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Thursday, 20 July 2017

BBC Salaries and the 'Paradox of Value'

The media - not least, the BBC itself - has had a field-day taking apart the data that the BBC has been required to publish on the salaries paid to people who appear on television; if they are paid more than the prime minister. These are only partial data, because [as has been pointed out in all the reports that I have seen] those presenters who sell their services through production companies are not paid salaries as such, so do not appear in the list. Those like Graham Norton, who are part salaried and part freelance only display the salary portion of their earnings: for this, and myriad other reasons, the data are of no effective use. But that has not presented any obstacle to the pontificators who have taken politically correct positions and argued that it is 'scandalous' that men are paid more than women, and that no person from an ethnic minority is among the highest-paid.

It would be possible for the BBC to award salaries [and refuse to employ non-salaried presenters] according to a popularity poll conducted by the Guardian, which was recently shown to the overwhelmingly the Corporation's favoured 'newspaper'; but it is most unlikely that the vast mass of the population would agree with that ranking. I am constantly astonished at the vulgarity of much of the output on all channels that appears to be highly popular.

Adam Smith, the founding father of the Econocracy, wrote about a so-called 'paradox of value'. Items that are absolute necessity for the continued survival of human beings, like bread and cheese, are cheap, while essentially 'useless' objects like gem diamonds are massively expensive. Human society is paradoxical: what people are prepared to strive and compete to get seems quite irrational to other people. Once a man or a woman has enough food to eat, a place to shelter and clothing that seems to them adequate, the preferences that they display thereafter if they are able to widen the pattern of their consumption seem utterly silly to other people. There are no natural laws to direct people's choices. Various religious guidance is offered; but more often than not that steers wealth towards the religion and those who lead it, and offers no valid guidance to individuals on how to manage their own disbursement of their incomes.

The medical professions have become vocal in expressing their view as to what consumption and behaviour is healthy and what is not, and sometimes there is sufficient evidence to convince people that the advice is basically sound. Politicians are presented with speeches to read out, in attempts to steer public behaviour in directions that are seen as affordable and socially desirable; but everyone views such utterances with cynicism.

Ultimately there is no valid system for valuation of anything or anybody's action. Some things, like poisons and poisoners, can generally be condemned; but they are at the extremes of consumer behaviour and they are threatening to the majority of consumers: so collective action against them is self-defence by the majority. There will never be a definition of 'value': so there is no 'true' way of differentiating Graham Norton from Fiona Bruce. They and their agents are left to haggle; and that is the only way it can be.

Wednesday, 19 July 2017

The Tragic Triumph of the Econocracy

'The Bank', with a capital letter, means the Central Bank in any country or community: in our case, the Bank of England; and 'the banks', as a collective, means all the other firms and partnerships that the Bank recognises as legitimate banks and thus it is authorised to give them instructions and to trade with them. Specifically, it will sell them bonds and other debt certificates [from a list of approved categories] and lend them money at a publicly announced rate of interest called 'base rate'. A large proportion of the Econocracy [the prevailing rat-pack of professors of Economics] argue that if the management of the banks by the Bank is perfectly calibrated the economy can operate perfectly. If the money-managing institutions work perfectly, the whole economy can achieve 'equilibrium': a state where all the resources available to the human race are allocated to their optimum uses.

This is a model of perfection. The realities of human existence make it a total nonsense: but the Econocracy currently has control of the channels of advice to governments, and most of the economic commentators in the media, in banks and investing institutions are required to parrot the prevailing orthodoxy: though there have always been some brave spirits who have the wit and the integrity to deny the validity of the whole structure.

So-called Monetarism, a package of ideas formulated by Econocrats in terms that could be explained to politicians and to students, was introduced in the USA in the later nineteen sixties, when the flaws in the attempt at practical neo-Keynesianism had generated a disastrous wage-price spiral as trade unions demanded pay increases to match price increases [as reported on official indexes of 'inflation']. In the early nineteen seventies the major oil-exporting countries tripled the royalties that they charged for access to their oil and natural gas; and this sent up the prices of all goods and services because of the universal impact of the costs of fuel for vehicles to deliver goods and people to where they were wanted, and the price of fuel for the provision of energy to heat homes and schools and to power factories. Additionally, petroleum was a vital ingredient in many plastics and polymers. So all prices were rising, hence wage demands took on a new stridency: and governments tried to stop the 'spiral' going out of control.

The Monetarists argued that if real control was given to the Bank and the government backed up the Bank in issuing stringent instructions to banks as to when and on when terms they could lend money to whom, that would strangle the spiral of rising wages and prices. Employers would not be able to borrow from their banks on affordable terms: so instead of borrowing to pay workers inflated wages, they would have to tell them "take what is on offer, or we'll have to close down and sack you all". Similarly, consumers would be told that they could only stay in the homes on which they were servicing mortgages provided they paid penal interest rates which went as high as 15%: which left them with little to spend on other things. So if they kept the house and the car, paying high mortgage interest and high interest on their car loans and the loans against which they had bought their fridges and TV sets, they had to reduce consumption of everything else.

The Thatcher government adopted their own version of this policy straight after their election in 1979, and by 1992 they were well on the way to implementing it. Economic growth slowed dramatically; and wage growth slowed even more. Then the government itself stopped creating money with which to maintain activity in the coal mines and the shipyards. They compensated for the loss of income that they suffered as the real economy declined from the tax revenue that they received on North Sea oil and by the sale of the privatised industries. They cut back heavily on government spending on defence and in support of industries that had previously been considered essential for national survival: steel, shipbuilding, aerospace and coal. The economy was dramatically changed, as the 'real' material productive sectors were decimated and the financial services - notably 'investment banking' - began to predominate: and that sector of the economy was supposedly susceptible to refined control by the Bank.

Thus, by 2005 the 'real' - the material - economy on which human animals depend for their continued existence and comfort was utterly denigrated and largely despoiled; and the finance sector was put in a position to undermine the entire economy through its greedy overindulgence in speculative deals that the Bank did not even understand. This is the achievement of the Econocracy. The real incomes [money wages adjusted so that their current purchasing-power can be computed] of the mass of the British population have been static for a decade. Over those years, 2007-2017, plenty of jobs have been created; almost all of them in activities that do not result in any substantive increment to the real economy. There has been a spectacular degree of material stagnation which, set alongside the government's obsession with 'austerity' [in which they have been mentored by the same Econocrats] leaves almost everyone with an awareness that the economy is not "working for me". That is because the economy is being driven in obedience to an abstract model. The fundamental reality, that the economy should be the mechanism that serves material, living, aspirational individuals, has no place in contemporary Economics. That is why Economics must be brought down from its high place in academic temples, and opened up for radical restructuring.

Tuesday, 18 July 2017

Brexit: Hard, Soft or Stupid?

Yesterday, David Davis began his 'negotiation' with the agents of the EU Commission about the terms on which Britain will carry through its invocation of the relevant provisions of the Lisbon Treaty, for the cessation of Britain's membership. It was emphasised on all the visual media, that the EU side of the table had extensive piles of briefing material while the British had none.

The British people has no idea whatsoever their government is seeking in this vital negotiation. All inquiries are referred to Mrs May's 'Lancaster House Speech'; which is uninformative and no longer relevant. It is uninformative because it has no specifics; it is irrelevant because since she made that speech she has tried, and disastrously failed, to establish a strong political base in the Commons for herself. On becoming the prime minister, she made the spectacularly stupid remark: "Brexit means Brexit". Brexit means nothing: it was dreamed up as a code-word for the process that no-one understood - how to interpret and implement the intentions of the narrow majority in the 2016 Referendum - and it copied the term Grexit which had been coined in the previous year to cover a potential Greek withdrawal from the Eurozone.

I voted for leaving the EU as part of the mass protest against the political class - even more the continental version than the British - and, more specifically, against the idiotic scare stories that were being promoted by George Osborne and David Cameron. I expected the remainers to win, but I hoped that their majority would be so small that it would serve as a warning to the class [right across the Union] that they were pushing the mass of the people too hard in a direction of austerity and integration that the people deeply resented.

It was obvious that the political class would still be in power on the day after the referendum; and my hope was that they would be sufficiently chastened for their europhilism to be modified. Instead, the class leadership crumpled. Cameron ran away early on the morning the result was announced; and in quick time a mild remainer, Mrs May, became a prime minister who was totally unprepared to address the situation. Inevitably, she rid her government of Osborne; then, at her own discretion she appointed three 'Brexiteers' to lead the negotiations and thus to shape the path that that the UK should take in implementation of the referendum vote. Boris Johnson has developed his role as an insubstantial buffoon and a pretty ineffectual Foreign Secretary. The important role of planning the way through 'Brexit' [whatever that might mean] was divided between Davis as lead negotiator with the EU and Fox as the man who would - apparently - make trade deals with the rest of the world that would substitute worldwide markets for what Britain might loose in a Europe that was closed against British goods and services. So far as one can tell, these are two dafter buffoons than Boris, who have been given licenses separately and in their own ways to ruin the country.

It is essential that Britain remains within the European Economic Area: news items every day show that supply chains from toffee factories to radiotherapy suites depend unconditionally upon that precondition; and the UK must be prepared to pay whatever has to be paid, immediately and for the indefinite future, to get out of the EU political institutions [Commission and Parliament, in particular] and to remain within the economic union. There must be a massive national uprising if and when it becomes clear that the 'hard Brexiteers' are trying to produce any other result. As I pointed out a few days ago, India, China and USA - in particular - are notorious for overriding trade agreements whenever point protectionism is needed to protect one of their industries or service activities. It is the height of folly for any responsible adult to pretend that a series of one-to-one trade agreements - even if they could be effected - would be validated by events.

Allegedly, some members of the Cabinet, unable to halt the buffoons, are arguing for a long adjustment period, during which more rational thinking should be allowed some space. Against such 'slow Brexiteers' there are those who argue that the national referendum result was binding, that it must be implemented in the most ruinous way, and that it must be done quickly to give effect to the 'will of the people'; who will be free to repent of their votes at leisure. Mrs May has no authority to adjudicate on this contest.

Mercifully, Corbyn has shown himself to be completely out of his depth on the matter: otherwise, the Labour opposition could be extremely difficult at this time. The Labour party will not provide the focus for the national revolt: so we all may have to fall back on Vince Cable to be the nation's lightening conductor. Let us hope that, if it comes to that, he has the necessary stamina. At least, he got his doctorate in Economics before the Econocracy had gained their mastery of the field.

Monday, 17 July 2017

High-Speed Idiocy: and Some Sense

Today will see another series of announcements on the scheme to build a completely new high-speed railway between London and Birmingham, with branches to Manchester and Leeds.

I am one of the many who deplores the London to Birmingham venture. The existing line from Euston takes only 70 minutes, non-stop. The need on that route is for more capacity to take stopping trains that can bring commuters more effectively into London from towns and cities on the route, and on feeder routes to that line. The environmental damage that it will inflict is immense, and the cost will be added to the effective national debt [from Britain to aliens, largely Chinese state-owned enterprises] even though it is to be wrapped up as corporate lending. That borrowing will have to be paid for: so if British people decide they cannot afford the prices that will be slapped onto tickets to travel on HS2, the cost of the daft first-stage enterprise will either be offloaded onto the prices of rail tickets nationwide, or onto taxes.

The so-say second stage: or, at least, investment in the improvement of main rail routes for travel across the north midlands and the south of northern England, is absolutely essential. Direct trains from Sheffield to London have been improved, and thus times on the route via Chesterfield, Derby and Leicester, with a sideline to Nottingham, are acceptable. The fast trains on the west-coast mainline that bypass Birmingham on the way to Edinburgh and Glasgow do not serve any major city in northern England: and they are slowed down by stopping at some selection from the list of Crewe, Warrington, Wigan, Preston, Lancaster and Carlisle. The history of railway company formation, and the consequential construction of lines, means that there are various cities and towns to be served in Yorkshire, causing there to be barely-adequate services to York, Leeds, Bradford, Wakefield, Halifax, Huddersfield and Hull from the metropolis: only after Northallerton is there a clear principal route via Darlington, Durham, Newcastle and the north: and this all leaves Sunderland and Middlesborough at the edges of the map. Huge expenditure is needed on that infrastructure to bring it up to the level that is common on the European continent. Half a century has been spent closing railways and parts of routes and despoiling the railways of the land that could have been sold to provide the cash to fund updating of the system. While the Osbornian HS2N plan may not be feasible, the investment is necessary: and it should come from a state-led infrastructure pool to which crowd-funding from the British people should be added. It is not necessary to add to the public external debt of the nation to improve this infrastructure: the state should lead, the people can follow, and the spending that will be generated by the construction work and then the operation of the lines will help to revive the economy. It is necessary to build not just 'strategic' main lines, but the ensure that all the 'bypassed' towns - even Darwen and Accrington - are effectively linked in to the new system.

Before one gets too depressed at the present state of the British railways, one should look at the home of capitalism, the United States of America: and at its financial capital, New York. There the railways are in a state of extreme dereliction: with collapsing bridges, five-mile-an-hour speed limits, frequent derailments at the major stations and [literally] century-old wiring providing power to some routes. President Trump trumpeted his intention to change all this, with massive investment in infrastructure, including in his home city: but so far he has cut down on the Obama-era commitment of federal investment.

Thought must be given to the effects of economic thinking, both in the neo-Keynesian era and in the more recent period when 'rational markets' theory has predominated, on the real structure and infrastructure of human life in the urban environment. It is Economics that got us down into this mess: economic dogma will not help us out of it.


Sunday, 16 July 2017

Economics - Again

A few days ago, I had a brief discussion with a student of History about my views on Economics and the Econocracy, referring him to the website of the Post Crash Economics Society where I first saw the very apposite term, Econocracy. On our next encounter [in the pub where he earns a crust as a part-time barman] he told me that he had mentioned my stance to a friend who is studying Economics; and the friend had vehemently disagreed with me. Perhaps we will be able to have a face-to-face discussion some time. In the mean time, I will post here today the briefest summary of my views.

I had the great good luck to go up to university when classes were small - my year in Politics and Economics comprised just 12 students - but teachers were good and libraries well resourced. The era of electronic access to data had not yet arisen, so we had to read: and we read voraciously.

At that time what we now call neo-Keyesianism was in the ascendancy, and models of the entire economy had been constructed in the National Institute for Economic and Social Research [NIESR], in the Treasury and in various universities. Given the state of development of computers at that time the models were crude and simplistic, and they could only be manipulated laboriously. Nevertheless, estimates could be made of the impact on the modeled economy of the policy options that were available to governments. These options came in two categories, monetary policy and fiscal policy. Monetary policy involved the creation of money; implicitly by the Bank of England on behalf of and with the authority of the government that owned the Bank. Banning the creation of money was a means of limiting the rate of growth of the economy; and encouraging the Bank to create money to lend to the trading institutions in the economy was a way of stimulating the growth of the money supply more generally. It was taken as a sign to the commercial banks that they could risk making more loans of their own money [deposited by their customers] whenever the Bank of England was stimulating the money supply; thus the amount by which spending could increase was very much greater than the amount by which the Bank increased the supply. Any commercial bank could borrow money from the Bank of England at a 'bank rate' [later called the 'base rate'] which was publicly announced; and lending by commercial banks was made at rates higher than the bank rate. The banks charged their customers rates of interest that varied according to the perceived riskiness of the loan. When the Bank of England had the nod from the government, it lowered bank rate; which was a clear indication to all the banks that they could drop the rates they charged to their customers, and perhaps risk extending the range. Thus a drop in bank rate, accompanied by an increase in the Bank of England's willingness to lend, signaled that banks and their customers should invest to expand the economy; thus expanding trade generally and stimulating economic growth and job opportunities in many sectors of the system could be increased.

However, at that time there were major constraints on the expansion of credit extended by banks. Their customers were required to pay cash deposits on durable consumer goods, and were only allowed to borrow a set percentage of the purchase price. Thus the spread of TV sets, washing machines and other desirable consumer goods was slowed down by the legal requirement for would-be buyers to save up for the deposit before they could enter into a hire-purchase agreement under which [having paid the deposit] they could pay off their borrowing while they had the use of the device. The firms that made the television sets were protected from foreign competition by import tariffs and controls on the amount of foreign currency that businesses could buy: so the system of monetary policy operated within a physically controlled system of protection. The present situation, where consumers can borrow huge amounts of credit and thus create the 'consumer demand' that 'drives' the economy was unthinkable. The world in which neo-Keynesiansim appeared to thrive was utterly different from the world in which we live now; and over the next few days I will outline how that change happened.

I try to keep my blogs at a modest length, and hope that anyone who becomes interested in my ideas will word-search through the archive.

Saturday, 15 July 2017

Water off the Donald's Back

The pictures of yesterday's ceremonies in Paris feature two utterly bizarre couples. Wearing an almost-pristine Dior A-line dress of 1953, Melania Trump looked about the right age [but, certainly, not the right temperament] to be Mme Macron. Dressed for today, the real Mme Macron obviously made no positive impression on her near-contemporary, Donald Trump.

President Trump lapped up the limelight - it helped to correct the hassle he has been having at home - but it will be hard to find any evidence in the coming months that he actually feels any strong fellowship with a younger man who is trying to be monarchical while scrambling to assemble a sustainable government. Macron went home feeling that the day had been a success for French diplomacy: by the time Trump was in Air Force One the flattery had gone where the water goes off a duck's back. The net impact of the event was nil: except to reinforce the reflection in British minds that the French will never forgive the UK for saving them twice in the twentieth century. The French were thanking the US for entering the First World War in 1917, by which time hundreds of thousands of young Brits had been killed and wounded at the battle front in France.

Donald Trump is so used to apparent adulation from his TV audience, his minions in his patchily successful businesses, and the recent audiences at his campaigning rallies that he takes all such responses in the same way. He welcomes them, as reptiles welcome the warmth of the sun, because he needs them: but the impact of each day's intake is trivial in context of of the extent his previous experience. It has become apparent that he bridles - and twitters - at any critical comment that gets onto his radar; and this trait, too, seems now to have become ineradicable.

The progenitor of modern political campaigning in the United Kingdom, Benjamin Disraeli, was a magnet for criticism, much of it vitriolic. Some was easily turned aside as ignorantly antisemitic. For the more substantial venom of his many enemies [including much from his own party as he rose through the ranks] he had a well-studied display of contempt. He knew that success came to an outsider like himself by using his verbal facility and quick wit to pour flattery on those who could be useful to him. Once, when he was commended on this attribute, he responded on the lines of: "Everyone likes flattery; and with royalty I lay it on with a trowel". He showed the virtues of resilience and intelligence that have yet to be displayed by Macron, and which are apparently completely alien to Trump.

Another politician who combines indefeasible egocentricity with insensitivity to other people's opinions of him is Tony Blair. He has now imagined what shall happen to keep Britain in a 'reformed European Union'; or, perhaps, just within a European Economic Area where the continentals will surrender their 'red line' insistence on the free movement of peoples. It is sad that any newspaper would pay him for such tosh.

Politicians do almost nothing to deny to their fellow citizens the right to despise them.

Friday, 14 July 2017

Britain-in-Europe Survived as a 'Service Economy'

Yesterday, I hinted at the crucial fact that in 1948 the British people generally accepted that the country needed to rebuild its balance of payments; but their interests as consumes came to predominate over the recognised priority for productive investment in the economy. Following the collapse of neo-Keynesianism, the entry of the UK into the EEC was a vital step in the next major development. Within the cocoon of the EEC, then the EU, Britain was brought within a vast shelter that [it was hoped] could save any member country from economic catastrophe.

After Mrs Thatcher had eviscerated the economy, her successors were obliged to express admiration for her achievement in 'rebuilding' it. So, as the balance of payments worsened and the material economy continued to decay, it became imperative for the European shelter to be toughened. Mrs Thatcher herself huffed and puffed about Europe's exactions - and she gained an unprecedented rebate when other member states admitted that Britain was, indeed, being screwed under the prevailing formula - then she signed up to integrationist agreements. John Major, a hugely under-estimated figure, won a general election and proceeded to lead the country into the 'inevitable' process of political association of the EEC states with the passage of the Maastricht Treaty. A significant number of Conservative MPs, who he apparently classed as 'the Bastards', recognised that a political price was being paid for an economic shelter; and several of them did not like it. Thus they sought to oppose the surrender of ultimate sovereignty to the European Union: and though Britain went fully into the Union, there were many who resented it, in both major political parties.

Tony Blair's contempt for any history but his own, and for any political principle more profound that his convenience, led him to pack the House of Lords with donors who spared him the need to mollycoddle the trade union leaders whose predecessors has dominated the Labour Party through their control of the purse strings. His cavalier attempt to abolish the ancient office of Lord Chancellor showed how superficial he was; and the scandal of the Gulf War has rightly become the basis for an ineradicable contempt for his unconcern with truth; and apparently for the lives of British forces and Iraqui civilians. He allowed the drift towards further integration of EU institutions to continue, while considering himself a 'bridge' between the USA and the EU. Gordon Brown's brief period in office was dominated by the economic crisis, to which he and his Chancellor, Alastair Darling, responded well.

The came the Cameron-Clegg coalition. The LibDems were fanatically pro-'European', so for the five years of the coalition government the subjection of the UK to the EU was welcomed: the economic protection that it gave to the UK was recognised, and as the major financial centre to have survived well when the dust settled after the great crash of 2007-8 London was proven to be an asset to the whole of the EU. Of course, French and German bankers resented this situation; but their banks had to build up their London operations to remain globally competitive. Thus in the period 2010-15 a sub-set of the service sector, the financial services, became central to the economic offering that the EU made to the rest of the world. After five years of coalition the LibDems were adamant that they needed to stand [and to crash] as an independent party in the 2015 general election; while David Cameron [with an arrogant insouciance reminiscent of Tony Blair] promised a referendum on membership of the Union hoping, once and for all, to show that the 'Bastards' were a declining and impotent minority within the British state. Cameron was surprised to win the election, and he decided to call the referendum on the basis that a simple majority was required, with no limiting conditions. He apparently expected something over 70% of those who voted to favour continued membership of the Union. He had not foreseen that the referendum could be opened up as an avenue for the pent-up resentment of large swathes of the nation against his austerity policies, against deindustrialisation, against alien immigration, and simply against authority. The more the odious apostle of austerity, George Osborne, predicted doom and disaster, so the more people were tempted to vote against the government.

Thus came about Brexit. Cameron stood down, shocked at the consequences of his actions. The largely unknown Theresa May became the surprise premier, and she immediately grasped the wrong end of the stick on Brexit. Without comprehension of the importance of the economic cocoon, she set in train a process which - if it were continued to the end - would be calamitous. On her minsters' first presentation of major Brexit legislation - yesterday - it immediately became clear that she would not get away with it. The nation is about to descend into faction, debate and disagreement that will be reflected in both houses of parliament and in all the devolved assemblies. Things are getting interesting: and the only certainty is that Brexit as Mrs May has misconstrued it has gone into protracted death throes,

Thursday, 13 July 2017

Good Jobs?

Yesterday the Right Honourable Damian Green, for the first [and perhaps the only] time stood in for Theresa May to answer Prime Minister's Questions in the House of Commons. As is common, he had been fed with various points to include in his responses: regardless of whether those points actually fitted with the run of the questions that were put to him. Thus he challenged the opposition to agree that the employment statistics that had just been issued were a very positive indication of the strength of the economy. He did not get the answer that he was supposedly seeking, but that did not matter as the boast about the state of the jobs market was entered into the records of the House.

Only in the most superficial sense are the data positive. The number of people recorded as being employed had gone up, and the recorded number of unemployed had gone down; which meant that on those measures the figures are the most positive for more than forty years.

Forty years ago, in 1977, the Thatcherite destruction of the real economy had not begun and the mixed economy was essentially in good shape. There was an economic crisis nevertheless, due to the effects of failed neo-Keynesian economic policy in stimulating inflation and a consequential wage-price spiral that was causing ever-more-disruptive strikes.

During the nineteen-sixties the Economics profession was dominated by self-styled neo-Keynesians who believed that they could advise the government so precisely on using the 'tools' of macro-economic management that the economy could be 'fine-tuned' to produce a high level of employment without shortages of specifically skilled sets of workers that could became so severe that wages would rise due to the competition by employers to attract those skills.

During the nineteen-fifties there had been willingness among the general population to develop the economy step by step to repair the ravages of the Second World War both in terms of direct damage [especially by bombing] and the exhaustion of industrial plant due to it being run hard for a decade with absolutely minimum investment. Thus a massive house-building programme was given high priority both in the public sector of council homes and in the private market where the building societies were flourishing. It was also accepted by trade union leaders as well as by company directors that Britain was a trading nation, highly dependent on imports. This had been emphasised during the war by the U-boat threat: everyone knew that the country would have been starved into surrender if the German navy had been able to cut off imports of essential foodstufs and other commodities. So it was easy for people to understand that in peacetime it would be necessary to build up the export markets that alone could pay for the imports the UK would continue to need.

But the workers were also consumers, who were informed by mass media [among which television was emerging as probably the most important] as to what was fashionable as well in the USA as on this side of the Atlantic. Most of continental Europe was more damaged and run-down than Britain, so it was to the prosperous North American markets that Britons looked for examples of what was fashionable. American films were the principal content in the cinemas, and there too people saw what a relatively-affluent community of consumers could have. Twenty-first century people will find it hard to understand how desirable nylon stockings and simple make-up were to women, and why their menfolk accepted and accommodated those 'needs'. Thus scarce foreign currency, especially dollars, had to be spent importing those things, and many others. Consumer goods were far more prominent among imports than economic planners had anticipated during the war. Thus less machinery was imported to develop the exporting industries, so that more could be spent on consumer goods; and once that trend was accepted it came to dominate the pattern of economic evolution.

Fast-forward sixty-odd years and we see that the balance of payments is hopelessly adverse for Britain. Industry is still important as provider of goods for export, but massively overshadowed by service trades. Tomorrow I will develop this theme further.  

Wednesday, 12 July 2017

Weather Wisdom

After a long period of hot, muggy nights, London has had one cool wet night. I lay awake for much of the night, due to the now-unfamiliar sounds associated with heavy rain: particularly gurgling drains on the patio three floors below my bedroom.

Then I went to sleep, and woke two hours later than usual.

For several days previously, people have been commenting on their difficulties in sleeping due to the [relatively] hot and muggy weather. Today one will hear of people oversleeping and travelling in more crowded commuter vehicles [which would have been even busier has the school holidays not begun]. In some cases the stress of travelling will have offset the advantage of having deeper, longer sleep; in other cases, especially for people who work near their homes, or at home, one refreshing night will have had a restorative effect.

This is a trivial reminder of how much the weather has affected humanity throughout history. Extreme weather events have changed history. Some leaders have been associated with good weather and great good luck: other have fallen because of inauspicious weather. Population movements have been driven by the weather: and climate change is forecast to bring about the greatest mass migration of humans ever, during the present century. Freak occurrences of tropical fish in the English Channel are increasing, and Atlantic cod are moving northwards around Iceland and into the northern seas where summer ice cover is less than at any known historical period.

The options facing human history are being set by climate. How much of climate change is due to human agency is not known, but there is some evidence that human intervention has exacerbated a problem. Now Donald Trump is able to play a maverick part that could be catastrophic if the most extreme assessments of the consequences of human behaviour are valid. Thus are small men allowed to become extremely significant.

Tuesday, 11 July 2017

'Free Trade' Deals and Point Protection

Mrs May was apparently very pleased with the offer that President Trump made to her on the side of the recent G20 Meeting, that Britain would have a 'great' free trade agreement with the USA after Brexit. He probably didn't remember that the next day; and even if he did, it does not add up to a string of words. The US Congress, specifically the Senate, has the power to make or to decline to ratify Treaties of all kinds; and Mr Trump has enough hassle with the Congress [even though both houses are controlled by his recently-adopted party] for him to be willing to make a big deal of a mere trade agreement with the UK.

Much more important is the fact that the USA is an instinctively protectionist state. It is the natural reaction of American politicians to set up temporary tariffs or other means of restricting imports, wherever a significant sector of the US economy activates its lobbyists to make Washington aware of any potential existential threat. For post-Brexit Britain - if we ever reach that state - to depend at all on the US as a crucial export market would be even more foolish than it would be to leave the European Economic Area.

British manufacturers' organisations have already issued warnings about the tendency of India, China and other advancing economies to follow the US example. As industries in those countries are developed to be able to offer sophisticated consumer goods, pharmaceuticals, advanced software and the rest of the range of sophisticated products and services, so the tender 'infant industries' can run to their governments for protection against the inroads of alien producers into their markets.

Although the UK has been laggardly in developing the market for inventions that continue to pour from British residents [including immigrants], the potential for the expansion of Britain's global markets continues to be among the best in the world. Shamefully, many innovative British businesses are sold to aliens [and then misrepresented as 'inward investments] simply because their developers have not been able to get development funding. Other brilliant British inventions, that do get adequate investment and build up their markets, are picked off by alien predators before they make anything like the contribution to the balance of payments that they should: and once the ik [the intellectual property] that the companies own has been alienated, the benefit of that ownership goes wherever the alien owners of the business direct it. This depressing pattern has been developed even while the United Kingdom has been within the cocoon of the European Union, and will not be broken by a 'hard Bexit': rather, it will ensure that the economy shrinks drastically.

While the UK is fully within the European Economic Area it will not be subject to point protectionism by Europe. If our government is crazy enough to try to take us out of the EEA, they would expose the country to European point protectionism, whenever a British concept or project caused a scream from EEA firms and interests. That is the way of the world. Lobbies transcend Trade Agreements and set aside solemn international agreements. Ministers seem to be oblivious to this, as to so many other obvious facts. They have no right to cross-party support in the Commons.

Monday, 10 July 2017

Lame Ducks and Kamikaze in Cloud-Cuckoo Land

Mrs May's new ploy might be quite clever; and if it is, one wonders who dreamed it up for her. To issue a draft speech two days early is a new trick, as far as I know. It is designed to set the media into a frenzy and to challenge the opposition parties to make a considered response to the apparently-arid actual content of the discourse.

Mrs May appears to be a lame duck premier, but her party dare not precipitate an election if it can be avoided. She may indeed survive long enough for the arch-Brexiteers to be shown up as lame ducks, instead.

A so-called Kamikaze wing of the Conservative party is - against all reason - demanding a 'hard' Brexit, which seems to mean complete withdrawal from the European Economic Area and the destruction of what the Thatcherites [and the neo-Thatcherite New Labour crew] left of the British economy. With various degrees of enthusiasm about self-immolation, there are reckoned to be up to sixty people of that persuasion: enough the prevent any more moderate consensus in the Tory party. Before her spectacularly unsuccessful election campaign, Mrs May hoped to get a big enough majority, including a large number of Remainers among the new MPs, to be able to face down the loonies and come to a solution of the Brexit dilemma [which she did not solicit personally] that could probably attract massive support in parliament and in the so-called parliament of the EU.

She is now launching an attempt to build a Commons consensus anyway. It will take a long time, but it may have the effect of moderating the success of the Momentum movement in the Labour Party.
Corbyn was spectacularly equivocal in all the recent election grandstanding about the Brexit issue. His personal antagonism towards anything that might protect or strengthen capitalism is beyond doubt, and as is evidenced in Germany the EU is good for business. M Macron's euro-enthusiasm is largely driven by his recognition that it will be less difficult finally to smash the French trade unions in a context of a stronger European Union than in has proven to be in a still-sovereign France. The Corbynistas will have noticed that: Macron is a product of the French system for producing technocrats who serve the secret state that lies behind the constitution, and the hard left recognises the enemy. This is the context in which Corbyn's twists and turns in the coming months should be observed. He has command of the party - increasingly - thanks to the crazy constitutional changes that his predecessor pushed through the party: but he has no empathy with the mainstream tradition of the Labour party which most of his MPs [including the new cohort] represent.

Thus Mrs May's scenario planning could set the Corbynista minority of Labour and the Kamikaze minority of the Tories on the outside of a developing consensus. As that political experiment fails at the first hurdle, but might eventually be made to run, economic reality will turn the enthusiastic Brexiteer ministers into lame ducks. Putting both Fox and Davis alongside Johnson in key roles at the sharp edge of the Brexit negotiations seemed crazy at first: and perhaps it was simply that: crazy. But now the real evidence is coming to the top, the wedges between the three musketeers will become apparent. David Davis is learning the limits of practicality, and will soon have to make a decision about whether he sides with Philip Hammond [who has already, in effect, said that the UK must remain within the European Economic Area] or go out on a limb. Johnson will follow where the wind blows: he was late in deciding to opt for the Brexit camp, astonished when they won, and confused now that they are faced with increasingly harsh realities.

Liam Fox has appeared to be the most dangerous Brexiteer minister. He seems really to have believed what he said about the gains that post-Brexit agreements with the USA and India and China can bring to the country. But today the main manufacturing employers' body has emphasised that point protectionism is increasingly transcending overall trade agreements specifically in China, India and the USA. To protect their own firms, trade associations and governments in those countries are simply setting up ad hoc barriers against imports, especially of the high-tech and IP-strong exports that Britain needs to build up in the future. Fox will be proven to be a very lame duck before he can be really dangerous; and that public exposure will greatly strengthen the argument that the UK must remain within the European Free Trade Area: on almost-any terms.

Sunday, 9 July 2017

Penal Economy

It is increasingly well-recognised that prisons in the United Kingdom are at, or very close to, a crisis point. The Cameron-Clegg-Osborne austerity programme has reduced prison officer numbers below the level at which health and safety requirements for the inmates can properly be maintained, and though some recruitment is now taking place it is probable that the new staffing levels will be enough.

Meanwhile health fetishists are arguing for a complete ban on smoking in prisons. This indicates the tip of a huge iceberg of trouble. It is notorious that many thousands of prisoners are addicted to tobacco [and very many to other addictive substances, including cannabis], and that there is a massive underground economy to supply the prisoners with their 'need': backed-up by a brutal system of enforcement among the inmates. Today the BBC placed a report that massive amounts of tobacco and other addicts' supplies had been found in prisons over the past year: together with thousands of illicitly-held mobile phones [and, presumably, the related charging devices]. The use of drones to carry some of this contraband into prison has been reported extensively; and means to prevent their use have been implemented in some prisons to modest effect.

But it is clear that the historic routes for illicit commodities into prison are via visitors and by the use of corruption or intimidation on prison officers. To impose mandatory vaginal and anal examination of 'innocent' visitors to prisoners would be considered outrageous; so that route for contraband remains open. Given the operation of human nature, activities like threatening an officers' family will always find a way of influencing individuals. There are historic ways of mitigating this problem, but it will never be eradicated. As was indicated in Ronnie Barker's brilliantly-scripted series of TV scripts about life in prison, there is a stand-off, a compromise, between inmates and management that can usually be kept in balance. To overset that balance by having too few staff, or unacceptable strains placed on prisoners [such as a smoking ban would cause], would be calamitous. The attempt both at once would be catastrophic.

Saturday, 8 July 2017

Hospitality and Productiveness

An area of significant growth within the 'dominant services sector of the British economy' is designated as Hospitality. This covers hotels, restaurants, pubs, cafes and all such outlets; which directly employ 3.2 million people, supported by 2.8 million people who work in support and supply trades to the sector. Thus six million households are wholly or partially maintained by the business. The trade association for the sector, the British Hospitality Association, has undertaken studies that show that the sector is well spread across the whole country, with Hospitality constituting a top-six employer in every region of the United Kingdom.

It is also a sector that has defied the general sluggishness of the British economy since 2008. The increase in output measured over the period is 5.9%, double performance of the whole economy. Labour productivity [measured as gross 'value added' per hour] is around 3.2%, which compares favourably with the shameful national figure for the whole economy of only 1.5%. The sector paid £38 billion in direct taxes and claimed to have brought £161 billion of turnover into the economy in 2016.

The sector also displays many of the structural weaknesses to which the British economy is prone. It is very heavily dependent on low-paid labour, much of which is recruited from abroad: mostly from the European Union and the Commonwealth. This is obvious in the patchy linguistic skills of the staff, where more 'white Europeans' are in front-line jobs, with a higher concentration of non-white people as cleaners, kitchen porters etc. There is very considerable use of casual staff on very uncertain contracts, who receive low wages and thus make little contribution to the buoyant consumer demand on which the momentum of the economy depends. The British Hospitality Association emphasises that there is great potential for growth in the sector, so long as foreign travelers are attracted to the many well-marketed natural and urban assets that Britain and Ireland have to offer, and so long as the resident population have sufficient incomes to enable them to use catering and related facilities. If the now-evident slowdown in the real earnings of the nation at large continues, it will impact disproportionately heavily on the hospitality sector as people buy ready meals and take drinks home from the supermarket rather than eat and drink out.

Over the past twenty years hundreds of pubs have closed in every part of the country as social habits have changed. It is increasingly unacceptable for chauvinist husbands to leave their wives at home with the television and the children and cups of tea, while they booze with their cronies several nights weekly. Couples, often with their children, dine out together; though it is notable that many families sit as three or more isolated individuals who are communicating with different sectors of the games business, or with different contacts, even as they eat: so they may just as well stay at home where the kids could access 'unsuitable' sites from the bedrooms. It is little hardship to a family to cut out a restaurant meal when economy is forced on the household budget; but the negative impact of that happening a million times to the hospitality business is huge. Supermarket takings increase, and more pubs close.

To preserve their market, the better-designed and best-located pubs are moved upmarket as dining and drinking establishments; and, increasingly, managers are deterring 'traditional drinkers' from occupying floor space in 'gastropubs'. Significant investments are being made in the physical plant and in the image of selected catering outlets: and this requires the 'right sort of customer' to be attracted to them: people with sufficient money to provide a return on the investment [in premises, staff and the offering that is made] and who have the inclination to use just that sort of outlet. So this enhances the need for specialisation, branding, image-building and the need to advertise; which also require heavy investment. The returns that come to successful outlets are increased turnover, higher productivity from staff and increased productiveness which justifies constant further investment. A very few pubs survive as retrospective examples of the 'spit and sawdust' image of hostelries: though sawdust is not welcome on customers' shoes and most people would deeply be offended by any use of spittoons: it is a very subtle job to make an 'olde Englishe pub' attractive to capable consumers.

Friday, 7 July 2017

The Iron Lady Cast in Bronze?

In this blog a few weeks ago, I welcomed the report that a statute to Millicent Fawcett was to be erected in Parliament Square; the first woman so to be honoured. She was not a parliamentarian: her husband was, as a Liberal he was the Postmaster-General who made many innovations. The range and depth of Millicent's contributions to economic and social improvement, particularly during her long widowhood, more than justifies her place beside the Mother of Parliaments and Westminster Abbey.

It is now reported that the management of the Royal Parks, who manage the square, is minded not to allow the erection there of a larger-than-life bronze statue of Margaret Thatcher; on the grounds that Mrs Thatcher's family has not supported the project.

It is also  matter of open discussion as to whether the statue would become a favourite target for vandalism. Margaret Thatcher remains a highly contentious figure almost three decades after she tearfully quit the office of Prime Minister, after holding it for a decade during which her government had radically redirected politics and restructured the economy.

It will be obvious to anyone who has looked at this blog in the past [or who does a word-search on it at any time in the future] that I am of the view that Mrs Thatcher had no serious grasp of economic theory or reality, beyond the corner shop mentality of keeping the books balanced that she imbibed from her parents.

What was blindingly obvious when she became leader of the Conservative Party at the height of the inflationary crisis of the mid-nineteen-seventies was that the status quo was unsustainable. A Labour government that was dependent on votes in the Commons from minor parties went cap in hand to borrow a large sum of money from the International Monetary Fund in order to have a hope of stabilising the external payments position: and the conditions that were set on that loan would radically change the direction on national policy from that which had - generally - been followed by both Labour and Conservative governments for a quarter of a century.

Through the 'fifties and 'sixties a generation of Economists who could broadly be classified as neo-Keynesian had promised to be able to deliver policies that would give the country pretty-well continuous economic growth. When the politicians applied the policy, after twenty years it became a recipe for inflation of prices that stimulated increasingly vociferous demands for matching pay increases.

The International Monetary Fund's conditions on the loan required the British government [of whichever party was in power] to introduce Monetarist policies. In the 1979 general election the Labour Party was riven between those who felt obliged to impose the policies required by the IMF and the mass of trade unionists who hated that policy. The Conservatives accepted the policy, and some of them embraced it. The consequences of the Thatcher 'revolution; in the economy were immense. Unprecedented wealth came to those who operated in the financial services, especially in the south-east; while whole swathes of the country faced mass unemployment and dereliction as long-established industries and their underpinning assets of coalmines, steelworks, shipyards and railways were shut down. Many areas still have not recovered from the devastation that the Thatcher pack caused, and the whole economy has been set back by the crisis measures that were taken in 2007-9 to save the overblown financial institutions that emerged from the 'big bang' of 1986.

Even in 2020 there is a strong likelihood that a larger-than-life-sized bronze image of Mrs Thatcher could indeed be the much-painted target of expressions of hostility to the entire policy direction that 'Mrs T' embodied. The family and the Royal Parks are right to have reservations. The first woman prime minister should be honoured, as should Mrs Fawcett; but felings are such that the statue could well have a very mixed reception.

Thursday, 6 July 2017

What Comes Next, After North Sea Oil?

Mrs Thatcher's government's economic and social policies were made viable only by the fact that her era coincided with the United Kingdom being able to exploit the oil and gas reserves that had been found under the North Sea over the previous couple of decades. The tax revenues derived from those resources largely funded the welfare state, enabled the government to give redundancy pay and early pensions to unwanted employees from the nationalised industries, and maintained the nation's defences. The material fact of having sufficient gas to meet the national need, and a significant oil supply that diminished the need for imports, enabled the country to shut down the coal industry almost completely. 

Those were the material conditions in which the financial revolution of 1986 was facilitated: and the financial services [with their related activities like the courts and arbitration services] were opened to the international community and became a significant earner of foreign exchange. The loss of the textile, crockery and steel industries was mitigated by the sale of financial and related service globally. In particular, Britain's membership of the European Economic Community as it went through the transition to the European Union enabled London to become the unchallenged financial hub of the Union. It will be interesting to see how far President Macron, as an ex-banker, is able to steal business for Paris in the coming years; but that will be a side-show compared to the issue that is being considered here.

The key fact is that material assets - oil and gas - enabled the immaterial activities of 'the City' to become established as major export markets. Simultaneously, the incomprehension of successive governments as to what was happening in the domestic financial services market was building up to the crash that almost brought down the entire economy in 2007-8. New forms of contract, most particularly securitisation, enabled the domestic financial sector to grow in an unprecedented ways to an extent that was way beyond the regulators' power to comprehend or to control it. Securitisation was developed simultaneously in the USA and the UK, as a means whereby borrowing by some firms and most individuals could be lifted off the books of the banks and building societies that made the original loans, and sold on as new forms of security to suddenly emerging 'wholesale' traders and investors. This meant that the retail banks reduced the amount of lending in their books, and could lend more again; which loans could then be securitised: and so on. The debts owed to their banks by small and medium-sized firms largely remained with the banks, because they were recognised to be too risky for securitisation. But the mortgages and credit card debts owed by millions of ordinary people were seen as safe debts to be securitised. Thus when the crash came, the banks faced the fact that they had many billions of pounds of debts from smaller companies on their balance sheets, most of which the companies could not settle in the depressed condition after the crash. So the debts were kept on the books, the Bank of England allowed the banks to cash in government bonds in sufficient volume and value to make those books look balanced, and a huge problem for the future in the form of 'zombie' companies was created [and it now seems almost permanent: impossible in the near term to resolve].

Meanwhile the financial institutions collectively have carried on lending pretty freely to house buyers with reliable incomes, fueling a boom in property prices for the sectors of society than can afford to maintain their repayments and causing a major social division between those who can 'buy' homes and those who can not. Juggling money to keep the mortgage market expanding, largely by expanding the money supply through the Bank of England's 'quantitative easing' trick, has maintained the illusion that 'owners' of property are asset-rich: and this has kept the economy buoyant with regularly reported 'growth' of the Gross Domestic Product of the economy. This is all based on a bubble of credit; about which the Bank of England is becoming increasingly concerned.

Meanwhile, the 'real economy' of goods made and imported and exported and consumed has shrunk to a minor proportion of the domestic economy. The country has become import dependent: to a degree that ongoing sales of financial and related services to the rest of the world will not enable he country to pay its way. Departure from the European Union, even if the UK is able to retain its status as the financial hub within the European Economic Area, will make this situation worse.

It is usually condemned as old-fashioned and uncomprehending to stress the overriding importance of the material economy. But the success of Germany as a material-exporting country [of high-value-added products] is the living demonstration of the point. The reckless use of North Sea assets to finance a material standard of living that the country can no longer afford, and to fund a finance sector that has exacerbated the nation's problems, is a horror story which will haunt economic reality for at least a generation to come: and no politicians are preparing to cope with it.

Wednesday, 5 July 2017

Paying for University

A few lucky people have enough 'family money' behind them to be able to pay their university fees and their living costs while at university. For the rest of the university population - the vast majority - the option is to borrow the money to pay the fees; and additionally to borrow most of the money with which the student's living costs are met. Some families are able to subsidise the student to some degree, mitigating the total that is borrowed by a percentage but leaving most of the cost of the higher education experience to be paid for from earnings when the salary earned by the graduate exceeds £21,000 a year. Until that salary point is reached, no repayment is demanded but the debt accrues [from the student's first day in higher education] at 6% interest.

Under this regime, there has been a vast expansion in the student population, which conveniently keeps that number of individuals off the jobs market and therefore makes them ineligible for inclusion in the statistics of the unemployed.

The extent to which students are 'employed' is a matter of some contention. Many students in subjects other than engineering and 'hard science' [which require significant time to be spent in workshops and laboratories, where proper standards for health and safety must rigorously be maintained] have 'contact' with a teacher for only a few hours a week. The contact may include a lecture to a few hundred individuals gathered together [or, at the extreme, a requirement to watch a video that is to be seen by hundreds of thousands of students in many institutions]; or it may be a one-to-one tutorial; or many variants between the two. For a typical History student the 'load' might be three mass lectures, two or three small-group lectures and two smaller-group tutorials [3 to 5] students: making the contact hours 8 a week. Some of the teaching may be done by internationally respected academics - in person - but some may be done by postgraduate students, research fellows or junior lecturers 'borrowed' from another institution. I do not know the current situation, but I do know that a decade ago some individuals were giving the same short courses in four or more universities in major cities [especially London] due to a shortage of people holding certain skills in areas like business studies.

Despite the patchy nature of teaching in different parts of different institutions, most are fully subscribed. Most non-laboratory students have a maximum load of a dozen contact hours a week, for between twenty and thirty weeks a year, with the requirement to write essays for tutorials a few times each term. The phrase continues to be used, "what are you reading?" to denote "what subject are you studying?" but very few students use the vast resources of an historic library as students did until about the millennium. Most of the newer universities do not have large libraries, and many older universities have redesignated their libraries as 'resource centres' or equivalent terms, and have reduced book purchases dramatically. Many institutions have 'slimmed down' their libraries; and the massive Stacks, often below ground, that used to be open for research by students have been downgraded or even closed down. Students now do most of their 'reading' on-line, in a highly selective manner as is common in this era of downloadable gobbits. Essays and dissertations are on offer on-line at very modest prices, because in most subjects there are topics that must be included and only a modest range of questions need be dreamed up by tutors to show that students have mastered the essentials. For several years. sophisticated programmes have been available to universities to check [as far as possible] that students are answering those questions in their own words: hence, many students acquire skills in paraphrasing standard answers to satisfy the requirements.

For the rest of their time, students can pursue the activities that appeal to them: including sport, sex, and earning some money by part-time work to buy booze and drugs. Some students from caring, modest homes assiduously do their work, and use their earnings from part-time work to mitigate the amount that they need to borrow for their maintenance costs; but they are conspicuously a minority. An increasing proportion, almost certainly the majority, leave universities with degrees in subjects that are not directly useful in the jobs market. It is now common for graduates to be forced to recognise that they are stuck with a 'worthless' degree, and they have to take jobs alongside people who left school at sixteen. Such people are at least freed from the burden of graduate debt: the notional interest that they owe continues to accrue but as they will never earn the threshold salary of £21,000 [or the equivalent, once inflation is back in the picture] they will never be required to repay. It is generally accepted that at least 60% of the total of outstanding student debt will never be repaid, so it will fall to the state to write it off.

I am moved to write this piece because I heard a BBC correspondent say on the early News this morning that female graduates a few years after graduation 'earn' three times as much as non-graduates: this is rubbish. Some graduates, such as those who go into City law firms or the research departments of City finance houses, can indeed earn three times the average graduate salary after three years; but these are an exiguous minority. For the vast majority of graduates, no such recompense is on offer. Scientists and Engineers are special cases, which must be addressed on another occasion. People with unusual talents in such fields as music and literature would mostly be able to make their good livings without degrees, and they too must be lifted out of the general group. Most graduates now face an unsustainable situation of debt; combined with a humdrum job and a place at the back of the queue for housing.

This situation, like so many others in the United Kingdom, is unsustainable.

Tuesday, 4 July 2017

Definition, Differentiation and Sense

Yesterday in Liverpool the Chancellor of the Exchequer told a 'business audience' [the CBI and guests] that the government must 'hold its nerve' to strike a balance between the legitimate aspirations of public sector workers and 'the taxpayer'. Such arrant nonsense could only emanate from a scriptwriting team that includes Economists.

The simple truth is that all public sector workers are taxpayers. Some, in the most simple jobs and on short-hours contracts may not pay income tax; but they are open to assessment for the tax and to national insurance. In all other aspects of life they are taxpayers: as drinkers, smokers, buyers of petrol and owners of TV sets.

While the Corbynite faction in the Labour party might include some extremists who mentally separate 'capitalists' from 'workers' and both categories from the rest of society, that is equally nonsensical. Even if their investment in shares and bonds is as exiguous as their slowly-accumulating 'pot' of savings in a compulsory minimum pension scheme, virtually everyone in employment willy-nilly has some capital. Those who have been lucky enough to 'buy' their homes [even though the mortgage lender often owns more of it than they do, and there is always a risk of them falling into 'negative equity'] do have a capital asset so long as they have 'equity ' in the house or flat.

Over the last weekend the media emphasised the bizarre situation that a very large proportion of the new cars that people 'buy' are effectively on loan from finance companies. The user is logged as the owner, but the loan agreement that enables her to obtain the vehicle is such that at the end of the initial loan period [say, two years] the 'owner' has not returned enough cash to the lender for the residual ownership of the vehicle to be given to the user. So the user is tempted to buy another new car on a similar contract to the last one, and the used car passes from the lender into the second-hand market. The lenders are usually able in total to recoup the discounted price at which they buy the cars from their manufacturers. The users are able to feel proud of their new car every couple of years. The economy contains a rising amount of 'unsecured personal debt' in the form of car loans; and the Bank of England can begin to worry about the sustainability of the whole edifice. So the Bank may require the lenders to hold larger balances of 'tier one' capital, which means that they can lend only a smaller proportion of the funds that they have on their books; thus the number of new car loans available in the ensuing months may be reduced, and the demand for new cars may decline. In that way, the impact of the Bank will be to reduce demand in the material economy; which can impact adversely on employment statistics, sales figures and manufacturing output. Thus [at least, in theory] 'excessive' borrowing by a man who works in a car factory can indirectly lead to the tipping-point in the money market that leads to his redundancy. This may seem a far-fetched example, but it does illustrate the principle that at least some producers are also consumers and borrowers.

So if Philip Hammond wants to convince the country that his endeavour to maintain at least the basic outline of Osbornian austerity is in the nation's interest, he has to begin with the recognition that 'taxpayers' and 'public sector workers' are not discrete sets of people. We are all in this together. It may be easier for Economists and statisticians to separate out aspects of whole individuals and put them in separate categories for some illustrative purpose; but in the end we are all entire people who necessarily live in a mixed economy. Simplistic Thatcherites may still try to separate the good 'private sector' from the parasitic and inefficient 'public sector', and some voters can always be conned into accepting that sort of categorisation. But anyone who experiences the wonderful care of the hard-worked staff of the NHS in a family crisis becomes very much harder to convince of the case for despising and oppressing the public sector and the people who sustain it.

Both Corbynite categorisation and Tory classification of people and activities are unsatisfactory. The present government's stand, largely derived from bad Economics, and sustained by a dogmatic assertion that 'debt is bad', is becoming indefensible and ministers are rushing to differentiate themselves from it. Labour's policy is mercifully opaque.

There is an urgent need simply to recognise that we all live in a mixed economy, that we have badly scrambled the mixture, and need rationally to reconstruct it.

Monday, 3 July 2017

A Long Week

Harold Wilson, allegedly the Queen's favourite prime minister, said "A week is a long time in politics".

The present prime minister must be finding the weeks constantly elongated as events turn against her and more of her ministers begin publicly to cavil at the inheritance of Osbornian austerity that almost cost the Tories the election. The precarious position of the party in parliament makes it almost impossible for the leader to dismiss querulous ministers; and the chancellor [whom she expected to be able to dismiss, following an electoral triumph] is now in a position strongly to influence the Brexit discussion.

A delegation from the City of London is off to Berlin this week, to make an assessment of the appetite of the Germans for a form of Brexit that would leave the UK firmly within the European Economic Area. The shock of the Brexit decision has been followed by months of assiduous work in the City, and there is no doubt that the loss of [at least] tens of thousands of jobs from the financial services would be a calamitous blow to the whole British economy. The financial bubble that has been inflated ever since 1986 in compensation for the destruction of the materially-productive bulk of the economy has provided a support mechanism for the economy, and its removal would have utterly catastrophic consequences. The chancellor is now fully aware of this; but it is doubtful if the prime minister could comprehend this: it is also questionable whether all three Brexit Ministers - Davis, Johnson and Fox - fully understands the importance of the point. Certainly the insouciance displayed by Davis on the matter is alarming.

But the clock has been ticking, and those who are capable of recognising the signs of impending crisis have begun to read them the same way. A minority of Labour MPs also showed last week that they have a pretty good idea of the problem, when they voted against the party line to stress their concern that Corbyn's left-wing contempt for capitalism could impose on the Labour party an interpretation of Brexit that would plunge the country into chaos and a whole era of impoverishment. A tiny number of extreme lefties would be happy to impose the hair shirt austerity of the Stalin era in Russia on the British nation; but they would not have many followers, and the Momentum movement has not yet gained sufficient power to unseat all the rational Labour MPs if there were to be an early general election.

All the rational Conservatives have come to realise that their precarious alliance with the Paisley faction must last for at least the two years while the Brexit negotiations continue. If the government can gets its act together in the next month, recognising that the maintenance of momentum in the economy depends on being in the European Economic Area [on the best terms that can be negotiated: though they will not be ideal], there is a chance that they will gain sufficient goodwill in the mass of the population to have a chance of winning an election. That is conditional on the change in policy that I mentioned yesterday: there needs to be more money for public sector workers' pay, as Gove and Johnson are not pointing out. And there must be a resolution of the student fees issue: the reckless promise of Labour in the last election, simply to abolish those fees [and probably write off the debts owed by past borrowers] puts the Tories in an impossible position as long as they retain the Osborn line; so they are going to have to admit that so many holes are being poked in austerity that it might just be wise to admit that the policy is not acceptable.

Wars are fought by selling government bonds, to buyers who accept the extreme urgency of the situation. The present situation is no less alarming than a war. The government must be willing to replace austerity by a combination of flexibility on key areas of public spending and a massive investment in infrastructure, coupled with the development of a facility for the state [directly and through the banking sector] to invest heavily in all the firms that have credible business plans to advance technology and innovation. Mrs May's early decision to let Japanese speculators buy ARM was a very bad indication of her incomprehension: she needs to be educated; otherwise, like Anthony Eden, she needs to be taken away on leave. And there are not many weeks left for one or the other of these steps to be taken. The Tory party has saved itself by ruthlessness in the past: the era of "you've never had it so good" followed on very soon after the Suez catastrophe. They need to find the same strength again: with or without Mrs May.  

Sunday, 2 July 2017

Home-Grown British Bananas

The descent of the United Kingdom in the league table of banana republics continues apace.

The Mail on Sunday tells us that Mrs May is tempted to undertake a U-turn on student fees ahead of the anticipated election that is at present expected to deliver a Corbyn government, perhaps even this year. If the Tories plan to buy back any significant proportion of the student vote, plus the votes of people who are repaying student fees, plus those of parents who have made sacrifices to spare their children the full burden of potential debt incurred in higher education, they are going to have to throw billions of pounds a year into the pot. Since it is problematic whether students and ex-students will be conned so simply, it will be necessary to recover lost ground with the old: so guaranteed real-terms pensions and free transport will have to be retained, even if the winter fuel allowance is to be means tested.

Ministers are openly talking and writing, lobbying and leaking about the imperative need to retain some votes from the 25-60 age group by ending the arbitrary 1% cap on public sector pay increases in the face of rising inflation of the goods in the shops. Relaxation of that cap is inevitable if the National Health Service is to survive and the forces of law and order are to be maintained. As the probability of Mr Corbyn going to Downing Street is proclaimed more and more, so the potential that some self-appointed 'patriot' will attempt to assassinate Corbyn [whose record justifies extreme hostility to him in some quarters] increases. The level of protection allocated to Corbyn needs to be at least as much as the serving prime minister, regardless of cost: the nation could not afford another Jo Cox type of tragedy if some aide to Labour leader were to be struck down in an attempt on his life. So more millions of pounds will have to be found, whether Corbyn wants it or not.

Meanwhile the chaotic wanton self-destruction of the government continues. It is now announced that they intend to abrogate the 1964 London Convention by which fishermen from some European countries, including France and Germany, can fish within British waters up to six miles from the coast. The Convention was signed a decade before Britain's accession to the Treaty of Rome, so it cannot be construed as any part of our membership of the EU. But the government announces the intention to repudiate it now, carefully souring the attitude of the Continental members of the EU ahead of the Brexit negotiations. It will be interesting to see what other irritants and insults the government will be able to find, to ensure that the 27 remaining countries in the EU feel that they are well rid of us; and that they owe us no concessions at all.

It is increasingly painful to try to keep up with the News.

Saturday, 1 July 2017

Defence Spending in context

The United Kingdom has some pretension - still - to be a major military power, by virtue of the nuclear arsenal that Jeremy Corbin so ardently wishes to destroy. Were he to have his wish, Britain's decline, far below the status of 'the world's fifth-biggest economy', would instantly be apparent. No sane living person who has breathed since the end of the war with Japan in 1945 has ever wanted nuclear weapons to be used. Many people deplore the use of two atomic bombs to 'bring the Japanese to their senses' and thereby save many millions of lives by enforcing the surrender of the Empire of the Sun. But the Corbyn ideal of mutual nuclear disarmament is not going to happen within decades; so to undertake unilateral disarmament would diminish Britain further than it has been diminished under Thatcher and her successors would be an act of harebrained vandalism.

Millions of people in southern England have been told so often that Thatcherism was a great restorative of the country's power and of its pride, that they at least half-believe it. I had the benefit of a Sheffield perspective, where the truth that I beheld was totally different from the myth that enabled Blair and Cameron to continue the craze for deregulation and the dissipation of economic and political cohesion that made inevitable the Grenfell Tower tragedy.

The Thatcher government deliberately stood back from the steel industry, when fellow members of EFTA [notably Austria and Sweden] took simple measures to protect their equivalent production facilities. Thus the greatest concentration of skill and capital intensity in steel and related technology in the world was exposed to cheap, short-term competition; and destroyed. More than 60,000 skilled jobs [out of around 80,000] in the steel sector in South Yorkshire were redundant within three years; while the government rode high in the polls on the post-Falklands euphoria. In Sheffield the loss of HMS Sheffield during the campaign to recover the islands was a salutary symbol of what was to come when a previously-unpopular government was returned with a sufficient majority to press on with its destructive policies.

The primary target of the returned Tories was the coal mining sector. The oil industry was riding high globally. High inflation in the industrial countries had counteracted the negative impact that the OPEC oil price hike of 1973 had had on the oil price relative to that of coal; and awareness of the detrimental effects of carbon-based atmospheric pollution was increasing throughout society. In various corners of the state-owned coal and electrical power industries experiments were being undertaken - successfully - to find ways of using coal to produce energy with minimal polluting effect; and with a realisable end objective of being able to use coal indefinitely [mostly mined from the abundant resources under these islands] as a primary source of electrical energy. The oil lobby was empowered hugely by the development of oil wells in the North Sea, and their arguments against investment in coal resources had weight with a government hell-bent on simplistic privatisation of electricity generation and distribution without the successor companies being lumbered with the obligation to fund research on 'clean coal'.

A more urgent reason for the Tories' ideologues to oppose the coal sector was, of course, the National Union of Mineworkers and their influence over the whole trade union movement. The Labour government of the late 'sixties had encouraged union membership, and the weakness of the Wilson and Callaghan governments in the 'eighties meant that they could not resist the pressure from their trade union supporters [and funders] greatly to empower unions to recruit members in the workplace and demand negotiating rights between firms and their employees. Millions of people were members of unions under 'closed shop' types of arrangement, where people who could not prove a conscientious [usually that meant a religious] objection had to join the union to get the job. The government was keen to sweep away all such obstacles to a 'free market' in labour: and saw the Mineworkers as the inevitable block in their way. So they decided to tackle it directly, and a plan was carefully devised simultaneously to stockpile coal where it was still needed - mostly at the power stations - as the necessary preparation for a strike that would probably cause coal production to cease for a protracted period.

The National Union of Mineworkers was controlled by a clique of hard leftists, led by Arthur Scargill, who were on their side so determined to have a strike that they alienated their colleagues in some regions that those regions' miners stayed at work when a strike was called without a formal ballot and at the time of year -spring - when the demand for coal at the power stations was declining. The dispute then turned into an uprising. I saw this for myself. Hundreds of the police who were drafted in to confront the miners and their violent leftist supporters stayed in the hall of residence where I was the warden, during the vacations. Non-miner supporters of the strike [and of the revolution that they hoped it would ignite] came along for the rough-stuff; and the strike took on another political dimension when the already heavily-exploited miners of the Soviet Union were levied a portion of their wages to support the supposedly-starving families of British miners. No ordinary miner saw any of that money: it vanished into bank accounts for which no explanation nor audit has ever been issued.

People spoke openly of a potentially revolutionary situation. Those around Scargill included a cohort who believed that the mineworkers were the last mass workforce who could spearhead a revolution in the UK. From being a sympathiser with the union, I became a sceptic and then - regretfully - an opponent of the extremism that the confrontation bred. In the end, enough people went through the transition that I experienced myself for the government - despite its destructive motives - to have the strength and support to drive the miners to surrender, and return to work until the pit closure programme could be implemented.

The attitude that closed the steelworks went on to shut the shipyards and aerospace plant, and allowed the demise of the potteries and a series of other regionally-based industries. Much of industry was tied up with national defence - steel for ships and aircraft and guns, as a prime example - the rundown of the nation's defences became inevitable as the real economy slowed down. The bubble of financial services and the poison of consumer credit were encouraged as means of claiming 'economic growth' through the expansion of consumer spending: increasingly on imports.

I have warmed too much to my theme and gone on too long. Apologies to anyone who actually does read this.

Friday, 30 June 2017

Textures of Brexit

I am deeply suspicious of whether the three 'Brexit Ministers' - Fox, Davis and Johnson - have a shared view as to what a 'soft' or a 'hard Brexit' means; or even implies. I am certain that even if the three were to be agreed on this, their mental picture does not match that of Mrs May or of Philip Hammond. Just looking at what those five individuals have said, and trying to discern what they have not said, it is apparent that not all of them want Britain to make a 'hard Brexit', were that term to acquire a reasonably precise definition.

There is clearly open debate within the Parliamentary Labour Party, where the Corbyn-McDonnell line appears to be in favour of some sort of 'hard Brexit', characterised by formal departure from all the European institutions [but somehow staying attached to them] and a group of at least 40 MPs who favour a 'soft Brexit' that would leave Britain within the institutional framework of the 'European Economic Area' but not in the political structures of the European Union [the Commission and the Parliament and all their subsidiary bodies]. The 'hard' and the 'soft' supporters are left high-and-dry on the question of the European Court of Justice, for which a residual role would probably remain under any form of Brexit at least in respect of EU citizens in the UK and vice-versa.

In the nineteenth century there was much debate, much of it of a frivolous nature, about the 'Schleswig-Holstein Question'. Schleswig-Holstein was the southernmost region of Denmark, which Prussia took over in the same sort of way as Putin recently took over the Crimea; though the Danes made more of a fight over the issue than did the present corrupt Ukrainian state over the Crimea. There was endless debate about the historical veracity of Prussia's claim to the territory and [as with Crimea today] in the end the argument that 'might is right' won the day. Lord Palmerston, the British prime minister dismissed a discussion of the rights and wrongs of the case with the remark on the lines that "Only three people have ever understood the answer to the question: the Prince Consort, who is dead; a German professor, who has gone mad; and me: and I've forgotten the answer."

Would that any of us could be so flippant about the texture of Brexit that Britain needs, or can afford!

It is quite clear that a government of highly fallible people has no settled idea of how 'hard' or 'soft' a Brexit the British people wants, what sort of Brexit parliament would accept [after how many more elections]; or what sort of Brexit the European Union will let us have. Meanwhile, the clock is ticking down to the two-year deadline in March 2019.

Whilst ignoring the nuances summarised above, the glorious Tim Martin the creator of JD Wetherspoon and his pub chain uses the forward of his Summer Magazine to make a simple, true and alarming point. The majority of Brits voted to leave the EU, but the remoaners don't want it to happen. The opponents of any Brexit are Oxbridge graduates and other categories of citizens who separate themselves from the 'real' ethnically-sound British people. Martin does not use the term, but he refers to 'the Establishment'.

There is a widespread fear that if the discussion haver on for two years without any conclusion and with a hung parliament that is heavily weighted towards a 'soft' Brexit, the 'Establishment' - a term that has not much been used for the past generation - will stitch the nation into a sort of relationship of helotry to the European Union: like the Helots in ancient Athens, we will be a subject people of the EU without the rights of full, free citizens of the EU. You just watch!

It will suit the 'softies' to prevent any conclusions being reached within the time frame, in the hope that the EU will then close down the discussion with an offer of terms that the UK will not be able to refuse. Meanwhile, uncomprehending quibbling politicians will take us nowhere.

Thursday, 29 June 2017

The Descent of Ascension as a Symptom of Britain's Decline

Ascension Island was indispensable to the Falklands War in 1982: without that airbase the islands could not have been supplied. Subsequently, until recent weeks, regular RAF flights from the UK to Stanley have stopped off at the Ascension airstrip: which has given the locals a regular access to the UK for themselves and for supplies. That has had to stop: the islanders must now travel several days by ship to South Africa to get a commercial flight to Britain. Sick people are in a deep quandary and it is impossible urgently to secure any medical supplies.

The reason for this is Osbornian austerity: the cuts that have so disastrously undermined every aspect of social and public services in the UK and its dependencies. Under a longstanding agreement, the Americans have use of the Ascension airstrip; in return for which, they maintain it. The cuts in UK defence spending [even before the Queen Elizabeth is fully manned or armed] mean that the RAF has had to dispense with the planes that have formed the 'airbridge' between Brize Norton and Stanley, via Ascension. The planes that are now available are unsuitable for the increasingly ropey surface of the airstrip on Ascension, which the Americans do not plan to upgrade for a couple of years. Thus an important point of communications, which has been militarily vital since at least the Second World War, is left to fester along with with council tower blocks, decaying schools, under-equipped hospitals and all the other increasingly conspicuous evidences of the failure of the state.

Ascension island is a long way off, so it is almost completely out of mind to the British public: which suits their government very well. The Tories [aided and abetted by the LibDems for their first five years in office] have painted themselves - and the country - into a corner where many options are cut off, and will remain so until the inevitable decision is taken to open up the stop-cocks of state spending. Then the catching-up will be begun, with remote islands in the South Atlantic very low down the list of priorities.

But hereby hangs another tale. The UK government, after a century of pleading, did build an airport on the larger island of St Helena: and located it in a place where the prevailing winds make it next to impossible for the sort of 'planes that could use the airport to do so. So one dead duck and one white elephant have been provided on the UK's major possessions in the mid-south-Atlantic. Thus the bureaucracy and the supine politicians whom they manipulate have embarrassed the nation, at significant cost in the case of St Helena and at the opportunity-cost of surrendering essential access to Ascension. Between crass incompetence and cretinous austerity Britain has created a total cock-up.

But why should anyone really take notice? The answer is very clear. Today the Chinese president drops in on Hong Kong, to mark the twentieth anniversary of the surrender that Mrs Thatcher left it to John Major and Chris Patten to complete, the abandonment of any chance to secure the then-colony's independence. Hong Kong is inexorably being wound in to the hegemonic block that China wants to consolidate. Meanwhile, China is building islands islands in the South China Sea to provide military bases and evidence on the map that a huge area is 'Chinese home waters'. Those claims are contested, and will increasingly be a source of friction with neighbouring countries and the USA.

Meanwhile, Britain is frittering away the residue of a great empire: in the island territories all around the world that could be developed [as the Chinese are developing theirs] into strategically significant points of focus. If Britain would just invest the necessary few billions of pounds the islands from Ascension to Pitcairn to South Georgia would restore a global presence as the contest to control the resources that are accessible in and under the oceans becomes increasingly important. The UK has given up or wasted most of its assets. It should quickly undertake a rational audit of what we have, and what can be done with it by an enterprising nation.

Wednesday, 28 June 2017

Google's ik

It is more than a quarter of a century since I first heard a colleague - Tony Tudor - say "I Googled it" in explanation of how the had ascertained some obscure fact very quickly. I don't remember the data in question, but I do remember exactly where I was at the time. With a quarter of a century behind me as a researcher in the history of political economy and the economy as such I recognised that I was living in a period of revolutionary change. Then, as now, there were several 'search engines' available and the demise of traditional reference libraries was confidently being predicted; but this was the first time that it was obvious to me that Google was way ahead in the market. That dominance has increased; and yesterday the European Commission struck a blow against it.

The particular issue on which the Commission's ruling was made, was whether or not Google so used its mastery of the system and the data within it that its preferred items were presented to inquirers first, when they wished to make a selection between products and services. The Commission decided that such manipulation took place, fined the firm more than two billion euros, and ordered it to mend its ways. Google 'respectfully' disagreed with that ruling.

A bigger issue, that has been the basis for much Eurobabble over many years, is the dominance of US-based 'technology' firms over the entire universe of computing software and devices that connect customers with the data or the experience that they want. A majority of the few Americans who bother themselves with this issue take the view that it is sour grapes: that the tired old continent of Europe still refuses to recognise that the US has been dominant in global technology since the first quarter of the twentieth century. The EU Commission has tried to use competition law to limit the extent to which European consumers simply use the easiest-to-access and best-known. It is simply a fact that the US giants - Google, Facebook etc - had become predominant before any Europeans had presented alternatives. 

One of my biggest gripes with formal Economics is its under-valuation [almost to the point of ignoring] the centrality of intellectual property - which I characterise as ik - in the contemporary world. The ownership and control of ik - patents, copyright,brand names, trademarks, a person's image and reputation, et cetera - is the principal source of wealth, and the biggest differentiator between individuals. The firms, most notably those in so-called Silicone Valley in California, have gained their prominent position by the novelty and innovation in their products and the skill with which they are then promoted globally. Although it is accessed through computers, smartphones etc, the ik has no physical impedimenta. The distributors of the service and the controllers of the content do not need to deliver any physical product to their global customers: they just put it out there, and claim their tribute for doing so. The European Commission, in all its pomp and glory, can do nothing about that.

Tuesday, 27 June 2017

Not a squalid little deal!

Mrs May's agreement with the Northern Irish DUP has a 'headline' cost of £1billion in extra cash to be available for the Northern Ireland Executive to spend. But that is not even the beginning of the cost [and I refer to the cash cost, leaving aside the reputational damage that is being done to keep  this weak and wobbly government in office, but not truly in power]. Retaining the 'triple lock' on state pensions and retaining the free winter fuel for all will cost billions more, and the deal may well last for the five years for which the parliament could remain in being. Given that some demands from Scotland, Wales and English regions will have to be met if the Tories are to have any hope of winning future election, estimates of the ultimate total cost of the deal seem to be running upwards of fifty billion pounds in the next few years. This drives a coach and horses through the residue of Osborne's austerity which Philip Hammond's Treasury Team was seeking to maintain. Thus it will be necessary for the government to increase its borrowing while the Tories negotiate with the DUP on the possible increases in taxes that Mr Hammond already knows will be necessary. Since the DUP-Tory agreement is on the basis of 'confidence and supply' the DUP will have an effective veto on any tax increases: so the overwhelming probability is that state borrowing in the coming year will be several tens of billions of pounds more than had been foreshadowed in any of Mr Hammond's [actual or imagined] spreadsheets.

I am sure that Mrs May's grasp of economic reality is slight, and that she has not yet comprehended anything of the hydra-headed monster that she has attached to her government. Austerity was becoming intolerable to the electorate as its effects on policing, schools and hospitals became apparent. The departure on sea trials of HMS Queen Elizabeth - the biggest ship ever assembled in Britain - was accompanied by comment that she went without any aircraft, amid rows about how many 'planes could ever be afforded to fly from her. Almost all the other areas of the armed services are being robbed of funds to make some sort of show of fitting out Queen Elizabeth properly, which means that Britain's power of self defence is significantly diminished at a time when perceived threats are increasing. Mrs May's new monster, that she will not be able to control, is the myriad demands for more money that will come from every sector of the public services and every region of the country. Ryedale in North Yorkshire has been given press coverage as one of the two areas on England most deprived of reasonably-fast broadband, and that part of the country has a special plea that may become irresistible if Scotland and Wales are allocated extra money for communications: and so it will go on, inexorably, for longer that than Mrs May can hold on to power.

Should Mr Corbyn come into power, he would find that all the key-turning jobs have been done for him, by default. The military are virtually prostrated. Austerity is being overcome by sectoral and regional demands that will become irresistible. Government borrowing will be high, and Mr Corbyn and his clique would have no compunction in 'taxing the rich' to fund even more state spending. In those circumstances the stock market will collapse and the pound will decline rapidly in external exchange: so a radical government could claim justification for radical measures to establish control of a 'socialist' economy.

The Tories will remain desperate to prevent Corbyn having access to the electorate. So they will have to try to control the monster that they have released. How they do this will be fascinating to watch: or perhaps the Tories have finally lost that ruthless determination to survive that has sustained then for centuries?