On 27 April Barclays Bank bosses will face protests from shareholders at their annual general meeting. They will question the bank’s decision to pay a £5.7 million extra to boss Bob Diamond last year in the guise of a “tax equalisation payment”, and the total £17.7 million paid out to him.
Another two bosses, Jerry del Missier and Rich Ricci, are being paid £6.7 million and £6.5 million.
The labour movement should not leave protest to well-heeled shareholders. We should be raising an outcry against such pay-outs, and demanding that the big banks, already dependent on public subsidies, be put under democratic control and run with limited top-wage levels, with their wealth directed to improving social provision rather than boosting bonuses.
Real wages have fallen in recent years, and the Government’s plan, with its public sector pay freeze, is to push them down further. Benefit and service cuts have reduced the “social wage”, and will reduce it more. Yet the rich are back to the levels of income and wealth they had before the crisis.
Capitalist slumps increase poverty, but usually, in statistical terms, they reduce inequality. The rich lose too, with their businesses going bust or their shareholdings losing value, and they have further to fall. Inequality fell in the 1930s, and it probably fell a bit in 2009, too.
Yet in this crisis, since 2010 anyway, inequality has risen. In the UK as in the USA, the slice of income taken by the top one per cent has more than doubled since the 1970s. That long-term trend had a momentary hiccup in 2009, but on the available evidence (no comprehensive surveys have been completed yet), it has got right back on course since then.
Banks and the financial markets surrounding them have been pumped up by vast public subsidies. Large payouts and credit guarantees were given to the banks at the peak of the crisis in 2008, to stop them going bust — and that continues.
The European Central Bank has lent one trillion euros to banks, for the next three years, at ultra-low interest rates. Unless the banks choose completely wrong when using that cash to buy bonds and shares, the ECB operation amounts to a public subsidy to the banks of some tens of billions.
“Quantitative easing”, done in Britain by the Bank of England, amounts to another subsidy to banks — giving them hard cash in return for dodgy assets. When the banks are cashed up, that tends to have a positive effect on all financial markets.
Thus, despite the fact that total output has been pretty stagnant, and prospects are bleak, share prices on the London stock exchange have recovered sizeably since 2009. People who own lots of shares are doing well, and top bosses have plenty of cash to pay themselves with.
Directors of the top 100 companies had a 49% rise in average earnings in 2010-1, to almost £2.7 million each, while average gross earnings for full-time workers fell 5.9% in real terms between April 2007 and November 2011.
The Government’s and the bosses’ drive to push down wages and “social wages” is not just, or even mainly, a matter of healing deficits. It is a drive to use the crisis in order to impose a shift in the balance of class forces — to set a lower baseline for workers’ attempts to recoup standards whenever a general economic recovery comes, and to ensure that this recovery starts with a lush profit rate from day one.
So far the Tories are getting away with it. George Osborne’s move in the Budget to cut the top tax rate from 50% to 45% shows their smugness.
But they are getting away with it only because the labour movement is not mobilising the great pool of resentment which exists in the working class against the people whom Ed Miliband last year called the “predators”. (Remember that, Ed Miliband? What about some more like that? And with some practical campaigning conclusions this time?)
Bonuses in high finance and in other industries totalled £22 billion in 2011. The Coalition government’s planned cuts for 2011-2015 total £18 billion from benefits, and £16 billion from education and other local services. They are big cuts. But the amounts going to the wealthy — £22 billion in bonuses for a single year, £137 billion gain in wealth by the top one thousand over a single year — are much bigger.
The resources are there. It depends on which class fights hardest for its slice.