The economic consequences of Mr Greenspan

Nora Connolly 

Image © IMF Photograph/Stephen Jaffe

Dedicated to David Wright who is about to celebrate his 50th birthday.

Alan Greenspan the former chair of the Federal Reserve has just published a book an occasion that allows time for reflection. In his pomp he was known as Saint Alan and the economic consensus he helped shape, today appears unruffled and widespread. The austerity programme followed by the UK government recently commended by Greenspan, a supporter of George Osborne. One of the important ingredients for economic success according to Mr Greenspan (speaking several years ago) is the need for `growing worker insecurity which reduces pressure for compensation and decent working conditions` the UK government is following that piece of advice to the letter. Meanwhile in the USA wealth resides in the hands of a tiny fraction of the population a `section so small that the census doesn’t even pick it up…a tenth of a percent of the population`. This has political implications because power is held in limited hands and helps explain the ideological hinterland of Barack Obama, a centrist amid a right wing consensus. Unsurprisingly there has been no Obama New Deal. Given this situation, one need not wonder why adherence to the market continues unabated. Even though the crash of 2008 is considered worse than 1929, but in the 1930s a new consensus emerged, while today a conservative orthodoxy dominates.   Read more of this post


What`s the word?

Nora Connolly

Image © Chatham House

What language was he speaking? [Answer] All languages. And none…Umberto Eco – The Name of the Rose

It seems to me, that politicians would get more respect, if their oratory was a little more sincere, especially when spouting egregious policy at conference. The Chancellor of the Exchequer, this week made a crass speech in Manchester. Words used devoid of genuine meaning; `Help`, `Abandon`, `Work`, `Benefits`, `Job`, `Hired`, `Great`, `Future`, `Faith`, `Optimism`, `Nerve`, `Cuts`, `Sacrifice`, `Yes`, `Decline’, ‘Business`, `Country`, `Sound`, `Economic`, `Fair` `Prosperous`, and `Standards`. One could cite the entire speech but these words stand out, the meaning lost in a sea of thinly disguised spite. The audience listening including several Ministers, who like the Chancellor, require no mandate even though this government is implementing profound change and massively altering the social fabric of this country. At least in the 1980s when the Conservatives hammered the poor, they had the good grace to administer it with a Parliamentary majority. And believe it or not, there were elements in the Conservative Party in the 1980s that had some hold on reality; although they spawned this mob and mob is the correct word to use in this context. Read more of this post


Bill Bolloten, Sameena Choudry and Robin Richardson 

Image © Chris Ensell

The pupil premium grant (PPG) is a flagship government scheme for schools. Next week it will be praised and celebrated at the 2013 pupil premium awards ceremony organised in partnership with the Department for Education (DfE).

An independent panel of experts has judged which schools have best used the PPG to make a real difference to the attainment of disadvantaged pupils.

However, almost two-thirds of the 48 schools that have been named as regional winners or commended for the awards ceremony have so far failed to comply fully with regulations relating to accountability. Also, about four-fifths of them appear to have ignored or misunderstood the regulations concerning accountability in the Equality Act 2010.

‘Take it and use it as you think fit. But …’ Read more of this post

London Calling: From Peoples March 1981 to Workfare labour 2012

John Curran

Image © John Keogh

In the spring of 1981 the UK was in the early stages of a monetarist revolution linked to the economic philosophy of Milton Friedman. Keith Joseph the principal advocate of the `Chicago School’ was forced to abandon his ambition of leading the British Conservative Party after delivering a speech about cycles of depravation where the perceived feckless behaviour of the poor was held to be the key to understanding poverty. The leadership baton was handed to his feisty acolyte and former Conservative Education Minister, Margaret Thatcher, who gained fame in the 1970s, “as Maggie Thatcher Milk Snatcher”.

Mrs Thatcher became Prime Minister in May 1979. Her first words those of Saint Francis of Assisi, uttered as she entered Downing Street, sounded increasingly hollow as the inner cities went up in flames and a war ensued over the Falkland Islands invasion.  Her doctrine at home was the `Resolute Approach` and abroad she earned the new nickname of `Iron Lady.’

Mrs Thatcher faced early opposition from many quarters. She confronted her first enemy within, not the political left but elements of her own cabinet a faction of `One Nation Tories’ contemptuously described as `wets.’ These liberal Tories viewed her agenda as anathema, adhering as they did to an economic orthodoxy forged in the post war consensus. However, the Conservative victory in 1979 was viewed as a mandate to overturn the Keynesian settlement to restructure the UK economy and in doing so laying waste the industrial heartlands of Britain.

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Osborne doesn’t need to spend more time in the Treasury

Image © HM Treasury

Image © HM Treasury

Tom Bailey (@baileys72)

Tim Montgomerie recently argued that George Osborne should restrict his role to being Chancellor, rather than also acting as ‘chief election strategist and general busybody across government’, so that he can get a grip on the economy. I’d argue that he should be sacked from both roles rather than restricting his duties to the Treasury. Of course, it is unsurprising to read a left-wing blogger demand that a Conservative chancellor be sacked but I believe many of the coalition’s problems, both political and economic, spring from him. However unrealistic it is, I think there are various reasons why the Conservatives’ long-term prospects would be best served by Cameron ditching his part-time Chancellor.

Firstly, Osborne has not demonstrated any evidence of economic understanding ahead of the crash nor had any success since taking office. In 2006 he described Ireland ‘as a shining example of the art of the possible in long-term economic policymaking’ before in 2007 pledging to match Labour’s spending plans. Given the coalition’s rhetoric against state spending and excessive debt, this seems extremely hypocritical. Since 2010, there has been an economic failure as result of the economic strategy that he put in place. His 2010 Mais Lecture provided the underpinning for the austerity strategy which has helped drive us into a double dip recession. It is hard to see how Cameron could ditch his failing policies without getting rid of the architect.

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Could it happen again?


Image © Ell Brown

On 30 March 2001 the BBC carried an article discussing the Department of Trade report into the Robert Maxwell affair. This involved Maxwell taking over £400m from his company’s pension fund, leaving 32,000 pensioners fearing for their future financial security.  The BBC asked ‘Could it happen again?

11 years later on 4 March 2012 the Sunday Times Business section leads with the headline ‘Osborne grabs £28bn windfall.’ This is the plan by the Conservative government to take over the Post Office pension fund. According to the Sunday Times, the pension fund has a net deficit under current accounting rules (as applied in the private sector) of £4.6bn, but for government accounting purposes (which it attributes to ‘quirks’) the liabilities of some £32.6bn will not appear as liabilities on the government’s books. The assets, however, of some £28bn, will be regarded as a ‘surplus’ and will be liquidated ‘creating a new pool of cash for the chancellor to play with.’

Apparently some conservatives would like the money to be used to invest in infrastructure projects, such as roads power stations and railways. This is despite the fact that pension funds typically do not invest in such schemes until they are completed, because of the high risks involved.

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The issues that shall really determine Scottish independence

Scott Hill

Image © Saul Gordillo

So, we now know the all-important question: Do you agree that Scotland should be an independent country? Yesterday, the Scottish government published its consultation paper[1] on an independence referendum to be staged in the autumn of 2014. Within the document, which outlined a path similar to what many would have predicted, it was stated that 16 and 17 year-olds should gain the right to vote, those voting should be residents of Scotland and, crucially, the possibility of a multi-option ballot was left open, meaning that Scots may get the opportunity to vote for full-fiscal autonomy; an option they seem to prefer[2].

Whilst the document remained largely controversy-free, a few troubling queries could be forthcoming. It seems odd that the majority of sportsmen representing Scotland in rugby and football, for example, will not be permitted to vote on the future of their country. However, this is an awkward issue for which there appears to be no easy way round. Either way, somebody out there with a strong affiliation for Scotland shall miss out on the vote. Perhaps by making eligible all those who can prove that they were born in Scotland would be the best solution. Others will point to the fact, in relation to 16 and 17 year-olds voting, that individuals not permitted by law to enjoy an alcoholic beverage or puff on a cigarette have no plausible right to vote. I, however, am quite relaxed about the proposition put forward by the SNP. Read more of this post

Tzedakah and the British Economy


Image © HM Treasury

Could George Osborne have something up his sleeve, a rabbit to pull from the hat, a magic fiscal firework that causes us all to ooh and ah with excitement?

The Chancellor gives his autumn statement today and we are wallowing our way through economic gloom and doom.  Austerity is really starting to bite, or maybe folk just feel it more in the approach to Christmas, mentally calculating how much they can afford to spend and continually coming up short.

The Euro crisis still threatens to engulf us all with markets see-sawing every week;  the UK economy has ground to a standstill;  youth and long term unemployment are at their worst levels in a generation;  and the only things rocketing are fuel and food prices. Read more of this post