Category Archives: Politics

Economics, Politics

Adam Smith and the Cuts

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The Institute that takes the name of Adam Smith (wholly in vain in my view) has been in the forefront of the expenditure cut propagandists. They have produced, in the guise of impartial analysis, two documents that start with their desired conclusions and proceed by the use of pseudo-logic and misdirection. The great Kirkcaldy moral philosopher and economist will be spinning in his grave if he has had the misfortune of posthumously reading these travesties.

Firstly, the Institute’s co-director, Dr Eamonn Butler has produced a document apparently rather cleverly called ‘Re-booting Government’. In fact, the correct computer analogy would be ‘Re-installing a cheap and cut-down operating system sold to you by a dodgy guy in the local computer repair shop’! It starts with an economic premise that is simply wrong: Continue reading Adam Smith and the Cuts →

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Economics, Politics

Cameron’s Deceitful Cuts Rhetoric

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David Cameron says he wants an apology from Labour for the state of the economy. But his approach to the budget deficit is either one of the most mendacious or one of the most ignorant ever made by a British Prime Minister. By using half-truths and gross over-simplifications Cameron has shifted the blame for the financial crisis and its aftermath from the reckless and probably fraudulent behaviour of traders of financial assets to the ‘irresponsible economic management’ of the previous government. By implication the hapless ordinary British voter is also guilty, and is going to feel the righteous pain of public service and job cuts. We are quite likely heading for one of the most unjust periods of governance Britain has ever known. Continue reading Cameron’s Deceitful Cuts Rhetoric →

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Economics, Politics

Labour’s Future

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In May 1998 I attended an academic seminar in Downing Street organized to discuss the meaning of Tony Blair’s ‘Third Way’. The event was hosted by David Miliband, then the head of the No 10 Policy Unit. Before the meeting I sent Miliband a document I entitled ‘Two Lanes on the Third Way’ pdf(95.5kB), in which I argued that since ‘when we increase the capacity of others to help themselves, we also increase their capacity to help us’ the Labour government should embrace proportional representation and economic democracy. Both of these, in the form of a manifesto commitment to a referendum on electoral reform, and as an exploration of the stake-holding idea espoused by Will Hutton among others, had already entered ‘New Labour’ thinking. Continue reading Labour’s Future →

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Business and Society, Economics, Politics

Coalition calculations

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Well, they went for it anyway – the Lib-Dems that is. I guess they hope that an AV referendum plus a House of Lords elected by PR will pave the way for more substantive electoral reform for the Commons. (It might also lead to some interesting legitimacy issues too – that has always been the potential problem with a directly elected upper chamber.)

From the coalition policy statement that’s been produced and the attitude of David Cameron (plus the fact that William Hague has thankfully been dispatched to foreign parts) it rather seems that he (Cameron) was really a closet Lib-Dem all the time! Quite a few Conservatives must now be waking up to this fact with some horror – it may well be from the Tories right wing that the immediate threat to this coalition lies. Continue reading Coalition calculations →

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Politics

Electoral Arithmetic

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Interesting times in politics indeed! As anyone reading my No 10 Seminar Paper of 1998 (apparently seen by David Miliband himself – hope he read it!) would know, I am a keen supporter of electoral reform leading to genuine proportional representation. But I find myself torn on the political and possibly the moral implications of the various options. I think, however, there is an underlying reality that will guide what will happen.

Unless either the Tories or Labour offer a whipped vote on a referendum for a genuine PR system (not AV alone), there will be no PR. No PR now means no PR for the foreseeable future, and the Lib Dems might as well disband. So basically the only thing that makes sense is for them to go with the party offering this. That’s the reality, and the Lib-Dem MPs must know it.

Opponents of PR should realise that it is actually the lack of PR that is causing the problem here. For the Lib-Dems it is an existential issue of political representation and so trumps all others. If PR were already in place, the Lib-Dems and Tories could probably fairly happily reach a compromise agreement on the economy and support the Tories either on a minimum agreed programme or measure by measure for everything else.

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Economics, Money and Banking, Politics

Debt and Deficits – Sustainable but Unfair

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At the end of January 2010, UK government debt stood at £848bn and around 60% of GDP. The European Commission says ‘additional fiscal tightening measures’ are required. The Tories warn that investors are getting anxious and that the ratings agencies (who also certified the security of mortgage-backed derivatives) are about to downgrade the UK government’s debt, with the likely consequence of increased interest rates to pacify bond-holders.

Two-thirds of Treasury bonds are held by UK citizens and institutions – mainly banks and pension funds – that rely on them as secure and predictable basic assets. This is UK government money owed to UK citizens by the UK government. It is a purely internal redistribution of claims that cannot be compared, as it sometimes is, to household debt. The one-third of Treasury bonds held by foreign investors, such as other central banks and financial institutions, is a rather different story. Clearly these bond-holders have less direct interest in the long-run health of the UK economy, and so may and sometimes do, exert pressure on governments to increase the rates of return on the new bonds they issue. Were these rates of return to exceed a reasonable expectation of the political and economic tax revenue capacity of the UK government, then there would be difficulty in continuing to fund the current level of debt in the same way. In fact this situation seems a long way off. Currently interest rates are low, UK debt is not particularly high relative to other countries, and the UK has strong social and economic assets to back its liabilities. This makes UK government debt a particularly safe form of wealth in a time of economic turbulence and one that tightening capital regulations are likely to create even more demand for. The real question about the UK’s debt is not so much whether it is sustainable, but whether it is fair. Continue reading Debt and Deficits – Sustainable but Unfair →

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Politics

Welcome to Cameronia!

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The Conservative Party leader David Cameron has today published in the Guardian the text of a speech in which he outlines a programme of constitutional reform. What he says is interesting, but shouldn’t be taken too seriously. We mustn’t forget that David Cameron is no political thinker. He is and has always been a political operator. He is the type of individual we need less of in Parliament. Still we must make do with what we have, and maybe he can serve an important purpose. Certainly he may have jumped on the right bandwagon. Labour, having promised constitutional reform to appeal to their less tribally-committed supporters over the years, have as far as Westminster is concerned signally failed to deliver. Indeed it is practically (and may effectively turn out to be so) criminal that the government has not transferred many of the systems trialled in the Scottish Parliament and Welsh Assembly (proportional representation, powerful and independent committees, transparent expense arrangements, to name but a few) to Westminster. It is probably too late to claim the initiative back on these issues, and so we have the strange sight of the Conservatives leading on them. Continue reading Welcome to Cameronia! →

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Politics

A New Politics?

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The Daily Telegraph and their informant have certainly opened a veritable can of worms! Their publication day after day of new revelations of MPs’ expense claims has certainly boosted their sales, despite the widespread reporting of every detail in other outlets. But if they also have a political agenda, this must be a dangerous game, both for the paper’s chosen champions, David Cameron’s Tories, and for the rest of us. The likely public response to the Telegraph’s uncovering of the somewhat murky operations of the Commons Fees Office is ‘a plague on all their houses’. This will probably encompass all the prominent parties in Westminster: Labour, Conservatives and Liberal Democrats. Many will presumably opt not to vote in the Euro elections on 4th June and perhaps in the General Election which must come within the next 12 months. Some may be persuaded to vote for candidates they would not otherwise have voted for. If they are going to do so let us hope they are clear on exactly the issues at stake. Continue reading A New Politics? →

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