Tory financial policies: too clever by half?

Yesterday, George Osborne, the British Chancellor of the Exchequer – our Minister of Finance – gave the first entirely Tory budget since 1996.

He’s been delivering budgets since 2010, of course, but up till yesterday that was always as Chancellor in a Coalition government where some of the sharpest parts of his edge were taken off by the need to conciliate the Liberal Democrats. Well, yesterday that restraint, such as it was, no longer held him back, and he could be a pure Tory. And he was.

One of the most impressive aspects of the Tories is that they’re devilishly cunning. They know how to get elected. That was all on show yesterday.

George Osborne setting off to deliver the budget

Labour has been hitting the Tory party for being far too closely tied with just a tiny portion of the population, specifically the wealthiest, most privileged people. It didn’t stop them winning the election, but Tories traditionally don’t have to put up with small majorities in the House of Commons. They’re the kind of party that wins big, and they didn’t this time.

A smart way out of the Labour criticism is to reposition themselves as a party for everyone, what’s known as a one nation party. And Osborne set about doing just that yesterday.

First of all, he announced that “Britain deserves a pay rise.” That’s a phrase the Unions have been using for quite a while. 

See what he did? He’s saying you don’t need a Union. A one-nation Tory party will deliver you what you need. Brilliant.

And then, at the end of his speech, the master stroke: he announced that he was introducing a “National Living Wage.” That’s something that the Left has been calling for some time. What’s more, Osborne wants it to reach £9 an hour by 2020 – but Labour had only promised to get the minimum wage, which this national living wage will replace, to £8 an hour by then. 

Talk about wrong-footing the Opposition. They must have felt as though their clothes had been stolen from them, while they were still wearing them.

Two body blows to the other side. Absolutely magnificent. At first sight.

Looking at things more closely, one has to start wondering whether Osborne has perhaps been a little too clever for his own good. You see, “Britain deserves a pay rise” suggests you’re going to deliver one. But in fact, he announced that the public sector pay rises would be restricted to a maximum of 1% a year for the next four years, which will represent a real-terms pay cut.

What about the move the “National Living Wage”? Well, those on the minimum wage today will indeed have a higher increase than that 1%, by 2020. Sadly, however, many of these low earners also receive tax credits at the moment, and they are to be phased out. The Institute of Fiscal Studies think tank calculates that the loss of the tax credits will leave 3 million families £260 a year worse off, despite the the living wage initiative.

So several million people who’ve been told that the country deserves a pay rise, will in fact suffer a pay cut. That may come back to haunt Osborne: he’s made a promise which he doesn’t look like keeping.

What’s more, by talking about a “living wave” he’s moved that notion into the mainstream. As it happens, he isn’t in reality talking about a living wage, just about an increase to the minimum wage. The living wage is a level of pay which should allow someone to live on it without taking a second job. The tax credits Osborne’s phasing out would be part of the living wage calculation. So he won’t be delivering it – though he he has legitimised the demand.

In other words, he’s set the bar high, and doesn’t look like clearing it. Which sounds like a hostage to fortune. 

Setting expectations among voters and then disappointing them? That may not prove to have been as smart as Osborne looked yesterday. If the Opposition can rally and hit back, he’s left them a great target to aim at…

Remembering the 7/7 attack, in Luton with its constant reminder

7/7. The tenth anniversary of Britain’s worst terrorist attack since the 1988 bombing of Pan Am flight 103 over Lockerbie in Scotland. Oddly, though, living in Luton I really don’t need an anniversary to be reminded of that attack.

The bombs, detonated entirely at random, killed 52 innocent people and injured 700 others. It was a gratuitous act, pointless and ultimately futile: nothing was gained and only damage was done.

Although the perpetrators claimed to act in the name of Islam, their victims included Muslims who don’t have anything in common with their point of view. To add insult to injury, as one Muslim survivor pointed out in the Guardian, there is a tendency to treat all Muslims as somehow associated with the guilt of that day, which is particularly hard when one is in fact a victim.

The most awful scenes from the day were naturally of blood-soaked remains or weeping survivors. However, for personal reasons I’m particularly struck by a grainy, indistinct image from a surveillance camera, of a fly-blown, unsightly car park.

That’s because it shows the open parking area outside Luton station. Which was where the bombers left their cars before heading for London, on 7 July 2005.

Surveillance camera shot of the bombers' two cars at Luton station

Another surveillance camera shot: the bombers enter Luton station
Travelling to London to end their own lives while
killing 52 innocent civilians and injuring 700 others

At the time, I wasn’t living in Luton. But I arrived a few years later, and the station is one of the places that I tend to go to or through pretty frequently, whether I’m going to London or just into the town centre. And it always bothers me that this was the place, fifteen minutes walk from my home, where the last stage of that fatal voyage started. It’s almost as though I ought to feel guilty, or at least partly responsible, for what happened next.

The place doesn’t look anything like it did then. It’s hardly become breathtakingly attractive – it’s an open-air bus station – but at least it isn’t quite as run down as it was. Not quite as dishevelled. Not quite as appropriate a setting for such shameful deeds.

The same area today.
Hardly a scene of beauty, but somewhat less desolate

But it still acts as a baleful reminder to me each time I pass.

Time to listen to the Greeks?

The thing about a crisis is that it’s a great moment to re-examine some fundamental assumptions about what on Earth you’re up to. And when it comes to the European Union and, in particular, the Eurozone such an examination is badly overdue.

No one in authority in the European institutions will see it that way, but what this means is that the Greeks may well have done them a service.

By voting massively to reject the austerity package being forced on them by the Troika of the European Union, European Central Bank and the IMF, the Greek people have sent us all an important message. It is that though the Greeks may be in serious trouble, and the difficulties there have to be addressed, it can’t be done exclusively on the backs of those least able to cope with it.

It is almost unthinkable that a modern economy should shrink by a quarter over five years. 26% of the workforce is out of work, and that figure reaches nearly 50% for the young. Pensioners have seen their pensions cut in half – pensions to which they had loyally contributed throughout their working lives. To behave in that way is to break any kind of covenant there may be between government and people – it is to say that even if you do what we ask you to do, and the law requires of you, we reserve the right to refuse you the reward we’ve promised, even if that plunges you into penury.

To say “no” to that kind of action is practically an obligation.

Guardian photo of young Greeks celebrating the "no" vote

Nor does it matter only to the Greeks. Austerity politics are being pursued in a great many countries, particularly across Europe. And yet we know they fail. Back in the 20s, in the last great crash of the proportions of the current one, the immediate reaction of the Right was to tighten belts and impose austerity – though, as ever, not on themselves, only on the poor.

The result was mass unemployment and back-grinding poverty. In Britain, we had the Jarrow Hunger marches, starving workers converging on London from the North. In the US, we had “buddy, can you spare a dime?”

Fortunately for all of us, the US had the genius to find a man of Franklin Roosevelt’s calibre to replace the austerity incompetent Herbert Hoover. He applied policies of public investment in large projects to stimulate the economy and return it to growth. And at last the problems of the slump began to be solved.

This time round, we’re dominated by people of the Hoover persuasion once more, and they’ve made Greece the test bed of their policies. Where, unsurprisingly, they’ve failed again. Even the IMF has admitted as much, in a report that was leaked last week: they conclude that even if it applies the austerity policies precisely as prescribed, Greece cannot sustain its debt.

What Greece needs is help not austerity. It needs debt relief so that it can start to invest in itself, and get itself back to growth.

And by the way – a lot of economic activity these days is in services, where you’re not manufacturing, you’re not even consuming an intolerable amount of energy, you’re just using people to provide service to other people. Growth, in other words, does not have to be environmentally disastrous.

The irony is that the entire Greek government debt works out at $630 per inhabitant of the Europe Union. If the EU took on half the debt and cleared it over ten years, we’d be talking about just over $30 a year per inhabitant. What’s that? The price of a cheap shirt?

In any case, no one’s asking for that extent of debt relief. The question we should be asking, though, is if we can’t make that level of sacrifice for a member of our own union that is in desperate trouble, then what is our union for?

The Greek referendum result poses that question starkly, to us all.

And we too should be asking it, of our governments. In Britain, for instance, government is about to take £12 billion out of the benefits bill. That may sound like a necessary retrenchment at a time of economic hardship. But what it really means is that £12 billion of demand will go out of the economy: recipients of benefits spend what they receive, so every penny goes into generating demand.

Is Britain really saving anything by making those cuts? Are other European nations or the US doing themselves a favour by seeking austerity solutions? Or are we making things worse?

The Greeks have given their answer. It might be a good idea to listen to them.

US Independence Day Thoughts

Happy Independence Day to my US friends.

Today’s a good time to think a moment about the main architect of the document whose signing you’re celebrating, the Declaration on Independence.

Fourth of July: a time for celebration in the US,
Perhaps also for reflection everywhere...

At a time when rising racial tensions are belying the hope raised by the Civil Rights movement and the reforms that followed, it’s worth recalling one of the principal denunciations it hurls at the British King, George III:

He has waged cruel war against human nature itself, violating its most sacred rights of life and liberty in the persons of a distant people who never offended him, captivating & carrying them into slavery in another hemisphere or to incur miserable death in their transportation thither. This piratical warfare, the opprobrium of infidel powers, is the warfare of the Christian King of Great Britain. Determined to keep open a market where Men should be bought & sold, he has prostituted his negative for suppressing every legislative attempt to prohibit or restrain this execrable commerce.

Don’t worry, if you know the Declaration well and don’t recognise these words, it’s not your memory letting you down. They appeared in Thomas Jefferson’s draft, but were excised from the final version. He explained later that they were removed to satisfy slave-owners in Georgia and South Carolina, and slave-traders from the Northern States.

Besides, although this passage denounces the transatlantic slave trade, it stops short of condemning slavery itself. Jefferson was a slaveholder till his death. The only slaves he ever freed were Sally Hemings, with whom he had a near forty-year affair, and the children he fathered with her.

However, he undoubtedly disliked slavery. That shouldn’t be taken as implying, though, that he was a champion of the kind of integration the US still needs so badly:

Nothing is more certainly written in the book of fate, than that these people [African Americans] are to be free; nor is it less certain that the two races, equally free, cannot live in the same government. Nature, habit, opinion have drawn indelible lines of distinction between them.

Gary Younge is an outstanding (Black) British journalist with The Guardian. He and his (Black – or perhaps I should say African) American wife and their children are about to leave the US for Britain after twelve years. In an excellent valedictory piece, he mentions the hopes for progress on racial issues many expressed over the election of Barack Obama. He didn’t believe much would improve:

…one person cannot undo centuries of discrimination, no matter how much nominal power they have… He was the most progressive candidate viable for the presidency, which says a great deal, given the alternatives, but means very little, given what would be needed to significantly shift the dial on such issues as race and inequality.

Centuries of discrimination indeed. And we can see it deeply embedded in the writings of even so liberal a figure as Thomas Jefferson.

Still, none of us is free of the assumptions of our times. Jefferson is remarkable for his ability to adopt thoughts that were revolutionary for his epoch. Some of them have become part of the fabric of societies that aspire to democracy, sometimes to the point of being so familiar we run the danger of forgetting them altogether. It’s salutary to remind ourselves of what some of them were.

Thomas Jefferson drafted the Declaration of Independence
Contradictory as we all are, but he got a lot right
as well as a few things badly wrong

For instance, in his first inaugural address, he called on his fellow citizens to bear in mind:

…that though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possess their equal rights, which equal law must protect, and to violate would be oppression.

What of his political opponents, those in particular who might oppose the very existence of the Union or its republican basis?

…let them stand undisturbed as monuments of the safety with which error of opinion may be tolerated where reason is left free to combat it.

A couple of years earlier, Jefferson wrote to a political ally:

I am for freedom of religion, and against all manoeuvres to bring about a legal ascendancy of one sect over another: for freedom of the press, and against all violations of the Constitution to silence by force and not by reason the complaints or criticisms, just or unjust, of our citizens against the conduct of their agents. And I am for encouraging the progress of science in all its branches; and not for the raising a hue and cry against he sacred name of philosophy…

Well worth reflecting on these thoughts. Especially at a time when many are calling for restrictions of liberties in the US for the sake of religious faith (such as the refusal to perform legal gay marriages), while others are resisting the progress of science (for example by denying climate change).

More important still, on both sides of the Atlantic, is the principle that the majority is not entitled to trample on the beliefs and behaviours of a minority, simply because we dislike them. We don’t like the burqa? That doesn’t give us the right to ban it.

Worst of all, we keep forgetting that it’s essential in a democracy that “error of opinion may be tolerated.” Today the talk is all of resisting radicalisation, principally among young Muslims. But the holding of radical views isn’t and should never be illegal – that’s a net that would have caught Jefferson himself. To believe that ISIS is right and deserves support may be a view so misguided as to be imbecilic, but we have no right to forbid it.

Pick up a gun for ISIS, or conspire to give it material support, or even incite others to do so, and you have broken the law and can and should expect action against you. But espouse the opinion? That must be legitimate.

Ah, well. July 4th is not a day for too much heavy thinking. I’ll stop there.

Enjoy the fireworks!

Experts do so much to inspire our confidence...

It’s not immediately obvious how legitimate it is for the wife of a former British Prime Minister to be lobbying a US Secretary of State, who happens also to be the wife of a former President, on behalf of a wife of the then ruler of Qatar.

That, however, was revealed to have happened when messages exchanged with Cherie Blair emerged from the publication of Hillary Clinton’s e-mails as Secretary of State. It seems that Cherie was terribly interested in Sheika Mozah of Qatar’s charitable work and keen to set up a meeting between her and Clinton. In itself, there’s no reason to feel suspicious about that – it may be entirely above board – though one can’t help sharing the view expressed by Luke Harding in The Guardian:

There is no suggestion here of malfeasance. But the emails are a further example of how alluring the Blairs apparently find the very wealthy, even when charity is involved.

What struck me most, however, wasn’t so much the goal of Cherie’s e-mails. It was their illiteracy. This woman is, after all, a British judge. What’s worst, the illiteracy concerned the principals of her lobbying: she referred to the Sheika as “Moser”, though the received European spelling of her name is “Mozah”; and she couldn’t even get her dear friend and lobbying target’s name right, referring to her as “Hilary” and not “Hillary.”

Oh well. Perhaps up there in the stratosphere of international relations what we mere mortals would regard as simple professionalism doesn’t apply. It doesn’t do much for my confidence in the great and good, however.

Confidential relationship
But not good enough for Cherie to learn how to spell Hillary's name

But then nor does one of the other exchanges, gleefully recorded in The Guardian, between Clinton and one of her aides.

Jake Sullivan: I’m being told – and still trying to verify – that as of last week, we’ve succumbed to the Europeans’ preferred term. That there was interagency discussion of this, and that going forward, we will join the rest of the world in calling the P5+1 the E3+3.

Clinton: What does it mean? What is the E and who are the three?

Jake Sullivan: E is Europe. E3 is UK, France, and Germany. +3 is US, China, Russia So it’s the same 6 as the P5+1, just a different name.

Clinton: I already feel safer.

Jake Sullivan: And I feel ashamed that I had to subject you to this.

Yep. Like Clinton herself, I feel much safer for knowing that leading figures have worked out whether to call the same six nations “E3+3” or “P5+1”.

But then there’s been quite a bit of news to excite confidence recently. We also had some curious revelations about John “Goldfinger” Palmer, a bit of a serious underworld character, who apparently had a sign over his desk “remember the golden rule – he who has the gold makes the rules.” He made a lot of money from gold, including smelting some that wasn’t his client’s to smelt.

Police and paramedics were called to his house on 24 June and found him dead. Six days later some suspicions were raised about how he’d died, and a postmortem was carried out. It found that his death was not unrelated to the bullet wounds he had in his chest. It seems the paramedics had assumed them to have been caused by some recent surgery, which says a lot about either (a) their rating of the skills of local surgeons, or (b) their ability to tell their arse from their elbow.

It’s not the first time something like this has happened. On 1 May 1992, Graeme Woodhatch, a patient at the Royal Free Hospital in North London, was called to a public phone. What he didn’t realise was that Rangimaria Ngarimu, a 27- year-old Maori woman, was waiting for him in the corridor. As he took the receiver, she shot him four times.

That was bad enough, but when hospital staff found his body, they decided he’d been killed in a fall. It wasn’t until the evening that the four bullet holes were discovered.

Now the killer had used a .22 gun so the holes were small. All the same, one would like to think that medical professionals ought to be able to tell the difference between injuries due to a fall, and those caused by a gun.

Ah well. I’m sure experts know what they’re doing. Most of the time, at least.

Separated by a common language? Over-united more like. With some odd quirks

On both sides of the Atlantic, we love to quote the Shaw view that England and America are two countries separated by a common language.

A completely different view was expressed by the first US Secretary of the Treasury, Alexander Hamilton. He’d been a leading aide to George Washington during the Revolutionary War, but emerged in the 1790s as an outspoken Anglophile. Which made him the nemesis of Thomas Jefferson, Anglophobe and friend of the French.

Hamilton told a leading British agent “I have always preferred a connection with you, to that of any other country. We think in English and have a similarity of prejudices and predilections.”

Indeed. There is something out there which the French call the “Anglo-Saxon” mentality, and not as a compliment (they move quickly on to talk about globalisation and neo-liberalism). It tends to come out in a joint obsession between the two countries to put profit before pretty much anything – if Britain, as Napoleon claimed, is a nation of shopkeepers, the US is a country of mall operators – and to use military force against anyone who is even suspected of possibly jeopardising such a sacred way of life.

As a result, even an ostensibly Centre-Left government could end up trotting obediently into Iraq at the beck of possibly the most inept of US presidents, Dubya Bush. We’re still paying the price twelve years on. And it’s likely to get worse. Just because ISIS are a lot grimmer even than Al Qaida doesn’t mean we won’t face something still more dire down the line.

Yep. That’s the one we chose to follow into Iraq
Might have been useful to have spoken a different language:
he made no sense in ours

The community of thought which makes possible this kind of consensus, with all its beneficial consequences, surely owes much to the fact that on both sides, “we think in English.”

So – it’s more a matter of two nations (along with New Zealand, Australia and Canada – predominant whiteness plays a role) bound together, for better or for worse, by a common language.

What differences exist, are pretty insignificant. Does it really matter that Americans wear their pants outside, covering their underpants, while we keep our pants inside, with trousers over them? I think not.

Even so, from time to time I find some of the differences a little quaint. Quaint to the point of bizarre. Here’s a curious contrast between the two sides of the pond in the use of prepositions (little words that really matter in this common language of ours).

If I were to call in on my friend Tom, I would reckon I was visiting him. In the language the French persist in calling “Américain” I would, however, be visiting with him. That always strikes me as slightly odd. I feel that if I’m visiting with Tom, then we’re popping in on someone else, George perhaps. Together.

On the other hand, an American desiring to enter into correspondence with him, would write Tom. Without a preposition. Again, that puzzles me. Surely if you write Tom, you have to be penning a piece of fiction? Shakespeare wrote Touchstone, and pretty clever it was too. If he’d wanted to send him a letter, he’d have written to Touchstone. Which, if he’d expected a reply at least, would have been pretty silly. 

Branagh playing Touchstone in As You Like It.
He did well to write him, but never wrote to him.
And wouldn't have had a reply anyway

Occasionally I listen to books instead of reading them. Recently, I was listening to a book being read by someone called Edward Herrmann. What struck me about him was that, despite being American, he pronounced the word “era” in a way that distinguishes it from “error”. As I do. Generally, on the other side of the pond, the words are indistinguishable when spoken.

This is awkward if we wanted to describe, say, the time of Dubya, if I can return to that sad period. In British English, even in the spoken language, we can distinguish the two words in “error era.” In Américain, they’re the same. You’ve got to admit that would sound a bit silly.

On the other hand, you might argue that to sound silly when talking about the Dubya presidency is entirely appropriate.

And you may well be right.

Greece and the EU: who's been betrayed by whom?

It seems that Jean-Claude Juncker, President of the European Commission, feels betrayed by the behaviour of the Greek government.

The purpose of a union is to create something that is greater than the sum of its parts. By pulling together, the nations of the European Union agree to work together, giving up some of their individual freedom of action, because they believe that in joint effort they can achieve more.

Within the Eurozone, the bonds are even closer, since the countries have given up control over their own currency, a major sacrifice when it comes to combatting financial difficulties.

Part of the bargain is that if any constituent of the Union gets into trouble, the Union as a whole rallies round to help. Now, following the financial crash of 2008, five EU nations, all within the Eurozone, were particularly harshly affected. These were the so-called PIIGS: Portugal, Italy, Ireland, Greece and Spain.

Several years on, all but Greece seem to have weathered the worst of the pressure. That’s not to say that they’re doing well. No one in the Eurozone is doing well. It’s stagnating as a whole,but that’s a not unexpected result of the austerity economics it has imposed on itself. Austerity cuts people’s spending power, so demand goes out of the economy and, as day follows night, the economy fails to grow.

Greece however is in a far worse state than the others. The EU, the International Monetary Fund and the European Central Bank, clubbed together to provide it with funding and to buy it some debt relief, but only at the cost of an even harsher austerity programme than the other nations underwent. As a result, unemployment rose to one in four of the workforce and, far from growing, the economy has shrunk by a quarter. A catastrophe.

Instead of banding together to help its weakest member out of the mud, the EU has inflicted on Greece policies that could only drive it far deeper still. While its membership of the Euro denies Greece the classic solution of devaluing its currency, as Larry Eliiott explains in The Guardian.

Guardian photograph from Athens:
graffiti expressing increasing anti-Euro feelings

So the EU has achieved precisely the opposite of what is intended in a Union.

The result is that it now looks increasingly as though Greece will, as long feared, have to leave the Euro, and perhaps the EU too, if only to have any chance of working its way out of the mess it’s in, with even a shred of dignity left to it.

Make no mistake about it. It would be extremely painful for Greece if it came to that. But it would be a disaster for the EU and the Eurozone. Greece is the first test of the capability of the Union to stand by a member that is in real trouble. They’re on the brink of failing that test. That inevitably raises the question “what is the EU for? If it can’t even rescue a relatively small member from penury…”

Angela Merkel enjoys a high and deserved reputation for her statesmanship. But it is she, and Germany more generally, that has led the campaign to inflict the harsh regime on Greece which it is now rejecting. If she can’t magic some solution out of the chasm in front of her at the moment, her legacy may be that of the leader of Europe who saw the experiment of union founder.

Larry Elliott’s article calls what we are facing now a “Sarajevo moment”. The assassination of the Austrian Archduke in Sarajevo in 1914 initially seemed to be a relatively minor event in a distant place. But within weeks it had engulfed the whole of Europe in the torment of the First World War.

The exit of Greece from the Union might be another minor event, but it will be a critical step in causing the EU project to start to unravel. The Eurozone will have shown that it is incapable of solving a problem within its membership. And the EU will have shown that it can’t look after its constituent nations.

Those of us in Britain who want the country to remain a member of the EU will find our arguments for staying in weakened in the run up to our promised referendum. And Eurosceptic movements in other European nations will also gain momentum. The impact on the Union could be lethal.

Someone has certainly betrayed the ideals of the European Union here. But, Mr Juncker, I’m not sure it’s Greece.