The Budget

Nice steady performance from Alistair Darling. I thought he explained things very well - the point that we had the best growth last year in the G7 is one that's not heard much.

Most people will find themselves unaffected by this budget. No one will mind - given world turmoil, people simply want steadiness from government till we know more about how things will pan out. Binge drinkers will hate the budget - but they can always save themselves some money by cutting down, people in city centres will be grateful for it.

Eliot Spitzer - the moral for our times

I had to comment on Eliot Spitzer's woes. For those not following the story, Eliot Spitzer is the Governor of New York, who got caught soliciting a prostitute. As prostitution is illegal in New York state, that's the end of him.

So what? He's just another American politician, right? Well his story is interesting because of the way he tried to set himself apart from "establishment" politicians. He ran on a "change" ticket - he promised to "change the ethics of Albany [the state capital of New York]". Sounds familiar? The great and the good rushed to endorse him, including Bill Richardson (Governor of New Mexico and a possible Vice Presidential candidate) who declared Spitzer was the "future of the Democratic party".

People in New York state lapped it up and elected him in 2006 with a stonking 69% of the vote. Things started to go wrong almost straight away. Apparently he thought "change" meant not consulting or compromising with the state legislature on all sorts of issues big and small, from health-care bills to drivers licences to the budget. He upset Democrats as well as Republicans and his approval rating sank to 33% before the news broke about his links to prostitution.

The moral of the story? Don't believe politicians who say they are "different" and be suspicious when they claim the are above politics and for hope and change and all that good stuff. Not only do they never live up to the rhetoric, they tend to be worse than the usual politician, partly because they believe they are so special/gifted/different they think they can get away with anything.

Your average establishment politician on the other hand, who has worked his way up the ranks, gaining experience all the way about how politics is about compromise, and how political decisions are often about making painful choices between something bad and something awful - they tend to turn out OK. They won't wow you with grand flying rhetoric, and their policy proposals might seem like the most boring things since sliced bread, but they do try to deliver them and you know exactly what to expect. It's time everyone grew up and realised that politics is desperately bread-and-butter, and expecting every politician to be Pericles/The Saviour/Alexander the Great is to doom yourself to disappointment.

The Richest Regions in Europe

Eurostat looks at the regions of Europe every year and calculates the GDP per inhabitant of the region based on a Purchasing Power Standard, and then expresses this as a % of the average for the EU 27 nations.

The average for the EU-27 is set at 100. The richest region turns out to be Inner London, with a value of 302.7. The next richest region in the EU is Luxembourg with a value of 264.3. The Eastern European regions came up below average as expected, with North East Romania the poorest with a score of 24.2.

The surprising thing for me was how many regions in the UK are below the EU average, especially as the EU-27 average is depressed by the accession of the eastern europeans countries. Here's the list:

Tees Valley and Durham 85.9
Northumberland, Tyne and Wear 105.1
Cumbria 90.2
Cheshire 132.8
Greater Manchester 110.0
Lancashire 97.2
Merseyside 84.8
East Yorkshire and Northern Lincolnshire 97.6
North Yorkshire 105.8
South Yorkshire 92.7
West Yorkshire 110.1
Derbyshire and Nottinghamshire 109.1
Leicestershire, Rutland and Northants 118.6
Lincolnshire 86.5
Herefordshire, Worcestershire and Warks 108.9
Shropshire and Staffordshire 92.6
West Midlands 112.4
East Anglia 107.9
Bedfordshire, Hertfordshire 136.1
Essex 99.3
Inner London 302.7
Outer London 108.5
Berkshire, Bucks and Oxfordshire 168.0
Surrey, East and West Sussex 123.7
Hampshire and Isle of Wight 120.2
Kent 101.0
Gloucestershire, Wiltshire and Bristol/Bath area 133.9
Dorset and Somerset 102.8
Cornwall and Isles of Scilly 77.4
Devon 92.5
West Wales and The Valleys 79.0
East Wales 115.2
Eastern Scotland 116.1
South Western Scotland 107.1
Northern Ireland 97.0

For instance Cornwall and the Isles of Scilly with a score of 77.4 is poorer than the Algarve (Portugal) which has a score of 79.6. Outside Inner London there are only pockets of success - Berkshire, Bucks and Oxfordshire with a score of 168.0, Bedfordshire, Hertfordshire with a score of 136.1, Gloucestershire, Wiltshire and Bristol/Bath area with a score of 133.9 and Cheshire with a score of 132.8. And Scotland is clearly far from the basket-case that the English like to pretend it is.

We really need to be asking ourselves why places like Cornwall, Devon, Cumbria, Merseyside, Tees Valley and Durham are doing so badly. Durham is an old mining and shipbuilding area that still hasn't found any other industry to replace them. Cumbria, Durham and Merseyside are represented by Labour MPs and they can and should be pressing the Labour government for help as agressively as possible. Cities like Bristol and Manchester have shown how well an effective local Labour government combined with Labour MPs can build up the area's economy. Instead of Frank Field wasting his time writing fanciful pamphlets on how MPs should be selected by primaries (and pray who would pay for these primaries?), he should be concentrating on lobbying business to invest in his area. Perhaps poor performance in these areas is an indication that the MP's haven't been cheerleading for their areas as much as they should, and should be de-selected and someone more effective put in?

Cornwall and Devon are agricultural and tourist areas and have suffered from UK tourists deciding to holiday in the Mediterranean instead. Devon and Cornwall also dominated by the LibDems, which suggests people there have opted out of UK politics in that the LibDems will never be part of any government, and will thus never have the clout to drive investment and regeneration towards their area.

All the areas scoring below 100 are entitled to EU Objective 2 help. (Objective 2 regions are not in as dire need as Objection 1 regions. All Objective 1 regions are in Eastern Europe).

To look at the full EU regional list click here.

UK service sector activity accelerates

The FT reports today that UK service sector activity for February accelerated:

The Chartered Institute of Purchasing and Supply and NTC Research said their index of service sector activity rose from 52.5 in January to 54 last month, indicating faster expansion. Analysts had expected the index to weaken to 52.

So much for the supposed "slowdown" that the more excitable parts of the press are reporting.

As I've said before, keep an eye on the oil price. In the absence of a supply shock, a strong oil price indicates strong demand and that the world economy is growing. During recessions, when the world economy contracts, the oil price always drops - because among other things there are far fewer trips made by distributors from warehouses to stores in recessions.

The American services sector also performed better than expected. I think history may judge that the Bank of England and the European Central Bank called it right when they refused to panic by cutting interest rates sharply during last year's credit turmoil. The US Federal Reserve though may have cut rates too much.

Conservatives using council tax for propaganda purposes?

Southampton has a hung council, with 18 Conservatives, 18 Labour councillors and 12 Lib-Dems. Labour should have formed the administration in May 2007 as they hold the position of Mayor, but one Lib-Dem voted with the Conservatives to put them into power.

In November 2007, the conservative-run council sent out a letter to all the council tax payers stating what their budget proposals would be - a 10% cut for the over 65's. They state in the letter that "At the moment this new discount is only a proposal and the final decision to introduce it will not be made by the city council until February 2008". They intended to pay for the discount with £8 million of cuts, mainly attacking children's services and schools (i.e. the discount for the old was to be paid for by hurting the young), but this was not unveiled till Jan 2008.

The Tories knew that they wouldn't be able to pass the budget which is subject to a full vote of the council - they had only 18 seats out of the 48 (37.5%). So why send out the letter? To publicise their council tax plans, and hopefully to convince some old people that the discount will go ahead if they vote Tory in 2008. It cost the council £100,000 to pay for this mailshot.

The trouble is that it is not clear that it was legal to send out this mailshot. In 1986, Margaret Thatcher passed legislation banning councils from issuing party political literature on the rates. Once a budget has passed it is OK to send out letters explaining changes if they have been substantial. But you shouldn't send out the letter beforehand, knowing that you have absolutely no chance of passing the budget, purely to get party political material out there at the council tax-payer's expense.

I think there should be an investigation into improper use of council tax money, and that the Tories should pay the council back the £100,000.

Some people reading this will be thinking tax cuts? spending cuts? Are these David Cameron's compassionate conservatives or old-fashioned Thatcherite Tories? Well they don't fit in with the touchy feely image the national party is putting about, that's for sure. Maybe the touchy feely stuff is just PR propaganda and the Tories will drop "compassion" just as quicky as Dubya did after being elected in 2000. The local Tories are not even very sensible - the worst decision being to hand two schools to an evangelical Christian consortium to be run, instead of to the trust run by Southampton University (the preferred choice of Labour).

What is becoming clear from the budget choices is that Conservatives are increasingly enagaged in old people v young people politics, where Conservatives = Old People.

Elections

I'm currently reading Gavin Esler's 1997 book, The United States of Anger which brilliantly records the maelstrom of forces building up in that country (and which we now know led to George W Bush and all he stands for). I was particularly struck by a passage about the 1996 general election:

"Outside a polling station in Arlington, Virginia, voters were waiting in a 200-yard-long line to vote... The line moved so slowly everyone was forced to wait for more than an hour to vote, on a workday, in a society which values hard work above all.

... The Arlington crowd was patient and polite, many voters reading books brought for the occasion. A family friend said she waited for more than an hour and then left without voting because she had to pick up her children. Others told of horrible problems working through the entire gargantuan ballot paper, spending twenty minutes in the voting booth, in some areas electing everyone from the president and senator to members of Congress, governors, local representatives, county commissioners, sheriffs, judges and dogcatchers."

Turnout in that 1996 election was just 48% - imagine what would have happened if it had reached French levels of over 85%+.

Esler concludes that the Americans suffer from over-democracy and are over-governed. Paradoxically making voters spend so much time electing so many officials weakens democracy, because some voters can't afford the many hours it takes to vote, and some would-be politicians can't afford the many months they must devote just to fund-raising in order to be heard. Thus potential voters and potential politicians drop out of the system, leaving it in the hands of the activists and extremists.

This is an important point, because from time to time people here think, if only we could have referendums on everything, if only we could have primaries, if only we could elect sheriffs etc, life in Britain would improve. They imagine that voters will be so enthusiastic about all the extra voting that voter-participation would rise, when the evidence from America shows it will probably go down.

In most of England you elect your council, you elect your MEP and you elect your government (who double as your representative in the Council of Ministers), and you delegate to them the power to appoint other officials, and you are in and out of the polling station in five minutes. It's a good system. Participating in democracy doesn't cost a lot of time, and democracy doesn't cost too much money either (compared to the Americans), which means we have money to spend on other things.

It's no accident that when the Berlin wall fell, the fledgling eastern european countries followed in the footsteps of the ex-colonial countries and opted for the type of parliamentary democracies you see across Europe (and of course the parliamentary system was invented in Britain). The US constitutional experts who had hot-footed east hoping to persuade the newbies to copy the American system (and earn fat fees setting it up), were bitterly disappointed. But if they'd thought for a moment, they'd have realised that only daft people would willingly choose a system like the American one.

This November the US turnout will be much higher than in previous years - but only because a toxic combination of Hurricane Katrina, economic woes and Iraq has made Americans desperate. People are so desperate that some will willingly queue for the entire day to vote and get their new saviour into office. I only hope that the polling officials lay out enough polling booths to accomodate them, else we'll have the tragedy of citizens willing to do their bit and the system letting them down.

Santos of the West Wing was modelled on Obama

Hat-tip to Tom Freeman who says that the scriptwriters of the West Wing have confirmed that they modelled the character of Matt Santos on Barack Obama:

"I drew inspiration from him in drawing this character," West Wing writer and producer Eli Attie told the Guardian. "When I had to write, Obama was just appearing on the national scene. He had done a great speech at the convention [which nominated John Kerry] and people were beginning to talk about him."

Art taking inspiration from life and then predicting it! The only difference between Obama and Santos is that Santos is married to a traditional American who shares his universalist views. Obama's big weakness is his wife Michelle who appears not to.

The secret attraction of Obama is that his world-view is colour-blind and neutral. Listen to his speeches, they are very universalist. Anyone can relate to them, whether you are from Britain, Germany, America, Kenya or the Phillipines. This is backed up by his biography: Kansas mother, Kenyan father, Asian-American half-sister and born and raised in Hawaii, that friendly mixed and exotic out-post of America. This is the melting pot embodied in one family.

Michelle Obama however is culturally African-American in a way Obama is not. All her speeches (which you can see on You Tube) are full of the anger, grievances and victimhood of black America, that are completely absent from Barack Obama's speeches. She doesn't address any other community in America, and gives the impression that without her husband's family connections to white America and asian America, she wouldn't bother with these people at all. Of course black Americans have been victims, but they are also only 13% of the US population. Anyone in the White House has to do the Nelson Mandela forgiveness thing and include the other 87% in their new world. Obama gets this but I'm not sure his wife does. The Obama campaign would be wise to ask her to keep a very low profile, especially as the Republicans have a history of attacking the wife when they can't attack the candidate, as Hillary can attest.

Speaking of Hillary - it looks like she will graciously step aside if she doesn't do well in Ohio and Texas. Her stock has risen during this campaign - it's clear she's the better Clinton, not just intelligent, but calm, disciplined and gracious where Bill is self-indulgent, self-absorbed and impulsive. It was the Bill-the-spouse that scuppered her campaign. If Obama gets elected, I hope he offers Hillary a place on the Supreme Court. It will serve the Republicans right. They plagued the Clintons, determined to try to overturn the 1996 election result, and to attack them beyond endurance. What would be better justice than for them to have to bear Hillary in the court for the next thirty years?

A surge in tax revenue

The FT reports that we've received a surge in tax revenue this January. Income tax receipts were 15% higher than in Jan 2007 and corporate tax receipts were 23% higher than in Jan 2007. January is the period when businesses pay one quarter of their taxes, and when individuals who complete their self-assessment forms pay what they owe to the revenue. In addition, the ONS had to revise down their estimate of government spending (the govt has been keeping a very tight rein on this as public sector workers will attest). All of which is good news for the public finances.

The thing to understand about tax is that people only pay it on profits or income earned, and only after they've exhausted their allowances (and everybody checks their allowances avidly). If you don't have a job or don't make a profit, you don't pay tax. Tax revenues are therefore a very good gauge of how well the economy is doing, because no one has any incentive to pretend they earn/have made more profits than they actually have, because then they pay more tax. The surge in tax revenue proves that the period 2006/7 was a very good one for UK plc and the corporate tax shows 2007/8 is pretty good too.

The question is what happens in 2008/9. It's still not clear to what extent American problems will affect the UK. The financial sector has tightened their lending criteria quite sharply, but on the other hand employment continues to rise and unemployment continues to drop. The claimant count has been falling for 16 consecutive months and was 794,600 in Jan 2008, which is the lowest since June 1975. The number of economically inactive people also continues to drop (those classed as economically inactive are students, housewives, people who've retired early, the unemployed and the disabled). In order for there to be a proper blowout in the property sector, you either need massive oversupply or massive unemployment. We have neither.

In a way all the economic doom and gloom in the newspapers might actually be to Labour's benefit. It lowers expectations and if it makes people take advantage of the good job situation to earn more and put their financial affairs in order, it should stand us in good stead in the rest of the year, and if we guide the country through this patch, the results will contrast sharply with the darkness of the expectations.

The Tories have been prancing about town trying to claim the country is experiencing a return to the 1970's. Of course no-one wants to see a return to the 70's - or the 80's with it's grim recessions. The Tories electoral message is "it's a return to the 70's, therefore the country needs to elect the Tories". Of course the corollary to that is "if it's not a return to the 70's, then why elect the Tories?" Especially if it is clear that they can't even tell the difference between the dark period of the 70's and 80's and the conditions in this new Labour century. If we weather this storm even while the USA struggles, it will be the second worldwide slump New Labour has seen off (the first being the world recession of 2001). If we go into the next election with twelve consecutive years of growth under our belts Labour deserves to be re-elected - according to the Tories.

LibDems signal support for Tories

Very significant article in the FT where they say the following:

Nick Clegg says his Liberal Democrats could support a minority Conservative government after the next election, if David Cameron proposes genuinely “liberal” reforms in areas such as civil liberties, public service reform and the environment.

.........Mr Clegg’s legislative shopping list is remarkably similar to the priorities identified by Mr Cameron’s team for his first Queen’s Speech. They include a focus on civil liberties, education reforms, the environment and more local decision-making.

In other words, the Lib Dems have decided they are a match for the Tories, and Labour should expect the two of them to do a deal in the event of a Hung Parliament. This is HUGE. It completely turns on it's head the politics leading up to the 1997 general election, where Labour supporters voted LibDem in places where the LibDems were second to the Tories, or in the lead, with the explicit reason of "keeping the Tories out".

In these areas the LibDems originally gained ground in the 1980's when they were the Alliance, and voters who weren't Tories but couldn't bear Old Labour went to the third party. However Michael Foot, Militant and Old Labour have long been consigned to the dustbin of history. There was no reason for Labour voters to continue to vote LibDem except simply convenience and expedience in that the Labour party in the run-up to 1997 didn't want to spend a lot of time reclaiming these constituencies, preferring instead to concentrate their fire-power on Labour-Tory fights.

The new LibDem-Tory coalition changes everything. What on earth is the point of Labour voters tactically voting LibDem if it results in a Tory government? It underlines again how politics is changing. Not only new generations with new ideas coming through, but old coalitions and old tactics being made redundant.

This LibDem overture to the Tories has been coming a while now, and it is a relief that they've made it public. At least we now know where we stand. Labour activists in Labour-Tory marginals should take a screen-print of the FT article and put it on their leaflets. Especially if they are in those constituencies that the Tories won from Labour in 2005 without increasing their vote at all, because some Labour voters switched to LibDem. Ditto if Labour are up against LibDems either in general or local elections. And the Labour party need to start making plans to reclaim those areas we left to the LibDems and Tories, not least because Labour voters in those spots are now disenfranchised.

What does the Obama phenomenon tell us about the coming changes in our world?

What an exciting night in the US primaries. Mrs Clinton seems to have held her own in the populous New York, New Jersey, Massachussets and California despite wall-to-wall Obama mania in the press combined with attacks on her. A tough woman. But Obama did really well too, cleaning up the mid-west and north-west and taking more states than Mrs Clinton.

Even if Mrs Clinton wins the nomination and becomes President, it is clear that something very important is happening in the USA and it is personified by Obama. In my last post I wrote about the shifts that occur when new generations come of age. Obama is sort of the left-wing marker that Barry Goldwater was for the right-wing in 1964. It's important to remember that the Boomers, born 1946 to 1960, did not vote for John F Kennedy. They were too young to vote for him, he was just before their time. Their first insurgent election was 1964, when they supported Goldwater. They were far too few in 1964 to make a difference - but the Goldwater phenomenon was realised with Reagan in the 80's when the Boomers had come of age in sufficient numbers to dominate.

Obama is a similar marker of the views of a new generation. The Millenials in the US are really keen on voting, they trend leftwards and seem quite civic minded - they can't bear torture, they are quite internationalist and are thinking about universal health-care, a big shift for the US. And we are at the early stages of this phenomenon - the US Millenial generation is very big (twice the size of Generation X) and only about eight years of this generation is currently old enough to vote - we won't see their full power till about 2018, when lots more of them come of age. This is a very exciting and important change and we will experience it this side of the Atlantic too.

The UK Millenial generation is much smaller than the US one, but they are still bigger than our Generation X. They also seem to be trending leftwards and it remains to be seen what effect this has. It's quite possible they will move politics in general and the Labour party leftwards slightly, because while the cynical non-ideological Gen X demanded pragmatism, triangulation and steady economics from their politics (which New Labour duly supplied), the Millenials seem to be more interested in fairness, civics, human rights, citizens rights. The good news is that polls show this generation is trending left, they believe in government, regulation and the welfare state and are internationalist, so it will be difficult for "smaller-state" conservatives to win them over - indeed polls show that most Tory support currently comes from the 50+ Boomer generation who seem nostalgic for the 1980's. The Tory hatred of the Human Rights Act, Europe and the world, doesn't chime with the Millenials either.

We live in very interesting times because I believe the Labour party will need to reinvent itself again - possibly into Civic Labour and shed the authoritarian impulses that we've inherited from Blair. And we need to do this before 2012 at the latest, or the Lib Dems will move into this space. People like Caroline Flint need to take note - times are a-changing and pandering to the Daily Mail won't cut it anymore, as the Mail represents the Boomer generation whose influence is waning.

Generational Shifts

The Washington post has a very interesting article on how the changing tempers of different generations have changed America. The authors contend that every 40 years a "civic" generation follows an "idealist" generation in the USA, and that this pattern goes back to 1828.

The 1932 generation that brought in Roosevelt, fought WW2 and voted more enthusiastically than their predecessors or successors was a "civic" generation. The 1968 generation that voted for Nixon and Reagan, and ushered in 40 years of Republicanism (interrupted only by Carter and Clinton) was the "idealist" Boomer generation. The Boomer generation it turns out, are not just self-absorbed and self-indulgent, they tilt rightwards. But now there is a new big civic generation coming of age - the 1981 to 2003 "Millenial" generation, which is twice as large as Generation X, and promises to be like their grandparents in WW2 in attitudes (less self-absorbed, more collegiate, willingness to engage in politics, trust in insititutions etc and more left-wing).

However in between the "talking" generations that appear every 40 years (civic or idealist) are the so-called "silent" generations - Generation X (people born between 1961 and 1980) and the people who came of age in the 1950's, whose children they are. The silent generations are much smaller than the talking generations, and thus have less clout. The author glosses over the silent generations apart from characterising Generation X as cynical, "Life sucks and then you die" is their motto.

There are parallels with the UK. Our "civic" generation of the 1940's fought the war and gave us the revolutionary Atlee government and the Welfare state. As that generation starts to die in the 1980's, Mrs Thatcher's majorities increase, as the right-wing Boomers hold sway.

However I disagree with the authors of the article in that I think that Generation X is a very important generation. They are the internet generation, using it with increasing dexterity from 1995 onwards, and more entrepeneurial than previous generations. And Generation X put New Labour into power, aided by the Lib Dems who, via tactical voting, split the Boomer vote. Gen X weren't as sucessful in the USA - they managed to put Bill Clinton into office when they had Ross Perot to split the Boomer vote, but this decade the mad right-wing Boomer generation have out-voted them.

The pragmatic (and sometimes cynical) Generation X, now aged between 28 to 47, is still New Labour's staunchest supporters. But because they are a small generation, they can only continue to prevail in British politics if the Lib Dems continue to split the Boomer vote, or if the new emerging Millenial generation sides with them.

The Guardian ICM poll of 18th to 20th Jan, showed the Tories overall ahead of Labour by 4%, thanks to the Boomer generation (the 50+ group). The LibDems continued to split some of the Boomer vote (they scored their best % among the over 65's), but the new Millenial generation (under 25s) favoured Labour. That's the good news - it means the Millenial generation will ally with Generation X. The bad news so far is that the UK Millenial generation isn't as keen on voting as the American Millenial generation. Hopefully that will change with time. We just need to hang in there.

The Vietnam Factor

It looks like John McCain is gaining enough momentum to win the Republican nomination for President. McCain's main claim to fame is his experience as a Vietnam veteran.

The Vietnam war is a very important event in recent American history. The Vietnamese may have got over it a long time ago, but Americans still haven't. Some Americans still contend they could have won if only they'd stayed and fought and they blame the "liberal establishment" for the pull-out, despite the fact that it took place under Gerald Ford. Other Americans blame the loss on the soldiers who ran amuk, burning villages and killing indiscriminately, turning the South Vietnamese to the Vietcong in the process. Still other Americans are more charitable, but believe that Vietnam veterans are "unstable" due to their over-long tours of duty and the horrors they experienced (I recall meeting a particularly intense Vietnam veteran, and an American colleague shaking his head and remarking "They're all like that, Vietnam really screwed with their heads").

The first Vietnam-era person to challenge for the Presidency was Bill Clinton. Clinton managed to avoid going to Vietnam by studying at Oxford University, and his Republican opponents were quick to label him "the draft dodger". However this had no effect on the voters. Most of them thought Clinton was smart to have avoided the ill-fated war, and younger Americans thought "I would have done that too" (i.e. "I'm also smart"). Bob Dole, who was a WW2 veteran, tried again in 1996 to attack Clinton on Vietnam and failed again.

The next Vietnam-era person to challenge for the Presidency was George W Bush. His father famously got his son a safe position in the reserves, where it is rumoured Dubya didn't even show up most of the time. Again American voters didn't mind. They thought he too was smart to have avoided the war. But voters were harsher on his challenger for the Republican nomination, Senator John McCain. The Bush team successfully spread rumours that McCain was traumatised by his experience in Vietnam, which they said resulted in a short-fuse and unstable behaviour. The tactics were cruel and reprehensible, but they resonated with that part of America that believes that Vietnam vets are unbalanced. Bush defeated McCain handily.

The next challenger for the presidency was John Kerry. Dems thought that while the war in Iraq was raging it would look good to have a Vietnam vet run against a man who talked war but didn't fight. Kerry had been decorated in Vietnam and fondly imagined this gave him a Kennedy-like aura. However Kennedy had fought in WW2, which was a glorious win for America, and further, his exploits took place in the Pacific, against the hated Japanese who attacked Pearl Harbour (Americans have always demonised the Japanese more than the Germans for this reason). There was nothing glorious about Vietnam at all. In addition many Americans believed that purple hearts were handed out like sweeties in Vietnam for exploits that wouldn't have rated a mention in WW2, to boost troop morale - which made it easy to mock and "swift-boat" Kerry.

The only Vietnam veteran not stigmatised is Colin Powell, and that's because his loss as a young soldier is more than offset by the Gulf War, where as General and Chairman of the Joint Chiefs of Staff, he was the architect of a decisive victory.

This time the Dems have been smart enough to stay well away from any connection with Vietnam. Hillary is well clear because women weren't drafted, and Obama is well clear because he is too young.

Which leaves McCain on the Republican side to be the Vietnam standard-bearer. McCain is more vulnerable than Kerry because he was captured and tortured for five years, during which he released a statement condemning America and the war they were waging. This is normal, torture victims will say anything to stop the pain, it's a defence mechanism, which is why torture is useless as an interrogation tool, as well as being morally reprehensible. However, swathes of right-wing America - whom McCain depends on for votes - think torture is acceptable, Guantanamo Bay is acceptable and don't see anything wrong with Abu Ghraib at all. They've been quieter in the last year, but there is no evidence that they've really changed their minds. Can they really stomach a man who cracked under torture as their candidate? Or will they stay home on polling day? Left-wing America is inclined to be more compassionate - but they won't be voting Republican.

Americans think of themselves as Winners. They believe they are a superpower because they have a special propensity for winning that other nations haven't. It's notable they only began to question Iraq when it started to look like they were losing, whereas most of Europe was against Iraq in principle before the war commenced. Americans find losing almost unbearable because it challenges their self-image as winners. I don't believe a Vietnam veteran will ever become president, because secretly Americans believe almost everyone associated with that war is a loser. When Iraq-era people come to challenge for the presidency in thirty years time, I believe that Iraq-war veterans will find the same problem, Americans will conclude that the Iraq debacle was not just down to the politicians and generals but also poor soldiering on the ground and they will refuse to put these perceived "losers" into the White House. This attitude might change if they stop thinking of themselves as a superpower, but I wouldn't count on it.

The Hillary and Bill Show

The race for the Democratic nomination is so facinating, it's hard to focus on British politics. Because the Clintons are back!

The Clintons are particularly fascinating to New Labour because they are New Labour's grandparents. It was from the Clintons that Alastair Campbell learnt rapid rebuttal. It was from the Clintons that Blair learnt to be centrist. It was inspiration from the Clintons that led to New Labour's successful New Deal welfare-to-work program in 1997 and tax-credits.

Obama is a good-looking chap (though a bit too religious for my tastes). If he was running against Kerry or any of the other Dems, he'd be a shoo-in. But against the Clintons? Against the Clintons he seems too much like the Principle Boy in a panto, at once petulant, untried and too perfect.

What is it about the Clintons that is so fascinating? I think it is because they are clearly so flawed and human, but manage through sheer determination and brains to keep going despite everything and succeed. A metaphor for the human condition.

It's interesting too how many of the criticisms leveled at Bill Clinton are now being levelled at Hillary. In 1992, Hillary declared that “If you vote for my husband you get me. It’s a two-for-one blue-plate special.” People howled about it then, but voted them in anyway, and the Clinton presidency was a "two-fer" for the entire eight years - and very successful as a result, with the US federal budget going from deficit to surplus, the US economy booming, unemployment tumbling, innovation bursting out (this was the period when Google and Cisco systems were born and revolutionary technologies were being developed) and the USA an admired, respected and feared superpower at it's zenith.

Now you have the same thing in reverse, with Camille Paglia saying about Bill, “He is not going to sit on the sidelines. He is going to be out of control in office.” But will he? Or will Hillary's famous control and discipline rein him in?

They work so well together because they have complimentary skills - her strategic sense combined with his populist instincts. Her discipline combined with his creative insights. Bill Clinton wouldn't have been as good a president as he was without her. His creative, impulsive side would have run amok. Hillary gains something from his presense too - contact with how messy most of humanity is.

This campaign is also mirroring the 1992 one in that the spouse as defender-in-chief is visible again. Hillary famously defended Bill in 1992 from attack from Gennifer Flowers by going on TV and saying that if she could get over it, everyone else should too, and if they couldn't "just don't vote for him". In her role as defender-in-chief, she drew fire towards herself and away from Bill. Bill is now taking that role on. With his angry interventions, and sometimes self-indulgent spiel, he simultaneously says things that her campaign needs saying while making Hillary look good by comparison. She's calm and not self-indulgent.

Some Americans are saying that the experience of the Bushes means that you shouldn't have family in the presidency. However, while sons often don't inherit their father's skills (the genetic inheritance is a lottery, you don't know which ancestors genes will come to the fore), spouses usually tend to have equal and complimentary talents, and the Clintons' marriage in particular was one between equal intellects. Bush jr also had a rivalry with his father - eg appointing Donald Rumsfeld because he knew his father hated him - that the public were unaware about when they elected him. This rivalry doesn't exist between the Clintons, they are a team. People didn't know much about Dubya when the elected him (and they don't know much about Obama either). But they know everything there is to know about the Clintons in gruesome detail.

The question is who will America go for - the known quantity or a blank slate on which they can project wishes which might not be true? It's interesting that Ted Kennedy has endorsed Obama. That man gets everything wrong and he has the same reputation in America that Arthur Scargill has here. His endorsement just emphasises how centrist the Clintons are. Which is a good omen for Hillary.

So the Lib Dems have elected Nick Clegg...

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.

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.

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.

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.

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.

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...

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.

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.

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.

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.

This Election Business

So we're not going to have an autumn election. It's the right decision and will chime with voters' opinions. Polls showed substantial numbers unenthusiastic about having an election so early. Voters have got used to the Labour government going to the polls every four years in the spring and believe that the only reason to deviate from this cycle is if there is a crisis that urgently needs the voters verdict, and there is none now.

As to the volatility of the polls and the "embarassment" of having to say there will be no election - it will probably do Labour good. The Labour party works best when it thinks elections are on a knife-edge. Though Labour was strongly ahead in the polls in the run-up to the 1997 election, nobody believed it, and everybody worked to the bone and campaigned as though there were only a couple of points in it. And though Labour got a huge majority in 1997, the government behaved cautiously, as though things were finely balanced. The lead-up to the 2001 election was full of fretting from Labour about foot-and-mouth and fuel prices. The 2005 election was overshadowed with fretting about Iraq, and the recent Ealing-Southall by-election was fought with the sounds of crowing Tories ringing in Labour activists' ears.

Labour won all the above. But when we allow ourselves to believe it's in the bag, we get careless, we say things we shouldn't, and we lose. Think 1992. All the caution that Labour has shown in the last ten years has been correct. Voters really are brutal and un-sentimental. Look at what happened in 1992. Look at what the voters did to the Tories in 1997.

Voters don't like it when parties talk about "smashing" each other. They don't like it now and they didn't like it in the 80's when David Owen said Labour was "finished" or when Thatcher wrote in 1991 that it was unlikely Britain would ever see a Labour government again. Voters want all parties to be viable in case something goes wrong with the government, so that they have the option of changing government. When they hear talk of "smashing" they shift in the polls to give the would-be smasher a swift shock.

Voters don't like it when they hear talk about the "next ten years" or of people "going on and on". They might give us another ten years, but only if we don't take them for granted and don't act like it's in the bag. When they think people take them for granted, they have an irresistable urge to administer a good kick.

We saw what hubris did to the Tories in the early 90's. The good news is that while they delivered five full years of it, we've just had a couple of days of it at the conference. If we can end it now and go back to being our cautious New Labour selves, all will be well. We haven't lost an election, we've just had a few red faces and some people laugh at us.

We learn from it, and move on. And if the Tories want to be triumphant, let them. We all know where that leads.

Family Matters

For all the talk of the death of socialism, there is one social unit that remains as socialist as ever: the family. Husbands subsidise wives (and vice versa); siblings lend each other help and money when profit-motivated organisations such as banks refuse; parents try to help out the weakest child in the hopes of achieving equality among their children despite varying ability or effort; the black sheep gets bailed out in circumstances they wouldn't be if their situation was objectively assessed.

The tradition of family socialism goes back millenia, probably to when homo sapiens first appeared, and there was good reason for it - it was a way of ensuring that the old, the sick and the weak were taken care of.

More recently, we've had the phenomenon of perfectly healthy able-bodied people relying on their wealthy parents to subsidise their standard of living - something that was characterised as "Economic Outpatient Care" by American professors Thomas Stanley and William Danko in their book The Millionaire Next Door. It can be simple (and beneficial) starter help such as parents paying for university or helping their children to buy a home with the gift of a deposit, or the more destructive version where adult children live expensively and run up debt in the belief that inheritance from their parents will clear it.

Stanley and Danko observed that too much help from parents weakens the ability of their off-spring to cope when the parents pass away, as by then they are too old to learn how to survive on their own. The annals of the rich are full of stories of the next generation unhappily frittering away their wealth through dissipation and lack of drive. Indeed this was what motivated Bill Gates to decide to give away most of his money - he didn't want to weaken his children by removing their motivation. The best parents are the ones who push their children out of their nest and force them to stand on their own two feet, and the earlier they do this the better, as the parent is still around to watch progress, offer advice and if the child stumbles really badly, pick them up: what usually happens in these circumstances is that the young adult struggles mightily at first, and then gets the hang of it and begins to thrive and prosper.

As the welfare state sprung up, we've also begun to see conflicts between the powerful pure socialism that exists within the family and the much weaker state version. For instance, many elderly people are outraged that they have to sell their houses to pay for their nursing care at the end of their lives. They demand that the state (i.e. other people's children) pay for the nursing care, so that they can provide substantial socialism in the form of inheritance to their own children.

And so we come to the issue of inheritance. Here several threads merge powerfully - the tradition of family socialism, the fact that parents worry about their offspring, and as mortality approaches, seek to protect them from beyond the grave. It's not accidental that the people who worry the most about inheritance taxes are the elderly, even though it arises after their deaths. And not many are as clear-headed and logical as Bill Gates on how inheritance could hurt their children.

Family socialism has the same strengths and weaknesses as the state version. As a support system, nothing beats the family, especially if you are ill or disabled. But families can also be indulgent, enabling and entrenching bad habits and laziness - giving is equated to loving, so you see poor mothers running up debts to buy their children the latest toys instead of simply saying, no, we can't afford it, we're on a budget. And you see adults "counting" on inheritance to bail them out of their problems instead of striving to solve them themselves. If critics of state socialism say that it demotivates and weakens the recipients of it, family socialism does this a hundred-fold.

The only way to resolve this would be to go back to the original purpose of family socialism - to protect the old and the sick. I would be in favour of inheritance going completely tax-free into a family fund if it could only be drawn on for the purposes of paying for nursing care, supporting an ill/disabled family member and to provide an income in old age, and that if the family fund was drawn on in this way, you got an offsetting reduction in benefits from the state. It would solve the problem of an aging population needing nursing care. It would solve the problem of people not thinking about their income needs in old age. It would solve the problem of parents desperately worried about offspring who are ill. It would remove some of the imbalance in society where some people get a capital leg up in enterprise. And if it turned out that you were one of those rare people who enjoyed perfect health in your lifetime and worked to the end, then you simply pass the family fund untouched to the next generation. Over the decades and centuries, someone among your descendents will get old or ill and draw on it.

Obviously people who are living high in the hopes of getting "free" and unearned money from their parents will hate this. For many people though, they just want to know that they are protecting their descendents from the ills life can throw at them, and they will be satisfied. The big question is which group is the biggest? The first group would prefer the current system where you get free money and simply spend it as you like, including blowing it all and having the state look after you at the end, and sadly this group is probably too big for my idea to ever get off the ground.