The Private Finance Initiative (PFI)

Politics. Ugh, British politics. The Private Finance Initiative (PFI).

PFI is a type of public-private partnership in which the government hires a private company to build and maintain some infrastructure - roads, schools, hospitals, etc - for regular payments over many years. It began in the Thatcher and Major governments of the 80s and 90s, and was extended under the Blair-Brown governments until it became a cornerstone of public policy.

PFI contracts are kept very secret, so there is little chance of the general public - whose money is being spent - finding out whether they are getting a good deal. The private companies involved have no formal responsibility to the public; contractual obligations are kept secret: PFI contracts cannot be obtained through freedom of information requests.

There is very little competition for PFI contracts: the companies that go for them often work together to rig the bidding process (one company will submit an unrealistically high bid, and then another will submit a slightly less unrealistically high bid, which comparatively looks like a good deal). The companies increase the costs after construction has begun: a recent analysis found that 719 projects with a shared value of £55 billion will cost a minimum of £301 billion over fifty years. Thus, PFI is a mechanism which redistributes wealth from the masses (the tax-paying population) to a rich minority (private company shareholders).

Source: 'How Corrupt Is Britain?' by David Whyte

The Neoliberal Revolution

"Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable." - Milton Friedman

Towards the end of WW2, Friedrich von Hayek wrote and published 'The Road to Serfdom', which argued that fascism is the inevitable endpoint of giving the state too much power over the economy. Powerful governments led to oppressive societies and individual serfdom. The economy should be controlled by individuals: the free market ensured the freedom of individuals.

In the aftermath of WW2, a group of Western intellectuals, including Hayek and Friedman, gathered to pass judgement on the world. Their conclusion: governments had too much power, too much control. Individual freedom and private property were in danger. There would be more tyrannies, another great war.

Over the years, this group and their associates founded a range of economic think tanks to propagate and popularize Neoliberal ideas (neo = new, liberal = economic freedom, free from government control and regulation). In America in particular, Neoliberalism got mixed up with the 'Greed is Good' objectivism of Ayn Rand. These think tanks received a lot of funding from big corporations, who would benefit from free-market policies.

The 1970s were a period of economic and political turmoil. The think tanks upped their game, laying the foundations for the Neoliberal policies that Thatcher's government would implement. Privatization of public assets. Deregulation. Tax cuts for the rich. The Neoliberal revolution had begun.

In 2004, a new economic think tank was born: the TaxPayers' Alliance, a corporate entity that unashamedly pretends to be the voice of the masses. (Recently, the head of the TPA advised the government to cut pensioner benefits immediately, despite all their election promises not to, because old people will likely die or have forgotten by the next election.) Throughout the 2000s, the TPA campaigned aggressively against government spending.

Until 2008, the Conservative party had agreed with New Labour's spending plans, sometimes even suggesting that they spend more. But the economic crisis, created by an under-regulated financial sector, was an opportunity: the Conservatives teamed up with the TaxPayer's Alliance to rewrite history: government overspending had ruined the economy. The Conservatives, the TPA, and the Media Overlords all propagated this retcon. After teaming up with the Conservatives in 2010, so did the Liberal Democrats. The TPA advised the coalition government on its policies. Spending cuts. Privatization. Deregulation. Tax cuts for the rich. The Neoliberal revolution was taken to new extremes.

And now look at the news.

(Sources:
'The Establishment' by Owen Jones
'How Corrupt is Britain?' edited by David Whyte
http://www.bbc.co.uk/news/uk-politics-34439965?SThisFB )

My Politics Phase Begins

Having spent a year figuring out my opinion on religion, I'm now moving on to my politics phase. (My engrossment in politics in the run up to the General Election was like a 'Coming Soon' sneak preview.) I'll write some posts about politics and economics to organize my thoughts as I go. I still consider myself a politics newbie, so please point out errors and misunderstandings. For news, I follow The Guardian, The Economist, The Canary, The Independent, Another Angry Voice, BBC News, MainlyMacro, and Boris Johnson, and have subscribed to Private Eye. Any other sources I should follow? (I only have Boris on the right so far.) Good books to read? (I have a few titles floating around in my mind, but recommendations are always welcome.)

I've been reading about corruption in Britain ('How Corrupt is Britain?' edited by David Whyte), and there is rather a lot. Since 1979, Britain has undergone a 'neoliberal revolution', beginning with the Thatcher government and continuing to the present day. Neoliberalism is an economic doctrine that sees market exchange as the ethical basis for human action. Inspired by Ayn Rand's 'Selfishness Is A Virtue' pseudo-philosophy, neoliberalism promotes the individualist values of hedonism and wealth accumulation, while undermining more collectivist values, such as concern for other people and the wider society. Self-interest is good for society; self-interested politicians are better than well-meaning zealots who think they know what's best for others. Businesses boosting their profits are good, because market exchange is the core of society: governments shouldn't interfere with businesses boosting their profits.

So from 1979 to the present we had state assets sold into private hands, with government money being used as a convenient cash-cow for private profit; 'a revolving door' between government and the private sector, with politicians becoming lobbyists and businessmen becoming policy advisers; and a global financial crisis caused by an under-regulated financial sector. The causes of the economic crash were then retconned by the politicians and media: it was caused by government overspending: time to cut government spending, sell assets into private hands, while our politicians and their mates make a lot of money in the process!