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article imageOp-Ed: How bonuses pay and benefits don't

By Alexander Baron     Nov 6, 2011 in World
Yesterday, it was reported that the European Parliament was planning to curb the bonuses being paid to bank staff, while a guest on a BBC news programme explained how benefit claimants are stuck in the poverty trap.
The story about bank bonuses made the front page of The Independent. Although the British public has been aware of and indignant about the size of these bonuses for a long time, they did not really become an issue until “Fred the Shred” hit the news for all the wrong reasons. Chartered accountant Sir Fred Goodwin was Chief Executive of the Royal Bank of Scotland, and presided over its ignominious downfall and its takeover by the Government, although they don't like to use the word "nationalisation".
When a football team goes down the tubes, the manager is sacked, but Sir Fred walked away with a pension of £700,000 a year and into a post of senior adviser with RMJM.
Nowadays of course, people the world over have had enough of this sort of thing, and the ongoing “Wall Street occupations” are merely one aspect of a global populace that is at last coming to grips with the banksters and their illegal occupation.
While the idea that people should be paid bonuses for wrecking the economy may sound novel, people at the other end of the economic scale, the underclass and the class below them, are trapped in a downward spiral thanks to the benefit system.
It is true that this system has been abused big time on occasion, like the claimant who bought a yacht. Occasionally there are also humorous tales of bogus claimants who are caught out, like the clairvoyant whose crystal ball appears to have let her down.
The reality though is that in spite of the figures that are thrown around like confetti, the amount lost to large scale or organised benefit fraud is unknown, but when such cases come to light, they make big headlines.
Most so-called fraud is not fraud at all in any meaningful sense, what happens is people become embroiled in the poverty trap. One of the major reasons for this is that in the 21st Century, there are very few unskilled jobs in the advanced nations that pay a living wage.
True, there are exceptions, for example, the celebrity culture has led to the creation of a type of man or more often woman who is literally famous for being famous, and paid handsomely for the privilege.
But that is no consolation to the large numbers of older people who having reached fifty and been made redundant will probably never find paid employment again, or the young in our inner cities who have never had a job including many who perhaps never will.
Two years ago, there was a debate about the poverty trap in the House of Lords. This trap is still there for most people, as was pointed out on the BBC yesterday morning. If a person is receiving housing benefit and other benefits, and takes a job, he or she loses as much as if not more in benefits than can be earned by a person at that level.
Some people are actually a lot worse off working than they would be on benefits when one factors in the extortionate cost of travel and other things for which someone staying at home all day does not have to budget.
The Labour Government of Tony Blair made a genuine attempt to redress this problem, unfortunately, it was soon sidetracked by the little matter of 9/11 and the war in Iraq. The current administration has also sought to do something, in particular Iain Duncan Smith has been charged with looking into the reform of the benefit system, but not only is this taking too long, it is again oriented towards getting people into (low paid) jobs that for the most part aren't there.
The previous Conservative adminstration - Margaret Thatcher and then John Major - sought to solve that problem by a novel method, a squeeze on benefits. This led to especially young people ending up on the street in droves, which on the plus side, inspired Luke Morley to write the song Low Life In High Places, and on the minus side, well, think about it, people on the street are vulnerable to crime, to predators, to health problems, very often they end up in prison themselves, or even in and out of prison, all of which costs money, but these morons who will unthinkingly part with six figure pensions for the likes of Sir Fred Goodwin and seven figure bonuses for banksters would rather pay for police, courts, social services, and all manner of other expenses than shell out a relatively small sum to provide for people who through no fault of their own are left without the means to earn a living wage. Seen through this prism, it is little wonder that last August, so many of our youth ended up rioting and burning on the streets of London and elsewhere, even if they were burning out innocent shopkeepers instead of the people who caused the economic collapse of a once great nation, and are in the process of doing the same to the rest of the world and then some.
If the Government wants full employment, the easiest way to bring it about would be to start another world war as suggested by David Cameron's fellow Eton alumnus Gilbert Frankau, with all the horror and madness that would entail. A far better alternative would be to institute a Basic Income, because as automation increases, more and more for the most part menial jobs will be destroyed - something we should welcome - but unless an alternative method of distributing purchasing power is introduced, we will simply see more and more people thrown onto the scrapheap, and more and more social disorder as society is divided increasingly into the have and have-nots.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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