Tuesday, 27 September 2011

Upwardly mobile tadpoles

All the parties, and even the egalitarian Polly Toynbee, are currently obsessed by the concept of social mobility: that everyone, regardless of their background, should have the ability to rise. This is essential a Tory concept as it accepts as an ideal a hierarchical society. Liberal Democrats should have no part in it.

In the context of social mobility equality of opportunity means equal opportunity to become unequal. Surely for Liberal Democrats the ideal is for everyone to have an equal opportunity to develop their full potential, be it barrister or bricklayer, plasterer or politician, businessman or blacksmith (or both, as with Christopher in The Archers), or even just a successful parent with 2.4 children in a decent council house near a competent school and a bus stop with a reliable service

No one puts this better than R H Tawny in his celebrated Halley Stewart lectures on Equality, given in 1929

It is possible that intelligent tadpoles reconcile themselves to the inconvenience of their position, by reflecting that, though most of them will live and die as tadpoles, and nothing more, the more fortunate of the species will one day shed their tales, distend their mouths and stomachs, hop nimbly on to dry land, and croak addresses to their former friends on the virtues by means of which tadpoles of character and capacity can rise to be frogs.

Page 142, Allen and Unwin edition

Rather than upward mobility, Liberal Democrats should be looking to build a society in which: "The aristocrat who banks with Coutts, The Aristocrat who cleans the boots...They all shall equal be." I know it didn't quite work out in Barataria, but Liberal Democrats are nothing if not optimistic, as our Birmingham conference demonstrated.

Monday, 26 September 2011

Anonymous fame

In his G2 "review" of the Liberal Democrat conference (23/09/11) Alexis Petridis writes:

"The moment when a lone voice shouts:'Rubbish!' as Danny Alexander suggests Gordon Brown spent too much turns out to be a dizzying pinnacle of insurrectionary excitement that the conference will never scale again."

I am happy to acknowledge that the lone voice was mine and sad that no other Liberal Democrat was prepared to express dissent to a blatant distortion of the truth. The prime cause of the current expenditure deficit is not Labour profligacy but the collapse of revenues resulting from the financial crisis which in its turn was caused by the financial deregulation which is part of the monetarist creed with which almost everybody went along. True, Vince Cable uttered a few words of caution in 2006, but as far as I can remember that was more to do with private rather than public debt, and I don't recall any sustained Liberal Democrat campaign to urge people to cut up their credit cards and live within their means.

At the 2010 election we promised more honest politics. Latching on to a dishonest myth, however popular and convenient, will not restore the public's confidence in politicians and the democratic process. I understand that today's headline in the Daily Mail calls upon the Labour Party to apologise for the economic mess in which it claims they left the country. If Liberals and the Daily Mail are singing from the same hymn sheet we have cause for worry.

Petridis is wrong, however, to think that there was only one expression of dissent. Alexander's claim that an immediate coalition and savage cuts were necessary to avoid the fate of Greece brought from me a cry of "Nonsense!", and his insistence that the government will not alter course (as the economy stagnates and unemployment rises) a cry of "Shame!" Again, alas, a lone voice. Where were the other Liberal Democrats who are proud to be inheritors of the traditions of Keynes and Beveridge?

For my own suggestions of how the course should be changed please see My Plan B post (09/08/2011)

Whilst on the subject of the Labour record, it is worth remembering that, with all his faults (and especially PFI) Gordon Brown is credited with taking the lead in organising prompt and effective international action which possibly averted an even worse financial crisis in 2008. There is no evidence of similar action by any member of the present cabinet. Again, my own suggestion is that the G8 finance ministers should get together and slap a Tobin-type tax on all financial transactions with effect from this-afternoon. Maybe I do George Osborne and Danny Alexander a disservice and they are working on this at this at this very moment, but I'm not holding my breath.

Thursday, 22 September 2011

Liberal Democrat Conference; morale booster

Liberal Democrat activists are certainly a hardy lot. In spite of the loss of about one third of our (their) council seats last May endless repetitions of our achievements in government:

* pensions linked to earnings
* 880 000 low earners out of income tax
* the pupil premium
* the green investment bank
* loans rather than up-front payments for part time students
et al
were endlessly cheered. Surprisingly, fixed term parliaments, which I feel in the long run may be the most important achievement, weren't mentioned all that often.

There were also, unfortunately, endless repetitions of the half-truths, if not the downright lies, that the public deficit is all the fault of Labour's profligacy, and that savage cuts are necessary to avoid the fate of Greece. Polly Toynbee's headline, "Balderdash and Mendacity " (Guardian 20/09/11 - sorry, link thing is not behaving itself) may be a bit strong, but really she has the conference bang to rights

Happily, light may be beginning to dawn. Vince Cable called for "stimulus" along with stability and solidarity, and there were hints of small gobbets of extra expenditure.

I've just heard on the "Today" programme an American whose name I didn't catch say that normally he was in favour of balanced budgets but current American attempts to lower their interest rates even further are a waste of time and that "fiscal stimulus" as advocated by "your Mr Keynes" is what is needed. Maybe the world is learning.

Thursday, 15 September 2011

Brownfield sites - a public-private partnership.

A must-read article by by Simon Jenkins, a Guardian columnists who is also chairman of the National Trust, provides a devastating critique of Eric Pickles's plans to "reform" planning laws in order to release protected greenfield land for housing. Among other things Jenkins claims that existing brownfield sites are estimated to have room for a further 3m houses.

A friend of mine who specialises in housing finance tells me that the major reason why builders prefer to build on previously undeveloped land is that the risk is substantially less. Building on brownfield land involves the risk of subsidence due to the possible collapse of old drains and culverts, seepage of noxious gases and other undesirables. If local authorities were to clear and prepare brownfield sites for building, and guarantee them, that would produce a more level playing-field.

That seems to me to produce an excellent opportunity for a viable public-private partnership. As a bonus the public works involved in clearing and preparing the sites would produce an income injection into the economy which would help create the demand for the houses to be built.

Changes in the planning rules may seem small beer compared with the effects of businesses bankruptcies and public services cuts caused by the government's misguided economic policy. But the effect of these falls mainly on present generations. A free for all by greedy developers looking for short-term profit will damage our green and pleasant land, and the quality of life of future generations, for centuries.

Tuesday, 13 September 2011

The Banking Firewall

George Osborne's repose to the Vickers proposal to create a "firewall" between the retail and "casino" activities of the banks is perhaps more robust than many feared. However, several questions remain.

Most obvious is: why on earth do we have to wait until 2019?. It is already four years since the run on Northern Rock. Four years after the Great Crash of 1929 the Americans actually introduced their Glass-Seagall Act which created a similar separation, not proposals to think about it. It is the repeal of the Glass-Seagall Act in 1999, with similar deregulation in the UK, which is largely responsible for our present financial woes.

Why therefore is there to be a seven year pause: time for the banks to find ways round the new regulations? VAT has been increased, benefits are being cut and public services slashed now, not in seven years time for us to get used to the idea. Just to put things into perspective, the recent riots are said to have cost the UK taxpayer £133m. Such rioters as have been caught and convicted have been punished now rather than been given seven years to sort themselves out. The cost of bailing out the banks is said to be in excess of £850bn but the bankers do get their seven years potentially to wriggle out of the consequences of their folly. So much for justice and all being in this together.

A second question is to ask whether a "firewall" or "ring-fence" is enough. There's already a whole financial industry devoted to finding ways round new rules, and this area will provide another lucrative field. Vince Cable has advocated complete separation between retail and merchant banking activities, and he is probably right.

Much is made of the estimate that the cost of the proposals, if fully implemented, is said to be between £4bn and £7bn. £7bn is roughly the total paid out in City bonuses in 2010.

Saturday, 10 September 2011

Testament of Yoof (2)

For the background to this post please see Testament of Yoof (1)

“Third, a Liberal is an Internationalist. He realises that the inequalities that exist in this country are nothing compared with the inequalities between this country and the developing world. He believes that our rich country should, as one of its highest priorities, play its full part in assisting the Third World in its fight for economic development. In practical terms this means that he will not only press for the raising of Britain's Aid Bill to 1% of our G.N.P., at once, but he will also fight for trade agreements which will help the poor countries , and against those (like the Labour Government's new Cotton Tariffs last year) which hamper them. "

Well, I certainly stand by all that. It is shameful, after forty years, how relevant it remains. As far as I can remember Britain signed up to the UN call for rich countries to devote 1% f their GDPs to development aid in 1967. Three years later Liberals were calling for this target to be achieved "at once." We still haven't got there though, to his credit David Cameron has agreed to honour the Labour government’s promise to reach the government's share of the target (0.7%) by 2013.
Progress on the reform of the international trading system has been equally modest Still today international trade agreements, supervised by the World Trade Organisation, remain heavily skewed in favour of the rich.

However, a great deal has been achieved in bringing the subject of world poverty on to the political agenda, not least through the Jubilee 2000 campaign to cancel much Third World Debt. Unfortunately the promises made at summits are rarely honoured in full.. For example, Egypt, where more than 18 million people live below the poverty line, still has an international debt of $30 billion, much of it borrowed by Hosni Mubarak, not for development but to prop up his regime. Mubarak has been overthrown but the people of Egypt are still required to pay his debts. Details of a "Dictator Debt Day of Action” in London on the 31st October can be obtained from the Jubilee Debt Campaign.

Thursday, 8 September 2011

That 50% tax rate

As every student of elementary economics will have been taught, there are two ways of analysing the effect of income tax on effort and enterprise.

One assumes that work is disagreeable and leisure is agreeable. All workers have to do some work but at the margin have the choice of whether to do a little bit more or a little bit less. The higher the net wage (ie after tax) the more attractive work becomes compared to leisure. This is the rationale for paying time and a quarter or time and a half for overtime. A high marginal tax rate reduces the net wage and makes work less attractive. Therefore the worker reacts by doing less work and enjoying more leisure.

The other analysis comes to the opposite conclusion. It assumes that the worker has in mind the income necessary to maintain his/her household's standard of living. Most households live up to their incomes. An increase in the marginal tax rate means that net household income falls. Hence the worker will work more in order to maintain the household standard of living (whereas under the first argument he would say something on the lines of "Sod this for a lark," work less and lower the household standard of living even further.)

There are flaws in both analyses. Both are couched in terms of hours worked and most workers don't have much choice: we are given a job with a stated number of hours and that's it (apart from the possibility of overtime, mentioned above.) Only part-time workers tend to have much flexibility on the number of hours worked, although, of course, some "full timers" can get a second, part-time (evening) job.

A more serious flaw, in my view, is that both analyses assume that the monetary reward is the only or most important factor in determining how hard one works. Beyond earning enough for the basic necessities, this is unlikely to be true for most people. Pride, the respect of one's colleagues, desire for promotion, doing a fair day's work for a fair day's wage, all motivate the employees. Entrepreneurs are similarly motivated, along with aims such as to maintain the reputation of a respected business, to increase the size of the business or market share, fame (for actors, singers, artists etc), to wield more power, gain in prestige, or even have enough to contribute to a political party and get a knighthood.

Empirical evidence suggests that marginal tax rates may affect the amount of work offered by part time "second income" earners (in earlier times usually housewives earning "pin money) but not many others. That high marginal tax rates discourage effort and enterprise is a convenient myth promulgated by the rich.

Personally I would keep the 50% tax rate, introduce it at a lower level and consider even higher rates for for higher incomes. Remember at present it is only paid once taxable income has reached £150 000 a year, Depending on allowances, that's around £3,000 a week. Over half the working population would be in the seventh heaven if they received that amount a month. If we really are "all in this together" then the rich have to play their part, not opt out of the society that enables them to be rich.

Wednesday, 7 September 2011

More peaked caps

Not long ago my fellow passengers on a bus journey were school children, boys and girls from 11 to 16 or so. They sat still, talked to each other quietly and most thanked the driver when they got off. I was so impressed that I toyed with the idea of writing to their head to congratulate him on their impeccable behaviour, with a request that he should not identify them publicly or it would destroy their "street credibility." Unfortunately, as with many generous impulses, I never got round to this.

Some weeks later I travelled on the same bus and the school children yelled loudly, insulted each other, used offensive language, horsed around and were generally an intimidating nuisance.

It was then that I realised that on the first bus was, in addition to the driver, a second bus company "official." He didn't inspect the tickets so I think he was carrying out some sort of survey. Whatever, it was clearly his obvious presence which accounted for the different behaviour of the young people.

Of course, in the high and far off times when most people behaved well on buses, and few, adults or children, put their feet on the seat opposite and if they did were promptly asked to take them off again, all buses had that second official, the conductor.

This incident came to my my mind yesterday when I read of proposals to close the ticket officers in a further 675 railways stations, and therefore leave them unstaffed. This will surely lead to more vandalism and hooliganism.

I do not feel it is illiberal or an advance of the police state to want more bus conductors, station masters, park keepers, concierges and other semi-official figures, with or without peaked caps, to keep a friendly eye on our public property and improve the quality of life in our public spheres. CCTV cameras are no substitute for the personal touch. At a time of high unemployment it is an obvious step to begin to re-introduce real live guardians of our public spaces.

Tuesday, 6 September 2011

Another cheer for Nick

Nick Clegg spoke out strongly yesterday against the lazy idea that the recent riots are all the fault of the schools and all that is needed is for the teachers to be tougher (hence fast-track in some former soldiers), teach traditional subjects in the traditional manner and and make the kids behave.

"Teachers are not surrogate mothers and fathers," said Nick. "They cannot do it all."

Blaming the schools for perceived social ills, from bad spelling through teenage pregnancies to hooliganism and rioting, is nothing new: in fact it has been around throughout my career, and possibly longer. I well remember, in the 1960s, when I was a keen union representative for the NAS (now the more politicly correct NASUWT) our general secretary, the formidable Terry Casey, forcefully pointing out that schools are often oases of virtue amidst deserts of immorality. (Mr Casey put it rather better than that: he had a way with words.)

However it is put, the truth remains. With or without the statutory act of "broadly Christian" worship at the beginning of each day (and what other organisations other than parliament attempt that?) schools try to develop the concepts of integrity, modesty, honour, loyalty, endeavour, reliability, tolerance, respect for others, sportsmanship, teamwork, the pursuit of truth, justice and the appreciation of beauty in a world motivated principally by greed,sex and self-promotion.

A respected deputy head for whom I worked used to ague, in relation to length of hair, dangly earrings and other items with which deputies are required to concern themselves, that "the school cannot be too far in advance of society." The same applies to the more important aspects of life. If society expects the young to behave honourable and decently then it must adopt those values itself.

Nick deserves another cheer for trying to block the idea that free schools could become "for profit" businesses. A pity he didn't stick the Liberal Democrat neck out even further and try to block the largely self-serving free schools altogether.

Monday, 5 September 2011

With firends like these...

The "revelations" in Alistair Darling's memoirs do nothing to enhance the British public's respect for politicians and the political process. Darling was allegedly a principal supporter of Gordon Brown over a long period, and a senior partner in government, but shows no hesitation in "slagging him off." What has happened to decency and loyalty? Clearly they take second place to self justification and the desire to make a fast buck.

On a slightly different plain, but equally demeaning and off-putting, the editorial in this week's Liberal Democrat News repeats yet again the tired and misleading mantra of "the economic mess this country had been left in by the previous Labour government." Yes, there is an economic mess, and it was created principally by the collapse of the unregulated capitalist banking system. Trying to pretend that the blame lies with Labour and its profligacy is an an unworthy distortion of the truth from a party that offered a more honest form of politics.

Cleaning up politics is a much larger task than cutting down on MPs' unjustified expenses. Loyalty, decency and honesty are all required.

I shall not be buying the Darling memoires. However, I have just received the third volume of those of Chris Mullin. I look forward to a good read which, if like the earlier volumes, will be "funny, fascinating - and free of malice."

Saturday, 3 September 2011

Testament of Yoof (1)

A member of the Literal History Group is researching the Liberal Revival in the Batley and Morley constituency (as it then was) in the 1960s and 70s. He has unearthed an article I wrote as PPC for our Members' Newsletter in April 1970, and has asked me to what extent I'd stand by it today. Well, pretty much all of it, actually.

The article is rather long (members were assumed to have a longer attention span than in in today's "sound bite" era,) so I'll reproduce in in smaller snippets.

"In past issues of Contact I have tried to explain aspects of Liberal policy in detail. In this issue I should like to ignore, for the moment, the trees and examine the wood - the philosophical basis of Liberalism in the 1970s.

What then is a Liberal?

First a Liberal is a Radical. He believes that the world is a god place, but is wrongly organised at the moment, so wrongly that it cannot honestly be maintained as it is, as the Conservatives believe, nor can it be put right by a few minor adjustments here and there, as the Socialists now believe. A full and fundamental reorganisation is required.

Second, a Liberal is an Egalitarian. He believes that one of the major things wrong with this country is the concentration of power, privilege and property in the hands of the few, whilst the many have little share in the making of the decisions that shape their lives, and very little share in the products of their labour. Some have so little share that, despite our national prosperity, they are very poor indeed. This is the basis of the Liberal's belief in co-ownership in industry , which will improve the distribution of wealth, and comprehensive education, which will improve the distribution of opportunities."

Well, apart from the assumption that all Liberals are male, I stand by all of that. Indeed, in the forty years since it was written "Socialist" tinkering has become even more minor and conservative (vide Tony Blair), the "have nots" have become an even larger group with an even smaller share and, despite the advance of comprehensive education (hampered in my view because the schools are too big through of an over-emphasis on subject choice) opportunities are still very unevenly distributed, and there is much less industry for us to co-own

So a Liberal (Democrat) party with a clear vision of where it wants to go is even more necessary now than in the 1970.

Thursday, 1 September 2011

Liberal Democrat Pride .

Statements in the past few days have caused me to feel a surge of pride in our Liberal Democrats in government.

First Vince Cable is proclaiming loudly and clearly that the the gambling and retail activities of the banks should be separated and that this should happen now and not "after the next election." Most people wonder why the banks were allowed to gamble with our money in the first place (and then come to us as taxpayers for a bail-out when they got things wrong), why it has taken three or four years to bring forward proposals to put a stop to it, and why in the meantime bankers have been able to pay themselves outrageous bonuses. Well done, Dr Cable, please stick to your guns and do all you can to prevent this essential and overdue reform form being kicked into touch by the bankers' friends, the Tories.

Secondly Liberal Democrats in government are making it chttp://www.blogger.com/img/blank.giflear that in our view the 50% tax rate is right and just and should be here to stay. Critics claim, without much evidence as far as I can see, that it doesn't raise much money and discourages the enterprising, who may go somewhere else. The answer to the first criticism is to clamp down more vigorously on tax evasion and avoidance. The answer to the second is to call their bluff and let them go.

Thirdly and perhaps most importantly Nick Clegg has spoken out boldly in favour of the Human Rights Act. Part of his article in the Guardian last week (26/08/11) is worth quoting in full:

The Labour government that passed the Human Rights Act then spent years trashing it, allowing a myth to take root that human rights are a foreign invention , unwanted here, a charter for greedy lawyers and meddlesome bureaucrats....

The reality is that those who need to make use of human rights laws to challenge the decisions of the authorities are nearly always people who are in the care of the state: children's homes , mental hospitals, immigration detention. They are often vulnerable, powerless or outsiders,and are sometimes people for whom the public feels little sympathy. But they are human beings, and our common humanity dictates that we treat them as such.

As Shami Chakrabati put it at the Liberty AGM earlier this year (04/06/11), "Unpopular people have human rights too." Great to see the Liberal Democrat leader standing out from the populism which has became such a feature of our politics and sticking his neck out on an unpopular issue, because it is right.