George Osborne’s ‘Emergency Budget’ on June 22nd 2010 quite impressed me at first.  We can earn another £1,000 before paying Income Tax, food and children’s clothes remain exempt from VAT and so are outside the coming hike from 17.5% to 20%, and the state pension will not be cut. The rise in Capital Gains Tax from 18% to 28% will apply only to those who pay Income Tax above the basic rate, i.e. a small minority.

After chewing it over for a few days, I am less and less convinced. The idea is to force the UK economy into a dramatic shift, away from dependence on consumer spending and towards a shiny, high-tech exporting economy on the German model. The unanswered questions include:

What are we going to make??

The World Trade Organisation allows us (big of them) to protect industries vital to national security. That means arms. We have protected our arms industries, which are modern and efficient. Are we going to ramp up arms exports? That will make the world a safer place!

Who is going to buy our exports??

Dictators anxious to bolster their armed forces to stay in power?

The whole of the Eurozone is suffering from the financial wobbles caused by Greece, Spain, Ireland and, probably quite soon, Italy.  Eurozone countries are not going to import more stuff from the UK. The Chinese government is awash with dollars, but while it may be interested in highly specialised exports, China will not want mass freight from the British Isles. Your ideas are welcome.

Who is going to finance the re-industrialisation of the UK?

The banks aren’t interested, as opportunities for big profits would be slim. If the government had a mind to make Royal Bank of Scotland (RBS), which it controls, serve primarily the national interest, it might be a different story. But the plan is to sell the state’s holdings in RBS, Lloyds Banking Group and Northern Rock back to the private sector, when the time seems right.

Are taxpayers going to stump up the cash? No chance, our higher taxes are destined to help plug the chasm between our government’s income and its expenditure.

Are we expecting transnational corporations to build new factories here? Why should they, when Vietnam, Brazil et.al. look more enticing, and have cheaper workers.

Of course, the mass unemployment likely to result from the coming slash and burn approach to public spending would force wages down, and thus Income Tax revenues would suffer too. The phased reduction in Corporation Tax announced in the Budget, from 28% to 24% over four years, and intended to attract businesses, will create long-term jobs only if there is an expanded market for the UK’s products and services (and let’s not stake our future on casino banking).

It looks to me as though this could be a disastrously Thatcherite budget, not that surprising as George Osborne is a Tory chancellor, although I think the sops to the Liberal Democrat coalition partners have, to an extent, disguised the coming pain. This ‘Emergency Budget’ had scarcely anything to say about mitigating climate change, or encouraging co-operative and not-for-profit ventures to help local people meet their own needs,  or facing up to Peak Oil and the inevitable limits to growth.

Bad luck, LibDems. You recognise these issues, but your voice was not strong enough.

The redundant steel worker wore a black armband. He was 58, he said, and would never find another job. He was one of 1,600 in Redcar, on Teesside in North East England, whose jobs have been axed by Corus, which since 2006 has been owned by the Tata Steel group of India. On Thursday evening this week I watched ‘Question Time’ on BBC TV, coming from Teesside, and felt that an impotent anger afflicted the audience. Teesside makes high quality steel, but the Redcar plant does not fit into Tata’s strategic plan.

The steel industry has been globalised. Who are the winners? The owners of Chinese factories making metal goods for sale around the world? The directors of the most aggressively profit-seeking steel companies? The bankers who lend them money? I cannot think of many other ‘winners’, but there are millions of losers. Just on Teesside, 1,600 lost jobs mean at least 2,250 or so more people affected in the immediate families of the redundant workers, on the basis of the national average 2.4 people in a household. So we have about 3,850 people directly affected. Then there are the enterprises that depended on the steel plant for their livelihoods. A typical multiplier in manufacturing is 2.35 or so. That would mean 3,760 consequential job losers, in turn affecting about 5,265 more people in their households,  an additional total of 9,025 persons experiencing the repercussions of the plant closure.

So the end of steel manufacture at plant employing 1,600 may well result in the economic impact of worklessness affecting, in a short time, the lives of 12,875 people.

We are told that our future as a nation depends on us offering a highly skilled workforce to the world. We are successful in weapons manufacture, but that is because  security and defence are the only industrial sectors exempt from the free trade — no quotas, no tariffs — mandated by the World Trade Organisation. It’s no surprise that the defence company BAE Systems is the UK’s largest manufacturing company, because BAE and similar defence (weapons) companies are exempt from the open competition rules.  This means that our economy, and jobs, become over-dependent on the arms business.

We have been conditioned to accept global free trade as both desirable and inevitable, but it is neither. It has proved to be an excellent method for transferring resources from the majority to a tiny minority of global super-rich. As a supposed democracy, we have the capacity to challenge the ‘common sense’ that unfettered free trade benefits peoples and nations. That ‘common sense’ was carefully constructed, and can be deconstructed given sufficient effort and will. A first step may be to elect politicians who will scale back the World Trade Organisation, to allow nations more control over their own economies.

The major political parties in the UK still accept subordination to the WTO, and thus acquiesce in the diminution of democracy that makes us into victims rather than active citizens. The steelworkers in Redcar understand only too well what it feels like to be economic victims, in a system that does not give them a voice.

‘Empty Plates Tomorrow’ has a chapter called ‘False Dawns’ in which I wrote about dubious magic solutions to energy and food scarcity such as the hydrogen economy, nuclear fission and fusion, abiogenic oil, carbon storage, and genetic modification of agricultural crops. The section on genetic modification is headed ‘Genetic modification benefits big business, not small farmers’.

The alarming concentration of power over seed supplies, which worried me when I wrote the chapter, is portrayed in detail in ‘Seeds of Destruction’*, by F William Engdahl. ‘Seeds of Destruction’ catalogues the capture of world seed breeding by corporations, principally Syngenta, Dow, DuPont and, the most powerful of all, Monsanto.

Monsanto is the world’s dominant supplier of genetically modified seed. The seeds are ‘modified’ to improve Monsanto’s income stream, because the farmers purchasing them are contractually prohibited from saving any to re-use in a future planting. Many GM seeds are engineered to tolerate specific agrochemicals, such as Monsanto’s glyphosate-based herbicide Roundup. GM seeds are at the base of a corporate-controlled column that extends through cultivation technologies to the  sale, processing, manufacture and distribution of the crops farmers grow. In a further twist of the screw, the technology now exists to engineer seeds that self-destruct after a single use: they are sterile or terminator seeds.

Around three-quarters of the world’s farmers save their own seed for use the following year, a practice that terminator seeds would halt, forcing those farmers to buy fresh supplies every year. Generally, farmers’ own saved seeds come from plants well adapted to their local environments. The mega breeders like Monsanto are, for commercial reasons, concerned more with their seeds’ suitability for their own agrochemicals than with their fitness for local conditions.

Corporate control of seed production became far simpler after 1994, when the Uruguay Round of the General Agreement on Tariffs and Trade  (GATT) created the World Trade Organisation. One of the early outcomes was the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which allowed corporations to patent plant and animal life forms. The rush to patent genes, and gene combinations, began. F William Engdahl comments (‘Seeds of Destruction p.221) that:

“The WTO marked a step for the globalization of world agriculture, under terms defined by US agribusiness. WTO rules would open the legal and political path to the creation of a global ‘market’ in food commodities similar to that created by the oil cartel under the Rockefeller Standard Oil group a century before. Never before the advent of agribusiness had agriculture crops been viewed as a pure commodity with a global market price. Crops had always been local along with their markets, the basis of human existence and of national economic security.”

The US administrations in the 1990s — under George Bush senior and then Bill Clinton — backed the WTO’s constant pressures on nations to open up their markets for free trade that benefited corporations first and foremost, as they expanded and policed procurement and supply chains. George Bush senior decreed that genetically engineered or modified plants are “substantially equivalent” to their non-engineered counterparts and therefore do not require any special regulation. The WTO adopted this ruling as a binding Sanitary and Phytosanitary Agreement (Engdahl p.221), which commands that food standards and measures aimed at protecting people from pests or animals can be potentially used as a deliberate barrier to trade . This meant that governments could not ban genetically modified foods because that would be a deliberate barrier to trade. Furthermore, even the labelling of crops and foods as genetically modified was outlawed as a ‘technical barrier to trade’ (Engdahl p.222).

Engdahl summarises the issue thus: “The doctrine of the WTO was simple: free trade — on terms defined by giant private agribusiness conglomerates — was to reign supreme above nation states and above the concern for human or animal health and safety. ‘Free market uber Alles’ was the motto”. (p.224)

GM crops have other potential uses apart from making profits for the organisations holding patents on them. The US government holds the patent for terminator gene technology, jointly with a major cotton-breeding company called Delta & Pine Land, which Monsanto acquired in 2006. It doesn’t require much imagination to see how terminator technology could be incorporated in covert operations to destabilise a regime. Engdahl includes a quote (p.xiv) from Henry Kissinger, secretary of state to US presidents Richard Nixon and then  Gerald Ford. The quote is  “Control the oil and you control nations. Control the food and you control the people”.

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* ‘Seeds of Destruction’, by F William Engdahl, was published in 2007 by Global Research of Montreal, Canada. The ISBN is 978-0-9737147-2-2.

Sorry, I just deleted a couple of genuine comments by mistake.

The Royal Bank of Scotland’s loans to Kraft Foods of the USA, to finance the purchase of the British chocolate company Cadbury,  raises all sorts of issues about national identity and the role of the nation state.  Kraft raised billions of pounds for its £11.5 billion acquisition of Cadbury, from the Royal Bank of Scotland and other supportive financial institutions. The money talked so loud that Cadbury’s shareholders voted for the deal. The Royal Bank of Scotland, let us remember, is 84% owned by the UK government.

Kraft lost no time in announcing job losses at Cadbury. The Somerdale factory at Keynsham, Bristol, is to close, resulting in 400 lost jobs. The work is transferring to Poland. True, Cadbury was itself planning to to stop production at Somerdale, but workers hoped that Kraft would — as business secretary Peter Mandelson had apparently pleaded — protect British jobs.

The migration of jobs to lower-cost locations is all too familiar now, an inevitable consequence of our global capitalism in which certain corporations have become more powerful than the elected governments of nation states, through methods that include the ‘revolving door’ for senior personnel, who move between business and government and back again.  The development of global busno-politico networks threatens to make the views of national populations almost irrelevant. How many British taxpayers would have supported Royal Bank of Scotland in its venture to aid Kraft take control of Cadbury, which was an iconic British brand, founded by a Quaker family for whom social justice was crucial? After all, the UK government owns Royal Bank of Scotland on behalf of the UK population, doesn’t it? For me, the fact that a bank controlled by the UK government can lend what is in effect our money to a company that is destroying our jobs poses a big question: who exactly is government working for?

It seems to me that we have lost control over our national life. If we are to feed ourselves adequately in future, to return to the theme of ‘Empty Plates Tomorrow’, that control needs to be regained. To a great extent, a government’s freedom to act in the interests of its own citizens has been circumscribed by the free-trade rules of the World Trade Organisation. Who, exactly, benefits from the World Trade Organisation? Your answers, please.