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Friday, 27 July 2012

Investment into Britain: Profit out of Britain

David Cameron, temporarily the British Prime Minister in a coalition government, took advantage of the Olympic Games to convene a large gathering of fellow-politicians and international business leaders to which he made a well-known sales pitch: 'invest in Britain, stimulate growth in this country, help the world economy to recover, and take the profit'. The last and most important phrase is usually excluded from reporting of the speeches within the UK; but it is the one crucial part of the proposition from the perspective of the potential investors.

A masive proportion of the British economy is already under alien ownership; much of it by outright ownership and most of the rest by shareholder participation which [although split between various overseas owners] often exceeds 50% of the total shares. This means that the Political Economy of British capitalism has failed, and is failing further. For centuries before the emergence of  modern academic Economics it was absolutely understood that investment was crucial for economic growth; and that the primary source of investment resources was from 'the profits of stock': the earnings produced by the efficient use of the resources that were available for investment in previous years; after the costs of running the state and the wages of labour had been paid.

The de-industrialisation that began during the period of very high inflation in the nineteen-seventies, and was massively expanded in range and pace during the nineteen-eighties, compelled many formerly-productive employees to retire, and thus become eligible for state benefits  until they reached the age at which the state old-age pension [with all the attendant benefits] was receivable. Other people of working age who became unemployed could not get new jobs in their area, and many of them became physically and/or mentally ill as a direct consequence of unemployment [often shading into unemployability] and thereby recipients of benefits. Hundreds of thousands of people came out from schools and colleges onto the employment market which offered nothing to people of of narrow and limited education in whom was instilled the absolute lack of any work ethic. Politicians readily recognised the effect of this socio-economic situation on children. 'Hereditary pauperism' had been well-recognised from the middle ages until the end of the nineteenth century and massive endeavours were made by charitable institutions to assist children to gain the attributes that would enable them to gain useful and remunerative employment.

The 1945 government introduced 'child allowances', cash sums payable to parents of a second and of subsequent children. The Thatcher government and its successors developed a system of family income supplements which new Labour converted into 'tax credits'. By 2008 and the exposure of the fake economy through the credit crunch, Britain had become one of the greatest  and most disastrous socialistic experiments in human history. There was no correlation between work done and income received, for a huge proportion of the population. The highest-paid employees received massive multiples of average earnings, often withour justification; many thousands of low-paid employees worked extremely hard for minimum wages which were below any realistic 'subsistence level', especially in London, and thousands of cases were recognised in which recipients of benefits 'played the system' to huge pecuniary advantage [not counting conspicuous cases of benefits fraud of which those which were exposed were recognised as the 'tip of the iceberg'. The allocation of government funds to the benefits system drained the national treasury, forcing the government to cut spending in other areas and to borrow in order to fund essential services such as health and education. The present policy of spending cuts, ostensibly designed to reduce the government's rate of increasing its borrowing, is recognised to have a negative impact on economic growth. But the government can see no alternative to its present course, even though the weakening economy increases demands on the benefits system and exaggerates the original problem.

The Labour opposition was the government which for thirteen years pushed the socialistic experiment forward, expanding the deficit  at an increasing rate. Their present abstract proposals that the government should relax their limited efforts at austerity would soon be forgotten if the government 'got real'  and Labour politicians hurled insults at 'Tory' measures directly and radically to challenge the unsustainable benefits drain of the nation's income and wealth.

All three major parties got Britain into this mess: they show no sign of recognising its real nature or its gravity, so there can be no hope of them resolving it within the current system.

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