Ask Tenants blog
This blog is hosted by Asktenants.co.uk. Asktenants.co.uk is free to use website where tenants (including social and council housing) can upload their landlord and rental property review online. Housing crises are a part of a bigger problem called “radical capitalism”. This blog discusses the emergence of modern capitalism, how it ended up being radicalized and how can we fix it. We break this blog into two sections. Section 1 talks about the emergence & radicalization of capitalism while section 2 focusses on what can we do fix it.
SECTION 1: HOW CAPITALISM WENT FROM BEING POST WAR RISING STAR TO BEACON OF INEQUALITY?
The new world order was established after the world wars, atomic weapons acted as a strong deterrent for future wars. Capitalism drove a huge economic boom and consumerism rose to new levels; the cost of production reduced significantly and the middle class started growing. Emerging middle classes, credit cards, low-interest rates acted as fuel to fire driving up consumerism.
Average humans had always owned basics and a little bit more, but with consumerism, we started making sub-optimal purchases, which would have been considered ‘vanity’ by our ancestors. Economists realized that while most of the purchases we made were not necessary the labor involved in producing those goods & services boosted economies. Inspired by the wealth of western economies, capitalism driven consumerism became the choice of most countries in the world.
With no more wars at a scale of world wars and the advancement of medicines, population and consumerism both started to grow at an unprecedented rate. The population of the world increased to 7.7 Billion today vs 2.3 Billion at the end of WW II. This growth is higher than ever seen in the history of the planet. Not only is the population growing, but we are also consuming many times more per capita than our ancestors. The average human now has a carbon footprint of 4,900 kilograms per year (the US has high as 16,000 kilograms per capita).
Capitalism in the first fifty years after World War II looked like the way to go. While it brought inequality, inequality to an extent was necessary to incentivize innovation. Capitalist came out as big winners of this era as wealth led to more wealth, success will lead to even more success. Capitalists were quick to take control of media, which meant they controlled the flow of information to the people, and indirectly of politicians in democracies. The political class became dependent on capitalist for funding election campaigns and media coverage, which meant politicians, did not enforce laws to enable the distribution of wealth. Politicians not thinking beyond 4–5 years (election cycles) and hopelessly dependent on capitalist for funding added more fuel to burning inequality.
More wealth and political influence led to automation investments, free trade and globalization, which led to a reduction of stable permanent and secure labor jobs in the western world. Jobs became either low pay unskilled/semiskilled or high paying/technical. Most low paying production and services jobs moved to poorer countries taking out millions of people out of poverty. While millions in the poorest countries were taken out of abject poverty, the biggest winners of globalization were the capitalist as their wealth and profits soared at the back of low-cost production.
The world today produces $78.28 trillion (GWP, Gross world product) which equates $17,300 per living human per annum after neutralizing for Purchasing power parity i.e. scaling the entire world to US economy for simplicity. If this wealth was distributed equally (perfect socialism), a household of four will earn $69,200 per year. Even if the top 20% took away 60% of income, the remaining 80% will still earn around $30,000 per year. This income supports capitalism (top 20% take 60%) but still leaves enough for the bottom 80% to live a good life.
However, extreme capitalism supported by politicians meant this income was distributed extremely unequally. Such is the scale of inequality that every 10 second there is a child dying of hunger in the world. Around the world, 821 million people do not have enough of the food they need to live an active, healthy life. One in every nine people goes to bed hungry each night. There is enough food for everyone, but not everyone has enough food. In wealthier countries, housing crises are worsening by the year. In the UK, one in every 201 people is homeless at a time when golf courses used primarily by rich for leisure arguably occupy more land than housing.
This inequality is not limited to poor countries. Below facts about the USA, the world’s richest country and pioneer of modern capitalism will blow your mind away:
1. The top 0.1% of households now hold about the same amount of wealth as the bottom 90%.
2. Top 25 hedge fund managers make more money than the combined salaries of every kinder garden teacher (about 140,000 of them).
3. Top 1% take home 24% of US GDP now vs 9% in 1978.
4. 45 million (1 in 7) Americans forego medication due to cost. This may include children.
5. 80 percent of the population live paycheck to paycheck. Falling sick for a month or two will push the household into homelessness.
6. At the same time, the sum of the total value of Microsoft, Amazon, Apple, Google, and Facebook is around 4 Trillion dollars. This is about 1.5 times of GDP of India (1.5 times the total income of 1.37 Billion people of India).
7. Apple has $245 Billion cash in hand. United Nations estimates it takes $30 Billion a year investment for 8–10 year’s to eradicate world hunger for 862 million undernourished people and boost the world economy. This cash can completely eradicate world hunger.
The greed of self-indulgent bankers leading to the 2008 financial crises is well documented. The crises was not a surprise to many economists given the private and public debt driven the western economy, which has continued unabated even after the crises.
Very large multinational corporations pay almost no taxes through sheer political influence. They get years of tax breaks and rebates for setting up operations as states and regions compete to host these companies in their local area. Not only do these companies not pay taxes they invest heavily in automation taking down many local businesses and feeling of community. The community businesses while less innovative and automated employed lot more people locally and paid taxes, as they could not afford the army of accountants, lawyers, and lobbyists involved in bending the laws in their favor. Lower taxes means less money for public health, schools, and basic amenities.
Lack of good stable jobs and squeezed resources led to nationalist movements emerging in the west in the shape of Brexit and Trump as the local population became disenchanted with the status quo.
Nationalist movements convinced the voters that immigrants were to blame for their misery, not the capitalist or politicians who did not do anything to drive wealth distribution. Nationalists convinced the local population that causes of their misery were people below them (immigrants) dragging them down not people above them (capitalist and politicians) pushing them down. Immigrant workers were not responsible for things not working out for indigenous people; they worked their hearts out for the capitalist in return low wages and long hours, to have a better life for their family.
Capitalist aim to continue the pace of automation with artificial intelligence set to take away millions of jobs from poorest of people, and politicians agonizingly and possibly wilfully ill-prepared to deal with this challenge.
The average human rightly feels that the world belongs to the group of capitalist and they have little power or say in it; While consumerism increases the wealth, the land mass of the planet is still the same leading to exponential increases in house prices. Housing has become to most pressing challenge and most young people unable to buy a house in major cities of the world. Homelessness and inadequate housing are on the rise.
Consumerism and unfettered capitalism are having a profound on public health. One in three in America will have diabetes by 2050; obesity is rising around the world with 30% of the world population obese or overweight. They face the slow death of fast food, processed meats containing carcinogens is increasing the risk of cancer and heart diseases, air quality dropping with a day of breathing in some cities of the world is like smoking 10 cigarettes. This means huge investments in health care at a time where government income tax receipts are dropping as capitalist hoover the money from the economy through automation and low taxes. Artificial intelligence will add fuel to this fire of capitalism.
Here is how helplessness and short-termism are blinding various sections of the population:
1. The bottom 80% of the population in terms of earning are living from pay check to pay check do not feel obliged to fight for challenges like climate change. They feel its job of the rich and government. They are ripe to be persuaded by anyone who promises to make their lives better.
2. The top 3%, the capitalist elite are blinded by their wealth thinking more about the companies they run, less about the planet and future. Many of them have found exotic hobbies of finding other planets, which lack the atmosphere, and colonizing them, what they should be focussing on is making this one work. They are best placed to make this planet work due to the power of capital and indirect control of power.
3. Remaining 17% either look down at the bottom 80% and try to avoid falling into that group or focus on getting into the top 3%.
4. Politicians and government are blinded by winning elections not thinking beyond an election cycle. They are deeply intertwined and almost comingled with the top 3 percent.
The modern human has completely lost focus to deal with challenges of the future; Climate change, Energy crises, Artificial intelligence, Water shortages, Growing Population crises.
SECTION 2: HOW CAN WE FIX CAPITALISM?
Socialism and Capitalism need to find a middle ground. Capitalism has been magical for humans but it has become chronic. There should be a big reward for capitalists taking a risk and creating jobs but not at the cost of others pushed into poverty, homelessness, zero hours contracts and hopelessness. We need to move away from this “winner takes it all” system, which is weakening us to the core as a society. Scandinavian countries are a good example of the middle ground. Wealth distribution through high taxation has created a responsive, happy society in Nordics and it has no surprise they are leading the battle against climate change. The region has the highest happiness index in the world despite a harsh climate.
Nordic happiness: https://www.youtube.com/watch?v=sEKQYYhp3eE&t=130s
Sweden turning waste into gold: https://www.youtube.com/watch?v=14r7f9khK70
There are several ways to redistribute wealth like introducing a revenue-based tax for large multinational organizations, wealth tax; property tax, minimum wage increases, employee ownership, renationalizing key industries are some of the ideas.
Many socialist political parties are supporting policies that would require businesses to transfer a percentage of their shares annually to a fund controlled by employees. The fund would then pay a regular dividend to workers while giving them a powerful voting bloc in corporate governance. Growing over time, the funds would be a new way of socializing the economy from the inside out. The greatest benefit, though, is not greater income, but more collective power and slice in future success.
Few of us, whether in the US, the UK or elsewhere, own shares directly. While household savers might be indirect shareholders, voting rights are controlled on their behalf by large financial institutions who often fail to act in the interests of the saver — and extract vast rewards for themselves in the process. In other words, most of us lack meaningful control over where we work, and existing structures of ownership fail to deliver it.
Major multinational corporations make a huge profit on a worldwide basis, but do not pay enough taxes as profits on income statements can be managed and moved to tax havens. This has stripped society of billions of dollars, money that could have been used for hospital beds, school places, roads, cancer treatment, and save lives. A global corporation that turning over $1Billion a year, operating in a country over 10 years but still not showing profit locally despite making a profit at the global level, is most likely managing profits. A small tax on revenue may be a good idea in this situation, as you cannot hide revenue.
These are just a few of the ideas and there are many more. What we need is political leadership at a global level to shut down tax havens, stop handing out tax breaks to the super rich, backbone to increase or in some countries like India implement the minimum wage. The thought that capitalists will themselves drive the change is wishful thinking, as capitalist by nature accumulates wealth and will not give a penny away unless it is necessary. It is the job of the government to impose the measures.
Most politicians know the problem but have not grown the backbone to implement changes fearing their capitalistic masters. The unequal society we see today can never fight challenges like climate change.
Inequality in America: https://youtu.be/QPKKQnijnsM
Tax breaks (over 18’s): https://www.youtube.com/watch?v=8bl19RoR7lc