Clegg's election is probably a good thing for the Lib Dems. He's a palpably nice man in a way Chris Huhne is not and the Lib Dems have always marketed themselves as the "nice" party (indeed they started slipping in the polls when they displayed "not-nice" behaviour - knifing Charlie Kennedy and not standing up for the chilly but elderly Ming).
It's perfectly true that Clegg is a bit waffly, but I'm not sure this matters. Charlie Kennedy was also waffly and poor at party organisation, but he led them to their best performance for about eighty years. The public know that the LibDems won't form the government, so they don't pay much attention to LibDem policies, let alone whether their leader can explain them. Instead they look at the leader and ask whether he is a decent bloke that they can trust with their protest/tactical vote. Likeability matters more than anything for libDem leaders.
Clegg should help the Lib-Dems in LibDem/Tory marginals - Labour tactical voters in these seats will prefer the nice and genuinely good-looking Clegg to the balding and bullying Cameron. Both are public school men, and Labour voters will go for the least nasty one - Clegg in this instance.
Labour/Conservative marginals should be interesting too. In 2005 we had the interesting phenomenon of Tories winning seats off Labour without increasing their share of the vote, simply because some of the Labour vote switched to LibDem. And in other seats, Labour MPs saw their majority slashed for the same reason. These Labour switchers thought that Charlie Kennedy was a good bloke, a man of the people, whom they preferred to Blair whom they saw as increasing elitist and arrogant, particularly on the issue of Iraq. In a sense, these Labour voters felt that Kennedy was to the left of Labour and were comfortable voting for him. Clegg however nice, is not "the common man" in the way Kennedy was. Given the choice between earthy Labour (as it is in it's present incarnation) and the "posh" Clegg, these people should return to Labour, particularly as we are steadily withdrawing from Iraq and are unlikely to get involved in any new foreign adventures in the forseeable future. Labour should really work these marginals hard - there is all to play for.
I note with some amusement Tories trying to dismiss Clegg as a "Cameron clone" as though Cameron was some sort of original! But of course both Cameron and Clegg have modelled themselves on Tony Blair, who has turned into the John F Kennedy of European politics, influencing not only British oppposition parties but European politics too, with politicians from France to Sweden modelling themselves on him. (and in a sense if Kennedy had lived he would have faced Blair-like consequences in Vietnam). Clegg however comes closer to capturing the early "bambi" Blair than Cameron whose facade has slipped to exhibit his true personality which is nastier and altogether more off-putting. This will have implications in southern seats with a particular strand of "nice" middle class voters. Clegg out-nices Cameron by a mile.
Wednesday, December 19, 2007
Thursday, December 13, 2007
Lessons from History
IPSOS-Mori have produced a fascinating trend report called Ten Years of Blair, where they've produced graphs of trends on everything they've polled about since 1997.Of particular interest is the graph for Economic Optimism (from page 43 of the report). In 1998, the hedge fund LTCM collapsed, Russia defaulted on her debt and the "Tiger" economies of the Far East saw a massive flight of money as the capital markets took panic. Conditions were similar to today. Liquidity collapsed, all banking share prices were marked down regardless of whether they were exposed to the problem countries and the Fed and other central banks struggled to pump liquidity into the markets to stabalise them.
Take a look at the graph to see what happens to economic optimism in the UK in 1998 (click on it to enlarge if you are having trouble viewing). Captains of Industry, MP's and the general public alike assumed that the crisis would affect the economy and confidence nose-dived. The economy however continued to grow healthily at a pace not that far off the current one (the dotted green line). Once everybody realised that the crisis had left the economy unharmed, optimism promptly recovered. There was more to the economy than the banking sector, even though participants in that sector have the knack of screaming loudest.
What happened in 1998 is not that different to what is happening now. For exposure to loans to the Russian and Far-Eastern economies, simply substitute exposure to US sub-prime paper. Labour people should hold their nerve. Just because the newspapers are in full panic mode and saloon-bar Tories talk incessantly about "the coming economic crisis" doesn't mean there will be one. The jury is still out as to whether the travails in the banking sector are affecting the real economy.
Saturday, December 01, 2007
YouGov on the Economy
Long-time readers of this blog know that it's my firm belief that general elections swing on the voters' perceptions of who will run the economy well. Everything else is just noise.
In 1992, in the midst of a recession and with house prices lower than in 1990, voters went for the Tories because of doubts planted in their minds about Labour's competence, and fears of tax-rises. In 1997, voters had experienced tax rises from the Tories (after their promises not to raise them), and most importantly house prices in 1997 were still below 1990 levels, seven long years on, and voters had lost confidence in any possible recovery under the Tories.
So perceptions of how the economy is doing matters, and we come to YouGov's poll for the Telegraph.
They found that 14% were very worried about a recession and 50% were "somewhat worried". On the question of "which party do you think will run the economy well" the Conservatives were on 33%, Labour on 32% and Don't knows on 36% (compared with conservatives on 27%, Labour on 49% and don't knows on 23% at the 2005 general election).
None of the above is surprising. People "predict" the future by what they read in the press and the newspapers have been full-on with "Recession is nigh" stories, seizing on such things as house prices dropping in October according to the Nationwide, and ignoring the figures from the Land Registry which showed a rise, let alone the figures from everyone showing house price growth strongly up over the year. However, despite the gloom, it's not clear that the American sub-prime crisis will cause a recession in the USA, let alone here. A strong indicator is the oil price - during world slowdowns, the oil price always retreats. The huge American economy is still the main driver for the world economy. Yes, China and India are now factors - but both countries have small economies relative to the USA, and both are dependent on the USA. And globalisation has produced a set of automatic stabalisers that we don't fully yet understand. Anyone who claims they know with certainty what will happen in the global economy next year is likely to be fibbing.
Of course that won't stop the newspapers with their doom-and-gloom stories. An article in Moneyweek makes the point that these doom-and-gloom predictions are nothing new. They note that "in 1997 many commentators predicted that a Labour party win would hit [house] prices hard". Then came predictions of collapse after 9/11, and then in 2003 Professor Oswald advised everyone to sell their homes and the IMF has been predicting a housing collapse every year since 2002.
What is likely to happen? In order to have a house price crash, you need forced selling. That means people selling their house because they have lost their job, and are desperate enough to sell at any price. High unemployment is a necessary condition for a house price crash. In the absense of high unemployment, what you have is a stalemate between buyers and sellers. Buyers try to force prices down by holding off buying in the hopes that the seller will cut the price in desperation. Sellers meanwhile are determined not to cut the price, and withdraw from the market and stay put. In this situation the number of transactions drop, but the overall prices stay relatively steady.
What about the buy-to-let people? They would off-load en masse only if they were struggling to rent their properties out. But there is no evidence at present of rental falls or an increase in vacancies. Indeed the Association of Residential Letting Agents say that tenant demand is at it's highest for five years.
What is happening now is not unlike what happened in Britain in 2005, in my opinion. In the absence of a recession, there will be a pause, and then buyers will get tired of waiting, and the market will move again. These pauses are actually healthy. They allow people to build up deposits, they allow people to pay off some debt, and most important, while the housing market stays level, earnings continue to rise, which eases things in a couple of years time.
There is a shrillness in the press at present that is determined to talk Britain into a recession and talk the Labour government out, but I believe the economy is too complex to be talked down like this. What is likely to happen is that growth will go from the current above-trend 3% to trend 2.2% and Labour will probably go into a general election in 2009 with a record of 12 solid years of growth and the opposition with a record of 12 solid years of wrong predictions.
Update 3/12/07. I see that Vince Cable is saying that the "housing bubble is about to burst": "Gordon Brown’s reputation is built on economic growth but there are ominous signs that the bubble is now about to burst." In my opinion this is a mis-reading of the situation. I think events will prove him wrong, and when they do, we should expose him mercilessly as yet another b$$$$cks-merchant masquerading as a serious politician, when all he's doing is engaging in scare-mongering.
In 1992, in the midst of a recession and with house prices lower than in 1990, voters went for the Tories because of doubts planted in their minds about Labour's competence, and fears of tax-rises. In 1997, voters had experienced tax rises from the Tories (after their promises not to raise them), and most importantly house prices in 1997 were still below 1990 levels, seven long years on, and voters had lost confidence in any possible recovery under the Tories.
So perceptions of how the economy is doing matters, and we come to YouGov's poll for the Telegraph.
They found that 14% were very worried about a recession and 50% were "somewhat worried". On the question of "which party do you think will run the economy well" the Conservatives were on 33%, Labour on 32% and Don't knows on 36% (compared with conservatives on 27%, Labour on 49% and don't knows on 23% at the 2005 general election).
None of the above is surprising. People "predict" the future by what they read in the press and the newspapers have been full-on with "Recession is nigh" stories, seizing on such things as house prices dropping in October according to the Nationwide, and ignoring the figures from the Land Registry which showed a rise, let alone the figures from everyone showing house price growth strongly up over the year. However, despite the gloom, it's not clear that the American sub-prime crisis will cause a recession in the USA, let alone here. A strong indicator is the oil price - during world slowdowns, the oil price always retreats. The huge American economy is still the main driver for the world economy. Yes, China and India are now factors - but both countries have small economies relative to the USA, and both are dependent on the USA. And globalisation has produced a set of automatic stabalisers that we don't fully yet understand. Anyone who claims they know with certainty what will happen in the global economy next year is likely to be fibbing.
Of course that won't stop the newspapers with their doom-and-gloom stories. An article in Moneyweek makes the point that these doom-and-gloom predictions are nothing new. They note that "in 1997 many commentators predicted that a Labour party win would hit [house] prices hard". Then came predictions of collapse after 9/11, and then in 2003 Professor Oswald advised everyone to sell their homes and the IMF has been predicting a housing collapse every year since 2002.
What is likely to happen? In order to have a house price crash, you need forced selling. That means people selling their house because they have lost their job, and are desperate enough to sell at any price. High unemployment is a necessary condition for a house price crash. In the absense of high unemployment, what you have is a stalemate between buyers and sellers. Buyers try to force prices down by holding off buying in the hopes that the seller will cut the price in desperation. Sellers meanwhile are determined not to cut the price, and withdraw from the market and stay put. In this situation the number of transactions drop, but the overall prices stay relatively steady.
What about the buy-to-let people? They would off-load en masse only if they were struggling to rent their properties out. But there is no evidence at present of rental falls or an increase in vacancies. Indeed the Association of Residential Letting Agents say that tenant demand is at it's highest for five years.
What is happening now is not unlike what happened in Britain in 2005, in my opinion. In the absence of a recession, there will be a pause, and then buyers will get tired of waiting, and the market will move again. These pauses are actually healthy. They allow people to build up deposits, they allow people to pay off some debt, and most important, while the housing market stays level, earnings continue to rise, which eases things in a couple of years time.
There is a shrillness in the press at present that is determined to talk Britain into a recession and talk the Labour government out, but I believe the economy is too complex to be talked down like this. What is likely to happen is that growth will go from the current above-trend 3% to trend 2.2% and Labour will probably go into a general election in 2009 with a record of 12 solid years of growth and the opposition with a record of 12 solid years of wrong predictions.
Update 3/12/07. I see that Vince Cable is saying that the "housing bubble is about to burst": "Gordon Brown’s reputation is built on economic growth but there are ominous signs that the bubble is now about to burst." In my opinion this is a mis-reading of the situation. I think events will prove him wrong, and when they do, we should expose him mercilessly as yet another b$$$$cks-merchant masquerading as a serious politician, when all he's doing is engaging in scare-mongering.
Thursday, November 08, 2007
The Vision Thing
Commentators have been quick to criticize the Queen's Speech for not having a "vision". There wasn't any visionary rhetoric to be sure, but if you look closely at the content, vision looms large - the aim is no less than to secure the survival of the welfare state for the coming decades in the face of demographic stresses.
I've written before about demographic problems and some of the solutions such as getting older people to work, but the problem we face is best illustrated by looking at what can go wrong if the demographic "timebomb" is ignored. One country has already gone through this - Japan.
The graph left illustrates the distribution of Japan's population, and the bulges in the middle graph correlate to two baby booms, in 1947-49 and in 1971-74. Japan's overall population has already started to decline, and the shape of the "population pyramid" has also started to alter.
In 1950 most of their dependencies were under 14, now they are over 65. This has profound financial implications. The old are simply more expensive than children. They consume a huge amount of healthcare (as most serious expensive illnesses occur in the last decade of life). As adults, they also demand spending money in the form of pensions. Children by contrast simply need shelter, food and education (much cheaper than healthcare and pensions).
There are several solutions to this - getting the old to work longer, increasing the birth rate, increasing productivity per worker, curbing the size of the state and immigration.
Unfortunately, Japan refuses to consider immigration, their birth-rate per woman in 2006 was 1.36 up from 1.26 in 2005 (and way below Britain's 1.7). they haven't wanted to change the way their state is run, and their productivity has remained low (the lowest in the G-7 and not much improved over the last decade - Britain's productivity is 23% higher than Japan's).
Combined with financial mismanagement of their bubble economy in the late 1980's, this toxic combination has left them with recession for most of the 90's and weak growth this decade. Plus government debt of 164% of GDP, compared to 79.7% of GDP in 1994 (Britain's government debt including PFI is 43% of GDP, down from 50.8% in 1997 - see Eurostat).
Japan illustrates the perils of burying your head in the sand and saying "No" to every solution.
Which leads us to Britain. The point of the Queen's speech is that the Labour government is not burying it's head in the sand.
The education policy to the age of 18 is designed to improve the skill set of the population, and hence increase productivity in the future (we've increased productivity since 1997, see here, but need to do much more).
The family friendly policies - flexible working, increased maternity leave, introduction of paternity leave and child tax credits - have been about easing the stresses of parenthood so people arn't put off having children. The first increase in maternity leave happened in 2000, and has been extended since then, and the native birth-rate has increased since 2003. It's interesting to note that the Tories voted against all these things.
Legislation against Age Discrimination came into effect in December 2006, outlawing discrimination for the under 65's, and has given people the right to ask their employers if they can work beyond 65, with an obligation on the employer to seriously consider the request. The state pension age will rise to 65 by 2020. the idea behind this is to get older people to continue to work and pay tax.
The government continues to think about welfare-reform in particular as regards those claiming disability benefit.
And of course Labour wants us to remain in the EU and continue to attract migrants to work here in the short-term.
Essentially the Labour government is covering all solutions in a coherant program designed to secure the welfare state for the future. This is huge. The Tories by contrast simply say "No" to everything (immigration, family-friendly policies) Japanese-style, while claiming to support the NHS. They are being hypocritical - they know it would be unpopular to dismantle the welfare state, so they pay lip-service to it, which trying to block every policy that would keep it healthy. One can't help wondering whether their secret hope is for the welfare state to collapse under demographic stresses.
It amazes me that people can't see the Labour vision or the difference between the two parties. Labour's vision is to tackle the demographic problem head-on to secure the welfare state for the next fifty years. Tory policy is to block all solutions Japanese-style probably because their secret solution is to dismantle the welfare state.
I've written before about demographic problems and some of the solutions such as getting older people to work, but the problem we face is best illustrated by looking at what can go wrong if the demographic "timebomb" is ignored. One country has already gone through this - Japan.
The graph left illustrates the distribution of Japan's population, and the bulges in the middle graph correlate to two baby booms, in 1947-49 and in 1971-74. Japan's overall population has already started to decline, and the shape of the "population pyramid" has also started to alter.In 1950 most of their dependencies were under 14, now they are over 65. This has profound financial implications. The old are simply more expensive than children. They consume a huge amount of healthcare (as most serious expensive illnesses occur in the last decade of life). As adults, they also demand spending money in the form of pensions. Children by contrast simply need shelter, food and education (much cheaper than healthcare and pensions).
There are several solutions to this - getting the old to work longer, increasing the birth rate, increasing productivity per worker, curbing the size of the state and immigration.
Unfortunately, Japan refuses to consider immigration, their birth-rate per woman in 2006 was 1.36 up from 1.26 in 2005 (and way below Britain's 1.7). they haven't wanted to change the way their state is run, and their productivity has remained low (the lowest in the G-7 and not much improved over the last decade - Britain's productivity is 23% higher than Japan's).
Combined with financial mismanagement of their bubble economy in the late 1980's, this toxic combination has left them with recession for most of the 90's and weak growth this decade. Plus government debt of 164% of GDP, compared to 79.7% of GDP in 1994 (Britain's government debt including PFI is 43% of GDP, down from 50.8% in 1997 - see Eurostat).
Japan illustrates the perils of burying your head in the sand and saying "No" to every solution.
Which leads us to Britain. The point of the Queen's speech is that the Labour government is not burying it's head in the sand.
The education policy to the age of 18 is designed to improve the skill set of the population, and hence increase productivity in the future (we've increased productivity since 1997, see here, but need to do much more).
The family friendly policies - flexible working, increased maternity leave, introduction of paternity leave and child tax credits - have been about easing the stresses of parenthood so people arn't put off having children. The first increase in maternity leave happened in 2000, and has been extended since then, and the native birth-rate has increased since 2003. It's interesting to note that the Tories voted against all these things.
Legislation against Age Discrimination came into effect in December 2006, outlawing discrimination for the under 65's, and has given people the right to ask their employers if they can work beyond 65, with an obligation on the employer to seriously consider the request. The state pension age will rise to 65 by 2020. the idea behind this is to get older people to continue to work and pay tax.
The government continues to think about welfare-reform in particular as regards those claiming disability benefit.
And of course Labour wants us to remain in the EU and continue to attract migrants to work here in the short-term.
Essentially the Labour government is covering all solutions in a coherant program designed to secure the welfare state for the future. This is huge. The Tories by contrast simply say "No" to everything (immigration, family-friendly policies) Japanese-style, while claiming to support the NHS. They are being hypocritical - they know it would be unpopular to dismantle the welfare state, so they pay lip-service to it, which trying to block every policy that would keep it healthy. One can't help wondering whether their secret hope is for the welfare state to collapse under demographic stresses.
It amazes me that people can't see the Labour vision or the difference between the two parties. Labour's vision is to tackle the demographic problem head-on to secure the welfare state for the next fifty years. Tory policy is to block all solutions Japanese-style probably because their secret solution is to dismantle the welfare state.
Sunday, October 28, 2007
Kirstie Allsopp and the Tories
Last week came the news that the Tories had appointed Kirstie Allsopp of Location, Location, Location fame as their "Housing Tsar". According to the Guardian, she is to
head a review of home buying, working alongside shadow housing minister Grant Shapps, to come up with ideas which could regenerate the housing market and make it easier for first-time buyers to get a foot on the housing ladder.
Unfortunately, Kirstie Allsopp is very unpopular with first-time buyers, especially those who hang around at Housepricecrash, where she is something of a hate figure.
The spat started in 2004, when Allsopp stated that HousePriceCrash was set up with the intention of "creating panic" and that it's activities were "immoral" and would be "illegal" in the stock market. HousePriceCrash responded with a press release, where they asserted their rights of free speech, said that they were an information tool and that there are similar perfectly legal sites and boards discussing the likelihood of shares falling, and drew attention to Allsopp's conflicts of interest.
The spat has grown from there, with the forum members nicknaming her "Krusty", and starting threads with titles such as Phil and Krusty being Thick Again (posted yesterday and which dealt with Channel 4 being forced to apologise for Allsopp's error in claiming that one fifth of Stoke-on-Trent families were homesless, when that city has a total of just thirteen registered homeless families).
The HousePriceCrash people are a bit gloomy, but they are also right that relentless cheerleading from people like Allsopp is not good for the property market. The more prudent Sarah Beeny who emphasises that prices don't always go up, is more respected.
The interesting thing is that for most of this decade, the HousePriceCrash lot have blamed the government amongst others for the housing bubble (despite the govt's attempts to damp down speculation by increasing transaction costs like stamp duty on properties over 250k). These people should therefore be fertile pickings for Tories. But Cameron has shown how out-of-touch he is by appointing their hate figure to his team.
Allsopp's aims to make property transactions cheaper and quicker are of dubious help to the property market. As every market watcher knows, if you reduce transaction costs you increase churn and speculation and as a consequence, boost prices. It's bad enough that people trade houses as though they were stocks, - imagine what it would be like if transaction costs (designed to slow the process down and impress on people that housing is a long-term decision) were removed. People like Allsopp would be buying one week and selling another, in an orgy of speculation. Given her conflicts of interest, perhaps that's her aim.
head a review of home buying, working alongside shadow housing minister Grant Shapps, to come up with ideas which could regenerate the housing market and make it easier for first-time buyers to get a foot on the housing ladder.
Unfortunately, Kirstie Allsopp is very unpopular with first-time buyers, especially those who hang around at Housepricecrash, where she is something of a hate figure.
The spat started in 2004, when Allsopp stated that HousePriceCrash was set up with the intention of "creating panic" and that it's activities were "immoral" and would be "illegal" in the stock market. HousePriceCrash responded with a press release, where they asserted their rights of free speech, said that they were an information tool and that there are similar perfectly legal sites and boards discussing the likelihood of shares falling, and drew attention to Allsopp's conflicts of interest.
The spat has grown from there, with the forum members nicknaming her "Krusty", and starting threads with titles such as Phil and Krusty being Thick Again (posted yesterday and which dealt with Channel 4 being forced to apologise for Allsopp's error in claiming that one fifth of Stoke-on-Trent families were homesless, when that city has a total of just thirteen registered homeless families).
The HousePriceCrash people are a bit gloomy, but they are also right that relentless cheerleading from people like Allsopp is not good for the property market. The more prudent Sarah Beeny who emphasises that prices don't always go up, is more respected.
The interesting thing is that for most of this decade, the HousePriceCrash lot have blamed the government amongst others for the housing bubble (despite the govt's attempts to damp down speculation by increasing transaction costs like stamp duty on properties over 250k). These people should therefore be fertile pickings for Tories. But Cameron has shown how out-of-touch he is by appointing their hate figure to his team.
Allsopp's aims to make property transactions cheaper and quicker are of dubious help to the property market. As every market watcher knows, if you reduce transaction costs you increase churn and speculation and as a consequence, boost prices. It's bad enough that people trade houses as though they were stocks, - imagine what it would be like if transaction costs (designed to slow the process down and impress on people that housing is a long-term decision) were removed. People like Allsopp would be buying one week and selling another, in an orgy of speculation. Given her conflicts of interest, perhaps that's her aim.
Monday, October 22, 2007
The New EU Treaty's effect on the Labour Government
Some commentators are predicting that it will be like Maastricht. I don't think so. Britain has changed utterly since the early 1990's.
Though the Single European Act was signed in 1985, it didn't come into effect till 1 Jan 1993, which meant that Britain in 1991-1993 was still a country trapped on it's island looking fearfully outwards, with some older people like Nicholas Ridley muttering darkly about how the re-unification of Germany was sure to mean that World War Three was imminent. In this atmosphere, scare-mongering about Europe was easy.
In addition, when the Single Act came into force it contained many things that upset Tory little Englanders, such as health and safety regulations, which the anti-Maastricht people latched onto as a reason not to ratify any further treaties. The Sun began to campaign about the latest directive from Brussels (including many directives that didn't actually exist outside the Sun's imagination).
Stupider Tories blamed a conspiracy of eurocrats. Actually it was all the work of the Blessed Margaret, who had instigated and signed the Single Act some eight years previously. Mrs T did give a good defence of the provisions of the Treaty in her Autobiography, but few of her supporters bothered to read it. Indeed to this day they maintain that the Single Act merely removed tariff barriers. Actually tariff barriers were removed in 1968. The Single Act was about removing non-tariff barriers by harmonising health and safety and other standards. I think Tories practice self-delusion so that they don't have to admit to themselves that the only way to have stopped the EU harmonisation was to have voted for the then anti-EU Labour party in 1983.
Outside this mad Tory bubble though, Brits in general didn't fret too much about harmonisation, but focussed instead on another aspect of the Treaty which had just come into force in 1993 - freedom of movement. Booze cruises became popular overnight. Shows started to be made about the idyllic life lived by Brits in Provence. When the 1997 election came, people enthusiastically voted for New Labour's pledge to put Britain at the heart of Europe, and dumped the Tory eurosceptics.
By 1999, shows such as "A Place in the Sun" were drawing millions of viewers, and Brits had got into the habit of popping to Europe on the new low-cost airlines for their stag dos, and for any reason really. As property started to recover at home, some people cashed in to move permanently abroad. Meanwhile in France, newspapers started producing articles with titles such as "I went to London and got a job in a day!" Young Europeans moved to London and met and married Brits.
When the Eastern European countries joined, there was again a two-way movement. British property entrepreneurs went to snap up deals, and young easterners came here to work (and again, many have married Brits).
And now we have this new reform Treaty that will make the EU more efficient, and the euro-sceptic newspapers are promising to oppose it every bit as much as they did Maastricht in 1992, some of them using the same tired arguments as in 1992.
Only the readership of these newspapers has declined sharply since then, even while the population has increased, and Brits are enjoying their EU benefits and european connections too much to stir up angst over Europe (polls show that Europe hardly features in people's list of concerns). Besides, the euro-sceptic press didn't really make a difference to public opinion in the 1990s - people voted in droves for Blair's europhile New Labour and proudly watched him go to France and make a speech in French. So why should they make a difference now, when we are so much more integrated with Europe? There's a reason that 1983 Labour manifesto is known as the longest suicide note in history - it would be lovely if Tories adopted it's anti-EU provisions for the next election...
Though the Single European Act was signed in 1985, it didn't come into effect till 1 Jan 1993, which meant that Britain in 1991-1993 was still a country trapped on it's island looking fearfully outwards, with some older people like Nicholas Ridley muttering darkly about how the re-unification of Germany was sure to mean that World War Three was imminent. In this atmosphere, scare-mongering about Europe was easy.
In addition, when the Single Act came into force it contained many things that upset Tory little Englanders, such as health and safety regulations, which the anti-Maastricht people latched onto as a reason not to ratify any further treaties. The Sun began to campaign about the latest directive from Brussels (including many directives that didn't actually exist outside the Sun's imagination).
Stupider Tories blamed a conspiracy of eurocrats. Actually it was all the work of the Blessed Margaret, who had instigated and signed the Single Act some eight years previously. Mrs T did give a good defence of the provisions of the Treaty in her Autobiography, but few of her supporters bothered to read it. Indeed to this day they maintain that the Single Act merely removed tariff barriers. Actually tariff barriers were removed in 1968. The Single Act was about removing non-tariff barriers by harmonising health and safety and other standards. I think Tories practice self-delusion so that they don't have to admit to themselves that the only way to have stopped the EU harmonisation was to have voted for the then anti-EU Labour party in 1983.
Outside this mad Tory bubble though, Brits in general didn't fret too much about harmonisation, but focussed instead on another aspect of the Treaty which had just come into force in 1993 - freedom of movement. Booze cruises became popular overnight. Shows started to be made about the idyllic life lived by Brits in Provence. When the 1997 election came, people enthusiastically voted for New Labour's pledge to put Britain at the heart of Europe, and dumped the Tory eurosceptics.
By 1999, shows such as "A Place in the Sun" were drawing millions of viewers, and Brits had got into the habit of popping to Europe on the new low-cost airlines for their stag dos, and for any reason really. As property started to recover at home, some people cashed in to move permanently abroad. Meanwhile in France, newspapers started producing articles with titles such as "I went to London and got a job in a day!" Young Europeans moved to London and met and married Brits.
When the Eastern European countries joined, there was again a two-way movement. British property entrepreneurs went to snap up deals, and young easterners came here to work (and again, many have married Brits).
And now we have this new reform Treaty that will make the EU more efficient, and the euro-sceptic newspapers are promising to oppose it every bit as much as they did Maastricht in 1992, some of them using the same tired arguments as in 1992.
Only the readership of these newspapers has declined sharply since then, even while the population has increased, and Brits are enjoying their EU benefits and european connections too much to stir up angst over Europe (polls show that Europe hardly features in people's list of concerns). Besides, the euro-sceptic press didn't really make a difference to public opinion in the 1990s - people voted in droves for Blair's europhile New Labour and proudly watched him go to France and make a speech in French. So why should they make a difference now, when we are so much more integrated with Europe? There's a reason that 1983 Labour manifesto is known as the longest suicide note in history - it would be lovely if Tories adopted it's anti-EU provisions for the next election...
Saturday, October 20, 2007
GDP grew faster than expected in third quarter
GDP grew faster than expected in the Third quarter at 0.8% per quarter, which is 3.3% faster than a year ago. According to the detail supplied by the ONS, the best performance came from business services and finance (in particular architects, engineers and management consultants), which grew a strong 1.7% per quarter. Distribution, hotels and restaurants grew by 1.1% in the quarter. By contrast growth in government and other services slowed, with zero growth, compared with a rise of 0.1 per cent in the second quarter. For the first time in a while ALL the growth is coming from the private sector.
This all came as a bit of a surprise to economists, who were expecting a slowdown due to a knock in confidence after the turmoil in capital markets, and the Northern Rock business. The Bank of England too had estimated slower growth in the third quarter in their August inflation report.
How to explain the robustness of the consumer? Part of it is that people have confidence in the abilities of the Labour government to protect them from a downturn. Part of it is that unemployment continues to drop. According to the ONS, the number of vacancies stands at 668,800 in the three months to Sept 2007, the highest since 2001. There is work out there for whoever wants it, including taking on a second job if interest rates are biting.
The global economy could still derail us - I've been worrying since April whether the American economy will affect ours. Plus there is oil, and the delayed effects of interest rate rises.
It's almost a certainty that interest rates will be held next month though, despite RPI dropping and CPI being unchanged for August at 1.8%.
Maybe the much predicted slowdown will come in the fourth quarter, with a rate cut in January.
Friday, October 19, 2007
Older People Working
If Nick Clegg is elected as leader of the Liberal Democrats, then Labour will have the oldest leader of the three political parties. It's almost a certainty that the other parties will begin taunts about "age" in an effort to injure Mr Brown in the way Ming Campbell was injured.
However, this presents an opportunity for Labour. Legislation against Age Discrimimation came into effect in December 2006. It's not just that the Labour government thinks it is wrong to discriminate against the old, the govt thinks that the survival of our welfare state depends on people working longer.
The old-age dependency ratio is the proportion of pensioners to people of working age. This ratio has been stable because though we have more pensioners, the number of people of working age increased sharply due to the baby boomers joining the workforce. These baby-boomers though are due to retire shortly, and there arn't enough young people to take their place in the workforce ( according to the ONS, the % of people under 16 has fallen from 26% in mid 1971 to 19% in mid-2006).
Another way of looking at it is the ageing index - this is the proportion of older people to children - this has jumped sharply from 64.0 in 1971 to 97.8 in 2006. This has big implications for the NHS. Most serious illness occurs in the last decade of life, which means the old are heavy users of the NHS. Children by contrast are light users - there's usually just the birth to worry about, and the coughs and colds of childhood illness are easily dealt with by GPs.
The obvious solution is to persuade the baby boomers to continue working (and paying taxes). Government has already announced that the state retirement age for men and women will be equalised at 65 from 2020, and has given people the right to ask their employers if they can work beyond 65, with an obligation on the employer to seriously consider the request. And age discrimination has been outlawed for those under 65.
But all of the above legislation comes to nought if society itself continues to discriminate against the old. If people start attacking the Prime Minister for being too old in his mere mid-fifties, then what chance does someone aged 60 have of getting work?
We in Britain need to have a serious discussion about our attitudes to age, and in particular about how much money discrimination against the old will cost. An ageing population means that the demand will outstrip our ability to increase spending on the NHS. To some extent we see this already - people ask "where has the money in the NHS gone" - answer, treating record numbers of people as the ageing index has jumped in the last 15 years. If we can't get older people to work longer, the alternative is a lower level of public services or a higher amount of taxation on those who are younger.
A general election would be a good time to have this debate. Let the opposition accuse the Prime Minister of being too old, so that we may have the opportunity of explaining to the electorate that the opposition's ageist attitude will be the ruin of Britain.
However, this presents an opportunity for Labour. Legislation against Age Discrimimation came into effect in December 2006. It's not just that the Labour government thinks it is wrong to discriminate against the old, the govt thinks that the survival of our welfare state depends on people working longer.
The old-age dependency ratio is the proportion of pensioners to people of working age. This ratio has been stable because though we have more pensioners, the number of people of working age increased sharply due to the baby boomers joining the workforce. These baby-boomers though are due to retire shortly, and there arn't enough young people to take their place in the workforce ( according to the ONS, the % of people under 16 has fallen from 26% in mid 1971 to 19% in mid-2006).
Another way of looking at it is the ageing index - this is the proportion of older people to children - this has jumped sharply from 64.0 in 1971 to 97.8 in 2006. This has big implications for the NHS. Most serious illness occurs in the last decade of life, which means the old are heavy users of the NHS. Children by contrast are light users - there's usually just the birth to worry about, and the coughs and colds of childhood illness are easily dealt with by GPs.
The obvious solution is to persuade the baby boomers to continue working (and paying taxes). Government has already announced that the state retirement age for men and women will be equalised at 65 from 2020, and has given people the right to ask their employers if they can work beyond 65, with an obligation on the employer to seriously consider the request. And age discrimination has been outlawed for those under 65.
But all of the above legislation comes to nought if society itself continues to discriminate against the old. If people start attacking the Prime Minister for being too old in his mere mid-fifties, then what chance does someone aged 60 have of getting work?
We in Britain need to have a serious discussion about our attitudes to age, and in particular about how much money discrimination against the old will cost. An ageing population means that the demand will outstrip our ability to increase spending on the NHS. To some extent we see this already - people ask "where has the money in the NHS gone" - answer, treating record numbers of people as the ageing index has jumped in the last 15 years. If we can't get older people to work longer, the alternative is a lower level of public services or a higher amount of taxation on those who are younger.
A general election would be a good time to have this debate. Let the opposition accuse the Prime Minister of being too old, so that we may have the opportunity of explaining to the electorate that the opposition's ageist attitude will be the ruin of Britain.
Tuesday, October 16, 2007
Poor Ming
He didn't even last two years.
His problem I think, was that he looked much older than he was, with the classic old man's hunch of the shoulders. And Britain is a country that doesn't value the old (unlike say Italy). The LibDems could have protected him by publicising the fact that he'd just recently recovered from serious illness (cancer I think) - the public tend to be very kind and sympathetic to people bravely carrying on in the face of illness. And they could have sent him to a deportment class to make him stand straight and not hunch. But they didn't. Instead we kept seeing black-and-white footage of him at the Olympics in by-gone times. As the black-and-white era is pre-history as far as most people are concerned, it made Ming seem even older.
So the LibDems are shortly going to have their third leader this parliament. They need to make sure that whomever they elect lasts at least five years, else they stand a good chance of being thought of as cavalier as the Tories.
At least this leadership election should keep the press busy. Let's hope it lasts for a good six months.
His problem I think, was that he looked much older than he was, with the classic old man's hunch of the shoulders. And Britain is a country that doesn't value the old (unlike say Italy). The LibDems could have protected him by publicising the fact that he'd just recently recovered from serious illness (cancer I think) - the public tend to be very kind and sympathetic to people bravely carrying on in the face of illness. And they could have sent him to a deportment class to make him stand straight and not hunch. But they didn't. Instead we kept seeing black-and-white footage of him at the Olympics in by-gone times. As the black-and-white era is pre-history as far as most people are concerned, it made Ming seem even older.
So the LibDems are shortly going to have their third leader this parliament. They need to make sure that whomever they elect lasts at least five years, else they stand a good chance of being thought of as cavalier as the Tories.
At least this leadership election should keep the press busy. Let's hope it lasts for a good six months.
Sunday, October 14, 2007
The return of the TBGBs - or an attempt by the press to stir up trouble?
The Sunday Times leads today with the dramatic headline Blair rounds on 'empty' Gordon Brown but the article itself contained no such comment from Blair. Instead they quoted a conveniently un-named "friend" of Blair.
The Guardian too headlined with breathless speculation that the old Blairite trio, Byers, Milburn and Clarke are thinking about speaking out. But even the Guardian stops to add that
last night Blair's spokesman said: 'When he stood down Tony Blair said he would be completely supportive of Gordon Brown and that is what he continues to be.'
This view is confirmed by Matthew D'Ancona in the Telegraph who says that
Tony Blair has been telling his allies that they must under no circumstances join in the Gordon-bashing that is now all the rage.
This is probably correct. New Labour watched with horrified fascination when a deposed Thatcher helped to destroy the Tory party. The whole business of the seamless transition, painstakingly engineered earlier this year, was to prevent the type of bitterness caused by Thatcher's decapitation, and Blair certainly has a horror of being thought of as being so needy and desperate for power that he tries to do a back-seat driver number on his succesor the way Thatcher did to Major.
So where have these stories come from? We get a clue from John Rentoul in the Independent:
I have spoken to some of Blair's most loyal lieutenants who have been inundated by media requests for interviews – more than 200 in one case. Would they like to speak about the election timing or the Pre-Budget Report? No, they would not. They know that their interviewers are interested in only one story: Blair says Brown is useless.
200 requests for interviews! Undoubtedly one person has succumbed - but he probably speaks only for himself.
As for the Sunday Times and the Guardian, they have their own agendas. The Sunday Times is openly hostile to Labour and has been for some time. The Guardian isn't really a Labour paper, it's SDP, and since the demise of the SDP they've grudgingly given Labour some support, but always managed to find some excuse to fall out with the party. They fell out with Blair and campaigned strongly against Brown becoming leader while fawning over David Cameron in the first year after he became leader. Hardly the behavior of a Labour paper.
There is only one Labour paper, and that is The Mirror (which very helpfully broke the story of David Cameron's Lexus following his bike to work). The rest are at best lukewarm and at worst openly hostile. This is how it's been for ages, and we'll have to live with it. One thing Labour should do is not give ammunition to hostile papers that don't have our interests at heart. Blair's "friends" should take notice of Blair when he says Don't Talk. He really means it.
The Guardian too headlined with breathless speculation that the old Blairite trio, Byers, Milburn and Clarke are thinking about speaking out. But even the Guardian stops to add that
last night Blair's spokesman said: 'When he stood down Tony Blair said he would be completely supportive of Gordon Brown and that is what he continues to be.'
This view is confirmed by Matthew D'Ancona in the Telegraph who says that
Tony Blair has been telling his allies that they must under no circumstances join in the Gordon-bashing that is now all the rage.
This is probably correct. New Labour watched with horrified fascination when a deposed Thatcher helped to destroy the Tory party. The whole business of the seamless transition, painstakingly engineered earlier this year, was to prevent the type of bitterness caused by Thatcher's decapitation, and Blair certainly has a horror of being thought of as being so needy and desperate for power that he tries to do a back-seat driver number on his succesor the way Thatcher did to Major.
So where have these stories come from? We get a clue from John Rentoul in the Independent:
I have spoken to some of Blair's most loyal lieutenants who have been inundated by media requests for interviews – more than 200 in one case. Would they like to speak about the election timing or the Pre-Budget Report? No, they would not. They know that their interviewers are interested in only one story: Blair says Brown is useless.
200 requests for interviews! Undoubtedly one person has succumbed - but he probably speaks only for himself.
As for the Sunday Times and the Guardian, they have their own agendas. The Sunday Times is openly hostile to Labour and has been for some time. The Guardian isn't really a Labour paper, it's SDP, and since the demise of the SDP they've grudgingly given Labour some support, but always managed to find some excuse to fall out with the party. They fell out with Blair and campaigned strongly against Brown becoming leader while fawning over David Cameron in the first year after he became leader. Hardly the behavior of a Labour paper.
There is only one Labour paper, and that is The Mirror (which very helpfully broke the story of David Cameron's Lexus following his bike to work). The rest are at best lukewarm and at worst openly hostile. This is how it's been for ages, and we'll have to live with it. One thing Labour should do is not give ammunition to hostile papers that don't have our interests at heart. Blair's "friends" should take notice of Blair when he says Don't Talk. He really means it.
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