From Socialist Worker, No. 1453, 29 July 1994, p. 11.
Copyright © Estate of Paul Foot.
Published on MIA with the permission of the Estate of Paul Foot.
Paul Foot Internet Archive (marxists.org) 2018.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
“NEW ATTACK On Dole Cheats” – the recent headline in the Daily Mail could have come any week since the very beginning of what is now loosely known as “social security”.
The government and its supporters are obsessed by the notion that hundreds of millions are flowing down the drain from social security fraud.
To deal with that obsession, a vast network of snoopers and spies has been set up by government to catch the cheats. They spend every hour of every day working out new ways of ensuring, for instance, that people on disability allowance can’t walk properly, or that people on carers’ allowance aren’t inventing the people they care for.
Control of poor people’s lives is the essence of this operation, and the control is increasingly invasive and intolerable.
This month the Benefit Agency reckons that the controls and the crackdowns on the 20 million people on benefit “saved the taxpayer” £717 million.
Now pass on to the amazing story of Barings Bank. The most quoted sentence in the recent report of the Board of Banking Supervision states that the Barings collapse was “due to the unauthorised and ultimately catastrophic activities of, it appears, one individual”.
This was Nick Leeson who lost hundreds of millions on the international stock markets.
What a happy conclusion for the big bankers!
The fraud could be blamed entirely on a single rogue crook who went to a grammar school and therefore probably shouldn’t have been allowed into a decent bank in the first place.
But wait. The sentence goes straight on as follows, “... that went undetected as a consequence of a failure of management and other controls of the most basic kind”.
The main control which Barings escaped was the Bank of England’s iron rule that no British bank can expose itself to (i.e. gamble) more than 25 percent of its capital. A simple point, you might think – easy to understand and easy to enforce. Yet in its last few months Barings managed to expose 73 percent of its capital.
How? By an “informal concession” granted by a relatively junior Bank of England official. Apparently he told the blue bloods who run Barings in London that they really didn’t have to worry about the rules. For this “informal concession” there was no precedent, no regulation, no need to refer to anyone in authority.
It was not so much a failure of controls as a case of no controls at all.
Barings shipped out £827 million under this concession. Remember Barings was one smallish merchant bank, and remember that figure (£717 million) for the total recovery from controls on the alleged social security fraud on benefit paid to 20 million people.
The few City gents who feel they owe society an explanation shrug their shoulders and say, “Well, no one really lost anything from the Barings collapse.”
If that is true, and it nearly is, the economic system we live under is revealed as all the more grotesque.
If £827 million can be shipped out from Britain and used for stock exchange gambling without anyone really noticing or losing anything, then what more proof is needed to establish that losses for the rich can easily and instantly be made up?
Losses for the poor, on the other hand, caused by cuts, stricter controls and witch hunts over benefits, are irrecoverable, devastating and in more and more cases even lethal.
Last updated on 2 Novem9ber 2018