Tag Archives: Disraeli

Bankers the unruly and uncontrollable children in the family

Politicians seem to think that as they can manage their own family budgets, they have all the knowledge necessary to manage the economy. This results in statements such as the government needs to balance its books or that the country has maxed out its credit cards. Such statements demonstrate an appalling ignorance of the economy and how it works. However there is a competence that is lacking at the most elementary of levels,  as too many MPs are appalling at managing their own finances. Disraeli one of the greatest leaders of the conservative party was always on the verge of bankruptcy because of his extravagant lifestyle. Fortunately he had a rich wife and friends ready to bail him out. Politicians are as likely to follow his example as they are that of his prudent rival Gladstone. The recent expenses scandal when it was demonstrated that most MPs used their expense account to finance their comfortable lifestyle. People still remember the MP who used his expense account to pay for a duck house. If financial rectitude is not characteristic of many MPs This should give pause to any claim that they are capable of managing the economy.

If the analogy of family finances is to be made it should be said that the government resembles the nominal head of an unruly family, whose views are largely disregarded by the family members. The unruly children in the family take little notice of the head of the family, only listening to them and accepting their authority when they get into trouble. The banks are the obvious example as they pay minimal heed to the authority of the government except in times of crisis such as during the financial crisis of 2008.Once the crisis passed the banks forgot their need for government support and showed a lack of gratitude to the governments actions for bailing them out during the crisis. They successfully prevented the government from introducing a reform which would have separated their retail banking activities from those of investment banking. If a bank fails  in future the government is still on the hook, as it can’t protect the individual customers of the bank without bailing it out for the much larger losses incurred by its speculative investment banking arm.

This is no small matter as the combined assets of the banks are in total ten times the value of our national GDP.    Our national GDP is the country’s national income. There are four large banks in the UK and it is not unreasonable to suggest that the assets of each is in total a sum near to, equal to our GDP or greater than it. In the event of a failure of one of the large banks the government could be called on to raise a sum equivalent to our national income to bail them out. At one time during the crisis of 2008/9 the government of Gordon Brown had to pledge a similar figure to our banks creditors to prevent a run on their finances. Fortunately the banks creditors did not call on our government to make good this pledge, they were satisfied with the the pledge alone. When the next crisis occurs the country may be less fortunate.

When I describe the banks as unruly children over whose actions their parent has little control, there are numerous examples I can cite of such behaviour. Britains biggest bank is HSBC and Standard Chartered is its branch in the US. This bank almost lost its licence to conduct banking in the USA because of its money laundering activities. Only the pleas of the British Chancellor of the Exchequer prevented the American financial authorities from withdrawing its banking licence. It had lost its licence to bank in the USA, its parent bank HSBC would have been in serious financial trouble and it would have had to ask the British government for financial support to enable it to cope with the crisis.

The family finance analogy of which so many politicians are so fond of using describes so well the activities of the banks. The banks are the prodigal children who can behave as badly and irresponsibly as they wish as they know that their parent the British government will always come to their aid no matter how badly they behave.

In Britain as in most countries the politicians are content to remain in ignorance of these unpleasant truths. They believe that their homespun economics all they need, or they are ideologues who believe that the great prophets of economics Hayek, Friedman and Rand said all there is to be said about economics and the managing of the economy. This last group believes that all the answers to matters economic are to be found in books such as ‘The Road to Serfdom” (Hayek) or ‘Atlas Unchained’ (Rand).

There are a small group of politicians who understand the problems of which I have written, but they are only too willing to pretend that all is well in return for government office or employment as well paid lobbyists for the financial sector. Money is incredibly effective balm for soothing fear.

I am not the first person to express concern about the appalling ignorance of our politicians. Leo Amery looking around at his fellow politicians in the 1920’s said that the country would be better served, if there was  separate parliament consisting of industrialist and trade unionists to manage the economy and industrial policy.

The Big Lie 1 – an economists view of the general election

There is always one big lie in any election campaign and this year’s one is that the government’s election promises are practical because only they have realistically costed their programmes.   Natalie Bennett leader of theGreens was ‘monstered’  in the media for failing to explain how she would fund the house building programme that she promised. Instead of stumbling over the figures, she should have replied that all costings of public expenditure programmes are little more than  ‘guesstimates’ and some are more accurate than others. Given the access the government has to advanced computer technology, one would assume that it’s costing of programmes would be more accurate than that of others, although that is not always true. A glimpse at the history of government spending projects would demonstrate this; it is difficult to think of one government project that has come in on budget.  The costs and management of Britain’s two latest aircraft carriers demonstrate this all too clearly. Not only were the costs grossly underestimated, but so were  the ancillary costs were ignored, such as the need to construct supporting vessels. The consequence us that when completed only one aircraft carrier will be able to be put to sea and then only if our NATO allies can provide a projected shield of warships. There is even the suggestion the the costs were so grossly underestimated that their might only be enough money in the budget to provide enough aircraft for one carrier only. Yet this is the government that accuses the opposition of failing to fund its plans,


Canary Wharf http://www.rsh-p.com

Why cannot the government accurately cost its programmes? The first answer is that most programmes are intended to operate over a number of years and many unexpected factors can throw the best laid plans into chaos. Large construction projects very rarely come in on budget, unexpected geological problems might occur, or a spell of bad weather delay construction or conflict in a country providing essential materials all of which can lead to a spiralling of costs. Usually to avoid this most projected plans include an element of overspend. Even allowing for this large spending projects can bankrupt the business. Perhaps the best example is Canary Wharf, where the one company Olympia and York Canary Wharf Limited won the contract to build and develop a commercial centre on the  site of the old Canary Wharf Docks. Yet this well run business went bankrupt in 1992  having constructed most of the buildings. What bankrupted the company was the collapse of the property market in1992. If well run commercial enterprises can get costs and revenue so wrong, is it any surprise that government running much larger projects get their figures wrong? Uncertainty about the future is why so many cost estimates are wrong.

Government cost estimates for projects such as the High Speed 2 rail network and the Queen Elizabeth aircraft carriers are subject to an unusual budgeting practice, one based on the two principles over optimism and underestimation of the costs. Whereas in commercial practice an element of over spend is built into the costs, the government adopts the reverse practice, where the practice is to choose the most favourable cost projection (even if it’s an unrealistic option) in the belief that this is the best way to sell a project to the country. There are two infamous examples of this the cost estimates for the IT programmes in the Health Service and the now universal credits  programme for the Department of Work and Pensions. The first was abandoned because it proved unworkable and too costly, a fate that will be probably shared by the Universal Credit programme. Despite having proved so inept at costing their own programmes the government sneers at the other opposition parties for their so called ‘unfunded’ policy options.

Perhaps the best explanation lies with Disraeli who said there are ‘lies, dammed lies and statistics’. Statistics while if used correctly can be invaluable in the decision making process, all too often they are used to confuse. Part of what can be called a policy of disinformation. Confuse the opposition by getting them stuck in an unfathomable morass of misleading statistics.

Politicians also seem to believe that using statistics confers validity on their policies; I suspect because they believe that the arguments in support of their proposed policy option are not very strong. Using statistics no matter how flawed or selective is assumed to make their arguments more convincing to the electorate. What it signals is a lack of confidence in the politician who realises that they cannot win the debate by reasoned argument. Statistics are the screen behind which weak policies and politicians hide.  

Statistics when used properly are a useful guide to policy making, it is essential to have a reasoned estimate of the costs of a programme. Unfortunately politicians all to often make the most optimistic, rather than the most realistic cost estimates for their programme. When Ian Duncan Smith (Minister for Work and Pensions)  started the reform process to introduce universal credit, he claimed it would cost the tax payer £2.2 billion to introduce, yet three years later he acknowledged costs have risen to £12.8 billion. One estimate suggests that for every person placed on the scheme the cost was £225,000, an incredible figure for a programme that was intended to reduce the cost of administering welfare.  Perhaps the bible has the best explanation of Ministers who claim only they and not their opponents have properly costed their programme. Matthew 7:3 ‘And why beholdest thou the mote that is in thy brother’s eye, but considerest not the beam that is in thine own eye?’ (from the King James Bible). Whenever a government minister or senior opposition politician claims that only there policies are practical because they have been properly costed, the only answer can be an expletive. 


Is not ‘Black Friday’ but a symptom of a sickness that infects British society?


Shoppers competing to get discounted televisions on Black Friday. (London Evening Standard)

Seeing the gardarene swine like behaviour of the Black Friday shoppers, with customers fighting each other to get bargains, reminded me so much of the emptiness of contemporary Life. Thus behaviour longer attracts much criticism of these it is more likely the competitive zeal of these shoppers will earn them admiration. If this frenzied hyperactivity was restricted to shopping, it would be a problem but one with limits. However this frenzied hyperactivity is not limited to bargain hunters but is a behavioural practice characteristic of contemporary Britain. This practice is at is most dangerous when practised by our politicians who rush out a frenzy ill considered legislation to meet whatever crisis or problem occurs. Criminal law reform is one such example it seems that each successive government has to make major changes to criminal law to satisfy the apparent public demand for new laws to protect them from dangerous criminals. Reflection not something practised by contemporary politicians, no contemporary politician would copy would as did Prime Minister, Harold MacMillan read Trollope’s novels while in office, reading would either be some serious economic or political tome for fear of not being seen to be ‘on the job’ or a collection of DVD’s, acceptable frivolity. They are truly the ‘One Dimensional Men’ as described by Marcuse. Men with no depth or breadth of vision. One unfair but a comment with some truth in it is that legislation is rushed out to meet tomorrow’s media deadlines.

Politicians have a philosophy to justify their behaviour, it’s the market led theory of politics. They are as with businesses just there to respond to the demands of their customers. If their consumers suffer from a fear of crime, what is needed is more laws to reassure the voting political customer that their concerns are being met. Whether this crowd pleasing legislation has any impact on actual crime is debatable. What matters is reassuring the customer. Draconian anti drug legislation has had little impact on actual drug taking, but it’s there to reassure the public that the government takes drug abuse seriously. The unintended consequence of this legislation is to eliminate the small time (easily caught) drug dealer from the market, leaving the trade in the hands of major criminal cartels who are able to evade detection through either corrupting the law enforcement agencies or through using expensive sophisticated methods to avoid detection. The fact that current drug laws have inadvertently led to the creation of rich powerful criminal gangs is of no relevance to the government of the day. The fact that there are better alternatives is irrelevant as they lack the crowd pleasing factor.

One thought that occurs to me is that any drug baron would want the current laws to continue in operation as by eliminating many smaller rivals it enables them to remain a monopoly supplier.

A possible explanation

What I want is an explanation of why so many in society indulge in this frenzied purposeless activity. Kierkegaard (The Concept of Anxiety) does offer for me an explanation of this behaviour. His explanation was in part based on self analysis and in part in from observation of his contemporaries in 19th century Copenhagen. In his youth he could be described as a ‘party animal’ a person who was a popular guest at parties, because of his ready wit. However he was aware of an inner emptiness which frenzied social activities could not remove, a behaviour he observed in his friends. However he realised that this emptiness was not apparent to his friends and contemporaries who were content to live life on the ‘outside’. Yet even these apparently happy people would experience an anxiety of something missing, but suffer from not knowing the cause of their anxiety. The solution for them was to engage in more social activities to offset this feeling of anxiety.

This anxiety was consequent people’s failure to understand their true nature. *There is within the human psyche a longing for a different life, an aspiration for a more satisfying spiritual life. He identifies two forms of better life, the first a life lived in conformity to the norms of religion and the second superior a life lived in knowing God. This life may be achieved, through the individual opening themselves to God. They become as a mirror reflecting God in their lives. It is only this final group who are truly free from anxiety, they know happiness, all others know an inferior or counterfeit happiness.

It is not necessary to accept Kierkegaard’s Christianity to see the value of his analysis. Contemporary culture whether it be political or that of wider society fails to recognise the need for spirituality or any form of life that is not based on the consumption of goods or services. It is a barren and empty culture. A market society in which everything is up for exchange lacks any sense of higher value. There can be no universal value system such as Christianity which values compassion, agape (love of mankind) as they have no place in a society of aggressive self seeking traders. There is no market in agape, fairness or compassion, instead they are seen a barrier to wealth making as they demand restrictions be imposed on the businessman. Only recently the Chairman of the Confederation of British Industries spoke out against fairness and compassion. Imposing the living wage on employers or ending the cruel zero hours contracts he said would make the British economy uncompetitive in world markets. The economy demands the immiseration of the majority, if it is to prosper. It is the worship of a strange inhuman God, that is not too different in nature from the Aztec Gods that demanded human sacrifice.

A possible solution

While it is tempting to say that a happiness is dependent on a redistribution of material wealth; this fails to recognise why one of the richest world economies has descended to a level where an increasing number live impoverished lives. Why does the miserablist philosophy of Neo-Liberal dominant the political discourse? Quite simply because the majority of politicians exist at the lowest level of life as identified by Kierkegaard. Their realist philosophies have taught them that there can be no higher values as all that matters are the practical and graspable truths, so we have an opposition campaigning to reduce energy prices and ignoring the problems of a dysfunctional economy that created the misery associated with low incomes. Focus groups are set up to find what are the simple wants of the the electorate. The questions are designed to elicit simple responses that can be transferred into easily marketable policies. Never do politicians offer more than a few simple and banal phrases in place of a political philosophy, a something that is easily sellable.

Kierkegaard for me offers an answer to this malaise, that is how do you stop politicians behaving like moths flitting from one policy light to another. He writes of two religious types, religious A and B. The first practise religion without real understanding they know that they must conform to certain religious practices otherwise they will suffer the wrath of God. If fear of God made politicians believe that they should conform with the rules of Christian practice then the mindless inhumanity of Neo-Liberalism will be dropped. A minority would achieve the understanding necessary achieve to become religious B. They have the understanding necessary to develop policy in conformity with the highest moral and spiritual standards. They would be the leaders or natural aristocrats who would lead society in towards a change that would benefit all.

However Kierkegaard admits that his truly spiritual man would be more likely to be an outsider. His criticisms of society would make him an uncomfortable companion to the rich and powerful. Thus man would have to be prepared to suffer in return for a life lived in imitation of Christ. Father Gleb Yakunin a Russian orthodox priest was one such man. He was a fierce critic of the old soviet regime for its persecution of christians, for which he suffered imprisonment and exile. Yet his actions led to a change in government policy, first the destruction of churches ceased and a policy of toleration adopted towards the Orthodox Church. The role of such critics in society needs to be tolerated, beneficial change only follows from listening to them. In Old Testament Israel these men were the prophets. The Jewish people had a schizophrenic attitude towards their prophets they both accepted and rejected them. They recognised the need for such men as only they kept them true to their faith, yet they also hated them for their criticisms. One of the Isaiah’s was sawn in half by angry Israelites and another John the Baptist was beheaded.

In Britain there is a need for such critics, yet their their voice is silenced. The judiciary is going through one of its most repressive phrases, critics of powerful businesses can be silenced by super injunctions or through expensive libel actions. Police spies are used to infiltrate and disrupt opposition groups. The same police through the misuse of bail conditions can effectively silence activists through making avoidance of political protest a condition of bail. Any organised opposition is emasculated and marginalised through repressive laws. Recently legislation makes it impossible for charities and other groups to campaign on policy issues during an election campaign. While the voice of opposition is so effectively silenced there will be no change in society.

It is too easy to criticise Kierkegaard by claiming that he had an unrealistic view of mankind’s potential. Even when he was alive it was said of Kierkegaard that his definition of a Christian as a life lived in imitation of Christ was practically impossible to achieve. Rather than hoping for an unrealistic change, there is an alternative. I want a return to the age of ideology, an ideology such as socialism that celebrates the potential of man, one that should replace the inhumane Neo-liberal ideology that celebrates the brutal nature of man. There can be no more depressing philosophy than that of Neo-Liberalism that sees man as a grasping egotistic animal seeking only to advance their own interests. An ideology that encompassed hope, compassion would constrain the behaviour of politicians. They could no no longer claim indifference to to what can only be described as the evils in British society. They could no longer ignore the plight of the low paid, the least cost philosophy would be replaced by the criteria of fairness. It could easily be achieved by insisting that all businesses that are in receipt of government contracts or funding pay the living wage to their staff.

The emptiness at the centre in to the political debate would be replaced by an ideology that celebrated humanity. There have been plenty such ideologies in the past such as evangelical Christianity, socialism, the ‘One Nation Toryism’ of Benjamin Disraeli and the compassionate social liberalism of Herbert Asquith and Lloyd George. Such ideologies would constrain the behaviour of politicians, their behaviours and policies would be judged against a set of higher standards. Who would not judge the parliaments of the reforming 19th century and early 20th century superior to those of today. Contemporary parliaments are where self interest in the guise of Neo-Liberalism is the only moral standard. These are the no hope parliaments of today, inhabited by politicians whose attitude is ‘that I would like to help but …’ the but being the cruel moral imperative of Neo-Liberalism.

*i have edited and simplified Kierkegaard’s psychological analysis of human spirituality