Blog 2023 Malcolm Blair-Robinson

Playground Cuts

Certainly nobody can accuse Michael Gove of being a hesitant cutter. Playgrounds, part of some grandiose initiative by Labour in its twilight hour, are the latest victim of his axe. The problem, as always, with so many of the spending plans of the fallen government, is that it lost the connection between launching programmes and having the money to fund them.

Very disappointed organisers, parents and children is the certain result of an inevitable, but unpopular, decision. However, it occurs to me that if the Big Society is to show its mettle, this is a good place to start. Setting up a fun playground is just the stuff for a local community to get stuck into. Playgrounds really never had anything to do with central government. Its job is to organise the economy, defend the realm and so on and so forth. The people can be trusted to work in partnership with local government and fundraisers to fix their own children’s playgrounds surely?

Al-Qaeda returns to Iraq

There is a report today in the Guardian that members of U.S. backed Sunni militias are rejoining al-Qaeda in Iraq because they are being offered better pay. If this is true it shows an unravelling of a dream that was never real.

At the end of the month American troops will, as a combat mission, be gone. A considerable number will remain as advisers and so on. There is still no agreed government after an inconclusive election. The security situation is deteriorating. After eight years of bloodshed and cost, not only in real terms but in America’s standing internationally, the apparent outcome is a travesty of the original goal.

This news comes on top of a deteriorating picture in Afghanistan and a Pakistan in a turmoil of floods, militancy and unease. The big picture is now looming into view, so large that it will have to be faced. It is not the vision of the original protagonists of these destructive wars. It is much closer to the fears of those who saw the follies from the beginning.

Soon all this will all have to confronted. There will be a political earthquake on both sides of the Atlantic. Neither Obama nor Cameron were in on this at the beginning and both now regret earlier support for these wars, albeit lukewarm and conditional. Nevertheless both have been taken in by their optimistic military and the irrational supposition that their homelands are in some way safer. Each has at their side a deputy far less enthusiastic, Biden and Clegg. All four will have to work very hard and together to survive without fatal electoral damage.

The Senators are Back

They really do not get the message, these guys. It is not in order for American Senators, however distinguished and whomever they represent, to badger and cajole a Sovereign Government of a foreign country, itself a constituent part of another Kingdom. The Americans may not like the decision the Scots made, nor agree with the motives nor like it any which way they look at it, but they have to accept it, because it is beyond their power and their remit. It is odd that they simply cannot see that.

Alex Salmond will no doubt be courteous but firm when he says no. He can go on and say that while the Senators may see nothing which is not in the public domain or available under our freedom of information statute, they may see everything that is. That should be that. Knowing these Senators it will not be. Until after the mid-term elections. After those are over, either it will no longer matter, or they will no longer hold office.

Bank of England Forecast

We have learned from the financial crisis and the consequent recession that whilst most economists agree on the obvious elements of the cause, not everyone is agreed on the root cause. When it comes to how to orchestrate a recovery, there is a sharp division between Keynesians and Monetarists.

Central to the argument is forecasts. In my view they play far too big a role. In the end it is what happens which counts. Like bets, forecasts are fun but they are not fundamental. We are near a dangerous point of trimming policy to forecasts, when the opposite must be the rule. Policy must be based on the need to rebuild the economy on sound principles which will offer real prospects of long term prosperity, not another bubble.

To repeat the mantra of this blog, in case you are new to the site and do not have time to browse previous posts, this can only be done by nurturing the strong in enterprise, industry, retail, commerce and domestic life and allowing the weak and the flawed to fade. This creates opportunity for innovation and enterprise to fill gaps and consolidate markets. It reduces gearing and increases net investment. It requires efficient use of assets, selling off to raise more capital for example, more saving and re-investment of profits and less borrowing.

It requires banks to be cautious about lending initially but to back winners who show they can run cost effective businesses which create real new wealth, not inflate assets thus devaluing money. Services need to enable the economy not drain it. Households need to be net savers and spend money earned rather than borrowed. Growth must be founded in industry and business, not the High Street. Retailing must be the beneficiary of growth not the cause of it.

House prices must return to their relationship with earnings of twenty five years agoof  x3. People will then be able to live on what they earn and save, borrowing only for real growth in their circumstances to enhance future wealth, not to pay for groceries or petrol because the cash runs out before payday. When the tills ring out in the High Streets, Malls and Retail Parks more of the takings have to go to British manufacturers creating British jobs.

In the context of all this, the recent good news is the return of falling house prices, cautious bank lending, net saving of households and net deposits in banks and above all a significant narrowing of the trade gap, all  announced, but either ignored or remarked on for the wrong reasons.

What the Bank of England forecasts is academic. What it does, is not. What it will have to do soon is raise interest rates. Inflation cannot be allowed to bolt.