Behind Blue Eyes

OK so this is not strictly a left/right thing but generally lefties love the idea of neo-Keynesian deficit spending to rejuvenate the economy and generally righties prefer the idea of letting things run their course and eventually returning to growth by allowing the free market to unwind imbalances in order to invest resources in the most productive way. But what if there was a set of circumstances where the sum of individual actions was actually working against the re-allocation of resources to productive industries?

I cannot claim to represent anyone apart from myself. However if there are lots of people stuck in the same situation as me then it might explain why the economy is only growing feebly and why this is the worst recovery for a century.

The free-marketeers tell us that people are much better at spending their own money than the state is at spending other people’s money. On the face of it this makes total sense. I can decide which home or phone or electricity or food suits me the best given my requirements and amount I am willing or able to spend. But might there be a situation where implementing my least-worst financial options is actually reducing my lifetime earnings capacity?

A quick back-of-the-envelope estimate reckons that I am putting between 30% and 45% of my net income each month into paying down debt. This is because I am trapped between the mortgage loan-to-value ratio that I borrowed at and the loan-to-value ratio that I think might be available when I need to re-mortgage in a scarily small number of months time. I am converting income into capital as fast as I can without starving in the process.

But if lots of people are doing the same thing then our incomes are not being converted into investment or consumption. And maybe this is why the economy is not exactly booming despite very low rates and a huge public deficit.

Could it be possible that in this situation the government might actually be better at spending my money than I am? For example, what if taxes were raised slightly to pay for much-needed investment in projects that would improve the economy, such as transport and communications infrastructure? As Stephanie Flanders points out in her blog, because infrastructure projects are slow to come on stream this might not give us the boost we need now.

What about if taxes were raised slightly in order to underwrite more mortgage lending? That might actually increase the amount I and people in my position have to spend on goods and services. Unfortunately that wouldn’t be a very clever idea in the longer term because it would just prolong the required rebalancing of the economy.

There do not seem to be any easy answers to this. Unfortunately, from my “ideological” position to the smaller-state side of the political spectrum, it does seem to me that the power to kick-start the economy does lie exclusively in the government’s hands.

Then again, maybe we should not be expecting an artificial boost. Maybe the only possible way forward is several more years of grinding our way through our debts, putting – literally – our houses in order, and not expecting any easy return to the good ol’ days.

In the meantime, while Vince and George work all this out, I shall mostly be consuming cathode rays for entertainment.

Our Friends in the North is a British television drama serial, produced by the BBC and originally broadcast in nine episodes on BBC Two in early 1996. Telling the story of four friends from the city of Newcastle upon Tyne in North East England over 31 years from 1964 to 1995, it also brought in real political and social events specific to Newcastle and Britain as a whole during the era portrayed, including general elections, police and local government corruption, the UK miners’ strike (1984–1985) and the Great Storm of 1987. Publicity material for the serial used the tagline “Three decades, four friends and the world that shaped their lives”.

The serial is commonly regarded as one of the most successful BBC television dramas of the 1990s, described by The Daily Telegraph as “A production where all… worked to serve a writer’s vision. We are not likely to look upon its like again.” In a poll of industry professionals conducted by the British Film Institute in 2000, it was 25th in a list of the 100 Greatest British Television Programmes of the 20th century.

It was also a controversial production, as its stories were partly based on real politicians and political events, and several years passed before it was adapted from a play performed by the Royal Shakespeare Company, due in part to the BBC’s fear of litigation.

I watched this series a couple of years ago, rented from LoveFilm, having missed it when it was shown originally. If you haven’t already seen it I highly recommend it. It provides a snapshot of major issues in political, economic and social Britain at important junctures in recent history, starting with 1979 and finishing as Major’s government slid, unstoppable, into the mire.

One of its most important themes is corruption. Corruption of the planning system resulting in concrete towers that did not work. Corruption of local politics. Corruption of the police. Corruption, corruption, corruption: the disease that affects us all. The disease that Britain’s elite likes to claim is minimal and disorganised. The lack of this disease which is supposed to put this country right up at the moral high table of international superiority.

Not looking so bloody virtuous now, are we?

Some would say that in a country where so many decisions are made by central government, in a country with a parliament that both produces and checks the government, in a country with little political plurality, in a country where politicians are drawn from a tiny gene pool and where most who find career success in other fields would not be seen dead on the campaign stump, in a country where the media’s opinion-formers are drawn from the same tiny gene pool, is quite likely to turn out to be corrupt to the core. Those people would seem to be correct.

Not long ago, Britain’s ruling class were basking in the reflected glory of the Arab Spring. Look! they shouted, some dodgy countries are waking up to their corrupt and undemocratic regimes! How slow they were to wake up to how systematically unpleasant their countries were! How stupid of their population to have put up with it so long! Look how enlightened we are in comparison!

Not looking so pious now, are they?

It turns out that some of our most important institutions have been turned to dust by corruption, mismanagement and political kowtowing. This isn’t must about Rupert Murdoch. This is about spinelessness and pork-barrelling. This is about keeping one’s principles private to avoid appearing out of line with the consensus. This is as much about the corruption of money and favours as about the corruption of not standing up and saying no, enough is enough. “All that is necessary for evil to triumph is for good men to do nothing” – have we not seen that in spades recently?

So now what?

It’s time for a proper (moderate, British-style) revolution. We need to get away from the central decision-making machine. We need proper localism. We need direct elections of more political posts. We need to smash up the party system. We need proper parliamentary pluralism and scrutiny of government policy. We need to set constitutional limits on what the government of the day can do. We need a major clear-out of personnel in Whitehall and the political parties. We need mass retirements to country houses for the senior executives of our major institutions, both public and private.

This is only the first crack of thunder in what will turn out to be a slow but important political storm. Let’s hope it clears the air.

I don’t understand Northern Ireland.

I know a little bit about the way that Ireland was controlled and then planted by the English. I know that it was torn apart time and again by the English elite. I understand that a corrupt Parliament refused to lift trade barriers in order to prevent the potato famine. I understand that plans for Home Rule were stymied by vested interests and global politics. I understand the bitterness of living under a state and constitution that does not feel like one’s own. I understand the massive injustice that was meted out by the tyranny of the majority.

But I thought we were largely past all that. I thought that the issue had mostly been de-toxified. I thought that a modern understanding of human rights and equality under the law had started to put an end to all of the hatred. I thought that devolution had brought an element of self-determination to the country. I don’t understand why it is kicking off now.

On 7th July 2005 some of us were nervous, because we didn’t know what was going on. Yet we did not panic, we did not run scared. We tried to find out what was going on using the available methods. We tried to contact friends and family to ensure they were OK. We listened to our radios and kept an eye on the news websites.

On 8th July 2005 we picked ourselves up, dusted ourselves down and got on those trains, tubes and buses and went to work as normal.

Because we are London, and we won’t be bullied.

A squib is a miniature explosive device used in a wide range of industries, from special effects to military applications. It resembles a tiny stick of dynamite, both in appearance and construction, although with considerably less explosive power. Squibs consists of two electrical leads which are separated by a plug of insulating material, a small bridge wire or electrical resistance heater, and a bead of heat-sensitive chemical composition in which the bridge wire is embedded.

While most modern squibs used by professionals are insulated from moisture, older uninsulated squibs needed to be kept dry in order to ignite, thus a “damp squib” was literally one that failed to perform because it got wet. Often misheard as “damp squid”, the phrase “damp squib” has since come into general use to mean anything that fails to meet expectations.

Up to 750,000 public sector employees are to go on strike today in protest against being asked to contribute a little bit more towards their retirements. A friend of mine believes that strikes are just a form of pay bargaining and no more selfish than any other form and should not be decried in principle. I tend to agree: it’s not as if a state teacher can – at the moment – sack his or her employer and move to find better conditions in the way that those of us who work in the market economy can.

However for a public sector strike to be effective it has to garner public support. After all, if the people who ultimately pick up the tab can’t be persuaded that the strikers are more valuable than their current pay package suggests then the battle is lost. Not many parents are going to lose sleep over a day’s lost provision from an education system that cannot teach significant numbers of children to read and write before they get to secondary school. Voters will not barricade Parliament to demand that UK Border Agency staff are protected from the ravages of financial reality. They will simply try to minimise the disruption caused to their day. [As a childless net contributor to the public finances who gets no employer or state support for my retirement savings I am particularly unsympathetic. However when it comes to political strikes, not even Bob Crow can ruin my day.]

How do we know that nobody really supports the strikers? Union man Red Ed and his puppet-master Dr Strangelove don’t even support them. My colleague who thinks that Gordon Brown was the best Prime Minister since Chorleywood doesn’t have the slightest bit of sympathy.

What the leaders and gormless followers of the amusingly-named Public and Commercial Services Union seem to have forgotten is that everyone is having to make do with less. The British tax-paying public look at Athens via their TV screens and say hmm, we can probably deal with our own fiscal hole with a little more grace.