Her Majesty’s Loyal Opposition should officially and unequivocally object, to everything, even good ideas, loudly and often

I don’t think Labour really know that the game has changed. We will have an election in 2015 and there is very little chance of one before that. The move to fixed term parliaments means that Ed Miliband et al find themselves in a totally different position to someone like Cameron circa 2005 or Blair in 1994.

In 2005 Cameron suspected the next election wouldn’t be for five years – and he turned out to be right. But he nearly had to fight an election in 2007 against a newly inaugurated Brown. This is something he had to expect and prepare for from the day he was elected Tory Leader, because we all knew some sort of hand over from Blair to Brown was imminent and that this may have been followed by an election.

This meant that Cameron spent a lot time and effort trying to appear electable, trying to appear “in-touch” by visiting the arctic, liberal by hugging hoodies and as a better heir to Blair than Brown could ever be. All this was essential when Labour could have called an ambush election at any point.

Tean Miliband seems to be employing a similar tactic. Liam Byrne is fighting to appear tough on benefits claimants, Ed Balls is trying to sound more fiscally conservative, even Diane Abbott is doing her best to swiftly cover up her gaffes. The commetariat are also playing along, they want to know if he is too ugly to be prime minister etc. Cameron moved left while Ed is moving right.

All of this is stupid. As Sunny has been documenting, not only is nuance from Labour Wonks confusing the public, those who aren’t confused couldn’t care less anyway. I have a better plan for Ed, to be in operation for the next three years or so, or at least until a year before the election date. Her Majesty’s Loyal Opposition should officially and unequivocally object, to everything, even good ideas, loudly and often.

First of all, this is essential to good governance. A noisy opposition ensures that a Government has to advance the strongest arguments for its policies and ensure the sharpest execution for fear of being lambasted. If all Tory mistakes are leapt on with gay abandon then the Tories will make sure they screw up less. Remember the incorrect list of schools Gove released last year? That is what happens when people are not terrified of screwing up.

Even where this policy would be a trap it is good policy. For example, Miliband will gain almost no votes by opposing capping benefits at £26,000, but he won’t lose any votes either because, and this is important, nobody is voting until 2015.

Any damage supporting bad policies or opposing bad policy while in opposition can be shrugged off because the opposition won’t have done anything because they can’t. Wrong calls can be disowned and vote winning stances embraced as manifesto fodder. A manifesto which won’t need to be published until 2015 because, I repeat, that is when the next election will be. Plus, by being the voice of opposition Labour would be able to build an activist base which will be important in getting out the vote and campaigning come election time.

By playing the old game, where an opposition has to be constantly on the alert for an election Labour are strengthening the Tories, and doing damage to people’s lives. They need to shape up and realise the rules have changed.

Filed under: Politics , Benefits, Blair, Brown, Cameron, Ed Miliband, Election, Labour, Polling, Strategy Conservative, Sunny Hundal

“The second rung of a five-level corporate structure”

Problems the Labour Party may have number 589 of an ongoing series:

With a scoop headlined “Senior Labour adviser defects to the Tories”, readers of Monday’s Independent  were left in no doubt as to the gravitas of party operator Luke Bozier. But the story left one group grinning mirthfully at their BlackBerrys: anyone who had worked in Labour HQ or 10 Downing Street during the tenure of the “Blairite former Labour official”.

With Dan Hodges blogging that Bozier “worked for the party for a while, but not at an especially high level”, Scrapbook can confirm Luke was, in fact, a junior staffer on only the second rung of a five-level corporate structure.

A five level corporate structure of advisers? I do wonder how a party claiming to represent working people - and which more or less did so in the not too distant past - ended up swallowing this corporate, management bullshit so entirely.

Filed under: Blogging, Politics

Hubris is Fun: Recovery Winter Edition

I’m sure people holding set squares and bottles of quinine felt the same down on the Congo Basin.

The pretense of knowledge is a lot less pretense-full when you have a 1 Terabyte portable Hard Drive and GIS mapping software.

In all seriousness, Karl has a point. While we should always be sceptical of how much we really know, we should always do our best with what we do know.

When it comes to macroeconomics, in the US, all signs point to free lunches sitting everywhere if only for a little more nominal expenditure, and hopefully Karl can elaborate on this soon.

Filed under: Blogging, Economics, Foreign Affairs

A desk is arriving at my new house on Wednesday…

…that may enable me to begin blogging again.

Filed under: Blogging

Ah! A sensible response to #Abbottgate

My real beef with what Abbott said is precisely because of the “context” that she protests her tweet was taken out of. I don’t like the way she rejects Bim Adewunmi’s point.

Questioning the merits of a set of “community leaders” (black or otherwise) is not on any meaningful continuum with the tactics and values of 19th-century colonialism. And the suggestion that black people shouldn’t criticise their so-called “community leaders” for fear of being seen to “wash [their] dirty linen in public” is depressing.

Yes.

Filed under: Blogging

Happy New Year

Radio silence may continue for some time. Can I just say, I will return, but I’m not sure when. Do pop back soon.

Filed under: Blogging

Tim “Facepalm” Worstall

Tim continues to prove that right wingers really, really love banksters and will abandon all logic and reason to defend them despite them being subsidised, cheating, arrogant wards of the state:

AIG, GM and Chrylser, that’s where the losses are.

The banksters aid, turned a profit.

I think the easiest way to show this to be silly is to compare this bailout ex ante and ex post. Before the bailout the financing cost for banks was through the roof, after the bailout it began to converge with that of the soveriegn government doing the bailing.

In Ireland, a tiny economy with a big banking sector, the government’s interest rate converged up to that of its banks, in the UK, Europe and US banks’ borrowing costs converged down towards that of the government funding them.

This happened because the government assumed all the downside risk and associated financing costs of these banks. It almost bankrupted Ireland and made tidy profits for bankers living in jurisdictions with large tax bases at those large tax bases’ expense.

As Steve Randy Waldman riffs on the same topic:

But who has lost anything from the bailouts? Wasn’t it a win-win? This all sounds very abstract. Where are the transfers?

If the government borrowed or printed a trillion dollars and gave the money to me, would there be any losers? If you don’t think there has been a wealth transfer, if you don’t think ordinary people have lost, please call your Congressperson and ask her to cut me a trillion dollar check.

Indeed, can I have a trillion dollars Tim? If I can, I promise to pay it back in a few years, and if I can’t then we’ll just call it quits.

Rightwingers, please, fall out of love with finance and think a little.

Filed under: Blogging, Economics

Art and Wealth

Once again, Left Outside brings you quality programming. But does it matter that today’s video is sponsored by Nokia or that yesterday’s video was sponsored by Zapata Racing? [1]

I don’t think it really does.

A lot of great art has been sponsored by rich people or by religious powers or by wealthy and powerful statesmen. That art is now produced by private companies isn’t much of a step down. For example, I’d rather be sponsored by Nokia than the pope, or WordPress (hello!) than Henry VIII.

A polarisation in wealth might pose many problems for many things, mental health, macroeconomic stability, cosmopolitan theories of justice, but art? No. I think inequality might be good for art, or at least neutral.

There seem to be two contrasting currents to art, one is very rich people sponsoring art the other is people of reasonable means taking up art for fun. I don’t know which dominates. But I don’t think we’ve really had any significant stagnation in aesthetic life for the last couple of centuries so . [2]

So, art in corporate hands. Not ideal, but probably not any different to anything that has happened before, nor any worse than any other set up that we’ve seen. [3]

___

[1] Your humble blogger uses a blackberry and I don’t know what the hell Zapata do, so I’ve no horse in this race.

[2] other than that period where we built hundreds of hideous concrete buildings after the war.

[3] Okay, so the analysis on this site has suffered of late, but I’m trying.

Filed under: Politics

Blogging may be slow, but I still bring you quality programming

Filed under: Foreign Affairs

Space race 2.0 time

Astronomers have confirmed the existence of an Earth-like planet in the “habitable zone” around a star not unlike our own. The planet, Kepler 22-b, lies about 600 light-years away and is about 2.4 times the size of Earth, and has a temperature of about 22C.

This is brilliant. Load up a (large) rocket with lots of people and some sort of farm and send them out ASAP. They won’t get there for some time so we best get moving. Tagged under foreign affairs, hmmm…

Filed under: Foreign Affairs

AAA ratings are a beauty contest – someone has to win

Duncan worries that the UK might lose its treble AAA sovereign debt rating. I think this is mistaken, even with David and George in charge I don’t think they can screw the economy fast enough to make us lose our rating.

For the purposes of this post I going to assume that Duncan didn’t really mean “AAA rating” because it is a informationless designation created by corrupt and incompetent rating agencies. However, it is useful short hand for “our borrowing costs increasing and investors thinking UK debt is unsafe” so I understand using it as a proxy.

The Eurozone is a mess, the US is still not adding jobs quickly enough to lift its employment to population ratio and Japan is Japan. The US, Japan, Italy, Germany and France all have debts of over a trillion dollars outstanding. The UK’s total debt is just under a trillion dollars [src, some figures a little out of date, all close enough].

Apart from perhaps Canada, no country comes close in terms of providing a deep, liquid and widely traded market for their bonds. If someone wants to own something which can be easily and quickly sold and about which there is a lot of information available they are going to hold one of these bonds. Similarly, many banks and organisations will be forced to hold some nominally safe bonds too.

The UK doesn’t have be run well or grow strongly (which it looks like it won’t), because so long as Europe remains a mess people will be happy to hold our debt because it is one of the least ugly around. Take that thought as consoling or terrifying as is your preference.

Filed under: Economics

Things that put me off central planning…

Demographic trends for India, the second most populous country in the world, suggest that a million new workers will join the labour force every month for the next two decade.

Plan that? The very thought terrifies me.

UPDATE:

But then, a basic modern capitalist mixed economy comes out of this paper well:

The two most consistent factors that predict overall entrepreneurship are local education levels and the quality of local physical infrastructure.

Little grist to the mill for libertarians or socialists here.

Filed under: Economics

Why can’t we give people jobs that don’t involve killing people

You escaped from the Dole queue, from Mum’s nagging, from a United Kingdom where you really weren’t wanted, or appreciated.

Anna‘s post reminded me that the military is the only public works programme that is widely supported. If our society fucks up someone’s life chances they can always find “meaning” and “skills” and “camaraderie” in the military.

Why we can’t give people meaning doing something useful? For example, we live in an ageing society, soon to be in need of a great number of carers. That is something far more productive than the military and wouldn’t cost a penny more.

I have a feeling that some people who think it is good people can find meaning in the military might think care work is below our boys; I think that reflects badly on them not me.

If your support for the military is grounded in giving people a chance in life you might want to consider giving people a chance in life that doesn’t involve centrally directed ultraviolence.

Oh well, this opinion is deeply unfashionable and tantamount to saying that our brave boys are wasting their time killing foreigners and dying for no good reason. No good reason?! Why look at the monuments we’ll build them!

 

 

 

DULCE ET DECORUM EST

Bent double, like old beggars under sacks,
Knock-kneed, coughing like hags, we cursed through sludge,
Till on the haunting flares we turned our backs
And towards our distant rest began to trudge.
Men marched asleep. Many had lost their boots
But limped on, blood-shod. All went lame; all blind;
Drunk with fatigue; deaf even to the hoots
Of tired, outstripped Five-Nines that dropped behind.
Gas!(7) Gas! Quick, boys! – An ecstasy of fumbling,
Fitting the clumsy helmets just in time;
But someone still was yelling out and stumbling,
And flound’ring like a man in fire or lime. . .
Dim, through the misty panes and thick green light,
As under a green sea, I saw him drowning.
In all my dreams, before my helpless sight,
He plunges at me, guttering, choking, drowning.
If in some smothering dreams you too could pace
Behind the wagon that we flung him in,
And watch the white eyes writhing in his face,
His hanging face, like a devil’s sick of sin;
If you could hear, at every jolt, the blood
Come gargling from the froth-corrupted lungs,
Obscene as cancer, bitter as the cud
Of vile, incurable sores on innocent tongues,
My friend, you would not tell with such high zest
To children ardent for some desperate glory,
The old Lie; Dulce et Decorum est
Pro patria mori.

Filed under: History , Anna Raccoon, Carers, Never Again, The Military, We Will Remember

Cameron’s dreadful case for national pride

This is just wonderfully revealing from Cameron today:

Whatever the obstacles to growth today, we still boast some of the best universities in the world, the most favourable timezone in the world, and the world’s first language.

Hundreds of years ago we conquered and colonised a load of places and they and their trading partners now speak our language. Also, by historical fluke, we just so happen to sit in between populus Asia and wealthy North America.

So this is what national pride has come to. No celebration of the English Pub, the centre of the community, no longing for days of imperial grandeur, no ideological fervour for christ, cricket and capitalism. Nope, something more like this…

A cosy 25 million bedroom nation with excellent local amenities, a large secluded garden and great transport links. Comes complete with lovely views of France and neighbours who will begrudgingly speak your language.

Filed under: Economics, Foreign Affairs, History, Politics , Cameron, Capitalism, China, Christ, Colonialism, Cricket, France, FT, India, nationalism, The Pub, USA

Migration as Technology

I was a little confused by this Robin Hanson post. He cites with approval the fact that since 1970 40% of all the extra consumption in the world has occurred in the United States. Below are the top 30 gainers in terms of tens of billions of dollars a year.

United States 583, Japan 183, China 103, United Kingdom 73, Germany 63, France 53, India 47, Brazil 47, Italy 39, Canada 37, Mexico 37, Spain 28, Indonesia 14, Netherlands 11, Greece 9, South Africa 8, Thailand 8, Switzerland 8, Belgium 8, Austria 7, Colombia 7, Sweden 7, Philippines 7, Norway 7, Malaysia 7, Portugal 6, Chile 6, Finland 5, Ireland 5, Denmark 4. (source)

Robin argues that this is argument against Tyler’s notion of a slow down in technological innovation. But the population of the US is 48% bigger in 2010 (310,000,000) than in 1970 (209,000,000). At first I couldn’t see why this would counts as evidence against some notion of a slow down in intensive growth. The US got more from more which is great for all those people involved, but it is not evidence we can get more from less, is it?

Well, in a way it is, although you have to denationalise your perspective. The US does have an overwhelming lead in one “technology”; that of receiving and assimilating migrants. The factors behind this are geographical, historical and cultural, but it still as a really important technology in terms of increasing “our” productive and consumptive capacity.

The productivity of millions of people has been hugely increased simply by them moving across a border. Allowing more migration is an innovation that can make many people better off by improving their productivity. But it is a technology which cannot be excercised by a single firm, it is better thought of as a society-wide innovation akin to germ theory or corporation law.

Filed under: Blogging, Economics, History, Migration , Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Denmark, Finland, France, Germany, Great Stagnation, Greece, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico, Migration, Netherlands, Norway, Philippines, Population, Portugal, Robin Hanson, South Africa, Spain, Sweden, Switzerland, Thailand, Tyler Cowen, United Kingdom, United States

ATOS, Actually TOSsers

This beggars belief…

From the local press, so usual caveats apply, but this story really is astonishing. I’ll quote the important parts below.

Wheelchair users have to climb a flight of chairs to prove they are disabled enough to get benefits at a centre in Croydon.

Although there are lifts in the disability benefits assessment centre, anyone in a wheelchair or who cannot climb stairs is banned from using them due to health and safety requirements.

Anyone who cannot tackle the 42-step staircase is instead forces to make a 14 mile round trip to Balham because the centre in Cherry Orchard Road is not disabled friendly.

The local Tory MP called it “ridiculous” in a letter to Chris Grayling.

This is grist to the mill for those who think that the Tories are 1) evil and 2) not actually any good at running a government any more.

Filed under: Politics, Society , ATOS, Conservatives, Disability, Disabled, Evil, Scum Watch, Tories, Wheelchair

Laban Tall, fancy earning £20 for your favourite cause?

Laban, understandably, is rather annoyed with the Bank of England’s apparent inability to hit its 2% inflation target. Lets remind ourselves, the Retail Price Index is at 5.6% and the Consumer Price Index is at 5.2%. Laban scoffs at the idea that inflation will fall significantly in 2012 whereas I think it is incredibly likely that it will, even with the bank printing up another £75bn in freshly minted electronic cash. Only one way to settle this, I propose a bet.

I reckon inflation won’t average above 2.5% and I’ll donate £20 to anyone Laban wants if it does. If Laban will take the mirror of this bet we have ourselves a deal.

As far as why I’m so confident, this morning’s post explained why QE is a good idea when an economy is depressed and Luis‘s explains why QE isn’t really too different from your common and garden interest rate cut. I’ve already covered why temporary factors are what is to blame for elevated inflation, factors which are unlikely to be repeated:

One major source of inflation has been successive increases in VAT. In the last two years it has increased from 15% to 20%, adding at least a percentage point to inflation. A lot of inflation is also still working through import prices since sterling devalued. Lastly, crisis in Europe and continued depression in the US means the UK’s economy can expect little external support.

And finally Paul explains why inflation is unlikely to rise next year; nobody has enough money to keep it going…

Here’s the key graph, from the Office of National Statistics:

Like the US, Britain has no wage-price spiral — wages are going nowhere.

Plus we have continued contraction of the state sector which will cause people to be unemployed, to lose their services, and will have various knock on effects through the rest of the economy. Unlike Hopi I am not worried that we will soon need to battle inflation, inflation will splutter down on its own to a more comfortable rate.

So, Laban, that is why I am not worried about inflation. Would you like to take me up on my bet?

Filed under: Blogging, Economics , Blogging Bets, Inflation, Krugman, Laban Tall, Luis Enrique, Monetary Policy, Money, QE, Quantitative Easing

Money gets printed, get over it

Guest post by Luis Enrique (edited from an e-mail by LO)

Something I find particularly striking is how few people seem to recognise how similar QE is to standard monetary policy. QE is often called something like a bank bailout by the back door, or corporate welfare, or a harbinger of hyperinflation, but that doesn’t make much sense in the context of actually existing monetary policy.

In standard macro theory, if people want to hold more money they will sell interest bearing bonds for cash, which would increase interest rates. But if the BoE is targeting say a 2% rate, it will create money and buy bonds to keep they rate at 2%. So changed in money demand are accommodated.

If the BoE wants to cut the rate from 2% to 1% it announce it is doing so and will print money and buy bonds to get it there. This will cause bond prices to rise, creating a “windfall” for bond holders and banks that charge fees for trading bonds. The money it creates thus doing is every bit as inflationary as the money created by QE. Probably more so, in fact, because the money is less likely just to sit in reserve.

Many people object vociferously to QE yet yet wouldn’t blink at a decision to cut interest rates from 2% to 1% despite their similarities.

Filed under: Economics , Luis Enrique, Monetary Policy, Money, QE, Quantitative Easing

Why we should support QE in language an undergrad student can understand

Here’s a piece on QE I wrote for the LSE student rag (with some help from Luis Enrique).

Printing £75bn does not sound like a plan to make us all richer. It sounds like a plan to turn us into Zimbabwe. But last week Mervyn King, Governor of the Bank of England, announced that is exactly what he will be doing. When complete, the Bank’s Quantitative Easing, or QE, programme will have seen £275bn leave the printing presses, nearly £5000 for every person living in the UK. Informing the Bank’s decision is the news that more than two and half million people are now unemployed, including nearly a million young people. In fact, many students reading this will have chosen to come to LSE because finding employment has been difficult. Urgent action is obviously needed to tackle this, but printing money appears a method of dubious merit. Of course, there is a logic to the Bank of England’s action that may mean students graduating this time next year will find it easier to get a job than they expect.

The Bank’s actions appear odd, even dangerous, only because of the rarity and extremity of our situation. In normal times the Bank doesn’t announce how much money it will be printing, it just changes the interest rate at which it will lend. To keep growth steady, when the economy is decelerating they cut interest rates to encourage spending and when the economy is accelerating they raise interest rates to discourage spending. You can raise interest rates as high as you like, but can only cut them to zero, and that is where they’ve been since March 2009. This means they have to try to encourage spending through other methods.

Over the last nine months the economy has seen no growth when normally it would be almost two per cent larger. If an economy stops growing it may be because bad policies prevent new companies from setting up shop and creating and employing new technologies. Alternatively, an economy may falter because there is too little demand for those new industries and technologies. Whether the Bank’s actions are wise will depend very much on which describes our current situation.

The idea that firms and people may be lying idle because nobody wants their produce is a strange idea at first. If people are willing to work that must mean they want to consume. If they didn’t people would be happy to stay at home and relax. But there is one good people want to buy which won’t put others to work. You buy a car to get from A to B and you employ a mechanic. You buy a sheep because you want mutton or wool and you employ a shepherd. You “buy” money to swap it for something else by working or saving, but you don’t employ anyone because money can be created for free.

In nervous times, we all would like to improve our balance sheets, we all want to build up buffers of savings, and that often involves wanting to hold more money in our current accounts. When one person does this it causes no problems, but when we all become more nervous we all end up wanting to build up a safety buffer. Now with only so much money in circulation this can only happen if we each spend less than we earn. But this is impossible because everyone’s spending is someone else’s earnings. Unless extra money is put into circulation we get slowly poorer until people decide they have the right amount of money relative to their earning and spending. We have a recession. We have our current stagnation. QE is designed to put more money into circulation and to create more safe places to invest that money. That should lead to healthier balance sheets and more demand to employ people and will bring the economy back to life.

In an economy held back by bad policy, printing money does exactly what you would expect it to and makes everything more expensive. At a time of stagnant wages and austerity budgeting this would be a terrible result. Some people have pointed to high inflation as proof the bank has already printed too much money. In one story growth falters because people start demanding relatively more money than goods and services. In that world, printing money -whether through changing interest rates, QE or targeting total cash spending – will make us richer. In the other it makes us poorer.

Looking at the UK and global economy, three things imply the Bank’s actions will help more than hinder. One major source of inflation has been successive increases in VAT. In the last two years it has increased from 15% to 20%, adding at least a percentage point to inflation. A lot of inflation is also still working through import prices since sterling devalued. Lastly, crisis in Europe and continued depression in the US means the UK’s economy can expect little external support. The Bank of England has little influence over any of these and has ignored them to focus on what it can influence in the domestic economy.

In the last three years a lot has changed. Whether more QE is a good idea or not depends on whether the economy has been damaged to the point where we can employ a million fewer people than we used to. If the financial crisis or government policy has wrought such damage upon us then QE will merely produce ever higher prices. If there is still some slack in the economy then we will see more people employed and better living conditions for everyone. Simplistic comparisons with Zimbabwe may be attention grabbing, but in reality QE may be the best hope we have to get the UK back on track.

Filed under: Economics, Politics , Fiscal Policy, Inflation, JS Mill, Level Targeting, Monetary Policy, Money, NGDP, NGDP Targeting, QE, Say

UK NGDP makes me go “epp!”

Graph and commentary courtesy of Chris Giles.

There is a rule of thumb that says you want nominal gross domestic product to grow by around 5 per cent a year. It is a pretty good guide, because it roughly accounts for the sum of Britain’s long-run productivity growth and a stable inflation rate close to the Bank of England’s 2 per cent CPI target.. Strip out the VAT rise and underlying nominal GDP (at basic prices) grew by 1.9 per cent – split into 1.4 per cent inflation and 0.5 per cent growth. Worrying about inflation in this climate is crackers…

You will notice that declines and slowdowns in NGDP growth are associated with bad things, and that steady 5% growth is associated with good things. This graph is a reason Hopi is wrong to see a fight with inflation looming, deflation remains our enemy.

Two questions, where will inflation come from with nominal growth so weak and were will real growth come from with nominal growth so weak?

Filed under: Politics