Blog 2023 Malcolm Blair-Robinson

The uncertainty about where this country is headed is now very damaging. The new government, having made a promising start, has gone very quiet, not only over where we are going, but solutions to local frustrations like Southern Rail. It is summer we know, but the people did not call the referendum, the government did. Cameron promised that he would stay and take the country out if that was what it voted for; a promise he broke within minutes of the result. We thought the arrival of another strong woman at the helm would bring a new sense of urgency to a rudderless muddle. But has it?

It is not in order for the new Chancellor to sit on his hands and meditate until his Autumn Statement in November. The Bank of England can manage the financial system but not the wider economy now in crisis. Political decisions are demanded by events and cannot be docked until a moment of convenience. The Chancellor must as a matter of urgency paint the big picture, point the direction of travel or however you want to put it, and he must do that now or admit he is clueless and not up to the challenge. The details can then be fleshed out in the Autumn Statement.

He argues that time is needed. Maybe. But time is not on his side.

It is a very good thing that the bank of England has at last acted, more especially because a contracting economy worries about a government that does not seem to know what to do. So any action is better than no action. Well, is it?

This Blog has a view which is expressed often. Here it is again. Assets are too inflated, profits can be made by doing nothing, too much money is available in the financial sector which is top heavy, personal borrowing is far too high, productivity is at an all time low. The base of the economy has too little money circulating and is forced to borrow to cope at interest rates way above prime. There are too few decent jobs paying good wages. The return on savings is very poor.

Seen under that analysis the last thing we need is a cut in interest rates which are tantamount to zero anyway, more lending stimulus or more QE from the Bank. What we need is the biggest investment stimulus in infrastructure and industry from the Government since the end of WWII, of which Dynamic Quantitative Easing should play a key part. What are required are political decisions. The stimulus of this misshapen economy is way beyond the remit of the central bank. Theresa May will have to make her cowardly Ministers step forward with a real plan. A bit of handbagging would be just the thing.

This might be a moment to stop and consider why it was that from the very beginning Britain was always the outsider inside the Common Market, then the EEC and finally the EU.

It is an island, yes, but that cannot be all. One of the reasons British psychology is different is that it is a nation which has evolved gradually over 1500 years since the departure of the Romans without a single seismic event other than the invasion of the Normans. Since then the crown has passed, not always without a fight, sometimes with rather tenuous links to the claim, from one to another, as the system of government has evolved from absolute monarchy to a democracy using the structures and powers of monarchy as if owned by parliament, which some constitutional authorities would argue they are. There is no formal constitution, it is tweaked and tinkered with all the time, often without any formal approval. The outcome is a nation in a state of continuous and quiet evolution which is at once traditional and modern, advanced and backward, adventurous and pragmatic. It is unique.

Every other nation in Europe has a written constitution and has been through periodic occupations, triumphs and disasters, changes in structures, boundaries and governance, together engaged in a common story into which Britain has often been called to take a part, but has never truly shared. While France is on its Fifth Republic since the French Revolution and Germany, only a single country since the 1870s, has fallen and risen three times, Britain has been crowning its Kings and Queens in the same Abbey since the Norman conquest. One was a Mr Silly and had his head cut off, but the country soon tired of the republic idea, put his son back on the throne and carried on as if nothing had happened.

Yet as it meanders its way through the meadows of history like a lazy river in no hurry, Britain has managed to become the power behind the political consequences of the Reformation, to inaugurate and drive the industrial revolution, build the largest empire the world had ever seen spanning the globe upon which the sun never set, give it up with barely a murmur and very little bloodshed, put together the coalition of powers which defeated Napoleon, the Kaiser and Hitler, split the atom before anybody else and loads of other stuff besides. It has now enshrined in law one of the most advanced interpretations of equality of sexes, genders religions, cultures, orientations, rights and customs to be found anywhere, in which the welfare of the individual can legally trump the priorities of the State.

Interesting when you think about it. We may be fools to leave the EU, but history tells us without any doubt, they will be even bigger fools to let us go.

     QE in various forms is now very much part of the economic conversation, especially in following Brexit and the fall in the value of the £. Dynamic Quantitative Easing (also called Peoples Quantitative Easing) remains under government, not bank, control and targets specific investment projects without borrowing, interest or repayments. It can reboot the economy, boost manufacturing and exports and enable sustained growth of real national wealth shared by all, rather than just asset inflation which is the downside of ordinary QE. It is ideal for financing mega projects like Hinkley Point without the need to involve foreign governments in strategic infrastructure.  If you want to find out more you can enjoy a lucid explanation of the original idea from the link below.

Download .99p  Paperback £2.99   

Because no work on an action plan was done by either side before the referendum and because so much of our national daily life is interwoven with the EU, there is no clear way forward now that the country has voted to draw stumps and go. There are what one might call foraging expeditions going on with various secretaries of state visiting potential trading partners overseas, but even they do not speak with one voice, as a new Cabinet Committee meets to discuss how to fire up the economy. To bring life back to a weak fire  you need fresh fuel. To fire up an economy in the doldrums you need fresh money.

And this is where it all goes wrong. Economists today, as well as businesses and politicians are far too ready to fall back on borrowing as a means of generating new wealth. But as I have been writing exhaustively in every format for some long time, borrowing inflates assets, saps wealth from the base and shrinks the new wealth generating capacity of what is one of the most advanced economies in the world. The rich get every richer and everyone else sees their standard and quality of life gradually sink lower. If a benefit is to be gained from Brexit, this dreadful cycle of debt needs to end.

This requires quantitative easing, not in the financial sector, as has been the case thus far, but in the manufacturing and construction sectors. Here it must be Dynamic Quantitative Easing  which comes direct from the Treasury as cash to fund a reboot, not as loans. Without this it will not be possible for our economy to benefit fully from the falling pound, because the increase in competitiveness of our pricing of exports, will be offset by the rise in the costs  of imported raw materials and of components made overseas and used in final assembly. Too many of our component manufacturers have moved their plants overseas. To get them back and to fund new start ups we need an increase in the money supply at the base of the economy. At the same time we have to increase demand through the creation of new activity in infrastructure renewal and social housing construction. DQE is the only sound way to do this.

The Honours system is not just falling into disrepute;  it has become disreputable and should be scrapped in its present form.

Only one Honour should exist; the Order of Merit. This is in the  gift of the sovereign and has nothing to do with politicians. It should be awarded to people who have sacrificed their potential to help others before themselves in order to better the lives of those in need. It should be rare, nominated by the public and awarded after careful scrutiny. It should not be available for celebrity, succeeding in one’s job or profession or becoming rich, all of which bring reward enough; or prowess in sport or giving big money to charity. All these things are worthy but bring their own reward. Honours should demand real sacrifice, not just generosity of time or money which can be afforded. And never, ever, given to politicians.

And the House Of Lords? That should be scrapped and replaced with an elected Senate. The title Lord could be used instead of Senator, but only while in office, which should end automatically after two six year terms, whether consecutive or not.