“Two sides to every story
Somebody had to stop me”
The fall of the Berlin Wall marked the end of the cold war.
The west basked in the glory of perceived our exceptionalism; capitalism had prevailed over communism..
Only, it hadn’t. The fault lines were there but masked by complacency.
Income inequality, which had fallen post-WW2 had been on the rise since 1980, as Thatcher implemented her market-influenced policies
To highlight this inequality, I have used two measures. The higher the number the greater the inequality:
- 90:10 ratio, measuring the ratio between the 10th and 90th percentile of the income distribution. This reached a low of 2.95 in 1978, rose to 4.44 in 1991, today it is 3.7 or 4.4 including housing costs
- The top 1% was 3.04 in 1978, rose to 8.64 in 2009, today it is 12.7.
Inevitably, poverty increased in-line with this inequality.
In 1977, the percentage of the UK population living in poverty was 12.2%, in 1992 it reached a high of 25.2%, today is C. 21%.
Data: The Institute for Fiscal Studies; Joseph Rowantree Foundation.
For the 21% already living in poverty, and others who are severely hobbled by flat-lining incomes, the cost-of-living crisis that started in 2022 with Covid impacted supply-lines and Russia’s invasion of Ukraine, has been perpetuated by America’s war with Iran.
‘The last nail in the coffin of free-markets should have been the GFC’
Prior to Thatcherism, the 1970s witnessed geopolitical disruptions in the Middle East, with two oil crisis, in 1973 and 1979, which led to massive spikes in petroleum prices, severe economic recessions, and global fuel shortages
Adding to this, in 1979, Iran fall under the auspices of the Ayatollah, becoming a fundamentalist, anti-America state.
Only months later, Russia invaded Afghanistan creating the bizarre situation of a US government supporting Muslim fundamentalists. After Russia’s defeat, the fundamentalists were both better-armed and organized.
The last nail in the coffin of free-markets should have been the GFC. The crisis, instead of finishing off this failed economic model, resulted in ordinary people, main street, funding banks bail-outs through shredded social provision.
‘domestically and globally, we are in a mess’
As a result, most, if not all would agree with the conclusion that, domestically and globally, we are in a mess.
Where this is disagreement is over the symptoms and treatment, which has polarised into two camps.
The hard-right were sufficiently nimble to identify and taking advantage of the carnage. Their diagnosis is regressive ethnonationalism: the west is dying because of migrants, Muslims, trans people, “woke” and the “deep state”.
Which can be summarised as; the answer is cutting immigration, what’s the question?
This week, we have seen livestreamed footage of the supposedly Christian far-right agitator, Daniel Thomas, to his 100,000 viewers as he stabs a knife into the inflatable dinghy in the Channel while a rescue worker was onboard, and shouting: “This is England. This is not France anymore.”
Fortunately, in “this is England”, the rule of law still applies, and Thomas, has been arrested on suspicion of criminal damage with intent to endanger life.
Despite what right-wing politicians say, their ideas will do nothing to ease the burden on working people.
‘their ideas will do nothing to ease the burden on working people’
Instead, as we are seeing in Trump’s America, their mega donors want less regulation and lower taxes, often described as being business friendly. In truth, it’s just doubling-down on what bought us to this point.
Just how bad things are was demonstrated by research by Trussell Trust found that hundreds of thousands of low-income households face a choice between paying their rent, putting food on the table and turning on the heating.
A part of the cost-of-living crisis that is often overlooked is the fact that actual rent increase outstrip the local housing allowance (LHA)
The Resolution Foundation found that the average difference between rent and LHA faced by a low-income household renting a two-bedroom home in the private sector is £158 a month – rising to as much as £324 in parts of London.
Trussell wants the government to relink LHA to the cheapest 30% of local rents, which, it estimates would lift 105,000 people out of severe hardship by 2028-29, including 40,000 children. The Resolution Foundation estimates this would cost £2bn a year.
What sums up the last 46-yrs of neoliberalism is that, whilst it has created wealth, the vast majority has been extracted rather than invested.
‘whilst it has created wealth, the vast majority has been extracted rather than invested’
The economist, Mariana Mazzucato, who previously worked with the PM when he was the Mayor of Manchester, says that “over 80% of British finance flows directly into the Finance, Insurance, and Real Estate sectors, rather than supporting production, infrastructure, or innovation in the “real economy.”
“Had we invested at G7-average levels between 2006 and 2021, the public sector would have deployed an additional £208 billion in real terms.”
Source: IPPR, 2024.
The case for investment in net zero, is highlighted by data which shows that for, “every £1 of public money invested in net zero is estimated to deliver a return of £2.20 to £4.10.
Source: Climate Change Committee, 2026,
A working paper for the IMF finds that the multiplier on renewable energy investment is more than double that on fossil fuel investment.”
Source: Batini et al., 2021
There are, however, sign under our new PM that there is a realisation of our problems and, rather than trying to copy right-wing policies, we are looking to progressive solutions.
Polls show that disillusioned labor voters are returning, especially those from the left who had become disenchanted by the party losing it traditional direction.
Added to this, is the tactical voting of the “anyone but Reform” voter coalition., which could benefit the LibDems.
‘unsafe maternity care, inadequate disability provision and polluted rivers – largely arise from failures of collective provision or state regulation’
At last week’s party conference, their leader, Sir Ed Davey outlined ambitious plans aimed at voters disenchanted by the right-wing bloc associated with Brexit, nationalism and reactionary politics. His £17bn tax giveaway was clearly aimed at disillusioned Conservative voters.
Davey presented Reform’s politics as an existential threat, appealing directly to left-leaning tactical voters, whilst telling moderate Tories that only a vote for the LibDems can block both Reform and a Conservative-supported Nigel Farage premiership.
In 2024, 60 of the party’s 72 seats were taken from the Tories, and they ran second in others. The aim is for the party to replace the Conservatives as the respectable, pro-market opposition, while Reform occupies the space of the nationalist right. As a result, Davey could become kingmaker as the representative of a liberal southern tendency.
He is correct when he says that “people feel powerless”. The examples he cites; unsafe maternity care, inadequate disability provision and polluted rivers – largely arise from failures of collective provision or state regulation.
What we need is capable public institutions, which requires more resources.
In summary, investment and state regulation, the polar opposite of what the offshore billionaires want.
“Load up on guns, bring your friends
It’s fun to lose and to pretend”
We end the week with polarisation between the left and right on how to fix this mess.
If there was one incident that summed-up the right’s take on things, it was the broadcast by Danny Tommo while he slashed a dinghy, with the rescue worker still aboard.
The whole event was stage-managed; he knew he would be arrested—he likely wanted to be. Now, he will paint himself as a martyr to the cause, standing up for Ennnngerrrrland. The only sadder thing is, people will believe him!
If there is one thing that might start to right the global mess, it is America returning to its political and moral senses.
In its quarterly forecast update, the OECD said: “Global economic prospects remain heavily dependent on whether a durable resolution to the Middle East conflict is achieved.”
Perhaps, a polite way of saying we need Trump replaced?
It also identified the record-breaking El Niño weather system – expected to be the strongest in 1,000 years – as a “significant downside risk” to the global economy, warning that it could hit agricultural production and push up food prices.
Climate change: we definitely need Trump replaced.
However, when they turned to the UK, it seems Burham’s luck continues, with the OECD cutting its inflation forecast for this year, from 3.7% to 3.1%, after prices rose less dramatically than expected.
They also forecast growth of 1.1% for 2026, up from the 0.9% forecast in June and 0.7% in March, “with consumption expected to be supported by newly announced government support measures”.
Much to contemplate, and there are still the conclusions formed after the Xi and Trump meetings to look forward to!
Lyrically, we start with “Public Image” by Public Image Ltd., and end with “Smells Like Teen Spirit” by Nirvana.
Enjoy!
Philip.
@coldwarsteve
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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