Wednesday, 30 May 2012

Christine Lagarde, Greece and Niger

From the content of last Monday''s letters page I must be one of only a few (maybe the only one) Guardian readers who has some sympathy with Christine Lagarde's statement  that she thinks  "more of the little kids from a school in a little village in Niger who get teaching two hours a day,  sharing one chair for three of them, and who are very keen to get an education"  and who "need even more help than the people of Athens."

Yes, I know that it is the policies of the IMF (of which Lagarde has only just taken charge) that have been a major cause of world poverty: I have spent much of my life teaching about and campaigning for more enlightened policies.  But Lagarde can hardly be blamed for the past, and there are signs that the World Bank, almost certainly, and the IMF, possibly, are learning from past errors.

The fact it that the per capita income of Niger (in US$ using the purchasing power parity measure) is $800, whilst that of Greece is  over 34 times higher at $27 600.  ( For comparison the UK's is £35 900 and that of Malawi, where I worked as a VSO for a couple of years, is $900 - all figures estimates for 2011, source CIA World Factbook, which in spite of its dubious ownership, is regarded as reliable)

Those of us in the developed world should stop moaning, stop blethering on about austerity (few of  us have experience of real austerity, and that is a far cry from abject poverty), and by sharing our wealth more equitably we could all live in a state of luxury undreamed of by our grandparents, and still have plenty left over to help countries with real economic problems achieve a decent level of comfort.

If the Greeks paid their taxes (and yes, I know, as here, it is mostly the rich ones who do the evasion and avoidance) then there is no need for any of them to suffer real hardship, and the same goes for the rest of Europe and the developed world.    It is high time we changed our use of language  and began speaking, not of the burden of taxation, but of the privilege of having enough income and welath to contribute to the maintenance of the civilised society which makes our wealth creation possible.

Monday, 28 May 2012

Close the Coalhouse Door

Last Saturday in Huddersfield I watched Northern Stage's splendid revival of Alan Platter' musical drama on the history of mining. Although I rather balked at the £3 price, the programme is packed with valuable nuggets of information.  It took a strike in 1831 to bring the length of a shift down form 18 hours to 12hours (which puts today's mutterings about austerity, in Greece or here, in perspective.)  These shifts often involved children as young a s six. In spite of regular deaths on an almost daily basis (only major incidents hit the headlines) there was no official inspection of mine safety until 1842.  After an accident in 1862 which killed 220 boys and men aged 10 to 71, largely through suffocation,  mines were forced to have two shafts, so that if the way to one was blocked air might still get in and there was a possibility that trapped miners might be able to get out by  the other.

I have no doubt that, had the phrases then been invented, mine owners would have muttered about the "nanny state" and the "red tape" which interfered with the free operation of the market and hampered their competitiveness.

A major grievance of the miners in the early 19th century was the "Bond", which gave he coal owners the "power to lay men idle and discontinue their wages  on the most trifling of pretexts."  Nearly two centuries later, from 6th April this year,   the period during which an employer can sack someone  without recourse to an industrial tribunal has been extended from one to two years, and  there are provisions in the Queen's Speech   for "consultations" regarding the removal of all employee protection from companies with 10 or fewer staff..

As economic professor  and former member of the Bank's monetary policy committee  David Blanchflower confirms, "There is absolutely no evidence to support the idea that sacking people boosts the economy."  Liberal Democrats in the government should take heed rather than take our labour laws back into the dark ages just to placate those guided by the whims and anecdotes of the tabloids

Saturday, 26 May 2012

Random Observations

There have been no posts for the past week as I've spent it walking in mid-Wales with Anglo-French Walks(for details of which please see earlier post). I have not therefore been able to keep a close eye n the news but have picked up the following:
  • Last Sunday a bishop called for prayers for the Olympic flame. What on earth is the point of prayers for a flame?  (If they are that it doesn't blow out than they've obviously failed.)  I think this is a rather sad attempt to link the Church to the Olympic razzmatazz.  The Church should think itself fortunate that we are inextricably linked with the Queen's Jubilee and leave it at that, rather than try to jump on a bandwagon which is nothing to do with faith, Christian or otherwise. There seem to be rather desperate attempts by the Olympic organisers to whip up enthusiasm for this "jamboree for sponsors, providing unhealthy food and with a large proportion of the  tickets for corporate use," as a letter in the Guardian put it.  I know it sounds a bit "dog in the manager" but I hope they fail.  I'd have more enthusiasm if the Olympics were to be held in the North East, or some other part of the the UK that really is in need of regeneration, and not just another fancy facility for the already over-provided London.
  • Nick Clegg has been accused by the head of a posh fee-paying school of using communist-style tactics to promote social mobility.  Good for Nick: he must be doing something right if his critics, those with a vested interest in preserving and benefiting from  inequality, can challenge him only through vacuous  smears. 
  • The resuscitation of Vince Cable continues apace.  The messages from the Leveson enquiry indicate that he was the only politician prepared to resist overtures from the Murdoch camp.  Now, although he still seems a bit more wedded than I should like to the dilution of the Working Time directive, he has at least refused to allow employers to hire and fire at will. As becomes increasingly evident, though the Tories in the government wilfully refuse to notice, what the British economy needs to revive is not more job insecurity, but more demand.
  • Vast and very beautiful areas of Wales are uninhabited other than by sheep, have heavy rainfall (though happily not last week) and are ideally suited for the building of more dams on the lines of the 19th century development of the Elam Valley.  A Wales enjoying home rule (now called "independence lite" in the Scottish context) could solve some if its immediate economic problems by investment in dam building programmes, become "water-rich" and live in comfort for the future by exporting its water, at a price, to London and the South East.

Monday, 14 May 2012

Jesus, the Sabbath, Man and the Economy

Jesus taught that the Sabbath was made for man and not man for the Sabbath.  In my view much the same applies to the economy: it exists to serve men and women - men and women do not exist to serve the economy.

In this context I'm not too enthusiastic about the government's proposals to scrap "red tape", including parts of the  Working Time Directive.  We have to remember that although some "red tape" is a bit odd (eg the rule that prevents shops displaying liqueur chocolates in their windows for fear of turning the young to drink) most exists to protect our health, safety and security.  The Working Time Directive places a limit on, for example, the number of hours that lorry and bus drives can work without a rest. Presumably we can all see the sense of that.

More generally, the limit of 48 hours in a working week may infringe the liberty of someone who wishes to work more, but it is possible, voluntarily, to opt out. The danger of removing the pre-supposition that 48 hours is the maximum, is that it then becomes very easy for employers to require  more.

When Sunday trading became the norm there were many assurance that no-one would actually be required to work on a Sunday. Although I have no personal experience I suspect that that guarantee, though it may still exist in theory, has become a hollow sham, and those who want to opt out of Sunday work either  don't get employed in the first place or remain shelf-stackers all their days, with management posts beyond their reach.

In any case, the idea that Britain is full of eager entrepreneurs anxious to to invest in all sorts of exciting innovations which will bring joy and prosperity to all, but are held back by excessive regulation, is a convenient Tory myth.   As the distinguished Cambridge  economist Ha-Joon Chang pointed out in the Guardian on 30th April ,the requirement for 299 permits in order to establish a new factory in South Korea in the 1990s did not prevent their investing 35% of GDP and growing  at 10% per annum. 

What holds entrepreneurs back is not over-regulation but lack of demand. It is high time the government accepted this basic Keynesian premise. Then we can all enjoy the very comfortable standard of living, with plenty to spare, and leisure to boot,  which our still very high per capita income makes possible.

Friday, 11 May 2012

The Home Office - fit for purpose yet?

Yesterday I attended a training session on the workings of the immigration/asylum system in the UK.  I heard that one chap, who claimed at his hearing to be a Christian, was asked to prove it by a) naming the date for Easter next year* and b) describing how to cook a turkey.  Another chap's claim to have been tortured was turned down because he couldn't state the colour of the torturer's tie.  His explanation that his mind was filled with other things at the time was not accepted.

*Had this unfortunate person been, like me, a choirboy in his youth, and whiled away the sermons by flicking through the Book of Common Prayer, he would have known that the date for Easter (the Sunday following the first full moon after the Vernal Equinox) can be found using the Golden Number and the Sunday Letter.

To find the Golden Number, add One to the Year of our Lord, and then divide it by 19; the remainder, if any, is the Golden Number; but if nothing remaineth, then 19 is the Golden Number.

To find the Sunday Letter, add to the Year of our Lord its fourth part, omitting fractions, and also the number six: divide the sum by seven; and if there is no remainder, then A is the Sunday Letter: but if any number remaineth, then the letter standing against that number in the small annexed table (below), is the Sunday Letter.


Or he could buy a diary.

But if he were an Orthodox Christian it would be different.

Thursday, 10 May 2012

The Basildon Tractor Factory Relaunch

The venue was more prosaic than the rose garden of 10, Downing Street, and there were fewer  smiles and other overt signs of cloying matiness.  But David Cameron and Nick Clegg were united in claiming that the coalition's first priority is to get rid of the deficit and put the economy back on its feet.  Quite right too, but the question is, and the difference should be, how do you do it?  And which is the horse and which the cart?

The Tory policy is that the first prerequisite is to get rid of the deficit by cutting government expenditure and then the economy will revive.  When government expenditure is no longer hogging the resources available for investment and "crowding out" the initiatives of innovative private enterprise, then go-getting entrepreneurs will move in to set up bright new industries, rebalance the economy and, hey presto, jobs are created, growth is restored and joy and prosperity abound.

Keynesians put it the other way round: revive the economy and then, as the tax take increases and welfare expenditure falls,  the deficit will correct itself. Keynes also pointed out the obvious: that  entrepreneurs will not invest unless they can be reasonably sure of a demand for their products. In a depression, therefore,  the government can and should inject demand into the economy by public works (a massive house-building programme, infrastructure improvements, green energy technology - there is no shortage of projects).  The income generated will have a multiplier effect as demand stimulates the private sector and,  hey presto, jobs are created, growth is restored and joy and prosperity abound.

In spite of his greater coolness Clegg seems still wedded to the Tory view, at least on the surface.  However, a "body language" expert observed, that "while (Clegg) gave Cameron lots of attention  and nodded in all the right places, a look at his feet  showed his weight was often  on the foot furthest from the prime minister.  Consciously he was being supportive , but his body was secretly trying  to distance him from Cameron."  (Peter Collett, Guradinan,09/05/12)

On such slender threads hang the hopes of a revival of the Liberal Democrats, and, more importantly Britain's economy.

Tuesday, 8 May 2012

Forming a government - what we can learn from the French.

François Hollande was elected President of France on Sunday 6th May but will not take office until Tuesday 15th. What a sensible way to go about things, and what a stark contrast to the ridiculous British convention by which, if there is to be a change of party, the new PM enters No10 by the front door and the old one leaves by the back, all on the morning after the election,and the new PM sets about forming a government in a state of dazed exhaustion.

This  silly situation is even worse when no party has a clear majority, as in 2010, and it is my belief that one of the problems of the coalition is that it was cobbled together without sufficient time to appreciate and remedy  its flaws.   More time  would have enabled  Liberal Democrat negotiators to realise that an agreement to abstain from voting on student fees was an insufficient concession when nearly all MPs had signed pledges to vote against, and made this a major feature of their campaigns.  More time would have enabled us to probe the attitude of the Tories to electoral reform rather than assume, bathed in the good will of the Rose Garden,  that they were "vaguely in favour."  More time may have enabled Liberal Democrats MPs in the Social Liberal mould to negotiate an agreement which would have enabled us to stand aside from destructive monetarist policies rather than be fully associated with them, and, indeed charged with implementing them by accepting the appointment of a Liberal Democrat as Chief Secretary to the Treasury.

Instead a deal was struck in haste on the pretext, almost certainly false, that "the markets" were baying for a decision.  Now around 1000 former Liberal Democrat councillors have plenty of leisure in which to repent.

We like to think we can teach the rest of the world about democracy.  We need to become more humble and see what we can learn from others, in this case the French.  And this "pause" between an election and the taking of office of a new government, would be a valuable import.

Monday, 7 May 2012

Vive la République socialiste

Congratulations to the French on having elected a president determined to challenge the monetarist hegemony and introduce policies designed to produce growth and create employment.  All Keynesians will watch his progress with rather more than sympathetic interest, as his success or otherwise will have reverberations far beyond France.  Interesting that the French electors have supported  a politician who is not afraid  to propose a marginal income tax rate of 75%. Cowardly Liberal Democrats, who were once proud to be the only party proposing a 50% rate, please note. If the new Greek government, when it is formed, can persuade its richer citizens to pay their taxes rather than export their wealth, there is some hope for recovery there too.

Whereas the French have elected the "dull" M Hollande rather than the flamboyant Sarkozy, London has done the opposite (though I suppose it is rather unfair to describe Ken Livingstone as dull.).  This is surely an object lesson in the dangers of introducing show-biz style contests into serious politics.  I do not follow London politics all that closely but I understand that whereas Livingstone has introduced various  schemes which have benefited ordinary Londoners (eg lower Tube fares, the congestion charge) Johnson has done little other than provide entertainment.  Even his iconic bicycles were actually planned under Livingstone. Thank goodness all the other cities except Bristol have voted against having a directly elected mayor.

Saturday, 5 May 2012

Rose Garden 2 - ouch!

Apparently Nick Clegg and David Cameron are to hold a joint event, dubbed "Rose Garden 2", to show that the collation (oops, "coalition" - see comment) partners are determined to stick together, united by the "glue" of taking tough decisions to rescue the economy.

This is about the last thing Liberal Democrats need, and one wonders what on earth Nick Clegg and his advisers are thinking about.  The "tough decisions" policy, in other words public expenditure cuts, has been opposed by we so called "Social Liberals" from the beginning and, after two years the failure of the austerity approach which we predicted is now amply evident, as we endure the "double dip" recession and unemployment is now predicted to reach 3 million by the end of the year.  Those who claim that the policy is on course for success are as Panglossian as the famous Comical Ali, the Iraqi Minister of  Information, who resolutely proclaimed massive glorious Iraqi victories against a background of American gunfire as they approached the gates of Baghdad.

After Thursday's humiliating but not unexpected defeats, Clegg needs to distance us as far as possible from the destructive Tory economic policy, and repeat and repeat and repeat that they have 306 MPs and we have only 57. So we can't stop them from implementing their principal ideology, all we can do is ameliorate it and introduce some of our own priorities such as the pupil premium, raising of the income tax threshold, and long-overdue constitutional.reform

Thursday, 3 May 2012

How on earth can that be?

There's a BBC radio programme called "The Unbelievable Truth" in which contestants make up improbable stories which contain a number of facts which are actually true,  which other contestants are challenged to spot.

However, with surprising regularity "facts" which seem absurd emerge from our highly sophisticated democracy, allegedly in the hands of the best and most highly educated brains in the country for decades, which would challenge the inventiveness of these radio comedians.

Last week we learned that policemen involved in public disorder incidents give written evidence on what they have observed but cannot be questioned on their statements.  This seems an absurd exemption.  Who on earth thought of it and why?  Since the police are frequently accused of provoking or contributing to the disorder, and reacting disproportionately or even illegally, this is a particularly serious breach of the concept of our equality before the law.

Yesterday it was revealed that more than 2 000 senior civil servants, mostly on long term engagements, have designated themselves as private companies in order to minimise their tax bills, and that the Treasury, surely the department most responsible for seeing that we all pay our fair dues,  has so far sanctioned these measures.

It is indeed an Alice in Wonderland world.

Tuesday, 1 May 2012

Disrctly elcted mayors - just say no.

On Thursday next 10 English cities are forced by the central government to run referendums on whether or not to have a directly elected mayor who will wield (very limited) executive authority over the city. This is the latest of a series of measures designed to put a bit more vigour into our democracy without actual changing anything, such as Harold Wilson's decision to extend polling hours from 9pm to 10 pm in the evening in the hope of increasing the Labour turnout, putting polling booths into supermarkets, and the highly damaging extension of the postal vote to anyone who asks rather than just those who need one, which has so extended the possibilities of fraud.

 I hope the referendums will each record a resounding "No" because:

 1. These referendums are imposed from above: once again central government bossing local people on what they are to do and how they are to do it. (I am reminded of the Stanley Holloway monologue on Magna Carta which concludes with the couplet that the charter shows;

"... that  in England today we can do as we lake
          So long as we do as we're told.")

 2. They place emphasis on "big personality politics (which) appeals to testosterone-charged male egos" rather than reasoned policies. The present London "X-factor" style contest between Boris Johnson and Ken Livingstone is an apposite illustration.

3. The claim that only a directly elected leader can achieve national prominence and speak with power on behalf of the locality is false. Livingstone was nationally known when he was the indirectly elected leader of the Greater London Council (so much so that Mrs Thatcher abolished it) and the most famous and effective mayor in our history , Joseph Chamberlain of Birmingham, was indirectly elected by the council. Bizarre is the argument put forward by Lord Heseltine, leading proponent of directly elected mayors, that Alex Salmond is a good example of what these direct elections will produce, since Salmond is indirectly elected and speaks on behalf a country rather than a city.

 4. The system will increase the opportunity for croneyism and corruption. I think at least two of the deputies (each paid over £90 000 a year) appointed by Johnson were forced to resign.

 5. With no possibility of executive power, there is little incentive for able people to put themselves forward as councillors. I do not necessarily see local government service as a pre-requisite for national government, but one of the weakness of the present government is that it is lead by young men who have never run anything of importance before.

 The way to revitalise local government , and public interest in it, is to return genuine power back to it, including the power to set, keep and spend its own taxes, to introduce a fair and representative system of elections and to insulate local government from Whitehall and Westminster interference by a written constitution.

 The proposed cosmetic will mean another change for the worse.