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. 

Austria's Choice

Today, there is to be a general election in Austria. Thanks to the actions of Angela Merkel two years ago, the conclusion of the election in this neighbouring country to Germany was clear before voting began. The overwhelming majority of Austrians agree that there are now too many Muslims in the country, that the strain they have put on the social assistance and housing and education and health systems is unacceptable; and that no further significant immigration - however desperate the plight of people claiming to be 'refugees' might be - should be permitted. The government that will emerge from the election will be a coalition with a more right-wing structure than any since the re-unification of Austria [after allied occupation] in 1956. The two stand-out policy positions that it is expected to adopt are to seal the frontiers of the EU against immigrants, and to review and restrict access to the social security and related systems.

Neigbouring Hungary has had a government with policies designed to minimise immigration from outside the EU for several years: access to that country is very heavily controlled, with high wire fences and a strong presence of border guards. To the south-west of the Hungarian frontier is Austria's border with Italy, which has already been 'strengthened' to limit the onward passage of any of the tens of thousands of economic migrants who reach Italy by sea every year. No doubt that border will further be toughened: but there will also be sympathy for the Italians in their situation of receiving the migrants, which is resulting in right-wing politicians rising through 'populist' movements there, too.

There will be resistance in Austria to any attempt by Germany to impose any quota of Muslim [or, indeed, any other category of] immigrants on any EU country. It is widely expected that Austria will adhere to, and may even join, the 'Visigrad' group of countries [Poland, Czech Republic, Slovakia and Hungary] that have 'ganged up' to resist pressure from Germany and France. Thus there is already the making of a very powerful subset of the EU that will simply decline to go along with aspects of the settlement that the USA imposed on 'liberated' Europe after 1945. The Liberal Consensus to which Roosevelt and Truman, Churchill and deGaulle subscribed is fading fast.

The right-wing AfD in Germany has gained seats in the Bundestag, sufficient in number to harass whatever coalition government Mrs Merkel may be able to cobble together. France has a completely unproved president; and there are huge questions as to whether his parliamentary majority and constitutional authority will be enough to overcome the inertia of the trade unions, farmers and other vested interests. It has been noted above that Italy has strong and growing right-wing parties, and the legacy of Fascism is ceasing to be seen as an embarrassment. Those countries in north and west Europe that have a couple of centuries of constitutional government [Belgium, the Netherlands, Sweden, Finland and Luxembourg; plus non-EU-member Norway] have all seen some emergence of minority anti-migrant movements. The three Baltic States [Estonia Latvia and Lithuania] have no significant problem with Muslim immigrants; they have suffered, to varying degrees, net emigration to the more affluent west of the EU.

The Balkan EU members, and aspirants to membership, want to prove their democratic credentials; but they have limited resources to accommodate immigrants [balanced by limited means of keeping them out]. They will sympathise with [and envy] the countries to the north that have the means and the will to seal their borders to a significant extent.

Thus the European Union that is harassed by the Brexit issue is a very different political and emotional structure than it was at the beginning of 2015: the year in which Cowardy Cameron launched the Referendum as an election pledge. It is quickly becoming an entity about which any true democrat would have serious questions. Britain is so beset by a useless government that it has not yet faced up to the point: but there is a growing doubt as to whether we would wish to join, if that was the issue before us.

Merkel and May: Common Origins, Shared Failures and Different Prospects

Angela Merkel and Theresa May are both the daughters of clergymen, so they grew up in the psychologically comfortable environment of a clergy house with attentive members of the local community willing to support them even though the majority of the outside population was post-Christian. May's route into politics was typical of an Oxford graduate who had always been a young Conservative. The much rougher road that Merkel followed depended on the collapse of East Germany, on Helmuth Kohl's determination quickly and fully to integrate the east and the west, and on the ruthlessness that she had learned under Communism to move in at an opportune moment and slip herself into Kohl's place. By contrast. Mrs May's accession to the party leadership was by default of David Cameron, whose panic flight from the tragic situation that had been created by his daft, imprecise referendum question was one of the most shameful incidents in British history.

Mrs May's great 'weakness' as Home Secretary was the abject failure of her department to come anywhere near meeting the policy requirement to reduce net immigration to the UK to fewer than 100,000 non-students a year. In one sense, the target was unattainable under EU Freedom of Movement rules; Mrs May should have said that clearly: she had no way of limiting EU immigrants. She would then have had to establish and enforce a quota of non-EU immigrants; and that would have to be a tight one. That would be impossible to enforce, too, because almost every MP is constantly battered with demands and petitions from their Asian constituents to support the immigration of family members, and to support cousin-to-cousin mail-order marriages; many urban constituencies could be swung if the whole south-Asian population united to support one party [Labour, if the Tories in government had imposed a real cap on immigration]. George Osborne was apparently scathing about this'failure' in and out of Cabinet meetings: so she had to dismiss him on taking up office as Prime Minister; and superficially journalism's loss is her political gain in not having his constant carping at her elbow. He will, however, be a powerful enemy outside the Westminster hothouse, and he will surely dissect her ongoing failure to address Brexit adequately.

Mrs Merkel's massive mistake was to allow around half a million chancers from the Muslim world to claim to be asylum-seekers when she opened Germany to Syrians who were genuinely in flight from the appalling chaos of their home country. Many of these men - Afghans, Eritreans, Pakistanis etc - claimed to be juveniles, despite their appearance being clearly that of adults. She and her ministers appealed to Germany's Christian tradition as a major ground for welcoming the homeless: a sound point, in principle, which was instantly vitiated by the recognition that the chancers must include some jihadis and some potential recruits to jihad. Other EU countries have refused to take the quotas of these thugs that Germany has persuaded to EU to thrust upon them, and that will continue to be a source of discord within EU institutions for years to come.

Even if May is able to achieve a half-sensible Brexit, with the help of Merkel [which is by no means guaranteed], there is no reason to think that this will make May's position in the UK more secure: it could create the situation in which the Tory party can ditch her. May has, however, one cunning ploy that she has used already and will doubtless play heavily in her Florence speech today: that the UK can contribute materially to 'security' in the EU on an ongoing basis, after Brexit. That could well have a positive resonance, [particularly with Merkel and with the central Europeans who are resisting the quotas of chancers and thugs whom Merkel is foisting on them]. But everything is 'up for grabs' in a quickly-changing world and European context; with Trump and Putin spoiling on the sidelines.

More Pathetic Government Papers on Brexit

It is becoming increasingly apparent that the British State does not have the resources that are necessary to arrange for any sort of Brexit. Some commentators [from both sides of the debate] have welcomed this absence of any clear thinking and positive planning as a time during which a consensus can emerge in the wider public, in favour of a 'soft Brexit' based on remaining in the European Economic Area [EEA]. Such commentators argue - persuasively - that Mrs May's government does not possess sufficient brainpower [either in numbers of people or on a basis of their average intelligence] to work out alternative solutions to the tens of thousands of issues that are emerging, within eighteen months.

The EU has now produced two papers [among others] that are unanswerable by the May team within the constraints of time and human resources that apply. One challenges Britain to find a way of carrying forward the European system for designating such products as Cornish pasty, Stilton, Camembert and Parma Ham. The other carries the ultimate challenge: it throws entirely on the British government the initiative in creating open borders in Ireland that is acceptable to the Irish Republic and supported by all 26 other EU member states. England opened the 'Irish Question' when the English Pope Hadrian gave King Henry II an invitation to assume the role of Lord of Ireland, and the Union of England and Scotland has been struggling with the aftermath for at least two hundred years. The chances of it being resolved, other than in the context of the EEA, are negligible. Mrs May depends on the support of the most hardline opponents of concessions to the Irish Republicans for her majority in the House of Commons; thus there is no chance of the Irish Question leading to any new answers.

This blog has also emphasised the simple fact that a 'hard Brexit' could only be implemented at the cost of many billions of pounds of extra state spending on border and customs controls, both to implement the hard border then to maintain it. It would be impossible to continue to implement 'austerity' if such extra costs were being imposed on the state budget. Borrowing to pay for such border controls would make the government's attempt to end state borrowing [that has failed so far] even more ridiculous than it already is. The alternative, to try to pay for the new resources of equipment and manpower by increasing taxes, would result in revolt by business lobbies and the general public. The Chancellor of the Exchequer, whose department would have to present this scenario to the public [and must, surely, have attempted to warn the Brexiteers in the Cabinet of these facts], has argued for the general acceptance of a transition period in recognition of the fact that none of these issues can be resolved by March 2019: which is deadline set by Mrs May when she formally notified the EU of her interpretation of the referendum result.

The headbanging Brexiteers know that the longer time passes before a resolution is imposed on the country, the chances of a rational solution - withdrawal from the political EU while remaining in the EEA - will rise; and they hate this concept. They will therefore be hell-bent on pushing the weakest Prime Minister since the Second World War to take panicky decisions in a show of uncharacteristic determination that would make her ridiculous, and almost certainly push her to a position where the DUP would refuse to support her and Tory Remainers would be opposed to her.

In all this political maelstrom key facts could get lost; but here the sheer incompetence of the UK government's papers on Brexit are significant. A draft text on immigration, post-Brexit [leaked to the Guardian], assumed that Britain does have the native resources of skilled, fit and willing labour to fill most of the jobs that would be vacant in the period after a 'hard Brexit'. The mass of work that has been done on labour supply and skills shortages in the UK contradicts that naive assumption; unless - and this is a really chilling thought - the authors assume that there would be so big a contraction in the economy that skills shortages would disappear. The absence from the paper of any reference to seasonal labour from the EU, on which much of UK agriculture depends, illustrates the sheer incompetence and inadequacy of the work that is being done in Whitehall.

This all serves to strengthen one's fear that those who have a clear policy, who I call the headbanging Brexiteers, will have too much of the argument for too long; because everybody else is inadequately informed to make judgements on myriad issues that any form of Brexit will throw up.

Straws in the Wind

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

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

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

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

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

Brexit: Trouvez la Femme

So now we know, for sure; definitely.

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

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

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

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

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

Lambing Time in Cloud Cuckoo Land

All the major organisations that represent farmers in the United Kingdom have come together to express their acute concern that the government has not given any of them a hint as to what sort of economic structure there will be surrounding the farmers after Brexit. There is a broad and vague promise that the existing level of EU payments to farmers will be paid from 1 April 2019 until the end of the present EU budgeting period in 2022: and, after that, nothing

This is almost certainly because nobody in government has the faintest idea what sort of regime they can fund, or organise, or administer. Mrs May is just obsessed with the idea that we MUST be in full control of immigration to the UK from the date of Brexit, and [as far as she seems to be concerned] all else is swept aside from serious thought or planning. Self-styled 'Brexiteers' in her government are running around, with one breath promising us free-trade agreements with the half of the world economy that has any serious economic clout; and with the next breath saying that it is too early to say if we will be expected to watch British farms go bust as consumers [with ever-more-quickly declining incomes] are steered towards buying hormone-fattened beef and chlorinated chicken from the USA.

The government has become a conspiracy of silence against any valid information being presented to the nation: and behind that lies abysmal ignorance of the implications of any action upon which the cabinet decides.

So let us take an absolutely basic example. Most members of the government, and even a sizable proportion of the civil service [and, just possibly, some Econocrats] know that due to the ecology of the sheep-farming regions of the UK it is only feasible for our sheep to produce their offspring in the spring. Some parts of the country have earlier and milder spring weather than other parts, thus they can arrange for the lambs to arrive early in the calendar year; while the areas with a more robust climate arrange for the lambs to arrive at the end of the winter. Thus, later in the year, lambs are ready for slaughter over a period of several months. The amount of lamb that is produced in Britain in those months is more than British restaurants and households are able to use: so prime British lamb, in season, goes to Europe and other destinations. Over 40% of the annual production of lamb from the UK goes to the other EU countries, currently without tariffs or other hindrances.

In the parts of the year when there are few lambs ready for slaughter from UK farms, the New Zealand, Australian and other southern-hemisphere farms can supply the EU [including Britain] with lamb: so the UK exports 40%+ of the lamb that is raised here, and imports about the same proportion of the lamb that is consumed over the whole year. This is an entirely sustainable and sensible process; and common sense indicates that we should stick with it. This would work, if Britain has the basic good sense to think straight and act accordingly.

Sadly, it appears that Mrs May has placed fantasists in key positions: so as she dreams of making a niche in history by closing our borders to immigrants to rectify her 'failure' to reduce net immigration below 100,000 when she was Home Secretary; reckless of the long-term economic damage that a 'hard Brexit' would cause, other ministers have been freed to pursue their own fantasies.

I would like to think that this characterisation  of the current situation is an alarmist fantasy of my own: but in the absence of any evidence of rational policy-making, one is licensed to expect the worst.  

Theresa May: Competence and Comprehension

It is increasingly a matter of speculation, as to how competent a person the Prime Minister is. Despite the great achievements of people like Professor Ron Johnston, the general perception of geographers among the intellectual hierarchy is pretty low. Mrs May read geography at Oxford, which may rank higher than media studies at Mid-Montgomeryshire but it is not regarded as a particularly powerful component of the university overall. She has had a steady political career, indicating that she is content to take orders and vote at the call of her party whips; most of the time. When in the safe-hands role of party chairman she voiced the popular view that the post-Thatcher Tories were regarded as the 'nasty party' she spoke no less that the truth: and the import of her message to the party was that 'we have to invest more in improving our image', rather than telling the Buffton-Tufftons to change their personalities. Her mention of the'nasty party' was frequently cited over the ensuing years, almost as her defining achievement; it certainly got her name nationally known, which ultimately helped to get her the leadership.

In six years as Home Secretary she 'failed' to get net annual immigration reduced below 100,000: by a margin of several hundred per cent. Now, as Prime Minister, she declares herself determined to try again, harder. The reduction of immigration is at the heart of her determination not to retain the EU obligation of free movement of people in the European Economic Area: it virtually sets the tone and terms of how she sees 'Brexit'.

She appears to be incapable of understanding that she had to 'fail'. If intending immigrants had simply been turned away from the ports and airports of a fortress Britain, the economy would have been undermined catastrophically. Market gardening would have collapsed, at least until the firms in the industry moved their capital to countries where they could find labour. Many of the rising 'knowledge industries' would likewise have emigrated. The City of London would have imploded as a global financial centre. British users would have had to pay foreign firms inflated prices for the goods and services that had ceased to be made or grown in Britain; with a disastrous detriment to standards of living.

Meanwhile many thousands of non-EU immigrants would still have got into the UK under threat of  appeals to the human rights industry on the ground that 'family reunion' is a human right: so there would have been more non-English-speakers appealing to the benefits system and using the NHS in the face of a collapse of the state's revenues. The 'racial' dimension to the anti-immigrant mood would not have been exorcised; though fewer ethnic  groups would be scapegoated.

Mrs May still seems to want all those bad things to happen. She is deaf to appeals from industry and commerce. Unless she can clarify quickly that she has not meant these things, her government must fall quickly.

Jobs and Wages

There is a great deal of talk - and much less action - from government about the need to create jobs in the economy to produce growth. There is also a recognition that any sustainable increase in jobs should focus on 'manufacturing': a series of sectors that have been continually in decline and in default throughout the careers of most working retail bankers, setting up institutional and psychological barriers to lending for any such development. There is also a very emphatic policy from the Department of Work and Pensions to push benefit recipients into employment.

Most bar-room conversationalists, through the length and breadth of the Kingdom, take it as axiomatic that that there are 'no jobs' that have any attraction for many of the British unemployed. There is huge resentment about the plain fact that there is still a torrent of immigration into unfilled existing jobs as well as of benefit-hunting immigrants. In the high-earning employment categories, British graduate doctors, scientists and engineers migrate to North America and Australasia; and their places in the UK are filled in the NHS by Europeans, Asians and Africans, and in science and technology by Europeans and Asians. Thousands of British engineers, physicists and mathematicians are also lost to the 'real ecnomy' when they take employment in casino banking. In middle remunerated ranks, plumbers and builders from East Europe have supplanted much British recruitment. In hourly-paid jobs with some 'unsocial hours' working Brits are conspicuously less abundant among applicants than are migrants.

If the country is to avoid Islamisation by mass immigration, British people have to fill the jobs that are available in Britain: but the second-and third-generation non-employed population show no inclination to work. Hitherto they have been able to show how much benefit they would loose if they took jobs: they could surrender 38 or 40 hours a week of their time to the discipline of the workplace and receive only a few pounds a week in higher nominal income. So the glib answer is to say that their benefits must be reduced. This supposedly would provide a stick and a carrot: the individual would have a lower standard of living if they did not work, and would have the opportunity - perhaps - to buy more if they did get work.

But if such people have children, an ages-old problem arises. It appeared first in its contemporary form in the eighteen-seventies when Poor Law Guardians began to put up workhouse orphans for fostering by working families. Tables were drawn up of the clothing, food and other necessities that each such child would need: and it was immediately evident that the sum of money required to deliver that subsistence each year was very much more than any lower-paid working family had for each of their children. The same arithmetic applies today: the cost of keeping a child in care or in state-sponsored fostering is far more than the portion of millions of parental earnings that they can make available for each child. This recognition is carried forward in the 'tax credits' that governments give to families. If wages are reduced in real terms the 'needs' of children will have to be provided for in increased credits. This is axiomatic, because it is pretty well universally accepted that nobody can expect seriously deprived children to grow into good citizens. So if tax credits [or their successors] are to keep pace with prices, any incentives or penalties on parents to 'make them work' will largely be rendered nugatory.

Of course parents are only raising children for part of their lives: but many, many people think in terms of short-term living rather than of lifetime earnings, or career progression [when many jobs offer no prospect of promotion]. So the conundrum of 'childrens' needs' set against rates of parental remuneration will not go away. Hence much of the government's talk about employment, pay rates and benefits, is nonsense. Deeper thinking in this, as in other crucial issues, is urgently needed.

Six Days To go

After a nugatory meeting of the G20 Finance Ministers over the last weekend, the world economic community is still waiting for France and Germany to overcome their significant differences about how the Greek crisis can be solved in a way that will assure the future of the euro. European Ministers are to have a 'summit meeting' over the next weekend: meanwhile, as the US Treasury Secretary put it, France and Germany "have six days to save the world". That is no less than the truth, about 'the world as we know it' . It will be important to follow that key story as the days go by; but it is even more important to understand what other realities the world community should be facing up to, regardless of whether or not the euro can be nursed into some sort of health.

I have just spent a couple of days in the Derbyshire Peak District, and on my return to London I noticed a phenomenon that I have not seen before: the leaves in the south are going brown before those in the north: normally spring comes earlier in the south, and the leaves remain on the trees longer in the south than in the north. I assume that this year's deviation is a consequence of the unusually dry weather in the south and east of the country, which has left the trees exhausted and deprived of nutriments. Parts of Derbyshire have also been drier than usual in the past year, but not sufficiently to have a comparable effect on the trees. Crop yields in the south and east - Britain's heaviest agrarian regions - are down this year. As the global population trend is raising more awareness that countries [and economic communities, if they can survive] must become more nearly self-sufficient, given that that they must export surpluses of what they produce if they want to continue to be able to buy crops that their climate will not sustain. Meanwhile, if it is implemented, EU environmental legislation will massively reduce the rights of farmers to access rivers and ground water when rainfall is insufficient to support the growth of the crops, and will increase the charges that the government makes for the permitted abstractions: so food is likely to become both more scarce and more expensive.

Another key sign is exemplified today by the Prime Minister meeting the main gas and electricity suppliers to ask them to lower their charges, at least to 'vulnerable' customers: and this at a time when the government is pursuing environmental targets that will require the companies to invest massively in 'green' energy supplies. The cost of that capital spending can only be repaid from charges to customers in the future. So it is becoming dearer to heat as well as to eat, in response to deliberate government policy: and that is happening in more and more households across Britain this year, as real incomes fall.

It remains fashionable, almost compulsory, in journalistic circles and in academia to scoff at the few commentators who advance a worst-case Malthusian proposition that the world is close to the point where it cannot feed the population that will be born in the next few years. And even when the possibility of a crisis of overpopulation in some faraway countries is allowed, it is assumed that this will not affect the old advanced economies. Yet it is now speculated by demographers that the ageing of the indigenous European population will lead to massively increased immigration of culturally alien Africans and Asians. Japan has absolutely refused to allow immigration to dilute the racial structure; and Europeans are becoming increasingly resentful of immigrants who draw on the benefits system while they 'outbreed' the indigenous population. Opposition to immigration has usually been based on racial and/or religious grounds: which means that people have muted their expressions of concern because of the existence of laws against 'racial hatred' . Ambitious politicians will soon recognise that dependent immigrants will cost so much in benefits that the rate of benefit for all claimants - indigenous and immigrant - will be reduced [at least in real terms] and large immigrant families will be seen relatively to benefit. Then opposition to immigration will become 'economic' rather than 'racist', which will make it respectable.

As the economic squeeze intensifies, the date at which this grim forecast for socio-political consequences will be applicable comes closer. That gives increased importance to the downward revision of unprejudiced forecasts for the British economy: the announcement by the Item Club today is consistent with the worsening prospect.