A Municipal Bank Would Radiate Happiness

With my wife Vivienne I recently attended an open day at the former Municipal Bank headquarters in Broad Street. This was an interesting event being the initiative of local artists who used the still fine premises as the basis for showing their work. While the upstairs rooms were not accessible on this occasion, the main banking hall with its improving mottoes (e.g. ‘Thrift Radiates Happiness’) was still splendid as was the safe deposit area in the vault.
Whilst there we met people who have still retained their deposit books and former staff who used to work there. All remembered those better financial days with much fondness and would be delighted at the prospect of a re-opening.
So I was very pleased to see Cllr John Clancy’s article in this week’s Birmingham Post commending the re-establishment of the late and much lamented Birmingham Municipal Bank. Both Cllr Clancy and myself have been long term proponents of this possibility and I’ve made numerous postings on this blog to this effect.
There seems to have been a partial awakening at national level that some kind of regionalism in banking might be a good idea. In my view any such developments if they came about should not – repeat not – be left to the tender mercies of the private financial sector - to which political parties have been so wedded over the years - and which of course is primarily responsible for the fine mess that the country is now in.
These people simply cannot be trusted. There needs to be a simple and reliable service to ordinary people – especially savers. The former Municipal Bank with 40 or so branches throughout the city also issued mortgages at reasonable rates that didn’t need switching every ten minutes.
Any re-creation of this noble and thoroughly trustworthy service could also extend to the provision of finance to small businesses and supporting the issuance of municipal bonds so that local people can be part of the regeneration of our infrastructure (as was the case with the original construction of the Town Hall).
Also of course, the bank’s work should include support for manufacturing industry which was the main remit of the banks founded in Birmingham which shall be nameless now morphed as they are into unrecognisable, useless and globalised entities.
It would be entirely acceptable if a re-established Municipal Bank cast its net more widely throughout the region as suggested in Cllr Clancy’s article since ordinary people and small businesses throughout the West Midlands have been just as ill served by the bonus brigade as folk in Birmingham. If so I would suggest the name: ‘The Greater Birmingham Municipal Bank’. That really would be great and would radiate happiness more widely, but bearing in mind earlier false dawns – don’t start holding your breath just yet! 

The Virtuous Economy, Respect and an Approach to the Common Good

As a follow on to the previous posting (In place of Austerity) I’m making available as a pdf the full article from which this was drawn. If you would like to see the item in full, email me as MWi8327963@aol.com and I will send you a copy (it does not seem possible to upload a pdf on blogspot).
The article is a study of the present state of the economy and society, what would be the characteristics of a Virtuous Economy, the importance of restoring respect for ordinary people, the relation of these desiderata to the Common Good, and how each might be achieved.
The contents of the paper are:
1 The State We're In
2 The Virtuous Economy
3 Restoring the Balance
4 Well-being in the Virtuous Economy
5 Virtuous Exemplar Institutions
6 An Economy for the Common Good
7 The Virtuous Economy and the Good Society
8 Regenerating the Economy
9 Getting There
10 Towards the Common Good
The proposals are radical and undoubtedly challenging and I hope that you will find something with which to agree.

In Place of Austerity

Isn’t it amazing – some senior politicians not on the tea-party right are now suggesting that austerity may impede economic growth! Would you credit it? Who would have believed that deep cutting in a protracted recession could have such an effect?
In many postings on this blog I’ve mentioned particular policies and actions that I believe are needed to remedy our current parlous condition and move towards the common good. They differ very sharply from current policies and orthodoxies. In this posting I draw them together and add others in a similar vein.
Taxation:
 Flat rate National Insurance – all income levels above the minimum wage 40-hour income.
 Increase the top rate of income tax to approximately 53% to a total 60% with National Insurance contribution.
 Re-introduce a starter rate of 10% for income tax.
 Two higher bands of Council Tax.
 Introduce a financial transactions tax along with other European countries
 Introduce a windfall tax to deal with excessive profits and bonuses.
 Simplify the tax code removing loopholes and increasing penalties for evasion.
International:
 Take the lead in dealing with tax havens.
 Form an international group to identify ways to eliminate cheating in trade, abusive working practices, use of child labour, environmental damage etc. and start winding back adverse aspects of globalisation.
Public Expenditure and ownership:
 No further cuts to benefits with some restoration.
 No further cuts in grants to Local Authorities with some restoration.
 Greatly increased infrastructure spend especially transportation and power with some public ownership.
 Reform public sector purchasing with awareness of external effects and constructed to favour domestic suppliers.
 Renationalisation of and major investment in rail transportation.
 No further privatisations.
Governance:
 Introduce a well-resourced and proactive industrial policy.
 Vigorous decentralisation of Civil Service with relocation to regions.
 Return powers to Local Authorities and allow a much freer rein in terms of enterprise and income generation.
 Reform party political funding to reduce influence on policy and including an element of public funding.
Financial Sector:
 Allow Local Authorities to re-establish Municipal Banks.
 Break up the major banks to separate out retail banking.
Respect and Ethics:
 Produce agenda of respect and ethics to run throughout all organisations.
 Get business commitment and training with incentives if necessary.
Pay:
 Legislate to deal with excessive executive pay and bonuses to achieve similar extent of control as in public sector. This to include windfall taxes.
 Give incentives for companies to adopt a uniform pay structure across all levels and worker shareholding and board representation.
General:
 Clearer identification of goods made in England/UK.
 Have a ‘state approval’ scheme for food suppliers and promote use of domestic producers.
The above are examples intended to illustrate the scope, range and type of initiatives that I believe are needed to reform the economy, restore balanced growth and equity and enhance the common good. They are extracted from a lengthy tract I’ve written entitled ‘The Virtuous Economy, Respect and an Approach to the Common Good’. Much analysis would of course be required on details, levels and the projection of overall impact. But take heart my friends - it could be done if the will was there!

The Horsemeat Scandal

It’s been quite some time since my last posting while I considered what to say – or how to contain what I say - about the still ongoing horsemeat scandal.
It is an unmitigated outrage of course and totally appalling in its impact on ordinary people. And so is the way that the companies involved tried to play down their negligence and culpability by hiring PR consultants to use terms like ‘inconvenience’ and ‘labelling issues’ and how the profiteering outfits really had the personal interests of their customers at heart and that there were no ‘safety’ concerns - as if these were what preyed on people’s minds. We know that it is ‘safe’ to eat horses – or dogs and cats for that matter – but in this country we most definitely choose not to do so as the culpable, negligent and couldn’t-care-less companies involved know full well.
I read one article saying that ‘it beggars belief’ that this could have occurred after the BSE/CJD outrage. Well, no, it does not beggar belief. Those who think that it does still don’t understand the fundamental factors behind BSE/CJD – profiteering and pressurising, lack of moral values, contempt for the public, disrespect for nature and totally inadequate inspection and enforcement to name but five.
I seem to recall a government minister of that time forcing his child to eat a burger in front of the press – a clear case of paternal coercion that should have precipitated a bye-election. Did he know something we didn’t i.e. no beef in there anyway?
The reluctance of ministers of this wretched government to engage with, let alone take charge of the response to the horsemeat scandal is another disgrace. So desperately inconvenient to have to get back to Westminster! The ducking, weaving and buck-passing (‘a matter for the industry’) is contemptible especially following the government cuts to testing, their love of ‘light touch’ regulation for their friends and the neutering division of responsibilities for food safety.
What are ministers for? Who are governments for? And why do they think it’s OK to test on the basis of passing over up to 1% horse in a ready meal?
And what are today’s capitalists for – perhaps to enhance the well-being of ordinary people or just possibly line their own pockets? Let them sail away on their yachts to pirate waters fat on the bonuses from their job exporting, eviscerated, deregulated, lowly taxed and globalised corporations.
Hmmm. Just as well I didn’t let myself go in writing this piece!

Respect first, Trust later.

The outrage over horse and pig meat in burgers (and what else?) is entirely warranted and, once the realisation has sunk in, it is clear that something like this could have been expected. Commercial values and behaviour haven’t changed much - if at all - since the BSE/CJD crisis where animals were fed remains from their own species - all driven by profit greed, cost cutting, inadequate inspection and regulation and a complete lack of moral values and respect for the consumer.
To this is now added yet another wonder of globalisation where what passes for food can come from all over the place instead of being sourced locally and more easily traced. The regulation, such as it was, was of the ‘light touch’ variety beloved of the world of low finance. It was set to get still lighter, or at least even more confused. Perhaps minds will be  changed, if only for a little while until it is assumed that punters and voting fodder can be assumed to have forgotten.
Regulation of many private sector dominated industries, particularly those with a consumer focus, needs to be tightened up rather than loosened – as does tax collection. And this goes well beyond banking and food and beverage retailing. Any future easement should only follow a clear demonstration that proper respect is being shown towards ordinary consumers rather than their being treated with contempt such as the recently quoted example of air passengers being referred to as ‘self-loading freight’.
But back to those disgusting burgers – although maybe not just yet. Tesco – don’t apologise and expect to have gotten away with it, change your values and your behaviour and prove to us that you’ve done so. Start respecting customers and stop piling the profit-derived pressure on farmers and food suppliers to meet unrealistic, dangerous and ill considered price reductions. Show some respect for people as well as mammon – then perhaps you’ll deserve to get some of your lost business back.

Saving the Economy – and Savers

As the economy continues to bump along the bottom it is clear that by any criterion the policy of austerity is not working. And it will never do so especially if the reaction of the government to each failure is to apply even more austerity – usually to less well off people.
So it is abundantly clear that effective measures need to be taken to stimulate the economy. In doing this, careful consideration must be given to the form that the stimuli should take and the effects that the measures have on different groups of people. In this regard my opinion is that we need to assist the long-suffering saving community.
There has been far too much reliance on keeping official interest rates pegged down. The consequences feed directly through to savers although some personal borrowers, especially the less well off, are nonetheless charged horrendous, usurious rates quite legally.
Instead, there should be a much greater emphasis on public works such as useful aspects of transport infrastructure, particularly rail (and I do not refer to HS2 here), power generation and increasing the nation’s pitiful fuel and water storage capacities.
In the present circumstances the historic low and sustained bank rate and massive ‘quantitative easing’ have had only limited positive impacts on the real economy as we continue to endure the worst recession since the 1930s. Furthermore, rock bottom interest rates hit savers immediately and have only been partly passed on (in some cases loan charges have even been put up by banks) to those borrowers that can secure loans.
Savings are the bedrock on which long term investment should be built. Not only this, but savers, particularly older people in or near retirement, have had their incomes severely reduced by interest rates that continue to be at derisory levels on savings accounts - even at banks such as the Co-op that it might be thought had retained some shred of respectability.
Ways must be found to moderate this highly adverse impact on responsible people who are trying to live within their means, provide for themselves and indeed set a good example to others.
Furthermore, the economic effect of interest rate cuts can, under some conditions, be the opposite of that intended. The substantial income reductions for savers mean that they have less money available to spend and so stimulate the economy. For example, in Japan in the 1990s the experience was that as interest rates were pared back people saved even harder to make up for the lost income and succeeded in further deflating the economy.
As we have seen, it is certainly no use relying on the commercial banks to support small businesses or to be reasonable about the interest rates as applied to savers. Therefore action needs to be taken by the Government.
We certainly need banks that are operated in the interest of the economy and society as a whole and which provide secure and reasonable returns to savers. If central government won’t provide such a bank then local authorities should be encouraged and enabled to step in to act in the public interest.
Here in Birmingham this would mean re-instating the late lamented Municipal Bank. Why do I keep on putting this idea forward? Because hopefully it will become clear in the fullness of time and the depths of austerity that the commercial banks are useless.
So far as ordinary people and small firms are concerned, politicians must stop deceiving themselves that their friends and bankrollers in high finance will ever consider the people, the economy, the nation and the common good as much as their ever-beloved bonuses.

The true basis of Social Security

I would have thought that it was obvious that in a coherent civilised society we all support each other. This is the true basis of social security. But to read repeated comments in the right wing press (i.e. most of the printed media) about how older people will become an ‘increasing burden’ on younger people in the future, there are those among us who have a much narrower outlook.

This is at a time when, having initially given the impression of being on the side of pensioners, the coalition parties are now looking for every possible way to minimise this commitment and maximise claw back. Witness the attempted redefining of RPI (to give lower values and consequent lower upratings of course) and the talk about cutting winter fuel allowances, travel passes and TV licenses for supposedly ‘better off’ pensioners.

All this as if current and soon-to-be pensioners were not contributing substantially already. All pensioners with savings (i.e. most of this generation) have been severely hit by the artificially and historic low interest rate policies, losing hundreds or thousands of pounds in interest every year. Annuity values for those coming up for retirement have also tanked as another consequence of the nailing down of interest rates.

There is also the practice of the financial cartel in salami slicing the interest rates on Isas so that there’s now hardly any benefit from the tax-free nature of these investments. Another thank you to our wonderful financial services ‘industry’. In this regard building societies have been infected with the same ‘squeeze the punters’ attitude to savers as have the banks.

All of this represents a massive transfer from the older generation to those much younger people who have run up debts or who have mortgages – or both. How much longer pensioners can continue supporting borrowers to this extent is unclear but no doubt we’ll soldier on and reflect on all that was built up in our society (prior to the curses of globalisation, cutting and privatisation) during our most active years?

Despite this wretched government's favouritism towards the truly wealthy there is still a sense in which we are all in this together across the generations. Taking a long view also involves a look at the past and the near present - especially the last four years - as well as projected futures. So let’s understand that we have a mutually supportive society – something that’s going to be needed as the age of austerity is dragged on by misconceived policies.