Trump's Triumph for Mercantilism

It is inevitable that the entire Economics establishment is critical of the new US tax regime that will [almost certainly] be approved by Congress today.

The package largely restores Mercantilism to fashion: that is, the idea that a country should build up its own commerce and industry, and only trade with others where there is an obvious advantage in doing so. It is significant that among the tax reductions there is a swingeing decrease in the tax on funds that are earned for the sale of intellectual property abroad. This can only strengthen the technology giants as exporters and earners, who will bring more of their overseas earnings into the USA for investment in new developments, the purchase of foreign intellectual property [UK beware!] and distribution in the USA as wages and dividend payments.

The Econocracy has been inculcated with the contrary view, that 'Free Trade' is an ideal to be pursued: as if any sane government would expose a country to imports from the rest of the world regardless of whether the prices charged are set deliberately to undercut - and ultimately to destroy - the native industry. The econocratic view has been prominent since 1766 [Adam Smith's year of publication] and predominant since 1890 [Alfred Marshall's Principles of Economics].  Britain's economic decline is pretty well coterminous with the adoption of Marshall's dogma in the universities between 1920 and 1940. That whole mindset needs to be swept away.

The great proof of the new Republican policies will be the extent to which the increasing US deficit supports growth of the US economy. If the economy is growing at a greater rate than the accumulated debt is growing, the ratio of debt to GDP will be declining, which will signify success and be the final proof of the extreme disutility of conventional Economics.

I am working slowly trough my text, and finding it a very depressing experience: the sheer pompousity of my style upsets me hugely: no wonder the last effort did not sell!

Bitcoin: the material costs

Bitcoin has no material substance; but it only exist in an environment of massive computer power which deploys energy to give effect to the complex algorithms and mathematical structures that it rests on, and the massive security networks that have been proven breachable at several points on various occasions.

The amount of brainpower that is included in the system and in its use has to be paid, fed and watered; as do all the traders and buyers who have now joined in the bubble. I have also seen massive estimates of the cost of the electric power that had been - and is being - consumed in the process.

The bitcoin bubble will burst: though the notional 'currency' may survive [as the South Sea Company survived the crash that ended that particular bubble]. More importantly, millions of people know a little about blockchain which will almost certainly develop as a massive set of tools of commerce very beneficially: but the costs of constructing and operating any such systems need carefully to be evaluated.

This is a very interesting phenomenon: but the bubble will end in tears for a lot of people.

Now I will return to the work that is preoccupying me at present. I will continue to blog occasionally so that i have a log of the dates on which I post comments.

A Great Day for the Irish

So:
the Irish did win. Mrs May is now committed to defer the dual vetoes of the Dublin government and the DUP. The British have promised, in effect, to remain subject to the EU: indirectly.

Now we can expect to see little Mr Macron trying to grab some thousands of British banking jobs.

The rest is mere detail. Submission to Brussels is assured.

I Told You: The Irish Change the Question

There will never be a better example of Boris Johnson's unfitness for a responsible job than the Foreign Secretary's recent - disastrous - failure to recognise the importance of the Good Friday Agreement in the context of the Brexit negotiations. The Agreement is a full-scale international treaty, sponsored by the USA and registered with the United Nations. The idea that it could ever be buried in weasel words that slid over the crucial facts - let alone openly abrogated by unilateral decision by the UK [with or without the 'sanction' of a referendum] - shows a degree of lazy, slovenly negligence that is breathtaking.

It will be fascinating what twists and turns are now going to be enacted, in the full blaze of publicity.

Further Disintegration: Mrs May's Government Shambles

I have met Damian Green a few times, mostly in his capacity [when the Tories were in opposition] as a director of his regional water company. I would be very surprised indeed if he wasted his time, or risked his reputation, using an office computer to spend 'many hours' watching soft porn. If his computer was used in that way, by one of the staff in Portcullis House or possibly by an intern, then it is no part of the role of the police to make accusations against Mr Green on national television. The fact that the credibility of the First Secretary is being challenged suggests that there are indeed dark forces at work, with the intention of bringing about the end to the agony of failure of this government.

The precarious state of our national politics is again emphasised by the letter to the Prime Minister [which has, of course, been released to the press] from Nigel Lawson, John Redwood, Jacob Rees-Mogg and others who seem to want the nation to be quite sure of their guilt if the economy hits the disaster to which their demands would drive it.

I find it difficult to concentrate on other issues - of which there are many - when the key elements of national sustenance and security are being knocked away. The people, whether the they voted to stay in or to leave the European Union, deserve a better politics than they are offered at present. The entire political class, including McDonnell and Corbyn no less than Mrs May and the Thatcherite dinosaurs who have just sent her a 'nudge' towards ruin, have forfeited the trust of the electorate; but we are left with no better choice, no alternative that could achieve any degree of visibility to the electorate before March, 2019.

If, in the coming days, there is real news about the economy or our society - or about Economics - I will not be able to restrain myself from blogging about it; otherwise, I shall go off-line for a period and try [yet again] to set out my current understanding in a longer piece of continuous text.

Spectacular Naivete

Jacob Rees-Mogg speaks slowly and clearly. He has a reputation for expressing clear ideas, some of which are out of kilter with contemporary fashion; notably his strictly orthodox Roman Catholic attitudes to homosexuality and the procreation of children. Yesterday lunchtime he excelled himself in a discussion of the Commons committee report on the Brexit situation on the BBC2 show, the daily politics.

He displayed an astonishing degree of ignorance about the realities of contemporary human aspiration and about the nature of world trade. In his view, the mass of the British people want cheap food and cheap clothes; therefore the UK should open its borders to imports from the countries that can supply the cheapest food and the cheapest clothes.

He did not mention the need to have countervailing exports of British goods and services to other countries, with which to earn the foreign exchange to buy the cheap imports. he did not seem to have any awareness that the countries - like Bangladesh - that are home to the cheapest clothes manufacture have the least capability to pay for the high-tech exports on which the future of the UK depends.

It is a recurrent theme of this blog that the most advanced country, the USA, will never grant to Britain [or to the EU] truly most-favoured access to their domestic market, because they are anxious to nurture their advanced economic sectors: which is best done by enabling their innovating firms to make big enough profits continue with the research and development programmes. Even before Trump, and certainly after Trump, they will be unashamed to prefer US technology, entertainment, financial services and other highly profitable areas of activity. It is part of the American culture to preserve, protect and defend their own firms and their intellectual property.

As the world's second economy, China is notoriously prone to require firms trading into China to share their intellectual assets with Chinese 'partners'. Japan has been closely chauvinistic throughout its modern economic history, and India is developing on similar lines.

Thus, if Brexit Britain went down the route prescribed by Mr Mogg there would be a monumental and rapidly expanding balance-of-payments deficit.

Even more significant, however, is the implicit ignorance shown by Mogg about the pattern of consumer aspirations that has developed all over the world. Yes, the class of hereditary paupers that was created by the Thatcher regime [and subsequently consolidated as part-salaried welfare dependants producing low levels of output per head under Blair, Brown and Cameron-Clegg-May] does want cheap food and clothing. But they also want smart phones, computer games, access to popular music and sports coverage. A major reason why they want cheap food is to have enough money [and access to credit] to buy the high-end products and services that are most fashionable. Such a living standard is accessible to the poorer members of an advanced-economy common market: it is not available on WTO terms to a rapidly-declining economy that is denied access for its exports to the richest countries in the world.

Mogg has revealed to me the extent to which the extreme Brexiteers live in cloud cuckooland.

The Future of Britain and Ireland; and the Relevance of Donald Trump

Five Tory MPs yesterday labelled themselves even more firmly as people who were willing to risk the economic future of the United Kingdom outside the carapace of the European Economic Area. They also accepted - whether or not they see it in those terms - the possibility of a recurrence of the 'war' waged over centuries by the IRA and its precursors. By refusing to recognise that the only secure way to carry forward the peace accords that have been achieved in Ireland since 1970 is for the UK and Ireland to remain integral to the the Common Market, these people have exposed the entire population of both islands to a very real danger.

I have repeatedly pointed out in this blog that by subsuming enough of the identities of the two states in a community it was made possible for Britain to put huge subsidies into Ireland [via various European funds] that were sufficient eventually to secure the Good Friday Agreement. It would be insanity to reverse that process; and it is fervently to be hoped that by remaining in the same economic space - even without the UK participating in the political European Union - the peace can be maintained. The majority of the Commons committee on Brexit sensibly agreed that the half-baked notions for a sham land border between the Irish Republic and the UK, secured by unachievable and unaffordable IT, would never be satisfactory. Unless the Tory party can formally decouple leaving the European Union from remaining in the European Economic Area, there is no 'cast iron' means of securing an open border in Ireland.

It is - literally - a matter of life or death for the DUP to insist that Northern Ireland is fully part of the UK [for as long as the present peace and constitutional status can be maintained]. They must oppose any half-witted pretence that anything else will do.

The Irish government and its 26 associates in the European Union would be wildly irresponsible not to make this point: and, if necessary, make it the sticking point in the upcoming EU summit. It is a moot point whether Mrs May understands this issue.

Meanwhile, the British political class has united to excoriate the US President for riding out his ego by quoting from a fringe right-wing political outfit in the UK, The publicity of this episode has apparently caused a rush of interest in the group [which I will avoid naming], including a rush of membership applications. That issue may have caused bad feeling in the egotist in the White House, and has certainly increased the misplaced contempt that the British Grauniadistas express for him; but it is not the most important nor the most relevant point. The election of Trump to the presidency was the consequence of a massively effective populist campaign. Trump promised to 'make America great again' and one of the preferred ways of doing that is to discriminate against imports. The UK is not a massive importer of goods into the US; but the UK is probably still second to the USA in the generation and worldwide diffusion of intellectual property, especially in fields of culture, entertainment and key areas of scientific innovation. Any idea that Britain will be pushed to the front of some queue for special access to US markets is dafter fantasy than the idea that some cosmetic 'solution' will resolve the Irish border question. If the UK economy is not within the European Common Market, it will be out in the cold. It will shrivel, living standards will collapse and any idea of renewing economic growth through investment will be an impossible dream.

We have very little time to 'get real'. The shortest route to sense is to separate the vote to 'leave the European Union' from the Tory minority's obsession that this rolls-in the ideas of leaving the Common Market and the economic area. No second referendum is necessary: just a dose of common sense.

Personality, Effectiveness and the National Interest

The London Stock Exchange has been in the news for precisely the wrong reasons in the past few days. Following the announcement that the very successful, reputedly abrasive, chief executive was  leaving one significant shareholder took a very public stance to assert that the chairman should go and the chief executive should remain. Rumours swirled about clashes of personality, secret payoffs and dirty work at the crossroads. After entertaining the speculative journalists for a couple of weeks it is now announced that both chairman and chief executive are to go: the chief executive soon, the chairman in 2019. The publicity has been unsettling, and the Exchange is now said by some to be a vulnerable takeover target; with the owner of the New York Stock Exchange said to be a keen potential buyer.

There is no doubt that, despite regulatory and chauvinistic forces preventing a proposed merger with the German stock exchange, the chief executive has been very successful, multiplying the share price very significantly: he will no doubt leave with very significant financial reserves to underpin his aim to grow vines.

Over the decades, there have been many examples of chief executives who dominate and build up hugely successful companies; often for them to be ruined within a few years after the great man stands down. One of the most spectacular in my lifetime has been Arnold Weinstock of the English Electric Company. Over the spectrum from domestic appliances to world-class warplanes, this conglomerate company built a steady reputation for business success and thus declaring decent dividends. For most of the couple of decades while Weinstock ruled the company in a highly individual and essentially conservative way, the chair was occupied by the complementary character Lord Nelson of Stafford whose emollient, confident handling of the formal business of the company [including shareholder relations] left the chief executive the space he needed to manage in his own way.

After Weinstock's retirement there came in people who teachers in Business Schools would undoubtedly rate higher than Weinstock on all the measures of formal competence that are emphasised by academic commentators [especially those in third-rate British business schools]. With major reorganisation, changes of name and restructuring, the next generation of managers destroyed the business in a very few years.

What is left of the 'clever end' of the old English Electric Company, the aeronautical facilities in the north-west of England that have survived until now within more recently cobbled-together conglomerates, are being reduced - and are very much under threat of closure - as a consequence of cuts to the defence budget, combined with the increasingly prudish opposition to the sale of aircraft and arms to regimes that purists consider to be oppressive. There is a very present danger that the United Kingdom will soon forfeit any capacity to build military aircraft: while Brexit [if the buffoons have their way] will lead to the slow exclusion of UK manufacturers from Airbus.

Lords Weinstock and Nelson together took a major part in enabling the UK to be at the very forefront of defence technology: and one of the ways in which they helped this process was by including the defence-oriented projects within a larger conglomerate that made significant profits from its consumer electrical goods. Thus the some of the defence contracts, for some of the time,  could be priced at less than full cost because of internal subsidy by the company. This pricing structure also applies to the suppliers of components for the major projects in the defence arena. It is extremely important in France, where the heavily-state-supported viability of the aircraft industry is maintained with constant nudging from the state.

Britain has lost both the Weinstocks and the appetite to enable them to maintain their niche in the "military-industrial complex" which is essential for any state that hopes to be a power in the world [or even in the neighbourhood]. Before the last dregs of the potential to restore the complex have drained away, it behoves the wider public to recognise what we have had, and are so close to losing for ever.

Selling Newspapers to the Great British Public

The popular taste has again been demonstrated on a massive scale: the upcoming royal wedding has dominated all but one newspaper for the past few days. The Grauinad  has equally pandered to its constituency by keeping the news off its front page. The rest of the press has at least had large photoshoots, and some papers have had multipage pull-out supplements. The papers would not do this unless they were sure that the public wanted it.

The recent announcement of a National Industrial Strategy has stimulated rather bored comment from industrial and business correspondents, largely emphasising that there is little new thinking in the large document; and very little new money from the government to give effect to the strategy. One of the saddest aspects of the strategy is that it is an 'industrial' strategy: while above all the UK needs a new Economic Strategy.

The Thatcher era created millions of hereditary paupers who, in the past decade have been steered into low-paid jobs that achieve low productivity while the 'workers' receive subsidies in the form of state benefits to maintain their modest standard of living. This is not a sustainable system - but it is not addressed in the strategy.

Nor does the strategy address the key issues of the century: climate change , the supply and salubrity of water and the availability of food [both on a global scale and in the sad little world of an economically isolated United Kingdom].

No wonder the redtop tabloids have had little time for this latest effusion of governmental thinking-in-the-box.

Corbyn and Bitcoin: Capitalist Catastrophes

A major Wall Street bank has released a piece of research which [inter alia] warns that the advent of a Corbyn-led Labour government in the UK would potentially have a more calamitous impact on London share prices that would  'Hard Brexit'. The markets have balanced out the 'risk' arising to future profits from firms if the government totally cocks-up the Brexit negotiations with the actual fall in the pound among world currencies and the day-to-day performance of the listed companies. The level of the stock market index would fall in the event of failure; but the possibility is factored in to buyers' calculations. On the other hand, the imponderable impact on the market of Corbyn actually becoming prime minister is inestimable. How far he would cling to his lifelong Marxist dogma [and how far his party would follow him there] cannot be predicated on any known basis of probability. Thus, the bank argues, there might be no 'floor' below which British stock prices would fall. Consequently, the Wall Street Crash of 1929 might be replicated, or even exceeded, once panic sets in among dealers who have no precedent for such a change in government to be assessed against.

The very worst case is a catastrophic Brexit followed by a collapse of the present government and the anointing of Mr Corbyn to preside over the chaos, while John McDonnell would try to enact some of his socialist plans. This is no longer an impossibility, with Dr Fox, Mr Davis and Boris Johnson working so hard to achieve the disaster that they cannot understand.

Meanwhile, the vicious charade of bitcoin continues. The 'price' of this nonentity is continuing to rise, giving strength to some of the unknown number of hundreds of other cryptocurrencies that are now on offer. An ever-wider range of investors, fearful of the very high level to which the world's leading stock indeces have climbed, have 'diversified' some of their holdings into these fanciful 'assets'. Some expect that [whatever they may say now] the central banks might have to buy cryptocurrencies to prop up the market: as they have propped up derivatives and other bets that existed before the crash in 2008. If the central banks do shore up the whole rotten fantasy, the real-world economy will be hammered even harder than it has been since 2008.

The prospect for Britain, host to the London market, is especially hazardous. Warren Buffer called derivatives 'weapons of mass destruction' but they have have been protected and the market in them has continued to grow. The traders in, and owners of, those assets remain complacent: that is what gives confidence to the cryptocurrency speculators. Real people have good cause to be worried; and Corbyn's communist-inspired views give no reassurance at all.

A Less-than-half-cock Strategy

Mrs May was talking in January about the importance of the 'Industrial Strategy' on which her government was supposedly working very hard. It has now been unveiled, and although there is some straight thinking in it there is also grave incomprehension of economic realities. Just to list a few:

*Brexit: it is vitally important that any drugs, designs or other innovations are marketable throughout the European Union on more-or-less the same terms as at present: otherwise, firms that are subsidised to employ teams of researchers in the UK will do the final stages of development within the Union so that the product is not inhibited by regulatory barriers from getting to its primary market. Innovative products will be held up at any border by licensing and regulatory systems, to allow indigenous companies in the potential importer countries to catch up. WTO Rules will not stop such chauvinistic chicanery. Even before the advent of Trump, the USA was notorious in that regard: while firms in emergent economies - including China and India - are not above simple intellectual theft.

*Profits can be shoved abroad by alien companies. So the British state will be sponsoring and helping alien-owned firms to develop products - employing some British scientists and technicians, true - but also allowed to import their own managers and experts for the duration of the period of product development. The manufacturing of the developed idea can that be conducted anywhere on the globe, and the pricing structure can be adjusted so that British taxpayer gets little back for the investment by the British state. Although some share of the intellectual property in some ideas may go to British universities and individuals, the vast majority will be owned by alien organisations; and can thus be alienated as they wish.

*Fake apprenticeships such as are being developed with schools and universities in the UK are most unlikely to produce people with the skill-set that is achieved by real apprenticeship in Germany. It is therefore unlikely that the programme will develop a strong and longstanding skilled workforce such as exists in the dreams of the contributors to the strategic plan. The ongoing delay in the actual launch of the Apprenticeship-MBA will provide no obstacle to the companies that have already agreed to participate in the Industrial Strategy.

*Any genuine development of science and technology in the UK is greatly to be welcomed. But I have observed personally for more than forty years that a huge proportion of the research that is carried out in the best British universities of technology - places like Birmingham, Manchester and Sheffield - is done by alien research students. Not enough Brits are capable of getting good degrees in science and technology, because of the awful state and status of science in schools. Side-tracking kids into fake apprenticeships where they simulate industrial processes instead of doing full-time hard learning will set the UK back in its development of the right skills for the twenty-first century.

My overwhelming feeling about the strategy is: "too little, too late"!

Most importantly, the 'strategists' still have not got lesson number one: that productivity improves only when productiveness gets the prime place. Productiveness is improved only when the profit from any activity is devoted to improving the plant, the processes, the materials used and the people employed. When that is done, productivity can improve and real economic growth [in the sense of generating more income-per-head from the workforce]  can be achieved. I do not see that productiveness will significantly be enhanced by this new Strategy.

The Prime Duty of the State

It has been a primary axiom of government for millennia that the first duty of a government is to defend itself and its people from enemies who would wish to despoil either the public or the personal assets of the members of the community. This requires maintaining a sufficient police system to keep private individuals safe and secure, and sufficient armed forces, sufficiently well equipped, to secure the position of the nation in the world.

Some states are democratic in nature, some are autocratic; and these differences mean that the means by which governments fulfill their primary duty vary enormously. In Britain, we have been lucky to have a generally democratic and fair system; with a reasonable status among nations: though we now know that these are significantly in danger.

People are decreasingly confident that the system is fair, and that the state has added to the duties of defence and law-and-order the obligations to educate the nation in a fair and sufficient system of schools and higher institutions and the obligation to maintain systems of health provision and social care that meet the recognised needs of an ever-changing population. This past week's budget has again shown the utter failure of a regime of Osbornian austerity to correct the disastrous mistakes of the Thatcherites or the idle complacency of the Blair-Brown era. The promise to patch and mend the schools and the health service, and to ignore [for the time being] the increasingly urgent needs of social care and the police and the military, are generally recognised to be not good enough.

As if to epitomise this situation, the Queen's Guard at Buckingham Palace today will be provided by the Royal Navy. Some beancounters in the Admiralty and the Army have recognised that so many of the navy's submarines and surface ships are stuck in harbour because of poor maintenance and a shortage of sailors and of supplies that some seventy sailors can be scraped together to relieve the pressure on the diminished Household Division.

This is not a vainglorious bleat about Britain's lost glory. It is not even a hint that we should try to restore the Empire. But it is recognition - shared with a significant cohort of Tory MPs - that the cuts in defence are dangerous. The more the police is diminished, set against the terrorist threat, the more the army and the navy may be needed to "come to the aid of the civil power" as substitute police and firefighters. If those troops are not there, the nation is in danger.

Against this argument, the government is bleating that the UK has the biggest defence budget in Europe. So, when did Russia cease to be in Europe? Putin has almost completely rebuilt the front-line Russian forces, replacing the decrepit rabble that Yeltsin left behind and raising national morale hugely. France spends less through the formal military budget than the UK; but by other means it maintains the capability to  design and build now warplanes, warships, tanks and guns. Yet again, the excuses that civil servants are supplying to minister to defend the indefensible has become embarrassing. In the twenty-first century, Britain cannot aspire to rule the waves: but we must avoid sinking beneath them.

Productivity: No Puzzle

Since the Budget in the middle of this week, the media have been vociferous about the desperate prospects for British lining standards in the coming decade, all emphasising the predictions [based on recent past records] of low economic growth which is primarily ascribed to low productivity.

I have several times in this blog - as in my book - emphasised that low productivity follows from the low productiveness of the British economy: which is the direct consequence of underinvestment linked to the leeching of wealth from industry and commerce.

Share prices are high because the payout from businesses to their shareholders and bondholders is high. The payout comes in three forms: dividends on shares, interest on bonds  and share buybacks whereby the company uses some of its income to buy some of the shares from the shareholders [which it then cancels, so that there is notionally more capacity of the company to pay even higher dividend per share on the reduced number of shares]. The consequence of this massive flow of payments to the owners of companies is that the companies retain very little income for investment. The long-term consequence of this dearth of investment is that the products will become out-of-fashion, probably on the same timescale as the factories, shops and other installations owned by the company become decrepit due to lack of investment in their maintenance. Future income for shareholders will be shrunk: but by then the shareholders who have enjoyed the high dividends and the share buybacks will have sold their shares in the failing company.

While this process is going on the executive directors can be paid massive salaries to keep the show on the road. As the company is not progressing to the next stage of technology in either products or the plant with which they are made, the workforce needs to be maintained in high numbers [relative to the number of people who would be employed in up-to-date plant] so a large workforce is retained on low wages. There is no mystery here.

There are, of course, many companies that have not succumbed to this depressing slide into decay, which contribute positively to the expansion of national productive capacity and higher-paid employment; but they are no sufficiently prominent in the economy to be dominant.

There is a huge cultural issue here, which can be tackled by education and by adjustment to the tax system. But so long as our pathetic politicians and misled by the Econocracy, that process cannot begin.

Are Our Politicians That Dim?

Mrs May has gone off to an EU Heads of Government meeting today, apparently with a somewhat more precise estimate of the sum that the UK government is prepared to pay to the EU to meet one of the three preconditions for the negotiation to proceed to considering the terms on which the UK may deal with the EU after March 29, 2019.

That leaves one of the three points still in the air,as far as the EU is concerned; with the other two nowhere near resolution.

The current crisis in the Irish government will give the entire EU 'side' in the talks a perfect pretext to prevaricate - probably into next spring, possibly into the summer of 2018 - before the question of the Irish border comes for consideration. I have previously suggested that the Irish Question is likely to derail the whole Brexit charade. The UK government's bland trivialisation of the issue, with 'Downing Street' briefing the press that British-Irish relations are excellent, evades the issue entirely. Thus I repeat my message that the relative state of peace that has been achieved in Ireland was built in the context of both the UK and the Irish Republic being locked into the EU as it proceeds with the trivialisation of statehood in the 'ever-closer union'.

The whole peace process will be undermined unless the Irish border remains a matter of local government, as it now is. If it became an international frontier, with customs posts and passport checks [even if the pipedream of all that being done electronically and unobtrusively could be fulfilled technically] it would end the peace. The Tories' parliamentary majority - supplied by the  Democratic Unionist Party - would be lost if the notion of putting a frontier between the UK and the 'Island of Ireland' even became a serious proposition.

If the members of the British Cabinet, or of its 'Brexit Committee' are daft enough to believe that the problem can be wished away if it is allowed to languish for long enough in the 'Too Difficult' tray they are undoubtedly ruling themselves unfit for office.

Then there remains the third matter to be resolved ahead of the discussion that David Davis wants to begin, the status of the European Court in the future of the United Kingdom: not least, in resolving issues between the UK and the Irish Republic. This makes the issue of the Court inextricably part of the Irish Question: as it is on the status of EU nationals in the UK {of whom there are roughly three times as many as the Brits scattered around the rest of the EU.

It is the most astonishing impertinence for Mr Davis to tell the rest of the EU - 27 states and their shared institutions - to 'grow up' and get on with what the UK wants to discuss, when they have repeatedly made their position clear. Meanwhile Germany might not have a post-Merkel government until the summer, unless the present logjam can be broken by a 'Grand Coalition' that looks most unlikely; and during that time little Mr Macron will do all that he can to entice financial firms to France. The longer the Brexit negotiations are stalled, the more firms will decide how much of their business and personnel to move to the continent: so even if the Irish Question completely stops Brexit from happening - as is highly likely - there will be a loss of investment and employment from the UK to the continent. Well done, Theresa, Boris, Michael, Liam and company!

[And I voted Leave: assuming that in the unlikely event of that side winning, there would be a rational accommodation made with the EU that would respect historical facts and common sense]

The Budgetary Pantomine

The media have given a generous response to the Chancellor's Budget, emphasising that the grim assessment of the prospects for the British economy supplied by the 'Office for Budget Responsibility' gave the Treasury team very little leeway to take any risks.

The torrent of publicity and public pressure that must have made the Chancellor's life quite unpleasant ever since he accepted the job came to a peak in the days before the Budget was announced; and many 'leaks' and hints and briefings had already made it clear what the principal elements in the speech would have to be. If no more money had been allocated to the National Health Service the fuss would have been intolerable for the whole government: though exactly how much more is being given than had previously been announced is obscured by the possibility of double counting. The relative regression of the British educational system, compared especially to those in emergent countries, has been shaming for many years; so small steps to tackle the issue are the least that could be done.

As founder of a housebuilding firm, Mr Hammond can be assumed to have a direct and personal grasp of the issues about housing which had to be addressed. While still fiscally cautious, the measures announced to increase construction and to begin to restore the dream of a 'property-owning democracy'.

The intrinsic theme of the Budget, as had long been foretold, was the desperate state of the British economy: most especially the deplorable level of productivity and the yawning north-south divide. In the past year, plans to electrify the main line to Sheffield and a transpennine route have been axed, thus the lie is given to the words about redressing regional inequity. Still the government is pressing on with HS2 and Hinckley Point, which will do no good for anybody but will take up both engineering capacity and money.

Nothing will be done about productivity until radical change is introduced to the economy at large. That will be my theme for the next few days, when I will be based in Derbyshire and thus can probably have a better perspective on things.

What Hope for Zimbabwe?

Robert Mugabe has gone from office. It is not clear whether he will be allowed [or required] to stay in the country, or what will happen to his deeply-hated wife.

There has been great public rejoicing at the fall of Mugabe; but that is just one man, who has been set aside by the alliance of military officers, former 'freedom fighters' or 'War Veterans' and the current members of ZanuPF: Mugabe's party. There has been no ambiguity about what they want to happen next: the recently-deposed vice-president, Emmerson Mnangagwa - a Mugabe thug for the past four decades - is to be put into the top job. He has a record of extreme violence, most notably the 'ethnic cleansing' of Matabeleland in the 'eighties. This was part of the campaign to establish ZanuPF as a one-party government, which never succeeded fully but was sufficiently ruthlessly maintained for the opposition never to have a chance of winning either the presidency or a majority in parliament. North Korean mercenaries were imported to do much of the killing, and estimates of the numbers killed run around 20,000.

Especially in the light of his recent experience, some commentators are asserting that the incoming president might prove to be a pragmatist, who will recognise the need to engage the opposition in a widespread reform of how the country is to be run. It is blatantly obvious to all commentators that the economy must be opened to international capital, at least some cash-crop farming must be reinstated [though not on the old Rhodesian basis of white-owner-occupied large-scale holdings], and corruption - especially by the police - must be stamped out. How far the new president has the will or the intellectual capacity to do these things, only time will tell.

When Southern Rhodesia had white minority rule it was extremely prosperous, with a high educational standard right across the races and classes. Mugabe has destroyed much of the prosperity, but the educational standards have been maintained. There is almost universal access to the lingua franca - English - and there is an unusually high proportion of graduates among the population: many of whom are unemployed. Insofar as academic qualifications have maintained their value, the latent talent pool is massive.

Mr Mnangagwa is seventy-five, and although he appears to be fit it would indeed be remarkable if he has either the physical resources or the will to hang on to power for more than a decade. He has the opportunity to set in process a positive restoration of the country, and thus become the national hero that Mugabe certainly was not. We shall see....

Puerile Politics

The news media this morning tell me that some of the pathetic runts who have inveigled themselves into Parliament have come up with a spiffing wheeze. They suggest that as Mrs Merkel is in a possibly-terminal struggle for her political existence, the time is right to cut down the amount that the UK should offer to the European Union to settle our obligations as departing members.

Most of the citizens I know - many of whom voted Leave - agree with Mrs May's public assertions that we should pay all that we owe, fair and square. It should have been possible to produce openly-published estimates of the amount many months ago, and most people are bemused that this has not been done. It is a matter of accountancy: the items should be listed, defined, quantified [in sterling] and a total determined. The UK government's tabulation may not tally with that of the Brussels bureaucracy, and an arbitration might be needed; but the whole thing should be open and and conducted in a fair minded manner on both sides.

This is the latest incident of low-mindedness among some politicians, whose behaviour has become a national embarrassment. The word puerile derives from the Latin puer - a boy - and is used to denote human conduct [chiefly by apparently-adult males] that seems to others to be very like the sort of behaviour in which pubescent males engage: often when they group together and goad each other on towards a greater excess of silliness. Every male adolescent is puerile at times: that is human nature. When grown men act in a puerile manner that is always embarrassing: when men in public life behave thus, it is a national disgrace. We have almost become used to fractions of the Conservative Party behaving in such a way: yet it is still painful, and the nation is shamed by it. That Mrs May is so weakened by her election debacle that she is at the mercy of such men is a national tragedy.

It is very hard to see where we go from here. It does appear that the government has ignored the idiots, for the time being, and agreed that we should make an increased offer to get the financial conditions of Brexit settled. It is devoutly to be wished that the government can hold to that decision and move on to substantive discussions.

Germany's Second State

It is a commonplace assertion that a cabal of German bankers and industrialists fixed Hitler's appointment as Chancellor in January, 1933, at a time when support among the electorate for the Nazis was waning. The business figures were scared that the Communists in alliance with the Social democrats could take power: then the Social Democrats would be dealt with and a Communist revolution would be achieved. To forestall that possibility, an alliance of the Nazis with other right-of-centre groups in parliament was cobbled together, and vonPapen was installed as vice-chancellor to provide a restraint on Hitler. vonPapen was easily set aside, but the Nazis followed policies that were endorsed, broadly, by both the bankers and the industrialists who got the orders for rearmament and the construction of the motorways.

Over the last weekend, as Mrs Merkel struggled to cobble a government together after her disastrous loss of seats in the parliamentary election, a cabal of German industrial and commercial bosses put out a statement to the effect that Brexit must be prevented. It looks likely that Germany will have to go through another election, in which the anti-immigrant, eurosceptic Alternative for Germany is likely to retain [or even improve] its share of the vote. If that election is to be avoided, Mrs Merkel must find coalition partners who will agree with the agenda suggested by the business lobby. If that election becomes necessary, Mrs Merkel will be replaced and a new coalition will have to be formed - probably on the lines of past left-right 'Grand Coalitions' that will start with the business sector resolution high on their agenda.

Several other European states want the EU to cut a deal with the UK, including the central European countries that have never submitted to Mrs Merkel's instructions to accept a share of the immigrants whose admission to the continent has caused her to loose her electoral power.

Unfortunately, the shambolic British Brexit secretary, David Davis, will flatter himself that his address to a business group in Berlin last week influenced at least the timing of this exercise of the influence of German's Second [or Secret] State's muscle; which has always been powerful within and behind Germany's politics. The massive economic success of Germany since the utter devastation of the country in 1945 has been driven by the lineal descendants of the people who put Hitler into power, and that lobby remains hugely powerful. Their recent announcement included a reference to the need for flexibility on the EU's principle of free movement of people, since it is well understood that immigration was a key element in the British people's vote for Leave; as it was the key to Mrs Merkel's electoral disaster in Germany itself.

Britain voted to 'leave the European Union'. The 'Tories for National Self-Destruction' [aka the headbangers] interpret that vote as meaning that the UK must leave the political club of Brussels and the Common Market. I have always assumed that it is only rational to split those two: we must leave the antidemocratic political institutions, but remain in the economic community [whether formally, or under the guise of a new trade deal]. That now looks feasible.

The Tories spent much of last week excoriating the MPs who have argued for such a solution. They will soon be vindicated. Then the real target for contempt, those who plan the economic devastation of the United Kingdom by quitting the European Economic Area, must be exposed and defeated. 

Power, Legitimacy and the Economy

Chairman Mao declared that "power comes out of the barrel of a gun"; and over the millennia many regimes all over the world have gained and held power by the power of the sling, the arrow, the spear, the sword and the gun. The Bible tells how the pyramid-building rulers of Egypt consolidated their power over centuries by maintaining state granaries, in which crop surpluses were stored in fruitful years, which could then be doled-out to maintain the people when harvests were insufficient; whether that was due to crop failure [usually due to irregular weather] or to military intervention with the farming year [as when 'the peoples of the sea' invaded some provinces].

The comfortable delusion upon which the European Union was built is that the founder states were mature democracies, where the mass of the population acquiesced in the constitutional order and selected between political parties in regular, orderly elections; largely on the basis of their performance or promises in developing the economy. Since 1995 several states were admitted that had recently been 'democratised' after decades under the Communists gun-rule, and their dissent from the consensus established in Brussels [not least, on inward migration from outside Europe] has now become conspicuous. But [as has been pointed out before in this blog] the west European democracies were new when the Treaty of Rome was signed. Germany was fascist and brutal until mid-1945, Italy was in a similar state. France was still recovering from the hidden conflict between wartime collaborators and resistants. Smaller states with monarchies had been able more quickly after 1945 to establish a sort of normalcy, but all carried legacy issues from the war [except Sweden, which had the great luck to maintain its neutrality]. The EU had a mock-democratic parliament, which was subject to the farce of moving every month from Brussels to Strasbourg that was the proof of its impotence: if the assembly had an iota of real power the members would have opted for a fixed location.

The United Kingdom and Ireland joined the Common Market together, with the secret agenda [agreed in London and Dublin, but not shared with the broad electorate in either country] that a 'peace process' could follow in Ireland as the identities of the two states was subsumed in the European project. Before Mrs Thatcher won her infamous 'rebate', the UK was paying in massive amounts to  the Common Market funds that made similarly vast payments to Irish farmers and local authorities. A generation on, Mrs May and her pathetic cabinet seem not to know that, so they delude themselves that are avoiding the crunch on the Irish Question by putting up notions for a customs arrangement that is very much secondary to the political fudge. If the political fudge is ignored the whole Brexit project will end in violence. It is more than a coincidence that Gerry Adams has announced his intention to stand down: if there is to be a new civil war in Ireland [with inevitable excursions into the British mainland] it will necessarily be  conducted by a new, vigorous Republican high command.

If this interpretation of current events seems apocalyptic, be aware that if consent is withdrawn by a coherent component of the population in any country [or province] the men and women of violence will seek to develop that situation. Mercifully, there is no sign of such a thing happening in Catalonia; but Ireland has been a different case, for centuries.

If a regime is able to provide the mass of the people with palpable economic benefits, as the pyramid-builders did - and as the welfare state did in western Europe for the half-century after 1950 - revolt against the centralised state is rare: Northern Ireland, the Basque region and a few other cases were the exceptions that proved the rule because there were deep historical reasons for those special cases. It is significant that as the Irish Republic gained more of the advantages of a welfare economy, so the politicians in that state eschewed the IRA and their political allies more and more deeply.

Meanwhile, in Zimbabwe massive crowds have assembled to support the army and the ruling ZanuPF party in their attempt to replace Mugabe by his erstwhile deputy. 'The crocodile', as he is known, is a notorious enforcer; hitherto in Mugabe's interests. It was he who unleashed North Korean mercenaries to support his own thugs in killing at least 20,000 Matabele. It was he who organised such beatings of opposition voters in the last presidential election that the opposition withdrew from the second round and allowed Mugabe to reap his 'democratic' mandate. By all accounts he is less blatantly kleptocratic than Grace Mugabe, who was being set up as the next president. Optimists are hoping that the crocodile will metamorphose into a consensualist who can forge a truly 'national' government, but the odds are stacked against that. Once the dust settles on Mugabe's departure, Zimbabwe will revert to rule by fist and cane, supplemented - as judged necessary - by bullets: as in the case in most of Africa.

The chances of Zimbabwe approaching any credible standard of democracy within fifty years are very small.

The chances of the beneficent Brussels fantasy lasting for another fifty years are diminishing: as Mrs Merkel's struggle to build a coalition well illustrates.

Inter-Generational Inequity

It is now a commonplace for even Tory politicians to acknowledge that the under-thirties [on average] have a less affluent lifestyle than the over-sixties. There are, of course, obscenely wealthy young people in sport, entertainment, entrepreneurship [especially in 'technology'] and in the arts: but the median and the average for the age group indicate a lower level of home ownership, a higher level of debt, lower real income and lower expectations than were common among their parents.

There are, of course, desperately poor old people and middle-aged people whose fate can be ascribed to the inhibitions of their ethnicity [especially among low-aspiration native British] or to illness, or to having been failed by the education system [including careers advice], or to drink, drugs, inappropriate social relationships or pure bad luck. Sadly, all these causes of relative poverty afflict a significant proportion of the under-forties [and, indeed, the under-twenties] as well as their grandparents' generation.

More than ever is spent on pensions, schools, the heath service and benefits each year: but the 'deprived' cohorts continue to increase and state provision misses millions of cases of need. The idea that we have  a welfare state is no longer uttered: 'universal credit'  as a pair of words should imply a sort of superior welfare state that reaches everybody who needs it and makes sufficient wealth available for every recipient to have a modestly comfortable lifestyle; but it has no such resonance.

The great benefit that universal credit is meant to confer on its recipients is that it provides them with an absolutely minimal standard of living whilst they are goaded into taking a minimum-wage job. Thus it is part of the downward escalator by which the British people are being habituated to lower expectations, as economic growth stalls and productivity continues to plummet.

The current crunch-point that is having the greatest political wind-space at this moment is housing, and it is almost certain that the upcoming budget will offer increased spending on housing. The key fact to remember about the house building sector is that they have satisfied their market very satisfactorily since the credit crunch: in the sense that the people who have [or can borrow] the money to buy flats and houses have had plenty to choose from. In some areas they can not find exactly the sort of property that pleases them, because all the pretty cottages with roses round the door have been bought already, and conservation zones have not been upset by much development; but in general the affluent have been able to buy more-or-less what they wish. The great lack is of 'affordable' housing, which in the welfare state era was provided largely on a rental or rent-to-buy basis by local authorities and housing associations. In one of the many cretinous supposed 'achievements' of the Thatcherites, the local authority housing was largely sold at knock-down prices to existing tenants [thereby breaking the cycle by which tenants saved the money with which to pay a deposit on their own home, and thus they freed the house for the next aspirant]; and then the government banned the local authorities from spending the pittance they received for the sold houses on building replacements. The reduced stock of social housing very largely became occupied by the 'hereditary paupers' who were created by the destruction of industry. Everybody with any social awareness knows the nature of the housing crisis. Blairites and the Cameron-Clegg clique ignored it. Now it is so acute that it is a major electoral concern, as is evidenced in all the opinion surveys.

Some pathetically inadequate steps will be announced in the upcoming budget, which the infinitely-untrustworthy John McDonnell will mock as he repeats his promise to borrow to spend to solve social problems.

Behind this lie the simple facts that the present socio-economic disaster that is epitomised in the housing situation was politically created, at the behest of Economists. In Economists' terms, the housing market works well: those who can afford to buy houses and flats can get houses and flats, more or less where they want them. But the mass of the rising generation cannot afford to buy the houses that are available: their purchasing-power is insufficient because of the failure of the economy to achieve the necessary state of productiveness. Many of them have been taken so far down the scale of real incomes that they cannot even afford to hire clean, safe accommodation at a reachable distance from where they could hope to get a genuinely remunerative job. Nothing that the current Tory deadbeats can countenance will solve the problem.

Housing is the touchstone of a much more general social and economic failure - by the political system. The inequity to which is gives rise works hardest against the young: but the older generations of their families are increasingly drawn in to sharing the consequences. The voters'revolt, as it grows, will include more parents and grandparents: they are less likely to be conned by Corbyn and McDonnell; so the political means by which this societal problem - like the Brexit crisis - will be resolved is yet to become apparent. Time is short.