Information for Social Change

Occasional Papers

Overview of articles in the Financial Times Wednesday May 3rd 2006 by Paul Catherall

• Watchdog Brands Profits on PFI Scheme 'Unacceptable' (Nicolas Timmings).
• Spain Warns Bolivia over Nationalisation and related articles (by FT journalists).
• Out on a limb: why Americans see their future as precarious (Edward Luce).

Watchdog Brands Profits on PFI Scheme 'Unacceptable' (Nicolas Timmings).

This article reveals how Britain's biggest investors in the Private Finance Initiative (PFI) have been described by the parliamentary spending watchdog as 'the unacceptable face of capitalism', including companies such as John Laing, Serco and 3i who have been accused of abusing government deals in an attempt to generate enormous profit. One example described how the Octagon consortium had made gains of £95 million from contracts involving Norfolk and Norwich Hospital, whilst leaving the hospital with potential liabilities of £257 million. The examples given in the article reveal how large private companies are accepting government deals for involvement in schools and hospitals whilst failing to deliver effective econonomic value. Other issues involved private companies running government agencies at enormous loss, including the National Physical Laboratory which was running at a loss of £80 million under the Octagon consortium. Other organisations which were shown to have suffered under private sector association included the Darent Valley Hospital, Fazakerley Prison and the Ministry of Defence Joint Services Command and Staff College.

Spain Warns Bolivia over Nationalisation and related articles (by FT journalists).

This section outlines the radical shift towards nationalisation of state industries and adoption of socialist domestic policy within the South American countries of Bolivia and Venezuela, particularly citing the nationalisation of gas production in these countries, which have been heavily criticised by governments and corporations of the United States and Europe. The response of the Venezuelan President, Hugo Chavez and Bolivian President, Evo Morales has been to point out that they are merely redistributing their countries' wealth through public services, education and health care - as opposed to allowing this wealth to be harvested by foreign corporations whom they claim have traditionally exploited their natural resources like oil and gas. The wider rise of socialist governments across the region is also discussed including the role of Cuba’s Fidel Castro in supporting these developing countries with medical professionals to support their struggling health systems. There is the possibility of a backlash by America and European countries against Venezuela and Bolivia in the form of economic sanctions.

Out on a limb: why Americans see their future as precarious (Edward Luce).

This article describes the plight of workers in the America's 'rust belt' central region, characterised by declining heavy manufacturing industries which have suffered as a result of reduced investment and falling demand for outdated products, especially in the competitive automobile sector. The article outlines how social mobility is in decline amongst a significant group of Americans whose economic background is based on these heavy industries and how they are becoming a forgotten underclass in contrast to other burgeoning hi-tech and financial sectors. The article also indicates how the majority of new jobs being created in America are lower paid, in the words of one interviewee: 'the only jobs being created are at McDonald's and Wal-Mart'. Pensions, health care and other benefits that were secure under traditional industries are often inadequate under these new, lower paid jobs. The influx of migrant workers from South America may also have been seized upon by employers to drive down wages amongst these jobs. The threat of a political backlash from voters dissatisfied with the free market as a solution to economic problems is also mentioned, stating that popular protest will follow 'unless the defenders of the open market economy find solutions to the real problem of growing inequality'.