Lost in the stupid market

I cannot tell a lie. I chanced upon this blog entry, originally written in August 2011 at the cusp of the UK’s “double-dip” recession, and realised that it is all still true, and all still relevant, which is quite depressing after 18 months of the world turning and money coming in and going out, so please forgive me if I republish it for anyone who missed it, or remembers it. I’m glad I wrote it. (If, at the end of it, you wish to read the 20 or so comments left under it at the time, they’re here.)

This is a picture of a market. I understand it. On this market, people sell things to other people and the people who sell the things make sure that they sell them for a bit more than they paid for them, so that they can make a profit by which to pay for the opportunity to have a stall on the market and with enough left over to pay for things that they need to buy at other markets. What could be simpler?

All the newspapers today are reporting meltdown in the market. But it is a more complicated market. It is the stock market. It is not based upon things being sold, it is based upon the idea of things being sold. It is based upon selling the idea of something. The people who sell these ideas do not meet the people that they sell them to. In fact, most of the selling of ideas is done by third parties, who buy and sell the things that do not exist on behalf of the people who actually own the things, and are paid to do so. Already, this is a more complicated market than the market in the picture.

I am not very good at economics. I understand how much money I’ve got, which is a minus figure, as I owe money to a bank who foolishly lent it to me to buy a house I cannot afford, on the understanding that I will pay the money back to them by a certain date. Unfortunately, I have to pay them back more than the sum they lent me. This is how they make money. I make money by rearranging the English language, mostly by hand, occasionally by mouth, and every month I hope that enough people pay me to do this for me to pay the bank what I owe it for lending me a sum of money. Any money I have left over after paying the bank, I am free to spend on whatever I like, although because I have a house, and a car, there are certain things I have to pay first, to insurance companies and to the council, for instance. It sounds pretty stupid when you lay it out, but I do at least understand it. Once I have bought food and household goods, I might have enough left over to go to the market and buy something nice for myself.

Because I am self-employed, I do not have a boss, and cannot be sacked, but neither do I have any security. Those who pay me today are under no obligation whatsoever to pay me tomorrow, or ever again. Because of this, I tend not to go to the market to buy nice things as often as I’d like. Why? Because there is a recession on.

The recession started in 2007 and really started to get serious in 2008, when house prices fell and people who had been lent more money than they could pay back defaulted on their mortgages, meaning that the whole house of cards came crashing down. The banks and building societies had been lending money for years to people who couldn’t pay it back based upon the idea – another idea – that house prices would just keep going up. They stopped going up and started going down. It turned out that all the countries that thought they were rich and doing well, were only rich and doing well because they expected house prices to keep going up, thereby making everybody richer without actually doing anything. If you watched Property Ladder with Sarah Beeny in the mid-2000s, one thing you knew was that the amateur developers who tried to increase the value of a property but spent too much in doing so by buying stupid taps could have made money by just doing nothing for three months. Because the market went up anyway while they were mucking about with taps.

There was a banking crisis, which I understood, because it was to do with the banks having lent money that wasn’t theirs to people who couldn’t pay it back, so they ran out of money, and the money wasn’t even theirs. It was our money that they had lent to other people. Some people tried to get their money out of the banks but many banks had to be lent money by the government, who used the money we had given them through tax to help the banks. I’m not stupid, but I couldn’t really work this one out. Since 2008-2009, the best thing I could think of doing to beat the recession was spend less of my money. So I did.

Now, we read the news and find that America, the richest country in the world, cannot afford to pay money back to the people who lend it money. Why is America rich if all its money is borrowed? It is rich because of an idea. The idea is: if everybody works really hard, especially the poor, and if we allow the rich to keep all their money, they will create more money. The stock market deals in ideas. Wealth is an idea. If you do not own the house you live in, your house is an idea. You might own some of it, in that if you ran out of money, you could sell it to pay off the money you still owe, but it’s not yours. Because Greece and Spain and Portugal and Cyprus and Ireland are all in financial trouble based upon an idea – the idea being: all the money we have is borrowed but we might carry on making more money if house prices continue to go up – there are fears that the Eurozone will collapse.

As I believe I’ve mentioned, I’m not very good at economics, but I know that the single currency for some but not all European nations was introduced so that money could be simpler. Instead of lots of currencies which have to be exchanged all the time, some but not all European countries would have the same currency, which would make trading between some but not all European countries easier, and fairer. However, this Utopian ideal seems to be in trouble. Because Greece, which doesn’t really make anything, or Ireland, which doesn’t really make anything, or Spain, which doesn’t really make anything, built the idea of their wealth upon the idea that house prices would continue to go up, and they have gone down, almost an entire continent using the same currency seems to be in more trouble than it might have been if it still had lots of different currencies.

I love Ireland. It is my favourite country. I have been there a lot, and regularly, over the past 20 years. It used to be a small, modest, rural economy, self-sufficient, surrounded by water, and with enough tourism to give it a bit of spare money to buy nice things at a market. It joined the EU, became eligible for all sorts of grants and funding, and built better roads. These were really good roads, and they joined the place up a bit. Having joined the Euro, Ireland started advertising itself as a great place for foreign businesses to move to. So lots of foreign businesses did indeed move there, as rent was low, tax was low, services were almost free, and labour was cheap. And money came in. And Ireland started building houses, which people who couldn’t afford them borrowed money to buy. And people from other countries moved to Ireland to work for the businesses, and rented houses from landlords who had bought too many houses. Then, when it stopped being a good place for foreign businesses to be based in, the employers and many of the employees moved out again, to find a cheaper place to work and be based in, and Ireland’s wealth, based on an idea, disappeared. This is how quickly ideas can disappear. Now the people of Ireland are moving out, which means less tax, and tax is not an idea, it is real. This is why U2 moved their business to Holland. This is what happens if you have actual money. You move it to where people can’t get at it. (This involves not caring about the country you are moving it from, which U2 clearly don’t.)

If the current “whichever-dip” recession tells us anything about wealth is that it is only real for the wealthy. The rest of us might feel wealthy because we have credit cards and big tellies, but we are just as poor as we were when we didn’t have them. Men in stock markets are moving money that doesn’t exist around a huge, global market, and it’s not our money, and yet the success or failure of the men who move it around affects us all. Why? Because global meltdown affects the amount of extra tax we are expected to pay on goods, and the amount of interest we have to pay the institutions who lent us money we can’t afford to pay back.

The previous government in this country ran it on the basis of an idea, and that idea turned out to be a bad idea. They spent all our money, which was not even money we had in the first place, and then borrowed against money we had not yet paid them to save the banks which had lost all of our money. Luckily, this money didn’t exist, so in a way, we had lost nothing, but we had lost nothing twice. Does that sound ridiculous? It should do. The current government didn’t actually lose our money as they weren’t in power when it was lost, but they have decided that the best way to pay it off is to put quite a lot of us out of work, so that employers won’t have to pay us. But when we are out of work, other people who are in work have to pay us not to be in work, and it’s not very much money, so we can’t afford to go to the market and buy nice things, which cost more because the government have put up tax on nice things in order to pay themselves back for losing all our money, twice.

The bad thing about our government is that is that it is run by men who are rich. They were rich before they went into politics and don’t know what it is like to be poor. (Poor being what nearly all of us are, in reality.) So they have come up with a Plan A that protects people who are rich, but hurts people who are poor. It is a shit plan.

If you are actually rich – in other words, you own the house you live in, something only the rich actually do – you can pay people to prevent you from having to pay the government what you owe them in tax. This is a luxury only the rich can afford. So the rich, the very people who should be paying tax, don’t pay it. While the poor, which is nearly everybody else, pays tax that it can’t afford, but can’t afford not to pay. This is also an idea. This idea is called capitalism.

So all these sweaty men in coloured jackets and on phones we keep seeing on the news – who are, at the end of the day, just men with jobs they could lose as quickly as you could lose yours – are the most powerful men in the world, but unlike the people who work on the market in the picture above, they don’t have anything to sell. They don’t even have a stall. If you went up to the desk and tried to pay for the idea that they trade in with cash, they wouldn’t have anywhere to put the cash, and you wouldn’t have anything to show for it.

I wish the cakes weren’t so pricy in the British Library. But the British Library, which is a public service, pays a private company to make and sell its cakes. This is not a market, as there is only one place to buy cakes inside the Library.

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Drinking outside the Bucks

If I was less busy trying to earn a living, I’d blog every time I had a passing thought that I wanted to solidify, get down and expand upon. Because I don’t have the luxury of spare time at the moment, I often take to the immediate medium of Twitter and type sentences that, at best, come out as pithy aphorisms and, at worst, cheap slogans. I wrote this about Starbucks and the corporation’s notorious UK tax-avoidance doctrine on Monday morning. I enjoyed typing it.

As you can see, its deft combination of jokey tone and serious message struck a chord with 99 people, who passed it on. (Like Oscar Wilde in a donkey jacket, I cooked it up while walking past a Starbucks that morning and wondering what the patrons inside it thought about the economy they were in.) However, once you’ve dropped a pith-bomb and you are followed by more than a manageable number people, you must expect a percentage of antagonistic responses from people you have never met and will never meet, most of them reasoned and fair, one or two of them simply patronising, insulting, or borne of what seems like misunderstanding for furious effect. I sincerely believe in the power of the consumer. It is the predominant power we have as individuals when there’s not an election taking place.

If we accept – without prejudice – the reality that big business runs the world, because it does, and that politicians largely do the bidding of big business, whether by oiling the wheels, relaxing regulation or, more fundamentally, running an economy based on “growth”, which naturally favours more business and never less, then unless we are on the board of a large global corporation, we live in a world shaped by large global corporations.

Starbucks, which began as a local store in Seattle in the early 70s, arrived in this country in 1998 and, through a successful programme of aggressive expansion, it quickly made a mark on our high streets. A Starbucks coffee was probably the first takeaway coffee I’d ever gone out of my way to buy, not really being a coffee drinker at that point, and certainly no connoisseur.  I enjoyed the drink, albeit mostly the fluffed-up milk, and the relatively new experience (“experience” being the key to the brand’s success, of course). The proliferation of Starbucks, followed by the others that bloomed in its wake, did indeed change the way a nation of tea drinkers viewed coffee. You have to hand that to them. But this soon went sour.

Before I could settle into a new routine of buying lattes on my way to Broadcasting House, for instance, I read Naomi Klein’s No Logo and my head was turned. Overnight, I despised Starbucks for the way it did business, along with what had become the new usual suspects of corporate greed, sharp practice, exploitation, non-unionisation and bullying: Nike, Gap, Coca Cola, Wal-Mart, McDonald’s, you know the drill. I have, in my adult life, given money to some if not all of these corporations. I am not a saint.

But when I feel a boycott is called for, I only have my own conscience to deal with. And the recent exposé of Starbucks’ tax affairs in the UK, the payment of which has been deftly avoided by sleight of hand involving licences, the Netherlands and declaring losses, has put the chain in a lot of people’s sights. It may be that pressure from the MPs – led by Margaret Hodge – who sat on the select committee flicked the switch, and forced the corporate hand into face-saving reparationary action, but it was surely the fear of loss of custom and attendant share price threat that sealed the case.

Give or take the odd exception since 1999, I’ve hardly given any money to Starbucks, so they won’t have noticed my total blanket boycott since the Reuters report into their UK tax-avoidance, but as I always say, if enough people make what seems like a futile gesture, it might just amount to a meaningful one. I once read an interview with Klein, in which, admirably, she admitted to occasionally grabbing a Starbucks if it was the only concession in an airport, say, and she really wanted a coffee.

I admired her candour. It’s easy to avoid Starbucks in any UK high street, as there’s usually another chain nearby, if not an independent outlet. (I understand that Whitbread, the UK hotel and restaurant firm, which owns Costa, pay their full UK corporation tax, so if you must use one of them … ) However, that’s not what I intended to blog about. I was more interested in the nature of the way Twitter extends a dialogue, and why it’s foolhardy to do as I do, which is type in cheap slogans.

Having published my call-to-arms on Twitter on Monday, I spent way too much of the following days counter-arguing my case with nitpickers and, in some cases, outright apologists for corporate tax-dodging. (There was also one rude bastard who began his reply, “FFS, wake up, man …”, which guaranteed him a blocking. As Billy Bragg says, freedom of speech comes with the freedom not to have to listen.) Most people hit back along the lines of, “Don’t boycott Starbucks; pressure government to close tax loopholes and force HMRC to hit the corporations harder.” This rather assumed that in being angry with a corporation, I was fine with HMRC’s timidity and failure to act, and with the government’s protectionism with regards tax loopholes. I’m not fine with it. (Oh, and I’m not angry with the people who work at HMRC, like the wife of one affable plaintiff on Twitter – “she’s lovely” – I’m angry with the management.)

So, that’s that argument dealt with. Others reckoned my boycott will only harm individual franchises who do pay tax, and throw ordinary, hard-working UK baristas out on the street. Nobody actively wants this. But in the same way, let’s say boycotting a bank because it invests in murderous regimes might ultimately affect those blameless individuals working in the bank who have no control over what their corporate employer does with its money. This kind of joined-up thinking is always enough to push you to the conclusion that it’s better to do nothing. Most people, after all, do nothing. (Except in Syria. And Egypt. And Palestine. And Greece. And so on.)

Other people – nigglers, really – said that if you’re going to boycott one corporation you have to follow through and boycott all corporations who avoid tax, and then they list the other offenders. Hey, the BBC have been caught out encouraging their contracted stars to set up limited companies, through which they are paid, thus reducing tax on both sides, so surely, if I’m so bloody righteous, I should boycott the BBC, too! (And my friends who are contracted BBC employees! Presumably by altering my Christmas card list?) Again, if you tie yourself up in knots, you will end up doing nothing. “They” would much rather you did nothing. We got into this recession by running up credit, and “they” seem to wish us to spend out way out of it by running up even more credit. Where will it all end?

I do not believe in criminal damage, so will not be smashing Starbucks’ windows in. I think UK Uncut’s planned series of civil disobedience sounds admirable, and witty and clever – turning coffee outlets into refuges for women, and creches, which are the worst hit by the cuts, which are linked to our failing economy, which is linked to the very rich not paying their fair share and being given a tacit blessing to Carry On Avoiding, so I’ll be interested to see how that works out tomorrow.

Having just spent a couple of days with Billy Bragg, researching a new chapter for his official biography, I am dangerously fired up with progressive left-wing ardour. His message these days is simple: it’s all about accountability. I’m cutting down on caffeine anyway.