Thursday, 29 December 2011

On Europe, Economics and a Panoply of Policy. An end of year round-up of recent events.

A brief personal note: I know I haven't written much recently, I've been seriously ill for most of the past year or so. I had hoped to start writing more sooner but the death of a close friend and assorted other far less important obstacles have held me back from it. That said I'm hoping to write more soon, and to be more involved and productive in general, particularly after the Fabian Society's New Year Conference. So to borrow from the closing paragraphs of Hitchhiker's Guide to the Galaxy: "We apologise for the inconvenience."

In recent days there have been some positive signs from Italy, the putative repercussions of monetary activism, long denied and decried and finally-- to some limited extent-- implemented by the ECB. This apparent policy of 'say what the Germans want, do what the French want' has, for the moment, set back the metaphorical doomsday clock that seems to hover over Europe from our vantage point here in Albion, perhaps to the consternation of some. Even so, noone can be resting easy just now.

I confess I always assumed that they'd see the seriousness of the thing and act in the end, but the months have passed, and the pronouncements of days, weeks and months to save the euro--all hollow, all futile-- have come and gone. My assumption that this didn't have to happen has given way, in part, to the fear that the Germans are playing at brinksmanship without knowing where the brink is, how fast the wind is going or when it might change.

In light of the suspended catastrophe on our border the argument over whether Cameron did the right thing when he walked away some weeks ago-- which was somehow domestic, but domestic everywhere-- has  at last silently slotted into its proper place, concluding that his decision was probably incompetent but basically irrelevant. Irrelevant to the unfolding crisis, that is, the fears of future irrelevance remain as Cameron struggles to keep his own backbenchers from overt schadenfreude-- a nasty but helpful German word-- and to avoid completely  detaching the UK from the EU.

After all, whatever else he's done the Prime Minister can't be blamed for the inadequacy of the European response. Tighter fiscal controls without transfers and ECB action would be counterproductive, if anything. A complete package is both necessary and highly unlikely. Meanwhile Labour found itself trying to criticise the PM while (validly) not saying it would have signed up, a doomed fudge brought about by the conspicuous popularity of the sort-of-veto, and which followed what seems to be the usual pattern for the opposition at the moment: Try to be in two places at once while claiming to be standing firm.

This unfortunate stance comes as the culmination of a general malaise around Labour as the polls-- which had stubbornly refused to come to their aid over the Autumn Statement-- seemed to dip lower and lower, despite everything imaginable going wrong for the Conservatives. And the less said about the Liberal Democrats, the better. Nick Clegg was apparently heard saying what most of us already believed, that the liberal democrats no longer have any choice but to sleep in the bed they've made for themselves until 2015. Their only hope is that the economic policy will succeed and they'll get the credit and be able to stand on an economic platform closely aligned to their mortal adversaries, and bedfellows.

The problem for Labour, and for the country as a whole, is the lack of a clear, consistent and coherent alternative to the government narrative. The lengthy leadership contest and the vacuous months which preceded it allowed the Tories to establish profligacy as prelude, such that anything they did no matter how harsh was now the only morally responsible act, conjuring an almost Victorian shade of prudent pecuniary policy and moral rectitude. The rather facile talking points for this position take the form of analogies to ordinary but upright family life, invocations of morality through economics: You cannot solve a debt crisis with more debt, or "we have to pay down the nation's credit card".

The alternative is not so easy, reality is not so neat. Whole economies do not operate in the same way as individual families, and the evidence is that this slump is demand-based. We cannot rely on easily expanding our export trade while demand is slumping globally and our trading partners are inclined to devalue at the same time as us. In the meantime the private sector is not likely to hire or invest if they expect future demand for their goods and services to decline, both through government orders and indirectly through the decreased spending of the unemployed. Similarly, decreasing the deficit is not done in absolute terms, it is relative. If the government's tax take is diminished and GDP falls, debt to GDP as a ratio will be far harder to reduce. If welfare payments have to be made in increasing amounts at the same time the problem is compounded.

Interest rates have been tied by the government to the anonymous shadowy powerbrokers we know better as 'the markets', and in large part this is true enough. The problem is that there is no surety whatsoever that our interest rates would rise as the government suggests if we abandoned their plan. Rates in Japan, the US etc provide some evidence here, but even in the UK rates have gotten lower despite the government failing to achieve its own plans. This is difficult to explain, unless you assume it reflects perceptions of risk in other places, and the value of our control over our own currency.

Meanwhile the NHS reforms have over the course of the past year come in for repeated criticism. Of special note for me personally, however, has been the repeated use of empirically false claims concerning the performance of the NHS. Noone is going to defend the status quo-- that places you immediately at the straw man position of thinking the NHS is perfect and should never be changed--, but I think that changes should at least not be pushed on the back of lies about how well the service currently performs. This not only undersells a national institution and the hard work of many simply for the sake of political expedience, it also panders to the tendency of the public to assume things are worse than they actually are. Last but not least, it ignores the very good case that while things could be improved, they could also be improved by smaller, cheaper and better trialled changes. Huge, transformative non-iterative changes are necessary sometimes in policy, and are often difficult to achieve, but that doesn't mean we should bypass that debate altogether.

Speaking of debate, the media reform issue, which has long-- always-- been one of my biggest pet causes, has finally kicked off this year. It seems like virtually everyone has already given up on the prospects for reform, but I'm holding out some hope, I sincerely think it is worth fighting for. We hear a lot about the freedom of the press, but very little about their obligations. A free press, like a free market is an abstract concept. It exists only in theory. In reality, monopolies and power structures inevitably grow and re-enforce themselves, rules, both emergent and externally imposed, come to govern behaviour within certain bounds, and feedbacks and constraints lead to relatively stable systems.

When I used to talk about regulation I'd sometimes hear the complaint that: "people should be free to choose to watch fox news if they want", and this is emblematic of the difficulty in explaining this issue. Noone is free absolutely, we are free within a framework, we are free to choose the options which exist. If Fox's . . habits, were unacceptable in a given framework-- or even a given culture of journalistic integrity--, then some other Fox, different in all but name would exist, and people would want the right to choose that as well.

There is a false argument that simply because something exists now, that represents a sacred choice which must be preserved forever. Somehow I doubt the demise of the News of the World will do much to change that particular problem. Even so, regulation, properly designed and independent of both government and press would simply create a new framework, in which newspapers would adapt and operate differently. If newspapers could not survive while operating ethically-- and this assumes that they lack the creativity to appeal to the public without resorting to deceit, subterfuge and sensationalism-- then we must question their role, and their value, and how we can restore social goods, such as investigative journalism, and through what mechanisms we might do that. There are options, even subsidising investigative journalism is not impossible. A thought for another time perhaps.

Anyway, these are a few of my thoughts and reflections as the year draws to a close, not my finest contribution to the science of brevity, I know. I'll work on that, at length. In the meantime I wish everyone a very happy new year.


P.S. Though I may have lamented so-called "deceit, subterfuge and sensationalism", that was not intended as a wish list of things I'd ban. I've written more extensively on this topic elsewhere on this blog, but in short I'm most concerned with malicious and deliberate falsehoods, the balance between privacy and free speech, and other specific issues. Sensationalism is not on my ban-list. I probably don't even have a ban-list.

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