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welcome to Sputnik orbiting the world
with me George Galloway and me gatri the
world sometimes seems to be hurtling
towards yet another economic crash
currencies oscillating growth going into
reverse trade deals stalling financial
institutions bankrupt at least of
credibility in Britain add the shambolic
lurge towards brexit into the mix and no
one the markets are all over the place
one of Britain's most brilliant
economists Lord magdi Desai of the
London School of economics and the House
of Lords might be best placed to explain
where we are and where we're headed and
it's an honor for us and he has many an
honor that he's here on board the
Sputnik Lord Desai thanks for joining us
thank you there's a run on the Marmite
the shelves are empty the Pounders are
168 8 year low the markets don't know
what shock is coming next are we headed
to Hell in a hand cart I think we're
headed for two kinds of Hell in a hand
card first of all
UK will realize slowly what the brexit
decision means and especially if hard
brexit is going to be argued because
that says that we will give up access to
single Market we'll have to re build all
of the trade relations that will take
anywhere between 3 to 5 years maybe 6
years so there's a lot of uncertainty
and not everybody is sure that it's
going to come out right in the end but
the other thing is interest rates have
been low for a very long time lot of
cash is around but the cash is not in
people's hands it is the BS of Banks and
corporations they have been buying old
capital old shares mergers and
acquisition those things are going
up and so there is an acid bubble and
one of these days this acid bubble is
going to
crash the question is you know will they
be able to do something before that or
not you know you saw Deutsche Bank uh
you know one of the biggest bank in
Germany was very much on the brink of
collapse 10 days ago we still don't know
whether it it's out of they haven't
announced whether they're bailing out or
it's escaped death or what and so there
is a lot of fragility in the system and
while on one hand everybody says low
interest rates are fine they're not very
good for the stock
market so what we have right now is some
possibility let's say of a repeat of
2008 uh another financial crash and then
we will be stuck in this another little
bout of recession if that happens one of
the things to infer from what you have
just said is that this is not just a
British problem yeah if uh if Germany's
biggest bank might be busted uh then
it's clearly not necessarily related to
brexit you might argue brexit
exacerbates pre-existing problems but
clearly the German deutche Bank isn't
going burst because Britain voted to
leave the European Union the instability
in the world economic system uh
affecting even China though its problems
I wish we had it rate of growth India
for example uh uh South Africa uh Brazil
is in negative territory now where we
used to talk about it as a burgeoning
economy it's capitalism that's sick
isn't it well you know my I have a I
have a view that capitalism very often
Falls sick to get rid of the weaker
things and then they kind of bounces
back so I mean it is not like the
terminal crisis of capitalism we've been
waiting for that for a very long time
but I think in a sense people overdo
things buy expensive assets asset
bubbles then the whole thing crashes
then you reconstruct but one thing has
happened today we think of China and
India as substantially big
economies 50 years ago Henry Kissinger
was saying Man full of wisdom if only
India and China can feed themselves the
world will have no
problems I I this is 1966 exactly 50
years ago in our lifetime yeah In Our
Lifetime and so now the the center of
gravity of the world economy has moved
eastwards sorry can I just go back to um
to the British uh situation and the
asset bubble that you were talking about
because a lot of people are interested
in this question London Remains the most
expensive place for houses to purchase
prices have just bounced back by the way
so what is that all about a lot of
people were anticipating you know a drop
in the in the house prices you the thing
about house prices is that a we haven't
built any any affordable houses you know
the 13 years of Labor government we
didn't actually replace any of the
council house
stocks and you know as population grows
land is always sces but other thing is
we have thrown ourselves open for the
you know for the runaway capital of the
entire world to come and invest ex
that's what I mean and if you if you buy
if you and everybody think if you buy a
London house is better than the the back
probably much much saer so you know you
you are you are generating this uh this
boom and you taught people that house
price is going up is a good
thing which isn't which it isn't you
know we don't have a rental market of
other speaking of some some European
countries do have very good rental
markets almost all have deliberately
yeah we deliberately destroy the renting
sector both social and private and we
are leaving people with no other choice
but to buy buy byy by and I've I've said
again and again in in the house of law
why don't we actually
create a renting Market because you know
house is not the only asset people can
have they can have something else as an
asset why why why does everybody get
stuck in it's a non-performing asset
nonperforming asset exactly you know if
you buy a
car and then you sell it 3 years later
it will have depreciated he low money
everybody thinks that house price will
always go never go down that's a very
good point let me go back to brexit
because that's the issue of the moment
of course pound is at a 168 year low bad
news if You' got a lot of pounds and
you're trading them bear in mind 16
million people in Britain have less
than1 in the bank and many millions more
don't have a bank account and are up to
years in debt so doesn't necessarily
affect the man and woman in the street
all that much except when it comes to
Imports yeah therefore import
substitution British m manufacturers
British producers can come into the
market compete with foreign imports more
cheaply British exporters can sell their
goods abroad more cheaply why is it held
to be unreservedly a bad thing that the
pound is falling in value you know the
things that you described are longer run
effects you know to to start our own
Industries to to have manufactured brand
exports will grow up what happens what's
happening right now is the thing we
export most Services IE tourist coming
here is an export and that you see you
there's a buzz in the market that you
tourists are coming to for London the
pound is cheap and so on that will be
there but to to have a sustainable
manufacturing to replace you require the
pound to be permanently low because
you're competing with with uh not you're
not competing just European countri
you're competing with you know Indonesia
and Malaysia and China and India so I
think that kind of strategy you have to
have five or 10 year perspective on that
you can't just one morning say okay
we're going to have our own industry so
the way to do this first of all I think
the pound is overshot in my view it's
it's it's gone back down much more than
it should have the markets are worried
the world is worried at what we are are
doing by going for a heart brexit and
the idea
that Mrs May proudly says terrorism
proudly says I am for a heart brexit
people say but what's going to happen to
your trade what's going to happen to
your
income you know our firm is going to
relocate from here into on the continent
just maybe go to Ireland or whatever it
is but there is going to be an impact on
this okay
you don't want people coming in from
Europe
migrants yes but what at what price are
you willing to pay for that and that
price has not been clarified no but the
scene is Set uh I'm myself campaigning
for a general election where these two
Roots brexit is a given that's what the
referendum decided hard or soft yeah can
be there can be a mandate for either and
the only way to get that mandate is a
general election you say and you're
right Mrs May has painted herself into a
corner a corner called hard brexit uh
that leaves labor the opportunity of
being the soft brexit party I I fancy uh
labor to win that contest whatever my
own point of
view I think yes if labor does an
intelligent soft brexit strategy stays
United you know and I think
the further program of reforming EU and
all that we can we can leave aside for
the while right now it's a brexit we are
arguing for and it'll have to say yes we
are going to come out but we are going
to come out much under much better
conditions than what what these other
lot are risking so I think that would be
now as you know uh we have this fixed on
Parliament act and so there is a problem
about can we get a two3 majority to
change the date of the election now that
is where I think the subtlety arises how
can labor convince the Tories that now
is the time to have an election I mean
remember what they were saying about
Gordon Brown Gordon Brown is no
legitimacy because You' become Prime
Minister without an election now same
thing applies to uh to Terris you know
and so if they can be convinced I think
events might convince them event might I
think if the the pound where to go below
a dollar below parity that will be a
very big shock you know that that that a
psychological barrier there you this
Marmite story is very interesting
because that the first time ordinary
people's lives are shown to be affected
by
brexit and and and
and Dawning on people that Such Great
British institutions as Marmite and even
HP Sauce are actually Imports they're
not ours uh anymore now you uh in a word
because we we're out of time you've
tried to repeal the fixed term
Parliament act very nobly is there a
point in the Lord's trying again oh no
I'm I'm waiting for my second reading
date so it might go through it might go
through I mean it's only a one Clos Bill
Lord toi I could talk to you all day I
could listen to you all day thanks very
much for coming on board the Sputnik
thank you coming up next Professor guy
standing a pioneer of basic income don't
miss
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it welcome back to Sputnik Professor guy
standing of the development studies
Department of the school of Oriental and
African studies is a co-founder of BM
which means good in French or basic
income Earth Network or maybe both he
campaigns as it says on the tin for
everyone to have a basic income
regardless of anything really I've never
entirely grasped what that means so I as
well as you might well learn something
today because Professor standing is here
with us with his new book the corruption
of capitalism why rentiers Thrive and
work doesn't pay he's just flown in from
Geneva and joins us now Professor guy
thanks very much for coming do you mean
that capitalism is corrupt or that
something is corrupt in capitalism I I
think both apply but in particular what
I'm arguing in the book is that the
proponents of capitalism claim that
they're in favor of free markets and
that is a fundamental lie about what's
happened in the last 30 years of
globalization it's not free markets at
all yeah you could claim and I argue in
the book that what they've done is
construct the most unfree market system
that's ever been devised that's a strong
statement but it begins with the
realization
capitalism in the globalized context has
changed in character fundamentally
changed in character and the character
is today rentier capitalism in other
words the return to property and assets
is shot up and the returns to labor and
the returns to producing goods and
services have both shut down it's a it's
a very strange thing and what's happened
is that the income distribution system
of the 20th century has broken down give
you a few facts that support that U
assertion traditionally in the middle
Decades of the 20th
century the share of income going to
Capital and the share going to labor was
roughly stable you know it was a social
consensus but in the last 30 years
across the world the share going to
Capital has gone up the share going to
labor has gone down and within those two
shares the share going within Capital to
rentiers who are earning from rent has
shot up and within the labor share the
share going to the top part through
forms of rent has also shut up so you
have a double whammy for the group that
I've been analyzing the precariat
because what has happened is a new class
because of the precarious nature no no
not that please the class structure
that's emerged with globalization you
have a plutocracy an
oligarchy earning rents by bucketfuls
then you have a salariat shrinking
Employment Security pensions and all of
those things the old proletariat Which
social Democrats and the unions and rest
supported in the 20th century is
shrinking everywhere and the precariat
is underneath but it's a class because
it's not an
underclass global capitalism wants a
supply of people who are being prepared
to accept unstable labor
without a sense of future without a
sense of occupation but the precariat is
growing and at the moment it's a
disorganized Mass some people are what I
call activists they're falling out of
all workingclass communities they don't
have University education or thing and
this group tends to listen to the
populists the trumps the brexit debate
Marine Le Pen they follow that sort of
populist message but there's another
part of the precariat which is the young
educated or coming out of University and
college they were promised by their
parents and their teachers to have a
future they don't have a future so if
you're in the precariat you're facing a
life of declining real wages bumping
along more and more volatile living on
the edge of unsustainable debt where one
accident one mishap one bad
decision you tipping you're tipped out
and that's existential fear is real a
real outcome of what's been happening
now the rent is being earned
fundamentally by intellectual property
the intellectual property regime that I
discussed there is enormously more
powerful than it was 20 years ago since
the passage of trips in
1995 the number of patents has tripled
each and every patent guarantees the
patent holder 20 years of Monopoly
income we have cop copyrights which have
multiplied the income from all forms of
these intellectual property soall has
been shooting up exponentially so it's
taking a vast proportion of total Global
income it's it's a parasite on the
process but in addition our governments
other governments have been indulging in
beggar my precariat type of fiscal
policy if you follow my meaning by
indulging in subsidies huge millions and
millions of pounds are spent by
governments in giving Rich corporations
and oligarchs subsidies encourage them
to come to our country or to stay here
or patent the patent box type of you
know gift to the winners and these are
regressive they are sucking money out of
the ex cheers and every country is
competing on the same sort of thing
raised to the bottom raised to the
bottom but through subsidies the
subsidies create part of the government
debt so then you have your austerity
logic that we have to reduce debt
because of what happened in the
financial crash so they're paying out on
subsidies they're paying on tax cuts
corporation tax cuts income tax cuts for
the rich allowances etc etc so they say
well we've got to try and balance the
budget so we've got to cut
benefits we know where that leads it's a
a brilliantly uh uh described
context how does the basic income demand
fit into this and how can it be afforded
and is it just here or everywhere well
very I've been advocating basic income
for 30 years for a long time we were
regarded as mad bad and dangerous to
know in the last couple of years we've
suddenly become respectable so I'm
getting a bit worried I get invited on
your programs I should be really worried
and and and it's an thing because every
single day I get emails and contacts
from a wide variety of types from the
left to the far right and I've just been
invited to speak at the world economic
Forum in Davos on basic income you
really made it I've really made it now I
really must look in the mirror and be
careful but the situation is this that
income distribution system has broken
down just to give you another couple of
facts to to indicate the problem it used
to be when I was an economic student
that when productivity went up wages
went up but in the last 30 years the
jaws of the snake have been opening
productivity has gone up not very much
in some countries but in some quite a
lot but wages have been going down used
to be the case when profits went up
wages went up I know seemed Fair the
last 30 years snakes Jaws open used to
be the case when employment went up
wages went up but if you look at the
recent record it's it's the opposite
right so this means the system has
broken down okay now what we can see is
that we need to revive and create a new
income distribution system for this
global capitalism and the way to do it
is to do what John Maynard KES said
would happen but he hadn't foreseen the
intellect the intellectual property
rights regime but he said we need to
achieve the euthanasia of the
rentier put him to death I'm up for that
you are so am I but how do we do it in
the 21st century what we've got to do is
capture that rent all those forms of
rent which are immoral inefficient
distort markets so even on even on a
blatant capitalist line they can't
justify it okay you and I would disagree
with with it for different reasons but
even on their own grounds they can't
defend this sort of rentier situation
and using debts you know securitization
all these fancy gadgets by which the
financiers are sucking rental income out
of the precariat they can't justify that
so what we should be doing is working
towards a system where you create
Capital funds Sovereign wealth funds
democratically controlled Sovereign
wealth funds which a number of countries
are moving into to creating and using
those funds to help pay for a basic
income that's part of the creation of a
new income distribution system you can
also roll back the subsidies cutting all
those regressive subsidies to help in
the funding of a basic income now you
said in your introduction and perfectly
fairly that you never fully
understood what it means and you're not
the first person to say that to me what
it means is this
that any good
Society every man every woman and every
child should have basic security basic
economic
security the best way is the simplest
way to make sure that every
individual as a citizen as a legal
resident in our country should have a
basic income covering their basic
needs that means it should be Universal
it should be unconditional in behavioral
terms as long as you obey the law of the
land it should be individual and it
should be Universal in the sense that
everybody has the right to it as a legal
resident it's much better than means
testing which has huge problems as we
know and it's affordable anybody who
says it's not affordable has not been
looking at the figures on rentier
capitalism on the subsidies on on the
huge expenditures that that are
currently exist with tax credits and
things like that it's affordable and the
standard argument that if you gave a
person a basic income they would become
lazy they wouldn't work they wouldn't
work we've done pilots in a number of
countries which we've reported in the
books and and in a special book on basic
income shows that people who have basic
security work more not less well I know
a lot more now Professor guy standing
thanks for coming on this wouldn't
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it and now it's your turn to tell us
what you think through the portals of
social media what's rling gri so we're
talking economics this week so we asked
the people is the world economy on the
edge of a cliff and Linda answers well
maybe capitalism has reached its Tipping
Point and our very own Theresa May says
don't worry George I know some nice
little places in Panama to keep your
pennies
safe well of course that's uh part of
the rentier issue that Professor
standing was talking about it's not that
wealth isn't generated it's that is in
the hands of a tiny number of people 64
individuals own as much wealth as half
of the entire world's population that's
64 own more than 4 billion people
mindling mindboggling could make up
that's all the tweets uh we have time
for today which alas means that's the
end of the show but you can stay in
touch with us on social media through
Twitter rtor Sputnik on Facebook Sputnik
on Russia today it's goodbye from me
gatri and from me George Galloway it's
been marvelous
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