Tuesday, April 29, 2008

The Virtues of being a Fighter not a Quitter

Barack Obama's campaign is in grave danger thanks to his pastor the Reverend Wright. Just as the whole pastorgate thing looked like it was dying, up pops Wright on national TV and according to the Washionton Post

Wright praised Louis Farrakhan, defended the view that Zionism is racism, accused the United States of terrorism, repeated his view that the government created the AIDS virus to cause the genocide of racial minorities, stood by other past remarks ("God damn America") and held himself out as a spokesman for the black church in America.

It wouldn't have been so bad if Obama had denounced Wright in no un-certain terms when the pastor problem first arose. Instead, Obama tried to explain the pastor and said he could no more denounce him than his own grandmother (who is white). The speech was very elegant and won many plaudits for it's prose, but from a political point of view many wondered why Obama didn't simply dump the pastor (who is clearly bonkers). He might as well have, as Pastor Wright seems to be speaking out now in revenge because he's ticked off that Obama didn't praise him to the skies in the speech. His behaviour would have been the same if Obama had denounced him, but at least moderates would still be onside. As things stand Obama, by hedging, has upset everyone.

Why did Obama not grasp the nettle earlier? Did he believe that denouncing the pastor would hurt him with the African-American community? He's surely wrong - African-Americans must be horrified that the pastor is stereotyping them so negatively on national TV just at the point they had thought they'd beaten back this sort of profiling.

Thank goodness Hillary is still in the race! If this gets worse, the superdelegates have the option of choosing Hillary as the least damaged candidate, whereas if it had been all over in February, they would have had the horrible prospect of watching a trainwreck, powerless to do anything about it. She's in the race simply because the people of New Hampshire, California, Ohio, Pennsylvania and other places were determined not to make the mistake they had made in 2004, when they chose too early before the candidates had been properly vetted (the 2004 race was practically over after New Hampshire). This time they've gone for a proper trial by ordeal to see what skeletons will surface (as they always do).

It's also a credit to Mrs Clinton herself that she's still there. She started off the campaign with the reputation of an ice-queen, distrustfully masking her thoughts. She got attacked relentlessly and viciously by everyone, being called a witch, a b*tch, the terminator, and worse and was repeatedly told to give up and step down. But she decided to fight and as she did so, the real Hillary broke through the mask, and she's proved herself feisty, full of nerve, un-expectedly warm and completely shameless in her determination to win - not only throwing the kitchen sink but boldly announcing in advance she'd do so. The only thing she didn't throw at Obama was Pastor Wright - he did that to himself.

It's hard not to smile and be charmed by this shameless, bravura and up-front display of guts. You know exactly where you stand with the Clintons. In a fight you'd want them on your side. People have criticised her chaotic campaign, forgetting that Bill Clinton's campaign (and indeed his entire white house administration) was equally chaotic. It's not always the case that disciplined campaigns such as that of Obama (and George W Bush before him) produce the best presidents. On the contrary, an atmosphere where people feel free to argue the toss prevents group-think, shows up flaws in arguments and in the end makes for better decision-making.

By holding firm, she's put herself into a position where she can now profit from Obama's mistakes. All eyes will now be on North Carolina and Indiana. The Wright thing can only hurt. They say you should never write off the Clintons. The last time they lost an election was in 1981. Since then they've been winning everything they contested, governorships, the presidency, the senatorship, now possibly the nomination to be the Democratic candidate for president again.

Even if she doesn't pull it off, the Labour party should take notice of how she's handled herself, because she's far more popular now than she was at the start of the contest. No-one likes people who pathetically give up and "resign themselves to losing". Everyone likes people with the gumption to fight because it implies you believe you have something worth fighting for.

Sunday, April 27, 2008

GDP grew by 0.4% in first quarter

According to the ONS, GDP grew by 0.4% in the first quarter, which is a slowdown from the previous quarter, but still higher than the growth we had going into the 2005 general election. It came as a disappointment to those who were claiming that we were "in recession", but still some papers tried gamely to spin this as "Economic Growth lowest in three years".

Looking at the figures, as expected, business and finance had lower growth than in the previous quarter (0.4% compared to 0.6%) and contruction also grew more slowly (0.5% compared to 1.1% in the previous quarter).

Retail held up nicely - but there is evidence that customers are deliberately shifting to the low-priced end of the market - Primark is doing a roaring business for instance. Online sales are also doing better than high street sales and supermarkets like Sainsburys have launched a 25% off sales push to try to wrest customers from their rivals. All of this is a normal response given the way consumers have reacted to the headlines in the press. Retailers will have to cut prices if they want people to buy - not so good for margins but good the customer.

Friday, April 25, 2008

The Awful YouGov Poll

YouGov have produced a poll which puts the Conservatives on 44%, Labour on 26%, LibDems on 17% and others on 13% (others broke down as follows: SNP/PC 4%, Green 3%, BNP 3%, Respect 0, other 1%).

This gives the Conservatives a huge 18% lead, which comes as a surprise as the ICM poll just three days earlier put the Conservatives on 39%, Labour on 34%, Lib Dems on 19% and others on 9%, giving the Conservatives a 5% lead.

One or both of these poll is a rogue, (there is a huge difference in the reported Labour party figures).

The divergence is interesting because both YouGov and ICM weren't too far off about the 2005 election:

General Election result: Con 33.2%, Lab 36.2%, LibDems 22.6%, others 8%
YouGov May 3-4 2005: Con 32%, Lab 37%, LibDem 24%, others 7%
ICM May 1-3 2005: Con 32%, Lab 38%, LibDems 22%, others 8%

So both pollsters were pretty close to each other and to the final result. So why the current sharp divergence? The two pollsters use different methodology, ICM telephones people randomly and weights by certainty to vote, YouGov relies on a panel of voters on their database and doesn't weight by certainty. It's possible that as politics has moved out of the holding pattern of the last ten years, one of the methodologies has an underlying problem that is giving a skewed answer.

Both methods have vulnerabilities. ICM is vulnerable to the spiral of silence where people are embarassed to admit their affiliations because of the human desire not to be judged, even by a stranger on the phone - this could take the form of people who remember John Major's govt being shy to admit they are Tories, people who are shy to admit they like Gordon in the face of the bashing he's receiving and people who are shy to admit they are BNP.

Because YouGov's polls are on the internet, the spiral of silence problem is eliminated (as data is sent back anonymously). However they are vulnerable to people setting up multiple accounts (as they pay per poll done) and being swamped by activists joining en masse to try to move the polls.

Both pollsters are vulnerable to people mis-remembering who they voted for in the last election (eg people who voted LibDem and let in a Tory might want to conveniently "forget" this and people who are Labour to the core but voted LibDem to "keep the Tories out" might simply answer "I'm Labour" to the question). YouGov tried to get round this by polling their entire database on election day in 2005 to get a record of how they voted (and given how close their pre-election polls were, it's fair to say that most of their database would have answered truthfully). However, they are vulnerable to new panellists joining since 2005 giving the wrong information about how they voted in the last election.

Looking at the data for the recent YouGov poll, I'm struck by the BNP figures - can they really be polling roughly the same as the SNP and PC combined? Given how popular the SNP is? Or have a whole bunch of BNP supporters joined the YouGov panel to bump up their count (the BNP phenomenon is largely a post 2005 one)?

There is an easy way for YouGov to resolve this. They know that the panellists on their books at the 2005 election were sound and they also have the exact details on how they voted in that election. This group can therefore be used as a control. All they need to do is run three opinion polls, one sampling the pre-May2005 database, one sampling the post-May2005 database, and a third poll run based on the whole database. If there are sharp differences in the results, they can conclude that the post-May2005 panel has been corrupted and take action to sort this out. If there are no differences, they should conclude that their methodology and panel are sound, publicise the findings and stand by their polls.

Wednesday, April 23, 2008

Consequences of the whole Olympic Torch Business

Gordon Brown got severely criticised by all the talking heads plus the Conservatives and the Liberal Democrats for allowing the Olympic torch to enter Downing Street in his presence, and agreeing to go to the closing ceremony, especially as the French announced they would stay away from Beijing unless "certain conditions were met". The Lib Dems indulged in grandstanding to the extent of writing to the PM to advise him to stay away.

Luckily Gordon didn't listen to them and luckily he didn't follow the French line either.

There has been widespread coverage of the protests in the Chinese media (particularly of the way a disabled female Chinese athlete was attacked by a pro-Tibet protester in Paris, which was wrong no matter how you look at it). China had been furious with France for taking such a high-profile attitude over the Olympics anyway, and the incident with the disabled athlete gave them the chance to scapegoat France for all the protests in Europe. There have been demonstrations and protests outside French businesses like Carrefour in China, and boycotts have been organised.

The business implications are so big that President Sarkozy has had to do a public U-turn from castigating China to appeasing them. He has written personally to the disabled Chinese athlete apologising to her, and has dispatched three high profile envoys to China to patch things up. Meanwhile the CEO of Carrefour has publicly distanced himself from the protests in France.

Given the way the Chinese have made the French bend the knee to them, does anyone believe that the French have the authority to make any further protests to them about human-rights?

It makes our Gordon look like a diplomatic genius, because compared to Sarkozy all he had to endure were a few uncomfortable minutes watching the torch in Downing Street. And businesses like Tesco, competing in China against Carrefour and Wall-Mart, are serenely unaffected. And we still retain the authority to express concerns in private and have them taken seriously because the Chinese know we won't play grandstanding games with them.

Of course human rights in Tibet matters, but concerns need to be voiced in private behind closed doors, especially as the Chinese put great store on not losing face. The Chinese have a long history of reacting positively to approaches made in private but very badly to approaches made in public. In the run-up to the expiry of Britain's lease for Hong-Kong, the private negotiations were going well, the Chinese were all set to extend the lease for another century - till Mrs Thatcher couldn't resist opening her mouth and demanding in public that they renew the lease. Then it became a matter of patriotism to get Hong-Kong back - which they did. Britain had been moving towards full democracy in Hong Kong, and had Mrs T kept her gob shut and let the negotiators get on with it in private, the 7 million Hong-Kong citizens would have been enjoying full democracy by now under a renewed British lease. As it is, the shouting delivered them into the hands of the Chinese Communist party. Chris Patten too found when he was governor of Hong-Kong that publicly criticising China did him no favours (to the extent that Sir William Purves, chairman of HSBC at the time, got visibly irritated with the way he was damaging British business).

It's also not clear whether sports is the correct forum to express concerns on human rights as it hurts innocent athletes and make the target of the protests even more stubborn. And while the Chinese were heavyhanded and over-the-top in putting down the Tibetan demonstrators, the demonstrators were disturbingly xenophobic towards the Chinese (imagine if the Spanish rioted because the English have moved there in numbers, or if the English rioted because Scots live in England in numbers).

China is now a de facto superpower, just like the United States, and just as we express criticism to the Americans in private, we need to express criticism to the Chinese in private too. However much our press and opposition parties may like to pretend that we live in a Love Actually world, we don't.

Much better to have a cautious and discreet Prime Minister like Gordon than a "shoot your mouth off one minute, publicly abase yourself the next minute" leader like Sarkozy. And it's lucky we have a Labour govt in power - because according to the Conservatives and the Liberal Democrats, they would have gone the Sarkozy route.

Wednesday, April 16, 2008

Unemployment Falls Again

Unemployment fell again according to figures out from the Office of National Statistics, and inactivity rates are also falling. The net result is that 74.9% of people of working age are now in work, a total of 29.51 million people, up 152,000 over the quarter and up 456,000 over the year.

The number of outstanding vacancies is now 687,600 which is the highest since 2001. This accords with anecdotal evidence - I know several people desperately trying to recruit IT staff and struggling to find people who will respond to adverts let alone turn up to interviews. It explains why the BoE has been cautious and has only cut interest rates by a total of 0.75% from the peak of 5.75%, unlike the US Fed which has cut by 3% to take interest rates from 5.25% to 2.25%.

But you wouldn't have known unemployment had fallen if you had logged onto the Times website this morning. Their main headline screamed Unemployment looms large as crunch bites deep - anyone glancing at it would have shivered and assumed that unemployment had just risen. But their whole article was instead based on an predictive "estimate" put out by JP Morgan - you know those people whose predictive abilities are so notable that they loaded up with sub-prime which resulted in them announcing a 34% writedown in Q4/07 income, followed by an announcement today that their 2008 first quarter profits had dropped by 50%. When the ONS released their figures, the Times removed the article from the front page and published the correct employment figures on the business pages - but couldn't resist spinning with the headline that the rise in employment was "masking" the "crunch".

It's hard not to conclude that the Times is doing it's darndest to frighten the public into staying away from the shops, hiding under the bed and stuffing their money under the mattress - all the better to make people doubt the Labour government and vote Tory. It will be interesting to see how far they take this. You can scare-monger to a certain extent, but when you start to do it persistently and in direct contradiction to the facts you get a reputation rather like the Daily Express when they run one of their interminable "Diana was killed by Prince Phillip" stories.