The London Stock Exchange has been in the news for precisely the wrong reasons in the past few days. Following the announcement that the very successful, reputedly abrasive, chief executive was leaving one significant shareholder took a very public stance to assert that the chairman should go and the chief executive should remain. Rumours swirled about clashes of personality, secret payoffs and dirty work at the crossroads. After entertaining the speculative journalists for a couple of weeks it is now announced that both chairman and chief executive are to go: the chief executive soon, the chairman in 2019. The publicity has been unsettling, and the Exchange is now said by some to be a vulnerable takeover target; with the owner of the New York Stock Exchange said to be a keen potential buyer.
There is no doubt that, despite regulatory and chauvinistic forces preventing a proposed merger with the German stock exchange, the chief executive has been very successful, multiplying the share price very significantly: he will no doubt leave with very significant financial reserves to underpin his aim to grow vines.
Over the decades, there have been many examples of chief executives who dominate and build up hugely successful companies; often for them to be ruined within a few years after the great man stands down. One of the most spectacular in my lifetime has been Arnold Weinstock of the English Electric Company. Over the spectrum from domestic appliances to world-class warplanes, this conglomerate company built a steady reputation for business success and thus declaring decent dividends. For most of the couple of decades while Weinstock ruled the company in a highly individual and essentially conservative way, the chair was occupied by the complementary character Lord Nelson of Stafford whose emollient, confident handling of the formal business of the company [including shareholder relations] left the chief executive the space he needed to manage in his own way.
After Weinstock's retirement there came in people who teachers in Business Schools would undoubtedly rate higher than Weinstock on all the measures of formal competence that are emphasised by academic commentators [especially those in third-rate British business schools]. With major reorganisation, changes of name and restructuring, the next generation of managers destroyed the business in a very few years.
What is left of the 'clever end' of the old English Electric Company, the aeronautical facilities in the north-west of England that have survived until now within more recently cobbled-together conglomerates, are being reduced - and are very much under threat of closure - as a consequence of cuts to the defence budget, combined with the increasingly prudish opposition to the sale of aircraft and arms to regimes that purists consider to be oppressive. There is a very present danger that the United Kingdom will soon forfeit any capacity to build military aircraft: while Brexit [if the buffoons have their way] will lead to the slow exclusion of UK manufacturers from Airbus.
Lords Weinstock and Nelson together took a major part in enabling the UK to be at the very forefront of defence technology: and one of the ways in which they helped this process was by including the defence-oriented projects within a larger conglomerate that made significant profits from its consumer electrical goods. Thus the some of the defence contracts, for some of the time, could be priced at less than full cost because of internal subsidy by the company. This pricing structure also applies to the suppliers of components for the major projects in the defence arena. It is extremely important in France, where the heavily-state-supported viability of the aircraft industry is maintained with constant nudging from the state.
Britain has lost both the Weinstocks and the appetite to enable them to maintain their niche in the "military-industrial complex" which is essential for any state that hopes to be a power in the world [or even in the neighbourhood]. Before the last dregs of the potential to restore the complex have drained away, it behoves the wider public to recognise what we have had, and are so close to losing for ever.
Showing posts with label military-industrial complex. Show all posts
Showing posts with label military-industrial complex. Show all posts
Thursday, 30 November 2017
Sunday, 19 August 2012
Big Science, Cost and Risk
A couple of days ago the USA announced the catastrophic failure of a test fight for a new super-high-speed aircraft. This news came a few days after the successful landing of a superb American vehicle to explore the surface of Mars, and to analyse the materials that it can collect. The combination of triumph and disaster has a cost of billions of dollars; with more massive expenditure to follow as the errors with the plane are corrected and as the success on Mars is followed-up before the Chinese programme for Mars exploration [which is gaining momentum] scoops up and exploits the gains from the American research. The US Congress has always distrusted the 'military-industrial complex' but it recognises that unless their country leads in both pure and applied science it cannot lead the world in anything; and it recognises that only the state can fund great strategically significant developments. Thus the federal budget must fund projects of vast scope, some of which will fail.
Currently healthcare is a matter for hugely damaging dispute throughout American politics, but in terms of state spending it is relatively unimportant: the debate focusses on whether it is appropriate - and constitutional - to legislate for compulsory purchases of health insurance by small firms and by individuals. The budget cost for the immense scheme of Obamacare is modest. The biggest debate about state funding of big science in the US in recent years was over NASA making cuts in spending that were seen as excessive, especially the retirement of the shuttle craft that had conveyed people and supplies to the space station. In China and Russia there is no publication of defence budgets and western estimates of the extent of the related spending on science are conjectural. India and Pakistan, which possess nuclear weapons, throw up massive obfuscation about both the scope of scientific research and the budget for it.
Most obscure of all is the situation in North Korea, whose progress towards developing the capability to deliver the nuclear weapons that it has almost certainly constructed cannot clearly been assessed; but that 'rogue state' is recognised by all the leading members of the United Nations to be an extreme danger for the whole human race.There is little doubt that the North Korean budget for big science and for a ludicrously large mass army overwhelms expenditure on the maintenance of the civil population. And now Israel and its dependency the United States, are determined to prevent Iran from reaching a situation where it too could become a nuclear threat to anyone. The proportion of the Iranian budget that has been spent on the development of weapons and vehicles to convey them is more in line with the Indian than with the North Korean, and hence progress has been slower and the achievement [thus far] is less dangerous than in North Korea: but it has become a crucial test case in global diplomacy and a major threat to peace and to oil supplies globally.
In Britain, where austerity is still a matter of gossip rather than an acute personal experience for the majority, there is annoyance that India is developing its own space programme while Britain still gives that country hundreds of millions of pounds a year in development aid. Progressively over five decades the UK has chosen not to afford its own aerospace or space programme. The political class apparently still consider it intrinsically good to assist rapidly-expanded populations in dozens of countries to secure health for the children who will become the next breeding stock within two decades; during which the projected rate of economic development [even on the most optimistic interpretation of global and local trends] cannot possibly elevate the existing population to a current American standard of living. Britain taxes its people to hand out international aid; then taxes them more, both through the tax system and in the form of raised electricity prices, to spend on constructing windmills and to close viable power stations in order to meet global standards for the control of carbon emissions that both the USA and the emergent economies ignore. What little capital the economy is investing is in largely applied to low technologies that will be delivered at high cost to captive consumers. Britain is not in the space race, which India and China have joined: and which Britain could have led in the 'fifties and'sixties of the last century. Instead the British state poured wealth into welfare and the dissipation of real wealth. The results are at last now beginning to become understood.
Currently healthcare is a matter for hugely damaging dispute throughout American politics, but in terms of state spending it is relatively unimportant: the debate focusses on whether it is appropriate - and constitutional - to legislate for compulsory purchases of health insurance by small firms and by individuals. The budget cost for the immense scheme of Obamacare is modest. The biggest debate about state funding of big science in the US in recent years was over NASA making cuts in spending that were seen as excessive, especially the retirement of the shuttle craft that had conveyed people and supplies to the space station. In China and Russia there is no publication of defence budgets and western estimates of the extent of the related spending on science are conjectural. India and Pakistan, which possess nuclear weapons, throw up massive obfuscation about both the scope of scientific research and the budget for it.
Most obscure of all is the situation in North Korea, whose progress towards developing the capability to deliver the nuclear weapons that it has almost certainly constructed cannot clearly been assessed; but that 'rogue state' is recognised by all the leading members of the United Nations to be an extreme danger for the whole human race.There is little doubt that the North Korean budget for big science and for a ludicrously large mass army overwhelms expenditure on the maintenance of the civil population. And now Israel and its dependency the United States, are determined to prevent Iran from reaching a situation where it too could become a nuclear threat to anyone. The proportion of the Iranian budget that has been spent on the development of weapons and vehicles to convey them is more in line with the Indian than with the North Korean, and hence progress has been slower and the achievement [thus far] is less dangerous than in North Korea: but it has become a crucial test case in global diplomacy and a major threat to peace and to oil supplies globally.
In Britain, where austerity is still a matter of gossip rather than an acute personal experience for the majority, there is annoyance that India is developing its own space programme while Britain still gives that country hundreds of millions of pounds a year in development aid. Progressively over five decades the UK has chosen not to afford its own aerospace or space programme. The political class apparently still consider it intrinsically good to assist rapidly-expanded populations in dozens of countries to secure health for the children who will become the next breeding stock within two decades; during which the projected rate of economic development [even on the most optimistic interpretation of global and local trends] cannot possibly elevate the existing population to a current American standard of living. Britain taxes its people to hand out international aid; then taxes them more, both through the tax system and in the form of raised electricity prices, to spend on constructing windmills and to close viable power stations in order to meet global standards for the control of carbon emissions that both the USA and the emergent economies ignore. What little capital the economy is investing is in largely applied to low technologies that will be delivered at high cost to captive consumers. Britain is not in the space race, which India and China have joined: and which Britain could have led in the 'fifties and'sixties of the last century. Instead the British state poured wealth into welfare and the dissipation of real wealth. The results are at last now beginning to become understood.
Saturday, 26 November 2011
Democratic Deficit
One of the discredited Rating Agencies has downgraded Belgian government debt: apparently on the grounds that they have not had an established government for well over a year. The cause of the bickering between political parties arises from an excess of democracy, that pretty well ensures that there is never a predominant party with a parliamentary majority. Belgium's policy options are restricted by the fact that the state is a member both of the European Union and of the euro: the national capital, Brussels is overshadowed by a few buildings within that city from which the EU is run and by Frankfort where the European Central Bank is located. Every opinion and brand of Flemish nationalism is represented in the Belgian Parliament; as are all the factions and aspirations of the French-speaking Walloons. This wonderfully democratic outcome is impotent: the politicians can't agree formally how to share out ministerial posts, so they have just shuffled the pack and carried on from week to week as 'caretaker' ministers; and operationally it doesn't matter. But cosmetically it looks untidy, so Standard & Poors have chosen to give Belgium a kick by reducing their rating from AA+ to AA: this will license market traders to have a whirl at making a bit more money by selling Belgian debt short: a great game for the insiders, and a worry for ordinary folk, who know that policy on trade and industry is made by the EU, and well understand that the euro is completely beyond influence from any Belgian government.
A Belgian is President of the EU Council of Ministers, but he has no power: he can merely try to co-ordinate 27 heads of state and heads of government. The EU Parliament remunerates it members exceptionally well, in the combination of salary [related to the local parliamentary salary in the members' home countries] and EU expenses; but they have no real power. The Commissioners are nominated by the governments of the member states without any convincing pretence of democratic consent. Britain's Commissioner is a Labour Party hack who has never held national elected office, was totally unknown to the public on her appointment [made in haste when the sitting Commissioner was recalled to serve in Brown's despairing government], and whose rare appearances on the British TV News cause a surge of national embarrassment.The democratic deficit on the EU probably exceeds 100%.
The new Italian and Greek Prime Ministers are described as 'technocrats'. The 'technology' that they are supposed to understand is Economics, the discredited subject whose practitioners sanctioned and applauded all the excesses that have created the crises in business and in personal and in governmental debt; that none of the 'Atlantic economies' has yet begun to addressed effectively for the long term. They personally applied their Economics in bringing their countries into the tissue of lies and false hopes that enabled a very disparate group of countries to create the euro. They went on to occupy cushy roles in the unaudited EU mechanism and now have been set up as proconsuls for their cronies. They are part of the problem, not of any radical solution.
Germany has a carefully drafted democratic constitution, with a special court to protect it and a Chancellor who grew up as a subject of a militarily occupied satellite state. She is committed to democratic principles and is accutely aware of the fraud that was committed by the founders of the euro. She is reported to be viscerally unwilling to legitimate the lunacy that has created the state debts of those eurozone countries that have systematically [and knowingly] lived beyond their means by 'monetising' those obligations under a German guarantee. So she is pressing for something like a democratic structure to be created, within which at least part of the eurozone can move close to fiscal union [a united tax and budgetary system]. Ms Merkel is not prepared to guarantee past follies and frauds in the mean time.
The EU has never been even slightly democratic: the 'European project' is the imposition of an elite who have drawn on the widespread fear of European wars to justify their own job-creation machine. Any currency zone that adopts Merkel's principles will certainly be smaller that the eurozone of seventeen states that is just about surviving into another week. A German-led outcome may be a eurozone shorn of the weaker bretheren, or it may be a Neumark zone comprising Germany, Austria, Croatia, the Netherlands, Luxembourg, Slovakia, Finland and Estonia, probably Belgium, and possibly France, Poland, Latvia and Lithuania. The Czech Republic, Hungary and the Scandinavian EU members would probably be welcome to apply to join once the system were up and running. The 'Club Med' countries would not be considered for candidacy until their devalued euro - or their separate currencies - had well stabilised and their balance of payments was restored.
Britain's desperate imbalance of payments and its structural budget deficit would become even more conspicuous when it drew comparison with the Neumark bloc. It would become clearer that party politicians cannot solve the problems, and the yaa-boo antics of the House of Commons and in the TV 'question' programmes would move from being a national joke to become recognised as evidence of the failure of the entire political structure. The British situation is worse than that of the EU: it is worse than a democratic deficit: it is an advanced case of defective democracy. This tragedy has been developing for several decades: in Can Britain Survive? [1971] Ken Watkins and I wrote:
"...there is a kind of auction of popular programmes carried on by the major parties, in which the highest bidder tends to win the lot. Since the parties do not wish to commit political suicide they are, willy-nilly, compelled to act accordingly. The fact that this inhibits them from tackling the fundamental structural weaknesses in the in the economy can be seen from the study of the elections since the end of the Second World War."
The same political auction game has continued unabated for forty more years! The deep defects of democracy, British-style, will not easily be corrected; and yet only when that correction has taken place can a rational economic strategy be formulated: then implemented over several decades. If the democratic defect is not corrected by completely fresh democratic means; a less democratic solution is quite likely to intervene.
The oldest current Constitution in the world, that of the USA, is not directly under threat. But American commentators from all segments of the political spectrum are worried about a failure of their institutions to provide clear policy in a very grave national crisis. Franklin D Roosevelt was - in effect - given exceptional powers to lead the economy out of depression, and he continued to exercise exceptional powers, sanctioned by Congress and unimpeded by the Supreme Court, for the Second World War. Harry S Truman had barely begun the process of surrendering the special powers when the emergence of the Cold War brought the Marshall Plan. Then came the Korean War, then the long stalemate of the nuclear confrontation. After 1991 the US was the unique superpower and the Clinton presidency was the first 'normal' incumbency since the mid-nineteen-thirties. It led to impeachment proceedings and a reassertion of party politics over constitutional propriety. George W Bush was continuing with the diminished role when 9/11 created a crisis and led to two overseas wars. The role of the Commander-in-Chief was once again unquestioned, and guided by the Vice-President and Secretary of Defence it transcended constitutional propriety. The limits to US global power were challenged and the end of hegemony was slowly acknowledged. Obama came into office in a diminished power and he has faced the full force of a resurgent, if uncomfortable, congressional democracy. His fluency became his greatest failing: he was unable to listen to and to interpret the diverse dialogues that had been unleashed by the collapse of the financial system and the weakening of the military-industrial complex. The attempts at bold initiatives to deal with the human consequences of the crisis that he has promoted seem to be based on the European welfare state from the nineteen-fifties: which the Europeans themselves are having to abandon under the burden of debt with which it saddled them. The result is that the USA has its own, very specific demcratic deficit: it is a real and urgent stress-point, that has been confronted by a dialogue of the deaf in a polarised Congress that exactly mirrors the depth of division in the country. Meanwhile, the prophets of economic Armageddon are having a bonanza.
A Belgian is President of the EU Council of Ministers, but he has no power: he can merely try to co-ordinate 27 heads of state and heads of government. The EU Parliament remunerates it members exceptionally well, in the combination of salary [related to the local parliamentary salary in the members' home countries] and EU expenses; but they have no real power. The Commissioners are nominated by the governments of the member states without any convincing pretence of democratic consent. Britain's Commissioner is a Labour Party hack who has never held national elected office, was totally unknown to the public on her appointment [made in haste when the sitting Commissioner was recalled to serve in Brown's despairing government], and whose rare appearances on the British TV News cause a surge of national embarrassment.The democratic deficit on the EU probably exceeds 100%.
The new Italian and Greek Prime Ministers are described as 'technocrats'. The 'technology' that they are supposed to understand is Economics, the discredited subject whose practitioners sanctioned and applauded all the excesses that have created the crises in business and in personal and in governmental debt; that none of the 'Atlantic economies' has yet begun to addressed effectively for the long term. They personally applied their Economics in bringing their countries into the tissue of lies and false hopes that enabled a very disparate group of countries to create the euro. They went on to occupy cushy roles in the unaudited EU mechanism and now have been set up as proconsuls for their cronies. They are part of the problem, not of any radical solution.
Germany has a carefully drafted democratic constitution, with a special court to protect it and a Chancellor who grew up as a subject of a militarily occupied satellite state. She is committed to democratic principles and is accutely aware of the fraud that was committed by the founders of the euro. She is reported to be viscerally unwilling to legitimate the lunacy that has created the state debts of those eurozone countries that have systematically [and knowingly] lived beyond their means by 'monetising' those obligations under a German guarantee. So she is pressing for something like a democratic structure to be created, within which at least part of the eurozone can move close to fiscal union [a united tax and budgetary system]. Ms Merkel is not prepared to guarantee past follies and frauds in the mean time.
The EU has never been even slightly democratic: the 'European project' is the imposition of an elite who have drawn on the widespread fear of European wars to justify their own job-creation machine. Any currency zone that adopts Merkel's principles will certainly be smaller that the eurozone of seventeen states that is just about surviving into another week. A German-led outcome may be a eurozone shorn of the weaker bretheren, or it may be a Neumark zone comprising Germany, Austria, Croatia, the Netherlands, Luxembourg, Slovakia, Finland and Estonia, probably Belgium, and possibly France, Poland, Latvia and Lithuania. The Czech Republic, Hungary and the Scandinavian EU members would probably be welcome to apply to join once the system were up and running. The 'Club Med' countries would not be considered for candidacy until their devalued euro - or their separate currencies - had well stabilised and their balance of payments was restored.
Britain's desperate imbalance of payments and its structural budget deficit would become even more conspicuous when it drew comparison with the Neumark bloc. It would become clearer that party politicians cannot solve the problems, and the yaa-boo antics of the House of Commons and in the TV 'question' programmes would move from being a national joke to become recognised as evidence of the failure of the entire political structure. The British situation is worse than that of the EU: it is worse than a democratic deficit: it is an advanced case of defective democracy. This tragedy has been developing for several decades: in Can Britain Survive? [1971] Ken Watkins and I wrote:
"...there is a kind of auction of popular programmes carried on by the major parties, in which the highest bidder tends to win the lot. Since the parties do not wish to commit political suicide they are, willy-nilly, compelled to act accordingly. The fact that this inhibits them from tackling the fundamental structural weaknesses in the in the economy can be seen from the study of the elections since the end of the Second World War."
The same political auction game has continued unabated for forty more years! The deep defects of democracy, British-style, will not easily be corrected; and yet only when that correction has taken place can a rational economic strategy be formulated: then implemented over several decades. If the democratic defect is not corrected by completely fresh democratic means; a less democratic solution is quite likely to intervene.
The oldest current Constitution in the world, that of the USA, is not directly under threat. But American commentators from all segments of the political spectrum are worried about a failure of their institutions to provide clear policy in a very grave national crisis. Franklin D Roosevelt was - in effect - given exceptional powers to lead the economy out of depression, and he continued to exercise exceptional powers, sanctioned by Congress and unimpeded by the Supreme Court, for the Second World War. Harry S Truman had barely begun the process of surrendering the special powers when the emergence of the Cold War brought the Marshall Plan. Then came the Korean War, then the long stalemate of the nuclear confrontation. After 1991 the US was the unique superpower and the Clinton presidency was the first 'normal' incumbency since the mid-nineteen-thirties. It led to impeachment proceedings and a reassertion of party politics over constitutional propriety. George W Bush was continuing with the diminished role when 9/11 created a crisis and led to two overseas wars. The role of the Commander-in-Chief was once again unquestioned, and guided by the Vice-President and Secretary of Defence it transcended constitutional propriety. The limits to US global power were challenged and the end of hegemony was slowly acknowledged. Obama came into office in a diminished power and he has faced the full force of a resurgent, if uncomfortable, congressional democracy. His fluency became his greatest failing: he was unable to listen to and to interpret the diverse dialogues that had been unleashed by the collapse of the financial system and the weakening of the military-industrial complex. The attempts at bold initiatives to deal with the human consequences of the crisis that he has promoted seem to be based on the European welfare state from the nineteen-fifties: which the Europeans themselves are having to abandon under the burden of debt with which it saddled them. The result is that the USA has its own, very specific demcratic deficit: it is a real and urgent stress-point, that has been confronted by a dialogue of the deaf in a polarised Congress that exactly mirrors the depth of division in the country. Meanwhile, the prophets of economic Armageddon are having a bonanza.
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