Blog 2023 Malcolm Blair-Robinson

WE MUST NOT FORGET

Whilst we engage in the ceremony and formality of Remembrance Sunday, with the poppies, the parades and the silence, our thoughts turn to those in our own families who gave their lives. My father fought throughout and survived WWI. My uncle, his brother, was killed on the Somme, so I never had the cousins who would have been his children. My great grandparents were killed in the blitz. Today there are many who grieve for much more recent sacrifice, most recent of all in Iraq and Afghanistan, both wars which cause much public unease. The death toll combined for these two theatres of the War on Terror at this moment stands at 522, but by tomorrow or the next day this number will have risen.

We need, too, to remember, how a war can be won and the peace lost. This is how World War One was followed by World War Two. We need also to remind ourselves of the numbers. The total death toll among  the British armed services in both the world wars was 1,270,009. This must never be forgotten.

The Price of Big Government

Many U.K. readers will have seen the excellent Channel 4 documentary by Mark Durkin last evening which brought home the scale of the public debt here. I have already explored these figures many times, so I will not repeat them. 

The programme examined in depth the fact that big government (as opposed to state ownership) is a drain on the economy because it has to be paid for by the taxes on wealth creation by the private sector as the government makes no wealth. Properly organised and kept small, government can facilitate enterprise and wealth creation which in turn raises standards and creates jobs and multiplies. Big government burdens.

There is a case for arguing that major government shareholdings in corporations, especially banks and public utilities can be a good idea if it brings profits back to the Treasury, which can then invest them in services, but as a shareholder and not as manger. We had an element of this with the nationalised industries, but the lack of business acumen in their management made them sluggish and often unprofitable. The taxpayer/shareholder is different to nationalisation but no different to the pension saver/shareholder through their pension fund. Left-wingers might want to explore this.

What simply cannot sustain, as the C4 documentary showed, is a bureaucratic state which accounts for over half the country’s GDP as we have now in the UK. To underline this came the startling disclosure that the percentage of GDP controlled by the state in the United Kingdom, a free enterprise democracy, is twice the level of the GDP controlled by the Chinese government in a one party communist state. Dear me.

Quantitative Easing

America came in for a good deal of criticism in Seoul for its latest batch of QE from the Fed. Quite right too. To expand the money supply whilst spending at cosmic levels on borrowed money risks a very bid bang indeed. Even if there is no explosion economically, it further damages the economic clout of the U.S..

Modern money is not based on gold, it is based on assets and wealth creation. Thus anybody can make electronic money and that is what happened in the boom before the crash. By parcelling up worthless securities and creating a market for them to be traded, money was created with no substance.  When the crunch came there was nothing there. The Fed and the government had to rush in with real money to plug the gap. This they had to borrow mostly from China. Printing money, to use the old name, is very dangerous. If the Banks had all been allowed to go bust and QE had been used to restock depositor accounts it would be less inflammable. Using it on top of massive borrowing and government expenditure leads to an accelerating defamation of the currency. It was tried by the Confederacy, the Wiemar Republic and Zimbabwe and led to economic collapse every time.

G. 20 and the Balance of Power

It is clear from the reports of goings on at the G.20 that the balance of economic power has shifted away from the United States. The condition of its own economy, the fact that it was at the heart of the global financial crisis and the fact that the Asian economies are doing so much better (and have all the cash) has ended an era. It is not likely to return.

Britain has always had a trader’s instinct, this is how and why it built its Empire. It now has a monetarist government, busy slashing government spending and size. It is following a different fiscal path to the U.S., which unusually is led by a left of centre administration, so the U.K. is much closer to understanding China’s position. Germany has emerged from the crisis as the economic power of Europe, which it will progressively dominate financially, not least because it has spotted that the balance has shifted to Asia. This is why its factories are on overtime exporting cars to China.

How this is going to pan out for America remains to be seen. It is a country of unmatched potential and resilience, but is politically not only divided and divided within the divisions, but suffering from a lack of confidence driven by uncertainty. At the moment it is not calling the shots. That is a new experience for all Americans alive today.

G20 in Seoul

Correspondents report that the U.S. is on the back foot at this summit and does not exhibit the clout of previous summits. This is not surprising. In the height of the crisis the priority was to stop a global financial collapse. Now it is how to build recovery. In determining that path, knowing what went wrong is critical. The view of the economies which relate to events in Britain and America is different to the one prevailing in Asia, where a strong recovery is well and truly under way. In China, India, South Korea, Singapore and down to Australia things are going rather well.

There are then, three problems. One is Japan which has been in trouble for years because China, Korea and Taiwan can produce the same stuff for its markets for less. It allowed its cost base to become uncompetitive in mass consumer manufactures and electronics, were cost is everything.

Another is Mediteranean Europe, where governments borrowed to oblivion, fooling their populations that they were delivering prosperity which was illusiory, while smothering them in benefits which could not be paid for. The third and critical issue is centered on London and New York. Here were the twin epicentres of a complete collapse of an economic model which had hitherto dominated the world financial system.

There remains in the City and New York a good deal of denial. In Westminster and Washington there is a slow awakening, but little of this has translated into new economic thinking; to the extent that it has, the Coalition is ahead of the White house. Among the people and businesses of these two countries there is a faster awakening, which is why the fiscal conservative alliance with the small government Tea Party inflicted a drubbing on Obama. Here George Osborne is a  monetarist, so we already are embarked on a tight economic path.

The argument, however, has shifted to trade imbalances and currency rates. Here there is confusion. The mantra that if only the Chinese would let their currency rise all would be well, is both mistaken and misplaced. China’s currency is rising, but at a manageable pace and its trade imbalance is reducing, but it will not, rightly, accelarate the process to get the U.S out of a hole. It does not have to. It is now a financial super power. Indirectly it now controlls the U.S economy. It will not ruin it because it is valuable to it, but it will not disadvantage its own economic ambitions and its need to raise the standards of its own people in the process.

The U.S. and to an extent the U.K. have to get used to this. It will not change. What can change is our perception of the opportunities it presents to us. Again Cameron, Osborne and Cable are now ahead of the beleaguered Obama. The issue is not the the Chinese currency is too low. It is that Anglo Saxon costs have risen too high. We have manged to do something really spectacular. We have priced ourselves out of our home markets.

 A major cause of this disaster which will take a long time to correct, as so often hammered home by this Blog, is the excessive cost of housing which has been allowed to inflate way above and beyond the natural economies of both the UK and the US as a whole, creating an illusion of wealth and fuelling expansion on borrowed money. This causes the cost of living and therefore wages, to be way above the world market level and in a global market, that is a downhill road. So we cannot compete. Moreover in the £10 trillion projected debt for the UK for 2015 (see previous post), most is secured on property. This means assets cannot be sold to pay it off because a mass sale would reduce their value. We have to earn the money to pay.

There is no quick fix to this. It is our own fault, not China’s. But China has benefited as have the other cash  rich Asian economies. For that reason they will help us get out of this mess, but in their time and in their way. Because they are now the masters. Germany has seen this. That is why their workers are on overtime to meet orders from China.

Time to stop arguing about currencies and get down to work.

The £10 Trillion Debt  and Flat Tax.

PwC has just published the result of an in depth financial survey which confirms what I and others have been saying since the start of the financial crisis, except their figures which are worked from scratch, are worse than mine, which came from the IMF. I have stated that the total of all debt, private, public and commercial for the U.K is 450% of GDP against a world average of about 92%. PwC say that in 2009 it was 540%.

They go on to say that this will reach £10 trillion by 2015 and be a millstone round the neck of the economy for more than a generation. Servicing it and repaying it will inhibit growth and, as interest rates rise, as they will, more and more will be sucked out of the economy to pay the rising bill. This is stating the obvious and it is the most significant underlying issue with which we will for years have to grapple.

There can be no recovery by increasing long term debt either at a government, private or personal level. The natural tendency for pople and companies to reduce borrowing which has reduced demand for loans is, in this context a good sign, as are the much tougher criteria for mortgages. Not only do we have to gradulally reduce this debt mountain; we have also to reduce by a margin the cost of housing relative to earnings and we have to expand the economy without another borrowing binge. There are signs that this is what is slowly happening, part due to government policy but a good deal because people at all levels are coming to their senses. Oddly there are signs that some bankers, politicians and economists are slow to grasp all this, but I suppose if they had understood we would not have had the crash.

Another problem yet unresolved is that income tax was allowed under Labour to drift too low from the sounder rates of the Thatcher era (she was the arch tax cutter but she knew when to stop) and putting them back up will be difficult. There then comes all the argument about rates versus volume about which there is a lack of informed consensus, though no shortage of emotional outpouring.  In my book,  2010 A Blueprint for Change,I advocate a switch to a single flat rate of income tax which is operated in conjunction with higher personal allowances and the rate of vat. Having determined the total revenue required to pay for government spending, using these three elements, there is almost an infinite variation of how to achieve it. This provides the opportunity to apply stimulus or restraint, wherever adjustment is needed, in a joined up fashion unknown hitherto. 

Politicians have not yet managed to get their minds around this opportunity yet, but the pressure for something on these lines is rising. Sooner or later it will come to pass. Meanwhile the need for economic re-strucure becomes ever more apparent. Recovering from the unsustainable borrowing binge which took off at the millennium, which fed into not just asset inflation but assets without credible value, will take as long to pay off as the whole of WWII. We paid the last tranche of that in 2006.

The Falklands and the Retired Admirals

A group of very distinguished retired Navy grandees, one an ex- minister, have written to the Times complaining that the scrapping of the out of date Harrier force places the Falklands at risk from invasion. There are two issues here. One political, one military. They are wrong on both.

Let us deal with the politics first. I have never, having examined the history, been convinced that the Falklands areBritish beyond challenge, or that Argentina’s claim is without merit. Many people across the world think likewise, especially and crucially many Americans. I supported the war to take them back following Argentina’s ill judged invasion of 1982 and joined in the celebration of a hugely successful campaign, which showed British forces at their heroic and ingenious best. I did so, however, with a caveat. It was that we should use the victory and authority that it gave us to find a resolution to the dispute which recognised both the interests of Britain, but also those of Argentina. Sadly none of that happened. We just put our heads in the sand. Thus another invasion by another weak Argentinian government in trouble at home is always possible, though after the last one, unlikely.

If it comes we will have few allies, though one or two critical ones in South America. This brings us to the military point. That war will be fought by different weapons in a different way. It will surprise readers to hear that out of the shambolic muddle which is our Ministry of Defence, we are emerging as one of the top military powers on earth, not on land but on the sea and not by mass but by technological stealth. We are also a cyberpower.

The age of the giant carrier group is not over to project political power, but it is over to fight a sophisticated war. We now have the Type 45 Daring class destroyers, which are the world’s most advanced surface warships with an unmatched air/missile defence cababilty. They can detect and track simultaneously every airliner taking off at any time from every airport in Europe and can engage nearly 40 targets simultaneously. The Astute class submarines can hear from home waters a ship leaving New York harbour and are themselves undetectable. They can listen to all forms of spoken traffic, whether mobiles or whatever and carry advanced cruise missiles which can hit land or sea targets. Put bluntly they could penetrate the defences and sink an entire U.S carrier battle group.

Argentine planes would be shot down before they left their own airspace, all their airfields and military installations would be destroyed and any troops who did manage to land because of surprise, would be isolated and cut off. All Argentina’s communications would be disabled by cyber attack, its economy, power and utilities shut down. In all of this ageing Harriers, not without losses last time, would have no part to play at all. The Admirals are hopelessly out of date and out of touch. They also seem to be out of the loop. I wonder why.

As I have already said we are not, and never have been, a land power. The difficulties in Iraq and Afghanistan testify to this. But we are and remain a sea power. We are a sea power most as a force on the sea, not a naval ancilliary to an army. This is how we built our empire and how we could not be beaten by the Spanish, by Napoleon, by the Kaiser or by Hitler. More by luck than judgement and by a leap of technology, we are again a sea power and that is the power which will defend us and our interests. The Coalition has cherry picked the key projects which sustain that power and, coupled with the continent frying capacity of Trident, make it awesome. Those silly new aircraft carriers are irrelevant. Hopefully we will flog them to the French. Or even to Argentina. They will be very easy for us to sink.

At the end of the day we have to reach an accommodation with Argentina by negotiation. These islands are on their doorstep but are the most far flung survivors of the defunct British Empire. There may be oil in volume offshore. Argentina is fundamentally an ally and friend with close family, cultural and business ties with Britain going back generations. A way forward can be found if we try and it is in our interests to do so and especially if we want to protect them. It is no longer a military issue. Let us not dwell so much in the past that we make it become one again.

President Bush

George W. Bush has published his memoirs. All of this is designed to improve his image. It might do this if we caught a glimpse of a wiser man, who could see that things did not work out as planned. Instead we saw self  justification for a range of bad judgement calls and flawed decisions. People across the world are dismayed at his enthusiasm for torture, or cruelty that he thinks is not torture. The picture revealed is not the one intended. What is revealed is a fool. A fool who cannot even see when the plate is broken, is the biggest fool of all.

The tragedy for George W. Bush is that he became President. Without the dynastic connection to his father and the help of the deluded neo-con lobby he would not have. He is a decent man, a loyal friend and was an effective governor of a conservative and traditionally independent state. The Presidency was way above his pay grade.

It is a tragedy for America that he was in the White House to respond to 9/11. Though a spectacular attack with an appalling death toll, its purpose was to goad. This it did. To thwart the purpose of terrorism is to defeat it. To confront it is to nurture it. What Bush needed to do at that point was to be measured and subtle. He was bombastic and aggressive. He stoked his nation’s anger and played into the hands of AlQaeda. The outcome is three wars, on Afghanistan, Iraq and on Terror. Ten years on, all have failed. None are yet totally lost, though Iraq is pretty close, but none can be won.

If John Kennedy had been in the White House on 9/11 we can only speculate, with some confidence, in a better outcome. If Bush had been President at the time of the Cuban missile crisis we do not have to speculate upon the outcome. We know it. We would not be here. The civilised world would have been obliterated in a massive nuclear exchange. Looked at that way we all got lucky.

Mid-Staffs the NHS and the U.S.

If this heading baffles, read on. The public enquiry into, literally, hundreds of deaths at this Staffordshire hospital, due to inadequate care,  has begun. Everyone even vaguely connected will be called to give evidence, including senior NHS managers and even Ministers. It will be held in  public. This is all very good news, especially for the hundreds of surviving relatives of those who fell victim to this failure of near biblical proportions. As bad as the death toll is, the attempts first to cover it up, the opaque previous enquires which failed to uncover the whole truth are equally and at a certain level, more disturbing. 

What will be laid bare by these proceedings should dismay. For it will not be just a tale of incompetence and neglect. It will reveal that the NHS is a state within a state, out of control and unaccountable. If an attempt is made to balance the vast talent and dedication of those who work in it, with the money that is spent on it, it is one of the most inefficient and ineffective organisations on the planet. Yet as a nation we love it above all our other treasures. For a politician to condemn it is to commit political suicide. We are of course in a state of denial. A considerable number of savvy Americans have spotted this. It is one of the reasons Obama’s Healthcare project has had such a rough ride.

Gradually bit by bit, this enquiry, in the narrow confines of what went on in a hospital polishing off its patients by the score, will uncover the wider truths about the NHS and how it is run, or better said, how it runs itself. The Coalition knows this, which is why it set up this enquiry to override those which had gone before. This will create the climate where reform will be much easier to push through.

So far the main reform announced, putting the GP’s in charge of their patients and in the driving seat of medical provision is fully supported by this Blog. Indeed similar proposals are contained in the Health chapters of my book 2010 A Blueprint for Change. But there is a fundamental issue from which I suspect the government will draw back. It is this.

Our ancient democracy, currently about to have the modest upgrade of AV voting, is barely in modern terms a democracy at all. The NHS is the largest employer in Europe, it costs over £100 billion each year to run, everybody in it, including the doctors, is a public servant, yet nowhere is any elected official to be seen. When things go wrong there is no head which will fall at the behest of the angry voters, whose lives, literally depend on it. It is the contention of this blog that it is no longer acceptable to have large, very large, indeed enormous, sums of taxpayer money spent without much more direct democratic sanction.

The old Regional Health Authorities  have gone and everywhere there are these self governing (and self serving) NHS Trusts and Foundations.  But unlike normal charitable trusts and foundations which are common enough in every walk of life, this lot do not use their own money, they use the taxpayers’. This is a wholly improper way to structure public services and one which is out of date, out of time and out of order.

It is quite different in America. There, every public, judicial, and municipal official is elected. An American friend living tempoarily here but voting there showed me the voting ticket for a Presidential election. It was more like a catalogue. I thought it ridiculous. I now know it is not. Because over there if somebody screws up and a public instiution starts killing people, the officials in charge go down at the polls, big time. The discovery that the British NHS was in charge of the people not the other way round, gave rise to the cry of socialism among so many Americans and not just on the  right or among the rich, which we found quaint and misguided.

But to Americans socialism is not about caring, it is about big public institutions of whatever hue and purpose seeking to control the habits, lives and money of the ordinary citizen. Because they know that those big Federal institutions are not subject to local democratic control and local is where the people are. This is why there is the Tea Party, why Obama took a drubbing mid-term and why the march of big government and big taxes has come to a full stop.

We, in our islands, do not see things quite the same way. Perhaps it is time for us to take another look.

Bishops off to Rome

There has been a certain amount of propoganda among the players in Church politics  (that other form of politics so closely woven into the history of our democracy in these islands) that the good old Cof E is actually a Catholic church. In the sense that the word catholic means open to everyone it is. It very much is not, if those who want to join, support another interpretation of the Christian faith, beleive in an outmoded theological basis of Chritianity and prefer to recognise the authority of Rome.

The Church of England is about our freedom and indepdence and our wish to be in charge of our own destiny and not subject to the ultimate sanction of the sucessor to the Roman empire, the Roman Catholic Church. It is above all a Protestant Church which abhors a good deal of the ritual and quite a few of the beliefs of the original, from which it broke away in the Reformation. It is a democratic institution, bound Constitutionally into the State. It has a fluid doctrine based upon Christian teaching, but adapted as times change, knowledge accumulates and enlightenment spreads. This includes acceptance of condoms, the pill, abortion, divorce, gay rights and women priests and bishops. It is debating and will eventually accept gay bishops.

Not all these issues are without challenge, but they are not, in the proper context sins and certainly not sins beyond redemption. The Church of England sees itself as enlightened and capable of evolution, just as mankind continues to evolve. Rome, by contrast holds to a fixed position set down long ago, to which it sticks, no matter what the suffering or consequence. Thus the Catholic empire of Spain was allowed to pillage and plunder and engage in genocide, so long as it built churches with allegiance to Rome along the way. It proclaims condoms sinful, blissfully ignoring the suffering of aids across Africa, especially among children.

In the early centuries after the Reformation it was illegal to be a Roman Catholic in England, but to compensate and provide a haven, some lattitude was allowed to an Anglo Catholic wing, often known as High Church.From the middle of the nineteenth century it has been perfectly legal to be a practicing Roman Catholic and therefore there is no reason whatever for those of that faith to remain in a Church which in their view falls short and has abandoned ancient verities for new and questionable inventions. Fine. Let them go. They should go. They should go now. They do no good by hanging on. The should go in Peace and with our Blessing.

Above all they cannot stay, arguing and bickering and, in one unhinged case, alleging persecution on a Nazi scale. For that kind of gratutious insult those responsible deserve to be kicked out.