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 Symbolic Bonnet?

I was brought up, long ago, with the constant admonition: 'do not mock the afflicted!'

I usually avoid doing so; but sometimes it seems that a voluntarily-adopted affliction makes an important point about the person who has adopted it. I increasingly feel this about the prime minister's selection of clothes. I recognise that she is tall and slim: as many leading models are, so there is an amplitude of clothing for women of means who are of those dimensions to choose from. Mrs May's choices vary between the odd and the wildly eccentric; and yesterday at the Cenotaph I thought that she established a new, abnormal norm. The black bonnet that she had selected - possibly it was even designed for her - looked like something that a war widow of 100 years ago would have dressed her teenage daughter in for a remembrance event: yet it was also vaguely reminiscent of a German army helmet. Yesterday it simply looked anachronistic on a grown woman.

But for me it also epitomised her situation. She gambled on winning enough seats in the Commons for the Conservative Party so that she could discount the ten-to-twenty headbanging Brexiteers who for various reasons - including pure stupidity - want to risk national economic ruin by interpreting the referendum result of 2016 as authorising the government to leave the European Economic Area altogether, on a cliff-edge date at the end of March 2019. As she totally misjudged the one-woman campaign that she ran, she lost her majority; since when the headbangers [and the DUP] have dominated her field for policy options. She has retreated into a psychological bunker, from which - so it is rumoured - she continues to radiate confidence that all will become well in the best of all possible worlds: sometime. And meanwhile, as M Barnier has said, the clock on the exit door is ticking.

Yesterday the Sunday Times - never known as a Labour-supporting vehicle - gave a prominent page to an article in the name of Jeremy Corbyn [which was, therefore, at least authorised by him]. In it he presaged a shift of parliamentary arithmetic, implying his recognition of the fact that while virtually all members of the Commons accept that the referendum result [though many of them think it unfortunate] must  - at least, minimally - be implemented. But he also accepts that an overwhelming majority of members have come to recognise that to leave the Common Market and the European Union in a simple step would be a calamity for the country.

To demand a general election - which may become necessary if Mrs May is defeated by the defection of any section of her party - would mean that the current crop of MPs have abdicated all responsibility. It is deeply unclear what the result of a general election would be: but the most probable outcome would be a small renaissance for the LibDems, the Scots Tories at least holding their position, no change in Ulster, Labour gains in Scotland [but the Nats still in the lead] and no clear result from England. Labour might just be the biggest party, though the Tories have an equal chance of that; so the construction of a coalition would be a slow and painful business: while the Europeans could fold their arms and enjoy the British discomfiture and the tick of the clock.

The last time when Britain was in a comparable situation was in June, 1940; when a paralysis of government [albeit, with a strong Conservative majority] faced an existential threat. Talk of coalition was in the air; and Labour had already made clear that they could not support a Chamberlain-led government: though they also accepted that the Tory majority required that any coalition was led by a Conservative. In the crucial debate, as a government supporter spoke for the government, a fellow member challenged him to "speak for England". The government left the debate with a clear majority, but the loss of confidence in them was equally clear. Chamberlain - a sick man - resigned, and the amazing, anachronistic career of Winston Churchill reached its apogee.

Corbyn is no Churchill: he is no patriot, he has supported obnoxious alien regimes acting on the lines of the traduced anti-patriots of whom W S Gilbert wrote they admire "all centuries but this one, and all countries but their own". Corbyn's recent adoption of statesmanlike utterances - at odds with his career-long posturing - is utterly unconvincing: but if he were to prove capable of keeping to manifesto promises [and capable of keeping his close associates within those bounds] he might be useful in the hour of crisis. 

Mrs May: Deadline or Deadbeat?

Theresa May has announced her intention to confirm March 2019 as the date on which the UK will leave the European Union; and has indicated an intention somehow to establish that date in law.

On the same day, a spokesperson for the European Union has said that unless there is to be a 'hard border' in Northern Ireland [which no party in Ireland will accept; and which the British state cannot afford to enforce] Northern Ireland must remain under EU jurisdiction permanently: regardless of what arrangement will apply to the rest of the UK. The Democratic Unionist Party, whose votes in the Commons keep Mrs May in power, thus faces a huge dilemma. The one thing that can deprive them of their majority mandate in Ulster would be for them to be seen on the island of Ireland as the group who  would vote to enforce a hard frontier. However the DUP may decide that dilemma, there is a bigger one facing the UK government.

Can any UK government [Tory, Labour, fragile coalition - LibLab - or 'grand' coalition of three or more parties] contemplate bearing the cost or the odium of renewed conflict in Northern Ireland? This is an intractable question, to which I have drawn attention on previous occasions. The headbanging Brexiteers have put Ireland into the 'too difficult' file, as they busily fantasize about trade deals with countries that have no particular interest in doing Britain a good turn. Ireland has been a determining factor in British politics for centuries: and it is worth remembering that whenever the British think they have found an answer to 'the Irish question' the Irish change the question.

By a vote of 52% to 48% the UK population voted in favour of ceasing to be a member of the European Union: without any deep understanding of the implications of that question. Now that the ramifications of just a few of the implications are becoming clear, the proportion of the literate classes [especially of the civil service, which would have to administer Brexit Britain] that favours Brexit has declined rapidly.

Millions of people - including me - voted 'out' in genuine opposition to the ever-closer union of a corrupt political dictatorship [masquerading behind a facade of democratic institutions]; we also wanted to cock a snook at the British political class [represented by Cameron, Clegg and Osborne] who were the principal advocates of Remain and of austerity. None of us wanted to ruin the country economically. Some 'out' voters accepted assurances that that the world was open for free-trade deals on WTO terms. Some - me included - believed that, in the unlikely event of the 'outs' winning the vote, a continuance of the [Liberal-supported] government that had given us the referendum would negotiate terms that enabled stable economic life to continue. Nobody expected David Cameron to be such an utter coward as he proved to be. Nobody much minded what happened to Osborne: as he has demonstrated, he could move on to adopt half a dozen lucrative careers at once. On the day of the referendum nobody contemplated Mrs May being the prime minister; and we could not have conceived that she would place herself in thrall to people who actually would be prepared to see the British economy dismembered: starting with the crown jewels in the City of London.

Today, in the Silent Ceremony at Guildhall, a new Lord Mayor of the City will be installed. By the end of his year, the die will have been cast as to whether Britain will survive [and thrive] as an economy in association with the European Union, though with greater facilities for trade with the rest of the world.

Yesterday's two announcements - Mrs May's 'firm deadline' for leaving the EU, and the EU's comments on Ireland - are incompatible and will almost certainly ensure that no kind of Brexit happens in March 2019. Meanwhile, Mrs May's government looks increasingly unlikely to survive even to March 2018. The Tories will implode, even if the DUP do not simply repudiate their voting pact. Mrs May's chances of winning a by-election, even in the leafy home counties, are vanishingly small. Politics has become far too exciting; and that is before the inevitable mass movement against economic suicide begins to capture the headlines.

Mrs May's Brexit: from Chaos to Catastrophe

Mrs May and Mr Hammond - her Finance Minister - are represented by various sections of the media as being in a serious conflict about making provision for a 'no deal' outcome from the current negotiation between the UK and the EU. The Chancellor [who is wedded, as tightly as if he were welded] to the concept of 'austerity' has told a Commons committee that he has contingency plans, but does not want to release any funds until the very last moment. He could not make that statement if staff time and some expenses [notably consultancy] had not been applied to the planning: so what he obviously means is that he is reluctant to release funds on implementing such a plan until that should appear to be the [utterly disastrous] inevitability.

Mrs May seems to be saying the same things, when she indicates that £250 million has been set aside for implementing a 'hard Brexit'. Yet the press, notably the Daily Mail, has become hysterical about the 'dispute' and the 'disloyalty' - even 'sabotage' - attributed to the Chancellor.

This stupid scenario shows that the minority of extreme Brexiteers are dragging the Tory party to its destruction; which would be no bad thing [in view of the appalling inadequacy that is apparent right across the government] if there was an opposition that combined honesty and competence over the board. But that is not the case. Labour is led by an unreconstructed Marxist who is as good as the late Comrade Suslov [the chief exponent of Leninist-Stalinist orthodoxy as the USSR was heading for destruction] at avoiding direct or evidence-based questions. The Momentum group show a dangerous revival of the 'entryism' that undermined the Labour government in the nineteen seventies, and thus opened up the way for Thatcherism and the dissipation of all that remained of the legacy of the first industrial revolution.

If May or Hammond was serious about managing a really 'hard' Brexit their first decision - however covertly it was taken - would be the abandonment of 'austerity'. Government spending far in excess of £250 billion would be needed to install a full customs border with the EU. The recruitment and training of hundreds of thousands of officials would need to begin now: somehow, the IT systems would have to be provided - almost instantly - despite the fact that even modest government schemes for computerisation are always over-cost and excessively delayed in implementation [to the extent that they often have to be abandoned].

British firms that still make things - there are many, often high-tech companies developed or reconstructed since 2008 - are almost all integrated into just-in-time Europe-wide supply chains [both in getting their necessary inputs and in selling components to EU companies]. Such businesses are making contingency plans that would require them at least to double the manpower and computer availability just to manage the 'paperwork' that would be involved in trying to maintain the flow of business after a default Brexit. Many such firms are already finding that their European customers are looking elsewhere for contingent supplies. Furthermore, insuring trade and the goods traded in a crash-Brexit situation will become massively more complex and thus expensive.

The clowns on the Tory right, with their airy assertions that all will be well 'under WTO Rules' [which they certainly do not understand:cf my many references to point protectionism], are driving an amazingly weak Cabinet towards the destruction of the national economy.

There must a popular movement, of Leavers and Remainers united, to avoid national economic destruction.

Back Again To Productiveness

There has been serious panic in the Treasury, which has resonated round other government departments, about the latest 'findings' of the Office for Budget Responsibility [OBR] on the basic facts about the UK economy. With no evidence in the raw data to support the supposition, it has been assumed that the productivity of the economy is increasing. If it were true, it would mean that on average, across all sectors of the economy, the output per worker per day is increasing. For half a century until 2007, year after year, on average productivity was increasing by around 2%. This constituted the strongest evidence that the output in the economy was growing and that there was more output to provide investment in  new plant in industry and commerce, and to renew the economic infrastructure, and to improve welfare services and education, and still to afford more wages for most of the employed people year after year.

It is now admitted, rather shamefacedly by the government ministers and officials who have assumed that productivity 'must have been' rising since 2010 at something close to the historic norm of 2%, that this has not been the case. The financial crunch of 2007-8 was a huge shock to the whole economy; but it has optimistically been assumed that things have been returning to 'normal' since 2010. It is also noted that the entire world economy suffered a shock in 2007, and that most  'mature' economies' growth since 2010 has been less than the pre-crunch norm. Nevertheless, the USA, Canada, Australia and the Eurozone all have experience increasing productivity in recent years: while India and China have continued to make massive strides forward [though at an irregular rate year-on-year].

I am not alone in having banged-on since 2007 about the fact that productivity in the UK is abysmal because the people who control the country - grossly misled by the Econocracy [the professors of Economics] - are totally unaware that productivity is always dependent on the productiveness of the system; but not many people have been saying it, and nobody has been listening. Productiveness is the capacity of the system to deliver increased productivity; and it can only be increased by well-targeted investment. Karl Marx was at one with the other nineteenth-century Political Economists who saw that industrial progress [and the development of the infrastructure of railways, ships and ports, postal systems, banking and the telegraph] was entirely dependent on a surplus being accumulated from the sales of current output and withheld from consumption by the people so that it can be converted into new and improved means of production. Marx thought that he had made the discovery of the age by claiming that the accumulation of capital had been captured by a 'class' of capitalists, who were taking over the levers of economic power from the landlord/aristocratic class who had dominated Europe since the dark ages. Other Political Economists saw that the development of shareholder capital allocated the profits that were derived from from industrial and commercial activity between the controlling shareholders in firms [who could decide how they divided the dividends and wages that they received between their own consumption and re-investment of the profits to produce even higher returns from the business in future years] and the other shareholders who would decide for themselves how much of their dividend income they would apply to their own consumption and how much they would spend on buying more shares. Investors in shares could choose between all the shares and bonds that were on offer in the stock market: so provided those investors were reasonably sensible the majority of buyers would opt for putting their investment into firms that were effective and innovative: those that were enhancing the productiveness of the economy, whose fruits would be seen in terms of higher productivity and high future dividends. Workers could be rewarded with high wages [or even profit-sharing schemes] and thus the entire economic ans social systems would be strengthened.

Obsessed Marxists gained control of Russia in 1917 and it took their successors seven decades to prove decisively that a simplistic Marxist regime does not work. Mao tried the same, and drove China into even deeper poverty than had been achieved in Russia; only for China to be restored by pragmatists who know better than capitalists the importance of concentrating on the productiveness of all sectors of the economy.

Britain's 'productivity problem' arises from the failure of industry and commerce to invest since the 2007 crunch. Companies have built up cash piles, some of which has been distributed to shareholders through devices such as share buy-back; while consumers have increased their borrowing to carry on buying goods as prices rise faster than wages.

Now the Chancellor of the Exchequer has been driven into a corner by the productivity data: the entire nation is heartily sick of 'austerity', but output is [at best] stagnant. Hospitals and prisons are in crisis, schools are increasingly stressed, the police has been cut back too far. What can he offer in his autumn Budget?

Jeremy Corbyn's almost pristine Marxism cannot be any sort of solution; but at least he has adopted more reasonable rhetoric for the purposes of getting elected. Provided Labour produces - and adheres to - a rational Manifesto, they offer the best bet for the nation in the coming years. But the trust problem is probably unsurmountable. 

Mrs May Drags Out the Agony

Putting aside the disasters of the recent election and the very recent Tory Conference, as best she may, the Prime Minister will today fantasize in the House of Commons about 'progress' in the talks with the EU about Brexit.

From what has been released in advance, she plans to develop on the charade that she enacted in Florence a couple of weeks ago, when she spoke to much of her Cabinet, the British press and a few bored Italian officials about where she thought the negotiations had got to. She was spectacularly vague on all the relevant points about which EU officials and commentators had already asked repeatedly for clarification and specificity. She apparently intends to say to the Commons that she has now made everything crystal clear, and that the EU must now 'respond' by offering concessions.

The truth is, that David Cameron led to Tories to their surprise victory in the 2015 election by promising the referendum on leaving the EU. He confidently expected that this would produce a massive vote in favour of remaining, which would bury the Tory exiteers who had been a pain to the party since John Major accepted the Maastricht Treaty. The Liberals were removed from the scene, effectively, in 2015 by the kicking that they got for aligning with the Tories in the 2010 coalition that had increased student fees. Labour lost votes in Labour heartlands in that election, partly because they opposed the idea of the referendum. So, against all expectations, the Tories won the 2015 election; but their majority in the Commons was only half the size that would be needed to marginalise the thirty-or-so Conservative nutters who apparently believe - really believe - that Britain can survive as an independent economy in a world characterised by regional trade pacts, point protectionism and chauvinistic policies to protect sectors of the economy that are essential for national defence. These headbangers airily assert - contrary to all the available evidence - that if we boldly go where no sane man or woman would go, we will reap the same sort of rewards as the UK gained when we were both the only industrialised economy in the world and the most dominant imperial power. The sheer silliness of such thinking - or, maybe, absence of the power to think - needs no further comment.

By losing the election this year, Mrs May found herself left with around thirty MPs who are determined to devastate the economy in pursuit of their delusion. They will support Boris Johnson remaining in high office, and they are apparently demanding that the Chancellor be sacked for making reasoned statements about the probable economic effect of a 'hard Brexit'. Mrs May is evading giving a strong lead, and this will weaken her already-impossible position and contribute to the ultimate demise of the Tory party as we have known it.

The only powerful and patriotic thing that she should do - starting with her Commons statement today - is to say that the UK has been shamefully imprecise in the Brexit talks so far, to give a specific cash offer on the 'divorce bill' [making it quite clear that mediation is available] and make a sensible offer as to what would be the relations of UK courts and the EU Court in the period after March 2019. Then she should outline sensible terms for a post-Brexit relationship with the European Economic Area and defy the headbangers to force a general election that Labour would be likely to win.

The bonkers Brexiteers should be flushed out and forced to say - precisely - where the 'facts' arise that nobody else can see. Then they should fall into line to avert a Corbyn government.

The clock is ticking on Brexit, and Mrs May's attempts to evade the implosion of the Tory Party - though entirely comprehensible - are ruinous.

Cheap and Nasty Government; But Would Labour Be Any Better?

The present government constantly provides ministers and 'spokespersons' who will defend any policy and any situation. Thus, in the past 24 hours, a survey has shown that the majority of NHS nurses go home from their shift, not only physically exhausted but emotionally drained as well. They report not being able to be present when people die, completely alone. They are anxious and embarrassed that medication is not given on time; and is sometimes missed altogether due to the pressure of work. Some clown in the Health Department did not deny that the report was true, but made the irrelevant comment that there were 7,000 more doctors in the hospitals that there had been seven years ago.

Soldiers reported that the vehicles that were designed to protect them from roadside bombs and similar hazards often break down in the hot weather conditions for which they were supposedly designed, at a huge cost. The Defence Department flatly denied this report, asserting that the vehicles were effective in keeping the troops safe: maybe so, if the failure of the vehicles keeps the soldiers in their bases. Old naval hands despair at the lack of resources to keep the massively reduced fleet operational and seaworthy and fit for action. The two new aircraft carriers have no aircraft. There are plans to reduce the number of Royal Marines beneath the present level where they cannot cover all the actions to which politicians commit them. Mrs May flies off to Estonia to declare that Britain will defend all its NATO allies: with words and sharp cuts?

More than seventy Tory MPs have signed a demand to the Prime Minister to implement her election promise to impose a cap on energy bills for millions of households: it would only affect a minority of families, but would cover many of the most vulnerable. A smaller number of Tory MPs are also agitating for delay in the implementation of the government's penny-pinching scheme to accelerate the roll-out of the single state benefit. This would save money; particularly in that as people are migrated from the complex of former benefits onto the new system there is a six-week delay before they get any money from it. This the government's outward cash-flow is deferred; while individuals and households are plunged into desperate want, forced to apply to food banks and doorstep lenders.

The sheer insensitivity of all of this calls into mind the cynicism of the worst Victorian workhouse masters and the cynical Stalinist Commissar. Both of those classes of individual - like the civil service in austerity Britain - have had drummed into them that no more resources will be made available; so they simply deny truths that are on open display.

It is the record of socialist governments, whether Marxist or not, to assert their own propaganda more often and more fervently when the truth does not accord with the official line. This is happening more intensively [and more absurdly] by the day in Venezuela at the present time. Jeremy Corbyn's  enthusiasm for the Maduro regime consequently becomes more indefensible by the day: but the Labour leader evades every opportunity to admit the lack of substance in the regime's claims and assertions; or to recognise the increasing level of oppression. Those who wore 'HANDS OFF VENEZUELA' T-shirts and baseball caps in and around the Labour Party Conference earlier this week seemed to me to be anticipating their future role as deniers on the domestic scene when the Labour Government that they expect to take office soon fails actually and humanely to implement their proposed policies. While Corbyn can still claim to be a 'seventies idealist, the people who have built his machine are ruthless advocates of extreme measures to rob the rich and to coerce the rest of the population. Nasser, Ghadfi, Ken Livingstone and a score of other 'strong men' shoved aside the much gentler figures who originally fronted their coups or electoral victories. It is well authenticated that while Mrs Attlee was driving her husband to Buckingham Palace to take the King's commission to form a government, Professor Laski, Herbert Morrison and others were plotting to hold a leadership election in the Labour Party that would choose a far different candidate than the election-winner Attlee.

There is a real and proximate danger that a Labour election victory, especially if the party won by a small majority, would quickly be followed by the overt capture of the government by a radical faction who would move quickly to consolidate their power undemocratically for a long period of authoritarian rule. As the saying in revolutionary circles goes: rely on one man one vote, once! Hence, although the Labour offering in the past week has been largely composed of highly desirable policies, and the austere Tories show that they cannot mind the shop while they flounder towards a Brexit disaster, the risks in having either party in power are immense.

Managing the Labour Party

Jeremy Corbyn may be the starry-eyed idealist that he often presents himself to be: in which case he is too good for practical politics, and certainly the last person to control nuclear weapons. Yet there is a good chance that the incompetence of the Tories, and the egomaniacal economic illiteracy of Boris Johnson in particular, could hand him the control of Downing Street.

It is therefore particularly important to note that he - or his manipulators - has prevented the Labour Party Conference from expressing a view [let alone, declaring a policy] on the dominant issue of the day: what does Brexit mean?

On one aspect of the matter his view is entirely sensible: this country needs a fundamental economic restructuring, with a significant implementation of mixed economy policies. This could well include the resumption of state ownership of natural monopolies - the railways, electricity, gas and water supply. It is also fundamental that a country with advanced manufacturing industries, which need to be fostered and developed into a new era of high productivity, retains the fundamental capability to produce steel. Corbyn has rightly said that the EU rules on 'state aid' to business would make it virtually impossible to take the necessary measures; but he has conceded that it is plausible to envisage a model in which the UK can be free to make industrial policy and still have a close customs agreement with the EU.

Given Corbyn's popularity with the new party faithful, and the anxiety of older loyalists to remain in favour, it is likely that he could win a vote on Brexit in the conference, and vindicate his stance: but he had declined to do that. This is pure Stalinist politics; the avoidance of any risk that he-who-must-be-obeyed is to experience challenge.

Also in the conference, John McDonnell is to make a major issue of the mass indebtedness that has beset the United Kingdom since the 2007 credit crisis compounded the economic disablement that Thatcherism brought upon the population of the ex-mining and formerly-industrial regions. His 'solution', to make it impossible for lenders to charge more than twice the amount borrowed, in fees and interest during the length of a loan, looks wonderful: but is utterly impractical. While it could apply to specific hire-purchase type agreements of individual items, most debt is not susceptible to a cap of that kind. Car loans are usually cut short when the car is changed: the debt outstanding on the loan is settled usually by manipulation of the used-car's and the new car's 'prices': it would be impossible to compute what would be twice the amount of the loan, in any simple terms. Even more complex is the question of credit cards, which are by definition a flexible rolling loan covering a complex of debts that are entered into and resolved in myriad individual agreements. It would be impossible to compute how much interest and service charge was imposed in respect of any item within the card's compass. To set a maximum APR would make the system non-viable for the banks, even though they would be constrained by circumstances to charge the set maximum all the time for everybody: and the system might still be non-viable. If the credit card system collapsed, a lot of people would be disadvantaged. But it is odds-on the McDonnell's proposal will be accepted with rapturous applause. This will demonstrate another Stalinist 'truth', that the practicality of a policy is unimportant: it is the principle and the intention that count in an authoritarian regime.

There is always somebody to blame when a policy fails; and McDonnell has spent the last quarter century blaming the bankers, for the much evil they have done and the many things they could not help. Thus the world rolls on, and the left changes as little as do the Tories. Time for the Liberals to re-invent themselves again?

The Present State of Economy and Society

Official statistics are compiled by honest professional people, and tell the 'truth' in simple numerical terms. But much can be done to interpret them, either favourably or unfavourably, according to the wish of the interpreter. Hence, although the United Kingdom now has the highest proportion of its available adult citizens in employment since 1975 [one of the three years during which the mixed economy was tested most severely] it is sobering to note that in almost every way the present pattern of employment is massively more fragile than was that which NeoKeynesian inflation undermined. The effect of the inflation of prices, especially after the oil price hike of 1973, was that production was interrupted by strikes when the authorities took action to suppress wage rises in their clumsy attempts to cap the wage-price spiral. In each period of pay 'restraint' government costs rose while government revenues declined, and the balance of payments with the rest of the world became strongly negative. In those circumstances, the Labour government [which relied on minority parties to retain control of the House of Commons] sought a loan from the International Monetary Fund; and the conditions applied to that loan [in retrospect] can be seen as a demand for the state to bring in Monetarist policies to replace they failed pseudo Keynesianism that the Economic establishment had applied.

The Labour Party was torn apart by the consequent dissent from the new policy, with the trade unions - the traditional paymasters of the party - doggedly opposed to the government. Consequently the Conservatives won the 1989 general election. The new Tory leader, the largely-unknown and completely untested Margaret Thatcher, embraced monetarism enthusiastically; and she deplored the less-than-half-hearted attitude towards her radical policies from most of the Tory establishment [including most of her cabinet]. They had been broadly content with the mixed economy and were scared by the new radicalism. Mrs Thatcher and her close cohort dismissed the majority as 'wets', and became more intent on radical change in the economy. As to the social consequences of disruptive economic policies, Mrs Thatcher was simply to say 'There is no such thing as Society'.

The people who could be identified as the 'enemies' of the new Monetarist policies began with the Economists, 364 of whom signed a letter to the TIMES condemning her policies from a standpoint of NeoKeynesianism [and who succumbed thereafter, with amazing speed, so that those who remained in their 'profession' become locked in to the new Econocracy by the millennium]. Next among the 'enemies' were the trade unions, that had frustrated the attempts by the Labour government of 1974-79 to control the wage-price spiral. Here the Thatcher gang decided on a radical solution: if you close the coal mines and a large section of the iron and steel industry [including shipbuilding] you take the cash and the members away from the unions, leaving them as shell organisations with no real power. These radical solutions were adopted; and the majority of the electorate was unmoved by the pleas of miners and steel workers whose communities were largely isolated geographically and socially from the cities where banking, finance and smart retailing were providing more nice, clean jobs for the middle classes. While the traditionally unionised areas continued to return Labour MPs from constituencies with very high percentages of the industrial and ex-industrial population, other urban centres and the less-densely-populated majority of constituencies were content to return Tory [or, in some cases, irrelevant Liberal] MPs; and thus the wrecking job was done.

It is now more than thirty years since the steelworks of Sheffield, the pit sites across the country with their unmistakable winding-gear, the massive cranes on the dockyards to the Tyne and the Tees and the Upper Clyde, and other symbols of the most basic and essential industries were first left derelict; then cleared away. It is hard to believe that Meadowhall in Sheffield was once the world's leading steel and engineering centre, or that the placid banks of the Upper Clyde were once the proudest shipyards in the world.

No thanks to successive governments, pharmaceutical and biological companies have developed lucrative new products; creative industries [including computer games] have developed magnificently and - despite the idiocies that created the financial crisis of 2007-9 - the financial services based in London lead the world in expertise and innovation. So Britain has high spots, and remains uniquely innovative; but fools in government have congratulated themselves on 'attracting inward investment' as one after another the innovative firms [along with the intellectual capital] are snapped up by aliens. This almost-constant alienation of the most valuable assets that the British continue to create means that the balance-of-payments becomes increasingly adverse, as British consumers have to pay foreign firms to access British inventions, even if they are manufactured here.


The final knell of heavy industry has been sounded today, with the news that Tata is selling its steelworks in the UK to Thyssen-Krupp: whatever promises are made [and especially if we really do leave the European Economic Area] Port Talbot will go; and with it the last evidence of heavy industry will be consigned to the film archives and to history books.

The Glory of a Mixed Economy

Between 1950 and 1972, Britain boasted of its Mixed Economy. Then, in the 'seventies, the misapplication of Keynes's principles by the self-styled NeoKeynesians combined with the OPEC cartel to create an inflationary spiral that threatened to destroy the economy. That situation, in turn, made the opportunity for Thatcherite Monetarism and the 'free markets' dogma to be installed: with apparent temporary success and long-term ruinous outcomes. I have issued sufficient jeremiads about the latter state to give it a rest for the moment, and to pick out instead the features of the economic policy [broadly pursued by both Labour and Conservative governments] that prevailed beneficially under the generic description of the Mixed Economy.

During World War II the coalition government published the Beveridge Report, which promised a universal, compulsory social insurance scheme that would provide healthcare, unemployment insurance and old-age pensions for all contributors and their dependents. Both the major parties in the coalition were committed to implementing the scheme, and though the costs - especially of the national health system - always exceeded the income of the national insurance fund it was hoped that a time would come when those books would balance and a subsidy from general taxation would not be necessary. The National Health Service, in particular, was immensely popular and it delivered massive benefits to the entire nation.

Labour won the 1945 election, with a clear mandate to nationalise core infrastructure services and the 'commanding heights' of the industrial system. Under the infrastructure policy, the clapped-out railways, the partially-derelict canals, the major bus companies and the biggest road haulage companies [with their depots and other support facilities] were nationalised. The railways already owned some ports, and major hotels near stations, and these were taken into state ownership as well. For the first decade of nationalisation there was an attempt to support all of these facilities; but with the rapidly rising popularity of private cars and the consequential demand for the state to provide an appropriate road network the aggregate costs became too great. The slow death of the canals continued, and the subsidy of railways became excessively burdensome until a Tory government appointed a 'technocrat', Dr Beeching, to manage the railways. He just adopted a slash-and-burn approach, reducing the system too much in an orgy of destruction that is pretty universally regarded with hindsight to have been absurdly excessive. But the core railways system was preserved, to become a success eventually: and the motorways were built.

Coal and steel were among the 'commanding heights' of the economy which were nationalised, reorganised, and subject to massive investment and modernisation: which worked beneficially for a couple of decades. Electricity and gas services were nationalised, with massive investment in new power stations and the creation of the national grid for electricity and the beginning of a similar system for gas distribution. Telephones had been developed as a state monopoly, under the Post Office, and their availability increased immensely. Television had been suspended for the war, and it was reintroduced [BBC only, at first] to become massively popular.

The state managed all these things, while making good the massive destruction that had been effected by German bombing during the war and the massive wear-and-tear on all types of plant and equipment that had happened while concentration on war production had meant that maintenance and repairs had been minimal. Perhaps the greatest achievement was in housing. Private builders were enabled to develop private estates while the state sector built hundreds of thousands of houses. So great was the success of that programme, that under a Conservative housing minister in the later 'fifties 400,000 houses were completed in a single year. By contrast, the pathetic shower who govern us now cannot orchestrate the 'market economy' to provide so many as 100,000 homes in the face of desperate need.

Not all was perfect in those years; but things felt better than they do now because there was a feeling of common national purpose with significant objectives being achieved by the public and proivate sectors of the economy working in concert.

Brexit Britain Divided

The United Kingdom is more deeply riven by economic, political and social issues than it has ever been before. I say this with the benefit of a quarter of a century teaching Economics and economic History in a major university followed by a further quarter-century living in Tower Hamlets and active in the City of London. Thus I have half a century of reading, listening and probing; and, as a bonus, I have the luck to have a second home in the Peak District where I hear another spectrum of opinions and lore. Throughout history, most constituencies were controlled by a single party, after the dominant landowners surrendered control during the nineteenth century. Rural areas and affluent inner London were solidly Tory, some mixed-economy areas tended to return Liberal MPs, and the heavily industrial and mining areas were solid Labour. There were - and still are - anomalies: the constituency in which I first had a vote [Darwen, now Rossendale and Darwen] has improbably elected Tories all my life; but such exceptions are rare. However, in a rapidly-changing context, the old certainties have gone. The Brexit vote cut right across party traditions, and leaders' admonitions had minimal impact on voters' choice.

In the nineteen-nineties the Labour Party was split by the Blairites, who did not eradicate old-Labour in the new century but instead left stagnant pools of Marxist infantilism to fester while the legendary pragmatism of the big-union bosses became heavily diluted. The present mushroom growth of a new-left Labour is both an indication of voter dissatisfaction - especially [but not only] among the young - and of a search for ideals. The cupboard-love of the students and graduates who liked Corbyn's reckless 'pledge' about tuition fees during the recent election has dissipated, and the peak of the latest boom has probably passed.

The Conservative Party has never been in such disarray as it now displays: the old establishment of 'grandees' who could remove a leader with swift silence seem to have disappeared, and everything now hinges on a speech in Italy which has been heralded for weeks and will prove in the event [on Friday] to be a display of the Prime Minister's incomprehension, confusion and insecurity. Even if her cobbled-together second kitchen cabinet is able to deliver a more rational speech than I expect, the Tories will be left with the recollection that they set the referendum hare running - expecting a different result - and they have no idea what to make of the situation that they have created. Mrs May said "Brexit means Brexit", a supremely silly phrase which will haunt her even more than "strong and stable"; and she has given no indication of whether she thinks the vote was to leave the political institutions of the EU [only] - as would gain massive popular approval - or to cut adrift from the customs union and the common market, which would smash the economy and make the Irish situation irresolvable.

Tories and Labour are split on which sort of Brexit was intended by the voters, and by their opinions as to where to go now. The LibDems and ScotNats are determined remainers, and may well swing parliamentary votes: especially by the LibDems in the House of Lords.

Meanwhile, media commentators cannot agree whether or not the country has a wider gap between better-off and worse-off citizens; though the gap between the most highly remunerated and the lowest has not been greater than it is now, since the economy and society were put back to zero by the Second World War.

An early General Election would not resolve the situation. In England the LibDem vote might go up, which would mitigate Labour gains and produce the spectacle of Corbyn and Cable negotiating a coalition: that would then have to try to attract the ScotNats and some Irish contingent [most of whom hate Corbyn as an IRA supporter].

Most people know that they are getting worse off. Many worry about their borrowing. Many are extremely anxious about the homes they can barely afford to keep or those they cannot afford to rent or to buy.

Just as the majority of Russians are content to have Stalin rehabilitated, and his statues refurbished in some places, so there is a nostalgia in Britain for the mixed economy and the welfare state that the Thatcherites and the Blarites did so much to destroy.

To that I will return tomorrow; as my recent blogs have become overlong.

QE: The Social Cost

The Labour governments of Tony Blair and Gordon Brown [1977-2010] progressively moved from following their Tory predecessor's conservative budgetary policy to creating a deficit on government spending [the amount by which the government spent more than their income from taxes, tolls etc]. As Chancellor of the Exchequer, then Prime Minister, Gordon Brown made a very quaint use of the word 'investment'. It has been normal for a couple of centuries [at least] to use the word 'spending' [or expenditure] to mean the amount that is spent on pay-as-you-go government activity, and the word 'investment' to mean spending on projects that have a net cost as they are undertaken, but which it is hoped will yield an economic or a social dividend - ideally, both - when they have been completed. Under Labour, this distinction was eliminated. 'Investment' was just part of current spending: it just sounded better to make it seem as if some future return was in mind.

Alongside this abuse of words [and of common sense] the Labour government introduced the wildly irresponsible PFI concept, by which a school or a hospital building [which could be seen as an investment for the long term, in the conventional understanding of the term] would be built by a private contractor who could then charge a rent for the building while it was in use. This crazy system meant that the contractors, and the funders with whom they formed consortia, would be able to take a high rent from the health service or the school governing body. In addition, many such contracts gave the builder the right to undertake all maintenance work - at their own 'costing' - for several years, at the expense of the user of the building. This obviously provided a massive drain on the income of the user organisation when the premises came into use. As the premises had often been designed many years before they came into use, the designs were often very much less that state-of-the-art when they became operational. Thus taxpayers were involuntarily having to meet these charges.

Thus, when the Tory-LibDem coalition came into power they were horrified at the 'out-of-control' public spending obligations that they confronted. They decided that the burgeoning annual deficit on the national budget must be reduced: then they experienced their own brainstorm, and decided that they must cut future spending projections by the state. Hence began the regime of 'austerity'. Under that regime, public spending has been held down; almost as a matter of faith.

This policy was imposed in 2010, just after the Bank of England had become used to administering its programme of Quantitative Easing, as explained in the previous two blogs. The orderly queue of bankers was allowed each to encash approved securities for new credit, which they could then spend as they wished. This meant that they could keep in being the securities whose existence had been threatened by the market crash of 2007-8 until they came to their term dates; and an increasing proportion of them could be sold once their face-value had been restored [more or less] within the highly flexible wholesale finance market. So while people running public services were increasingly constrained by what they could spend - including on wages and social benefits - the banks could lend more money to firms and to individuals. Not many firms needed to borrow from the banks: the successful among them could derive all the investment they needed from their profits and from share issues; the unsuccessful drew in their horns and hoped to survive. Furthermore, the government provided modest funds to help some classes of start-up and developing businesses [although most of the more successful of them fell prey to overseas takeover, whereupon the technological innovation that they embodied was alienated].

In both the public and the private sectors, wages were constrained; in the public sector by the austerity rules, which included either nil or 1% increases each year. The private sector was able to import staff from less high-wage countries, and a consensus of commentators accepted that the combination of immigration with the appallingly low level of skills among the indigenous British population kept wages low; in both cash terms and real terms. Hence after 2010, most people found that the only way to increase their spending on consumption was by borrowing. Loans and credit card debts were freely available, so people borrowed; largely to buy imported commodities. So the balance-or-payments deficit burgeoned, while the government struggled to keep public spending within the limits that Osborne and then Hammond vainly aimed to enforce. Unsecured household indebtedness increased, alongside the debt that the UK owed to the rest of the wThen it became apparent that QE had another perverse effect on ordinary people. After the financial crisis, new starts in house building had reduced to a record low level; and virtually nobody was building social housing. Thus the resale prices on existing properties increased: but with interest rates set at their lowest ever level by the Bank of England the cost of borrowing [per pound] seemed affordable. Cassandra-like warnings that people who had mortgaged their property heavily might not be able to maintain payments when interest rates rose received scant attention.To get a new home, people had to borrow the money to buy expensive new properties on terms that profitable to their constructors. Mortgages were freely available for house buyers with even modest incomes, thanks to QE and government schemes to enable a minority of first-time buyers to enter the market. The majority of would-be first time buyers could not find the cash deposit they needed to enter the housing market; and anyway their incomes, especially for those burdened by student loan debt, could not support the ongoing cost of house purchase. In addition to the existing poor, there was a growing cohort of nearly-poor, including many graduates. In the next blog I will examine the pattern of poverty in Mrs May's Brexit Britain, and relate it to QE and to austerity.

Not Another Party, Please!

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

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

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

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

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

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

How British Governments Have Made Life a Misery for Millions

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

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

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

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

How had this happened?

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

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

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

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

Politics, Economics and Science

There are degrees that purport to qualify their graduands in 'Political Science': there are even some professorships under that title in British universities. That there is some degree of scientific precision in some aspects of the study of politics has been proved in recent British general elections, where 'Exit Polls' that systematically ask voters how they have actually voted have displayed an astonishing degree of accuracy; as demonstrated 24 hours later when all the votes are counted. I describe this accuracy as "astonishing" because it contrasts with Opinion Polls conducted right down to the day before the election, which are often wildly wide of the mark; thus, politicians and commentators who rely on them can grossly be misled, as were most of both those groups when the Tories' chances were over-rated and Labour's popularity was grossly under-reported in the polls before the election this year. This appears to show that people are in large measure unsure how to vote [or whether they will vote] until the last minute, while it can be inferred that many do not tell the truth in advance of their casting their ballots. After voting, people seem more confident that they can not be swayed in their decision-making by the lift of the questioner's eyebrow or their sniff of disapproval; so then they tell the truth, and the statisticians and psychologists who set and assess the actual questions to be asked are vindicated in the precise methods that they use.

The scope of 'Political Science' is much wider than this, of course. Where it combines statistical rigour with sound social analysis or experimentally validated psychology, interesting and potentially useful data are produced. But where it attempts to explain the underlying factors which make a population of humans behave in this way or that to determine the direction of government it can only follow the conclusions presented by sociology, psychology or history: and within each of those disciplines there is no agreement on what are the rock-bottom principles emergent from the study that should be followed by government with the same degree of authority as applies to Botany, Geology or Medical Science. There are, of course, fundamental disputes within the natural sciences; but there is also a sufficient consensus to validate measures that are taken to support public health, safe transport and the control of thousands of potentially dangerous substances.

Politicians with some degree of common sense - and many such people still exist, though their expression of their views is often limited by the need to have the support of their party at the next election - make a mix-and-match pragmatic personal portfolio of ideas drawn from the natural sciences, and from academic politics, history, psychology and sociology; and accept that they must be willing to change their understanding in line with new facts [including new false interpretations that capture the public mood]. This inner assessment of the situation is necessarily combined with what the electorate in the particular constituency where the politician is based understand and want. This is a precarious situation to be in and politicians usually recognise their vulnerability within the nexus of shifting popular opinion.

The biggest intellectual problem that many politicians face is that of Economics: the pseudo-science that has been captured by the Econocracy, the hegemonic advocates of the crazy dogma that markets can become so developed - on their own - that they produce results that could not be bettered by any amount of detailed direction from the political machine. The tragedy to which that dogma has given rise is that in the countries that have partially opened up their markets to untrammeled competition it has increasingly become apparent that untrammeled [or even relatively unrestricted] free operation of markets conduces against humans having an inner sense of wellbeing. This is now the very nub of political debate in the USA and in the United Kingdom, and must be a major theme in this blog for the next few days.

The Iron Lady Cast in Bronze?

In this blog a few weeks ago, I welcomed the report that a statute to Millicent Fawcett was to be erected in Parliament Square; the first woman so to be honoured. She was not a parliamentarian: her husband was, as a Liberal he was the Postmaster-General who made many innovations. The range and depth of Millicent's contributions to economic and social improvement, particularly during her long widowhood, more than justifies her place beside the Mother of Parliaments and Westminster Abbey.

It is now reported that the management of the Royal Parks, who manage the square, is minded not to allow the erection there of a larger-than-life bronze statue of Margaret Thatcher; on the grounds that Mrs Thatcher's family has not supported the project.

It is also  matter of open discussion as to whether the statue would become a favourite target for vandalism. Margaret Thatcher remains a highly contentious figure almost three decades after she tearfully quit the office of Prime Minister, after holding it for a decade during which her government had radically redirected politics and restructured the economy.

It will be obvious to anyone who has looked at this blog in the past [or who does a word-search on it at any time in the future] that I am of the view that Mrs Thatcher had no serious grasp of economic theory or reality, beyond the corner shop mentality of keeping the books balanced that she imbibed from her parents.

What was blindingly obvious when she became leader of the Conservative Party at the height of the inflationary crisis of the mid-nineteen-seventies was that the status quo was unsustainable. A Labour government that was dependent on votes in the Commons from minor parties went cap in hand to borrow a large sum of money from the International Monetary Fund in order to have a hope of stabilising the external payments position: and the conditions that were set on that loan would radically change the direction on national policy from that which had - generally - been followed by both Labour and Conservative governments for a quarter of a century.

Through the 'fifties and 'sixties a generation of Economists who could broadly be classified as neo-Keynesian had promised to be able to deliver policies that would give the country pretty-well continuous economic growth. When the politicians applied the policy, after twenty years it became a recipe for inflation of prices that stimulated increasingly vociferous demands for matching pay increases.

The International Monetary Fund's conditions on the loan required the British government [of whichever party was in power] to introduce Monetarist policies. In the 1979 general election the Labour Party was riven between those who felt obliged to impose the policies required by the IMF and the mass of trade unionists who hated that policy. The Conservatives accepted the policy, and some of them embraced it. The consequences of the Thatcher 'revolution; in the economy were immense. Unprecedented wealth came to those who operated in the financial services, especially in the south-east; while whole swathes of the country faced mass unemployment and dereliction as long-established industries and their underpinning assets of coalmines, steelworks, shipyards and railways were shut down. Many areas still have not recovered from the devastation that the Thatcher pack caused, and the whole economy has been set back by the crisis measures that were taken in 2007-9 to save the overblown financial institutions that emerged from the 'big bang' of 1986.

Even in 2020 there is a strong likelihood that a larger-than-life-sized bronze image of Mrs Thatcher could indeed be the much-painted target of expressions of hostility to the entire policy direction that 'Mrs T' embodied. The family and the Royal Parks are right to have reservations. The first woman prime minister should be honoured, as should Mrs Fawcett; but felings are such that the statue could well have a very mixed reception.

Capital, Labour and Donald Trump

In the long history of political economy [the science that existed before Economics was invented] the starting-point for understanding the economy was recognition that there were three 'factors of production', three inputs that were necessary to achieve any output that was useful to [or desired by] the human race.

'Land' stands for all the resources of planet earth: the surface of the earth and everything that is on it, under it or capable of capture above it [such as birds].

'Capital' is all the output of past periods of time, that people hold back from consumption so that it can be used to facilitate production in future. This came to include tools, equipment and machinery and the buildings that house them, breeding stocks of animals, stores of seeds for future crops, and [after the invention of money] a stock of money that some people accumulated with which to employ people over time to produce output in the future. Those people became known as 'capitalists' because they became the controllers of a large proportion of the capital the any nation carried forward from each period into the next.

'Labour' is the capacity of humans to work physically and mentally to extract the materials of the earth [and, in the case of capitalists, to organise the activities of other humans] so that the product of successive years could increase: subject to the risks that can arise from climate, geology and human behaviour to disrupt a smooth process of wealth creation.

After the creation of human society and political entities, some of the risk that were assumed to exist for humans in a 'state of nature' were lessened by the system of law and order. Other risks, such as subjection to tyranny and the possibility of destruction in war, were inherent in society.

From the very beginning of political entities, the people who gained control of communities, of cities and of states recognised that they could achieve a good lifestyle for themselves, and acquire the means of influencing and dominating others, by controlling and exploiting exchanges between the common people. Governors facilitated trade by creating money; then creamed off taxes from markets where exchanges took place. In early stages of social sophistication it was recognised that if some people concentrated on activities in which they had special skills or experience, or access to knowledge that was denied to other people, they could specialise in a small range of production, maximise their output and exchange some of their produce with specialists in other fields. Thus specialisation and exchange developed together, and produced economic expansion; and if the government facilitated this process there would be even more available in taxes to make for a luxurious court and a powerful military resource.

By 1700 there was a considerable literature on political economy, especially in northern and western Europe; and among the writers there was a general assumption that a 'good' government facilitated production. It was also recognised that due to climatic and other factors, no country produced everything that would satisfy the wishes - the wants - of the people and their rulers. So international trade [or the development of colonies in different climatic and geological zones of the earth] should be facilitated: provided it increased the aggregate wealth of the nation. International exchanges that led to a loss of wealth to a country were to be prevented wherever possible; except where a short-term dependence on some import facilitated an accumulation of capital that would, over a series of future periods ensure an even greater national product.

These might seem to be arcane points in terms of the second decade of the twenty-first century: except that, just last year, a man was elected to the presidency of the United States who accepted pretty well the pure understanding of political economy that I have just summarised. This leaves open the question: was the invention of Economics - foreshadowed in Adam Smith's 1776 Inquiry into the Nature and Causes of the Wealth of Nations - an intellectual aberration that has dogged humanity for 250 years?

That is a question to which I will return; not least, as relief from the depressing daily news about the UK General Election.

University Free For All?

The leaked Labour Party Manifesto that the BBC [among others] is brandishing this morning aims clearly at 'old Labour' voters and at first-time voters, in particular.

The promise to abolish tuition fees in UK higher education in England will be hugely popular with students; and also with the millions of working people who are struggling to cope with their own student debt repayments and would love to avoid their children becoming trapped in the same debt tangle in their adult years.

However, there are many consequential issues that need to be considered. The question of how 'free' higher education would be funded needs realistic answers, rather than platitudes. This immediately knocks-on to the question of "how much higher education should be funded by taxpayers?" To which a respondent must ask further questions, of which the first and most fundamental is that which was addressed by Cardinal Newman in the nineteenth century; since when, the opposite of his argument has been the basis on which governments have funded universities. Newman argued unequivocally that the purpose of universities is, and should only be, the humane education of the individual: no utilitarian objective should be allowed to intrude into the process of self-fulfillment.

Meanwhile, in the last third of the nineteenth century, the masters of industry and commerce in Manchester, Sheffield, Birmingham, Leeds, Liverpool and Bristol were collecting funds from each other to establish university colleges that would teach the young men of the area [by full- and part-time study] the essentials of textile technology, metallurgy, engineering and other applied sciences; with the necessary underpinning of mathematics, physics and chemistry. Into the twentieth century, especially in the light of deficiencies in British technological capability revealed by the First World War [which exposed areas of shameful technical dependence on imports from Germany], government funding for universities - especially in applied sciences - was increased. But technology is hard to learn, and has never had the high prestige that the literate classes have given to music and literature. History is popular relaxation reading: higher mathematics has a very small appeal to the mass market. So it has proved with student preferences: especially in the 'Robbins expansion' of the higher education system in the nineteen sixties [which saw the doubling of the older civic universities, and the establishment of several completely new universities] the arts were allowed to take in many more students, while the science capability of the universities was expanded beyond the level that could be filled by capable and willing UK students. Hence by the nineteen eighties, when the Thatcher governments welcomed university expansion to absorb otherwise-unemployed twenty-year-olds, a pattern was set whereby the arts, social studies and 'media' grew in response to demand; and science labs were stripped out to make more lecture space that could be crammed with people doing 'useless' degrees.

Although teaching media studies requires only a fraction of the unit cost of teaching mechanical engineering [which involves high expenditure on machinery, workshop space, materials, technical support etc], the aggregate cost of allowing hundreds of thousands of people to undertake materially non-productive courses every year was seen as excessive: so tuition fees were brought in; and the 'arts side'of institutions, at least, became virtually self-funding. The residual capacity for teaching and research in applied science was increasingly filled by overseas students, who took their knowledge back to support competition with British industry, while the UK schools system encouraged their pupils to take the cheaper and more popular arts options in which nice children from nice homes got goods grades and so got their schools good gradings. The consequential mega-disaster for the British economy needs no elucidation in this blog today; though it is a subject that must recur frequently in future.

Having opened up the subject, Mr Corbyn and his little friends need to explain how - and why - the universities should be funded. Is there any national interest in maintaining over a hundred and thirty such institutions, many of which have no functioning applied science capabilities? Are the taxpayers really willing to fund a million Newmans a year? Now that the issue has been raised, it needs to be addressed clearly and in full.

It's No Secret!

Throughout human history, inventors have had to borrow money to make their machines; then have to borrow more to scale up their innovation to the point where profitable production can begin.

In the era of the industrial revolution the infrastructure of better roads, then canals, then railways was provided by raising money from shareholders in Turnpike Trusts, then in Canal and Railway Companies. In case you had not noticed, selling shares in a company is a form of borrowing: the directors of a company ask their investors to make their money available to the company, under the promise of long-term partial ownership of the company and the hope of recurrent profits. Usually investors have come forward if there is a reasonable prospect that the returns to shareholders over a ten-year timescale will put more money at their disposal than they would get in interest if they had just kept the money in the bank.

Richard Arkwright had to borrow the money to build his first spinning machine; then he established patents on all the technologies involved, including the work supplied by a clockmaker who cut and assembled the gears that were indispensable for the project. Other people who wanted to open spinning factories had to pay Arkwright royalties on the technology until, many years later, the extent of his patent coverage of the device was reduced. James Watt developed his concept of a steam engine in the university laboratory at Glasgow, where he was a technician to Professor Black. Eventually the good professor moved on in his research, and to make the engine a commercial proposition Watt had to find an investor with deep pockets. Matthew Boulton was a successful serial entrepreneur based in Birmingham; so to Birmingham Watt had to go, and Boulton's name came before Watt's in the name of the firm that successfully patented and sold the first steam powered devices that were ready for the mass market. The first engines were for pumping, and their principal customers were mines, breweries, dye works and other consumer-goods suppliers: the steam engine that could provide motive power to road and rail vehicles and to vessels came later - which ties in with the fact that roads, canals and railways needed to be built first, at vast capital cost.

The essential problem of the British economy, certainly since the swathe of industrial destruction that is the strongest characteristic of the Thatcher era, is the lack of big industrial development. That picture of failure is reinforced by the poverty and antiquity of the infrastructure on which the UK economy depends. The shining exceptions of Sir James Dyson and of the Bamfords' JCB stand alongside the massive pharmacological companies as rare exceptions to the general picture that the remaining British-owned large firms are either dependent on their overseas operations or on the popularity of long-ago registered trade marks and copyrights. There are many wonderfully innovative small firms; most of whom find it difficult to impossible to secure funding for their expansion, to the extent that many of them sell their technology [and thus the potential for future profit] to aliens.

In the current election campaign, it is clear that the Tories are content to continue the stagnation, and [as the economy is contracting, in real terms, with a huge balance-of-payments deficit] they will continue with their socially destructive austerity programme. Labour is suggesting that investment is needed: and the Tories assert that this would create a great 'black hole' in the national finances. Labour is not bold enough in its investment programme, which doesn't matter anyway, because they can't win. Every time you see Mrs May in a 'factory' context, you will see that she is in a clean, small-scale workshop: because that is pretty well all that her minders can find to indicate 'industry'.

It is not at all secret, that nothing happens without investment: and Britain's investment drought is exacerbated by virtually every action of the present government.

Colonists Smash Consensus

George Galloway, a former Labour member of the British parliament, has spend the past decade establishing his new Respect party which seeks pacifist and Muslim votes against wars on Islamic countries. He won an election in east London but left the seat to be retaken by Labour in 2010 when a majority of his Bengali supporters were snatched back to their former voting pattern by the complex of tribal networks to which they are susceptible. Galloway transferred his primary efforts to the ethnically different people from the northern parts of the Indian sub-continent who have colonised the former mill towns on both sides of the Pennines. There is a good chance that those populations will be less amenable to recapture by Labour. While the voting in recent by-elections has been only 30% of the roll, yesterday in Bradford West 51% turned out. In round numbers, 18,000 voted for Galloway, 8,000 for the [Asian] Labour candidate, 2,000 for the Conservatives and 1,000 for the LibDems: Galloway's vote exceeded that of all the established parties altogether.

The political class will spend the next week pretending that the Bradford by-Election result that was announced announced this morning was utterly unimportant. In a couple of weeks, when their pollsters and focus-group technicians report back on the new questions [those their masters had not cared to ask previously] that are raised by the Galloway result, they will find that there is elation among the mass of immigrants who voted for Galloway feeling that they have been patronised and mollified with benefits for decades. They will also report new pressure on the Asians who remained Labour voters to reconsider their position, and despair among the ethnic British who have been coaxed and bullied by patronising politicians who have suppressed discussion about immigration and the benefits bonanza.

These are not trends that the government are capable of understanding. The leading cabinet ministers simply do now know that in addition to the massive Greggs chain of bakers' shops is a mass of well-loved local bakeries and well-used garage forecourts where hot pies and pasties have for generations provided modest refreshment for millions. They are uncomprehending of the fuss that has been created by their decison to levy Value-Added-Tax of 20% to the prices of hot pies and pasties. They have no comprehension of the social structure and daily habits of their fellow-countrymen. There may well be some 'sleeper' in the Treasury who advocated the pasty-tax in full awareness of the probable impact on the popular press and the mass of voters. The nauseating scene of Gordon Brown's mass welcome to the Treasury by its Grauniadista denizens should have been sufficient warning for the Tories when they returned in 2010 to beware of a coven of socialists. But the major political issue is the incomprehension of the future Sir George Osborne Bt, the craven eurorat Clegg  and the Etonian Prime Minister. The pasty tax had no influence on the Bradford West election: but it did enhance the gulf between the government and the people; which is a completely outre way was also George Galloway's charge against the political establishment.

The Labour opposition is almost equally composed of 'intellectual' life-long would-be politicians, most of whom are as remote from the mass of the electorate as the similarly clad people on the government benches. They go through puerile rituals to make themselves seem - in their own conceits - to have speech patterns not unlike some of the lower orders; but examples like the fake-fishwife utterances of a shadow treasury minister [who spent years as a Bank of England official] produce only ridicule. Those like the Labour leader, Ed Milliband, who cannot even affect working-class accents equally fail to display the sort of articulateness that makes Galloway so devastating.

Galloway has exposed eighteen thousand of a million-plus Asian Muslims in Britain to the euphoria of defeating the political establishment. There are at least fifty seats that could fall to the Respect Party unless the indigenous British, with Hindus, Sikhs, Afros and EU immigrants can unite in voting for single candidates: the emergence of another party or network, with the primary object of stopping Respect, is highly probable.Unable to influence Respect, the established parties would bend all their efforts to denigrating and obstructing that new movement; with the result that in some places the new group will fail and in other places the established parties will be eliminated.

British politics suddenly got more exciting, more dangerous, and more likely to be followed by increasing cohorts of Islamic colonists and by those who become scared by the Muslims' new militancy all over Europe.

Nobody predicted this: one can search in vain for any hint in the press [up to and including early editions of March 30 newspapers] that Galloway's victory was even a remote possibility. I was not even aware that he was a candidate. But I live in the parliamentary constituency for which he formerly sat as MP: I recognise his intellect, his speaking ability and his political agility. He has changed British and world politics, and anyone who tries to ignore the fact will come to rue that day.