Wednesday 28 September 2011

The strange, the mad and the dangerous - Labour grapples with policies

Party conferences are times to impress the faithful as well as the wider public. To do this, you can put on memorable performances, or you can reveal novel policies that may define the public debate for a long time to come. George Osbourne's announcement about stamp duty reduction in 2007 was an example of the latter. It defined the discussion about the tax burden and tax justice at times of phenomenally risen house prices for middle Britain.

Labour's conference in Liverpool was a chance to present some equally impressive policies, yet the party decided to field policy ideas that must have puzzled many watching British politics. First up was the odd. On the eve of the conference, Ed Milliband announced that Labour would lower the tuition fee cap to £6000. This surprised many, not least the student unions, since it was Labour's policy to introduce a graduate tax instead of tuition fees. The announcement was hence a U-turn before a full policy was even announced, forcing the party to converge on the coalition's terrain who equally advocate financing universities through tuition fees rather than a graduate tax. Why Milliband felt the need to formulate a policy prematurely on something so sensitive and on something where the Labour party would only benefit from sharp differentiation to the LibDems will probably always remain a mystery.

The strange was to be followed by the mad. In his final conference speech, Ed Milliband announced that any future Labour government would tax 'bad' companies more than 'good' ones. He defined bad companies as those that are 'asset strippers', presumably meaning those that are private equity funded. Is he going to tax companies that create thousands of jobs in the British economy such as AA, RAC or Weetabix into oblivion? Labour as the job terminator, rather than the job creator? If this policy will ever make it into a manifesto, he will be asked, I imagine, what the difference is, not just between a bad and a good company, but also between a 'bad' and a 'good' job.

The list of policies however was topped by the announcement of the shadow culture minister Ivan Lewis that all journalist should have to apply to government for a license if they wanted to publish in the UK. Needless to say that I would not be able to write this blog if such a licensing scheme was to go ahead. The howls of disapproval (or rather the laughter of disbelief) started to rise through the media outlets almost instantly, with many Guardian journalist leading the march.

If you think about it, not even communist regime of Eastern Europe dared to introduce licensing schemes. They operated censorship in a far more subtle way. So what on earth motivated the shadow culture minister to suggest that government should decide who can and who cannot publish? Some journalists were quick to make some rather unkind comparisons between his suggestions and the situation in Zimbabwe.

I am certain this proposal will disappear quickly in the archives, filed under 'indefensible' but the fact remains that this ragbag of policy ideas reflect a party in philosophical and ideological confusion. Labour needs to regain its sure-footedness on policy otherwise it will stumble from one policy disaster to another.

Tuesday 27 September 2011

What is Labour for?

Life on the benches of Her Majesty's opposition is tough. Hardly anybody wants to hear what you say and even fewer people care. The fall from grace for Labour was particularly hard. Under Gordon Brown, the party achieved the second worst result in a general election in its history. 
As the Labour conference is coming to a close in Liverpool, the party had to answer above all one question: what does the party stand for? What is Labour for? 
The instant answer is the easy one: to hold the government to account, to scrutinize ministers and to offer an alternative to the government's agenda. However, at the heart of the struggle for influence in the public's psyche always stands another quest: to define the public debate, to shape the way in which we think about the challenges ahead for society. 
It is this grander project that Labour has to find answers to over the next couple of years. The way back into power will only be possible if it can persuade the British people that its vision of British society contains the right answers to the difficulties of a modern state with a market economy that is operating on a global scale. 
There are two main challenges to defining such a viable vision. The first is that Britain is placed in a difficult spot with a diminishing manufacturing sector, an overgrown banking sector that has failed to invest in technology and the things that create jobs outside the City. Returns for investments in stocks and shares were a manifold of what investment in manufacturing or engineering promised. A skewed education and skills sector has failed to create strong links with industry, producing fewer and fewer apprenticeships and training places. 
The second big challenge is political in nature. While individual lives are lived in villages and cities, in concrete environments and people demand ever more control over their lives, the mechanisms to drive change and impose order on society have become more and more centralised over the last decades. The best example is the NHS. This great national institution is riddled with contradictions: devolution of the NHS into the four components of the home nations England, Wales, Scotland and Northern Ireland; a drive towards 'eliminating post-code lottery' and health inequalities exist simultaneously with an emphasis on individualisation and the need for personalised health services. 
The previous Labour government relied on one dominant mechanism to drive change: central government and targets. It attempted to micro-manage public services but, reluctantly, also created some limited elements of local control, such as local regeneration partnerships. It didnt work. While it frustrated communities that they didn't get sufficient control over important decisions, central government also never managed to ensure that public services improved in line with the enormous amount of extra expenditure they received. 
So the lesson is simple: the state cannot drive change in public services in the way it used to. Once this is clear, the magnitude of the challenge for the Labour Party is revealed. Who or what is to change society for the better? Local communities will want to have more choice, more say and more decision making powers; industries will be more global and public services under the control of central government will become less and less responsive to targets. The old certainty of change driven by central government is gone. Increasing expenditures does not guarantee that lives are improved on a local level. Labour has to formulate a convincing answer to this if it wants to shape the discussions on the future of British society. If it does not, Her Majesty's opposition will consist of the same party for a long time to come. 

Thursday 22 September 2011

Should Britain go non-nuclear?

Despite the catastrophe in Fukushima and a lively debate in many countries on the continent, the British public shows little interest in a full scale debate on the risks and benefits of nuclear energy. The government's position, that nuclear is part of the energy mix required to meet energy demands in the next two decades, appears almost non-controversial here.

Even some of the most vocal critics of nuclear industry in the past have joined the ranks of the advocates of this type of energy, probably motivated as much by the hope that heavy use of nuclear energy may help the government to meet its emissions targets in 2020 rather than by a rational risks and benefits analysis.

Such a 'tacit consensus' may be strange given the scale of the Fukushima disaster. The almost complete absence of a debate on the issue is, however, bizarre.

A recent BBC programme tried to raise some controversy by questioning this consensus. Jim Al-Khalili in his programme on Fukushima and the risks of the nuclear industry asked the question how safe it is, and whether or not its safety record should be a matter of concern (you can watch his programme here

While Al-Khalili freely confesses to have an interest in the matter (he is a physicist), he maintains that he  approaches the issue with an open mind. His main argument, developed as he travels to Fukushima and Chernobyl and interviews experts and ordinary people in both regions, runs like this: The thresholds where radiation is deemed to be dangerous are set so low that a reasonable way of dealing with risks that radiation poses to human life is prevented. If the thresholds were adjusted upwards, people could more quickly be re-settled in the exclusion zone around Fukushima. His argument culminates in the claim that there have only been two deaths from the catastrophe at Chernobyl that can be causally attributed to radiation.

While the programme does show the anguish and suffering of those misplaced by the Fukushima catastrophe, his argument counters its message that nuclear energy is dangerous by arguing that, if more sensible risks assessments of radiation were done, re-settlement at Fukushima could be quicker than anticipated at present.

I call this the scientist view and I have to admit (being one myself) that I always found this way of 'assessing risks' troubling. In essence, Al-Khalili asks us to be rational about the risks and the potential damage if nuclear energy goes wrong. Compared to how many people die in traffic accidents every day, the nuclear industry is one of the safest around, so the argument goes.

Yet this is a deeply disturbing notion, as well as shortsighted and simplistic. If we fail to count the human costs of evacuation, re-settlement and possible radiation and contamination, we are basing our cost/benefit analysis on a false prospectus. Yes, people can be moved elsewhere when soil is contaminated and large swathes of the countryside are made uninhabitable. But we have long ago stopped thinking in merely pecuniary terms.

Loosing your home and your job, on top of loosing everything you cherished causes deep emotional traumata. Such hurt and pain incurs social and economic costs as well. It may be difficult to imagine what it means if 80 square miles of landscape (as in Fukushima) are devastated until we think of it as happening in North Wales, leading to the evacuation of Liverpool. Al-Khalili offers us an insight into the worst of scientific silo thinking. Good scientists have long time ago abandoned this type of isolated calculations when it comes to human and social risks.

Scientists like Al-Khalili usually object that this leads to emotional arguments which scientists are not capable of assessing. Yet, we, as a society, must acknowledge the human dimension. That's why scientists should never be in charge of making decisions for society as a whole. Their view is a legitimate contribution to the larger debate, yet should not provide us with the only benchmark for our thinking.

Tuesday 20 September 2011

Would Greek default bring Greek prosperity?

There have been few things that arouse people's feelings like the impending Greek default. The airwaves and the print media are full of informed and some less informed opinions and debates. Essentially there are two camps at the moment: those who feel that the austerity imposed on Greece is unjustified and creates unacceptable hardship for the Greek population and those who think that Greece has to pay for its sins.

I have advocated the latter but, I have to admit, there is little comfort in such a view. The Guardian comments pages carried an articulation of the first view, you can read it here

The author essentially advocates a default of Greece and the re-introduction of the drachma in quick succession. He believes this will allow the government to de-value the currency and postpone the austerity programme, hence producing less pain for the Greek population.

The fascinating aspect of this view is that it operates with some of the conventional market-supply side frameworks it attacks. De-valuation is believed to bring about a quick recovery of the Greek economy, an increase in Greek exports and hence a significant rise in tax revenue.

This view is, strangely enough, as short sighted as all the IMF programmes of the 1990s were supposed to be. Yet, default is a favourite view of the opponents of reforms and austerity. Why?

There are several simplistic assumptions that would work against a successful recovery if Greece defaults and leaves the Euro.

First, a default will not only be bad for Greek credit in the future, but also for the rest of the European banking system, which, whether they like it or not, is the one that will have to lend the money to Greece once it leaves the Euro. A banking crisis will make quick lending on favourable terms and interests rates to the Greek economy or her government unlikely.

Second, a recovery of the Greek economy will depend on competitive industries and having goods to export. Greece has neither. It is essentially, as many observers commented, still a closed economy, importing goods from the Eurozone (on account of demand through high salaries in the bloated public sector) but able to export little since it has only a slender industrial basis. Being competitive in the world markets, in turn, would depend on attracting investment which, again, cannot come from Government since it is flat out broke, so requires the banks in the Eurozone to chip in. This is highly unlikely given the prior default.

Third, the default will remove any incentive to reform the tax system and to shrink the bloated public sector with massive pension liabilities. So, even after a default, the government will still face an enormous annual expenditure which will drive up inflation.

Last but not least, Greeks are saying they are hurting now since they cannot buy goods anymore as their wages are decreasing. However, things would be even worse after a default and the re-introduction of the Drachma. Since most goods are IMPORTED from the Eurozone, leaving the Euro will make these goods prohibitively expensive. The Drachma will not buy much in the way of IKEA furniture or French perfume. What will be left to buy are goods manufactured in Greece, of which there aren't many. Hence the Greek population will experience a far more serious decline of their quality of life after leaving the Euro than now.

The simplistic equation: leaving the Euro + devaluation = less austerity fails to recognise that Greece in future still needs an enormous amount of steady investment to improve its industries. Any short term relief from the postponement of the austerity and reform programmes are likely to backfire.

To have any chance of overcoming its problems, Greece needs to stay in the Euro and swallow the bitter pill of giving up its fiscal independence. This is a small price to pay for the chronic mismanagement, budget falsification and billions of Euros they received.

Monday 19 September 2011

Should the Welsh Conservatives re-brand themselves?

To some Welsh Conservatives, the Welsh electorate may seem a difficult animal. Since Nick Bourne took over the reigns of power, the party has undergone a remarkable transformation. Previously staunch opponents of devolution, Nick Bourne moved the Welsh Conservatives into more moderate terrain and, over the last two assembly elections, the party reaped the benefits. The Welsh Conservatives recovered from an almost wipe-out in Wales at the general elections in 1997 to being the strongest party after Labour at Cardiff Bay. This is no mean achievement! 
Yet, large parts of the Welsh population have proved impervious to the moderating overtones of Nick Bourne and his colleagues. The Welsh Valleys in South Wales are a good example. Despite the fact that, arguably, Labour does not always send candidates of the highest calibre into battle, Welsh Conservatives struggle to gain sufficient votes there. 
David Melding has argued recently (once again) that this may be a problem of branding (you can read his piece here ). He suggested to change the name of the Welsh Conservatives to boost their chances with some voters who hold generally conservative values, yet tend to vote nationalist. Changing the name to Ymlaen, so he argues, may allow these voters to identify themselves with a re-branded Welsh Conservative Party reconciling their conservativism (with as small ‘c’) with their nationalism. 
I believe this is a dangerous path. And here is why. First, I think it hints at a lack of confidence in the message and policies that the Welsh Conservatives put forward in Wales. Second, it smacks of a PR stunt which may open them up to ridicule. The most important reason however has to do with the way the Welsh Conservatives may achieve power again in Wales. 
Politics is as much a competition about good policies as it is about perception. At some times, perception is in fact more important than anything else. Think of Tony Blair’s catch phrase ‘tough on crime, tough on the causes of crime’. Labour before 1997 knew that they had a problem, they were seen as soft on crime. So they had to change the way they were perceived by the public on this issue. The slogan captured the imagination of those who liked to see a strong punishment for perpetrators of crime, yet it also appealed to those who had a more sophisticated understanding of the causes of criminal behaviour. In other words, Blair’s phrase appealed to two critical constituencies at the same time. It repaired the Labour Party’s image in the public on law and order. 
Is there a lesson in this for the Welsh Conservatives? I believe there is. The key to successful campaigning is to shape public debate in a way that is advantageous to them. I strongly believe that guaranteeing health spending for Wales in the last manifesto was such a positive step. More of that is needed. If politics is about perception, then dominating and shaping the public debate is a critical mechanism to win over voters. Offering sensible policies that address those issues is the second step. Nick Bourne and his team have already developed some with great success, Andrew R T Davies will undoubtedly continue in this vein. 
That, it seems to me, is the best way forward to rejuvenate the electoral fortunes of the Welsh Conservatives. While re-branding smacks of gimmickry, determining the key themes that Labour fail to address and bringing those into the public debate with patience and consistency is the best avenue to power. 

Saturday 17 September 2011

Why are we failing?

It’s been 10 years since the attacks on the World Trade Centre in New York and the sense of crisis has not gone away. George Packer wrote recently in the New Yorker (George Packer: Coming Apart, New Yorker, Sept 12 2011) that the past decade has been one of missed opportunities. No other attack on the US has left the country in a more divided state than 9/11. 
For Packer it is a lack of political leadership, a lack of a unifying narrative that prevented the country to become great again. Although his analysis is thoughtful and measured, I think the crisis has a deeper cause than an absence of a grand narrative. 
There is no doubt that the US, just like the countries in Europe, experience an unprecedented challenge in the economic, political and social sense. Since the late 1990s, the economy has failed to create winners in the middle and lower middle classes. Real wages have been stagnating, jobs have migrated to China or, in the case of Europe to the former post-communist countries, and economic foundations turned out to be shaky, built on enormous personal and governmental debt. As we anxiously watch the jitters in the stock markets and the wrangling of political leaders to get to grip with the Euro crisis, there is above all one interpretation that emerges more strongly than others. It is that we are clueless, bereft of any ideas how to find the exit to this economic and political disaster unfolding before our eyes. 
To be clear, there is no shortage of options, nor any lack of experts. What is missing is a consensus of what we want to achieve, who we want to be in a world that is bound to be fundamentally different to the one in 2001. 
For Packer and others it is a lack of consensus on the basic principles of economic and political life. Yet, despite the rise of the Tea party, I am convinced that political debates in the distant past were often just as acrimonious as the ones we witness. We just have a very short memory, and historians often don’t help by telling grand narratives of unified people marching forward under a banner of national will and determination. 
What we forget I think is that democratic politics is always characterized by a multitude of options. What creates certainty is not the stability of principles, or the sureness of political leaders. Roosevelt dithered about the entry into the European War before Pearl Harbour just as Lincoln’s professed motifs of going to war were a subsequent abbreviation of many ideas. 
What democracy is, above all, is a mechanism to deliberate freely, to think about the options available and to foster a consensus. The crisis we are in is not a crisis caused by a lack of confidence or of principles we hold dear. It is above all a crisis of practices, of mechanisms that structure and organise our public discourse, and bring to bear rational thought on what to do next. 
Given human nature, this should be no surprise. We all feel from time to time anger, rage or despair and our reactions to events around us are often guided by those sentiments. Yet, eventually we come to realise, in our own individual world, that gut feelings are a bad guide to solve our problems. We sit down, take stock and think what might genuinely solve the difficulties we are in, rather than what would satisfy our immediate feelings. This isn’t always easy. It is uniquely comforting to give in to anger and wrath. But once we cool down, and we think clearly we often come to different, ultimately better conclusions about what to do. 
Politics is no different. Why should politics be the rational deliberation guided by a clear vision of the public good? Politics is a creation of human beings, engaging with each others with all their flaws and shortcomings. So we built mechanisms to ensure that rational thought would prevail. We ask people to ‘represent’ us, politicians who, we think, would be able to remove themselves from the influence of gut feelings. 
Yet, politics has also become more immediate, more direct and infinitely more instant through a proliferation of technological means, social networking and the ever present media. So, the structures we originally put in place to ensure that rational thought prevailed in public debate are about to fail. The choices we have about what to do with the economy are not a domain of experts anymore, everyone, including myself, has an opinion which may often just reflect his or her own interests. 
In other words, our political frameworks are failing, parliament, government and civil service are not delivering the disinterested consensual decisions any more. They are moving closer to the strife and uncertainty that characterises all our daily deliberations and arguments. We, as individuals, have always been subject to our emotions, yet our political institutions are progressively becoming subject to them too. The result is a cacophony of voices rather than an emerging choir of finely tuned registers. What has been failing us since 2001 is not the will to unite, to come together, but the absence of political and economic frameworks that provide carefully deliberated decisions about the public good. 

Thursday 15 September 2011

The limits of economic stimuli

When George Osbourne first announced his austerity programme, the time for budgetary prudence was not the best. The US was trying to kick start its economy with the biggest stimulus programme in its history. Last week, President Obama told Congress to ‘pass the jobs act right away’, another enormous stimulus for the languishing us economy, or face the consequences of a long drawn out double dip recession. In other words, while Obama and the Democratic party believe that spending more money will fix the economy, in the UK George Osbourne holds fast to a programme of austerity. 
I am no economist so I wont judge either of the governments nor their hopes which may border on desperation in the face of an unprecedented economic downturn. However, I do know something about John Maynard Keynes and so it puzzles me what again and again Ed Balls, the Shadow Chancellor of the Labour Party, peddles as Keynesianism in action. 
Balls regularly tours the TV studios to say that Keynes advocated governments need to put on significant economic stimuli in times of economic downturns. Hence, Balls argues, Osbourne’s austerity drive is ill-thought out and runs counter to Keynes’ message to spend more in times of need. 
Yet, this is only half the story. Keynes did advocate an increase in governmental spending when the private sector suffered a downturn. However, the foundation of his theory, and the economic debate between Keynes’ supporters and opponents, centred on the issue of anti-cyclical spending. Keynes was keen to stress that the expansion of governmental spending at times of an economic downturn had to be followed by a significant cut in the government budget. 
This for two reasons. First, Keynes clearly understood the danger that economic activity subsidised by governments would crowd out private enterprise. Second, he also saw that in order to increase spending in hard times, government had to be thrifty in good times, so that they retain some room for manouvre when things get tough again. Economist argue about where the threshold lies where ‘activist’ governments turn into monopolist economic providers stifling the recovery of private initiative. 
Yet, there is general agreement that three of our four home nations have skidded fairly closely at this threshold with more than 60% of GDP in Scotland, Wales and Northern Ireland originating with state investment. In comparison, in the 1990s, post-communist Romania and Bulgaria had rates of 66 and 65% respectively. The rate for Germany under Helmut Kohl was believed to be 48% and generally seen as far too high. 
So, Balls’ argument suffers from two errors. First, even Keynes advocated sharp and significant cuts in governmental expenditure once the private sector showed signs of recovery. And second, in order to have space for another stimulus, governments need to roll back their investment in good times so they can act the next time around. 
For Keynes, economic stimuli were part of anti-cyclical governmental investment, rising in difficult times, while shrinking in good times. I have not heard Balls speaking of cutting expenditure once things come back to normal. In fact, the history of his involvement in the treasury indicates that cutting government spending is not his priority. So when it comes to unbounded profligacy, Balls needs to look elsewhere: Keynes wont help him with it. 

Wednesday 14 September 2011

To pay or not to pay for other people's sins?

The Euro crisis is currently focussing some economic and political minds while we witness the possible default of Greece and other Eurozone countries in slow motion. As with all economic problems, there are just as many opinions as experts, but more and more people agree, that eventually, there is only one outcome: Greece leaving the Euro. Many people in the UK (including myself) just feel lucky that we didn't join the Euro, yet, being a German, I also feel for my countrymen in this difficult moment. The question raised all over the airwaves is: Why aren't Germans simply digging into their pockets and bail Greece out? The sums needed are ridiculously small compared to German's GDP. The current installment due this Friday is a meagre 8 billion euro.

However, there is something called 'moral hazard' and its absence in national economies has a fundamental effect on how governments are behaving. Although I am not an economist, here is what I think about the 'moral hazard' of unlimited bailouts.

It's commonly known that Greece, after joining the Euro, lived way beyond its means. It also suffers from a serious lack of economic competitiveness and deep-seated problems with tax-evasion and low revenue. The shocking examples of public sector employees retiring at the age of 55 in Greece with pensions at the value of almost 80% of their last salary are well known. More interestingly, the public sector has also expanded dramatically over the last decade. The reasons are obvious. Having joined the Euro, Greek bonds were gold-plated and desirable. No one thought that a Eurozone country could default. Hence interest rates were low and the Greek government went on a spending spree of enormous proportions. A curious side effect of the massive expansion of state services is often that private enterprises are crowded out, which in turn means less revenue and more borrowing. That does lasting damage to any market economy.

Interestingly, this is not just the story of Greece. This summer I was in a small town in Spain. I was looking for a gym to work out and was told that there used to be several private ones but they had all shut down. Instead the town now had a huge brand new leisure complex that was run by the council. Private fitness studios just couldn't compete with the subsidized prices of the council leisure centre and had to close. The leisure centre was indeed impressive. For a town of about two thousand residents, the centre boasted a 50m swimming pool and a fully equipped gym with various sports halls. This was all available for 2 euros a go.

Now, needless to say, most of the equipment was little used and the swimming pool was almost always empty when I was there. Yet, this was all built and run by the council at an enormous cost to the taxpayer. Well, actually not: it was actually run on borrowed money and it is this what I call the lack of moral hazard. The Greek government, just like the Spanish one, knew one thing. If they couldn't foot the bills anymore, somebody else would. The Germans would always pay up since they benefitted from the Eurozone by exporting to the Eurozone countries.

That in effect meant that countries such as Greece and Spain could spend money like a drunken sailor and never be held to account for it. Until now that is. Wolfgang Schaeuble, the German finance minister, says he refuses to throw more money into a bottom less pit and Angela Merkel is under pressure by her own party not to release the latest bailout installment to Greece.

People say that the Euro is doomed and Greece should default and leave the Euro. Yet this scenario is fraught with problems. Few spell out exactly what would happen to Greece if it indeed left the Euro. Who in their right mind would buy the Drachme if it is re-introduced? The most realistic scenario is that Greece would experience a far worst run on its currency and its banks then it does now. Also, where will the recovery come from once it has left the Euro? Greece does not have any competitive industries. In fact, it is, as one observer called it, even now still a 'pretty much closed economy'. Once outside the Euro, currency exchanges would add to the costs of any producer. Who would invest in a country like that?

The harsh truth is that Greece needs to pay for its party, one way or another. What Germany can do is to stabilise the situation temporarily until the Greek economy recovers. Until then it needs to do what all governments do in these situations: sell the family silver, reduce the extent of bureaucratic controls that stifle private initiative and scale back public services where they hold back free enterprise.

If the Greek government is genuine in their reforms, I am sure the Germans will be willing to pay the bill for now. Yet as we say in German: 'Erst die Arbeit, dann das Spiel.'

Localism or centralism?

There have been some significant changes in the way we are governed in this country over the last decades. Political scientists talk about a shift from government to governance. And politicians complain that, once in power, they can decide precious little, while unelected bureaucrats in Europe or impersonal market forces are the real diving forces of the political agenda.

Curiously, the current government has embarked on a fundamental reform of government that can, at first glance, only compound these problems: I am talking about localism, the desire to devolve decision making powers to the local level, away from London and its faceless civil service. It seems to me that there is little to be gained for the current government if it is successful in this reform. In fact, they have a lot to lose.

Conventionally, central government is held responsible for pretty much everything that goes wrong, from ill-thought out foreign adventures to burst pipes in the local street. Yet, political observers agree that central government has fewer mechanisms today to make decisions that affect people than it used to. A large number of laws are 'adopted' from Europe where European directives are taken over wholesale into the body of national law. On the other hand, national governments are no match for the economic might of international companies, not to mention hedge funds or banks as the recent liquidity crisis in the European Union reveals.

Yet here is the crunch point. Central government is also squeezed by the forces of devolution, transferring power to the four home nations, as well as by the principle of localism. Now, localism is nothing new. It was already the rallying cry of Blair's first government and even Margaret Thatcher talked about it. However, neither Thatcher nor Blair's governments actually put in place the mechanisms to devolve substantial powers to the local communities. The community regeneration partnerships under Blair are a good example. They were the attempt to let communities participate in decision making without quite giving up on pulling the strings, not least the purse strings. The fact is that genuine localism would involve the transfer of tax raising powers to local authorities (beyond council tax and some business rates), a step still unthinkable in the UK.

So, this government is stuck in the same conundrum as those before: between a rock and a hard place, increasingly unable to make decisions, yet held responsible for everything that affects people in their local community.

The latest example of this is the cut to the local authorities budgets by the Local Communities Department. While cuts are administered across the board (with some thought to differential need), it is up to the local authorities to structure their budget in such as way that public services remain viable. The reaction of local councillors have ranged from constructive co-operation to outright obstinacy. We will see who will be blamed if and when public services take a knock. My guess is central government will get it 'in the neck' whatever it does.

Tuesday 13 September 2011

Coalition without legitimate mandate?

Since 2010 the UK is experiencing its first coalition government in more than 50 years. Following general election in May last year and the failure of the Conservatives to achieve an absolute majority in the House of Commons, David Cameron took the unusual step and offered to form a coalition with the Liberal Democrats. Since then, there has been a vocal debate on whether or not a coalition government can command any proper legitimate mandate. At times, some senior Labour figures joined the debate with claims that some bills going through parliament have no mandate since neither of the governing parties won an outright majority. Does legitimacy depend on an electoral victory by a single party? Is all coalition politics inevitably illegitimate?

The question has as many perspectives as there are democratic or electoral systems. I cannot remember ever encountering the claim that the German government may be illegitimate simply because it was a coalition between two parties. Yet, different nations, different customs.

The argument against the current government's mandate seem to have two aspects. First, some observers maintain that governments are elected on the basis of their manifesto and hence only have a democratic mandate to implement what they have included in their manifesto. The second idea the opponents of coalition government put forward relates to the fact that all coalition governments are results of compromises that have been forged AFTER the electorate gave their verdict.

Both of these arguments assume a direct relationship between electorate and elected. In other words, legitimacy is the function of an uninterrupted and uncorrupted link between the choice of voters and those they elect. If governmental legitimacy is indeed based solely on such a clear connection, coalition government presents some serious challenges to legitimate democratic politics.

There are some other views, however, that cast some doubts on this rather simplistic vision of governmental legitimacy. First, some argue (and I think convincingly) that the assumption that elected members of parliament represent the will of their constituents directly resembles, if anything, a convenient fiction. The fact is members of parliament are supposed to vote with their conscience and in the interest of their constituency. It is up to them, however, to judge what this interest is. If the electorate thinks their judgments to be flawed they can re-call them next time around through the ballot box. But there is nothing that necessarily compels members of parliament to act as representatives of the wishes of all their constituents. In any case, given how divided modern society is on many issues, this would be an impossible task.

The second argument is that the notion of a linear line of legitimacy between the electorate and government is not very plausible. Society and government is far more complex. In order to implement policies, government requires much more than just a majority in parliament. It needs to win a public debate on the issues it wants to legislate, plus, to the chagrin of many political leaders, also has to battle the objections of the civil service.

In other words, if legitimacy for governmental action is not simply established by the walk to the ballot box every four or five years, why should it exclusively rest on it in the first place? Legitimacy is much more a result of continuously persuading the public to support legislation or policy rather than a singular act of electoral whim. Legitimacy, so some argue, is an ongoing reiterative process, rather than a linear one.

This in fact puts in place a far better system of checks and balances on the government than linear legitimacy could ever achieve. If governmental legitimacy would only require support every four or five years, semi-authoritarian government may be possible. If, however, government needs to win a public debate and persuade society about its suggestions for change and reform, we all have a stake in decision making. This share of responsibility and share of legitimacy appears to me to be a far more appealing arrangement. The flip-side is that we need to stop whining about 'not being told' in their manifestos what government does and does not do. Governmental legitimacy does not originate with a single act, nor does it end there.

Monday 12 September 2011

Plaid vacates the centre ground

The fortunes of Plaid Cymru have waxed and waned over the last decades. In 2007 they came close to forming a coalition in Cardiff Bay with the Welsh Conservatives and Lib Dems. However, the next four years were then spent with Labour, their arch enemy, and it seems the voters have punished Plaid for this at the ballot box in 2011. In May this year Plaid's share of votes decreased significantly: they lost seats that seemed safe in West Wales, and came in only behind the Welsh Conservatives as the third largest party in Wales. This is a remarkable turn of fortunes. There were times when Plaid couldn't do anything wrong. So what brought it down?

The pattern of Welsh politics is a curious one. Two factors play an important role for a nationalist party such as Plaid. First, there is the defining issue of the Welsh nation. What should Wales look like, and what notion of national identity should it embrace? This question may seem difficult to answer in a modern society, where cosmopolitan urban centres have little regard for a nationalist discourse. However, an idea of the Welsh nation is critical for a nationalist party and, as Wales is becoming ever more modern and more diverse, Plaid's older visions of Welshness are being tested and found wanting by the electorate. So far Plaid has unsuccessfully oscillated between some notion of bucolic Welsh bliss and a modern high tech country. In addition, it was hampered by a contradictory socialist doctrine that advocated the expansion of public services but never explained how to pay for it or how to generate inward investment for the Welsh economy.

The second factor is the brutal electoral arithmetics and the predominance of Labour in the South Wales Valleys. This means that Plaid cannot become the strongest party in the Sennedd. Which leaves two options. It either locates itself at the fringes of the political debate, cultivating dreams of national independence, or it readies itself to go into coalition with Labour to shape the future of the nation. The former may be soothing for a large part of Plaid's constituency, yet it removes the option of being in power in Cardiff Bay. The latter option is fraught with difficulties too since Plaid is bound to be the junior partner in a coalition with Labour and destined to suffer while in power. Junior coalition partners do not fare well generally with their own voters. Coalitions are marked by compromise, more so for the smaller party than for the party that leads.

Given these unattractive options, Plaid should have a natural desire to develop a third option. To become the second biggest party in Wales and eventually form a coalition with the Welsh Conservatives and the Lib Dems. That would allow them to lead the Welsh Government and shape the future of Wales.

Yet, opposition politics are politics of comfort. And so, this weekend at its annual conference, Plaid decided to sulk rather than grasp the nettle of leadership. It almost barred itself (through a binding decision) from ever entering a coalition with the Welsh Conservatives. Given the arithmetics of Welsh voting, this can only mean one thing. Plaid would remain in opposition and have no ambition to be at the heart of Welsh politics. It would effectively cede the centre left ground to Labour and nurse its nationalist dreams.

In the long run however, such a strategy would spell nothing but disaster for Plaid. The Welsh people wont forgive this capitulation in the face of Labour. Plaid may temporarily recover some of its core vote, yet that will never be enough to win a central place at the table in Cardiff Bay.

Thursday 8 September 2011

The joy and pain of contemporary classical music

At first, a confession. I love contemporary classical music. I enjoy the experimentation, the desire to innovate new sounds, and the willingness of many composers to cross-fertilise different types of music.

At the Vale of Glamorgan festival, the BBC National Orchestra of Wales aimed to undertake exactly this, to experiment with novel sounds and to wow its audience with music never heard before. The part before the interval achieved this aim with excellence. Some contemporary music lives and dies by accuracy. If you ever listened to Karajan directing the Berlin Philharmonics playing Schoenberg you know what I mean.

Yet, the BBC National Orchestra of Wales accomplished no mean feast too last night. Under Thierry Fischer its playing has become far more disciplined and last night, directed by Jean Michael Lavoie, the initial piece evoked all human emotions. It was delivered with grace, excitement and excellent precision. It was simply a joy to listen to it. Qigang Chen's piece demonstrated what miracles of sound contemporary music can produce and the richness of the piece was rendered beautifully by the orchestra.

While John Metcalf's Mobiles for Soprano Saxophone was pleasing and funny at times, Mark Bowden's piece, though it seemed popular with the audience, has its problems. For large sections, it was not entirely clear why the cello was made the solo instrument, as it struggled to develop a unique sound or even be heard above the orchestral sound. This was neither the fault of the soloist nor of the director. Both clearly showed a remarkable rapport and, where the piece allowed it, Oliver Coates showed off his extraordinary soloist skills.

However, this was only the prelude to a singular disappointment that perhaps can only happen in contemporary music. Steve Reich's City Life was painful to listen to with its complete lack of imagination and nuance. During the first twenty minutes, monotonous rhythms were repeated over and over again, without significant development. For large parts, the music was simply dull. One reason may have been the lack of variation in the volume level, crescendos were absent, and the faint semblances of techno rhythms contributed to an impoverished sound, rather than to enrich it. This is saddening since modern music has much to offer, from jungle to drum and bass all the way to jazz. However, Reich failed to draw imaginatively on those traditions. The result was a mix of repetitive electronic sounds that quickly started to bore.

Yet. if it is right that the price of experimentation is occasional failure then this event was still a full success. The BBC orchestra played wonderfully and the Hoddinott Hall is still a joy to behold. The acoustics in this hall are light years ahead of the drab and muddled sound in St Davids Hall and the BBC National Orchestra of Wales and its guest director took full advantage of this.

Does inequality make sick?

Tony Blair was famously 'not bothered' about the super rich. However, more recently, the Labour Party has found its passion for a more equal income structure. There have also been some academics who argued for a while that there is a link between income inequality and health (The Spirit Level: why equality is better for everyone by Richard Wilkinso, Kate Pickett). In other words, they claim that there is evidence that the bigger the gap between top and bottom earners in terms of take home pay, the less healthy a society is. Health is often measured by morbidity, i.e. incidences of ill-health.

While for the Labour Party this new agenda may be prompted by its desperate search for its left-leaning voters, the case of academics is more puzzling. I believe there are some problems with their argument and here is why.

First, the evidence available is not in their favour. The Agency for Statistics in Germany has just released the figures of morbidity for the German states. The stats make interesting reading. Hamburg, Bremen and Bavaria, all states with the highest income gap, have the best population health. Thuringia and Saxony, states with the smallest income gap (half that of Bavaria), have the worst health outcomes for their populations.

So the evidence is at least contradictory. More importantly, however, there is, second, another problem with the supposed link between income inequality and health.

There has always been clear evidence that health is influenced by factors (amongst others) such as poverty and deprivation, access to prevention programmes, and health care quality. Now, the income gap says little about poverty. In fact, states with a large income gap between top and bottom earners might still have earners at the bottom of the scale that earn far more than those at the top of the scale in other states that have a small income gap.

In other words, income gap does not mean poverty. It's a relative measure of how far top and bottom are apart, which leaves the possibility (for example Hamburg), that the bottom earners are still better off than those in other areas.

Also, much has been made of the bad health outcomes figures of the US. However the figures there are skewed. Until recently, a small but sizeable minority of people had not access to health care at all, except for emergency care. It is difficult to see how this could NOT influence health outcomes. Early detection and treatment are a central pillar of good health care.

So, the argument will continue, but so far I am unconvinced that we have incontrovertible evidence that the income gap itself makes people sick.

crisis of representative democracy?

This summer the UK political system was shaken by two main events: the trials of politicians who had claimed expenses illegally and the demonstrations against tuition fees. Many people would add another event, the recent riots in some cities, but I firmly believe this is a law and order issue that the political class will address by adequate policing.

Why did the expenses scandal and the demonstrations on tuition fees stand out for me? Mainly because of the fundamental shifts in the way politics is done in this country, for which they are symptoms. The expenses scandal did not just reveal the contempt in which much of the population held politicians of all political colour, it also coincided with a crisis of trust between the represented and those representing them.

The demonstrations on tuition fees was often hailed as another 'political awakening' of young people. I believe it is nothing of this sort. Rather it reflected an unwillingness to accept that politicians could and should take decisions for the people in this country that do not accord with what they had previously promised to do. In other words, the tuition fees saga ruptured the belief that there is a direct link between people's vote in the general election and the agenda politician subsequently enact. This may be a curious aspect of the British political system only, given that Continental politics is often done with compromise between political parties due to the lack of clear parliamentary majorities. However, this rupture was significant since it also coincided with the ascendancy of new media and new technology.

What does this all mean? The decline of trust and the rupture between an (imagined) link between electoral promise and parliamentary work results above all in one thing: a crisis of representation.

This is rarely commented on in the public but I believe it is a more significant development than temporary eruptions of violence on the streets of London or Manchester.

The reason is that it lays bare the ambiguity at the heart of modern politics: that the people's will can somehow consistently be represented by politicians in parliament. Two developments have considerably undermined this useful fiction. First, the rise of modern technology which makes public the type of knowledge that has previously been only accessible to politicians, specialists, or academics. Second, the rise of the call for self-determination, on a personal and community level. Both trends chip away at the notion that a small number of politicians can and should take decisions for a large number of constituents.

The argument in favour of representative democracy has always been that direct democracy is neither practical nor reasonable. Impracticable because modern politics requires fast decision making in a complex world. Unreasonable because party politicians could channel the plethora of ideas into a competition of best political strategies which would play out fairly in the arena of parliamentary chamber.

The gravest challenge to these useful fictions is the recognition by the population that there is no reason why individuals and communities should not take the decisions themselves, that have so far been taken by politicians. Apart from international security, there is little that necessarily requires people to ask a small number of party political representatives to make decisions about their lives. The foundations of representative democracy were always shaky, now they are coming under sustained attack from two sides: politicians who, through behaving criminally, severe the trust between their constituents and themselves, and, on the other hand, a growing awareness that politicians are actually redundant in the bigger scheme of things as new forms of social communication emerge.

Over the next decade or two, politicians will be battling for their position and role in society. The outcome is not certain at all.

Why wikileaks does nothing to enhance government transparency

I wrote on the Guardian CIF website on 7 January 2011

It seems the Guardian is trying hard to backpeddle from its close association with Assange. This is the first attempt to put some clear water between it and Assange. Expect more soon! The fact is that even the Guardian is realising how damaging this whole affair has been to good journalism. Journalism is a profession that requires rules, such as verification of sources, judgement of context and truth. The fact is that it was these rules that made Watergate a highpoint in journalism history. 

Wikileads is the opposite. It is a subversion of the best in journalism. It has degenerated into a smear campaign from all sides and was always bound to end up as a highly personalised matter with somebody like Assange. For Assange it has never been about the truth but about himself. The sadest thing is however that the campaign for better governance and transparency may have been damaged irreparably by the Guardian’s actions. How could they have ever thought the mass publication of stolen documents could further the cause of transparency? This would be like asking somebody to lend you their coat only to steal it first! How could anybody ever thought governments could be bullied into transparency? What will provide transparency is more robust freedom of information laws. Assange neither has the interest nor the patience for this. The Guardian however should!

and on 13 May 2011 

The point of democracy is accountability. Wikileaks refuses to establish even the slightest structure of accountability for itself. Any small company has more accountability by way of board of directors! In fact, Wikileaks publicly refuses to take responsibility for anything UNLESS it is something it sees as a desirable outcome from its own perspective. This is a really strange way of 're-introducing' democratic politics. Assanges' ramblings on 'making governments accountable' is facetious as long as he wants to be judge, jury and prosecutor at the same time. His notion of democracy and public affairs is a strangely warped idea of 'everything must be public' unless it has something to do with me.
However the most significant point is, wikileaks has failed on an even more important point of principle. Assange argues that wikileads will provide more public accountability for governmental action. How to achieve this? By (illegally) obtaining secret documents and publishing them. This undermines the efforts of all those who have for decades campaigned for openness in government by lobbying for a change in the law and for robust freedom of information laws in the US and UK. 

In one fell swoop, Assange has wrecked decades of hard work on this front. He himself has no interest in doing the hard work of lobbying for legislative change. He is only interested in instant, temporary gains without thinking about the long strategy for change. Nicking documents is not a strategy!
The Guardian sadly jumped on the bandwagon but quickly realised it was the wrong train. It started backpaddling fairly quickly and I am glad it has seen the light. Now let the real fight begin: to legislate for a robust freedom of information law in the UK and US. It will take painstaking efforts to persuade and convince people. Assange wont take part in this battle. There is no celebrity status to be had there!