David Boyle's Blog, page 86
March 28, 2013
The British Disease and the Airblade Effect

The British engineer James Dyson is best known for his successful and rather expensive vacuum cleaner. It is successful because, unlike so many other vacuum cleaners on the market, it works rather well. The same goes for his Airblade dryer, an alternative to hand dryers which began appearing in public lavatories in 2007.
The old hand dryers used to take up to 44 seconds to work – or so Dyson claims. Actually, I have encountered many, especially on trains, that would happily maintain the dampness on your hands at great expense for hours under a pathetic breath of tepid air. The Airblade works differently: it scrapes the water off your hands with a powerful jet of cold air, and claims to dry them in ten seconds.
But here is the point: it uses 80 per cent less energy to do it. It uses more air but in an effective way. It works, so it costs less to run.
In the weeks since the end of the Barriers to Choice Review, I have been spending my time writing a very short book bout the submarine passage of the Dardanelles in 1915. I've also been spending my baths - a lazy but enjoyable habit - re-reading Robert Graves First World War classic Goodbye to all That.
Most of these are events a century ago, but the message always seems to be the same. All the equipment by the opposing sides, from the grenades to the periscopes, were better quality on the German side than they were on the British side, at least for the first few years of the war.
I have been wondering why this seems to be inevitable in British history, at the same time as listening to the constant phrases on the radio news - "the Treasury has rejected" or warned or vetoed... There seems to be a UK tradition of blind and pointless cost-cutting at the Treasury's behest - with devastating results, from our failure to invest in industry right through to our failure to invest in people.
Now, I've recently been working in the Treasury - admittedly as an independent reviewer. They are highly intelligent, civilised and imaginative people. And it is no criticism of any Treasury that they warn. That's their job. What is a problem is when that warning becomes a constant and powerful voice in favour of short-termism - and even worse when that voice has the power that the UK Treasury does.
So when I heard the announcement yesterday that all government departments have to bring forward plans to cut another ten per cent of their budgets, I thought - here we go again. It's the British Disease.
I write this as rather an old-fashioned kind of Liberal. I think the deficit is too high. I believed the Labour government's management of public services has made them far too expensive. I don't want the UK to fall into the pathetic powerlessness at the hands of international bankers that has been reserved for Cyprus and Greece.
But you can't just carry on cutting percentages. As the systems thinker John Seddon says: when you try to manage services by managing the costs, paradoxically the costs go up. I think I should re-christen this insight 'Seddon's Law'.
Unless there is a big idea behind the spending cuts - an idea of how it might be possible to bring costs down - then we will be right back into the British Disease, which means backwardness and ineffectiveness and probably bluster for another generation.
What we need is a revolution in effectiveness. Do that successfully and we will be able to reduce ten per cent or more from public spending. I've explained a little about how it might be done in my book The Human Element, and John Seddon's work is definitely a vital part of what needs to happen.
That is the reality of the situation. Another ten per cent cuts without organised purpose means more costs in the long-term - and as the benefits and welfare changes come into effect, we will begin to see what an over-stretched services really look like. It is the perfect time to commit the nation's services to effectiveness
Which brings us back to Dyson's Airblade. It is a metaphor for the approach to spending we need. If we have services that work like the old dryers, and need to be turned on over and over again before they have any effect, then it is hardly surprising they cost so much.
If we can have a revolution in effectiveness, which is bound to mean investment - possibly even revolution - then we can cut costs. But we can't just play around with it.
Think about it next time you're drying your hands in a public place...
Published on March 28, 2013 08:33
March 27, 2013
The real reason things don't work

I have a nervous shiver down my spine when I drive past Lunar House in Croydon (which I do far too often) even now. It gives me the heebie-jeebies. It was like some kind of monster that only knows two emotions: rage and fear.
There is no doubt that the Border Agency is an extreme case of hollowed out institutions. They neither managed to treat people with humanity, nor managed to provide effective and fair controls over immigration. If they had managed one or other, it might have been possible to forgive them - as it was, I can't think of an organisation that more thoroughly deserved being broken up.
And lo and behold, that is exactly what the Home Office is going to do
I find myself linking it in my mind with the Francis proposal that doctors and nurses should be prosecuted for failing to blow the whistle on abuse - a staggeringly ineffective idea. I know an NHS whistleblower and have heard directly from her what the system puts her through. A far better idea would be to make it a criminal offence to suppress whistleblowers, but that is another story.
What this combination of stories suggests to me (and I know this is a continuing theme of this blog) is that the failures of the Border Agency is really the tip of a huge iceberg.
When it came into office, the new coalition realised that there was a serious problem in the way the last government centralised control over public services. They got rid of many of the most corrosive targets, but unfortunately their understanding of quite how dysfunctional our institutions had become has never quite caught up with the reality.
Consequently, they still embrace major IT investment when there should be an emphasis on building relationships. They embrace centralised procurement when anyone who has tried to extract an invoice from the Whitehall machine will know where that will lead. They embrace shared back office services despite mounting evidence that it makes services more expensive.
Each of these approaches make our public services less effective - less able to deal with diversity, as the systems thinker John Seddon explains. And if our institutions don't work, the demand on them mounts and they get more and more expensive - especially when contractors are paid just according to their manipulation of the demand.
I find it enormously frustrating that a government, where the Lib Dems are playing an important role - and which I therefore have a great deal of sympathy for - is continuing half-in, half-out of the disastrous old New Labour model.
But there was a glimmer of light today.
Home Secretary Theresa May said during her announcement that hiving the Border Force off from the Border Agency last year had been a great success. It showed what she called the benefits of having smaller structures.
Quite so.
So if she reads this blog (which of course she won't) I hope she will see the implications of this. We know, for example, that:
Small police forces catch more criminals than big police forces.Big hospitals are more expensive to run per patient than small hospitals.Patients recover quicker when they know the doctor. Small schools have more choice, more after-school activities, more tolerance and better results than big schools.If you want the evidence, you will have to read by book The Human Element , but it is overwhelmingly in favour of the effectiveness of human-scale institutions. So why is so much effort still being expended in government in pursuit of non-existent economies of scale?
Published on March 27, 2013 01:28
March 26, 2013
Antidote to Double Dip Winter
Now that we appear to be getting a Double Dip Winter (I blame George Osborne), I thought this picture of the lane behind my house - with my son Robin coming home from school in midsummer - might cheer everyone up a little.
It has certainly made me feel a little warmer just looking at it.
It has certainly made me feel a little warmer just looking at it.
Published on March 26, 2013 02:06
March 25, 2013
Going down the wormholes through time

But I am fascinated by his blog yesterday: his story about the two children of soldiers from the American Civil War still being paid pensions by the US government is one of those strange tales which reveal that human history is not quite as long as it seems.
Apparently, the last Civil War widow only died in 2003.
I was thinking about this, having just come across a letter to the Morning Post on 12 April 1919 from a cousin of mine called Dulcie Boyle, where she says this:
"My father told me that his father had been told by his uncle that the latter's grandfather had danced with the old Countess of Desmond, who had told him that Richard III, instead of being hump-backed, was a very handsome man."
Now, as we know, Richard III has since come to light and apparently had some curvature of the spine, but was not exactly the hunchback of popular mythology. The Boyle grandfather was born in 1784. His uncle was born in 1733. I met Dulcie Boyle's brother before he died in 1967. That gives us eight links from me back to Richard III I think.
There is some confirmation of the story from other places. Other historians report that the old Countess of Desmond dined and danced with Richard III and said he was the handsomest man in the room except his brother Edward and "very well made".
I also came across this from the Morning Post shortly afterwards (still 1919):
"Mr Paynton, the magistrate, related to my son, the Rev. Sydney Turner, the following particulars: when a boy, about the year 1810, he heard the old Lord Glastonbury, then at least 90 years of age, declare that when he was a lad, he saw and was often with the Countess of Desmond, then living, ab aged woman. She told him that she she was a girl, she had known and frequently seen an old lady who had been brought up by the former Countess of Desmond, who was noted for her remarkable longevity... This lady mentioned that this aged Countess of Desmond had declared that she had been at a court banquet when Richard was present, and that he was in no way deformed or crooked."
So, would Richard III's spinal problems have been at all apparent? I think we should be told. In fact Lord Glastonbury was only 68 in 1810, but still...
But there are a lot of these strange wormholes through time. I know one leading Lib Dem, who is younger than me, and whose father lost a leg at the Battle of the Somme. We forget that human life is long enough to straddle very different ages - someone who watched the Armada in the Channel as a child might well have lived into the English Civil War. Someone who could remember the guns at Waterloo might have been driven in a car with a man with a red flag in front.
Lord Brougham, the famous pre-Victorian statesman, died in 1868. When he was a boy, he met an old lady who had actually seen Charles I being beheaded in Whitehall in 1649.
I must say, I enjoy these stories. During my lifetime, I have met many people who remember the nineteenth century. I hope by the end of my life to have known many people who will know the twenty-second century.
If the human lifespan stays stuck within a century usually, the experience of one lifetime can - via the people you meet - extend very much further. The nineteenth to the twenty-second century is four different centuries after all, and human history gets a bit blurry beyond ten centuries. It is amazing that human memory can almost extend that long, if it is extended via meeting people.
I am 54. Only four of my lifetimes would take us back to Jane Austen's heyday. It isn't really terribly long.
The Countess of Desmond, incidentally, is supposed to have died in 1604 aged somewhere north of 120 years old. She had just sailed from Cork to Bristol to complain about her castle being appropriated by Richard Boyle, Earl of Cork (no relation of mine), and walked from there to London to petition James I. It is said that she travelled with her invalid daughter aged 90, who was pulled along behind in a cart.
This was not what killed her. That was apparently falling out of a tree, though contemporary historians argue whether it was an apple tree she fell out of or a nut tree.
Published on March 25, 2013 03:51
March 24, 2013
What 'the hoods' taught me

Harriet is not your average revolutionary. She is from a deeply Conservative think-tank. But I've just finished her book about south London gangs, Among the Hoods , and it is explosive and extremely challenging.
It has taken me so long to read partly because it was so fascinating, and so honest. Loach questioned on air whether the quotes from the gang members were recorded, but they have the ring of truth about them - especially the moment when they meet Harriet in Victoria and are amazed by the buildings. I've worked in Brixton myself and was astonished how little some people there travel around London - they go by taxi to Heathrow, and to Ghana and back, but often no further than Stockwell in their own city.
Harriet never seems to have quite meant to befriend a gang leader, and he ends up in prison at the end of the book. But his irrepressible personality, and her own determination to get him a job, drives their relationship on.
It is the kind of book that everyone who has thought a bit about our future as a nation needs to read, partly because of the picture it paints of just how tough it is to be a young black man growing up in inner city Britain - the danger, the temptations, and the sheer intractability of the system that is supposed to be there to help them.
But partly also because of the picture it paints of the target-driven charities, and the hopeless state institutions, that are supposed to help but which manifestly don't.
This is the real challenge of the book, and it fascinated me because of what I wrote in The Human Element about how our institutions have been hollowed out, especially under the previous government with their targets - but the damage has continued since.
Job Centres, youth charities and the welfare system alike get Harriet's lashing, as we see how they trap young people in debt and do almost nothing to lift them out of it - especially when the education system has already failed to teach them to read and write.
For me, these are central issues - way beyond the comparative advantage of state versus private sector. It is that our institutions exist primarily to meet targets, or to get their grants renewed, and their most desperate clients are - at best - fuel to help them achieve this.
Harriet Sergeant didn't say this, but her book has convinced me that it is so: the real social crisis in the UK is that our welfare systems don't work. They never did work that well, but now they have been hollowed out - by IT and targets.
That is why they are so expensive. Because they fail, their workload rises, and so does the demand and the desperation, and they fail over and over again. It convinces me again that they only way to increase the efficiency of the public sector is not to cut it indiscriminately, but to make it effective.
I agree that has been the objective of the public sector reforms since 1997, but no objective has so backfired. Being effective means finding professionals capable of making relationships, and giving them the power to act - precisely the opposite of the direction of travel over the past generation.
Published on March 24, 2013 08:18
March 23, 2013
Darwin, Lubbock, Liberalism and the meaning of progress
"It is surely unreasonable to suppose that a process that has been going on for so many thousand years should have now suddenly ceased... The future happiness of our race, which poets hardly ventured to hope for, science boldly predicts. Utopia, which we have long looked upon as synonymous with an evidence impossibility, which we have ungratefully regarded as 'too good to be true', turns out on the contrary to be the necessary consequence of natural laws, and once more we find that the simple truth exceeds the most brilliant flights of the imagination."
The 'process' means evolution. 'Our race' is the human race. This was how John Lubbock ended his 1865 book Prehistoric Times, and I heard it yesterday in a fascinating lecture by Janet Owen today (her book is out shortly), at a special day of lectures on Lubbock at the Royal Society.
I was particularly excited to hear this for two reasons.
First, because it was what Janet called an ‘overtly political’ extension of Darwin’s evolutionary message – human progress was heading towards happiness. And Lubbock was in a position to understand evolution: he was Darwin’s neighbour, his pupil, his great popular interpreter, and a pallbearer at his funeral.
Lubbock died a century ago (hence the Royal Society’s celebration), the originator of bank holidays, the doughty fighter for the first Ancient Monuments Bill, the saviour of Avebury circle – and of course the grandfather of our own brilliant and pioneering Eric Avebury.
It is no coincidence that The Origin of Species and the Liberal Party both emerged in 1859. The party was and is bound up with the idea of enlightened human progress – human evolution in its broadest sense.
The second reason I was fascinated by all this is that Lubbock was my great-great-grandfather. His daughter Ursula was his secretary in the later years of his life, and was my great-grandmother. She held me at my christening and always had a copy of Liberal News in her handbag, along with some knitting (perhaps this is what really made me editor of Liberal Democrat News, as I was for six wonderful years).
She continued the family tradition as the liberal wing of the eugenics movement (yes there was one), as a leading feminist and by campaigning against the misuse of nuclear technology. It was a Liberal tradition too, of the central belief in the perfectability of humanity – based on what Darwin called the "mutation of species".
I’ve been thinking about the belief in evolution in the broadest sense at the heart of the Liberal soul because of a note on Facebook by a friend of mine, boasting that she had voted Labour for the first time – and wondering why I could never do that.
It is because, however cross or exasperated by the party I am occasionally – specifically about the government’s support for nuclear energy and its failure to build a new local banking infrastructure – I am and will remain a Liberal.
But what I have always found most exasperating – most of the time – is the party’s failure to see beyond the immediate and to articulate their purpose and central beliefs.
Luckily, I had reckoned without the multi-talented Mark Pack, who has created one of his brilliant visual representations of what the party is for. It is an important breakthrough and, although it doesn't mention Darwin, I very much recommend it. Here it is.

The 'process' means evolution. 'Our race' is the human race. This was how John Lubbock ended his 1865 book Prehistoric Times, and I heard it yesterday in a fascinating lecture by Janet Owen today (her book is out shortly), at a special day of lectures on Lubbock at the Royal Society.
I was particularly excited to hear this for two reasons.
First, because it was what Janet called an ‘overtly political’ extension of Darwin’s evolutionary message – human progress was heading towards happiness. And Lubbock was in a position to understand evolution: he was Darwin’s neighbour, his pupil, his great popular interpreter, and a pallbearer at his funeral.
Lubbock died a century ago (hence the Royal Society’s celebration), the originator of bank holidays, the doughty fighter for the first Ancient Monuments Bill, the saviour of Avebury circle – and of course the grandfather of our own brilliant and pioneering Eric Avebury.
It is no coincidence that The Origin of Species and the Liberal Party both emerged in 1859. The party was and is bound up with the idea of enlightened human progress – human evolution in its broadest sense.
The second reason I was fascinated by all this is that Lubbock was my great-great-grandfather. His daughter Ursula was his secretary in the later years of his life, and was my great-grandmother. She held me at my christening and always had a copy of Liberal News in her handbag, along with some knitting (perhaps this is what really made me editor of Liberal Democrat News, as I was for six wonderful years).
She continued the family tradition as the liberal wing of the eugenics movement (yes there was one), as a leading feminist and by campaigning against the misuse of nuclear technology. It was a Liberal tradition too, of the central belief in the perfectability of humanity – based on what Darwin called the "mutation of species".
I’ve been thinking about the belief in evolution in the broadest sense at the heart of the Liberal soul because of a note on Facebook by a friend of mine, boasting that she had voted Labour for the first time – and wondering why I could never do that.
It is because, however cross or exasperated by the party I am occasionally – specifically about the government’s support for nuclear energy and its failure to build a new local banking infrastructure – I am and will remain a Liberal.
But what I have always found most exasperating – most of the time – is the party’s failure to see beyond the immediate and to articulate their purpose and central beliefs.
Luckily, I had reckoned without the multi-talented Mark Pack, who has created one of his brilliant visual representations of what the party is for. It is an important breakthrough and, although it doesn't mention Darwin, I very much recommend it. Here it is.
Published on March 23, 2013 03:29
March 22, 2013
Why I have donated 82p to Barclays this year

Bolton, like so many of his profession, was an outsider from the establishment: he was a Quaker. He could hold no public office. He was barred from the army, navy and universities. His fellow Quakers were a persecuted minority, especially in Gloucestershire, where a number of them were languishing in prison and where Bolton, as a senior Quaker, was particularly concerned about them.
He therefore made has way out of London to the west to Rickmansworth, now a London suburb, then a wealthy village within reach of the metropolis, and also the country seat of the bishop of Gloucester, to plead for some of those who had been imprisoned for their beliefs.
This is why the upright, moral Quakers so irritated the establishment with their rigid Puritanism, and also why that rigidity gave them such an advantage as bankers. Because Quakers remove their hats for no man, Bolton immediately torpedoed his cause by refusing to take off his broad-brimmed Quaker hat. The bishop was so furious at this slight that he stormed across, grabbed it from Bolton’s head and flung it across the room. You did not have to be a Quaker to want a man so principled and so rigid to manage your financial affairs. If you had financial affairs in the 1680s, you did need somebody with a cool head, even if it was covered with a wide-brimmed hat.
It was Bolton’s apprentice, a 21-year-old son of a textile merchant from Cirencester, another Quaker called John Freame, who set up shop himself as a goldsmith in Lombard Street in 1690 - and founded the bank that became Barclays.
You can find out more about the bizarre history of Barclays in my book Eminent Corporations. But the question is how a bank begun in such high morality should have ended up quite where it has.
I still have my business account with Barclays, but after the last round of bonuses - £39.5 million to senior staff - I think it is time to go.
They have 48 million customers worldwide. We have all donated approximately 82p to the bonus pot this year. It doesn't sound much compared to their bank charges but we have to do it every year, and I am fed up with it.
There seems no understanding among those who run the bank that these kind of bonuses corrode our lives as well. We pay it out, and we pay all over again as the price of houses goes up and the price of many other things too. We pay out a third time because they are being paid for activities that are corroding the real economy of the UK, economically and morally.
Added to which, I had a call from my Barclays business account manager yesterday afternoon who asked me if I had time to talk and then asked me to confirm my date of birth. I said I don't reveal personal data over the phone - they had phoned me after all - and they sounded surprised.
It may have been a scam, of course, but I suspect it was a version of the same corporate bone-headedness that shells out £39.5 million to the richest and least useful people in the nation.
Published on March 22, 2013 02:29
March 21, 2013
Not another housing bubble, please...

Ah well, the Budget. I am of course delighted that the Lib Dems have managed to keep their promise to make the first £10,000 we earn free of tax - which really is the kind of tax cut that can help the lowest paid.
Equally I am pretty horrified at the planning permission for another nuclear energy white elephant, but relieved that it will probably never be built - it is just too expensive.
But what bothers me most in the budget is the likely side-effect of the help for people to buy homes. Help like this can only increase the cost of homes another notch, and make them that much less affordable for the next generation. It is a frightening thought that, if the average UK home was to rise in value in the next 30 years like it has in the last, our children will face homes costing £1.2 million on average by 2043 - and I am quite sure wages won't rise that fast.
This is very important, and not just because the Westminster elite seems to be unable to grasp policy levers that don't simply replicate the conditions of the last bubble - just as the banks want. And each bubble ratchets up the damage to our lives and social fabric. They also seem unable to grasp why house prices rise.
In the 1930s, the heyday of middle-class house buying, a new semi-detached cost just over £500, available with a down payment of £50 (that is why I've got that poster at the top). This was when mortgages cost about 10 per cent of a middle-class incomes and were paid off within sixteen years.
The most important moment when we lost that opportunity was in 1980 when, as a result of the abolition of exchange controls, Sir Geoffrey Howe abolished the so-called Corset, which regulated the amount of money pouring into the mortgage market - and did nothing to replace it.
There is always an argument about why house prices rise, and why those prices accelerate. Politicians like to say that it is a shortage of homes, and there certainly is a shortage and it doesn’t help. But if it was only about housing shortage, you would expect massive price rises in the late 1940s, whereas – after a burst after the war – house prices stayed completely steady from 1949 to 1954.
In our own day, planning permission has already been given for 400,000 unbuilt homes in the UK, yet prices still rise, as they do in places like Spain, where there is little or no planning restraint.
Politicians get muddled about this because building houses sounds like a tangible thing they feel confident to tackle (though they usually don’t), whereas they don’t feel confident about mortgage supply at all. Yet that is the other side of the process: inflation is about too much money chasing too few goods, and the main reason for the extraordinary rise is that there has been too much money in property, both from speculation and from far too much mortgage lending.
Sometimes this came from people’s rising incomes, which translated into rising home loans. Sometimes, more recently, it was bonuses and buy-to-let investors. But most of the time, it has been a catastrophic failure to control the amount of money available to lend, and which has fed into all the other trends to create a tumbling cascade of money, with its own upward pressure on incomes and debt until the vicious circle now seems quite unbreakable.
This is why only half of London’s homes are now owner-occupied. This is why Londonis rapidly shifting from property-owning democracy to a city of supplicants to the whims of landlords and rental agents.
Yet here we are - another budget and another politician has a go at boosting house prices to kick-start recovery, unaware of the rack it has become - not just to home-owners but to renters too. Help home-buyers, definitely - but only in a way that begins to bring down house prices.
Find out more about this in my book Broke: Who killed the middle classes , out next month!
Published on March 21, 2013 03:11
March 20, 2013
The real trouble with Cyprus
During the 1998 Asian currency crisis, a desperate finance minister whose currency had come under sudden attack in the world markets called the IMF for advice. But it was after 5pm Washington time and the IMF officials had gone home. The security guard told him he would have to make up his own mind.
The IMF may not have been there when they were needed them - at least outside Washington office hours - - but they were always able to help some of the most unpleasant third world dictators, including Mobutu, Moi, Samuel Doe, the Argentine junta, Marcos and Pinochet - all regarded as useful to the USA in the Cold War. Of the $26 billion of foreign aid flowing to the Philippine government under his regime, Ferdinand Marcos managed to salt away $10 billion into secret foreign accounts. Worse, the whole of the $4.4 billion bailout to Russia in 1998 disappeared within days, siphoned out of the economy through secret offshore bank accounts in Cyprus.
Here is part of the problem of tax havens. The drug lords, black marketeers and mafiosi use the offshore centres to launder their ill-gotten gains. Cyprus alone handles about $2.5 billion a year from the Russian black economy.
The trouble with the Cyprus bail-out is that the authorities knowthat Cyprus is a tax haven. Tax havens are an invention of the British government incidentally – though Cyprus is one of the less reputable ones that takes the hot money and sends it to the more reputable ones like the Bahamas, which then send it to Jersey and thence to the City of London, and so on ....
That is an explanation for the unprecedented demand for all those with bank accounts to pay ten per cent: they know some of the money is hot.
But two aspects of this whole business rather stick in the throat.
First, if finance ministers are finally concerned about tax havens, why on earth do they not tackle these problems more directly – close the loopholes for the tax avoiders and evaders rather than hitting everyone with the bill (as if we don’t all pay for tax havens in one way or another)?
Second, the great tragedy of tax havens is that they ruin the people who live there. Jersey has more than 600 banks but nobody can afford property there. Their agriculture is in a state of collapse because nobody can afford to work there if they are not in financial services.
This is because of the version of a Casino Effect (I coined the term). Gambling money tends to drive out everything else, because it is so profitable. In this same way, the City of London is slowly impoverishing the UK – but so slowly that we don’t notice. In tax havens, the same process happens much faster.
And so it is that the people of Cyprus have to suffer not once but over and over again.
Tax haven status is tolerated because of lobbying by the tiny elite that benefit, but also because governments – and the UK government particularly – believe that small island states are not economically viable.
The idea of bottom-up economics, where small economies and neighbourhoods can drag themselves up using their own resources, is only just emerging. Because it is a slower but more effective means of economic development, it is a key idea in the battle against tax havens and money-laundering.
Find out more in my book Money Matters.
The IMF may not have been there when they were needed them - at least outside Washington office hours - - but they were always able to help some of the most unpleasant third world dictators, including Mobutu, Moi, Samuel Doe, the Argentine junta, Marcos and Pinochet - all regarded as useful to the USA in the Cold War. Of the $26 billion of foreign aid flowing to the Philippine government under his regime, Ferdinand Marcos managed to salt away $10 billion into secret foreign accounts. Worse, the whole of the $4.4 billion bailout to Russia in 1998 disappeared within days, siphoned out of the economy through secret offshore bank accounts in Cyprus.
Here is part of the problem of tax havens. The drug lords, black marketeers and mafiosi use the offshore centres to launder their ill-gotten gains. Cyprus alone handles about $2.5 billion a year from the Russian black economy.
The trouble with the Cyprus bail-out is that the authorities knowthat Cyprus is a tax haven. Tax havens are an invention of the British government incidentally – though Cyprus is one of the less reputable ones that takes the hot money and sends it to the more reputable ones like the Bahamas, which then send it to Jersey and thence to the City of London, and so on ....
That is an explanation for the unprecedented demand for all those with bank accounts to pay ten per cent: they know some of the money is hot.
But two aspects of this whole business rather stick in the throat.
First, if finance ministers are finally concerned about tax havens, why on earth do they not tackle these problems more directly – close the loopholes for the tax avoiders and evaders rather than hitting everyone with the bill (as if we don’t all pay for tax havens in one way or another)?
Second, the great tragedy of tax havens is that they ruin the people who live there. Jersey has more than 600 banks but nobody can afford property there. Their agriculture is in a state of collapse because nobody can afford to work there if they are not in financial services.
This is because of the version of a Casino Effect (I coined the term). Gambling money tends to drive out everything else, because it is so profitable. In this same way, the City of London is slowly impoverishing the UK – but so slowly that we don’t notice. In tax havens, the same process happens much faster.
And so it is that the people of Cyprus have to suffer not once but over and over again.
Tax haven status is tolerated because of lobbying by the tiny elite that benefit, but also because governments – and the UK government particularly – believe that small island states are not economically viable.
The idea of bottom-up economics, where small economies and neighbourhoods can drag themselves up using their own resources, is only just emerging. Because it is a slower but more effective means of economic development, it is a key idea in the battle against tax havens and money-laundering.
Find out more in my book Money Matters.
Published on March 20, 2013 08:10
March 19, 2013
The nearest thing to an intellectual guru?
I'm very grateful to Jonathan Calder for calling me "the nearest thing the Liberal Democrats have to an intellectual guru". If true, this may be a measure of the Lib Dems intellectual difficulties, but let's look at the hopeful side - it makes me feel I have something to live up to...
So let me, for a moment, act like the nearest thing to an intellectual guru. I promise it won't be for long, but these somewhat philosophical issues are important.
"I suspect I have more time for postmodernism than he does (nor do I believe the concept needs a hyphen)," says Jonathan. Which is good: we can have one of those rare things: a Lib Dem debate about ideas (or hyphens).
He recommends that we read Richard Rorty's Contingency, Irony and Solidarity, which I also recommend. He also defends postmodernism in his essay 'Philosophy as a transitional genre' and says this:
‘Once again, I am telling the old Nietzschean story about how ‘‘Truth’' took the place of ‘‘God’’ in a secular culture, and why we should get rid of this God-surrogate in order to become more self-reliant."
This is important because it is the intellectual foundations of the modern world, that truth is relative. I have my truths; you have yours. It is the basis of tolerance, but it is also the result of a corrosive kind of liberalism - which destroyed all those things that kept mankind in tyranny, yet keeps on corroding - family, community and all the rest.
It may indeed be impossible to find the objective truth in this world, but that doesn't mean that nothing is true. What's more that fact should be absolutely vital to Liberals everywhere, because it is the antidote to tyranny. If we are caught in the Matrix, or are subjects of Big Brother, and they weave their own ersatz truth around us, the only way out is to assert an absolute truth.
We escaped from Stalin because there was an objective reality beyond. Without that, any corporate monster can control our whims and thoughts and, after all, what is our truth against theirs.
So postmodernism isn't enough, it seems to me. That is why the debate about what comes next, which I am struggling to launch, is important. So read my new ebook The Age to Come: Authenticity, Postmodernism and how to survive what comes next and see what you think.
Richard Rorty's book costs £25.99. Mine only costs £1.99!
So let me, for a moment, act like the nearest thing to an intellectual guru. I promise it won't be for long, but these somewhat philosophical issues are important.
"I suspect I have more time for postmodernism than he does (nor do I believe the concept needs a hyphen)," says Jonathan. Which is good: we can have one of those rare things: a Lib Dem debate about ideas (or hyphens).
He recommends that we read Richard Rorty's Contingency, Irony and Solidarity, which I also recommend. He also defends postmodernism in his essay 'Philosophy as a transitional genre' and says this:
‘Once again, I am telling the old Nietzschean story about how ‘‘Truth’' took the place of ‘‘God’’ in a secular culture, and why we should get rid of this God-surrogate in order to become more self-reliant."
This is important because it is the intellectual foundations of the modern world, that truth is relative. I have my truths; you have yours. It is the basis of tolerance, but it is also the result of a corrosive kind of liberalism - which destroyed all those things that kept mankind in tyranny, yet keeps on corroding - family, community and all the rest.
It may indeed be impossible to find the objective truth in this world, but that doesn't mean that nothing is true. What's more that fact should be absolutely vital to Liberals everywhere, because it is the antidote to tyranny. If we are caught in the Matrix, or are subjects of Big Brother, and they weave their own ersatz truth around us, the only way out is to assert an absolute truth.
We escaped from Stalin because there was an objective reality beyond. Without that, any corporate monster can control our whims and thoughts and, after all, what is our truth against theirs.
So postmodernism isn't enough, it seems to me. That is why the debate about what comes next, which I am struggling to launch, is important. So read my new ebook The Age to Come: Authenticity, Postmodernism and how to survive what comes next and see what you think.
Richard Rorty's book costs £25.99. Mine only costs £1.99!
Published on March 19, 2013 06:04
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