Imagine a door-to-door salesman comes to your house one day to try and sell you a burglar alarm by telling you about the terribly high crime rate is in your area. You’re not convinced, so you tell him you don’t want one. A little while later that same salesman breaks into your house, nicks the TV and does a crap on the sofa.

Now replace “door-to-door salesman” with “David Cameron”, “your house” with “France” and “burglar alarm” with “financial transactions tax”, and you’ve pretty much summed up our government’s attitude to attempts to rein in the forces of global finance.

This was Cameron speaking a few months ago (bolded text my emphasis):

The danger, we have always believed, is driving transactions to a jurisdiction where it wouldn’t be applied. So a global tax would be a good thing, but in Britain also we have put in place stamp duty on share transactions, a bank levy.

…and this was him this week:

Boris Johnson and David Cameron today urged French bankers to quit Paris and move to London in a dramatic escalation of a row with the French president.

The Mayor joined the Prime Minister in calling for traders to escape Nicolas Sarkozy’s plans for a financial tax by setting up business in the Square Mile.

Mr Johnson said: “Bienvenue à Londres. This is the global capital of finance. It’s on your doorstep and if your own president does not want the jobs, the opportunities and the economic growth that you generate, we do.”

Hours earlier Mr Cameron condemned Mr Sarkozy’s plans for a new financial transaction levy. Speaking at an EU summit in Brussels, he stressed that the new tax could cost the EU half a million jobs.

He added: “If France goes for a financial transactions tax, then the door will be open and we will be able to welcome many French banks to the United Kingdom.”

So, in November you have Cameron telling us that of course a tax on bank transactions is a lovely fluffy idea, which we’d be only too happy to implement if only we could, but you see it just isn’t possible because all those nasty banks would move their operations abroad if we did that, and we don’t want that, do we? Then this week, he explicitly invites those very same nasty banks to move from France to the UK so they don’t have to pay the transactions tax which Sarkozy is threatening to bring in.

Cameron, in short, is explicitly trying to bring about the very thing which he previously said would make a transaction tax untenable, despite ostensibly supporting such a tax in principle. Which, perhaps not surprisingly, suggests rather strongly that his original commitment to it was somewhat less than whole-hearted. Whether this also applies to Cameron and the Conservatives’ attitude to other redistributive taxes is something about which I leave the reader to draw their own conclusions.

This is a guest post by Natty

As we all struggle to grasp what David Cameron’s veto in Brussels last Friday actually means, one theme continues to re-emerge. Indeed it’s a theme that has emerged time and time again in the history of British politics. When asking ourselves why the PM decided to ostracise the British economy from 26 other EU countries, of which we do over half our trade with, one answer stands out above all others; The City.

This was not simply some principled stand by an aristocratic leader with frankly aristocratic views of Britain’s place in the world, although Cameron’s ‘defiant’ post-match analysis did betray such a worldview. Neither was this a weak PM caving into his Europhobic MPs. Instead Friday morning’s events were an archetypal case of the financial hub of British capital, and one of the financial hubs of world capital, exercising their veto.

All 27 European leaders in Brussels knew this. Sarkozy explicitly (and by some reports expletives were used) made it clear to Cameron that several of the safeguards and protections The City had enjoyed for decades would be dropped if Britain were to retain their already awkward place in Europe. Commentators are now painting the picture of a ‘two-track’ Europe, although a multilane highway may be a far more accurate analogy.

Cameron’s use of the ‘veto’ has clear implications on the UK’s trade and diplomatic relations with what we can now more than ever demarcate as ‘Europe’. However the veto also conveys what the Coalition government believe a recovery in our economy should look like. Despite sound bites suggesting an economic recovery based on growth in manufacturing [note Obsorne’s ‘march of the makers’] it seems that productive capital will yet again play second fiddle to The City. It is here where the Government is hoping growth will arrive and the money to cut the deficit will be found. Cameron’s veto was not only a diplomatic gamble, but also an economic one.

But what do we mean by The City? Well for one thing its no longer a ‘square mile’ geographically, with many banks and all London offices of the big three rating agencies based in Canary Wharf. The financial core of The City consists of the Bank of England, Merchant Banks (the traditional trading houses and newer investment banks), Clearing Banks (you’re everyday high street banks) and the London Stock Exchange. Obviously despite their interconnectedness, to completely homogenise the interests of such a diverse range of institutions is a simplification. They can however be impressively cohesive in advancing their cases on capital controls and tax regulation to government.

Indeed The City have historically counted the Treasury as close friends in these battles, consistently supporting the role of The City as a global hub of financial transactions. Their help has historical foundations in the civil service’s sense of imperial entitlement that Cameron himself expressed on Friday. The relationship between the Bank of England and Government has been crucial too. In the mid 1960s the Bank’s chief Lord Cromer explicitly told Harold Wilson that his much-vaunted plans for industrial modernisation were to be curtailed in order to retain the position of sterling as a world currency. Wilson backed down. In 1947 Clement Atlee was forced to make a very similar decision by the Treasury. This is not to say that what many term ‘productive capital’ have starved over the last hundred years; they clearly haven’t. But as far as the direction of the British economic policy goes, with a few short exceptions, its been the financial hub who have been in the driving seat.

Clearly Cameron’s desperation to protect The City has short-term benefits for the ‘Square Mile’. But some commentators are already arguing that in the long term it may hasten its demise. The City doesn’t always follow their long-term interests and regulations from Europe may still arrive. Many merchant banks opposed the ‘Big Bang’ deregulation of the 1980s, and already some are pointing to the powerful enemies in Europe and elsewhere the British have made. Given the speed at which EU institutions work there will be the time, if not the political will for U-turns. History tells us whatever happens those in The City are up for a fight. And for the coalition government, we now know that they need The City to win big.

Well, my friends, the suspension of Greek  democracy appears to be complete. When Papanderou was forced out, to be replaced by a government of national unity. I remarked:

Greece’s multi-party democracy has in effect been supplanted by one party – The Austerity Party. The political elites have, in effect, formed a cartel. Greece’s major parties imagine that they can force through the huge austerity package without facing the wrath of the electorate – just as long as they all in on the game

But even a few days ago, I did not grasp quite how far the shelving of democracy would go. I imagined that, at the very least, the National Unity government would be made of people whose parties had actually won some votes at election time, and who were planning to stand for office again. Not so. Meet Greece’s new Prime Minister, Lucas Papademos, former Vice-President of the European central bank.

“I am not a politician” he announced yesterday. Well no, he certainly isn’t. Politicians are people who have to do a whole lot of dreary things, like making themselves known to the  public, winning their confidence and standing in elections. Papademos, by contrast, has never stood for public office. He has assumed his position purely on the strength of his career in banking, and in particular his connection – via the ECB – with Europe’s political and financial establishment.

Neither does he intend to stand for office in the future. His sole function will be to ensure that Greece impoverishes its citizens enough that it can keep the interest payments flowing to Europe’s major banks. He will preside over the most important political and economic decisions that have faced Greece since the 1970s. And will be to do so without worrying a jot about the opinions of those who will have to live with his decisions – i.e. the people of Greece.

For Papademos, this is probably a fine way to cap to his grand career. He better just hope that he doesn’t find himself on the wrong end of a revolution. After all, the only democracy that exists in Greece today is on the streets of Athens.

To contact Reuben email reuben@thethirdestate.net

There are serious tensions building up within the Conservative Party ahead of tomorrow, as MPs prepare on whether Britain should have an in/out referendum on the EU. Cameron has whipped has MPs to vote against it, and the possibility of a minor rebellion has generated numerous column inches. However most commentators have failed to grasp what these intra-conservative tensions are fundamentally about.

According to some accounts this is an insurgency by the Conservative right. Certainly there is a hardcore of traditional Tories who feel deeply alienated from Cameron and Co’s metropolitan clique. Yet despite the huffing and puffing in the Telegraph, Cameron is not the Conservative Party’s Tony Blair. The “modernisation” of the Tory Party has been very much a cosmetic job, and Cameron and Osborne have made no serious attempt to pull the party’s politics towards the centre. Equally flawed is the tendency in the Liberal press to frame this as simply a repetition of previous conservative squabbling over Europe. Back in the early 1990s the were a number of serious, ideological Europeanisers at the top of the Conservative party – think Michael Heseltine, or indeed Geoffrey Howe, whose resignation over the government’s failure to follow a sufficiently integrationist path lead to the fall of Thatcher.

This is not, in any sense, true today. The Conservative ministers holding the line against their Eurosceptic bankbenchers are themselves a heavily Eurosceptic bunch – not least David Cameron. The tensions we are seeing arise not from a clash between different ideological wings of the conservative party, but from a dissonance between the ideology of the Conservative party, and the politics Conservative government.

Throughout most of the 20th century, the Conservative party has been the primary representative of the interests of British business, and, in turn, has generally won its backing. Yet, having a political life of its own, the Tory party has never been a perfect vehicle for the interests of the business class. This is partly because, while the interests of business are liable to change over time, politics is not simply a matter of turning one tap off and another tap on. There have been periods in which fiery patriotic rhetoric – of the kind we may see from the conservative backbenches on Monday – deeply suited the interests of capital. The word “jingoism” arose at the turn of the 20th century, as the conservative government was firing up up hundreds of housands of ordinary Brits to fight and die for the gold and diamond mines of South Africa. More recently, Margaret Thatcher leant heavily upon the rhetoric of “making Britain Great” in order that the destruction of many people’s living standards could be reframed as sacrifices made for the sake of national salvation. Meanwhile, across the 19th century and into the 20th, the Tories made a point of fetishising Britain’s ancient constitutional machinery in order to stem the tied of democracy – again something that will feature in tomorrow’s debate.

Given the party’s philosophical baggage, it is not surprising that its activists, its Parliamentary party, and its leadership display an instinctive antipathy towards the European project. But here’s the rub. The party relies on the backing of big business, and, like any government in capitalist economy, relies on the acquiesence of corporations in order to get things done. And a desire to get out of Europe is utterly incompatible with the party’s crucial relationship with corporate Britain.

Despite the delusions of some on the liberal left – who see the EU as nothing more than a cuddly internationalist project – it is in no way surprising that the FT has consistently taken a ridiculously integrationist stance on Europe. Britain’s major corporations have little to gain and a great deal to lose from British withdrawal from the EU. Not only does the current situation grant them a huge open market. It also enables matters like the EU-India FTA – wherein the working class stand to take a huge hit for the benefit of the investor class – to be hived off beyond the reach of democratic institutions. Moreover it grants British business unfettered access to enormous reserves of cheap non-British labour (an uncomfortable truth for us lefty internationalists, but a truth nonetheless). In other words, British business would not countenance a decision to put Britain’s relationship with Europe in the hands of the mainly Eurosceptic public.

Cameron gets this. As the leader of business backed party, and as a Prime Minister who relies upon the co-operation of business, he knows that a referendum on the EU is not an option. Yet, it appears that these realities are less prominent in the minds of those lower down the conservative food chain. Thse people are less invested in conservative government, and for them the trade-off between politics and strategy is rather different. And so tomorrow we will se the manifestation of tensions inherent in the Tory party’s relationship with business. Yet the possibility of the British people actually being given a say over how they are governed remain as slim as ever.

To contact Reuben email reuben@thethirdestate.net

On reading George Osborne’s oh-so-convincing CiF piece setting out exactly how tough he’s going to get with tax dodgers (they’re “like benefit cheats” apparently – can you imagine the depths of their perfidy?), one sentence in particular jumped out at me:

Tax evaders also make use of tax loopholes, and the truth is that over the last decade they have multiplied.

Really? I could have sworn that all those boring snarky rightwingers who like to have a go at UKUncut repeatedly told us that tax evasion (as opposed to avoidance) was illegal, while making use of legal loopholes is kind of within the law by definition. Ah well. Lucky Osborne isn’t supposed to know about economics for his job or anything, or that would have been really embarassing.

Last night, the American House of Representatives passed legislation to raise the debt ceiling and heavily cut public spending – a historic move if you take into account the first has never been conditional on the latter. Today, the Senate unsurprisingly passed it.

This trimming of the budget was inevitable considering the normalisation of neoliberal policies. Horrendous facts and figures regarding the extent of the cuts aside, the focus is on negotiations which took place and the ideological victory won by the Republicans and their Tea Party offshoot who succeeded in their desire to see no tax increases. The Democrats were evenly split in House votes (95 for and 95 against), whereas the Republicans were heavily in favour of the bill (174 for and 66 against).

Talk of a compromise being made flatters to deceive, with even staunch Obama supporters disillusioned by this legislation. Obama’s posturing has been to attract support from the centre of his party and the independents who are worrying about the deficit and its relationship between Wall Street investment for Main Street businesses and services. However, this will not wash when imagining the destruction of public services, social security and education. If people don’t have these things, they can’t get to work, won’t be qualified to work, and won’t be able to afford the rising costs of living in urban towns and cities.

Its easy to say Obama isn’t to blame; that he’s held in thrall to corporate interests and a Republican majority in Congress. However, it is easy to say he is to blame too. It is foolish for anyone to think he has failed because no one person should ever have that much responsibility or power anyway. The criticism will always be easy if it is about him. I am not taking anything away from his agency as president here, but we must not forget the words being whispered into Reagan’s ear to “hurry up” by Don Regan , his policy man, during a speech, or Clinton and the continuation of the Washington Consensus, or Bush Jr. and both the recent invasions. These men, while being the public faces of the problem, deflect away from a festering undergrowth of corruption, corporate collusion, nepotism and class warfare perpetrated by those who wish to maintain the status quo, their own corporate welfare, and social immobility.

Commentators have suggested this outcome is a severe weakening of Obama’s already lacklustre authority and maybe even his re-election chances, but this is all too simplistic and linear. Americans love a narrative, preferably with a soundtrack, of individuals with ideals battling their nemeses and prevailing for the ambiguously greater good.

It is popcorn politics the American mainstream media try and peddle, and it is the American public who start feeling powerless and apathetic because of it.

While austerity will be pushed onto us here and we will fight it tooth and nail, it is the Americans I wish to see rally and fight this new bill once it is enforced. If a large scale movement can be built with the support and enthusiasm the “Save Our Schools” campaign has recently generated there, there will be huge protests in all the major cities in the U.S, which will in turn reverberate around the developed world.

It has been said capitalism would destroy itself for a profit. We may be witnessing the beginnings of America’s implosion. After all, as we’ve seen with Spain’s “Indignados”, a movement which has been virtually ignored as of late despite daily protests and demonstrations held by thousands, “No es la crisis, es el sistema” (its not the crisis, its the system) must come to mind.

I think, or rather hope, more Americans act on the realisation that it is not Obama who they are now feeling increasingly alienated from, but the sacred system which both major parties defend and maintain with very little deviation.

Two prospective building sites in London are, I think, totemic of our current economic climate. The Heygate Estate and the Broadgate Estate, though very different, show two sides of the same coin.

The Heygate Estate in Elephant and Castle, South East London, was completed just over 30 years ago. Now, however, it has been completely boarded up, the doors and windows locked with metal from the inside out. Of 1800 units which used to house over 3000 people, there are now only 8 residents left. The rest have been dispersed throughout London, having been offered generally unfair compensation, and shunted to Zone 4, away from their communities, family and friends.

The Heygate Estate

The reason for the prospective demolition is that as the city expands, Elephant and Castle has been deemed a prime area for business development and regeneration. It’s an old story, and one to which we have perhaps become far too familiar. The Elephant Amenity Network, the local community group, has been fighting the ‘regeneration’ plans with counter planning, campaigning to save the trees and green spaces in the area, and trying to put pressure on both the council and the architects.

Part of the way Southwark has got away with this is by abandoning the Heygate residents for longer than it seems. About 10-15 years ago, maintenance work on the site slowed to a halt, as the council let the buildings run into so much disrepair that the estate became a favourite for film crews wanting to capture ‘gritty urban life’ in the metropolis. But this was a purposeful dilapidation, which allowed the council to label a large working class community as criminal and innately impoverished.

Southwark Council then adopted a masterplan for transforming the area in 2004. Since then the main task has been finding investors and emptying the buildings. However, it has now been revealed that it could be another 5 years before any work is done on the site. Due to the recession and the slow pace of planning permissions these 1800 homes near to central London are simply going to remain standing and empty.

There are of course possibilities for temporary use. Guardian resident agencies like Camelot might be brought in, essentially outsourcing security work to an increasingly precarious workforce in London, desperate for cheap rents and shorter commutes. Alternatively, there’s the artsy option of Meanwhile, a fairly new organisation which sets up artists with temporary work and exhibition spaces.

But these schemes have two big downsides. While they do provide some temporary spaces for those who want them, they are also used to ‘protect’ buildings against squatters, a residential group who are being increasingly targeted by the Conservatives and the right wing press. Secondly, neither scheme deals with the general problem of housing in the capital. The simple fact is that the Heygate estate should not be used to meet a temporary space problem. The energy, time and materials invested into it in the 1970s was to meet a need then for residential space in the city, and that space is still needed.

Meanwhile, on the other side of the city centre, bankers and right-wing commentators are up in arms about the potential listing of the Broadgate Estate as a heritage site. The Broadgate Estate has no housing; it doesn’t meet any immediate need of the majority of the city’s residents, but instead is a complex of banks, businesses and office space with a central ice rink and shopping area. Why would it possibly be listed as a heritage site? Well, its innovative design, heralded at the time as an architectural jewel in the city’s complex of squares and high-rises, was only finished in 1985. Now, however, the owner British Land has a better idea for the site: headquarters for the banking giant, UBS.

the Broadgate 'Estate'

UBS apparently wants to move its headquarters from Switzerland to London because the Swiss tax regulations are getting just a bit too strict. Let’s play that again: the tax regulations in London are actually seen as lenient in comparison to those of Switzerland, the economy of which is almost entirely based on creating a political environment suitable to banking. Faced with being refused the space for its new shiny home, the kleptocrats of the Corporation of London are now crying ‘red tape! red tape!’ to anyone who will hear them, hoping to gain some points from sympathetic reactionaries and free marketeers.

What strikes me as so monumentally absurd about both the Heygate and Broadgate proposed demolitions is the extraordinary waste involved. While the Broadgate boasts of its advanced recycling schemes, and Southwark Council is piloting a food-waste program, the demolition of the buildings would signify that all the energy and resources expended on their initial construction comes to naught.

And of course, the two schemes are connected by the still-going-strong debt economy in the UK. The reasons for developing Elephant and Castle is simply to raise property prices, and with his leverage yet more credit for further expansion in the financial sector. The reflation of the debt economy is underway.

This construction project has nothing to do with meeting a need: the new ‘knuckle duster’ building right next to the Heygate, Strata, boasts of its sustainability. But its combined heat and power system, and its fancy iconic wind turbines, are mere decoration when compared with the massive loss of energy and sustainability that happens in a building that’s not even half full. The Gherkin remained similarly empty for years (I don’t know how it is now), and I have little hope for the Shard, the building which has already eclipsed the Strata Tower for the odd title of ‘tallest building in Southwark’.

the Strata Tower (aka the knuckle duster)

The turbines of the Strata Tower, which cause too much noise and vibration to actually be used in the building, hover over the Heygate Estate as a homage to green capitalism, and an icon of current attempts at debt reflation. But how long would a business development in Southwark last, if even the the 1980s business campus at Broadgate is deemed outdated and expendable to the irrational ravings of the city’s high capitalists?

So there we have it, an ecology of debt. Attacks on unions and a debt-economy built on cheap oil have caused mass unemployment, and a sizeable migration of workers towards London in search of jobs. I imagine that many of the fought over jobs will be low paid, ununionised construction work, commuting in from distant suburbs and demolishing and rebuilding sky scrapers for big business while thousands of homes next door remain empty.

This is a guest post by Samuel Wilson.

As you may have heard, the government is planning to bring a ‘Military Covenant’ into law. This would give soldiers and their families particular rights and privileges – including (quoting from the Guardian, 16th May) ‘priority NHS treatment for forces personnel and their families; council tax rebates for all personnel serving abroad; guaranteed places at schools of choice for forces children; a promise to pay forces’ widows a pension for life; giving service families priority in allocating council houses’. The argument put forward by proponents of this idea is that it recognises brave soldiers ready to make the ‘ultimate sacrifice’.

Now, all the main political parties seem happy with the alleged principles behind this new law. But, consider the economic situation in which this law is being brought in. When the government is slashing funding to all sectors of public services they are pushing for greater access for the armed forces. My problem with this isn’t that “we just don’t have the money to spend on these brave soldiers in this difficult economic time”. Instead my scepticism arises from two economic policies coming together: 1.) a decrease in access to public services for the public at large, and 2.) an increase in access to these services for those in the military.

It seems quite simple really: if you take away provisions from the hardest hit in society – take away access to health care, education, housing, and employment opportunities – whilst making these more accessible to those who sign up to fight, then, given the harshness of the economic climate for the least well off, more will be forced to (‘choose’ to) sign up. Of course, this conscription of the poor – in order to have access to chances that the better well-off have through their relatively greater spending power – is couched in the language of patriotism; no-one dare suggest that the government’s motives are anything more than honourable, and that class or economics may play at least some role.

I don’t want to suggest that this covenant is being put into place for purely clandestine reasons. However, the fact remains that it will have social impacts beyond merely “helping heros”. For this reason, it is something which should not be debated simply in terms of nationalism or how members of the military are ‘valued’ (what soldiers do for the state and what the state does for them in return) – something must also be said of the economic context under which this change in the law unfolds.

Your starter for 10: Which voice of Britain’s embattled public sector workers said this yesterday?

We acknowledge that some cuts are necessary due to the parlous state of the country’s finances, but we feel greatly let down that we are not considered to be a protected priority area by the government.

They have and will continue to spew out that much-abused mantra that we have to be more effective and efficient, but don’t be fooled by this insincere, nihilist, smoke and mirrors, slash and burn policy, for it is in large parts economics and in greater part ideology.

The answer? Police Federation official John Giblin. His remarks – made at the organisation’s conference – were greeted with enthusiastic applause. He went on to add that ‘this government, to put it bluntly, hate the Police Service’.

This has got to be as clear evidence as anyone could need of the existence of strong opposition to the government’s spending plans within the police. I realise that in the wake of the events at Fortnum & Mason on March 26^th and the deeply worrying arrests of republican protesters on the day of the royal wedding, it’s probably even harder now to make the case that the anti-cuts movement should try and engage with police officers who oppose the government’s spending plans than it was when I argued for it back in March, but the reasons why we should do so remain as strong as ever. The police are getting screwed by spending cuts as much as anyone, and – given that the Tories have traditionally been trusted by a majority of voters as the party of law and order – getting large numbers of them onside makes it that bit harder to dismiss the anti-cuts movement as some kind of mere radical fringe.

“There is nothing necessarily dignified about manual labour at all, and most of it is absolutely degrading…To sweep a slushy crossing for eight hours on a day when the east wind is blowing is a disgusting occupation. To sweep it with mental, moral, or physical dignity seems to me to be impossible. To sweep it with joy would be appalling. Man is made for something better than disturbing dirt.” – Oscar Wilde, The Soul of Man under Socialism (1891)

This story should have got much more attention than it did:

Researchers at Australian National University have found that positions with low security, high demands, and imbalanced effort-reward ratios cause more mental distress than unemployment. Over seven years, the researchers followed 7,000 respondents in an Australian labor survey. People who moved from no employment to jobs of “high psychosocial quality” showed gains in mental health. But those who went from jobless to employed in thankless, unstable positions were found to be more depressed and anxious than those who never got hired at all.

The authors of the study conclude (a bit mildly) that their ”results suggest that employment strategies seeking to promote positive outcomes for unemployed individuals need to also take account of job design and workplace policy.”

Anyone who has studied some economic theory knows the long list of costs associated with unemployment (including the often dramatic psychological costs). Hence the general view that work is better than worklessness. But when was the last time somebody brought up the issue of the psychological costs of work in a discussion on benefits and unemployment? (Clearly the sorts of people on the dole for a great length of time are not very likely to ever have jobs of a “high psychosocial quality”.)

For the necessary dirty work to be carried out, our economic system requires a permanent underclass of underpaid, overworked and under-appreciated human beings, for whom the mind-bending boredom and squalor of long term unemployment would actually be an improvement in their lives. (This is often the kind of work, remember, that stops the sewers overflowing and keeps our rubbish from piling up and rotting in the sun.)

Findings like these should provide an opportunity to openly and frankly discuss capitalism’s sheer fucking barbarity. Maybe we could decide that our current division of labour needs to be replaced with something more humane; we could defend the rights of individuals to abstain from jobs that will do incredible damage to their long-term health (maybe we could even decide that such people should not be denounced as ‘scroungers’ for doing so).

I’m not holding my breath.