The Financialization of Child and Elder Care: The Tax Justice Network December 2019 Podcast

Yves here. We missed some good Tax Justice network monthly podcasts and are remedying that oversight today. These Tax Justice talks typically combine an update on news events, which today is Brexit, and a feature discussion on elder and child care. In the UK, for instance, public funding has  helped support private operators, many of whom are small and where the owners have modest financial goals. Private equity is moving in and making bids on even Mom-and-Pop-sized private nurseries and are creating corporate chains.  Experts describe how these operations are not more efficient but are skilled at extraction.

From the Taxcast:

This month we ask – what’s going on with our pre-school childcare and elderly care home services? We take a long hard look at the financialisation of our services and what we can do about it.

Plus: the Conservative party in the UK has won a major victory in the general elections. With major challenges for tax justice, what are the next steps for trade deal negotiations? Will Britain now become a fully fledged Singapore-on-Thames?

It’s not good for essentially public infrastructure…to have public infrastructure at the whims of companies that we can’t even contact is extremely precarious and unsustainable… that’s why there’s a strong case to be made for politicians and people of all political persuasions to be interested in the sustainability of this industry. Because it needs to be fair and it needs to be sustainable because of the people involved, the people who will be affected.”

~ Vivek Kotecha, Centre for Health and the Public Interest, author of Plugging the leaks in the UK care home industry – Strategies for resolving the financial crisis in the residential and nursing home sector

The European Union is a colossal export for the City of London and one which the large banks and the major law firms do not want to be locked out from… all sorts of pundits have been flagging up growth opportunities in far East Asia, but with Hong Kong and Singapore already well established as offshore financial centres and the Chinese are now talking about expanding offshore financial services through Macau, the growth opportunities in Southeast Asia are unlikely to compensate in any way for the market share losses which arise from a hard Brexit from Europe.

~ John Christensen, Tax Justice Network

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21 comments

    1. Joe Well

      With increasing competition in East Asia, London is unlikely to be able to increase its marketshare in that region, let alone become the next Singapore. I got that just from reading the summary above.

      And obviously it can’t become the Singapore of Europe because it already was the Singapore+Hong Kong+Tokyo of Europe and is now abandoning that. The Americas has its own financial hubs, meanwhile.

      Also, how many dialects of Chinese does the average London trader speak?

      Reply
      1. Synoia

        One, English.

        The Chinese have discreet languages. Theoretically the English could speak English and write in 中文;

        It would be nice if English were spoken on the west side of the Atlantic. Sadly this in not so. There is however, a crude dialect spoken there with many misspelled words in its written appearance.

        Reply
        1. Yves Smith Post author

          This is not a chat board. Your comment is both a straw man and an assignment. Both are against our site Policies. Broken record, thread jacking and bad attitude are further violations. I suggest you read them before commenting further since commenting here is a privilege and you are accumulating troll points.

          Reply
    2. Yves Smith Post author

      I suggest you bother reading our many posts on Brexit. Singapore has all of 5 million people. It can’t be a model for the UK with 65 million people. We’ve unpacked why.

      Reply
  1. Colonel Smithers

    Thank you, Yves.

    Just to give some context and figures from my local government auditor mum.

    There’s a fifteen year old boy in Buckinghamshire. As he had mental and physical disabilities from birth, he was given up by his birth parents after a few weeks. After being passed around carers for a dozen years, an elderly couple took charge. The Mayfair based investment firm that acted as intermediary gets £20,000 per month. The carers get £1200 per month. As the carers are struggling themselves, eventually a way was found to break the contract with the investment firm and award the carers £5000 per month directly. This sum will rise. That is just the most recent of many egregious examples. Many of these firms / intermediaries have Tory and Blairite MPs on their boards. It’s the same with NHS parasites.

    Reply
    1. JBird4049

      Municipalities and states social programs in the United States are also draining, sometimes illegally, often hiding the fact that the trust funds, federal disability benefits, savings, real estate and other assets. They use the excuse that they need the funds as the cuts in government services have been heavy. So McKinsey like consultants pimp the idea, for a nice fee, to the various governments and since the victims are the most disabled or the youngest, and therefore the most vulnerable to this hidden abuse, nothing stops the questionable, dishonest, and sometimes just flat out illegal activities of the local governments.

      Reply
  2. John A

    Private elderly care is outrageously expensive in England. For instance, a friend’s mother, now deceased, was ‘paying’ £1500 a week. In most cases, they don’t pay up front, many elderly people have a lot of equity in their homes due to housing market inflation that the private care company grabs when the person dies.

    Reply
    1. Wukchumni

      My mom has been in an assisted living place since she turned 90 and has been there 4 years and yes, it’s spendy. There’s a ‘memory loss’ ward attached but separated, and it’s about 50% more for residents there.

      If she makes it to 100, they will have gleaned every last cent she received for selling her house in L.A.

      …you can’t take it with you

      Reply
        1. Wukchumni

          I think it was a 1-shot deal only possible on account of real estate going up so much. Most everybody there bought a home in 1964 for $23k that’s worth upwards of a million bucks, that sort of thing.

          Reply
          1. Joe Well

            As Yves commented yesterday or the day before, the “Silent Generation” was the last living cohort of Americans that ended up economically better off than the previous cohort.

            And then the healthcare man came to take it all away, anyway.

            Reply
            1. JBird4049

              They can’t have the peons think that they might actually win, now can they? It would be bad for the Lords’ of the Universe egos if that happened.

              Reply
            2. Synoia

              I’d note that the Killers of the system the silent generation enjoyed, were of the selfsame silent generation. Carter, Reagan and Bush the First.

              Reply
  3. Susan the Other

    What a rational discussion on financialization. Private equity extracts 15% for profit. Unconscionable. That is only possible with ultra lax regulation. Sitting ducks. And worse – it’s vertical usury the minute the care center is sold. Extraction at every level including usurious interest rates. Followed by bankruptcy. So clearly what we have is not an innocent overlooked loophole, we have government by and for equity, including equity extraction.

    Reply

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