Category Archives: Bit of politics

Is Britain really going bankrupt?



Britain is not Iceland. Iceland is the size of Coventry. Britain is the fifth-largest economy in the world (although it also has the third-largest current account deficit). The pound is still a reserve currency that people want to buy, despite the efforts of the speculators. We are bankrupt only in the sense that we could not pay if all debts were called in right now – which is true of many countries. A falling pound will be good for exports, assuming there is someone to buy them. The UK’s credit rating was reaffirmed last week. The only thing that could push Britain into bankruptcy would be a full-scale panic.

Anyone who proposes a worse policy wins a prize

OK, so we appear to be in the early stages of a major recession, which may well go on for years. A whole load of people may well lose their jobs, pay rises will be a thing of the past for people who keep them, and overall incomes from working will fall substantially.

Meanwhile, inflation has fallen to pretty much nothing. Falling fuel and food prices are among the main drivers of the fall in inflation. Imported consumer goods, of the sort that kept inflation low during the boom, have risen in price due to the pound’s devaluation.

So let’s think about the people who’re left worst-off by this. Are they:
1) people living on fixed incomes (ie pensions or savings), who’re seeing their living standards remain pretty much flat, who have no chance of a catastrophic decline in incomes, and who spend disproportionately on heating;
2) people not living on fixed incomes, who’re seeing their living standards fall, who’re at risk of losing their jobs, and who’re much more likely to spend on imports, but who have relatively large savings to cushion the blow if anything bad happens;
3) people not living on fixed incomes, who’re seeing their living standards fall, who’re at risk of losing their jobs, and who’re much more likely to spend on imports, but who have debts to service that will utterly crucify them if bad things happen?

The answer, fairly obviously, is group 3. People with decent net savings are just fine: if they never had jobs, they’re insulated from anything bad happening anyway; if they have jobs now, then they can afford the time taken to find a new job if they lose the current one.

So the new Conservative party policy of punishing people in group 3 to reward people in group 1 [*] can only be viewed in two ways: either breathtaking, witless stupidity, or the intergenerational equivalent of class warfare, deliberately screwing over economically productive people even more than the recession will do anyway to give money to the elderly, who the recession won’t have any impact on. [***]

[*] in group 2, where I’m lucky enough to sit, we’ll gain slightly on the tax breaks but lose out from the spending cuts [**].

[**] To “they’ll be funded by cutting waste not productive spending”-ists, that’s not the point. If you’ve got a plan to cut waste, great – but you still need to explain why the benefits from that plan should accrue to people who’re doing fine, rather than something sensible like a rise in the income tax allowance to benefit the working poor.

[***] Of course, the working poor are busy either working or drinking themselves into a stupor to forget their miserable lives, whilst pensioners spend their time talking to Edna in the post office about absolutely nothing, and therefore voting rates for the latter group are far higher than the former. This is another reason why democracy is A Bit Pants, Even If It’s Better Than The Alternatives.

Epic political theory WIN

Andrew at LC on bloggertarians:

Libertarians almost all seem to believe that they have achieved everything in life entirely by themselves, having struggled against mighty odds and overwhelming enemies to become moderately successful computer programmers, despite the horrible disadvantages of being born white, English-speaking heterosexual males in middle-class families.

I admit this is slightly unfair: some bloggertarians are gay, and some are from upper-class families.

Constitutional clarification

Parliamentary privilege, as traditionally viewed in the UK constitution, grants MPs freedom of speech on what they say within the House of Commons. It doesn’t:

a) give them the right to run spies in the civil service; or
b) cover what they say or do outside of the House of Commons.

Its relevance to the Damian Green case, therefore, is rather limited.

Update Dec 3: Sam Coates at the Times has been doing some digging, and has found that – of course – my interpretation is correct:

Parliamentary privilege is a narrow beast. Article IX of the 1689 Bill of Rights guarantees that “Parliamentary proceedings” – anything said on the floor of the Chamber or published in Hansard – cannot be used in evidence against MPs during a prosecution. But, citing a 1999 committee report, it says Parliamentary privilege “does not embrace and protect the activities of individuals, whether members or non-members, simply because they take place within the precincts of Parliament.”

The report cites the precedent of Lord Cochrane, who was arrested in 1815 while sitting on the Government front bench in the Chamber, having escaped from prison. The arrest took place before the sitting of the of the House, and the Committee of Privileges concluded that no breach of privilege had taken place.

Terror police, arrest this man

In case anyone’s wondering why Damian Green was arrested by ‘anti-terror’ police – it’s because all investigations involving potential breaches of the Official Secrets Act are dealt with by Special Branch, which was renamed to Counter Terrorism Command when it was merged with the Met’s Anti-Terrorism Branch in 2006.

As with the freezing of Landsbanki’s UK assets, it has absolutely nothing to do with terrorism at all – neither in terms of the crimes that Mr Green is accused of committing, nor in terms of the laws under which he was arrested.

Rather, the media have picked up that one of the other functions of the legislation (for Landsbanki)/police force (for Mr Green) in question is terrorism, and jumped to entirely ridiculous ‘MP Arrested Under Terror Laws / Brown Brands Iceland Nation Of Terrorists’ conclusions.

‘How Racist Are The BNP?’

BNP apologists frequently claim that supporters of the group aren’t necessarily racist, they’re just misguided working-class souls who’ve been abandoned by the mainstream parties and feel the BNP speaks for them. Non-apologists suggest, with equal frequency, that perhaps if people weren’t racist then they wouldn’t vote for a party whose primary feature was racism, even if it did better match their views on employment policy.

As Alex Hilton points out, the leaking of the BNP membership list, including several thousand email addresses, provides an excellent opportunity to answer these questions: send out a surveymonkey to the people on the list, asking them to rate how racist they are on a scale of 1-10. Problem solved…

Electoral impairment

Two things are going to impair my analysis of this election: brennivin, and my landlady’s inability to make the wi-fi work. On aggregate, however, I’d rather be spending it in Iceland than pretty much anywhere else.

update: yeah, that pretty much worked. been liveblogging on lc, will link sometime. Yay Obama, yay the American people, yay worst fears averted; let’s see how landslidey it goes, how the senate looks, and then what gets done afterwards…

Final word on Teacupgate

5CC wins:

At least the Daily Mail is doing its best to ensure this sort of thing never happens again. Its asylum coverage is working towards there never being any future Andrew Sachses by making sure they die in a war zone rather than be allowed in the country. Just like it tried in the 30s, when it opposed giving asylum to Jews fleeing the nazis, like Andrew Sachs.

Violence most horrid

It only seems like a few months since the biggest “idiots failing to understand numbers” issue was that of crime… oh, for those heady pre-recession days when people had nothing more to worry about than lamenting that crime was a major problem despite it generally not being one.

The latest row, which has unfortunately given ammunition to the ‘all crime stats are lies because my uncle’s neighbour’s nephew’s dad’s dog got STABBED! with a KNIFE!!!’ brigade, is about police forces wrongly classing minor-ish violent crime committed with the intent of inflicting majori-ish violent crime as ‘other violent crime’ (in line with how the courts treat these offences) instead of ‘most serious violent crime’ (in line with how the statistical guidelines say you should treat these offences).

Mark Eaton has an excellent piece on this, using the old stats, the new stats and BCS data to make the point that the reclassification changed nothing significant (not least, because only criminal justice wonks look at these subcategories anyway, with reporters and politicians alike dealing solely in ‘reported crime’, ‘reported violent crime’, and specific types of offence). Hooray for the BBC for hiring him and saving me a job…

Furniture, nudity thereof

If anyone uses the phrase ‘the cupboard is bare’ when referring to the UK’s current economic position, this is an excellent indicator that they are entirely clueless about it. For one, it’s an embarrassingly trite and twee metaphor, unlikely to be used by anyone literate; for two, it paints an entirely false picture of the government’s financial situation (also, note that the government precisely and exactly did pay down the national debt as a proportion of GDP, which is the only figure that matters, during the boom times, which makes criticising them for not doing so particularly weird).

As Chris highlights (while also, correctly, pointing out that the current ‘sterling crash’ isn’t one at all – if it were, the pound would have fallen significantly against the euro, which it hasn’t. Rather, it’s a dollar/yen rally), people are still falling over themselves to lend the government money at very low interest rates. That’s an indicator that outside of cutesy-talking-point land, serious people accept there’s plenty of, err, cupboard-room.

While I’m here, a couple of points on the Centre for Policy Studies report that purports to show the UK has a ginormously terrifying public debt. For a start, it’s written by a Tory MP – aren’t think-tanks producing this kind of report supposed to maintain some vague pretence of not being entirely motivated by partisan hackery?

Content-wise, it’s the same report the CPS churn out every year, with the figures slightly updated. And as always, it’s spun ridiculously: the angle is approximately “when you include the PFI Enron accounting, Network Rail’s nationalised in all but name-ness, bank bits, various other dodges and public sector pensions, the national debt is enormous”. In fact, the only non-trivial sums it identifies are PFI payments – which it exaggerates by a factor of more than three by failing to follow anything even vaguely resembling accounting standards, as I’ve already pointed out here – and public sector pensions, which are an order of magnitude larger than any of the other factor, and are the only way authors of this kind of paper can get from “the national debt is 42% of GDP instead of 39%, nobody cares” to “oh my god, the national debt is 150% of GDP and we’re all ruined due to Evil Labour”.

Quite how the hell public sector pensions should be accounted for is a tough question, and not one which has been satisfactorily resolved anywhere by anybody. However, suggesting that the UK is particularly screwed because of Labour’s incompetence and dodging, when actually the problem has existed forever and in every developed economy, is grossly dishonest. It also doesn’t represent debt in the sense of ‘people who have pieces of paper saying you’ll pay them and who’ll sue you if you don’t’ – it’s just a promise from politicians to be nice to old people, and we all know about the iron-like unbreakability of politicians’ promises…

[*] Yes, Network Rail’s GBP20bn debt should be included in the headline figures, as it’s government-guaranteed and not secured against tradeable assets. So should the real PFI number of c.GBP30bn; together, these add an extra 4-5% of GDP to the official national debt figure. I’m happy to confirm for the benefit of readers who question my political neutrality that these should be classed in the national debt proper and that Labour are slippery sods for not doing so (although on the other hand, they were the first ever UK government to move to GAAP for public sector accounting and are one of the first globally to adopt IFRS).

The banks shouldn’t be: it doesn’t make sense to view debt backed by tradeable financial assets as part of The National Debt, since it doesn’t represent money that’ll have to be paid back out of future taxation. At worst, we’re on the hook for the difference between the value of the banks’ mortgage books now and the long-term value of the relevant houses, cushioned by homeowners’ wiped-out equity. Even if we have a two-year depression and house prices fall 40% from their peak, the loss potential isn’t high.