Monday, February 18, 2019

Notes on "The Corruption of Capitalism" by Guy Standing,

The Corruption of Capitalism by Guy Standing, Biteback Books, 2017

First a definition – that of "rentier capitalism." According to Standing - income from "control of assets that are scarce or artificially made scarce" such as rental income from land, resources, finance, debt interest, patents, govt. subsidies and capital gains. p. 3

How neoliberalism has effected us - Labour's share of wealth (of USA GDP) 1970 was 53% by 2012 this had decreased to 43.5%. Real wages (USA) 1947-1975 grew 75%, from 1975-2007 fell 4.4%. Profits, however rose from 7.6% global GDP to 10% in 2013. pps. 20,21.

Worker income decline rooted in de-industrialization. In 1950 in the USA manufacturing was 28% of GDP, by 2008 this had shrunk to 11% Even by 1985 FIRE (Finance, Insurance, real estate) was larger than manufacturing in the USA. Today it is 40% of national profits p. 24 In the crisis period 2008-2014 the USA lost 6 million manufacturing jobs. p. 14. Manufacturing is only 9% of the British GDP today (compared with 21% in Germany) and two thirds of manufacturing companies in the UK employing 500 plus employees are owned by foreign companies. p. 38

China is now moving toward rentier capitalism. Half the Chinese economy is now services and the country has foreign currency reserves worth $ 4 trillion. p. 14. By 2015 China had invested $20 billion in Europe, 70% of this from state enterprises. Helped by the EU austerity China bought ports and other infrastructure in Poland, Greece, Italy, and Portugal. State enterprises bought Motorola, Pirelli, Volvo and Club Med as well as buying into North Sea oil and British nuclear industry. As well, $150 billion in illegal money left China though Macao in 2015. pps. 15, 16.

I will now explore some of the various means by which rentier capitalism feeds on the public.

Patents – According to the Carnegie Institute only 10% of patents "had any real economic value" and the rest is to create monopolies or prevent competition. P 54 Companies find ways of extending patent monopolies by "evergreening" – making insignificant changes to a product or process. They also lobby govts to extend "market exclusivity." Big Pharma spends more on advertising and marketing than R and D – so much the argument that these monopolies are needed for development of new products. Pps 57-58

Subsidies - 6% of GDP of most developed countries eaten up by these. 90% of exports from poor countries must compete with subsidized products from rich nations. Pps 85, 87 EU CAP subsidies account for 3.6 billion pounds in the UK and 90% of these go to richest 10% of "farmers" including the Queen and Duke of Westminster. p. 104. Direct US federal govt subsidies to corporations = $100 billion. p. 105 Worst subsidy of all is fossil fuel costing $550 billion worldwide or 4X the subsidy for renewables, according to International Energy Association. p. 107 Welfare subsidy to corporations for low wage workers (food stamps, tax credits) costs $153 billion p.a.

Tax breaks - Income from dividends and capital gains taxed much lower than income in UK and USA. Removing this subsidy would add $53 billion to US govt coffers p.a. p. 88 Low inheritance taxes – cutting in at $5 million in USA – none in Australia. Corporate tax cuts - corporate tax in UK 1980 53% , 2015 – 20% p. 89 Tax breaks altogether account for 7% GDP, USA, 6% UK, 8% Italy and Australia. p. 93 Tax breaks from state and local govts in USA cost 7% of income or about $80 billion p.96

Off-shore tax havens – some two million companies – many "shell" companies – use them. Up to $20 trillion hidden there. p. 100 US only taxes profits from overseas if repatriated. Thus US corporations keep profits overseas in low tax regions, which equals $2 trillion. Pps. 101, 102 Profit shifting generally worth $600 says IMF, p. 103

Bailouts and cheap money – Cost $4.6 trillion to bail out 1000 banks and insurance companies in USA. Artificially low interest money a $70 billion subsidy in USA and $300 billion in EU p. 121 Much of this money went to property speculation. London became centre for laundering billions through property buying. 30% of houses bought in Central London by foreigners – driving prices up 50% pps 122, 126, 127. Most bank lending is for property, and that for existing dwellings, not new ones. 1928 borrowing for housing 30% by 2007, 60% p. 140

Result? A global debt of $199 trillion or 3X global income. 33% of this debt is in or held by China. p. 138


Post a Comment

Subscribe to Post Comments [Atom]

<< Home

Blogging Change
BCBloggers Code: Progressive Bloggers Site Meter