Blog 2023 Malcolm Blair-Robinson

Bank Shares

Tory activists must be getting anxious. At the beginning it all made sense. Cut the size of government, re-energise local government, cut spending, regulation and quangos, increase personal responsibility and authority. Set the financial house in order and set the people free.  Miles ahead in the polls, Labour might even be knocked into third place, Cameron was Prime Minister in waiting.  But now? Oh dear.

Suddenly it was muddle over marriage and tax, then it was whether to cut and when, followed by schools set up anywhere without planning permission as long as Whitehall said yes, now it is discount shares in, wait for it, Banks.

There are two reasons why the Tory lead is slipping fast. One is that  (for the first time I can remember, and I can remember every election since 1950) their election campaign is coming apart with wheels flying off all over the place. But their is another much more fundamental reason why someone has to get a grip. The campaign is treating the voters as gullible fools, when the reality is the most sophisticated and best informed electorate in history, in touch and communicating as never before. Harking back to Thatcher’s golden era with Sid and British Gas is infantile. Not least because everyone now knows that our energy supplies are far from secure, owned by foreigners, in some cases foreign governments and very expensive. Everyone knows after the killing it is all down hill.

Remember too those bastions of our financial bedrock that stood the test of wars, depressions and austerity, The Halifax and the Abbey National? Mutual societies without shareholders, owned by their customers. Then they were allowed in another Tory initiative to convert to shareholder companies and call themselves banks. Where are they now?  The one is bust and the other was rescued by the Spanish.  Not to mention Northern Rock, Bradford and Bingley etc.etc.  The message needs to arrive at the headquarters of the Conservative party that there is now a new capitalism and their old model is dead. Nobody is quite sure what the new capitalism actually is, but everybody knows what it is not.

It is not too late for Cameron and Co, but it nearly is. Ask any London taxi driver who they think would make a good Tory and national leader if Cameron goes down. Only one name ever comes up. William Haig.

Statecraft

This is a good moment to consider the nature of the appropriate foreign policy of the new government, when it finally arrives. If we get a hung parliament it may be a government of many different colours. 

The key issue now is not the war on terror or Afghanistan, nor is it the Palestinians and Israel, although as this blog has reiterated time and again, this unresolved confrontation in the Middle East should be. It is the once in a generation shift in the tectonic plates of relationships between states made manifest by the global financial crisis. It is about the rise of China as the world’s second power. It is also about the recognition that it will then emerge as the world’s Number One.

It will not be the triumphalist imperialism of the short lived tenure of the United States, neither will it be so short. It will be more subtle, based, more like Britain’s near forgotten Empire, on a foundation of trade, commerce and national wealth. Its capitalism will be state controlled and its governance authoritarian, but that does not mean that it will be harsh or life in its shadow will be without freedom. It will be respectful of the independence of Europe, Russia and India, with whom it will enjoy trade and in which it will invest. America will be its greatest commercial asset and it will not seek to destroy it for good economic reasons. It will watch over America’s economic health just as a multinational manages a local subsidiary. But as every subsidiary management knows, the ultimate power is with Head Office. It will be the age of China Inc. There will be a military arm but not so in evidence as the hardware of the Pentagon or the Kremlin in their heyday. There will be less ‘with us or against us’ simplistic diplomacy and more of  mutual interest, balance and nuance.

This all comes about because of the collapse of the free market economic model of the United States and Britain due to its excessive  reliance on credit, together with its mirage of money based wealth rather than the reality of wealth based money. China, India  Asia  and Russia now have most of their money. It is the start of the decline of the U.S as a super power which cannot be challenged.

This is not bad news. Especially not for Britain, one of history’s greatest trading nations. To take greatest advantage of the quite different opportunities which will present themselves we need to de-couple from the foreign policy of the Americans and follow the subtle, nuanced type of statecraft of which we were once masters. Europe has already detached from America and the feeling is mutual. Russia hangs in the air and needs to be brought closer to Europe. India needs to dis-engage from rivalry with Pakistan and resolve their mutual problems. America must adjust to the new reality it faces, way off  its radar hitherto. Israel has to be made to be reasonable with the Palestinians and the Palestinians in turn must resolve their feuds and present a combination with whom business can be done. 

In all of this the scope for Britain to play a major role as a broker and fixer, using its centuries of experience which have polished its craft to unusual smoothness, will ensure we are still at the centre of events. Maybe not a new golden age but one with a glow certainly.

Gordon Brown

This blog affirms once more its independence of political parties, whilst commenting in robust terms on political issues. The latest excitement revolves round allegations in a new book that Gordon is a bully, to which is added the mysterious claim from an anti-bullying charity which is itself not without controversy and  apparently endorsed by leading Tories, that ‘three or four’  unidentified people had called and sought advice on matters relating to the working atmosphere in 10 Downing Street.

Workplace bullying does exist and it is very unpleasant indeed for those subjected to it. Let us be clear, however, that the kind of bullying that I am repelled by is not what is being discussed in the present media feast. It is a singular achievement to be chosen to work at the very heart of the nation’s government. Nobody has to do it. Anyone who does can leave at any time. So spectacular is the entry on a C.V that a new posting, even in the recession, will come easily.

That there are shouting and tempers behind that famous door is not in doubt. Nor is that new. Churchill became so unpleasant at one point in the war that officials approached his wife for help and she wrote Winston a letter of reproach. Margaret Thatcher was kind and thoughtful to her staff but allegedly reduced her less robust male ministers to tears when their performance fell short. Heath was difficult.  Major referred to his cabinet colleagues as bastards. The story goes on. Some Prime Ministers are calm, but that does not mean they are better leaders or more competent. Blair and all those wars for example.

Gordon Brown is a towering political figure who dwarfs most of those around him in the same way as Thatcher. He, more than Blair, is the force behind Labour’s re-birth and rise to power, after eighteen years out of office. I do not agree with many of his policies and particularly not in regard to the credit crunch, but his leadership at that point both here an overseas saved us all from a meltdown of our entire way of life. He is chronically indecisive on some issues but in a crisis he, like Churchill whose personal flaws were legion, is the man.

He began this election campaign in his own words as the underdog, but bit by bit the gap in the polls is narrowing. These polls now point to a Tory lead that would fail to give Cameron a majority. This is not really due to Brown’s success. It is much more to do with Cameron’s failure and a Tory campaign which is rapidly losing credibility. The Tories needed a break. There is something very odd about this bullying business. Not so much the book. These things happen in politics. More about  the charity. I smell a rat there.

The Deficit

There is a rather entertaining exchange of letters in the papers with scores of economists taking opposing views as to whether to cut the deficit this year with immediate action (or at least halt its rise) or to go on borrowing. Ordinary people find this a bit unnerving  as they suppose economists know all the answers. Unfortunately economics is such a moveable feast that I have for years doubted whether, as a single discipline, it really exists at  all. Throughout my life economists have argued and disagreed. None from Keynes to Friedman to Blanchflower have been proved entirely right, yet neither have they been proved entirely wrong. This is the point. Both sides of the argument are valid and it is somewhere in the tension between the two that the least bumpy road will be found.

But that is by no means the end of the matter. Having selected the least bumpy road the question must be put, where does this road lead? Here the number of experts willing to scout forward diminish to a handful whose observation are largely ignored.

The nature of the recovery presently being engineered is not only hesitant but useless, since it ignores the calamitous structural imbalance that put the West in to this mess in the beginning, in which grouping we are actually in the biggest mess of all. It is a fundamental strategic imperative that we re-structure our economy on a socially fairer model which relies far less on borrowing and which makes more of what it consumes, whilst saving much more significantly for the future both at national and personal levels. Relying on asset inflation to accumulate wealth is in the long term a mirage. If a restructuring programme begins, the issue of the national debt, when and how to reduce it, falls  more readily into context and leaves some choice about how soon and by how much.

Failure to restructure voluntarily will, after a false dawn of failed recovery, force upon us the biggest economic and social upheaval of the last hundred years whether we want it or not.

China and the U.S.

Twenty nine years ago, having moved to a new office in Regent Street (London W.1), I wanted to hang up some pictures and found we had no hammer. I asked a colleague who was on his way out to buy a sandwich to pop into the ironmongers (we were just on the edge of Soho which still had lots of useful shops) and buy one for the office and I gave him £5 out of petty cash. He returned shortly with a magnificent hammer, beautifully made and finished to a standard hard to beat even with the best available at any price. I said ‘How much did you blow on that?’

50p was the reply. It was, he explained, made in China.

In those days we were still in the cold war, Russia was the other superpower, not one move could be made internationally about anything without weighing her reaction and neither NATO nor the Warsaw Pact could trespass upon the other’s sphere of interest without the risk of nuclear war. The world was both frightening and at the same time stable.  There was  what was called called a balance of power. There were other players. The West had Japan. The East, as the communist world was known, had China but both were minor players. But I looked at that hammer and began to think.

Later I said to anyone who would listen that China would one day emerge as the world’s first mega power. Almost nobody listened. But the clue was in the hammer. Anything bought made in Russia was crude, or in America was functional. But this Chinese hammer had function, style and excellence, an air of outstanding quality. It seemed to me that if they ever sorted out an economic model to suit their totalitarian form of government with their vast population and their historic interest in technology they must one day rise to the top.

This is now so far advanced as a process of national development that it is  certain that China will come out on top and within a shorter timescale than many think. Because unlike the Soviets whose economic model was dysfunctional, China’s is so good that it is set to become the world largest economy before babies born today are through their teens. China is at the heart of an astonishing irony. Its strategic plan has been to gain an economic, not military hegemony and becuase of the untrammeled greed and crass conceit of so many of the players in the West’s omnipotent free market economic system, it is already the dominant economic power. With Russia, India, Taiwan and Hong Kong behind it ( this is not yet fully the case) the world economic tune will be played to China’s beat. This will affect all our lives in the tiniest detail. Even the level of Council Tax. 

If China were to decide to take the losses, dump the dollar and stop buying US debt, America is bust. China is not spendthrift and it will not do this yet. But it has decided that the arrogant expansion of imperial influence pursued by the U.S since the end of the cold war, is to stop. From now on it will want to approve every move. Sanctions is a word the West uses often to threaten smaller nations who will not do its bidding. But just suppose China decides to apply sanctions on America. Now that really would be something. The economic impact would be devastating but the psychological impact on the United States of America will much more profound than 9/11.

The time has come when for the first time in its history America will have to stop making enemies. It will have to learn to make friends. In the end it comes down to numbers. America has thee hundred years of history with 300 million people. China has 1.4 billion people and a civilisation many thousands of years old. Soon America will be forced to acknowledge that this time it has no choice.

There will be the trigger happy in the Pentagon. America has used  armed force in the past to see off those in its way. Starting with the British the list goes on. The Mexicans, the Confederates, the Native Americans (red indians at the time), the Spanish, the Kaiser, the Japanese, the Nazis, the North Koreans, the Russians in the Cold War which they think they won by jacking up the military cost until the Soviets went bust, the Iraqis and unfinished business, the Taliban. Pretty impressive list. Mostly they were on the right side but not always. Oh, then there was Viet Nam.

China is different. It already has the nuclear capability to wipe out the population of the U.S. It has the ability to create a big enough army to invade and occupy the U.S. and it could rapidly create the naval and air forces to make it feasable. It also has the money. All that American spendthrift money. If America pressed the button and wiped out 3oo million Chinese and China retaliated and did the same, China would have 1.1 billion standing and America none.

The United States of America is approaching its crossroads of history. For the first time it is faced with a rival against whom its military hardware is of no value other than suicide and whose financial muscle is more potent than its own. More to the point its economy  and standard of life now depends on China playing ball. Bit by bit China will shift the rules of the game to fulfil its vision of the world order of the future. 

The U.S. will be forced by self interest which will including dependence, onto a different path.  There it will find, for the first time, the promise of its inauguration as an independent country as it sets about building a society that lives up to the aspirations it has itself proclaimed, but never found, over the first three hundred years of it life. This is really a very bright prospect.

The Banks

There is hardly a current affairs programme these days with a financial section which does not feature some discussion over banking profits and bonuses. There is a point which is central to the discussion but which there is often not time in these sandwiched interviews to develop. It is this. Nobody minds people like Sir Richard Branson or J.K.Rowling earning great wealth, because these people create wealth for others to share through using their products  or working in their dependent industries. They have enormous creative talent and enrich the culture of our country. We are all better off because of what they have done. Where would we be without Virgin Atlantic or Harry Potter? Moreover they have done this without the need to be bailed out by the taxpayer and they have not contributed, by reckless gambling, to the crash which brought on the recession.

The same cannot be said for the Investment Bankers, or better put the Banking Gamblers. What they do helps only those in their game. So little of it is needed by anybody that they are allowed to keep a staggering proportion of their winnings which are sanitised and called profits. Whatever may be said in their defence they are, as previously described by Lord Turner, engaged in a socially useless activity for personal gain. This is an unacceptable face of capitalism which is not only uselss but dangerous, since when it goes wrong it threatens the livelihoods of ordinary people whose lifetime earnings for their toil do not equal a single bonus of these modern day alchemists.

We cannot stop them doing this but we can stop funding them. We can ring fence the essential economic service of true banking from this activity of financial fornication and we can make clear to those addicted to it whether Shareholders, bosses or dealers that when the bell rings time they will be left to go bust. We do not care if they take off to Dubai or Japan because we no longer consider this carbuncle on the face of the great London tradition of financial professionalism a vital national asset, rather a reeking liability without which we would be better off.

We need to worry about getting the model of our economy into a sustainable and socially just format. We need to reduce the cost of housing, borrow less, earn more of what we spend, save more, make more of what we buy and restore our industrial strength. We also need to transfer resources from the public to the private sector, but take public responsibility for energy supplies, infrastructure, public services etc. No more management through quangos and regulators financed through inner city neglect. And definitely no more gambling with taxpayer money or secured by taxpayer guarantees.

Workers Co-operatives

The Tories have just unveiled a weird plan to turn welfare services and schools into workers co-operatives. Labour has plans not wholly dissimilar.

This blog will not comment on the efficacy of these proposals until more is known. It does hasten to remind its readers of the complete fiasco of the NHS internal market introduced by the Tories on their privatisation binge years back and the inherent weakness in trying to make a business out of a service. This is what caused the GP surgeries to go to pot.

Some elements of modern life must operate at a profit to create wealth. These elements are mostly best in private hands. But there are other elements, infrastructure and public services, which are there to enable the rest of the economy to work smoothly and these are best left under some form of public control. This control needs to be accessible and democratic as public money is involved. Where relevant that democratic control should be exercised locally and not through Whitehall. This is a point made by Cameron. Whether workers co-operatives in primary schools and welfare services would achieve that, is very much open to question.

Civilian Casualties

The deaths of twelve civilians on the second day of the NATO offensive is tragic news. Built into the profuse aplogies and regrets from the military top brass is the caveat that accidents happen in war.

This is the nub. Indeed they do. Which is why war cannot any longer reasonably be used as an instrument of civil policy or as a means to install a government of whatever beneficence upon a people who do not themselves take the initiative to make the change. It causes death among civilians, among them women and small children, it means young military personnel on both sides will be killed and it will never bring the reward of the objective because order brought forth behind the barrel of a gun will not sustain. Only order brought about by the consent of the people will endure and this must be wrought, through whatever self imposed suffering, by them absolutely.

The Karzai government has tottered on the fringe of power, as the invaders’ official regime, for coming up to nine years and through that time as a consequence of mis-management, corruption, dishonesty and deceit it has manged to fail spectacularly to live up to the early promise of its inauguration. 

The Taliban were conquered militarily but have enjoyed a resurgence in popularity which has enabled them to establish an insurgency which has rested large tracts of the country from any control whatsoever from Kabul and even rendered the capital city itself a frightening and dangerous redoubt.

The reason these exotic tribesmen, whose fundamentalist faith appeals to the traditions of their country, are able to pose with small arms, mopeds and kitchen built mines a military challenge sufficient to engage the West’s best generals and assure  top of the in-tray priority in London and Washington, is because their governance and economy is more efficient and a great deal more honest than the tacky and uncertain alternative which has to blast its way around the country behind thousands of foreign troops.

This has all  happened before in a place called Viet Nam.

Afghanistan and America

The new offensive in the south is going well for NATO so far. In military terms it may well work but it cannot succeed in the long term as a civil solution. There is not a single instance in modern history when an outside power, backing one side in civil war, has succeeded in creating an era of peace and tranquility in the affected country. The way to do this is through economic aid, business ties and infrastructure development. These things empower people. People in their own homeland. It is they and they alone who will rid their country of medieval regimes and other despotic rulers. Sometimes it takes a generation but in the end the government which succeeds contains in large measure those branded as terrorists by the occupier.  

There is a useful list of examples. Spain, Kenya, Vietnam, Cyprus, Algeria and Ireland all had military interventions which failed in the end and their own people created the government structure that suited them. 

Farther back, but where all the powers, led by wise men of the day, refused to intervene and let the fractured people reach an outcome on their own, there was the Confederate States of America. Imagine the even greater suffering, the mess and the bitterness if France and Britain had come up with some bullshit about home security and sent their armed forces across the Atlantic ‘to bring peace to the people of America’.

No, some things just don’t work and never will. America, above all others, should know that.

Working Hours

The New Economics Foundation, an out of the box Think Tank, has just issued a report to say the quality of life, especially for children, would be hugely improved if people worked earned and spent less and had more time for family, children, civic contributions and leisure.

This is bold and worthwhile thinking. The manic approach to work now prevalent in order to endlessly consume more and more is a daft way to organise life and causes much suffering.It reduces life to an adjunct of commerce rather than the reverse.

The solution of a 21 hour week proposed in this report may not be realistic, however. For the well paid to earn less would be no problem because their reduced living standard would remain comfortable. For those on low pay it would not be possible to make ends meet. This is why we desperately need a plan to reduce the overall cost of housing and the false value base which inflated domestic property has created in the national balance sheet.