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Sunday, 30 April 2017

Theresa the Obscure

Our Prime Minister seems to be under the delusion that she can con all of the people all of the time until the coming election. She has revealed nothing of her plan for negotiating with the European Union on our country's exit from that corrupt and - now, apparently - vindictive club.

She has offered no indication of the Treasury's estimate of what would be a fair exit price; yet such a computation must, by now, exist. It would be sensible for her to indicate how far she would be prepared to flex that sum in order to end that potentially tedious technical discussion quickly.

More importantly, apart from indicating that there are 'red lines' in the areas of immigration and the restoration of all UK courts to national sovereignty, she has shared nothing of materiality with those whom she is asking to vote for her. Amid a cacophony of trivial noise, it appears that she still wants to count international students as 'immigrants', which would be devastating to several good universities as well as to some of the institutions of low-level aspiration that should never have been designated as universities. The devastation would not just be financial, but would greatly impoverish their access to talent and the positive aspects of their diversity.

The EU has made it clear that they want the UK to concede that European courts could rule on cases involving EU citizens in the UK indefinitely: there is a short answer to that "Rule away, but no British court will enforce alien law in the United Kingdom." Mrs May has offered no significant guidance on this point: or any other.

These are just two items in a long list, where the Cabinet's thinking - it it exists - should be shared with the electorate. We should repose no confidence in obscure hints, and put no trust at all in anybody who promises 'strong leadership' into a black hole..

I am going to buy a lottery ticket this week, in the hope of winning enough money to mount a national campaign advising my fellow citizens not to vote for 'the woman with the back box in the place of an explicit policy' - or maybe she's the woman with the blank mind?

Saturday, 29 April 2017

Collaborative Autarky: Trump Encounters Common Sense

In the last few days the world's media have latched onto Donald Trump's frank admission that he finds the job of being US President harder, and more demanding, than he expected. When confronted by facts he has followed the axiom set out by Lord Keynes, which can be rephrased: 'if the facts that I now recognise are not as they seemed previously, I must change my mind to fit the facts'. Thus NATO is no longer redundant, China is not a strategic enemy but the best hope for dealing with North Korea, it might not be a good idea to destroy the North American Free Trade area, and Britain is not now at the front of the queue - or in the queue at all - for a special trade deal with the United States. What Trump said on the campaign trail is rapidly being adapted to the realities of power.

Nevertheless, some of Donald Trump's fundamental beliefs will remain; and high among these is the mantra that the US must only consider the interests of the USA in forming its policies on tariffs and trade, and the movement of people into the USA. Economic policy based on looking after the national interest, above all other considerations [such as, supporting democratic regimes around the world], is known as autarky. The word was much-used in the early years of Hitler's Reich, as shorthand for the highly nationalistic economic policy that was pursued, before the utterly destructive imperialism that was implemented in Central and Eastern Europe brought in forces from the rest of the world that were ultimately sufficient to destroy the whole rotten structure.

Mr Trump is in the process of learning that it may be feasible to build a wall along the Mexican border, and contractors are entering their bids to become potential builders, but the cost and complexity of the task will almost certainly lead to its abandonment. This will be in line with a change of heart on the whole issue of borders within North America. The US birth rate is not sufficient to replenish the workforce, even in an era of robotisation. Not many Mexicans are Muslim: so there is less to fear about 'terrorism' in an immigrant population of Catholic neighbours than if refugees from the Middle East were admitted. So if modern, joint policing of drug manufacture and trading were adopted in Mexico and in the USA and in the lucrative market that is Canada, much more could be done to control the destructive trade without the cost of the wall.

Currently there is a spat between the USA and Canada about 'lumber': softwood. Canada grants its citizens access to the massive state forests on terms that appear to be more advantageous to Canadian logging firms than those that confront similar firms in the US, and the US government has imposed retaliatory sanctions against Canadian imports. No doubt the angry rhetoric will be followed by some compromise, and that compromise will be a step towards a more general agreement. The length of the border between the USA and Canada [obviously, including the border between Alaska and Canada] is 8,891 kilometers, and not even Trump can imagine a wall so long; so the question of how much it would cost - and who might pay for it - does not even arise. No policy other than a close political and economic alliance can make sense for either Americans or Canadians.

However, a Free Trade Area framed according to principles derived from academic Economics - such as has been in the minds of the progenitors of the North American Free Trade Area - is neither the only nor the best way forward. A form of mutual autarky can become the basis for a new type of trading community of states, where each recognises that the common good is greater than each nation's total freedom to act, but where each state has particular interests that must be accommodated [and, where necessary, the parties to the deal make exceptions to the general rule, either permanently or on a temporary basis].

Collaborative autarky will be a better solution than trade war in North America. And it is likely to be the only solution to current Brexit negotiations. Trump may become the inadvertent progenitor of a new model for international trade deals.

Friday, 28 April 2017

We Want Eight and We won't Wait

At the period when the imperial success of Britain seemed most assured, and Free Trade was an absolutely dominant mantra, in the nineteen-hundreds [1900-1910] there was a huge agitation demanding increased government spending. Alongside the tentative steps taken by the Liberal government to introduce the first scheme of social insurance [basic cover for sickness and unemployment, plus non-contributory old age pensions], which was eventually passed just in the next decade, the Navy League was demanding a massive expansion of the navy. Kaiser Wilhelm II was leading a campaign for Germany to achieve something close to parity with the British Fleet in terms of the number of vessels that could be maintained in European waters. The Royal Navy had responded by designing and building Dreadnought a revolutionary design of battleship with new-style armament, impressively high speed and a new level of armour-plate protection. Germany responded by ordering their first couple of similar ships, so a numbers game began.

It had been recognised for centuries that Britain's predominance in world trade depended on the navy, which in its turn depended on the availability of naval bases all round the world. Thus it was an implicit condition of British politics that - regardless of which party was in power - the necessary money be found to keep the navy in a position of unparalleled predominance over all others. The navy not only supplied protection for trade and traders, it was the originator of modern navigational systems, and Admiralty Charts provided the best maps of the oceans that had ever existed. Thus spending on the navy went far beyond the construction, manning and victualing of ships.

The introduction of HMS Dreadnought was followed by the Germans' attempt to improve on that innovation [and they were followed by the US, Russia, Japan, France and Italy], to which Britain responded with a 'super-Dreadnought', and to buy into innovations in wireless communication, the development of better ammunition and a plethora of related developments, which provided employment for more and better technicians in both the naval dockyards and the wide range of suppliers across all industrial sectors. George Bernard Shaw wrote Major Barbara, a morality play in which a Salvation Army officer learns that the workers in a town that was focused almost entirely on designing and making ever-more-lethal armaments are very much better paid, housed and provided with 'improving' art galleries and lecture classes [and the leisure time to enjoy them] than the workers in the rest of the country. While Shaw's play is clever fiction, it contains an essential truth. What President [ex-General] Eisenhower was to call the 'military-industrial complex' in the nineteen-fifties had provided innovations and high living standards for centuries. The emergence of the US 'rustbelt' in later decades is related to two principal factors: one is the decline in the amount of  steel and the number of basic ships, trucks and tanks that are needed by a modernised military, combined with the automation and robotisation of the material industries that are still needed to provide the new hardware

Military-industrial development and production are still vital to the USA, and the technology that spins off from defence spending - including the space programme - is a major component in the lead that the USA has in intellectual property worldwide. Britain has spent decades dismantling the plant and trying to ignore the lessons that were understood in the era when this country, too, managed a positive balance between military and civil science and technology. The decline of the UK will continue as long as the ancient lessons are ignored by an ignorant, ideologically driven Econocracy that has the ear of the government.

Thursday, 27 April 2017

Austerity and Tecnological Decloine

Today's news includes the item that 'big pharma', the leading pharmaceutical companies that spend billions of pounds on research and develop new treatments are threatening to leave the UK. The headline is that they say the National Health Service is underspending by at least £20 billion a year, which means they are either refusing to buy some drugs at all, or strictly rationing the patients to whom some new drugs are administered. The economic effect of this parsimony is that the companies are not getting the return they require on the money they invest in research. In other countries [the richer Commonwealth, the more affluent EU states and the USA and other aggressively capitalist countries where the wealthy are big spenders on health care] the greater spending by the medical professions provides more data for the drug companies to use in the verification and development of new treatments.

The threat from the drugs firms need not be taken too seriously, in the short term, because the factors that keep the pharmacological teams in the UK are the size and quality of medical schools and related scientific communities in the universities, the very good lifestyle available in Britain and the availability of good quality personnel. But there could be an eventual drift of such researchers away from Britain if those environmental advantages are lost in a continued downward spiral of social and economic degeneration. That will happen if the fundamentals of policy are not changed: and that will only happen when the impedimenta of Economics is removed from official thinking.

Government spending has for many centuries been the basis of much [if not most] major technological development. The needs of the Royal Navy for navigational tools led to the construction of the first Royal Observatory, from which much wider developments of astronomy were derived. Efficient timekeeping was needed for the discovery of where a ship was, hence the search for wholly efficient chronometers to make the calculation of longitude a simple everyday task for naval officers - then for merchant seamen. From the seventeenth century until the twentieth naval dockyards were among the biggest employers in the country, and the national determination to keep the navy [then also the air force] at the forefront of international comparison led to thousands of innovations which could then be spun-off to commercial applications. In this new century, a major factor in the US predominance in technology is the massive spending on research and development by the US government, to maintain supremacy in terrestrial conflict and in the space race.

Britain was the first front-runner in this contest for the best in military technology. Peter the Great of Russia notoriously spent a year in Deptford learning the techniques of building, equipping and arming warships in the eighteenth century, then went back to Russia to found his own great port and create the navy that enabled him to break Sweden's hegemony in the Baltic. Charles II, like Peter of Russia, was fascinated by all the gadgets that were unveiled to the Royal Society that he created; and countries all over the world have developed derivative science academies. The close engagement of the state in the development of science and technology has been crucial, both in funding the research and in giving prestige to the achievers. Cameron-Osborne austerity is stripping away Britain's capacity to compete in this area, and this will soon produce a calamity of historical proportions. The time for a fundamental policy is change is very limited.  

Wednesday, 26 April 2017

Water and Wealth

Having grown up the Lancashire Valleys where some of the first cotton mills were established, and more recently resident in the part of Derbyshire where Arkwright established the factory system, I have always been incensed by the oft-repeated intellectual nonsense that the emergence of industry using water power was benefited by the 'fast-flowing streams' of the Peak District and the Pennines. A twenty-minute visit to any surviving water-mill shows that the waterwheel requires only a slow, steady, controlled flow of water; which is optimally supplied from a lodge [or reservoir] in which enough water for a several days operation can be stored. Most of the time in the UK, the river or stream from which the water is drawn into the lodge has sufficient flow of water to top up the lodge constantly: the usefulness of the lodge to keep the mill going in a drought depends on how many days' requirement for powering the mill can be held in the lodge.

Almost all of Britain has enough rain through most of each year for most streams and rivers to keep going; but droughts do occur. The most recent spectacular drought was in 1976, but more recently the south of England [particularly, the south-east] has seen the need for periodic controls on water supply after a series of relatively dry winters. It has been axiomatic that if enough rain falls during the winter to top-up the aquifers - the strata of rock that hold water, which can be accessed from boreholes - water companies and major users only need to build reservoirs big enough to top up the supply during a drought. However, new reports suggest that the impact of climate change is already meaning - as seen in the last year - that while northern Britain will be milder [with fewer days of severe frost annually] it will also become wetter; while the south, and especially the south-east, is becoming dryer and warmer. The result is that a deficit in water supply is becoming imminent. Thames Water has plans to build a mega-reservoir, and has already opened a desalination plant for estuary water from the River Thames.

It seems obvious to pipe water from the north, where there is an excess, to the drought-prone south: but water is heavy and Britain [even in the south] is hilly; so massive energy costs have to be incurred to transport water long distances. At the turn of the nineteenth century, water for Manchester was piped from the Lake District; that was a gentle downhill conduit, so minimum pumping-power needed to be called upon. The same went for transporting water from North Wales to Merseyside and from Mid-Wales to Birmingham. But the logistical and political issues that would arise from any extension of those plans would probably be insurmountable; they would not meet the technical requirements to get water to south-east England, and the cost would be excessive for a progressively-impoverished country.

With typical purblind political arrogance, the issue has been ignored. It will have to be recognised soon. Then the question of ways and means will present itself, and the horrendous situation will become clear. As in all other areas of infrastructure, there has been too little investment, and Britain has progressively become a poorer country. This blog has often stressed the fact that Britain is presented as being the 'fifth-largest economy in the world' by totting up transactions including imported goods and borrowing. In terms of national income per head the UK is declining towards the TWENTIETH place in the 'league table'; below Finland and Austria. The neglect of infrastructure investment will accelerate the downward spiral. No major party has stressed this as an  issue in the current election; another reason why thinking people should use their ballot forms as a means of showing their contempt for the whole of the political class.

Tuesday, 25 April 2017


The chattering classes are beginning to recognise their problem with President Trump. He talks and tweets as a fool; but [mostly] he acts as a wise man who takes good counsel. He leaves the major departmental heads to do the talking in their respective areas of responsibility, and publicly defers to their judgement most of the time. Now he has convened the whole Senate to come to the White House, to be briefed by his colleagues [under his aegis] on the Korea problem. Those who write him off are in danger of writing themselves off.

Meanwhile, Mrs May increasingly shows signs of lack of principle, weak grasp of the law, and lack of economic understanding; yet all that is combined with a determination to be top dog and final decision-taker. She seems to want to be arch-Brexiteer, without understanding what is involved. Meanwhile Corbyn increasingly shows himself to be a 'sixties schoolboy-socialist, even when reading formal speeches produced by a team of intelligent, despairing party officials: surely nobody can trust his maturity or fitness to rule. Farron's party will attract votes, and may gain seats, simply by default of the other parties: the Liberal leader will carry no conviction even as a coalition partner [which he says he will not be, when he has no chance on offer]. Ms Davidson will gain the Tories a small clutch of seats in Scotland; which may compensate for the Tory seats that will fall to the Liberals and to apathy of old Tories [and Remoaners] in reaction to Mrs May's dull and pusillanimous performances.

In France, the totally untested Macron faces up to lePen, who is surely seen as un-electable by a majority of her fellow citizens, even though they are acutely concerned about immigration and the fecklessness of Merkel's minions in Brussels  in the face of terror. Merkel is not a leader; as befits her upbringing in a parsonage in East Germany, she is a power broker and dispenser of patronage: her only memorable statements are those on mass immigration that have rent the EU quite significantly, and taught her that it is better not to sound off.

So, all in all, this is not a good time to be a follower [or just an ordinary voter]: there is less quality up for election than ever before: except in the USA?

Monday, 24 April 2017

'Excess' Pay: Executives and Footballers

One of the axioms set out in my book, NO CONFIDENCE: The Brexit Vote and Economics, is that intellectual property is the greatest source of wealth in modern society. Starting with the right to be a priest, to claim a kingdom, or to have the rights of a landlord, the pattern of legally defined invisible property pervades every aspect of the economy. Inventors can claim patents on genuine novelties and creative thinkers of all other kinds can claim copyright and various modern derivatives from that concept. Patents and copyright are defended by the state and its courts for a period which [by any stretch of the imagination] is long enough for the concept creator to be remunerated sufficiently for the idea; with the brightest and most popular ideas generating the most wealth for their creators [and/or for those who acquire the rights by legal means]. 'Pirates' who try to use the intellectual property of other persons ans companies and penalised, and in general the system works well. The firms selling the products and services that embody or incorporate legitimately exploited intellectual property have to tread a fine line in setting prices, to ensure that the product is affordable to a large enough market for the firm to optimise its profit. If the price is too high, not enough consumers are capable of buying it; but if the price is not as high as is reasonable for the market to bear the firm is wantonly surrendering profit that it could acquire.

Obviously the material costs of providing a product or service that requires material components must be met within the price; but material cost-of-production is not a price-determining factor in the case of most of these 'goods and services' that the book classifies as quons. Any such product or service, in a sophisticated marketplace, incorporates many patents in the product itself and in the process by which it is produced and the marketors promoting the product will use a variety of copyrighted slogans, texts and images. In addition, even more important than the items of intellectual property mentioned in the previous sentence, is the brand under which the product is sold. Brands are permanent intellectual property: they do not 'run out of time' as patents and copyrights do. Thus the maintenance of a brand, by constantly updating the product and the intellectual property that it brought to bear in and around it becomes the crucial factor in the continuing success of the organisation that manages the whole process by which it comes to market.

Thus it is that the few individuals who are given charge of any brand-owning organisation can be massively remunerated, because billions of dollars-worth of investment in plant, materials and intellectual property needs to be given constant inputs of new momentum while it maintains all the assets that continue to be income-generative. A firm can fail if an overweening and domineering chief executive is able to bring it down, as was done just a decade ago with the world's biggest banking group. The selection and retention of the right people - plural - who can provide the necessary checks and balances between chief executive, chairman, finance director and company secretary [and equivalents] is the most important task in any company: hence the individuals must be most carefully selected, sufficiently motivated and rewarded, and constantly monitored. A successful company does this over several human generations.

Commentators and politicians may wax verbose on the evil of 'excessive' pay; and often executive pay does seem out-of-line with a company's performance; but the pay must be sufficient, and few chairmen and willing to aim for the lower quartile in remuneration in case they also get inferior performance.

While it may take several years for a corporate executive's performance to be found inadequate, if the firm has been surviving on the momentum generated by a previous management, it takes only a few eeks for a football team's performance to be found wanting. In order to be sure of appearing in the English Premier League and the Championship of the Continent in the next season, a team must be at top form all the time. The reason for being in the big league is to get maximum earnings from television, merchandise etc: to pay to the brightest and best footballers so that they will come to and play with that team. Thus football has become the classic example of the firm trying to maximise its earnings, by constantly coaching players to deliver exceptional performance: for which it has to pay the world's top prices to the few truly star players. Apart from the timescale to which the two sorts of organisation work, and the fact that a corporate executive team is rarely as many as eight top directors, while a football squad needs at least thirty players plus a management team at least as big as a global company, the same rules apply as to how high the remuneration for 'exceptional talent' must be. There is no mystery about this, and little room for corruption.

Sunday, 23 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.

Saturday, 22 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.

Friday, 21 April 2017

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.

Wednesday, 19 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.

Tuesday, 18 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.

Monday, 17 April 2017

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.

Sunday, 16 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".

Saturday, 15 April 2017

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.

Thursday, 13 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.

Wednesday, 12 April 2017

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.

Tuesday, 11 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.

Monday, 10 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!

Sunday, 9 April 2017

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....

Friday, 7 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.

Thursday, 6 April 2017

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.

Wednesday, 5 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.

Tuesday, 4 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.

Monday, 3 April 2017

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.