Tuesday, October 29, 2013

Whether the weather be fine or whether the weather be no...

The day after the "St Jude's day Storm":  it was a rough night, but let's face it, we've had worse- well anyway, enough of Estonia. 

In the UK the predicted zombie apocalypse seems not to have happened, although the press-inspired panic was by turns absurd and sinister- like most things in the British press.

In fact it is still pretty wet and windy in Tallinn, but we just get on with it- after all a year ago we were fighting the first blizzard of the year, at the beginning of a very long winter, and for sure there will be tricky days ahead when the winter finally does arrive.

As for the disruption and mild panic in Southern England- it all seems a very long way from the stiff upper lip, and makes the British look ridiculous. 

Monday, October 28, 2013

Politeness, Political Correctness & Censorship

In "1984" George Orwell created the idea that the way we express ourselves has a fundamental effect on the way we also view the world. In the world of Newspeak, bad things could not be permitted, they could only be ungood. In such a way, the party restricted the ability of the individual to dissent. If the idea of dissent could not be expressed, then the very concept of opposition to the party line became impossible.

In recent years the idea of political correctness has gained much traction in the way we talk about the world. Ideas deemed to be socially unacceptable- discrimination on the basis of race, creed, sex, sexual preference and so on- are to be eliminated by the use of carefully proscribed norms. Sometimes the earnestness of this exercise seems faintly comic, and at times "politically correct" has become a term of abuse.

I have generally been tolerant of politically correct language, on the basis that it is a matter of politeness to address a person or a group in the way that they feel most comfortable. Increasingly, however, I have grown more uncomfortable with the idea that the wrong words can justify violence. Words like Nigger, which once had general currency, have become completely taboo- and given the historic loading on that word, it is a matter of politeness not to use it to describe another human being. Where one does so, it is usually deliberately offensive. Yet the net of political correctness now spreads far wider than this, and even the social norms that determine what is or is not offensive can not necessarily agree as to the right term. Yet, even where there is such doubt, the boundaries of what is acceptable are guarded with a vigour that often seems to match Orwell's own Thought Police.

And this is where I must not merely part company with the politically correct, but oppose them. The intensity with which some would wish to clamp down on free expression- or at least free expression with which they disagree- is often quite shocking. A free society must allow dissent. The network of lobbying and sinecure jobs as political officers has created a large economic clientele for the new industry of political correctness, but the fundamental foundation is not in support of politeness, but is support of proscription. Bans and stern punishments are the basis for this industry. Things are not merely deemed unacceptable as a societal norm, but as a political imperative. It is a very short step to get to the use of language as a political weapon- precisely what Orwell warns us against with Newspeak.

Then there is the question of who decides what is and is not acceptable?

In general, again as a matter of politeness, I have been content to follow what the distinct groups prefer that they should be known as. This has sometimes changed. For example, Self-identifying homosexual groups have used "Gay", "LGBT"- as part of a wider group of sexual minorities- or even "Queer", as a dissenting academic construct. All, even the last, may be deemed inoffensive, depending on context.

"Aye, there's the rub": context.

The fact is that even using what we must now refer to as the N-word, as I did above, is a matter of context- almost all language is. So the idea that we must obey some iron rules as to how we express ourselves is not only wrong, it is actually dangerous.

I choose to avoid language which I think might cause offence, but I can not support condemning those who do not choose politeness rather than confrontation. Like Voltaire, I may not approve of what you say, but will defend to the death your right to say it.

Recently I have encountered American students who have been completely indoctrinated with the "politically correct" concept of language proscription- it is a humourless and neurotic world in which they live.

At my school it was "sticks and stones may break my bones, but words can never hurt me", in the US, such a blase approach seems impossible- and that is the beginning of the end of free discourse if such ideas infect the world beyond the campus gate.

Thursday, October 24, 2013

Unprofitable dinner

After the usual tedious journey to Riga, I attended the kind of dinner that wealth managers inflict on their customers. I happen to have a long history with these particular wealth managers, so received an invitation- probably to make up the numbers, since we have not transacted any business.

If I sound a little jaded, well, perhaps I am- the speaker was interesting in himself, but the topic- trying to institutionalize entrepreneurship- was not really what the first- really only- generation of Baltic millionaires is yet ready for. It was, of course a plug for the services that this particular house provides, and frankly, given the pleasant venue and good wine, fair enough.  Yet as so often in the past I was struck by the way that the large investment houses have a tin ear for the process of innovation and change that is hitting financial businesses around the world. 

They seek to trade on a brand which reflects "centuries of tradition and continuity", yet this particular house, while maintaining the same name, has been through at least four separate mergers and de-mergers- all of them value destroying- in the course of the last fifteen years. The fundamental brand equity, when you come down to it, is a big fat zero. There is little fundamental difference between this house and some no-name spivs also out there in the market. The DNA of the institution was long ago compromised, and the decades-long careers of the people I used to know has been replaced by a very much shorter-run attention span.

Neither truly based on traditions and long-term culture, nor particularly innovative, it is easy to see that this house has been the victim and not the moving force in the industry. Yet they will not change- they regard "Conservatism", in all meanings of the word, as the last best hope for retaining customer loyalty and with it their place in the market.

I think that this is wrong.

The storm of 2008 will be repeated, and possibly quite soon. This time, the power of disruptive technology will circumvent the outmoded business models of classical banking. Disruptive dis-intermediation, whether from Transferwise or peer-to-peer businesses, is already active in the financial market place. The classical investment houses are relying on the accumulated capital of decades to be able to buy- or break- this new competition. 

Except, there isn't any. The broken brands and wasted value involved in the consolidation of the banks leading up to the crisis has left the banks rather short- and what nimble entrepreneur would want to enter into the corporate embrace of decayed, hierarchical systems in any event?

So the lesson of a good dinner was that what the banks offer has changed very little, but the world has changed a lot and is about to change a lot more. 

Tuesday, October 22, 2013

Tallinn re-discovers an old tradition

Dimly remembered from my fourth year Latin is the idea in Virgil that a nation should "choose foreign leaders". 

It is surprising how often nations do in fact choose foreign leaders, the positive and negative examples are legion: of course there is Hitler, an Austrian, who led Germany, Eamonn De Valera, a half Sicilian New Yorker, who led Ireland and Napoleon, the scion of a Corsican speaking family, who led France. Winston Churchill was half American, and most royal houses trace their origins to each other and not necessarily to the countries that they reigned over.

In the Baltic there has been a civic tradition of foreign participation. The first Mayor of Riga was George Armitstead, who came from a family of British Merchants. 

Now we have a successor, Abdul Turay- whose family originated in Guinea, became prominent in Sierra Leone and later came to the UK. Abdul had already added another step in his family's journey, by marrying an Estonian wife, but now he is set to be elected as a Councillor of the City of Tallinn, when the results are ratified later this week. He is not the first foreigner to be successful in Estonian civic affairs, nor, considering Pushkin's Ethiopian grandfather, Hannibal, was Governor of Tallinn under Peter the Great, is he the first man of African heritage.

He is however the first foreigner to be democratically elected to the City.

It is quite an achievement, let's hope he lives up to the hopes that Virgil (and others) will place in him.

Monday, October 21, 2013

EU turn

The FT reports on the sharp rise in support for the limitation of the powers of the European Union- even amongst traditionally strong supporters of the bloc.

The context is interesting- the suggestion is that the backlash against the EU is coming as a result of the rapid growth of immigration. The rise of immigration has indeed been rapid, and there is obviously generally pretty limited support for expanding the rights of free movement to the citizens of Bulgaria and Romania. Yet the majority of immigrant attacks are not made against EU migrants but against those coming from the Arab World, the sub continent and sub-Saharan Africa.

To my mind, the issue of immigration is a kind of referred pain: discontent is far more entrenched than merely a right-wing backlash against immigration. The creation of giant government-lead projects, such as EU funded rail construction, is a symptom of a Brussels elite which is seeking to buy the support of the voters. Yet the elite is very isolated and as a result consistently hits the wrong note. Spiffy infrastructure funding looks more like pork-barrel politics when you move beyond the European quarter of Brussels. Whizzy initiatives lose their sparkle when we note how the last grand projet - the creation of the Euro- turned out.

The fact is that the EU clientele has lost its way. The idea of ever closer union has been buried for at least a decade by the economic shocks post-2008. They fear the loss of momentum that puts the creation of a single EU economic and political space at risk. Yet that fear is itself putting the EU into reverse. The point about the functionalist EU was that it sought to create practical agenda for integration, which was to be a lasting and mutual benefit to all the members. The fact is that the current system works to the benefit of Germany and not to the PIIGS, and the sense of injustice that this has created is undermining support for the Union across all member states.

The next EU elections will doubtless see a big upsurge in anti-EU groups, from UKIP and the True Finns in the North to Le Front National and the PVV in the West. Yet the fact is that the voters will give such support because they know that in the great scheme of things it doesn't matter much- and that is a measure of the failure of the Brussels political class: despite all the political influence and investment clout they can wield, they still don't matter to most voters.

It is not the hatred of the voters that the EU needs to be most afraid of- although that is growing- it is the sense of impotence and irrelevance that the EC still has in the eyes of most EU citizens, even compared to image of the national governments. That is a problem that will not go away, and the current thinking in Brussels- all free spending pork and no civic authority- will not address that crisis in the slightest.

Sunday, October 20, 2013

The Low Tax Problem of a Global City

A few weeks ago, Michael Goldfarb published an article in the New York Times highlighting the growing crisis in London property. His view- that Prime London property has become a global currency- has been said before, and rightly. However the timing of his article hit the zeitgeist of growing anxiety about the mismatch between London as a place to live, the capital of the United Kingdom, and London as a playground of the globalized rich. 

The squeeze in London is having a strongly negative effect on large areas of British Society, and the influx of hot money from places such as China, Russia and the Arab World- not to mention crisis-hit EU member states is not just undermining the social fabric of London but the economic fabric of the UK.

At the Liberal Democrat conference in Glasgow, several London based members made the point that these apartments now owned by the global uber-rich are often left empty, so at night you see few lights on in Mayfair and Belgravia- and the impact on the city is a kind of hollowing out.

The fact is that the taxes which are payable on Prime London property are so low as to represent a gigantic enticement to the emerging investor class of China to fill their boots in London, at the expense of the cohesion of the the city and the lifestyle of the British people.

It seems to me self-evident that the cost of this influx of investment has created social problems way in excess of the benefits. If the coalition government in the UK actually wants to fix the housing bubble, they should not be trying to distort the market still further by attempting to create even bigger mortgages: they must instead impose the appropriate level of property taxes on those assets which are held to the benefit of foreign, non-resident owners. Doubtless unscrupulous legal and accounting advisers will try to create UK domiciled structures, but as elsewhere in the world, notably the US, HMRC should be allowed to look through those structures to determine ultimate beneficial ownership.

The London property market is wrecking British competitiveness, and without decisive intervention, to remove the low tax incentive for foreigners to invest, this will become permanent and crippling burden for the UK..    

Thursday, October 17, 2013

Blogging On

Blogging has become more and more intermittent of late.

There are two reasons, one weak and one perhaps less so.

The weak reason is that I have been travelling even more than usual and have simply got out of the habit. 

The other reason is that this blog has its origin in my political activism, and although I am more motivated than ever to try to put forward a platform for economic, social and political change, the fact is that I am much less sure that conventional politics in the UK can deliver necessary reform.

The Liberal Democrats have been a great ideas factory. Many of their ideas were so powerful that they were adopted by the party's political competitors: most recently the increase in the tax-free rate, but also in many other things, such as the independence of the Bank of England.

Most of all the Lib Dems were the party that recognised the deep problems of the British constitution. The position of the citizen, which we call a "subject" in the UK, has been undermined by over mighty government and over mighty corporations. The need to create a more open society lay that the heart of the policy ideology of the party. 

Now, I am no longer so sure. The pragmatism of government has damaged the very soul of the party. We have taken the blame for unpopular policies, but failed to explain the value of fundamental reform- our core values- such as clearer English representation within the UK, which would actually, in my view, be popular. Our friends have left us, the party is down to a core group of activists. We are so few that we can not fight the general election in every seat: targeting has gone from a matter of pragmatic choice, to a matter of necessity.

Yet the weakness of the Lib Dems is only half the story. The fact is that the Liberal Democrats still remain the most thoughtful political party in the UK- but the UK isn't listening. 

The visceral anti-politics mood is throwing up even more damaging problems: UKIP in the party political sphere, but rent-a-mob responses to any issue of the day from fracking, to planning, to many other controversies. Intelligent debate gets left behind in a morass of simplistic cat-calling. As the world grows more complicated, British Society demands ever more simple solutions.

The result is a confused and leaderless country.

I have the privilege of living in Estonia- a country pioneering in its use of technology and uncompromising in its understanding of a free society. The UK is already 20 years behind Estonia, and far from catching up, it is falling ever further behind. I do not believe it can catch up in my life time.

So the focus of this blog must change. Less British and political; more Universal and social. More aware that the debate is already beyond the UK's capacity to contribute; less exhorting to the British political class, that can not respond the the required level of change. The UK is now in the remedial class, and I prefer to work with the best kids at school.

While that may not eliminate the time pressure that I still face, I hope that it will give a sharper edge to this blog, which is now in its eighth year, with nearly 1200 posts made and over 200,000 unique readers.