Book Review

Ignorant, Erroneous, Unjustified

Book Review:

Owen Jones, The Establishment: And how they get away with it, (Allen Lane, 2014).

Owen Jones, the Oxford-educated left-wing Guardian columnist, has written a book about the establishment. For Jones, the establishment comprises anyone he does not like. Its main activity is to conspire against the working class.

Some of his claims are simply startling. For example, he accuses the current coalition government of privatising the NHS. This might be news to anyone who has recently visited a NHS GP or hospital without being handed a bill for healthcare.

Commenting on the 1992 general election, he states: “the combined political power of the British media had been unleashed against Kinnock’s Labour Party.” Perhaps Jones thinks the Daily Mirror and his own paper, The Guardian, both of which supported the Labour Party, are not part of the British media. More notably, the paper widely read by establishment figures he despises, The Financial Times, backed Kinnock’s Labour Party.

Jones attacks the charitable status of private schools, saying that this benefits the wealthy to the tune of £88 million per year as a result of tax breaks given. This figure, if true, ignores the fact that the wealthy, by sending their children to private schools, are saving the rest of the population substantially more than this as they are not utilising the state system of education to which many would be entitled.

He provides support for the Financial Transaction Tax, claiming it would be a “tiny levy on transactions” that would promote “economic stability.” The truth is that it would be a disaster for the UK. The proposed levy of 0.1 percent on securities would mean a tax on $100,000 on every $100 million bond transaction. If a bond trader working in Dubai could call someone in London to do the trade and suffer $100,000 tax or call someone in an offshore jurisdiction where the tax is not implemented and not pay any tax, it is obvious where he will call. The telephones would stop ringing in London dealing rooms and redundancy notices would be issued.

Jones comments on the percentage of British companies owned by foreign investors – but there is no corresponding figure for foreign companies owned by British investors. Similarly, he mentions British companies now in foreign hands – but he does not mention foreign companies taken over by British companies.

Jones’s scholarship is sloppy. He provides an unsourced 1970s quote from Harold Lever. When, post-publication, he was asked for a source, he claims it came from an interview with Neil Kinnock. It is at no point clear that this quote is based on a decades-later recollection from someone else.

Of all the things that Jones despises, the City of London is at the top of the list. He cites a former City trader as saying the people who work in the City “are largely despicable, venal, greedy.”  Jones has no comment on ARK, a charity popular with City and hedge fund types, which, in one gala dinner in 2012, raised £14.5 million for children’s health and education around the world.

A central villain is Madsen Pirie of the libertarian Adam Smith Institute. Jones claims that Pirie’s ideological zeal is “shared by politicians of all parties.” But this leads him into a mass of contradictions. He refers to the bailout of the banks in the credit crisis of 2007-9 as “socialism for the rich on an epic scale.” If libertarian thinkers such as Pirie had as much influence as Jones imputes to them, then the banks would never have been bailed out in the first place. Pirie specifically argued against such state action.

Jones simply does not understand finance. The errors are embarrassing. He confuses exchange rates and exchange controls. He refers to the private-equity firm Kohlberg Kravis Roberts as Italian, when it is headquartered in America and does not even have an office in Italy. He states: “Mortgage books that were in actual fact junk were rated as ‘triple A’.” In fact pools of subprime mortgages were securitized and sliced and diced into tranches; the most senior tranches were rated AAA and these were not junk. His claim that packages of mortgages “with very low actual chances of being repaid were rated as having a 99 percent repayment likelihood, if they were structured in a certain way” is false. Specific tranches of structured pools of mortgages were given a high chance of repayment likelihood because this was deemed to be fair.

Jones ends his book by calling for nationalisation of the utility companies, strengthening trade unions, increasing the top rate of tax to 50 percent “as a start” with an implication that 75 percent might be preferable, and by urging the people to “use their collective power to win social justice.”

Oddly, he never employs the words, “Workers of the world, Unite! You have nothing to lose but your chains.”

Share this article.

shares