Some Facts about the Economy

The article by Martin Wolf in the Financial Times to which Jaime draws attention (click here) contains some interesting figures:

• The UK economy is presently operating at 10% below its pre-crisis trend (which means there's lots of idle capacity, of capital as well as people)
• the UK Government is able to borrow at a real rate of interest below 1% (which means it's not a bad time to be in debt)
• the average maturity of UK debt is 13 years (which means there's no need to panic at the moment)
• the UK's debt to GDP ratio was 68% at the end of last year, against 73% in Germany and 77% in France (which means that our so called "black hole" is rather smaller than those of some of our neighbours.)

Wolf, who as far as I know is not a rabid left-winger, concludes that "this is a Keynesian situation," there is no urgent need to cut the fiscal deficit, and that doing so prematurely risks that "the economy flounders for years."

Liberal Democrats in government, heirs to he party of Keynes and Beveridge, may be forced, as junior partners in the coalition, to stand aside as the present foolish policies are implemented, but they should be arguing against them in private and withholding vocal support in public.

Some" fings" are "wot they used t'be."

On Friday I spent the afternoon and evening wandering around the the Saddleworth and District Whit Friday Brass Band contests. These take place, and have been doing so since 1884, in several villages straddling the Yorkshire/Lancashire border up in the Pennines. Unfortunately I was unable to attend the first event of the day, a Whitsun Walk of Witness involving some 1 800 people, a walk, bands and an ecumenical service,

The band competitions started at around 4.30 in the evening, with some 100 bands transported in coaches from village to village where they each perform a march and and specialist piece, observed by a large crowd and judged by hidden adjudicators.

The event is a miracle of logistical organisation by whoever arranges the bus transport, and an astonishing level of musicianship from bands of international standing (some of which come from abroad) to local youth bands. Presumably the coach drivers are paid, but everyone else is a volunteer.

The day is evidence of hours of practice by several thousand brass band players and their conductors, involvement of local people who help organise the event and raise money for modest prizes, and genuine and orderly enjoyment from visitors.

This is an example of participatory society at its best, not on the instructions of the government, not to save money by cheeseparing the social services and farming our essential services to charities, and, in musicianship, for pleasure, personal achievement and teamwork,not to tick boxes in order to impress a government monitoring office.

Best of all, it ignores the artificial Wilsontide and the trendy Pentacost label, and still takes place in Whit Week.

A Day in the Spotlight for Local Government

Liberals and Liberal Democrats have traditionally believed in the devolution of power to the lowest possible level, and the Conservatives say that that is now their belief. It is therefore anomalous that the coalition proposes to hold the next general election on the first Thursday in May 2015, local government election day.

Elections for local government are often used as a substitute for a referendum on the government of the day, but this is surely a trend to be resisted. Council candidates of all parties and none deserve a campaigning period in which they can promote their local policies with the minimum of competition from the national scene.

Hence, if the coalition partners are serious about increasing the powers and independence of local government they should move the general election to a different date. Since June 2015 would prolong the parliament beyond five years and produce accusations of malpractice I suggest the second Thursday in June 2014, thus producing a four year fixed term for this parliament, and establishing a precedent for future ones.

The Employmnet Trap - a Solution

Ir is good to hear Tory Ian Duncan Smith speak so passionately about the absurdity of the employment trap, by which unemployed people can face marginal tax rates of "70%, 80% and 90%"(Guardian 27/05/10) through loss of benefits when they take jobs. Unfortunately his proposed solutions do not include the obvious - the Citizens' Income as proposed by the Green Party.

Briefly, under this proposal every adult citizen receives as of right from the state an income of around the present level of the Jobseekers' Allowance, with a higher rate for pensioners (to replace state pensions) and a lower rate for children. Personal tax free allowances would be abolished so that, on taking up work, even the first tranche of income would be taxed at the standard rate. Thus every individual would be assured of a minimum standard of living as a right of citizenship, and everybody who wanted more, the overwhelming majority, would benefit by taking a job.

According to the Greens the abolition of personal tax allowances would pay for the scheme. I have no means of checking this but it is certainly something the government should explore. At a stroke, to quote Ted heath, it would abolish the demeaning benefits procedures and take away some of the heat out of the anger felt by many of the employed towards those they regard as "spongers" and possibly "benefits cheats" because they are unemployed.

A fuller outline of the Citizens' Income scheme and its advantages is given at the Young Greens website.

For a while the Liberal Democrats too adopted this splendid policy, but through lack of courage or imagination it seems to have been quietly dropped. Now we are in government, with the resources of the civil service available to us, we should at least demand its serious consideration.

Full Circle, but Private

An article by Peter Wilby in yesterday's Education Guardian (Brand New World:http://www.guardian.co.uk/education/2010/may/25/free-schools-private-companies) predicts that " 'free schools' started by parents, teachers and voluntary groups...will (eventually) be run by private companies...(which)...talk eagerly of economies of scale if they can take charge of dozens, even hundreds (of schools)."

Aren't these "economies of scale" in managing salaries and appointments procedures, organising contracts for buildings, furniture, stationery and text-books, allocating budgets, etc exactly what Local Education Authorities used to do? The "free school" project is therefore merely privatisation under another name, with no evidence that the private sector can improve on the services of the now maligned public authorities.

Sadly, as today heads of both primary and secondary schools receive letters asking them to consider becoming "free", senior staff of all schools will be distracted from their real purpose of educating the young in order to concentrate their attention on debating the illusion of a brighter future (and the prospect of higher salaries?) under a new regime dominated by commercial considerations rather than the public good.

Chemical reaction

Already the alleged chemistry between Nick Clegg and David Cameron appears to be having its effect, and not to the advantage of Liberal Democrat policies and priorities. Clegg is reported as "having come round to the argument for action to bring down (public) spending this year . " (Guardian 24/05/10). Surly the correct repose for Liberal Democrats in government to this crazy policy of cutting public expenditure in the middle of a recession is to point out that:

• we are junior partners in this coalition
• our view is that expenditure cuts should not take place until economic recovery is assured
• we are forced to accept these premature cuts as one of the compromises of coalition
• it is our hope that the recession will not be prolonged as a result, as our priority is to ease the already high level of unemployment, especially among the young.

Vince Cable's citing of the Greek situation as the excuse for the change of heart seems a bit feeble to me: the Greek situation existed well before the election.

400 MPs

Since both the Conservative and Liberal Democrat manifestos contained proposals to reduce the number of MPs to 400 there is a real danger that this measure will go ahead. From the Liberal Democrat point of view this is a great mistake.

One of the few disadvantages of the Single Transferable Vote method of PR, our preferred option, is that the multi-member constitutes can be very large in sparsely populated areas such as the north of Scotland. This problem will be exacerbated if the number of MPs is reduced.

Clearly there was a lack of "joined up thinking" here by Liberal Democrat policy makers. What is more important: a "symbolic" cost-saving measure as a knee-jerk reaction to the expenses scandal or the basic requirement to facilitate the only electoral system which will genuinely transform our politics?

Against the odds, I hope this proposal will be quietly forgotten.

That 55%

I cannot understand all the huffing and puffing from senior Labour figures and some constitutional pundits about the proposal that the five year fixed term of future parliaments should not be curtailed unless 55%, rather than a simple majority of MPs, vote for it. It seems reasonable to assume that a major change, such as the highly desirable move to a fixed term for parliaments, should involve other consequential adjustments. If the prime minister is no longer able to bully his critics into line by the threat of a dissolution (or, strictly speaking, asking the monarch for a dissolution) than smaller parties, or even individual MPs, should not be able to blackmail an administration by a similar threat.

I believe that in Scotland, which also has fixed term parliaments, the barrier is set at 66%. Compared with this 55% seems modest. The rule would not mean that a government defeated by only one vote would necessarily remain in office. Theoretically the government so defeated would resign and the monarch would invite another leader, or maybe even the same leader, to try to form an administration with a different composition which could command the support of the existing parliament. It would be interesting to see these circumstances tested in practice before such rules are codified in a written constitution (which doesn't, at the moment, appear to be on the agenda)

In the event of deadlock, without a written constitution with safeguards requiring a higher majority for constitutional changes, there would be nothing to stop a parliament overturning the 55% rule by a simple majority, and then the prime minister asking for a premature dissolution.

The Real Crisis

A few days ago it was announced that the number of unemployed people in the UK had risen to over 2.5 millions. Yet since the initial announcement there has been little mention of this in the media, and the coalition "programme for government" declares that tackling the alleged financial crisis is its first and most urgent priority.

In the 1970s, when Michale Foot was minister responsible for employment, we watched with bated breath as the number of unemployed people rose inexorably towards 500 000. There was serious discussion as to whether or not a stable society could survive if the symbolic half million figure were reached. How is it that we can now tolerate a figure five times as large, plus a similar number diverted to incapacity benefits, without turning a hair?

All prolonged unemployment is devastating, but that of young people is a cause for particular concern. We are told that the young unemployed of the 1980s have never recovered and have become a lost generation. Is this to be repeated, even with Liberals in government?

It is perhaps not surprising that a government dominated by the Conservatives should give priority to placating the financial establishment over the lives of real people, but surely the Liberal Democrat element, heirs to the party of Keynes and Beveridge, should be pushing for measures to reduce life- sapping unemployment as their priority.

Brains for the Economy

At one time the Labour government combined the Department of Education with the Department of Employment. The clear implication was that the government regarded the main purpose of education as to prepare our young people for their jobs (hands for the factories) rather than to develop individual talents, open windows, develop self reliance and self-confidence and help young people to achieve their potential as human beings. There is quite enough pressure from parents and pupils themselves to see education as a means to good qualifications and jobs. The government and educators should be pulling in a more altruistic direction.

Happily, for compulsory education this link has now been broken, but under the coalition, it remains for universities and science, which are under the direction of the Department of Business, Innovation and Skills. Our Universities should be centres of learning and exploration in all the arts, sciences, classics and humanities, motivated by the whims and interests of the teachers and learners. They should not exist primarily to feed the economy with commercially viable technologies and suitably trained human fodder.

Dangerous Chemistry

Umpteen years ago I studied some social psychology and came across a theory that harmonious personal relationships within an organisation are not necessarily conducive to efficiency. The argument is that actors in such cosy institutions tend give the greatest priority to maintaining the good relationships and the actual purpose of the institution becomes a secondary consideration.

The alleged "chemistry" between David Cameron and Nick Clegg is therefore potentially dangerous, in that the purpose of Liberal Democrats in government can easily become forgotten in a desire to preserve that "special relationship."

I did not attend the conference last Sunday in which party representatives endorsed the coalition, but I understand that sharp reminders were given to our leaders on why we had worked so hard to put them there.

The Liberal Democrat priorities of:

• preserving and defending the human rights and civil liberties of all, including asylum seekers and migrants
  
• working for increased economic and social fairness and the protection of the vulnerable
  
• positive engagement with our partners in the European Union and the United Nations
• protection and conservation of our environment
• reform of our political institutions, starting with proportional representation by single transferable vote in multi-member constituencies
  

must never be allowed to take second place to a cosy relationship with the Tories.

Old politics not dead yet.

Yesterday, in common, I suspect, with all other Liberal Democrat members for whom the party has an Email address, I received a letter from David Laws which claimed that there is "no money left", the "nation's finances (are) in an utterly ruinious state" and that "irresponsible decisions (have been) inherited."

Well, maybe so and maybe not. But it is this predictable knee-jerk "put the blame on the last lot" reaction which turns people of politics and politicians. Part of the task of the coalition is to restore faith in politics. We shall not do so by continuing sniping as usual. If we must have "savage cuts" (and I have the gravest of doubts: see posts "Economic Crisis," 8th April and "The Solution that Dare Note Speak its Name," 27th April) then let them quietly get on with it, doing as little damage as possible, and like grown ups, take any flak that arises from what is essentially a wrong-headed policy.

The Great Betrayal?

Having spent last week on a walking holiday with French friends in the Isle of Wight I have missed the blow by blow accounts of political developments in what has probably been the most exciting political week of my adult life. " La loi de l'emmerdement maximum," as the French would so graphically put it.

On one thing I should like further and better particulars: who scuppered the possibility of a "progressive alliance" between Liberal Democrats, Labour and other moderately left-wing parties? Was it the Liberal Democrats, who, Labour claim, were really only interested in a deal with the Tories, and used the rather feeble excuse that the "body language" of the Labour negotiating team was all wrong. Or was it Labour, whose "Neanderthal tendency," to quote Polly Toynbee "emerged roaring opposition" as "David Blunkett, John Reid, Jack Straw, Diane Abbott...reminded the world how backward , how unrogressive, tribal and sectarian much of the People's Party still is."(Guardian 12/05/10)

Although this detail will be of interest only to we political anoraks, I look forward to a definitive account of these negotiations. Until such is produced, for my own self respect I shall choose to believe the Toynbee version, for which there is a good deal of historical precedent. For almost half a century local government elections have frequently produced balanced councils. In such circumstances the Liberal/Liberal democrat custom has been to offer to work with all other parties in an all-party administration. Labour council groups have more often that not refused, thus forcing Conservative/Liberal administrations. Like some small boys, Labour will only play the game when it conforms to their rules. When it doesn't they take their bat home.

Perhaps the truth is that there was no betrayal, as parliamentary arithmetic made a "Rainbow Coalition" unviable. I believe it was Blunkettt who pointed out that, on average four MPs die every year. Thus any progressive alliance would have been fighting for its life in by-elections every three months.

In person and in private

(Note: This blog is actually posted on Wednesday 5th May, the day before polling. I have not yet discovered how to make the apparatus default to the UK time-zone, as instructed.)

This will be my last post for over a week. Tomorrow I shall be busy and on Friday I leave for a week's walking holiday in the Isle of Wight with an Anglo-French group. (This is the result of thoughtless planning: the holiday was booked some months ago when it did not occur to me that this was the likely date of the election. As a consequence I shall be on a train when what I expect to be the crucial Friday results are announced. So that I don't miss out altogether a friend has advised that I buy an MP3. I have ordered one on the internet and, if it arrives on time and I manage to figure out how to work it I shall join what I have hitherto regarded as anti-social earplug-wearers cut off from everyday life - but for a higher purpose.)


Posts will resume in a different political world: I hope very different. However, one story from the "old world" that is bound to be around is accusations of fraud in the postal voting. Over my lifetime various changes have been introduced to try to make voting easier or more attractive. The minimum age has been lowered to 18 in order to engage the young, the closing time for voting has been extended from 9pm to 10pm (much to the distress of the polling staff) and the restrictions for entitlement to a postal vote have been removed, so that anyone who wants one can have one. There have been experiments at local government level for "all-postal" elections, and suggestions for internet voting, text voting and putting polling booths in supermarkets. These have failed as turnout has fallen from over 80% to barely 60%, though, given the excitement, we can hope for an increase in this election.

Voting by post is insecure and leads to the possibility of fraud through illicit applications and pressure to vote in a particular way either within families or from party aparatchicks, as will be evident from accusations circulating by the time this blog resumes.

The French recognised that postal voting was insecure and abandoned it in 1976. Those unable to vote in person are permitted a proxy. Rather than extending postal voting we should do the same.

Frankly, given the fact that the majority of votes are cast in safe seats and have no hope of affecting the local outcome, it is amazing that as many bother to vote as do. The way to increase participation is to make every vote meaningful and the best way of achieving that is by introducing STV. If we Liberal Democrats have crucial influence after tomorrow I hope and pray that this will be he condition of our support for any government.

And that "supervote" should normally be cast, in the words of pavement-politics pioneer Tony Greaves, "in person and in private."

With friends like these...

The futures market in bonds and sterling does not normally open until 8 o'clock in the morning, but, according to yesterday's Guardian (03/05/10: Sterling faces battering within hours of polling) Euronext Liffe, which runs the gilts and futures exchange, has arranged that on Friday, as the election results begin to come it, the market will open at 1a.m

As economist Hugo Radice has pointed out in a letter to the Guardian (27/04/10): "...bond purchasers have an interest in talking down the issue price of UK government debt in the short term... They are happy to exploit our electoral jitters safe in the knowledge that the price will rise as the recovery gathers pace, netting them an easy capital gain."

Many economists have long advocated a Tobin-type tax to curb speculation on the international currency markets. Surely it is time to impose a similar type of tax on all financial transactions to curb short-term speculation. As Keynes pointed out, the purpose of the money markets is to channel savings into useful purposes such as investment: not to provide a casino for gamblers (though I understand that did not stop him making a tidy packet on behalf of his college.)

A Too-Quick Fix

In the United States a President is elected on the first Tuesday of one year and, if he is a new president, takes over the government in the second half of the following January. This "lame duck" period of some ten weeks is probably rather too long for modern conditions.

However, the British system, under which, if a prime-minister's party is defeated on a Thursday and, given a clear winner, the new man or woman takes over on the Friday, is much too short. Even under the "normal" circumstances of the past, when one party has had a clear majority, this has meant that key decisions, such as the structure of the new government and who should or should not be in the key posts, have been made hastily when both he new leader and his colleagues, not to mention the new MPs, are all exhausted from the campaign.

In the circumstances which are likely to prevail in the future, when no single party may have a clear majority, it means that key negotiations need to be carried out by exhausted leaders whose advisers have had no time to prepare for and think through the consequences of the new circumstances. Nor will the new MPs, on whose support the new government depends, have had time to "learn the ropes" and exert their influence. Rather they will be bounced by the old hands into accepting decisions they may come to regret.

Clearly among the constitutional reforms now needed is one that says that after an election the old government should remain in a caretaker capacity, not for ten weeks but for ten days, so that the membership and structure of a new government can be considered in a period of calm reflection.

A final frantic few days?

The BBC Radio 4 News this morning reports the beginning of "a final frantic few days" of campaigning, and I'm sure there will be, but my experience is that it won't make much difference: most people have usually made their minds up buy the weekend before the poll.

The exception was February 1974. On the final weekend the papers were seriously looking at the the Liberal leader Jeremy Thorpe as Prime Minister and speculating as to who would be in the Liberal Cabinet. This was a much more startling "turn-up for the books" than today's "Cleggmania" since, at the time, we Liberals had far fewer parliamentary seats and a much smaller local government base. Alas the surge faded in the final few days, Labour emerged as the largest party and the opportunity for a genuine change in the quality of our politics was lost.

There are many reasons why I desperately hope that the present Conservative lead will similarly fade in the next few days, but the most important three are:

• Their economic policy is just plain crazy. To cut public expenditure before the recovery is assured is totally unnecessary and risks returning to recession. It ignores the teachings of Keynes and the experience of the 1930s. If anything public expenditure should be increased and taxes cut.
• They clearly have a deal to cut back the broadcasting functions of the BBC and permit the Murdoch empire to fill the gap, leading to even less balanced news and views than at the moment.
• Cameron has set his face against electoral reform. Given that voting intentions are now split roughly three ways and are likely to remain so it is simply ridiculous to stick with a system that could easily give unrestrained power to the major party with the fewest votes.With a turnout of 70% (which may well not be achieved) and a share of the vote of 33%, that would mean that barely one in five of those entitled to vote had supported the party forming the government. The case for electoral reform has been obvious to all fair-minded people for at least half a century: it is now imperative.

Technical point: I have now discovered that, although the time zone on this blog is set to GMT+1 (ie the UK) it operates on GMT-8. The system also insists on "correcting" un-American English, even though it is set to British English. I have no idea how to force the system to do what it is told. If anyone knows I'd be happy to receive their advice.

Manners

Last night I caught the second half of Gordon Brown's interview with Jeremy Paxman on BBC1. After only a few minutes I was tempted to switch off, not by Brown's evasions or untruths - in fact he seemed to by trying to respond to the questions relatively honestly - but by Paxman's constant interruptions and hectoring. Whilst I have long believed that it is the way politicians respond to each other with rudeness and contempt which turns people off the political process, it is increasingly clear that the media themselves contribute to this attitude.

The nadir of the interview came when Paxman asked Brown: "Why don't people like you?" My reaction was: How dare he? In a civilised society no one would ask that question of another except, perhaps, if the other were on a psychiatrist's couch. Chivying hesitant students on University Challenge is one thing: open rudeness to another human being on a public medium is quite unacceptable, especially when one is fully aware that the other must "take it on the chin" rather than respond in kind.

Mr Paxman's bullying technique does no service to our democracy. I hope he will receive a reprimand from whoever have replaced the BBC Governors - and perhaps a reduction in salary to the size of that of the prime minister.