centralised e-record system cost the taxpayer over £10 billion, £3.6 billion more than ministers had anticipated.

From the outset, the project was plagued by delays. The delivery of core systems was stalled due to fears that some software was not fit for purpose. After seven years, only 13 acute trusts out of 169 received the full patient administration systems they were agreed under the National Programme. The new systems also caused chaos for many users; a newly-installed IT system lost Barts NHS Trust thousands of patient records, delaying the treatment of urgent cases, costing millions in additional staff and warranting an internal investigation. The Milton Keynes Foundation Trust wrote a cautionary letter to the times about the inefficacy of their system, and warning others not to use it. 

The Ministry of Defence’s secure military network was built to help British troops operate more effectively around the world. The MoD gave parliament a figure of £2.3 billion, but a report by MPs has shown that they knew that the project would cost at least £5.8 billion. The true figure has since risen to at least £7.1 billion. By 2008, the programme was running at least 18 months late, had provided only 29,000 of a contracted 63,000 terminals, and had supplied none of the contracted Secret capability.

According to the then chairman of the Public Accounts Committee Edward Leigh, there was no suitable pilot carried out for such a multifaceted programme. The condition of the Department’s buildings where the system was to be installed was badly miscalculated due to insufficient research.
These disasters could all have been adverted by better planning and listening to expert advice. 
The cost to the tax payer in relation to these failed IT projects is exceptional.  Every major IT project cost nearly 3 times the original quotes and took 3 times as long as predicted.  Many still don’t work and although we see doctors and nurses with their Tablet computers, the system is deemed so unreliable that notes are transcribe to paper for safe storage……

Carillion – A Company with Almost No Assets…..


Carillion is more of a management consultantcy than a subcontractor.  I’m sure the latest PowerPoint presentation looked great but if the Government had been listening to the Office of Budget Responsibly and Public Accounts Committee things may have been different.  Profit warnings and a gaping hole in the pension pot (remember BHS) should’ve led to a complete end to any further contracts being awarded, however, Carillion continued to pick up more and more contracts.  As I said Carillion is just a huge management consultant rather than a subcontractor.  Its flags wave above thier prestige projects but it owns almost nothing on the site apart from the flag.  Its assets are virtually worthless considering the size of the contracts they have in their portfolio which is made up almost exclusively of Government contracts…

Too big to fail……

Carillion provide school meals, cleaning and maintenance in hospitals, alongside dozens of other services to nursing homes etc.  That is why a solution must be found.  So far the Government’s only solution is to fund this disaster itself, at an estimated cost of £200 billion.  While loyal Carillion workers worry about how their pensions will be paid, the board have chosen to keep their astronomical bonuses and unnecessarily large pay chequers…

The Classification “Too Big to Fail” is Wholly Down to Bad Government Policy…..

Carillion is no different to the financial institutions we had to bailout 10 years ago.  If you put all of your eggs in one basket as they say.  We could’ve simply taken the banks into public hands instead of handing over tens of billions in bailouts.  Even though most people you ask will tell you how bad things have been during the recession, the banks have continued to make money.  It would suggest that it’s the tax payer is responsible for the ‘to big to fail’ payouts whilst the profits made post bailout is still reaching the pockets of the ‘one percenters’.  If the majority of contracts go to one international organisation they become by definition too big to fail, which if distilled to the basics is this; ‘the club’ relies on these unbreakable contracts to make money for both sides.  It’s just that we’re not one of the sides.  As per usual with these badly thought out policies and certain ‘select’ companies benefitting hugely, we have yet to see any politicians or board members loosing their jobs and being stripped of their ill gotten gains…

It Isn’t Over Yet……

Capita is yet another favoured service provider to the DWP and many local councils.   However, they too are balanced on a knife edge.  If/when Capita fails they too will, doubtless, be deemed too big to fail.  And as for BREXIT, I voted in or out; not for ten or more years of a negotiated contract at great cost to the UK economy.  God only knows how many companies will deemed too big to fail during the exit process.

We don’t live in a Democracy.  We live in a Duocracy where we have a choice of Labour and Conservative, and both have a proven track record of making things worse for us and better for a select few.  Isn’t it time for a major rethink?

And Finally……
‘One of the major problems in society today is the Internet, our manufactured way of life and the way in which all politicians lie or give the answer to a question that wasn’t even asked. People add thier name to an online petition which is the least effective way to protest. If we ever want change it will only come from direct action……’

Stephen P. Walker

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Bring Out Your Dead & Your Cheque Book

8 Jun

Proprium Corpus [Latin – Own the Body]

For legal purposes a dead body doesn’t belong to anyone & why should it. After all in life the right to self determination and autonomy are enshrined in multiple articles of international Human Rights Law and only under very rare circumstances can you be forced to do something against your will. So why does the ownership of a dead body matter? When your loved ones get the bill from the funeral directors & they want £5,000, (minus the headstone; another £1,000 at least) – that’s when……

So, why do we spend unbelievable amounts of money disposing of the dead? Tradition; predominantly as result of anachronous Christian doctrine, which the majority of intelligent people accept is nonsense but blindly follow anyway. A dead body is dead body; the transient shell of a conscious, thinking person. I’m not suggesting that the loss of a loved one should not be honoured & their life celebrated, but there is nothing to stop that happening without having to adhere to the usual inordinately expensive cost of a ‘traditional’ funeral. So, whose responsibility is it to pay the bill?

Usually, the family take care of the arrangements but they are under no obligation to do so. Lack of knowledge is what can make you unwittingly liable. Firstly, acting as the executor makes you automatically liable. Many people take on this role unknowingly. For example: your relative or friend dies. Liability is the last thing on your mind when you are in shock, devastated at your loss & in the surreal bubble that is the precursor to mourning. Even if there is a will naming you as the executor you are under no obligation to accept. But if you unwittingly handle any part of the process, such as registering the death, you become responsible. It is your right to simply say it has nothing to do with you and responsibility becomes a matter of public health. Responsibility becomes the duty of the state. They then make and pay for the arrangements; sometimes referred to as ‘a pauper’s funeral’. Although the term is an antiquated leftover from the 19th century, it does tend to put emotional pressure on people who are already in a delicate disposition……

Secondly, if you arrange the funeral you have entered into a legally binding contract with the funeral director, who can later sue for breach of contract if it turns out that the deceased assets do not cover the cost of the funeral. Not something that is made clear as you are whisked off into the room with the comfortable sofas and they begin the emotional manipulation by talking about your loved ones whilst writing down a long wish list, none of which is priced as you go. Only when you’ve made your choices does the calculator appear and, let’s face it, nobody’s going to start asking where they can skim off a few quid.

So, there you go. When I snuff it don’t have anything to do with me. Oh, and don’t do the sycophantic “What a fantastic bloke he was” bullshit. Tell it like it really was. In fact, don’t tell it at all……

Remember, just say NO…….

21st Century Slavery……

2 Mar

‘Reach for the history books and they’ll tell you that slavery was abolished in the UK by the Slave Trade Act of 1807, driven by the unstoppable will-power of William Wilberforce. Well, almost……’

 William Wilberforce (1759-1833)

William Wilberforce (1759-1833)

The Slave Trade Act of 1807 simply outlawed the transportation of slaves. It wasn’t until 1833 that the Slavery Abolition Act was passed; making the owning, buying or selling of slaves illegal. It is not a coincidence that 26 years separated the two acts. Most of the Parliamentarians of the day had slaves and given life expectancy most had exploited the full potential from the slaves they owned. So, what’s changed…..?

 

First we need to define precisely what a ‘slave’ is. There’s the meaning we all take for granted, of people imprisoned against their will, transported to ‘the colonies’ and forced to work for a ‘master’; all enforced by extreme brutality and violence metred out to anybody who didn’t tow the line. It is now part of our shameful past but still happens all over the world to this day.

There are other definitions which have more congruity with our lives today. The Oxford English Dictionary contains several. Here are the ones that are pertinent to this article:

  1. A person who works hard without proper remuneration or appreciation.
  2. A person who is completely dependent upon, or controlled by something.
  3. A state of subjection.

Anybody who is a member of the plebeian proletariat, which is me and most of the people I know, falls into one, two or all three of the definitions given above. Here’s why.

greedy-bankersThe Joseph Rowntree Foundation estimates that a single person with no dependents requires an income of £16,300p/y, after deductions, to meet their basic needs. No holidays, cars or HDTVs included; just survival. Therefore, you are a slave to your employer, who holds you in subjection by the necessity to survive. Worse still, that employer probably doesn’t even come close to meeting those basic needs, leaving many people dependent upon the Government for Tax Credits; which is effectively another way of admitting that British employers pay too little for you to survive, further enslaving you to the State. To add insult to injury many of those employers manage to ‘avoid’ paying taxes to HMRC……

Having taken into account your own position the chances are that you fit the definition of a slave, only the ball and chain has been replaced by the threat of withholding essential income.

Ball and ChainThis form of modern slavery is a very clever device which causes apathy amongst huge groups in society who apostatise issues they hold dear for fear of disenfranchisement by the State upon which they depend for their survival……

It is my personal belief that this ideology is not accidental. Only the other day two more MPs fell prey to a press sting where they told us how they could influence policy and trade ‘under the radar’, and how this was excellent value at £8K per day; more than an unemployed person is paid yearly. If it was 1715 instead of 2015 I dare say we would have adopted the French model and separate MPs heads from their bodies, but it’s a carefully built house of cards and the distraction of survival along with the threat of ‘Jihady John’, ISIS/ISL/IS, global warming and the astutely constructed financial instability from which they protect us, keeps the vassal status quo.

 

The basic fact is that we are enslaved by a system from which we are unable to escape, with the exception of Ray Mears and maybe Bear Grylls. The nepotism, quid pro quo and control of the ruling elite keeps us firmly in our place; slaves who keep the cabal in positions of power and wealth through meaningless elections. You are most probably a modern slave……

Emancipation anybody…..?

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Eight Simple Ways for the Treasury to Save Money……

17 Jun

Introduction……

We are not broke, we do not need to tighten our belts and we are certainly not ‘all in this together’.  Immigration and welfare benefits are not the drain on the economy our politicians continually claim; they are just an easy target to divert attention and act as a smokescreen to the reality of our economic position.

Here are eight ways to emancipate billions of pounds back into the economy……

1 – IT Projects……

Government IT projects are notorious.  They frequently do not perform the function for which they were designed, go over budget and are delivered late, if at all.  Those that make it into public use are usually redundant within a couple of years due to their failure to be able to communicate with newer systems in other departments.

Here a just a few examples:

1980 – TAURUS was an electronic trading platform designed to make the buying and selling of stocks and shares easier.  Outcome: cancelled.  Cost: £75 million.

2002 to 2011 – Electronic Care Records; one of many NHS IT project failures.  Over nine years and despite numerous attempts to make it work, it was never launched.  Outcome: Discontinued.  Cost: £12 billion.

2008 to 2013 – Digital Media Initiative was the BBCs digital platform.  It was scrapped when it became clear that other media companies could provide services at a much lower cost to the customer.  Outcome: cancelled.  Cost: £98 million.

The Government continues with IT initiatives, the latest being the universal benefit system.  Again, it has over run and will doubtless be over budget, if it ever works at all……

2 – Public and Judicial Enquiries……

It is understandable that the relatives and victims of events like Hillsborough and Bloody Sunday want answers.  However, the Public or Judicial Enquiry has become a tool for politicians to kick issues into the long grass.  They are hugely expensive, often take years to complete and rarely deliver results.  The Hutton enquiry into the Iraq war was carefully limited in terms of what it was enquiring into.  As a result nobody faced prosecution and nobody  suffered any consequences in respect to the ‘sexed up’ document that was used as the justification for going to war.  The same is true of the enquiries into the shooting of John Charles de Menezes and Mark Duggan, or the newspaper sales man Ian Tomlinson who died after being assaulted by a Police Officer whilst walking home from work during a demonstration.  None of these cases has led to the prosecution of the Officers involved.

The Jimmy Savile case has as many as 30 enquiries currently taking place……

3 – Defense Spending……

The Department of Defense should change its name to the Department of Attack, as the last time it defended the UK was during WWII.  It is time we stopped acting under the influence of the US as the worlds’ police force and concentrated our resources on defending UK sovereign territory.  A look at a map will show that there are no threats to the UK from any of its neighbors, most of whom are our allies.  The non geographical and greatly exaggerated ‘al Qaeda’ does not warrant £57 billion per year on defense spending.  Government wastage has led to the building of redundant aircraft carriers and the replacement of the Trident nuclear deterrent, which is not wanted and unnecessary……

4 – Tax Avoidance……

It is estimated that the UK treasury is deprived of £95 billion per year due to tax avoidance.  At the same time, many of the employees of the companies involved receive benefits to support low paid jobs (more on this later).  It is interesting to note and a demonstration of Governments priorities that HMRC have a team of 300 people dedicated to tackling £95b of tax avoidance whilst the DWP has 3000 people dedicated to recovering £1b of benefit overpayments and fraudulent claims……

5 – The Monarchy……

The Queen’s household and assorted hangers on costs the UK tax payer £33.3m in 2013; a rise of £900,000 on the previous year.  Although I am a republican I feel our Queen does deserve credit where credit is due.  She is a tourist attraction, or rather her palaces are, so I don’t propose we wheel our the guillotine just yet.  However, the monarchy are independently wealthy and becomming richer by the day.  Assets such as the Duchy of Cornwall net Prince Charles tens of millions each year.  They also hold a huge private art collection thought to be priceless, all of which they aquired through a questionable hereditary lineage.  I propose that the public purse does contribute towards the Queen’s official duties but the numerous palaces, estates and country retreats should be handed to the National Trust and opened to the public thereby generating an income for their upkeep and relieving the tax payer of a large financial burden……

6 – MPs Expenses and Allowances……

Sure, MPs work a long way from home but then so do thousands of other people who pay for their own travel and expenses.  MPs are already well paid but on top of their salary claim £100m in expenses.  Some of this is for the everyday things you and I pay for out of our own pockets and some is for the second home allowance.  As already mentioned many people commute from as far away as Peterborough, Grantham and even further.  If an MPs commute is deemed reasonable they should pay for it themselves.  If a second home is needed it should be sold when the MP looses their seat to reimburse the tax payers.  Even with the Independent Parliamentary Standards Authority overseeing claims, MPs are still receiving far too much money for expenses that the rest of the population are expected to pay for themselves……

7 – Diplomatic Travel……

The year is 2014, not 1914 and with technology there is little need for diplomatic travel when a simple conference call will suffice.  According to the Daily Mail a lot of ‘diplomatic’ travel is little more than an excuse for what they describe as ‘jollies’ and range from £2k to £10k depending on the destination and who is traveling.  This money does not form part of MPs expenses but comes from departmental budgets; the same budgets that have been squeezed by 25% in recent years.  It is rich to say the least to expect the UK public to ‘tighten their belts’ when MPs and Diplomats do not.  We are not ‘all in this together’……

8 – A Fair Pay Act……

It is time that laws are introduced setting out a workable minimum wage.  Not the £6.31 (21+), £5.03 (18 to 20), £3.27 (under 18) and £2.68 (apprentice); all of which are an insult when taking into account the increasing cost of living.  If you earn £6.31 per hour for 37.5 hours per week, you will barely be able to afford necessities.  This is the reason for the various Tax Credits which are paid to top up earnings to a reasonable amount.  But as mentioned earlier, many of the companies that pay minimum wages are also tax avoiders, thereby depriving the treasury twice.  Our whole economy would function better if wages were increased, Tax Credits abolished and tax avoidance curtailed……

None of this is rocket science and all perfectly achievable given the political will.  But instead of tackling the real issues of waste and poverty our representatives continually repeat the mantra of immigration and welfare reform; always being careful not to give factual details.  Immigrants pay in far more than they take out and welfare covers pensions, tax credits, child care allowances and a multitude of other benefits including universal benefits such as family allowance.  Unemployment benefits make up 1 or 2% of the welfare pie.  It is a tactic as old as democracy; divide and rule.  Whilst the arguments are focused on two vulnerable groups who have been demons, it gives the public someone to blame for the hardship they are suffering when in reality, with a little political will, this country could be £250 billion per year better off if only the pigs would pull their heads out from the trough and do the job for which they were elected……

NB: On the Radio 4 Today program (17th June) a recent survey revealed that the majority of residents believe most immigrants come to the UK to claim benefits.  It appears the political message is working……

The Cost of Technological Progress……

15 May

‘We all love our mobiles, iPads and laptops and most of us would feel lost without them. We also care about our planet, support eco-friendly products and would use them if they met our needs. Everybody loves a bargain, so when the price of technology keeps on falling we upgrade, even if our device is perfectly adequate. It sounds like a panacea; cheap, accessible and green. But as the old saying goes, if it seems too good to be true, it probably is……’

 

We all know that global industries are not in business for pleasure. They have one goal and that is to return the maximum possible profits. So a penny saved by the consumer is a penny recouped from somewhere else and that usually involves a human cost along the way……

 

I am writing and administering this blog from a seven year old laptop and, with good housekeeping, it continues to function perfectly. In fact I cannot think of anything I can’t do that a new computer would make possible. The truth of the matter is that we suffer from ‘technology envy’ and the sleek new laptops and phones are more cosmetically satisfying than they are functionally better; but we want one anyway. This applies to TVs, fridges, coffee machines, cars and almost any gadget we own. To supply goods at discount prices savings have to be made……

 

Human Resources, and a ‘resource’ is what we are in the eyes of global industries, is one of the first lines of cost cutting which is why your technology is almost always made in a country with no public healthcare, dilapidated infrastructure, chronic poverty and corrupt officials. For it is in those countries that humans can be bought at the least cost. They work 16 hour days and the concept of health and safety doesn’t appear in the equation. There is no sick pay or paid holidays and the employees dare not challenge the bosses because they are replaceable by the next desperate person……

 

Many companies claim to monitor standards at their far eastern supplier but the reality is that they will be shown a specially set up part of a factory; clean, safe and air conditioned. If they interview employees they are too frightened to speak up. This was brought into sharp focus by the recent collapse of a factory that made clothing for many well known high street brands……

 

The second issue is caused by the technology itself. To make batteries that last longer, motors with more power and the materials that aid miniaturisation we often use what are known as ‘rare earth elements’ such as Boron and Neodymium. By an accident of geology rare earth elements are most common in third world economies. Extracting them requires yet more cheap manpower and extracting them can leave behind toxic chemicals; chemicals that developed nations have strict regulations regarding their disposal. Unscrupulous third world companies simply dump them on the ground or into rivers. Another unfortunate consequence of rare earth elements is their rarity. Hundreds of tons of earth may contain only a tiny amount of the desired element, therefore, extracting them causes the destruction of vast areas of important ecosystems……

 

So, the next time you’re thinking of upgrading to the latest sleek, brushed aluminium mobile phone or laptop, ask yourself if you really need it, because your new phone may be helping to shorten someone’s life, contributing to the extinction of plants and animals, and ultimately halting development of third world countries.

 

And all because multi-national global companies need to pay huge bonuses and increase profits. ‘Sustainable growth’ has to be one of histories most damaging and unrealistic oxymoron ever to have come from a comfortable, air conditioned, over staffed and detached boardroom since ‘think tanks’ came into existence……

What has the Big Bang got to do with Economics……?

4 Apr

‘At first glance nothing but read on and all will become clear……’

 

In the early 20th century Edwin Hubble, the Cosmologist after whom the Hubble Telescope is named, made one of the most important discoveries in science when he plotted the rate of the recessional velocity of galaxies, demonstrating that the universe was, and still is, expanding.

 

It is from Hubble’s observation that the idea of a Big Bang was born. Put simply, if the universe is expanding today, if one winds back the clock, at some point in the past the universe must, logically, have been smaller; taken to its conclusion, at some point in the past the universe had a beginning. This is now an empirical, undisputed fact in Cosmology and Physics (Monotheistic religions may disagree but that is a whole new ball game), I diversify.

 

An awful lot has happened in the 14 billion years since the Big Bang to leave us with the universe we can see today but what has this got to do with economics……?

 

First of all let’s set out some facts about banks which may not be apparent given that they have names like ‘The Bank of England’, ‘The Federal Reserve’, ‘The World Bank’, ‘The International Monetary Fund’ and ‘The Central European Bank’.

 

All of the above give the impression that they are owned and run for the benefit of the people by their respective governments. They are not. They are all privately owned institutions, given permission by governments to literally print money. They are more like a cartel than a service allowing for the convenient exchange of goods and services without carrying bags of gold or diamonds, and, most importantly, when they ‘create’ money it is a debt with interest payable upon it……

 

Back to the Big Bang……

 

Let us now imagine the application of Hubble’s Law to global economics. The 14 billion years of the expansion of the universe is akin to the interest that is created along with every unit of currency created by a bank as it expands. If we wind back the economic clock to the point at which the very first bank note was issued, that solitary note was issued with interest. Ergo, to settle the debt owed on the first ever bank note printed required the creation of more. This is why the big economic superpowers have national debts which add up to hundreds of trillions of Dollars/Pounds/Euros.

 

Wind the clock forwards and we reach the current state of global economics where more and more money has been required to settle the ever expanding debt. The practical upshot of this model is a debt that increases exponentially at an ever increasing rate; just as the universe is expanding at an increasing rate. This debt can only go in one direction and I’m sure you have all worked out which direction it is going.

 

One could consider the simplicity of the early universe as the solitary note. All of the birth and deaths of stars that created the elements we see in today’s universe is the equivalent of the increasingly complicated business deals that mask the inflationary model. The bonding of atomic nuclei inside stars and transmutation of elements in supernovae could be seen as the borrowing, lending and taxing that make economics seem as complicated as the universe……

It is a model that can never be satified. It can only expand and to keep the expansion in check, money is conveyed from the poor to the rich……

And that is what the Big Bang has to do with the Global Economy……

 

It could not be explained with any more simplicity……

 

‘With special thanks go to Sonia Greaves, the Emeritus Professor of the Inspirational Ideas, without whom the seed of this idea would not have been planted……’