Monday, February 18, 2013

Is the EU handing over our welfare states to Goldman Sachs?

At first I thought it was a joke. Goldman Sachs, the epitome of greed and power, wants to look after the little people. Bigwigs from the bank's offices in the City of London have been in touch with the European Commission about initiatives that seem to be of a social nature, according to internal documents that I've seen.

Then it dawned on me that the idea wasn't as fanciful as it appeared. If there's a whiff of money in the air, then the "vampire squid" (as Rolling Stone memorably christened Goldman) can't be far away.

In a "social investment package" -- to be published shortly -- the EU executive will set out some proposals for "modernising" the welfare state. One of the suggestions being toyed with is to encourage the use of "social impact bonds".

These instruments were introduced in Britain during 2010. They were first tried out in Peterborough prison in Cambridgeshire, which is run by the for-profit corporation Sodexo. Under the bond programme, released detainees are helped to find housing and jobs. If the men and women in question desist from re-offending, their "investors" reap a handsome reward.

A similar scheme has begun in the New York "correctional facility" Rijkers Island. Goldman is the key backer of the scheme, along with Bloomberg Philanthropies, a foundation run by the city's mayor. (Philanthropy, by the way, is something rich guys do to avoid paying tax).


Am I alone in finding this offensive? Bankers have for the most part not been punished for their reckless behaviour leading to the financial crisis. And now these same bankers are gambling on whether run-of-the-mill criminals will re-offend.

Of course, this all fits in with a wider push to hand over almost every aspect of the economy to corporations. It was that supposedly unhip prime minister John Major who set a trend for "public private partnerships". His successor Tony Blair was sympathetic to some of the surrounding thinking. Yet it is David Cameron's current government that is really advancing this malign ideologically-driven agenda. The fiasco of last summer's Olympics -- when G4S wasn't up to the task of meeting the games' security requirements -- illustrated why key services must be kept under public control. That, however, hasn't restrained the Tories.

Common interest?

Preparation of EU's new "social investment package" has been followed closely by the employers' federation BusinessEurope. Towards the end of January, BusinessEurope organised a breakfast meeting to discuss ways of promoting corporate involvement in social policy. The group had the neck to claim that "public private partnerships" are in the "common interest".

This is manifestly not the case. Reforms to Britain's arguably most egalitarian institution, the National Health Service, are not designed to benefit the masses. They are designed to let a handful of companies make a killing. The health care and social care act, which came into effect last year, provides for the NHS' evisceration. Analyses published by the British Medical Journal show how it paves the way for restricting the provision of free medical care. A system financed by taxation is being replaced with a model more akin to that in place in the US, where health insurance firms have the power to decide who gets life-saving operations and who doesn't. None of this is in the "common interest".

The constant refrain from supporters of "public private partnerships" is that they want to guarantee efficiency. In their warped worldview, markets cut out any unnecessary flab and so the exchequer ends up footing a smaller bill.

It doesn't work that way in practice. When my daughter was born in Brussels last month, I was deeply impressed with the quality of health care in this city. To my astonishment, I learned that Belgium spends only about half as much per capita on medical care as the US. Having a hugely unfair health care system such as America's places a higher burden on the public purse than having a more equitable one. So the "efficiency" case made by proselytisers for privatisation is essentially a canard. (Belgium, admittedly, has a mixture of private and public healthcare providers but without the extremes found on the other side of the Atlantic).

Veneer of compassion

The "social investment package" is being presented as the brainchild of László Andor, the Union's employment and social affairs commissioner. Andor signalled recently that he wishes to give a "human face" to economic policies, especially to the euro.

His veneer of compassion does not conceal how the euro is an inhuman project designed by bankers (Goldman Sachs was represented on the Association for the Monetary Union of Europe, which drafted a blueprint for the single currency). Cutbacks demanded by Andor's colleagues have triggered a humanitarian catastrophe in Greece. The homelessness situation there - affecting an estimated 40,000 people - is unparalleled for a Western European country in modern times. Ireland, meanwhile, is still being pressed to reduce its health spending by the EU and International Monetary Fund. Spain has been told by the European Central Bank that cutbacks forcing teachers to work in overcrowded classrooms has put the country on the "right track".

"We must not allow those at the bottom of society pay the highest price for the moral failure and misconduct of others on the top," Andor has said. He can't really have believed those words. If he did, he wouldn't be so intent on "modernising" the welfare state to please corporations headed by moral degenerates.

•First published by New Europe, 17-24 February 2013.

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