Monthly Archives: December 2015

The City: Paragon or Parasite?

The City of London claims to be the biggest and most important financial centre in the world. In strictly numerical terms, I’m sure it’s true. According to Wikipedia, it is “the largest financial exporter in the world which makes a significant contribution to the UK’s balance of payments”.

Finance Sector “Facts”

Financial services account for nearly 10% of GDP (national income) and employ nearly 4% of its workforce. Business services and finance combined have risen from 5% of GDP in 1948 to 32% in 2013. Gross Value Added (GVA) is a net figure of the output of a sector less costs of goods and services consumed. On this basis, finance’s GVA is 8% of the economy as a whole. Half of this amount comes from London. The City employs 415,000 people (2014 figure), up 25% on 2009. Financial services paid – or collected, e.g. income tax – 11% of the government’s tax receipts.

The flip side of this is the decline in manufacturing since World War II. Britain’s manufacturing sector has declined more rapidly than elsewhere – see graph below. The contrast with Germany is particularly striking.

GVA attributable to manufacturing

Decline in manufacturing graph(The black triangles above represent spot figures for the UK for 1947 and 1977)

The City: A Source of Economic Instability?

My earlier blog post Two Gamblers and a Pint of Lager discussed how City trading has grown out of all proportion to the “real” economy. In his brilliantly illuminating 2010 book 23 Things They Don’t Tell You About Capitalism, Cambridge economist Ha-Joon Chang explains how things have evolved. Here’s a key part of the picture:

  • Mortgages are repackaged and resold as Mortgage Based Securities.
  • MBSs get repackaged into Collateralized Debt Obligations.
  • CDOs get repackaged into a kind of CDO-squared.
  • And so on.

As Ha-Joon says, “the same underlying assets (i.e. houses) were re-used again and again to “derive” new assets. A massive tower of financial assets teeter on a tiny foundation of real assets. Financier Warren Buffet calls them “weapons of financial mass destruction”. What we have is potential instability on a massive scale. One small disturbance and the whole pile falls over. And, of course, no one really understands what they’re doing: it’s all a matter of faith.

In an interview following the decision to set up the Women’s Equality Party, Sandi Toksvig spoke of the crisis which brought about the near-total collapse of the banking system in Iceland. Only one Icelandic bank survived. It was set up by two women. One of their policies was to only invest in things they understood.

 

The City: Centre of a Web of Tax Havens

Much has been written about the tax avoidance activity of multinational corporations and super-rich individuals: the list is endless. Such activity is made possible by a web of tax havens around the world. Places like Jersey and the British Virgin Islands are part of a number of offshore territories linked to the UK. We have more such tax havens than the rest of the world combined. A 2011 article in the New Statesman describes how the City of London Corporation sits at the centre of this web. It is a local authority, but like no other in Britain. It is exempt from many of the laws applicable to the rest of the UK. Businesses can vote in local elections – the number of votes they have in proportion to the business size. The Corporation has its own representative in Parliament and acts as a cheerleader for the finance industry. It’s the last surviving “rotten borough”.

With over 50% of donations to the Tory Party coming from financial institutions in the City, it’s easy to see why this government really means “the interests of the City” when it talks of “the national interest”. Whether through ignorance or isolation from the “real” world, Cameron, Osborne and company conflate the two. The British Government lobbied hard against an EU proposal to introduce a “Tobin Tax” in 2011 because it said it would damage the City. It made an unsuccessful legal challenge in 2014 to the European Court of Justice. The UK failed in its attempt to ban plans by 11 EU countries to introduce such a tax in their own countries. The Tax is designed to reduce instability (euphemistically called “volatility”) and to cut the finance sector down to size. It works by introducing a tiny (typically 0.1%) tax levy on all financial transactions. As we have seen, given the huge volume of such transactions each day, the tax would potentially raise billions of euros (or pounds).

Large Financial Sectors Damage Economic Growth

A detailed study by Stephen Cecchetti and Enisse Kharroubi of the Bank for International Settlements in February this year showed how too big a finance sector damages economic growth. (Their full, rather technical, report can be found here.)

An earlier (2012) paper showed that once finance grows to a certain size*, which in Britain it has, any further growth in the finance sector depresses economic growth. The trend for the past decade is for finance to grow at 5% p.a. So any further growth in the UK’s finance sector will be bad for the economy.

The 2015 paper shows two ways how the finance sector growth suppresses growth in the real economy. The first is a simple “crowding out” argument: finance “steals” from other sectors the best brains coming out of universities. The second is more subtle. The report shows that those countries with large finance sectors invest proportionately more in real estate, creating property “bubbles”. The sectors which suffer most are the R&D intensive industries. The scope for productivity growth in property is small; in R&D-rich industries it is large. As productivity growth is the main long-term driver of increased prosperity, economic growth is depressed.

The performance of the UK economy since 2010 fits this negative pattern exactly. Only two sectors of the economy have prospered. Bankers and financial service workers continue to pocket the proceedings of the government bailouts (“quantitative easing”) and pay themselves bonuses as if the 2008 crash hadn’t happened. And the housing bubble is inflating to the point where more and more younger people cannot afford to get on the housing ladder. Productivity growth has been non-existent. A highly visible example is the trend away from automatic to manual car wash services.

*finance employs more than 4% of the workforce or private debt is over 100% of GDP

The Inequality Engine

My earlier post Chain of Fools explained how most of the innovative “products” introduced by finance over the last thirty years have a common characteristic. They provide a way of enriching the traders in finance at least risk to themselves. They transfer wealth from the majority of the population to those rich enough to have spare cash to invest and to employ the services of financial advisers. A good example is quoted in Thomas Picketty’s 2014 book Capital in the 21st Century. Harvard University spends $100 million a year on financial advice, far more than any other university. It gets a 12% return on its investments – three times the US average for university endowment funds. Once you’re rich enough, you can’t help but get richer.

The upshot is that financial services provide, in fact, a very powerful engine driving up inequality. Any attempts by national governments at redistributive policies such as progressive taxes are like walking up a down escalator.

Balance of Payments and Exports

The UK’s balance of payments has been in deficit for the past 15 years, although it can be seen below that matters have been going further downhill since 2010.

Balance of PaymentsThe 2014 deficit in goods of £124bn was offset by a surplus of £89bn in services. Finance services supplied a useful £39bn of this surplus. This is perhaps not surprising as the UK economy is responsible for 37% of global financial transactions (with 1% of global population).

However, in value terms, financial services are a poor way to export. Goods, despite manufacturing representing only 10% of our economy, produce 19% of our exports. Financial services, also around 10% of GDP, contribute only 4% of exports.

The underlying picture is that we consume far more than we produce. This has been propped up by overseas investors continuing to invest in the UK economy. The “crowding out / poor productivity” effect of finance over manufacturing described above means this position is not sustainable for ever.

Other Perspectives on the Finance Sector

Finally, I will summarize the work of two independent-minded professionals, the first legal and the second a former key player in finance itself.

Critical Legal Thinking

A 2012 report by the above organisation forensically dissects the value of the various ways banks and financial intermediaries make their money.

30% comes from fees, which the report concludes are extortionate: their words “protection racketeering, fraud, and spivvery” to be precise. 10% comes from speculative dealing with clients’ money, often against their interests. The report mentions that Goldman Sachs traders use the affectionate term “muppets” to describe their clients of these services. 30% is called “other operating income”, an obscure basket of activity believed to include help to clients to hide their money in offshore tax havens. The final 40% comes essentially from charging higher interest to creditors than the banks need to pay themselves. Banks “earn” this by making themselves the only route for clients to capital – as the report says, by “simply being banks”.

Howard Davies article

Howard Davies, former chairman of Britain’s Financial Services Authority, deputy governor of the Bank of England, and director of the London School of Economics, is a professor at Sciences Po in Paris. So he is someone in the know. His Guardian article from 2014 is entitled “Does London’s financial centre boost or harm the UK economy?

He cites a number of sources, including the 2012 BIS report mentioned above. He makes a few caustic remarks: the expected continuing growth of the finance sector should be good for some other parts of the economy. He cites “Porsche dealers and strip clubs” as examples. His overall conclusions appear to be twofold. Firstly, the net benefit of the finance sector is overstated. And net benefit to the economy as a whole is “mixed”. It’s hardly a ringing endorsement from a man who was at the top of finance tree for so long.

Overall Conclusion

And so to my overall conclusions to the original question: the City, paragon or parasite?

Well, it’s clear that financial services and the City of London in particular are a very important part of our economy and employ a large number of (generally well-paid) people. Any major policy changes which had the effect of destroying large swathes of the sector overnight would be damaging in the short term. Although, of course, finance had a very good try at doing just this in the 2007-2008 crash and the bailout by the government was the lesser of two evils. The finance sector does bring in a surplus on our overseas trade – hardly surprising as the sector is proportionately 37 times larger in Britain than for the world economy. This surplus helps to offset our massive trade deficit in manufactured goods.

But look at the other side of the “balance sheet”. Finance is a major source of economic instability, as the 2007-8 crash showed. It facilitates tax avoidance through its network of tax havens. Its growth is damaging to productivity and long-term growth in the economy as a whole. And it repeatedly creates property bubbles instead of investing in productivity-enhancing industries. Finally, it powerfully drives up inequality.

So, overall, that makes it more parasite than paragon. It’s high time we started rebalancing our lop-sided economy before the next crash.

(Sources for this post include: City of London Corporation, Office for National Statistics, House of Commons Library, Bank of International Settlements, The Economist, The Guardian, New Statesman)

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Chain of Fools

Back in 2009, Adair Turner, former head of the CBI and the financial regulator FSA, called much of what the City of London does “socially useless”. In this post, I will explore this assertion, via a few other ideas on the way.

Chain Letters

As a child, I remember receiving the occasional chain letter. In those days, it was an actual letter through the post. They were generally pretty benign. Typically the recipient was asked to do two things. Firstly, to write a letter to the person named at the top of a short list of names in the letter. Secondly, to copy (by hand) the letter to 4-5 friends, deleting the top name and adding your own name to the bottom of the list. By the miracle of the power of arithmetic, you would then receive a large number of letters from far-flung places. Writing 5 letters to the fifth person in the chain should theoretically bring you 3125 (5 to the power of 5) letters in return – if everyone plays the game. At each step, the total number of people needed is multiplied by five.

The problem is, after fourteen rounds, this system requires the entire population of the planet to take part: 5 to the power of 14 is about 6 billion. And then where do you go? So in practice, chain letters might work for a round or two and then quickly fizzle out.

Pyramids and Ponzi schemes

A more sinister version of the chain letter is pyramid selling.

Pyramid sellingNo, no that type. I’m not aware that the Egyptian government has followed Britain’s lead and is attempting to sell off the nation’s assets (usually these days to the Chinese). No, I’m talking about the illegal business practice of selling some spurious goods or service for an up-front fee. The rest of the scheme works much like the chain letter. The same multiplier effects come into play, as those people drawn in then try to sell on to a number of others. In practice, the very few at the top of the pyramid make all the money and a much larger group lose a little each. It’s a zero-sum game.

Byalistock and Bloom
The Producers

A Ponzi scheme works in much the same way. It relies on enticing investors into believing they will make unrealistically high returns on their outlays. Again, in practice, it’s usually only those in the know at the start who make any money. Again, the majority lose. A good example is the scheme set up by Max Bialystock and Leo Bloom in Mel Brooks’ The Producers. They sell shares many times over in failed Broadway musicals to rich “little old ladies” susceptible to Bialystock’s seductive(?) charms.

Financial “Products”

Much has been written over the years about the wonderfully innovative financial “products” dreamed up by City types since the sector was freed from too much nasty regulation. But what are these “products”?

Let’s start first with what is at the heart of traditional markets in goods and services: the transaction. This requires two parties – a buyer and a seller – a product or service and an agreed price for exchange. The producer of the product or service has used resources – physical or human – together with skill, organisation and possibly ingenuity to make something which the buyer values. This may be because the buyer does not have the time, resources or skills to make the product or service him/herself. Provided it’s traded at a fair price, both parties gain from the transaction. The buyer gets the benefit (s)he values from the product or service. The seller gets paid for the time and effort gone into producing it. A win-win game.

Compare this to a typical financial “product”. These are investment schemes of one form or another, offering the opportunity of financial gain under conditions specified by the seller. The buyer trusts the seller to use his skills to maximize the prospects of a gain. The seller invariably minimizes his risk by taking his commission or fee up front. The seller then undertakes some form of speculative investment. If he does well, the buyer gets a profit. But where does this profit come from? The seller has used his knowledge to “play the market” to his advantage on behalf of the client. The only way this is achieved is by hundreds or thousands of other people losing a little each, just like in the pyramid selling scheme. These losses may take the form of actual investment losses or in consequential higher costs in other goods and services. No new wealth is created: this time it’s a win-lose game.

Chain of Fools

Who are the winners and losers in this game? The winners are likely to be those with spare cash to invest: mega-rich individuals and large multinationals – and of course the traders. The transfer of wealth from the many to the few doesn’t have to be very much for each transaction. Tiny margins will do, as the process goes round and round repeatedly. Cumulatively, the effect is massive. Remember from my earlier post Two Gamblers and a Pint of Lager that sums equal to the entire annual output of the UK are speculated in the City every day and a quarter.

As Aretha Franklin sang: “Chain, chain, chain… Chain of Fools”. And who are the fools? It’s us. Turner’s “socially useless” is putting it too kindly.

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Worth Every Penny?

My eye was drawn to one small detail in the recent story about the embarrassing error in an online form on the Ministry of Justice website, for which minister Michael Gove has apologised. An error on the form, used in divorce proceedings, meant that the financial position of one or both parties in a divorce was miscalculated. This in turn, would mean that many a judge had directed a party to pay an incorrect amount. The error was reported by a woman working for the Family Law Clinic in Ascot. This happened almost a year after the form was first published on its website by the MoJ.

The detail is that the woman spotting the error was a McKenzie Friend. These are people with experience in family law who offer mentoring services to people who cannot afford solicitors’ fees. It is ironic that no solicitors, barristers or academics in university law departments had spotted the error before.

lawyersMy son had cause to use a McKenzie Friend a few years ago. The other party to the case had a solicitor using legal aid. My son reported that the solicitor was contemptuous and rude towards the McKenzie Friend, who was obviously considered inferior. You might call it professional bullying or professional misbehaviour.

Of course, a McKenzie Friend is considerably cheaper than a lawyer. Around these parts, solicitors routinely charge £240 per hour (including VAT) for their services. This incident makes you wonder exactly what it is you are paying for!

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What Have You Got to Hide, Mr Cameron?

I’ve met a wide cross-section of people from other EU countries who have come to Britain to work. I’ve never met one for whom Britain’s in-work benefits factored at all in their decision to come here. Yet Cameron and his cabinet colleagues assert, again and again, that curbing such benefits is a key part of our EU renegotiations.

Cameron looking shiftyI’ve searched many times for any research or evidence from a reliable source supporting the idea that our benefits system attracts workers from other EU countries. I can find no such evidence. Last week, an economist working for the Office for Budget Responsibility told a Parliamentary committee that curbing such benefits would make “not much” difference to migration flows. And yet Cameron ploughs on, hitting strong opposition to this proposal in his Brussels working dinner last night.

It has also emerged recently that HMRC (who administer tax credits) have refused a Freedom of Information request from the respected National Institute of Economic and Social Research. The request is to publish figures of EU migrants claiming benefits. The reason stated is worth a full quote:

“The information is being used to inform the development of policy options as part of the negotiation process and therefore relates to the formulation of Government policy. HMRC continues to believe that releasing information in the form requested would, at this stage, be unhelpful to the negotiation process.”

Any intelligent human being is quickly going to come to an obvious conclusion: the numbers don’t support Cameron’s assertion. You can be sure the numbers would have been published if they did. Once again, this demonstrates Cameron’s ineptitude as Prime Minister. His weakness shows again against the Daily Mail and Sun , UKIP and the xenophobic right in his own party. Trying to counter their lies and distortions by hiding the facts is hardly reassuring to the public.

As government ministers are keen to say when demanding ever more snooping powers for the security services: “If you’ve got nothing to hide, you’ve got nothing to fear”. So what exactly have you got to hide, Mr Cameron?

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Cheats Never Prosper – Or Do They?

When I was a child, my grandmother had a number of oft-repeated sayings which she saw as part of our moral education. On such saying was “cheats never prosper”. In this post, I want to explore this idea in a variety of contexts: education, gambling, city trading.

Education

Exam cheatingIn this data rich internet age, there is a whole industry of software available to examination boards and universities to detect cheating. With copying and pasting just a couple of mouse clicks, it’s so easy just to plagiarize another’s work. There’s a saying in education along the lines of: “to steal from one other is plagiarism, to steal from more is research”.

Betting on the Horses

Horse racingWhen I first started work in the 1970s, people still took a whole hour for lunch. One of my colleagues regularly spent his lunch hour carefully studying the racing pages of several newspapers. He explained it was his hobby. He made small bets and reckoned, with enough study, he could make about a 10% return on his bets over a year. In the horse racing world, it’s perfectly fine to make a little money this way. What is not right – in fact, illegal – is to use specific information about a jockey throwing a race for gain or similar misdemeanours. Once again, it’s specific, rather than general, knowledge that creates the problem.

City Trading

There’s a similar distinction when investing in, say, stocks and shares. Insider trading is a crime. Using information that is not available to others, for personal gain, is clearly morally wrong. But there is a difficulty here. There’s a continuum between inside knowledge gained through personal contacts and that accumulated as part of one’s daily work as a city trader. Information flows continually around the (electronic) trading floor and the fastest and best at picking up on this will be the winners in this game. A City trader is, after all, nothing more than a gambler with other people’s money. Sebastian Faulks’s 2009 novel A Week in December illustrates this beautifully.

PPI Mis-sellingA further moral hazard – and clearly a form of cheating – in the City was the fixing of the so-called LIBOR rate of exchange between banks. A further example is the mis-selling of Payment Protection Insurance (PPI), which took a further twist this summer.

As so-called financial “products” (of which more some other time) have got ever-more complex, problems have compounded. The ability of people to understand what is going on gets ever more challenging. So too is it harder for regulators to do their overseeing role properly. In all these examples, deciding between what is fair and what is cheating becomes harder and harder.

Conclusion

The orthodox economic view since the 1980s asserts that unfettered free markets make the best – indeed the only – way to run economies. The not-so-implicit subtext is that “greed is good”. This, in turn, gives encouragement to those who have few scruples about how they make their money. The key message about cheating becomes: “don’t get caught”. And yet, (mentally healthy) human beings have brains that are hard-wired to the concept of fairness. We have lots of evidence that cheats appear to prosper – at least, for some of the time.

Perhaps my grandmother was wrong – but I, and many others, don’t like it.

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Two Gamblers and a Pint of Lager

This is the story of two men with gambling habits and a pint of frothy beer. But there might be a bit more to it than that. There’ll be a short quiz at the end, to see if you’ve been paying attention. Read on…

Poker-Face Dan

poker player
Poker player

Dan lives in a country that is neither particularly rich nor particularly poor. He has a job and his total income is £8000 a year. His friends call him “poker face” as Dan is a mean poker player. His gambling is successful and his poker winnings bring in £400 of his annual earnings. His long-suffering wife Maria is deeply troubled by his habit. She has found out that Dan gambles over £120,000 a year on poker games. Dan says not to worry as he is good at the game. Maria thinks his luck will run out one day and bring ruin to his family.

Oliver: “A Bit of a Flutter”

horse race betting
Betting at the Races

Oliver lives in a much richer country. Also with a job, he brings in a total of £26,000 a year. Oliver’s new girlfriend Amelia really enjoyed the day out at the races they went to recently. But she was a bit surprised by the size of the bets Oliver was placing, including one bet of £5000. Oliver said he likes “a bit of a flutter” on the horses. He told her not to worry: he’s a real expert, studying form and placing his bets with care. In a typical year, Oliver’s betting contributes a useful £3500 to his annual income. Amelia might be a bit more worried if she knew Oliver placed bets totalling £4 million each year – the equivalent of gambling most of his annual salary every day.

The Frothy Pint

Frothy pint
Frothy pint

A man walks into a pub and orders a pint of lager. He notices whilst it’s being poured that it looks a little frothy. “Beer’s a bit lively tonight” he says to the barmaid. She just smiles and says nothing. The man takes his drink to a table and sits down. He notices his beer still looks frothy. In fact, there’s only two-thirds of a teaspoonful of liquid in his glass; the rest is head. He takes the drink back to the bar and complains. The barmaid shrugs and says there’s nothing she can do: it’s always like that. The man sits down slowly again, still feeling he’s been cheated. (Sorry if you were expecting a good punchline!)

What’s Happening Here?

Well, I confess, this story is not really about Dan, Oliver and the pint of lager. It concerns the global economy in 2015 and financial services in particular. Economic statistics quote numbers so huge – total world income, for example, is around 74 trillion US dollars a year – it’s hard to relate them to anything real. So I’ve scaled everything down to more human-like terms.

Let’s start with the pint of frothy lager. As recently as 1975, roughly 80% of all global foreign exchange transactions involved the real trading of a product or service. Only 20% were speculative, betting on the rise or fall of prices, exchange rates or some such. Since the liberalisation of financial services in the 1980s, the proportion of speculative transactions has increased almost beyond belief. The speculative stuff now accounts for nearly all the activity: only 0.6% of transactions involve something tangible. That’s equivalent to the two-thirds teaspoon (3.4ml) of actual beer in the pint (568ml) glass.

Dan and Oliver represent the global and the UK economies. Daniel is, apparently, a popular man’s name in Peru. Peru comes half-way down the International Monetary Fund’s ranking of 183 national economies, in terms of income per head of population. Oliver and Amelia are the most popular boys’ and girls’ names in Britain, which comes 27th in the IMF’s rankings.

Dan’s income of £8000 is the average global income per person. £26,000 is UK middle income. Financial services represent about 5% of the world’s income, but 13% for the UK.

Globally, money equal to the entire planet’s annual output (or income) is traded every 14 working days. In Britain, our annual GDP is traded every one and a quarter days.

Compare Britain’s place in the world with these three numbers:

  • 1% of the world’s population
  • 2.5% of the world’s income
  • 37% of the world’s daily financial transactions.

After the 2010 election, David Cameron promised to rebalance Britain’s economy away from an over-reliance on finance. With over 50% of Tory Party donations coming from financial institutions in the City, don’t bet on real reforms any time soon.

A Short Quiz

Think back to the concerns of Maria and Amelia, with their partners’ gambling habits. Considering the state of affairs in financial services in Britain and around the world, do you think the current situation is:

  1. perfectly OK as it is,
  2. a bit worrying, or
  3. stark raving mad?
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Who’s Afraid of the Big Bad Trump?

So, Donald Trump thinks the solution to mass killings, such as the recent incident in San Bernadino, is to ban all Muslims from entering the USA. These shootings were the 353rd incident of mass killings in the USA so far this year. (A “mass killing” is defined as an incident in which at least four people, including the attacker, die.) Yet again, Barak Obama showed his frustration at his own powerlessness in the face of the US gun lobby. The graphic below serves as a useful reminder of the facts.

USA and other homicide ratesThe latest Private Eye, published after the killings but before Trump’s remarks, has an excellent parody of Trump’s position. In their version, Trump praises Syed Rizwan Farook and Tashfeen Maliki for integrating fully into American society. The couple were “all-American and buying as many … weapons as they could lay their hands on”. His solution, Private Eye style, is to allow into America only those Muslims who “swear allegiance both to the flag and Smith and Wesson”. Trump is an extremely rich businessman. He is also self-evidently a complete idiot.

The Wisdom of Business Leaders?

Which brings me to a wider point. The British media, BBC included, invariably turn to business leaders or City and think tank “experts” when they want analysis of some economics news story. The views of academics or trades union people are sought much, much more rarely.

Trump is an extreme example of a wider phenomenon. Being a leader of a large corporation does not make you wise: in Trump’s case, it doesn’t even immunize him from being very stupid! National and global economies are not like a company’s accounts. What works in the one case may be counter-productive in the other.

So, how about it, BBC and others? Let’s have a wider range of “expert” opinions on or TVs, radios and websites and in our newspapers!

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We Can Work It Out

Try to see it my way
Do I have to keep on talking till I can’t go on?
While you see it your way
Run the risk of knowing that our love may soon be gone

Think of what you’re saying
You can get it wrong and still you think that it’s alright
Think of what I’m saying
We can work it out and get it straight, or say good night

Well done, voters of Oldham! Labour candidate Jim McMahon comfortably won with 62% of the vote. UKIP came a distant second; the Tories share of the vote halved to 9%.

This result doesn’t fit with the establishment narrative of the week’s events in politics. David Cameron led a (nearly) united Tory win in Parliament with a comfortable majority in favour of bombing Syria. Labour were hopelessly divided as shadow cabinet ministers defied their leader and 67 Labour MPs voted with the government. Labour, as predicted, confirmed they were “unelectable”.

Father and Son

By all accounts, the best speech in the “Bomb Syria” Parliamentary debate was made by Shadow Foreign Secretary, Hilary Benn. I heard the speech in full: I recommend that you do too: click here. No matter that I disagree with his final conclusions, there is a great deal in the speech with which I do agree. It contains many arguments that hold much sway. Benn’s speech is eloquent, passionate and full of humanity and compassion for the suffering of others. It is totally in keeping with the traditions and values of the Labour Party over its history.

Tony and Hilary Benn
Tony and Hilary Benn

What would his dad have made of the speech? I would imagine that the late Tony Benn would have found much to admire and to be proud of his son for the speech. I suspect that they would have had in impassioned argument over the conclusions – from a position of mutual love and respect.

During his lifetime, the establishment meted out the most vitriolic barrage of hatred against Tony Benn. He was that most detestable apostate: a class traitor. Eton-educated and heir to a hereditary peerage, he renounced the latter. He genuinely believed in the principles of democratic legitimacy: he would only serve in Parliament if the people voted for him, not through some inherited privilege. No wonder he was such a hate figure for his political opponents.

Debate and Decision

It has been obvious for some time that both main parties are divided on the issue of bombing Daesh in Syria, with Labour more evenly split than the Tories. It was notable that Tory dissenters from the government line included ex-military personnel and the chair of the parliamentary committee closest to the subject. Put simply, the anguished debate, mainly on the Labour side, grappled with two issues. Firstly, the idea that “something must be done” to stop Daesh’s murderous activities was agreed by all. But the idea that “bombing will only make matters worse” was one which profoundly divided the “for” and “against” camps. There was much historical precedent for the second assertion. David Cameron’s claims about 70,000 moderate opposition troops are simply not credible; the Vienna ceasefire talks are making painfully slow progress.

David Cameron, to his credit, allowed a full day of parliamentary time for the debate. The speeches were made, to a very large degree, in a spirit of anguished wrestling with the propositions and of respect for the opponents’ position. However, Cameron has, at the time of writing, still not apologised for his earlier remarks that those who differed from his view were “a bunch of terrorist sympathisers” and “a threat to national security”. These low, despicable personal attacks were not worthy of the postholder of Prime Minister. Cameron’s smooth façade occasionally slips and the result is not attractive. Jeremy Corbyn, on the other hand, has stated his opinions from a consistent set of principles and respect for others.

Labour’s Oldham Win

This brings us back to the first electoral test of opinion since the general election: the Oldham West by-election result. Under the orthodox view, after what was reported as Labour’s “worst” week for years, they should have been humiliated in the polls. Instead, they increased their share of the vote. It seems the voters of Oldham are more intelligent than the orthodox view gives them credit for. Instead of seeing Labour as a party riven by factions tearing the party apart, they saw a group of people grappling with a nearly impossible to grasp dilemma, and doing so in an intelligent and principled way.

Jim McMahon
Jim McMahon and partner Charlene

Contrast this with the petulant reaction of UKIP’s Nigel Farage, with his comments about “electoral fraud” and vote-rigging of postal votes. The Oldham result would have still been a decisive Labour win if all the postal votes had been discounted. Farage’s behaviour demonstrates all the intellectual standards and emotional maturity of the school playground bully. The moment anyone stands up to him, he goes crying to teacher.

Farage and Cameron, Benn and Corbyn this week provide a neat illustration of the basic difference between left and right in politics. For the left, there’s a deep conviction of the need for collaboration and cooperation. This includes the necessity, when the time is opportune, to talk to those with whom you disagree and to try to reach some accommodation or understanding. For the right, it’s all about me and getting my own way. The former is based upon an optimistic view of human nature, the latter on a more cynical, pessimistic view.

Hope or fear. Engagement or a sneer. We Can Work It Out or My Way. You choose.

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One Day in December

It was a grey December morning. The weather was unusually mild for the time of year.

In Downing Street, the Prime minister went to his computer. He opened the private folder named “Legacy” and a spreadsheet named “Exit Strategy”. He clicked a tick-box marked “Bomb Syria” and updated the figure next to “Destroy Labour” to 75%. He saved the changes and closed the file. Elsewhere in Westminster, the Leader of the Opposition sat with his head in his hands, trying to figure out what he’d done wrong.

Across the government benches in the House of Commons, three enemies eyed each other warily. Theresa May, George Osborne and Boris Johnson laid rival plans for capturing the attention of the public in their jockeying for leadership of the Tory Party.

Brimstone missile
Brimstone missile

The BBC, as usual in times of war, unleashed an orgy of images of military hardware and endless analysis of their capabilities. “Look how big, firm, smooth and accurate our missiles are” was the unquestioning message. At £100,000 a pop, the virtues of the “most accurate ever” Brimstone missiles were exalted. Around the country, hundreds of men with very small brains, some in positions of high authority, paid close attention. They exploded with orgasmic delight as the first pictures and booming sounds of flashing explosions hit the TV screens.

In Raqqa, centre of Daesh power, families cowered in their houses. Couples, especially those with a professional background, again discussed spending their life savings on paying the “friend of a friend” who promised to smuggle them to safety out of the country. Their children cowered at the increased sound of not-so-distant bombs.

In an office near London Bridge, the Campaigns Director for the British Legion wondered whether the time was now right to contact that Tory backbencher. This was the one proposing a private members bill to make the wearing of poppies compulsory for all adults over 16 years of age for three weeks leading up to the 11th November each year.

Vera Lynn
Vera Lynn

In the music business, the UK headquarters of a multinational media company announced they had signed a contract with Vera Lynn to release her new album, entitled “98”.

In a TV studio in London, the Defence Secretary repeated once more that Britain was now “a safer place” because of the decision to bomb Syria. Throughout the land, tens of thousands of Muslim families shuddered slightly, fearful of what fresh humiliations, or worse, tomorrow might bring. For a handful, they were fearful, too, that they didn’t really understand what their teenage sons were up to all evening on their computers. In their bedrooms, their disaffected children decided to have a look at that website they were told about by someone they had met recently.

In Whitehall, a senior civil servant in the Ministry of Defence picked up the phone. Perhaps now was a good time to accept that lunch invitation from a top manager in a famous arms manufacturer. In another part of Whitehall, an experienced civil servant in the Foreign Office reached down and opened the bottom drawer of his desk. He took out an envelope containing the terms of the voluntary severance package he had been considering for weeks. Perhaps his wife wouldn’t mind not having two foreign holidays a year.

On the fifteenth floor of a bank’s headquarters in the City of London, a meeting was convened. It was of the “blue sky” strategy group aimed at considering innovative ways of making more profit from the increased government military expenditure. Across the country, food banks continued to do a brisk trade. Thousands of sanctioned benefits claimants, many with mental illnesses, were grateful for the mild spell which meant their unheated homes were not quite as cold as they had expected.

In Paris, scientists, lobbyists and politicians at the summit on climate change felt a frisson of frustration, as the world’s media attention turned away for a while from the greatest threat to humankind. In the English Channel, yet another storm force wind lashed the waters into a fury. A small group of bluebirds huddled together in the crevices of the cliffs near Dover; the unseasonably warm December weather had delayed their usual migration. They looked at each other in the gale and, as if of one mind, flew south.

Biggles
Biggles

In a hospital bed in Surrey, legendary RAF pilot James Bigglesworth (aka “Biggles”) lay dying. With one last supreme act of will, he raised his enfeebled torso off his pillow. He took down the sign hanging over the bed saying “Do Not Resuscitate” and, with the aid of a conveniently-located marker pen, crossed out the first two words. In a final act of defiance of regulations, he lit a cigarette. The deathly rattle of a breath escaped from his disease-ridden lungs. His head fell back, a trace of a smile on his thin lips. Biggles died a happy man.

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