‘The debt’ (2)

• July 18th, 2012 • Posted in All posts

(The latest installment in my attempt to understand economics).

My good friend Ian Pinchen, in response to my previous post on debt, said:

“the scale of what ‘we’ owe may not be what it seems – I read recently that, as a proportion of GDP, what we ‘owe’ now is less than what we owed during the first 20-30 years of the establishment of the welfare state. What has happened since the Thatcher years has been less a problem of growth and debt and more a problem of the transfer of wealth away from the population as a whole (including public spending) and towards large corporations and the already wealthy…”

It’s an interesting thought, the idea of wealth having been sucked out of, so to speak, the ordinary everyday sphere, and fits with many things that strike me about the way the world now works.

For instance, nowadays, many of the functions that were once performed by local councils, are now carried out by large corporations.  It’s said that the corporations are more efficient (i.e. better value for money) than the councils were.   I don’t know if that’s true (the corporate contractors seem to make a lot of crass mistakes, as we’ve seen recently with the security company, G4S), but even if it were true, the fact remains that money that would, in the past, have all been recycled in the local community, is now being sucked out of that community to pay shareholders’ dividends, and the salaries of senior executives (who, for some reason, require and are entitled to, gigantic salaries that would have been condemned as appallingly wasteful if they have been paid to local council managers).

The same with businesses too.   Coffee shops, restaurants, cinemas, are increasingly owned by national or even international chains (Starbucks, McDonalds), rather than being local businesses.  (A ‘leisure park’ round the corner from me has Nandos, Frankie and Benny’s, Vue… etc, and I’ve seen virtually the same combination in similar leisure parks in other towns: not a local business in sight).   More money channelled out of the community.

The very fact that giant corporations now have to be wooed by governments, like giant zeppelins of money floating above our heads that have to be coaxed and wheedled into alighting on our lands, is I suppose in a way a measure of the amount that they suck out.

Perhaps a day will come when we look back on their reign much as we look back on the era of medieval barons (who also insisted that their immense wealth and power was necessary, inevitable, just, and in some way beneficial to all).

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