Sunday, November 18, 2007

An Important Principle: No Subsidy without Equity

One of the great myths about the turbo-globalist neoliberal model is that it is "free market". The reality is that the system requires enormous state support to survive: in Britain for instance, having a privatised railway system costs the taxpayer four times more in subsidy than it did when the railways were publicly owned. And our privatised bus services are no different, next time you're in the Scottish Highlands, take a peak (from the road, because they won't let you go any nearer) at either of the two huge castles, Ann Gloag, the co-founder of Stagecoach now owns, thanks in no small part to the enormous public subsidies her company has received. (And in 2003 she was still after more taxpayers money!) A more accurate way of describing the turbo-globalist neoliberal model is to call it theft on a massive and audacious scale. And the theft is from you and me, dear reader, as it's our money that is being spent in keeping afloat the privateers, bankers and the other financial insitutions who because of the state safety cushion, are really on a no-lose bet. Just think back to the summer, when central banks in the US, UK and Europe used taxpayers money to bail out financiers who, in order to make even higher profits, had lent with incredible recklessness. Now, at last, some respected commentators are saying enough is enough, and calling for the state to take banks which it bails out- like Northern Rock- into public ownership.

But this issue is not just about Northern Rock. In the interests of fairness, it's time to campaign for the adoption, by the government, of a very simple principle: not a penny of taxpayers money should be handed over to a privately owned company without the public gaining equity in that company.

9 comments:

Steve said...

Agreed.

Anonymous said...

Does the same apply in cases where a private individual hands over money to a private company: I should gain equity in a company every time I hand a penny of my money over to it? If not, why not?

The Exile said...

OK, count me in on this one. I have just blogged about it.

Do you see this as a blog campaign? If so, how will it run?

I hope it does become one because it could be a winner.

Neil Clark said...

anonymous: are you talking about when people buy goods or services in a private company? If so, its a silly analogy. I'm not talking about the situation where the state subsidises a private company with taxpayers money.
The Exile: I hadn't thought of it as a blog campaign, but now that you've mentioned it, I think it would be a great idea. It's our money that they're spending- and it's our money that is being used to bail out fat cats and we're getting nothing back in return. Anger against the way that ordinary hard-working people are subsidising City fat cats and reckless bankers is growing by the day, so I think we could be on a winner.

Dan said...

In the case of Northern Rock, this is a hopeless idea - its shares are likely to become worthless and, when a company's in trouble, you're much better off as a lender than a shareholder.

Neil Clark said...

oh I see, Dan, the governemnt should pump taxpayers money in to keep the bank afloat and then have private equity companies- the most likely buyers- reap the benefit. That's a much better idea...
The principle stands: the government should not put a penny of taxpayers money into a privately owned company without taxpayers gaining equity in that company. What we have today is not a 'free market', but a corrupt and fundamentally unfair system whereby hard-working taxpayers are subsidising some of the wealthiest people in our society.

Sam said...

To be fair to Dan, his point was that your scheme would see the government worse off financially than if they lent money. Whatever "principle" you want to uphold, that's quite a good argument, and it needs answering if you want to persuade people that your idea is sensible. What's your argument that it would be better for the government to own a worthless company than to be owed money by a viable one?

Merkin said...

Great article, Neil.
The fat cats will get their collective noses into the trough that is Northern Rock - with the rest of us picking up the bill.
As usual.

a very public sociologist said...

Good comment. Has anyone yet in mainstream politics pointed this fallacy out?