I haven’t blogged in this area for more than a year. What is there to say, other than Trump’s tax cuts will be interesting to watch, given the positive precedents of Kennedy, Reagan and Thatcher .
However, public spending brings out the worst in politicians, in terms of pandering to various interest groups – at all points on the political spectrum – and the persistent inability to cut back. Cutting back, not because of a desire to hammer ‘the poor’ etc, but more because the fabled future generations will be saddled with the potentially unpayable bill.
The can is always licked down the road (see also NHS management techniques).
However, here in Western Europe, there is a view that the USA is different, and that greedy capitalists have failed to apply a welfare state type of safety net. Not so however. Virtually everything in this passage on the new bipartisan US budget deal applies to pretty much all developed economies in Europe and North America. Singapore, not so much.
Of course, last week’s agreement has some virtues. You can’t spend so much money and get nothing in return. We may be spared another government shutdown over the budget, because the agreement sets spending levels for two years. Similarly, the agreement suspends the federal debt ceiling — how much the government can borrow — through early 2019. This presumably postpones another self-destructive debate over whether the government should default on its debt, damaging its credit rating and flirting with a financial crisis.
In truth, much of the spending authorized by the agreement is desirable. Future deficits have been wildly underestimated, because projections for defense and non-defense “discretionary” spending were unrealistically low. On defense, Obama’s budgets reduced readiness, left the services too small and made it harder to counter new technological threats, most notably cyberwarfare. There was a similar squeeze on many vital domestic agencies, from the Internal Revenue Service to the National Parks.
To some extent, the new agreement represents a catch-up from this stringency. Meanwhile, so-called “entitlement” programs such as Social Security and Medicare — for which people automatically qualify — were largely untouched. They represent about 70 percent of federal spending. Together, costly entitlements and expanded discretionary spending produce enormous deficits, exceeding $1 trillion a year, as far as the eye can see.
That’s a huge gap — roughly 5 percent of our gross domestic product — to close or shrink. Most politicians are can-kickers. They want nothing to do with the necessary tax increases or spending cuts, including possible reductions in Social Security, to curb the out-of-control deficits.
Ignoring them seems to involve few economic or political costs. The extra borrowing caused by deficits hasn’t sent interest rates sky-high. Indeed, after the Great Recession, deficits helped the economy recover. Now, despite our political and social problems, foreigners still seem happy to hold U.S. Treasury securities as “safe” financial assets. In general, the public doesn’t seem aggrieved by big deficits, especially when compared with the alternatives.
How many people know that 70% of US federal government spending goes on social security and healthcare? I’m not sure exactly how the two compare, but in the UK it’s half that, 34%. The single biggest chunk is on pensions, of course. And the public, by and large, are happy with it.
We are indeed, all in the same boat. Except Singapore.
Things are ticking over nicely. Three little gems:
48. Unfunny ex MP Eck could be going on tour
What is it about the bullying despotic politically inclined type that makes them want to go on stage? Eck is possibly following in the footsteps of gruesome thug Alastair Campbell (1, 2), in selling his tedious schtick for cash and adulation once the political spotlight has begun to fade. German journalist Matthias Matussek, reviewing Campbell’s nonsense thirteen years ago said: He provided a strange white noise, two hours long. Sounds about right for Eck. What could go wrong?
49. Well this could..
Eck continues (see 47) to damn his successor with faint praise, knowing exactly what the headlines will say.
50. More seriously though. Money.
There is now a more open, and less adulatory mood in parts of the Scottish media when it comes to following whatever the SNP party line is this week. Former Salmond adviser, Alex Bell, transformed himself into a sharp and knowledgeable critic of Salmond and the Nats some time ago. Here he is this week:
There are days when Nicola Sturgeon must wish Alex Salmond gone. Not for the sexist gags or the disloyalty to her (though how he would have hated that in return). It is the legacy which leaves her trapped between hard numbers and soft promises, destined to disappoint the nation…
….But she is never free of the legacy, the memory of her political mentor, as Salmond is built into every atom of the modern SNP. She can no more be free than start a new party – a thought that must have crossed her mind in darker moments. Her dilemma is when the annual round of economic figures (GERS) come out showing a big gap between what Scotland earns and what it spends within the UK.
If she admits the truth, that Scottish spending would have to be different to the UK budget, she exposes Salmond’s trickery. If she defends it, she holds the movement back from seeing the truth and facing questions about spending priorities and tax increases…
….Most of all, she has wrestled with the SNP belief that Scotland can afford what it wants because Salmond told them so. Whether Salmond ever believed this, I can’t tell. But it seems unlikely as the man isn’t stupid.
The numbers are the numbers – and they show that UK spending attached to Scotland is greater than Scotland could afford if it was detached. Salmond was smart enough to realise that admitting this would end up irritating voters so he never did. And because of what Salmond spun and the SNP believed, the party are based on an illusionist trick – that anything is affordable.
Painful stuff for true believers, although evident to sentient thinking punters for years. If you want to know what those GERS actually show in their cold, uncomfortable detail, then visit the indispensable @kevverage over at Chokkablog.
I’d like to claim that I got in early on the meme currently gathering momentum: that the SNP’s shrill, frantic and infantile yelling about independence is now proving counterproductive to their cause. In fact, it’s probably all over.
I’m not criticising a legitimate wish for Scottish independence – the only coherent argument for which is self-determination and sovereignty, not economic benefits, not social justice, whatever that is. And that same nationalism contains a very hefty chunk of naked bigotry and resentment, naturally.
By early, I mean last September, which was just the latest in a long line of posts over more than 6 years (for example) about the genuine iniquities of the SNP and some of their fellow nationalists. Not all, but a significant and vociferous mob, even so. They can make life pretty unpleasant.
A few very switched on commentators like Iain Martin and Gerald Warner (try this gem) at Reaction have always got this, the latter dishing out dollops of well deserved and very funny contempt. The newly liberatedStephen Daisley is now another, but they were all in a minority compared to the breathless respect delivered to Ms Sturgeon by very many hacks who know better, or should do, both in England and Scotland. Well, it’s mainstream now.
This post is the latest then in an ongoing Decline and Fall series (1, 2, 3, 4, 5, 6, 7…), which shows little sign of letting up.
30. All the best writing is from the Nats’ opponents
True, the SNP and their fans can do a good line in ad hominem brutality, but if you want top quality lucid, fair and rational writing on the whole independence malarkey, you generally have to go elsewhere. I won’t quote them at length, but apart from the hacks mentioned above, try the done-in their-spare-time work of Kevin Hague, Fraser Whyte and Brian Monteith (try this). These guys are essential reading for lots of professional journalists, with good reason. The three mentioned, by happy coincidence reflect pretty much the political spectrum outwith the SNP Collective Groupthink. Funny that. I have yet to read a coherent, evidenced argument for independence beyond the very narrow confines of the self-determination thing. The Nats know there is no economic case, in fact the opposite, they’re just not allowed to say it.
31. The UK is doing much better economically than Scotland, which may be heading for a recession. Also, better than the EU.
The first bit is a cause for joy, the second part, not so much. However, they’re the facts. Read Murdo Fraser here for a more detailed breakdown of what it’s all about. There are lots of reasons, but despite the ungrammatical talk of ‘growing the economy’, the appointment of gormless rabbit-in-the-headlights dropout Derek Mackay in the theoretically important role of Finance Secretary suggests that in reality the Nats will continue to be happy to dole out abuse to Westminster while hoovering up the excess cash provided by the increasingly controversial Barnett Formula. Scotland, viewed in isolation, is teetering on recession.
32. Those pesky polls
Hot off the press are these two polls. If I may lift the details from Politics Home earlier today:
The Kantar survey found backing among Scots voters for the break-up of the UK has slumped from 47% to 40% since August last year.
It also showed that nearly half of them do not want a second independence referendum to ever take place.And barely a quarter of Scots back Nicola Sturgeon’s call for another breakaway vote to be held in either spring 2018 or autumn 2019.
33. The Scots don’t actually love the EU. Why would they?
More polls, but in fact, any sentient human in Scotland might question why Miss Sturgeon is putting it about that the Scots love the EU. It’s hardly on everyone’s lips. At best people don’t really care.
The ScotCen annual Scottish social attitudes survey found that two in three Scots (67 per cent) either want Britain to leave the EU (25 per cent) or for the EU’s powers to be reduced (42 per cent).
This was a 14 point rise in Euroscepticism in Scotland from 2014 and 27 per cent increase based on opinions in 1999 when the Scottish Parliament was opened.
Perhaps the neatest summary of the state of play of the SNP in power is from the erudite and perceptive farmer/historian/Hellenophile/linguist, Victor Davis Hanson. He is describing the then mayor of NYC, billionaire Michael Bloomberg’s inadequacy in the basic tasks that he’d been given:
The Bloomberg syndrome is a characteristic of contemporary government officials. When they are unwilling or unable to address premodern problems in their jurisdictions — crime, crumbling infrastructure, inadequate transportation — they compensate by posing as philosopher kings who cheaply lecture on existential challenges over which they have no control.
A second independence referendum is exactly that, something over which they have no control. Hanson poses a question, to which in Scotland the answer appears to be yes:
Do our smug politicians promise utopia because they cannot cope with reality? Do lectures compensate for inaction?
So with that in mind, here’s the latest choices from a cornucopia of SNP nonsense…
24. The creative use of the conditional
Thanks to Wikipedia for this: The conditional mood (abbreviatedcond) is a grammatical mood used to express a proposition whose validity is dependent on some condition, possibly counterfactual. It thus refers to a distinct verb form that expresses a hypothetical state of affairs, or an uncertain event, that is contingent on another set of circumstances.So far then, regarding the fabled Indyref2, we’ve had:
The Scottish First minister claimed autumn 2018 would be the ‘common-sense time’
The SNP leader has claimed a vote on separation is ‘highly likely’ and has now given her clearest hintyet that Scotland could bejust 18 months away from another vote…ifthat is the road we choose to go down.
Pressed on the timing of a possible second referendum while on BBC Two’s Brexit: Britain’s Biggest Deal, the First Minister said she was “not ruling anything out”.
Sturgeon said that if May failed to do so, then “proposing a further decision on independence wouldn’t simply be legitimate, it would almost be a necessary way of giving the people of Scotland a say in our own future direction”.
A Scottish Government source said: “We have made clear an independence referendum is very much on the table as an optionifit becomes clear it is the best or only way to protect our vital national interests.”
Ms Sturgeon has warned another independence referendum is “almost inevitable” in the event of a hard Brexit and has hintedshe could name the date for a new vote next month.
…and so on and so on and so on. I know that the highly overrated Sturgeon – who must now be looking over her shoulder at a predictably unpleasant sight– has to placate the noisy zoomer fraternity, but every sentient citizen of Scotland is rapidly getting fed up of this political footsie.
Says who? Er…says Salmond’s own economic guru, nice guy Andrew Wilson. Which lead to the correct response (from @murdo_fraser), “If the SNP is now admitting oil is a bonus, it must set out which taxes would rise and what public services would be cut in order to fill an independent Scotland’s £15bn deficit.”
27. A new referendum has never been less popular.
According to this poll: A Panelbase survey of 1,020 voters for the Sunday Times found that support for an “indyref2” before Brexit — which is scheduled to happen by March 2019 — dropped from 43% last June to just 27% last week. The poll also found that 51% of Scots oppose a second referendum within the next “few” years.
28. The SNP are hopeless at governing. Still.
The dismal education record of Scotland under the SNP actually lead to that very rare beast – a productive Holyrood debate. As Labour’s Iain Gray put it: “Yes, our schools need reform. But, above all, our schools need more teachers with more support, more time and more resources to do their job. That is the core reform. Failure to deliver it is the defining characteristic of the SNP decade in charge of education.”
He’s increasingly reminiscent of Captain Mainwaring in Dad’s Army, and if Eck thought this would be a credible photo-op, I fear he’s mistaken. However it did provide one comedy highlight of the culture that prevails in parts of The Democratic Republic of Scotland (see pics below, my thanks to @BrianSpanner1).
…then you can probably understand a large chunk of what matters in practical management of the economy and allied matters. So much economics is rubbish, witness the terrible track record of academic economists when they issue their fatwas on Maggie, Brexit etc.
The other consistent issue is the abuse of JM Keynes’ thinking and advice to justify almost any stupid politically inspired policy (see the last Labour administration). As it’s been pointed out:
Keynes was determined to establish for the post-war world a global exchange rate regime that placed equal obligations on deficit and surplus countries to adjust, thereby ensuring that the new system did not have a deflationary bias. This is most definitely not the system that we have today.
The extract is from a very good article by City economist Roger Bootle and businessman John Mills (a Labour supporter), both of whom have long argued that the pre-Brexit overvaluing of the pound has beeen very bad indeed, and that the current correction is essentially good **. The whole piece is sound, but here’s a key paragraph, looking at the basic concepts:
Moreover, there are links between the current account deficit and the UK’s other serious deficit, namely the fiscal one. The financial balance of the UK private sector, UK public sector and the overseas sector must sum to zero. Accordingly, if the government tries to improve its financial position (i.e. the gap between expenditure and tax revenue) without there being an improvement in Britain’s overseas balance, then this can only happen through a worsening of the private sector financial balance, which is often difficult to achieve. Another way of putting this is that policies of austerity often fail. By contrast, a spontaneous improvement in the current account of the balance of payments would usually improve the financial balance of both the public and private sectors. Higher incomes (from net exports) would automatically improve the financial balance of the private sector and, as they pay taxes on this income (and receive fewer state benefits because of increased income) the public deficit will fall.
You don’t have to agree with them***, but as a context in which to discuss the detail, it’s spot on.
A few years ago The Knife wrote a brief summary piece about the now happily discredited Alex Salmond’s ongoing attempt to use his acclaimed gifts of lying and bullying to make Scotland independent (AKA ‘still dependent, but on someone other than those English bastards’). My post was entitled Alex Salmond: My Part in His Downfall. Older readers may recognise this as an allusion to one of Spike Milligan’s war memoirs – Adolf Hitler: My Part in His Downfall. It’s a catchy phrase, but I wouldn’t want it to be taken as yet another tiresome comparison to a well known ranting demagogic bigoted nationalist despot. Heaven forbid.
The above title repeats the literary steal, in this case channelling Evelyn Waugh. I know it’s unoriginal. Oddly enough, long after my Salmond post, an excellent book appeared with the same title, written by one of the true cognoscenti in Scottish political hackery, Alan Cochrane, most recently of the Daily Telegraph, though I’m unclear whether he’s still there, given their axe swinging. It would be their loss. Cochrane is an amiable fellow and a wonderful writer, who has delighted millions with his precise and knowledgeable takes on whatever malign nonsense the SNP are promulgating in any one week.
In this respect Nicola Sturgeon is every bit as bad as the wretched Salmond, she just tends to get better press because she’s less unpleasant to the media. Her ‘achievements’ in power are limited, to put it politely. The trouble with even the well-intentioned balanced media, is that so many of them are remote from the battlefield. Superb writers like Fraser Nelson amped up the independence threat before the 2014 referendum when in all honesty it was never a goer. It still isn’t. The Nats are still benefiting from the same distant reporting, when Sturgeon’s every cliched appeal to her base is recycled weekly with the threat that another referendum is round the corner. It isn’t.
The two writers who are best on this are Gerald Warner, and Cochrane, who both now feature on the newish website of another fine analyst, Iain Martin, called Reaction. Martin is a Scot living in London, who is thankfully far more robust in his opinions and insights than most of the expat hacks. Don’t get me wrong – there a quite a few left in Scotland, like Euan McColm and Stephen Daisley, but not enough. The Nats don’t appreciate their work.
…the only people I hear even considering another referendum are either SNP stalwarts or journalists desperate for a story.
Ms Sturgeon has to keep the referendum threat on the boil to keep the daftest of her supporters on side, even if sober-sided realists in the Nat ranks – such as former leader Gordon Wilson, one-time deputy leader Jim Sillars and ex Scottish Cabinet member Alex Neill – have extremely grave doubts about the prospects of another independence vote.
To keep the zealots happy and feed the fears of all in London – whether London Scotties or Tory ministers – she’s been forced to make roughly the same speech, albeit with her fingers and toes firmly crossed, every couple of weeks, warning that independence is still very much on the cards because of Brexit….. It is a fact that the prospect of another independence referendum will keep rearing its ugly head as we enter the conference season, with the issue certain to dominate the Nats Glasgow event in October. But it is extremely doubtful if circumstances – especially on the economy where an independent Scotland would face a £15 billion black hole – will change much.
As a result my advice to my Anglo-Scot colleagues is simple one: Stay by your phones, lads, I shall tell you when to panic.
Perfect. Despite such sense, it can be hard to discern this stuff. Two of the doughtiest campaigners that I know, both against a Yes vote in the 2014 referendum – one a journalist, one a politician – were deeply concerned that their resounding victory was just a pause in the fight. I don’t think so. Here’s Warner on a similar theme:
A second independence referendum would be meaningless since only Westminster can authorise a binding plebiscite. All Sturgeon’s referendum would amount to – if she were ever rash enough to waste Scottish taxpayers’ money on holding it – is a glorified opinion poll, with no constitutional significance whatsoever. Even in those circumstances Sturgeon would be insane to risk it, since current opinion polls show Brexit has had no effect on voters’ opinions on the Union and the SNP could expect to be thrashed again, burying the separatist issue at least for a generation.
Unfortunately Sturgeon’s announcement came just 24 hours before the publication of this year’s GERS (Government Expenditure and Revenue Scotland) figures; it may even have been a cackhanded attempt to distract attention from them. The latest statistics represented the SNP’s worst nightmare.
The GERS figures showed Scotland’s deficit now stands at a crippling £14.8 billion, or 9.5 per cent of GDP, compared with 4 per cent for the UK. Oil revenues have plunged from their peak by 97 per cent to a derisory £60m. If Nicola thinks these are favourable conditions in which to fight an independence referendum, good luck to her.
He’s actually being polite. He can be a lot more biting (and funny).
In fact, it has occurred to quite a few people, including myself, that despite the endless hype, the SNP’s trajectory is not at all good, not for their alleged dream. (I have a theory that the few wise heads don’t actually want independence. Far too much hassle and responsibility, if they can just get along enjoying the perks, the aggro, and a certain kind of low rent adulation from folk who don’t know any better). So I thought I’d do a quick recent timeline. It speaks for itself.
1. Scottish Independence Referendum 18th September 2014
…a relatively easy win for No, despite a wildly aggressive and triumphalist campaign by Nat maniacs: The “No” side won, with 2,001,926 (55.3%) voting against independence and 1,617,989 (44.7%) voting in favour.
Remember that we only had a referendum because Cameron rather nobly agreed to it after Salmond unexpectedly won an overall majority in the Scottish Parliament in 2011. In retrospect that was their high water mark and it generated colossal quantities of Salmond hubris and hot air. It doesn’t take much.
We had something of a lull then, despite almost constant drivel from excitable Nats about “Indyref2”, even though they’d just been decisively gubbed in Indyref1.
2.UK General election 7th May 2015
It may seem odd to include this, but even though the Nats sent 56 clones to Westminster, their hated enemy, the Conservatives won an overall majority and were clearly not interested in Indyref2, ever. In addition, although Salmond will always be a solipsistic thug, he had acquired certain street smarts over the years, which Sturgeon, despite the robotic Stalinistic acclaim, just doesn’t have, yet she’s their leader.
However, they seemed to be on an electoral roll, surely…?
3.Scottish Parliamentary election 5th May, 2016
Well, that didn’t last long. They may still be running ‘the show’ (not a big deal in reality) at Holyrood, but they lost their majority, back to being a somewhat feeble minority government, in a large part thanks to those evil Tories having a resurgence. That wasn’t in the script. This was Sturgeon’s first real electoral test. The brave face didn’t quite convince.
4.SNP love triangle 22nd May 2106
The man accurately described by Euan McColm as ‘charmless’, Stewart Hosie, quits as SNP Deputy Leader because of his shenanigans with a posh English lady. Actually Hosie’s former wife, also an SNP politician, is a good egg, so I mention this just to keep the narrative accurate. He became (more of) a laughing stock. Another SNP MP, dopey Angus McNeil, was the third point of the triangle
5.Brexit! 24th June 2016
Britain votes to quit the EU, in Scotland the SNP make a lot of the % margins. The actual numbers are less exciting: 1,661,191 Remain to 1,018,322 Leave. That’s a difference of only 642,869 people, which is 12% of the population and 16.5% of the Scottish electorate. Yes it’s a majority, but hardly a ringing endorsement.
Needless to say Sturgeon and the Nats immediately went berserk with silly claims along the lines that Scotland just loved the EU, that Holyrood could block the result (very embarrassing that one), and that Indyref2 was now inevitable, because, y’know, the Scots really love the EU bureaucracy, but the consternation caused by Brexit in certain Hyndland salons seems to have died down pretty quickly, really. The concept that the EU might not want an essentially bankrupt independent Scotland fomenting trouble in Catalonia and elsewhere into the bargain, never seemed to cross her mind. History will not be kind on this one.
In the real world that the rest of us inhabit, neither business nor the voters agreed with her and her Nat toadies, that Brexit mysteriously made independence more attractive. The SNP parallel universe is a mysterious place.
6.The Named Person scheme gets hammered by the Supreme Court, 28th July 2016
With the SNP, authoritarianism is a constant temptation, to which they normally succumb. I have commented previously on their Jacobin tendencies here, where they seem to have decided that the state supplants parents, by right. It’s already failed, very tragically. Don’t these sanctimonious idiots think anything through properly? Clearly not. The Nats are now having an “intense consultation”, the sort of things that grown up governments normally do before pulling the trigger.
7.The SNP lose a significant by-election, 12th August 2016
Well yes, and it wasn’t widely reported considering the detail. The SNP leader’s own father, Robin Sturgeon, stood for an SNP seat in the Irvine West by-election, and lost. To the dismal remnants of Scottish Labour, who became the party with the most seats as a consequence. I would say that tells us something interesting about the grass roots of Scottish politics. If he’d won, as they clearly anticipated, we’d never have heard the end of it.
8.The Scottish Government Expenditure and Revenue (GERS) figures are released 24th August 2016
Put simply, Scotland as an independent nation is bust. Totally. Happily the UK isn’t quite. The Scottish deficit (not total debt) is officially £14.8 billion. This is rather important, and is one reason why Salmond is truly the most lying liar of all lying politicians. He makes Hillary Clinton look like George Washington. It’s a long story, but the Zen Master of GERS interpretation is the mighty Kevin Hague, over at Chokkablog. The Nats hate him of course. Read his long running commentary, it’s better than most professional journalists have managed.
9.The UK government politely tells the SNP they’re not needed in the Brexit plan, 2nd September 2016
This didn’t go down well. Having ranted about the iniquities of Brexit, Sturgeon appoints a Brexit minister, the ludicrous Mike Russell. He has no apparent role. The SNP are sad. Eager to get in on a process from which they are correctly excluded, they form an SNP Westminster committee to emulate Russell’s ignominy.
10.The SNP’s raison d’etre is independence, so when they announce their programme as the Scottish Government on 6th September, 2016….
Happily, some things are still within the party’s gift. So after the thrilling announcement in June that ‘the Summer of independence starts here’, Ms Sturgeon unveils her legislative programme for the forthcoming Holyrood term. What are the plans for Indyref2 that the foaming hordes have been eagerly anticipating, nay, promised, by their Nat overlords? Er…..nothing actually, just a weak-kneed ‘draft’. As Iain Martin aptly puts it: “Consulting on a draft is the government equivalent of a cash-strapped would-be tourist ordering a bunch of glossy holiday brochures and saying “we might go for St Tropez this year.””
I can’t be bothered to spell out the incompetence in administrative duties and basic educational and NHS needs, the grim faced North Korean approach to party management and independent thought, the humourless obsession with social media points scoring etc etc. None of it is hard to find on the internet, as they haven’t got round to censoring it. Yet. Chuck in the as yet only rumoured other ‘situations’ in the party, and one doubts that this cavalcade of incompetence, scandal and chippiness will go away soon.
So, from a glorious independence rolling in oil money to obsessing over the occasional tiger that finds its way north of the border, in just under two years, with support evidently and inexorably draining away.
It’s a joyous, deserved slow motion car crash. Well done everyone.
There are plenty of people making hay over credit agency Moody’sdeclaration that the UK economic outlook has turned ‘negative’. This may or may not be correct. The rider that there will be “a prolonged period of uncertainty” doesn’t look like a particularly insightful comment, whatever their data sources. It’s not that long ago – February 2013 in fact – since Osborne’s economic approach was hammered using (Moody’s) removal of its Triple A credit rating. This was because “the government’s debt reduction programme faced significant “challenges” ahead”.
Well, something must have happened that was unanticipated by the agencies if Moody’s rival, Standard & Poor only yesterday, after Brexit, decided they would remove the Triple A status, apparently joined by Moody’s, as well as Fitch (the third big agency). One suspects that Moody’s original claim had been rather overdone (and possibly this one too). Had they in fact restored their Triple A rating in the interim? It looks like it.
My point in all this is that these agencies are big businesses in themselves, with their own agendas. When they get it wrong it gets less publicity. Even uber-liberal cat loving Nobel economic guru Paul Krugman thinks it’s overdone :
“…right now all the talk is about financial repercussions – plunging markets, recession in Britain and maybe around the world, and so on. I still don’t see it. It’s true that the pound has fallen by a lot compared with normal daily fluctuations. But for those of us who cut our teeth on emerging-market crises, the fall isn’t that big – in fact, it’s not that big compared with British historical episodes. The pound fell by a third during the 70s crisis; it fell by a quarter during Britain’s exit from the Exchange Rate Mechanism in 1992; it’s down about 8 percent as I write this….This is not a world-class shock”
These appeals to authority, in this case credit ratings agencies, are an omnipresent feature of modern life, hugely abetted by the intrinsically unreflective nature of much of the internet and its social media. That is not to suggest that all such pontifications embody the fallacious appeal to authority – but clearly some/many of them do. Nearly all of the EU referendum campaign was built on unreliable speculation on both sides (which is why this was the single best argument I read on the topic).
I call it the Formula 1 argument. F1 as we know and (possibly) love it, is a suitably important sounding name for the fastest level of motor racing. It is overseen by FIA (Fédération Internationale de l’Automobile) otherwise known as the Association Internationale des Automobile Clubs Reconnus, where the last word means ‘recognised’. Recognised by whom? In other words, although FIA has historical precedent, it is essentially a self-appointed authority. There is nothing to stop the entire set of F1 teams decamping to a brand new tournament calling itself whatever it wants. Boxing has already recognised this, which is why there are currently four ‘world’ authorities – the WBC, WBO, WBA and the IBF. Big bucks all round with their many different titles to fight for.
Football is the same. Let’s dump FIFA and invite all the countries to play every four years in a new tournament, preferably in somewhere with an appropriate climate (not Qatar). We can call it the Mundial. Who decided a bunch of corrupt phonies like FIFA should still get the prize? The main reason of course is that like Formula 1, like boxing, there is a very healthy living to be made from the many lucrative sidelines., and it’s worth clinging on to.
And you get it in medicine, all the time. The phrase ‘top doctors’ is regularly trotted out, and is frequently associated with the most paternalistic self-important drivel. One of my favourites is when the grandly named King’s Fund pronounces. They self describe as a “health charity that shapes health and social care policy and practice”. Perhaps they do produce the odd good idea that no-one in the NHS would come up with, but in reality, they are a private body with plenty of well paid staff, some of whom may have a sketchy knowledge of actual health care delivery. An acquaintance of mine went for a job there, and it was very revealing. The key thing is the brand name, which relates to a long lost charitable fund named after King Edward VII (died 1910). Somehow, if it was just called ‘private NHS advisory think tank’ – a more accurate description – I feel its authority may appear diminished.
And on that note, what about the ‘Royal’ colleges of medicine, surgery etc? The presidency of these bodies is undoubtedly a classic bully pulpit, but what are they for? The answer is that they organise the odd educational event, they run (very good and necessary) postgraduate exams, and they produce not very good journals. None of this comes cheap. They also, however, choose to proclaim on NHS issues where they may or may not have any real insight. Naturally they tend to get a media hearing, and sometimes a governmental one. This lapses rapidly into ex cathedra nonsense in many cases, and gets the NHS nowhere. An academic colleague of mine, who is extremely competent, distinguished and sensible and did himself hold high office in such a college, wearily confessed to me recently how disillusioned he was by the institution “I’m not sure what it’s for these days”. Like most clinicians, he now favours his own specialty organisation when it comes to practical issues, and for very good reasons.
Here’s a recent letter from Michael Romberg in the FT. Perhaps it is too unrealistic, but we should always revisit economic concepts that government would prefer us to think are set in stone. The Overton Window can always shift. Income tax is another – why do we hand over our dosh in such huge amounts, when it began as an emergency levy to fund war? Who realises that it “remains a temporary tax, which expires on April 5 each year, and has to be renewed as a provision in the annual Finance Bill. “? Just saying…
This is Mr Romberg’s smart letter:
Sir, The year 2015 was one of zero inflation for the UK (FT.com, January 19). I suggest that zero inflation should be our target for the future.
We have now had 100 years of continuous inflation since the start of the Great War. But for a period of more than 200 years before then, prices were broadly stable in the long term, with periods of rising prices offset by periods of falling prices. The average price in London of a loaf of bread was about 5½d in both 1694 and 1894.
There are two main economic arguments for inflation. First, it makes downward wage adjustments easier as workers will accept a fall in real wages but not in nominal wages. However, relying on money illusion is hardly an ethical policy. Second, unanticipated inflation moves resources from “unproductive” savers to “productive” borrowers. But with only one-fifth of UK debt held by non-financial corporations that argument is overstated.
Zero long-term inflation would bring benefits. Long-term planning would be easier. Relative price movements would be clearer. The economy would be neutral between borrowers and lenders, with the interest rate reflecting only time preference and the balance of supply and demand.
Nor should we worry so much about deflation, periods of falling prices to offset previous price rises. Concerns about deferring spending apply only to investment goods — few would skip lunch because it will be cheaper next year. Eventually everything needs to be replaced. And many pay extra to have the latest piece of kit. Those who draw apocalyptic lessons from Japan are looking only at gross domestic product without considering the falling working age population.
Not bad. I quite like price stability personally, and I’ve certainly had a fall in real wages.
This post is a bit of a double header. The first part is to bring to the attention of anyone interested a quite remarkable bit of presentation and exposition by Scottish businessman Kevin Hague (AKA @kevverage on Twitter). Hague has been a major thorn in the side for the numerous SNP fantasists who are either too thick, deluded or malign to admit that the entire Nationalist economic ‘strategy’ went up in smoke a long time ago – the main reason they lost the referendum, as the public aren’t daft. He seems to do this stuff in his spare time, and it is quite brilliant in both content and execution. His Chokkablog is great reading. Any teacher or lecturer could learn from the clarity of his thinking and his use of evidence. The video is worth 8 minutes of anyone’s time, particularly if you live in Scotland. See what I mean:
You could probably rename that video ‘why Scottish independence is dead in the water, whatever you may hear to the contrary’. The point is that besides Hague’s narrative and logic skills, he is a genuine practising economist, ie: a succesful businessman who sinks or swims according to his decisions. This is compared to current Finance Minister John Swinney – nice guy but a politics graduate who has always lurked in the public sector – Alex Salmond, who bafflingly claims to be an economics guru because he worked for RBS aeons ago, despite his lies/ramblings over the years, and Nicola Sturgeon, a lawyer who has only worked briefly in that area, then the public sector. In fact the SNP have still not provided any factual and coherent assessment of the Scottish economy. Who would you trust with your dosh?
Cross the border and head today for Westminster, where (history graduate) George Osborne knocks out a budget that is economically cautious and safe, but politically astute. No Eck-like lies or wild claims. The initial reception is remarkably good, both from fans and enemies – as the Guardian says: a dish of Conservative and Labour ingredients seasoned with the promise of economic competence. Both Osborne and Hague frame their message around evidence freely available to the public. Plausibility and pragmatism.
The Knife, as an interested observer, makes no claim to economic expertise, but I’m happy to pay homage to Hague. The standard of debate in Scotland has been so poor at times, he stands out like a beacon of common sense and reasonableness. When it comes to Osborne however, four years ago when the Osborne hatred and the cliched omnishambles claim were really building up, I invented PWUGO (People Who Underestimate George Osborne), in response to the now utterly defunct DUEMA (I lifted Iain Martin’s witty joke). PWUGO appears to have a rapidly declining membership now.
The point is that Osborne always struck me as having genuinely thought things out carefully, developed a long term plan accordingly, and stuck to it. This was greatly helped by Cameron’s refusal to sack him, despite a clamour which reached a peak in 2012, aided and abetted by Ed Balls and serious political commentators alike**. Nobody knows anything, as the saying goes.
My conclusion: you don’t have to be likeable (Osborne struggles) to make it. You do have to be serious, plausible and authentic. Both Kevin Hague and Osborne in their different ways demonstrate this. Salmond and his cronies, along with the two Eds, have proved that the alternative approach always ends in failure. Deservedly.
Bizarrely, it seems that Boris Johnson, the bien pensant left from various parties and the Scots Nats all share the same political philosophy. To quote Boris:
“My policy on cake is pro having it and pro eating it.”
I see this all the time, because I’m a standard middle class professional, who pays a huge whack in taxes, and I work in the public sector, where I’m fairly well paid. The thing is, I’m not complaining.
I have various colleagues – not as many as you might think, as NHS surgeons tend to be realists, not fantasists – who bang on about Thatcher (stepped down twenty five years ago), Tories (I am not one, by the way) and ‘unfairness’. Oddly enough none of them actually claim the NHS is being privatised, because it’s manifestly not.
All these people, and many many more, including some of my relatives, rant on about Michael Gove (the most polite bogeyman ever), Osborne and Cameron as if they’re devils incarnate. Strangely, rich middle class politicians like the politically late Vince Cable, Ed Balls, even the monstrous hypocrite Alex Salmond, get a free pass. Same for hacks like the ridiculous and wealthy Polly Toynbee, Will Hutton, James Naughtie and the rest of the BBC cosa nostra.
My theory is that in the privacy of the polling booth, quite a few of these people probably voted Tory. There was an interesting breaking of lefty ranks when the mansion tax absurdity looked like it might become reality, and various dopey showbiz types realised that Ed Balls actually did intend to rob their bank accounts, if given the chance. I’m pretty sure that the Guardian editorial conference finds someone like Dave far more congenial than they would ever admit to in print. However, none of these people would ever relinquish their right to complain in public but benefit in private.
You have to be nearly my age to remember the benefits that Thatcher provided for all of us, not just Tory voters. No-one would ever go back. The Guardian and the Mirror rapidly copied Murdoch’s new production techniques that lead to the famous Wapping strike. Everyone takes easy access to communications for granted – phone, post offices etc – believe me, it wasn’t like that in the 70’s. There are hundreds of practical, everyday examples.
The SNP are possibly the most hypocritical of them all. Here is the incisive Iain Martin, who understands the Nat psyche far better than most of the other London based hacks, on ‘Full Fiscal Autonomy‘:
If the Nationalists complained about getting such a deal, with full fiscal autonomy, because the collapse in the oil price will leave a massive black-hole in Scotland’s finances, there would then be the beautiful spectacle of the SNP complaining about the Westminster Tory-led government wanting to give the Scottish parliament too much power. In such circumstances, God help Scottish taxpayers.
It goes further. At every election/referendum there are always a few public figures so far up their own backsides that they issue proclamations about leaving the country if they don’t like the outcome. The most delicious of these is naturally Paul O’Grady.
This is a professional Scouser of limited talent, who made a fortune by playing a professional Scouser drag queen whilst tapping into the anti-Thatcher zeitgeist from 1978 onwards. He now doesn’t wear a dress, but the act is the same, and naturally, given he’s on the BBC a lot, he’s a publicly funded multimillionaire. As Paul said:
“I can’t live under this bloody Government any more. I am going to get a house on the Lido in Venice. I have paid a fortune in tax and I will say ‘you can have that mate’. What I am going to do in a house on the Lido in Venice when I can’t speak Italian and hate pasta, God only knows. But I can’t live under this Conservative Government, this Coalition. That is why we have to vote Labour, we have to get Ed in, we have to make changes.”
At the time of writing, he seems to still be here.
Similarly, as everyone knows, if you genuinely want to pay more tax, as opposed to lofty declarations about the desirability of such a course of action, then HMRC will gladly accept your cheque. I’m making enquiries, but it seems that the anticipated flow of money from North London to the Treasury has yet to start.
Really, all these idiots should publicly thank all the voters who stopped Miliband et al getting in, because they are the major beneficiaries. And in their heart of hearts, they know it.