Malcolm Blair-Robinson's Blog, page 217
July 5, 2014
Obama’s Challenge
President Obama is one of the brightest intellects to occupy the White House and like another, Abraham Lincoln, he has been caught in intractable problems which are difficult to resolve. Lincoln used force to settle an issue which should have been solved peacefully. Barack Obama was elected in part because he promised to bring America’s foreign wars to an end and find a better way forward.
He was a reluctant partner in the Libya adventure; now we can see with good reason. He hesitated rightly over the crackpot plan to bomb Syria. He has told Israel it will go nowhere on the peace road unless and until it stops building illegal settlements. He has been lukewarm in supporting the so called moderate Syrian rebels, recognising that they lack enough popular support either to win or to form a sustainable government. He has limited support for Kiev to kind words and opposition to Moscow to pointless sanctions. He has sounded tough to appease his domestic hawks but has acted cautiously because he, almost alone, has seen a shift in the tectonic plates which drive international affairs.
One can discount the problems in Ukraine as the consequences of local adjustments following the break up of the Soviet empire, which actually have no global significance. The proposition that Russia is on the march West is ridiculous. The major threat to civilian populations now comes from Islamic extremism. Nobody now doubts this. The forces now allied in their opposition to Al Qaeda and the new grouping of the IS, are the West, Russia, Iran, Assad’s Syria and what is left of the Iraq state.
That turns on its head every supposition upon which Western foreign policy has been based. Time for Obama to ring Cameron and explain, but first he will have to ring Angela and explain what on earth the CIA are up to in her country.
July 4, 2014
Abortion in America: The Religious Question.
Once again abortion is in the news in America at a sufficient level to cross the Atlantic into the European media. At the heart of the issue is the freedom of individuals to choose what they believe in, and what they do with their lives. The problem comes when the beliefs and the actions clash. If both occur in the same person they cause torment. If they occur in different people this causes discord, which can go on to become hatred and unrest.
One solution is the religious state, where the law of the faith and the law of the land are the same thing. Another is the secular state where all are free under the law of the land to practice their faith without imposing its strictures on others of a different persuasion. In these states the law of the land is paramount. Sometimes concessions are made. It is the law but not if your beliefs disagree. At the margin, this may not matter although it is a very bad principle. It is against the law everywhere to kill and eat people and nobody suggests that some people professing a faith in cannibalism should be allowed to practice it.
The overriding principle must be that all religious disciplines function within the law of the land, wherever they are practiced. In enlightened countries these include human rights laws and those outlawing discrimination on the grounds of race, colour, gender or sexual orientation. This should apply to marriage in the priesthood, woman priests, gay bishops, genital mutilation, polygamy, forced marriage and so on. Yet this is not always the case. Exceptions are made, allowing faith adherents to break the law because the believe in something different. This is wrong.
It is also wrong of abortion. If it is allowed under the law, subject to appropriate conditions, it must be against the law to deny it. That is what law is and what laws are for. They pull a diverse society together in common protection rather than allow the hazard of everyone for themselves. Americans should know this better than any people on earth.
Bank Of England: Is it Right on House Prices?
In the view of this Blog, this answer is both yes and no. It is right to point up the risks of the current boom and right to introduce measures to prevent the problem getting out of hand. But some may say it is out of hand already. Many worry that both the Governor and the Deputy Governor have suggested that the Bank is less concerned with prices and more concerned with debt. Indeed the message is that prices are not its patch, but the debt overhang to fund them is. This does not really work. It is like travelling in a car at excessive speed, concerned only about the potential malfunction of the brakes. Certainly faulty brakes would make the danger excessive, but the problem in the first instance is the speed.
At the heart of the imbalance in the structure of the UK economy is the fact that house prices have become not only excessive, but the molten core fuelling the economy. Because the cost of housing is so high (the average house price should not exceed the range of 2.5-3.0x average income), this sucks away money which would otherwise expand other sectors of the economy. In order to fund these huge costs people borrow, both to buy homes and to fund other purchases for which there is no surplus income left to use. The government has to pay the excess of rent beyond the level which ordinary people can afford. All of this consumes huge resources and contributes to imbalances in wealth, opportunity and employment.
The figures speak for themselves. The government now pays £50 odd billion a year to service the interest on its debt, without a penny of this applied to its reduction. A less well known figure is the the astonishing total of interest being paid on household debt, currently approaching £60 billion a year. This means the economy is having to fund as a first call over £100 billion each year, most of which goes abroad. Worse, government, personal and mortgage borrowing are all on the rise.
When property prices went through a process of correction after the crash, it was incumbent on both the government and the Bank to devise controls which would stop prices rising again faster than inflation. My proposal was for a Mortgage rate, separate to Bank rate, so that it could rise to restrain the housing market, leaving industry and commerce with continued access to cheap money. I put this in my book in 2009. The critical issue was to subject house price inflation to the same discipline as general inflation. Failure to do this is at the heart of our current problem, which should concern the MPC. Tinkering with lending rules now after prices have been allowed to rip in the housing market may avert a catastrophe, but they will not prevent a good deal of difficulty, potentially even a disaster.
Buy my book 2010 A Blueprint for Change You will find the chapter on economics very simple to follow and it puts this whole issue in clear perspective.
July 3, 2014
House Price Anxiety
The Deputy governor of the Bank of England is the latest distinguished authority to raise concern about the house price boom, of which the government is more or less in denial. This blog and others have been warning since 2009 that another housing boom would be a disaster, yet the government has organised a recovery programme setting this economically poisonous process in train. It was a mistake to fund Help to Buy without having in place a clear correction system like bank rate, which would be triggered if prices rose faster than inflation. It was also a mistake to launch it without a major and strident housebuilding programme, not the piffling affair we have at the moment. Macmillan built 400,00 houses a year. So can we.
It should come as no surprise in the end that this Tory blind spot has yet again intervened to put economic prosperity at risk. Every Tory led government since Sir Alec Douglas Home took office in 1963 has engineered a housing boom which then has been followed by a bust. Last time flashy New Labour embraced the thrill of illusory wealth fuelled by the biggest debt mountain in the world except for the US, leading us to the biggest bust ever.
What is sad is Labour now has the greatest opportunity since 1945 to really show it stands for a different economic structure, not based on some muddled ideology but on practical arithmetic and public interest in a fair society which prospers for the common good. It does not measure up. All we hear of is ‘initiatives’ and tinkering at the margins, much of which is worthy, but all of which is forgotten five minutes after it is announced. None of it creates a narrative of hope, nor paints a picture of a future worth aiming for. Perhaps a plan to tackle what will soon be the housing crisis would be a good place to start afresh.
Meanwhile in the Tory headquarters champagne flows in celebration that Britain has the fastest growing economy in the G7. Yes well. Remember Ireland. In Ulster average house prices fell by fifty per cent and they are still down there. If prices go on rising in England at five times the rate of inflation and significantly ahead of wages it will happen here for sure. This is a dangerous moment.
NHS Funding
The last reorganisation of the NHS, which has given us Commissioning Boards instead of Primary Care Trusts, has achieved nothing which could not have been achieved within the previous system. This can be repeated backwards through one upheaval after another right back to 1948.
There are two problems which override everything. The first is the way the service is funded.This assumes that you can provide an infinite service on a finite budget. This is mathematically impossible. It is equivalent to giving a major supermarket, or a group of them, a fixed annual sum, in return for which they feed the nation for nothing. The people would be fed after a fashion, but there would be shortages and waste and waiting lists for butter. The most dramatic transformation to the NHS would occur if instead of giving it a fixed budget it was paid for every treatment and process it carried out, patient by patient, item by item, according to a price menu set by the government.
The true cost of a decent health service, about £200 billion at today’s prices, would then be understood and paid, but there would be no waiting lists or delays. To fund it, income tax should have the rate substantially cut and a new income related health tax introduced, operating one year in arrear on the actual cost of the service. The NHS would continue to be free at the point of delivery but the illusion that it is actually free and someone else’s problem to pay for it would be broken. It is not free, it never has been, everybody is contributing, but under this new system the link between cost and delivery would be properly established. Vast swathes of bureaucracy currently mixed up in commissioning boards, waiting lists and so on would disappear, to be replaced by an accounts department appropriate to an organisation supplying on demand. That is the nub. What the NHS provided would be according to public demand, not government control.
The second problem is the barmy and utterly ridiculous relationship between the NHS and its doctors. This is that Consultants, though employed by the NHS are free to carry on lucrative private practice, which extends waiting times for those who do not have private medical insurance and speeds treatment for those who do. GPs are classed as self-employed (!!!) under a financially rewarding contact which is out of all proportion to the service they provide. All doctors of whatever rank, class, discipline or experience would become employees of the NHS working exclusively for it and paid to a fair professional standard.
Make those two simple changes and the NHS would be transformed. The medical profession would for the most part oppose these moves hook line and sinker. Treat them like Thatcher did the miners. The majority would see the sense and move forward. The greedy ones would leave. They should never have been there in the first place; treating the sick is not about getting rich. If you think it is, you are in the wrong job.
July 2, 2014
Israel: Stop the Cycle
The news that a Palestinian teenager was seen being kidnapped and that his body, partly burned, has been found this morning is truly shocking. This is clearly a revenge attack. What is also clear is that a rubicon has been crossed when both sides engage in tit for tat violence which involves killing young people out of hate. No cause can remain unsullied with this kind of blood on its hands and it is now incumbent upon every political figure across the spectrum of this endless conflict to take stock and find a better way forward.
At present everyone is losing. Without change there can never be a winner.
Labour: Is This A Big Idea?
There are two ways of looking at yesterday’s big speech by ED Milliband. You can be positive and you can be negative.
On the positive side it is a sound idea (actually proposed by Lord Heseltine) which diverts money from the financial sector, which is London based, and redistributes it to the regions which are closer to industry. It also transfers decisions from Whitehall to local government. It restores ownership to people who will be benefit. It builds growth from the bottom up, not the top down. As a policy it has the support of this Blog. But is it a Big Idea?
Perhaps it is for suits, but not for overalls. And it is to overalls that Labour must appeal, its own grass roots, to be sure of a majority in 2015. The risk to Labour is not from the Tories, or from the Lib Dems who are in a period of electoral freefall, but from apathy; feelings that ‘they’re all the same’ and ‘nobody speaks for ordinary people’. In that frame of mind people may have in the past voted for the Lib Dems or the BNP. Now some may vote for UKIP, but mostly they will not vote. That will help Cameron.
A major problem for Labour is that in its flight from the looney left under Blair, it is no longer a party of the left at all but a party of the centre and the centre is crowded out with too many parties and too few voting. This is where UKIP is picking up support, not because of its policies which nobody has a clue about, but because of its anti-establishment rhetoric and populist focus on simplistic answers to complex questions. For example whatever the problems of being in the EU, they are as nothing to the period which would follow withdrawal, while the trading, regulatory and legal systems were reconfigured, for which nobody has anything other that the vaguest plans.
In a balanced democracy one party or grouping should speak for capital and the other speak for toil. These two elements should be constantly in productive tension, without one achieving absolute ascendancy over the other. We now live in a society where capital dominates, because Labour no longer speaks for toil. It must start to reconnect with its mission. If it does not, who knows what could step into the vacuum. History has some very bad examples to show us. The alarming truth is that the modern economy, based on asset inflation and financial services, makes the rich richer and the poor poorer in an unsustainable spiral, more toxic that at any point since the start of the industrial revolution.
July 1, 2014
Downfall In Downing Street
Originally published as Downfall in 1995, these new paperback and Kindle editions of one of my favourite works has stood the test of time rather well. I began it late in 1993, completed it during 1994 and it was published in 1995. I dipped into a copy on a recent rainy afternoon and found it had acquired something of a vintage feel. The country was just recovering from one of its recessions, Canary Wharf had gone bust mid-construction and sleaze was beginning to seep through Whitehall as John Major’s Government tottered forward to destruction in 1997. Negative equity was rife.
If you want a political page turner with murder, sex (strong) and establishment intrigue, you will find this worth reading. I urge you to help give it a new lease of life. When you have read it I hope you too will agree it deserves it! Maybe you could even add a review, good or bad!
Israel Mourns
There is no cause which can be advanced by kidnapping and murdering teenagers and the world is united in its condemnation of the perpetrators of this shocking crime, which Israel is satisfied are from Hamas. As expected, the Israeli defence community is planning retribution. The terrible thing is that this will lead to more killing on both sides and will change nothing. This cycle of violence has now been operating for over half a century and shows no sign of resolution for the benefit of either side.
At the heart of the log jam in the peace process, if indeed there is such a thing, is the Israeli settlement policy.This has done more to lose the Jewish state friends and influence than any action by its enemies. It has also done more to multiply those enemies than any internal recruitment drive those enemies could themselves promote. So long as it goes on, the likes of Hamas will have a cause and a purpose. Each bulldozed Palestinian home is a spur to hatred and violence.
Israel has to ask itself for how long it is willing to subject its citizens to this level of insecurity and suffering, for unless it comes up with a better way forward, the killings will go on for ever.
June 30, 2014
Cameron and Junker: Kiss and Make Up?
The British prime minister and the President elect of the European Commission are apparently talking to each other and saying helpful things, in the tradition of consensus democracy, after a bitter personal contest. It has never seemed to this blog too significant who was in charge of what in Europe. What matters is what institutions are they working in, and what is the mission statement of them? Even the Germans, having got their way on Junker, are saying things which envisage shrinking powers for Brussels. This is music to Cameron’s British ears, but it strikes a discordant note in some of the capitals of the smaller, poorer EU members. Having spent generations or even centuries under the domination of leading European powers at different times in their history, they see merit in an impartial bureaucracy in which all member states are represented, as a brake on the freedom of the major powers to have it all go their way.
This contradiction is one of the many discussed in previous posts, which Junker has to balance and which Cameron has to change. Essentially the British have always been primarily interested in trade. All the other founding members were primarily interested in peace being secured on a continent previously repeatedly torn by wars in which tens of millions had died. Trade was to be the first element in bringing harmony, a common currency the second, federalization the third. Whichever approach you take and whatever your priority, all threads now lead not to Brussels or Strasbourg, but to Berlin, for it is here that the true power of the European Union lies, especially since German re-unification and the introduction of the Euro. The counter-weight to Berlin is London.
Another lesson of history: When Britain and Germany are united Europe holds together, but when they confront each other Europe falls apart.
