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Thursday, 31 August 2017

Flood, Fuel Prices and Human Costs

The tragic flooding in Texas and Louisiana over the last few days has no precedent in the history of North America, and its consequences will only emerge in full over several years. The immediate effects are that thousands of homes will need to be replaced or majorly reconstructed, a massive proportion of the infrastructure will have to be reinstated and transport links repaired. Mercifully few deaths have been reported so far; and the life-saving capabilities shown by thousands of ordinary small-boat owners and their helpers have been both effective and heartwarming. Much of the damage is insured; probably more is not insured because damage on this scale had previously been inconceivable, so there is a huge cost to be met by the public purse and by private individuals.

The main industry in the area is oil refining, with a huge proportion of the United States' refining capacity being concentrated along the coast of the Gulf of Mexico: precisely where the hurricane [as it then still was] hit the coastline. It is forecast that global oil production is now so flexible that the loss of any oil wells to active exploitation in the coming weeks will have no significant impact on the availability or the price of oil, as such. However, the loss of massive refining capacity for [at least] a period of weeks will significantly affect the availability of petrol ['gas'] to American drivers and of refined fuel for domestic and industrial purposes. There may, therefore, be a period of raised prices for refined oil products, partly because the net supply is cut, but more because to deliver fuel from places other than the Gulf coast requires longer supply-lines, the use of different pipelines and more vehicles to move the products to their consumers, and thus the costs of actually making the petrol and heating oil available will rise significantly until the gulf refineries can begin operation again.

One of the problems that the refinery companies are already tackling is the fact that thousands of staff have had to move from their homes; and a large proportion of them will not be able to reoccupy their homes for many months. Thus, though the operation of the refineries may not suffer much as a result of inundation in the flood [because many measures of damage mitigation could be taken after storm warnings had been issued], the need to rehouse so much of the labour for many months had not been taken into account in the contingent planning of the refining companies. The unforeseen costs of these measures to secure attendance by the workforce - over several months, at least - will add to the increase in the price of petrol and other refined products, and will extend the period over which the price increase will endure. This may be sufficiently significant to add a fraction of a percentage point to US inflation.

So, while the human and social costs are rightly the primary concern at the moment - and for some time to come - the economic consequences of the flooding [and the relative small amount of wind damage that has occurred] will be long-lasting and significant. They will also require the entire risk-management approach of the community and of its major employers to be recast. Nature is constantly stressing her power to disrupt humanity's activities, and to show that our risk management was not sufficient. This is the first lesson of the Texas tragedy of the past few days.

Wednesday, 30 August 2017

Mrs May in Japan

I find it increasingly difficult to believe that Mrs May has any significant common sense at all. She demonstrates daily that she has no dress sense; and in the selection of her kitchen cabinet when she went into Number Ten she created a machine that came close to destroying her credibility with her party and her relations with her most necessary ministerial colleagues.

The Chairman of the EU Commission was quite right yesterday to assert that the position papers that have been cobbled together for the UK government lack both conceptual clarity and essential data. It appears that the Prime Minister - who was an indecisive 'Remainer' in the 2016 EU Referendum - has been bullied into quiescence by the noisy minority in her party who choose to believe that the narrow result of the Referendum must be interpreted to mean that the UK must leave the political Union and also the European Economic Area.

And now she has gone to Japan, where she will encounter almost-infinite courtesy but where it is most unlikely that anyone will speak directly to her of their country's attitude to the risks that are inherent for them in the present utterly unclear Brexit situation. Thousands of Japanese firms in both manufacturing and the financial services have established facilities and bases in Britain. One major factor in this is that London is [obviously] an English-speaking city so this suits the Japanese, most of whom are not great linguists but have been schooled in English for at least a decade of their lives. But a bigger factor than the use of English is that the UK is fully in the European Common Market and the customs union.

The "hard Brexiteer" position on the future relations of the UK with the EU will seem to the Japanese - who located their assets in Britain-in-Europe in good faith - to be a complete betrayal of the understanding on which they have invested so heavily in the United Kingdom. The Japanese are still keen on concepts of honour, and if Mrs May and her team dishonourably shuffle their papers and equivocate on the key question of whether Britain will remain in the European Economic Area after any 'transition period', Japanese finance will be withheld: and if Britain is sufficiently idiotic as to opt  openly for a 'hard Brexit' Japanese firms will be among the first to move assets out of Britain. There is no equivocation about this, and however much Mrs May might try to con herself by accepting Japanese courtesy as acceptance of any stance that she might take up, the fact remains that Japan will be strictly self-interested. Grandiloquent talk about "island peoples furthering their common interests in a wide trading world" will just be talk.

Britain outside the European Economic Area is only of minimal interest to Japan, as a minor market for some exports. The main Japanese concern about Britain, in the event of a 'hard Brexit', will be to get their assets out of the UK with the least possible loss of money and of 'face'.

Prime Minister Abe is an unusual Japanese: he is more capable of directly expressing his individual thoughts than are many of his compatriots: and he seems to be more willing than most to do it. There is just a small hope that he will be able to educate Mrs May [who is, indubitably, difficult to educate], but I am not optimistic.

Now that the Labour Party has approached a sensible position on Brexit, the Tory majority of 'moderates' are realising that they have very limited time to talk their leader into common sense. I doubt that she is capable of undergoing that learning process: if so, the sooner she is removed from office, the better.

Tuesday, 29 August 2017

All Quiet on the Eastern Front?

A North Korean ballistic missile was fired yesterday, whose trajectory went over the centre of Japan before it was ditched in the Pacific Ocean to the east of Japan. This was a hugely provocative act: yet the Japanese stock market was unaffected by the news: the main index fell by less than 100 points,and that can be attributed to a number of minor technical adjustments within the market. There is no reason to think that the news story had an impact on the market.

Japanese ministers again mentioned the possibility of reviewing defence policy, which has been constrained since 1945 by the terms of the treaties that followed the Japanese surrender at the end of the Second World War; but no immediate action was taken.

Commentators on the world's stock markets have felt the need to comment on this lack of any response in the level of stock and share prices to a significant demonstration of the rogue state's rapidly developing power to attack its neighbours, which is regarded as, a side-issue to its plan to develop the capability to attack the continental USA. The general view is that the main markets [in the the Americas, in Europe including the UK, and in Asia] are all in a euphoric condition, carried ever-forward by the massive creation of 'money' by the central banks over the past decade. The cautious withdrawal of the policies by which the capitalist system was 'saved' in 2008-9, by the US Federal Reserve over recent months has not affected that highly positive set of conditions for dealers and players in the global market.

Two other factors are in play. The first is, that if there were to be any direct action by the USA or by any other threatened power against North Korea the consequences would be calamitous and totally unpredictable. The possibilities of a thermonuclear response by North Korea to an attack by the US Air Force, using high explosives in an attempt to destroy buried facilities are so enormous that nobody can assess the effects that would ensue: so the possibility cannot be factored in to stock market price adjustments. The second factor is that governments in the region appear to assume that the Chinese have the power forcibly to 'discipline' North Korea, and would use it, if they judged that the situation really needed it.

Inevitably, it has already been announced that the United Nations Security Council will meet this afternoon, for another session of tut-tutting and to allow the main players to make their positions even clearer and for the North Koreans to say - as ever - that they do not care what the UN says or does.

North Korea has land borders with South Korea, China and Russia. North Korea was created by Stalin's USSR, before the Peoples' Republic of China was established. The position of Russia in relation to North Korea is no less important now than it was in 1950 at the time of the Korean War. Though Chinese troops rather than Soviet forces actually entered the land war, the supplies for the Communist side came from the USSR. It is inconceivable that Mr Putin is not hugely influential in Pyongyang, though the connection is downplayed in the public discussion of the matter; and lazy commentators have taken the view that the North Korean dictator pays little attention to Russia. It will be very important to take note of exactly what the Russian delegate says in the Security Council today: the nuance will matter. The state of US-Russian relations is important in what happens in North Korea, and pretty well the whole of the US political system is in a dangerously anti-Russian frame of mind at present. This does not play out in the calculations of the world's stock markets, but it is a factor not to be forgotten

Monday, 28 August 2017

More Lessons from British Home Stores

The defunct chain of shops that was British Home Stores has had more publicity in the past year than it enjoyed in any decade when it was an active business. This has largely been due to the pathetic way in which the life of the business ended, and the way its deferred pensioners were treated by the last two majority owners of the firm. The penultimate owner, Sir Philip Green, has in my view unfairly been lambasted: he has made a donation to the pensions fund that has been acceptable to the Trustees [who cannot be excused of negligence] and to the Pensions Regulator. The circumstances of his sale of the declining business to a twice-bankrupt chancer are murky, but there has been no indication of criminality. The final owner might well have been out of his depth, but he pushed his luck and took what he could out of the struggling business in a way that can at best be characterised as cynical.

For many years I had wondered how the business survived: and the one commonly recurrent answer was that it was the best place for lampshades and other lighting, especially for the home. I used the BHS shops for that purpose because they really were at least as good as anywhere else in the range, variety and taste of the wares in their lighting department. I became surprised at the longevity of that lead in one aspect of the business, over a couple of decades when all other departments seemed to get more run-down and the selection of goods was less attractive than in other stores. I was also surprised when Philip Green took the chain over, because his other shops were focused on particular market segments, which they addressed [in the main] successfully; and I was unsurprised when he dumped the cuckoo from his nest.

It is now a year on from the collapse of the business, and research publicised today makes interesting reading. More than 90 of the 160 BHS shops that closed last year remain empty; but almost all the London shops have been re-let and are in operation [mostly as shops] under new management. But around the rest of the country almost all of the shops are empty: this applies to most of the high street sites, and also to a few that are located in modern shopping centres in relatively prosperous towns. Large stores are less and less needed, as more shopping is done on-line via large warehouses and delivery services; which include the revival of Royal Mail for whom the internet has provided compensation for the decline of letter mail, which is itself largely to product of the internet.

Behind these obvious changes in shopping habits lies the more important fact that all Tory and many Labour politicians fail sufficiently to emphasise: the absolute real-terms decline of the economy in most regions since the Thatcherite destruction of so much of the material capital on which true prosperity ultimately depends. Human beings are material structures: we need the clothes and furnishings that British Home Stores used to offer us, almost as much as we need food and housing. Much of what we eat [and an increasing proportion of what we wear] is imported: so we need to sell countervailing exports to the rest of the world. But we no longer export goods in sufficient volume or with sufficient quality, novelty or other positive characteristics that used to make British goods attractive in global markets.

 Britain - hailed as the 'workshop of the world' before 1800 - became a net importer of manufactured commodities early in the Thatcher years: but the residue of old industries and the rise of new sectors, especially in the so-called 'knowledge' and 'technology' sectors as well as pharmacology and financial innovations, meant that until the financial crisis [that became apparent in 2007 and reached its peak in 2009] the balance of payments could from time to time be maintained. Since the 'crunch' a deficit on the UK's balance of payments has become entrenched: even after foreign money has been paid prolifically to UK sellers of London house properties, small estates in the home counties and firms that have made successful innovations. While super-luxury shops proliferate in central London, largely addressing wealthy aliens and the very small top-earning segment of British society, the majority of the country becomes increasingly dependent on pound-shops and charity shops and the most competitive supermarkets. A walk along any high street, especially one that lies more than commuter distance from London, is a salutary experience. It is proof of the material decline of the British economy; which no amount of financial manipulation can conceal.

British Home Stores, both historically in its decline and fall and now through its legacy of unlettable premises, stands as a stark symbol of the disaster that Mrs May and her cabinet have not yet noticed.

Sunday, 27 August 2017

Labour, Brexit and an Alt-Econocrat

There is no more pressing issue in British politics than that of the future relationship of the UK to the European Union, and therefore no apology is required on returning to the subject.

The Labour Party has taken a huge step towards rationality on that matter over this Bank Holiday weekend by making a new and very different statement on its policy. Under the new Shadow Secretary of State for exit, Sir Keir Starmer, they now accept that it would be essential for there to be significant transition period during which the UK would continue to enjoy the comfort of being within the European Economic Area [though out of the political Union, in deference to the referendum resut]. This would be at the  expense of keeping the country under the jurisdiction of the European Court, and obliged to accept the free movement of people with the EU. Starmer can claim to be far more traditionally Labour than the public schoolboy Jeremy Corbyn, because his working parents named him in honour of Keir Hardie: an early Labour leader. If discussions during the transition can include the resolution of the two difficult issues of free movement and the extent of the powers of the European Court, Labour holds out the prospect that the 'transitional' could become the permanent basis for the relationship of Britain to the EU: while the country would be able to make additional pacts on trade with other countries provided the conditions for retaining membership of the European Economic Area are maintained.

This presents a package on which Labour can make a strong bid for the 'middle ground' of politics, and knocks any idea of the LibDems forming the core of a strong new 'Centre Party' right out of the picture. Corbyn's caricature student-leftery can virtually be ignored if the party continues to promote rational 'moderates' [with good political credentials] to shadow posts. Pro-EU Tory MPs - who formed the vast majority at the time of the referendum, and who have been largely ignored since Mrs May's 'conversion' to hard Brexitry - should be really scared, to the extent that they should now make clear their reservations about the tone of Cabinet policy, in view of the fact that Labor has displayed a capacity for rationality.

Also in recent days, Professor Patrick Minford has obtained publicity for his view that a 'hard Brexit' would be beneficial for the United Kingdom. According to his ultra-Econocratic model of the economy, Britain would gain massively by being completely outside the European Union [including all aspects of the European Economic Area], with a GDP at least 6.5% higher than is being achieved within the union. This rests on the assumption that the country could trade on a completely level playing field with all economic entities in the world; according to his model of a market economy whose participants operate on the basis of 'rational expectations' of each others' actions conforming to the psychological assumptions that are implicit in the model. Professor Minford achieved prominence when he supported extreme Thatcherism against the majority of the then-still-NeoKeynesian 'economics profession' in 1981. For a while he had the Prime Minster's favour, though he was eventually palmed-off with a CBE.

The fruits of Thatcherism are here for him to see, and to input into his model [which is now even more comprehensively Econocratic]: desperately low productivity, nil productiveness, a massive deficit on public spending, a constant deficit on the balance of payments, over-dependence of the economy on the service sector and on consumers spending borrowed money. To that catalogue of the achievements that are ascribable to the policies that he recommended to the Thatcher government, we can be sure that after a hard Brexit the UK would find that there was no permanently level patch on the playing field of global trade. Point protectionism [as mentioned several times in this blog], combined with long-term protectionism of favoured sectors in virtually every economy on the planet will ensure that a naked Britain, alone in the wicked world - which still remembers the slights from the British Empire of the past - would be nothing like the heroic entity in the professor's model, and the irrational prejudice which is more common in global statecraft than anything like Minford's 'rationality' would ensure that the model could not work. The limit to the Econocrats' world view is seen in the fact that real people have not vanished from the villages that surrounded the closed coal mines: they stay as second and third generation malcontents whose habits undermine their health, while they survive on a combination of low wages from non-productive jobs, state benefits and borrowing.

Keit Starmer is well on the way to producing a rational and humane model of Brexit for the Labour Party. Patrick Minford is trying to power the nutty Tory Brexiteers along a path that would enable
them massively to intensify the range and extent of the problems that already confront the real-world population of this benighted country.

Saturday, 26 August 2017

Religion, Power and Money

Yesterday much of northern India - a vast area - was affected by riots, following the conviction of a guru of two rapes, which occurred several years ago. Along with the railways and Indian Army, the British Raj left behind for modern India a functioning system of courts: while slow and sometimes affected by corruption and political influence, the judicial system is broadly fair and follows the law. So there is a fair chance that the verdict will stand scrutiny.

That will not affect the actions of the people who want to believe that the man is a true prophet, and that he should be immune from civil penalties; and some among them will be incapable of accepting that he has behaved in ways that the civil law regards as criminal. He has been showered with praise and with a huge amount of money by the people who follow him. An unknown number of men have castrated themselves at his behest, as a way of assuring that they will lead pure lives [at least, in the sense of sexual abstinence]. This is evidence that the mesmeric power of suggestion that has emanated from him is quite exceptional. Rich and poor devotees have contributed to his fortune by making donations, by purchasing his goodwill and his guidance, and through buying his writings and watching the films of which he is the producer and the star.

I have seen no evidence that the guru has advocated that his cult should develop into a militant force such as has now become common in fragments of Islam. It is probable that the rioting arises from a sense of outrage and shock among his followers at his conviction, which implicitly challenges any concept of his perfection as an exemplary super-human.

Millions of people from all layers of Hindu society have paid a lot, relative to their income, to experience the mindfulness and inner contentment that they claim to receive from following his precepts. How far the rioting represents the resentment of shattered delusions, and how much anger at an apparent injustice, will become clearer as people settle down and contemplate their future in the acceptance this the conviction is a fact. Some people will quietly abandon his cult, some will proclaim their disillusion; and many others - perhaps millions - will assert that their faith is undimmed. His actions and utterances from now on will, of course, be hugely influential in determining whether the faithful hold firm and enable him to rebuild something like the position he has occupied in the recent past. It will be interesting to see how these matters pan out.

Meanwhile, this case provides an interesting contrast to what has happened in recent decades in Christianity and in Islam. The decline of Christianity in the developed West has continued, while it has continued to expand in competition with Islam in much of Africa. Throughout the world, the decline is most apparent in the sects and churches that are 'progressive'; while Christian denominations and sub-sets that adopt conservative positions have largely thrived. Similar trends are apparent in Islam. Most of the men in traditionally Islamic territories and communities continue to obey the Prophet's injunction to attend prayers in the mosque, while leading otherwise secular lives [though usually requiring their womenfolk to conform to conservative, largely tribal dress codes and patterns of behaviour].  Yet sub-sets of the community have been increasingly susceptible to backward-looking interpretations of the religion and of the Prophesies on which it was founded.

While many western Christians are less than lukewarm about the existence of Heaven and Hell, the attainment of unspeakable bliss in heaven after the travails, struggles and imperfections of life in the material world is the promised reward: to which jihadists are offered a short cut. The more conservative a sect's belief in Heaven and Hell may be, the stronger that belief  is as a motive for how earthly life is to be conducted.

The guru is in the great tradition of self-proclaimed prophets who offer a means to achieve inner peace in this imperfect world, followed by celestial rewards. The millions of poundsworth of wealth that has been showered on him shows the ongoing potency of such promises and practices. The Econocracy have no explanation of this phenomenon - common all over the world and throughout humanity - of people willing to surrender earthly wealth for the hope of spiritual contentment. It is obviously an important aspect of human character and aspiration, which will merit further consideration as the interesting incident in India develops.  

Friday, 25 August 2017

Straws in the Wind

The extreme Tory Brexiteers are not quite so thick that they all fail to realise that once the nation understands the extent of the damage that a 'hard Brexit' will do to the economy, the government will have to back away from that option. So their tactic has been to push as hard as possible for the government to adopt positions from which a complete retreat would be impossible.

As the government has started to publish slightly more precise position papers as a basis for negotiations with the extremely well-prepared team around M Barnier it is clear than common sense is still present in most of the arguments and suggestions that are appearing. And while this moderate position is developing, so the events in the economy - and the predictions to which they trend - show that the UK would be ruined to an incalculable extent if it withdrew from the European Free Trade Area. Mrs May has made sticking-points [or 'red lines'] on immigration and the the ECJ [the European Court of Justice]. The immigration issue has been somewhat clarified by the discovery that the number of international students remaining in the UK when their visas expire each year is certainly less than 20,000: not the hundred thousand of the May myth. Also, the largest flows of immigrants by country of origin are India, Poland and Pakistan: the immigration that has been unaffected by the European policy of freedom of movement - that has always been under British control - is massive; and it is that migration that is of most concern to many people. On the issue of the European Court it is evident that some compromise will be made, that allows the ECJ a role in Britain that is not 'above' the British courts.

Meanwhile, the economic data stack up against the idiotic assertion that the UK can survive as an economic power, and maintain the people's living standards, outside the cocoon of the European Economic Area. Britain's growth is lowest among the G8, productivity is not improving, the decline of the pound [now 18% against the euro, since the referendum] more than offsets any benefit that the UK gets from its exports seeming cheaper in other countries; and government policy continues to be hurtful to firms and their capacity to invest. Today the Chambers of Commerce point out that three policy initiatives that lie within Mrs May's concept of a caring society are laying a heavy toll on business and on employment. The living wage has been increased, while the productivity of labour generally is not increasing. Mandatory workplace pensions are part payable by employers, and employees who have their share of the contribution to pay are seeking wage increases to pay it, so it is a double-whammy for employers. And in addition, the introduction of the apprenticeship levy on firms [according to the number of people they employ] will better educate those who could well become unemployed in coming years, as technological change makes the skill that the apprentices acquire become redundant]. An economy that should be training the young in the mathematics and in the principles of engineering and coding that support IT and AI [artificial intelligence] is instead preparing young people for jobs whose obsolescence is virtually inevitable.

The economy's capability to employ the whole available population increasingly depends on investment, adaptation and the rising productiveness of industry and commerce, on which productivity improvements depend. Living standards are now falling, and people are feeling it. Real wages are still lower than before the crash of 2008; and although the USA has begun to rein in Quantitative Easing and raise interest rates, and the European Central Bank is expected to so the same soon [it may announce steps in that direction at Jackson Hole this weekend] there is no sign that the Bank of England under Mr Carney - who is to be absent from Jackson Hole - has the opportunity of the bottle to do similar things.

As the extreme fragility of the British economy becomes more apparent, the idiocy of the Cameron-Clegg-Osborne gang and of their 'project fear' becomes more obvious. One can have slender sympathy for Mrs May as the inheritor of the mess and the inheritor of Brexiteer bullying, but not very much. She is grown up, and should be able to recognise the weakness of her negotiating stance. If she does not act on that basis, she will attract odium even greater than that which has settled in the Cameron clique.

Thursday, 24 August 2017

A Changed World: WPP and Advertisisng

One of Britain's most successful companies in recent decades is WPP - originally Wire and Paper Products - whose success is almost entirely ascribable to the genius of its long-term Chief Executive. Though it is still a London-listed company, it has a truly global reach; which means that for at least twenty years its fortunes have largely been independent of the ups and downs of the British economy. When Asia has been in crisis, the Americas have generally been strong; when Europe has stagnated, Asia has thrived: so WPP has been able to expand in most years, as a global conglomerate.

Like Warren Buffet, Martin Sorrell entered and then took over an existing company that was not doing particularly well, re-oriented its business by moving into a completely different sphere of activity where it proved uniquely innovative and deservedly became a leader in its field. The chosen field for Wire and Paper Products was advertising: precisely at the tie when brands were becoming globally important and technologies were advancing rapidly. Standards of living worldwide were rising, and consumers were becoming more conscious of their power in the market. Consumers were also better-informed than ever before, as firms increased their advertising and sales budgets. By the use of better-informed I do not imply that the quality of the customers' understanding was enhanced: simply that more information was being presented to them, much more professionally. Commercial television was in most homes in the advanced countries; radio was still expanding as a means of disseminating news, information and entertainment [particularly popular music]; and print media - books newspapers, magazines and journals [both popular and targeted at specific groups] were more affordable and better-presented than ever before. In that world, WPP thrived: and as more countries entered the consumerist age [at least, for the upper and middle classes] so WPP could bring in its expertise and marry it with an intelligent development of local methods and traditions.

But with apparent suddenness - this week - the past year's results from the company show a downturn in business that has instantly been associated by commentators with major global trends.

Over two decades entertainment and information have been digitised: people now look to their smart phone for data on almost every topic. Companies have responded, so that it is now possible from one's armchair to find out which shop in the locality currently stocks which item. As this process has developed, so the great organisers of information - most obviously, Google - have responded by developing the means largely to predict what a user will want as soon as he or she types in [or says] the first fragment of the request. Hence the demise of traditional advertising is confidently predicted; though it is recognised that new brands, products, services and approaches will always have to be promoted, and most promoters will not want to have to put their fate entirely in the hands of the giants like Amazon and Google. Thus independent advisers who are up-to-the-minute on technology and offer an affordable service will always be needed; but this will be a niche rather than a mass-market business. Print media are declining. Families no longer sit around looking at one TV set, as all members have their own access to their own preferences: so the value to a firm of advertising through that medium needs to be focused on specific groups - like the elderly - who are likely still to watch 'conventional' TV.

If any affected firm can keep abreast of these developments it is the highly-adaptable WPP; but how much of the world's business will need to use such services in the future is an increasingly disputed area of prediction. Most of the pundits expect WPP to survive for at least a decade, but probably in a shrinking context: unless, of course, some as-yet unimagined innovation comes to their rescue. In his eighth decade, Martin Sorrell remains an outstanding innovator and developer of ideas. I would not yet write off him or his firm; despite the changed world in which he is now operating.

Wednesday, 23 August 2017

Improvident Financial

100 years ago, more than half the settled households in England had at least one 'product' sold by Prudential Assurance under the provisions of the Industrial Assurance Acts. These laws had specifically been designed for the 'working poor' so that they could have the resources that would be needed in the event of the incapacity of the principal wage-earner, or the death of a family member. To avoid a loved one being subjected to a pauper's funeral and deposited in an unmarked grave, it was considered essential to have a 'death policy'; and it was a high priority for the household to maintain the payments towards that highly-desired end. In most cases, the premium was collected every week by an agent of the company, who entered the payment in 'the book' that he [or, rarely, she] carried along with a satchel for the money. Thousands of agents were supervised by hundreds of Inspectors, and the log of payments into the book was checked against the cash paid in and then entered into company accounts by an army of clerks. Some more sophisticated products were sold to better-off customers, notably Endowment Policies, but the death policy was an almost-universal product; because alongside the Pru there were several other major life companies [the Refuge, Royal London, Royal Liver, Liverpool Victoria etc] most of which have been transmogrified into modern insurers and wealth managers with trendy names [often just initials] as well as many smaller companies and Friendly Societies. While some of the smaller 'burial clubs' survive, most of the companies that have survived have been through a path of change that was first mapped out by the Pru.

A generation ago, with the coming of computers, the management looked carefully at the whole structure of their market. By 1993 better-off consumers were installing computers to their homes and were happy to join the digital economy: they were the people whom the Pru decided to target. The company also wanted to convert more people into digital trading, before they would have been self-motivated to do so, so their sales force was encouraged to persuade customers in that direction. Massive advertising and information schemes were embarked upon, and sufficient business came the way of the company for it to be able to transmute itself into a wealth-management conglomerate; not repudiating its assurance roots, but developing for a different market in a different era. The whole door-to-door operation was abandoned: some customers maintained their payments by standing order if they had bank accounts, and a few went to the company's diminishing number of local offices to maintain their cash payments. Eventually, a vast number of policies lapsed and the huge cost of the door-to-door operation became a memory.

Other companies followed the lead of the Pru.

But as the digital economy developed and higher earners and permanently employed people entered the world of bank accounts and direct debits and more advanced savings and insurance products, that only provided for a minority of the less well-off in society. The ongoing fear of not having enough money to fund a family funeral has been enhanced by scare stories about the cost of a funeral; to the extent that I am now extremely irritated by the frequent repetition of an advert for a very reputable company that is trying to cream off as much of that market as can be got.

Beneath the people who can buy an 'over-fifties plan' for funeral expenses - paid for by direct debit, of course - there are a few million people [including many elderly] who do not have both computers and bank accounts. When these people need money urgently, perhaps for a funeral, they need to borrow it: and until last year there was a very solid company, Provident Financial, that met their needs in most cases. The company was represented by door-to-door agents, who knew their areas and knew how to maintain and expand their incomes by meeting the requirements both of the company and their clients. It was always expected that that there would be a proportion of defaults, the 'moonlight flit' was not just a Victorian phenomenon; and the agents knew the admonitory signs and might be able to save the contract. Then in came a 'modern management' with a 'modern model' for the business. Some of the agents were offered new contracts as salaried door-to-door collectors rather than as helpful providers of contingent finance. Such an animal was akin to a bailiff, rather than a welcome contact: a greeting was replaced by abuse at the door. Unsurprisingly, the model is a disaster and the inept individual who drove the model past the company board and into effect has been dismissed. The business has effectively been destroyed. Whether some hugely charismatic individual can be found to turn it round is questionable.

An important underpinning of the weakest layers of society has wantonly been destroyed. The consequences of this will be deeply significant.

Tuesday, 22 August 2017

Afghanistan: Trump Digs Deeper

Donald Trump has a genius for digging holes to sink into. Amid the several areas of confusion that he has created in US politics, he has now announced the opposite of one of his most consistent campaign promises. His new minders have persuaded him that the risks in abandoning the disastrous Afghan campaign are so much greater than any potential benefits of quitting that the US must stay. And if they are to stay, they have to reinforce their resources there. Then they have to cajole their allies into helping them. Mrs May has already committed more forces, though less than 100 troops: for now. As has been noted here several times, Afghanistan has never been 'pacified' by alien forces. Alexander the Great, the great Moguls, the British Empire, and the Tsars all failed; before Brezhnev brought the USSR to bankruptcy by his attempt to subdue the country.

Ever since the US sent forces into Afghanistan in pursuit of Osama Bin Laden under the Command-in-Chief of George W Bush, many strategists have argued that the 'real' seat of terror is probably in Pakistan: which is where Bin Laden was finally tracked down. The people who were sheltering Bin laden temporarily were the Taliban, so removing them from power became objective number one. Once that was achieved, at least to the extent of having avowedly non-Taliban ministers installed in Kabul, it became clear that Afghanistan would be dangerously unstable - from the American perspective - if alien forces left. So the US and its little herd of followers stayed, and continued to loose lives and use up resources.

In the terms of western democracies, Afghanistan will never be stabilised. Trump, at least, has recognised this to the extent that he has renounced any pretension at building a democratic state: yesterday he simply said that his troops will 'kill terrorists'. How to identify an enemy or a 'terrorist' among the tribesmen of the Himalayas has never been answered explicitly. If someone if carrying a gun, it may be to protect his sheep from wolves. In such a social context, when someone is actually attacking western forces they can be regarded as legitimate targets; but not otherwise. The conflict cannot be won; but it will send a new flood of young men on the trail to Europe, hoping to join Merkel's million: some of whom will have nefarious intentions. And so the migrant problem for Europe, and explicitly for the European Union, becomes more intense.

In this one sense, Brexit might seem to provide a desirable context for the UK to strengthen its borders further. But then we came up against the problem of paying for proper border controls. To establish, man and maintain adequate borders for the UK would require a vast investment, followed up by hundreds of millions of pounds of recurrent expenditure. If that border is both a customs border and a border against the passage of people and financial assets, as Mrs May seems to desire, the cost is multiplied. Either austerity will have to be abandoned, or state expenditure in all areas but border controls will have to be cut back so far as to create intolerable strains throughout society.

So Trump's abandonment of yet another campaign commitment leads directly to a double dilemma for Britain. First comes the question, how can we meaningfully join 'the leader of the free world' in his madcap Afghan plan: if, as indicated by the government, we will submit so to do; within the present limits of defence spending? Second, how do we pay for meaningful border controls here in the UK?

Thus we come to the most consistent and fundamental issue with which this blog has always been concerned: how can we create the national income that will enable Britain to afford a better living standard for all and maintain the position of the UK in world affairs and in the world economy? The answer begins with the repudiation of the Economics that enforces austerity on the regime: we need a Political Economy that reinforces the concept of productivity by recovering from limbo the need for productiveness. I will return to this topic in the coming days: meanwhile, when you have time, do a word search in the past issues of this blog to see what productiveness means and implies.     

Monday, 21 August 2017

Carney in Jackson Hole

Mark Carney is due soon to return to Canada and make a political career in an environment free of worries about the pound sterling, the European Union and Theresa May. While Trump survives in the US presidency there will be a small risk for Canada in the future of the North American Free Trade Area, but in other respects Trump cannot hurt Canada; and if his failures drive down the value of the US dollar, this will be to the benefit of the Canadian currency and economy. Britain's problems may be of passing interest to Mark Carney post-Bank of England, but he will have [nor will he want] any part in addressing them.

George Osborne is a co-culprit with Cameron and Clegg in most of the disastrous aspects of the Coalition and subsequently the Conservatives' economic policies, but it is generally accepted that he alone drove through the decision to bypass Bank of England insiders, and all other Brits who might have had a claim to be considered as Governor of the Bank of England, and opt to advise the Queen to appoint the clever Canadian. Carney was appointed when the policy of Quantitative Easing and low interest rates had been entrenched by the previous management of the Bank, who had reacted to the meltdown of world banking as a crisis of moral hazard until Chancellor Alastair Darling sounded the alarm and compelled them to act positively [if not entirely sensibly]. Since his appointment, in retrospect, Carney has not had much to do. His 'forward looking' comments about the British economy in context, and what the Bank may or may not do about lending and about interest rates have all been falsified by events; to the extent that some journalists have made a joke of his predictive capabilities. He participated in 'project fear', the campaign to scare the British electorate into voting to remain in the European Union even after the continentals had grossly insulted David Cameron [and, by implication the country that he represented] by their contemptuous dismissal of his half-hearted attempt to make the"ever-closer union" less objectionable to sensible Brits. When the referendum result was announced, before there was time for any deep observation of its short-term impact on the economy and on the currency, Carney led his outfit into panicky and wrong decision to lower interest rates further and to continue 'printing money' that the banks could then lend and drive asset prices [especially house prices] ever higher even as real wages continued to fall.

Mark Carney seems a pleasant man, and has a reputation for high intelligence. His record in Canadian banking is excellent: his record at the Bank of England gains him nul points. Later this week he goes to the US ski resort of Jackson Hole to meet the other governors of central banks, with a massive audience of media, to exchange platitudes. The real meetings of central bankers, that matter, occur in the context of the Bank for International Settlements at Berne; and sometimes the governors have influence when they gather with their countries' finance minister in the context of the G20, G8 [or whatever number gather, dependent on which countries are in favour with the USA]. The annual performance at Jackson Hole, beside allowing opportunity for some private chatter and data swapping, allows some more speculative statements to be made. This year, it is expected that the Chair of the US Federal Reserve Board will indicate the approximate scheduling of future interest rate increases; and that the Chairman of the European Central Bank will indicate that it is his organisation's plan to begin policy tightening, within the next year. Carney will have nothing to say. The Bank of England is still stuck like the proverbial rabbit in the headlights, mesmerised by Brexit, Trump and the fear of Britain being alone in the world without a Churchill able to summon up the Few, the Dunkirk Spirit and the resources that were handed to stand-alone Britain by President F D Roosevelt.

Mr Carney's children have already gone back to their Canadian educational institutes, and he will follow them soon. He has learned a lot, but been unable to do anything. His experience in Britain has fitted him better for his future career in Canada; and Britain gained nothing from his presence with us here.

Sunday, 20 August 2017

Why Bannon Had to Go: The Importance of China

On leaving the White House, Steve Bannon promised to wage war on the enemies of the President of the United States. Of course, he means  that he is ready to fight anyone who challenges his idea of the 'mission' of the United States: which may now come to include Donald Trump, if Trump can retain the presidency.

The idea of waging a trade war against China, even at the price of ignoring the buildup of North Korea's nuclear arsenal and Kim's development of rockets capable of reaching the continental USA, is far too crude to be practicable.

The rustbelt that provided a huge cohort of dedicated followers of the Trump line was not created by the Chinese. Factory sites became derelict, and lives were 'ruined', in consequence of thousands of decisions that were taken by US Corporations; with the encouragement and support of the Econocracy. Many of those decisions were based on the fact that components for advanced manufacturing could more cheaply be bought from emergent countries - including China - than by building and equipping new factories in the US and training the appropriate workforce. This enabled major corporations to concentrate their investment on the 'top end' of manufacturing, and on research and development for innovative products.

Simultaneously, American retailers found new cheaper sources of consumer products, which could thus be sold [largely under the retailers' 'own-brands'] at prices that could maintain some shreds of a consumerist lifestyle even for the ex-industrial workers and their children who survived on government benefits in the rustbelt. Hence imports from emergent countries, not just China, enabled their mass-producers of such products to expand their capacity and reduce their costs. Hence they improved their competitiveness with surviving US manufacturers of similar goods; many of whom were ruined. This all suited the model of 'free markets' that forms the basis of recent econocratic theory. The fact that it left individuals who were sunk in mortgaged houses without the means [economic or intellectual] unable to move on from where they were, rather than to seek new economic opportunities for themselves, is beneath the radar of the Econocracy. Equally invisible to most Econocrats is the fact that as the proportion of the population who are sunk in misery expands, so the communities in which they live progressively lack the will and the means to renew or replace collapsing infrastructure. Until an urban area falls so far into dereliction that it becomes a source of potential danger to the rest of the country - as happened with Detroit a few years ago - national government ignores the problem, while the bankrupt local government is incapable of tackling it. Even after a major assault on poverty and its causes, large areas of greater Detroit remain deeply depressed; and eyesores have not been removed.

While the rustbelt was consolidating, the lead by which the USA is ahead of the rest of the world in advanced technologies has become greater than ever. America remains the predominant and military power in the world, and even despite Chinese efforts to develop and promote competitors like Alibaba their corporations remain far behind the US in developing intellectual property. And here is the pressure point. Bannon's reason for wanting a trade war with China rests precisely on the point that China is determined to catch up with the USA in all areas, and that China will use fair means or foul: just as the US did in the nineteenth century when piracy of European intellectual property was fostered by state and federal governments, principally by deferring the development of laws to protect alien intellectual property until there was an equal danger of American inventors loosing out in global competition.

Bannon has picked on an aspect of trade policy that is used heavily by China now, and was used in Europe and America over a couple of centuries. This is the requirement that the technology used in imported devices and products should be understood, so that the items can be allowed into the country on health and safety grounds. It involves requiring the intending importer [or the company hoping to open a subsidiary plant in China] to disclose the technical matters that - whether reasonably or not - the Chinese regulators say is necessary for the product to be sold as safe and healthy in China. Once those technological data are disclosed to Chinese authorities, there is a danger that they will be leaked to Chinese competitors for their commercial benefit; as has happened in Europe and North America in the past.

To treat this as an act of war is absurd: it is a matter for patient negotiation, case by case; always remembering that in such issues it is best to speak gently, and carry a big stick. America needs better to coordinate the ambitions of US companies to develop trade with China with the need to protect American intellectual property. Steve Bannon will have done his country a huge service by highlighting the issue; but his use of bellicose rhetoric meant that his role in government had to be brought to an end.

Saturday, 19 August 2017

Trump Trumped?

At seven o'clock this morning I saw from my window in Bakewell what was perhaps the most perfect rainbow I have ever seen. The colours were brilliant, the bow was complete and behind it the rain clouds were dissipating quickly. From my radio I heard comment on the departure of Steve Bannon from the White House: and it would have been easy to take the atmospheric phenomenon in the English East Midlands as a portent of better times to come in the District of Columbia. But to ascribe to natural events, whether it be the positioning of stars in the zodiac or a trick of the light in the Peak District, as an indication of the future trend of events in politics, in society or in one's private life is to abdicate responsibility. The management of one's conduct in the circumstances where one is placed in life is the sole responsibility of the individual; and the people who went out last evening in Barcelona to oppose immigrants [especially Muslim immigrants], and the contrarians who went to oppose them, were each responsible for being there however far they may have participated in mob behaviour if things had become any more stressful.

Similarly, the events in Virginia earlier in the week showed divergences in people's reactions to circumstances; and the President of the United States [possibly with Mr Bannon's advice] made a major mess of responding to it. It is possible to read President Trump's reaction as a perfectly comprehensible determination not to endorse the 'left', who show an increasing tendency to violence and intolerance. The president now has a huge task of deciding what he means, then of saying it consistently. The removal of Mr Bannon should help, at least a little, in this process. Mr Bannon appears to have an obsession with war. In the last couple of days he has argued that the spat with North Korea over nuclear weapons is a sideshow; which has distracted the president and the media from the 'real war' that is the trading relations of the two dominating economies. It is more important that Bannon should be whisked off the official stage if he is correct in his assessment than if he is wrong: incendiary utterance [written or spoken] can be hugely damaging in the resolution of a matter of such complexity as US-China trade relations, which will take decades to resolve satisfactorily.

Bannon has said that he will now feel free to wage war against the president's enemies. He will surely find that as the president is managed into moderation 'the president' [or, at least, the presidency] will become the target for more and more opposition and abuse from Mr Bannon's shrinking cohort of ultramontane conservatives.

The question has now become explicit: can Mr Trump be controlled so that he can be made to appear as a more intelligent and sensitive person than he has displayed over the years? I call to mind the image of Woodrow Wilson, a two-term president who had redrawn the map of Europe but failed to get the US Congress to agree to the treaties that created the League of Nations, who spent his last months in the White House as a shriveled shadow 'managed' by his wife. The image of Trump constrained by a kitchen cabinet, and thus protected from impeachment and not allowed to resign, is intriguing perhaps my rainbow was a portent, after all?

Friday, 18 August 2017

Constitutional Conformity

The absence of a 'written constitution' in the United Kingdom has enabled the political class to elevate the office of Prime Minister to a level where almost all the powers of a medieval monarch are now concentrated in the small clique of people who control the country from the complex of buildings that have a modest front door at 10, Downing Street. The Prime Minister is personally responsible for the actions and statements that emanate from the buildings, though it is manifestly impossible for the responsible individual to produce the required throughput of work personally. Nevertheless, the general tenor of policy and the basic substance of statements must reflect positions that the PM is willing and able to defend.

One of the greatest mistakes that has been made by "number ten" in modern times was the decision to hold the referendum on EU membership of the European Union on June 23, 2016. Having been given the means of showing their contempt for the political class [in London and Brussels, especially] and having been pumped-up with ludicrous scare stories derided as 'project fear', a  narrow majority of the electorate voted to 'leave'. No particular means, terms or conditions for leaving were adumbrated, and this has enabled the 'Brexiteer' minority of Tory MPs insistently to pressure 'number ten' to adopt a perilous path that may well end up with the UK being economically isolated. The isolation of the UK by U-boats in two world wars almost starved the population: economic isolation could have a similar effect. 'Number ten' is not yet aware of that prospect; which probably means that they will sleepwalk towards it.

Meanwhile, in the USA the written Constitution has heavily been researched as this this-skinned, vain and intellectually challenged president displays increasingly challenging behaviour. On taking office, Mr Trump was determined that everyone should believe that his tenure was the most popular in history; hence his and his spokesman's absurd insistence that the crowds who gathered for his inauguration were the biggest ever. More recently, his extreme sensitivity has been shown by his abolition of his consultative bodies with US capitalism as soon as a few members resigned. His remarks about the riots that surrounded the statue of Robert E Lee in a small Virginia town have sparked a major storm, providing leverage for the left-inclined groups who want to be provoked by him to challenge everything that he says or does, and everyone who appears to align themselves with him. It is now a matter of speculation whether he will become bored with criticism to the point where his ego forces him to resign, or whether he will be goaded into actions that qualify for impeachment.

In both the USA and the UK there are campaigns to demolish statues of colonialists or slave owners from past eras, and to remove their names from the schools, colleges and hospitals that they founded. In some colleges, History, Sociology and Politics have degenerated into shouting-matches where 'white men' are blamed - as such - for all the misfortunes that have befallen 'white' women and men whose skin colour includes any hint of genes that are not definable as 'white European'. Academic institutions have been captured by people who promote these ridiculous non-historical assertions, and where any dissent is suppressed.

Women and minorities [including the men in many white minority groups] have been oppressed all over the world through many centuries; but such oppression is less prevalent now that it ever has been in the countries that one would recognise as being constitutionally democratic. It is possible to construct an argument that Robert E Lee was leading a campaign for states' rights, as a legal principle. The fact that victory for the Confederacy would have enabled him and his officers to keep their slaves is undeniable; but it can be argued away as a subsidiary matter to the constitutional principle. It suits the new left in the USA to ignore the constitutional issue altogether, and just to concentrate on the history of oppression and the perceived need to eradicate oppression [and all memorials to its perpetrators]. In so doing, they are prepared to use undemocratic and unconstitutional means to make their point: and thus they bring up the danger that extra-constitutional 'direct action' can be justified. President Trump is displaying an ability to fan the flames of such a movement, and could thus become very dangerous indeed. His way of defending the Constitution could endanger it.

Thursday, 17 August 2017

The Uses of University

The principal social purpose of universities today is to keep around 44% of the age group 18-22 out of the jobs market and [in the main] in a life of sufficient social indulgence to keep them from radicalisation in support of any real or imagined cause. In England [which forms the bulk of the population] the cost of achieving this objective has been shunted from the state budget into a La-la-Land where it appears as a debt owed by the graduate community; which no one believes will be repaid in full, or even in half. The fact that the interest that is added to the accumulated debt has now increased to more than 6% - compound - makes the dream of repayment even more laughable.

It is still argued in some quarters that the universities have an economic purpose, to train the inventors of the future and to nurture some of the best researchers as teachers in the universities who combine their pedagogic work with the selection of the best students to join their research teams who will thus extend and perpetuate their work. This happens, on a depressingly small scale in comparison to the massive size of the university sector overall. Some buildings that were provided by the state in the nineteen sixties and seventies for university schools of science - especially of applied science and engineering - have been 're-purposed' to take some of the expansion in social studies: especially business and media. Where applied science capacity has been maintained, since the mid-seventies it has been occupied by an increasing proportion of overseas students [at both undergraduate and postgraduate levels] who mostly take their skills to competitor countries after graduating. Around the best scientific, medical and engineering departments have been gathered spin-off companies, which have developed innovations formed in the academic context into potentially successful businesses. Where these grow into conspicuous successes, the probability of them being taken over and developed by aliens, rather than by British capitalists, is overwhelming.

It is also worth noting that much of the best spun-off development has been in business parks funded by richly-endowed colleges, especially in Cambridge; which have been better resourced that spin-offs from Manchester or Sheffield Universities. Bullshit about the Northern Powerhouse has drawn heavily on the resources of the universities in the region for its rhetoric: but the Oxbridge endowments have not been matched by state funding for spin-offs from the multiple universities in Leeds or Birmingham.

The chief function of the universities is indeed to maintain intelligent young people in suspense over a period of years in which they have a good chance of being softened by drink, drugs, sex and idleness, or of being diverted into sports and hobbies that absorb their attention in ways that are not economically or politically disruptive. The school results that determine which university and course [if any] pupils in England, Wales and Northern Ireland will take up are being announced today, and the universities are competing vigorously to attract the best talent [insofar as it is revealed by A-level results]. The short-term motives for this are to be able to claim a 'high quality' of intake to keep a flow of good applicants coming to the university, and to get their fees through the university's books. The longer-term objective is to be a survivor when the inevitable cull of the over-bloated higher education system is begun. Economic and social usefulness will then be asserted as the criteria for selection as to which institutions should be culled and which retained: but the objectivity and validity of those criteria will be subject to challenge. The outcome, as to the size, shape and orientation of the higher education system cannot now be predicted.

There still are great scholars and sensible researchers in the British higher educational system. One such has just challenged the increasing optimism of government and the media about the extent of the oil and gas supplies that can be gained by fracking shale. He has gently suggested that the shales that are to be found in the UK are mostly too new [in Geological terms] to yield much that is economically useful. So another bubble may be about to burst: which shows how important it is - and always has been - to develop and retain the applied sciences: they can provide counterbalance to the fantasies that emerge from the Econocracy, which currently corrupt far too great a proportion of the university population.

Wednesday, 16 August 2017

Brexit and Ireland

At least since the time when the only English pope 'asked' King Henry II of England to take full possession of his Lordship of Ireland, there has been an endless and fascinating sequence of tense relations between the rulers based in Westminster and the people of Ireland. Several times, kings and the Cromwellian republic tried to settle conformable populations of Scots and English in Ireland, and between 1670 and 1690 the great Sir William Petty wrote extensively about his plan to resettle half the Irish population on the island of Britain and/or in British colonies elsewhere, replacing them in Ireland with Brits, so that a short period of interbreeding could eradicate the difficult characteristics of the native Irish. Often, British policy in Ireland has been highly revealing about the actual character of British government and the real intentions of British policy.

Thus the publication yesterday of a less-than-half-baked paper on the future of the Irish border under Brexit is in that revealing context. As I have commented previously in this blog, the present UK government can not possibly give effect to any sort of Brexit that involves leaving the European Economic Area whilst retaining the policy of austerity. Actually to erect realistic customs borders and controls on the passage of people all around the UK - which would be necessary before Britain could begin to trade with anybody under the rules of the World Trade Organisation, outside the EU - is totally incompatible with austerity.

Yesterday's UK government paper on the Irish border rejects any hegemonic physical line, either on the land border between the Republic and Northern Ireland or enforced by frigates in the middle of the Irish Sea. One radio commentator summed up the potential control methods as "an iPad in every truck's cab". Interestingly, this looks as if it would put the primary cost of compliance with any new system of "technological" border and customs control onto the private sector; but, of course, billions of pounds would have to be spent for the government to acquire the equipment and train up and pay the skilled people [who probably do not exist anyway] who would be needed to create and maintain the records that would be needed of the passage of people and goods over the borders. The notion implicit in yesterday's paper is simply potty.

Both the British and Irish government are adamant that there cannot be a hard border in Ireland: not just prosperity, but also peace is dependent on free movement of people, goods and arguments.

Ireland will prove to be a sticking-point: the first - and probably the most fundamental - of all. Any genuine Brexit is not affordable to the British state, even if Osbornian austerity were relaxed. Corbyn will not understand this; but, more importantly the headbanging Tory Brexiteers - on whom Mrs May relies for her parliamentary survival - will not understand it: some because they do not want to, and some because their intellectual capabilities do not stretch that far.

The Irish Question will again be a determining factor in British history: and [as Sellars and Yeatman said, in their inimitable 1066 and All that] the English will never solve the Irish Question because whenever they come up with an answer, the Irish change the question. This is certainly the present situation, where the new Irish Prime Minister has set new terms for the discussion of the border: and we can be sure that the great bulk of the European Union will back him to the hilt. Nigel Farage and the 'hard Brexiteers' will claim that the electorate is being betrayed as a 'transition period' mutates into continuing membership of the European Economic Area [but without membership of the Brussels political set-up]. The 'betrayal' will come from the incomprehension and incompetence of the political class: against which a majority of the nation voted on 23 June 2016. Hence, the political class - the very people who are least trusted by the nation - froth and posture about 'taking back control'. They don't know how to do it, because there is no affordable way to achieve it within their mental universe.

Interesting times indeed.

Tuesday, 15 August 2017

Draining the North Sea

One of the most frequent assertions made by critics of the government's austerity programme is that the UK is 'the fifth richest country in the world'. This is correct, in terms of the recorded turnover of the economy, the Gross National Product. But the country has been living on its reserves of capital, goodwill and material assets for many years [probably since 1915], and has disgracefully been wasting the talents of its people; not least, by selling off their inventions to foreign companies who then reap the profits from the ideas. The medium-term prospects are bleak, even before one considers the idiocy of the politicians who the rest of us allow to remain in control. The position paper on the Brexit process, issued today, dreams of a customs union of undefined size, shape or duration: more like something from a naive fourth-former than from the government of a great country: I will leave that concern aside today, and look instead at two basic facts.

First, coal. Britain led the world into modern industrialisation, using the abundant coal resources under the ground and under the surrounding seas [as in County Durham, where pits stretched a couple of miles beneath the North Sea]. The entire coal mining industry [with trivial exceptions] has been shut down, as other countries use old British ideas to develop uses for coal that do not involve atmospheric pollution. If we decided to return to those developments, we would be far down the queue.

Second, oil. Before North Sea and Irish Sea oil reserves were discovered, I grew up in Lancashire with the legend that the Romans' main reason for coming to Britain was to exploit the 'Tockholes Treacle Mines': a tale vindicated when oil was found in the area; and now a focus of protest as [further west, towards Blackpool] fracking is under way. When I was an undergraduate in Durham the university was demonstrating that there were potentially massive oil reserves under the North Sea. This geological observation was confirmed, and oil deposits are still being found offshore all around the United Kingdom.

The availability of that oil came just as Mrs Thatcher's deindustrialisation of the heartlands of production was developed, and it helped to balance the country's payments while a huge proportion of the population was deprived of the context in which they could work profitably, providing exportable commodities to exchange for the imports that are inescapably necessary. Instead of building up a massive investment portfolio, as Norway and the Gulf oil-exporting countries have done, the UK just mitigated the accumulating deficit with the rest of the world by its sales of oil [and by not needing to import so much as oil as would otherwise have been needed] as the unemployed and early retired were maintained, exiguously, on benefits.

Then, in 2016-17 [according to figures from HM Revenue and Customs, published early in July], the amount paid in tax by the companies that exploited our diminishing oil and gas reserves declined so far that the rebates paid to companies for decommissioning former oil and gas wells [and other permitted expenditure] exceeded the amount of tax payable. It was bound to happen one year: our luck means that it pretty well had to occur at the very time when Brexit loomed. Back in 2011-12, when Osborne was just stepping up the austerity programme, net revenue from oil and gas was £10.9 billion; in 2016-17 the net figure was MINUS £312 million.

The numbers will get worse, with occasional relief as new wells are opened and new ways of exploiting abandoned reserves give a short extension to the 'life' of some facilities.

These facts are so horrific, in their implications for Britain's economic survival [let alone, its tenure of the fifth place in the big league table] that they have largely been passed over by the media. We must not forget them: they must be a spur to new action and new thinking about the whole shape and future of the economy.

Monday, 14 August 2017

Brexit: Trouvez la Femme

So now we know, for sure; definitely.

As on the previous Sunday, when I went to get a copy of the Mail to check on the context of remarks by Vince Cable, so yesterday I bought the Telegraph so that I could read exactly the piece attributed to Philip Hammond and Liam Fix. It was cited on the radio as representing the formation of a joint strategy for Brexit, and thus the conclusion of a cabinet spat that has been reported over this year's 'silly season' by much of the media.

It was a short piece, attributed to the two men [and doubtless accepted by them] but indubitably crafted in 10, Downing Street, and polished by party professionals. It represented what had generally been understood to be Mrs May's position ever since she made her sublimely idiotic remark that "Brexit means Brexit". Since it was coined, derived from 'Grexit' which meant the threatened departure of Greece from the eurozone, the term Brexit has simply meant "the departure of the United Kingdom from the European Union, in response to the referendum decision of 23 June 2016". Mrs May was asked how she interpreted the terms: did it mean withdrawal from the European Common Market and the Customs Union? Did it simply require departure from the political institutions only? What mix-and-match of possible options did she favour?

None of this has been clear: either in her much-cited 'Lancaster House Speech' early this year or in her disastrous election campaign. Nor has it been any clearer whether she favours a 'hard Brexit' [undefined] or some 'softer' version. Two things that do appear to be consistent in her few and often oblique remarks on the matter are:
1. Her proclaimed determination to reduce net immigration: the great 'failure' of her six year tenure of the Home Office which she apparently thinks she can achieve from Number Ten. If she does achieve it, she will alienate industry and commerce, the universities, and the immigrant communities from the Commonwealth who had seen a reduction in EU immigration to the UK as a chance for them to bring more friends and family members into the country.
2. Her equally definite declarations that there is no place in the UK post-Brexit for the European Court are equally likely to make for an extremely difficult negotiation with M Barnier on trade matters that should be straightforward.

Lewis Carroll, in one of the most brilliant satires on society, has a character declare that they can think of six impossible things before breakfast. Mrs May, without saying anything on those lines, has made it abundantly clear that she has one impossible thing on her mind all the time: the removal of the British economy from its European Economic Community context without significant damage to Gross National Product or to the standard of living of the mass of the nation.

It now appears that Fox and Hammond have accepted that they must both support this point of view, at least publicly and for time being. This is a consensus that cannot last. The crisis in British politics will continue: well done, David Cameron, Nick Clegg and Odious Osborne!

Sunday, 13 August 2017

The Expulsion of the Holy Ghost

The vast majority of the population of Europe, including the United Kingdom, has severed any material connection with the Christian religion. Thus the immense number of quotations from the Bible and the Book of Common Prayer that are used in daily speech have been severed in the public mind from any appreciation of the texts from which they come.

When the Muslim population are speaking English, they virtually always deploy religious phrases in Arabic; which is the language in which they hear them in the mosque; whatever may be the language  used by the preacher in linking the religious phrases with the point that is being made. Thus very few quotations from the Koran have come into everyday secular English usage.

As one of the minority of the population who still does regularly attend church, I am increasingly aware of how few Anglican churches make any use of the King James Bible and of the Book of Common Prayer in their regular worship: thus for many young people who are taken to church the resonance of the 'old' phrases has been lost. In most churches awful, clumsy late twentieth-century versions of the official liturgy are giving way to non-liturgical 'popular' or 'family' events where the clergy simply make up what they think the congregation will find a happy experience. In other cases, the laity are simply encouraged to use the space, lighting and heating of the church to create their own event; with the intent that they shall go home feeling 'better' for the encounter. Traditional, authoritarian preaching is at a huge discount among Christians and Jews; while Islam faces up to the problem that some traditional preaching can easily verge on 'Islamism'.

Among the secularisation and debasement of religion, which is particularly prevalent in the Church of England [where it has driven away the majority of former adherents], to me one of the most interesting changes has been the removal of the 'Holy Ghost' from the usage of the clergy. Almost universally, the phrase 'Holy Spirit' has supplanted the ghost. I can find two reasons for this:
1. In the relatively recent English Language Mass, the Roman Catholic church adopted the 'Spirit';
2. Naive Anglican clerics, whose training includes little reference to [or respect for] traditional usage of any kind, are told that the phrase 'the Holy Ghost' might make people think of spooks, boggarts, zombies and other scary creatures of the human mind.

Such clowns do not seem to realise that 'spirit' can also refer to a powerful intoxicant, and thus their adoption of the term 'Holy Spirit' is simply carried forward. The words of well-known hymns are changed to incorporate this, and other changes of usage that are thought to be more politically correct. The result has been to remove both beauty and character from the Sunday services that become an unwelcome duty for people who can remember better days.

The occasion for writing thus is that I received during the past week the annual Report and Accounts of the Prayer Book Society, and realised that fewer than four thousand people - in the whole wide world - care sufficiently about maintaining some use of the Book of Common Prayer as to contribute to the body that makes efforts to allow all candidates for ordination as ministers of religion to handle, read, think about and - possibly - use the root source of what used to be the strength of the Church of England and it affiliates worldwide.

I have long anticipated a reaction against the shoddy state of the Anglican Church; but there has been no serious sign of it. One could, just possibly, take a sort of comfort from the emergence of radicalism in the Muslim population; in that young people are seeking to express their contempt for the degeneracy of contemporary society: even though that search can lead to jihadist destruction of society and of the perpetrators . It is a very sad fact, that such a search for enlightenment can lead to medieval violence and social oppression. There must be a better way, for the people who could benefit from any of the world's great religions.

Saturday, 12 August 2017

Not Another Party, Please!

When it looked as if Jeremy Corbyn was leading Labour to the expected [and deserved] electoral catastrophe a couple of months ago, siren voices were calling for a split in the party; which could lead to the 'moderates' joining up with the LibDems and hoping to attract some Tory Remainer MPs; and thus forming a coalition that could reverse the Brexit decision. The depth of politicians' squalor was again confirmed when Mrs May lost the election and Labour was beefed-up as being a potential governing party. So, although Labour MPs are viscerally split between those who are keen to compromise with Corbyn and those who know him for what he is [an unreconstructed Marxist who has a wide range of casuistic devices], the party has been held together by the fragile cement of ambition.

Subsequently, other voices have been raised - now, within the Tory ranks - hoping to cobble together an anti-Brexit coalition. As with the SDP, it would be impossible for such a party to gain traction with the electorate; even if they had a period of years available to make the attempt. As it is, the Brussels clock is ticking down to March 2019; and the chances of getting Mrs May to understand anything of the ruin to which she is driving the nation are minimal. There is not time enough to reconfigure British politics, or to educate the prime minister.

The great majority of MPs, mostly with regret, accept that the referendum vote was decisive. The question was whether the UK should "leave the European Union" or "remain in the European Union". There was no definition of the European Union. It was left unstated whether the European Economic Area, or the European Economic Community [the common market and customs union] - as Mrs May now says is inextricably the case - were included in the vote. This is the basis on which honest men and women who accept the referendum result can legitimately believe that the vote was to withdraw from the political aspects of the EU - the Parliament, the Commission and the Court - but not to undermine the economy by withdrawal from the economic area.

From everything that I have heard and read in recent weeks, there could well now be a strong majority of the electorate in favour of splitting the economic from the political aspects of the Union. The Economic Community pre-existed the Union, and membership of that club was clearly accepted in the referendum on withdrawal that was held under Harold Wilson's premiership. The electorate was not allowed an opinion on the transmutation of the Community into the undemocratic morass of Brussels under the nomenclature of the Union [and with the intention that the Union should become 'ever-closer': which means 'ever less accountable to the people']. I believe that a national petition - a reflection of the People's Charter of the 1840s - might be the most effective way of proving to the boneheaded Brexiteers that a very clear majority of the nation is capable of making the distinction between the Community and the Union.

If that could be proven, I like to think that majority of MPs have sufficient dregs of integrity then to act as representatives of the nation, and compel the government [whether the present shoddy shower, or a coalition containing the heavily-compromised Corbyn] to make a sensible and mutually beneficial deal to remain in the Community.

The issues of the European Court and of migration would remain to be resolved; but they will be much easier to define within the context outlined above. Time is short, but there is enough time to implement this suggestion of a People's Charter, deploying the resources of up-to-date social media.

Friday, 11 August 2017

Settlement, Colonisation and Exploitation

The recently-concluded trial of several men in Northumbria for sexually exploiting children and young women has been recognised as a representative case of a type that has arisen in several English towns and cities. Muslim clerics have been among those who have recently made statements to the effect that here is a pattern of behaviour that is unacceptable in modern Britain. Women of indigenous British origin are first classified as being beneath the contempt of Muslim men, and once the whole female population has been condemned to a less-than-equal status, weak individuals within the category can be selected for sub-human exploitation.

It is notable that the so-called Islamic State has also classified the women of some non-Islamic tribes and religions as worthy of enslavement and concubinage; and it can be noted that this behaviour is of much more recent origin than the exploitation of girls in Rotherham and other places in England. The Nazis exploited Jewish women as "field whores" for the army; as did the Japanese Empire with Korean "comfort women". Thus it can be emphasised that nothing in this piece assumes that the cases in the UK over the past two decades  [many of which have not yet been brought to the courts, and some may never properly be pursued] are a particular aberration of British Muslims. It is a tragically recurrent theme in human history; but its recent appearance in the United Kingdom merits attention against the broad sweep of history.

One of the major achievements of the nineteenth century Factory Acts was to ensure [eventually] that children were not unduly exploited in the workplace. A feature that is less well-remembered is that overnight working by women was banned from the factories and workshops, where there had been cases of extreme intimidation and bullying as well as sexual aggression. That provision against women working at night continued after the Second World War, and it is firmly embedded in my memory that as the Lancashire cotton industry collapsed in the later nineteen-fifties, some of the more successful firms decided to expand production by 24-hour working, In the absence of an available male workforce, some of the mills began recruiting Commonwealth citizens, mostly from the Indian sub-continent. In the first instance the men came alone: only later did they bring their wives [or import their brides]. Then there developed a pattern of settlement, whereby as the native Brits withdrew from the terraced houses where their forebears had lived while they were in the mills, abundant cheap housing was available for more immigrants to occupy. Ethnic sub-groups attracted their families into the areas where they were becoming settled, and eventually colonies of like-minded people created mutually self-reinforcing communities who became big enough for ethnic food, dress and religious traditions to become installed. Settlements had become colonies; and just as the British and the French had tried to establish settlements in the territories that they occupied, so these mainly-Islamic groups did in the UK and in the French Faubourgs. Some of the European colonies - especially in Africa - have been eradicated, or eroded, Algeria is no longer part of France, but there is a huge swathe of Africa where the language of education and commerce is French. Robert Mugabe is progressing his plan to eradicate the British-descended settlers from Zimbabwe; but English will remain the language of trade and teaching. Further south, there are members of the ANC would would like to deal with white South Africans as Mugabe has done with those who called themselves Rhodesians.

The tragedy of the British towns and cities is that immigrant colonies based on religious, ethnic and cultural similarities have been allowed - in some cases, encouraged - to regard themselves as distinct from the rest of society, protected by the concept of 'diversity' and by the pressure within the police force to eschew 'racism'. This has ensured that most of the colonists have been exempt from the application of the law and the prosecution of crime as they are applied to the indigenous British [and to the Afro-British population, where matters like stop-and-search have become extremely sensitive].

Minorities of the colonists have developed into exploiters. They have formed moralistically reinforced views on the degeneracy of British society, and twisted the outcome into a licence to treat weak and ignorant individuals from outside the colony as fair game for any sort of exploitation.

Add to that mix the option for any colonist also to decide to embrace a violent Jihadist interpretation of the prevalent religion [usually to the horror of their family and friends, whose lives can be endangered along with those of the targeted group] and we have the situation that Lord Evans has predicted will lead to a supply a Jihadist recruits from the colonies for at least two decades to come.

The situation must be recognised and understood as it is, before either the specifics of the protection of minors from the 'host population' or the roots of Jihadism can be tackled. No government willed it to turn out this way, but a mixture of past affluence and constant concession to the racism of the colonists has created a mess that must now be resolved.

Wednesday, 9 August 2017

How British Governments Have Made Life a Misery for Millions

Academics in the University of Manchester have published data [mostly derived from well-known official data] which shows that death rates among younger people in the deprived areas of northern England have increased over the past twenty years, while in the south there has not been a similar outcome even though dangerous drugs have become more common and alcoholic abuse has continued. The difference is that more people in the north take intoxicants more prolifically than in the south, and they do this in cold homes where their bodies are less well fed than those of the majority of southerners.

As one commentator on the TV said, as she was shown with the background of a canal and a derelict factory, this was the ambiance that viewers expected to see as she summarised the Manchester data. In the course of this presentation the term 'diseases of despair' was deployed to describe the effects of depression, alcohol and drugs in a society which appears to offer no hope of a better lifestyle. The lives that are to be seen in soap operas and other apparently-commonplace programmes, seem so different from those that the inhabitants of deindustrialised backstreets as to be unattainable. Coronation Street, Victoria Square and Ambridge occasionally present a denizen with a drink, drug, psychiatric or personality problem; and such individuals appear as searing exceptions to the societal norm, that enter into the script with the approval and encouragement of the lobbies who try to highlight those problems; but after a point has been made, the problem is removed from the script, and the characters return to lives that may be far from ideal, but which are far superior to those of hundreds of thousands of the most deprived people.

I used personally to bridle at the use of the term 'deprived', whether used of the people who experience these diseases of despair or the areas where they live; but as austerity has tightened the grip of despair and disease in these places I have recognised that these areas and these people have indeed been deprived. The schools are less well equipped and the teachers are more dispirited than in 'nice' southern towns; the hospitals have less resource and the dedicated staff are less able to give time to patients when the demands on them are swollen by staff shortages; provincial public transport is cut dramatically as London contemplates Crossrail Two; across the country Libraries are closed and the entire social infrastructure is squeezed.

Today, August 9 2017, has a good claim to be the tenth anniversary of the day when it became absolutely apparent - to anyone who understood the financial world to any degree - that there was a major problem emerging from the apparent technicalities of the financial markets which would affect the real lives of everybody in the money-using economy. It took fourteen months until the 'financial crisis' [or 'credit crunch'] reached such an intensity that government action, co-ordinated with the Bank of England and the authorities in the USA and the major European markets, was unequivocally necessary. It was essential that something absolutely drastic was done was done, or the financial world as we knew it could simply cease to function.

How had this happened?

The Thatcher governments were guided by Economists who suggested that 'the market' could grow best without government interference, and that organisations like trade unions impeded the market in finding the optimum way of allocating resources through society. So the Thatcherites deliberately removed support from coal mines and shipyards, and protectionist cover for steelworks and other industries that has previously been regarded as 'essential'. Simultaneously they reduced the excessive 'rights' that had been given to the unions under Labour governments; to the extent that workers' rights were placed at a discount of almost 100%. The result was massive deindustrialisation across much of the country. The Conservatives ignored this dereliction, because the financial services were largely replacing the losses to national income that came from factory closures. The 'big bang' of 1986 set the financial institutions free to develop their own fantasy markets: just at the time when computers placed unprecedented processing capability at their disposal. Transactions could become more complex and take place much faster than had every been contemplated when unknown forces were freed.

The economy continued to grow - in terms of gross aggregate turnover - because the growing financial sector constantly found new ways of creating purchasing-power from thin air, by creating new financial devices; of which one of the most prominent was securitisation. This device enabled the 'retail' banks and building societies to lend far more money than they could have loaned if they had remained dependent on their depositors to provide them with the stock of money to be lent. Now the lenders simply lent more, then bundled the mortgages and the credit-card 'balances' into blocks or 'packages' which they sold to institutions in the new 'wholesale' financial market. Thus money could constantly be recycled through new loans; and it was considered a triumph of innovation: until it became apparent that many mortgages [starting with 'sub-prime' mortgages in the USA] would never be repaid. Concern about the security of the 'securities' escalated during 2008 as more and more of the financial 'instruments' that had been traded through the wholesale finance sector came under suspicion as having no substance behind them. Eventually the Bank of England [backed by the government] promised to buy enough 'securities' [using newly-created credit] to keep the financial sector funded with : and they created billions of pounds of 'cash' every month for several years to keep the system rolling on.

In saving that fantasy world, that had been created by a tiny fragment of the population, the real world in which most people lived had to bear the cost of the exercise. At first, it all seemed to be a technical matter; but later a conflict opened up between the demands of the financial sector and the real economy: and by then the government was so committed to saving the financial world that real people in the real world had to forced to accept lower living standards and lesser public amenities. This began slowly under the Gordon Brown government, and consequently the government rapidly expanded its borrowing to continue funding social commitments.

Then came the coalition government, in 2010. To the incoming ministers, the amount of debt that the former Labour government had been incurring was unsustainable. Month after month, as the taxation that people had paid stagnated, the government had borrowed what was necessary to keep public and social services going. Large areas of the economy - especially of the real economy - imploded and ceased to pay taxes to the state or wages to former employees [who also ceased to pay taxes when their incomes failed]. Thus the temptation to borrow yet more to compensate for the failure of the material economy was pressed upon the new government: which boldly decided that the deficit must be eradicated. So austerity became the essence of the coalition's economic policy; and mass misery was ensured. Since most of the misery was well away from Westminster politicians and civil servants could ignore the consequences of their actions. And because there was no place for humanity or reality in their model markets, the Econocracy could ignore the situation entirely.

Tuesday, 8 August 2017

Can Democracy Prevail in Africa?

Kenya has a General election today. Already, before the election, a senior electoral official has been found dead, with irrefutable evidence of torture on his body. Massive preparations have been made to ensure that the voting is properly conducted, but opposition leaders are ready to claim that the presence of security officials at all polling stations is for the intimidation of voters rather than for securing the fairness of the poll. The electronic voting machines will prevent any tampering with paper ballot forms, but can give rise to massive possibilities for malpractice in the processing of the votes. The last election was followed by a period of violence in which at least a thousand people died; and a repeat of that horror is dreaded by the peaceful mass of the population. Much of the voting will be on tribal lines, which gives the Kikuyu the strongest chance of retaining power since they remain the largest tribe.

Kenya, at least, has elections; with are conducted with every appearance of propriety. Most of the people obey the law, and most of the elected opposition MPs take part in civilised debate, most of the time; and the civil service is broadly professional, and corruption is not crippling to normal economic processes. Not many African countries have a similar level of adherence to the sort of constitutional norms that the former colonial powers left them with.

Most African countries' boundaries were set by conventions between the European occupying powers in the nineteenth and early twentieth centuries. There is little concession to ethnicity in the allocation of people to states, which were given independence by their former occupiers within the nonsensical frontiers that their colonisers had compromised upon. Thus some parts of some tribes live in reasonably prosperous countries where to some extent the rule of law is respected; while their ethnic cousins are repressed and suppressed in adjacent states.

From the northern tip of the continent to the extreme south, and from east to west, with just a few exceptions like Kenya where a form of democracy prevails, there are two options for the state to operate: strong-man dictatorship with reasonable social stability, or anarchy. Some states, particularly in central Africa, have been in anarchy for decades; with internationally-recognised governments controlling little more than the capital city, the airport and the ultimate pinnacle of corruption in the distribution of the mineral royalties and international aid that comes into the country. China has been willing to exploit such situations where a Chinese corporation has been able to secure a defensible area of land for exploitation for farming or mining, and in some cases that has helped greatly to stabilise the country in which this takes place. But in general, from Libya to South Africa, the tragic abuse of the majority of the population goes on.

The umpteenth attempt to rid South Africa of its demonstrably corrupt president is taking its course, and may at last succeed: shortly before his term is due to come to an end anyway. Many of the formal procedures and processes that were established by the British colonial regime, and retained by the white supremacists during the apartheid era, are still maintained; thus it is curious to see forms of procedure that seem to accord with the European democratic tradition still being used to cover the chaos into which South Africa seems inexorably to be descending.

I was studying politics when the first former colonial territories were granted independence; and was bemused to see tribal politicians wearing western suits and ties as they sat on parliamentary benches modeled on those of their former coloniser, in some cases - briefly - deferring to a 'Mr Speaker' in a black gown and a white full-bottomed wig. Such images quickly disappeared from the world's newsreels. There is now little reportage in the west of the day-to-day politics of any African country: the stories are all too sad and too familiar. Nobody expected the election in a former Belgian colony last week to produce any result other than what happened; just as nobody expects change in Kenya. There is a chance that the logjam will break in South Africa, but the prospect for returning to the 'rainbow nation' image of the first years of Mandela's presidency are slim.

A small part of the tragedy can be ascribed to the colonial frontiers and the colonial legacy: but, after half a century of independence, most of the blame for the chaos is ascribable to Africa: and so the solutions must emerge from African minds and become accepted in African hearts. That is the only way in which true progress in politics and in economic affairs will be achieved.