I’m not sure what’s brought on this mini ‘road to Damascus’ like change of mind but Nick Clegg is now opposed to replacing Trident. The Guardian reports:
Figures in the cabinet and the shadow cabinet have been privately pressing for their parties to renounce a replacement for Trident, but have not been able to persuade their leaders. This means Clegg is the first big figure to argue openly against a full-scale Trident replacement.
Clegg said: “New leadership in Russia, new leadership obviously in the White House and a wider geo-strategic appreciation means that a cold war missile system designed to penetrate Soviet defenses and land in Moscow and St Petersburg at any time, in any weather, from any location anywhere round the planet, is not our foremost security challenge now. We have got to be grown-up and honest about it.”
So, the LibDems have basically adopted the SNP policy on Trident, the Guardian describes it as the first ‘mainstream’ party to oppose the replacement. I’m not sure our Scottish friends will agree that the SNP is a fringe party…
Either way it’s good to see another party moving forward on the issue, even if they won’t give credit where credit’s due to those who held the view earlier.
I was asked to contribute an article to X-Bow, the publication by the centre-right thinktank Bow Group. Here it is.
The Death of Capitalism
If capitalism isnâ€™t dead then someone should certainly strangle it and put it out of its misery. And once that is done, it would be nice to have a sane economy back. The precipitous decline of financial companies and the knock-on effect on other industries has been described by many as a â€œonce in a centuryâ€ event. But it is clear that in many ways, capitalism and Milton Friedmanâ€™s free market model, which had become prominent since the late 70s, is now beating a hasty retreat.
Laissez-faire, as John Maynard Keynes famously said, could be at an end. Again. Here are some reasons why. For one, government intervention as a lender of last resort has become fashionable again to the point where even analysts on the American network CNBC, a haven for free-marketeers, have opined that the government may have to nationalise large parts of the financial sector to ensure it doesnâ€™t go under.
With government intervention and rescue of banks comes added regulation. Many blame the hands-off approach in the US and UK that led to companies developing lax lending standards, but the problem here is two-fold. Not only has it become painfully obvious that governments have to maintain tight regulation in sectors including finance, but that those companies failed overwhelmingly to adequately assess their own risks and financial models. As Alan Greenspan, former Chairman of the US Federal Reserve, said recently, â€œthose of us who have looked to the selfinterest of lending institutions to protect shareholderâ€™s equity (myself especially) are in a state of shocked disbelief.â€
The disturbing thing about Alistair Darling’s Budget was not that it extracted a few extra thou from the few, the fortunate 350,000 or so who already enjoy six times the average British salary. It was the implication that taxation for the rich is a punishment, some vindictive redress for the misdeeds of the bankrupting bankers called for by a torches-and- pitchfork-wielding posse, rather than what it should be, what it is for the rest of us: an enduring social obligation, a mark of citizenship, a duty.
And a decade of wealth worship perpetuated the notion that money turns people into delicate super-beings who might take fright at mortal rules and financial regulation. The Â£30k flat tax imposed on non-doms last year – a sum Notting Hill bankers might spend unthinkingly on flying their family to Antigua for Christmas – was received with threats, as yet empty, of escape to Gstaad. And now we learn that if our wealthiest few pay 50 per cent tax on earnings over Â£150,000 it could kill their work ethic entirely. While most of us toil to pay the mortgage, to keep our jobs or – weird thought – to contribute to society, the rich… well, take away a tiny fragment more and they might just stop trying, or give up altogether. If people now revile the rich – and The Times poll yesterday suggests that 57 per cent regard the tax hike as fair – it is because so many have spent a decade being loathsome.
All spot on, of course. What I find interesting are the hypocritical arguments used by many about the economy.
1) Where is the actual evidence that raising taxes to 50% will lead to lower tax receipts? The Laffer curve is a theory – I’d like to see actual evidence.
2) Why is the thinking that lower pay will lead to a flight of talent not applied to public sector workers? That’s the first thing Tories want to cut – why not assume talent will also leave there, leaving us with less talented teachers, doctors and police constables?
3) How it is ‘class-war’ if it only affects less than half a million people out of a population of 60 million? The right-wing media really is insane.
4) Why should we have sympathy for ‘wealth creators’ who only destroyed all the wealth created over the last decade? Where is the evidence that courting these tax dodgers is good for the economy over the long term, instead of ordinary people who earn less than Â£100,000? We should be rewarding the hard-working middle-classes not the freeloading, tax evading super-rich.
Martin Kettle makes a very crucial point in the Guardian: this isnâ€™t 1997, this is a global recession of unprecedented proportions. Tory sound-bites are propelling them in the polls and will likely gain them victory in the next general election. But then what? They need to state clearly what they plan to do about the current crisis.
As Martin Kettle notes:
There are still plenty of senior Tories who see the current Labour overspend as a huge opportunity to press for a far more ideologically driven cuts agenda than Cameron â€“ and plenty of potential Tory voters â€“ would like. The public is entitled to know which Tory approach it is buying and, the longer the answer is denied, the more suspicious they have a right to be.
Apart from keeping suspiciously quiet and giving the media an endless supply of platitudes, theyâ€™ve done the normal opposition thing and opposed every Labour move. This means that where Labour have U-turned, on public spending for instance, so have they, yet no one seems to have a problem with this. They are using this crisis as a stepping stone to power, yet offering no solutions -apart from leaving everything to market forces which got us into this mess in the first place
Last week The Economist wryly observed that the annual teachers’ unions’ conference contained those who “can always be relied on to provide a few news stories to delight the headline-writers.” And so it came to pass that a 10% pay rise was demanded.
The predictable response was one of withering contempt from many quarters. I don’t think that such a rise would be justified either. Teachers’ pay, while not incredibly high, has to be seen in the context of final salary schemes, which promise to provide a retirement income far out of the reach of most workers in the private sector. Instead of focusing on pay, the unions should devote their time solely to lobbying for changes in conditions, which are often poor.
Years before Washington spent $787 billion on a national stimulus bill, it staged an unintended trial run in Louisiana, a huge injection of some $51 billion for which historians find few, if any, precedents in a single state. The experiment is still playing out, but some indicators suggest that what occurred in Louisiana â€” dumping a large amount of reconstruction money into a confined space in the three and a half years since Hurricane Katrina â€” has had a positive outcome. The stateâ€™s unemployment rate of 5.7 percent in February was considerably below the national average of 8.1 percent, and it was the only state to see a drop in unemployment from December to January. It was also the only state with an increase in non-farm employment in February.
State economists specifically mention what one called â€œthe ongoing building boomâ€ from federal dollars as a main reason for the numbers. Largely a result of the damage caused by Hurricane Katrina, construction projects have not dried up as they have elsewhere, and a few can even be seen in downtown New Orleans.
I want to highlight this article as part of a narrative I’m trying to construct – on an leftwing response to the economic crisis. There are many on the right, including Charlotte Gore most recently, who keep echoing Bobby Jindal’s hilariously outdated and Milton-Friedman-textbook view that government spending is bad and doesn’t create any jobs. The evidence states otherwise.
Lord Myners, the minister charged with clamping down on tax avoidance, ran two more businesses that controlled substantial offshore funds, it emerged yesterday. The disclosures come a day after it was reported that the peer set up an offshore company in the tax haven of Bermuda of which he was part-time chairman. That company â€” Aspen Insurance â€” avoided more than Â£100 million a year in tax.
This is a guest post by Riz Din as part of Speaker’s Corner Sundays.
Please pass this information on to anyone you know who has incomplete National Insurance (NI) payments over the past six years:
- Under the current National Insurance (NI) regime you can make up for incomplete payments going back up to six years. It currently costs Â£421.20 to buy a missing year of NI contributions but the government has cottoned on that in terms of returns on investment this represents too good a deal, and from April 6 the yearly contribution will be increasing by almost 50% to Â£626.60.
While around 15% of men fail to qualify for a full state pension due to insufficient NI contributions, this figures rises to a staggering 70% for women.
Because each person’s circumstances are different please read this article in the Daily Telegraph and contact the Pensions Advisory Service for further advice.
“It does mean that a rape victim who was drunk deserves less sympathy. You can hate rape and want it punished, while still recognising that a woman who, say, goes back to a manâ€™s home after several Bacardi Breezers was being a bit dim.”
Not really. Women have a right to expect that they can spend an evening with someone of their choosing without being raped. If Mr. Hitchens’ point was simply that drunken women are more vulnerable to sexual assault because of reduced awareness, that would be one thing. But that is not what he said (he even managed to take a swipe at Muslims later on, for no apparent reason).
In a typically extensive post on his FT Maverecon blog, economist Willem Buiter looks at the derivatives market and asks the interesting question of whether the western financial system should be thinking about applying the shari’a principle of not being able to sell that which you do not own.
At it’s peak in mid-2007, the size of the credit-default swaps (CDS) derivative market was around $60 trillion and while recent estimates put the level of outstanding contracts at half this amount, that is still $30,000,000,000,000. If you are having trouble imagining it, picture a stack of dollar bills towering a over quarter the way to the moon. That’s a trillion. Multiply it by thirty. The problem, however, is not the absolute size of the market but that it is probably only be supported by a small base of underlying bonds.
I did study Economics at university so I suppose during this collapse of western capitalism era, its time to start dusting off some books. First, a hello to Duncan, who’s starting blogging on economic matters from the left. We need more of this, people!
There are two main reasons for this crisis, according to Duncan:
1) The high savings (east) / spending (west) imbalance between world economies
2) Financial ‘innovation’ and instruments like derivatives, that allowed banks to package bad loans and sell them in a way that made it difficult to assess that risk adequately.
I have some issues with this analysis. Firstly, if Duncan is saying that we, those in the west, didn’t save enough, then I’m not convinced because even high savings economies like Japan are doing worse. Secondly, it was long pointed out that the west was basically living off the savings of countries such as China. These are just flows of capital and goods – I’m not convinced in themselves they are the problem. The mismanagement of risk is a huge issue, and actually says that companies don’t necessarily best evaluate risk. That is a fundamental blow to free market ideology itself (hence Alan Greenspan’s shock).
What I think many are missing is in this analysis is that the inter-dependence of banks is in itself a problem. We end up with some banks (Citigroup, Lloyds TSB) that are effectively too big to fail because they would take down the entire financial system with them.
So either you limit this inter-dependence, or you limit the size of banks, or you put in regulation such that even if one fails, the others are sufficiently protected (have enough money to survive). And you definitely create some mutual banks who don’t engage in risky investments. The key problem for me is this inter-dependence of financial institutions.
This isn’t just one of Jon Stewart’s best rants; it actually illustrates the emptiness of the American financial punditry, who basically refused to believe the shit was about to hit the fan. This isn’t just a few bolshy investors trying to make a quick buck. This is a microcosm of the entire system enveloped in that corruption. Watch it in full.
Despite the mammoth amounts of unjustified money which our MPs claim for expenses, they still appear to be rank amateurs compared to MEPs:
“There are no guidelines regulating how much an assistant should be paid, and many MEPs use this allowance to pay members of their own family. The amount is so generous that an MEP can slip his or her spouse or offspring Â£50,000 to Â£60,000 a year and still have enough loose change to employ more than one full-time secretary and a few researchers…
MEPs can also claim a subsistence allowance of Â£257 a day, tax free, for every one of the 40 or so weeks of European parliamentary sessions without having to provide receipts. There is no requirement to attend a debate or committee session. On Fridays at 7am there is usually a queue of MEPs with their luggage waiting to sign in to get their allowance before rushing off to the airport or station.”
Of course most of these expenses claims are perfectly legal. But then that is the problem. It is legalised theft. The same problem exists in our Parliament, where people such as Jacqui Smith and Ed Balls ensure the rules are on their side before appropriating to themselves funds which have been raised by taxing the low paid, or by cutting spending on domestic violence refuge centres. The link between the European and British Parliament is one of contempt; namely, for the people who elected them and pay their wages.
Could this video, taken from the scene when the unions gave an hour’s notice to 850 agency workers at the BMW Mini plant, be a sign of things to come? (via Shiraz Socialist)
We’re likely to see many more redundancies at short notice, and we’re likely to see rising tensions and anger as people scramble for jobs. I almost get the feeling its in danger of spiralling out of control and almost anything could spark it off.
It was recently revealed that the UK now has a larger Sharia banking sector than Pakistan and many other Muslim countries:
“There are now five “fully Sharia-compliant” banks in the UK while another 17 leading institutions including Barclays, RBS and Lloyds Banking Group have set up special branches or subsidiary firms for Muslim clients.
The $18billion (Â£12bn) in assets of Britain’s Islamic banks dwarf those of some states where Islam is the main religion, including Pakistan, Bangladesh, Turkey and Egypt.”
For most people, this shouldn’t be especially alarming. London is a centre of global finance, and Britain has a growing Muslim population. Moreover, many of the Muslim countries used for comparison are poor. If consenting adults wish to place their money with a legal institution, it is unclear why that should be controversial. There are legitimate criticisms to be made of Sharia finance (namely whether it only upholds the letter and not the spirit of Islam), but it is nothing more than a system which is structured slightly differently. One columnist disagreed (I won’t name her, but see if you can guess who before clicking on the link):
Who is to blame for the financial crisis? If you’re a hardcore capitalist and don’t want to blame banks or big businesses, then you have to find other scapegoats. Enter, promiscuous couples. According to Tim Montgomerie of ConservativeHome:
“The proximate cause of the banking crisis was the increase in couple cohabitation and the banks supine acceptance of the government’s promotion of “every choice of lifestyle”. The banks lent money to couples who were unlikely to stick together.” – Nick Gulliford has posted the above thought on the thread below Michael Fallon’s indispensable Platform article. It’s a very uncomfortable thought but I bet Nick is partly right. All the stats point to much greater instability in cohabiting relationships. I’d certainly like to see the data.
First blacks, and now promiscous couples (maybe even gays?). I wonder if David Cameron will take up this baton. Will he announce that the Conservative Party’s policy to subsidise married couples will end boom and bust by protecting the housing market? Heh.
(via Mark Pack)
On an different note, I’ve been writing some long articles for different newspapers and websites, and so drowning in work. Hence the blogging is a bit quick and dirty. Apologies for that.
Vino is right – when the Tax Payers Alliance refuse to condemn tax dodging by rich people and corporations, they’re acting in the interests of the super-rich.
This is strange since, it is because the wealthy dodge tax that ordinary taxpayers have to pay more taxes than they otherwise would do. By defending the tax dodging of wealthy individuals and corporations, the TPA demonstrate that they are not interested in standing up for ordinary people who pay the taxes they should – but instead choose the side of the rich and big business who ignore their social and legal responsibilities.
Spot on. That comment was inspired by this article on Liberal Conspiracy, where Clifford offers an example of how the TPA went ballistic about a local project even though it was helping get children off the street and saving thousands of pounds of money otherwise spent removing graffiti or dealing with crime. The TPA’s attitude confirms the view that the TPA’s aim isn’t to stand for all taxpayers, just the very rich ones.
Edmund Standing over at Harry’s Placereports that a BNP front group is attempting to capitalise on the recent protests over the use of foreign labour:
“A new website has sprung up ostensibly offering non-partisan support for the current â€˜wildcatâ€™ strikes in Britain. The site states that it is run by the â€˜British WildCats Strike Support Collectiveâ€™… So, the Collective supports workers â€˜regardless of race, creed or colourâ€™? If thatâ€™s so, then why is the site being promoted by the likes of the CUNT lunatics and the Stormfront â€˜white nationalistâ€™ forum?”
Whatever the validity of the protests, let’s hope that the BNP struggle to benefit from them. Sadly, I don’t think that this will be the case, as the government has failed to set out coherent reasons for freedom of movement in the EU (remember Gordon Brown’s ‘British jobs for British workers’), while the dishonesty surrounding the impact of the EU on Britain (80%+ of our laws emanate from Brussels) means that it is difficult to have a frank discussion about what should happen. This is because the government doesn’t wish to be seen to be powerless in the face of EU legislation, so pretends that it is still in charge.
I’m disappointed though not surprised about the strike action being carried out to protest against the use of Portugese and Italian subcontractors.
Its what happens when the government repeatedly fails to make the case for trade and especially for the European Union. Even smart euroskeptics argue against European regulation, rather than against European free trade and mobility of labour which is what this case seems to be about.
Remember that closing economies off to outside links is one of the main reasons for the rise of fascism in the early 20th century, as well as exacerbating the great depression.
Although I’ve been among the people annoyed at the media’s obsession with Barack Obama’s black heritage, there’s no denying that symbolism matters. But could that go far as student performance? The New York Times reports:
Now researchers have documented what they call an Obama effect, showing that a performance gap between African-Americans and whites on a 20-question test administered before Mr. Obamaâ€™s nomination all but disappeared when the exam was administered after his acceptance speech and again after the presidential election. The inspiring role model that Mr. Obama projected helped blacks overcome anxieties about racial stereotypes that had been shown, in earlier research, to lower the test-taking proficiency of African-Americans, the researchers conclude in a report summarizing their results.
Whoa. Now there’s two, possibly contradictory, reasons that occur to me. Firstly, that (racial) symbolism matters and those who argue for better representation of ethnic minorities in public offices have a point in that it might help people of those minorities feel like they have more of a stake in the country.
Secondly, it also suggests racial differences in education achievement are less because of a kid’s race or even ‘institutional racism’, but more down to how they see themselves doing. In other words, if they’re self-motivated then they do better than kids of other races who think they won’t achieve anything in life. Which may all suggest that if you want to achieve educational achievement among poor black, white and Bangladeshi kids – then money might be better spent motivating them rather than other things.
The cause of social mobility overlaps with that of a progressive racial agenda. But it also transcends racial politics and is inextricably linked with education. Historically, and in less developed countries, access to education is the key to better social mobility.
But where the provision of state education is a given, differences in the quality of education are paramount. Hence, the issue is closely aligned with the debate over private education and the extent to which it is deeply regressive institution.
In view of the hugely disproportionate number of privately educated entrants at the top universities and the extent to which many of Britain’s top doctors, politicians, lawyers, broadcasters, etc also got a leg up thanks to a priviliged education, it is arguably the biggest barrier to social mobility in the UK. If you believe in the principle of equality of opportunity — i.e. if you are truly progressive — then better social mobility should be high up on your wish list.
However, as the former Conservative Dominic Lawson argued in a well-written article this week, the only sure fire way to improve social mobility is to lower standards. What do you think?
The news that Barclays is about to unravel and may even have to ask to be partly nationalised made me chuckle a bit. I remember my friend Riz telling me while he used to work there that the reports he used to produce for the Forex markets were absolute shite, and yet people paid big money to read stuff a monkey could have put together. He said it was soul-destroying work and got out before they took his brain.
Today, Will Hutton says the going is about to get a lot worse. That inspired me to pull out this short extract from a book I read recently.
This is from Sidney Blumenthal’s: The Emergence of the Counter-Establishment (page 90)
The origins of the [US Federal Reserve] can be directly traced to the panic of 1907, a Wall Street upheaval that almost triggered a general economic collapse Friedman assiduously presented numerous statistics about the panic. And he attributed the stemming of the crisis to the banks’ refusal to convert deposits into currency. His tone was dispassionate, but he was scoring points. To him, government intervention always destabilises the market. And the creation of the Fed is an ideal case study.
Shariq Updates: In case anyone missed it, a link to the first part of my review of Will Hutton’s ‘The World We’re In’.
I wrote a big-ish article for the media supplement of the Guardian, which was out yesterday and is available to read from here. My conclusion:
In addition, the closure of the Asian Programmes Unit highlights a greater issue. “The problem within the industry isn’t necessarily about race – to me it’s more about class,” says Ahmed. “There are certain racial groups doing well, but to me they are often too similar in class and social culture to white, middle-class people to make a difference. I don’t think there are enough executives in the media who realise that the industry is not being as representative.”
Last year, after the producer Richard Klein told an internal audience that the BBC was “ignoring, at its peril, a great swathe of white, working-class audience”, he went on to make BBC2′s White Season. But many saw the series as tokenistic: working-class whites were largely seen through the prism of social breakdown, racism and immigration, and commissioners then returned to their usual fare.
British Asians could now become as underrepresented as other groups. Perhaps that’s some semblance of equality.