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Saturday, 22 April 2017

Fire and Rescue Services

One of the greatest honours in my life has been to serve as a trustee of the Firefighters National Memorials at St Paul's Cathedral and in the National Arboretum. We have a major national commemoration of fallen firefighters every September, and very sadly in most years we are joined by the families of firefighters who have given their lives for others in the British Isles during the past year. I have also had the honour of serving twice as Master of the Worshipful Company of Firefighters; and thus, over nearly three decades, I have gained a close knowledge of the Service and of some of the fine people within it.

Like all sections of the public sector, Fire and Rescue Services have been subject to several rounds of cuts driven by the government's obsession with austerity. Simultaneously there has been a major restructuring of the service in response to the changing pattern of the demands falling on the Service. Happily the demise of open fires and the reduction of the use of gas for domestic cooking have led to a dramatic decline in the frequency of house fires, Half a century ago there were frequent house fires all over the country. They still occur, but with such a dramatic decline in their incidence that each of them figures on the national news. Nevertheless, there have been two serious fires in care homes within very recent weeks; perhaps evidence that cost-cutting in those establishments has been a contributory factor, in that with reduced staff the discovery of an incident may be delayed for long enough to enable the fire to develop to the stage where lives can be lost. It is also a sad fact of life in a socially-riven country that fires are sometimes started deliberately in the hope that the evidence of other crimes might be destroyed.

Thus firefighting capability has to be available all over the country, to provide a rapid response in the relatively rare life-threatening situations that arise. Part-time Retained Firefighters and trained and tested volunteers can help to reduce the cost of full nationwide coverage, but there is an unavoidable necessity to have the relevant equipment accessible in every part of the country. Risky experiments are taking place as to what is the absolute minimum of equipment [including pumping-power] that is needed on any economy-mini fire appliance in each locality; and all such experiments rely on the reasonable proximity of much more powerful resources. Infrequently but unavoidably, very large fires occur, usually on industrial and logistical premises: this requires that there needs to be a very considerable concentration of equipment and personnel that can be called up [from various bases, perhaps in several countries and cities] within a half hour. The cutting has reached the point where any more significant surgery to the service will undermine its firefighting capability.

Meanwhile, calls for rescue services continue to expand; requiring the countrywide availability of trained personnel with the necessary skills and equipment. Nasty, messy jobs need to be done, with the greatest sensitivity.

Cheeseparing bureaucrats and bean counters see firefighters apparently doing nothing necessary as they check their equipment and their manuals and run exercises,. Such luminaries suggest [for example] that they should double-up as ambulance crew - who would, of course, be out on calls when fire and rescue incidents also demand their attendance. Lives could thus be endangered by the unavailability of either fire crews or paramedics. This is another incidence of the government-driven impoverishment of national life.

Friday, 21 April 2017

M&S et cetera

Marks and Spencer has been an essential feature of every high street and shopping mall in the UK since time immemorial, as far as living humans are concerned. Over the past two decades, however, their star has been waning; and successive chief executives who have presented wondrous curricula vitarum have failed to re-established the predominant position that the company held at the time of the Queen's accession.

In particular, the firm has lost its leading place in clothing the country. To a considerable extent, the loss on the swings of fashion has been compensated by gains on the roundabout of food sales; but not completely. M&S was among the first firms to recognise that households with two working adults raising a family has limited time for food shopping and preparation but has more money in real terms that any previous generation. Hence wholly and partially prepared meals became a feature in which M&S was briefly the market leader. But so obvious was the success of that innovation that all the significant supermarkets emulated it, and now there is nothing special in range or quality about M&S prepared meals that gives them a natural advantage: beyond the fact that one generation of householders first began using M&S and have kept to the habit. M&S have the pricing disadvantage in that despite the large volumes of food they turn over they are also saddled with huge estates of shopping space, largely devoted to clothing: which is soon to become very much more expensive with the newly increased business rates from this month. For several years the firm has been cutting back on clothing and opening food-focused stores, and this week another new CEO has announced an acceleration of the move from clothing to food. Half a dozen major stores are closing, and this can be taken as a sign that the company has come to recognise that drastic action is necessary.

It looks another case of 'too little, too late'.

The rise of firms delivering ready-to-eat hot meals to the residence at a specified time is taking an increasing share of the market from those who are still affluent. Many families, however, are feeling financial constraint and are shopping around for their convenience food: something as good in quality as the M&S offering can be had of Morrisons, Tesco and the German discount stores at competitive prices. While Morrisons and Tesco have the albatross of significant estates of retail premises to deal with, the proportion of lossmaking space in their total register of assets and liabilities is proportionately less. The supermarkets are also ahead of M&S in the online arena, where they compete effectively with each other and with the bespoke hot food suppliers. M&S are discussing converting more shop space into food distribution, and even of opening new food stores: I have seen this locally, where the Co-op left their large Matlock property and M&S took it on just last year. While that shop was a local novelty it did well, but now the grind of competition is coming more into play.

Debenhams has announced yet another major review of the extent and siting of their stores, with promise of a radical redistribution; and Next, much fleeter of foot than Debenhams or Marks, is facing up to changes in the pattern of their customers' demand. Sainsbury's have extended their range hugely by taking in Argos, and making goods from their extended online catalogue available to customers by home delivery; or by collection, not just from Sainsbury's stores but from central places such as major railway stations.

M&S seems to be compounding rather than transcending decades of relative decline. This is sad, especially for longterm shareholders, but it looks like the hand of fate.

Death Taxes Deferred

It is a well-know saying that the two certainties in life are death and taxes. Governments have linked the two through death duties and inheritance taxes for several generations, and the present UK government intended to take this process a stage further by replacing probate fees by a progressive tax. That proposition met with a storm of protest, and it has been abandoned as part of the deck-clearing operation that every government has to undertake before a general election. No doubt, something like a progressive tax in place of probate fees will be introduced in the non-too-distant future.

The Justice Department, which had proposed this increase in the cost of administering a deceased person's estate, is facing ever-mounting costs. On the same day that the department climbed down on the death tax, they confirmed that they are constructing a series of isolation units for specially dangerous prisoners, starting with three units each for around thirty inmates. These will include the most dangerous indoctrinators of susceptible people who can be radicalised in the context of a prison. This necessary construction is yet another example of how the costs of government constantly rise: public safety requires that more is spent on security.

So alongside the heath service, social services, schools and transport, law-and-order demands more resources. The prisons are approaching anarchy, the police have been cut back too far, and the armed forces are overstretched yet constantly asked to face up to new challenges.

Taxes must be increased; and if governments continue to fail in stimulating economic growth, this means that taxes must increase relative to national income. There is no alternative.

Thursday, 20 April 2017

Bill Gates, British Reality and George Osborne

Bill Gates of Microsoft, usually described as 'one of the richest men in the world' after giving billions of dollars to good causes, was in London yesterday. In a set speech, he said that if Britain decides to reduce its foreign aid budget, people will die who would not die if the aid had been continued. That statement can be taken at face value, in respect of the unknowable proportion of the aid budget that gets through the web of exploitative contractors and venial bureaucrats and actually gets to where it is needed. If the total DfID budget was reduced, and the leakage from the system was reduced also, the same amount of good could be done for less.

Meanwhile, within the United Kingdom, lives are being lost and curtailed by the combined impact of actual cuts and of underfunding in the National Health Service. As long as the total expenditure of government is limited [as it always must be] some of the choices that parliament makes, under tutelage of the government, will result is some people being relatively advantaged to the cost of others.

The British economy, and its tolerance of taxation and other tolls taken by the government, are not large enough to fund all the good causes that the most beneficent citizens might be willing collectively to finance in an ideal world. I have repeatedly pointed out, that supposed 'economic growth' is no guide at all to the health of the system. 'Growth' merely records the notional amount of money that was turned over in one year [or month, or day] within the whole economy, compared to a previous period of the same length. Therefore 'strong growth' can be reported by an economy where more and more spending in successive periods is financed by consumers' borrowing to buy imported goods. If such an economy also sells control of its businesses to foreigners, who thereafter draw some or all of those firms' profits into their foreign bank accounts, the funds available to expand and to maintain the resources for production within the economy are reduced. So in successive years the balance of payments deficit increases, putting still more resources into foreign hands to be used for lending to the government [which thereafter will have to pay interest to the foreign holders of government debt], and into foreign hands to buy more indigenous companies. Far from being strengthened by a relatively high rate of 'growth', compared to other countries' data, an economy can massively be weakened as it appears to be 'growing strongly'.

This explains the apparent paradox by which George Osborne could spend his six years as Chancellor of the Exchequer boasting about the economy 'growing' more quickly than most others among the once-industrial countries, while he demanded cuts in real-terms government expenditure on all fronts. He talked a lot about 'inward investment', which meant the sale of assets to aliens. He talked about a 'march of the makers' [expansion of material production] that never happened. He deplored the low rate of 'productivity' in the system - the calculated average output of workers in various sectors of the economy, set against the cost of employing them - but he did nothing about it. As Britain's material output declined, thousands of 'zombie companies' remained in existence, with disastrously low productivity, simply so that banks that had lent money to them did not have to foreclose on the debt and thus increase the total of losses that the banking sector had to report; while this chicanery kept a lot of non-viable jobs in the employment statistics. As Osborne's policies made the country poorer and nastier, he retained the air of a master of the universe.

The announcement of a General Election yesterday was followed by the news that Osborne would stand down from parliament. This was the trigger for interviews in which his indefeasible complacency and self-satisfaction were unabashed. His successor at the Treasury has followed his policies, and will do so if he remains in office after the election. That means that government cuts will continue as the weakness of the economy becomes more apparent: thus the government's choices between British and foreign deaths will be more apparent. The deaths will continue to be chargeable to HM Government.

Tuesday, 18 April 2017

Not Cut-and-dried

Yesterday, while travelling to my charity discussion in Catford, of all places, I heard of the coming General Election. Overnight, I was determined to blog about anything else. Then, in the bright light of dawn [at 7.15, anyway] it seemed the obvious topic: just to say, that the election could be a lot more open than the recent opinion polls would suggest.

Mrs May continued with her 'trust me to do do what I won't tell you' line. That will not survive the six weeks of campaigning. She will have to give clear answers on terms of adhesion with the EU,  on immigration, and all the other questions arising from Brexit: and when she does, it will be clear that the electorate has other things on their minds anyway.

Brexit was an accident: David Cameron thought to bury euroscepticism, and instead it buried him. Mrs May was an under-performing Remainer. Now she casts herself as the apostle of the Brexiteers, without putting any flesh on the bare bones of the concept of surviving 'outside' the EU. Unless she changes that fundamentally, her apparent majority will evanesce.

The biggest issue in the minds of the majority of voters, of all parties and of none, is that which this blog addressed yesterday; the degeneration of British social life through the egregious 'cuts' imposed by the last two Tory-led governments. The most certain voters are state pensioners: will they vote for a manifesto that threatens the link between inflation and pension increases? Will they vote away their bus passes and winter fuel allowance? Will they vote for more cuts in the health and social services, with the probability that care for the frail will become even more hit-and-miss, and both drugs and operations will be prioritised for younger people?

Jeremy Corbyn, who many Labour MPs do not believe is fit to be Prime Minister [ a view they share with the vast majority of the electorate], nevertheless has a prominent platform on which to continue to oppose the cuts, as he did in his first statements yesterday. The press will follow him, looking for gaffes and evidence of ineffectuality: but they have no option but to present his case to the public. He will plug away. He is reasonably articulate. He regards the Brexit vote as 'given', and the negotiation of decent terms - including Britain remaining in a broadened Common Market - as pretty well inevitable. The more airtime and column inches Labour get, provided they stick to the core message of Tory evil, they will have a negative impact on the Conservative vote.

The LibDems have a massive dilemma, which they do not yet appear to recognise. They can continue to deny democracy, by trying to reverse or nullify the Brexit decision: in which case they will continue to appear stupid, especially given the manner of speaking represented by their leader. He is much more likely than Corbyn to gob his way to embarrassment.

The one-trick pony from Edinburgh will continue to pretend that the Brexit decision licences her to demand a new referendum on Scots sovereignty: in which case her party has nothing material to contribute to the UK-wide election debate.

Labour will be more effective in preventing the Tories from having a massive majority than in holding seats for themselves, and may yet give a field-day to the LibDems as the repository of negative votes.

Now I will keep off the topic of the election until mid-May: by which time I will be able to retract any or all of the above in the light of what happens.

Monday, 17 April 2017

Ever-Meaner Britain

I will spend part of today at a meeting of Trustees who are trying to plot a viable future for a thirty-odd-year-old Charity that faces ever-harsher financial circumstances; as does almost the entire charity sector. Local authority funding is rapidly drying up, even for the local public library which we took into our premises when the purpose-built facility was closed in an earlier round of spending reductions. Well endowed grant-making charities are overwhelmed with requests for assistance to be given to worthy causes. In our own case, after a heavy investment of resources, especially highly specialist human resources that were unstintingly supplied by our brilliant staff, a package approved for the Health Service has not been implemented because of the cuts that are decimating the options available to the clinical commissioning groups. We will be able to plan for constrained survival of the charity; but we will also, of necessity, discuss how best to dispose of our [not inconsiderable] residual assets if the future becomes unsustainable for the organisation as an independent entity.

Similar issues have been discussed repeatedly by thousands of charities around the country over recent years, and the unremitting pursuit of George Osborne's squalid policies makes nonsense of the May government's rhetoric about about 'a country that works for everyone'.

Schools have reverted to the Victorian model of asking parents for a few pennies a week [now translated into a few few pounds] to supply the children with reading materials and outings that the state no longer funds. Research shows how important it is that ALL children have access to the same basic facilities. The strictly stratified performance of children in tests and examinations according to parental income, which is only marginally affected by differentials in innate ability, has become horribly clear in recent in-depth studies. In order that all children have the best chance of not falling completely into a poverty trap it is essential that they all have the same minimal provision in school. The gap between the most affluent and the poorest children on entering school is apparent in their vastly disparate degrees of socialisation, articulation, body mass and susceptibility to discipline at age five. Hundreds of thousands of children arrive at school hungry every day, and the funding of breakfast clubs is increasingly uncertain: so another burden falls on the goodwill of better-off parents and charitable sources in the neighbourhood. Of course, parental fecklessness and failings, ethnic differentiation and associated misunderstandings make their contribution to stretching the bottom of the achievement scale downwards; but society accepted the need to address these issues for over a century: until the Osborne axe reduced the resources that could be applied to that fundamental work.

So the government is continuing with Blair's policy of free schools, which do not readily bear comparison with the mainstream of educational standards and attainments. And, all on her own, Mrs May has resuscitated the idea of establishing grammar schools: a distraction in which the Education Secretary has become fully embroiled.The partial implementation of this daft policy will further denude the resources from all other schools - including free schools.

Britain is well beyond the point where social norms can be maintained. Britain is becoming a meaner society. Sharp-elbowed educated parents with modest means will continue to bag the best for their children, in a vicious contest for the crumbs that will not affect the really affluent who can still send their children outside the state system into private schools. The differentiation between the haves and have-nots will widen and can become a lifelong experience due to the evanescence of private charities; unless the policy is drastically changed in the near future. The apocalypse is coming close. Mr Osborne can write about it in the Evening Standard and Londoners can use his journal in substitution for the toilet paper they will no longer be able to afford.

Dictatorship versus Democracy

Within three months of taking his oath of office, Donald Trump is obviously becoming conditioned by the checks, balances and information flows that constrain any democratic head of government. The members of his cabinet and the senior appointees with direct access to the White House have shaken down and the relativities between them in terms of power and influence has become more evident. Perhaps the most striking departure from his campaign rhetoric is the concern that he now shows for China's interests and opinions. This is largely the consequence of presidents Xi and Trump confronting the terrible twins, opportunity and coincidence, as they address the question of how to rein back North Korea.

Over the past decade China has continued to import - and to pay for - a diminishing quantity of coal from the Pyongyang regime: which is just about the only North Korean commodity export that it can make any use of. The Chinese nuclear capability far exceeds that of North Korea, so they have no use for either military or civil applications of nuclear science [though Pakistan is widely reported to have drawn on those resources, together with other emergent stockists of nuclear weapons]. China has so far acted as a reluctant patron of the North Korean regime, using both votes in the UN and the threat of military confrontation to bar any outside power from striking any real blows at North Korea. Yet now that the threat of the North Koreans having intercontinental missiles with viable warheads in a very short time [maybe measured in months, rather than years] has changed the whole scene.

Almost all of the vast landmass of China has been within range of North Korean missiles for several years; and as that capacity is enhanced - as was displayed over the past weekend - and as the third Mr Kim shows that he accepts no constraints on his power, the risk that he could lash out at his dynasty's long-term patron must increase. Much of the territory of China's natural ally, Russia, also lies under the threat of North Korean missile attack; as do Japan, the Philippines and South Korea, whose capital is within artillery range of the North. The immediate neighbours and Russia have looked askance at the development of Pyongyang's armoury; but have not felt that the time for action had ever dawned.

Trump's perspective of  'America first' made it apparent that North Korea was the number one threat; an irresponsible government with total power over its people and half a century of weapons design have created a unique nuisance value.  The new president's briefings, plus an early meeting with President Xi, convinced him that he must get China on-side: then he must act as decisively as would be needed to put a complete block on North Korean nuclear and ballistic capability. The Chinese population needs to be reassured that their government has a grip of the situation, hence the top rank of the Communist Party recognise that they must do enough to prevent Trump from acting unilaterally to restrain Kim. The total concentration of power in North Korea means that an implosion of the regime would be immediate and abject, leading directly to complete anarchy and mass destitution; in which circumstances rogue scientific and military personnel could access the available horror weapons for release among their own people and over the borders in South Korea and China. China has been paralysed by fear of such an event for several decades, and must now act, alone or with the USA, to prevent it.

Meanwhile, President Erdogan of  Turkey is trying to make himself a dictator. He did not get the majority he sought in yesterday's referendum, and there are plenty of calls for the polling to be reviewed in the light of claims of fraud. The odds are that he will brush all objections aside, win the proposed second referendum on restoring the death penalty, and roll back all the advances in politics and society that Turkey has made since the collapse of the Ottoman Empire in the early nineteen-twenties. Access to the European Union will be denied to him, and an impregnable 'refugee-proof' border will be established with Europe. He will declare various sanctions against the EU, withdraw from NATO and may even try to rebuild the lost empire in Mesopotamia and Arabia  He will move progressively through the phases of paranoia and megalomania that have been well mapped in previous dictatorial careers; and eventual nemesis will be accompanied by mass misery among all who voted either for or against him in the referendum. Ever since the death of Ataturk democracy in Turkey has needed 'guidance', often from the military. Erdogan dismasted the military long before the fake failed coup a couple of years ago gave him the pretext to dismiss and imprison thousands of officers, judges, teachers and public servants. He was well into implementing a classical dictatorship long before his referendum. Pity the poor Turks, and even more the Kurds, as the process develops.

Saturday, 15 April 2017

Easter Day 2017

The day dawns with deep fears for the safety of Coptic Christians, who make up around 10% of the population of Egypt, and for other Christian groups in various parts of Asia; not least, in Syria where Easter makes them a prime target for attacks that will get maximum publicity worldwide.

President Assad's prime defender, Vladimir Putin, will make an ostentatious church appearance and his friend the Patriarch of Moscow will avoid any embarrassing reference to the oppression of Syria's Christians [as usual]. Angela Merkel is likely to attend church, in a low-key manner; and will recall that the one occasion when she publicly appealed to the Christian tradition in European politics was when she had taken the reckless decision to admit an unlimited number of 'asylum seekers' into the EU without the consent of other states which are reluctant to accept a quota that she now wishes to impose on them. Several of the heads of state and government who refuse to accept into their countries significant numbers of alien [non-Christian] migrants will go to church also; and will hear variant interpretations of the Gospel.

Mrs May [like Mrs Merkel, a parson's daughter] will be in church, and Mr Trump will certainly make clear his adherence to the Christian message. Nobody of significance in China will be seen in church. In most countries, religious observance by public figures is not considered significant. Nonetheless, the Queen of the United Kingdom will publicly display the simple faith that she has maintained all her life; and the public messages issued by the Pope and the Archbishop of Canterbury will have air-time on all the UK media.

Will all this have any resonance in political action in the coming days? Will the supposedly life-changing recognition that Jesus Christ is asserted to have risen from the dead, after volunteering for a very cruel form of execution, have any impact on the doings even of the most ostentatiously observing political leaders? Almost certainly not.

Does that matter? Did it make any difference that men by their thousands [on both sides] were marched to drumhead services and then straight into the trenches to continue the slaughter of the First World War? Did the 'benefit' that they had gained from being admonished and/or sprinkled with holy water affect their attitude to life, killing and death? Surprisingly, in many cases, it did. In my youth I knew several impressive and wholly sincere Christians, clerics and laity, who ascribed their faith to experiences in the First World War: and my own father was ordained as a priest in the Church of England in consequence of a 'conversion experience' while serving in the artillery during the Second World War. This is a most peculiar thing: while high-level political action does not often arise from religious observance, millions of individual actions by ordinary individuals are motivated by religious principles. There is every reason to take statements by Mrs Merkel and her Interior Minister in favour of mass acceptance of refugees as being concordant with the European Christian heritage were simple statements of what they believe to be the case. This has not resonated positively with Mr Orban, Mr Fico and the other  EU heads of government who have been unmoved by that rationale.

It is impossible to say that religious belief is immaterial to political action in this century, but the words of the old hymn resonate ever more appositely: "God moves in a mysterious way, His wonders to perform".

The importance of QUONS

In my book NO CONFIDENCE: The Brexit Vote and Economics I stress the importance of differentiating between assets of four kinds. Assets are material and immaterial things that people seek to acquire and to retain, which in common parlance are assumed to have 'value' to them.

I point to four significantly different categories of assets:
KEYNS: immaterial things like the ownership of land. Many such things are represented on deeds or certificates, but these are just tokens. Substantively, they are all legally enforceable 'rights'.

MARCOMS are material commodities that are brought to market and offered for sale in competition with similar produce from other providers. Free competition between providers ensures that they must provide their wares at a price that covers their costs in getting the product to market; but no provider is able to demand that the customers give them any 'excess profit'. because the customers will simply use suppliers who do not  charge that excess, and the 'profiteer' will not be able to sell his/her stock.

QUONS are material goods, and services, where the seller can charge more than the material cost of providing the visible components of the produce because it is sold with the cachet of a brand name which the customer recognises as a guarantee of quality. Products and services that are provided with the protection of a patent are also quons: the law prevents other suppliers using the intellectual property that is the exclusive property of the patentee. Copyright is similarly protected.

JEVS are material objects that are priced exclusively on the basis of what a buyer will pay for them on the day they are offered. The scarcest jevs, such as famous works of art, are offered for sale by public auction.

In a free market economy, marcoms are sold in direct competition with those from other suppliers and competition can drive prices down towards the cost of production. Quons are sold with the implicit intellectual property incorporated, and open competition between suppliers is therefore prevented.

Friday, 14 April 2017

School Funding, Equipment and Intellectual Property

Two [rival] teachers' unions are holding their conferences in different cities over the Easter holiday, as is usual. This year, they are united in their insistence that there is a crisis in school funding throughout England; to which the government responds with the pathetic mantra that more money is allocated for spending on schools than ever before. If there are more children in schools, and prices are rising - however slightly - then more money is going to be needed every year for each child to have the same assets available to her/him. Books are still important, and up-to-date books are copyright material so the author and the publisher can each take their premium within the price that must be paid for each copy of the book. As more IT and computing equipment is used, so the intellectual property aspect within the prices of such aids and of the relevant software has to be paid; together with the access charges to sites and the fees payable to broadband providers [not to mention the rising cost of electricity to power everything]. Schools can take steps for the sharing of all types of learning device: but every child must have adequate access to the full range of assets, and the schools must pay the price. The daft insistence of the government on repeating their mantra merely makes them look sillier.

The development of high-value intellectual property is the best possible investment in any country. Britain has been a world leader in this arena for at least four centuries, and continues to be highly generative of world-class intellectual assets. The appropriate level of school and university and apprenticeship education and formation is indispensable for the future generation of such assets. However, as has been well documented [including in this blog] the lack of support for second-stage and subsequent investment by both financial and governmental institutions in Britain has created a long catalogue of developing world-leading patents being sold to alien investors. The British-based inventors usually receive an acceptable premium for selling out; but the nation is a net long-term user as the retail price of the resultant products - including a high premium for access to the embedded intellectual property - has to be carried on the country's balance of payments. What should be a generator of profit for the economy as a whole becomes a drain of wealth; yet the technology still has to be accessed if the country is to be enabled to achieve any next-stage economic development.

The extreme importance of the ownership of intellectual property is most clearly seen in the health care sector, where scavenger firms buy small pharmaceutical companies that hold the patent on life-saving and life-extending drugs and then increase the surcharge for the implicit intellectual property many times over. Today's News includes reference to a firm in Spain that has tried to charge FOUR THOUSAND PER CENT more than the previous asking price for such a drug. The principal potential buyer of such a drug is a state health service, and the patients of such a service can expect 'essential' drugs to be made available. Thus such companies try to screw the taxpayer by creating a public demand for the drug that will extent granny's life by some weeks. This raises the question: should the state set limits to the 'monopoly profits' than can be made by owners of intellectual property? Probably the most free-wheeling economy in modern history, the USA after the Civil War, deliberately smashed attempts to stitch up control of the railways and of the distribution of oil in a phase of 'trust-busting' legislation. Now all countries have the equivalent of the UK Competition and Markets Authority; and even though they are pretty ineffective [as seen in electric power supply in the UK] they sometimes achieve benefits to the consumer. It is surely time for a similar [but stronger] approach to be taken to exploitative deployment of intellectual property, especially patents in areas such as health care.

Wednesday, 12 April 2017

Trump, Trade and Geopolitics

Less than six months from his election, Donald Trump is ascending the biggest learning curve that he has ever faced; and so far he is coping. His most recent utterances show that he has learned that the almost-euphoric reaction of protectionists in the USA to his election sent the dollar to a high against other currencies that is not reasonable or sustainable. After meeting President Xi and the debriefing that he has undergone with his senior aides he has reviewed his rhetoric about Chinese 'currency manipulation' and reconsidered the simple proposition that Chinese imports to the USA have replaced American jobs. The confrontation on all fronts against China that seemed destined to be a major facet of his presidency has evaporated and a step-by-step development of policy in regard to China [and, possibly, even North Korea] is now likely to be the preferred route.

On the other hand, the president's righteous and sentiment-driven revulsion at actions ascribed to the Syrian government has led to a direct confrontation with Russia that has become very serious. With total accuracy and complete cynicism Putin has said that there is no 'proof'' [that he would accept] of the guilt of the Syrian government. Even if it were to be proven that a Syrian air force 'plane dropped the toxic substance, then Assad could pretend to penalise the pilot as a 'rogue element' and continue on his cynical path. Meanwhile there is much talk of deeper trade sanctions on Russia among that NATO allies. The existing sanctions, imposed in the light of Russian adventurism in the east Ukraine and the Crimea, have hurt the Russian economy - especially poorer consumers - and have damaged west European exports. They have had no effect on the political situation; and it is unlikely whether tougher sanctions would do anything other than convince the Russian population that the west has a perverse hostility for their great nationalist leader. Meanwhile, the Ukraine remains a sink of corruption far worse than Russia itself.

For geographical and mineralogical reasons, China and Russia need each other. Their economies are intertwined at many points. They are necessarily allies, and the existence of that alliance means that China's relationship with the USA will always be characterised by caution: the Chinese will want the best terms of trade that can mutually be agreed with the USA but America will never replace Russia as the prime ally of China. So although the world can heave a sigh of relief at the relative defusing of the mood in Washington toward Beijing, the highest level of geopolitical relations has not yet shifted. It probably will not, for several years.

Western European politicians like to boast about the EU being the 'world's biggest economy', until it will inevitably be overtaken by China and India; but with or without the UK [with or without Scotland or Northern Ireland] in its common market, 'Europe' does not have the weight of the USA, or of Russia, or of China in world affairs. This is partly because of willful military weakness: the 'Axis powers' of World War II have not been allowed to develop nuclear armaments; and indeed have made a virtue of that enforced abstinence. France still has a significant nuclear arms capability; and unlike the UK the technology is entirely their own; this is not seen as a European resource: most EU countries would deny any proprietary or strategic interest in it. A 'High Representative' of the EU attends most major international conferences [she was at the G7 meeting last weekend] but that person is not seen as having any 'clout' in world affairs. Donald Trump is still banging on about getting his NATO allies to bear their part of the cost of the alliance; without success.

Outside the EU there is no doubt that the UK would struggle economically. Within a few weeks the false picture of a reasonably-strong economy would fracture. It is painfully clear that those ministers who talk confidently about coping with the consequences of a 'hard Brexit' do not know what they are talking about. Britain's one bargaining-chip is the skill of British cyberintelligence agencies - especially GCHQ - combined with the possession of bases and colonies around the globe and Commonwealth-based strategic alliance with Canada, Australia and New Zealand. Britain plays well above its weight in this field, and is indispensable to the USA because of it. Whatever terms of trade the May Team can agree with Brussels, that is not the great game for the United Kingdom. England-and-Wales, with whatever other components of the UK remain after the dust of Brexit has settled, has no destiny other than the Atlanticist option. Australia has accepted this for herself, as has Canada; New Zealand has no alternative option. Britain must ignore the Remoaners and go for the only viable option; whatever the restructuring costs might be.

A Sad Picture of Government

The new, deliberately meaner, criteria for the definition of disability, and for assessing each individual's degree of disability have led to some tens of thousands of cars being taken away from their users. While a small proportion of the users may have been serious malingerers, most were in a position where the person's assisted access to a car made a very positive contribution to their lives; so the quality of those lives was diminished by the confiscation. No doubt, money was saved to the Exchequer: and thus the principal purpose of the changes to the benefits system was served.

So overwhelmingly important is the money-saving aspect of this story, that the genuine attempt of officials to create a system that does support those in abject need has been almost unnoticed. The government has again shot itself in the foot, by announcing that more people are in the motability scheme now than there were in 2010. Since everybody knows that the inexorable pressure of demography, combined with the increasing competence of the medical professions in enabling more people to live better lives for longer [despite the cash restrictions on the NHS], means there are more people in need of support every year. To make the level of support that is given to successful applicants 'less eligible' than it used to be is a deliberate diminution of the lifestyle of each recipient; for which the government is wholly responsible.

The government's excuse for all the cuts is that the deficit on the state budget is unsustainable, so the continuance of Osborne's austerity is inescapable. That fact must be set against the other: that all Osborne's bluster about a 'march of the makers', and about massive investment in infrastructure enriching the whole economy, and about a 'northern powerhouse', was simple moonshine. In seven years, the Conservative-led governments have done nothing of the slightest substance that would increase the real output of the economy and thus provide the wherewithal with which to provide decent social services and enough resources for each school to serve its pupils well. 'Economic Growth' that is led by more boozing and a greater consumption of imported clothes in each year is merely a statistic that shows how the economy is being depleted of viable resources. Just as there are more old and disabled people year on year, and more demands on the health service, so [thank goodness!] there are more children who should be able to contribute to society and to the economy in the future. The shoddy government says that more millions of pounds are spent on schools now than ever before; but even they do not pretend that the resource per child is increasing. The dire condition of every aspect of state provision is increasingly clear: and each successive government statement misses the real political point - quite deliberately - by quoting a fact that is ultimately irrelevant.

To change the focus, while continuing with the topic of the shoddy state of Britain's governance, I come to the Foreign Secretary. I understand that there are still those who are impressed by his reputed intelligence; and it is obvious that millions [not least, of Londoners who voted for him as mayor] are attracted by his personality. His faults and failings are brazenly apparent; and his many displays of ineptitude are greatly enjoyed; while they would be disapproved in a member of the royal family or Philip Hammond. His tendency to wade into complex situations [which he presumably understands quite well] with simplistic statements actually made him more appealing to those voters who were already minded to vote for Brexit. But now, as the high representative of HM government, he has made quite a fool of himself in a meeting of his peer group, the foreign ministers of the G7. The other ministers have taken the line that while it is highly probable that the Assad regime has used gas in recent weeks, that is not yet proved; and it may never be proved. Even the US Secretary of State has gone to Moscow with a much more conciliatory brief than that which Mr Johnson would have provided for him.

Boris has got himself into a hole, and should go on a long course in the use of very small tools in any sensitive excavation.

Monday, 10 April 2017

A Shabby Statement

The BBC is claiming a 'scoop' for the Panorama programme last evening, in which they showed - with no serious room for doubt - that in August 2008 the Bank of England, in the person of an Executive Director, put pressure on the leading British banks [through their senior executives] to instruct the members of their staff who reported on interest rates to the British Bankers' Association to hand in deliberate underestimates of the actual cost of inter-bank borrowing. The result of the banks obeying that 'advice' was that the London Inter-Bank Offer Rate of interest [LIBOR] as it was officially stated was lower than the actual cost of inter-bank lending. This was intended to give a signal to traders in general to regard the falsified lower rate as a 'benchmark' for their own trading in the coming days. Thus, it was hoped, some of the pressure would be taken off the banks at the height of the financial crisis. This was massively important, because trillions of pounds-worth of financial contracts, worldwide, used LIBOR as their reference interest rate.

The BBC struggled to make this complex story palatable to an untutored audience in a half-hour programme, but a clearly-evidenced incidence of attempted market manipulation was sufficiently well explained for the public to take the point.

The Bank of England then made matters vastly worse, by making a statement to the effect that the subject-matter of the programme had not been 'regulated' in 2008. Nobody suggested that the preparation of LIBOR had been 'regulated', either well or badly, by the Bank in 2008. The programme simply stated that the Bank had applied pressure to market participants. It was implied that the intervention had had a beneficial effect on the evolution of the crisis. The Bank's shabby little statement, besides being entirely irrelevant, drew attention to their willingness to deploy tangential language rather than answer valid questions.

For two centuries, it had been understood - and often written - that the Bank of England exercised great influence on financial markets by the raising or lowering of the Governor's eyebrow. The Governor of the Bank just needed to give a hint that some activity was approved, and some activity was not approved, for the closed community of the City [until the 'big bang' of 1968] to obey. Anyone who did not, was not a Gentleman and could be ostracised or even denied facilities by the rest of the market. The replacement of the gents by cads in the very short period of frenetic development in the wholesale financial market led inexorably to the crisis. By 2008 no non-verbal signal by the Governor or any of his team could influence the market: so the precedent had to be set of actually browbeating people on the telephone. It had to be done, from the perspective of the Bank: so it was done. It should frankly and simply be admitted.

Sunday, 9 April 2017

Slow Train to China

With considerable publicity, a goods train will leave the London Gateway today with cargo for China. The containers on the train will be conveyed via the re-opened 'Silk Road' to China. This will involve trans-shipment of the containers to different bogies to travel on the different railway gauges that will make it possible to describe the transport as 'direct' from London to a depot south of Shanghai. The first train the other way came to London a few months ago, and it is proposed to launch a regular two-way service twice monthly. Although this trip takes some 17 days, this is notably quicker than taking cargo by sea - which is much cheaper - and it is cheaper than air freight. Among the cargo items mentioned in the publicity are baby food and whisky: evidence of the growing market for consumer goods in China as the standard of living in that country increases.

There can be no doubt that the limited volume of goods that will follow this route will provide a balance of payments in favour of China; which is a part of the explanation of why the Chinese state has been so keen to secure a land-route to Europe as the situation in the middle east becomes more uncertain. Piracy has not been eradicated from the South China Sea, the Straits of Malacca or the Somali coast; even though Chinese and Indian naval forces have joined the international effort to ensure the security of ships, their crews and their cargoes. Large areas of the world are essentially lawless, and much of this opportunity for crime is fostered by the conflicts within and around Islam and Islamism. The geopolitical problems are increasing, and this is the context in which one should view the very heavy investment that China is making in militarising and [effectively] colonising the South China Sea. As more islets and atolls are built up into air bases and naval ports the sea becomes more secure for Chinese trade; but the USA and its allies view this expansionism by China as threatening.

There is an alternative view. When Britain controlled India and much of Asia, it was considered essential that the UK should maintain impregnable bases in Gibraltar, Malta. Suez, Aden, Ceylon [Sri Lanka] and Singapore. It was the surrender of Singapore, more than any dozen other events, that made it evident in the nineteen-forties that Britain had lost the ruthless drive that had created the Empire. The USA still requires Britain to prolong the maltreatment of the native islanders in order to maintain the total security of their base at Diego Garcia. The recent fuss over the sovereignty of Gibraltar has re-opened the issue of these bases, still strung around the world: Britain still rules in Gibraltar, St Helena, Ascension, The Falklands, Pitcairn and a string of non-viable dependencies around the world. Perhaps they could pay their way in a rebuilt security strategy for the UK, in the context of the global alliance of the US, Canada, Australia and New Zealand that automatically exists already. The Chinese know what they are doing: in a non-threatening way, maybe we should do the same.  

University Challenger

The audience of University Challenge has been mesmerised by the extent of the knowledge displayed by a Canadian entrant; and as the latest round of the quiz comes to its finale he is expected to shine most brightly. This all-time superstar of the show has been reported as expressing the intention to return to Canada, rather than pursue his former plan to study for a PhD in Economics. The reason he gave is that, instead of being allowed to get on with his own project, after finishing a Masters programme, he would have to submit to more courses [for which read, more indoctrination by the Econocracy] as part of the PhD requirement.He has enough knowledge and wisdom to recognise that this would be both a waste of his time and a challenge to his common sense.

Good luck to him in whatever alternative career he adopts!

Econocratic Darwinism

Today is Palm Sunday, the day when Christians recall the Bible story that one day Jesus rode on a donkey into the Jewish capital of Jerusalem. This was a deliberate enactment of a prophesy that the future saviour-king of Israel would do just than: ride humbly into town to claim his kingdom. He was greeted by ecstatic crowds, and hailed as 'King of the Jews'. Within a week the religious establishment had persuaded the occupying Romans to execute the troublemaker: then, according to the Christian account, Jesus "rose from the dead".

In an opinion poll published today, 23% of those who say they are Christian believers do not believe in the physical resurrection of Jesus as a normal human being. Some do not think it necessary to their faith for there to have been any evidence of afterlife; others believe that Jesus' followers might have seen a 'spiritual body' of some kind, or had an insight into the alternative dimension to which he had been admitted. There is a huge range of variants on which an acceptance of religion can be developed: and at least an equal number of reasons to reject the whole concept of faith in spiritual powers as manifested in each of the different religions extant in the world.

The rise of science in the nineteenth century appeared directly to contradict the very ancient account of the creation of the world that was brought into the Jewish scriptures as the first chapters of the book called Genesis. As the immensity of geological time became clear, the idea that a force or entity called God could create the material universe in a week, and the earth in a day, was seen as simply ludicrous. The sceptics went on to declare that if that was the whole starting point of the story, the fundamental reason to believe that God existed as creator of the world and its context, then it was all disproven in a minute of serious reflection. Christian apologists pointed out that even in the fourth century AD Saint Augustine had written that the 'days' in the creation story could not be days as humans experience them; and it is generally accepted [other than by extreme fundamentalists in the Jewish, Christian and Muslim communities] that the 'days' were epochs of potentially massive duration. If that point is taken, the sequence by which the material universe was created is broadly in accord in the bible and in the scientific account.

An increasing number of scientists and other intellectuals decided to adopt the position that the simplistic rejection of the bible's concept of 'days' enabled them to move free from all the restraints implied by religious teaching. They found many other philosophies that asserted rules for the conduct of life, some of which imposed no penal sanction on transgression of the principles set out; some individuals decided broadly to follow their chosen code of ethics [which they could construct and adapt for themselves], and others declared themselves free from all such constraint. They were all subject to the law of the land in which they lived: and many of the laws imposed by states were based on [or sanctioned by] religious assertions. Hence during much of the century and a half since Darwin's and Wallace's simultaneous  publication of the theory of evolution, massive efforts have been made to remove those aspects of law which had been derived from religious dogma or admonition.

It can be no surprise, therefore, that the creators of the new pseudo-science of Economics were keen to bring their own quasi-Darwinian approach to their subject matter. This tendency has been carried on into the present day, culminating in the dogmas that the Manchester dissidents from the subject have dubbed Econocracy. While Physics and Chemistry have progressed mightily in describing and exploring the material universe, pursued by many experts who are privately Christian and many who have no religion, Economics has conspicuously failed in its attempts accurately to describe the economic scene or to prescribe policies that are beneficial to humanity. The simplistic central dogma of Economics, developed from Adam Smith [1776], that humanity is ultimately and absolutely driven by self-interest, is vitiated by the fact that most people for most of the time can not discern their optimum self-interest and do not have the intellectual or material means to pursue it. Nobody in Britain can deny that the Economists' advice to government is despoiling the health service, schools, and public services generally; while the average individual is no better off that he/she was in 2006.

The year 2006 is significant: it is when the 'Economics profession' should have seen the looming disaster of the financial crash, and recommended steps to avert it: it is when the abject failure of the subject was set before the march of History and found to be wanting.

The only catastrophe created by Economics that is comparable to the 2007-8 crunch is the disaster of 'privatisation' of the productive assets of the former USSR in the early years of the Yeltsin regime. Mostly-American Econocrats advised the post-soviet government of Russia to create a shareholder democracy by giving the economically-untutored, oppressed, heavy-drinking workers vouchers representing share ownership in their factories. Quick-thinking individuals established banks to fund the purchase of these vouchers: so that the workers exchanged their vouchers for ready money that was quickly spent; and so the oligarchs emerged. Most of them remain, solidly in possession of their ill-gotten assets; but they have been 'tamed' by President Putin, who has become thereby an unshakable national hero. While the western press reviles him as the principal support of the evil Assad in Syria, he has become in Russia a devoted son of the resurgent [highly conservative] Orthodox Church. In that capacity he will conspicuously be taking part in Easter ceremonies in the coming days.

It is indeed strange that Putin's power comes principally from popular support. He was prepared, in a very limited way, to target enough oligarchs to bring the rest to submission, and thus he could begin to redress the unmitigated evil caused by the Darwinian exploitation of the people by the predators in Russia in response to the Econocrats' well-intended idiocy.

Nothing on this planet is so simple as it seems...

Saturday, 8 April 2017

Tragic Targets

At the start of what promises to be a most pleasant weekend, I offer just a sad reflection on the way our country, the United Kingdom, has been cheated by its governments time and time again, in many spheres of life.

Just to look at a few of the targets set, with the approval of parliament and allegedly in the general interest, we see:

Targets for treatment in the Health Service being set, slipping, then being breached, then being abandoned. We all know why this sad progression has taken place; because the 2010 and 2015 governments have set conflicting targets for the reduction of the rate of increase of public debt. So not enough money has been given to the NHS: simple!

Targets for the replacement of dirty petrol cars and trucks by 'cleaner' diesel vehicles were set in the light of the most obvious toxic emissions from the two types of vehicle. So superficial 'clean air' targets - conducing to the target to limit the emission of greenhouse gasses - have been met; but now it is generally accepted that other emissions from diesel engines are much more damaging to human health: so diesel is demonised. The Mayor of London is asking the government to part-fund a crash programme of mitigating penalties on the drivers of diesel cars taken into the most polluted areas of the metropolis. Some hope of his getting that past the beancounters in the Treasury!

Targets for the replacement of coal firing by the use of biomass in power stations were seen as a step towards meeting our 'green energy' target, and thus as a step against climate change. In the event, to emissions from such units are recognised to be unhealthy; and Britain can not meet more than a fraction of the electricity generators' demand for wood-chip: so imports of materials that produce toxic emissions add to our balance-of-payments deficit.

Targets for the use of home-grown biomass, in particular low-quality wheat and other cereal crops that the millers do not want [they'd rather import better quality grain, despite the negative effect on the balance of payments] temporarily give farmers a source of - EU subsidised - income that they will loose after Brexit. Needless to say, the particulate matter in the emissions from the plant that burn this fuel are dangerous to human and animal health.

And so on, endlessly....

Thursday, 6 April 2017

China-US Trade

The blogosphere is already clogged with Syria, and with the question how genuine are President Trump's sentiments about the appalling deaths of 'beautiful babies'. I do not doubt the sincerity of the US Populist: it is through the assertion of such basic American backwoods sentiments that his bizarre candidacy brought him to the White House.

Now the President is sleeping - or, perhaps, tweeting - in Florida, while his distinguished guest prepares for the second day of their get-to-know-you encounter. Both leaders have had intense briefings which have prepared them to start their discussion free from the propagandist piffle that has massively been used in the USA to present China as a ruthless and exploitative economic enemy of the USA. They begin from a mutual recognition of the essential economic facts, which are set out also in my text, NO CONFIDENCE: The Brexit Vote and Economics. 

China is the biggest creditor of the USA. Many billions of the dollars that China took from US firms in exchange for the goods that rising Chinese exporter firms supplied as imports to the USA were spent on buying debt certificates issued by the US Treasury and by other US agencies. So, far from denuding the US of goods, or buying the ownership of US brands on a heroic scale, the Chinese made possible the deficit spending of the Clinton, Bush and Obama regimes as factories and mines faced bankruptcy within the rapidly changing US economy. Welfare could continue to be paid. Some modest infrastructure schemes could be carried out. The US military continued to be funded.

Mr Trump rightly deplores the present state of the US rustbelt, but the simplistic equation that has been made between Chinese imports to the USA and the decline of US heavy industry [in particular] is unsustainable. As many US and international commentators point out, more US jobs have been lost to robotisation and automation of plant within the US that to direct Chinese imports: and where there are conspicuous cases of dumping of products at less than cost price - as has happened with Chinese steel - the US has not hesitated to apply crippling tariffs to the imports. The Chinese have been massive importers of goods to the USA since 1990. By exporting to the US the Chinese have acquired the money with which to buy access to raw materials in Africa and Latin America, and to import machinery necessary to their industrialisation process, as well as helping US governments to maintain their spending on US citizens. Now they are well advanced in the second and third stages of economic development, by which the living standards, thus the real wages, of Chinese skilled men and women are rising rapidly. As a result of that increase in wages in China, Chinese goods are no longer dirt-cheap by comparison with US production. President Trump's wish to see a more level playing field between US and Chinese production is well on the way to accomplishment.

Meanwhile, the USA retains its predominance in intellectual capital; what my book calls ik. Chinese brands have not yet hit the world's markets as Japanese brands did in the nineteen sixties and Korean brands did in the nineteen eighties. China has resisted the mass selling of all western brands in China so that circulating capital can be kept in China to fund the development of Chinese productive powers and the slow emergence of dominant Chinese brands in the home market.

The parameters of the discussion between the two presidents today are very far different from popular press concepts; and there is no reason why the talks should end in bitterness or rivalry.

Getting Clearance for Brexit: Debt or Dowry?

There has been a crescendo of silly talk in Strassbourg and Brussels in recent days, as various spokesmen - nearly all men - have sounded off. The contempt of European Parliamentarians for democracy has been strongly evident. The lobby demanding that Britain should be 'punished' for allowing the electorate to decide the fate of the country has made it clear that a major motivation on their part is to scare other countries from even thinking of leaving the EU. If a club thinks that its survival depends on scaring the members about the penalties for leaving, what sane or decent person would want to be a member?

Meanwhile, it is becoming clear that there will be an argument about the bill to be presented by the UK. A pragmatic British view must be, that we will pay all our debts and obligations; with delay only for so long as is necessary to agree on the currency for settlement and on how that sum may be inflated or discounted as a result of currency movements and inflation during the settlement period. There should be no argument about the quantum, and discussion of the post-settlement adjustment is essentially a technical matter.

The argument can only become serious if some of the eurorats who want to squeeze a dowry out of Britain, over and above our debts, are able to get that nonsense onto the table. It must be resisted absolutely.

Tuesday, 4 April 2017

Woodchip, Wheat and Diesel: A Trinity of Evils?

Drax, the huge sold-fuel power station in Yorkshire, was partially converted to burn woodchip in place of coal some years ago; when it was an acceptable argument with the lobbyists against fossil fuels to claim that it was 'green' to burn wood, because trees could be planted to replace those that went up in smoke. This week it has been announced that the company that owns Drax has bought a bankrupt American wood-chipping company to ensure future supplies. Yet some months ago there was a major news item to the effect that the atmospheric toxins produced by wood-burning were thoroughly bad for accelerating global warning and for their detrimental effect on human health. Against this accumulation of evidence that the place should be shut down at once, is stacked the fact that the non-planning of Britain's energy supplies means that the output from Drax must be assumed to continue for several years, at least: presumably to the continuing [or possibly, even the accelerating] detriment of people and of the planet.

Meanwhile, the government is considering altogether banning the continuing use of wheat as biofuel. As with woodchip, wheat used to be seen as 'renewable' because there could be a crop every year, while trees took decades to replace. Hence some farmers whose land and climatic endowment made their wheat unsuitable for milling to modern standards could still get EU subsidies for growing low-quality wheat which could then be sold profitably to the power industry. Now, with the possibility that the government will not afford subsidies to farmers after 2020, the economic case for biomass is vanishing: and meanwhile the evidence against burning the stuff is mounting, on the same grounds as with wood. Burning biomass was never obviously ecological sense for the planet, and recently the evidence of human detriment from the atmospheric toxins is incontrovertible.

So up pops the Mayor of London, the universal poser S Khan, with his announcement that older vehicles with diesel engines will be surcharged up to £24 per day within the central London congestion-charge area [which will inexorably be extended in area]. This is in accordance with all the best advice as to the catastrophic impact on human health and longevity of the substances released into the atmosphere by diesel burning engines. How different is this scene from a few years ago, when tax and other benefits were given to people who opted to buy diesel-engined vehicles because they were seen as more ecologically acceptable than straight petrol vehicles. Mrs May has speedily been on the case, 'suggesting' [or 'hinting'] that some way may be found of compensating individuals and small businesses whose obedience to the request to buy diesel now puts them at a disadvantage. Not many small businesses, faced by rising living wages and crippling council tax demands, can afford to change their vehicles more quickly than they had expected: so the impact of a daily charge of even £10 would be potentially ruinous.

It is clear that the stagnant economy can not support a whole series of corrections for bad policy decisions made in the recent past; on top of the calamitous underestimation of the needs of the health service and the education system. The moment of crisis is brought closer by every new manifestation of the problem: second-rate science informing incompetent policy making in an environment of economic austerity is bringing disaster closer by the day.

Monday, 3 April 2017

Xi and Trump: a Celebration of Mercantilism?

In a couple of days' time, a large Chinese delegation - led by President Xi - will arrive, not at the White House in the US Capital but at Mr Trump's 'resort' in Florida. Reminiscent of Emperor Tiberius's pleasure palace on the Dalmatian coast, this huge investment in hedonism is both an advertisement for Trump's business success and a clear indicator of his taste: which is self-evidently popular with many rich Americans.

Thus Mr Xi and his team will have a marvelous visual aid as they make their assessment of the new US President. Their preliminary briefings have told them of his career, his experience of setbacks as well as successes, of the explanation for his teetotalism and of his reputed sexual history. They have also studied his strangely non-political career including his highly individualistic, largely self-funded campaign for the Republican nomination in the General Election. And they will be acutely aware of the extent to which his much-trumpeted economic policy - of putting America first, and ditching all inhibiting policies and even treaties - resonated with the depressed and deprived former Democrat voting trade unionists of the depressed ex-industrial regions. The economic development of China over the past couple of decades is the exact opposite of the dereliction of the coal and steel producing centres that used to dominate much of the US economy; and the rise of cheap Chinese exports onto the world market is a very conspicuous component of the explanation for the rise of the rustbelt.

China has been so hugely successful, in major part, by remaining a centrally-planned, command economy, While paying lip-service to their application to the World Trade Organisation and to other international agencies which are imbued with dogmatic market economics, the Chinese state has remained essentially protectionist. Thus it has grown. Meanwhile the United States has allowed the Econocracy to dictate the parameters within which policies have been formulated, and the conspicuous results of those policies are visible in the mid-west and in other depressed zones across the USA. Mr Trump has not been able to get his immigration-limiting decrees through the US court system; and his Liberal enemies have gloated about that: but that stumbling block has in no way vitiated any of his more extravagant promises and his most frequently-asserted policy intentions.

This weekend's meeting between Trump and Xi brings together people with very similar policy intentions, in general: but the success of Trump's policy must be detrimental to Chinese exports to the USA. Compromise must be found. Over recent decades China has become by far the largest holder of US debt, which is quite a big bargaining chip. The recent statement byTrump that if China will not restrain North Korea the US will do so, unilaterally, provides another bargaining chip.

We are in for a very interesting few days. There will be no 'winner' as between Trump and Xi; but we will know next week whether they can 'do business' or if there is to be a new cold war.

Brexit and Collateral Damage

Heads of terms for negotiating Britain's status in relation to the European union are simply in draft, yet a former leader of the Conservative Party is talking about the possibility - however remote - of military confrontation between the UK and Spain in order to resist any preemptive Spanish move against the sovereign integrity of Gibraltar. Was such a reaction expected by the President of the European Council when he presented his list of conditions for Britain's separation from the Union, which he declared must be met before future trade relations can be discussed?

If he did not expect it, he is deeply ignorant of British history: but there is no reason why a Pole - who carries the burden of an extremely complex and painful history - should know or care about the residual consequences of the Treaty of Utrecht which dates to the second decade of the eighteenth century. The Poland that we see on a map of contemporary Europe was configured only in 1945, in consequence of the Yalta and Potsdam Conferences which were used by the winning side from the Second World War to resolve the most outstanding legacy questions from the conflict. Germany was meant to pay the USSR dearly for the murder and destruction that had wantonly been visited by the Nazi state on Soviet territory. The size of Germany was to be reduced, by almost 40%; and the border areas where German-speaking minorities in France [Alsace and parts of Lorraine] in Italy [South Tyrol] and in Czechoslovakia [mainly the so-called Sudetenland, but also areas of Slovakia] where minorities of pan-Germanists had hoped to be returned to Fatherland in the event of a successful outcome to the war were firmly settled in favour of the occupying democracies. The Sudeten Germans were to be expelled, and this was carried out over the following few years. More dramatically, the whole of East Prussia and Silesia, and most of Pomerania were to be cleared of German-speaking inhabitants. Their homes and public assets were to be taken over by Poles, who were themselves expelled from the west of Ukraine and Belorussia in order to enable the USSR to expand westwards. Massive inhumanity was shown to the German expelees, and the Poles who were resettled also underwent huge privation.

Many German families resent the loss of farms and homes that their ancestors occupied for centuries, as do Poles whose ancestral homes in around cities like Lviv [Lvov to Poles] are permanently lost. Through the years of the iron curtain and the cold war it became ever more clear that any attempt to reverse the brutally pragmatic frontier changes that were imposed in 1945-50 would bring new conflicts. This fact was explicitly recognised when the German Democratic Republic was allowed to merge into the Federal Republic without any great European Congress [as had been held in Vienna and in Berlin in the nineteenth century] to get everybody's explicit buy-in to the established frontiers and population distribution.

Spain is not proposing to expel Gibraltarians in favour of Castilians. It is not even explicitly claiming a transfer of sovereignty; though that is known to be a long-term objective. The issue seems so small and so unimportant, to peoples whose experience within the past seventy years has been massively traumatic, that most Europeans would simply nod the point about Gibraltar through as the terms of negotiation were discussed. Perspective is massively important in these matters.

Sunday, 2 April 2017

Language and Political Economy

It is notable that the President of the Council of the European Union - a Pole - gave his announcement in response to the British notice of withdrawal from the EU in English. English has become the de facto common language of the Union, and it will obviously remain so when the UK [with or without Scotland and/or Northern Ireland] has left. English will remain - alongside Irish - the official language of an EU member state, and this will legitimise the continuing use of English in the Councils and the counsels of the Union.

English remains [reluctantly] accepted as an official language in India, South Africa and many other African states: and it is, of course, the official language of the USA, Canada, Australia and New Zealand. Many people have noticed the paradox that English is at its most powerful ever as an international language, at the time when millions of 'remoaners' believe that Britain is cutting itself away from an advantageous position in the continent from which the British Isles cannot be removed. But English is predominantly the language learned by Chinese, native Arabic speakers, and Latin Americans. In all of this, the British state has made no attempt to emulate the French who have tried to impose their official version of French on the Francophone world, and thus helped to maintain those aspects of the language which make it difficult and uncongenial for aliens to learn. Only twenty years ago there was widespread recognition that French had been the language of diplomacy for several centuries, and an expectation that this might continue: it did not.

I draw hope from the eclipse of the French language that the pseudo-science of Economics can quickly be replaced in common discussion, worldwide.

The replacement must be valid, of course: and what it presents must be consistent with the facts. So here I will make a few indicative points in that direction. First, as to Britain's decision to leave the European Union. This is perceived in the UK overwhelmingly as an economic issue. Mrs May's letter of withdrawal is clearly based on the assumption that a 'divorce' from the political entity can be secured [perhaps for as little as £40 billion] and then a place for Britain in close proximity to the free-trade zone of the EU can be found that leaves the UK free from the political and judicial institutions of the Union. Mrs May acknowledged that the Irish issue needed to be resolved, without suggesting how that might be achieved [and probably in ignorance of its complexity]. President Tusk completely reversed the emphasis of the negotiations by raising the purely political issue of Gibraltar as one of the preconditions before the economic talks can begin. The intractable polar opposition of the opening British submission from the starting point of the European integrationists has put the UK in a position from which it becomes a petitioner that is open to any historical grouch that any of the other EU member elects to advance. The continentals see their club as a political entity first and foremost. Economic issues are - and always have been - secondary to the political imperative. The mass of the British, with their cheerleaders in the popular press, have never seen this: hence came the result of the referendum in June, 2017. The Brexit talks are going to be massively more difficult than the British establishment anticipated; and may never end satisfactorily.

The world is increasingly and rapidly changing, from one where individual sovereign states each strives in their own way to reach free-trade agreements with other states to one where hegemonic blocks of at least 300 million people pursue mercantilist policies: with the objective of protecting the technology and the jobs that have developed and are developing within their territory. Mr Trump will have to reach an accommodation with Canada before his trade policy is set; the open land frontier between the two states is not susceptible to the construction of a wall. He will then confront the EU, China, India, the Latin American economic area; and face the question of how his successors can compete with the outputs from entities with larger populations than his own [even after he recognises that he must reverse his policy towards Mexico, and restore the North American Free Trade Area to its existing place in the US map of the world economy]. To bring his trade bloc to a size where it really can face up to China and India - as they will be by 2030 - his successors will need more territory and natural resources: and more people, better technology, more real wealth. The United Kingdom has already been offered first place in the queue for a new economic relationship with the USA. Australia and New Zealand will receive similar offers: a concept familiar to Winston Churchill is about to be reinvented.

Saturday, 1 April 2017

Europe Reverts to the Norm

Within the expensive modern buildings in Brussels, Strasbourg and Luxembourg City lurks the spirit of the old Europe. That same spirit is seen in the Moscow Kremlin, where Mr Putin receives visitors in heavily restored tsarist palaces with no less pomp that was evident when Nicholas II received the Kaiser.

The buildings in Brussels are massively costly to maintain, and the army of deluded eurorats that operate within them is even more expensive. Britain has paid the second-biggest share of the EU's central budget, after Germany, ever since Edward Heath conned the country into joining a 'market'. When Britain's net financial contribution is removed - in just two years' time - the financial squeeze on the entire set-up will be catastrophic. France's share of the cost is much less than Britain's, a difference inexplicable in terms of comparative national income but easily understood in the context of the nineteen fifties when Federal Germany was willing to accept almost any burden to demonstrate the good faith of the newly-democratic regime in wanting to submerge itself into a wider federal Europe.

The British electorate sleepwalked from the European Economic Community into the European Union during the prime ministerships of Mrs Thatcher and Mr Major. Thatcher had no more idea what she was talked into doing in the EEC than she did in acquiescing in the destruction of British industry. John Major never did anything accidentally: he was convinced about 'Europe', about the benefits of integration. He was, therefore, extremely sensitive to the passion with which his opponents within the Conservative Party, especially among parliamentarians, applied to their euroscepticism; even though they never had any effective appeal for the wider population. It was only the rise of the United Kingdom Independence Party - largely among the disillusioned denizens of the formerly-industrial depressed areas of the north and the midlands [who didn't have their own nationalist independence movements] - that scared David Cameron into the fatuous promise of a referendum on the EU that almost certainly swung the 2015 general election in favour of the Conservatives.

The two issues that voters cite as their reasons for wanting to be out of the EU are 'immigration' and 'sovereignty'. Immigration is the most sensitive matter, and I will refer separately to that factor in future blogs. Sovereignty - making our own laws, and enforcing them in our own way - is easy to understand, and it is popular. It is growing in popularity on the continent, where the Russian people solidly support Putin, despite his thuggery; and a strong minority of Germans will almost certainly put AfD into the Bundestag in this year's nationwide election. That is not to say that chauvinism will become the most powerful political force, either in the still-prosperous north of the EU or in the depressed south where there are opportunities to export people northwards and the hope for cash handouts eventually passing from the north to the south.

Yet Spanish chauvinism has been allowed to intervene in the Brexit talks. It is no surprise that Spain has placed the well-pickled old chestnut of Gibraltar on the table; just as Spain is expected to try to veto any suggestion of an independent Scotland having a soft shoe-in to the Union. Ireland and Spain have been centuries-long allies [often clandestinely] in opposition to Britain. Just as the demands of the Republican faction in Northern Ireland for the Irish language to be given protected status might stymie the  resolution of the border issue in Ireland [and thus derail Brexit] so the Spanish demands on Gibraltar could have the same effect. By highlighting both these old antagonisms as early-stage issues in the Brexit saga, President Tusk and his advisers have found the surest way by which the vicious old Europe of frontier wars and imperial ambitions can enter the twenty-first century: with devastating effect.

It seems pretty clear that the British Brexiteers did not allow for any of this. They do accept that they are mandated to lead the UK out of the Union. In facing up to the activation of Article 50, the Union seems to be willing to overset sixty years of integration by introducing hard borders in Ireland and Iberia: whether Mrs May will be ready to deal with that, even in two years' time, is a fascinating question.

It was well said that the nation that forgets its history is bound to repeat it. Most Britons have never heard of the Peace of Utrecht [which gave us Gibraltar], and very few Britons has ever tried to understand Ireland [which largely explains the tragic history of the two islands' relationship]. Thus we have been pitchforked into reliving that history, farcically, painfully and for real.

Friday, 31 March 2017

Day One and Brexit has Gone Crazy

President Tusk of the European Council has given a first response to the letter from the British Prime Minister notifying him that the UK is to withdraw from the Union.

The circumstances in which this response was issued are exceptional: the remaining 27 EU member countries are under huge pressure [from the eurorats in Brussels and in their own establishments] to assert that they are more united than ever before, and more firmly set on the crazy concept of 'ever-closer union'. This cannot last long. The divisions between countries on the redistribution of the wealth of the continent from the north to the south will become more absurd and intractable. Those countries which held out against 'Merkel's madness' over sharp-elbowed thugs from central Asia being admitted as 'refugees' are not going to be bullied into changing their decisions. The next release of mass migrants from Turkey into Greece will be followed by bitter conflict between the declining number of states that are willing to take any refugees and the majority of countries that will refuse to take on unsustainable burdens and significant risks. So any assumption that the Union will remain a sold bloc of the 27 remaining member-states will be proven fatuous while the two years allowed for the Brexit process inexorably tick by.

It would be insane of British ministers [or interest groups] to try to pursue a 'divide and rule' policy towards any of the 27 remaining member-states while the inevitable fissures between them widen spontaneously. The UK must seriously maintain its existing policy of dealing with the Union, as such.

Meanwhile, President Tusk has shown his utter naivete in including a resolution of the Irish border [between the Irish Republic and Northern Ireland] as one of four issues to be solved before any future-oriented talks can begin. In one of the most perceptive books on British [and Irish] history that has been written, the authors [Sellers and Yeatman] point out that for 800 years the British have never been able to solve the 'Irish Question' - though many times they have genuinely tried to do so - because 'the Irish always change the question'. The present benighted condition of Northern Ireland surely precludes any sensible outcome being achieved. There is no sign that a power-sharing executive can be re-established in Belfast. There are very clear signs that the Irish Republic has no wish to absorb Norther Ireland while it is so riven [even though the north voted narrowly to remain in the EU]. The idea that any sort of patched-up agreement on the Border could be achieved in a few months shows a profundity of ignorance in the Brussels hierarchy that will bedevil the whole two year process. If the effective determination of the future of the Irish Border remains a precondition, the talks cannot succeed.

The other three preconditions are, in effect trivial. Two of them are insulting to Britain: resting on the assumption that the UK might act like some of the other EU member states, which lied about their economic health in order to be admitted to the eurozone and evaded payments that were due under various obligations. On the issue of paying what is due, the UK has always paid what it has owed: so the computation of what Britain owes to the EU, net of what is due to come back to Britain from the EU, is a simple matter of accountancy.  Then HM Government can be trusted to pay up, according to the agreed schedule. Honest accounting and auditing are not features of the usual repertoire of the European Union, but they can be achieved in a matter of months.

Similarly, in respect of the next condition, the UK is the country where modern contractual law and arbitration were developed, and the maintenance and strengthening of financial contracts between institutions and individual states is in the business DNA of the British. The satisfaction of that precondition for negotiation should be easy.

Again, millions of people, who have tens of millions of supportive friends and relations, are spread across the EU in countries other than those to which they are 'patrial' [i.e. attached by birth]. There is a massive consensual wish to regularise existing expatriates' status and to take a sensible view of the movement of people into and out of a post-Brexit Britain. I have mentioned a couple of times already that Mrs May has a hang-up about her personal 'failure' to reduce immigration when she was Home Secretary: she should take note that the economy and society would have been weaker than they are now if those immigrants who have contributed had never been here. If the Irish issue allows the negotiation of preconditions to get to the point about 'freedom of movement' of people; a sensible compromise can be reached, probably resting on the free movement of patrial Europeans who have jobs to come to or sufficient means to live in the UK without burdening the state.

EU officials have stressed that the Brexit process will be 'difficult' and have foreshadowed serious disputation. This is big talk from small people, who are enjoying the feeling of power that comes from speaking on behalf of many millions of people who have no say in [or understanding of] the coming negotiation.

Thursday, 30 March 2017

The latest British news

It is just seven-thirty [am] and the bad news has piled up.

The British military is warning that inadequate provision means that the already depleted-armed forces are to be further hollowed-out: including a major reduction of the number and effectiveness of the Royal Marines.

Care homes are increasing the 'tax' they impose on patients who have sufficient income to pay high fees, so that they can subsidise the larger number of people paid-for by local authorities. So those who have been provident [and, perhaps, lucky] pay through the nose for identical services to people funded by the state.

The NHS is going to make up a small proportion of the shortfall in Accident and Emergency departments and in the diagnosis and treatment of cancer by cutting funding [= lengthening waiting lists] for 'non-urgent' treatments, including joint replacements which relieve people from years of agony. A couple of days ago the NHS announced cuts in what the sick can get on free prescription; and calls are getting louder for extra taxes to fund the Health Service: regardless of the fact that National Insurance has been levied for that purpose [but appropriated elsewhere] since 1947.

And the National Living Wage is being increased. This means that employers must pay more per hour for labour on the statutory minimum pay; and it is expected that many firms will reduce the number of hours for which they employ people so that the total wages bill stays the same [or may even be reduced]; with extra burdens falling on the remaining workforce. It is noted that this increase in wage costs, combined with announced increases in business rates, will drive a significant number of businesses into bankruptcy.

Ministers are insisting that state funding of many activities is being increased: they know the increases are insignificant. They won't have the stamina to do this indefinitely; especially as the nation becomes bored and irritated in equal measure as the Brexit negotiations drag on towards unsatisfactory conclusions. At least, they chose to stand for parliament and accepted the Prime Minister's job offer: they deserve all that they will get!

An Economy that Works for the Econocracy

In my obligatory reference to the Brexit movement yesterday, I reported how Mrs May stressed the need - as she sees it - to build an economic and social system for 'everybody': in this generation and the next. No democratic leader has deliberately offered economically and socially divisive programmes in the past half-century; though the consequences of many well-meaning notions have been economically disastrous and socially sub-optimal: so she is saying nothing new, though she seems to think that she is saying it in a new way.

I went on yesterday to express the view that the Brexit negotiations are from now on - at best - the second-most important issue facing the British government. The most important issue is the dire state of the economy, which gets more precarious by the day. The economy does not 'work for everybody'. The general standard of living, taken across the whole population, is still lower than it was in 2006: Britain and Greece are the only EU states of which that depressing fact is the case. The only people who benefit from the prevailing economic policy are the Economists who get a living from providing the dogmatics, the policy details and the superficial 'explanations' whenever targets are not met or policies fail.

As frequently has been mention in these pages, the government's one great claim to economic 'success' is that 'economic growth' is higher than in most other formerly-industrial countries. This is impure fantasy. The 'growth' of the British economy is calamitous, because it reports the quintessential fact that consumers - ordinary people, who have squeezed real incomes - collectively borrow more money to maintain their spending power week by week. More and more of the borrowed money each month is spent on imported goods, so it does nothing to raise industrial employment in the UK; while it increases the balance of payments deficit. To cover the deficit, Britain as a whole has to borrow from the rest of the world, and individuals and companies have to sell their assets in the UK to foreigners. The result is that foreigners own more material and financial assets in the UK than they did before.

Economists and journalists blithely write about consumer spending as the 'engine' that drives economic growth [most of the time, carefully ignoring any reference to what actually is growing]. The latest figures issued by the Bank of England showed that total borrowing by British consumers in February 2017 was 9.3% higher than the total in  February 2016. This was after a more modest increase in debt between January 2016 and January 2017, at 8.6%. The February, 1917, figure showed the highest increase in 11 years - the period since the height of the financial bubble that ended in the crash of 2007-8. Households put £600 million more on their credit-card debt in February, so that at the end of the month the total that they owed was £10 billion more than it had been in August 2014. The credit-card debt total had risen to £63.7 billion by 1 March 2017. The Bank of England's Financial Policy Committee is becoming scared by these figures, and the Bank's Prudential Regulation Authority is being set the task of checking that the banks are being rigorous in applying their own rules to avoid customers over-extending their borrowing; relative to their ability to service their debts.

Meanwhile the banks and other credit-card providers seem to be confident that they can continue the current rate of credit expansion, and are competing with each other to attract customers by offering them several months of interest-free credit if they will transfer their 'balances' to new providers; which encourages them to borrow more during the interest-free period. As the number of mortgages approved by the lenders for house purchase continues a slow decline, people show no disinclination to slow down the rate at which they stuff their wardrobes and their bellies with mostly 'unnecessary' consumer items. This can only end in catastrophe.

Wednesday, 29 March 2017

Mrs May wraps her damp squib in platitudes

Theresa May has taken the most emollient line possible for her in the presentation of Britain's Brexit notification to the European union, and in her explanation of her position to the House of Commons.

Arch-Brexiteers should take warning: the tone for the discussion has now been set, and on a first reading of her official letter it is clear that the compromising component of the government has predominated in the discussion.

In the wordy statement in the Commons, doubtless the product of a small army of speechwriters,  the Prime Minister repeatedly referred to the government's obligation to future generations; which made a 'hard Brexit' and a leap off the cliff into the unknowable territory of a future without an agreed relationship with the EU equally unlikely. The possibility of an extended 'implementation period' is scouted from the first, and will almost certainly become a reality.

One interesting aspect of the coming talks derives directly from the bloated bureaucracy of Brussels, to which the EU lead negotiator M Barnier is closely affiliated. At a date before 2020, Britain will stop paying in to the ongoing costs of the fat cats. Britain must accept obligations to pensioners and for EU debts that have been incurred with British assent in the past [and during the negotiations]. But Britain has no obligation to pay for supposed services and facilities that it will not access after the date of Brexit. So either the EU machine will have to be slimmed down by the break date or the remaining 27 members will have to pick up the tab for any wanton waste. Britain can fairly be charged a share in the redundancy costs of any eurorats who are to be 'let go', and other adjustment charges that will be incurred up to the date of the rupture.

This will be a delicate negotiation that must in the end rest on a truthfully computed set of accounts: which is something the eurorats are not used to facing. Britain must insist on it being completed, and must be willing to pay the UK's share in full. M Barnier has indicated that he will ask for more, some sort of penalty or fine on Britain for having a residual belief in democracy: any such nonsense must be exposed and resisted intransigently.

Mrs May has indicated that her approach to the EU negotiation will be fair and rational. It is therefore sad that she has linked this with a great deal of fantasising about building a fairer and better society that 'works for everybody' in the UK. Her government is doggedly continuing with the Osborne austerity proposals, which will reduce the quality of life for every man, woman and child in the country. As the Brexit negotiations drag on, social discontent about hospitals and schools and other public provisions will increase. The government will be more and more massively unpopular; and Brexit will more and more seem to be an irritating side show alongside the increasingly urgent crises that affect ordinary lives.

Brexit is important, but from today it should be seen as the second problem with which the government should be concerned. Tragically, they have no wish or capability tackle the big issue. Thus it will feature more an more prominently on this blog; from which Brexit will certainly not disappear.