Blog 2023 Malcolm Blair-Robinson

Usually when people use the word corruption they think of bribes and kickbacks. There is another use which implies a decay, dysfunction and a loss of integrity. This disturbing pall now hangs menacingly over the governing establishment of our country and permeates through the very institutions, the police, the judiciary, the press and the politicians, upon whom everyone else relies for example, for fairness, for justice and for truth. We know the earlier inquiry into Bloody Sunday was wrong, that the Scott inquiry appeared to exonerate those involved in the Arms for Iraq scandal when the public evidence suggested guilt and that some of the Hutton conclusions were literally incredible. Now we learn that all that we had been told about Hillsborough, by every official organ and channel, was not only wrong but based on lies and fabrications.

The Prime Minister gave the relatives of the victims a full, gracious and unstinting apology in a Commons performance yesterday, which rose to a shocking occasion with dignity and authority. A new inquest or inquests and criminal prosecutions seem now a certainty. What is less certain is whether what this blog calls the governing establishment are learning that no longer can this form of national management be sustained. A people in 24/7 communication by every available device and medium do not readily bow to the manipulation of authority as was once the case.

A lot of people in high place have a lot of thinking to do. Failure to set new standards for themselves and their institutions will lead them to a catastrophic fall. Arab Springs do not have to be Arab, or happen in Spring, or be accompanied by violence. They come in many forms but when they happen they leave no doubt, nor do they show mercy upon those  upon the focus of public outrage sets.

We await Leveson and Chilcot. Lets us hope they can restore integrity to a badly shaken system.

It is easy to see why the worthy and wise Sir Menzies Campbell did not work out well as leader of the Lib Dems. The prim idea that it is out of order for coalition ministers to talk to friends in the opposition by text or whatever perhaps comes from his earlier career as an adversarial lawyer; it is entirely ridiculous in the modern world where the people expect a more grown up approach to governance and a more open and less tribal relationship among their leaders.

This blog hopes that Vince Cable will go on texting away. To whomever he chooses. Even to Sir Menzies.

Nick Clegg found himself in hot water for using the same B word that gave Gordon Brown trouble in 2010. The excuse was that it was an early draft of a speech which should not have been released. Oh, of course!

It is not surprising our politicians have a reputation for not being honest with us, since too often when they say what is on their mind we leap upon them accusing them of offending this or that sensitivity. Whatever he thought he was going to say, what Clegg meant was that opposition by certain members of various churches, including the established C of E, to gay marriage is out of date, out of order and out of touch. It matters not what the personal belief of members are, nor whether they like the idea or not. They are free to put any complexion they like on the rituals of marriage within their faith, but they have no right, no right at all, to try and denigrate the views of others who are more tolerant, have more understanding and more humanity and who are possessed of a more generous spirit towards their fellow beings.

No church can own marriage or its definition. The only people who can do that are the couple of whatever sexual combination or inclination who are involved each and every time. This government has accepted that it is their timely duty to ensure that all may do so under the law and be so recognised. The Deuty Prime Minister is right to defend this notable advance in human relations and civilised living.

It is worth, when a word causes controversy, to check its true meaning in the Oxford dictionary.

Bigot an obstinate and intolerant believer in a religion, political theory etc…

Exactly!

It may seem odd, but the idea of full employment has so disappeared from the political vocabulary that today the phrase is never heard. Yet in the post war period no political party could expect to win an election without full employment as a declared policy objective. What happened?

Full employment was generally achieved  until the early nineteen seventies, when increasing lack of competitiveness and the rise of the formerly vanquished Germany (split West and East) and Japan, began to erode Britain’s industrial strength. At the heart of the decline was trade union indiscipline with millions of working days lost every year through strikes.  Money which should have been used to modernise and upgrade industrial processes went instead on unsustainable wage settlements. Inflation became exotic. Finally the IMF had to bail the country out. The union response was the winter of discontent. Along came Thatcher and took on the unions. The militants declared war. The Lady would not yield. With unemployment hovering at three million, hitherto a sure fire ticket to political oblivion, she won not one but two electoral landslides.

Full employment was a dead duck politically. Nobody dared speak of it again. None speak of it now. Yet it is the key to a fully functioning, vibrant and growing economy. It is the greatest route to universally shared prosperity and social advancement. Unfortunately today we are obsessed by growth as an idea, but without any clear vision of where it comes from. Indeed all recent growth has come from borrowing to spend or invest, thus inflating assets without creating any new wealth. Wealth creation in the economy has shrunk. Benefit costs have risen to undreamed of levels, the gap between rich and poor grows ever wider, social exclusion, poor educational achievement, ghetto slums (once bright new estates offering a better life than the slums of the bed old days), child poverty, generations of workless and work shy, low skill service jobs leading nowhere, all these bad and terrible things stem from the fact that we are happy with the idea of two million people plus are unemployed even in good times, while millions more work at jobs which sap the economy, rather than build it.

There has to be a fundamental rethink. At the heart must be the necessity of full employment. In return the unions must stop treating grievances as opportunities for industrial action.  Full employment cannot be achieved without massive industrial regeneration and infrastructure renewal. All of that will depend on competitive costing. But, as our foreign owned car industry proves, GB can do it.  If the politicians could start to think it through, it would utterly transform the future for all. It cannot be achieved by the private sector alone, nor will a command economy achieve it. Full employment depends on partnership at every level, so that each part does what it can do best, to enable the other parts to do even better.

We have seen the ideas of partnership and pulling together work spectacularly at the Olympics. The politicians and the country need to take inspiration from their sporting heroes and move up a gear. Anything is possible if you put your mind to it. It was only a few years ago that a couple of Golds for GB at the Olympics was thought to be pretty good. Well, no longer.

Before the start of the global economic crisis in 2008, it was generally assumed that printing money, the term used for nowadays creating new money electronically, was the road to ruin. Zimbabwe and post WWI Weimar Germany were cited as benchmarks for this madness. This has not turned out to be the case. Quantitative Easing, as the US and UK call the creation of new money, may be the only way forward. The recent decision of the people who control the ECB to allow it to join in where the FED and BOE have led, is confirmation of this.

Economics, as a science, is more focused on interpreting the past than predicting the future, which is why so many predictions by the best and most renowned economists so often turn out to be wrong. Each economic crisis is different. Sometimes the cause has been a readiness to print money without due regard to the substance behind it.  This current crisis is caused by borrowing vast sums without a coherent idea of how they are to be repaid. Essentially it is not a crisis of too much money, but too little. At the start of the crisis the total foreign exchange reserves of the US, the UK and the EU combined, were only 8% of the total in the world. Today China holds three times more than the combined total of these dominant western economies combined. This is a measure of the imbalance within the global system.

It is therefore true and becoming ever truer, that you cannot borrow your way out of a debt crisis, more especially if the economy lacks the cash to function at more than a lot less than full capacity. For this reason the US and the UK began the process of QE. Essentially it is being used to buy back government debt. The effect of this is to reduce the debt burden, since if you own you own mortgage you owe  to yourself, which means that although the mortgage exists in book keeping theory, it has no practical reality. This reduces the weight of government debt pulling on the economy. Unfortunately, though, this does nothing to restore economic growth, because the money ends up in the coffers of bankers, from which it is used to buy and inflate assets. Asset inflation, without real new wealth based upon creative economic activity which provides full employment, is another road to eventual ruin and one down which we do not want to make another journey.

What will be needed is QE to provide direct state investment in green technology, infrastructure renewal, rail modernisation, regeneration of local industry, school and hospital updating, motorway completion and above all at least one million new homes for rent at affordable prices. The aim will be the post war notion, sustained for twenty five years, of full employment, which in itself will generate neighbourhood renewal and the re-establishment of local industry making the things we use everyday. It is critical that increasing consumer demand is not met, as before, with imported goods bought with plastic credit.

At present the government is in hyper mode announcing a multitude of initiatives here there and everywhere in the hope of boosting growth. Every little helps and although there is a lot of political noise, the scale of Osborne’s plans are, in relation to the scale of the problem, hardly more than a timely repair. The problem is that the system is broken and the time for repair is past. What is needed is a fresh start.

Well targeted QE is a way, perhaps the only way, to achieve that. The traditional risks of inflation and currency depreciation are manageable with care and anyway are a lot less than the risks of economic decline crippled by debt, with the shocking waste of human endeavour which arises when a great industrial nation forgets how to make things and loses the ability to employ its citizens. Put another way, it is no longer enough just to be a runner. The time has come to go for gold. GB is ready.

The markets thought so, at least for a while. The problems of the euro are now so complex that there is no single decision which will fix the whole thing, but the decision of the ECB to print unlimited money to buy the bonds of effectively bust countries is at last a recognition that the ECB is in charge. No currency can function without a fully functioning central bank, so that problem is now fixed. It is also true that no central bank can function without a government and that problem is not. To introduce some coherence into a situation so confused, we can divide the crisis into three segments; financial, political and economic. The financial element now has coherence, but the political and economic segments do not.

The complete failure of the euro countries to establish a proper political structure sourced in democracy has allowed Germany to take control by default. It is still in charge. It did not want the ECB to print money, but wanted even less to use its own cash. It agreed, provided all the strict conditions applied to bail out deals, applied also to countries taking advantage of bond purchases. Even then there has been a good deal of dismay in Germany and Merkel no longer has any political manoeuvre space left. In addition the German Constitutional Court is shortly to rule on what legally Germany can agree to. This could throw another spanner into the already clogged up works. At the heart of the German anguish lies its determination to preserve the euro as a hard currency modelled on the Deutschmark and not allow it to become a soft currency, of which the lire and drachma are their nightmare images. Whether the tottering economies of the debtor countries can be reformed, within their domestic political consensus, to meet German standards has been, and remains, a significant area of uncertainty.

This leads to the third segment. Euroland’s economy. All these issues and arguments have paralysed the European economy, including EU members not in the euro, to the point of stagnation and contraction. The ECB’s willingness to print money will not, on its own, solve this. There is a lot more still to be done. Nevertheless last week’s decision was, after a lot of dust kicking, the first firm step in the right direction.

The answer must be yes, but it will be difficult. A faltering economy is the most likely hurdle to deny a US president a second term in normal times. But these are not normal times. When Obama came to office promising change, he faced the biggest economic problems in all America’s history. The scale of the deficits and debts made them almost insoluble. Republican opportunism mixed with Tea Party fundamentalism destroyed the political consensus, essential in time of national emergency. Without it bad things get worse.

Given all that, Obama has done well to stop America sliding into a depression. He has managed anaemic growth and some parts of the industrial and technology base of the economy are doing well. The problem for a mighty industrial power which once made everything it used, but now buys in from China, is that Chinese workers are happy but many US workers without jobs are not. As GB has found, shrinking industry creates real problems of long term unemployment, social exclusion and neighbourhood decay. In America in 2008, great multitudes of voters who had lost all but hope, invested that hope in a vote for Barack Obama. Too many have seen no dividend.

Probably nobody could have done better for them in a single term with a raging financial crisis. What the President has to do now is to convince them he can and will deliver if he is given the mandate to continue. He must inspire them to believe that they are not forgotten and that he will not forget them. He will also need some good economic news as polling day approaches. Either that or a blunder by the Romney campaign. The latter appears, at the moment, more likely.

So, is this government any different to the last one? Yes, but not in the way commentators report.

It has shifted the Tory component to the right. Cameron has removed from areas of controversy ministers who might cause distraction because of their personal views or doings, Hunt, Lansley and Greening, but they are still at the table in different chairs. Ken Clarke, the only cabinet minister with previous experience, remains with a roving brief and a licence to comment on the economy, which could be interesting. Overall the performance of the government is unlikely to change much with this reshuffle any more than all the governments of the past, whatever anybody says. the hard fact is that reshuffles make little difference. Either the government works or it doesn’t. Many fear this one does not work any more. Among those who think that are two of its key members. Cameron and Cable.

The subtle undertone of this bout of musical chairs, is that both the coalition parties know that within a year or so, the partnership will likely end, to allow both to set up their campaign stalls for the general election scheduled for 2015. The Conservatives will remain in power with a minority administration kept afloat by a confidence and supply agreement with the Lib Dems. The people Cameron has put in place create a right leaning core which can be expanded seamlessly into a red blooded Tory government able to blaze a path to a Tory triumph at the polls.

Maybe.

But then again, maybe not.

The media is building anticipation of a cabinet reshuffle. Certainly one is needed to sharpen up the perception of a government in control of events, not the victim of them. Whatever Cameron does will impact the Labour front bench. What makes this latest prospect of musical chairs most interesting is that it is the first in the coalition. It will be a test of Cameron’s courage, but also a test of Ed Milliband, since both men have the same problem. Neither Osborne, nor Balls are any longer right for their jobs and in both parties better men are waiting.

Osborne has been a good Chancellor in many ways. He has toughened regulation in the City, restored the authority of the Bank of England and at last set about re-structuring the banks, albeit at  too slow a pace. He has made a stab at cutting the size of government and is slowly cutting the structural deficit. What he has not done is cause the economy to grow, indeed it has shrunk. His tax revenue has fallen and his benefit bill has risen, thus a new kind of deficit is set to overtake the old one. Rightly he refuses to borrow to grow, but he has failed instead to use quantitative easing with imagination to impact at the base of the economy. Moreover he loves to meddle in the everyday running of the government and acts as de-facto Tory party Chairman. He should be given that job full time. Baroness Warsi is unelected and a political lightweight. Her pleas to stay must be ignored.

Who then for Chancellor? Not William Hague. He did not shine as Shadow Chancellor and will not prove imaginative if given the job for real. There are two names for Cameron to consider. Both are able and tell it how it is. They come from opposite wings of the Tory Party. The first is the left wing, pro Europe, successful former Chancellor, Ken Clarke. The second is the  right wing, euro-sceptic untried but very clever John Redwood. Clarke would give the government a human face and show that it listens and cares. Redwood would show the markets and the world that the government means business. Cameron must decide what he needs to do to lift his party from the one term certainty into which it is settling. Many fear he will decide to do nothing at the point where it matters and tinker instead at the margins where it doesn’t.

Ed Milliband has a simpler prospect before him. Kick out Balls and Cooper and replace them with Alistair Darling and Chuka Umunna. Darling was the Chancellor who got us through the financial crisis. Umunna is the next leader of the Labour party and likely to be the UK’s first black Prime Minister.

And Clegg? The function of Deputy Prime Minister, unrecognised by the Constitution, is always a political appointment, rarely a success and easily redundant. It is redundant now. The Liberal Democrats are fed up with Clegg’s waffling, his constitutional reform brief is a shambles and he is fast becoming a political non-person. Cameron must either give him a department to run (how about the Home Office?) or face the very real prospect that Vince Cable will become leader of his coalition partners. Maybe that would suit Cameron better. If so he can speed the process. He could do as Churchill did with the peace plotting Halifax and send Clegg as ambassador, not this time to Washington, but instead to Moscow. He speaks five languages, including Russian. He could transform our relationship with the world’s most misunderstood and underrated power. That would earn him a worthy place in history. It would also clear the decks for Vince. That could be very good for the government.