Friday, 30 June 2023

Pasing the buck

 

Since the War the Conservative Party has been in charge of the government for two years out of every three: in other words, twice as long as Labour.  Hence they are largely responsible for the condition of the country, whether you feel it is thriving or crumbling at the edges.

At the beginning of this period, 1945, we regarded ourselves  (and some others regarded us) as a Great Power and were appointed one of the Five Permanent Members of the UN Security Council.  The unfortunate invasion of Suez in 1956 confirmed that we weren’t really a Great Power (along with Russia, China and the US) but we remained a “leading power of the second rank."

 In the mid-1970s, and particularly since the election of Mrs Thatcher in 1979, the  Keynesian economic consensus was abandoned, and the Tories’  ruling economic orthodoxy became free market economics in a deregulated system.  This they argued would release the latent entrepreneurial spirits of our wealth holders and innovators and ensure economic prosperity and our continued influence in the world.

Although the standard of living of the majority of us has undoubtedly improved since the 1980s,  for the past twenty years or so it has stagnated and in comparative terms we have fallen behind similar countries such as Germany and France. On present trends  Poland moves ahead of us by the end of this decade.

 In addition our democratic institutions have been damaged, our respect for international law diminished, our currency depreciated, our financial stability questioned and we are on the brink of ceasing to be counted among the world’s developed stable liberal democracies.

 The Labour Party is not entirely free from responsibility: the invasion of Iraq and our involvement  in Afghanistan haven’t helped our international standing, and Labour too fell for the “group think” of public spending cuts in the early 2010s, which have s weakened our public services.

However, the Conservatives have been in charge for most of the time.  How do they explain this deterioration if they choose not to deny it?

By a series of scapegoats.

·       For Mrs Thatcher it was “the enemy within;” overmighty trade union barons hampering the operation of free market by  unwarranted demands on behalf of greedy workers.

·        Brussels bureaucrats hampering our enterprise with unnecessary red tape.

·       Eventually the entire European Union, with unrealistic ambitions for further integration, which held back our potential for buccaneering exploits in the rest of the world.

·       For Michael Gove et al, “the Blob;” the  professional establishment, particularly in education and health, obstructing exciting innovation. . .

·       . . .and civil Servants squashing every brave initiative in the manner  of “Yes Minister.”

·       Not to mention “lefty lawyers” seeking technical loopholes to frustrate their democratic right  to govern.

·       Parliament itself needing to be prorogued  in order to implement “the will of the people.”

·       Supported by uncooperative judges; “enemies of the people.”

·       Invasions of migrants taking up places in schools and our housing stock;

·       The Liberal √©lite, given too much airtime by the BBC and broadsheet press.

·       Namby-pamby “wokeness” making milksops (snowflakes?) of our young.

·       The Bank of England, which “took its eye of the ball” regarding inflation.

·       The Regulators, which have failed properly to oversee the industries they should be watching, not least water.

 

All  this to disguise the real truth, that the Tory recipe of  public services operated for profit rather than service of the public, low taxation and freedom to the strongest to exploit the rest do not lead to a happy, prosperous and respected nation.  There is better way.

 

Monday, 26 June 2023

Infaltion: some thoughts, but few immdeiat solutions

 

Economists of my era divide the forces causing inflation into two: cost push pressures  and demand pull forces.  Both forces tend to be active at the same time.  Higher wages will tend both to  push prices up by increasing production costs a but also, if they are spent, will lead to increases in demand which, via shortages, pull prices up.

In our present situation it would seem that the predominant forces are cost push: higher energy prices, supply constraints and labour shortages resulting from Brexit, and possible “greedflation” – companies taking advantage of the general  climate to increase their  profits by raising their prices more than is necessary. That certainly seems to be happening in our local market.

Given that wages are rising much more slowly than prices it is hard to argue that inflation is predominantly “demand-pullful” as American economists express it.

 Yet the official response, by the Bank of England and fully supported by the government, is to raise interest rates.  This is the classic response to combat demand-pull inflation, taking demand out of the economy by raising borrowing rates and thus curbing investment and, more publicly evident,  by diverting what would otherwise go into consumer spending into the building societies or banks as repayments on mortgages. 

Just setting aside for the moment whether this is an appropriate response or not, is seems a bit daft to undermine its effect by generating all sorts of schemes to avoid the full effect of the higher repayments with extensions, payment holidays and interest-only alternatives.  It would have been more logical to raise the  interest rate by a quarter point rather than a half

Whilst we can all have sympathy for young people struggling to pay mortgages, they are not the poorest in society.  These could be helped by a cut in VAT. Increased social security, payments, at the very least the  restoration of the £20 should it now vbe £22?) addition to Universal Credit.  Given that the National Debt is now over 100% of GDP (the “respectable “ maximum is 60%) such a tax cut and increase in public expenditure would have to be paid for. An increase  in the top rate of income tax, excess profits taxes and windfall taxes, capital gains taxes on rising house values,  land taxes etc should all be considered.

Progressive parties will balk at these suggestions because they see them as electoral suicide, but unless we start to talk about them they will never become the practical solutions our economy needs.

 Inevitably the real solutions to our inflation problems are in the long run, and need to be introduced before we’re all dead: investment, in green technology rather than prestige projects such as HS2; improved infrastructure, particularly the northern rail network; re-integration with European markets; a greater measure of equality; effective and respected technical education; government support for the arts and universities; a more stable and effective political environment.

  These and the many others  will all take time.

A final word of warning.  It is easy to assume that when inflation does fall, prices will too.  But on post-war form they won’t.  Unless something very unusual happens, such as a depression as severe as in the 1930s, they will stay up at the new high level.  I was horrified to discover, in a walk through our local park yesterday, that a small cone with just one dollop of ice-cream on it costs £2.25. 

When ice-cream sales resumed after the war, when I was eight, a small cone from Mr Allott’s Dairy  in our urban village cost 2d  (less than 1p in modern currency.)   Now 225 times dearer.  Oops.

 

Tuesday, 20 June 2023

A timid step towards normal?

Thinking it to be an historic occasion (no Prime Minister has ever before been subjected to such excoriating criticism) I tuned in to the BBC’s Parliamentary Channel to watch yesterday’s debate on the Privileges Committee’s  Report on ex Prime Minister Johnson’s truthfulness or otherwise when speaking to the   Commons about the parties in Downing Street during the Lockdowns

 The debate was opened with measured dignity by the Leader of the House, Penny Mordaunt, who in another capacity had achieved recognition and fame by holding the Sword of State Upright for ages at the King’s coronation.  M/s Mordaunt welcomed the report, praised the Committee’s diligence in producing it, said that its conclusions that Johnson had wilfully and knowingly misled the House were absolutely essential if democracy were to function effectively, and she would vote in favour of it. 

Her opposite number, Labour’s Shadow Leader of the House, M/s Thangan Debbonaire, promptly lowered the tone by launching into a vigorous attack on the current prime minister Rishi Sunak for not being present: he was “weak, weak, weak.”

I believe these aggressive attacks are inappropriate and help to alienate a  large sections of the public from politics.  Here was an occasion for talk of high principles, the need for honesty in the proper conduct of public affairs. Yes the present prime minister’s absence may be noted, preferably regretted more  in sorrow than in anger.  Not “more of the same” vacuous knockabout.

Happily Sir Peter Bottomley, the longest serving MP, a Conservative, restored the tone by gently chiding her and admitted that when he had “misled the House” he had put matters right with two sentences:  “I was wrong,” and “I apologise.”  They can be found in Hansard.

Former prime minister Theresa May also made a measured speech, supporting the findings, praising the Committee  and pointing out that attempting to discredit  the procedure and the integrity of the members at this late stage was itself an abuse of Parliament. 

The Committee’s chair, Harriet Harman, gave some details of their findings and noted that she was wearing a necklace very similar if not identical to that worn by Mrs May.

I think that, on the whole, we saw the Commons acting at its best, although we may wonder why it took a whole year of investigations, £200 000+ on lawyer’s fees to defend the accused and then a five hour debate to  decide that Johnson was lying, when the rest of us had come to that conclusion in an afternoon.

The good news is that 354 MPs voted to accept the report and only seven voted against (the only name I recognised in that list was Bill Cash – where were “Sir” Jacob Rees Mogg and Johnson’s other acolytes).  The bad news is that 275 MPs chose not to vote.  Some would have legitimate excuses but it is reasonable to suppose that most put their perception of what might be best for their careers  rather than have the courage to acknowledge plain facts.

 

 

Monday, 12 June 2023

Gohnson

 

“It is a far, far better thing that I do now than I have ever done; it is a far, far better  rest that I go to than I have ever known.”

 

Ex-Prime Minister Johnson might have salvaged a smidgeon of decency in his reputation by a farewell sentiment such as the above.  Instead we have had a petulant justification of his trail of misconduct in office, coupled with  a vilification both the parliamentary processes and personnel that have condemned him.

But the real responsibility for his cavalier premiership,  gravely damaging to Britain’s reputation as well as the well-being of many of “the British people”  on whose behalf he was  so fond of  claiming to be acting, are the people who put him there.

Over 200 of the 350 or so Conservative MPs placed him on the final ballot for the party members to chose as leader.  All of them would have self-interest in furthering their own political careers as part of their motivation, but most of them would surely have balanced that with a solid sense of responsibility for the reputation the country, with the welfare of their contents and, indeed, the wider world.  But they didn’t. 

Similarly two thirds of the 150 000 or so Conservative Party members voted for Johnson in the final run off.  Some would have been akin to the “hard-faced men who look as though they had done well out of the War” whom the then Conservative leader Stanley Baldwin observed on the Commons benches back in 1918.  But many (and today including women) would be responsible and respectable local citizens, with their own personal ambitions, ambitions, true, but also working hard as councillors, magistrates, activists and pillars of the community to serve their local populations.  Yet they knowingly placed their faith in a popular but provenly dishonest and irresponsible charlatan.

Both groups would have been influenced by the predominantly Tory supporting press; in particular the Telegraph, Mail and Sun.

Poor Prince Harry has given his opinion in another context that both the government and the press have reached “rock bottom.” Such comments are, of course, beyond his brief, even as a “non-working” royal.  But he’s pretty much on the ball in this context too.

The one group to come out of this sorry affair with credit is the small Committee of Privileges.   Conservatives have a majority on this committee.  The Committee has stuck to the facts as they see them and taken a long-overdue step in the direction of restoring decency, accountability and integrity to Britain’s politics.