Friday, 11 June 2010

BP: Beyond Pensioners

As oil continues to gout into the Gulf of Mexico, another victim has made an appearance beyond dead fish and poisoned pelicans: British pensioners. According to yesterday's Daily Telegraph, the spill - and the American government's reaction to it - is hurting them terribly. "BP's position at the top of the London Stock Exchange and its previous reliability have made it a bedrock of almost every pension fund in the country, meaning its value is crucial to millions of workers," the paper reported. The story continues with these chilling quotes:

"We need to ensure that BP is not unfairly treated – it is not some bloodless corporation," said one of Britain's top fund managers. "Hit BP and a lot of people get hit. UK pension money becomes a donation to the US government and the lawyers at the expense of Mrs Jones and other pension funds."

Mark Dampier of the financial services company Hargreaves Lansdown said: "[Mr Obama] is playing to the gallery but is not bringing a solution any closer. Obama has his boot on the throat of British pensioners. There is no point in bashing BP all the time, it's not helpful. It is a terrible situation, but having the American president on your back is not going to get it all cleared up any quicker."

Neil Duncan-Jordan, of the National Pensioners Convention, said: "Most ordinary people would not have thought that BP would have an impact on their retirement but if BP's share price goes down then their pension pot goes down.

"Most of those pension funds are invested in the default option, which is stocks and shares, and so if BP goes down the pan then their pension pot goes down the pan."

Can a pot go down a pan? That pressing question aside, this whole argument is nonsense. Pensions might be affected by BP's tumbling stock price, but pension funds are in the business of risk management - that's all they do, or all they're supposed to do, just as BP is supposed to manage oil drilling is a reasonably responsible manner. The implication of these remarks is that BP should be immune from political or popular sanction or criticism, and to politically hurt BP is to launch an assault directly on pensioners. This is the logical outcome of the worship of "the markets" - a form of corporate fascism, the conflation of corporations, state and people, in which an attack on the FTSE or its larger members constitutes a direct assault on the Volksgemeinschaft.

The outraged tone taken by the fund managers here is extremely familiar. It's the voice of Milo Minderbinder, a character in Joseph Heller's Catch-22. Milo runs a syndicate, which comprises a number of generally crazy money-making schemes, and in which "everyone has a share". An elegant piece of circular logic allows the syndicate to get away with almost anything:

"Milo, how do you do it?" Yossarian inquired with laughing amazement and admiration. "You fill out a flight plane for one place and then you go to another. Don't the people in the control towers ever raise hell?"

"They all belong to the syndicate." Milo said. "And they know that what's good for the syndicate is good for the country, because that's what makes Sammy run. The men in the control towers have a share, too, and that's why they always have to do whatever they can to help the syndicate."

"Do I have a share?"

"Everybody has a share."

Everybody has a share, so what's good for the syndicate is good for everybody, what's good for the syndicate is good for the country, and what's good for Milo is good for the syndicate. Why, anything else is simply unpatriotic. Even the Germans have a share, so eventually the syndicate is being paid by the Americans to attack a bridge while being paid by the Germans to defend it. Milo starts flying German planes, and is horrified when an effort is made by the American authorities to confiscate those planes.

"Is this Russia?" Milo assailed them incredulously at the top of his voice. "Confiscate?" he shrieked, as though he could not believe his own ears. "Since when is it the policy of the American government to confiscate the private property of its citizens? Shame on you! Shame on all of you for even thinking such a horrible thought!"

"But Milo," Major Danby interrupted timidly, "we're at war with Germany, and those are German planes."

"They are no such thing!" Milo retorted furiously. "Those planes belong to the syndicate, and everybody has a share. Confiscate? How can you possibly confiscate your own private property? Confiscate, indeed! I've never heard anything so depraved in my whole life."

His tone of voice is familiar, isn't it? It's the same aggrieved wail of the fund managers, the banks, the hedge funds. Eventually, the syndicate bombs its own airbase, and Milo has gone too far. He is made to reimburse the government. But the syndicate has been making unearthly profits, and everyone benefits, and the government is a democracy, and therefore made up of people who have already benefited, so really the government doesn't need to be reimbursed and the benefit has already gone to the people. Even when it's fouling its own nest and screwing everything is sight, the syndicate is good for everybody and good for the country. That's the Minderbinder logic being used by the defenders of BP.

Update: This post has been reproduced on the New Statesman's Cultural Capital blog, with the volksgemeinschaft stuff trimmed out.


Markasaurus said...

The other thing that the Telegraph is conveniently ignoring is that most pension funds are only 1-2% BP shares (I learned this from an interview on the BBC this morning). It boggles the mind that people are treating BP like a cherished, benevolent national institution rather than as a greedy multi-nation corporation (US investors own 40% of its shares) with an abysmal safety record. In the last three years alone, "BP accounted for '97 percent of all flagrant violations found in the refining industry by government safety inspectors'." (

This whole saga is exactly like what happened a month ago with the hung parliament. The only thing you heard on television was about how "the markets are reacting." Your comparison to Catch-22 is very apt. Arguments about hurting pensioners could easily be turned around- why not blame the pensioners for destroying the Gulf of Mexico, since they are actually part owners of the company?

Adam Rothstein said...

I wonder how much of this is good old-fashioned nationalism. After all, "British" is still the first word in the company name.

I was reading these ( comments on an FT blog earlier this week, and other than the fact that the commenters sound like capitalist asses (the sort to defend BP on internet forums) it sounds like there is a lot of nationalist posturing first, capitalist rationale second. Read esp. the commmenter "Peter".

Just a single example. And of course, the fascism cuts both ways, when the corporation "is" the company.

Anyway, the US and UK should probably go to war over the whole deal. That makes the most sense.

Will said...

Mark, Adam, thanks for the comments. That's interesting stuff on the ownership, Mark, it certainly puts a slightly different complexion on the whole row. Beyond the name these companies owe little loyalty to the UK, or any other country. Look at BA, now saying it will favour Madrid over London after its merger with Iberia. (Less competition there, I'm sure.) After all, loyalty doesn't do very much for the shareholders, does it? I was reading in the Standard on Thursday that something like a quarter of the FTSE companies don't pay tax in the UK.

Anyway, BP's shares have bounced back, so "Mrs Jones" will be able to keep buying the better budgie feed for the time being.

owen hatherley said...

Reminds me of the ending of Adam Curtis' The Mayfair Set, where, after the decline of the 70s-80s buccaneers, the biggest downsizers and asset-strippers turn out to be the pension funds (leading to the weird paradox of workers essentially paying for their own redundancies).