Friday, 19 September 2014

Scottish Independence Referendum: six reflections


So it wasn't "neck and neck" after all, but a fairly substantial majority, 55% to 45%*, for remaining in the United Kingdom.  Nevertheless, Alex Salmond is to be congratulated on two massive achievements:
  • initiating a debate which encouraged nearly 85% of the electorate to turn out and vote;
  • placing devolution for the whole UK, including England, firmly on the political agenda, something the Liberals/Liberal Democrats have been trying, but failing, to do for much longer than the half century that I've been a member.
The campaign has raised some interesting questions.

1.  Salmond was clever in obtaining the right to pose the question, and he rightly chose the one: "Should Scotland be and independent county?" to which the answer was Yes.  Both psychologists and psephologist tell us that, whatever the question, people are more likely to vote Yes than No.    Had the question been : "Should Scotland remain in the United Kingdom?" then the majority for remaining in the Union would probably have been even greater.

This has profound implications for any referendum on our place in  Europe.  "Should Britain remain in the European Union?" is more likely to produce the answer to keep us where our future really lies, than, "Should Britain leave the EU?"  Let's hope Cameron or his replacement  is a bit more alert if and when Tory/Ukip mavericks force such a referendum on us.

2. Salmond complains that the Scots were bullied by the Westminster establishment into voting No.  However it is my belief that the aggressive and often baseless threats of the No campaign actually helped the Yes campaign.  Certainly had I been a Scot I should have been jolted into a Yes vote by the patronising and self satisfied emanations from the rUK.   The visit of the three Westminster party leaders would have been a particularly turn-off.  They seemed mainly  concerned with their own international prestige and fear of the humiliation a Yes vote would bring.  John Major's intervention, on a Radio 4 broadcast, was particularly revealing: we might lose our seat on the Security Council, our  influence in NATO and in the EU  would be diminished, we must hang on the Trident at all costs.  None of it  much to do with how best to govern Scotland.

3.  Salmond wanted the option of Devo Max (home rule) on the ballot paper and Cameron turned this down, presumably judging that with only the "all or nothing" options the status quo would win easily.  When this judgement appeared so badly wrong Cameron's offer of Devo Max in the event of a No vote is a particular humiliation for him. Neither he nor the other two party leaders who supported the last minute capitulation appear to have consulted their parties on the matter.  Given the eventual result the bribe was probably unnecessary, and, by guaranteeing the continuation of the Barnett formula, which results  a higher level of public spending per head in Scotland than in Wales or England, along with  legislation before next spring, this panic measure has unnecessarily tied the hands of whatever body is set up to hammer out the details of devolution the the rest of the UK.

4. Devolution of power from Westminster to the nations and English regions is  a complex matter which merits careful consideration, consultation, and examination of how other countries deal with the matter.  The last minute offer of Devo Max to Scotland has pre-empted this, and we shall be lumbered with a piece-meal solution which will probably result in almost as many anomalies as the present hotch-potch.  My own preference would be:

  • Devolution to Wales, Northern Ireland and, say, eight regions of England  on similar lines to what is offered to Scotland.  I prefer the existing economic regions of England to the city regions which have suddenly become topical, as I believe the former will provide a better balance between the needs of rural and urban areas.
  • A Council for England, sited in York, to deal with matters of English law and other truly national domestic issues (eg trunk roads, main-line railways, national parks, environmental issues.)  This could be a fairly minor body and might even be indirectly elected from the regional assemblies.
  • A  Westminster parliament to deal with foreign policy, defence, the currency, the meteorological office, national broadcasting, relations with the UN. EU and other international bodies, with the necessary taxation to support these functions and to provide equalisation grants to the nations and regions.
The above is just a proposal for starters. It is a complex issue, needs a lot of thought, and should not be rushed.

5. For the first time in any part of the UK  16 and 17 year-olds were allowed to vote.  In spite of the fact that a huge proportion of them did, and appear to have been very active on both campaigns, I am not too keen on this reduction.  I have spent most of my professional life  teaching this age group and have gained the very strong impression that the overwhelming majority of them at 16 merely parrot the views of their parents .  By 18 they are beginning to think for themselves but I suspect that most, in general elections, cast their first vote in the same way as their parents..  In the early 20s they begin to be more independently minded.  Hence I think the original age of adulthood, 21, was about right.  Now that it has been lowered to 18 we must accept that, but, in my view, so far and no further.

6.  Alas the referendum genie is out of the bottle and this issue will undoubtedly resurface.  Alex Salmond, in the speech in which he accepted defeat, was careful to say that Scotland has decided against independence "at this stage."  Commentators have talked of the matter being settled "for a generation."  Well, a generation is about 25 years. Let's hope that by then devolution will produce such successful domestic government, and international organisations are  so responsive and effective, that  nationalism is reduced to supporting football and cricket teams and athletes.

*For the record the actual figures are:

Total votes cast:              3 623 344   (84.6% turnout)
Yes to independence:      1 617 989    (44.7%)
No to independence :     2 001 926    (55.3%)




Thursday, 18 September 2014

Scottish Independence Referendum: two predictions


Scotland votes Yes or No to independence today.  Here are two predictions.

The first, pretty well agreed, is that the the turnout is likely to be over 80%, a level not reached in general elections in the UK as a whole since the early 1950s, and a staggering increase on the 2001 election, when the turnout dipped below 60%. The reason is fairly obvious: the vote actually counts and every Scottish voter must feel that how they vote will affect the outcome.

Compare that with our general elections, when, with our simplistic first past the post electoral system the outcome in over 80% of constituencies is a foregone conclusion because the seat is "safe" for the incumbent party.  Thus for the overwhelming majority of us the act of voting is merely a loyal but futile gesture in favour of our party of choice rather than something that is actually going to influence matters.  That being the case, it is quite endearing that 60% of us bother to turn out at all.

The answer, is, of course, a voting system based on proportional representation by single transferable vote in multi-member constituencies.  This is the system which comes nearest to making every vote count.  I hope that this issue will enter the constitutional discussions which will inevitable ensue in the aftermath of the Scottish referendum, which ever way  they vote.

The second prediction is that, although we are repeatedly told that the two sides are "neck and neck" (surely a more appropriate British metaphor than "too close to call" which I believe is something to do with baseball), I expect there will be a larger majority for No  than the opinion polls predict.  Here's why.

There is in our general elections a phenomenon known as the "shy Tory" vote: people who like in public to project an image of being up to date, progressive and keen for reform to achieve a fairer society for all but, in the privacy of the polling booth think of their own wallets, and believing (wrongly in my view) that their economic future is safer with the Tories, forget their reformist zeal and vote Conservative.

There is no doubt that the Yes campaign has gained the progressive initiative in the Scottish campaign.  I had the impression in my brief visit to Scotland earlier in the year that No voters were rather reluctant to display their views, maybe even afraid of intimidation.  But in the polling booth is suspect many will choose to  "keep a hold of nurse for fear of finding someone worse."

I also have a sneaking suspicion that the polls and media exaggerate the closeness of the race in order to keep up the excitement and sell more papers.  Maybe that's too cynical.

We shall see.

Wednesday, 17 September 2014

Democracy for sale.


A feature of the British system of government is that no parliament can bind a future parliament. In practice that means that we have no body of "special" constitutional law that is enshrined for ever or, more realisticly, cannot be overturned without a special procedure, such as a two-thirds majority in both chambers of parliament.  True there are special conditions attached to the act which introduced the fixed term parliament (probably the most important achievement of the Liberal Democrats in government, and one which we do not say nearly enough about) but these can be overturned by a simple majority in anther act.

Tory Minister of Justice Chris Grayling has found a way round this.  His policy, which most professionals involved oppose, is to farm out the bulk of the probation service to private providers.  It could reasonably be expected that a future government would want to reverse this process and bring the service back into the public domain where they feel it belongs. Grayling has pre-empted such a move by writing into the contracts with the private providers a clause that guarantees the profits they expect to make for ten years (twice the length of a parliament) should the contracts be terminated.

This means that a future government cannot reverse the policy without "compensating"  the private companies the profits that they haven't yet earned: a likely figure of around £400m from public funds.

Most of us believe that dealings with the most damaged and vulnerable people in our society  should be conducted by professionals  whose primary motive is helping the individuals rather than private companies whose primary motive is maximising profits.  That Grayling should get away with violating this principle at all is shameful:  that he should be able to lock in his ideology for ten years is disgraceful.

A similar, and far more wide-reaching, attempt to place the profit motive above democracy is being conducted on the international scale by the development of a Transatlantic Trade and Investment Partnership (TTIP)  which not only , in the words of Owen Jones "further opens up public services  to private companies  motivated primarily by profit rather than people's needs"  but also, through a provision called Investor-State  Dispute Settlement (ISDS) allows for private companies to sue sovereign states if the companies feel that their capacity to make profits has been reduced by a democratically taken decision.* 

Apparently our Liberal Democrat Business Secretary Vince Cable had the opportunity to go to Brussels last Friday and put a stop to this, but I haven't heard that he did.

Both these issues have far more serious consequences than the referendum on Scottish independence, but have not received a tenth, no, not even a hundredth, of the publicity.  Our democratic rights are being taken away whilst the political parties and media distract us with relative trivialities.

* The Australian government has already been sued by a tobacco company, which argues that a law requiring cigarettes to be sold in plain packets reduces  the company's profits.  Strange that, since the tobacco companies have always argued that their advertising did not actually tempt non-smokers to smoke, but simply persuaded existing smokers to change brands.

Friday, 12 September 2014

Keynesian economics still works.


Leading Liberal Democrats, including Vince Cable, have patronisingly claimed that Keynesian economics is "old hat" - no longer a viable option  in the open economies of today's world.

Whilst it is true that "Keynesianism in one country" is more difficult to implement in  world of open economies, figures quoted in a letter from Labour MP  Michael Meacher in  Wednesday's Guardian  demonstrate that Keynesian policies still produce the desired effects.

First, some elementary  theory.

When an economy goes into recession government revenues fall because of reduced taxation income, and government expenditure rises because of increased social security payments. Hence the budget is likely to fall into deficit.  The pre-Keynesian solution, implemented in the 1930s, was the intuitive one of trying to restore balance to the budget by cutting  government expenditure, including social security payments, and increasing taxes.

The result was to make the recession or depression worse because the resulting decline in demand forced businesses into bankruptcy and put even more people out of work. This is indeed what happened in the UK and much of the developed world in the 1930s.  Economies eventually recovered largely as a result of the increased government expenditure mad e necessary to fight the Second World War.

Keynes's counter-intuitive solutions is to combat a recession by increasing government expenditure and cutting taxes.  The resulting increase in demand will eventually generate further economic activity, increase taxation income,reduce social security expenditure, and thus  reduce or eliminate the budget deficit.

Meacher's figures demonstrate that this reasoning is still valid, even in  our modern open-economy world.

 In 2009 and 2010 the Labour Chancellor, Alistair Darling, introduced two Keynesian stimulatory budgets (increased government expenditure with a cut in taxes; VAT from 17.5% to 15%).  Bingo.  Instead of an increase in public borrowing the annual public deficit fell from £157bn in 2009 to £118bn in 2011, a reduction of almost £40bn in two years.

Although Meacher doesn't mention it, the economy actually grew during this period and was growing when the Tory-led coalition came to power..

In 2010 George Osborne took over with his austerity budgets, based on the pre-Keynesian intuitive position:  social security payments savagely cut, other public expenditure reduced  and taxation in the form of VAT increased from 15% to 20%.  The economy promptly flat-lined and the budget deficit, in the following three years, was reduced by a mere £10bn. compared with £40bn in the previous two years.

It must surely logically follow that the Tory cuts are introduced not from economic necessity but from an ideological  drive to reduce the size of the state.  It is shameful that the Liberal Democrats in government have gone along with this damaging and counter-productive programme.  We need now to have the courage to campaign on a bold programme of Keynesian public works to restore our economy to health,  and the lives of those most blighted by this unnecessarily prolonged recession to the level of  decency they should expect in what is still a very rich economy.

As Meacher also points out, following this blog and countless much more highly qualified economists, it is absolutely stupid, whilst interest rates are close to zero, for the government to miss the opportunity to borrow at historically low cost in order to to repair our dilapidated infrastructure, generate millions of jobs and return us to full-employment prosperity.

Wednesday, 10 September 2014

Scotland debate crowds out the really improtant issues.


I usually find the views of Guardian columnist Martin Kettle thoughtful and persuasive, but in claiming  in an article on Monday  that "no other issue [than he referendum on  Scottish independence] now matters in British politics" he has joined the ranks of those who use excitement at  "bread and circus" distractions  to divert us from the really serious issues facing us, whether in the existing or a diminished United Kingdom.

The overwhelming  domestic issue, which won't go away whatever the result of the referendum, is that of unfairness.  There is unfairness in incomes (top chief executives now earn 175 times the wages of the average worker, Frances O'Grady claimed at the TUC's annual conference on that same Monday); unfairness in wealth distribution; unfairness in opportunities to lead a satisfying and productive life (better to go to a fee paying "public" school  than the local comprehensive, however good the latter); unfairness in the opportunities  to buy a house (if your parents don't own one you've more or less had it); unfairness in public benefits (£300 a day if you're in the House of Lords, £57.35 a week in you're unemployed); unfairness in the dissemination of information (a press which toadies to the right and ridicules the left); etc etc.

Internationally we need to co-operate with others to take effective measures to preserve the environment; in the developed economies at least to discover how we can lead satisfying lives without relying on unsustainable  growth; to control the manufacture and sale of armaments; to develop a trading system that is fair to all rather than biassed in favour of the already rich economies; and to create an international world order that will enable us to settle disputes by law rather than by threats and force of arms.

These issues barely feature in our political debate and, even when they do, they are petty scratchings on the surface (45% or 50% marginal income tax rate rather than a thumping wealth tax).  No party has the guts, the Labour party least of all, to engage with these issues and tell us the truth.  (The Tory party can't be expected to because they're satisfied with the inequalities as they are  and will bust a gut to ring-fence the existing advantages of themselves and their supporters.)

Compared with these issues the Scottish independence debate fades into insignificance,.

I've already argued that I believe a "No" vote would give the entire UK the best of both worlds.  But if they vote "Yes" so what?  They will still be there, speaking the same language, though in modified form,  and sharing a cultural history of umpteen centuries of fighting each other and 300 years of peaceful co-existence. We shall still be able to visit their lovely countryside, buy their whisky and, if we dare, their Iron Bru;  share their universities, concert halls and current culture; play on their golf-courses; as fellow members of the EU (the claim that they may not be allowed  to join is silly scare tactic)  enjoy free trade and, if we follow the Irish precedent, a free border.

In fact a "Yes" vote will have its advantages.  It will put the brakes on the Westminster  politicians who so love strutting around the world  bemused by the illusion of continued great-power status, and that Britain's this that and the other is "the best in the world and the envy of the world" when whatever they're talking about  (other than the BBC) patently isn't.  Then  we may be able to settle for  aiming at modest competence which has been so much to the benefit of the citizens of smaller  states  in such as Switzerland, Scandinavia and the Low Countries.



Sunday, 31 August 2014

A wish list for a manifesto.

Last week  I was invited to a "working lunch" with a few other Liberals. The initial idea was to discuss proposals for the 2015 manifesto but we realised that we couldn't realistic do this as, presumably, the Liberal Democrat manifesto will be based on policy resolutions from our Conferences, and we didn't have a sufficiently comprehensive knowledge of these. So the terms of reference for our lunch  were reduced to a general chat about our party's predicament and how to improve matters.

However, by that time I had put together my "wish list", so here it is:



A manifesto 2014?

Taxation
Tax reductions, if any, to be on regressive taxes (eg VAT);
End to tax exemption for pension contributions above those necessary to build a pension pot necessary generate an income equivalent to the median wage;
Tax evasion and avoidance to become a high priority;
HMRC staff to be increased and powers strengthened;
Corporation  tax reductions for firms which offer  employee participation in decision making and profit sharing.
Housing
Ambitious building and repairs target;
Freedom for local authorities to borrow to build;
Right to buy to be suspended;
Local authorities encouraged to prepare brownfield sites for building;
New towns to be near sources of employment (not 10 to 15 miles away, as currently planned);
Land value taxation on all properties, including empty ones.
Social Security
Respect for the elderly, unemployed, disabled, single parents and other recipients of social security - (stop referring to is as “welfare” which is now pejorative);
Royal Commission on the social security system , with particular reference the feasibility of a Citizen’s Income;
Triple lock to be extended from pensions to all social security payments;
End to the bedroom tax where disabled people are involved, where extra accommodation is needed for separated parent to house their children on visits, and where alternative “downsized” accommodation is unavailable.
Defence
Trident replacement to be abandoned;
No military action except through UN.
Foreign policy
As far as possible work through United Nations and EU;
Work towards creation of an independent UN armed police force.
Europe
Stop prattling on about the need for reform (the others do enough of that);
Emphasise positive contribution EU makes through environmental protection, food security and labelling, catching international criminals, health and safety protection of employees etc etc.
Environment
Commitment to green sources of energy, in particular investment in and development of tidal and wave power;
Protection of Green Belt;
Support of EU  regulations on noxious emissions, clean beaches etc.
Health
No further privatisation of health services;
Those already outsourced to be brought back in house when contracts ended;
A system of hub (big ones) and cottage hospitals;
Restoration of full functions of NICE.
Education
Strengthening of local authority functions in education in terms of planning, support services , negotiation and awarding of contracts, and a supportive system of advisers to replace much of the work of OFSTED;
Reduction of powers and scope of OFSTED;
End to restrictions on qualified overseas students;
Generally, less meddling and allowing the system to bed down;
Strengthening of technical sector and real apprenticeships;
Scope for local authority variations and experimentation.
Transport
Put HS2 on the back burner;
Concentrate on improving regional rail networks and local bus services;
Fuel, road taxes and other motoring costs to be raised above inflation;
Local authorities, cities etc encouraged to introduce road pricing schemes.
Economy
Deficit reduction to be achieved by expansion of the economy, and therefore tax take, rather than public spending cuts;
Emphasis on productivity.  Firms encouraged to introduce profit sharing schemes and employee participation in decision making, and to expand R&D and training;
Tobin-type tax on share and currency dealings to raise public revenue and discourage speculation;
Retention of at least one of the part state-owned banks with the remit to provide long term low cost funding to industry, especially SMEs (as is done in Germany).
Constitution
Restoration of powers and responsibilities of local government (eg in education, as above, and other areas);
Royal Commission on a Bill of Rights defining powers of local, regional and central government  -scope depends on result of Scottish referendum;
Whilst the Second Chamber remains unreformed, any new members to be called Senators without any further titles or fancy clothes, appointed for a limited period rather than for life, and such new appointments (if needed) made through an appointments commission.
Lora Norder
Reduction in number of mandatory sentences;
Expansion of probation service, brought back into the public realm;
Reduction in number of prison sentences;
Expansion of prison health and education services;
Votes for all prisoners - they remain human and citizens.
Communications.
Restore cuts to BBC World Service;
Protect the BBC Licence Fee and protect it from privatisation;
Introduce measures to encourage diversification of ownership of media.

The above is from the top of my head rather than a systematic trawl through all possible issues, but I'd like to feel my party will have the courage to put forward at least some of the these ideas.

Thursday, 21 August 2014

Scare off the lions with a smile


A checkout operative at our local supermarket always has a beaming smile and seems genuinely glad to greet each customer.  When I commented on this to him he said that in his culture, presumably in some part of Africa,  children were taught from an early age to smile or "The lions will get you in the night."  gloomy faces, tears, were treated with the same injunction. He seems astonishingly happy in, and seems even to enjoy, what for many would be a thoroughly boring and lowly job.

Similarly the little corner-shop grocery where I now buy the morning paper (see previous post) is run by an elderly man from the Indian sub-continent.  Yesterday we both looked gloomily at the array of over-revealed bosoms and naked female thighs displayed on the front pages of many of the "redtops."  I felt ashamed of my culture.

"They do it for the money," he said, "and then they spend the money on drugs and things. It doesn't make them happy.  Me, if I can have two meals and two cups of tea a day, I'm happy."

"What, only two cups a day?"

"Well, three on a day like this," presumably because, even though it is still the middle of August, the temperature was more suited to the Arctic.

In yesterday's paper Tom Clark (whose "Hard Times" is well worth a read) finds it "breathtaking" that such young as can find work have suffered a 14% fall in real wages ,taking them back a full 16 years to 1998 wage rates.

Well, I wasn't young in 1998, but I was pretty comfortable, as I was in 1988 and 1978.  Even back in 1958, just before I started teaching, although I wasn't exactly living the life of Riley I was perfectly comfortable and having a pretty good time.  We are now between three and four times richer in real terms than we were then.  What's to grumble about?

Much gloom is expressed that the present young generation are the first for many decades not to be able to expect a higher standard of living than their parents. Yes, I admit that my own generation (I was born in 1937) have been lucky in that we've enjoyed the fruits of the most rapid period of economic growth in history.  But it cannot and needn't continue.  When a child is born we expect him or her to grow until the late teens and then ranch maturity and stop.  The same goes for trees, although maturity may take a little longer.

I understand that before and up to the end of  Middle Ages, maybe for longer, succeeding generations expected life to be much like that of the one before.  Given the state of technology, their economies had reached maturity.    We need to accept that our economy is now sufficiently mature that, given a bit more willingness to share, we could all be living the life of Riley at a level beyond the wildest dreams of my grandparents.  If we don't then the lions will come and get us.