By their deeds (or lack of them) shall ye know them

It was good to hear Ed Milliband admit that three of his political heroes, Lloyd George,Keynes, and Beveridge, "were not members of our party," (though he couldn't quite bring himself to admit that they were Liberals) and that he is going to vote for AV. But the main burden of his speech was to dissociate himself and the "New Generation" Labour Party from all the errors of New Labour.

On the previous day Brother David had given an enumeration of Tory foreign policy failures from 1979 to 1997:

• halving the aid budget,
• standing to one side while tens of thousands were slaughtered on the edge of Europe,
• fighting and losing a beef war with the EU.*

What's sauce for the goose is sauce for the gander. For 13 years New labour had a substantial majority and, in the early days at least, substantial good will. Yet in this period they:

• toadied to the most right wing American president in recent history and illegally invaded Iraq,
• failed to give the opportunity for electoral reform (in spite of a manifesto promise),
• introduced only half-hearted political reform,
• further reduced the powers of local government,
• were relaxed about people becoming "filthy rich" and failed to implement a fairer tax system,
  
• burdened future tax payers with the cost of the absurd PFI system,
• presided over an increase in inequality,
• further eroded our civil liberties,
• continued the Tories' prescriptive policies in education,
• debased politics by their obsession with spin.
  

An article on religion which I read recently claimed that repentance and forgiveness are merely a desire to achieve a happier past. Liberal Democrat campaigners should make sure that Labour is not allowed to wash its hands of its past, and Liberal Democrats in government should remember that the same will apply to us.

* As reported in the Guardian, 28/09/10

To play, or not to play...

Men and women go into politics as a career, and in order to transform society according to their ideals and beliefs. These are complementary motives and not either/or choices, but surely, at least for "left of centre" politicians, the second should predominate. Even if David Milliband is not, after all, to be leader of his party, he still has ample opportunity to contribute towards the creation of what is left of the socialist ideal. If he decides not to do so then he will seem like the playground footballer who refuses to play unless he can be captain.

The most urgent task of the present parliament, for all parties, not just the coalition, is to restore respect for politicians and confidence in the political process. If David Milliband decides to quit, that will add to public cynicism rather than restore respect. Service under a younger sibling may mean that a certain amount of pride has to be swallowed. I can't think of any exact parallels, but there are several examples of politicians continuing to serve under former juniors. Alec Douglas Home continued as foreign secretary under his former junior Ted Heath, as does William Hague under Cameron.

If David Milliband decides not to continue in front line politics he will confirm the suspicion in many people's minds that politicians are "only in it for what they can get." I hope that he will decide to stay and put what remain of his principles first, however misguided I believe them to be.

A post script: a young man in our Co-op appears to be reasonably interested in politics, and, I believe, represents the staff on a regional committee. When I asked him yesterday how he was, he replied that he was worried about where Ed Balls might lead the Labour Party. With a recognition factor like that Ed Milliband needs all the help he can get.

Two Liberal Democrat "prizes."

On Tuesday mornings at 9 am there is a Radio 4 programme called "The Brown Years." This week's was largely devoted to the inside story of whether or not to call an election in the autumn of 2007. Both private and published opinion polls were pored over and apparently the crucial factor in making the decision not to call an election was that not enough southern middle class voters were thought not to be likely to vote Labour. Now that the coalition is to introduce fixed term parliaments the gross unfairness, and time consuming burden, of allowing one contender to choose the date of the election at a time thought to be most favourable to his own party is now rightly consigned to the dustbins.

I am reading the second volume of Chris Mullin's diaries ( a fascinating read, as is the first.) On page 158 (15th march 2007) he records: "...I heard the other day from someone in the Lords, that David Cameron has privately told the Tory peers that Lords reform is a 'third term issue'. So the Tories new found love of democracy in The Other Place is, after all, entirely bogus." Gossip, I know, but given that Cameron's pragmatism rivals that of Harold Wilson, I have no reason to suspect Mullin's judgment.

That a wholly or largely elected second chamber is now firmly on the agenda of this parliament' is another "prize" for Liberal Democrats in coalition.

Those of us distressed by Liberal Democrat complicity in the Tories' obsession with cutting back the state through the bogus need for immediate "savage cuts" should not forget the the triumphs of achieving these long overdue constitutional reforms.

Inudstrial democracy

Vince Cable's statement of the obvious truth that "markets are often irrational or rigged" has produced injured bleats from the CBI et al about over-emotional language with might frighten the horses (by which they seem to mean foreign investment.) How does the right reconcile its belief that trade unions should be hedged aground with all sorts of regulations which restrict their activities, while capitalists should be free to do as they like?

Actually I'm not necessarily a great fan of trade unions. In the 1960s we Liberals had all sorts of ingenious plans for industrial democracy and worker participation. One I liked was that boards of companies over a certain size should comprise one third shareholder representatives, one third employee representatives and one third community representatives. No single bloc would therefore have a majority. These imaginative plans, which, had they been implemented could have transformed the British industrial scene and avoided the horrors of the eighties, were always opposed by the trades union movement, which saw them as a threat to their power base. They preferred confrontation to co-operation.

I am pleased to see hints of a revival of potential co-operative ideas in Vince's speech: mentions of an employee shareholder scheme for the Royal Mail, and the promotion of mutual ownership by Ed Davey. I should like to see ideas about industrial (and commercial) democracy return to centre stage. We shall not obtain a fair society until power is exercised in the interests of all, rather than one "side" or the other.

234 year old revelation makes news

One of the many things that annoy me about present-day society is the way the media devote so much time in the so called "news" programmes on speculating on what is going to happen or be said rather than what has actually happened or been said. So Vince Cable hasn't actually said it yet, but is allegedly going to say:"capitalism kills competition when it can."

Why this statement, familiar to any student of "A" level economics (it's an aspect of what is now called "market failure") should cause consternation is baffling. Adam Smith was possibly not the first person to recognise this truth, but probably expressed it most vividly when over two centuries ago he wrote:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." (Wealth of Nations, Published 1776, page 116 of Everyman's Library edition.)

(It is perhaps a sign of the times that more recent sixth form studnts seem to have been less interested in the economic significance of the observation and more in the exact form the "merriment" might take. I suggested pork pies and brown ale, but their conjectures were more exotic.)

So Cable's comments are not Marxist, as some commentators on the BBC's "Today" programme are claiming, but from the mouth of the economist now claimed as the guru of the right. The Adam Smith Institute is highly selective in the prescriptions they choose to adopt from the master.

Just as it was, to Jane Austen, "(a) truth universally acknowledged , that a single man in possession of a good fortune, must be in search of a wife" it is universally recognised by impartial observers of the workings of the market that entrepreneurs prefer collusion to competition. In the 21st Century and the days of massive international corporations (News Corporation?) it is more than ever the government's responsibility to regulate not just the banks but the market itself to ensure where appropriate that producers and providers practise the competition they vaunt but do their best to avoid.

All power to Vince's elbow.

Fellow traveller II

Another unpublished letter to the Guardian. I sincerely hope that both Phil's conclusions turn out to be wrong, but he poses two very real dangers.

19 September 2010

Dear Editor

As a long standing member of the Lib Dems, a lot fell into place when I read the feature about Danny Alexander, Chief Secretary to the Treasury, in the Guardian (Friday 17 September). On moving into his office, we were told, he took down the portrait of John Maynard Keynes and replaced it with one of Gladstone. Gladstone was a great Liberal prime minister, but his slogan of ‘peace, retrenchment and reform’ included retrenchment which meant cuts. The Victorian era was marked by recurrent slumps leading to a bigger one in the 1920s and a still bigger one in the 1930s. It took the genius of the great Liberal economist, Keynes, to grasp the counter-intuitive truth that you don’t cut your way out of a recession, you spend your way out. In a slump you’re not poor because you lack productive resources, but because you’re not deploying them.

A recession will inevitably worsen government finances, because more unemployed people means more dole paid out and less tax pulled in. If the government misguidedly responds as if it were an individual, by economising, it may balance the books in the short term. But the extra unemployment this causes will widen the deficit again, by increasing dole claimants and shrinking the tax take. So in Keynesian terms there will be a new equilibrium, but at a lower level of output and income. The economic illiteracy of rejecting Keynes’s analysis looks set, I regret, to smash the Liberal Democrats and put the country through the needless agony of the 1930s all over again.

Yours sincerely

PHIL PAVEY

A left-of-centre alternative to Labour

Nick Clegg is reported last week to have written that "there is no future for the Liberal Democrats as a left-of-centre alternative to Labour." If this is true, and I haven't actually read the alleged article, then I believe he is profoundly wrong.

My analysis of British politics assumes that there will always be a Conservative party, a party which believes it is born to rule, is happy that the already comfortably off should prosper, that those not comfortable may benefit from the "trickle-down" effect, and those with a bit of gumption at the bottom of the pile will be able to climb out of the mire, (or, as RH Tawney so brilliantly put it, like "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 tails, 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."* ) Or, these days, maybe win the lottery.

Against this, parties of the left will try to promote fairness and equality, the statist left, Labour, with a top-down, authoritarian approach, and the libertarian left, Liberals, with a decentralised bottom-up approach, committed to equality while at the same time giving priority to liberty.

So there'll always be Tories, Nick, but there are different ways of changing society for the better. Our job is to replace the failed statist approach with our own vision of Elysium.

* R H Tawney, Equality, Allen and Unwin edition, 1931, p142

Third class honours - third class teacher?

I'm surprised that this simplistic idea of Michael Gove has surfaced again. Of course teachers need to know what they're talking about, but I suspect that, once we are assured that a teacher has the necessary basic knowledge, there is little correlation between academic performance and teaching effectiveness. In fact, I suspect that if the teacher himself/herself has had to struggle to grasp the basics then he/she will have more sympathy with and understanding of the difficulties of a pupil who faces similar struggles. Able mathematicians and physicists in particular can easily zoom off into the stratosphere leaving ordinary mortals behind,

Many teachers, myself included, claim that we did some of our most successful teaching in our early years when we were often literally just a page ahead of the students. If you've had to bash your brains the night before to understand a concept you tend to be good at explaining it the following morning. Later, when a concept is thoroughly familiar, it is often hard to remember why it is difficult to understand.

In my view good teachers have four qualities: they have sufficient basic knowledge of the subject for the level they are teaching, enthusiasm for it, are good communicators and, above all, have respect for the people they are teaching. Of these only the first is learnt and assessed at university.

The teacher who is bored by the subject will soon bore the pupils. Many teachers are masters of their subjects but poor communicators. This was borne out to me several times when I attended evening classes on "car maintenance," only to be left behind by a skilled mechanic who was master of all the intricacies of engines but had little idea how to break down his subject into "learnable chunks." Teachers who do not respect their pupils, be they infants, potentially rowdy adolescents or old age pensioners, will soon be sussed out and condemned to failure, however great their knowledge.

So it is probably far better to be taught by an enthusiast with a third than the first class honours graduate who feels his superior qualifications entitle him to higher things.

Just pretending?

On Wednesday the Guardian ran a leader under the above title, suggesting that Charles Kennedy may be playing a "long game." It is just possible, of course, that such articles appear without promptings from Kennedy and his supporters - or maybe not.

Charles Kennedy receives may plaudits from his supporters for leading the party to victory in 63 seats, its largest number for umpteen years and larger than at present. However, in the 2005 election Labour was in disarray, largely over the illegal Iraq war, the Conservatives were led from the far right by Michael Howard on a manifesto written by David Cameron and, in such circumstances, as one commentator unkindly but rather aptly put it: "If the Liberal Democrats had been led by a Telly-tubby they would have done well." Indeed, many of us found the election result profoundly disappointing, as we had expected to win over 100 seats.

Frankly, Kennedy has had his chance, fluffed it, and should now retire into the background. The course for the party in coalition is choppy enough as it is without a putative "king over the water" further rocking the boat, intentionally or not.

A fellow traveller

Last month a reader and fellow Liberal Democrat, Phil Pavey, sent the following letter to the Guardian. Unfortunately the paper did not print it so at Phil's request I publish it here instead.

25 August 2010

Dear Editor

As a long standing member of the Lib Dems I have been waiting for someone prominent in the party to state the obvious about the government. But no-one has, so I will do it. The coalition’s budgetary policy of cuts, quite apart from its dire social effects, is economic lunacy. It is cutting off your nose to spite your face. It is sawing off the branch on which you are sitting. It is applying leeches to an anaemic patient.

Let us be clear. Pleasing though it is to score a point off New Labour, it is clearly not the Brown government’s profligacy that caused the deficit, but the banking crash. This had a direct impact on the government’s finances through the bail out (to save our savings) and an indirect one from the resultant recession, which of course cut tax receipts and increased benefit payments. Our economic problem is 2.5 million unemployed people (thought to be an obscene figure when I was young) being financed by the government, and contributing much reduced tax. On the Treasury’s figures the cuts will add another 1.3 million people to the scrapheap. So while the cuts will cut the deficit today, tomorrow they will widen it again.

To assert that the private sector will somehow magically expand in the ‘space’ created by the shrunken public sector is just saloon bar baloney. Private firms are shedding labour due to reduced government contracts, and they certainly don’t invest when unemployment is rising so that demand for their products is slack. And an export led recovery is hardly on the cards when other countries are also busy cutting consumer demand.

In practice some cuts may be necessary to satisfy those holders of our national debt who are economically illiterate that this is the best way to safeguard their investment. But it is a psychological case not an economic one. The way forward is to stimulate demand to get those millions back to work, saving billions on benefits and paying billions more in tax. If borrowing seed corn to do this is too frightening then there are projects, like universal property insulation, that would pay all those extra wages from the savings they achieve.

Like those Labour people who stuck on despite the enormities of Iraq, ID cards, 28 days etc, I do not intend to forsake my party but to strive to bring it back to its true tradition of Keynes and Beveridge. My fear though is that not only will the cuts shatter the party but, what is even worse, put the country through the avoidable agony of a 1930s depression.

Yours sincerely PHIL PAVEY

I can add only "Hear hear!"

Not jobs but outcomes

The unions' campaigns against the cuts concentrate on the loss of jobs they will involve. I think this is a mistake. Of course there is a strong Keynesian case for governments providing employment when the private sector fails to do so: Keynes is alleged to have argued that, in a depression, if they can't find anything better, governments should pay some men to dig holes and other to fill them up again.

However, in today's climate this argument is not going to appeal to that self-satisfied "Middle England," the alleged target of the TUC campaign, who unfortunately will not relish paying their taxes just to find other people jobs. Indeed it is a fault of the unions, and perhaps the public services generally, that they become producer orientated, thinking that their industries and services exist for their benefit rather than the benefit of their clients, customers, passengers, or the public generally.

A more effective campaign would concentrate on the loss of outcomes implied by the cuts: insufficient probation officers means fewer errant youths redirected to the straight and narrow; an already inadequate prison education service means more re-offending; fewer staff in HMRC means more tax evasion, avoidance and uncollected tax...feel free to add your own list.

I am quite certain that somewhere in the public service there is waste and slack. It should be rooted out: so politicians have been saying ever since I became active in the 1950s, and probably well before that. Consultants would make a god start, and personally I should abolish OFSTED, which as done far more harm than good, and let its ex-staff seek work in front-line education if they think they're so good at it. (I bet most of them wouldn't.)

But staffing reductions which do not affect outcomes are probably very limited. A more effective campaign emphasis today would be not on the loss of jobs but on the fact that public expenditure is necessary for a civilised social and physical environment. To cut it clears the path to public squalor

Party Funding

Nick Clegg has quite rightly raised the issue of party funding. Clearly, along with the raising of funds, the issue of expenditure should also be reviewed. It is a nonsense that the likes of Lord Ashcroft should be able to pour vast funds into marginal seats between elections (it will be interesting to see some research on how effective this was) and that rich individuals can buy influence by making huge donations to the party of their choice.

State funding, along with strict limits on individual donations and expenditure between and during elections, is clearly required. The great problem with adequate state funding is not that it is unpopular with the electorate, but that it allows the parties' headquarters and and even local branches to operate in their own private bubble, financed by " manna from heaven" and no longer needing to connect with the public, save at election time, in order to persuade us to support them financially and physically.

A simple way round this was described in an article in Liberal Democrat News a few years ago. In essence, parliament should decide how much in total the state should fund the parties collectively. This sum is divided by the number of the electorate and each person on the electoral roll is sent a voucher for the appropriate amount.

For simplicity, if the total sum is £100 million per year and the electorate is 40 million, then each person on the electoral roll receives a voucher for £2.50. Party members and committed supporters will promptly send the voucher to the party of their choice, who will cash it in with the Treasury. A few "plague on all your houses" individuals will throw it into the fire, but most will do nothing. It is then up to party supporters to go round, explain the virtues of their party and persuade the electors to give the voucher to them for forwarding to headquarters, and , of course, vote for their party next time.

The value of the scheme is that heightens the need for the parties to keep in touch with the people every year (if not exactly "all the year round!"), rather than disengage further, except at election time, which is the likely result of state funding direct to the parties' headquarters.

The above is a bare (and perhaps partly mis-remembered) outline of the scheme. It would be useful if Liberal Democrat News would re-publish the article.

Keynesianism alive and well in the White House

Regular readers, if such exist, will have noted few posts during August. This is because I have been juggling some time-consuming economics work with quite a lot of holidays. The end of the latter this week involved a four hour wait in the Gare du Nord in Paris. where, to pass the time, I picked up a free newspaper (20 Minutes, 08/09/10) and found the following short article:

OBAMA, UN PARI À 50 MILLIARDS.

Des grands travaux très coûteux pour relancer l’emploi. C’est l’ambitieux pari de Barack Obama en plein chute dans les sondages à deux mois des législatives. Le président américain a annoncé lundi qu’il allouerait 50 milliards de dollars à un plan de construction d’infrastructures routières, aériennes et ferroviaires. Ce plan ne « créera pas seulement des emplois immédiatement mais organisera mieux notre économie sur le long terme », a-t-il déclaré. « Même après la pire récession de notre vie, l’Amérique continue de maîtriser son destin. » Mais ce plan doit d’abord être voté au congrès où l’opposition risque d’être féroce.

For those whose French is rusty his means that President Obama is proposing a 50 billion dollar gamble of costly (public) works to create employment. These will involve construction in the road, rail and airways infrastructures which will not only create jobs now but will better prepare the economy for the long term - a classic classroom statement of the Keynesian position which an "A" level student with a modest E could understand and justify.

Why oh why does the British government cravenly follow the White House when it does stupid thing and ignore it when it proposes the correct course - especially when that course is based on the policies of a great Liberal and British economist? Liberal Democrats in government (and all Liberal Democrats in the coming conference) should be pressing Obama's example loudly and clearly.