Christiano Ronaldo is the world's best-paid, and probably the world's best, footballer. He is currently in the headlines as a consequence of a pursuit by the taxman, who is challenging the amount that the footballer's accountants have declared to be his taxable income from sale of his 'image rights': the use of his name and his photographic [or sculptured] image. No doubt there will be an eventual settlement. The media are interested because their viewers and readers are almost all fascinated by the massive amount of money that is attracted to people with a huge 'image'.
In my book, advertised on this page, I stress that the utter failure of Economists to account for intellectual property [ik] - of which image is just one category - is one of the most significant demonstrations of the utter failure of their subject to explain the real world in which humans live. So long as the received wisdom of the Econocracy dominates the advice that governments receive on economic issues, questions like the appropriate taxation of image rights will be more contentious than they need be; and disputes about the eligibility of different streams of income for taxation will enrich accountants and lawyers, and benefit journalists.
Footballers, film stars and inventors keep the residue of their incomes that the taxmen leave for them: that taxation makes them a little less obscenely wealthy than they otherwise would be; and some of them dissipate their fortunes due to bad character or bad advice, but the resultant distribution of wealth is generally thought to be 'fair' once the due tax has been paid. A megastar like like Sir Paul McCartney is honoured because he has remained tax resident in the UK throughout his career.
Politicians who became prominent have the opportunity to make significant fortunes after their careers have ended in failure [as all political careers do, with relative degrees of failure]. Tony Blair is notorious for the wealth that he has acquired since leaving office. The loathed George Osborne has been offered lucrative contracts, and David Cameron and Barrack Obama are both 'working' on their memoirs, for which they have been paid massive advances. Gordon Brown, unusually, has stuck to his Presbyterian principles, allocating most of his post-premier earnings to charitable causes and deserves credit for this. Even Theresa May, who is currently dissipating what little political 'capital' she has ever had, will make a nice little pile of pennies when her career is terminated.
How long that career will last is currently being determined; and the outcome of the current discussions will ultimately define the reputation on which her inevitable failure will be judged. She is risking chaos in Northern Ireland by her proposed political alliance with the DUP, and strife within her own party as a result of having sided with Liam Fox, Boris Johnson and other apparent economic illiterates in planning to leave the European Economic Area. The division of the population in the 2016 Referendum was broadly one-third to stay, one-third to leave, and one-third with no answer: a sensible prime minister would take this as a guide to seek the best and broadest possible consensus - which is very clearly for a 'soft Brexit'. Mrs May seems to be ignoring those signs, just at present.
Perhaps she is reckoning that her memoirs will be worth more, the more spectacular is her coming failure and the damage that it does to the nation? Perish the thought!
Showing posts with label Obama. Show all posts
Showing posts with label Obama. Show all posts
Wednesday, 14 June 2017
Monday, 16 April 2012
Money and Value
It is a key principle in my text Personal Political Economy - PPE [see link from this blog] - that while value is a common noun in everyday speech, and to value is a verb that matters hugely to anyone who is contemplating selling a house or an antique cabinet, the search for a comprehensive 'theory of value' has been one of the most useless components of academic Economics. Sometimes a chapter heading on the lines of The Theory of Value appears in a textbook above an exposition of the idealistic, mechanistic, normative model of Supply and Demand that has only ever applied to any real-world situation by chance for a very short period in specific circumstances. The concept that the untrammelled operation of Supply-and-Demand would 'in the long-run' produce an equilibrium, under which the optimum distribution of the available resources would be achieved throughout the economy, is utterly impractical and unconvincing.
In examining what is the 'optimal' allocation of wealth, Economists have no concept of justice that they assume to underpin their value theory. Tutored in Economics, the contemporary pack of machine politicians present voters with promises that they will promote fairness, which boils down to a variant of the package of trivial changes in taxes and benefits that the civil service Grauniadistas consider to be feasible. Fairness is one of the woolliest slogans that can be devised; but in contemporary politics it is a descriptor of a mixture of policies that intrude into the economy, and divert the patterns of payments, to achieve social objectives that might satisfy naive concepts of 'justice'. The dogmas of Market Economics that drove politics in Britain and the USA from 1980 to 2008 are in direct conflict with the 'fairness' agenda, which implies increasing transfers of wealth from those who generate it to the mass of dependants of the state: requiring more taxes from the diminishing minority of the population who can be classified as 'productive', and more government activity. While the Obama administration has increased state spending, especially through benefits and by funding projects that would not attract market investment in current circumstances [if ever], the UK government is committed to containing government spending and - in particular - capping benefits. The US economic data appear to show modest recovery [but not enough to pay for the increase in borrowing]: the UK data show less certainty of growth and increasing state borrowing. Benefits have been restricted for many tens of thousands of people, who will experience real hardship, while spending on benefits in total is still increasing.
Tens of thousands of immigrants are admitted every year to the UK who have no prospect of employment, and often a positive intention not to work. These people are admitted as asylum-seekers and as 'family members' of settled immigrants and as 'students' [notwithstanding efforts by the underperforming UK Border Agency to stem the flow]. These new migrants, and the children of settled immigrants, increase the total cost of benefits plus social housing plus schools plus health care: while the government attempts to reduce the rate of increase in spending on all those services by reducing eligibility to indigenous British subjects, many of whom have become retired or redundant after a lifetime of taxpaying employment. The resentment that has built up is not simply directed at the Conservative-LibDem coalition; voters recognise that a Labour government would not depart significantly from these policies, whatever the windbags say in their tedious speeches where attacking the coalition is much easier than making convincing policy proposals.
Economists [who are still being over-produced by the bloated university system] are now finding employment as 'valuers' of medical treatments, environmental 'assets' and other assets and actions that nobody considers can be traded on a basis of market Economics. The Health service evaluates treatments by setting the improvement in patients' lifestyle, or the prolongation of their lives, against the price of the medicine and the wages of the staff who administer it and the estimated cost of space and supplies in the hospital. It is impossible to 'value' a human life, and it is mere charlatanry to purport to state a 'benefit' that is equal to, or superior to, the computed cost of the treatment. Similarly any attempt to state the 'value' of a clean river or pollutant-free farming in money terms is simply voodoo Economics since nobody ever would, or could, set a price on such 'benefits' that the public would be willing to pay. There are areas of life where most mature people would agree that those who want to consume a product should be free to do so if their earnings enable them to afford the price. There are many other areas, such as healthcare and the preservation of parkland, where the vast majority would agree that the cost should be met from taxation. Whether it is local taxation or national taxation, whether it falls on income or spending [or whether the taxation is disguised as levies on water companies or petrol sales, so that the consumers paying the tax do not even recognise it] it is a societal levy. The more that deluded politicians follow the Economists' advice to 'privatise' public assets, the more they promote either the degradation of the environment or of health care or of education or the concealment of taxes within the prices that people pay for the output of the privatised businesses. The whole thing is a con: and the proof of that is that there is no credible system for the valuation of the 'benefits' that can be claimed to offset the costs of providing these services. The outcome is diminishing credibility for politics.
In examining what is the 'optimal' allocation of wealth, Economists have no concept of justice that they assume to underpin their value theory. Tutored in Economics, the contemporary pack of machine politicians present voters with promises that they will promote fairness, which boils down to a variant of the package of trivial changes in taxes and benefits that the civil service Grauniadistas consider to be feasible. Fairness is one of the woolliest slogans that can be devised; but in contemporary politics it is a descriptor of a mixture of policies that intrude into the economy, and divert the patterns of payments, to achieve social objectives that might satisfy naive concepts of 'justice'. The dogmas of Market Economics that drove politics in Britain and the USA from 1980 to 2008 are in direct conflict with the 'fairness' agenda, which implies increasing transfers of wealth from those who generate it to the mass of dependants of the state: requiring more taxes from the diminishing minority of the population who can be classified as 'productive', and more government activity. While the Obama administration has increased state spending, especially through benefits and by funding projects that would not attract market investment in current circumstances [if ever], the UK government is committed to containing government spending and - in particular - capping benefits. The US economic data appear to show modest recovery [but not enough to pay for the increase in borrowing]: the UK data show less certainty of growth and increasing state borrowing. Benefits have been restricted for many tens of thousands of people, who will experience real hardship, while spending on benefits in total is still increasing.
Tens of thousands of immigrants are admitted every year to the UK who have no prospect of employment, and often a positive intention not to work. These people are admitted as asylum-seekers and as 'family members' of settled immigrants and as 'students' [notwithstanding efforts by the underperforming UK Border Agency to stem the flow]. These new migrants, and the children of settled immigrants, increase the total cost of benefits plus social housing plus schools plus health care: while the government attempts to reduce the rate of increase in spending on all those services by reducing eligibility to indigenous British subjects, many of whom have become retired or redundant after a lifetime of taxpaying employment. The resentment that has built up is not simply directed at the Conservative-LibDem coalition; voters recognise that a Labour government would not depart significantly from these policies, whatever the windbags say in their tedious speeches where attacking the coalition is much easier than making convincing policy proposals.
Economists [who are still being over-produced by the bloated university system] are now finding employment as 'valuers' of medical treatments, environmental 'assets' and other assets and actions that nobody considers can be traded on a basis of market Economics. The Health service evaluates treatments by setting the improvement in patients' lifestyle, or the prolongation of their lives, against the price of the medicine and the wages of the staff who administer it and the estimated cost of space and supplies in the hospital. It is impossible to 'value' a human life, and it is mere charlatanry to purport to state a 'benefit' that is equal to, or superior to, the computed cost of the treatment. Similarly any attempt to state the 'value' of a clean river or pollutant-free farming in money terms is simply voodoo Economics since nobody ever would, or could, set a price on such 'benefits' that the public would be willing to pay. There are areas of life where most mature people would agree that those who want to consume a product should be free to do so if their earnings enable them to afford the price. There are many other areas, such as healthcare and the preservation of parkland, where the vast majority would agree that the cost should be met from taxation. Whether it is local taxation or national taxation, whether it falls on income or spending [or whether the taxation is disguised as levies on water companies or petrol sales, so that the consumers paying the tax do not even recognise it] it is a societal levy. The more that deluded politicians follow the Economists' advice to 'privatise' public assets, the more they promote either the degradation of the environment or of health care or of education or the concealment of taxes within the prices that people pay for the output of the privatised businesses. The whole thing is a con: and the proof of that is that there is no credible system for the valuation of the 'benefits' that can be claimed to offset the costs of providing these services. The outcome is diminishing credibility for politics.
Tuesday, 14 February 2012
China Checks Out the USA
Xi Jinping, the man tipped to be the next President of China, is to spend the best part of this week inspecting the USA. Having been a member of a trade delegation a couple of decades ago, he is sensibly retracing his steps to see what has visibly changed and what is the same: including a small-town sample of middle America.
With the possible exception of Australian Labour's rejected Kevin Rudd, no party leader in the 'western' states would have a chance of making an equivalent comparison in middle China on the basis of personal experience.
The significance of such an occasion is easily underestimated. Simplistic westerners still think of China as having only recently and partially emerged from centuries of dormancy, followed by decades of communist isolation: if they think about such things at all. The emergence of China as an industrial exporter has been sufficiently blatant for a majority of newspaper readers to have some awareness of the point: and perhaps 20% of Europeans and 10% of Americans [but at least 50% of Australians] know that China has recently become recognised as the second-biggest economy - by turnover - in the world. Speculation is rife among the chattering classes as to when China will overtake the USA in Gross National Product: which will occur several decades before most forecasters reckon that income per capita in China comes close to equality with that of the USA. It is to be expected that this week's Chinese visitors will be interested to check out these perceptions while they gain a visual impression of the conditions in the fourth year of the Obama presidency. They will have done more preparatory study than their American hosts will have devoted to them: and they will be looking for hard evidence; while the Americans will be primed on the finer detail - so far as it can be ascertained - of the visitor's curricula vitarum. A dozen US agencies will record what the Chinese say, and where they go, what they eat and drink, and what they appear to be looking at; but they don't yet have any technology that enables the hosts to see actually what the visitors are seeing.
The disparities between the USA and China are increasingly significant. Today it has become known that NASA is withdrawing from a planned series of visits by unmanned spacecraft to Mars, leaving the exercise to the Europeans, because of financial stringency which is becoming greater despite Obama's profligate deficit spending. China is constantly expanding its advanced programme of space exploration. As the USA continues the withdrawal of 'advisers' from Iraq and prepares to withdraw its fighting forces from Afghanistan, China is continuing its peaceful capture of resources in Africa. The pundits reckon that there is a diminishing chance of China contributing to any bailout of the Euro, while Chinese interests are taking over European firms especially in fields of advanced technology. The sophistication of Chinese policy on all fronts is of the highest importance.
The Chinese are not technologically backward. They do not need to buy foreign firms to access technology; but they sometimes find it convenient to acquire comparators from the USA and Europe and to have the experience of marketing advanced products to the world's most sophisticated consumers. The best British universities had significant cohorts of students from 'mainland China' back in the nineteen-sixties. I have a clear recollection of Chinese students waving the 'Little Red Book' of Mao's 'philosophy' as they disrupted a lecture by Professor Bernard Crick to announce that they were abandoning their 'corrupt' and 'decadent' academic study of Politics in a doomed system, to return to China to participate in the Cultural Revolution. As soon as the trauma was over, Chinese names again appeared in the class registers of British science and technology - and social sciences - departments. Chinese students also appeared in increasing numbers in American, Australian and European universities. Chinese graduates have been taking western best practice into higher education back home for more than forty years as the student cohort within China has expanded dramatically.
Observation of the relatively poor domestic circumstances in which the great majority of the Chinese live should be balanced against the fact that millions of modern flats have been bought by consumers who have had access to credit in the past decade. Tens of millions more flats and houses are needed: and will be constructed. Financing and managing such a massive construction and sales programme in a liberalising economy is bound to be uneven: there will be an alternation of relatively easy money with hardening rates of interest, and sometimes control of monetary and credit expansion is bound to be less than perfectly efficient. In rural areas there is constant regeneration of the housing stock as village families vie with each other to ugrade or replace their houses and this process seems to be less dependant on the banks' ability to lend. Outside commentators who optimistically see calamity emerging from each adjustment in this area of policy will have a long wait for fulfilment of their direst prophesies.
Even more importantly the typical Chinese consumer who has not yet been rehoused has already moved beyond the stage of just acquiring necessities. The near-universality of mobile phones and the spread of the internet have a much greater impact in empowering consumerism than they do in fostering democracy: there is not an inevitable equivalence of rising access to mobile media and an increase in political dissent. The limited means that dissident groups had of communicating with each other in earlier generations were much more susceptible to maintain secrecy than are tweets, blogs, texts and phone calls. The most serious political and social dissentients will continue to be the most cautious users of the new media for theuir secret purposes; and they may well be heavy users of games, marketing sites and music downloaders to sustain a deceptive profile.
Consumers need to be told what is available for them before they begin to work out whether they want it and - if so - how they could afford it. The web as an advertising medium, as a proponent of fashion and a source of information on the availability for preferred brands is immeasurably powerful; and it can sweep to prominence in China way ahead of commercial television, wall posters and advertising in the press. The ability of millions of interested readers to check for consumers' comments on products and services that the potential buyers have not yet even seen - although many posts are set-up by the providers - gives the individual an unprecedented freedom of information on the basis of which she or he can decide how to spend a small surplus on wages. It is only a matter of time and learning before the squalid underground lending market is transformed into a regulated nexus of credit unions and savings-and-loans firms that can advance cash to reliable employees who will thus be able to pay for expensive quons by instalments over many months.
The spread of high level consumption - of quons [in terms of PPE: see the link from the blog] - will be far more profound and extensive in China in the next few years than any consumer enfranchisement has been in the past, anywhere in the world. China will shift from an emphasis on simple manufacturing to the assembly and marketing of sophisticated quons, not primarily for export but to enhance the standard of living of the domestic population. Those Chinese quons that compare with the best on the world market will be bought wherever free trade is permitted: and in the period while that situation is being prepared China will continue to export simple mass-produced goods around the world and thus maintain a balance of payments notwithstanding the country's voracious demands for commodity imports.
The visitors to the White House this week will be lionised by the man whom a consensus of Chinese pundits are reported to regard as a lame-duck president: in response they will be polite, reflective and cautious. There is not much that their hosts can teach them: and the reassurance that they will get for themselves from their own observation of the condition of the United States will influence China's approach to global Political Economy through the next decade.
With the possible exception of Australian Labour's rejected Kevin Rudd, no party leader in the 'western' states would have a chance of making an equivalent comparison in middle China on the basis of personal experience.
The significance of such an occasion is easily underestimated. Simplistic westerners still think of China as having only recently and partially emerged from centuries of dormancy, followed by decades of communist isolation: if they think about such things at all. The emergence of China as an industrial exporter has been sufficiently blatant for a majority of newspaper readers to have some awareness of the point: and perhaps 20% of Europeans and 10% of Americans [but at least 50% of Australians] know that China has recently become recognised as the second-biggest economy - by turnover - in the world. Speculation is rife among the chattering classes as to when China will overtake the USA in Gross National Product: which will occur several decades before most forecasters reckon that income per capita in China comes close to equality with that of the USA. It is to be expected that this week's Chinese visitors will be interested to check out these perceptions while they gain a visual impression of the conditions in the fourth year of the Obama presidency. They will have done more preparatory study than their American hosts will have devoted to them: and they will be looking for hard evidence; while the Americans will be primed on the finer detail - so far as it can be ascertained - of the visitor's curricula vitarum. A dozen US agencies will record what the Chinese say, and where they go, what they eat and drink, and what they appear to be looking at; but they don't yet have any technology that enables the hosts to see actually what the visitors are seeing.
The disparities between the USA and China are increasingly significant. Today it has become known that NASA is withdrawing from a planned series of visits by unmanned spacecraft to Mars, leaving the exercise to the Europeans, because of financial stringency which is becoming greater despite Obama's profligate deficit spending. China is constantly expanding its advanced programme of space exploration. As the USA continues the withdrawal of 'advisers' from Iraq and prepares to withdraw its fighting forces from Afghanistan, China is continuing its peaceful capture of resources in Africa. The pundits reckon that there is a diminishing chance of China contributing to any bailout of the Euro, while Chinese interests are taking over European firms especially in fields of advanced technology. The sophistication of Chinese policy on all fronts is of the highest importance.
The Chinese are not technologically backward. They do not need to buy foreign firms to access technology; but they sometimes find it convenient to acquire comparators from the USA and Europe and to have the experience of marketing advanced products to the world's most sophisticated consumers. The best British universities had significant cohorts of students from 'mainland China' back in the nineteen-sixties. I have a clear recollection of Chinese students waving the 'Little Red Book' of Mao's 'philosophy' as they disrupted a lecture by Professor Bernard Crick to announce that they were abandoning their 'corrupt' and 'decadent' academic study of Politics in a doomed system, to return to China to participate in the Cultural Revolution. As soon as the trauma was over, Chinese names again appeared in the class registers of British science and technology - and social sciences - departments. Chinese students also appeared in increasing numbers in American, Australian and European universities. Chinese graduates have been taking western best practice into higher education back home for more than forty years as the student cohort within China has expanded dramatically.
Observation of the relatively poor domestic circumstances in which the great majority of the Chinese live should be balanced against the fact that millions of modern flats have been bought by consumers who have had access to credit in the past decade. Tens of millions more flats and houses are needed: and will be constructed. Financing and managing such a massive construction and sales programme in a liberalising economy is bound to be uneven: there will be an alternation of relatively easy money with hardening rates of interest, and sometimes control of monetary and credit expansion is bound to be less than perfectly efficient. In rural areas there is constant regeneration of the housing stock as village families vie with each other to ugrade or replace their houses and this process seems to be less dependant on the banks' ability to lend. Outside commentators who optimistically see calamity emerging from each adjustment in this area of policy will have a long wait for fulfilment of their direst prophesies.
Even more importantly the typical Chinese consumer who has not yet been rehoused has already moved beyond the stage of just acquiring necessities. The near-universality of mobile phones and the spread of the internet have a much greater impact in empowering consumerism than they do in fostering democracy: there is not an inevitable equivalence of rising access to mobile media and an increase in political dissent. The limited means that dissident groups had of communicating with each other in earlier generations were much more susceptible to maintain secrecy than are tweets, blogs, texts and phone calls. The most serious political and social dissentients will continue to be the most cautious users of the new media for theuir secret purposes; and they may well be heavy users of games, marketing sites and music downloaders to sustain a deceptive profile.
Consumers need to be told what is available for them before they begin to work out whether they want it and - if so - how they could afford it. The web as an advertising medium, as a proponent of fashion and a source of information on the availability for preferred brands is immeasurably powerful; and it can sweep to prominence in China way ahead of commercial television, wall posters and advertising in the press. The ability of millions of interested readers to check for consumers' comments on products and services that the potential buyers have not yet even seen - although many posts are set-up by the providers - gives the individual an unprecedented freedom of information on the basis of which she or he can decide how to spend a small surplus on wages. It is only a matter of time and learning before the squalid underground lending market is transformed into a regulated nexus of credit unions and savings-and-loans firms that can advance cash to reliable employees who will thus be able to pay for expensive quons by instalments over many months.
The spread of high level consumption - of quons [in terms of PPE: see the link from the blog] - will be far more profound and extensive in China in the next few years than any consumer enfranchisement has been in the past, anywhere in the world. China will shift from an emphasis on simple manufacturing to the assembly and marketing of sophisticated quons, not primarily for export but to enhance the standard of living of the domestic population. Those Chinese quons that compare with the best on the world market will be bought wherever free trade is permitted: and in the period while that situation is being prepared China will continue to export simple mass-produced goods around the world and thus maintain a balance of payments notwithstanding the country's voracious demands for commodity imports.
The visitors to the White House this week will be lionised by the man whom a consensus of Chinese pundits are reported to regard as a lame-duck president: in response they will be polite, reflective and cautious. There is not much that their hosts can teach them: and the reassurance that they will get for themselves from their own observation of the condition of the United States will influence China's approach to global Political Economy through the next decade.
Tuesday, 6 December 2011
Politicians: Out of their Depth?
Witty people who have never borne political or business responsibility can be highly vocal in expressing their criticism - and their ridicule, quickly descending into contempt - for office-holders who are struggling to pursue their ends in difficult, unpredictable and often adverse conditions. There are a large number of leaders at the present time who seem to have a limited [or even obtuse] perception of the situations that they are attempting to manage.Critical opposition is very often easier to mount than is reasoned presentation of feasible alternative options. Let us take a few examples that are in the News this evening.
In Moscow and other Russian cities there are small but significant demonstrations against the continuance of Vladimir Putin in office: either as Prime Minister or as President. These are at least matched numerically by demonstrating supporters of Putin's party; but it is notably oppositionists who are being arrested. In recent months, around the time of his announcement that he will again run for the Presidency of the Russian Federation, Putin has presented himself as a fitness fanatic, and a game hunter, and a supporter of the Arts, and a politico-economic polymath, and a populist who was astonished to hear boos directed at him when he came into the arena during a recent sporting event. He has done enough positive things for the country to enable him to seek re-election on the basis of that healthy record; but he seems to be unable to believe that. He also appears to lack any vision about how he can increase genuine popular support by tackling endemic problems that have emerged in a rapidly developing and changing socio-economic nexus. He has tried to project a 'personality' that is so multi-faceted as to be unsustainable, as well as fundamentally incredible; while he has been notoriously indulgent to corruption. He will never convince the punters that he is Superman; and by every device that he uses to try to demonstrate the impossible he increases the opportunities for satire. Even his fiercest critics have conceded that he has had every chance to gain the presidency by a real electoral majority: but now he is threatening his chances both by inviting ridicule at his antics, and by his toleration of cronyism and corrupt business practice, and by the exploitation of political and bureaucratic processes by venial officials who he retains in post. This is very sad for him [and it could be terminal, if he allows his personality to sink into megalomania] and it is tragic for Russia which he has demonstrated the ability to serve so well.
President Obama's gift, which is also his curse and his potential doom, is his fluency. He can be highly articulate both in set speeches and in off-the-cuff utterances; but the more he says off-script, the more apparent it is to the growing army of his critics that his understanding of issues is incomplete [at least], his power to analyse complex data appears to be exiguous, and he appears to have no attainable plans for delivering benefits to voters, despite the release of many billions of dollars by his administration and by the Federal Reserve system acting in cahoots with the federal government. The more Obama takes centre-stage and holds forth, the less credible he appears to be; the more money his administration spends, the less relevant he seems to be in the legislative process and yet he carries the primary blame for the lack of impact of the limited policies that are adopted.
The remarkable Prime Minister of India, Manmohan Singh, is constantly criticised for doing too much and to little to grow the economy, for obstructing measures of liberalisation and for letting in too much alien capitalism, for tolerating the residual curse of the caste system and for indulging capricious [and probably crooked] untouchable politicians, for being locked-in to party-political croneyism and for being meritocratic. All of which adds up to showing balance, moderation, and a positive skill in directing a cabinet of more than thirty ministers and in getting responses out of an immense, inert bureaucracy. This is an outstanding political achievement that is working to the economic and social benefit of a massive and fast-expanding population.
No such single figure prevails in China. The complex hierarchy of past, present and future holders of the highest posts in the echelons of the Communist Part - and thus of the state- is partially understood by foreign commentators; though all assessments of power shifts and secret alliances are subject constantly to revision. No system that channels humans who are heavily endowed with ambition and personality through the corridors of the Great Hall of the People and the courtyards of the Forbidden City can work as smoothly as the Chinese authorities would have one believe: but their system has responded remarkably well to the complex processes of liberalisation and hugely rapid economic change and development, delivering 9%+ economic growth despite the turmoil in global capital markets and its impact on American and European buyers of Chinese goods. In recent days various Chinese ministers and bank officials have popped up as expert spokespersons on the specific issues of the day; talking truth to the diminishing western powers, asserting China's independent assessment of policy options, emphasising that their country is now a responsible global superpower and demonstrating that this truly is the case.
The different modes of success of Indian and Chinese leadership do not betoken a general superiority of Asian political models, or of Asian politicians over the rest of the global crop. I have lost count of the succession of ineffectual Japanese Prime Ministers who have come and gone since I first had the privilege of being a visiting professor there; and the politics of South Korea hardly bear forensic examination. Thailand has a Prime Minister who was elected solely because she is somebody's sister; and the entire country is scared of what will happen when the revered King dies and his heir - generally regarded as a wastrel, or worse - claims the inheritance. Sri Lanka is a military dictatorship, Pakistan is prey to factions that assemble and undermine sullenly-consensual governments that exist by striking compromises with the military. Politics in Indonesia and Malaysia is being edged slowly in the direction of 'moderate Islamism', which also seems to be the trend is the Arab world from Saudi Arabia to Morocco. Iran is suffering an attempt at permanent revolution that could be ridiculous if it were not armed to be dangerous to its neighbours; while Iraq is the agonised outcome of more than half a century of conflict.
We have not yet glanced at the prevailing political mode in most Asian states, nor any in Latin America: so there is much of the world left to review in future blogs. One area that must briefly be mentioned in this wide-ranging look at the political effectiveness of various people and situations is Europe. Two countries - Italy and Greece - are directly ruled by EU Proconsuls; and half a dozen are constitutional monarchies where the party-political mix in government is pragmatic and is not existentially important. In France, Germany and the United Kingdom, despite very different rhetoric surrounding the relative position of the state government to the EU, it is clear that their politically-insecure leaders see the maintenance of the Union as the key priority. The original purpose of the Union was to prevent a third 'world' war: now it is seen as potentially [though not yet actually] an entity big enough to allow the European economy that is being overtaken by emergent powers to have a chance of survival on the world stage. The political leaders in the predominant EU member states, and [often more so] in the smaller states that follow them, are focussed on what Europe can do for the economic environment, and thus enable growth to return and eventually generate enough new wealth to transcend the present gloomy prospect. That was the proposition on which Heath 'sold' the EEC to the British Parliament and people, and Cameron and Merkel and Sarkozi are relying upon the same hope today. Not much fruit has sprung from Heath's planting of forty years ago and the politicians of 2011 understand that they cannot get away for long simply by saying that the long-term gains [when we are all dead] will make the short-term pains [that will be felt for several years of the immediate future] worth while. The message is impossible to deliver in a positive package, but that is the message to which the inescapable impact of the Iron Law of Wages has driven them. For European connoisseurs of politician rhetoric, if for nobody else, interesting times lie ahead.
For an explanation of the Iron Law of Wages, see Personal Political Economy which is accessible from this site.
No such single figure prevails in China. The complex hierarchy of past, present and future holders of the highest posts in the echelons of the Communist Part - and thus of the state- is partially understood by foreign commentators; though all assessments of power shifts and secret alliances are subject constantly to revision. No system that channels humans who are heavily endowed with ambition and personality through the corridors of the Great Hall of the People and the courtyards of the Forbidden City can work as smoothly as the Chinese authorities would have one believe: but their system has responded remarkably well to the complex processes of liberalisation and hugely rapid economic change and development, delivering 9%+ economic growth despite the turmoil in global capital markets and its impact on American and European buyers of Chinese goods. In recent days various Chinese ministers and bank officials have popped up as expert spokespersons on the specific issues of the day; talking truth to the diminishing western powers, asserting China's independent assessment of policy options, emphasising that their country is now a responsible global superpower and demonstrating that this truly is the case.
The different modes of success of Indian and Chinese leadership do not betoken a general superiority of Asian political models, or of Asian politicians over the rest of the global crop. I have lost count of the succession of ineffectual Japanese Prime Ministers who have come and gone since I first had the privilege of being a visiting professor there; and the politics of South Korea hardly bear forensic examination. Thailand has a Prime Minister who was elected solely because she is somebody's sister; and the entire country is scared of what will happen when the revered King dies and his heir - generally regarded as a wastrel, or worse - claims the inheritance. Sri Lanka is a military dictatorship, Pakistan is prey to factions that assemble and undermine sullenly-consensual governments that exist by striking compromises with the military. Politics in Indonesia and Malaysia is being edged slowly in the direction of 'moderate Islamism', which also seems to be the trend is the Arab world from Saudi Arabia to Morocco. Iran is suffering an attempt at permanent revolution that could be ridiculous if it were not armed to be dangerous to its neighbours; while Iraq is the agonised outcome of more than half a century of conflict.
We have not yet glanced at the prevailing political mode in most Asian states, nor any in Latin America: so there is much of the world left to review in future blogs. One area that must briefly be mentioned in this wide-ranging look at the political effectiveness of various people and situations is Europe. Two countries - Italy and Greece - are directly ruled by EU Proconsuls; and half a dozen are constitutional monarchies where the party-political mix in government is pragmatic and is not existentially important. In France, Germany and the United Kingdom, despite very different rhetoric surrounding the relative position of the state government to the EU, it is clear that their politically-insecure leaders see the maintenance of the Union as the key priority. The original purpose of the Union was to prevent a third 'world' war: now it is seen as potentially [though not yet actually] an entity big enough to allow the European economy that is being overtaken by emergent powers to have a chance of survival on the world stage. The political leaders in the predominant EU member states, and [often more so] in the smaller states that follow them, are focussed on what Europe can do for the economic environment, and thus enable growth to return and eventually generate enough new wealth to transcend the present gloomy prospect. That was the proposition on which Heath 'sold' the EEC to the British Parliament and people, and Cameron and Merkel and Sarkozi are relying upon the same hope today. Not much fruit has sprung from Heath's planting of forty years ago and the politicians of 2011 understand that they cannot get away for long simply by saying that the long-term gains [when we are all dead] will make the short-term pains [that will be felt for several years of the immediate future] worth while. The message is impossible to deliver in a positive package, but that is the message to which the inescapable impact of the Iron Law of Wages has driven them. For European connoisseurs of politician rhetoric, if for nobody else, interesting times lie ahead.
For an explanation of the Iron Law of Wages, see Personal Political Economy which is accessible from this site.
Friday, 2 December 2011
Leading Europe
On this day -2 December - in 1804 a man originally called Nabuleone Buenoparte crowned himself Emperor in the Cathedral of Notre Dame, Paris. He grabbed the crown from the Pope, who was about to place it on Napoleon's head, on realising that he did not want even symbolically to receive the crown from anyone else. His empire was delineated as an enlargement of the monarchical France that had been toppled in 1792, but it effectively held sway over continental Europe from Gibraltar to the Russian border. After the fall of Napleon, in 1815, the old monarchies re-established their states under the tutelage of Russia at the Congress of Vienna; and in the revivified 'Congress System' that assembled in Paris in 1919 under the tutelage of the US President Woodrow Wilson a new and more subdivided set of sovereign entities was confirmed in the Treaties of Versailles and Trianon.
In 1935 Adolf Hitler began his campaign to reverse the Treaties. The Rhineland was remilitarised and Saarland was reincorporated into Germany. Attention was then focussed on incorporating Austria into 'Greater Germany' and thereafter in bringing the scattered German-speaking communities in Europe, and the territories where they were settled, also under rule from Berlin. The indigenous inhabitants who were not German would become subject peoples; and anthropological devices were bent to asserting the 'inferiority' of such people. After absolute defeat in a devastating war Germany was shrunk in size, and the scattered Germans who were able to reach the four zones of occupation - however grim the conditions in which they found themselves - were the lucky survivors.
With this experience behind them, the governments of the northern European monarchies and new regimes in the formerly fascist states that operated new Constitutions that were authorised by the victorious allies [US, the UK and France] faced a difficult future. Soviet communism had become established behind the 'iron curtain' in the middle of the continent. Defensive support from the US, and to a lesser but significant extent from the UK, was essential and came at the price of persevering with democratic institutions. Germany, in particular, took the message to heart and has developed into a genuinely democratic state whose citizens' views really counted. Thus in the euro crisis the German electorate has made clear the limits to which they are prepared to pay for the past profligacy of countries that never met the criteria for membership of the eurozone.
The German Chancellor is called upon to lead the resolution of the euro dilemma, with foreigners asking her to lead in a direction that is not wanted by her people. She grew up in occupied East Germany; battered in school by the Communist version of German history. She has transcended those experiences and embraced democracy: and she is not prepared to impose intolerable burdens on German taxpayers at the behest of Obama, Cameron or anyone else outside the eurozone. Nor will she allow the fellow-members of the eurozone to despoil the assets that Germany has painfully accumulated since the nineteen forties. Germany wants to be a good democratic partner in Europe, not a new Reich with a wish to dominate.
A new settlement is needed for the euro: with or without retaining the fringe of spivs as members. Cameron is to visit Sarkozi today, to put down irrelevant markers: he is an impotent petitioner in relation to eurozone politics. Then over the weekend the serious talking that is scheduled to take place is likely to produce the basis for a new treaty by which the eurozone can be made manageable. That which will be defined as manageable, will probably be affordable. If Germany is to fund it, Germany must be satisfied by the new settlement. The crisis - for the moment - is a crisis of the euro: non-members depend on there being a solution that they cannot significantly influence. Eurozone members need a solution; and Germany needs it to be a democratic solution, so it must have a constitutional basis - a new Treaty. The odds are that Angela Merkel will take a modest place in proving that democracy can deliver success: that would be real leadership!
Meanwhile yesterday the Governor of the Bank of England has advised British banks to be ready for rough weather if either the success or the failure of the euro has adverse effects on non-eurozone countries. He suggested that banks should not pay bonuses, but hold the cash in their reserves. This shows a sublime ignorance that was repeated by the former Labour City Minister on the Today programme this morning. The overwhelming bulk of bonuses in 'banks' are not paid to managers or 'executives': they are paid to dealers, broadly in proportion to the purely notional return that they deliver in return for gambling in cyberspace. The more inventive and arcane are the contracts that they devise, in general, the less understood are the risks that the gambles might bring on to their firm's balance sheet. The bonuses are partly paid in shares - removing a proportion of the ownership of the firm from the other shareholders - and partly in cash that is taken from the regular business turnover of the firm. The cost of the bonuses is 'real' and obvious; the risks that the dealers' gambling incurs are unquantified and dangerous: but billions in taxation has been levied on the notional turnover of the gambling, and on the bonuses, so governments have not had any interest in terminating the problem.
In 1935 Adolf Hitler began his campaign to reverse the Treaties. The Rhineland was remilitarised and Saarland was reincorporated into Germany. Attention was then focussed on incorporating Austria into 'Greater Germany' and thereafter in bringing the scattered German-speaking communities in Europe, and the territories where they were settled, also under rule from Berlin. The indigenous inhabitants who were not German would become subject peoples; and anthropological devices were bent to asserting the 'inferiority' of such people. After absolute defeat in a devastating war Germany was shrunk in size, and the scattered Germans who were able to reach the four zones of occupation - however grim the conditions in which they found themselves - were the lucky survivors.
With this experience behind them, the governments of the northern European monarchies and new regimes in the formerly fascist states that operated new Constitutions that were authorised by the victorious allies [US, the UK and France] faced a difficult future. Soviet communism had become established behind the 'iron curtain' in the middle of the continent. Defensive support from the US, and to a lesser but significant extent from the UK, was essential and came at the price of persevering with democratic institutions. Germany, in particular, took the message to heart and has developed into a genuinely democratic state whose citizens' views really counted. Thus in the euro crisis the German electorate has made clear the limits to which they are prepared to pay for the past profligacy of countries that never met the criteria for membership of the eurozone.
The German Chancellor is called upon to lead the resolution of the euro dilemma, with foreigners asking her to lead in a direction that is not wanted by her people. She grew up in occupied East Germany; battered in school by the Communist version of German history. She has transcended those experiences and embraced democracy: and she is not prepared to impose intolerable burdens on German taxpayers at the behest of Obama, Cameron or anyone else outside the eurozone. Nor will she allow the fellow-members of the eurozone to despoil the assets that Germany has painfully accumulated since the nineteen forties. Germany wants to be a good democratic partner in Europe, not a new Reich with a wish to dominate.
A new settlement is needed for the euro: with or without retaining the fringe of spivs as members. Cameron is to visit Sarkozi today, to put down irrelevant markers: he is an impotent petitioner in relation to eurozone politics. Then over the weekend the serious talking that is scheduled to take place is likely to produce the basis for a new treaty by which the eurozone can be made manageable. That which will be defined as manageable, will probably be affordable. If Germany is to fund it, Germany must be satisfied by the new settlement. The crisis - for the moment - is a crisis of the euro: non-members depend on there being a solution that they cannot significantly influence. Eurozone members need a solution; and Germany needs it to be a democratic solution, so it must have a constitutional basis - a new Treaty. The odds are that Angela Merkel will take a modest place in proving that democracy can deliver success: that would be real leadership!
Meanwhile yesterday the Governor of the Bank of England has advised British banks to be ready for rough weather if either the success or the failure of the euro has adverse effects on non-eurozone countries. He suggested that banks should not pay bonuses, but hold the cash in their reserves. This shows a sublime ignorance that was repeated by the former Labour City Minister on the Today programme this morning. The overwhelming bulk of bonuses in 'banks' are not paid to managers or 'executives': they are paid to dealers, broadly in proportion to the purely notional return that they deliver in return for gambling in cyberspace. The more inventive and arcane are the contracts that they devise, in general, the less understood are the risks that the gambles might bring on to their firm's balance sheet. The bonuses are partly paid in shares - removing a proportion of the ownership of the firm from the other shareholders - and partly in cash that is taken from the regular business turnover of the firm. The cost of the bonuses is 'real' and obvious; the risks that the dealers' gambling incurs are unquantified and dangerous: but billions in taxation has been levied on the notional turnover of the gambling, and on the bonuses, so governments have not had any interest in terminating the problem.
Tuesday, 22 November 2011
Gift of the Gab?
The few students in my generation who learned some German were intrigued to find that Gift in German means poison in English. It is the sort of arcane fact that occurs to one in later life when someone who has made a reputation by oratory overexposes their acquired facility to a degree that becomes damaging. The most conspicuous case in recent British history is Neil Kinnoch who talked Labour out of credibility in the high Thatcher years and then lost the election that followed the fall of the Iron Lady in a single inarticulate wail at a premature celebration rally in Sheffield. In explaining the Tories' surprise victory academic analysts emphasised the fresh simple honest image projected by the new Conservative leader, John Major [hard to believe that now, is it not?]; and the refusal of the Labour shadow Chancellor, John Smith, to answer any direct question as to what taxes he would impose if he was in a position to do so. Analysts in the saloon bar had not doubt that the 'Welsh windbag' had simply got his cum-uppance. He was rewarded with a role as an EU Commissioner and a peerage, after which he was paid to pose as an elder statesman.
The most remarkable windbag - or oratorical genius, depending on the commentator's point of view - now active in the global political system is the current President of the United States. Obama appeared from nowhere to serve two years on the US Senate and went straight into the race for the Democrat presidential nomination. He talked himself into it, and into the White House, where he has continued to talk with remarkable facility. His many enemies claim that he was not born in the USA, that no school friends have been identified, that his income in significant periods of his life has not been attributable and that his university grades seem to be inaccssible: these and many even more far-fetched accusations have been brushed aside. He talks on: about anything and everything. The less impact his admonitions and assertions have, the more assertively he talks on. Meanwhile the United States has marched steadily towards an economic precipice as the public debt [just of the Federal Government] has reached $15 trillion: fifteen thousand billion. The Democrats have cheered Obama on as his adherents have brought in massively costly schemes for universal medical care and have maintained social welfare spending at the same time as they have approved massive spending plans for infrastructure investments designed to stimulate economic growth. The Republicans have become increasingly intransigent in opposing the government's plans.
American politics have reached a stalemate that is potentially ruinous in the current world context. The European crisis is apparently worsening. The dominance of the west is widely proclaimed. The west is patently incapable of addressing its problems with efficiency and intelligence: and the great stumbling block is democracy. The US Constitution and the people it has placed in office have combined to make a complete impasse. The ambiguities of the Treaties that bind the European Union, and the fudges and half-truths by which they have been implemented, have created a morass through which no known path exists. The USA and Western Europe have proclaimed the advantages of democracy as a universal exemplar for the rest of the world: and it has produced the toxic combination of economic disaster and political impotence. When the causes of this fiasco are analysed it becomes clear that is has obviously been accumulating for at least forty years. The shining success of Canada and Australia is not sufficient to justify democratic economic policy to a sceptical world that is doing better with different political structures.
The reasonably articulate Prime Minister of the United Kingdom made his excuse for his own incomprehension of the surrounding reality at the Confederation of British Industry conference yesterday. He declared that nobody had foreseen in 2010 how bad the economic situation would be in 2011. This was his excuse for the fact that his government could not now meet its schedule for reducing the rate of annual aggregation of national debt. The carefully chosen gang of Economists who staff the shiny new Office of Budget Responsibility predicted that the situation was to be eased by economic growth that is patently not happening. They predicted that the private sector would quickly offset the loss of jobs in the public sector, which has not occurred. Cameron and Osborne [the Chancellor of the Exchequer] have spent a year and a half bumptiously parroting those failed predictions. Their opponents in the Labour Party have also seen 'growth' as the panacea, arguing the absurd might-have-been that more growth would have happened if the government had not made the modest reduction that it has implemented in borrowing. It is more likely that higher borrowing by the British state would have brought forward the date when it has to offer a higher interest rate on its borrowing. Cameron's admission that the economy is not delivering the hoped-for growth is a belated recognition of the cor-blimey-obvious that the people who spend less that they used to in the saloon bar have been saying throughout the wasted year of coalition fudge.
Cameron is wrong to say that the better-informed counter-view to the official line was not available when he came into office. I am an outlier in having made the point in my small corner for more than forty years; but I have never been alone and will soon be in the majority. None of us wants to gloat over the abject national failure that democracy has brought upon us. Democracy is still the least-bad form of government; but is now in the painful situation that extra-democratic measures may be necessary to address the economic crisis: and that could put the future of the free society in unprecedented danger.
The most remarkable windbag - or oratorical genius, depending on the commentator's point of view - now active in the global political system is the current President of the United States. Obama appeared from nowhere to serve two years on the US Senate and went straight into the race for the Democrat presidential nomination. He talked himself into it, and into the White House, where he has continued to talk with remarkable facility. His many enemies claim that he was not born in the USA, that no school friends have been identified, that his income in significant periods of his life has not been attributable and that his university grades seem to be inaccssible: these and many even more far-fetched accusations have been brushed aside. He talks on: about anything and everything. The less impact his admonitions and assertions have, the more assertively he talks on. Meanwhile the United States has marched steadily towards an economic precipice as the public debt [just of the Federal Government] has reached $15 trillion: fifteen thousand billion. The Democrats have cheered Obama on as his adherents have brought in massively costly schemes for universal medical care and have maintained social welfare spending at the same time as they have approved massive spending plans for infrastructure investments designed to stimulate economic growth. The Republicans have become increasingly intransigent in opposing the government's plans.
American politics have reached a stalemate that is potentially ruinous in the current world context. The European crisis is apparently worsening. The dominance of the west is widely proclaimed. The west is patently incapable of addressing its problems with efficiency and intelligence: and the great stumbling block is democracy. The US Constitution and the people it has placed in office have combined to make a complete impasse. The ambiguities of the Treaties that bind the European Union, and the fudges and half-truths by which they have been implemented, have created a morass through which no known path exists. The USA and Western Europe have proclaimed the advantages of democracy as a universal exemplar for the rest of the world: and it has produced the toxic combination of economic disaster and political impotence. When the causes of this fiasco are analysed it becomes clear that is has obviously been accumulating for at least forty years. The shining success of Canada and Australia is not sufficient to justify democratic economic policy to a sceptical world that is doing better with different political structures.
The reasonably articulate Prime Minister of the United Kingdom made his excuse for his own incomprehension of the surrounding reality at the Confederation of British Industry conference yesterday. He declared that nobody had foreseen in 2010 how bad the economic situation would be in 2011. This was his excuse for the fact that his government could not now meet its schedule for reducing the rate of annual aggregation of national debt. The carefully chosen gang of Economists who staff the shiny new Office of Budget Responsibility predicted that the situation was to be eased by economic growth that is patently not happening. They predicted that the private sector would quickly offset the loss of jobs in the public sector, which has not occurred. Cameron and Osborne [the Chancellor of the Exchequer] have spent a year and a half bumptiously parroting those failed predictions. Their opponents in the Labour Party have also seen 'growth' as the panacea, arguing the absurd might-have-been that more growth would have happened if the government had not made the modest reduction that it has implemented in borrowing. It is more likely that higher borrowing by the British state would have brought forward the date when it has to offer a higher interest rate on its borrowing. Cameron's admission that the economy is not delivering the hoped-for growth is a belated recognition of the cor-blimey-obvious that the people who spend less that they used to in the saloon bar have been saying throughout the wasted year of coalition fudge.
Cameron is wrong to say that the better-informed counter-view to the official line was not available when he came into office. I am an outlier in having made the point in my small corner for more than forty years; but I have never been alone and will soon be in the majority. None of us wants to gloat over the abject national failure that democracy has brought upon us. Democracy is still the least-bad form of government; but is now in the painful situation that extra-democratic measures may be necessary to address the economic crisis: and that could put the future of the free society in unprecedented danger.
Monday, 24 October 2011
Council and Congress
One of the most important aspects of the present economic crisis, though it has had little media coverage, is that the most-troubled countries are 'parliamentary democracies'. The resolution of the crisis will be as important in terms of politics as it will be in the economy: and it will be harder to resolve in some countries because the workings of their democracies may generate stalemate that will be extremely difficult to dissolve.
The German Chancellor has become much more constrained by Bundestag reluctance to opening the coffers to the rest of Europe than she would have been in the first half of this year. The obvious fury of many millions of Germans at the mere idea of keeping the Greeks on their fantasy feather-bed will surely be reflected in the voting in the elections early next-year, so deputies seeking re-election have clamped down on the government. German democracy has limited the options for a resolution of the Euro crisis.
In Britain a more complex situation is being illustrated today by a parliamentary vote on the question as to whether or not there should be a Referendum on Britain's future membership of the European Union. The politics of this matter are clear: a Sunday Times opinion poll published on 23 October showed that about two-thirds of the electors in the sample would have favoured the Referendum, which was called for by a Petition of more than 100,000 people. If Britain were a 'real' democracy the way forward would be clear. But Britain is not such a democracy. Britain is governed by the Privy Council, of which most voters have no knowledge at all. After each General Election the Sovereign invites the party leader who is most likely to command a majority of votes in the House of Commons to become Prime Minister: and a member of the Privy Council if he or she is not a member already [which would be most unlikely as it has not happened since the improbable emergence of Labour as the leading party in the Commons in the early 1920s]. The Prime Minister then invites colleagues to become members of his/her Cabinet, which is a Committee of Privy Councillors: so any chosen members who are not sworn of the Council are quickly admitted. Any Cabinet is bound by all the decisions and commitments of its predecessors, however far apart the political stance of successive Cabinets may be.
For reasons that are not disclosed to the electorate at large, the Council is determined to suppress any real debate on Britain's membership of the EU. It may be the consequence of a major pledge to the USA: it is clearly not driven by the Monarch herself, whose preference for Commonwealth links has been unequivocal for the whole of her reign. Whatever the cause of the ban, it is very firm. Privy Councillors Clegg and Milliband {Ed] have joined Councillor Cameron in insisting that their Members of Parliament must ignore the manifest preference of the electorate and vote against the idea of a Referendum. Cameron has even descended to the old rogue's argument of 'unripe time' to escape the fact that he has made his career by indicating a general Euroscepticism. Other conspicuous issues are also placed beyond democratic resolution: 'human rights' legislation, immigration, energy policy and capital punishment are prominent among them. This pattern of suppression has seemed to be the constitutional norm for so long that the dominance of the Privy Council seems unshakable: but an economic collapse could suddenly precipitate the end of the charade. Councillor Cameron could just have allowed a minority of Tory MPs quietly to enjoy their day, with no urgent threat to membership of the EU: foolhardily, he has drawn attention to the sham of democracy.
In the USA, where the Constitution reigns supreme, the division of powers between the Executive, Legislative and Judicial wings of the Federation is seen as essential to the functioning of their democracy. Such a system requires effective articulation between the Congress and the White House, and between the two Houses of the Congress. That is now failing, and may freeze into rigid incompatibility. As unemployment remains stubbornly high, and massive state spending.appears not to be stimulating the economy sufficiently to change the situation, the basic economic policy pursued by the Obama Administration is increasingly incredible. The hugely expensive but functionally questionable Medical Care system that the Democrats have introduced is increasing costs on employers and on taxes. The level of vituperation between increasingly-radical tendencies in both Democrat and Republican parties is reaching historically exceptional levels. The Democrats face a huge dilemma as to whether or not to support Obama for a second term, or look for a candidate who might better achieve a national consensus. The risk of loosing the black vote may well secure Obama's selection: but however much money Obama might raise for his campaign his overall failure to galvanise the country must count against him. The Republicans' problem in finding any satisfactory candidate has been painfully obvious: but that does not affect the fact that around half the electorate is open to persuasion that the Republicans cannot be as disastrous as Obama has proved over the past four years. There is all to play for in the 2012 General Election: in that sense, democracy will triumph. But in the important area of achieving functionality of Government in concert with Congress, there is no clear indication that either of the eventually-selected candidates will be able to succeed sufficiently to create a new economic environment in the USA.
It is too soon to pronounce the end of democracy: but the threat of dissolution is palpable.
The German Chancellor has become much more constrained by Bundestag reluctance to opening the coffers to the rest of Europe than she would have been in the first half of this year. The obvious fury of many millions of Germans at the mere idea of keeping the Greeks on their fantasy feather-bed will surely be reflected in the voting in the elections early next-year, so deputies seeking re-election have clamped down on the government. German democracy has limited the options for a resolution of the Euro crisis.
In Britain a more complex situation is being illustrated today by a parliamentary vote on the question as to whether or not there should be a Referendum on Britain's future membership of the European Union. The politics of this matter are clear: a Sunday Times opinion poll published on 23 October showed that about two-thirds of the electors in the sample would have favoured the Referendum, which was called for by a Petition of more than 100,000 people. If Britain were a 'real' democracy the way forward would be clear. But Britain is not such a democracy. Britain is governed by the Privy Council, of which most voters have no knowledge at all. After each General Election the Sovereign invites the party leader who is most likely to command a majority of votes in the House of Commons to become Prime Minister: and a member of the Privy Council if he or she is not a member already [which would be most unlikely as it has not happened since the improbable emergence of Labour as the leading party in the Commons in the early 1920s]. The Prime Minister then invites colleagues to become members of his/her Cabinet, which is a Committee of Privy Councillors: so any chosen members who are not sworn of the Council are quickly admitted. Any Cabinet is bound by all the decisions and commitments of its predecessors, however far apart the political stance of successive Cabinets may be.
For reasons that are not disclosed to the electorate at large, the Council is determined to suppress any real debate on Britain's membership of the EU. It may be the consequence of a major pledge to the USA: it is clearly not driven by the Monarch herself, whose preference for Commonwealth links has been unequivocal for the whole of her reign. Whatever the cause of the ban, it is very firm. Privy Councillors Clegg and Milliband {Ed] have joined Councillor Cameron in insisting that their Members of Parliament must ignore the manifest preference of the electorate and vote against the idea of a Referendum. Cameron has even descended to the old rogue's argument of 'unripe time' to escape the fact that he has made his career by indicating a general Euroscepticism. Other conspicuous issues are also placed beyond democratic resolution: 'human rights' legislation, immigration, energy policy and capital punishment are prominent among them. This pattern of suppression has seemed to be the constitutional norm for so long that the dominance of the Privy Council seems unshakable: but an economic collapse could suddenly precipitate the end of the charade. Councillor Cameron could just have allowed a minority of Tory MPs quietly to enjoy their day, with no urgent threat to membership of the EU: foolhardily, he has drawn attention to the sham of democracy.
In the USA, where the Constitution reigns supreme, the division of powers between the Executive, Legislative and Judicial wings of the Federation is seen as essential to the functioning of their democracy. Such a system requires effective articulation between the Congress and the White House, and between the two Houses of the Congress. That is now failing, and may freeze into rigid incompatibility. As unemployment remains stubbornly high, and massive state spending.appears not to be stimulating the economy sufficiently to change the situation, the basic economic policy pursued by the Obama Administration is increasingly incredible. The hugely expensive but functionally questionable Medical Care system that the Democrats have introduced is increasing costs on employers and on taxes. The level of vituperation between increasingly-radical tendencies in both Democrat and Republican parties is reaching historically exceptional levels. The Democrats face a huge dilemma as to whether or not to support Obama for a second term, or look for a candidate who might better achieve a national consensus. The risk of loosing the black vote may well secure Obama's selection: but however much money Obama might raise for his campaign his overall failure to galvanise the country must count against him. The Republicans' problem in finding any satisfactory candidate has been painfully obvious: but that does not affect the fact that around half the electorate is open to persuasion that the Republicans cannot be as disastrous as Obama has proved over the past four years. There is all to play for in the 2012 General Election: in that sense, democracy will triumph. But in the important area of achieving functionality of Government in concert with Congress, there is no clear indication that either of the eventually-selected candidates will be able to succeed sufficiently to create a new economic environment in the USA.
It is too soon to pronounce the end of democracy: but the threat of dissolution is palpable.
Thursday, 22 September 2011
The UK cannot twist away from its problem
August 2011 was a terrifying landmark for the British government. They borrowed more than in any previous August: a year after taking power with ringing declarations that control of spending and borrowing was their overwhelming priority.
Is it really the fault of Balls-Brown 'mismanagement' of the economy, especially of government spending, from 1997 to 2008? The answer surely is that Labour did nothing to assist the real development of the economy, but they are neither clever enough nor bad enough to get away with wantonly ruinous policies. Britain is [at least superficially] not alone: we are perceived to be in a hole that looks very similar to that in which the USA authorities have begun to panic.
President Obama is obviously unhappy as his rating with the voters plummets. The Federal Reserve is trying a new version of 'quantitative easing' called 'the twist': and commentators are highly sceptical that this will have the desired effect.
But the US economy is much better placed than the British, as will become clear in the coming months. The Chancellor says that he will stick to a failed policy: this is reckless obscurantism. The problems must be diagnosed properly before they can be addressed effectively. This blog tries to help.
Is it really the fault of Balls-Brown 'mismanagement' of the economy, especially of government spending, from 1997 to 2008? The answer surely is that Labour did nothing to assist the real development of the economy, but they are neither clever enough nor bad enough to get away with wantonly ruinous policies. Britain is [at least superficially] not alone: we are perceived to be in a hole that looks very similar to that in which the USA authorities have begun to panic.
President Obama is obviously unhappy as his rating with the voters plummets. The Federal Reserve is trying a new version of 'quantitative easing' called 'the twist': and commentators are highly sceptical that this will have the desired effect.
But the US economy is much better placed than the British, as will become clear in the coming months. The Chancellor says that he will stick to a failed policy: this is reckless obscurantism. The problems must be diagnosed properly before they can be addressed effectively. This blog tries to help.
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