modern capitalism and the new marxism - part 1

At the risk of saying things that you my already know very well, I need to start with a ludicrously redacted version of Mark's theory of history. In short Marx argued that every age spawns the seeds of its own destruction. Thus, he believed, nineteenth century indutrial capitalism created an exploited working class that would ultimately rise up and destroy it. We do not need here to discuss whether, or why, Marx was wrong, but it is a good starting point for a discussion of modern post-industrial capitalism and where it is headed. 'New' marxism may be described as the use of his dialectic theory to analyse modern society, without necessarily passing judgement on its validity or exclusiveness. Marx, along with many other historians, also pointed out that, as civilizations approach their demise, they inevitably become decadent and grotesque exaggerations and distortions of their central elements emerge. The excesses of Rome are well known to us and Marx accurately foresaw the development of excessive 'conspicuous consumption' in the later stages of capitalism. Well it must now be clear where this is leading. If the analysis is useful it is in one particular aspect of modern capitalism that we should concentrate upon. And here I am referring only to the 'developed' West - the issue of the devloping world is very different. That is growing inequality. The key difference between the remarkable growth period which lasted from the early 1990s to 2008 (with the notable exception of Japan) and the period since 2008 is this: While inequality grew in both periods, in the first, the vast majority of people saw their living standards rise, even those at the bottom of the invome scale, either because growing wealth did indeed 'trickle down' or because of improved welfare systems. Thus the contradictions, to use a marxian term, odf inequality were not at all clear. This second period is more corrosive. This is becase, for the first time for many years, the living standards of the poor are actually falling. This is where the picture becomes forbidding. We are seeing massive increases in the wealth and incomes of the small group of perhaps 1-2% of western populations in a period when overall wealth is declining. Orwell, in Nineteen-Eighty-Four, painted a picture of a world where the poor are subdued by constant exposure to popular culture of a type that dulls their consciousness and manipulates their perception of the world. Marx had referred to religion (the opium of the masses) performing this role. I don't need to illustrate this devlopemnt which must be clear to anyone who turns on a TV or opens up a computer games programme. However, the Internet and the open access to it, renders the Orwellian nightmare impossible. The deprived in our societies are fully aware of their own deprivation and are capable of creating their own culture. While this is going on the excesses of the extremely rich are all too clear to see, whether it be dishonest bankers, corrupt politicians, megalomaniac newspaper proprietors, greedy CEOs or spoiled footbsllers. Are these the indications of the decadence of a dying civilisation ? Will growing inequality and the emergence of increasing desprivation create a marxist-style revolution ? Does the Internet make revolution more possible, or will it diffuse alienation so much that nothing tangible will occur ? More in part 2.

The War on Drugs

I notice this Monday morning that a Commons select committee is recommending a review of the drugs laws in the UK. Two things to say at the outset. The first is that, apparently, the use of illegal drugs and offences connected with them, have been falling significantly. This may mean the current war on drugs is succeeding or, as I suspect, it simply means drugs are becoming less fashionable. Secondly, there is a wide gulf in cultural outlook of people who were born before 1945 and those who were born since. Yes, as precise as that. The older of the two groups will be, on the whole, very fearful of any liberalisation of drugs laws;the younger group, however, are likely to take a more balanced view. Thus, as the older 'drugs-conservative' group age, or die, or at least vacate positions of influence, the agenda is bound to change merely through the passage of time. That time is approaching. My view is very strong, which is that virtually all drugs should be de-criminalised unless there is a dramatic threat to public health (ketamine may be an example. It is absurd that alcohol and tobacco remain legal while other types of narcotic are not. But, more compellingly, there is a deep philosophical argument that says the state has no business telling peole how they lead their lives. Many people voluntarily take risks and we do not make such activities illegal, as long. of course, as there is an extensive public campaign to demonstrate the risks (as occurs with smoking and alcolhol consumption. True, the activity of persading people to take risks, i.e. use potentially dangerous drugs, may well be a crime, but, here again, we do not prosecute people for persuading them that parachute jumping, hang gliding or extreme mountaineering are good ideas. No, the misuse of drugs is a health and cultural issue and should be treated as such. Ask yourself this question. 'If we were to start again from scratch, knowing what we now know, and drugs narcotics suddenly appeared on the scene, would we handle the situation as we currently are ?' Clearly not. By crminalising the production, marketing and use of narcotics we would be creating a whole new set of crimes and a whole new criminal community overnight. So, we must study, carefully and rationally, the experience of Holland, Portugal and the handful of US states who have voted to legalise cannabis. But I would be more radical. In the specific case of heroin and crack cocaine, the state should offer all current (not new) users free prescriptions in return for agreement to undergo rehabilitation programmes and to use the drugs under controlled conditions. This would destroy the market for such drugs virtually overnight, take away the incentive for anyone to persuade others to start to use such drugs (there would no longer be a commercial interest in doing so, by pushers and dealers)and would eliminate the crimes associated with use and dealing. In particular, users would not have to resort to crime or prostitution to finance their habit. This will only happen, of course, when the demographic as I described above comes about. But that time is coming. I believe that, in ten years time, such changes in law and practice will become publicly acceptable. We should start preparing for that day right now.

Its all about public interest

Later today the Leveson Report is to be published and its detail will, undoubtedly be poured over for some time. To be sure, it's a devilishly difficult issue and anyone who says it is 'simple' is lying. There is a huge temptation to bring in draconian controls simply because much of the print media is out of control. I am tempted to believe that the print media is actually dying out anyway, so that particular problem will solve itself. The gutter journalists will lose their jobs and no doubt work for private investigators where they can be regulated by law without any civil liberties issues interfering. The focus will then have to shift to web and social media generally and whether or how to regulate that. We have already seen the first warning shots with the McAlpine Affair and a number of other unpleasant twitter campaigns. You can't regulate gossip so that will be a tough one. In the meantime, what to do ? The key seems to lie with the issue of what is, or is not, in the 'public interest. There are clear examples either way. The Milly Dowler incident was clearly not in the public interest. Issues concerning MPs' expenses or Jimmy Savile clearly were. It is cases in between these that are hard to judge. For example was the revelation of Harry's games in Las Vegas in the public interest ? (I know it was not a press revelation, but the principle applies). Then, of course, there are the private lives of politicians and public servants in general - come to think of it, who are 'public servants' ? Are school headteachers, heads of broadcasting organisations, newspaper editors 'pubic servants' ? They are certainly engaged in public business, whether or not they are employed by the state. The recent Petraus issue in the USA is a case in point. His private life was clearly a matter of public interest because he handles intelligence and security matters, but what if he were just another four star general ? So, whatever Leveson proposes, and whatever the government tries to introduce, I think a workable (it can never be watertight) definition of 'public interest' must be the keystone of any system.

55 Days

I saw the play 55 Days recently at Hampstead Theatre. I would certainly recommend this excellent piece by Howard Brenton if it comes round your way. It concerns the events and debates leading up to the trial ane execution of Charles 1 in 1648-9. Two issues occurred to me after seeing it. The first was the extent to which the key elements of British government were being shaped at that time, even though it was over 350 years ago. In particular there were the disputes over sovereignty between Parliament (at that time a purged and garrulous institution, rendered impotent by sectarian divisions), and the executive (then the King, of course). All the same issues of where authority sovereignty and power lie that we see today, especially under coalition, were laid bare. Of course, at the time, the protagonists were unable to fathom out how to grant authority to executive government when it was no longer either an hereditary monarchy or a directly elected body. It was only when it was realised, towards the end of the century, that executive government could derive its authority from Parliament that the problem was solved. But is does demonstrate how far ahead of the rest of the democratic world England was. The characters even discussed the possibility of a constitution coming into being and certainly, Cromwell and fairfax favoured a constitutional monarchy - a very modern concept. The second feature was the attitude of Charles towards his own position and ultimate demise. Brenton, I understand, has followed closely contemporary acounts so one assumes the words of his characters are accurate. Charles refused to recognise the authority of the court that condemned him and did not acknowledge the possibility that he, the sovereign, could commit treason. There was also a general sense that he saw himself as the 'embodiment' of the people so he could not betray them. In his words could we not hear the same pleas as those of Milosovic, Saddam Hussain, Mubarak and the like. It seems that the refuge of dictators behind the principle that they represent the state and so cannot be tried by that same state, has a very long history. In the end, of course, the military took over in England, with Cromwell declaring himself Lord Protector. How often do we see reforming revolutionaries become, themselves, dictators, every bit as undemocratic as those they have replaced. Are we seeing this in Egypt today ? Incidentally, before we leave the subject, a footnote on democracy. Sitting on either side of me were Simon Callow and Benedict Cumberbatch with their respective partners. It occured to me that the fact that I, a commoner, could be literally rubbing shoulders with members of the theatrical aristocracy, was indeed a demonstration of modern democracy.

Obama's 'landslide'

I was in the USA last week and taking a look at the aftermath of Obama's win. It was predictable, I suppose, that the Democrats concentrated on the electoral college and called it a 'landslide', which, in that sense, it was, while Republicans stressed the narrowness of the win in terms of the popular vote. Certainly it was not a landslide in this latter sense. Can both sides be right ? Well, yes, I believe they can, but not, perhaps, as the Democrats would have it. We know that there are about 45% of the voters who will support the Democratic candidate come hell or high water (sorry for the unsubtle illusion to Sandy there), while a different 45% will always vote Republican, even if the candidate is deceased. (it happened recently in Missouri). This leaves a central 10% who can be persuaded. Now, of these, Obama won by a margin of about 7-3. Now that IS a landslide. This is why both sides can be right at the same time. It was, I think, a decisive win, perhaps not a landslide in the full sense of the word. Republicans in the USA are taking two views. Some are saying it was very close and that Obama 'bought' his victory with 'gifts' to minorities. They therefore believe Romney's campaign went OK and Obama stole the election. The others recognise that this was a flawed campaign and that Republicanism has lost its way. Well, again, both may be right in their way. The only way in which a candidate is going to be able to claim an undeniable mandate is if they can expand that central 10% to about 20% and win it all. The last president to do this was, arguably, Richard Nixon in 1968. Bill Clinton and Ronald Reagan also came close. Prospects do not look good. Political beliefs in the USA seem more entrenched than ever.

The press dinosaur

We are still not sure why the dinosaurs became extinct so many million years ago and we certainly know nothing about the prelude to that extinction. But we may know plenty more about the imminent extinction of the print media, and perhaps even the main broadcast media with it. I am pretty convinced that print media will not survive the Internet onslaught. All attempts to generate sufficient revenue through the web seem to be failing. So, I expect traditional newspapers to disappear, though the Huffingtom Post is having a good go at becoming a bridge between the old and the new. Perhaps, well, more than perhaps, 'probably' we are now seeing the great press dinosaur entering its final death agonies. As its demise becomes ever more apparent, its excesses seem to be increasing. Undaunted by Leveson, they are now baying for the blood of suspected Tory paedophiles, lascivious celebrities from the sixties and seventies,corrupt police officers and child abusers in the care system. Now, it may well be that all such people exist, perhaps in large numbers, and that they should be exposed, but the press do seem to be engaging in a witch hunt. I rarely find myself agreeing with David Cameron, but I do on this one. Such a hunt will inevitably spawn many innocent victims. It appears that Lord McAlpine may be one of them. How many more will there be ? Trial by newspaper is an horrific prospect, but I fear it may become common as proprietors and editors try to eke out dwindling sales from the dying embers of a doomed industry. Why should condemned men and women concern themselves with ethics when they are about to mount the scaffold ?

America's unchristian Right

We know that the American conservative right is strongly imbued with Christianity. This is somewhat bizarre. The reason I suggest this is that many of its attitudes are decidedely unchristian. Did Christ not effectively argue that people should pool their economic and social risks by sharing property and agreeing to help those less fortunate than ourselves ? The parable of the Good Samaritan says we should not pass on the other side but should make a special effort to help the disadvantaged and the wretched even if they are culturally or ethnically different to ourselves. Christ affirmed the ancient Jewish tradition that the love of money disqualifies us from salvation. When the multitude, who had come to hear Jesus speak were starving, he told the disciples to feed them before they looked after themselves. How can such Christian values be so assiduously ignored by the American Right in their opposition to welfare, socialised health care, foreign aid and some redistribution of income ? It's a mystery to me.

More thoughts on the US electoral college

I have to claim some credit for calling the US election pretty well though I got the margin of Obama's electoral college victory wrong (assuming Obama wins Florida, that is - why is it always Florida ? Something seems to be rotten in the state). In particular it has indeed come to pass that a very close contest in terms of the popular vote looks like a decisive win for Obama as a result of the distortion of the electoral college. A further aspect does, however, seem to be emerging in this election. That is the increasing polarisation of different sectors of American society, rather than the normal analysis on a state-by-state basis. Women, ethnic minorities and the young are increasingly Democrat-leaning, while white males who are middle aged and elderly are opredominantly Republican. This is potentially dangerous as it can give rise to excessive pluralism and political pluralism is likely to make governing even more difficult than the traditional institutional system of checks and balances has suggested in the past. Before we casually jump on the idea that the USA might become kind of 'Weimar' country where excessive pluralism creates political paralysis and gives rise to right-wing, authoritarian extremism, we need to take care. While the USA remains a staunchly two party system there is a safety valve in place. Thus, when American society becomes dissatisfied with the way they are being governed (or 'over-governed' as many Repubocans might say), it can simply turn to the other party next time elections come round. Mid term elections in the US certainly play that role. In Weimar Germany there was no alternative except another ineffectual, short-term coalition. The point of all this is to say, perhaps, that, although America's two party system looks, at first sight, to be hopelessly (not least by the exigencies of party finance) corrupted and out of step with an increasingly pluralist society, further consideration may indicate that it can actually save America from internal social collapse. In so far as the electoral college underpins the two party system, perhaps it is supportable. With no electoral college in place third, fourth and more candidates might enter the field and enjoy some success. The college helps to keep out too many alternatives and the prospect of more deadlocked results.

Britain's electoral college

Writing on election day in the USA – before the result – I had been thinking about the electoral college, which is, to say the least, a strange arrangement by any standards and possibly unique. Well, not totally unique in view of what I have to say later in this piece. Political historians explain the electoral college in three main ways. One is purely historical and relates to the time, in the 1780s, when the states (there were thirteen of them then) still saw themselves as separate communities and therefore saw the college arrangement as a way of asserting their autonomy. Secondly it has been suggested that the enduring federal culture of the US is reflected in the college, i.e. states of lost much autonomy since 1787, but do still wish to be seen as individual contributors to the process of electing a federal president. Thirdly, it is said that the college system forces the candidates to visit the whole country in search of college votes. In this way they can all feel ‘included’. This third reason is spurious today because, with the increasingly polarised nature of US party politics, most states are ‘safe’ for one or the other candidate. As we are now seeing in the campaign, the candidates need not bother visiting many states (how much time has Obama spent in New York, for example ? – answer virtually none until the hurricane struck). In other words a re-election campaign could not bring the president to NYC but a hurricane could ). So there is a dissonance today between the reasons for the retention of the college and contemporary American politics. In fact, in such a close race, the absurdities of the college system are thrown into focus by the possibility of a ‘wrong-way-round’ result when the winner in the college actually gains less popular votes than the loser. This occurred when Bush ‘defeated’ Gore with a minority of the total vote (not to mention dodgy events in Florida) in 2000. Having said that, the college can be defended on these grounds : With the US almost inevitably producing a very close result in presidential elections – I mean close in terms of the popular vote – the deep schism in the political culture is highlighted. The electoral college, however, can produce a more decisive result that the popular vote, as happened to Obama himself in 2008. In that election Obama only beat McCain in the popular vote by 52.9%-45.7%, hardly a landslide, but won the college vote by 365-173. So we can easily forget the deep divisions in American society and believe instead that Obama was swept into power on a wave of optimism. This also, incidentally, creates impossibly high expectations for an incoming president. Former presidential candidate George McGovern died recently, reminding us of his humiliating defeat by Richard Nixon in 1972. In the college Nixon won every state bar one – Maryland – on a popular vote of 60% against 37%, still a big defeat but nothing like the college result. Over a third of the US voters in 1972 were willing to support McGovern’s ultra-liberal agenda. This fact was disguised by the hugely distorted college result. And again let’s remember Gore’s defeat in 2000 when he actually won on the popular vote. The perversity of the US electoral college possibly, therefore, changed the course of recent history, in view of events in Iraq and Afghanistan. Now, before we in Britain become too smug over these truths about the US electoral college, we need to reflect upon the fact that Britain has its own version of the electoral college. It is called the House of Commons. Instead of 50 states we have 650 constituencies. Instead of states with different values in the college (depending on voting population), our members of the electoral college have an equal value of one vote each. No UK government since 1945 has won the popular vote (contrast that with many US presidential candidates who have done so). Furthermore, recent results have been ‘wrong-way-round’ in that more people vote against the incoming government than for it. For example the 1997 election was seen as a ‘landslide’ for Labour. In fact more people voted against Labour, for the Conservatives and Liberal Democrats, at 47.5%, than voted for Labour at 43.2%. Al Gore may have felt aggrieved (how well he took it !) in 2000, but his injustice was nothing when compared to British elections. So, if we see a perverse result tomorrow, possibly a dead heat, in the USA, we should think on before we are too critical of the Americans. For what it is worth I predict a close popular vote but a comfortable victory for Obama in the electoral college; let’s say he will be about 30 college votes ahead of Romney. We’ll see.

The socialism of American football

I am indebted to a nephew who made an interesting observation about the odd relationship betwen the 'American Dream' and the way in which Americans run pro football. One might think that free market ideology would dictate that the fortunes of the football franchises should be left to natural forces. The model suggests that the best will rise to the top, attract more resources and thus be able to retain their dominant position. In other words they should receive just rewards comensurate with the workrate and talent. Certainly this is what happens with European football where, in most leagues, only a handful of clubs have the resources to have any prospect of winning the title. In England there are perhaps six teams with such a prospect, in Spain it is two and in Scotland, since the demise of Glasgow rangers, it is only one, and in other countries only a handful each. But in America this is not allowed to happen through a system known as the draft. This works so that the clubs who do badly in one season, are given first pick of the best college players who become avaialable each Summer.In the folowing seasons they have the chance to climb back up the leagues, while the dominant clubs, who have to accept second-raters, drift down. In this way the chances of the teams are equalised through blatant market intervention. By now, you should be catching my drift. Theis manipulation to even out the chances of every club looks like a system of central planning in order artificially to create equality of opportunity. In other words, it sounds suspiciously like socialism. Strange.........

The Age of Deception

The disgracing of Jimmy Savile and Lance Armstrong has brought back to mind a recurrent theme in modern life. I don’t think it is overstating it to call the current era an ‘Age of Deception’. We now commonly see sporting personalities who cheat on the pitch and the track as well as in their tax returns, tabloid journalists who conceal opinion behind their deceptive versions of truth, banks and utility companies who cheat their customers directly, or indirectly through impenetrable terms and conditions, unreadable small print or simple lies and profiteering by exploiting market power. Cheap airlines extract money from us by making booking so complex we find ourselves paying charges we did not know were there; there are TV programmes where all is not as it seems (remember the phone-in scandals of a few days ago). Tax cheats now seem to be everywhere. And I have not yet mentioned politicians. This is a depressing picture. However, fans of Hegelian philosophy and its derivatives will believe that every thesis spawns its own negation. In this case, we can say we also live in an age of open information through the internet and the burgeoning media. These have emerged from corporate power because they have been seen as opportunities to extract vast profits from our growing consumerism. A common feature of all the deceptions identified here is that they have been rumbled in one way or another. The optimistic aspect of the age of deception is that, sooner or later, they do come to light. When a footballer dives or feigns a non – existent injury his misdemeanour is seen by millions, replayed over and over in slow motion, disseminated on U Tube etc. Regulators, inefficient and slow though they may be, do eventually seem to dig out the truth – witness the recent Libor scandal and several investigations of cartelisation by the Office of Fair Trading. Abused children become adults and eventually find the courage to reveal the identity of their tormenters. So the age of deception is confronted by its own negation, the age of information. How will this play out ? What is the ultimate synthesis of this dialectic ? Optimistically it may result in a new age of transparency and honest dealing. Pessimistically, the deceivers will ultimately take control of the media of communication, creating a kind of Orwellian dystopia. The main cause for optimism is that information is currently in the hands of the masses. History tells us, however, that this is no guarantee of ultimate victory.

Is Clegg a fool or a knave ?

So Nick Clegg has told us that he is not a knave but a fool, a fool for having made a promise he could not keep. The sad thing is, whether he is a fool or a knave we all want our politicians to be neither. To make matters worse, Dr Cable has told us the promise was a collectice decision, so the Liberal Democrat leadership[ is a collection of fools. Mmmmmmm. http://www.hoddereducation.co.uk/Colleges/Government---Politics.aspx?mRef=CNM01.

The olympic Spirit

e have now had a few weeks to reflect upon what happened during the Olympics – including the torch processions – and the Paralympics. Something undoubtedly happened and it was largely unexpected. So what was it and what are its implications ? There was clearly an upsurge of patriotism and it was noticeable that many members of so-called minority groups happily joined in the outburst of such patriotism. Two implications arise from this. First that we are becoming a more integrated society. One suspected this would happen in regard to ethnic diversity, but it was striking also how geographically united the nation was. The idea of the torch progress had a lot to do with this. The fear that this was ‘London-centric’ was, ultimately, unfounded. The Olympics and Paralympics threw up countless role models, but the most significant were undoubtedly sportspeople of colour and the disabled. Again the impact of these is very plain to see and also predictable. But less predictable was the manner in which the concept of ‘Britishness’ has been claimed by all groups in society, not just the shire-dwellers. This will prove to create cultural change, no doubt, and it is probably good news for those who have a vested interest in sport, but I wondered whether it goes further than that. My thesis here is to suggest it should inform us about the ‘Big Society’ agenda and the future of our national institutions which are coming under threat from both localism and privatisation. The first thing to say, I suppose is that this has demonstrated that it is possible in Britain to organise and deliver a major public sector project, efficiently, effectively and impressively. But, more importantly, I think the Olympics and Paralympics demonstrated something about civic attitudes to major public sector, national, undertakings. In other words it is not true, as Big Society thinking suggests, that we can only connect emotionally with local community enterprises. The British people do have a strong affinity with national, public sector enterprises. It runs to the NHS, the BBC, higher education institutions, the police and our welfare state in general. Those politicians who chant the mantra, ‘local good, national bad’ and ‘public sector bad, private sector good’, need to consider this demonstration of a strong national civic culture. Turning to the volunteer army, I am reminded of the great eighteenth century conservative thinker Edmund Burke’s conception of the ‘little platoons’ of local activists who ‘do good’ in their communities for no reward. Well, yes, he and Tocqueville forty years later were right to see these as fundamental to a healthy democracy and society in general. But the gamesmakers were a national army. They may have worked at separate venues and with different sports, but they undoubtedly came to see themselves and be seen as a national institution. And, of course, they were a variety of regions, age brackets, ethnic origins and states of able- bodiedness or disability, ` So the Olympics and Paralympics demonstrated not just a change on societal attitudes to sport and patriotism, but also an appetite for the potential of national and the state-sponsored undertakings. Politicians – attack them at your peril !

The Robber Barons

At the risk of being a ‘grumpy old man’, it is a good time to round up the current state of monopoly capitalism in the UK. Post Marxist capitalism theory suggests that free markets will prevent the exploitation of consumers, as the consumer is sovereign and quality, service and honesty will be protected by the fact that ‘good’ capitalists’ will ultimately drive out the ‘bad’ capitalists. This is clearly not a happening. I don’t want to get into the reasons why. These might include quasi Marxist analyses, or the power elite model of C Wright Mills and Ralph Miliband, but it may be too early to say. What is clear, however, is that there is now a new class of robber barons, in the form of large corporations and their executives, who are using their market power and their conscious or unconscious collusion, to exploit consumers (the issue of worker exploitation is another thing altogether). I have compiled a list of ways in which robber barons operate, with prominent examples to illustrate: • Energy companies exploit and overcharge us by complicating tariffs and by not passing on reductions on wholesale prices. We all know very clearly that wholesale price increases are passed on in full, but reductions are not. They argue that large profits are needed for the purposes of investment, but there are no signs that investment is benefiting consumers in any significant way. • We all know about executive pay and bonuses. This is now clearly a conspiracy, with excessive remuneration packages being passed by remuneration committees that contain members who receive similarly excessive pay. The argument that, ‘to get the best you have to pay the best’ is palpably nonsense in view of the incompetence we have seen lately. Look at Barclays and G4S for perfect examples. • Aggressive tax avoidance schemes. Remember – if large corporations or wealthy individuals avoid tax, we – you and I – pay the tax on their behalf. This is not a ‘victimless crime’. We are the victims. • Budget airlines seek to deceive us on hidden charges. In particular they `lump on extra charges such as for travel insurance and place obstacles in our way if we want to tell them that we do not need these service. Try avoiding paying travel insurance with Ryanair. • Credit card companies add disgraceful charges and interest rates for those who do not pay off their balances regularly. The charges, fines and interest charges are way in excess of the real cost to them. • The behaviour of banks is very well documented. No need to elaborate. These are just a few examples of hos free market capitalism has become corrupted. It’s not all bad, of course. The Internet does seem to be serving the interests of consumers in terms of good service, choice and prices. I also think the jury is still out on the supermarket chains. They may be exploiting their suppliers, of course, but I’m not convinced that we customers get that bad a deal.

After Leveson

Leveson’s recommendations. By way of both a prediction and set of suggestions, here is what I think Leveson ought/will suggest : 1 A piece of UK legislation guaranteeing freedom of the press. This is necessary to underpin the ECHR and head off the expected objections by the press. It is placed first deliberately so as to emphasise the balanced nature of the recommendations. 2 A new independent press body, avoiding any ‘regulatory’ connotation. Call it the ‘Press Review Board’ or something similar. It should contain no government or press representatives (past or present). 3 A new press code of conduct, with very specific criteria on privacy, public interest, permitted and prohibited activities etc. 4 The Press Review Board to make judgments on the basis of the code. 5 The Board could be proactive or react to complaints. 6 The Review Board also would hear complaints by elements of the press if they believe their freedoms are being threatened in any way. 7 The Board should not have judicial powers, but will be charged with the role of referring some complaints to the Crown prosecutors if there is a prima facie case of invasion of privacy, phone hacking etc. The Board’s decisions could also be used as authoritative in any future civil action. In other words, the Board should not have enforcement powers but will be required to refer cases to the courts where appropriate. 8 In criminal or civil cases, where a defence of ‘public interest’ is being used, the onus will be on the defendant to prove public interest, and not the other way round. In other words, it will be assumed at the outset of any case that there is no public interest where privacy was invaded. 9 Some strengthening of existing legislation and arrangements to ensure more assiduous pursuit of criminal cases.

tax e petition

Regular readers will know I have a bee in my bonnet about tax avoidance and evasion. You can now view my e petititon and sign if you agree. You'll find it on the Downing Street e petition site. Just key my full name into the search box and you'll find it. Go on, you know it makes sense......

Eton Mess

The increasingly popular calorie-fest known as Eton Mess can seriously damage your health. The current mess confonting the Eton-dominated Cabinet, however, is more likely to damage the health of the coalition. The verging-on-farcical hoo hah over House of Lords reforn is certainly a right mess. First, let us dispense with one nonesensical argument by the reform dissidents.This is that Parliament, the Commons in particular, has 'more important things such as deficit reduction to concern itself with'. This is nonsense, of course. The House of Commons has no effective role to play in economic policy. MPs may bark and shout at minsiters as much as they like, but they have not one jot of influence over the country's financial arrangements. Similarly, now that welfare and health service reform have passed through Westminster, the key legislative priorities of this government have long since passed. The fox has gone to ground; the hunt is over and the hounds might as well return to their kennels. Lords reform is exactly what the impotent-yet-garrulous backbenchers should be concerning themselves with, leaving the running of the country to the government. A second nonsense is the so-called need for a 'good debate' on the issue. It has been debated for a century and more. Little purpose could be served by another protracted and ultimately frustrating run of debates on endless amendments. Oh for an American style Rules Committee that could present a bill with consensus support at this stage. Next we have the strange mongrel bill the coalition has come up with. This notion that peers elected for fisteen years with no re-election can possibly be accountable is plainly ridiculous. What self respecting liberal could possibly support such an idea? The plan would simply create a second chamber of party placemen totally unaccountable to anybody. What is wrong with five years terms ? Come to think of it what is wrong with an all appointed chamber, supervised by an independent appointments commission which will accept only small numbers of political appointees and will eleminate the practice of giving honours to political time servers. A chamber of about 300 professional legislators, with minimal political interference over apointments looks by far the best option. They could be made accountable by regular Ofsted-style inspections resulting in the removal of peers who have poor absence, speaking and voting records. But at the moment is remains as big a mess as the last time this dessert was served up to me in an East Finchley gatro pub. And I ate too much and naturally felt rather ill for the next twenty-four hours !

The Laffer Illusion

An interesting discussion about the Laffer Curve on Radio 4 this morning ((June 27th). If you don't know the Laffer Curve, it relates to a theory that the amount of total tax collected by the government will vary according to the tax rates. It is based on the idea that, if the tax rate is zero no tax will be collected (obviously), and if it is 100% no tax will also be collected because nobody will do any work (also obviously). Between the two extremes, as tax rates rise, more TOTAL tax will be raised, but then the tax revenue will reach a maximum (the top of the curve) and will then start to fall, even though tax rates are still rising. This is because, when higher rates of tax are charged, people will increasingly have an incentive to find ways of evading or avoiding tax. In pure economic terms, therefore, it is futile for a government to continually raise tax rates in the hope of collecting more tax. This was the centre of the discussion when the highest rate of income tax in the UK was reduced from 50% to 45%. Osborne claimed he would raise more total tax. We shall see. Laffer is undoubtedly accurate in essence, but it ignores a number of considerations. First, it underestimates greed. There are many people who would try to get out of paying tax whatever the tax rate. Second, and similarly, it is naive to think that by reducing the highest rates of tax people will abandon their tax avoidance or evasion schemes. Think about it. A person earning, say, £500,000 per annum reduces their tax bill to, say, £100,000 through one of these schemes. Such a person should be paying close to £250,000. If we reduce the top rate to 40%, as result of which the well paid individual abandons his or her scheme and starts to pay tax, they will be paying something like £180,000. They will, therefore, be £80,000 worse off after tax. The Laffer theory therefore won't work. People are greedy. Third, it implies that we should reward people who illegally evade or legally avoid tax. We are saying, if you give up your illegal or antisocial tax schemes, we will give you money; we will give you a tax incentive. This is like approaching a burglar and offering him or her, say, £50,000 to stop burgling houses. This may make very good ECONOMIC sense in terms of reducing our insurance, policing, law enforcement and prison bills (not to mention eliminating the distress caused by burglaries), but it is rewarding criminal behaviour. Incidentally, as burglars have a criminal state of mind, they may well take the money and still commit burglaries (the same as wealthy tax avoiders getting the tax break but still using the illegal or immoral schemes). Finally it ignores the possibility that we might, with sufficient intelligence, determination and clever law making, be able to change the dynamics of Laffer by successfully hunting down tax evaders and closing down tax avoidance schemes. Then, raising the tax rates WOULD result in substantial increases in total tax revenue.

Egypt's democracy

As my last post suggests, democracy can flourish when the winners take into account the interests of the losers when in government. If the Muslim Brotherhood in Egypt can achieve this, democracy has a chance in that country. The counterpoint seems to be occurring in Mali, where a deomacratically elected government with much promise, failed to recognise minority Muslim interests and is paying the rpice in terms of internal conflict.

The Essence of Democracy

We currently view democracy in so many different contexts that it becomes difficult to establish its true essence. How can we judge it as a political system when it is claimed for such diverse polities as the USA, UK, Russia, Egypt and even Syria ? I suggest we can distil it down to two basic principles. These can apply whatever the nature of elections or the system of government or of the society in question. These are : 1. The losers of elections accept the authority of the winners to govern. 2. The winners take into account the interests of the losers when governing. All stable and successful democracies display these qualities. All 'failed democracies' do not. Just two other comments : First, this is particularly important when the winners are actually a minority. This applies to the UK (as a result of the electoral system), and also to many of the fledgling democracies we see struggling out of their chrysalises today (slightly mixed metaphor – sorry). Second, the USA actually foresaw the problem and institutionalised the solution in 1787 by introducing their system of checks and balances to esnsure that minority interests could not be trampled on. http://www.hoddereducation.co.uk/Colleges/Government---Politics.aspx?mRef=CNM01.

the ministerial gene pool

There is now a distinct impression emerging in British politics that the current collection of our political leaders - of all parties - is of very low quality. A clear reason may simply be, of course, that they are too young. They simply could not have picked up enough political experience to be able to govern soundly. The fact that they tend to listen to adisers who are even younger and have less exeprience only serves to exacerbate the problem. But I'd like to explore the problem a little more deeply. In periods when politics in Britain has been more ideological, more partisan in nature, it was logical and understandable that leaders should emerge from the parties and from parliament, for those were the places where political ideas and policies were being honed and developed. I would characterise the 1960s - 80s plus the New Labour era as appropriate examples of this. In the past ten to fifteen years, however, British politics has beceome increasingly managerial and technical in nature. How we deal with the financial crisis and the recession is a classic example of this, as is the issue of the freeing up of labour markets by dismantling employment protection legislation. Indeed the conflict over employment rights is particularly interesting. John Prescott - an ideological politician if ever there was one - sees it as a moral question, an issue of rights and personal welfare. Miliband, Balls and the coalition, on the other hand, argue about the economic merits of such a policy, ignoring the effect it might have on workers and their families. So certainly all current leaders can be described very much as 'managerial' in style. The fact that they tend to use think tanks, policy units and advisers to devlop policies is, therefore, perfectly logical. Yet, despite this, we are locked into the traditional mode of leadership selection. By limiting the potential field to MPs from the governing party who have the ambition to join the government, we find only a couple of hundred candidates, many of whom have no relevant experience. Contrast this with the US or French presidents. They have a much freer hand in selecting governments. Indeed the US President MUST look outside the Legislature as the Constitution does not allow individuals to sit in both the executive and the Congress. How much talent are we ignoring through the anachronistic notion that ONLY MPs should be considered for ministerial posts ? To be fair, it is possible to ennoble extra-parliamentarians (Andrew Adonis is a good example of the success of this device)and place them in the government. Even then, though we have the absurd practice of not allowing such ministers to appear in the House of Commons. And it is rarely used. To take a darwinian perspective on this, we have an extremely limited gene pool from which to find political leaders and any biologist will tell you that this practice will lead to too many inherited defects. To pursue the metaphor further, we also have a Conservative leadership who come LITERALLY from such a pool, as so many were brought up in families who are members of what we might call the 'petit aristocracy'.

The separation of powers

On the subject, again, of the malaise of British politics, I think we should be looking at some fundamentals, rather than short term, superficial problems. I met Speaker Bercow recently and he suggested that ignorance lay behind the typical alienation from politics that people are feeling. I rather agree, but suggest that citizenship education - one of bercow's interests - is just a sticking plaster answer. Why is there so much ignorance ? It does not seem like rocket science and it is certainly not short of drama, as PMQ demonstrates every week. Nor are the issues difficult to comprehend - social equality and mobility, educational opportunity, health provision, whether the economy needs austerity or growth, how to combat crime etc. are not hard to comprehend. The solutions may be far from simple and beyond most people's compass, but there is little excuse for not understanding the nature of the problems themselves. Furthermore, many of these issues lend themselves to a relatively simple choice between two alternatives. Obviously they are more complex than that, but they certainly can be reduced to such choices for general public consumption. Having taught politics for many years I have found that the most difficult thing about British politics for young people (and indeed adults)is understanding the relationships between government and parliament, the differences between the two, and the distinctions between MPs and ministers. And when you analyse it, we have developed a rather bizarre system of government formation in the UK. Think about it. We are asked, on the whole, to vote every few years for our local MP. Most of us then hear nothing about them until the next election. OK, some people are represented by ministers and opposition front benchers, or by flamboyant characters like Denis Skinner, Louise Mensch or Tom Watson, but most of us are represented by anonymous lobby fodder. Now of course we know we are electing a government in reality, but that merely begs the question, why should elections not be more explicit on the subject ? In other words, if we are being asked to elect a government, that is exactly what we should do. But no, we take part in a charade of electing MPs. MPs have virtually no power or influence. This is one of the reasons why they tend to behave so loutishly in the Chamber. Virtually all votes in plenary session or in legislative committees are ritualistically determined by the party whips. The public are, on the whole, not stupid and understand this reality. What they have difficulty with is the relationship between voting and the nature of government formation, the selection of ministewrs and the reason why some individuals rise to the top. Why, for example, has David Cameron become prime minister when he is not supported by the majority in the House of Commons, or in the House of Lords and whose party attracted the votes of about one quarter of the electorate ? Furthermore, it remains baffling why the prime minister should also be a constituency MP. In short, there is a complete disconnect between the act of voting and the nature of government we get after an election. The culprit is our lack of separation of powers, in other words, government remains IN parliament, not separate from it. This means that government is accountable to the body - the House of Commons - even though it leads and dominates that body. It is as if the defendant in a criminal trial were also foreman of the jury ! Were government to be separate from parliament, as is the case in the USA, there might be far a greater understanding of the separate and distinct roles of government and parliament. Better still, we might achieve a more coherent outcome of elections if the voters were able to identify the leaders, specifically, by whom they wish to be governed. Freed from its slavish attachment to patronage, parliament could then do its job of scrutiny and making government accountable in an independent and meaningful way. The doctrine of the electoral mandate is a further absurdity. Politicians ritualistically argue that the elected government (elected by a minority of the electorate) has a mandate to implement every one of its manifesto policies. Not some. Every one. How confusing is that to those who do not follow politics closely ? Of course governments do not have a democratic mandate. Voters certainly do not know what manifesto they are told they are voting for, most of them do not vote for the government and even those who do clearly will not support EVERY ONE of its manifesto commitments. To be truly democratic government need to be forced to earn a mandate for each of its policies separately. In broad terms this is, again, how things are done in the USA. The business of earning such a mandate has to be acrried out either by referendum, a practice used in a handful of countries such as Switzerland, but more likely through a genuinely independent parliament, not the supine institution which we unwittingly elect every few years. The degraded nature of parliament and the political parties also devalues the process of leadership selection. It is through parties and parliament that leaders emerge. The poor quality of our current collection of political leaders, of all parties, must be partly the result of such degradation. But that, as they say, is another story.

Vince Cable's morality

I was listening the other day to an interview with Vince Cable by Jeremy Paxman. The subject was executive pay. At one point Paxman asked him whether he considered excessive executive pay to be a 'moral' issue. Now I have had several conversations with Vince Cable and know that he does. He is, after all, from the social democrat tradition of the Lib Dems, and a former member of the Labour Party. Cable chose to evade the question. 'Yes', he said to Paxman, 'it is a moral issue', but he refused to be drawn on his view of the issue. He simply reiterated the coalition policy. He then said that his own moral outlook had nothing to do with it. I felt my hackles rising instantly, and had a good view of Paxman's, who looked aghast at this response. The implication is clear. Cable belives that his own moral outlook should not inform policy. Taking this one stage further, it implies that morality has no place in politics. What a state British politics finds itself in if a politician's moral compass does not influence policy! Cable's clear fear - that he should not contradict the coalition's morality-free zone - was greater than his own visecral reaction to the subject. The fact that contemporary British politics is largely 'managerial' in character should not be in dispute. Currently the obsession with 'managing' the budget deficit has overwhelmed any idea that government should promote welfare and justice. Contrast this with the French presidential campaign which presented a genuine choice betrween this managerial approach and a new contract with the public sector. The Americans, too, will shortly be presented with a a clear ideological choice. All we British can hope for is a choice between two teams who compete on the basis of effectiveness and efficiency. Vince Cable represents that degradation of the political process.

Mid term blues

Yesterday I discussed the low turnout in the recent UK elections (contrast, incidentally, with nearly 80% in France when the choice was between a deeply unopular incumbent and an opponent widely considered to ne terminally boring, and when a losing candidate had recommended abstention). Today, I am more interested in the mantra that govering politicians trot out on such occasions that 'this is normal, governments in mid term always get a kicking etc. etc.'


Why should it be normal ? Why should governments not be popular ? After all, politicians claim a mandate for their policies on the grounds that the electorate elected them on the strength of those policies. If they carry them out, why should they be unpopular ? It is an admission either that they are no good as politicians or that they are not carrying out the policies that brought them to power.


An alternative explanation is, of course, that the British public are so disillusioned with politics and political activity that they only vote in general elections under sufferance and then take the first opportunity to rehearse their disdain for politicians.


Either explanation is a terrible indictment on British politics. Even Alex Salmond, perhaps Britain's most effective and popular politician cannot encourage the Scots to turn out in significantly higher numbers than the English.

In the next two blogs I am going to look at two possible reasons for disillusionment OTHER than the obvious one  - that our politicians are very low calibre and the the voters recognise this. That is for a later date. The two explanations I shall look at are, first  why the electorate may be acting (or rather not acting) out of ignorance and confusion. Second it may be that the people they are electing are pretty much powerless so voting for them is futile.

What price apathy ?

There has been much discussion and dismay over the low turnouts at the recent UK elections. Much of this has centred on a belief in a 'crisis of democracy', suggesting that it represnts an alarming degree of ignorance, as well as disillusionment among voters. I'd like to offer an alternative perspective. I'd like to suggest that the electorate has, in fact, acted with great intelligence.

Obviously ignorance, apathy and alienation have played a part, but the low turnout may well be a logical reaction to the reality that local government and politics are irrelevant. Local government has very little freedom of action, possibly as little as 10% of its activities are determined by the policies of elected councillors. The rest lies in the hands of central government or local permanent officials. Why should we bother to vote for candidates who will have virtually no power. At the risk of opening up old wounds, Margaret Thatcher was quite right in claiming that the problem of local government is its lack of accountability. Of course her solution - the poll tax - was a disaster, but she underatood the nature of the malaise.

The stay-away voters perhaps understand the futility of voting - they are not even holding local councillors to account by voting them in or out of office because the results of local elections are universally seen as a verdict on central politicians. Why bother, therefore, if those politicians ignore such voting ?

The Liberal Democrat leadership was right when they apologised to the hard working councillors who had lost their seats as a result of ther poor performance of the coalition. How frustrating an experience it must be to work your socks off to improve the state of local communities, only to be thrown on the political rubbish heap because their political masters are so inept.

More to come in some, hopefully thoughtful, pieces on the real crisis and its causes

A Thought

I just had another thought about the Budget a few days before it is announced.

The dropping of thr 50p tax rate has been so extensively leaked, perhaps it won't happen at all. That way it will appear as if Osborne is making the wealthy pay their share when he actually is doing nothing.

Just a thought

Budget thoughts

It is just possible that the upcoming Budget will be a pivotal moment in the life of the coalition. Of course it may be a non-event, but the signs are that key decisions are going to be made. These could involve significant shifts in the distribution of income in the UK.

We already understand that the Chancellor wants to introduce regional wage differentials in the public sector. This is potentially explosive, divisive and also significant in terms of the public expenditure bill. I was taken straight back to the seventies when I heard the leaks, to the days when national colective bargaining was one of the key issues for the labour movement. It would be either brave or foolhardy, depending on your point of view.

Then we have the 50p tax rate. If this goes and the quid pro quo looks like a fudge it will be another nail in the Lib Dem coffin which is already halfway into the grave. It matters little that economists may predict that a 45p rate will result in more total tax being raised. Any reduction in the tax burden on the very rich will be greeted with dismay among the majority. It is difficult to predict what measures the Chancellor will take to offset such a reduction, especially as a mansion tax is a non-starter (Quite right - almost impossible to administer and unfair for many). They will have to be very precise to avoid charges of a cop out.

Then we have corporation tax and employers' national insurance contributions. If they fall, there will be a remarkable shift in the tax burden. My guess is he will announce the cancellation of child benefit for households, not individuals, earning above about £45,00o p.a. I don't know how much that saves, but it might pay for everything else.

The whole picture, though, looks like a potential disaster for the Lib Dems and a setback for the Conservatives. If the top rate were to go down to 40p, it might be akin to Brown's 75p pension rise moment.

For once it may be an interesting budget. What price a VAT rise ???? Ah ha. On second thoughts - out of the question if Osborne wants to avoid assassination. It just could be a key moment.

Tax, Mitt and Newt

I was pretty shocked as most people were no doubt to see recently that Mitt Romney paid 13.5% tax on his 40 million unearned income over two years, while Newt Gingrich paid 35% on his 1.4 million earned income, though I am not sure how he earned it. I almost felt sorry for Newt, struggling along on 75, 000 per month after tax. But then on second thoughts I didn't feel sorry for Newt.

Even more astonishing was the fact that Americans think it OK to tax unearned income at such a low rate compared to earned income. Come to think of it, we do the same, though higher rate capital gains at 28% is a little more realistic, though still grossly unfair, compared to 40% 0r 50% on earned income. Why was there not a bigger outcry over the revleations about the income of tax of these two presidential hopefuls ?

Americans are really strange people. If they did ask people to pay the same tax on unearned income as they do on earned income, and if they paid a little more gasoline tax, they wouldn't need austerity measures at all. Indeed a relatively modest rise in gasloine tax would pay for a free heath care service for all !

Equally interesting is the idea that wealthy people should allow their tax returns to be published. We should do the same. I note, incidentally, that one of the alleged reasons that Rangers fotball club is bankrupt is that the club was supposed to be paying the players' income tax for them and this may be the subject of the Revenue and Customs' problem - where is the tax ? This is also common practice in Italy apparently and many of their clubs are bankrupt too. Lessons to be learned ? The greeks haven't been paying their tax either, nor have many Italians. A theme is building up here.

Collecting tax efficiently and fairly is definitely the mark of a successful and stable economy. Fail to do it and the chickens will undoubtedly come home to roost.

The doctor and the banker

No posts recently owing to a long trip and then too much work.

This morning I listened to Jim Naughtie interviewing Stephen Hester on the Today programme. Naughtie asked one simple question which, I think, nevertheless gets to the heart of the issue of bonus culture. The question was along the lines of ' why does a banker need a bonus to do a good job while a doctor does not ?' It has been asked before, I know, and once again there was no answer from Hester. In fact he admitted he did not know the answer. This immediately shocked me as, if he is such a big shot in the business world, he should know the answer. I do and millions of others do. Perhaps he was just being blatantly disingenuous because the real answer does not suit him ?

There are at least two answers to the question. One is that doctors on the whole (though this may change if reform of the NHS has unfortunate consequences) are not in a full scale market situation. There is a market for doctors, of course, and UK doctors benefit because they are some of the best paid in the world, but they do not get bonuses because doctors round the world do not get bonuses. Additionally, they are employed mostly by the state and cannot on the whole practice anywhere in the world unless for humanitarian reasons. In short, we don't pay bonuses to doctors because we don't need to because no one else does. God forbid.

The second reason - and this is conceptually more interesting and less surprising that Hester does not know it - is because what doctors do is intrinsically of value to people and society. Put another way, improving people's quality of life and even saving their life is a reward in itself. It is sufficient incentive to persuade them to do a 'good job'.

As an illustration, perhaps not too far-fetched - of this latter point, we may turn our minds back to the days of the 'Captain Mainwaring' style bank manager whose bank branch served the community, its people and its businesses. They may well have felt that what they did had intrinsic value because their activities would benefit the community and they lived and worked in the same community. Like the doctor, this kind of bank manager did not need a bonus, because doing a good job was its own reward. But perhaps I am being romantic.

If we turn this second answer on its head we are led to the conclusion that being a top banker does NOT have intrinsic value to society so a monetary incentive is needed to make people do it well. This in turn leads to the logic that bankers do a job which has less intrinsic value to society than doctors, but mostly get paid much more. Mmmmmm.

Top bankers (and CEOs in general) earn a great deal of what economists call economic rent. That is earnings they receive, not because of their intrinsic worth or because they are creating goods or wealth, but because they are scarce (very like top footballers). The nineteenth century free market economist David Ricardo understood economic rent and recommended taxing it as it is not earned and will not interfere with the free working of markets.

The final logic is, therefore, ineluctible - a bonus tax. Sadly it will have to be inetrnational to meet Ricardo's criterion.

Speaking of tax another blog will follow.



http://www.hoddereducation.co.uk/Colleges/Government---Politics.aspx?mRef=CNM01.