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British Democracy isn’t Working

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failed statewhy Westminster worksI have been reading ‘How Westminster Works … and why it doesn’t ‘by Ian Dunt and ‘Failed State’ by Sam Freeman. They make a clear case that the democratic process in Britain is failing to deliver the standard of governance we need. There are two major problems. Firstly, the systems of Government are characterised by short-term thinking, lack of expertise and a failure to delegate. Secondly, the excessively tribal nature of political parties means that there is little scrutiny and control of Government by Parliament.

It starts with the selection of candidate MPs by a small cabal of party members. In this process the ability to repeat party dogma is more important than experience, knowledge and proven management ability.

When they get to the Commons MPs are expected to support the Government at all times and not hinder the legislative process. Promotion to Minister depends on government patronage, stepping out of line is career threatening.  As a result, the scrutiny of bills passing through parliament is extremely poor.

If they become a Minister, they are unlikely to have any formal expertise or training before they take up their posts. They are immediately overwhelmed with a daily workload of ‘red box’ decisions -typically 30-40 a day. Part of the problem is that the role of local government has been continually reduced over the past few decades. Successive governments have overcentralised decision making and the centre does not have the resources or expertise to manage local problems.

This lack of expertise is not alleviated by the civil service; they are generalists. If by accident they acquire some expertise and become good at their job, this is not appropriately rewarded.  To get promotion they have to move onto another department. Senior civil servants are in post a similar short length of time to Ministers.

Because of the lack of expertise in the Ministries there is an overuse of consultancy and outsourcing. Much control has been handed over to profit seeking conglomerates: – social care, childcare and children’s homes have been left at the mercy of unguided markets.

 

The Prime Minister has unlimited power but not the resources to exercise it. The size of his office is limited by the size of 10 Downing Street. He is essentially trying to run the country from a private house. Successive Prime Ministers are so wedded to history and tradition that they refuse to set up a more appropriate office elsewhere.

Britain has been stagnating for years because the political system isn’t working. Ministers lack   management talent. There is little expertise in Government and the focus is on short term achievement.

Because the effect of any change in the political system will be effective over a longer period and therefore will not improve re-election chances, no political party is interested in radical change. If you want proof that British democracy isn’t working you only have to consider the fact that we have had 5 Prime Ministers in 2 years since 2022: Johnson, May, Truss, Sunak and Starmer.

Change will not come from the current set of political parties.  It will only come from a sustained challenge from the general public who are suffering the decline of Britain from a once ‘Great Power’ to an also-ran.

 

Why do Americans vote for Trump?

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Most Europeans can’t understand why Americans vote for Trump. He is a liar, misogynist and a narcissist. He lacks the charisma of a populist like Boris Johnson; his speeches are long, rambling, humourless and frankly boring. What then is his appeal? He wouldn’t stand a chance of being elected in Europe. Why then Is he so popular in America?

trump is an idiotGeorge Monbiot , writing in the Guardian thinks he has part of the answer https://www.theguardian.com/commentisfree/2024/jan/29/donald-trump-americans-us-culture-republican. He identifies Trump as the ‘king’ of those who display an ‘extrinsic’ personality, that is those that:

are strongly motivated by the prospect of individual reward and praise. They are more likely to objectify and exploit other people, to behave rudely and aggressively and to dismiss social and environmental impacts. They have little interest in cooperation or community. People with a strong set of extrinsic values are more likely to suffer from frustration, dissatisfaction, stress, anxiety, anger and compulsive behaviour.

But why would anyone want to follow someone like that? As with all populists his views chime with all those that feel threatened by those that are ‘not one of us’: often characterised as immigrants, homosexuals, those with a black skin and so on. But why is he a successful populist?

Monbiot believes the answer is tied up with the American dream – the belief that success is possible for anyone who works hard enough. It is this vision that drove the growth of the American economy for the past two centuries. However, the dream is souring. Inequality has increased massively in the last few decades. More and more wealth is becoming concentrated in the hands of the top 1% of the population.  American society is now less mobile than most of Europe’s. Inherited wealth has frozen movement between classes; a new rich ‘aristocracy’ has been created. Those with wealthy parents go to better schools, better universities and have better access to the top jobs, leaving those from poor backgrounds with much less opportunity to be successful.

When people fail to reach their expected level of wealth, they naturally look for someone or something to blame. Trump blames the ‘deep state’ – a mythical conspiracy of left leaning people in education, government, the law, and the press. This resonates with people who are struggling and angry that the American Dream has passed them by.  In former times the workers would have rounded on the factory bosses, but now in this dog-eat-dog society it is those who govern or administer who are seen as the enemies of the people. The failure of the American Dream is the reason for Trump’s success.

Extrinsic behaviour is opposed to the principles of Eco-humanity.  It will inevitably lead to more discord and conflict in society. Its popularity, as demonstrated by Trump, is threatening to us all.

Common Humanity

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Common HumanityThe depressing news from Israel and Gaza is a reminder to us all of the destructive force of antagonistic tribes.  As Dostoevsky said: ‘“People speak sometimes about the “bestial” cruelty of man, but that is terribly unjust and offensive to beasts, no animal could ever be so cruel as a man, so artfully, so artistically cruel.”

The conflict in Palestine is doubly shocking because, in the West, group behaviour has become progressively more tolerant and humane since the end of the Second World War. In particular, women have gained a more important role in society and we have become less judgemental of minorities. No longer are divorcees, unmarried mothers, bastards and homosexuals stigmatised. We have set laws for discrimination on the grounds of gender, disability, race or religion.

This change in opinion is confirmed by the most recent results from the British Attitude Survey https://www.theguardian.com/society/2023/sep/21/britain-is-much-more-liberal-minded-than-is-was-40-years-ago-study-finds . One researcher described the change as a ‘near revolution’.

The only way to overcome tribal behaviours is by an appeal to common humanity. What is common humanity? This definition of values on the Humanist UK website sums it up for me.

In all our work, we strive to embody our values by:

  • engaging in dialogue and debate rationally, intelligently, and with evidence;
  • recognising the dignity of individuals and treating them with fairness and respect;
  • respecting and promoting freedom, democracy, human rights, and the rule of law;
  • taking opportunities to combat all forms of prejudice and unfair discrimination;
  • cooperating with others for the common good, including those of different beliefs;
  • celebrating human achievement, progress, and potential;
  • accepting that human beings are part of a wider natural world which must be treated sustainably for the sake of current and future generations.

There is no reason why both the religious and non-religious should not support these principles. It is impossible to see these concepts being adopted in Palestine right now. However, in Northern Ireland, which has similar intrinsically engrained problems, some progress has been made on these lines since the Good Friday Agreement.

If the world is to co-operate to overcome our common problems of climate change, habitat loss, and pollution we will need to exercise as much common humanity as possible. Tribal behaviours will condemn us all to a deteriorating world.

Economics is a failed discipline 2

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economic failureThe most important bi-product of the study of economics has been the creation and collection of measures of commercial and financial activity. We now know to a reasonable degree of accuracy a country’s total sales, investment, income, exports and imports. We know how this income is distributed – what share goes to company bosses and what is the average income of the poor. We have (less reliable) estimates of total monetary wealth and what proportion is owned by the top 10%. We know how many people are unemployed and of those how many are simply unable to work.

How we use these measures to direct national policy is important. As with all measures, it is vital to understand both their definitions and limitations. A country’s economic statistics can never be said to be totally accurate; they are always based on sampling and arbitrary definitions of what is included. Predicting GDP to an accuracy of 0.1%, as many economists do, makes no sense.

A further issue is that the critical measure selected by economists for politicians to concentrate on is GDP, the total value of goods produced and services provided in a country during one year. Countries are encouraged to achieve high levels of GDP growth. For the national good, however, it is crucial what type of growth is being achieved and who is benefiting. This is being largely ignored in setting policy.

An example of misleading GDP growth occurred before the financial crisis in 2008. The definition of GDP includes interest charges by banks. Just before the credit crunch banks were making huge profits by making irresponsible loans and GDP grew rapidly as a result. Subsequent asset losses when the loans failed were not fully taken into account due to government intervention.

Another example of the misleading nature of GDP measurement is that it includes estimates of the income from crime and gambling.  Few would agree that an increase in either would be of benefit to a country.

Further, and this is the case at the moment, if the gains are largely made by the super-rich whilst other incomes stagnate then social discontent is bound to follow.

The biggest problem, however, in concentrating on GDP as the sole measure of success, is that it records changes in income and expenditure, not wealth. Money spent on defence and policing, protects but doesn’t improve the wealth of the nation. Money spent on fashion, entertainment and leisure, whilst being enjoyable, doesn’t increase a nation’s wealth unless it attracts custom from overseas. Money spent on gambling only enriches (largely overseas based) bookmaker firms.

Surely a country should be aiming to increase its wealth. The wealth of a country is determined by the total level of resources it acquires. There are 4 types of resource: physical, natural, knowledge and human. Improvements in physical resources, buildings, plant and infrastructure, are achieved by   business investment and government expenditure. Natural wealth is our inheritance; it is easy to destroy. With care, however, it can be both preserved and exploited. Knowledge and skills are maintained and developed in our universities and businesses and are improved by expenditure on research, development and training. Human abilities are advanced by education, healthy living, and healthcare and welfare support.

Focussing on GDP as the sole measure of wealth creation can, and will, be counterproductive. By encouraging politicians to ignore wealth creation and distribution, economists may well have set back rather than helped the development of advanced nations.

Economics is a failed discipline

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economic failure‘Why did nobody notice it?’ is the question Queen Elizabeth II famously asked Economics Professors about the credit crisis which led to the 2008 Recession. It was obvious to many people that the practice of extending sub-prime loans to poor households in the USA was getting out of control. The fact that banks were leveraging these loans to acquire more debt should have alerted regulators to the danger of a run on the banks. Yet nothing was done until it was almost too late. This failure to notice that credit was over-extended, raise any alarm, let alone to act, is the ultimate condemnation of economics as an academic discipline.

It went wrong in the nineteenth century when it was shown mathematically that if firstly, there is full and fair competition, secondly buyers have access to the full information on available purchase options, and thirdly buyers always choose the cheapest purchase that satisfies their requirements, then it is possible to reach a state of equilibrium in which costs and prices are minimised. From then on, they assumed that purchase decisions were made in this way and that the proof explained the undoubted success of the market mechanism. This encouraged economists to believe that economics is a mathematical discipline. That, as in science, there are laws that relate all the economic variables. In essence that the economy is a giant clockwork machine in which once the inputs are known the results can be predicted.

The reality is that humans don’t make rational decisions based solely on price; for instance brands play a big role. This is because people never truly know the quality of goods they are buying, hence a supplier’s reputation is a critical factor in purchase decisions.

Also, there is never full and fair competition. Companies strive to establish unique selling points for which they can extract a price premium. This is crucial. If the lowest price seller always won out, there would be little profit remaining for future investment. Full competition is also impossible because it takes time and money to establish a company’s reputation.  Hence it is difficult for firms to freely enter or exit a market and as a result a small number of firms often dominate a market sector.

Stability is one thing markets never achieve. There is always dynamism. Raw materials can be in short supply. Transport links break down.  New products are brought to market.  Companies fail and competitors merge. The economy is the result of a complicated interaction between people, companies and states. There is no automatic link between demand and supply, prices and volumes, investment and interest rates, unemployment and wages. All links are nuanced, complicated and dynamically integrated with external factors. The idea that scientific laws exist linking these variables is pure fantasy. Yet these ‘laws’ continue to be taught in degree courses. Economists still act as if they are true. The discipline needs to be reset as what it really is a ‘social’ not a ‘real’ science.

 

For more background read https://www.theguardian.com/commentisfree/2019/aug/03/economics-global-economy-climate-crisis

 

 

Chaotic Government

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ShappsWant to know what sort of chaotic government we have? The career of Grant Shapps gives you a guide.  Shapps was appointed Transport Secretary on July 24, 2019, as Boris Johnson formed his first cabinet after replacing Theresa May as prime minister. Compared with what was to follow, his time in the role was relatively long-lasting, taking him all the way to  Johnson’s resignation on September 6, 2022.

After backing Rishi Sunak’s leadership campaign last summer, Shapps was initially overlooked for a cabinet job by new prime minister Liz Truss.

However, as her short-lived time in office reached its denouement, Shapps was called upon last October to become Home Secretary following the resignation of Suella Braverman for breaking security rules. Incredibly, he only held the job for six days after Truss resigned following her disastrous 45 days at No.10.

Shapps bid farewell to the Home Office to take over at Business, Energy and Industrial Strategy  in Sunak’s first cabinet. But less than four months later, in February this year, he had to change his business cards yet again as the prime minister carried out a government shake-up.

With climate change moving up the political agenda, Sunak put his close ally in charge of the newly-created department for Energy Security and Net Zero.

With Ben Wallace announcing that he planned to stand down from the government at the next reshuffle, Sunak again turned to his faithful friend to take over at the Ministry of Defence. Needless to say Shapps has no defence experience.

That’s 5 positions held in a year.  5 roles to understand, manage and to set a strategy for. It’s impossible to achieve anything in such a short time. Such a rapid rotation of disparate roles would never happen in any sane business. But. it’s the chaotic way our democracy works at the moment.

 

The Power of Money

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99%Ever feel that, although you have a vote, nothing you want to happen ever gets done?  Elective democracies give most of us a tiny bit of power but absolutely no influence. But what if you were rich? All you would have to do is to offer to make a significant party donation and you would immediately have the ear of those in government.

Mark E. Thomas in his book 99% claims that we may live in a one man one vote democracy but it is also a one pound one unit of influence government.  Putting aside direct corruption, there are so many ways the rich can, and do, influence government outcomes:

  • Funding think tanks that espouse their interests
  • Conditional party donations (before the Ukrainian war much Tory wealth came from Russians)
  • Direct Lobbying through professional lobbyists
  • Funding parliamentary pressure groups
  • Astro-turfing (pretending their concerns are the outcome of a publicly funded campaign group)
  • Media management and ownership (Murdoch is an obvious example)
  • Calling directly on friends in government (So many Tories have been at private school or Oxbridge together)
  • Threats to withdraw funding for business schemes
  • Inducements by promising to support favourable business schemes
  • Directly employing parliamentarians or offering them jobs in later life.

It is obvious to all that government policy in the UK is directly influenced by the rich to their own benefit. The situation is worse in the USA. A 2015 study by Princeton University showed that if a policy was popular with the general public, it did not increase its chances of becoming law, only when the rich became involved did laws reach the statute books.

Thomas claims that, in the West, the priority of current government economic policies is firstly to make sure the poorest don’t slip below the poverty line, but secondly to preserve the growth in incomes of the top 1%. The result is that those in middle incomes are steadily becoming worse off and mean incomes are declining. If the current trends continue he claims that by 2050 there will be mass impoverishment. This trend is certainly well-established in the USA. To quote Thomas:

The data show that although the richest are better off and the bottom 20% have been protected, most of the US population are around 20% worse off in real terms today than they were in the year 2000. And this is despite the fact that real GDP has grown by 17% in the same period.

Thomas’s solution? Reduce the power of money to directly influence government by:

  1. Banning all political party donations by businesses
  2. Limiting the donations by individuals to that affordable by the ordinary citizen
  3. Establishing strict controls over lobbying and full transparency over the source of funds of lobbying groups

 

He has other proposals for: reducing the influence of media owners, ensuring academic studies are not biased by business donations, and establishing a constitutional requirement to govern for the good of all.

Could this be done? It is possible, but it depends on whether a political party could ever become successful without relying on the rich for financial and media support. So far none has tried.

 

Why do the increasing levels of inequality in the Western World present a threat to political stability?

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Since the birth of civilisation there have always been extremes of wealth and poverty.  Many societies from the Roman Empire to Victorian Britain have had a small very rich elite who rule over the masses. The Roman Empire had very high levels of slavery. The working class in Victorian Britain was exploited and impoverished. And yet they were both societies that survived and thrived.

turchin's bookWhy then should the increasing levels of inequality in the West be destabilising? Peter Turchin in his recently published book End Times has developed an interesting explanation which has implications for all of us. He says increasing levels of inequality have two negative effects that mutually reinforce each other: immiseration and elite overpopulation.

By immiseration he means that the reduction in income levels of the poor is so significant that their quality-of-life declines. This might be manifested in lower life expectancy, less healthy, shorter children or less home ownership. It probably also involves increased levels of stress, child poverty, poor diet and drug abuse.

The USA has demonstrated the worst of these effects in recent years. Overall life expectancy has now declined for 2 decades and is significantly less than levels in Europe. The life expectancy of the white working class was particularly affected by the over-prescription of opioids in the early twenty-first century. Britain is not immune to the same trends. According to the Kings Fund:

In 2018–20, males in the least deprived 10 per cent of areas in England could expect to live almost a decade longer than males in the 10 per cent most deprived areas; for females the difference was 8 years. About one-third of these inequalities in life expectancy are caused by higher mortality rates from heart and respiratory disease, and lung cancer in more deprived areas. These conditions are potentially preventable: smoking and obesity, the main risk factors, are higher among more deprived groups.

It matters not that in the West we still have a much more affluent lifestyle, than Third World countries; that by living in the West an individual is so much more prosperous than he would be in Africa, China or India. Immiseration occurs if the current generation has a less fulfilling lifestyle than the previous generation. The poor feel that the elite ruling classes have exploited them; that the elite are actively pursuing their own get-rich agenda at the expense of the less well off. Trust in government breaks down and conspiracy theories abound.

At the other end of the scale, as society becomes more unequal, more people enter the elite group of high wage earners. More elite children are educated at private schools. They all enter the world with the expectation of getting good jobs with high incomes. The difficulty is that the number of good jobs is relatively static. The number of high-ranking posts in industry, finance and government is limited.  Not all can succeed. Those that are not successful become frustrated and more likely to breach the cultural norms of society by cheating the system. They also have a grudge against the successful elite and thus have a natural affiliation with the immiserated poor. They become the ‘counter-elite’ in Turchin’s terminology.

This is very dangerous for democracy. The counter-elite shares the anger, frustration and conspiracy theories of the immiserated. If they are politically adept, they can mobilise immiserated votes against the ruling classes. This is what Johnson and Trump managed to do. It is dangerous, because both men (being unsuccessful members of the elite) were poor managers and presided over chaotic governments that further immiserated the poor.

This is just the first stage effect of increasing levels of inequality. Turchin opines that the situation is so bad in the US that there is a danger that a further break down in society is possible. A large counter-elite will be very disruptive to the normal functions of society, at the extreme they are capable of instigating  an insurrection. With the high levels of gun ownership in America, this is a frightening prospect.

We in Britain are currently following the same track as America, although at least a decade behind. Growth in life expectancy has stalled, the economy is stagnating, young families struggle to own their own homes, all signs of growing immiseration. At the other end of the scale universities are turning out record numbers of graduates, most of whom will not get plum jobs, indicating a growing frustrated counter-elite.

Turchin believes that all societies eventually become unstable and that at an interval of around 200 years, every society has the risk of a major breakdown. The American civil war was around 1860. Could it be that America is due for another internal conflict by 2060? The French 3rd republic was formed in 1870 after the Franco-Prussian war.  Could the race riots in France, get worse and threaten their political system in the next 50 years? Not all crisis points end in conflict and violence. According to Turchin, Britain successfully overcame the last crisis in the mid-1800s by extending the voting franchise and enabling trade-unions to operate; this eventually enabled a more equal society to emerge. It is an open question whether Britain again has the political will to avoid the next major crisis by reversing the current inequality  trends.

 

The democratic Challenges of the tax system

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BookIn the first part of this book Paul Johnson explains clearly and succinctly the British Tax system: its rules and its consequences. The second part  summarises the challenges ahead.  In addition to Climate Change the biggest future issue results from Britain’s aging population. Not only will health and social care costs ramp up but also the proportion of those of working age and paying taxes will decline. The Office of Budget Responsibility (OBR) estimates that just to stand still expenditure will have to rise in the next 50 years by almost 10% of national income. This is huge; we currently pay 37% of National Income –  taxes will have to go up by 25%. No political party is daring to tell electors this truth.

In his final paragraph  Johnson gives an outline of what is required to manage the financial challenges ahead:

The repair job starts with honesty about costs and benefits and trade-offs inherent in any policy decisions. Promising the earth, lower taxes and higher spending, is a way to ruin. Effective policy acknowledges that change takes time , and puts in place long-term strategies to accomplish sustainable change. It recognizes the importance of delivery and values over theories. It appoints competent ministers and keeps them in post for long enough to get on top of the brief. It values effective management throughout the public sector. It rewards public servants appropriately. It is brave when it comes to confronting vested interests, whether they be taxpayers benefiting from quirks of the current system, homeowners preventing development, or public sector institutions resisting necessary change. It focuses on growth and on the delivery of services.

 

Does anyone think our current democratic system is capable of following through on this approach.? Political focus is always on the short term, driven by a natural  need to get re-elected. Difficult decisions are almost always postponed and vested interests are rarely confronted, especially if they are contributing to the party coffers.  Ministers change posts increasingly frequently; we have had  4 prime ministers and 6 chancellors since 2016.

We are in for some tough times ahead. To get through it our democratic system of government will need a thorough overhaul.

 

 

Inequality wastes money

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Inequality wastes money. The rich  fritter away their wealth, buying luxuries and investing in ego projects. This distorts a nation’s economy for the worse.   If incomes were spread evenly, ordinary people could invest more in improving their health, education and living conditions, thus increasing the wealth and vitality of society as a whole.

Thanks to inflation, many families in Britain are now entering food and fuel poverty. At the same time expenditure on luxuries is increasing. For example, The Guardian reported on 16/11/22 that:

The company behind Moët & Chandon, Veuve Clicquot, Krug and Dom Pérignon has said it is “running out of stock on our best champagnes” as the wealthy spend big on luxury goods in a new “roaring 20s” age of decadence.’

https://www.theguardian.com/business/2022/nov/15/wealthy-drinking-dry-lvmh-champagne-luxury

While most of us have to tighten our belts, the market for luxury goods continues to grow – up a massive 21% on last year.

Instead of investing in initiatives that would help the planet, billions are wasted by the likes of Bezos and Musk on boys-own trips into space. Bezos actually said: “The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel.”

While governments claim to have insufficient money to prevent climate change and maintain biodiversity, the rich pretend to be philanthropists doling a out a few million to their friends’ charities .  Martina Hyde writing in the Guardian has a magnificent polemic on this.

https://www.theguardian.com/commentisfree/2022/nov/15/jeff-bezos-philanthropist-taxes-amazon-founder

The rich should be fairly taxed so that a nation’s wealth can be used democratically for the good of all. Inequality is economically as well as morally indefensible.