Hitting where it hurts (part two)

In the 1930s, a charitable trust built London's New Era estate to provide affordable housing to working class residents.

In 2014, that estate has been sold to Westbrook Partners who have openly declared their intention to refurbish the entire estate and then raise the rent to 'market' rates. This is likely to treble the cost.

Many of the current residents will leave because they will not be able to afford to stay. They are unlikely to find anywhere else at a similar rent in a similar location. And so groups of friends, family members, social circles - an entire community - will be broken apart.

Some may end up homeless. Some of them will be rehoused by the local council. Some will not.

The story is explained very clearly here.

None of this is illegal

You might think something in the above story should be against the law. It isn't. Westbrook are perfectly entitled, in law, to act in this way.

Anything else would be unfair encumbrance on the free market. And we wouldn't want that, would we? Where would it end?

(Anyone saying 'Scandinavian levels of equality, social care, health care, civilised values and bleak television dramas' can award themselves an extra point.)

Enough of being flippant

Protests to Westbrook Partners are pointless. They exist in order to buy up stuff that they think is undervalued and then sell it on for a better price. They're not breaking the law. They're acting in the interests of their clients. Why should they give the current residents a break - and thereby give a smaller return to their own employees, shareholders and investors?

But maybe protests to the investors would work better.

According to the article in The Guardian, two investors in Westbrook Partners are the 'New York State Teachers Retirement System' and the 'State of New Jersey'.

Do you want your pension to be funded from mass evictions of working class families?

Has anyone asked that question of New York State teachers?

Sure, not all of them will care. But some of them will be horrified. Some of them would accept a very slightly smaller pension to avoid causing misery to others.

And some of them will work to ensure that Westbrook Partners leave the residents of the New Era Estate alone - and don't go looking for similar targets elsewhere.

And if they can't achieve that, some of them will try to stop their pension fund from investing in Westbrook at all.

I don't have the resources

I don't have the resources to track down every pension fund and private individual who invests in Westbrook Partners. But, with a bit of media exposure in the USA, some of them might even step forward.

And if the lost business becomes large enough, if the bottom line starts to smart, maybe investment houses will think this sort of speculation is not worth the trouble.

U-Turn

In my last post, I argued against a boycott of Amazon on the grounds that using the principle of the free market to try to encourage morality from a company was likely to lead to a resurgence of Roman-style entertainment. (Perhaps I got a little carried away, but I did state that I thought my analogy was clumsy.)

And yet here I'm recommending using the free market to try to alter a company's behaviour by pressure from its customers.

Some might call this a u-turn. I prefer to think of it as looking for an approach that might make a difference.

Feel free to argue the point - here, on Twitter, on street corners if you prefer but I might not turn up.

Playing into their hands

Since I last wrote about my objection to a boycott of a certain well-known web retailer, the situation has changed. The British government is proposing a change in the law to prevent some 'tax efficiencies' from being used. It remains to be seen whether that will help, or whether a new loophole will be discovered.

This, of course, leaves the other objection about treatment and pay for their staff.

Don't get me wrong

I am no apologist for companies trying to get away with paying staff as little as possible while reducing their tax liability as far as possible. But I fail to see why anyone would expect them to act any differently.

Yes, I'd like people to be paid an decent wage for a day's work.

No, I don't think that ludicrously low wages should be propped up by tax credits from the state - because that's effectively the state subsidising the profits of large multinational companies by making it possible for their employees to work for starvation wages.

If a human being needs to earn a minimum salary in order to buy food, clothes, and shelter then why on earth would the 'minimum wage' be any less than that?

If a company can't operate by paying proper wages then its business model is fundamentally flawed and it should be allowed to go bankrupt rather than relying on state handouts.

But it's not that, is it? They just want to make more profit and they can. So the minimum wage needs to go up. The profits can either come down - or they can charge more for their goods or services.

Anything else is market distortion. And we wouldn't want that, would we?

Market distortion is a good thing

Of course it is. And this is why a boycott is wrong.

If we, the great unwashed, the plebs, the salt of the earth, decide that we can change the behaviour of a large company by boycott then it means we have accepted that the free market has all the answers.

It means that we accept that change can only come about because of where the money goes. If it stops going to one company, that company will work out why people don't like it any more and try to change.

Which means that governments can wash their hands of any responsibility for looking out for the interests of its citizens. Don't like the actions of company A? Don't buy anything from them and the free market will do the rest.

No.

The role of a government is to look out for the interests of its citizens. And if something is being done which is against the interests of the citizens of a country (e.g. paying starvation wages, propping up your business model with state handouts, reducing your tax bill to near zero) - it is for the government to step in and fix laws and regulations so they work in the interest of the majority.

In other words, the government must distort the market. Because the alternative is unthinkable.

The boycott wouldn't work anyway

Sure, you might deprive a company of a million or two. But that's hardly going to be an incentive for them to start paying hundreds of millions more in tax and salary. Sorry.

Silly analogy - or a clumsy attempt to show why laws are better than market forces

Company D decides that they'll make a television programme in which random people are punched in the street - and their reactions captured in slow-motion high-definition.

Should we wait to see if anyone watches it? If so, the revenue from advertising will prove that the market approves - and a small amount of the profit could deal with the lawsuits and medical bills.

Or should the government stop them, perhaps by enacting a law forbidding that sort of violence, coupled with a law enforcement mechanism, perhaps including a police force, a judiciary and some prisons?