This is the first blog in a two-part series on ‘Bad Targets for Policy’. The second in the series will be on immigration.
We’ve seen a lot of focus on the ‘costing’ of policies in the parties’ manifestos for the forthcoming UK election. But we must remember that money is only a means of keeping account. Accounts are important but they are not reality. An account of debt is important, but it is not a physical reality. When a government has a debt in its own currency which only it (or its institutions) can issue, its obligations are important but not physically binding. They are not even legally binding, since the debt can be devalued virtually to zero by inflation. It follows that the real implications of government debt are not simply consequences of current government spending and taxation and the gap between them. Indeed these may be among the least important causes.
The real consequences of government debt result from the physical burden implied by the future obligation to transfer some control over a portion of real goods and services from the state to holders of the issued debt, either as interest or in repayment of capital. That debt in the nominal quantity of the national currency (the total amount in pounds or dollars say) is only a starting point. Inflation changes the relationship between that number and the obligation in real goods and services; the changing size of the national economy alters the ability to fulfill a fixed obligation. Continue reading Bad Targets for Policy 1: Government Debt→
Having recently had the opportunity to visit China and combine that with some reading about the country, I’ve come away with some inevitably fairly superficial thoughts about how the Chinese and the West do things differently. While the Chinese government sets limits on voiced or organised challenges to the Communist Party’s control of the country, it seems that most Chinese are able to pretty much get on with their lives as they wish. Having visited the great open spaces at the centre of London, Paris, New York, Berlin and Madrid, it felt disturbing to be shooed off Tiananmen Square at dusk, but otherwise despite the presence of police and soldiers at nearly every turn in central Beijing, I felt able to move around and take photographs pretty much as elsewhere.
I suspect the vast politically apathetic majority of Westerners would feel no restriction of their freedom under the Chinese regime. If the rise of Donald Trump and apparently popular strongmen such as Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdo?an, along with Brexit, show that the ability to vote is not enough to sustain government by reason then Mao Zedong’s Great Leap Forward and Cultural Revolution show that the lack of a democratic buffer leads to the deaths of millions.
I attended a fascinating meeting last weekend arranged by the East Midlands ‘Blue Labour’* group on the theme of ‘How Do We Champion the Cause of the Working Class?’ There was a panel of academics, journalists and local Labour politicians. I am interested in Blue Labour’s approach because they are the only group within Labour that seems to have a coherent view of how to remodel the economy away from the dominance of financialised capitalism without returning to widespread nationalisation. The essence of this view is that goods and service provision should be based less on anonymous (usually monetary) transactions and more on the basis of relationships. This implies an expansion of co-operative, mutual and stakeholder businesses, and more regional and community input into local, social and health services. I have myself written about why this is important.Continue reading Blue Labour, Relationships and Free Movement→
Just how much cash does the NHS and social care need to prevent the distressing stories of patients languishing on trolleys for hours in A&E departments? Can we possibly afford what it needs, or is it really a ‘bottomless pit’ as often claimed? Do we need to lower our expectations of what can be provided for us? Or does the whole funding system of the NHS need to be overhauled, with charges and/or insurance-style payments? Sadly, we are frequently being directed by politicians’ state-shrinking agendas and commentators’ ignorance towards the wrong numbers and the wrong reading of those numbers, with the result that the wrong answers are given to these questions. The truth is that if we look at things correctly, there is no reason why we cannot have an excellent healthcare system in Britain without any great sacrifice in our enjoyment of the other goods and services that the modern economy has to offer. Continue reading Explaining the NHS Crisis: Lies, Damn Lies and Health Spending→
Since the financial crisis of 2007-8, one suggested target reform has been the monetary system itself. This reform is based on the recognition that money in the modern economy is a rather peculiar phenomenon.
There are two popular conceptions of the nature of money, both of them incorrect. (Note that when we talk about money, it is entirely artificial to separate cash, in the form of bank notes and coin, from what we hold in bank accounts. To all effects and purposes, for the vast majority of us, they are the same and completely interchangeable.)
The first conception is that money is a fixed quantity determined by the government, which is either accepted by convention or because you can go to your bank and get a certain quantity of gold for it. (Presumably not many people have actually tried this!) The second is that banks can issue new money to lenders as a multiple of pre-existing deposits, depending on how often depositors demand cash. This is frequently referred to as ‘fractional reserve banking’. Continue reading A Banking Debate→
There was little discussion of our electoral system as part of the UK Labour leadership debate. Yet proportional representation has never seemed more clearly essential to avoid the permanent triumph of self-interest politics. Something quite extraordinary happened between the 2010 and 2015 elections that has been extraordinarily little remarked upon. The outcome in terms of Parliamentary seats was a very clear shift from a centrist coalition representing 59% of the electorate to a brazenly right-wing single-party government representing only 37%. Yet the voting pattern did not indicate any such change in preference by voters. Continue reading Irrelevant Alternatives and PR→
I do not, as far as that is a meaningful concept in today’s fragmented politics, consider myself to be of the ‘hard left’. And I am certainly no ‘entryist’, having been a member of the UK Labour party since 1997. In the end, however, I didn’t have too much difficulty deciding to vote for Jeremy Corbyn as the next leader of the party. This has as much to do with what the other candidates were not saying as with what he, Corbyn, was saying. I would have liked to vote for Yvette Cooper as Labour’s first woman leader, and hopefully as Labour’s first woman Prime Minister, but in the end she, like the others, failed to ask the right questions about modern Britain. Continue reading Why I voted for Jeremy Corbyn as UK Labour leader→
There’s a flavour of ‘What have the Romans ever done for us?’ in the Corbyn-led debate over the Blairite legacy. As someone who campaigned enthusiastically for Labour in 1997 and now feels a somewhat detached member of the party, I think I can articulate why -despite the many achievements of the Blair and Brown governments – there might be a lingering discontent with that legacy. Leaving the Iraq War out of this, for right or wrong a product of Tony Blair’s always just visible messianic tendencies, the problem is really the Blairite legacy’s impermanence. The two main manifestations of that impermanence are in the failure to reduce inequality, surely to begin rising again, and the ability of the Conservatives to roar back and dismantle the very achievements for which we should be celebrating the Blair-given years of power. Continue reading Why Power is not Enough for Labour→
After defeat at the 2015 UK election Labour talks about appealing to the ‘aspirational’ and David Cameron pledges before his cabinet ‘to give everyone in our country the chance to get on’. If we accept the premise that speaking to material self-interest is what politics is now all about, we still need to point out that neither party has any analysis or policies that make their proffered goals more likely. Powerful economic forces are splitting apart the have-more from the have-less, with these forces accelerated by the way in which discrepancies in wealth inevitably lead to discrepancies in political power and voice. In a way it makes sense for the electorate to choose the party that is more comfortable with managing this process, revealingly accepting that ‘the dignity of a job’, and ‘the pride of a paycheck’ may be the limited best it can offer its citizens – since any promises over the quality and security of that job and how far that paycheck might stretch appear beyond modern governments to fulfill. Continue reading Beyond Defeat for Labour in the UK→
Politics and Morality – Where Conservatism gets it Wrong
Tim Montgomerie wrote an interesting piece a while ago on ‘How the Left went Bad’, which asserted the necessity for Conservatives to ‘take the moral high ground’ from Labour.
Now, I don’t think talking about ‘morality’ gets us very far in politics – different morals are too irreconcilable. But Montgomerie thinks Labour’s advantage is in appearing to ‘have our hearts in the right place’. Of course, since this goes along with ‘messing up economies’ and ‘incompetence’, the true moral superiority and a ‘much superior approach to social justice’ lies with his team, through ‘sound finances, strong families, school choices and unshackled job creators’.
Some of Montgomerie’s arguments are just wrong or odd. The UK’s current debt burden was not acquired by ‘borrowing during the good years’, but by the effects of a global financial crisis. ‘Incompetent’ Labour apparently managed to preside over a decade of prosperity. Delivering ‘fairness’ appears to include public sector pay and conditions falling to match those of the private sector. But despite all this he picks out something important about the difference between the characteristically left of centre and right of centre view. Continue reading Politics and Morality→