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Thursday, 25 May 2017

Campaigning to Resume: The State of the Parties

Today UKIP will launch its manifesto for the upcoming general election, and the party's implausible leader will have considerable media coverage: much of it unfavourable. Then UKIP will sink to a low rating in the opinion polls, with no prospect of being represented in the House of Commons.

The other parties will re-start their campaigns tomorrow, though local leafleting will resume in some areas today.

In the limited time on the media that has been allocated to Jeremy Corbyn in the past two days, he has spoken sensitively and sensibly about the Manchester tragedy. Labour has certainly not lost ground during the shut-down of the campaign.

Mrs May has had a big opportunity to appear to be 'prime ministerial', and has not overplayed her part. However, her campaign was faltering before the suicide bomber shut down partisan discussion, and the Prime Minister can have had little time to review the mess that she had made for herself, particularly on the costing of social care and how that bill is to be met. Like all Conservatives, Mrs May has the dilemma that the policies pursued by her party - in power for the best part of seven years - has largely stifled real economic growth. A government that is hemmed in by obsessions with austerity and the [probably notional] elimination of the deficit on state spending can only contemplate shifting some fragment of the already-existing national wealth into the state budget to meet the cost. Thus people are being asked to accept that the inflated 'value' of their homes can be raided to meet the costs of their personal care, at need.

One significant aspect of the situation is that the management of social care lies with local authorities. Therefore local authorities, whose budgets have been squeezed very hard by the Osborne-Hammond policy of cuts, are to be expected to create mechanisms for valuing property, and further mechanisms for funding the care of property-owners [whether in care homes or at home] over periods of several years until the supposed 'value' of the property is realised in a sale. To maintain the 'value' of the property, it has to be maintained properly: which is a further element of cost that the local authority will have to meet. The implication is that local authorities will have to become massive borrowers: if anyone will lend them the money.

The segment of the massive complex of financial markets that led to the crisis of 2007-8 was the exposure of 'sub-prime mortgages' in the USA. Financial institutions were bullied by the Clinton regime into allowing people with no successful record of paying their bills, often with no secure employment, to buy houses on mortgage. When economic conditions tightened, in 2005-6, thousands of people simply handed the keys to their properties to the lenders and drove away. The 'value' of those houses in the books of the lenders - who had now become, will-nilly the owners - were the prices at which they had been bought. They could not be sold on for the same prices, as thousands of such houses were dumped on the market at once.

Thus one can expect lending institutions to be very cautious of advancing large sums against properties whose 'value' will be incalculable on the unforeseeable future dates when they will be available to be sold. If the government becomes the lender, or the guarantor, of the loans that local authorities will need to fund the care that has to be given to the owners of the properties that will be drawn into the scheme on the death of the owners - or of their partners [who may, obviously, also need years of care in the further future] - that guarantee must be added to the national debt: which obviously blows away any hope of reducing or eliminating the the deficit. The more this question is emphasised in the last fortnight of the election campaign, it will be clear that the Tories' plans are no more 'affordable' than are Labour's.

At the least, Labour is claiming that their plan, especially borrowing to fund infrastructure investment, will stimulate growth of the material economy. Mrs May offers no such prospect.

Wednesday, 24 May 2017

The Nation's Knickers

In these days of Primark, I am impressed by the survival of market stalls [all over the UK and beyond] whose owners seem to thrive on selling clothes, especially underwear and nightwear for women and children. Compared to Primark the range is limited and the prices are relatively high, but these stalls [particularly in market halls] provide full-time employment for their managers.

Virtually everybody uses underwear, therefore they need to buy it somewhere. It can come by home delivery after being bought online, in plain packaging, however 'exotic' or bizarre it may be; but most people buy it in person.

For three generations, the predominant supplier of underwear to the British nations was Marx &Spencer, M&S, which was an essential component of every high street and shopping mall in the land. They set the pace in design; but they were never the cheapest option. They increased the range of outwear that they sold, especially after the second world war, and through the age of austerity that was followed by the 'mixed economy'. Then, in the nineteen-sixties, new sorts of rivals emerged. M&S had itself originated as a market stall and as long as the founding families were in control it retained something of the open-market approach to stock purchases. The new chains of shops emphasised that they were 'fashion' outlets; while M&S - whatever its image-makers tried to present - was seen as essentially a utilitarian source of supply focused on the lower middle classes. Thus the market changed around the old staple: which then - in the 'seventies - had a serendipitous moment. M&S started supplying food for the busy housewives who had jobs, and quickly developed a positive reputation for ready-made or part-prepared meals.

Fast-forward to today. There are still M&S shops on all high streets, but the balance of trade in them has changed dramatically. After decades of redesign and restructuring [and financial losses, and changes of chief executive] the firm still has not caught up with the customers' behaviour. hence this morning they have announced a 64% drop in profits for the past year. This is ascribed to the need to spend ever-more money on shutting down acreages of clothes hangers and sock-and-knicker-stalls, and to open or adapt more smaller sales floors for food.

The dilemma that the firm has faced - and still faces - is that they are locked into property contracts [including the ownership of large buildings] which were ideal for extensive departmental stores, but which are not much wanted by their rivals and are vastly greater than their own requirements. To sell or lease whole or part of buildings to rival clothing suppliers would anyhow accelerate the decline of M&S as clothiers, by assisting the competitors to gain high-street prominence. Yet M&S need physical shops where the families can buy their part-prepared meals. There is mounting competition from the fast-food delivery firms, which chip away at the ready-food market as fast as M&S can adapt their estate to supply it: and it is probably too late for M&S to enter the market with a fleet of motorbikes, unless they are able to merge with [or take over] a market leader in that field.

Thus we are likely to see continuing phases in the decline and fall of a predominant name in British retailing: while the market stalls serenely carry on.

Tuesday, 23 May 2017

More on Universities: Fees and Cost

Within the past 24 hours, Labour has 'upped the ante' by declaring that their cessation of university tuition fees would apply to existing students and new entrants from the start of the next academic year. The Tories' riposte, that the Labour scheme is 'uncosted' has absolutely no merit, because it is quite clear that the prime minister and her 'scullery cabinet' have no idea of the costs of any version of their confused 'policy' on social care, either: and it is agonisingly obvious that the Tories do not want to know how much a revitalised National Health service would cost.

I refer to a 'scullery cabinet', rather than a 'kitchen cabinet', because it is obvious that the Prime Minister's close claque of chosen minions should not allowed near hot pans or ovens. Once a party has been unsettled as much as the Tories have been by the thought of loosing the 'grey vote', there is no chance for them to recover poise and confidence in a couple of weeks: especially if the Prime Minister doggedly sticks to her decision that some pensioner benefits will become means tested. Meanwhile, thousands - perhaps millions - of pensioners have for the first time considered not voting Conservative: and once the thought creeps into their minds it will recur. I know nobody who thinks that the IRA-supporting Corbyn is fit to be the Prime Minister: but millions now want his party to drive the government to a narrow majority in the next House of Commons. A mass student
vote for Labour, plus a couple of million hesitant pensioners, could achieve that target.

The question that I was considering yesterday was that of what is the use of a higher education system, and how much should such a system cost when the price is set alongside the demands of the Health Service, Defence, Social Services, support for rural communities, schools, lifelong learning and housing? Several days ago, I referred to Cardinal Newman's nineteenth-century book on The Idea of the University in which he advanced the totally non-utilitarian view that the purpose of higher education was simply and solely the development of the intellectual and moral capabilities of the individual scholar. In Newman's day, there was no state funding of the few universities that existed: he was himself involved in developing an essentially catholic university College in Ireland, and capitalists in Bristol, Birmingham, Manchester, Sheffield, Leeds and Liverpool were funding higher colleges to teach the skills that local businesses needed in their future employees.

The First World War revealed that Germany was ahead of Britain in many areas of production: and in some fields - such as optical glass for telescopes, binoculars and periscopes [used both in the trenches and in submarines] - the UK had no facilities comparable with the Germans'. The exigencies of war demanded that those gaps had to be closed, regardless of cost: and for more than half a century thereafter the Department of Glass Technology in Sheffield University, with the associated British Glass Industry Research Association, was fostered by the state to provide a national focus for developing the higher technologies in glass and related materials.

Throughout the twentieth century the utilitarian approach to funding universities was constantly challenged by graduates in the liberal subjects - history, classics, modern languages, music and philosophy - that had been funded by benefactors [ancient and modern] in the older universities, who now argued that to be 'civilised' any modern university had to offer those 'soft' subjects alongside science and technology. Once that became part of the received wisdom, applications from students to study the arts and 'social sciences' swamped science applications. The benefits for an individual holding an indifferent degree in arts or social sciences are exiguous: recent research shows that such graduates do not command higher salaries - or even more comfortable jobs - than people who have not been to university. It has also been revealed that mathematics graduates who do [idealistically] take up schoolteaching in the hope of raising the national skills base in science and engineering resign after a very short period, as in most schools the pupils have no wish to learn 'difficult' subjects and disrupt the lessons.

Mrs May would not do it, but the country deserves a full and fearless assessment of what the nation needs in terms of higher education. The size of such a system should be postulated, the cost estimated, and the optimum means of paying for it identified. During World War II Sir William Beveridge and a small team devised a model for the 'welfare state'; and the Minister for Education, R A Butler, himself co-ordinated the workstreams that led to the definitive 1944 Education Act. In the absence of such seminal template models, policy is lost in a drift that the economy can no longer support.

Monday, 22 May 2017

Tuition Fees

Due largely to the naivete and inflexibility of Mrs May's thinking, combined with the hegemony that her clique of advisers has achieved, the Conservatives are losing ground to Labour significantly as the election campaign continues. Two obvious areas where the Tory vote could crumble quickly are a consequence of the threat to the incomes and assets of older people - most of whom have worked all their lives, in the belief that they had a social contract with the state [pay national insurance and receive benefits in health care and pensions] - and the opportunity offered to students, their parents and their younger siblings to be emancipated from tuition fees.

Within my personal memory are the facts that in 1960 only about 5% of eighteen-year-olds could go to university: they paid no fees, and were eligible for means-tested maintenance grants that were sufficient to maintain a young person in modest comfort during termtime. There were plenty of casual jobs to be taken up in the vacations, also; but the majority of students were from the middle class who were happy to support their children to the extent of topping-up their maintenance grants and keeping them in the vacation.

In the late nineteen fifties Harold MacMillan's Conservative government became concerned as to whether the UK was preparing enough graduates in science and engineering, and eventually they appointed a Committee of the 'great and good', chaired by Lionel Robbins the dominant Economist at the London School of Economics. The government welcomed their report, which recommended a massive expansion of the university system to cover both the expansion of the existing universities [and colleges of advanced technology] and the foundation of several new universities. The government accepted the report: hence we have the universities of Warwick, Sussex, Lancaster, York etc. There was also a parallel expansion of city technical colleges into polytechnics, which later merged with local teacher-training colleges to become nascent universities [to be 'legitimated' as universities in the early 1990s].

The system grew; but it grew awry. Far from producing an abundant supply of scientists and engineers, the universities struggled to fill their spanking new laboratories with adequately prepared students. Even when they offered introductory programmes for students whose maths and physics were shaky, the science faculties were under-employed with teaching: so the staff spent more time and resources on research, which benefited the economy in general and attracted overseas students to take up some of the vacant places. For half a century the British schools system has failed to inspire young people in sufficient numbers to take the preparatory subjects they would need to study science or engineering; while the universities have prepared tens of thousands of engineering graduates from Asia. Asiatic countries have continued to send their students to the UK as fees for 'international students' have increased massively; maintaining some [but not all] of the engineering facilities envisaged by the Robbins committee.

Higher education was made a 'right' for all qualified eighteen-year-olds and 'mature students'; but maintenance grants were reduced and fees were imposed as the numbers rose to more than 40% of the age cohort and most of them opted to take non-scientific subjects. University became a growing-up experience for the millions: as Oxbridge had been for hundreds of the most privileged youths before 1850. Tuition fees have risen to £9,000 a year, loaned to the individual on apparently-manageable terms. Labour has promised to abolish the fees, that have never been imposed in Scotland.

The question of whether university is worthwhile for the nation would loom large, if Labour won the election and implemented its promise to end the fees. Billions of state funds would be spent on young people to study 'useless subjects' for a few hours a week, as the economy continued to go down the pan.

More on this issue tomorrow...

Sunday, 21 May 2017

Trump Triumphs?

President Donald Trump is having a great time in the Arab world. His hosts, led by Saudi Arabia, expect that he will reverse President Obama's raprochement with Iran [which will cause problems for the newly re-elected President of that country] and open up trade and other relations - including access to US territory - to some of those who would have been excluded from the US if Trump's attempted decree to 'ban Muslims' from the US had not been stymied by the lawful authorities.

The upside from all of this, besides The Donald getting a 'very heavy' gong from the King of Saudi Arabia, is that the Gulf States will buy advanced American weapons [some of which Obama refused to let them have], thereby increasing the profitability of the arms industry - including its British contractors; and the Arab states promise to invest heavily in the next generation of US technology and production. President Trump, of course, is claiming that this is a very quick response to his campaign promises to regenerate the rustbelt: which was a major factor in delivering him the election victory last year. But it is clear that the Arab managers of sovereign wealth funds, who have decades of shrewd investment behind them, are not going to invest in steelworks and metal fabricating factories in the midwest that will not have a chance of profitability in competition with low-wage output from emergent economies. The Arabs will select the knowledge industries and high technology projects that will have a very high probability of being doubly productive: they will have high productivity which means a high turnover per employee; and great productiveness which means that they will generate large profits for the firms that own them, that can be allocated to further projects and to high shareholder payouts and to rising wages for employees [which will raise the general level of demand in the US economy]. Trump and his colleagues may be able to offer incentives [such as have existed through the Obama presidency] for some of the investments to be located in the midwest, rather than on the Atlantic or Pacific coasts; but the plant will not offer mass redeployment of the horny-handed sons and daughters of toil who voted so enthusiastically for Trump. There will be a few posts for janitors, car park attendants, caterers and cleaners: but the tragedy of middle-age uemployment will not be removed by the direct outcome from the President's trip.

Other outcomes from the middle-east leg of this tour will be irritation in Iran, an escalation of the conflicts in Yemen, in Syria and possibly in Iraq, and deeper disillusion on both sides in the Palestine conflict and among the US Jewish population that has hitherto backed Trump enthusiastically. The tour goes on to the Vatican [a photo call], to Belgium [ a meeting of NATO which Trump appears to be learning to love: in contrast to his rhetoric on the campaign trail], and to a high-finance gathering at which he will be, at best, a passenger.

The pot of dissent from his actions as President is bubbling on in the US, and may overboil at any time.

I read that US Psychiatrists maintain strict patient confidentiality, and there is a rule against any doctor with specialist skills publishing any speculative piece about the mental state of a currently-serving officer of state. On the other hand, there are just the beginnings of breaches in that rule as the antics of a very non-standard head of state cause more embarrassment. I am sure that the top women and men in the profession will hold to its highest standards; but as international incredulity expands, there will be more speculation on every level.

The deals that the Donald has done this week are between the US and other governments: they will stand; and that should benefit some few of the American long-term unemployed, as well as the rising sectors of the US economy.

Saturday, 20 May 2017

Difficult to Believe - But True

I am not often astonished by politicians, but this week has been the exception. While Mrs May has hit out hard at those who should be her most secure voters, Jeremy Corbyn has subscribed to a manifesto that just has a chance of mitigating his own negative impact on the majority of voters.

The reason why the Tories have struck at pensioners' benefits and capped what they will put into the National Health Service arises from the Treasury obsession with eradicating the deficit on government spending; though this is now deferred [again] until after 2025. The Conservatives' assumptions are that economic growth will be sluggish over the period of the next parliament, that productivity will not improve significantly, and that the recent dependence of the economy on citizens borrowing more to finance continuing consumption will weaken as real incomes decline. Hence they make 'cautious' assumptions about the government's ability to increase taxation, which force them to a very limited vision for government spending. Implicit in the data are that defence spending will not increase, that the police will continue to be starved of necessary resources, and that some 'savings' can be made when we are no longer chipping-in to the European Union budget. Behind the personal campaign being fronted by Mrs May there is a void in policy and absence of realistic hope.

Labour, by contrast, are proposing massive spending on the economic infrastructure and on science and technology: which is the only way in which the productiveness of the economy can be enhanced. Gordon Brown greatly abused the word 'investment' when he was piling up the government's deficit in his last years as Chancellor of the Exchequer: he categorised a lot of government's ordinary spending as 'investment', while he also supported the external financing of school and hospital building that is so much of a burden on the institutions that now occupy those premises. This inherited Labour legacy is unfortunate, because the shadow chancellor [who has the reputation of a dangerous 'leftie'] has imposed on the manifesto - and on Mr Corbyn - the crucial understanding that real investment is the only way to achieve substantial economic growth that can fund both greater real wages and higher standards of social and health services. The public is rightly cynical as to whether Messers Corbyn and McDonnell are the people who can deliver what they offer: but their offer is based on good common sense: which has not much been visible during Corbyn's long political career.

It is a depressing prospect that millions of pensioners will vote for their own disbenefit, rather than take a risk of supporting Labour. By contrast, millions of younger people with nothing to lose might as well plump for Labour, and the hope that tuition fees will be abolished, more homes built, the NHS protected and the police reinforced. The last fortnight of this election campaign will be one of the most interesting periods in which to be alive and active.

I'm going to buy a lottery ticket with my newspaper today, in the hope of being able to buy some publicity for the proposition: "don't vote for Mrs May unless you really want to experience what she is offering".

Friday, 19 May 2017

May's Happy Hour in Halifax

No doubt, Mrs May's claque had reasons for setting her on the platform in Halifax yesterday, to deliver a speech of almost grandiloquent pompousity; and of equal vacuity. It would appear that they [and she] are so confident of victory in the coming election that the detail of the speech - other than the quaintly anachronistic phraseology - was unimportant.

Inevitably, she reiterated her target of reducing 'net immigration' to a maximum of 999,999 souls by a date to be announced. Later in the day her Defence Secretary admitted that there might be an 'economic cost' imposed on the nation; but it would not reduce national income immediately because there is no target date from when the policy is expected to take effect. Thus the prime minister's obsession can be tossed into the long grass, at least temporarily and rhetorically.

More significantly, the squalid face of the government has been revealed in the rumour that the government is trying to suppress data on the extent of aggregate overspending by NHS trusts until after the election. The politicos know that the state of the NHS is a very weak spot in the Tories' case, and showing how bad the situation is cannot help them. If the Conservatives win the election and stick to their present policies, people will die: who, in an ideal world, would be saved [at least temporarily] by an adequate health system. That is a material consideration, especially for the elderly who are being freed from the triple lock on their pensions and released from the bus queue by the withdrawal of the service.

The prospect that the Tories are creating is as unwelcome to the most reliable cohort of voters as that set out in the Labour manifesto.

Elections should not be this interesting!