The Myth Of An Alternative To The Bank Bail Out

Last month I was particularly angered by a comment from Defence Secretary Dr. Liam Fox when he said that the main reason for the cuts in defence expenditure was no fault of the coalition government rather it was the consequence of the sustained damage Dr. Gordon Brown had inflicted on the economy as prime minister 2007-10.  Among leading Conservative politicians, Fox has been one of the most vocal in attributing the blame for the UK's economic problems on the previous Labour governments, more so even than Prime Minister David Cameron and Chancellor of the Exchequer, George Osbourne.  Cameron and Osborne use the large deficit created by bailing out the banks at the onset of the recession as the excuse for their harsh public spending cuts, which would have been imposed even if the UK was in a boom because the current batch of Conservatives believe that the state is too large and needs to be culled as abruptly as possible.  Fox, however, takes it a step further and peddles the idea that for some reason Brown and his government deliberately 'wrecked' the economy for some unknown motive.  Fox, in many ways, is a throwback to the 1970s and 1980s seeing some Communist conspiracy at the heart of British government trying to do the worst for the decent British public.  The reality was that whilst governments do and pursue a particular agenda, and Brown less vigorously than the prime ministers that bracketed him, a lot of their activity is responsive rather than proactive, particularly in the age of the globalised economy when the demand from copper in China leads to thieves in the UK disabling electricity sub-stations and sections of railway in order to get the scrap copper.

All governments say that they could have done things better than their rivals.  There is an implication in everything that Cameron, Osborne, Fox, et al say, that if, for example, rather than Tony Blair handing the premiership to Gordon Brown in June 2007, there had been an election and David Cameron had come to power, then the banking crisis and the recession which came the following year, would have been handled so differently, so much 'better', if Fox is to be believed, that, in fact, we would not now be facing such a large deficit and the consequent 'need' to slash so much of public service.  So let us look at what the Conservatives might have done differently.

The first thing to establish is what would have happened if the government had done nothing.  Even before the global recession had started, in the UK, the Northern Rock bank ran into problems.  It lent 18.9% of all of the mortgages in the UK and handled deposits of £24 billion compared to loans and assets of £113 billion.  In the summer of 2007 it found it difficult to borrow money to cover its lending.  As the US sub-prime market began to stagger, lenders became reluctant to lend on any mortgages even though British lending was generally on a far more restricted basis.  I was not surprised that Northern Rock was struggling having had much anecdotal evidence of its poor customer care combined with its aggressive marketing of products including very high percentage mortgages; this has raised its market share from 14.6% in 2006.  Rapidly fading faith led to a 'run' on the bank with £1 billion in deposits being withdrawn on 14th September 2007. This was the first run on a British bank for more than a century.  To stop the bank from collapsing, the British 'lender of last resort', the Bank of England lent the company £27 billion and in 2008 bought up £3 billion of effectively worthless shares in the company.  In February 2008 the bank was de facto nationalised. 

At least ten other offers to buy the bank were rejected because these potential owners were unable to repay the public money loaned to the company.  Interestingly, the US company Lehman Brothers which was soon to collapse in a spectacular way was one of the bidders.  Others were equity funds such as Terra Firma Capital Partners, J.C. Flowers and Ceberus, investment companies like Olivant and other banks like Bradford & Bingley and Lloyds-TSB.  If Terra Firma's bid is anything to go buy, some of the equity fund purchases would have been de facto asset stripping processes.  Interestingly, before Northern Rock was effectively taken over by the state 40% of its best business accounts was transferred to a company called Granite based in the Channel Islands which have different tax laws.  Though Granite does not receive new business, this effectively meant the cream of the bank's business (and profit potential) remained free of state control.

Now, if the state had not stepped in, then we would have seen the run on the bank continue, reducing the amount of deposits even further than before in relation to its loan commitments. There was one incident in which one bank manager was barricaded in their office because two customers were unable to withdraw their £1 million after the online banking facility of Northern Rock collapsed.  It is likely that violent scenes would have continued as the bank would have found it impossible to cover all the withdrawals with the relative low level of reserves it kept. At this stage the bank would be compelled to foreclose on its mortgages, i.e. insisting lenders immediately repay their loans or lose their homes to the bank.  This would not have helped the bank much as they would have had to dispose of the property quickly to recoup funds and in many towns the housing market would have been utterly disrupted as numerous properties were auctioned off.  As it was some borrowers, including charities, accused Northern Rock of pursuing aggressive repossession especially in 2007-8.

Some borrowers could have transferred their mortgages to other banks but this would have brought pressure on to them as they would increasingly have faced the challenges Northern Rock had already faced to raise loans to cover the mortgages they lent.  Thus, even before the main recession started, not bailing out Northern Rock could have become a crash in the UK economy. The issue for many was that the total support to Northern Rock came to £100 billion which was added to the National Debt meaning it was equivalent to 37.5% of the GDP (Gross Domestic Product) close to what is seen as the highest permitted level of debt by a state. 

I suppose that the difference that the Conservatives would have done, is being so averse to nationalisation, they would have allowed Northern Rock to have been sold to another bank, with no guarantee that the public funds put into the bank would ever be returned.  Under the de facto nationalisation, by August 2008, the bank had already paid back £9.5 billion of what it had been given, so reducing its part of the National Debt.  It seems unlikely, given that so much Conservative support comes from property owners that they would have allowed Northern Rock to collapse, it held too large a market share.  Thus, there would have been addition to the National Debt just in the way the Conservatives complain about.  In addition, there approach would have meant that the government would not have had a chance of ever seeing the money it had provided returned at some date in the future. 

The key difference would have had to have occurred back in the 1990s when regulation of banks and The City financial bodies was far too lax.  The Blair government like the Major and Thatcher ones that had preceded it, seemed beholden to the financial institutions and was happy for them to act recklessly and earn big profits.  The 'invisible' trade of financial products has been Britain's strongest industry since the 1980s and no prime minister seemed to have the will or the wish to temper the behaviour of not only merchant banks but also high street banks too.  The conversion of mutual building societies into banks after 1986 and their focus on shareholders rather than customers did not help the situation in the mortgage sector, because they were prone to take more risks.  A lot of this could be foreseen, the Bank of England had apparently been working through scenarios of such difficulties as early as 2004 and like many others saw Northern Rock and Halifax/Bank of Scotland (popularly referred to these days as HBOS) as likely candidates.

The ongoing sub-prime mortgage crisis in the USA and the subsequent tightening of loans to banks meant that many UK banks beyond Northern Rock began to experience crises.  The Bank of England offered £4.4 billion in relief in September 2007 and it was drained by banks within hours. In October 2008, the Bank of England offered £37 billion to Royal Bank of Scotland (RBS), Lloyds TSB and HBOS who were struggling to cover their loans and certainly to grant new ones.  Would the Conservatives have refused to offer such funds to the banks and so, having avoided the collapse with Northern Rock, have seen even greater problems as these banks collapsed?  RBS had assets of £2.5 trillion in December 2008 and Lloyds Banking Group £1.195 trillion, thus the scale of their demise would have made that of Northern Rock seem minor.

RBS had had difficulty in raising funds from April 2008 and in the end first 60%, in March 2009 70% and in November 2009, 84% of the bank was taken over by the state.  RBS has been shedding assets since early in 2008 but did not close its tax avoidance department until March 2009 and in December 2009 stood by plans to pay £1.5 billion in bonuses to staff in its investment arm.  Lloyds-TSB already an amalgam of an old bank and a building society turned bank, took over HBOS in September 2008.  Like these other banks, through 2008 HBOS itself an amalgam of a bank and building society turned bank, saw rapid falls in its shares.  The government approved of the combination of Lloyds-TSB with HBOS even though it was effectively counter to competition as the 'super-bank' has 38 million customers, compared to a UK population of 61.8 million people.  This buy-out effectively relieved the government of having to take over HBOS itself.  However, the continued difficulty in banks raising funds meant that in 2009 the government bought 43% of the Lloyds Banking Group.  EU rules means that by 2013, it will have divested itself of the TSB brand and hundreds of branches of the retail group.  Now, it seems unlikely that the Conservatives would have overseen the nationalisation of any bank.  They certainly would have backed the buy-out of Lloyds-TSB of HBOS, but then in 2009 what would they have done with this super-bank running into difficulty given that so many people and businesses were dependent on its stability?  The likely solution from their view would have been to sell it to a consortium of equity funds.  Given equity funds' desire for fast profit, it is very likely that we would have seen even faster shedding of staff than the 15,000 made redundant by the company in 2010, a fifth of the total workforce.  By November 2009, RBS has similarly shed over 19,000 jobs.  Again, if the state had not stepped in and the only remaining source of support had been equity funds or perhaps foreign banks, then this figure is likely to have been higher. 

The Bradford & Bingley bank's mortgage book in was bought by the government in December 2008 whilst the savings and bank network was bought by Abbey National, itself owned by Spanish bank, Santander. Without UK state intervention, the only way to have avoid collapse of banks, many far bigger than Northern Rock would have been to hawk them to equity funds or to institutions from other countries.  Spain with its insistence on higher reserves being held by its banks almost inadvertently put its banks in a stronger position to weather the financial crises of 2007-9.

Aside from the state taking over banks, the British government, following the US model, but leading the way in Europe also provided funds that could be used by other banks, 'quantitative easing' to stand in for the lack of available funds on the commercial market. In October 2008 the government made available £500 billion but only RBS and Lloyds-TSB took any of these funds.  Barclays (with £2.3 trillion assets at the end of 2008) refused assistance and turned instead to the Qatari government for funds.  So, even though it would not accepted one government's funds it was happy to take them from another government.  This may have been a model that a Cameron government coming into power in 2007 would have promoted more widely for UK banks in the place of the British government nationalising or providing funds.  HSBC (with £1.736 trillion assets), the other key bank in the UK, was able to weather the financial crisis in the UK through share issues and that unlike the other banks discussed it was a multi-national bank on an already large scale.  A second package of another £50 billion in January 2009 and an increase of state ownership of Lloyds-TSB shares to 65% was announced due to the bank suffering from having taken on HBOS's losses. 

Now, the Conservatives may argue that there was no need to come forward with these funds, especially by 2009 when things seemed to be settling.  To them, no doubt, it all appears far too Keynesian in approach, stimulating the economy through state intervention.  However, much of what happens in the financial world depends on confidence.  A key problem for British banks was not that they had so many bad loans (though some did have a sizeable number) more that international lenders lost confidence in lending to any business engaged in lending mortgages no matter the quality of them.  Thus, the extra funds put forward in the latter stages were important in rebuilding this confidence, not only of lenders, but vitally of savers.  Banks have moved far from when they were dependent on depositors to provide the funds for their businesses, but what is saved cannot be ignored.  In fact, banks that weathered the situation were those who tended to have more deposits and reserves.

In total, the government paid out £131 billion in funds to keep banks from collapsing; including £107 million in fees for financial advice from companies from December 2007 to December 2009.  Other potential expenses such as borrowing support, money put into increase liquidity and protection for savings, brought the total costs to £850 billion, though of course with the easing of the situation not all these funds were called upon.  In addition, through nationalising banks, the government to some extent ensured they would get some of their money back; having them sold to private companies especially foreign ones would have meant that the government's investment to bring stabiliy, and, vitally, to try to increase the amount of lending needed by businesses and house buyers, would have never come back and in fact would have left the UK economy.

To blame the Labour government for the size of the National Debt resulting from the support it gave banks 2007-9 is false.  No government would have been able to allow Northern Rock let alone RBS or HBOS to collapse.  Even the folding of Bradford & Bingley would have had severe consequences beyond just those who saved with or borrowed from that bank.  The Conservatives, many of whom come from banking backgrounds, would not have let their friends go to the wall.  Thus, billions of pounds was needed and this would have gone on the National Debt.  I accept that rather than nationalising, the Conservatives most likely would have encouraged buy-outs by private equity companies and foreign companies.  Whilst this would have saved funds in the short-term, it would have meant that any money paid to banks most likely would never have come back, and, particularly with the private equity companies, the stability would be short lived as the banks would be broken up for what assets they could release.  The UK since the 1950s if not longer has had a real focus on privately-owned housing as a core element of its economic life, much more than any other country.  Instability in the housing market impinges widely in the UK economy and society.  Thus, the closure of banks, the foreclosure of loans, even just a greater restriction on lending than we see now, would all have dented this important sector of the economy, having a knock-on effect on purchasing and in turn jobs and economic activity.  Perhaps the Conservatives could have save a few billions by now bailing out the banks to the extent they were, but the cost would have been more instability and in turn falling tax returns, so reducing any saving they may have made.

The increase in the National Debt was a responsive policy not a proactive one as Fox and other Conservatives pretend.  If they had been in power they would have been compelled to do very much the same.  The alternatives would have only saved some small sums and at a cost to longer-term stability that many would have baulked at.  If seeking blame, one focus has to be on the freedom which financial institutions have had since the years of the Thatcher governments, though, of course, this has been a global trend, especially in the USA from where so often the UK takes its lead.  The Conservative governments of Margaret Thatcher and John Major, in line with other Conservative governments throughout the 20th century but boosted by New Right attitudes that appeared in the 1970s, believed in deregulation and the state standing back in many sectors of the economy, not least in the banking world.  Allowing building societies to become banks was one element in this trend building towards the UK aspect of the crisis of 2007-9.  However, on coming to power in 1997 under Tony Blair, Labour was beholden to the Thatcherite attitude.  Blair was a Thatcherite, making the Bank of England independent was an element of this.  Gordon Brown as Chancellor of the Exchequer was prudent, but in many ways was simply lucky.  No-one during the Blair years tried to rein in the behaviour of the banks and it was only sheer good fortune that meant the crisis did not hit in 1999 or 2003 or some other time in that period. 

Of course, the current government is a clear advocate of deregulation, unsurprisingly as it has been an unchallenged political trend of the last 30 years.  However, it means that the banks remain as free as ever to behave irresponsibily.  It is right that protestors from UK Uncut go into banks and turn them into libraries or woodland.  We could not let the banks collapse, it would have led to a social and economic crisis in the UK unlike anything we had seen.  The taxpayer provided the funds to bail them out after their mistakes, driven by pure greed for massive profits.  We have paid twice because now to fund that the government says it has to be taken out of public services with huge cuts, not by getting the banks to pay back what they received and in this I mean not only funds but also the steps to boost confidence and stop runs.  They do not even have the grace to curtail their vast earnings, they just behave as they did before, uncowed by what happened.  There is nothing to stop a similar crisis manifesting itself this year, next year, sometime soon and then where will be the funds to save the banks this time? It is not a scare story to recognise that in the life of this parliament we could see the end of a banking system that we have become familiar with in the last 40 years and a return to something very dated and very out of step with the rest of the world. 

It seems that, next time, UK banks will, in large part, stop being owned by British companies but by European and probably Chinese institutions.  A number will be asset stripped by equity funds, the only ones who have the money to afford to intervene.  Say goodbye to your savings, say goodbye to getting a mortgage unless you are already wealthy, say goodbye to free banking, say goodbye to even having a bank account if you do not have a well-paid job (especially once the Post Office accounts are privatised).  The current government panders to its banking friends and uses the myth that somehow Brown deliberately wrecked the economy as the excuse for their reverse social engineering and smashing up of the state.  It is a myth.  In the same position they would have done minimally different and like Blair and Brown, have done nothing to stop the chance that it will happen again, this time with no safety net.

Getting Through to Blair?

Having seen that Tony Blair has been compelled to cancel signings of his autobiography due to anti-war protests not just in Britain but also in Eire, I began to wonder what it will take to shake his self-view that he was God's gift to this country?  I remember back to the time of the Bernie Ecclestone scandal of 1997 when the leading promoter of Formula One racing had given £1 million to the Labour Party and then his sport was was exempted from the ban on tobacco advertising.  Of course, being immune to scandal this did not compel Blair to step down, not even to apologise.  The perceptive impersonator and satirist Rory Bremner did an excellent impression of Blair at the time being forgiving to us, the public.  He said that he accepted that we made mistakes about what was right and wrong, but this time he was willing to understand that we were fallible and to forgive us and move on.  That sketch was incredibly perceptive of Blair's character.

I suppose you have to have utter self-confidence to succeed in politics and those prime ministers, like Major and Brown have suffered for it.  However, Blair's attitude seems completely untempered by any recognition that he is fallible and has made grave mistakes that have led to the death of thousands.  It seems ironic that he moved from a Church of England stance, which though not really fully Protestant has some truck with those elements of Christianity which believe in predestination such as Calvinism, more prevalent in Scotland than in England.  Under such a creed Blair could believe that his greatness was all part of God's great plan.  One would expect such an attitude from George W. Bush in a USA which still adheres to the myth of its 'manifest destiny', i.e. that it was always going to be the size and as powerful as it has turned out, hence their dislike of counter-factuals.  However, Blair is now a Roman Catholic and that brand of Christianity is one which is very aware of fallibility (if not always of the Pope) and allows more regularly for contrition and foregiveness.  Unlike Protestantism which has only grace by belief, i.e. you will get into Heaven if you believe in God; Roman Catholicism needs you to have both belief and to do good works if you are to get into Heaven.  However, as Graham Greene noted in much of his writing the ability in Catholicism to confess and be absolved regularly, can lead people to do bad things in the confidence that if they pay up quickly on Earth it will not affect their entrance to Heaven.

Blair did lots of things wrong in his premiership but the one that continues to haunt him is his compliance with George W. Bush's invasion of Iraq simply to control the fifth largest oil reserve in the World.  There were spurious claims about what a threat Saddam Hussein was to the planet, or more particularly the USA, but it was forgotten that a large part of his weaponry was sold to him by western powers when fighting Iran.  In many ways removing him was like the Americans removing General Noriega, he was one of their tools that they had tired of or for political reasons no longer needed.  It is certain that the invasion of Iraq in 2003 actually increased terrorist activity across the World and whilst it freed the Iraqis from one dictator it simply plunged them into a different kind of violence and depridation.  As I noted at the start of this blog, Blair has never waivered from his self-belief that everything he has done is right.  He was very fortunate that he was able to mutate the Labour Party into the Blairite Party.  His dislike of Brown was because he was of that previous party rather than being a Blairite.  On that basis he could never have reconciled with him.  No wonder Blair found Brown 'maddening' as he says in his autobiography, he would simply not accept that Blair was the best thing ever to happen in British politics and be a true believer in the Blairite cult.  It seems like that David Miliband will be the next leader of the 'Labour' Party and so the Brown phase will be seen in retrospect as an aberration from the growth of the Blairite Party.  I have regularly given examples of this, Gaullism and Peronism being two that always come to mind; Blair with his Christian Democrat approach is very much in that mould.  It is interesing that we are so concerned with 'fundamentalists' but forget that with Bush and to a great extent Blair, we had them already in power.

Right-wing commentators have argued that the protests against Blair have been orchestrated by political groupings.  They, like Blair, still do not understand how unpopular the Iraq war was and that it has lost supporters every month.  They forget the huge and the persistent protests against it.  Blair was the favourite Labour leader of the right-wing press and wealthy because he was so like them.  He did nothing to shake the Thatcherite legacy and avoided policies which actually helped what should have been the natural constituency of the Labour Party.  The cutting out of the ordinary people has continued under Cameron, in fact, as I will analyse next month, has sharpened and accelerated.  Again, looking back from fifty years in the future I am sure we will put Blair in the same category as Major and Cameron, Thatcherites who gave some superficial elements to the policy but continuing with what Thatcher established in the 1980s and not repairing any of the damage she inflicted.  Brown tried to reverse that trend, but the hostility to his attempt is apparent in the still virulent attacks in the media on him even now he has left office.  Their fear, of course, is that with Ed Balls or even Ed Miliband will come to lead Labour, so they keep trying to scare Labour supporters and the general public so that the Thatcherite-Blair trend can continue.  In many ways Thatcher has achieved in her legacy what she set out to do as part of her mission in the 1980s, was to move to a situation where the two main political parties would be close together in policy the way the Republicans and Democrats were in the USA, though these days many Americans might dispute their proximity.

Tony Blair's self-confidence is unnerving.  It is the kind of self-confidence generally found in dictators rather than rulers of democratic countries.  I suppose winning repeatedly in elections and seeing his successor just about fall has added to Blair's ego.  However, I also believe it is a real flaw within him and the fact that he was able to run Britain and believe constantly that only his view was the correct one, shows how vulnerable the UK is to dictatorship.  I kept hoping that he would see one day that he could be wrong.  However, it does not seem to be the case, and I am coming to conclusion that only when he is turned away from Heaven will he finally realise what he did.  Then, he will probably blame someone else.  I would certainly use Blair as a model for children warning them of the dangers of such arrogance.  As yet, he may not have paid the price (though interestingly on the 'Daily Telegraph' blog there is someone threatening to assassinate him), but I hope that these protests which stop him lording around bookshops, squeezing out just that little more adoration which he clearly needs like a drug, may begin to penetrate.  I hope in time that he will be disgraced and ignored, because the danger of Blair is not only what he wreaked on people, but the fact that he has become too much of a model for other politicians and the UK and the rest of the World cannot live safely when we have politicians who believe that their personal decisions are the work of God and thus beyond even questioning, let alone challenging.

Lack of Political Maturity in the UK

Well, we had lots of certainties in the 2010 UK general election.  First it was that David Cameron would walk into office without even really having to think up any policies.  Then we had the idea that there would be a hung parliament and finally that somehow the Liberal Democrats would turn back the clock to 1906 and push Labour into third place.  As Norma Tebbit, a man I loathe, noted in 'The Guardian' today, in part David Cameron lost the election more than Gordon Brown did.  Brown was part of the party that had been in power for 13 years, he looks weary and is not charismatic, but still, Cameron could not defeat him outright.  Partly, it was because of the distorted electoral system in the UK so that despite gaining 2 million more votes than Labour and securing 36.5% of the vote compared to 29%, the Conservatives only managed to get 48 more seats than Labour.

One notable thing about this election is that in many heartland seats both Labour and Conservative more people turned out to support the existing MP or their successor from the same party, than they did in 2005.  It is good for democracy that more people voted, some constituencies were seeing a 73% turnout which is almost unheard of in Britain.  Of course, a lot of these extra votes were 'wasted' because in the UK you only need to win a single vote more than your opponent to win the seat.  Gaining an extra 5-10,000 votes in a constituency is not going to give you anything extra.  This trend was seen most in Scotland where the pattern of representation barely changed and the Conservatives still only have a single seat.  What the party leaders did well, certianly Cameron and Brown, was to alert their core supporters to the fact that if they did not get out and vote they risked having their opponents come to power.  This undermined the surge of the Liberal Democrats.  The tactical voters and their own smaller constituency still turned out, but they were now rather over-shadowed by an upswing in the number of traditional Labour and Conservative voters supporting their natural party.  Greater apathy, as is typical in British elections, ironically, would have benefited the Liberal Democrats.  Ironically, not getting as many seats as they 'deserved' might finally make at least some Conservatives see the benefits of a changed electoral system.

The hung parliament had been discussed and certainly was analysed by all the parties before Thursday's result.  However, the exact figures needed to be in to find out what needed to be done.  We could easily have seen a Conservative government brought to power by the 8 Ulster Unionists if Cameron had only fallen a little short of the figure he needed, hence his visit to Ulster last week.  In addition, with the Liberal Democrats having increased 10-20 seats as I thought they might, rather than drop 5 to 57, they would have been the real kingmakers as at present if all the 'Others' went over to the Conservatives, unlikely I know but still mathematically possible, they could out-vote even a Liberal-Labour combination.  On this basis I heard one Conservative ranting that Brown should not even be trying to form a government and should step aside, unaware that Plaid Cymru, the SNP, the Green MP, the SDLP MPs and the Alliance MP (a Northern Irish party closely aligned with the Liberal Democrats) would vote against the bulk of Conservative legislation, especially public sector cuts.

Britain is not familiar with coalitions, they are seen as something weak and even more damning, foreign.  It is ironic that Britain has had coalitions at the times of greatest challenge: during the First and Second World Wars and during the Depression.  The UK was ruled by a coalition for 21 years of the 20th century, in which time it managed to win two world wars.  I suppose the fact that the last coalition ended in 1945 and the last attempt at a 'pact' ended in 1978 means that because 'the past is a foreign country' even these aspects of British history are perceived by today's electorate as being alien.  Minority governments are weak and whilst people point to the example of 1974, there is also the steps towards a minority government that John Major faced as prime minister in the lead up to the 1994 election.  The Liberal Democrats had said they would not enter a coalition and would come to deals over particular policies.  However, the British, unfamiliar with coalitions as they are would be better served by a proper coalition rather than a limping minority government.

Where the lack of political maturity comes in, is how the public and the media cannot tolerate the deals that are being worked out at present.  In continental Europe and further afield, including in New Zealand, such negotiations are common.  There are benefits in a government which represents a wider range of opinion and it tempers the kind of extreme policies the 'elective dictatorship' of the UK has seen in the past.  The right-wing newspapers who insisted that Cameron had won and now insist that he should be in office, do not want this complication.  They have done all they can to sweep Brown away and despite their slurs and whining, they too were not able to convince the bulk of the population that he had to go.  In fact, those who will suffer most from the cutbacks the Conservatives are lining up, clung to him even tighter than before.  Whether Cameron or Brown is the next prime minister, the British public needs to grow up.  Politics is an adult game, and there is no place for stamping your feet and sulking because the simple picture too many Conservatives painted all along, has not become real.  Just because you are indignant and somehow expect Brown to disappear in a cloud of smoke, it will not happen.  Negotiations are not 'shabby deals' as I saw them described on the front of one right-wing newspaper.  Clearly they expect the Liberal Democrats to say 'yes, Mr. Cameron, you are entirely right, we are wrong, we support everything you want to do, without challenge'; that is never going to happen.

Now the work begins.  Even if Cameron becomes prime minister of a minority government any piece of legislation could be voted down, so I do not see the sharp cuts he has been lusting for coming into force any day soon, especially if, as seems likely there will be an election this Autumn.  The British public has thrown itself into this election in a way it has not done for many years, but the expectation that the outcome is going to be neat and tidy is deluded and betrays the immaturity of too much of the electorate.  To a great degree this is fostered by the constant portrayal of any other political system in Europe or further afield as 'weak' or 'unnatural'.  There is a real snobbery that the UK system is the best and no other is worth even considering, despite the fact that you have to get outside the EU before you can find a system less democratic than ours (remember half of our parliament is unelected; and the head of state is a hereditary position).  Grown up Britain and engage with the whole political process and do not sulk because it did not go the way you wanted the first time round.

There are a couple of other things I would note.  First is, as in 1992, when Labour was in with a chance of gaining power, there were electoral irregularities.  This time round people being turned away from voting, sometimes on discriminatory grounds (students in Sheffield were given their own longer line to queue to vote, whereas other voters were able to vote more quickly) and often insufficient ballot papers were printed.  This is because too many returning officers had become complacent that never more than 55%, perhaps 60% but never 73% of the electorate would turn out.  That is incredibly patronising.  Given that some majorities of both Labour and Conservative MPs are smaller than the numbers of people turned away from polling stations, I trust we will have some re-run ballots in some locations, though I imagine the issue will be fudged, again showing how rickety a democracy we live in.  Fortunately the civil liberties group, Liberty seems to be mounting legal challenges.  This is the kind of problem you expect in Third World countries where democracy is new, not a country like this which has had universal suffrage for over 80 years.

The one joyous piece of news is the failure of the BNP to gain any ground.  This is reported as weakening the party and I hope it is now terminally ill.  Saying this, if they are patient, proportional representation may let them get a path to some MPs, though UKIP will probably be in the queue ahead of them.  However much I loathe the thought of BNP MPs I know, as was proven the case very clearly in Barking at this election, such a threat gets parties, notably Labour, to raise their gain and tackle the issues that drive support to the BNP.

At the end of the day, the run on the stock exchange when Cameron did not win an outright majority shows how little we the electorate actually control our democracy.  Financiers are insisting on a government being assembled by Monday threatening to disrupt the economy even further if it is not formed.  Of course, historically there was always a 'run' on the pound whenever a Labour government was elected.  Blair had to win over the ultra-rich to stand any chance of coming into power in 1997.  Now we are being told that the financiers will not accept any government that will not cut public spending sharply and they are upset that Brown who supports a Keynesian rather than monetarist approach to the banking crisis even remains on the scene.  So, basically, even millions of us (30 million people voted on Thursday) have far less clout in terms of determining the next government that a couple of hundred bankers.

Feel No Shame - Call Bigots What They Are: Bigoted

This election campaign seems to be moving into the realms of the surreal.  Some mornings I wake up and think I am in 1906 or at least 1922 with the election seeming to be about the Liberals versus the Conservatives with this marginal party, Labour, attracting minimal interest.  It is a fantasy, of course.  I agree the Liberal Democrats represent a progressive voice and I support a number of their policies, but, as I have noted before, even with a 6% swing to them against both Labour and the Conservatives they will at most receive ten or twenty new seats.  Yes, they may hold a balance in a hung parliament, but Nick Clegg as prime minister is only going to happen in some alternate reality, not this one.  Much of the media, want us to think something very different.  Even 'The Guardian' has defected from supporting Labour to backing the Liberal Democrats and in sharp contrast to 1997 no newspaper now supports Labour.  Of course, this is not surprising.  Newspapers have not, in reality, supported the Labour Party since the 1970s.  What they backed in 1997 was the Christian Democrat Blair Party.  Brown's problem is actually to bring the Labour Party back to being the Labour Party and there is no support among the elites for that and there has not been since the era of the Thatcherite/Washington consensus came into British politics from 1974/9 onwards.

More on this in future postings as I feel certain that if Cameron comes to power we will enter one of the darkest periods in British society since 1979, not only in terms of mass unemployment but also in discrimination and associated violence, ironically further fuelling the 'broken society' troubles continues to whine on about, plus a further step in the eroding of civil liberties.  For the moment, however, I will look at the incident which was portrayed as seriously damaging Brown's campaign.  However, at present much of the right-wing media are frustrated that Brown has battled on so well and that Cameron has not had the walk-over that was long predicted, so they light on anything Brown does to condemn him.  Brown, out on the campaign trail on Wednesday was brought a 65-year old woman called Gillian Duffy, who said she was a Labour supporter.  She went on about the immigration of East European people into the UK.  This is not unusual, there have always been Labour supporters who have been as opposed to immigration as right-wingers, often from a misguided view that they would lose their jobs to them, unaware that it is always business leaders who bring in the immigrants to keep wages low and to unpleasant work.  Anyway, Brown had been wired up for recording and was recorded complaining, quite accurately that Duffy was 'bigoted'.  In this he has suffered many politicians.  US President Ronald Reagan in similar circumstances was recorded as saying, in 1984:  'My fellow Americans, I'm pleased to tell you today that I've signed legislation that will outlaw Russia forever. We begin bombing in five minutes.'  President George Bush made many such gaffes.  Perhaps because US politics has always been so much more about television and recordings they have suffered more.

Anyway, unlike much of the media that saw Brown's comment as a mistake, I was very pleased he said it, I wish he had told her to her face that she was bigoted.  I have noted before how the racists in our society make their comments seem as 'common sense' and seem to think they are acceptable conversation.  Tax drivers constantly try to force feed me their racist views as if they were commenting on the weather.  This normalising of bigoted comments leads to the normalising of racism itself and means that people are insidiously led down the path to backing discriminatory policies.  Of course, many people support racist policies right out, but if we are going to have a healthy civil society there is a need to challenge the easy falling back on racist statements.  When there is a mindset that discrimination is somehow 'common sense' and 'acceptable' this allows day-to-day behaviour which prejudices people and leads to damage to their health and wellbeing.  The focus is currently on immigrants, but from that there is an easy extension into discrimination against British people of ethnic minorities.  The BNP is already seeking to define people who are not Caucasian as not being able to be British.  Though a majority of the population, attitudes to women's rights and opportunities also seem to be being eroded.  Portrayals of women now are that they should either be demure housewives (the current John Lewis advertisement is an example of this) or sexually available and whorishly dressed.  I have encountered social class discrimination in recent months, the assumption that someone from a non-middle class background should not even aspire to be a manager let alone hold a job of that status.  We open the door to bigotry at the risk of opening floodgates.  I believe at present a lot of what has been established in post-industrial Britain's civil society is now at risk.  There is a desire to rush us back to the policies of the 1950s in which most people, except the wealthiest elites who were white and male, had opportunity.

Whilst David Cameron is not outlining policies suggesting this explicitly, his emphasis on Distributist policies of Philip Bond, which have echoes of John Major's approach: i.e. small town and village, nostalgic Britain with social welfare run by volunteers and not the state.  This has no relevance to the bulk of British people who live in large cities and certainly not to those dependent on benefits.  It does fit nicely with Cameron's pandering to the owners of large businesses and of the banks, because such a small horizon Britain would not bother itself with how big business makes it money and would be stoic in the face of the damage their methods do to our shops, services and jobs.  What Cameron's vision does is promote exclusivity, whether from the small town community, from opportunities in education and careers or to challenge economic policies that damage us.  In the shadow of such an attitude comes bigotry: keep out the stranger and keep those of a particular background, whether it be from an ethnic minority, from lower social classes or a woman, let alone disabled people, from rising up the levels of work.

If we are to have a tolerable, let alone tolerant, society in the UK, we need to challenge bigotry whenever we encounter it.  Speak out when people start force-feeding you bigoted views, at least refuse to listen to them.  Indicate that you are unhappy with people saying such things, tell them that they are not 'common sense', they are, in fact, based on a distortion of reality and are damaging to the very society these people think they are trying to strengthen.  The UK is on the cusp of facing severe problems in terms of divisions in society.  As rioting in the 2000s showed, these already have violent outcomes and we need to stem this slide into bigotry and all the nasty consequences it brings in its wake.

I was proud of Gordon Brown this week.  When you witness bigotry: name it, shame it.

2010 Election: Keynesianism vs. Deflation?

Many commentators have suggested that the recent recession is in the same league of the Depression of the 1930s which began to enter its direst phase in October 1929 with the collapse of the US stock market and came into full effect in 1931 with the folding of the Kreditanstalt bank in Austria and the subsequent weakening of the global banking sector.  The Depression affected different countries in different ways but generally led to mass unemployment, in some countries only peaking in 1936 and really only came to an end with rapid rearmament in many states in the period 1938-9.  The Second World War disrupted the global economy but also provided stimuli.  However, in 1945-7 it looked like many states would continue to suffer low production and consumption and so continue to face high unemployment.  The Marshall Plan in 1948 providing millions of dollars to states of western Europe helped to pick up demand which stimulated the US economy and in turn other economies across the world, not simply in Europe but late Japan and South Korea too.  Other factors such as the decline of colonial empires so freeing up markets to a wider range of states, organisations such as OECD and the EEC fostered trade, consumption and production.  This was aided by low oil prices sustained in part by neo-colonial relationships between the industrialised powers and the oil-producing states.

In the 1930s there was a clear lack of ideas about how to deal with the Depression.  For the dictatorships the drive for rearmament and related infrastructure, notably road building, did stimulate certain sectors of the economy but at the expense of light industry and consumption of domestic items.  Unemployment was ended by effectively drafting workers into state projects and in many cases throwing certain people out of jobs, for example, Jews, Socialists and Communists in Nazi Germany.  The Soviet Union underwent a massive programme of industrialisation combined with collectivisation of agriculture.  The country was starting from a lower industrial base and the consequences of the programme was the starvation of millions, though, by 1939 the USSR had become more industrialised than a decade before.  In the democracies the only real approach to combating the Depression was deflation and protectionism.  This involved particularly cutting back government expenditure, making more government employees unemployed and restricting welfare payments.  Currencies were freed from the gold standard and allowed to float but economies put up tariff barriers to protect their internal industries and those states with colonial empires developed trade with their colonies but firmly shut out other providers.  With the dictatorships also pursuing a policy of autarky, i.e. to make themselves self-sufficient for raw materials and markets whether through direct control or bilateral, often barter deals, trade was choked off.  This tendency was the one which Marshall Aid and initiatives such as the Bretton Woods process on currencies aimed to address after the Second World War.

There were some voices in the democratic states arguing for a different approach to the Depression.  Democratic forms of economic planning were advocated by centre, centre-left and centre-right groups, in the UK by the Liberal Party and people such as Harold Macmillan, later Conservative British prime minister.  Most notable was the work of economist John Maynard Keynes (1883-1946).  Keynes's principles developed following the First World War.  He opposed the harsh reparations imposed on Germany seeing a weak German economy as being damaging to the whole European economy and thus much of the global economy.  He opposed the rigidity of returning to the gold standard for setting currency exchange rates as happened in many capitalist countries in the 1920s.  With 'Treatise on Money' (1930), 'The Means to Prosperity' (1933) and 'The General Theory of Employment, Interest and Money' (1936) he outlined his policies for counter-cyclical economic approaches.  Basically he felt that depression could only be combated by stimulating consumption rather than reducing it through deflation.  He believed in the 'multiplier effect' that if the state pumped money into the economy to create work, often through major infrastructure project, then unemployment would not rise and with more people in work they would continue to consume products which, in turn would keep consumer good production going so keeping even more people in work.  In contrast to the balanced budgets, i.e. government receipts and expenditure were generally equal, Keynes was happy for the state to borrow in the short-term to fund the projects to keep employment levels higher, believing in the long-term that the maintenance of the tax revenues which would rise as the economy revived, would pay off the money borrowed.

Though there is some dispute about how directly Keynes's ideas influenced US policy, the New Deal, started 1933-4, introduced by President Franklin D. Roosevelt (1882-1945), president 1932-45, seems to be based on the kind of assumptions that Keynes's ideas used.  Roosevelt established a swathe of government agencies many of which produced public works projects to provide employment.  Examples include the Civilian Conservation Corps for agricultural workers, the Works Progress Administration, which included units for employing actors and writers and the vast Tennessee Valley Authority for public works building hydro-electric energy generation dams and facilities.

In Britain Keynes's approach was seen to be adopted in the 1941 budget, though of course, with the war in full force at the time, stimulus through arms spending and borrowing to fund the war, were likely steps anyway.  After the war the Labour Government initially pursued economic planning which was seen as a more Socialist approach to the economy compared to Keynes's Liberal (in the British sense of the word not the US meaning of it) economics.  However, by 1948 and certainly by 1950 they were moving more to Keynesian assumptions.  France pursued economic planning up to the 1980s but had things such as tax breaks to stimulate certain sectors of the economy and unlike British nationalised industries, large state-owned companies such as Electricite de France (now EDF Energy) strove to stimulate other sectors. Other states in Europe such as West Germany worked on Keynesian assumptions, keeping a predominantly capitalist economy but stimulating it with government regulations and funds, especially for regional development.  Partly Keynesianism, though forming the basis of economic assumptions after the Second World War was not really needed as there was an economic boom until the mid-1970s when the US economy became recessed in the early 1970s and then the sharp oil price rise in 1973-4 brought the boom to an end. Though there were some minor differences from 1950-1974 no-one in British politics really challenged Keynesian assumptions; they did not even challenge the mixed economy with a sizeable state-owned sector, which had been a Socialist rather than Keynesian policy.  Keynesianism was not used in a sophisticated way.  By the mid-1950s credit controls had generally been given up and the UK tax authorities eschewed tax breaks in the way they were used in many continental countries.  The basic tool was simply manipulating the base rate, the basis of the interest rates that banks charge.

In 1976 the pound was put under so much pressure that the British government went to the IMF (International Monetary Fund) for money to strengthen the currency (in those days the exchange rate with the dollar was reported on a daily basis and any move was seen as a source of concern, probably equivalent to falling house prices in the UK nowadays.  It is interesting how the British makes a fetish of particular economic indicators rather than looking at the broader economic picture; before the currency, the balance of payments had been the key focus).  The IMF demanded a deflationary approach to the economy, which had about 20% of industry under state control at the time.  From 1976 onwards there was consequently a move from Keynesian stimulus approaches in times of recession back to deflationary processes.  In the US there was the rise of monetarist economic approaches, which after 1974 gained ground in the British Conservative Party, though even after 1972 under Conservative prime minister Edward Heath there had been some minor steps in this direction until he fell in 1974.  Monetarism sought a strong control of the availability of money as a way to combat inflation, which was a key problem once oil prices had jumped, something they would do again following the Iranian Revolution of 1979.  Monetarism was wedded to 'free market' economics perceiving the end of state involvement in the economy through privatising state-run industry and reducing regulations on companies so allowing them to impose the pay rates and conditions that they wished.

Margaret Thatcher embraced monetarism and her regime 1979-90 saw it pursued increasingly vigorously with privatisation of the state sector, removal of regulations and reduction of the state, including dismissing a third of the civil service.  Private business was lauded and allowed to make as big profits as it liked and to move capital from the UK whenever it wanted.  The impact for the average person, however, was mass unemployment and an abrupt ending of established British industries.  In the move to a post-industrial economy after 1973 in the USA and 1974 in the UK, this was going to have happened anyway but monetarism made it more brutal and sudden.  Workers were encouraged to make themselves employable by taking lower pay and working longer hours, so reducing their ability to consume.  This seems to run counter to Keynesian approaches.  By the end of the Thatcher period, as I have noted on previous postings, the assumptions had shifted towards continued acceptance of monetarism.  In 1995 the Labour Party abandoned its objective of nationalising any industry.  When it came to power in 1997 it granted independence to the Bank of England to set the base rate so giving up the remaining Keynesian tool.  The Labour governments, bar in minor cases, before 2008, did not take back into state control industries that have been privatised.  This is apparently now called the Washington Consensus.

The financial crisis from 2007 onwards has led to what some have termed a Keynesian 'resurgence'.  It is fascinating how the faith in monetarist approaches dropped away so quickly.   In Germany and India both of which had retained a strong state role in the economy, but also the USA and the UK which had been at the forefront of monetarism, leading economists, bankers and politicians began talking about stimulus.  The President of the World Bank advocated developed countries pledging 0.7% of their GDPs to stimulus.  In January 2009 President Obama passed a US$787 billion (£512. billion: €589 billion) stimulus bill.  In November 2008, the British government launched a £20 billion (US$30.6 billion; €23 billion) package equivalent to 1% of the UK's GDP.  Much of this has gone into supporting banks rather than stimulating the economy through public works and there has been a challenge in that the supposed 'easing' of lending has not risen to the extent that the governments hoped.  This reflects that during the Thatcherite/Washington period financial institutions were given so much freedom that it is now impossible really to get them to do anything governments want, for example, even reducing bonuses.  Inadvertently the British have effectively nationalised two banks, but as was typical with British nationalisation of the past, they have not asserted much control over their behaviour and kept an 'arms length' approach.  In addition, in the face of claims of 'unfair competition' from other banks the government has not used its banks to drive certain behaviour by example or provide freer lending to stimulate business.  The state is not as strong as it was in Keynes's day and mulit-national companies and banks are often more powerful than governments as we have seen in resistance to various 'windfall' taxes and attempts to restrain bankers' behaviour.  However, stimulating (parts of) the economy through borrowing, now at £152 billion (US$232.6 billion; €175.1 billion).

Thus, it seems for the first time ever that Keynesianism is being implemented to combat what it was designed for, i.e. a depression.  In British politics because in the 1950s up to the mid-1970s there was consensus of the need for Keynesian economics and it was just over the details rather than the economic approach.  By 1979 even the Labour Party had stepped away from Keynesianism and whilst it did not embrace monetarism in the way the Conservatives did, it was no longer a strong advocate of an alternative economic path, partly because the economics then were focused on wage and price inflation which had not been a characteristic of the 1930s depression when there had often been over-supply depressing prices rather than excess demand or at least excess demand for income whether from sales or pay as was the case in the 1970s and overall was stimulated by the artificially raised oil price, oil being vital for freight of all kinds at that time and things like plastics at a time when plastic packaging was growing massively.

In 2010 we do have a difference between the continuation of Keynesian policies under Gordon Brown and with David Cameron, the revival of not even really monetarist but in fact deflationary policies as pursued by Conservative leaders such as Stanley Baldwin in the 1930s and overseen by the cross-party National Government set up in 1931.  Cameron's emphasis on the need to reduce public borrowing so reducing the available stimulus to the economy (though no-one would envisage a balanced budget these days) and swingeing cuts to public services is text-book deflation; it will cause unemployment not least amng public sector employees and raise unemployment, increasing social welfare payments and suppressing domestic consumption and through fear of job losses, domestic demand even from those still in work.  Keynesianism is not simply about stimulating consumption but with it the confidence to consume. Cameron is pretty old fashioned in his approach to the economy even in Conservative terms.  Perhaps this is because the Thatcherite approach of the free market now seems so debased with constant reports of vast profits for those in big business at the expense of jobs and homes for ordinary people.  This is the first time in British history that the two key economic approaches of the 20th century are being brought face-to-face and as a consequence Britain stands at more of a crossroads that this lacklustre campaign suggests.

The Nick Clegg Factor

People said they have found the current UK parliamentary election campaign to be dull.  I suppose after the big changes that happened in the USA it must seem a little downbeat, not helped by the fact that people have been talking about the election for so long.  The Conservatives' haranguing of Prime Minister Gordon Brown to call the election may have backfired on all the parties as we feel we have been in the midst of the campaign already for six months if not longer.  To some degree, the mudanity of this campaign conceals how much of a crossroads we have reached in British politics.  Whichever party comes to power it is going to be tough for them as we attempt to clear up the mess in the economy left by the greedy bankers, who of course are already back to their old dangerous tricks, though it was nice to see Goldman Sachs, the leading investment bank in the USA being charged with fraud.  I do hope they suffer harsh penalties for their criminal behaviour, but as yet am not confident they will.  However, the key point in the UK is how we cope with the recession.  It is clear that both Labour and the Conservatives want to cut public expenditure, it is just an issue of in which areas and how fast.  What has become apparent from the speeches of David Cameron, the Conservative Party leader is that if he comes to power with a majority we will see economic policies of a harshness not witnessed in the UK since after the 1983 election. 

This will mean sustained high unemployment and a damage to British industry, let alone to those dependent on social welfare.  Such an approach will increase the divisions in society as people will look for easy scapegoats and will blame people from abroad or other parts of the UK.  This is already what many employers are looking for as they feel the 'whip' of unemployment to get long hours on insecure terms and bad conditions out of workers on frozen or depressed salaries has become too weak in recent years.  High unemployment, they feel, works in their behaviour.  Partly they are right, because given the UK has long been a low income economy and yet people have high levels of consumption based on credit, they can afford to reduce the domestic demand without impinging as heavily on domestic sales in the way you might expect to be the case.

Given the nature of the MPs who would come in with Cameron, we will see the House of Commons with an very elitist flavour with apparently 68 of these MPs coming straight from the banking sector that needs to be reined in.  Brown will have a challenge in restraining outrageous bank behaviour, but Cameron and his MPs will have no interest in even attempting to do this.  Like many people of my generation and even younger, we really fear a return to the 1980s which is not the big hair, cocktail glamour that it is portrayed as now, but millions of people suffering years of unemployment, low incomes and whole swathes of the UK simply being wastelands of boarded up shops and houses, as a result.  Thus, this is actually a very important election.  There is the other factor of preventing the rise of the racist BNP (British National Party) and their watered down equivalent UKIP (UK Independence Party), both of which seem perched on the edge of getting some representation and no doubt will locally in the areas with local elections on the same day as the general election.

Another factor which makes this election interesting is the possibility that it has suddenly become a three-party race.  That has not been the case, probably, since 1923 when the Conservatives had 234 seats, Labour 188 seats and the Liberals 183 seats.  The eclipsing of the Liberal Party by the Labour Party in the 1930s was very rapid.  The Liberals struggled with single figures of MPs in the 1950s.  Whilst holding the balance of power March 1977 - July 1978 when there was a minority Labour government in power (a minority government is one which does not have a majority of MPs over all the other parties combined in the House of Commons; it is usually still the largest party though).  The 1990s and 2000s saw a renaissance of the Liberal Democrats, the latest version of the Liberal Party, though Tony Blair's vast majority in 1997 meant that plans for having the Liberal Democrats in with Labour in the 'big tent' cabinet were shelved.  The Liberal Democrats rose from 20 MPs in 1992 to 46 in 1997 to 52 in 2001 to 62 in 2005.  This is more seats than any combination of Liberal parties has had since 1935.  Of course, they are still behind the Conservatives with 198 seats and Labour with 356 seats. 

The big change in how the Liberal Democrats were perceived following the debate between the leaders of the three main parties on 14th April 2010.  This was the first televised debate between the party leaders in British history and mimics closely the model used on US television first in 1960 and then intermittently afterwards.  There have been regular jokes since 2007 when Nick Clegg became Liberal Democrat party leader than he was 'unknown'.  To some degree this is because in our very media-conscious age all the part leaders simply look like different varieties of bank manager.   However, appearing on a programme watched by more than 9 million people and which has generated a lot of general media coverage since, has helped massively. Labour and the Conservatives have been pretty successful marginalising the Liberal Democrats and in turn they seem to have shifted steadily from being more radical than New Labour in 1997 to seeming like a pale version of the Conservatives, only really marked out by a pro-European Union stance.  Now with the recession they seem to be ready to embrace more radical solutions and whilst not back left of the Labour Party do seem to have some radicalism about them once again.  After the lame duck leadership of Charles Kennedy (1999-2006) and Menzies Campbell (2006-7), in part Clegg, slowly, seems to be capturing a little of dynamism of Paddy Ashdown, leader 1988-99.

With the election of Tony Blair to being prime minister in 1997 just before his 44th birthday has made youth appear at a premium in British politics. Brown is 59; Cameron is 43 and Clegg is three months younger.  Cameron is very much old fashioned elitist Conservative, his long-term friendship with the moronic Mayor of London, Boris Johnston, does not help.  Brown seems to have aged a great deal while in office, though is much younger than some prime ministers of the past; Winston Churchill first came to power in 1940 at the age of 66 and was in office in 1955; Margaret Thatcher was 54 when she came to power in 1979 and was still there until late 1990.  So, Clegg appeared to be of that youthful style that is currently in demand.  As the two other parties have effectively kept him out of the spotlight, I believe has actually now helped, because Clegg's party's ideas now seem fresh.  He also presents them in a clear and logical way.  This morning the first poll to put a Liberal Democrat in the lead to become prime minister, came out.  There has not been anthing like that since probably 1918-20.

The issue for the Liberal Democrats has always been that the first-past-the-post system in the UK never distributes seats evenly depending on the percentage of the vote the party receives.  The classic example was in the 1951 election when the Labour Party received more votes than in 1950 but received fewer seats.  At the 2005 election the Liberal Democrats got 22.1% of the vote (but 9.6% of the seats; back in 1992 they got 17.9% of the vote but only 3.1% of the seats), the Conservatives got 32.3% and Labour 35.3% of the vote.  On vote percentage division the Liberal Democrats would have got 144 seats; Conservatives 210 seats and Labour 230 seats, making a minority government.  This means that the Liberal Democrats need more than twice as many votes as the other parties to get a seat; the Conservatives lose out a little, but it is far simpler for Labour to get seats these days with them securing 126 seats more than they would have get through the proportional distribution.  This is why the Conservatives want to redraw the electoral boundaries.  The fact that the Liberal Democrats need to struggle harder to get seats, as a lot of their constituencies are in large rural areas on the periphery of the UK, opens them up to the allegation that a vote for them is a 'wasted' vote.  If people believed they could get into power, more people would vote for them.  This is one reason why the Liberal Democrats do well in local elections.  They control 65 local councils, and a total of 4,200 local, 21% of the seats from 25% of the votes, ahead of Labour.

Of course, the political parties know they can no longer ignore or easily dismiss Clegg and you have immediately seen Cameron say that Clegg would simply usher in more years of Labour.  Of course, even if Clegg went into a pact with a minority Labour government it could not be the same Labour government that it would be if it won a majority.  The Liberal Democrats would bring far more pro-European and electoral reform policies into the mix, something Cameron could not stomach if he had to work with the Liberal Democrats to gain power, especially since the Conservatives in the European Parliament abandoned fellow conservatives for a right-wing extremist bloc.  The Liberal Democrats would not tolerate the kind of cuts Cameron is envisaging.  He has positioned his party almost as far as he can from the Liberal Democrats, overly cocky that he would not have to work at all hard to get into power, it would be gifted him.

Thus, even if the public now likes Clegg, there is still a long way for his party to go to get the votes, let alone the seats to form a government.  As was highlighted on the BBC news over the weekend, with our current electoral system, even to achieve additional seats in double figures, and, for example, lift the Liberal Democrats up to 80 seats would need a swing of 6% against both the Conservatives and Labour in marginal seats.  However, there are a number of seats where the non-Conservative support is split between Labour and the Liberal Democrats almost equally and a shift in such seats would certainly make David Cameron's job a lot harder.  This is in contrast to both a year or so ago and the day the election was announced when it was assumed that the Conservatives would 'walk' into power.  Now they not only face a battle with Labour by the Liberal Democrats too.  Whilst it seems unlikely that the Liberal Democrats can win, a loss of seats for Labour and a smaller than previously expected gain for the Conservatives was already being considered, with the Liberal Democrats as powerbrokers for government, even before Clegg's successful television performance.  Baroness Shirley Williams a Liberal Democrat peer who was Paymaster General and Secretary of State for Education and Science in the Labour government when the Lib-Lab pact was in force in 1977-8 (she left the Labour Party in 1981 and was in the SDP and then Liberal Democrats), has said the Liberal Democrats would work with a minority government on an issue-by-issue basis rather than forming a pact with one party or the other.  Calls for a government of national unity are likely to fall on deaf ears especially as the Conservatives have re-embraced Thatcherite economic policies once more.

The price for Liberal Democrat support of course will be proportional representation, a policy embraced by Labour until it won massively in 1997.  As I have highlighted on this blog before: http://rooksmoor.blogspot.com/2008/03/what-if-proportional-representation.html and http://rooksmoor.blogspot.com/2010/02/why-has-it-taken-so-long-to-even-get.html  this would change the face of British politics forever.  Given the corruption among MPs we have seen this year that is probably necessary.  By potentially allowing in a far wider spectrum of parties more people would feel their voices were being heard.  Of course, it depends on the model as (West) Germany has had proportional representation since 1949 and yet only the SPD and CDU/CSU have dominated the governments for sixty years.  In Britain with a centre party almost already stronger than the FDP in Germany (93 out of 622 seats in the Bundestag) a three-party system under proportional representation would appear to become the norm.  Of course, extremist parties are likely to appear (though Germany has seen off extremists like the NPD and Republikaner parties through a minimum of 5% of the vote needed) but then that would challenge  the major parties to address the issues these parties raise; the same goes for the Green Party.

So, whilst we may already be weary of the election, 2010 is going to be a year in which we may see a more radical change than even the Conservatives are seeking and we finally see the face of British politics change for the first time in almost 90 years.

When is a State-Run Bank Not State-Run?

I have commented before at how stunning the greed of some many of the leading staff of businesses in Britain are, especially those in a monopoly or cartel position such as utility companies and banks.  The risk of the collapse of banks in 2008 led the British government to take over chunks of a number in the largest round of nationalisation seen since the 1970s.  Not wishing to be tarred with the New Right allegations against public sector business, the government has generally adopted an 'arm's length' model to running them.  The largest bank it now effectively owns is RBS (formerly Royal Bank of Scotland) in which it has a 70% share, so not under total control but quite clearly a dominant majority. In addition, last month it was revealed that towards the end of 2008 the Bank of England made secret loans of £61.6 billion to RBS and HBOS (formerly Halifax Building Society and Bank of Scotland; subsequently merged with Lloyds-TSB).  In total the UK banks benefited to a greater or lesser extent from a £500 billion rescue package.  This was classic Keynesian economics with government deficit financing economic stimulus measures.  It is clear that government action prevented RBS and HBOS collapsing leading to thousands of job losses and severe financial problems in the UK.

Are the current directors of RBS grateful for the fact that the government saved the bank for which they work?  No.  Do they feel even the slightest obligation to temper the greed which got British banks into the dire situation they encountered in 2008? No.  Despite the difficult two years they have been through the directors of RBS have decided to pay themselves £1.5 billion (€1.65 billion/milliard; US$2.49 billion) in bonuses (so on top of their current high pay).  Despite the ongoing difficulties with the recession these bonuses actually exceed those paid last year.  Where is the vast improvement to warrant such payments?  When the government suggested that they do not do this all the directors threatened to resign from their posts.  Lord Mynors the government minister responsible for the banking sector has called their bluff pointing out how many unemployed bankers there are ready to step into the directors' shoes.

It is probably not surprising that others such as Barclays bank and the National Association of Insurers are backing RBS directors in paying large bonuses.  However, as Lord Mynors has pointed out, it is not simply RBS which has benefited from government intervention. Not only did the government take over Northern Rock and the mortgage arm of Bradford and Bingley, it now holds a 40% share in HBOS-Lloyds TSB.  In addition, all banks benefited from 'easing' of the credit availability by the government pumping money into the system.  The government has only been able to fund such intervention which prevented large chunks of the banking sector collapsing, through borrowing.  This borrowing is criticised by the very type of people who benefited from the intervention and risks the UK's credit rating.  If RBS is in a position to pay £1.5 billion in bonuses then it is in a position to pay back many millions of pounds to reduce government debt.

The RBS argument, repeated by their allies in the sector, is that they have to pay such high bonuses in order to attract and retain capable staff.  You can argue that even the bonuses they have paid have failed to do that as clearly as 2008 showed they only had incompetent staff able to wreck the bank they worked for.  Apparently there are at least 5000 bankers in the UK currently earning over £1 million, so what incentive is there to work well if you offer them an additional £100,000 or even £250,000?  As yet, I have to see evidence that we have any skilled or clever bankers in the UK, certainly ones worth the levels that have been allowed to become 'normal'.  These directors can threaten to resign because they can live without pay for many years.  It is particularly bitter when people whine about postal workers who are striking to try to keep their jobs and say that the unemployed are only out of work because they demand too high pay.  There is no 'whip' to bring in line the bankers in the way that they and their kind have been so eager to use on people earning less per year than the cost of one of the bankers' cars; remember 80% of the UK population earns less than £25,000 per year.

I support Lord Mynors.  The directors of RBS can resign if they like.  It will actually do the banking sector a deal of good.  I think then that the government should either dismember RBS or totally nationalise it.  However, importantly, they must run it properly as a state-run bank.  At the moment all the state is doing is pumping cash in and yielding complete control to people who simply want to make themselves even wealthier by funnelling that cash into their own pockets.  That is the morality, the business model of a mafia-run casino, perhaps even an extortion racket, given the level of house reposessions, and bankers who behave this way should not be lauded they should be condemned as we would gangsters.  The government should not be embarrassed at true nationalisation and they should do it on the French model rather than the half-hearted models the UK has had in the past that too often have simply given power to the privileged rather than making the industry benefit the nation as a whole.  They should stop nationalising things on the verge of collapse and take over some businesses in a healthy state again so the UK economy and society can benefit. 

Though the bulk of the population seems to make its assumptions from a Thatcherite economic perspective, with unemployment still high and pay frozen and hours cut back, there is both shock at the arrogance of the RBS bankers (as there was at the MPs fiddling their expenses) and sustained support for action to prevent such flagrant greed continuing unchecked.  In such an atmosphere, the government has the backing to take the necessary action.  It needs to be done before David Cameron and his upper class cronies have any chance to begin again to praise this kind of behaviour in order to benefits their friends in the financial sector.  Gordon Brown, Alastair Darling, Lords Mandelson and Mynors, do not let the RBS directors resign, sack them and block the obscene greed which has done so much damage to the UK!

P.P. 7/12/2009: I was very pleased to hear that Alastair Darling intends to tax the bankers receiving bonuses.  They have been given repeated (too many) chances to moderate their behaviour and yet have not only not done that but have whined on about the government daring even to criticise them.  There was a stage during the MPs' expenses scandal when some MPs realised how genuinely upset the public were about it; the change in expression and response from Margaret Beckett when answering a question about the scandal on 'Question Time' was a physical expression of that shift.  Of course, some MPs still have not really caught on and a couple have been deselected.  However, it was clear that many at the start thought they were doing nothing wrong and even more arrogantly that the public would not take them to task.  Now it is happening, if slowly and incrementally with bankers.  Most of us have no control over what bankers do, it seems even large shareholders (including in some cases the government) have no influence either.  Any, pretty mild criticism of their behaviour has a strong response attacking the critics and telling them to mind their own business.  In many cases now, of course what the banks do is our own business.  I really hope the bankers get hammered for their greed which is sickening when so many people are facing unemployment.  If it compels them to resign, all the better for the UK.  I fear, however, as with the windfall tax on the greedy utility companies promised a couple of years back the bankers will find some way to wriggle out of all of this and thumb their noses at all of us.  Personally I have come now, in the face of sickening greed to favour ending any private banking in the UK and having either mutuals (I bank with the Nationwide, a very successful mutual) or state-owned banks.  Let us get control of the economy back into the hands of the people who it actually effects.  The millionaires are really exempt from economic troughs (though they benefit from the peaks) whereas it is us who lose our job and our house.

Are Britons Only Socialist in Times of Crisis?

Many people argue that the British population is inherently conservative and for most of the time, Conservative, i.e. supporting the policies of the Conservative Party.  I suppose that most people who are generally comfortably off, no matter where they live have a tendency not to want that disrupted and to keep out others from enjoying what they and their families have.  It is a trend even in states such as China, which is Communist and founded on revolution and in which a lot of things still need to change, let alone countries, that whilst suffering from a recession currently, are far better off than those countries where the bulk of the world's population lives.  Recently I have noted people who whilst they want to reduce pressure or upset for themselves actually want other people to suffer more 'for their own good'.  Of course, the standard thing about pressurising unemployed people to take low-paid work and uproot and move right across the country or face punishment have been wheeled out again as the level of unemployment has risen.  However, I have encountered people saying Sweden is now lagging because its policies of equality means there is no 'edge' to drive people to work harder.  These people love having the whip cracked as long as it is on other people not themselves.

You might ask, well, 'what has this to do with Socialism?'  You may ask 'what is Socialism, anyway?'  It is a term that even the Labour Party dropped more than a decade ago.  The wealthy actor, Alan Cummings, when interviewed recently listed it as the extinct thing he would like see revived.  A lot of people equate it with Communism and they think that died the day the Berlin Wall was knocked down in 1989.  Of course, saying all Socialists are Communists is like saying all Conservatives are Fascists: inaccurate and ignorant of how the political spectrum works.  Of course, that was how many people have liked it.  In particular, Margaret Thatcher (British prime minister 1979-90), who, on more than one occasion said she wanted the elimination of a spectrum of political parties and preferred to have simply two very close to each other as is the case in the USA, often equated not only Socialism but the Labour Party (which often had more Liberal than Socialist policies) with the Communist.  In that way she could portray them as a the 'fifth column' or 'the enemy within', in league with the USSR to undermine democracy in the UK during the Cold War.  Of course, Socialists are passionate defenders of democracy as are most Conservatives.

What is Socialism? Well, the key word is 'social', it is a political philosophy which sees the benefit of the whole of society as the key driving force.  Of course, Margaret Thatcher argued that there was 'no such thing as society' and emphasised that it was individuals' desires and units no greater than families who should drive what happened politically and economically.  Socialism argues that people are different, they have different needs and abilities but they should be looked after when they cannot look after themselves (such as when ill, pregnant, unemployed or elderly) but also that they have responsibilities to the rest of the community and that whilst they are free to make their own way in the world and make profits (this is crucially where Socialism differs from Communism) they should not do so by exploiting people whether in their own country or in other countries.  This means employers should pay decent wages, have reasonable working hours and conditions and listen to the people that they are employing.  A key objective of Socialism is that everyone has equal opportunity, whether it is in terms of access to health care or education or to get on in their lives.  Vitally Socialism is against people being barred from certain jobs or other opportunities simply because of what social class they come, what gender, age or ethnicity they are.  In the 1960s this approach, seen with the creation of numerous new universities to allow people greater opportunity to go into higher education, was condemned as 'meritocracy', i.e. that people with ability could succeed.  Of course, this has been turned around from a negative term to a positive one.  As I have noted regularly on this blog since the 1980s we have moved too far away from a meritocracy to too many people simply getting good positions because of what family they were born into or which elite school they attended.  Opportunity is now less than it was thirty years ago.

A lot of Socialist principles overlap with Liberal ones and probably the most Socialist governments in British history, those under Clement Attlee 1945-51 actually pursued a Liberal policy.  Rather than having a controlled economy in line with what Socialism advocates, after 1948 they used Liberal Keynesian approaches, manipulating rather than directing the economy, notably through shifting interest rates.  In terms of health and social welfare, though they created the National Health Service, they permitted private, fee-taking doctors to continue practising and rather than funding a lot of health and social welfare from direct taxation as you would expect a Socialist government to do, they widened welfare insurance, which had been introduced in the 1910s and created National Insurance in line with what the Liberal, William Beveridge had advised during the war.  The idea is that you pay into national insurance as you would any insurance so that you build up a fund that you can draw upon when you need it, for example, when ill or elderly or out of work.  Of course, as with all insurance, some people never make a claim whereas others claim often, but that reflects the diverse needs of our society and that is not something we should try to restrain.

The most Socialist element was nationalisation of key sectors of British industry.  The focus was on the 'commanding heights', i.e. those sectors of the economy that fed through into many others.  Thus, coal mining and the railways were nationalised.  The fact that these industries had been run poorly or inefficiently before was a good reason for the state to take over.  Gas extraction and provision; electricity generation; water supply; coach transport; airlines; freighting and later steel manufacture were all nationalised; though some steps, such as with airlines had been taken before the war.  Other countries, notably France did the same kind of thing.  The British, however, even with nationalisation, tempered Socialism with Liberalism and had a very 'arms length' control by the state of these industries and did not direct them in the ways they should stimulate the economy the way that even right-wing governments in France did especially with the largest state-owned company in France, Electricite de France (now EDF Energy).  Often, as with the example of gas and water supply what we saw in the UK was really just grand 'muncipalisation'.  Many suppliers had been established by city councils in the 19th century and the regionalised approach to gas and water supply (and some water regions, such as City of York, were very small) was continuing this 19th century approach rather than moving to a really Socialist method. 

In later years nationalisation in the UK was not used as a way to try to stimulate the economy but rather to bail out failing companies such as Rolls Royce in 1971 (nationalised by Edward Heath's Conservative Government), British Leyland car manufacturers in 1976 and British Aerospace made up of a number of aeronautical manufacturing companies and British Shipbuilders, the same for that industry, in 1977.  It is unsurprising that nationalised industries that had failed continued to suffer but it meant that nationalisation was now seen as a failed economic policy and this was at the time when New Right ideas were rising both in the USA and the UK emphasising the reduction of all state control or even regulations and clearly nationalised industries were an anathema to such thinking (notably the economic viewpoint held by Margaret Thatcher).  Ironically Thatcher's government nationalised collapsed chemical company, Johnson Matthey in 1984. 

Despite the emphasis on nationalised industries the state sector was never larger than 20% of the economy compared to 90%+ in Communist countries.  In the 1980s and 1990s the nationalised industries were sold off by the government which brought revenue to the state.  The idea was ownership would be held by numerous small shareholders but generally they were bought out by large companies and increasingly ones from abroad.  Whilst there have been regulators of these former nationalised industries control over prices and profits and trying to keep up quality has not really worked; many have a near monopoly and as has been seen in the past couple of years attempts by government to stop them charging high prices and providing poor service have failed.

Conservative propaganda about Socialism has always been pretty successful.  In 1992, Labour did not win the election after a successful campaign arguing that its policies would lead to higher taxation, a view that even Labour supporters seem to come to believe.  In the 1950s the Conservatives argued that Labour's nationalisation was akin to a command economy and though Winston Churchill shot himself in the foot in 1945 likening the Labour approach to the Gestapo by the 1950s the Conservatives were successful in portraying themselves as the party of freedom against Labour's restraint and austerity.  In the late 1940s, of course, the public had been used to both restraint and authority so that argument had little impact.  In addition, Labour does seem to offer solutions to ingrained problems and in 1945 the public had been really voting on the problems of 1931 rather than the post-war era.

The reason why Tony Blair was so focused on manipulating the media was because he knew from history how long it had been manipulated against anything Labour had done.  However, he went so far in making the Labour Party seem acceptable to the media that he sheared it of the bulk of its Socialist principles.  Clause 4, the part of the Labour Party constitution which advocated nationalisation, was scrapped in 1994.  On coming to power in 1997, Labour in fact went further than the Conservative governments by denationalising the Bank of England and so giving up even Keynesian control over interest rates.  I believe that Tony Blair was neither a Socialist or really a Conservative, he was a Blairite and created a personal party out of the shell of the Labour Party; using Christian Democrat principles as the covered, but really based on his own ambitions and simply what he felt was 'right'.  This is why people feel Socialism is dead in Britain, but in effect we probably have not even seen a mildly Socialist government in Britain at least since 1976 if not since 1970 and that is the way company bosses like it.

The key problem for Labour, aside from the fact that the financial sector always tries to make a run on the pound and destabilise the economy, in fear of what constraints they will be put under, is that trade unions see an opportunity to get the deals that they have battled to achieve under a Conservative government.  Now, as in 1978/9, they are busily undermining the Labour government with demands and strikes that make it appear to voters, ironically most of whom will be workers, that the government has no control.  Of course, part of the problem is that no British government has been able to tackle the greed and huge profits of those who run business, so it is unsurprising that workers want more.  If the utility companies had been compelled to pay a windfall tax and bankers to limit their vast bonuses, ironically I think we would be seeing less industrial action.

Anyway, having cantered through Socialism, you might be thinking why is that relevant now?  Well, it is my suggestion that the British population while Conservative most of the time, turns to Socialism when things are going wrong.  In 1945 Socialism was seen as the way to avoid a return to the Depression of the 1930s and the economic slump that had followed the First World War.  In 1964 Socialism was seen as the way to stop Britain's industrial stagnation, unwillingness to modernise and thus its slipping competitiveness from worsening.  In 1974 Socialism was seen as a way to heal the sharp rifts in society and especially in industrial relations.  Of course, there has always been ambivalence as the elections of 1951, 1964 and 1974 showed and the wealthy always pull out the stops to prevent the advent of a truly Socialist government.  This is one reason why Gordon Brown who, unlike Blair, is a Labour leader, has come under sustained media attack throughout his term in office.  However, it is clear that the British public is drifting back in a Socialist direction once more.

Of course, it is not pure, unadulterated Socialism, there are other trends such as blaming problems of immigrants, which are an anathema to Socialism but almost seem to have become a norm in much discussion.  However, adherence to the National Health Service and a national innoculation programme to combat swine flu is one characteristic of a more Socialist outlook. People do not seem to realise that in the USA they would have to have health insurance for things they currently get for free and once they were elderly they would find it difficult to get cover.  Most likely they would be paying for innoculations.   I know prescription charges have risen but no-one pays for innoculation and the elderly and people like me with a lifelong condition, diabetes, who need constant medicines, do no pay.

There are, in fact, demands that the NHS expands it role and does more to provide treatment for the elderly, and for example, one-to-one care for premature babies.  Such things are costly and perhaps people are unwilling to tolerate the tax to pay for these.  The wars in Iraq and Afghanistan, whilst re-inforcing pride in the military among the British population, are seen increasingly as hopeless and people are calling for an exit.  The Conservatives argue that Labour has not provided the military with the equipment it needs, something I agree has been a problem, but how does anyone expect David Cameron with all his emphasis on cutting public spending to be able to afford to send even one more helicopter to Helmand province? 

The key area where we are seeing a return of Socialism is, ironically, in terms of the previously most controversial aspect of the ethos, nationalisation.  We now have a larger nationalised sector in the UK than at any time since about 1986.  The British government took over the Docklands Light Railway in 1997 and effectively the railway track of Britain is run by Network Rail a company without shareholders but underwritten by the government.  In 2008 Northern Rock building society and the mortgage lending part of Bradford & Bingley building society were nationalised. The government took over 60% of the Royal Bank of Scotland and 40% of the HBOS-Lloyds-TSB banking conglomerate giving it a large slice of the British banking sector, especially in mortgage-lending which has always been a key element in shaping the British economy.

It is unlikely that even Clement Attlee would have been able to control such a large aspect of the financial sector.  The closest we came was when Roy Hattersley, deputy leader of the Labour Party said around the time of the 1992 election that the investment group 3i would be nationalised under a Labout Government to form the basis of state investment in private industry.  The uproar was such that the idea seems to have been entirely forgotten almost immediately.  Interestingly, this year, finally, the government is compelling credit card companies to raise the minimum repayment level on the amount people owe.  This should have come in at least 10 or 15 years ago and could have restrained some of the overheated consumption and massive debt that amounted during the late 1990s and early 2000s that has distorted the economy in an unhealthy way.

All of these steps have been taken with no dismay from the general public.  When there is a crisis they expect the government to step in and sort it all out for them.  The rest of the time they whine about over-regulation, the 'nanny state', that taxes are intolerable and so on, not realising that lack of regulation has led to much of the crisis we are now in and that expensive bail-outs can only be funded by taxes.  Again nationalisation, which seems such a dirty word in most years, is seen as the solution.  Again, however, as in the 1970s, it is being used to catch falling businesses.  This is the wrong way to approach the economy.  Northern Rock should have been nationalised before it started its mad approach to mortgage lending.  I would have taken it over in 2005 at the latest and then, rather than it being a drag on the British economy it could have been used to stabilise house prices and provide stimulus to new business. 

With the first £1002 train ticket for the journey from Newquay in Cornwall to Kyle of Lochalsh in western Scotland, a distance of 2,720 Km (a round the world air ticket can be bought for £800 and you can travel from London to Zurich on the luxury Orient Express for £1000 or from Moscow to Beijing on the Trans-Siberian Railway - 5,806 Km for only £995) and most inter-city rail fare prices having trebled in the past 15 years, a period in which inflation has been below 3%, it seems apparent that if we want a mobile population using the greenest form of transport around, i.e. electric trains, then we need the whole rail system back in state control.  You find that the only people who praise the privatisation of the railways are people who never travel on trains.

So, are we seeing a Socialist conscience developing among the British population, wanting a tax on bankers' bonuses, limits on the pay of the wealthy, better value public transport and a health service expanding its scope combined with a tolerance, possibly even an enthusiasm for privatising what are now the controlling sectors of the British economy?  People would argue, as historian Corelli Barnett did in the 1980s that the British have become too used to the 'teat' of state intervention and would be traumatised to have it taken away from them and left to fend for themselves.  However, of course, with Thatcherite policies a great deal has been taken away and yet there are still billions of pounds of benefits that people who are entitled to them do not claim.  Britons are an independent people that still like to make their own way as best they can, despite all the propaganda about benefit swindlers and dole scroungers.  Ironically no-one goes after the tax defrauders who owe millions in total to the British economy but they have taken out to tax havens.  We need to go after these people and make them contribute the way I and the large bulk of ordinary British people do.  We have no choice about paying or not paying tax, so why should the wealthy get to make that choice?  Hopefully people are beginning to realise that only a tiny fraction of the population are ever going to win the lottery or set up a business we can sell for millions or become a pop star or some other kind of celebrity, so instead of thinking it is alright for the rich to get away without pulling their weight because one day we might be one of them, more of us need to make sure there are opportunities for a decent life for all.

The veteran Socialist politician Tony Benn often recounts when he was on a train that broke down and how it suddenly seemed as if people were becoming Socialist, sharing out the food and other supplies they had, working together to make the best of a bad situation.  When the train was running smoothly of course they did none of this.  People often refer back to the 'wartime spirit' when people supposedly collaborated in the way that Benn saw them do on that train.  Historian Nick Tiratsoo has shown that a lot of that was exaggerated and we know that 'outsiders', often Jews, were kept out of air raid shelters and whilst the bulk of the population was struggling to feed their families on rations, those who could afford to, could eat unrationed food in restaurants.  However, though it might have been exaggerated it does seem that, possibly counter to what you might expect, in crises Britons become less rather than more selfish.  It is a shame that they cannot maintain that attitude in the better times.  I know David Cameron thinks he will walk into being the latest Conservative prime minister but the recession has reawakened the dormant Socialist tendencies in the British population and if Labour appeals to those rather than trying to be a pale version of Margaret Thatcher's Conservative party, it may win at the next election.