We're all much taken up with the convulsions surrounding the Euro and the G20 Summit and what will happen in Greece. The complexities of this are mind boggling for most of us and the situation changes very fast. Only a week ago many of us were despairing at the way St. Paul's was handling the Occupy protest. Whatever happens over the Euro, and the consequences if it all goes wrong are extremely worrying, none the less the Occupy protesters at St. Paul's and around the world are pointing us to a significant part of the underlying cause.
We are now only too aware of the dangers of debt both personally, corporately and for governments. There has been a tendency to suggest that government debt is somehow worse than any other - and in one sense it is because, as we are seeing, if governments can no longer repay the options that are left are increasingly scary. But we have to ask where the governments' indebtedness came from and here I'm indebted to an article by the economist, Nouriel Roubini at his blog: www.economonitor.com/nouriel/2011/10/17/full-analysis-the-instability-of-inequality/
Just as with the 1920/30s crash there is a great deal of 'leverage' (debt in other words) around but also just as then inequality in the economy is very high. Roubini points out that the share of income of the top 1% in the US reached 23% in 2010, a figure not seen since 1928, having been 10% 25 years ago. The top 5% control about 75% of the financial wealth. The figures for the UK are lower but the same trend is evident.
This means that not only have some people become fabulously wealthy but that many of the rest of us have seen relatively low increases in our living standards. In part this is due to globalisation and the ability to manufacture goods in places where labour is cheaper, which has seriously affected people doing unskilled jobs. But in more recent times the 'off-shoring' of many middle income jobs means that few people feel unaffected any more.
The response to this in the Anglo-Saxon economies has been the liberalisation of credit, which has meant that the gap between income and aspiration could be made up by borrowing income from the future. Many people are now on a personal level facing a painful payback period. In Europe, Roubini argues, the gap was made up by increased social welfare spending, which if not matched by economic growth (or where the rich avoid their taxes) has created growing budget deficits. Similar deficits have accumulated in the Anglo-Saxon economies, such as the US and UK when the private debt bubbles burst and the private losses of the banks were socialised, automatic stabilisers (e.g. Job Seekers Allowance for more unemployed people) kicked in and counter-cyclical fiscal policies were employed in 2007-8 to prevent a depression (e.g. bringing forward government spending and the temporary VAT decrease).
The liberalisation of credit and of the financial system more generally has meant that money has become a commodity in itself from which more money could be made, hence the huge growth in the banking industry. However, as Will Hutton, Roger Bootle, and David Green (vice chancellor of Worcester University in a recent seminar orgainsised by the Diocese and the University Business School) have said, much financial dealing in the City is a zero-sum game - it is simply moving money around so some win and some lose. If the money to do this is borrowed (leveraged) then the winnings can be huge, but it doesn't contribute to the overall wealth of the country. What all this redistribution and concentration does, as Robert Peston said in his book 'Who Runs Britain' in 2007, is give the beneficiaries a great deal of power, which because it is not gained through the ballot box is largely unaccountable. Which brings us back to the Occupy protestors and the increasing sense more generally of unease about the inequity in our society and the way the 99%, as Occupy would put it, are losing out.
A lot of that anxiety is about not feeling in control of one's destiny. There are healthy and unhealthy ways of not being in control - it is fine, for example,to reliquish control of your life to God if you choose, but for many the present situation is not one they have chosen. Having personally been made redundant (though fortunately redeployed into another post) I feel the pain of those I visit as a chaplain who are presently going through restructuring where there will be fewer and different jobs, places where the bosses can't see beyond the next year or so, and particularly young people who can't find any kind of work and have no history of working to fall back on the give them any sense of esteem or hope.
The kind of dispair that grows from that is desparately sad, but it could be come very dangerous if it turns to anger. Perhaps sensing this, it is interesting that Bob Diamond, CEO of Barclays, who earlier this year was saying it was time for the period of remorse and apology for the banks to be over is now saying that they need to be better citizens and bolster their contribution to society. However, the point of the Occupy protests and the feeling of many other people is that a slight modification on the part of the banks is not sufficient. It is what appears to be the business as usual behaviour of banks and bankers that draws so much ire.
In the light of this, I was struck by some words of Isaiah in the daily lectionary readings for morning prayer today (4/11/2011) in the early prophecies against Judah, giving reasons for why the country is in the mess it is:
'Money lenders strip my people bare, and userers lord it over them. My people, those who guide you are leading you astray and putting you on the path to ruin' and '...against the elders and officers of his people: It is you that have ravaged the vineyard; in your houses are the spoils taken from the poor. Is it nothing to you that you crush my people and grind the faces of the poor?' (Isa 3: 12, 14-15).
Christians often focus of the crucifxion of Jesus, of course, in reflection on suffering and often then move almost seamlessly to the resurrection as the hopeful antidote. Of course, we must have this hope but we must never be trite about it. I recall writing in these terms about the Rover crisis in 2000 and then 2005 when the Longbridge factory closed. Yes, something like 90% of people did get jobs or training within six months as the authorities claimed. But many of them never regained the kind of pay they were getting at the car factory. It may be at the present time we should be mining the prophets more for our theological inspiration.
But in time most of the prophets see that Israel or Judah has served its time in exile and there is restoration. The critical question is what is learnt in the time of exile and how it is that the country is in a fit state to emerge. One should not overdraw analogies, but returning to Roubini his main prescription is a rebalancing between laissez faire markets and public goods, a rebalancing between capital and labour to increase effective demand and investment in social goods such as education to up skills and productivity.
It would be tempting to offer further prescriptions for getting out of the current crisis, though much may depend on what happens with the Euro in the coming days and weeks. We may conclude, though, that inequality is not simply unfair, it is morally wrong and it is bad economics because we all lose out not just because some get less than others but because the overall effect is that the economy as a whole is smaller.
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