Tuesday, 21 November 2017

Budget obsession

The annual obsession of Britain's political and chattering classes with the government's budget is both  unhealthy and unrealistic.

Unhealthy because it is simply not true, for the vast majority of us, that a little bit more or a little bit less income or spending power is going to make much difference to the quality of our lives and our happiness.  Yet on Thursday (the budget is tomorrow, Wednesday) the papers will be full of charts and columns showing how the budget will affect the incomes  and spending of various groups: single people; single mothers with one, two or three children;  happy families with a mother, father and 2.4 children; pensioner couples, and single pensioners.

For all of these groups a decision to take a twenty-minute walk every day, to eat less junk food, and to smile more often at our neighbours, would make far more difference to the quality of our lives than any decision the chancellor of the exchequer can make.

That is not to say that those on and below the margin, some twenty percent of our population, will not be affected by minor changes in their incomes, but these can be made, and often are, at any time on the year. .A decision to cut the "waiting time" for universal credit from six to four weeks has already been made, and it should now  be reduced by anther two,  There's bags of opportunity to force builders hoarding land with planing permission (a problem that  has existed for decades, but which the government has apparently only just recognised) to build on it or lose it.

There is no need to parcel all the possible improvements into one piece of political theatre.

Unrealistic because  there is the expectation  that the budget, for good or ill, will turn round the fortunes of the government.  Uniquely I think, some members of the governing party are hoping that the budget will be a flop as  this will enable them to get rid of the chancellor becasue he is insufficiently enthusiastic about Brexit.  But how many. other than anoraks (and not all of those)  now remember the details of last year's budget, or even George Osborne's omishambles?

More seriously, it is unrealistic that one collection  of economic tweaks  is going to transform the ailing British economy. As Larry Elliott pointed out here; 

"even before the referendum Britain was running a record current account deficit, growth was being pumped up by an overheating housing market, factories were still producing  less than before the start of the financial crisis, and people in the poorest parts of the country were being targeted  with deep cuts in welfare benefits."

Since the referendum matters have worsened. The pound has depreciated by some 15%, fuelling inflation; investment  has been held back because of the uncertainty caused be Brexit, and influential firms and organisations are either planning or actually moving to other countries. Yesterday, for example, it was announced that Goldman Sachs would make Paris and Frankfurt their post-Brexit" hubs,"  and two EU institutions will, not unexpectedly, move out of London:  the Banking Authority also to Paris and the Medicines Agency to Amsterdam.

There used to be a "joke" that it took three  miles (or was it three leagues?) to turn round the RMS Queen Mary.  Something similar can be said of the British economy: it well take not one but a decade or more   of the constructive budgets to put matters right..  There is no shortage of such constitutive ideas.  My own humble Keynesian contribution was published as early as 2011 and can be seen here.It all remains highly relevant, though I would now add, of course , that we abandon Brexit.

If Mr Hammond sticks to his guns tomorrow's budget may make a start, but I suspect it will be modest.

Saturday, 18 November 2017

Albion still perfidious.

I think most of we British are at least vaguely aware, possibly from the Lawrence of Arabia film, or reading his book, that our government let down, or even double-crossed, the Arabs, after the First World War.

As I understand it, and I'm no expert, Britain  promised, or at least indicated to, the Arab peoples, that if they revolted against the Ottoman Empire which had for centuries ruled much of the Middle East and was our enemy in the First World War, then, when the Allied victory was achieved, their lands would be handed over (or back?) to the Arabs as their own country.  This is what Lawrence of Arabia is said to have believed and promised the Arabs if they gave their support to the British forces.

Instead, the British and French parcelled up the area between them in the Sykes-Picot Agreement and, on top of that, apportioned a chunk as an international home for the Jews,without so much as a with your leave or a by your leave of the people who lived there,  in the Balfour Declaration..

Less well known (or at least it was new to me) was a betrayal of Chinese expectations which was exposed in a documentary, Britain's Forgotten Army, shown on Channel 4 last week and still available to watch again here.

Some 140 000 Chinese were recruited and acted as labourers for the Allies on the Western Front and elsewhere during the First World War.  Many were killed, and it is acknowledge that, without their help, it would have been far more difficult, if not impossible, to supply the troops.  In the event of Allied victory the Chinese government anticipated that the German concessions on the Chinese mainland would be handed back to them.  This expectation (promise?) was ignored at the Versailles Peace Conference, and the concessions were handed over to China's traditional enemy, Japan.

"New" Labour's shadow foreign secretary in the 1990s, Robin Cook, aware of this history of duplicity, outlined the "ethical foreign policy"Labour would adopt if returned to power.  He had the honesty  to resign when Tony Blair's government supported the Americans in the invasion of Iraq.  Sadly this exemplar of political  immediate integrity died shortly afterwards.  Cook's successor, Jack Straw, quickly reverted to type and it is hard to see your foreign policy becoming more ethical under the present foreign secretary, the vacillating and opportunist Boris Johnson.

Saturday, 11 November 2017

Remembrance Day

Here's a telling sentence from Giles Fraser's article in yesterday's Guardian:

"...I am always conscious that remembrance is too easily purloined by those who want to celebrate precisely the sort of militarism  and nationalistic chauvinism that led so many young men  to pointless deaths."

That certainly resonates with me, and for some years, in order to try and balance the motives behind Poppy Day I've worn a white poppy* alongside the red one..

In his article Fraser quotes this poem by  Ellis Humphrey Evans, who was killed on the first day of Passchendaele:

Why must I live in this grim age,
When, to a far horizon, God
Has ebbed away, and man, with rage,
Now wields the sceptre and the rod?

Man raised his sword, once God had gone,
To slay his brother, and the roar
Of battlefields now casts upon
Our homes the shadow of the war.

The harps to which we sang are hung,
On willow boughs, and their refrain
Drowned by the anguish of the young
Whose blood is mingled with the rain

I believe the poem was originally written in Welsh.

I shall try to publish this post as near as possible to 11am today, and reflect on  the poem in my Two Minutes' silence.

* These can be obtained from the Peace Pledge Union.  It's probably too late to buy one for this year but you cn read about them here.

Friday, 10 November 2017

UK unempoyment: a record low?

It's natural that those who want to boost our image as "global Britain" make much of any positive information about the performance of our economy.  Eighteen months or so ago much was made of the statistic that we were " the fastest growing economy in the G7."  Now, since the referendum result, we've slipped to the slowest among the G7, we no longer hear  much about that.

However, last week there was "good" news: our current level of unemployment, at 4.3% is the lowest since the days of Harold Wilson, and now among the lowest of the major economies of Europe - less half that of that of France, for example.

Those of us in the  economics education business learned to distrust government unemployment statistics way back in the 80s. That 4.3% is based on what is known as the "claimant count"  - the number of people "signing on" for unemployment benefit.  Mrs Thatcher's government made over 30 adjustments to the way the claimant count was calculated, almost all of them leading to a lower total.  Basically, if there is no entitlement to a benefit, many those who are unemployed don't bother to "sign on" at the Labour  Exchanges created by Winston Churchill when he was a member of  the Liberal government in the noughties of the last century and now called Job Centres, as these places are no longer  all that helpful in finding people jobs.

Rather, economists now focus on the International Labour Organisation's (ILO) broader measure of unemployment.  Independent research  by Sheffield   Hallam University, summarised here, claims that  that 735 000 people would need to be added to the claimant count to match the ILO measure.That's almost as many as the 785 000 on the claimant count, so  just about doubles the percentage figure to bring it roughly equal to that of France.

But that's not the end of the story.  There's another 750 000 people who have been shunted  off on to Incapacity Benefits who would really like a job but can't get one.  Many still look vigorously, but many have given up hope, I suspect because, once employers see a gap in someone's employment history they are reluctant to offer a job if there are other candidates with a continuous employment records.  Most people these days these days are careful to  disguise any gaps in their CVs.

The Sheffield Hallam researchers refer to this factor  as "hidden unemployment."  Whether in this they also include  the vast number, particularly women, who are in part-time jobs but who would really like full-time jobs, those on short-term contracts who would like longer-term security, those with routine jobs which make no demands on their qualification and capabilities, and those at the bottom of the pile on "zero-hours" contracts, I don't know.

What I do know is that the state of the jobs market is a far cry from the healthy days of my early teaching career, when we regarded 3% as the normally tolerable rate of unemployment.  Even today's claimant count is nearly 50% higher than this.

Saturday, 4 November 2017

Exiting Brexit: how democratic is that?

Handing out pro-EU leaflets in Brgigate, Leeds's main street, on Saturdays is an interesting experience.

Most people walk past and ignore us.  A surprising number come quietly to our little stall without being asked and sign our petition to put a stop to Brexit, and only a very few come actually to talk about the pros and cons of leaving or staying in the EU.

Every half hour or so we will be abused by an angry pro-Brexit enthusiast.

"It's democracy," they'll shout." It's decided.  We're leaving . Good riddance.. . " etc"

 They rarely want to talk about it, to listen, yet alone discuss, any of the arguments about the damage being done to the nation's status, their own wellbeing or  future prospects. The few who do simply harangue us.

"We've voted, that's it."

I'm not surprised.  These are the people who, under our "first past the post" electoral system have rarely cast a vote which counts for anything or decided anything.  Only those living in a tiny handful of marginal constituencies have that privilege.

But this vote, the referendum, was a chance to have a crack at the establishment which they feel has complacently ignored their needs.  For years they have been drip-fed  bile from the biassed press,(largely  owned by tax-avoiding foreigners) that their perceived ills -  wages undercut, traditional (white?) culture threatened, unaffordable houses, prising rices, crumbling transport system and health service  - are largely if not all the fault of the EU.

Over 40 years no leading politician since Ted Heath : not Wilson,  not Thatcher, not Major, not Blair, not Brown, not Campbell, has had the guts to put the positive case of the benefits to us of EU membership.  Indeed the reverse:  the EU's alleged regulations, red tape and bureaucracy have provided both major parties with a convenient scape-goat for any unpopular policy which may be for our long-run good

However, what did surprise me was this statement, aired by John Redwood on the BBC Radio 4 "Any Questions" programme.  (It comes about  ten minutes from the end)

In a debate on the so-called "meaningful vote" which Parliament is to have on the result of the negotiations Redwood says:

 "Parliament can vote what it likes.  We are leaving the EU in March 2019 [said twice] whatever Parliament thinks  about it."

Now Mr Redwood is no neglected left-behind from a deprived region but the Rt Hon John, MP for Wokingham since 1987 (that's 30 years), one-time Minister of State in the(Department of Trade and Industry), Minister in the Department of the Environment), and Secretary of State for Wales.

Not the most outstanding political career, perhaps, but pretty glittering all the same, and certainly not lacking in influence.

This, from a distinguished and informed politician who campaigned for "taking back control" and the "supremacy of the UK Parliament) is disgraceful.

Democracy is government by discussion.  There is no reason for the discussion to stop after a narrow victory in one flawed advisory referendum campaign supported by an overwhelmingly biassed press and, possibly , we now hear, dodgy money.

Public opinion has probably already reversed the narrow "Leave" victory.

Sadly so far that;s insufficient to stiffen the sinews of our supine legislators.

But a further shift to, say, 60:40, is surely well on the cards as the false prospectus promised by the Leave campaign unravels day by day

Brexit is by no means a "done deal" and the weakness of the Brexit case is revealed in their present  reliance  on the assumption that it is.

Monday, 30 October 2017

Cautious about confidence

Tonight BBC Radio 4 is broadcasting a programme ( (The Confined Trick, 8pm) advising us  how to boost our confidence.  I expect lots of aspirating go-getters will be listening-in and avidly taking notes.  But I hope the programme will also consider the downsides of confidence.

A first rate depiction of confidence is given in the  TV documentary “Army: Behind the New Frontlines” currently showing on BBC2.  From colonels though junior officers and NCOs to the newest recruits everyone seems and sounds supremely confident  of the justification for their presence in various parts of the world ( Ukraine in last week's episode), what they are about to do, and the  probability of success.  

 Actual military history tells a different story, from the unimaginable slaughter of the First World War to the pointless wastage of Vietnam and the counter-productive engagement in Iraq. 

Even the Second World War, which, from the British point of view is seen as justified and successful, even part of the glorious past,  was not, however,  quite the efficient operation some  like to think.  As Jo Grimond, a junior officer in it, points out in his Memoirs, (p99):

". . .once America joined in the war, let alone Russia*, we were bound to win .  If anything is remarkable, it is  remarkable that [victory] took so long."

Grimond goes on to point out the damage  our view of our exceptional national gifts which resulted from   our victory  did to our national psyche:

"Yet we came out of the war being told that we had saved the world by a unique act of courage against fearful odds..  We naturally became convinced  that the world must see that we were natural leaders of the West entitled by our deeds of valour and skill to rest on oars as far as work was concerned  and owed a debt, indeed a living, by our neighbours."

I strongly suspect that the residue of this attitude is what fuels the enthusiasm of the leading Brexiteers. Perhaps the  acronym SNAFU, coined. in the Second World War, aptly describes the situation towards which they wolud take us.

 Let's  hope the BBC, always concerned for balance, will run a series on the virtues of honest doubt. 

* We should never forget that, whereas the number of deaths does not necessarily correlate with the contribution to victory, according to https://en.wikipedia.org/wiki/World_War_II_casualties the Soviet Union suffered between 20 000 000 and 27 000 000 civilian and military deaths, compared with  the UK's
 450 900 and the US's 419 000.

Tuesday, 24 October 2017

Disunited Nations

Today, 24th October, is United Nations Day, though I haven't heard a whiff of information about it on the BBC news, or seen any mention in the papers.  However, there is no shortage of news about disunited squabbling (Mrs May v the EU and the rest of the world; Donald Trump v North Korea; to mention just two)

I suppose it is no surprise that the British press, and not only the Red Tops, should choose to demonise the negotiators on behalf of the EU and make desperate attempts to turn the fumbling efforts of the Brexiteers  into heroic shots from David's sling against an over-mighty Goliath.  And if we don't get our own way  we'll walk away.  So meuh!

I haven't yet heard a single concrete example of how Britain's economic prospects, political influence or prestige will be improved by leaning the EU: instead  a veritable Tsunami of predictions of woe if we are daft enough to go through with it and leave.  Much of this, agreed, is speculation, but there are also concrete facts, such as the plans of banks to move to Frankfurt or Dublin, postponements of investment by manufacturers, and a humiliating depreciation of the £.

Even more worrying is way the US/North Korea dispute is being conducted via childish Tweets which could make  the average  playground dispute look mature. The US foreign service must be tearing their hair.

The United Nations Organisation was set up to provide a mature and sophisticated  method of solving international disputes and promoting international co-operation.  It is worth remembering that the UK was instrumental in setting it up and is one of only five "super members" with a permanent seat, and veto, on the Security Council.  Today our Brexiteers are desperately negotiating to move us down  into the fourth division.

True the UN needs reform to reflect contemporary circumstances (the importance of India and Brazil, for example) rather than the perceived international league table of 1945.  The UK should be playing a constructive role in this.  Instead we are preoccupied with a childish skirmish in another arena, as well as neglecting the very real domestic problems which are daily taking us further down the international tables..

Some nostalgic buffoons suggest we should have another public holiday and that it should  be Trafalgar Day, 21st October.  (There was a march in London for those obsessed with our "glorious past" rather than our problematic present.).  I'm all in favour of an extra public holiday and suggest yet again that it should be United Nations Day, to encourage us to concentrate on the realities of trying to achieve  a constructive present rather than wallowing in delusions of past grandeur.

PS  Today is also World Polio Day. I'm not familiar with he details but I suspect that the discovery and distribution of the anti Polio Salk Vaccine owes more to public and charitable enterprise than the so-called  "free" market.