Sunday 29 April 2012

We're NOT all in it together

I've come across two sets of information recently which have rammed home the point that we're not "all in it together".

The Sunday Times has published its annual "Rich List".  Even their own headline makes the point "The Sunday Times Rich List reveals that Britain’s wealthiest people are richer than ever despite the worst recession since the 1930s".  Even The Telegraph, that well-known friend of the poor, highlights the discrepancy between the rest of us and the top 1000 people: "Their total fortune has risen by just under five per cent since 2011, to £414 billion, according to the latest Sunday Times Rich List.  That exceeds the previous record of £412.8 billion set in 2008, which came just a few months before the financial crash from which the wider British economy has yet to recover".

The second set of information has received a lot less publicity.  I found it via the blog of the economist Michael Roberts.  In this article on the weak US recovery, he highlights how as profit rates recovered, corporations hoarded profits, rather than reinvesting them, undermining the recovery of the wider economy.  The figures are staggering - he explains:

"US corporate profits have recovered dramatically since the trough at the end of 2008.  They surpassed their previous peak in 2006 by early 2010.  This was achieved by a massive reduction in costs (including labour costs) and a strike in investment.  But most of the recovery in profits since the end of 2008 has been hoarded and not spent on new investment.  According to these latest figures, undistributed profits have accumulated to $744bn from just $19bn at the end of 2008!   Profits are up around $1trn since then, but the cash accumulation is up over $700bn, so only 30% of the increase in profits has been spent on new investment.  This explains why the economic recovery has been so weak, with the US economy growing only barely at 2% a year (1.6% yoy according to the latest Q4’11 GDP data)."
So next time some millionaire cabinet minister (and most of them are) tells us that there's no money for decent jobs or for the services we all rely on, let's remember that there are individuals and corporations sitting on vast wealth which could be far better used by those who produced it.

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