Friday, March 30, 2012

No "Return to Normality"

The political conventional wisdom in Britain is that the current coalition is an aberration. Sooner or later either the Conservatives or more likely, Labour, will be able to govern alone. This will be-it is argued- a return to politics as usual.

I think this represents a failure of imagination. I also think it underestimates just how difficult the next decade is going to be.

Europe as a whole is already in an economic crisis  which is the equal of the hungry 1930s. It is a crisis that represents a sum of failures, financial, economic and political. The fundamental problems- wrong risk models for banks, wrong levels of leverage in the wider economy and inflexible political policies and institutions- have not been addressed. Despite the best efforts of financial, economic and political leaders, the process of breakdown has continued and is even accelerating. Much that we have taken for granted is now being tested to destruction.

The criticism that has been laid against George Osborne's budget is that it has not provided a plan B- which Labour identifies as abandoning fiscal austerity and creating a targeted stimulus for growth. Yet even this 180 degree turn is simply details- it still fails to address the root of the catastrophe that is bearing down upon us. Osborne's budget is a failure not because of anything it has done, but because it is nowhere nearly radical enough. A tinkering with tax rates is not enough when the tax system is itself a major brake on growth. To take just one example, income tax should be simplified to one, or at most two, rates, with an initial threshold that does not come in until one earns more than average earnings. The intrusive regulatory burden on small business should not be adjusted, it should be lifted altogether. The tax and benefits system should be integrated, and so on.  It is the institutional inertia against these radical but relatively simple measures that underlines the scale of the crisis. Labour's critique of the budget is totally flawed- and the alternatives they offer will fail even more rapidly than the collapsed souffle of Osborne's ineffectual tinkering.

There is a failure of vision, not just in the UK, but across the developed world. The breakdown of social mobility, and the massive increase in the financial benefits of success- no matter how unworthy the cause of that success- and the penalties of failure-not matter how undeserved the causes of that failure- is creating the conditions for a social explosion. The fact is that we have continued the attitudes and behaviour that caused the crisis, in the hope that a recovery will rescue us from excessive debt. In fact inflation has undermined the policy of low interest rates- and the continued freeze in salaries is dropping ever more people into a debt trap from which there is no escape.  In 1981, the UK was in a recession at least partly because of high interest rates, now the low interest rate environment is having an even worse effect- by destroying the value of money. Even those in employment have generally seen a significant fall in their living standards, but the return of a global recession is accelerating the squeeze.

Global growth is under pressure from several factors- energy prices, the Asian slow down and political change in China and the continuing European crisis- all at once. We are coming to a point of no return. The crisis is likely to take the form of a major, radical and irreversible change- the breakdown of the Euro, a political change in China, further upheaval in the Middle East- that will be a systemic breakdown with consequences that are difficult at this point to estimate.

Although the chances of a war, like the Second World War, which came as a consequence of the political breakdown of the 1930s, are perhaps relatively small, I see a failure of vision equal to that of Baldwin and Chamberlain- the leaders of the locust years.

It frustrates me that Nick Clegg- leader of the most visionary party in British politics- has failed to articulate that Liberal vision, even with the best platform to do so in three generations. Much of the economic, social and political model we have built since the 1960s has now broken down. The spectacular implosion of our standards of literacy, of our moral expectations, or of our risk appetite is pushing much of the West into a major decline- an absolute decline, not merely a relative one. In the face of this systemic, existential crisis, the prospect of "politics as usual", while comforting, to a certain sort of mind set is clearly a non-starter. Now, more than ever, we need to look to our fundamental values- and yet Labour, Conservative and, it pains me to say it, Liberal Democrat alike have missed the point.

This gathering crisis is a systemic inflexion point- we need leaders who understand this and articulate a democratic, liberal vision for the future rooted in fundamental philosophical principles. At the moment the critique is being seized -as it was in the 1930s- by populist demagogues and evident frauds like Galloway, Le Pen, and Geert Wilders amongst others.

Doubtless the Liberal Democrats in the UK will pay the political price for the coalition over the course of the next electoral cycle- indeed they are already doing so. However, what happens after that? Labour have no valid alternatives, and neither do the Conservatives alone. In Britain, it is now the responsibility- indeed the duty- of the Liberal Democrats to articulate a radical vision that understands the scale of the challenges ahead and which can therefore begin to meet those challenges. Across Europe, those who believe in the values of freedom and Liberalism also need to articulate their vision far more effectively. For if they do not, the upheaval that will follow the coming breakdown will lead to the same mistakes as the twentieth century- and with potentially even worse consequences for free humanity across the planet.

It will be a grim look-out for the human race, if they must look back at the last sixty years as a golden age.

"Where there is no vision, the people perish".   

Thursday, March 29, 2012

Boom, bust and the price of property

The release of the latest revision to GDP growth in the UK makes grim reading. The British economy slowed by more than expected, and the outlook for recovery is flickering at best. Incomes have not kept pace with inflation, and the increase in taxes and cuts in government services has helped to cause a sharp contraction in the general British standard of living. Even for those on well above average incomes, costs such as insurance, university tuition fees and now energy prices are really hurting the middle class. For those below median income it is house rents and petrol prices which are beginning to have a crippling impact. The standard of living in London even for those on median income levels is now exceptionally poor. 

So how come housing costs in Central London have continued to rise?

The short answer is that it is not the British buying. Russians, Arabs, Chinese and others have been buying bolt holes in London, that is certainly true, but more than that, it seems that these buyers are putting together portfolios of properties: buying several at once. London property as an asset class has become like old master paintings and classic cars, an investment class in its own right, and international investors have rushed to get in.  However the economic consequences for the UK look like becoming dire. The historic ratio of average house prices to average earnings was for many decades between 3-3.5 times. Now the ratio for London is already headed back to the peak of seven times that marked out the height of the housing bubble. From the point of view of the British economy, London has detached itself from the rest of the country. Yet, the workers who are the foundation for services in the capital are being pushed ever further out.. Even the best paid professions now find they must pay exceptionally high compensation in order that the talent they wish to attract will not suffer an unacceptable fall in living standards if they move to London. As these costs mount, London is losing the competitiveness  that made it an attractive centre in the first place. In short the situation in London looks like a classic bubble.

The only question is when and how this time bomb can be diffused. Perhaps, post the Olympic Games, we may see an adjustment, but despite the fact of London being an international city- indeed probably the premier global  city in Europe- the disconnect between the asset prices of London and those of the rest of the UK can not be sustained. Either a sharp recovery takes place in the rest of the UK or there is a sharp fall in London.

Given the entrenched problems in the British economy at present, my money would be on the latter option. 

Tuesday, March 27, 2012

Defend to the death...

There are many people I disagree with... often quite vehemently. Yet the jailing of a student for offensive tweets concerning the footballer Fabrice Muamba makes me very nervous. Freedom of expression means that we have the right to say anything within the law. The view of the court was that the drunken outpourings of Liam Stacey were illegal. They have been deemed to be not merely offensive but contrary to the law, since they have been deemed to "incite race hatred". As a result Mr. Stacey has now been sent to jail for 56 days. To my mind this is an excessive sentence, given the defendant's previous good character and in my view what has been inflicted by the word should be repaired by the word- that is to say a full and contrite apology. Some would argue that this is too lenient- yet the breach of the law comes less form the unpleasant content of Mr. Stacey's tweets, but from the fact that they were re-tweeted by genuine racists- which Mr. Stacey seems not to be. It strikes me that the law has paid no attention to malice aforethought- Mr. Stacey was simply drunk- and that makes me nervous, particularly in the face of such a severe sentence.

I have also grown more nervous about the increasingly offensive attacks being made against those who oppose gay marriage. The Now Show on Radio 4 has been particularly determined that those who oppose gay marriage must be nothing more than bigots, and that the only right contribution to the debate is to click "like" on the relevant Facebook page. To my mind, to reduce the complications of relationships and the wider issues of society to a simple "like" or tweet is not merely banal, but borders on Orwellian Newspeak. There are serious issues at the heart of the debate, not least the fact that marriage is not merely a legal and moral commitment of individuals to  each other, but also to any children they may produce. 

The religious believe that since it takes a male and female gamete to produce a child, the best way to bring up that child is that the providers of the gametes should be the parents through whole of their lives. Naturally this asks a lot of questions of gay relationships- or indeed hetero but infertile relationships. These are not the majority of relationships, but these together with those parents who break up before their children grow up, provide significant social questions. There is a discussion to have about wider relationships and why they fail. In that debate, the religious have a point of view which is sincerely held: stay faithfully together if at all possible, no matter what- even if, perhaps, the majority disagree with it.

To attack the religious because they disagree with you - particularly to dismiss their positions as mere bigotry- is unfair, and may be dangerous. For myself, having been friends for years with a couple that were amongst the very first to register a civil partnership, which I found very difficult to distinguish from a wedding, I do not oppose gay marriage, I support it. However I will defend those who sincerely believe that they should not be forced to offer religious sanction to something that they profoundly do not believe has that sanction. Forcing churches against their will to offer gay marriages is in any event- I believe- deeply illiberal. The tyranny of the majority over a minority is still tyranny.

In the end it comes down to respect. Liam Stacey did not respect those he attacked- largely it now seems because he was drunk. I am not sure that the Now Show has that excuse. Sincerely believing that children flourish best when they are brought up by their natural parents does not make that person a bigot- it may just show that they have read the scientific literature.

By all means ensure legal equality for gay and straight relationships, but also accept that there are inevitable differences among all relationships and that these should be respected. The reduction of individual people to some limited categories is unhealthy: pro-gay marriage=liberal hero, anti gay marriage= twisted bigot, is neither accurate nor wise.

I may disagree with other people's points of view, but by and large I am prepared to defend to the death their right to hold and express their views. I think people have a complete and total right to express whatever opinions that they have. Where that right is limited by the law, it should only be so limited with the lightest of touches. I don't think churchmen are generally bigots and I don't think Liam Stacey should be in jail.

Tuesday, March 13, 2012

Mr. Clegg and the Vision thing

The latest Liberal Democrat conference has trumpeted the achievements of the party as part of the coalition government. Taken as a list, I think there is little doubt that the party has gained many policy victories. It may even be that the government is enacting more of the Liberal Democrat manifesto than that of the Conservatives.

Unfortunately that is not really the problem.

Where the Lib Dems have been defeated- especially on electoral reform- those defeats have been comprehensive, while many of the victories have been managerial executive victories, the defeats have been philosophical and principle defeats.

Talking to a senior Liberal Democrat  minister on the terrace of the House of Commons recently I was surprised how upbeat he was. However the reason for his positive view was deeply worrying. 

"This may be" he said "the only time in a generation that Liberal Democrat ministers can truly participate in government. He added "If it is the case that we are going down to defeat, then we owe it to our party, our voters and ourselves to genuinely seize the moment to make a difference"

It is, I think, an entirely laudable sentiment, and explains both the higher activity and the higher quality of the Lib Dem ministers, yet it is worrying, because he may well be right: the Liberal Democrats look almost certain to face heavy losses at the next general election.

The problem for me is that I did not join and do not support the Liberal Democrats because they would be more effective administrators within the current system. I joined because the party was advocating a radical change to the way in which Britain is governed.

In that sense, the comments from Vince Cable on the failure of the government to develop a compelling vision is accurate but very frustrating. In so many areas, the Liberal Democrats have very well worked out ideas, based on a profound Liberal vision: the party's ideas on constitutional reform in the context of greater self government for Wales, Scotland and  Northern Ireland have been years ahead of their time. Yet the time is now for us to articulate our long term vision of a comprehensive constitutional settlement for all of the UK, including England. It is frustrating that so few voters recognise that the Liberal Democrats believe in home rule for England too- a policy which would now be genuinely popular! We even run our party on Federal lines: but very few outside are even aware of this fundamental fact- and the guiding principle behind it.

The Liberal Democrats have become great administrators: we need to return to being great visionaries as well. It is time Mr. Clegg expressed this fundamental part of Liberalism more loudly.

Tuesday, March 06, 2012

The Russian fallout begins

The Economist  this week puts forward a view that the re-election of Vladimir Putin as President marks the beginning of the end of his style of rule. Given that authoritarian rule tends to become unstable, the assumption is made that Mr. Putin will now seek to engage with the opposition in order to shore up his government.

I think this is rather naive. It underestimates how much Putin is a creature of the KGB school. 

As I watched the long line of Russians outside the Embassy in Tallinn I felt a mixture of contempt and disgust, and -I must admit- fear. Only about a quarter of registered Russian citizens living in Estonia actually voted, but of those 86% voted for Putin. Still, twenty years later, this crew of largely elderly Russians have not accepted the reality of Estonian freedom and would actively support the increasingly tyrannical regime in the Kremlin. For a tyrant is what Vladimir Putin is already. He blocked any candidate that could pose a threat from standing against him. He blocked the opposition from access to the media, and is turning against the few independent voices left in Russia- after several hundred journalists have been murdered, there a very few still brave enough to challenge the criminal greed of the regime.

Now the first action of Putin in the afterglow of his victory is to begin to use violence against those who oppose him. 500 protesters have already been arrested, and a bigger crackdown is on the way.

Putin is already seeking to stir up trouble against Estonia and Latvia, as well as continuing to support Syria and other enemies of the West.  These elderly imperialists lining up on my front doorstep continue to support the strutting bombast of the siloviki- and even if support is less in Russia proper, it is still likely that Putin has majority support- he may be a bastard but he is still a popular bastard.

From the Western point of view I do not think that we can simply wait for the demise of the regime. To me it seems that good fences make good neighbours, and that means setting clear limits where we will not permit further engagement by the Putinista government. Containment will be necessary- for every instinct of the Kremlin is to oppose the West and challenge the current settlement in Europe. 

Eventually the people of Russia may tire of their leadership, but unless and until they do, the West must look to its defences and ruthlessly avoid those who would compromise with the Russian regime. It could be many years before the forces of democracy can challenge for power.

The turn of the seasons

It is the light that signals the changing of the seasons in Estonia.

In the deep winter it is the long darkness and human life is measured by the welcome candles outside cafes and restaurants. Slowly though, each day begins to bring more light and soon the days grow long and bright.

The low horizons of this flat and forested land makes the early spring sunshine  blinding against the snow- it is almost as though a searchlight has come on in order to banish the winter darkness. The return of the sun is the promise of new warmth and by March and April the days are visibly lengthening from one sunrise to the next.

Gently the grip of the frost begins to fail. The workmen go onto the roofs to shovel the snow so that it does not turn to ice, though still the passer-by must be wary as the thaw drops icicles from the steep pitched gables of the Old Town.

The cafes begin to put out tables on the cobbles- not the elaborate terraces that come out when the leaves do, but still another sign of spring- albeit wrapped in warm woollen fleeces and blankets

From the cinnamon of the Hoogvein or Gloogi that we drank in the deep winter darkness, we might now venture a coffee without a shot of warming Naps. Now we now pick our way along the winding lanes in the clear light of the morning of the year.

Soon we will be drinking the cold beers or light wines of high summer.

Then there is no night at all- only the long twilight with buildings or trees picked out in sharp shadows against the luminous sky.

Monday, March 05, 2012

Inside Out

As Vladimir Putin embarks on a further term of office, he can at least point to the fact that even despite the vote rigging and stuffed ballot boxes, he can claim a mandate- even his opponents admit that he has won the election. As I watched the line of Russians outside the embassy in Tallinn I had mixed feelings: on the one hand a hope that Russia can become a genuinely democratic state one day and a fear that the brutal language that Putin uses against the Baltic might one day lead to brutal actions.

Yet as the Murdoch scandal cuts a further swathe through British democracy, I am beginning to think that about British democracy rather like Mahatma Gandhi, when asked what he thought about Western Civilisation:

 "I think it would be a good idea"

For the fact is that what appear to be criminal links between the Murdoch organisation and the Police and other government bodies undermines the fundamental basis of the British democratic system and places it on a similar level to the corruption of the Kremlin..

The forms of the British government have become a conspiracy by insiders against the interests and the wishes of the majority. Huge transfers of wealth are made at the behest of the state from the poor to the rich- as the "rescue" of the banks shows all too clearly. The cosy links between Rebekah Brooks and the Police- underlined still further by her ability to use a police horse for her personal hacking- which is a privilege that it appears she has shared with the Prime Minister.

Murdoch was able to use his power for his own personal gain- and if the allegations in the various investigations are proven, then there is little doubt that the political system that Murdoch dominated and controlled was in fact corrupt.

The Liberal Democrats were victims of this corruption, and they were a lone and principled voice against the power of Murdoch, yet I fear that they will gain little  benefit from this. The compromises of power have also compromised the Liberal Democrat brand. Yet for me, the lesson of the emerging scandal is that we should stick to our fundamental principles no matter what- and even more so as the United Kingdom in its current form faces over the next five years existential challenges that it has never seen before.

Britain can only survive the next five years if we restore belief in the values of our democratic culture, which have been poisoned by the depravity of the Murdoch Press and the collusion of the establishment. Liberals should speak out for the radical principles in which we believe: it may be the only way we can restore faith in our own democracy - and provide a standing rebuke to Vladimir Putin who practices the forms but not the reality of democratic government.