The power of credit

Published: Fri, 08/05/22

Last week I wrote about the dangers of debt and the position of weakness that a debtor can find themselves in. Whether being owed money you can’t recover, or owing money you cannot pay, dealing with debts is not a good position to be in. On the other hand, collaboration between institutions which can extend large amounts of credit, corporations with ambitious business plans, and governments who are prepared to legislate advantageous regulations and policies and a great deal of power is immediately put into the hands of a few people.
Rich people are not necessarily rich in the sense that they have a lot of money. When Elon Must tried to buy Twitter for 40 billion dollars people seemed to assume that he must be able to afford to spend that much of his own money because Musk is one of the richest men in the world. The reality is that Musk was looking to borrow most, if not all the money, he would have needed for the deal. I could go to my bank and ask for 40 billion dollars to buy Twitter too if I wanted too. I don’t think the bank would take me very seriously because my name is not Elon Musk, apart from that, what is the real difference?
Another example is PPI or Public Private Partnerships where the government encourages state institutions such as the NHS health trusts to build hospitals and other infrastructure in collaboration with private financial institutions. Just before a general election the government can boast that it has built this, or that many, new hospitals. The only problem being that those hospitals do not actually belong to the NHS and are leased back at great expense over the next 30 or so years. According to a Telegraph article from 2015 the NHS was then paying out £2 billion a year to PPP providers and it will have got a lot higher since then.
Or what about Student loans? When I entered higher education in 1983 I received a grant. With some paid work during the holidays and a part time job during my last year I left in 1986 with some money in the bank. These days it is very likely that a graduate will complete a three year course with a debt of around £47,000. As with PPP and the NHS this arrangement has pumped a lot of money into the Higher education system, but at the expense of long term debt for young graduates. How did the government facilitate this situation? Very simply, by taking student loans out of the bankruptcy system.
Some students have always spent more than their income and in my day quite a few of my fellow graduated left university with bank loans and credit card debt. However, the amounts of debt were quite paltry by modern standards. Personal bankruptcy is not a nice process, but it is manageable and when it is over you are free to continue your life debt free. The student loan system was never going to work if bankruptcy was an option, so the law was changed. I know we are told that the student loans will be written off after 30 years, but 30 years is a long time and the rules could easily be changed again.
The issue which really caught my attention is the ownership of agricultural land in Ukraine. In 2021 the Ukrainian government was in a position to receive 8 billion dollars in loans from the International Monetary Fund (IMF). However, there were conditions attached. In the 1930s Stalin collectivised agriculture in the in the same way that land was organised in Communist Russia. The process led to a massive famine known as the Holodomor which killed millions. Over time farming adapted to collectivisation and became reasonably effective in feeding the populations of the Soviet Union. With the collapse of communism in the 1990s and Ukraine gaining its independence, state assets were often put up for sale. Huge areas of farmland were bought up by local oligarchs and sold on to US corporations at huge profits. 17 million hectacres or nearly 60% of Ukraine’s farmland is now owned by corporations such as Cargill, Dupont, and Monsanto.
in 2001 a moratorium on the private sale of farmland was put in place to prevent all of the Ukraine’s agricultural land falling into foreign ownership. Ukraine also enforced a ban on the growing of GMO crops and use of associated pesticides such as Monsanto’s Round Up.
The conditions for receiving the IMF loan? Lifting the moratorium on sale of farmland and the ban on GMOs. President Volodymyr Zelensky signed just such an order in 2021. I wonder what effect the Russian special operation to liberate the Russian speakers of the Donbass will have on the US based corporations plans to own most of the country and use the land to grow GMO crops which the EU has previously done its best to keep out of Europe.
You may have noticed a recurring theme in the examples I have given. Corporate interests wish to expand their business and holdings. Money lenders provide the credit to outbid any competition. Governments create a regulatory environment which is highly favourable to the aims of both corporations and money lenders. The result is that monopoly capitalism takes over health care, education, agriculture, and any other sector where there is money to be made and power to be consolidated. War is probably the most profitable racket of all.
What do we do about it? To start with, awareness of how the world actually works, then finding the courage to imagine that the world could be different and better, and then choosing not to comply. Difficult? Of course, but if we want a future for the majority of mankind as anything other than as slaves to corporate interests we do not really have a choice.
Some useful links
How might the future look as imagined by the ultimate collaboration between high tech corporation, big finance, and autocratic government?
Check out this video which shows how corporate interests have been effectively cheating us for the past 150 years, yes the everlasting light bulb does exist
The Ukrainian famine of 1932 to 33
Land ownership in the Ukraine
This page actually dates back to 2017 but it explains Public Private Partnerships very simply and the situation has got a lot worse since then
Graham Butcher
21 Beaver Road
Beverley East Yorkshire HU17 0QN

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