Saturday 1 December 2012

The plight of the people of Western Sahara


Head over to a map of the world. Look for Egypt, that’s easy to find. Then look to your left. Assuming your map fits the usual specification, you will reach the western edge of North Africa. On the other side of the Mediterranean from Spain you will find Morocco. South of Morocco and north of Mauritania, there is an independent country of Western Sahara. This country is hardly known in global affairs, but it is not an independent country.

Western Sahara is the world's most sparsely populated country, being mostly dessert. It has a population of five hundred thousand people. Originally a colony of Spain, who withdrew from the country in 1975, the state of Western Sahara has been in dispute ever since. After Spain left, a war was fought between Western Sahara’s two neighbours, Mauritania and Morocco, which ended in 1979 when Morocco annexed most of Western Sahara. An independence movement, the Polisario Front, started a guerrilla war, seeking to establish an independent country known as the Sahrawi Arab Democratic Republic or SADR. This ended with a UN monitored cease-fire in 1991. Since then Western Sahara has been divided between the Polisario Front controlled SADR, which occupies around a quarter of the territory, and Morocco.

Morocco controls the majority of the country, including the population centres and natural resources. Both Morocco and the SADR are seeking international recognition for their claim to Western Sahara. Both have lined up support from across the world, but the territory remains disputed. Western Sahara is the largest and most populated territory on the United Nation’s list of Non-Self-GoverningTerritories and it exists in a legal grey area between being a disputed territory and a non-decolonized country or an occupied nation.


The location of Western Sahara in North Africa. Map from Wikipedia

Attempts to organise a referendum to decide Western Sahara’s future have been indefinitely stalled. The legal (and military) disputes that surround Western Sahara are varied and complex, with a host of countries and meta-national organisations (the Arab League, the African Union, etc) endorsing the different claims to the country. I suggest anyone with an interest in disputed territories and military occupations should look into the case of Western Sahara, as it is frequently overshadowed by events in Palestine.

So why is there less public outcry against what has happened in Western Sahara? Why do Palestine and Tibet get all the attention? It is difficult to say. All of the above and other situations around the world are clearly important places were citizens live without an ability to determine their own future. A lot of attention is drawn to the Middle East and China, partly because we in the west are complicit in the violations which take place in these countries through the trade agreements we have with their oppressors. This is especially true with Israel, as the UK and the US selling arms to the Israeli Defence Forces which are used against the Palestinians.

Also these other conflict areas are relatively well-populated. There is an estimated nine million Palestinians in the world, where as there are less than half a million Western Saharans. In the case of Palestine, many millions of people were displaced by Israeli occupation and have become refugees. Some of these have moved to the west where they have set up pressure groups highlighting the problems of those left behind in the occupied territory. In the case of Tibet, there is the Dalai Lama, an internationally-recognised figure, campaigning for freedom from occupation. However, more recently even the Dalai Lama has campaigned more for recognition of Tibet within China rather than independence. There are relatively fewer Western Saharans and less of them in western countries drawing attention to events in North Africa. When Africa is in the news more recently it has been in relation to uprisings connected to the Arab Spring, which did not spill over into an uprising in Western Sahara against Morocco.

Other disputed territories around the world attract more attention than Western Sahara, but it is important to remember that we in the west are just as complicit in the repression there. Morocco is enjoying a tourist boom currently, and the money we spend there funds the military which keeps Western Sahara under Moroccan control. Western Sahara may not be the world’s most high profile trouble spot, but is the largest disputed territory in the world and has the largest disputed population. Next time you are looking at a map do not take it for granted that a border is a sign of an independent country.

Wednesday 21 November 2012

Do you know who Xi Jinping is?


I have been asking people this question and a lot of people do not know the answer. We will return to that shortly.

The world watched with rapped attention a fortnight ago as Barrack Obama won a historical second term in the White House. The global news schedules were drowning in coverage of the campaign and the Election Day itself. I personally stayed up until 5:30 in the morning to see the results. It was an event of global significance, a race the outcome of which would affect the lives of billions if not everyone on the planet. However while this was going on, the leadership of another country was also being decided, an event that could perhaps be equally as important.

The Chinese Communist party (the world’s largest political organisation, with more members than there are people in the United Kingdom) recently changed the membership of its politburo standing committee, the countries highest decision making body. Once every 10 years at the Chinese Communist party conference, China’s leadership steps down and new leaders are appointed. These leaders come from the 25 member politburo and its higher body, the seven person standing committee. The General Secretary of the Communist Party of China as well as other leadership figures are chosen from the standing committee. All of this is conducted in secret, with the conference ending with the new leadership being shown to the party.

The makeup of the standing committee and China’s new leadership are decisions with the same global signification as the race for the White House. China is the world’s second largest economy and it is predicted that during the new leadership’s term of office China will become the world’s largest economy. China also holds the majority of the world's debt as well as being a key export market for the growth starved west and a major financial centre. They have the world’s largest army, an expanding space program and now aircraft carriers and stealth fighters. In less than a decade the members of standing committee may become the most powerful people in the world. My question concerning all this is, why has there been a lot less media coverage of the events leading up the anointment of the new Chinese leadership?

There has been coverage, with articles on BBC website and in other new sources but I have not seen one piece on the Chinese Communist party conference grace the front page of a British national newspaper or appear as the top story on a news broadcast, as the American election did. The change of power in China is just as important as the change of power in America, perhaps more important as the new leader has a much greater ability to effect change in his country than Barrack Obama does in America. This is where I answer the above question, Xi Jinping is the new General Sectary of the Chinese Communist Party and is very likely to be the next president of China. So why is there less coverage of the method by which he came to power? Why are we not globally weighing up the pros and cones of perspective Chinese leaders, examining Xi Jinping's qualities as a leader and considering what his vision of China might look like?

The main reason is that people in the west simply are not interested, which is not only a shame but a dangerous way of thinking. We prefer to focus on our own politics, believing them to be most important events in the world, whilst dismissing events elsewhere as less than important. It is foolish to ignore the changes that are happening in China. By all accounts Xi Jinping’s forthcoming appointment to the presidency is a victory for China’s more conservative factions. He has close ties to the military and is the son of a past powerful figure and party elder. He is certainly not a reformer, but he does have a more global prospective than previous leaders. We should be concerned about our future and the power that China will hold over it, and we should be more concerned about the people directing this power and the means by which they are appointed.

Another reason why western media is not as interested in the change in Chinese leadership is that the key events happen in secret. The standing committee and a shadowy group of party elders decide in secret on the next generation of leaders and who will be appointed to the most senior positions. This process does not lend itself to the extensive coverage, which news sources use to attract large amounts of views and readers. The results are also a forgone conclusion. It had been known for a while that Xi Jinping would be the next General Secretary and that Li Keqiang would be his deputy. It is almost certain they will be given the most senior positions in the Chinese government, the presidency and premiership. Xi Jinping, Li Keqiang and others had been elevated to positions of power by outgoing president Hu Jintao, a man who favored loyalty above all else.

Chinese leadership elections are not as exciting as their American counter part, they lack scandal, uncertain results and a dramatic conclusions. News vendors may not be that interested but that does not mean the events are not globally significant. We may not be that cornered about the changes in Chinese leadership but as a nation we should be.

Xi Jinping will lead China for ten years during which China and the whole world will face serious challenges in terms of the economy and the environment China also faces many internal challenges, in rooting out corruption  finding its place among the other global powers, maintaining its growth rate and balancing political freedoms with the Communist state. Xi Jinping is not a man much is known about in the west but his character may come to define the next decade of global events.

In the west we need to stop thinking of ourselves as the main stage or the only stage as we increasingly become a side show. We need to pay more attention to events in China and Chinese politics as our economic recovery will depend upon it. Xi Jinping and the other new members of standing committee step into the spot light as Obama secures himself a second term in power but Xi Jinping will be leading China long after Obama has left the White House. Us in the west should pay as much attention to events in China as we do to America as they profoundly effect our world. Xi Jinping should be a name that is on everyone's in the west's minds.

Monday 12 November 2012

The American Election: A Victory for Perspective


Having perspective about how people live in other countries is not something Americans are typically given credit for. In fact, they are known throughout the world for looking inwards, caring much more about domestic issues than international ones. This is true for most countries in the world, but American politics affects the entire world. The American economy drives the western world, their foreign policy defines who are our allies and who are our adversaries. It seems unfair that a decision of global importance, such who should lead America, can be decided by trivialities of domestic politics. In 2000 a few voters in Florida decided the trajectory of global politics. Had they voted a differently, the war in Iraq could have been averted.

If every person who was affected by the outcome of the American Presidential election was able to vote in it, the outcome could be very different. This is true of a number of countries. In China, even the country’s own citizens cannot decide their leadership and the decision is made in secret by a few people. Both leaderships have an enormous effect on the entire human race; the American decision is much more democratic, but both are made without considering the effect the outcome has on those outside the country.

As with most general elections, the recent US Presidential contest has been mainly fought over the incumbent’s economic record. Other issues were prevalent – foreign policy, social issues – but, as with most general elections, it comes down to the matter of which side the voters trust to handle the economy. After the credit crunch and the global recession, which began under George W. Bush, the American economy has stalled. Recovery has been slow and growth is lacklustre. Even after Obama was elected President in 2008, prosperity has not returned to America.

In the years since the credit crunch, America has not fared the best or the worst among OECD countries. When Obama took office in 2009, GDP was shrinking at 3.5% per annum. By the time of the election, growth had risen to 1.7% (all statistics are from Google’s public data). During the same period, unemployment has remained roughly constant at 7.8% (despite peaking at 10% in October 2009). Compare this to the UK, where growth is currently at 0.65% and unemployment at 7.9%. The same story of barely positive growth is true across most western economies. America is actually faring better than most but the prosperity of the late 1990s and early 2000s has not returned.

The question posed to American voters was whether they would be better off with Mitt Romney and the Republicans in charge. A growth rate of 1.7% leaves room for improvement, but it is certainly better than we are experiencing in the UK and better than a recession.

On Tuesday, American voters opted to stay with Obama and voted in favour of current economic policy. It was felt that the stimulus introduced by Obama in February 2009 had been effective, and that the bailouts of Chrysler and General Motors had prevented mass unemployment, which could have driven the country back into a recession. This vote in favour of the current administration’s economic policy is a reflection that Americans are aware that they are financially better off with Obama and better off than comparable countries.

Left learning social-democratic parties are generally out of power across Europe. Centre-right governments dominate and the fiscal agenda is austerity. In the UK, severe cuts to government spending have been enforced since the Conservative-Lib Dem coalition came to power in 2010. These cuts have killed off the green shoots of recovery and briefly pushed the UK economy back into recession. Looking at the British economy’s recent performance it is hardly a ringing endorsement of austerity and privatization. Americans recognise they are better off with Obama’s stimulus and steps to prevent mass unemployment than they would be with European-style austerity.

Usually Americans do not have a good deal of perspective, especially about how fortunate they are compared to other countries. However, in the case of the recent elections, it is clear that although Obama’s record on the economy is not stunning, Americans consider that they are better off with him than with the alternative. If anything, this week’s election result is a victory for perspective.

Monday 22 October 2012

Why you should not lend Ayn Rand your car


Recently I had to face the prospect of moving a large amount of house hold waste to the dump without access to a car or van of any sort. I do not have a driving licence so renting one was out of the question. The solution to this problem was evident; find an obliging friend who would happily drive my broken old furniture to the dump. This was easily done but a second problem quickly emerged, how best to pay my friend for his time and the use of his car. A simple cash payment between friends seemed crass, more akin to a business relationship than an honest friendship, so I was left with a dilemma.

What I actually wanted to acquire from my friend was use of his vehicle and his skills as a driver. Obtaining these for myself had been options in the past, but I deemed the cost of learning to drive and purchasing a car too high and thus declined. This afforded me more money to indulge in my other interests such as buying minimalistic furniture, however the keen investor is usually proved right and thus when some large items of furniture were broken beyond repair I needed to find some means of economic exchange to secure the removal of a broken wardrobe from my living room.

If hard currency was out of the question, what could I offer in exchange for my friend’s Sunday afternoon and his driving skills? Eventually I settled on the idea of a goods exchange. I would use some of my current wealth to purchase goods, which could be given to my friend in exchange for the use of his car and driving skills, which he had invested past wealth in. Both of us being fans of real ale I bought a selection from a local microbrewery for him to enjoy after he had driven home. I made it clear that I was not offering an incentive to violate drink-driving laws.

After our exchange of goods and labour was completed, the whole process made me think. How could I be sure my friend had received a fair price for his labour and the investment he had made in the car? The wardrobe was quite a problem for me and I might have valued the use of the car more highly than the payment I offered. In a competitive market place, where there are no restrictions of friendship then the use the car might have fetched a far higher price in terms of bottles of ale.

The whole situation reminded me of Ayn Rand’s novel Atlas Shrugged in which Midas Mulligan insists his friend charges him for the use of his car rather than simply borrowing it for free. Rand being a believer in the virtues of selfishness saw it as socialism to lend goods for free.

Perhaps this is an extreme interpretation of what she thought but the economics behind her ideas were simple. Someone invests time and money in learning to drive and buying a car. Those who choose otherwise should have to sacrifice some form of economic gain in order to get the benefit of what they have not invested time and money into.

I think Rand is missing a truth to this situation, which played out through my own experiences this weekend. On some level I was offering goods I purchased in exchange for the use of skills and equipment but there was another transaction taking place. My friend was sacrificing his Sunday afternoon to help me out of a situation, a choice which carried with it an opportunity cost. As part of this exchange he was building up good favour with myself which is in turn an investment which will yield fruit later, perhaps in the form of me fixing his computer or helping him clean up after a party. This relationship is not quantified by a direct exchange of goods and labour, but it is still taking place.

In short there is a human exchange taking place as well as an economic one. This human exchange can lead to an economic benefit in the future and the good relationships human exchanges foster can form the basis of strong long term economic alliances of the variety that really benefit communities and the wider economy. Not short term valuation aiming to get the maximum value for minimum input.

In Rand’s world we are all selfish machines, doing what is best for ourselves in the hope that this will somehow make human society richer as a whole. As the economic crash of the 2000s shows unbridled selfishness ultimately makes us all poorer. Human trust is an important commodity and good relations make as much sense economically as they do socially. I am very pleased that my friend gave up his Sunday afternoon to help me and I feel that it brought us closer together in a spirit of co-operation, a closeness that can help us overcome economic hardships.

Rand’s bleak view of humanity misses our real strengths; our willingness to sacrifice for each other that helps us collectively overcome great hurdles. What this all boils down to is that in the future, if I owned a car and Ayn Rand asked to borrow it, the price would not simply be economic and I doubt she could afford it.

Sunday 14 October 2012

Page 3 reveals the ingrained sexism in our society


"It's a newspaper's duty to print the news and raise hell," or so said Wilbur F. Storey of the goals of the Chicago Times in 1861. Most British newspapers do not fit this romantic fantasy of plucky reporters digging up facts, uncovering corruption and exposing the wrong doings of those in power. Newspapers are a product as much as anything else and one that exists in a very competitive market place. Beyond this they are part of our public psyche and form a key part of how we view the world. Most of us still get our news from newspapers, it may be in the form of articles published online, or downloaded onto smart phones but still newspapers are powerful players in the news market. They decide what is news or not news but deeper than that they decide what is normal or not normal.

When headlines denouncing 'Booze Britain' and the dangers of binge drinking were splashed across front pages, they reinforced the idea that most people drink excessively on a regular basis. Through the foggy lens of journalism we look at ourselves as a nation and we find out how we behave and what our hopes and fears are - mainly our fears. When newspapers are outraged at politician’s expenses or light penalties for sex offenders, so are we as a nation. As such it follows that when newspapers are casually sexist, we become a bit more casually sexist as a nation.

Sexism is rife in newspapers - especially tabloids. Women are constantly assaulted for being ugly, fat, having too much power, crying wolf in rape accusations, not breast feeding their children enough, having bad taste in clothes, for speaking out of line, for breast feeding their children too much, causing cancer and making house prices fall.

However, one aspect of all the misogynistic rubbish printed in tabloid papers stands out above the rest: The Sun's Page 3. Since 1969 The Sun (Britain's most popular and least trusted newspapers) has printed a picture of a glamour model on its third page. Initially clothed and later topless, these photographs show a misogynistic image of women as young, good looking, sexually available and silent.

Recently an online petition on the website change.org, No More Page 3, has sought the removal of Page 3 from the Sun. At the time of posting this campaign has picked up 46 thousand signatures, as well as press coverage in The Guardian, The New Statesman and on News Night. Social media is buzzing with the very real possibility that this No More Page 3 could be a success. The campaign is well managed, has picked up support from several public figures, including MPs and is targeting The Sun's advertisers such as Lego, Tesco and Sainsbury’s in an attempt to put added pressure on the tabloid. This campaign has attracted criticism from those who go out of their way to defend casual sexism. Unsurprising as this is, I wanted to take a moment to address a few of the misconceptions shaping the arguments in favour of Page 3.

The first strand of criticism mainly comes from a position of middle-class broadsheet superiority. Some argue that Page 3 does not really matter, as the Sun is not a newspaper but a news comic. It is difficult to argue that the Sun is not taken seriously as a newspaper. Certainly it's the main source of news for the ### million people who pay to read it daily. Its power to affect the opinions and actions of the general public was evidenced in the infamous 1992 election day front page, which allowed John Major to narrowly secure a majority. The Sun is clearly a newspaper and what it prints – both news and otherwise – clearly has an effect on its readership.

The problems caused by Page 3 go beyond those who read the Sun, as any newspaper so widely read sets a standard. Page 3 is often the largest picture of a woman in the newspaper. Those other images of women in The Sun are used to shame women for their failings in either being ugly, overweight or having an opinion differ from The Sun's right wing agenda. Page 3 sets a standard of how women are treated, i.e. either ogled or mocked.

The campaign simply seeks the abolition of Page 3 and invites people to support for it for their own personal reasons. People of many different ideological backgrounds have signed the petition. My own objection to Page 3 does not come from any perceived negative psychological damage caused by looking at naked women. Nor does it stem from a puritan desire to cover up women’s flesh. It comes from a desire to liberate women from the casual sexism in our society that Page 3 epitomises. I feel my goals are very much in line with petition’s creator who has demonstrated a desire to bring society to a place where casual sexism of the Page 3 variety is no longer acceptable.

Reading a daily paper is a very normal, very British thing to do and putting casual sexism in a daily paper clocks the misogyny in normality. It reinforces the idea that a sexist attitude to women is the normal way of behaving. It also fixes in the general psyche the view that women exist only to appear sexually desirable to men and when they do not fit into this neat bracket they are worthless. This the normality of of female objectification and the views it support hold back women across the world from gender equality. The campaign wishes to end the normality of female objectification in part through abolishing Page 3 and the way it normalises sexist attitudes.

Another argument used in favour of Page 3 is that it is a harmless hangover from a bygone area, much like Benny Hill or Naughty Nuns postcards. In some ways this is true. Page 3 is from the past, it would not be started today; it would be considered crass and sexist - which it is. The fact that Page 3 would not be started today indicates that it does not reflect the values of our modern society. It is worthy of note that the Daily Mirror used to have Page 3 photographs but stopped the practice in the 1980s because it was seen as demeaning to women.

Some wish to protect Page 3 because they naively yearn for a mostly fictional past age that was free from political correctness. An age where sexism was rife, traditional gender roles were strongly enforced, and any deviation was met with social exclusion. Although most people who look back to the past with fondness will acknowledge that it was sexist, they argue that sexism has been abolished from our modern society. To them, Page 3 is a harmless relic of the past to be preserved so that we do not lose all contact with tradition.

This argument holds little weight as sexism has clearly not been abolished from our society. In place of Benny Hill, Family Guy is making weekly rape jokes. Women have made social and economic progress since the 1970s but the playing field is still not level. Women are poorly represented among heads of state or chief executives of large companies. Where women have risen they have had to endure the ridicule and low esteem in which they are held. This is mainly a result of the institutionalised sexism that Page 3 normalises.

Page 3 reveals how deeply ingrained sexism is in our society. The fact that some wish to defend it is sexist in itself. It shows there is still work to be done in rooting it out misogyny. So long as Page 3 continues the objectification of women will be normal and natural. This in turn maintains the uneven playing field on which women compete for jobs and political power. In the past individual's racist behaviour went unchallenged because broader racist attitudes in society appeared normal. As the idea of racism being the normal state was challenged it allowed individual's be challenged for their racist behaviour. The same is true for sexist. The standard bearers for sexism need to be brought down before sexism can be challenged on an individual level. In the battle for gender equality Page 3 is Tank, ploughing its way across the field, shielding sexism from oncoming fire with the armour of normality.

Page 3 is complexly unacceptable in today's modern news market place and I cannot imagine the writing of Woodward and Bernstein next to the image of a topless woman. Tabloid newspapers use their power to create a culture that publicly shames women. The above example of the public outcry against binge drinking is a perfect example of this as the criticism falls more heavily on women who drink excessively than men. This sexist tabloid culture cannot be stopped until Page 3 and other examples of ingrained sexism are abolished. When the Chicago Times were doing their duty in printing the news and raising hell, I doubt they thought the quality of their work would be increased by daily images of topless women.

Wednesday 3 October 2012

Could Boris Johnson to Prime Minister?

“LOL Boris for PM!!!1!” tweeted one articulate person during the London Mayor's speech after the Olympic Games. The famously mop-headed Tory politician had declared a parade in honor of Team GB's medalists, and closed this event with a speech which many believe was setting him up for a bid for the Conservative Party leadership and ultimately Number 10. Pundits claim that he took credit for the games and that the success of the London 2012 Olympics reflects well on Boris Johnson. His visibility during the games and his savvy courting of the international media has propelled him to a new level of recognition which can only work in his favor should he decided to make a play for power. The idea of Boris as Prime Minister might not be a joke for too much longer - not the least because he out-danced Cameron's awkward shuffle during the game's closing ceremony.

Boris Johnson, or B-Jo to some, has always managed to use his status as Britain's most high profile joke to forward his career. His popularity lies in his appeal to people who are either not interested in politics or who believe all politicians to be gray suits, only marginally more interesting than accountants. He clearly believes himself to be the second most powerful person in the country, with eyes to take his unique brand of self-publicity to greater heights. The above quoted tweet is indicative of the fact that he appeals to people outside the main political debate.

I am yet to meet anyone who admits to voting for Boris for any position of power simply because he is funny, but the nagging suspicion that such a person is out there somewhere will not go away. Boris is the classic Cameron model of Tory, clearly a Conservative of the left of the party, a self-styled progressive and not a darling of the right-wing. His appeal to those who could make him leader is his ability to attract support from those who are unlikely to vote for traditional Tory candidates, primarily young people who the Conservatives have had little success in wooing. Rising youth unemployment under the Cameron government makes it unlikely that they will have much success among the under 25s in the 2015 election, but Boris Johnson as leader might make that more likely.

Let me lay out the case for Boris as party leader: the current economic stagnation is doing the Conservatives no favors electorally, and Cameron has a growing problem with the right of his party. He is seen as appeasing the Lib Dems too much and flip-flopping on key issues of immigration, welfare reform and – crucially – EU membership. All this could be brushed off, but Cameron cannot escape the growing feeling amongst Conservatives that the government is not right-wing enough and that this could cause the traditional Troy vote to stay home in 2015 or switch to a new party, such as UKIP. Tory strategists are concerned about the current leadership's effectiveness to mount a successful campaign for the next election, and Boris could make all the difference. He is internationally-known, watchable on TV and an effective user of modern political tools such as social-media. He appeals to the young, the politically central and the so-called “chattering classes”, what I will call the LOL B-Jo crowd. His connection with the Olympics brings positive thoughts to people's mind when musing on Boris Johnson. By contrast, David Cameron reminds everyone of government cut-backs and our own squeezed wallets. Boris also has experience of high office, and being Mayor of a city as diverse as London requires a special type of politician who appeals to different sections of society and fosters consensus. He is also of good Tory stock, Eton and Oxbridge educated, clearly a friend to wealthy and privileged, whose support the Tory party depends upon. Even his frequent gaffes come across as lovable buffoonery: Boris has turned his biggest weakness into his greatest strength.

However, there are reasons against making Boris party leader. He is clearly no more right-wing than Cameron, and thus unlikely to attract back the euro-sceptic support lost since Cameron became party leader. British politics are also very different from American politics and, although Boris considers himself to be Governor of the London (in more ways than one), being Mayor is an unlikely stepping stone to party leadership. Cameron's successor is more likely to come from a cabinet colleague, probably Osborne who occupies the traditional king-in-waiting role of Chancellor and is firmly to Cameron's right. However, the main reason against Boris becoming party leader is actually his clownish appearance. Britain longs to be taken seriously as a world power and everything about the London 2012 Games is a testament to this, but choosing a tousle-haired dandy as our leader does not project seriousness. The thought of a leader who might drop his trousers at a meeting of NATO has little appeal outside the LOL B-Jo crowd. Memories of how all of Italy was mocked for Silvio Berlusconi's gaffes are still fresh in people's mind.

The LOL B-Jo crowd may have their day: remember that in the early 1970s, the idea of Margret Thatcher as Prime Minister was laughable (remember Life on Mars?). However, Boris Johnson is clearly setting the agenda right now, with his appearance on David Letterman's The Late Show in America prompting Cameron to be a guest on the same late-night talk show. Recently, Douglas Alexander has written in the New Statesman that Labourshould take the idea of Boris as party leader seriously. B-Jo maybe the nation's favorite joke for now, but he is no fool. Boris Johnson's political foes (both inside and outside his party) would do well to take seriously the way he uses his public image to promote himself, and his appeal to people alienated by politics. No other politician better sums up the way Twitter has changed politics. It would not come as a shock to me if I were to read a tweet saying “LOL just voted for B-Jo for PM” in 2015.


Sunday 19 August 2012

Chinese democracy: is it an oxymoron?


More than a year after the Arab Spring began in Tunisia, its reverberations can still be felt around the world.  Civil war rages in Syria, Libya is attempting to rebuild itself, and Egypt is trying to shake off the shackles of a military dictatorship. However, one big question that remains unanswered is – will the Arab Spring turn into a Chinese summer?

The Chinese Communist regime is among the most unusual and interesting in the world. It maintains an ideological connection to Marxism and Maoism, but also presides over a labour market more deregulated than in most western countries, as well as owning some of the world’s largest private firms. It is somewhere between a socialist’s and objectivist’s dreams or their worst nightmares. Despite the government’s at times overbearing nature, it remains consistently popular with the one point three billion people it rules over, mainly due to the government’s ability to lift people out of poverty.

Chinese industrialization has been swift and effective, building high-tech industries where once there was subsistence farming. A country which once closed its doors to western technologies and goods now has a maglev network and is building 26 new airports. There are people in China today who run software firms whose parents farmed rice fields; one generation has gone from Milton’s green and pleasant fields to Silicon Valley. Many Chinese people do not want to change their government, because in their opinion they have the best government in the world: no other government has ever done so much to so drastically improve the wealth and living conditions of so many people. Poverty still remains a problem in China, especially for the millions of migrant labourers with no legal status or protection, but the wealth of the world is flowing into a country which throughout history has thought of itself as purely self-sufficient. Imagine if our parents and grandparents had been serfs on lands owned by feudal Barons, how much would we look up to the political party that brought us consumer goods.

The Chinese government has also recently relaxed its laws against political dissidence, and it is now acceptable to criticise openly state bureaucrats and regional officials if it is felt they are corrupt or ineffectual. What is firmly off the agenda is any suggestion that Communism should end or that the Chinese government should be elected democratically. For now this delicate balance works well, the government provides vast (but unevenly distributed) wealth for its people and they enjoy more social freedoms than their parents; in turn the party, politbureau and old guard remain firmly in charge and enjoy the universal support of their subjects.

Much like Enron, the entire system is kept afloat by rising stock prices and a healthy dose of aspiration, or the case of China rising absolute living standards and the slim chance of becoming a Communist billionaire. Should a recession strike China and living standards fall, then questions will be asked. The overbearing Communist regime will not be so popular when the trickle of wealth seeping down from the top dries up and suddenly over a billion people will want a say in their government. This will be especially true of the above-mentioned migrant works who currently have the least to gain under Communism.

No regime that has been in power as long as the Chinese Communist Party will quietly step aside, and it will be difficult for western powers to criticise any Chinese crack-down on pro-democracy movements whilst our business interests are so closely linked to the Communist Party. Pro-democracy rumblings in China, such as we have seen in the Middle East, will have disastrous effects on the global community. China owns most of the west’s sovereign debt (especially America’s) and a civil war in China (like the one we see in Syria) could involve more people than World War II. With what will soon be the world’s largest economy up for grabs, the stakes would be very high in a free and open Chinese election.  Multiply this by the problems Russia has had in transferring from Communism to democracy, and you have the potential for a very unstable situation with the very real possibility of grave consequences.

China is opposed to intervention in Syria, as they can hardly call for change in non-democratic regimes, especially as eventually the pro-democracy uprising will find its way to China. When living standards fall, when the impoverished people industrialization is built on the back of organise, when the distribution of colossal amounts of wealth becomes too uneven, calls for regime change will be inescapable.

Democracy will inevitably come to China, but just like the tide of pro-democratic uprisings across the Middle East, this will not necessarily result in the best outcome for the west. Democracy and the Chinese government might seem like strange bed fellows, much like the free market capitalism and state socialism of the current government’s economic policy. The Arab Spring is sill changing the political landscape of the Middle East, but it will be a mixed blessing if becomes a Chinese summer.

Thursday 19 July 2012

The benefit of space exploration


Last year on July the 21st NASA’s Space Shuttle programme officially came to end when Atlantis returned to Earth after completing its final voyage. Since then the US government has withdrawn from manned space flights, relying on the Russians and Chinese to ferry American astronauts to and from the international space station. Western governments are slowly abandoning space exploration and turning their attention towards more Earth-bound problems. In the age of austerity and economic stagnation, space exploration seems like a past excess we can no longer afford (along with public sector pensions and healthcare it appears). The space shuttles stand as a towering monument to the optimism of a by-gone age, when we thought the white heat of technology and Keynesian demand management could have saved us from ourselves. Many hold the same opinions of space exploration as they do of the welfare state, that it was a costly mistake fuelled by optimism and good intentions but ultimately lacking a grounding in the reality. With the space shuttles sent to museums and with no government plan in place to replace them, private companies such as Richard Branson’s Virgin Galactic are vying to be the dominant powers in our upper atmosphere. Some see this as an indication of the way the western world is heading with more and more of what we thought could only be handled by the government being taken over by private companies.

While America is already being nostalgic about the days of space exploration, on the other side of the world government space programs are very much alive and well. China and India are currently engaged in a space race of their own with the former launching their Tiangong-1 space laboratory in September last year and the later aiming to be the first nation to return the moon since Apollo 17 in 1972. In these countries their space programs are a source of enormous national pride, especially as they take over the arena previously dominated by the globe’s fading powers. As the age of US, Britain and Russia ends and their space programs are discontinued and new generation of super powers are aiming not only to conquer the world but also the space above it. Even North Korea maintains its sights on the stars with an attempt earlier this year to put a satellite into lower Earth orbit. This attempt was unsuccessful but it was unprecedented in the level of access foreign media was given to the launch, indicating how confident the famously isolationist state is in their rocket scientists. In these countries space exploration is not considered to be an extravagance of an overly confident super-power but part of the global coming of age process and vital arm of both industry and government.

However, space exploration is not just for rival super powers or a way for newly emerging economies to show off. In Nigeria firms are partnering with western experts to develop a national space industry with satellites already successful launched. These industries (supported by the government) are seen as a way of training workers in important 21st century skills of computer programming, engineering and micro-electronics. The space industry also has a positive economic effect in fostering a high tech support industry that offers well-paying jobs and boosts national income. Creating a space industry is seen as a wage to develop the national infrastructure with the aim of growing the economy and lifting people out of poverty.

Western economies showing sluggish growth could learn from these countries who are investing in an advanced technological industries and enjoying strong growth. Investing in space technology for Nigeria and China is having a positive effect on people on the ground by developing industries and training workers. It would be reprehensible to let the west’s flaunted competitive advantage in high tech industries slide to other countries because we were unwilling to spend the money needed to support it. Space exploration creates growth in in all manner of industries from software design to metal casting. Through government investment in large scale projects like space travel, money will pass to the industries needed to support space exploration and from them to the industries which provide the basic components and raw materials for these high tech firms causing the economy as whole grow. Something western governments are crying out for.

In order for the industry to progress, technical innovation is necessary. The old vertical take-off model used by the space shuttle and Apollo program might have to be replaced by the more efficient horizontal take off model favoured by Virgin Galactic and other private space ventures. Also for the industry to reach its full potential corporation is needed to spread the costs and ensure that the economic benefits reach all the denizens of Earth.

The strongest argument for global co-operation in space exploration is that the space industry is unlike any other industry in the world in its unique ability to inspire people and capture their imagination. The draw of the stars is irresistible to many and space exploration has given us the world’s most frequently used image (the Earth from orbit) as well as the iconic moon landing footage. There is no greater symbol in thawing of the cold war than a Russian Cosmonaut and an American Astronaut shaking hands in orbit in 1975. Great deeds inspire people on the ground to reach further and accomplish more, it is a symbol of how far we have come as a civilisation since we first discovered fire and a reminder of how far we still have to go to reach the heavens.

If Nigeria and China can find the economic argument for space exploration than surely it remains relevant in the west as well. In an age of tempered ambitions and cut backs we need the symbol of stirring accomplishment to inspire us. Not to mention the economic and scientific benefits that space exploration can bring. The space shuttle was an ambitious programme, much like the New Deal’s program of public works which lifted America out of the great depression. It seems our leaders are keen to remind us that we live in a time where we can no longer afford ambition and we should fix our sights lower on what we can accomplish. No wonder disillusionment has replaced the white heat of optimism. I believe there is still an argument for space exploration just as there is still an argument for ambitious government projects whether they come in the form of the space shuttle or the welfare state.

Sunday 15 July 2012

Feminism and class consciousness


The world needs feminism. In the western world one in four women will be affected by sexual violence in their lifetime and in developing economies women are more likely than men to have a lower standard of living. Any efforts to improve the living conditions of the world's poorest people will only benefit 50% of these societies if greater work is not undertaken to improve gender equality. The work of feminists is essential to our continuing social progress, not just bringing genders in line with each other but also working to combat racism, homophobia and transphobia.

There is broad support for the goals of feminism but there is also a good deal of debate as to the methods through which these goals should be accomplished. Due to the low social status of women around the world there are many factors which prevent them from uniting into a powerful political movement, as generally the politically less powerful do not engage with the political establishment as they feel the have less to gain from dong so. What I have set out below is my thesis on one way in which we can move towards accomplishing the goals of the women’s movement.

People who broadly identify as feminist come from a wide variety of backgrounds and bring their own experience to the debate, not just as women but also members of other minority groups. Feminism is in itself a Universalist ideology about readdressing the balance of power between minority and majority groups. As an inclusive movement it has many crossovers with similar struggles and causes, however here in lies a challenge that faces feminists, namely in building female class consciousness. Women (and indeed feminists) typically primarily identify as belonging to a more specific socioeconomic group, rather than simply identifying as being 'a woman'. More prevalent class signifiers incorporate a combination of class, race, sexuality and sub-culture as these have a large impact on someone's identity as well as gender.

Traditionally class consciousness is viewed as the Marxist idea of the proletariat becoming aware of how they are exploited by the bourgeoisie and banding together against their oppressors. In the 21st century where the struggle against oppression has taken on many different forms I feel the concept is still valid but needs to be expanded. We need to stop thinking of class in a rigid way of factory owners and laborers and apply this model to the various different power relationships in society that can be exploitative. In this case the privilege men have over women. This is not to say a means of pitting women against men but a way to spread understanding of how women are opposed by the patriarchy.

Earlier this year, noted feminist blogger Helen Lewis wrote about the challenges facing feminism as a movement in 2012. The piece, which focused on the need to keep the feminist debate current, can be found here. Central to the article is where she asks "What is the biggest, most important single issue for feminists in 2012? What should we get angry about?" I agree with the conclusions Helen Lewis reaches and want to now add my own answer to the question which that it is important to create the idea of women as an oppressed class and to show that the same patriarchal systems which oppress poor black women in developing countries also affect rich white women in the OECD. However there can be problems in creating united class identity as there are a lot of differences between poor black women and rich white women, for example access to affordable childcare. Instances of rape and domestic violence are an example of an issue which affects women as an entire class and poor support for victims is an example of how women as an entire class are oppressed by the patriarchy.

In America, African Americans have been very successful in building a class consciousness that transcends economic background. This is partly through the emergence of an African American culture uniting the class, a culture which places emphasis on exploring how the current system oppresses African Americans and on overturning the barriers society places against members of ethnic minorities. For more details on this see, the documentary The Black Power Mixtape 1967-1975.

If this example of how African American culture transcends the gender and economic divides within African Americans then it can be used by feminists to develop a women's class identity. There is already a women's culture which is as diverse as women themselves but feminists need to use this culture to openly explore how women are oppressed and what unites them together in their oppression, much in the same way African Americans have used their culture to advance their liberation. Many feminists are already doing this, so in answer to the question posed by Helen Lewis above, I would say an important challenge and opportunity is supporting the work of these feminists in creating a women's culture to unite diverse women together in a single political movement. In other words developing a united female class consciousness.

Class consciousness makes a diverse movement a more effective political force. The high level of African American class consciousness creates social pressure to tackle issues which affect African Americans such as poor funding for intercity schools and gang outreach programs. The status of Africans Americans within American society is still low but the government programs to tackle racial issues receive more funding than those designed to reduce gender equality. Programs supported by feminists such as women’s shelters or outreach programs to victims of domestic violence less finical support. Most of the hard work in these areas is performed by charities with little support from the government.

Developing the idea of 'woman' as class consciousness will help  bring political pressure on governments to address social and economic issues which affect women. However there is a problem with class  consciousness which is the homogenising effect it has on the class. In other words it creates pressure for the entire class to conform to the opinions and values of the prevalent subgroups within the class. A good example of this is seen again in African American culture where there is a lot of pressure within the class to identify as heterosexual. Class consciousness has created a hegemony of people identifying as heterosexual African Americans which makes it difficult for the oppressed class to connect with other oppressed classes in America to effect social change. For example homosexual Americans. An indication of this effect was the passing of Proposition 8 in California during the 2008 election, California being a state which also voted for Obama. Millions of African Americans went to the polls to support someone from their class but also support a law against another oppressed class because people identifying as African American also prominently identify as heterosexual.

One of the great strengths of feminism is it is a movement that can incorporate people from a variety of different oppressed classes. There are many crossovers in ideology between feminism and movements to liberate ethnic minorities, LGBT people, the poor and the disabled from the constraints that society places on them. This broad background is a great strength to the movement but also a handicap as it inhibits the emergence of a single united female movement as a class consciousness.

The development of woman as a class consciousness will create political pressure to improve the status of women the world over. This is no easy task but a good way of developing class consciousness is through the development of a feminist culture which would use the strength of the movement (its inclusiveness) to explore the problems being faced by women of different backgrounds and create a desire for political change. Hard work is already being done in this area and it is important that this work is encouraged and supported to protect the future of the movement. The world needs feminism, without it we cannot progress socially as half of society will be born into a world which restricts their freedoms.

Monday 25 June 2012

Austerity or growth: a politician's dilemma


With Karolos Papoulias emerging as the new Prime Minister of Greece, the nations of the Eurozone hold their collective breaths to see what approach to the crisis the new government will take. In some ways, Merkel and friends must be breathing a deep sigh of relief at having dodged the bullet of a coalition involving the ΚΚΕ (the Communist Party of Greece) who wish to renounce austerity and and leave the Euro. After the election dust has settled, a coalition has emerged between the parliament's largest party, New Democracy, Pasok (the Socialist party) and the Democratic Left. All three parties are broadly in favor of remaining in the Euro and desiring a less radical renegotiation of the bailout. However, the new government does seek some changes to the demands placed on Greece, and this must worry Merkel and co.

Across Europe, austerity is looking less attractive to politicians, as voters turn towards parties which favor growth. In France, François Hollande defeated Nicolas Sarkozy on a platform of taxing and spending. This is a sign of how much things have changed in the two years since the last UK general election, where austerity was taken as common sense. Since then, European economies have seen little growth, and the prosperity that has been created has not helped where it is needed most. As government budget cuts force roll-backs across the services which are available, most people feel worse off under austerity. Now the Tory-led government talks about efficiency and promoting growth, realising that if the situation does not improve then re-election looks unlikely. As well as watching Greece, keen eyes are also focused on France to see if Hollande's policies of tax-spend will boost the economy faster than Merkel's austerity.

In the UK, boosting growth has support on both side of the political divide not the least because GDP must rise if tax revenue is to increase enough to meet the government's deficit reduction targets. Further stagnation in the economy will hinder growth in the long term and cause lasting structural damage. Aside from the much talked about 'lost generation' of young people locked out of jobs and the housing market through increased scarcity, social problems are becoming exacerbated through a lack of prosperity – see last summer's London riots for evidence of this. Faced with the prospect of the economy tanking, the government's austerity programme now looks a lot less like common sense and a lot more like an ideological commitment to privatization and rolling back the state. I have blogged before about the roots of the government's philosophical commitment to austerity.

If austerity is ever going to work, it will have to deliver some growth soon. In the meantime, the people of Greece are facing a fifth consecutive year of recession and world greatly appreciate some growth. The austerity conditions imposed on Greece are very harsh and surely smothering the green shoots of recovery. However, the new government has little room to maneuver, as they are reliant on the support of the rest of the Eurozone to manage the country’s enormous debt. Papoulias needs growth and austerity, but it is becoming evident that the two are mutually exclusive. Greece will be watching both France and Germany to see which economy grows the fastest. The divisions across Europe are summed up last Friday's Euro 2012 match between Germany and Greece, a contest of the prosperous against the impoverished. Germany's victory does not silence the doubts about the merits of austerity.

The leaders of Europe are in need of some answers to the question of austerity verses a bold dash for growth, and are keen to see what happens in the countries which have most openly embraced either stance. The new Greek government will have to make some difficult economic choices and the continuing existence of the Euro maybe rest on these decisions. One thing that is certain – politicians will need to embrace either harsh austerity or a strong push for growth soon, as the current stagnation is unsustainable.

Monday 11 June 2012

The end of the high street: not with a bang but a whimper


It's easy to live in a left-wing bubble: between organic toiletries, pubs with locally-sourced food and shopping on the internet, sometimes it is easy to forget there are High Streets where a large number of people do the majority of their consuming. A few days ago, my delicate shield of ethical consumption was smashed when I spent a few hours inside the Westfield Shopping Centre near Shepherd's Bush, west London.

The phrase 'fish out of water' does not cover the experience that I went through. I assumed that Westfield employed people specifically to keep dirty lefties like me out of their palace of consumption. Much to my surprise, I was welcomed in and dazzled with the bright lights and the range of shiny baubles available for me to purchase. I had some time to waste, and decided to find a music shop to pass the time in. I briefly considered unraveling a thread from my shirt and attaching it to the door so that I could find my way back later, but then I noticed the handy maps available from an information stand. Armed with a plan of the place, and mentally comparing myself to Livingstone, I set out to explore this strange and unfamiliar land of retail.

As I walked past the juice stands and Sky TV sign up booths, two things become almost immediately apparent to me: firstly, that there were no music, DVD, books or games shops anywhere to be seen, and secondly that the shops which did make up the Westfield were almost exclusively either clothing or jewelry shops. This confused me, for surely the main point behind a large-scale retail development is to get as much diversity of shops into as small a place as possible, thus allowing consumers to satisfy all their needs at once. Apparently not, as the Westfield caters to a very small section of consumption, mainly high-end up-market deeply personal. For those who shop in the Westfield, the particular boutique they frequent is a statement about their individuality made through mass consumption, the triumph of late-stage capitalism. In short, I discovered that the Westfield is the last bastion of the high-end High Street retailers against the advancing tide of internet shopping.

Later in a gastro-pub serving organic, locally-sourced pies, I was firmly back in my element and discussing my afternoon with a friend. I said that clothes and jewelry were one of the few areas where internet shopping and has had little impact. My friend informed me that he purchases T-shirts and shoes online, to which I agreed. The internet's particular brand of culture is very suited to the T-shirt business and allows the consumer to seek out designs which speak to them. Here the internet has had success in breaking the High Street's stranglehold on fashion. I asked my friend, however, if he would consider buying trousers online and we both agreed the idea seemed somewhat perverse.

The internet has taken over from the High Street in areas where it does best: bulk selling of goods, mainly entrainment goods, where the major factors are price and range. The last time I went into HMV to purchase a DVD, a friend told me not to bother and that it would be 'cheaper online'. He did not specify a website or have any data to justify his claim, which was built on a cultural understanding that this variety of shopping is simply better on the internet.

So where does this leave the High Street, other than with pound shops and clothing outlets? Some things have to be brought in the flesh, and the time delay involved in internet shopping means some goods will always be purchased in meat-space. However, with the rise in smart phones, tablets and app stores, immediate entertainment purchases online are a reality. All that is needed is a shift in social conventions, to make the giving of online content an acceptable present, and there will be no need at all for High Street entertainment retailers.

The High Street is certainly in a bad state, and a simple Google search for 'the end of the high street' returns thousands of blog posts and broadsheet articles bemoaning the end of face-to-face retail and making lazy observations comparing the closure of Game to the rise of Angry Birds. The truth is that this is hardly a recent phenomenon. It was nearly two decades ago that Amazon's diversification into VHS selling meant that Saturday afternoons were no longer spent wandering into the city centre to buy the latest Simpsons collection. One article I read claimed that 2012 was the year the High Street would end, as if most people had only just discovered the internet. In fact, most High Street retailers discovered the internet a long time ago and have also moved into online shopping.

Most likely the current process will simply continue. Places like the Westfield will hold their own in certain sectors for a while, but eventually changes in technology and social conventions will move our lives and consumption almost entirely online. If the High Street does end, it will be slowly over many decades, and not because everyone turned exclusively to online shopping over one Christmas period. If the High Street does end, it will not be with a bang but with a whimper, and one which is already well underway.

Sunday 22 April 2012

The Hunger Games and Game Theory

I do not usually write posts about popular culture topics, so this blog will open with a first which is a SPOILERS WARNING. This article may ruin the ending of The Hunger Games if you have not seen the film or read the book yet.

With that out of the way, I can move onto the main area of discussion. One might think that The Hunger Games, which opened at cinemas nationwide on the 23rd of March, might not have much to teach the viewer about economics, but that would be a mistake. The film has some important insights into the nature of competition and game theory.

The film follows the story of Katniss Everdeen, a teenage girl who volunteers to combat 23 other juveniles in a battle to the death in order to avoid the same fate befalling her sister. She strikes up a friendship come romance come rivalry with one of her opponents who hails from the same district of the film's dystopian future as she does. Katniss has to rely on her own survival skills to make it back to her family but is also faced with difficult decisions along the way in regard to who she can trust. There can be only one winner of The Hunger Games and only one can return to their home, co-operation in this environment can only go so far.

This is very similar to game theory and I am sure that had John Forbes Nash been alive today he would have found the questions raised by this literary sensation fascinating. Nash's game theory is a study in human selfishness which attempts to find mathematical and logical optimal solutions to real world problems. His results are bleak and frequently point to the power of human greed as a means to achieve the optimal result from any situation. Nash won the Nobel Prize for economics for his efforts and his theories underpin a lot of the prevailing market ideology and government policy. I have blogged on Nash and his theories before.

In a typical game theory situation there is a trade off between cooperating with the other player(s) and behaving selfishly for personal gain. Frequently you do not know what the other player's moves are or how they affect yours until after you have made a key decision. Nash found that there is always an incentive to betray trust for personal gain as in any one moment the other player(s) is likely to be betray you if they are behaving logically according to game theory.

In The Hunger Games itself there is an incentive to cooperate with one or more opponents against further opponents. Katniss teams up with Rue during the game to great effect whereas Peeta Mellark (her rival/love interest) allies himself with the stronger and better trained players. However there is an incentive to betray trust at any point as there can only be one winner. During the course of the game Peeta switches sides to help Katniss defeat his former allies. Signs of personal weakness are rewarded with timely betrayal and several characters come to an abrupt end at the hands of their recent allies. At any moment there is an incentive to betray trust just as whoever you are allied with is likely to also be planning the moment they turn on you.

This all sounds very bleak and has led many to doubt the human virtues of cooperation and altruism but there is a positive side to game theory. More recent experiments have been based upon the idea of iterated game theory where games are not played in isolation but repeated over and over with the long term outcomes monitored. These studies have shown that there is a mathematical advantage to altruism in iterated game theory. If you cooperate in the long term, through repeated games then all parties can each gain greater results than they could have achieved through seeking personal glory.

The Hunger Games also has an argument for cooperation and altruism if you view not as a single game but a series of games Katniss repeatedly plays against a changing series of opponents. There is a clear incentive for her to cooperating with weaker plays against the players with advantages. Ultimately Katniss's victory in The Hunger Games is achieved because she works together with others and uses their competitive advantage against her opponents. She also exploits the selfish players willingness to turn on each other to thin the field. At the end of the film Katniss is able to save herself and Peeta not because of their ability to work together to achieve a common goal but because they are able to trust each other.

The Hunger Games shows that there is not only an incentive for cooperation but also for trusting others even in an single victor environment. It is a strong argument against Nash's dark view of human nature as motivated by selfishness and personal gain. In our personal lives as well in society as a whole we need to learn from Katniss example of helping the weak, harnessing the power of cooperation over selfishness and above all that we need to trust each other.


Wednesday 21 March 2012

A budget to reward work?

Politicians are always looking to incentivise employment. The general means of accomplishing this is by either cutting taxes on high earners and corporations to encourage entrepreneurship or cutting benefits to get the unemployed off the dole and contributing to GDP and tax revenue. In the run up to today’s third budget of the coalition government Chancellor George Osborne claimed he was planning a “budget to reward work”, i.e. one which will benefit those already in employment and encourage the unemployed to get a job.

Now with the details of the next 12 months of government spending announced we can ask ourselves: to what do degree has he succeeded? There was some welcome news, such as raising the level at which someone in employment begins to pay income tax to £9,205 a year with the aim of raising it to £10,000 next year. Not only will this reduce the tax burden on those with the lowest incomes but all those in employment will pay less tax; the average basic rate tax payer will now be £305 a year better off. This may not sound like a lot but it will boost consumption and aid the economy. Another good idea was tax breaks for firms working in the fields of computer games, animation and high end television manufacture. These are important sectors to the UK economy where we have a competitive advantage and are vital to our growth.

However over the last year those in employment have had their prosperity dogged by the specter of inflation above the Bank of England’s target. Although inflation has fallen back in the last few months (currently the CPI is at 3.4%) higher inflation erodes the value of income made from working and reduces the incentive to enter work. Firms have tended to give lower than inflation pay rises recently so as inflation remains high and those in work are finding themselves worse off. Inflationary pressure is largely the result of rising fuel costs caused by the soaring price of oil and gas on the global market. A domestic fuel subsidy or measures to reduce transport costs could have reduced inflationary pressure and made the income from work more valuable. This, however, was never on the agenda.

Another consideration is where will the funds come from to pay for this tax reduction? Borrowing is projected to be £1bn lower than anticipated which has given the Chancellor room to maneuver. A certain amount of the slack will be taken up by the rise in stamp duty for properties over £2m and the proposed clamp down on tax avoidance. The majority of the additional revenue will be raised by an extra 37p per unit tax on cigarettes. It is worth remembering that taxes on commodities disproportionately affect low earners as they spend a higher proportion of their income on the taxed commodity. A tax break for lower earners could be a double edged sword for those who also smoke – which there is also a higher instance of among the poor.

The other main highlight of the budget was the reduction in the top income tax bracket - from 50p in the pound to 45p – aimed at encouraging entrepreneurship and investment from overseas. I have blogged about this before but investment will remain low and the rate of business start ups will be sluggish while GDP growth is lack luster. With growth in 2012 projected at a mere 0.7%, Osborne should consider a growth strategy if he wishes to stimulate investment and create a fertile environment for new businesses.

Job creation and a plan for boosting growth were not overtly stated in today’s budget. There was protection for some vital areas but others important growth sectors (such as renewable energy) were all but activity discouraged – mainly through the government’s continual commitment to non-renewable energy. Unemployment is projected to hit a peak this year at 8.7% and a clear plan for job creation is needed to protect the recovery. Unemployment and the low growth rate are the biggest problems the UK economy faces right now and the government should commit to a clear strategy for tackling these before it leads to endemic social problems. Such a plan would also send a clear signal to overseas investors and aspiring entrepreneurs that the UK is committed to economic prosperity above political goals.

Overall this is a budget lacking in ambition or a clear plan to boost the economy out of its current dire situation. There were no sweeping cuts, surprise new schemes or massive tax boondocks. Just a few tweaks to the system with the vague goal of stimulating growth and getting more people off benefits and into employment. If Osborne really wanted to create a budget that would reward work he would take measures to reduce inflation or help get more people into work. More employment and a better growth rate would benefit both those in and out of work as it would grow the economy overall. The Coalition maybe attempting to incentivise work but while the economy remains weak, their efforts will be unsuccessful.

Monday 19 March 2012

50p Tax: What’s going through the Torys’ heads?

It is no secret that the Tories want to abolish the 50p tax band. There are few points more fundamental to Tory ideology than the belief that taxing the wealthy is not only bad for the economy but also morally wrong. It runs to the heart of their belief in individual freedom, economic liberalism and personal responsibility. The most surprising fact about the rumoured plans to abolish the 50p tax rate in the forthcoming budget is that it has taken the Tories the better part of two years in government to consider acting.

This is partly due to their coalition partners. The Liberal Democrats oppose the removal of the tax without the instigation of another tax on the wealthy in its place. They would prefer the Mansion Tax they proposed in their 2010 manifesto – which is also vehemently opposed by grass roots Conservatives. If the Tories were to repeal the 50p tax rate without implementing the Mansion Tax (or something similar) it could derail the coalition’s remaining legislative agenda at a time where Lib Dem support is essential to pass the government’s welfare reforms.

The second reason why the Tories have waited until now to considering removing the tax is fiscal. The government’s argument that the nation’s coffers are in such a dire state that all must make sacrifices for the economic wellbeing of the country carries little weight if it emerges that there is room in the budget to cut a substantial revenue stream. The Conservatives would be on dodgy political ground if as soon as they entered government they cut the essential services lower income earners rely on (such as EMA) and introduced a tax which falls disproportionally on the poor (the VAT rise) whilst also passing a tax break for the highest earners.

Sound economics does also lie behind the decision to keep the 50p tax rate. To reduce government borrowing as quickly as possible, tax streams would have to be kept at the current level or raised – hence the rise in VAT. Income Tax is the largest proportion of the government’s income from taxation, and high earners pay the lion’s share of this income.

So why act now? Again there is an economic case to repeal the tax. Growth has been poor since the coalition came to power, and many think tanks and economists believe that repealing the 50p tax would stimulate consumption of consumer durables (predominantly purchased by high earners) and boost the economy. It would also go some way toward attracting investment from overseas - although investment will be limited whilst growth remains sluggish. The Tories’ re-election and deficit reduction programme depend on growth rising in the next few years, and cutting taxes on high earners is seen as a short cut to achieving this.

There is also pressure to repeal the tax from within the Tory Party. Cameron has a problem with his own right flank, who feel that too many Liberal Democrat policies are on the agenda, that the government has not played hard ball sufficiently with the EU, and that Cameron is not doing enough to protect the international standing of Britain as a great nation. These MPs are also concerned about their own re-election under the Tory banner, and are crying out for some traditional Tory reforms to take back to their constituencies. Cameron’s failure to support the back-benchers’ proposed EU membership referendum has created resentment within his own party, and he needs a bone to throw to them to ensure they keep supporting the continuation of the coalition.

The Tories do have to consider the strong case for keeping the higher tax rate. Firstly, it generates essential revenue at a time when growth is slow and tax receipts are lower accordingly. Another key point to consider is that those who stand to benefit from the repeal of the rate are the very wealthy, and studies have consistently shown that the wealthy save a higher proportion of their income, whereas those with lower incomes spend the majority of their income out of necessity. If the government’s plan is to boost consumption, then conventional logic suggests the amount of money that circulates around the economy should be raised, rather than the amount left inactive in bank accounts.

Aside from this, the government is faced with a moral responsibility that any government should have, which is to help the less fortunate, the vulnerable, and those who cannot look after themselves. This government is failing in that regard as its austerity programme is cutting the services needed most by those whom society is supposed to look out for. To reduce taxes paid by those most capable of providing for themselves at this time would be a failure on a moral level.

If Osborne wishes to abolish the 50p tax band in tomorrow's budget, then he must consider the political fall-out with his Lib Dem coalition partners as well as the wider economic implications. He must also bear in mind that the most obvious logic of cutting taxes to boost consumption does not always hold true. Whatever decision is reached, it will certainly be considered a test of the Tories’ claim that all sections of society must make sacrifices in order to tackle the budget deficit. The Conservatives certainly would love to abolish the top tax bracket; whether they are willing to spend the political capital needed to do so will be a question that can only be answered by Wednesday's budget.