WHEN IT PAYS TO SETTLE

Earlier this month, Bernie Ecclestone was able to terminate the prosecution for bribery against him in a German court by agreeing to pay £60 million. His lawyers insisted, of course, that this payment was not an admission of guilt.

 

£60 million is a lot of money to pay when you are innocent. It is, however, considerably less than another out-of-court settlement this month:  that by Bank of America following a charge by the US Justice Department of “misconduct in the production of mortgage-backed securities”. This was for $16.65 billion. Like the settlement of the German court case, it is intended to ‘wipe the slate clean’ and forestall any further prosecutions or claims for damages. As in the Ecclestone settlement, there was no admission of guilt.

 

We will probably never know whether Bernie Ecclestone’s payment of £60 million represented value for money for him. As he risked a jail term if the prosecution was successful, perhaps, it did. After all, he is not a young man and he might have been required to serve his sentence in one of our grubby, under-funded and over-crowded prisons rather than in a more humane German lockup. We do know, however, that Bank of America’s settlement of $16.65 billion represented a real bargain for them. According to the US Government Accountability Office, the 2008 Financial Crisis triggered by the mortgage backed securities scam cost the US economy alone $22 trillion. The cost to the world economy must be a multiple of this huge sum.

 

Crises are endemic in capitalism. While Marxists have a good understanding of this phenomenon, capitalists and their advisers tend to ignore it until it happens. Even if they are interested in anything beyond mere personal and family accumulation, the economists to whom they listen fail to see beneath the surface of the economy and mistakenly conclude that the system can be managed and boom and bust avoided. The snake oil remedy they invariably peddle is ‘more competition’ as, for example, did John Vickers in his report on UK banking. It would be more honest to admit that capitalism is a casino for the rich who must get out of the market before the bubble bursts.

 

If the Bank of America had not decided to peddle worthless mortgage-backed securities, another trigger would eventually have kicked off the recession. Thus the real remedy is for ordinary working people to own the banks and all the other major undertakings in the economy, not the other way round. Until that day dawns, however, let’s kick up a fuss about the inadequacy of the fines and penalties, such as they are, on those banks whose reckless behaviour triggered the financial crisis.

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BBC: jumping before being pushed?

The BBC has recently announced plans to scrap quotas for in-house production. John McVay, the Chief Executive of the independent producers’ trade body described it as an “historic moment” and said that the BBC had “jumped before it was pushed”. BBC insiders have commented (off the record) that it is “a short hop, skip and jump to the BBC becoming a publisher broadcaster.”

To assess the significance of this move, we need to ask ourselves what exactly the BBC is for. When founded, the first Director General, Lord Reith, considered that it was there to inform, educate and entertain. As the ‘weapons of mass destruction’ row between the government and the BBC demonstrated, frequent reviews of the Charter, the power to appoint the BBC Board and Director General and the dependence on the license fee give the government of the day tremendous influence when it comes how it ‘informs’. In a recent survey for the BBC by Ipsos MORI in February, the BBC scored an average 6.5 out of 10 in response to the question of how impartial it was. To give this scale some meaning, that great fabricator of misleading information, the Daily Mail, scored 4.1! The BBC’s pitiful ‘balanced’ reporting of the Israeli attacks on Gaza can only have further depressed the BBC’s impartiality rating. The contempt with which the BBC’s flagship political programme, Question Time, is now held by a significant proportion of its potential audience (just look at the tweets than accompany this pitiful programme) is tangible and demonstrates how our confidence in the BBC has slipped.

On education, the BBC continues to play a useful but minor role. Its nature programmes are generally good and its coverage of science is sound if uninspiring. But surveys show that even on information and education, it is now treated with less confidence than Wikipedia.

On entertainment, the role played by the BBC is essentially to set a minimum quality standard that commercial stations have to take into account. In this it has been quite successful, prompting both ITV and even Sky to raise their games in drama and comedy and not to rely exclusively in cheap imports from the USA. Whether this leadership can be retained when the BBC is no longer constrained by an in-house quota is problematical. The BBC could indeed be on its way to becoming a “publisher broadcaster” and, from there, oblivion.

What is the way forward for the BBC? Obviously, it should not be handed over to Murdoch or Sky as many on the right would like to see. Its modest independence from the government of the day needs to defended and strengthened. The license fee needs to be retained, but an element of progressivity included. While it is not realistic to think that a public broadcaster can be truly independent of the capitalist interests that control everything else in our society, we should continue to press for a fair hearing for the left and progressive causes. A good place to start would be for the BBC to respond at last to Early Day Motions in parliament calling on it to include the Morning Star in its coverage of the UK press.

Stern Stuff

In a significant but little reported letter published in the Financial Times last week (7 August), Lord Stern, Head of the Government Economic Service between 2003 and 2007, revealed that, in addition to his celebrated reports on climate change and for the Commission for Africa, he had been responsible for a report on tax reform. This report had, however, gathered dust in the Chancellor of the Exchequer’s in tray and even its existence has been kept secret. What did it contain that so scared the government?

Enquiries under the Freedom of Information Act may now enable the report to be extracted from the government. Whether the effort will be worthwhile remains to be seen. According to Lord Stern, his report called for:

a. value added tax to be applied at the standard rate to a wider range of goods, including food and energy. The poorest could (Stern’s word) be compensated;

b. higher taxes on congestion, pollution and greenhouse gas emissions – again with a suggestion that the poorest losers could be compensated;

c. more tax on the financial sector; and

d. reform of property taxes with a tentative endorsement of Land Value Tax.

Some of these proposals may be contained in the forthcoming report from the Communist Party on taxation, but it’s hard to believe that the Communist Party would endorse higher direct taxes without much firmer protection for workers and their families than Stern appears to think necessary. The surprising fact, however, is what the report does not contain. Stern makes no mention of the need for a return to progressive taxation of income and capital.

The recent book by Thomas Piketty, Capital in the 21st Century, has deservedly attracted much attention for demonstrating that inequality of income and wealth is even worse than we had suspected. His data show that we are returning to levels of inequality not seen since the early 1900s. While his analysis lacks the clarity of Marx, his conclusion echoes that of Marx in predicting that inequality will continue to grow under capitalism. We are rapidly heading for, or have already become, a plutocracy in which the bottom half of the population subsist and the top 1% are super-rich. Piketty sees a return to progressive taxation of income and wealth as essential if capitalism is to survive. Communists would support this but would conclude that capitalism won’t survive. It won’t, however, fall by itself. This will take organisation and political work.

Morning Star Marks World War 1 with Unique International Collaboration

Get your copy of today’s Morning Star, which has published an international pullout this weekend to mark the centenary of World War 1 with views and analysis which break with the establishment consensus and a socialist perspective on the bloodshed, which puts the record straight. It is a unique collaboration with three socialist newspapers: Arbejderen of Denmark, junge Welt of Germany and Zeitung vum Letzebuerger Vollek of Luxembourg. The pullout will be published in all four countries during the centenary week.

The special edition has eight pages of hard-hitting feature pieces and pictures on “the war that didn’t end all wars”, led to slaughter on an industrial scale and a legacy of imperialism and conflict which continues to this day.

As Prime Minister David Cameron eyes “The Great War” as a PR opportunity for the election of the Conservatives in 2015, and with the mainstream media slavishly following his lead, the Morning Star supplement tells it like it is, from the Left.

Acting Editor Ben Chacko said:

“I know of no newspaper in Britain which is joining hands with others in Europe, and especially Germany, to tell the truth about the carnage of the first world war, why it happened, and who profited from it.

“We were then, as in many respects we are now, a nation of lions led by donkeys. We will not let David Cameron and his media cronies hijack history and portray this centenary as a patriotic exercise for the election of a Tory Government.”

The special souvenir edition offers analysis and historical insight on a range of issues related to the war, from how it affected women and their position in society, to those voices of courage from the Left who opposed it to their personal cost.

Writers from the four publications will appear in the pullout. They include:

– Andrew Murray, deputy president of the Stop The War coalition, applying the lessons of the war to today’s conflicts;

– Selina Todd of Oxford University on the women who emerged from the munitions factories and elsewhere to build new lives and help elect the ’45 Labour Government in a land fit for heroes;

– Martin Hedlund Fink from Denmark looking at war profiteering in his own country, capitalist opportunism and the so-called “goulash barons”;

– Arnold Scholzel from Germany on how workers and their organisations across Europe reacted to the inexorable move to conflict; and,

– Wayne David, Labour MP for Caerphilly, on how his forerunner, Morgan Jones, opposed the war to his huge personal cost, with imprisonment.

Ben Chacko added:

“This is a unique and fruitful collaboration between four major newspapers of the European Left. It is not a one-off, and we intend to come together again to offer working people of our countries a socialist perspective on the issues that matter to us all.”

The souvenir edition is free in today’s 32-page weekend Morning Star (Saturday and Sunday 2/3 August), which sells for £1. It is available at all key retail outlets. Or you can subscribe at: http://www.morningstaronline.co.uk. After that you can buy copies of the souvenir edition from the Morning Star online shop or by calling 020 8510 0815.