Archive for December, 2010

2010 Was it a Good Year ?

Monday, December 27th, 2010

Well, that depends who you are, where, your circumstances and your politics. We can all think of the teeming millions for whom it was not a good year at all. This Blog will concentrate on the U.K.

The coalition government was a good thing. It has been strong and effective, though recently the Telegraph scam has shown natural tensions about which most of us knew little. It is decisive on the economy and its monetarism is probably a better choice than the alternative promoted by disciples of J. M. Keynes. Some of the cuts have been insensitive or unfair or both, but cuts there have to be. The reforms are more questionable. Some are fussy and medling without clear benefits beyond ideological purity. Education is a very mixed bag here. The NHS, the most controversial, is the best. Putting GPs in charge makes very good operational sense. We must hope they are given authority to deliver and not given some prescriptive process which screws up. Welfare reform sounds a good idea, but it is far from clear whether the new ideas are good.

On the wider front of whether the State itself is working as it should, the impressions are universally bad. It is too complex and procedure driven to be able to function in the out of the ordinary as the bad weather has shown. It is effective at getting in the way of almost everybody’s  lives but good at removing obstacles from the path of almost no one. It has organised over the years dysfunctional regulation of the City, the banks, the public utilities, the communications system and the transport network, all of which overcharge and under perform. It will require much more than the woolly concept of the Big Society to put it right.

The economy is by no means out of the woods. There remains no certainty that there is a way out. We, are, however probably on the best path. The balances between spend and cut, inflation and interest rates, quantitative easing and currency devaluation, saving and borrowing, housing costs and incomes all remain out of harmony. It may be that 2011 will be the year when recovery is secured, but equally it may be not so. Anything can and indeed may happen.

As for our Foreign Policy, there have been some positive signs of a move to a more independent line, but so far too timid to have real impact. Afghanistan is an unwinnable war as everybody now knows and most are beginning to admit. It may also be a lost cause.

So, the report on 2010 is mixed, the prediction for 2011 is uncertain.

A Happy New Year to all our readers.

A Perfect Economic Storm 2011

Thursday, December 23rd, 2010

There have been some disturbing recent figures, ignored by the markets and lost in the snow. None of these is in itself a cause for undue anxiety, given that the  economic times are anxious anyway, but taken together they could be a portent of something nasty.

The first is that unemployment has started to rise. This means that benefits will be likely to rise also. Next, tax revenues have dropped rather unexpectedly. Third, government borrowing reached an all time record for the last published month. Fourth Inflation continues up. Fifth the Eurozone has not yet come up with a convincing plan of how to run its currency. All this may not add up to anything in the end, or it could be the signal that things will not work out as hoped. We shall have to see, but if this were an airliner in flight, the seat belt light would go on. Just as a precaution.

We are dealing with a skewed economy which has bet all on financial services for years, which now are financially unstable, propped up with money borrowed from the taxpayer, who in turn had borrowed it to lend. Not only does this place a millstone round the neck of future growth, but it requires huge economies of spending in order to prevent borrowing running amok.

Unhappily it does not end there. The nature of this financial services economy is that it sucks money from those who do not have it, to those who already have lots. This means that the government has to step in to help people caught in a trap of debt, unemployment, or in the case of housing benefit in some areas, the inflated cost of a roof.  Perfectly respectable people, working hard in vital jobs have to borrow in order to live, so the poor become poorer fiscally, even if notional assets make them appear well off. The ones who gain are on the mega salaries and bonuses, who can pay cash for everything, but these earnings are far too often paid either directly or indirectly by the mass of the less well off taxpayers. In the long run this is socially unsustainable.

Beneath this rages the debate whether to cut fast or slow. Cut too fast and you push up benefit costs and cut tax revenue;  cut too slow and a debt mountain will build up and become unmanageable. To some extend both arguments are valid. We may even have reached the position where both are equally and simultaneously true. In other words cut slow or fast makes no difference; we are heading for a crisis because we have long passed the tipping point.

The Coalition has had a good beginning. Now it is in political difficulties to the extent that the fault lines known to every Westminster gossip, are now clear to us all. In many ways the reverse of the obvious may be true. The Lib Dems may have grown in strength now that the curtain has been pulled, Vince may be weaker in the government, but stronger in the country. Clearly many of his colleagues are revealed to have similar sentiments.

Thus a shaken government, with its mask down, enters the New Year with both political and economic challenges on a scale without modern precedent. Nobody can reliably predict what will happen. The mix is made more toxic by another  dimension. Certain Liberal Democrats do not trust the Prime minister. Since the Iraq Dossier, the expenses scandal and Wkileaks, the country does not trust any politician, government or opposition. After the Telegraph sting, politicans cannot trust the bona fides of their constituents. If things get tough these could become not just  observations, but  serious hindrance to governance. The consequences of that will be far reaching. Let us hope we can fly round these hazards and turn the seat belt warning off.  Already we are off course and do not know where we will land. We do not want  where to become if.

Coalition Tensions: Vince Cable’s Future

Wednesday, December 22nd, 2010

He has not yet offered to resign. I think he will. When he does it will not bring down the Coalition, but it will change its nature. An unhappy Liberal Democrat parliamentary party, prodded constantly by unhappy activists in its constituencies, will acquire a leader and a spokesman, who is hugely popular in the country, whose status as a national treasure is, if anything enhanced by his candid indiscretions, which may offend the political establishment, but strike a chord with voters everywhere and Lib Dems especially.

This will mean that the Coalition no longer has an assured majority, especially as an emboldened Tory Right will want to stand up and be taken into account. Policies will have to be fought over issue by issue. This is the nightmare Cameron has seen and this is why he has kept Vince on. This is why Vince is working from home today. He is thinking very carefully whence his integrity beckons.

Coalition Tensions: Quasi Juducial Powers.

Wednesday, December 22nd, 2010

There should be so such thing. There should be Judicial power and Political power.The two are quite different. The first is impartial and is based on the judgement of what is proper within the law. The second is based on the judgement of what is best in the national interest. By its nature the first is and must be impartial. By it nature the second is based on the view of a politician from a political party, cannot be impartial and, in the national interest, should not be.

That we have a vast agglomeration of legislation that confuses the one with the other is due to a lack of a written Constitution and a lack of understanding of what the unwritten one is. Apart from certain provisions about universal franchise and the frequency of parliamentary and local elections, there is one guiding principle and one or two concessions to democracy.

The guiding principle is that we have an hereditary Monarchy with absolute power over everything. The concessions to democracy are that Parliament must approve the Queen’s choice of Government, which by convention is chosen mostly from its ranks. It can sack the government through a vote of no confidence and no money can be spent nor taxation raised without its prior approval. Every other aspect of power is exercised by Royal Prerogative through the Government, which as its title makes clear, is Her Majesty’s, not Parliament’s nor the People’s.

Parliament is broken down into political groups or factions formed into Parties. This is how Parliament organises things, because another principle of the Constitution is that Parliament has sovereignty over itself. In the nature of matters in action, such a body or its members cannot be impartial, they will have views,  passions even, about almost everything. This is why we have an independent Judiciary, made even more independent recently by the establishment of the Supreme Court.

As current shenanigans with the Telegraph and Vince underscore, none of this works as well as we think it does, nor is as honest in presentation as it ought to be, nor as understood as should  be universal in an open and free democracy. What it does do, is invest in the hands of the government of the day levers of power unmatched anywhere else outside a dictatorship. If we are happy with this we will continue to put up with inefficient governance, stings and public apathy, brought to life only by a universal distrust of politicians.

If we think we deserve better, we need to get a proper Constitution at the heart of our State.

Coaltion Tensions : Collective Responsibility

Wednesday, December 22nd, 2010

If there is government by one party, it makes for good order and is in our tradition, for the principle of collective responsibility to apply. It is debatable in a modern world whether tensions known to media correspondents and lobbyists, should be held secret within the Westminster village and not shared with the public, to whom the politicians are accountable. For the purpose of this post I will raise the issue only and let it pass.

What is clear is that Coalition government is different. If there are two parties (or more) it is very difficult for those parties (and those who elected them) to behave contrary to their principles without appearing dishonest and untrustworthy. This is why there has been such a crisis in the Lib Dem party over tuition fees. It is therefore important to make some changes in the  way we view such a government and in the way it presents itself to us.

If we prefer government by politicians of different parties getting together and forming a consensus, we must view them not as one government full stop, but as one government made of two parties who agree on some things, disagree on others and which are driven by differing ideals. So that we, the people, can fathom why certain policies develop in unexpected ways, it is necessary for each party to brief us separately, as well as the government to do so as a whole.

Currently the Prime Minister, or other Ministers, give regular  press conferences. At least once a month David Cameron, not as Prime Minister but as Leader of the Conservative Party, flanked by its senior figures, should give a  briefing of how they are  arriving at a joint position with their coalition partners on controversial issues. Likewise Clegg, Cable and Co should do the same. There will then be less opportunity for entrapment and the mists surrounding some peculiar decisions will clear. It may not be such a smooth government, but it could be a good deal more effective.  

There is still in Whitehall and Westminster a culture which supposes the roof will fall in if the people are allowed to know. This may once have been true. It is no longer. Most people appear to be a good deal more savvy and better informed than both the ministers and the mandarins. You cannot govern in today’s world of Internet empowerment with a system based upon Victorian telegrams.

Coalition Tensions – Media Issues

Wednesday, December 22nd, 2010

This is becoming a multi-strand political story, with different facets. I intend to deal with each separately. First the media. 

There is a question of whether it is right and proper to make an appointment to see and M.P., pretending to be a constituent, when one is in fact a reporter wired up with the direct intention of entrapping a democratically elected representative who has done nothing wrong, into saying stuff which might embarrass, shock or cause consternation when published. This is in no way the same as law enforcement agencies infiltrating terrorist cells or entrapping drug dealers.

To claim a false identity and tell porkies to mislead an innocent person, if not criminal, is certainly fraudulent. In this case a well meaning, if perhaps rather singular, Cabinet Minister,  beguiled by two charming young ladies who led him on to talk with disarming frankness, made a fool of himself. In the claims he made of his powers to thwart the ambition of Rupert Murdoch he caused such consternation in the government that he was instantly stripped of his media powers. Why his Department had these in the first place is to do with the Mandelson empire. There is already a Department of Culture, Media and Sport, so the move is no big deal.

What is much more alarming is the panic in the government about showing that he was not impartial. Why?

Politicians are not elected to be impartial and are not supposed to be so. We want to know what their views are, what their policies are and what they would do in various circumstances. Allowing the Murdoch Empire to grow the size of the universe or stopping it its tracks, are both perfectly legitimate positions. Having not a clue either way is just plain stupid. If you want impartiality you go to the judges not the government.

Therefore there is revealed something unhealthy and unsatisfactory about the relationship between government and media. It should not be necessary for the media to present a fraudulent prospectus to get at the truth, nor should it matter a fig if a senior member of the Cabinet hates Murdoch and intends to set about clipping his wings. Was Margaret Thatcher ‘impartial’ about Scargill?

Vince Cable

Tuesday, December 21st, 2010

Vince Cable has been taped saying things about Coalition policies which he thought were private. He was caught by the dodge of wired reporters pretending to be constituents. This kind of sting is now common, though, so far, politicians have not been primary targets. It is part of the same culture as Wikileaks and it is will not go away. After all, this was not a Murdoch tabloid at work, this was the Daily Telegraph which, after the MPs expenses saga, shows itself as a potent and ruthless force in journalism. The theme is that the days of behind closed doors are themselves drawing to a close. People are no longer willing to be told what is said to be going on, they now want to know what is really going on.

All branches of government will have to get used to this and adjust. More important, the better informed voters must make good use of their newly acquired knowledge to make sound judgements about those who govern them. In the narrow context of what we have just learned from Vince, we can now chart the fault lines in the Government. It is not as strong as we thought nor as cozy in jovial give and take as we had we had been led to suppose.

The Tories would prefer to be a bit more to the right, though probably not Cameron, Gove and Letwin. The Lib Dems would prefer more to the left. But here there is a new dimension revealed by the sting. It is Vince who is fighting tooth and nail for the things Lib Dems hold dear. It was Nick who did the very courageous deal with the Tories, but it is Vince who emerges as by far the more powerful in the government, with one of the  highest profiles among all the politicians in the country. Moreover if push came to shove, the majority of Lib Dems would follow Vince into a coalition with Labour. The figures do not quite add up, but after a bye-election or two they just might.

Meanwhile the single most important issue in front of this government is to deal with the bankers to public satisfaction. So far it is looking weak. If it gives the bankers an easy ride, it may lose a critical amount of public support in its drive to cut the deficit. There is much more at stake than the domicile of a handful of greedy financial gamblers.

Unite Strike Call.

Monday, December 20th, 2010

This is utterly ridiculous and has rightly been rubbished by both Government and Opposition. The Unions are not the government and are not charged with governing. They thought they were in the seventies and brought the country to its knees, condemned Labour to 18 years in Oppostion and made the passing of laws to curb their wrecking activities a doddle and hugely popular with the electorate.

The BA strike has got them nowhere and has no public support whatever. But that is a dispute with an employer. This new cry for militancy is an attack upon the lives of the ordinary people in order to try and change government policy. It will fail and cost jobs if this silly rhetoric becomes union policy.

Nevertheless there is at the core a valid and important point. The Bankers, who have dominated the economy for over a decade, have totally skewed the economy and run it into the ground. The feel good extravagance of Canary Wharf and all the glass houses around it has not only been preserved from the stones raining upon the bulk of the rest of the population, but is now set to engage in another splurge of bonuses, like some society of gluttons who think it fun to hold themselves a banquet among the starving.

The posturing of government ministers is beginning to look spineless. We now need more than hot air on chat shows. The message to the Bankers should be short and very simple. Pay what you like, but if you do we will shut off your taxpayer funding. It took just a few hours for the Irish banks to fall into line when faced with that ultimatum. The sums are quite interesting. The amount of taxpayer funding that these over fed, over paid, over indulged and over the top people enjoy equates more or less to the cuts we are all having to bear.

That is the message Unite should proclaim. Strikes have got nothing to do with it.

Snow and the Authorities.

Monday, December 20th, 2010

We begin to get the picture. The authorities are only partly prepared for snow. They can cope if it is not too bad. When it gets for real, the complexity and inter-dependence of the transport infrastructure, which has cost countless £billions to set up, is not matched by investment in a means of keeping it running in bad weather. Let’s get Norman Foster to design a lovely terminal, but not waste money on snow blowers and deicers. The incompetence of BAA is matched only by the stupidity of the comments of its spokespeople and the ineptitude of the airlines who use its airport to respond to the humiliating farce now unfolding.

Several things about our modern society have come to light. Little things like too many people go out on the roads when they do not know how to drive in snow. Big things like a management system which relies on due process, procedures and manuals, screws up big time when trying to cope with the out of the ordinary. 

There is something even bigger. The modern State is too active busy bodying every detail of the way individuals conduct their lives, whilst utterly feckless in many responsibilities for which it actually exists. It has a duty to defend the realm, uphold the law and dispense fair justice. It is also required to maintain in working order public utilities such as water, power, transport and environmental infrastructures come hell or high water, rain or shine, drought or freeze.  Clearly it is no longer able to do all of this.

Time for a rethink. And not just about likely weather patterns.

Banks Still Frail

Friday, December 17th, 2010

The report from the Bank of England underlines just what a mess our banks are in, although it tries to sound cautious and optimistic. Not only are these banks under capitalised for what they do, they owe half a  £trillion which has to be refinanced over the next two years. Furthermore the report reminds us of their excessive exposure to property as well as to the problems in the eurozone. This is not good news for the country, for the government or the businesses and people who need a sound banking structure to help lift us out of our economic difficulties.

The only people living in a blissful noddy land where none of these problems spoil the happy day are the bankers themselves. Not everything this government has done has been popular, nor has it been right. On balance, though, it moves in the right direction with the right purpose. An area of cowardly failure, however, is its unwillingness to read the riot act to the banks over the shambles of their collective business and the sheer financial gluttony of what they think for this historic cock up, they deserve to be paid.

These greedy incompetents need to be very careful. If there is another crisis, the anger against them will be on a scale not yet seen. They will go in fear of angry mobs. Few will pity them.