Category Archives: Politics

Is it fair to compare today’s Brexiteers with yesterday’s Nazis?

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This is my reply to a friend who said I was wrong to see similarities between the rise of the Brexiteers in Britain to the rise of the Nazis in Germany

Almost every day there is an event or a happening that reminds me that I am living in very strange times.  Its almost a feeling of déjà vu, except this sense of déjà vu comes from my knowledge of history. I can understand the feelings of the German citizen of the Weimar Republic who watched in horror as his country was taken over by the party of the ‘crazies’ and ’no-nothings’. Until the late 1920s the Nazi’s existed as a ridiculous but violent fringe group that had little impact on the politics of the country. When the Great Depression left the government looking helpless in face of this crisis, the Nazis were able to capitalise on this and campaign as the party with an answer and the one who understood the pain of the losers. The Leavers or Brexit campaigners were also a small fringe group once called ‘fruit cakes and nut cases’ by a Prime Minister.  Just as with the Nazis they were able to exploit the discontent among the people caused by de-industrialisation in the old manufacturing towns and years of austerity following the financial crash of 2008. Just like the Nazis their support came from those seeing themselves as the ‘left behind’. Now these ‘fruitcakes and nut cases’ have their representatives in the government. The ruling conservative  grouping in parliament has co-opted them into government, hoping to use their popularity to offset their own unpopularity. Now we have our own Von Papen hoping to use these extremists for her own ends, although history suggests she is more likely to be used by them to achieve their extremist agenda.

While most leading political figures of the leave movement would reject any similarities with the Nazi party of the 1930s, there are in fact many similarities. When I write of the ‘crazies’ I mean the right wing zealots and Europhobes who want to take Britain back to a past of their own imagining. Some extremists have even spoken of a British Empire 2.0. The heroic imagined past of the leavers is Britain of the 1950s, an island of heroes that had defeated the Nazis. The heroic past that the Nazis wanted to take Germany back was the age of Siegfried and the Nibelungenlied. This they would achieve by taking the people out of the cities and moving them back to the land. The hard physical life on the land would develop in the Germans the heroic virtues of that characterised the German warrior people of the sagas. Opting out the industrial age was no more a realistic policy, than is opting out of the international trading system. Neither can be achieved, yet that does not deter the zealots.

What the Brexiteers and the Nazis also have in common is the hatred of modernity. The Nazis believed that the cities and cosmopolitan spirit within them sapped the strength of the German culture. Germans were no longer the ‘blond beasts’ of Nietzsche’s writings. Cosmopolitanism was an alien introduction to the German culture, one brought in by an alien race, the Jews. Brexiteers also hate the cosmopolitan spirit which they believe has corrupted the purity of the British national character. Obviously the alien force that is responsible for this is the EU and the associated influx of European immigrants. What both want is the expulsion of these alien forces from their country. The Nazis confiscated Jewish property and created such a hostile climate in for the jews, that many felt that they should leave.  It is no coincidence that there are echoes of this policy in that of the British Home Office, which has been charged with creating a hostile climate for undesirable EU immigrants, so forcing them to leave. (At present it appears to be a policy focused on Eastern Europeans and those EU immigrants that are homeless. Although given the nature of the current political leadership that hostility could be extended to other groups of EU citizens.)

Hitler was very much the social conservative. One of his first actions was to discourage women from working. Women for him were primarily homemakers and bearers of the next generation of German children. Our Brexiteers are also social conservatives, most of whom would wish to return  to women to their traditional role as homemakers. They have been a strong influence on the government, this is a government which is making abortion more and more difficult to achieve. If abortion becomes increasingly difficult it means women will be increasingly forced into child caring roles and will have to leave the workforce. It is no coincidence that this government has announced that it will give a very generous grant to the anti-abortion charity Life.

Initially the Nazis were dismissed as not being a serious political party not just for there fantastical beliefs, but because so many of their leadership were relatively uneducated men. Leading politicians dismissed them as an irrelevance because they could never see such ill educated men ever being serious actors within the political process. The coarseness of their manner and speech made it easy to dismiss them as an irrelevance. Not so long ago the then Prime Minister dismissed the UKIP voters as a group of as fruit cakes. He as an Oxbridge first could not take these relatively uneducated people seriously. Now these people, as did the Nazis when they first entered into a coalition with Von Papen hold the whip hand in government. They despite there seeming ignorance of European affairs are dictating the terms on which Britain negotiates to leave the EU. The Prime Minister who to retain the support of them keeps talking about a no-deal being better than a bad deal. This is in spite all the advice from economists that such a rupture from Europe will have a disastrous impact on the economy. Just like the German conservatives who were willing to accept the nonsensical beliefs about the malign Jewish influence, the Prime Minister has readily adopted the Brexiteers belief that the EU is a malign influence on the UK. She has adopted the worrying practice of the Weimar politicians who willing swamped a realistic world view of for fantastical one, as a means of staying in power.

What makes the comparison between the German conservatives of the 1930s and British conservatives of today, is this last point. There willingness to abandon their realistic world view for the fantastical one of their former enemies. Just recently one of the leading Remain conservatives demonstrated this trend. She said that although Brexit might cause some problems, the British people would rise to the occasion and make a success of Brexit. With no evidence for this, there cannot be a greatest example of foolish wishful thinking. Conservatives of the Weimar Republic and contemporary Britain would rather go along the madness of their own extremists, as they saw that madness as being less damaging to the country that ceding power to the opposition. As further evidence of this adoption of the fantastical world view of the extreme right, they insist of referring to the parliamentary opposition as dangerous radicals. Yet the policy proposals of this party are very mild in comparison with that of the Labour Party of 1945.

While I would not suggest that the Brexiteers are Nazis, there are so many points of similarly that such comparisons are valid. One clinching argument for me is that both are enemies of democracy. This government of leavers has done everything possible to avoid an open debate or real scrutiny of their Brexit policies in Parliament. Their argument is that of authoritarian governments everywhere, which is that secrecy is necessary if they are to make a success of their negotiations; any open discussion of policy options would weaken their hand. Only yesterday the Brexit secretary in reply to questioning from a House of Lords Committee, said in effect trust me. He was not prepared to submit to any democratic scrutiny. of his negotiations with the EU.

Weimar Britain 2010 – ?

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There seems to be a gathering darkness in our society, unreason seems to increasingly be the language of our times. The darkness of unreason is said to have come from outside the political process, from  the extremists of the right who have been increasingly successful in infiltrating the political mainstream. Although there success is not entirely down to their own efforts, as they have been aided by collaborators from within the political mainstream.

Perhaps the most obvious example of this darkness is the increasing harassment of immigrants. All to often there are stories such as that of the grandmother of Singaporean origin who was sent back to her homeland, despite having a family in the UK. She was sent back penniless to a homeland where she had no family. Indifference often bordering on cruelty so often governs the actions of our politicians.

When I see the flourishing of unreason in society, I look to the past for explanation. One obvious parallel is the German Weimar Republic that was destroyed by the forces of unreason. One writer that tried to explain the rise of the forces of unreason was Ernst Junger. I find his book ‘On the Marbles’ particularly apposite. There exists within his narrative a wild uncivilised  family of huntsmen who live deep in the dark forest. This family breeds an exceptionally vicious and violent breed of dog, who are breed for nothing but fighting. In the climax of the book this pack of barbarous dogs takes on the hunting dogs of the foresters and destroys them. Now this barbarous family has control of the forest. There is one futile attempt later by the politicians to come to terms with the barbarians of the forest, but it ends badly in their death.

There is a darkness in the souls of us all, but a darkness that is suppressed by civilisation. Norbert Elias wrote of the significance of etiquette in making organised society and social  progress possible. When people started treating each other with courtesy and respect organised society becomes possible. These etiquette codes of behaviour or rituals are passed from generation to generations giving society its shape but once they are disregard or disrespected society begins to resemble a shapeless mass and loses its civilising aspect.* Football without rules is a meaningless undignified scramble and even the most aggressive and competitive of footballers who will resort to cheating to win a match, still accepts the need for rules. They know that if there were no rules to break there would be no game of football. Politicians increasingly resemble the cheating footballer but unlike them they don’t just want to break the rules to their own advantage, but they want to destroy the rules and reshape the game in their own image.

Ernst Junger’s allegorical tale was very prescient, there are dark groups in society who while they remain isolated and excluded from the mainstream, pose little threat to the larger society. If they are isolated in the depths of the forest they are little threat to the civilised whole. However once this dark group is welcomed into the mainstream of the body politic, their very ruthlessness enables them to rise to the top. Just like Junger barbarous dogs they destroy the opposition, an opposition that has not been breed for fighting.

This dark group existed within German society, they were the German nationalists. The most extreme of which were the Nazis. Mainstream politicians thought there ideas insane, such as wanting to return the bulk of the population to the land. Farm work and rural life they believed led to the cultivation the manliness virtues that the Nazi’s admired. Too many German men lived soft easy lives in the town and had lost the Aryan virtues that the Nazis admired. Having such crazy ideas led to the political elite believing that such simpletons could be easily managed.

When the economic crisis of 1929 lead to widespread unemployment, which many blamed on the government. The discredited ruling coalition thought that by incorporating the increasingly popular Nazi’s into government they come benefit from their popularity. They would be a useful counterweight to the powerful communist party. The conservative intellectuals such as Franz Von Papen thought that they could easily manage the ‘unsophisticates’ of the Nazi Party. Instead these conservative politicians lacked the ruthlessness of the Nazis and were out manoeuvred by them. The well behaved dogs of the conservative right proved no match for the wild dogs of the Nazis.

Once the Nazis gained control they removed those civilised constraints that kept those dark instincts of the German personality suppressed. Soon civilised Germans were treating there Jewish neighbours in the most cruel of manners. Once those civilised rules of social interaction were removed the darkest of behaviours become common. Millions of Germans knew of the existence of the death camps, yet only a small number of German opposed their use. Ordinary German citizen if they knew of Jews hiding form the authorities would not hesitate to betray them.

What I believe is that once the barbarous dark forces in society are admitted into the mainstream of the body politic they corrupt the political process and take it over. There barbarous belief systems cannot tolerate any diversity opinion or difference, so must they destroy it. That destruction as in Weimar Germany will be the destruction of the democratic system.

While the dark forces in Britain remained isolated and excluded from the mainstream, they could be tolerated as the harmless indulgence of a tiny minority. However in Britain as in Weimar Germany changes occurred within the governing elites that made possible the introduction of the barbarous views of the extremists. Within the conservative political spectrum there had always been a significant minority that hated the post war settlement. High personal taxation and the tax revenue used to fund of social welfare programmes and the health service they saw the illegitimate action of government. They saw the economic crisis of the 1970s as an opportunity to destroy the social democratic state. Whether it was the free market economics of Milton Friedman or the Neo-Liberalism of Hayek and Rand, they had a brutal philosophy. What they wanted was the re-create the society that pre-dated Hobbes ‘Leviathan’. They wanted a society of in which ‘nasty brutish’ men, were not restrained in their actions by the state. It was human competitiveness not social organisation they believed was the motor for economic and social progress.

As this philosophy increasingly took hold on the Conservative party, its policies became more and more brutal as it sough to recreate the society of ‘nasty and brutish’ men. Although policies were couched in morally virtuous terms such as taking people out of the dependency culture and making them self sufficient, all but the most deluded of Conservative must have realised they were practising a policy of cruelty. This policy was corrupting of the people making the policy, as implementing cruel social policies is not a morally neutral activity, it corrupts the mind. The poor become defined as a subhuman species unworthy of the decencies of human society.

With this degradation of moral sensibilities conservative politicians have not hesitated to exploit the those dark atavistic sentiments on race and ethnicity to win support. However what they fail to realise is that they these sentiments are not something that can used when needed for electioneering and then forgotten. Once they have been imported into the political dialogue they remain there. These politicians so resemble so many Franz Von Papen’s  who thought that they could use the extremists for their own ends.  Similarly these conservative politicians are offering extremists access to power, an access that they will exploit.

Again Ernst Junger’s allegoric tale offers a useful explanation of the current situation. Bad as the current conservative politician are, there are the much more dangerous extremists who are beginning to enter the political mainstream. The conservative politicians are like the hunting dogs in his tale, they are trained to hunt herbivores and not to fight other dogs. I liken them to they hunting dogs because they are trained to hunt weak herbivores of society, the poor and less well off majority. Neo-liberalism of the Ayn Rand type has schooled them in how to attack the less well off majority to benefit of the billionaires class, but it has not schooled them in how fight off the extremists. I fear that our conservative Neo-liberal politicians, will be as with Weimar’s conservative politicians little more than a conduit to power for the extremists. 

  • I must confess that my summary of Norbert Ellias thinking does not do justice to him. His ideas are far my complex that my summary would suggest.

The British Army a metaphor for Britain’s economic decline

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When you wish to understand what is happening in an economy, the answer comes from the small things. Not from the micro-economics of the classical economist but from stories repeated about events in the real world. The source of inspiration for this essay was a comment from my daughter who has friends who are married to soldiers. Their husbands are very discontented, as they seem to waste their time on a series of seemingly meaningless tasks. It seems as if the bad of practices of national service days are being reinvented when soldiers could be told to do such meaningless tasks as cut the grass with nail scissors. If they are correct the British army seems to be at present an organisation without purpose or meaning.

This I can contrast with the attitude of a former pupil of mine who served with the army in Northern Ireland. I thought that he would have hated service there because of the dangers. Instead he loved it, he had two posting there and was considering leaving the army because his next would be an action less posting to Germany. Anybody with even the briefest knowledge of the British army knows that it can do mindless routine like no other organisation. He as did many others join the army for the excitement, a life out of the routine. I cannot describe in words the excitement he told me he experienced on an active mission hunting an IRA unit.

A dysfunctional army and discontented soldiers is a metaphor for so much of contemporary Britain. There are countless business organisations that demonstrate the same lack of purpose, due to poor leadership and with a discontented workforce. What the British army demonstrates is how state and private sector organisations become increasingly dysfunctional in a society that appears to be in decline.

Britain has been in decline since it lost its Empire and in the words of Dean Acheson it ‘has lost an empire and has not yet found a role’. In the post war period many politicians attempted to find a new role for Britain. At first it seemed its future lay with Europe and the country joined the EU. However being one of the leading nations in the EU did not satisfy the political class, as it had not injected the hoped for dynamism into British economy and society. What the political class wanted was the great shock that would electrify the economy and restore it to economic health and they found the needed great shock they needed in the practice of Neo-Liberal economics.

One of the great ideas of the Neo-Liberal revolution is the idealisation of the private sector business model. In consequence much of the public sector was transferred to private ownership and that included much of the defence department. Now procuring weapons for the army is in the hands of a private sector organisation called the Defence Procurement Agency. This department was intended to be a commissioning agency, that would outsource the design and production of defence equipment to private sector companies, so getting the best deal for the armed services from the competing defence contractors.

It was assumed that by outsourcing expertise to the private contractor the government would cut out the expense of employing its own specialists and it could leave the difficult decisions about  design and production to the private sector companies. Unfortunately these very same companies also practised cost cutting and reduced the most expensive labour costs, which were the design engineers. Outsourcing of design has led to a multiplicity of contractors involved in producing a product that usually fails to serve its purpose. The new army automatic rifle (SA80) costing more than a £470 million is an example of the abject failure of this policy*. It tends to jam when used in action. Special forces units who are constantly in action never use it because of its unreliability, instead preferring to use the American alternative. Having to make do with inferior and unsuitable equipment is destructive of morale and it is said that in the Royal Navy service morale has never been lower, as it is the service most affected by having to operate with poor and inadequate resources.

Generals and politicians have with enthusiasm adopted the cost cutting practices of Neo-Liberalism. This means that in consequence the cost of having realistic large scale training exercises is too great in terms of men and resources. There is just not the money to keep the army trained in is a state of readiness for war. All to often soldiers are given home leave, as this is the least expensive option. One way politicians and the generals have tried to overcome this problem is by cutting the numbers of serving soldiers and instead relying upon the cheap part time reserve solder to fill the gaps in the time of crisis. Forcing experienced soldiers to leave the army because they are too expensive is destructive of morale.

Warrant officers are the unsung heroes of the army. These non-commissioned officers are the men who make the regimental system effective. They have years of service and are the men that keep the regiment operating at maximum efficiency. Officers come and go, but they are always there. However they are expensive and the government and generals decided that they should reduce their numbers in a cost cutting exercise.  A number of warrant officers who received their redundancy notices were on active service in Afghanistan. Many private and state organisations have suffered similar drops in service effectiveness, when they have got rid of much of the middle management.

Neo-Liberal theory emphasises the great value of the entrepreneurial leader, societies movers and shakers, whom Ayn Rand states the billionaire class. This has been applied to the army as the cost cutting has been at the expensive of the junior ranks, not the generals. It is believed that all is needed is the great man who will meld the disparate units that make up an army unit into an effective fighting force at the time of crisis. Skills, training and experience are almost irrelevant in the junior ranks, as what matters is the genius of the leader. Therefore whatever cuts are made they should not apply to the generals, as they are the key personnel who will make the army great in the times of war. In consequence the British army is one of the most ‘over generalled’ in the world. The British army is about the size of the American marine corps which has only a third of the generals.

The great weakness of current British army is that it does not have a large cadre of outstanding leaders. Too many of the current generals are quite undistinguished and there are too many duds amongst them. When an American general addressed a conference of senior British army staff to discuss the lessons learnt from the conflict in Afghanistan he said gentlemen you have failed. It is an open secret that the Americans have a very poor opinion of the British army or more particularly its generals.

There is a very revealing story from Afghanistan which reveals the poor quality of British generalship. There was an airbase in which was the responsibility of a British and American general. The British general was responsible for the defence of the perimeter. He left some watch towers unoccupied.The Taliban spotted this and crept in and destroyed a number of American aircraft. The American General who was responsible for the defence of the aircraft was sacked, although he was comparatively blameless, while the British general was not only not sanctioned but he was promoted to a higher grade. Incompetence does not seem a bar to seniority in the British army.

This is why my daughters friends husbands find that they are doing no real soldiering, it is because they belong a dysfunctional organisation that is unable to effectively utilise their talents. Recently the government was criticised for failing to respond adequately to Hurricane Irma. The Americans and French evacuated their citizens from the islands in the before the hurricane struck, the British did nothing. While much of the blame for the inaction must rest with the politicians, it is also likely that if the defence minister had asked for immediate action, the armed services would have struggled to respond.

What the British army demonstrates is the current British vice, over investment in a poor and undistinguished leadership and underinvestment in its workforce. Almost all British companies have experienced a ruthless weeding out of middle management and of its more expensive and skilled staff. Once the British Atomic Energy Authority was one of the world leaders in nuclear engineering, but since privatisation the new company disposed of the expensive engineers and became largely a commissioning organisation. Now when Britain needs to build new nuclear power stations it lacks the expertise to do so and instead relies upon outsourcing the task a French company EDF. The leadership of the nuclear industry is so poor that it is not concerned that the two nuclear power stations that EDF is building in France and Finland are so delayed by construction problems and cost overruns that are years behind schedule. Just as in much of British industry a poor leadership makes poor decisions.

*The initial model of this rifle used by the army was so poor that it had to be modified and re-engineered by the German manufacturer Heckler and Koch.

*The branch of the armed services that has suffered most from the lack of in house expertise and poor leadership is the Royal Navy. Its new £1 billion Daring class destroyers are so badly engineered that they are prone to break down. The only solution is cut large holes in the sides of the ships so engineers can install new power units. A ‘patch up’ job that will be extremely expensive and could double the cost of equipping the navy with these new ships.

Spurious economic thinking from our politicians. Inflation is not the greatest of evils, in fact the opposite can be true

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Over the last few days, there has been series of government ministers trotting out the same tired explanations of why a pay cap is necessary for the workers in the public service. These are two, the first is that the public finances are insufficient to finance a wage increase and that any such increase would only increase the national debt. There was the famous television broadcast in which the Prime Minister told a nurse that there was no magic money tree, an argument she has since undermined by her own actions. However what I want to demonstrate is the fallacious nature of the second reason giving for denying public sector workers a wage increase. This is the argument that it will be inflationary. The incorrect assumption these politicians make is that inflation is always bad. It’s not sufficient to say that taking a certain action is wrong because it can increase inflation. There are circumstances in which inflation can be good.

Price rises are welcome when the price increase is a consequence of the worker/s being paid a fair wage. Wages have fallen so low that nurses and other public sector workers are having to go to food banks so as to be able to feed themselves and their families. One of the unfortunate consequence is that now more nurses are leaving the NHS than are joining it. If we wish as a nation to have a health service that is able to deliver high quality care more money must be found to pay the health service staff. The cost of health care will rise but would this would be outweighed by the benefit to national as a whole.

The government would say that to increase the incomes of the thousands of public sector workers would be inflationary. These workers must continue to bear the pain of low incomes, as to do otherwise would be to threaten the nations well being. This is a totally fallacious argument, as what this inflation would represent would be a change in power relationships within the economy. Public sector workers will now as group have a much larger share of the nation’s incomes. As they spend there increased incomes demand for goods and services will rise and so will prices. One consequence of this is that other groups will find that there purchasing power is diminished.

There will be some unfortunate consequences in that workers in the private sector on low incomes will suffer disproportionately from price increases. However this could be offset by an enlightened government increasing the minimum wage to compensate for the reduced value of their incomes. Many workers will themselves solve this problem by transferring from poorly paid work in the private sector to better paid work in the public sector. There is within the economy an automatic adjustment mechanism, in that private sector employers will have to increase the wages they pay their staff if they wish to retain them. There is no great harm to be inflicted on the economy if inflation increases from its current rate of 2.9% per annum to 4 or 5%. This was the average rate of inflation throughout the 1950s and 60s and economic growth was then at its highest.

From within the private sector there will be siren voices arguing against this saying that they cannot afford to run their businesses with wage costs so high and that they will have no choice but to dismiss workers. Against this argument is the compelling moral one, if they are such rotten employers that they can only run their business if they pay wages so low that the employee is forced to turn to the food banks or to the government for wage supplements such as tax credits they deserve to close. There will be a temporary increase in unemployment and this will require a more generous approach to the payment of unemployment benefits from the government. This will only be a temporary increase, because the increased spending of the public sector workers will kickstart an economy which is at present in the merely idling mode. Economic growth will increase and so will the demand for newly unemployed workers.

One particular imagined scenario gives me pleasure. The City banker with an income of £100,000 plus will now find that as a consequence of the increased wages to the barista, there morning cappuccino will have increased from say £2.50 to £3.00. Having worked with such people I can imagine the indignation they will express at having to pay more for their coffee. Such people will see it as threat to their life style. Rich and super rich people will be able to buy less of the time of the less well off than they did formerly, which will hurt. There will be a return of the servant problem of the 1960s, when the rich found it difficult to recruit people willing to work long hours for low pay in personal service. Once wage rates and employment opportunities were available elsewhere the number of young women willing to enter domestic service dropped dramatically.

What needs to be prevented to stop inflation getting out of hand, is measures to stop the group that has most benefitted from the low wages of the past decade from over compensating for the loss in there purchasing power by disproportionately increasing their incomes. These people are those in the private finance sector, those whose wealth comes from large property holdings and company directors. This can simply be done by re-introducing a progressive income tax, together with a wealth tax and an effective capital gains tax.  The effect of these taxes will make it less desirable to earn excessive incomes, as a significant part of any increase will be taken in tax.  The tax take from this new taxes would help with funding of the public service sector.

There is one group that would be the losers from an increased inflation rate and that would be pensioners such as myself. The income I receive is fixed for a year and it would diminish in value as the year progressed, and although I do receive an increase in my pension at the end of the year equal to the new rate of inflation, that will not compensate for the erosion my income during the past year. However I will benefit from knowing that the health service is better funded and that my generation are the ones most likely to benefit from increased spending on this service.

Why we need economists

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Being a former social worker and state secondary school teacher I am used to belonging to a profession that is disparaged in the media. Now I find that being an economist means that I am subject to similar vilification. What made economists (or rather the good economist) so disparaged is that they tell inconvenient or awkward truths about the economy and society. When faced with such truths politicians and the powerful will resort to abuse to silence the truth tellers. What is remarkable is that we have a parliament dominated by graduates from our elite universities and yet they are in greater ignorance of the world around them, than the parliaments of the past! Parliaments that were mocked for having too many of trade unions and country squires, men supposedly lacking in education and knowledge of the world around them.

Having made this declaration I must now produce the evidence to defend my assertion. These awkward truths usually are warnings about coming troubles that politicians would prefer to ignore. When the great crash occurred in 2008/9 politicians claimed that it was a once in a lifetime event that could never have been predicted. An economic act of God. The truth is that all the warning signs were there and instead of acting on them politicians refused to act, as any action taken would have been cutting spending and that would have been unpopular with the electorate. There were two causes of this crash were the banks irresponsible lending policies, such as 125% mortgages. The other guilty party were the governments and central bankers who rather than regulating the market for the greater public good, preferred to turn a blind eye to the irresponsible behaviour of the bankers. Their justification for their inaction was the doctrine of neoliberal economics, which states that economic well being is maximised under the free market economic system.

I suspect that those trade unions and squires of the past would not have been so gullible, as they had a superior understanding of human nature. They from their dealings with bankers would have known that these men were not the giants of the financial world but men as fallible as themselves. These men would have recognised that greed for ever greater and greater financial rewards motivated these bankers.

Awkward truth warning – little has changed since 2008 bankers are still lending irresponsibly and the government is still turning a blind eye to such behaviours. One area of concern is car finance, it is suggested that car dealers in their desire to sell more and more cars are not paying sufficient attention to the ability of their customers to fund their repayments and the risk is that these buyers will default in the future on their loans. This will cause the defaulting customers to return their cars leaving the dealers with an unsold mountain of cars other hands. This would in itself be sufficient to cause another economic downturn. The banks who source the funds which enable the car dealers to offer generous financial terms to buyers, rather than offering a word of caution or refusing to increase there lending to the dealers just continue to shovel cash in their direction.  Other forms of bank lending such as to the property market suggest that bankers have not learnt the lessons of 2008 and unfortunately neither has the government.

As an economist you learn to read the runes, in my case as I have no access to government statistics, it is those short comments in the financial section in the newspapers that give the game away. In this case it was a short piece of no more than three or four lines. A financier was asked if the Bank of England was now cracking down on irresponsible lending to prevent a repeat of 2008/9. His answer was no, as the governor knew that if he reduced borrowing he would cause an economic slowdown, which would increase unemployment with all its associated problems. If I read the article correctly little has changed since 2008.

I also realise that the banks have fought tooth and nail to stop the governments of Europe and the USA to make them resilient in the event of any future crisis. British banks have successfully persuaded the government that reserves of 3% are sufficient to enable them to ride out any future crisis. European banks have even smaller reserves. These reserves are either cash or assets that can be easily turned into cash to meet the demand for cash from their customers. (A greater ratio of assets to lending would limit the money banks could lend and in consequence reduce their profitability.) The suggestion is that in an event of a repeat of the financial crisis of 2008 the banks will lack sufficient reserves of cash to enable them to meet their customers demands for money. In a crisis customers fearing the future will withdraw their savings from the bank, either because they doubt the loudness of the bank or they want money in hand to deal with any future crisis. It will only take one bank to close its door for a general panic to ensue with the consequence that the government yet again will have to step in to bail out the banks. If the banks held greater reserves as have happened in the past such temporary crisis could easily be resolved  The banks would have sufficient quantities of cash in reserve to be able to pay those panicking customers who wanted their money back. Once it was seen that the banks had plenty of money the panic would cease. However if banks have insufficient cash reserves the whole system is liable to collective failure. If only one bank has to close its door, because it cannot meet its customers demands for cash, the contagion will spread and there will be a major run on the banks. Yet again the government would have to rescue the banks from their follies of their own making.

However we tellers of awkward truths have a problem. We cannot predict exactly what will happen or  when. We are tellers of possibilities and probable truths and us such we can be easily discredited. Economist predicted that a vote to leave the EU would have a negative impact on the economy. Then when in the days after the Brexit vote, the economy failed to collapse the naysayers could claim that they were wrong and that the collective opinion of economists was worth no more than that of the collectivity of politicians. What these naysayers overlooked was  that the Governor of the Bank of England being all too aware of the negative impact of a Brexit vote took immediate action to offset its negative economic impact. He simply increased the amount of to the nations borrowers enabling them to go on spending spree which prevented the economy from taking a nose dive. What the naysayers don’t realise it that it is a crisis postponed  not as they believe an imaginary economic ghoul or nasty conjured up from the feverish imaginings of the economists.

There is one prominent economist or truth teller who has consistently, warned of the impending credit crisis but is consistently ignored by governments and that is Anne Pettifor. She is never called to sit on the committees that governments set up to advise them on matters economic, as they don’t want to hear her truths. She has written extensively about the impending first world debt crisis, yet like some unheard of  Old Testament prophet her writings remain in obscurity.

Our one weakness as economists is that we cannot say exactly when or how or what we predict will happen. Even more frustratingly we can be right but events prove us wrong. There are no economists that can accurately predict the future, we are the scientists of the possible or the perhaps. The economy is such a volatile and complex construct that sudden and unexpected changes can make fools of us. This is why a leading politician* can say with confidence  ‘we have had enough of experts’ (meaning economists) and be praised in the media for his sagacity and foresight.

Yet our awkward truth remains the economies of Western Europe and the USA are over indebted and not one government has taken any realistic debt reduction measures. The fact that Britain with Japan shares the unwanted title of the most indebted of developed countries has passed our politicians by. They will speak endlessly about the public sector or government indebtedness, but they are focusing on the mice in the room while ignoring the elephant that is private sector indebtedness. Prior to the crash of 2008 government debt was less then a tenth of private sector debt. While great pains have been taken to reduce government debt little has been done to reduce private sector indebtedness*. This indebtedness will possibly rise to unheard of levels as the Governor has said that he is relaxed about the possibility of banks increasing their assets to nine times the size of GDP. Banks assets are loans, so he is relaxed about the banks increasing the nations debt to nine times the total of its wealth!

*Michael Gove a prominent politician who campaigned for Britain to leave the EU

* A policy practice that is common to all Western European governments.

A suggestion from an economist as to how the free market could be made to work for the benefit of all

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All the evidence from the economy suggests that the free market system is failing. The list of markets that are failing seems almost endless. Perhaps the most obvious failing market is the housing market. In 1973 a minister (when the state directly provided social housing) could state with some justification that there were no homeless people, today the reverse is true. Yet despite the evidence of thousands either living in temporary local authority accommodation awaiting rehousing andthe  countless others living in unsatisfactory private rental property, politicians deny that the housing market is broken.

Why do politicians not recognise the failure of the free market system? One answer is political fashion, which to paraphrase George Orwell pigs ‘public sector bad, private sector good’. This belief in the supremacy of the market system for providing goods and services can be traced back to one influential thinker, Friedrich Hayek. In his book ‘The Road to Serfdom’  (1944) lauded the supremacy of the free market over any alternative economy model. In this very readable book he states that freedom is the free exchange of goods and services between individuals. When the state decides what people want it is tyranny, an economic tyranny comparable to the political tyranny exercised in the fascist and communist states of Europe. Although to this economist cannot see how the provision of state subsidised social housing is a deprivation of economic liberty.

Hayek was a voice speaking in the wilderness until the economic crisis of the 1970s happened. In Britain in 1976 inflation hit the unheard rate of 27%. Politicians desperately looked for a solution and found one in the writings of Hayek and his prophet Milton Friedman. The next twenty years saw a bonfire of regulations and a rush to transfer what public sector services and businesses to the private sector. What politicians hoped and believed was that the introduction of the free market economy was the once and for all solution to the economic ills of the this decade.

Hayek still grips the imagination of the political classes. The privatised railway system in Britain is one of the most expensive and inefficient in the developed world. Yet despite polling evidence suggesting that a majority of British voters would welcome the re-nationalisation of the railways, the majority of politicians regard this as beyond the pale. Only an outsider such as the current opposition leader would argue for this popular cause. There is one certain outcome from this election and that is even if the opposition won the election, the consensus view within parliament would effectively nullify any attempt to return to a nationalised rail service.

There is one failing in the free market philosophy of Hayek that is always ignored. He assumes that the exchange of goods and services takes place between individuals who are equals. The worker for him is free to bargain with the employers to obtain the best possible wage. In Hayek’s impossible scenario the worker and employer equally benefit from the exchange. What he does not recognise is that there is no equality of power in this exchange. While the employer is free to buy the workers labour at the lowest possible wage he can negotiate, the employee very rarely has the power to negotiate the highest possible wage. History demonstrates that in a market lacking employment protections and trade unions, the worker rather than being able to negotiate the best possible wage has to accept the going rate, no matter how poor. It is a market in which Says law applies. Rather than workers negotiating for the highest rate of pay possible, they have to accept the wage whatever rate of pay the employers are prepared to offer.

When the market works well it is unrivalled as a means of exchange of goods and services. The problem is that in Britain it rarely works well. It is the unequal distribution of bargaining power that prevents the market working to the benefit of all. When one person has significantly more bargaining power than the other, be that person an employer or landlord, the other person is at a significant disadvantage. They will inevitably lose out, whether it be having to accept a low wage or by paying a high rent for inferior accommodation. The only way to make the market work is to introduce some equality of power into the relationship. Only then will the more powerful not be able to exploit the less powerful.

One solution would be to introduce legislation to remedy the imperfections in the free market, as was the practice in the 1950s and 60s. However this is not possible when the majority of political classes are committed to Neo-Liberalism or the free market economy. A majority of the of the current generation of politicians would oppose any such policy. There is another solution that might appeal to the free market politician. Greater equality could be introduced into the market and through the legal system so making the exchange of goods and services a more equal relationship. At present civil law with its remedies for civil wrongs is unavailable to the majority of the population, because of the high costs of legal action. Not only is there the high  cost but the wealthy subject of a legal action can spin out a case almost indefinitely so discouraging all but the most determined and wealthy of plaintiffs. A reformed legal system that made justice available to all could make Hayek’s free market work in a manner which he intended. The free market politician would have no reason to object as such a change would only be to enforce the rights of the individual and not subject the business to the whims of the almighty state.

This might seem an incredible statement but the legal system of the Roman Empire particularly that of Justinian was in some ways superior to that of contemporary Britain. Under this system the aggrieved individual could bring their case before the local magistrate. These magistrates seem to have had more power than contemporary British magistrates. They could interrogate the plaintiff and witnesses before arriving at a verdict. From what I understand of the Roman system there was an approximate equality of position of the plaintiff and defendant, something lacking in British courts.

There already exist in Britain a network of small claims courts(1). The remit of these courts could be extended to include a new category of civil wrongs. These courts would retain the principle of not penalising the less well off plaintiff, by not privileging those defendants that have legal representation and through preventing the defendant claiming their legal fees from the plaintiff. What matters would be that the court proceeding do not privilege the wealthy, making these courts accessible to the poorest.

There is one example demonstrates the ugly nature of our current legal system. The British Human Right act gives every person the  ‘right to enjoy the privacy of your own property.’ In our unbalanced legal system a rich property developer was able to persuade the high court, that privacy meant the right to develop their property regardless of the noise nuisance it caused the neighbour’s. In a fairer legal system there would have been a counter claim by the less well off neighbour, which would have prevented this nonsense becoming law.

One further requirement would be an amendment to the Human Rights Act, an amendment that included new rights such as a fair recompense for work. These rights could be incorporated in a relatively short document as they are only statements of principle and it would be the role of the courts to define what these rights meant in practice.

What I am proposing is a remedy for market failure. A remedy that restores a measure of equality in  the bargaining process in the free market. Rather than looking to government to remedy market imperfections, individuals working through the court system will able remedy the failings of the free market. Employers and landlords will be less inclined to adopt exploitative or abusive practices, if they know doing so will involve them in having to defend such practices in open court. Instead of a race to the bottom in which employers vie to adopt most exploitative cost cutting practices to save, there would be a move upwards towards a fairer employment regime.

A salutary lesson for this left of centre economist is that the legislature cannot be relied upon to protect the rights of citizens. Individual legislators are too easily corrupted by powerful corporate interests. As the recent past demonstrates they are only too willing to legislate away the right of citizens to further the corporate interest. Not so long ago a senior member of the government (of a party claiming to represent the workers) saw his role as frustrate the EU commissions attempt to increase the rights of agency workers.There is an old adage that states that the person who can be best relied upon to defend your rights is yourself. The record of the Westminster parliament over the past forty years only too clearly demonstrates the truth of this adage.

This is only intended to a sketch of how the free market could be changed to the benefit of all. Today’s news has demonstrated the need to find an alternative to seeking remedies through parliament. The Prime Minister announced that she would be introducing a policy which entitled all workers to a 12 month period of absence to care for an ill relative. What she failed to make clear was that this would be unpaid leave. A meaningless reform on a par with all the rights of the Soviet citizen that were written into that country’s constitution. Rights that in a police state were meaningless.

(1) There are a number of tribunals that at present that consider these wrongs,but I have left out reference to them for ease of writing.

Fake Economics and the Great Shock Theory of Economics

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This is the age of fake news it is also the age of fake economics. One such is the Big Bang or Great Shock theory of economics. It is the policy preference for those politicians that have a disdain for the facts. They have an impatience with the world of fact or reality as it does not fit with their view of the world. In a very prescient film ‘Who Shot `Liberty Valance’ , John Ford has one memorable line in the film in which the news editor states that ‘when the facts become legend, print the legend’. This very much describes today’s politicians who have a preference for their ‘legend’ or story over reality. One consistent and common story is that by administering some great shock to the economy they will shake it out of its torpor and kick start a new dynamic economic era.

Believers in fake economics or the story predominate in the politics of the Anglo Saxon world whether its in the form of Donald Trump or Theresa May. The latter believes the necessary shock treatment that will revive the UK economy is the leaving of the EU. Once firms are deprived of their cosy relationships with the European market, they will be forced to find new markets outside Europe (or go out of business). The necessity of finding new markets for their products will inject a new dynamism into business, so transforming British businesses into world beaters. Businesses will now put a premium on those leaders who are doers and the influx of doers into the top levels  of business will have this transformative effect. The proponents of this shock therapy do admit that some businesses will fail to adapt and have to close, but these failures will be more than made up for by the new enterprises that will replace the old failing businesses. However what the proponents of shock theory fail to admit is that the shock is as likely to kill as cure. Evidence from the past suggests whenever the government administers shock therapy to the UK economy it kills more than it cures.

The classic shock treatment occurred in 1981, when the government decided to introduce the reforms that are associated with Neo-Liberalism. The shock killed of 20% of UK manufacturing industry and unlike the theory suggests new businesses did not develop to replace them. One consequence is that the UK now has the largest trade deficit of any developed country (as a proportion of GDP). Good fortune has enabled the UK so far to escape the consequences of this folly, but that good fortune cannot last forever.

Much as in a John Ford movie legend has replaced fact. Politicians generally accept that despite the evidence to the contrary the 1980s were a success story. With such a complex institution as the economy it is always possible to find evidence for your own good story and even when there ar plenty of bad facts, as their existence can be conveniently ignored. Ignorance of the workings of the economy is so widespread amongst the political classes and the media that its easy to sell the fictitious ‘good story’.

One consistent story coming from the government is that British business can find new markets to replace those lost through leaving the EU. India is one of the most populous of Asian nations and it is home to one of the world’s fastest growing economies. This is claimed by government ministers to be one of the new markets British business can exploit.This year India has been the subject of two trade missions to India, one led by the Prime Minister and another by the Chancellor of the Exchequer.  What India requires from the UK is an easing of restrictions of Indian migrants coming to Britain and until that is granted it will not consider a new trade deal. This government has made its priority restricting immigration into the UK and this means that all those trade missions have been in vain. Until Britain makes some concessions on immigration, India will not open up its markets to UK business.

Trade deals with other nations are also fraught with problems that make any negotiations fruitless. Brazil and Argentina are the two largest economies in South America and as such should be a potential markets for UK exports. However there is one issue that prevents a new trade deal being negotiated. These two countries both have a large beef industry and would love to export beef to the UK. However in these two countries the cattle diseases such as foot and mouth are endemic. If the UK accepted imports of beef from these countries it would possibly be importing disease into the country. Then the UK would lose its status as possessing a disease free cattle industry. British beef farmers would then be prohibited from exporting their beef to such as the disease free countries of the European Union. The powerful UK farmers union would prevent such a trade deal, particularly as the governing party is the party of the largest of agricultural landowners. Economic realities mean this is yet another potential market that is closed to UK exporters.

However for the practitioner of fake economics none of this matters. When one of the most significant purveyors of false economics said that the public were tired of experts, what he meant was that they were tired of hearing the difficult truth. They like their political leaders want believe the easy to fictions of fake economics. What fake economics does convey is the false story that the political leaders of this and other countries know what they are doing and that they are making those policy decisions that will be of benefit to the economy and the people. Nobody wants the truth which is that our political leaders have only the vaguest grasp of economic realities and that are doing the equivalent of shooting in the dark.

There is one other great advantage of fake economics. When the train wreck of the great shock inevitably materialises the politicians can claim that is not their fault. They have done their bit in that they  have administered the correct medicine, the failure now is with the patient for not taking the medicine correctly. Business leaders and workers have failed to respond in the correct way, the failure lies with them, not with the government. When one of the major purposes of a policy is to transfer blame to some other party than the policy maker it is always going to be the wrong policy. Being unwilling to take responsibility for one’s actions suggests that at least sub consciously the policy maker knows that they are in the wrong.

Societies of no opportunity – reflections on the Anglo-Saxon societies of today

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Politicians always have a story that transforms this dull rather ordinary looking individual into something quite different. These people who look rather like your unimpressive neighbour claim to have charisma. They are imbued with special qualities denied to the common man. Usually these stories come from a shared stock of charismatic images. One that is constantly brought up is how hard was the politicians childhood and how they overcame immense difficulties to achieve their current position. Recently a new story has become part of the common stock of images, the politician as revolutionary. However it as a special kind of revolutionary, what they are doing is overthrowing the tyranny of past thinking. They are much like Nietzsche’s iconoclast taking a hammer to those false idols that trap people into a false way of thinking and behaving*. While Nietzsche was taking a hammer to the Gods and idols of the Judaic Christian tradition, the current revolutionaries are taking the hammer to the idols of the Social/Christian democratic state. They as did Nietzsche believe that these idols encouraged the development of a feeble civilisation, one which suppressed the great men. A civilisation that reduced all to the most mundane levels of living, great men were forced to live the life of the mundane middle which prevented from fulfilling their potential. He despised the UK a society which through its democratic system gave ordinary men the power to rule over the great or the supermen. Similarly today’s political revolutionaries believe that the welfare state has given rise to a culture of feebleness which has led to the current political malaise.

One of the most detested aspects of the social democratic state for them is the dependency culture. State benefits created a type of person that rather than be go-getter looking for work and constantly trying to improve themselves, would instead rely upon the state for handouts to support them and their families. These people were a drag on society and in urgent need of change. I think General Kitchener best epitomises this way of thinking when he objected to the introduction of pensions for war widows in the First World War. He thought this would encourage the wrong kind of man to join the army, one who wanted to get killed or wounded so he or his family could benefit from state handouts. This type of thinking is very prevalent today. Politicians constantly talk about families that live from generation to generation on benefit, families in which no one has worked. Their solution is to reduce benefits to a level that are just sufficient for human survival, so the misery of a life on benefit will be the incentive to make people want to work. This one act will change the feeble creature of the dependency culture into a go-getter that is proud to work and prides themselves in supporting their family.

The lack of evidence to support this policy of cruelty does not matter. Whenever research is undertaken into the unemployed it never produces evidence of a work shy population. One estimate suggests that there are only 33 families in which the parents and then the children have never worked. However such evidence can be dismissed when the popular media can always produce stories about inhabitants of the work shy benefit culture. It is for politicians the morality of the hypocrite they can do evil in the cause of a greater good. Misery and suffering become merely the start of a life cycle that propels the individual towards the good life.

There is one fallacy in this revolutionary logic, it assumes that there is a career path out of poverty for the work shy. However in a low wage economy it is impossible for this new generation  of strivers to move out of poverty. This is the culture in which the strivers have to take two or three jobs to survive. There is little scope for such people either amassing the savers to improve their life circumstances or shave the time study to achieve the qualifications to improve their life chances. What is wrong with our society is not the people but its lack of opportunities? The economy is designed or structured to produce few winners and many losers. In an unfair society which denies an increasing majority of the population the opportunity to live a decent and civilised life, what is needed is a story to justify this unfairness, a story that turns moral dross into moral gold.

One is that told by our new generation of revolutionary politicians. They believe that it is the culture of the welfare state that has produced a generation of the feeble minded. People who lack the drive and initiative to improve themselves. Demolishing the welfare will be the shock these people need, it will transform the general population.  There will be a few degenerates that will be mired in poverty, but the rest will the strivers and achievers. The latter group will be the winners who will be rewarded with the material rewards that characterise the good life. This story has the virtue of demonising the poor as deserving their fate, a just return for their lack of drive. It’s a persuasive story but one that has little foundation in reality. In an unfair unjust society even the hardest working of the strivers can be denied a good life.

There is another story circulating about the unfair society and that is that it the natural outcome of a  the meritocratic society as suggested by the writer Toby Young and the sociologist Peter Saunders. Evidence shows that the IQ scores of the middle classes exceed those of the lowest classes. The argument is that higher income is the just reward for possessing the greater intelligence. However there is doubt that can be cast on IQ as a measure of real innate intelligence. If coaching for the IQ test can improve markedly the individuals test core it cannot be a valid test of innate intelligence. Innate intelligence just is there it can’t be taught, if these tests were a real measure of innate and not acquired intelligence, training in these tests should make little difference to the final score.

What unites this new generation of revolutionaries is their high income. These revolutionaries don’t live in garrets or hovels plotting change, they live in big houses and enjoy the lifestyle of the affluent. It is not unusual for these new  revolutionaries to enjoy six figure incomes, profitable second jobs can be as a columnist for a newspaper or lobbyist for a city finance company. Revolutionaries don’t live the comfortable life they are driven by a desire to change the unfairness of society, an unfairness manifested in widespread poverty and misery. These new revolutionaries wish to increase unfairness, inequality and poverty. Rather than accepting the self image of these new revolutionaries they should be seen as the really are stripped of their revolutionary romantic aura, they are merely the spokesmen for the rich and powerful oligarchs. These politicians rather than ushering in a new revolutionary age are the reactionary spokesmen for a new generation of backward looking oligarchs. What they are spokesman for is a hatred of modernity.  The oligarchs associate modernity with all that they hate which can be reduced to taxation and legislation to improve the life chances of the majority, which they see as reducing their opportunity to make money. As one of their spokesman so eloquently put it, its immoral to increase taxation on the well off. Making excessive amounts of cash and not paying taxes is the new approved morality of these new revolutionaries.

*Nietzsche ‘Twilight of the Idols’

Economic magic, the reason why politicians constantly interfere in the running of our schools. Also one economist’s explanation of Britains low productivity economy.

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There is one untruth that is always repeated about the baby boomers pensions and the young. Regularly one politician or another states that baby boomer generation has taken such a large share of the nations wealth that little is left for the young. Recently the Resolution Foundation released figures that showed the median income of a pensioner household exceeded that of the of the average working family. This became a media horror story, which the media claimed demonstrated that pensions were to generous. What the media ignored was that the median income for pensioners is not especially high and what it demonstrated was the appalling low level of incomes of the average working family. Rather than as the politicians argued that there was an urgent need to reduce the incomes of pensioners; what it demonstrated was the urgent need to increase the incomes of working families. No politician or media figure stated the obvious which was that even if the median wage of the working family was increased to that of the pensioner household, the former would still have great difficulty in paying their bills.

Britain is a low productivity and low wage economy. Without structural change in the wider economy the majority of families will remain in the category of either the ‘just managing’ or ‘not managing’. Our government and politicians sort of acknowledge the problem by talking about the need for educational reforms, reforms that they claim which will produce a highly educated and skilled labour force. This highly educated labour force will then produce goods or services of a high quality which will be in great demand and will be highly valued. Then these workers will then be able to command high salaries because they will be so highly valued. Sociologists use the term magic to describe behaviour or practices that the practitioners (in this case politicians) believe will magically solve their problems. Of course magic does not exist and neither do the imagined solutions to our economic problems.

One can add the rider that twenty years of educational reforms have produced a workforce that is less productive than ever. Britain is slowly slipping down the world productivity league.

The real cause of the problem of low productivity and low wages is the business model practised by most contemporary businesses. This model can be explained  simply as the minimising the cost inputs and maximising the output of profit. Labour is the most expensive of the inputs and if the costs of that can be minimised profits are maximised. All the reforms of the neoliberal era have made its possible for businesses to minimise wage costs through what can be described as the zero sum or gig economy. What is taken from the workers is given to the business’s owners. Workers are no longer employed by  ‘Deliveroo’ for example but they are independent suppliers, who are contracted to work when there is wok for them. This system achieves a massive cut in wage costs as the independent suppliers are only paid when there is work for them, which means low incomes for the independent suppliers and high profits for the owners. Also the business can pass on many of the other costs of the business to the ‘independent supplier’. They insist that they  buy they own means of transport, whether it be bikes or vans. This has a further benefit in that the independent supplier has to maintain their vehicles meaning the worker and not the employer has to bear the costs of maintenance of the business’s vehicles. Delivery businesses (goods or people) such as Deliveroo and Uber have achieved the nirvana of business perfection. All the firms have to invest in is the computer systems and staff for the handling and dispatching of the customers orders, all other costs are borne by their self employed contractors. When firms invest so little in the business they can only be low productivity businesses.

High productivity requires investment in machinery, and staff training all of which are high cost. As successive governments have reduced workplace protections to a minimum, it has become much easier to make money by squeezing wages and employment costs to a minimum. It is no coincidence that in a high cost industry such as car manufacturing there are no British owned businesses, all are owned by foreigners. Even Britain’s prestige car manufacturers Rolls Royce and Bentley are owned by BMW and Volkswagen. When there is a successful British manufacturer such as ARM, which makes computer chips for most of the world’s smart phones, it is sold by its owners to a foreign company. The owners preferring to live of the proceeds of the sale and live a life less arduous than that managing a business.

Only if the government took on British management and introduced legislative changes that would persuade or compel them to adopt the high input cost business model, would the low productivity problem be solved. However the government and the political class generally see this as a problem to difficult to tackle, so instead they continue with the non solution of constant education reform. In consequence every year there will be introduced by the government a ‘proliferia’ of education reforms. ‘Shouting in the dark’ is a behaviour which is intended to demonstrate that those scared by the horrors of the dark can scare them by talking loudly. Believing the noise they make will show that they are confident of resisting the evil one and force it to turn away to  find an easier prey. Educational reform is a shouting in the dark, politicians hope that if they shout loud enough they will scare away the horrors of the low productivity and low wage economy. Also by shouting loudly they hope to distract the people from the real problems that they are failing to tackle.

The nonsense politicians speak on economic matters (a decoding of politician’s economic speak)

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What people don’t realise is that when politicians speak on economic policy matters, they don’t really know what they are talking about, its just a glorious pretence of a speech. Their speeches are usually peppered with phrases supplied by their speech writers to create the impression that speaker is knows what they are talking about. Often this is done through the spurious use of statistics and handy method of knowing when a politician is pretending to a knowledge they lack is the number of times they refer to statistical evidence in their speech. The more statistics in a speech the more likely the politician is totally ignorant of the issue they are discussing. Politicians differ from economists in that economists know that they know something about the economy but the not everything and the speech of a good economist is cautious. Economists don’t wish to claim a knowledge they lack, whereas a politician would never admit to their ignorance.  Their sense of amour propre would never allow them to appear as lacking in knowledge. They are the solvers of mankind’s problems and unlike the common run of mankind they never admit to any failings.

What I hope to do is this essay is reveal some of the real thinking that underlines much of policy making.

The most common policy is  the ‘wishful thinking’ economic policy. This policy making is usually to be associated with the new right, although the new left can also be guilty of the same. Wishful thinking policy making is based on a wilful ignorance of economic realities or to put it more succinctly a wishing away the facts of economic life. Of all the developed countries Britain has the largest trade deficit as a proportion of national GDP. The simplest and most correct explanation is that the country is no longer producing the goods and services that other countries want. The solution would usually be to develop an industrial strategy that encouraged businesses to focus on producing those very goods and services that other countries want. This is wrong according the EU leavers as what is preventing our exports abroad is EU regulations, which prevents us exporting to countries outside the EU. However there is nothing in EU regulations that prevents the UK exporting to any country in the world. This analysis would only have any validity if there are as yet undiscovered countries to which the UK can export, as all the known and existing countries are already free to buy our goods if they want them.

Another common form of economic policy making in the UK, is that it will be all right on the day policy. This thinking can be summed up in a few words, in the past many serious crisis which have occurred and yet the nation rose to the occasion and survived relatively unscathed. If it had not we would not be enjoying the level of prosperity that we do today. Why look for trouble when it can be avoided. Mrs May’s government will not put into practice any serious measures to prepare the economy for Brexit, as there is the belief that the country which managed the 1940s existential crisis  will somehow manage the 2020s EU exit quite comfortably. Complacency might be another word to characterise this policy. The Chancellor’ claim that his was a budget that prepares for Brexit will be shown be meaningless. No action is proposed to counter any negative impacts of Brexit and the so called reserve to cushion the economy through Brexit will be shown to be largely a figment of the Chancellor’s imagining. Another phrase to describe this type of policy making would be hoping for the best policy making.

Big gesture little action the policy making of fear, the fear that any policy introduced could make things worse. Nothing scares a politician more that being blamed for a bad policy. To be fair to politicians rather than do nothing, they do tend to produce distractors which are small easy to make policy changes, which function to distract from the real problem. This is why the budget is always about small changes in tax and never about big policy measures to tackle the real problems afflicting the nation’s economy.

Elephant in the room economics (very similar to the previous policy), this is when the politician ignores the real problem and instead focuses on a smaller less significant problem which they believe will focus attention away from the major problem. The annual budget statement is a conjuring trick in which the government produces lots of small policy measures that capture the attention and distract from unpleasant reality. The one great problem of today is the growing level of household debt which reached the level of 160% of GDP prior to the crash of 2008 and is today nearing the same levels. Rather than take action to reduce this debt which would in effect make people poorer and be very unpopular, the government prefers to do nothing. It is sleep walking into yet another financial crisis, a policy which also has the advantage of postponing the coming crisis into the future and making it the responsibility of a future government.

I could make this an endless list but my intention is to introduce some scepticism about the grand policy claims of our political leaders on matters economic. There was a famous American journalist Louis Heron, who said his approach to interviewing politicians, was to think ‘why is this lying bastard lying to me’. This `i would rephrase as why is this ignorant bastard trying to pretend to me that they know what they are doing.