PROTECTING CORBYN’S LEFT FLANK

We should take some comfort from the increasingly hysterical attacks on Jeremy Corbyn in the pages of our corrupt and corrupting national press. Recent examples:

  • Sunday Mail – twenty pages dismantling his entire life in an attempt to show he’s ‘unfit for office’.
  • Express – attacks over his entirely proper call for Bloody Sunday soldiers to face prosecution.
  • City AM – claims that his inner team includes communists (he should be so fortunate!).
  • Sunday Times – smears about his “anti‑semite army” supposedly revealed in
  • “Labour’s hate files” .

A Corbyn led government is their big fear. It’s much more frightening to them than falling out of the EU in a disorderly fashion. May’s bungling and dysfunctional management, her hubris in triggering Article 50 without securing support in parliament, her dependence on the Ulster Unionists – a party that has wrecked power sharing in Northern Ireland and is implicated in a scam to heat empty warehouses – are ignored. When they are addressed, blame Corbyn!

The experiences of the Allende government in Chile and Maduro’s current problems in Venezuela provide stark warnings about the difficulty of challenging the power of capital when the press remains in the hands of the owners of that capital. What Corbyn has endured at the hands of the press in recent months is nothing compared with the vitriol and lies that will be pumped out when he forms a government. What can be done about this?

First of all, of course, Labour has to win a general election and Corbyn has to ensure that his own Parliamentary Labour Party don’t try again to unseat him. That’s a job for the democratic socialists in the Labour Party, especially the many enthusiastic young people who have flocked to Momentum; but if a Left Labour government, once elected, is to survive, it will require support on its left flank to counter-balance the threat from the capitalist right. This is why we need a strong Communist Party. It can propose necessary policies and strategies that can tilt the balance of public opinion – policies and strategies that, while sensible, are simply too provocative for Labour to propose themselves but which are necessary to counterbalance those from the right.

One such strategy might be to dispossess the current owners of newspapers and transfer their shares into the collective ownership of their readers – just as the Communist Party did in 1945 with the Daily Worker (now the Morning Star). This is no panacea. We will still need regulation of the press, with, for example, a statutory right of reply, prominently displayed when individuals and their collectives are mis-reported or traduced. The regulation of other media – TV, radio and internet-based media, will present different problems, but none are insurmountable, especially if the BBC is swept clean of its current pro-capitalist and anti-working class bias.

Neither, of course, will a Corbyn government be a panacea; but, as the alarm shown by the rich and powerful at the prospect demonstrates, it could be a step in the right direction.

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ANOTHER BOURNE CONSPIRACY?

City AM is a free newspaper, available outside many railway stations in the Greater London area, targeted at City workers. It’s always worth a quick read to see what is currently agitating finance capital. On Tuesday, 3 April, the lead article was written by Ryan Bourne who occupies the Chair in Public Understanding of Economics at the Cato Institute.

The Cato Institute is an immensely rich, right wing think tank based in Washington DC. It has been deeply compromised by its involvement in the denial of global warming. Professor Bourne wisely chose to refrain from improving our understanding of that particular problem; instead, he sought to improve our understanding of growing inequality. This, according to the Professor, is a myth: inequality is at its lowest level since 1987 and is currently declining. Really?

To support his case, Professor Bourne refers to an IFS study which he fails to cite. My guess is that he is referring to Fifty Years of Income Inequality . This concludes that inequality peaked in the mid-1980s (i.e. High Thatcherdom) and has not recovered significantly since. The study recognises that interpreting how income inequality has changed in the last 20 years depends on which years you include and exactly what measure of income you use. It appears to assess the situation as flat.

It’s undeniable that the IFS study does not provide much evidence of recent growth in inequality as measured by such statistics as the Gini Income Coefficient. Why is this when most of us can observe it with our own eyes? All it takes is a walk along Croydon High Street any afternoon. The reason is that such coefficients do not relect that

  • the social wage has been shredded by the austerity cuts since 2007 to health, education, social services and child support and the people at the bottom are being asked to bear too high a burden. We have replaced social security with food banks.
  • social mobility has been undermined by cuts to education and student support and attacks on trade unions. Become poor, stay poor.
  • the elite are sufficiently small in number and sufficiently adept for their income and wealth not to show up in Gini Coefficients

Interestingly, Professor Bourne concludes his article by saying that history shows that inequality only ever improves under communism, violent revolution, war or bubonic plague.

As bubonic plague, war and even violent revolution are best avoided (we much prefer peaceful revolution), it appears, against all the odds, that the Professor must agree with us on the need for communism! Either that or he’s actually dismayed at the prospect of the declining inequality he claims to detect. He cannot have it both ways. That’s impossible, even for a professor of public understanding of economics.

Looking to the future

The Labour Chair of the Parliamentary Environmental Audit Committee, Mary Creagh MP, has written to the top 25 pension funds to enquire about what they are doing to “safeguard people’s pensions from the financial risk of climate change”. Ms Creagh was reported in City AM on 5 March as saying that “a young person today may be 45 years away from retirement. Over that time scale climate change risks will inevitably grow”.

The lack of understanding implied by this statement is breath-taking. Setting aside the problem that personal pensions[i] , the kind subject to auto- enrolment that pension funds provide – represent poor value for money because of the level of management fees and other expenses and place all the risk on the employee, the issue here is a failure to understand the kind of risk that climate change brings.

Modern Portfolio Theory (MPT) holds that there are two kinds of risk: systemic and unsystemic. As we all live on the one planet, the risk associated with climate change is systemic. It is born by everyone and is independent of any investment decision the individual may make. With systemic risk there are no hedges available, no clever portfolio strategies by which it can be reduced. Ms Creagh might just as well have written to the Met Office to ask about what steps they were taking to stop climate change.

The primary interest of pension funds is to flog their product. They need to attract and retain customers – and the government’s requirement for auto-enrolment ensures a steady stream of these. They market their product by stressing their skill at achieving a good investment return and, to a lesser extent, the level of their fees. MPT holds that the future return on investments is largely independent of investment skill and, perhaps somewhat optimistically, the return will follow the long run average – no more than around 5% per annum real rate of return[ii]. Funds that imply a higher return are either in the snake oil business or taking on more risk that the punter realises. Rock bottom management fees of 0.5% per annum still represent 10% of this anticipated future return. Many management fees and other hidden costs are significantly higher than 0.5% per annum.

The horizons of pension funds are also determined by MPT. At the heart of MPT is the concept of discounting the future. This too is done at the 5% per annum real rate of return. Thus a certain loss in 45 years of £1 is treated as equivalent a certain loss of only some 10 pence today. Even if the pension funds had any way of influencing global warming in 45 years time, this interest would only represent one tenth of their concern about a similar risk today.

We need a solution to global warming, but it isn’t going to come from pension funds – or, regrettably it seems, from Ms Creagh. The only way out of the crisis we face is through genuine democratic control – the kind that promotes the interests of all workers, living and unborn. It’s called Communism.

[i] The alternative is a defined benefit scheme provided by an employer, but they are fast disappearing and, in the case of university and college lecturers, under current attack.

[ii] The only exception is when insider information is exploited. This is only possible for crooks and the super-rich.