Modern government: truth deficits and overspending

The Chancellor of the Exchequer, George Osborne, made a fib on television last week. When questioned about his decision to pledge nearly £10 billion to the IMF bailout fund, he said  "we've dealt with the debt crisis", and that Britain is now a part of the solution, rather than part of the debt problem. What a double-dip load of hogwash. 

Government debt is at an all-time high and the country has just nosedived back into recession. In addition, Osborne's government has actually set new records when it comes to increasing the UK's debt load. The Coalition's appetite for living on credit has even surpassed the borrowing plans proposed by Labour - which Osborne mocked as reckless and unsustainable. But bad things are never quite as lousy when you do them yourself, are they, George? 

Granted, things have moved on since the election in May 2010, what with the Euro implosion and higher fuel prices, for example. But saying that we've been dealing with our debt problem, while actually piling it on at speeds previously unseen, is doing to the truth what spaghettification does to matter; namely, ruining it. Doing so on camera without even batting an eyelid is behaviour one might expect from as trustworthy a politician as, say, Ed Balls, but the Coalition promised us something better: that they would be about a new kind of transparent politics.

As much as Osborne likes to play games with the truth and obfuscate things by using "debt" and "deficit" interchangeably, this government has done virtually nothing to reign in Government spending. It has, in fact, been increasing it. Meanwhile, Labour still bang on about the untruths  of "cuts" and "too far and too fast", but their version of reality is just as fanciful as the Coalition's. I don't dispute for a second that thousands have already suffered and many lives have no doubt been ruined by the Government's policies and the resulting lack of growth. But as long as long as the debt mountain keeps rising - which it has been - to scaremonger and hark on about deep cuts is disingenuous at best.

There has, thankfully, also been some good news of late - well, kind of. Government borrowing came within its target, but that was mainly the result of QE and ZIRP. These two measures have kept Britain's finances alive, but the lifesaving intravenous drips have done so by punishing the prudent and rewarding the feckless. The pain has simply been shifted onto consumers through inflation, and the inevitable hangover has only been deferred - thus, the measures are as useful a remedy as hair of the dog.

UK debt (excluding external debt) visualised

The real problem we have, which none of our politicians dare to mention for fear of losing face and, thus, power and their day job, is simple. Governments are spending too much. That is the essence of the Sovereign Debt Crisis - debts, deficits, interest rates and markets, all that, they are just a sideshow. This basic fact seldom mentioned in the mainstream media is one that will sooner or later come home to roost, and no amount of QE will be able to prevent it. 

When it does, the only way for us to avert an almighty fall in our living standards - when our debt mountain turns into an overwhelming landslide, as is happening in Greece - is for everybody to get off their assess pronto and begin working as hard as our Asian peers do. 

However, for decades now, our politicians have been offering us services and investment in return for re-election without concerning themselves with how to pay for it, and this has helped to spawn a something-for-nothing culture based on a sense of entitlement. As a result, we in the West have become lazy compared to our peers in developing countries who have no choice but to work for their daily bread. The chances of everyone just snapping out of this soma-induced stupor are depressingly low. Another option would of course be to just give up the hard earned luxuries of the welfare state - but that would hardly be a good turn of events either.

The hole we find ourselves in and the penchant that Western governments have for living beyond their means are highlighted well by this short and clear video about revenue, debts, spending and deficits. It discusses US debt in particular, but the UK finds itself in a similar, if not worse, situation. Enjoy.

Clapham Quotes

I suppose that would explain why we all recognize that same song...

Community ties

Wealth comes in many forms. Watching the people in this video ("The Cause of Labour is the Hope of the World", from the film The Miners' Hymns), it is difficult to escape the conclusion that, over the last few decades, spiritual wealth seems to have declined in almost direct proportion to the increase of material well-being.  A good example of this, I think, has been the proliferation of technological gadgetry, and the effect this has had on our communities.


Prior to the arrival of television, the little leisure time that townsfolk had was more than often spent together, at home, in pubs, on the streets, in parks, and so on. This social life - not to be confused with today's life as mediated by Social Media - along with community events like those of the miners had the effect of cementing the structures of society by binding people together through face-to-face interaction, which often resulted in relationships, a sense of interdependence and friendships.


TV, however, brought the whole planet and everybody else straight into our living rooms, thus bypassing the need to go out in order to meet people and hear the news, and instead allowing people to connect with the outside world from the comfort of their own sofa. In this way, the social unit became ever smaller, and by the 80's community experiences were being reduced from grand gatherings and street parties to family dinners or water cooler discussions about last night's soap opera.


At least scheduled programming and the need to prepare food kept people in the same psychological time zones, but even these unifying structures have begun to crumble over the last decade. Laptops, smart phones and on-demand entertainment in the palm of your hand, along with ready meals and fast food, are now doing to the family unit - the most basic building block of society - what TV did to the street community. Eating together, playing  together or even just huddling in front of the television in common anticipation of the latest episode of The Simpsons are fast becoming increasingly rare. Instead, today's individuals come, eat, play and go as and when suits their own timetables.


While technological innovations are surely not the only culprit, our social spheres have indeed become increasingly solitary over the last 50 or so years - and this has naturally lead to the fragmentation of society. Just compare and contrast our early 21st century town-life to the the people in this video. Dressed in their Sunday best, they look strong and cohesive; full of vigour, a sense of community and self-respect - not to be confused with its bastardised cousin: street "respec". Their purpose and drive are palpable, while the pride they take in their work is evident, and they also exhibit an awareness of something greater than themselves. 


These are all important components of being civilized - and they are all in danger of being lost amidst the blooming buzzing confusion of today's increasingly atomized world. So, if anyone knows of similar displays happening these days, do let me know - because it's moving stuff, people at their best. Enjoy (The video needs sound; hat tip, Eamonn).

A new president at the top of the world

The winner, Sauli Niinistö

Finland has chosen it's 12th President, the Kokoomus (National Coalition Party - broadly conservative and pro-business) candidate Sauli Niinistö. He won the first round of the election, and went on to gather 62,9% of the votes in the second round. Congratulations are in order. Sauli will become President Niinistö at the beginning of March. A lawyer by training - an entrepeneur as well, having run his own law firm in his home town, Salo - Mr Niinistö has previously held the positions of Minister of Justice, Minister of Finance, Deputy Prime Minister of Finland, Speaker of Parliament and, least importantly, but quite interestingly, Mr Niinistö is also the President of the Football Association of Finland. He has on several occasions retired from politics and high office after having previously run for President, but all good things come to those who try, revise, and  try again, it would seem.

The runner up, Pekka Haaavisto

The contrast between the winner and the runner-up candidate, Pekka Haavisto (Green Ulkopolitiikka called him the 5th most influential Finn on the international scene, and he has been highly popular with urbanites, environmentalists, artists and intellectuals, among others.
League), could hardly have been starker - unless Sauli was called Timo Soini (of the lamentably close minded True Finns). Mr Haavisto received 37,4% of the votes, which, although dissappointing to his followers and activists, is a remarkable amount considering the following: he is a Green, he is openly gay, he chose the civilian service over the military (Finnish men must complete one of these or the third option, prison, for their national service), and although he studied Social Sciences in university, he did not complete the degree. His strenghts, however, lay in international affairs in particular: he has worked for the United Nations, UN Environment Program, and the European Union in various capacities, which resulted in spells in Afganistan, Bosnia & Herzegovina, Darfur, Iraq, Kosovo, Liberia, Palestine, Sudan, to name but a few not alltogether friendly places. Haavisto is also a Member of Parliament and he previously served as the Minister for the Environment between 1995-99. The foreign affairs magazine

The role of the President of Finland is mostly ceremonial, and they have little power over national or foreign policy. Their main function is to act as the premier representative for Finland on the world stage and in non-European matters in particular. The President is the figurehead of the country and a sort of brand ambassador for all things Pohjola.

Personally, I voted for the losing candidate. At first, I felt that it might not be in the country's interest to have a gay President with an Ecuadorian civil partner, not because I have anything against either - because I honestly do not - but because it might complicate matters and impinge on the national interest should the President need to, for example, drum up trade with less civilized and less modern countries, where the private life of the President might be given more weight than their skills and professionalism. This is only an indictment at certain parts of the world, where prejudices are still far more prevalent than in the West, but in the real world, this could result in less opportunities for Finland PLC. Sad but true - and, after all, we were not voting for equality or justice or morals, but for the person most suited to further the Finnish national interest.

However, although Niinistö ticked all the trade boxes, his downfall for me was having such views as libraries should begin charging for their services, and for being a tad out of touch with the fortunes of the less fortunate in society, along with the discernible arrogance which I felt he displayed in his television debate with Paavo Väyrynen. Still, I walked to the Embassy thinking Niinistö would get my vote, for the abovementioned realpolitik reason,  but when I was standing in the booth, looking at the two numbers, I couldn't help but feel: will I vote for the status quo where leaders must conform to the norm, or should I give my vote to the person who to me seems superior and thereby try to push the envelope of meritocracy, whatever consequences that may have for Finland's economy? I chose the latter - although I must confess that I thought Niinistö would nonetheless win.

In any case, the turnout was depressingly low, 68,9% - makes one think, why should people be allowed to avail of the benefits of a welfare state but not have to take part in its maintenance? - but the demos hath spoken. Congratulations to Niinistö - now just do the right thing and keep the libraries open because there is little more important for the health of a nation than making sure that people can keep themselves well read and informed. And, Mr Haavisto, you did a great job and even though now was not your time, you certainly made Finland step up and show the world what a progressive, egalitarian and open minded country it can be. This election, the way it was managed, the innovative part played by the media, and the positive result for such an unlikely candidate, showed us leading the world by example in all things meritocracy and equality. As Haavisto tweeted after the result, "these elections might be a wave toward something better, which has begun now." If not today, you have brought tomorrow a lot closer, Pekka - for that we thank you, and we can all be proud.

Clapham Quotes

Especially on Sundays...

Ed Miliband's New (make belief) Reality

The lackluster leader of Labour, Ed Miliband, delivered a speech yesterday to the people's organisation London Citizens. It was billed as his nth relaunch, and he focused mainly on how his party would work to create a "New Reality" for Britain. This UK would be based on fairness and it would be one where vested interests are tackled head on so that the proceeds of growth are not just accumulated by those at the top, but also by low earners and the so-called squeezed middle. 

In what has unfortunately become his trade mark style of bland delivery with little substantive content, Mr Miliband also argued that the Coalition had failed by its own measure of getting rid of the deficit over this parliament, and that it was doing too little to stimulate growth while also cutting too much government spending. He accused the government of "shrugging its shoulders" while the UK's economic predicament deteriorated further, which, he argued, was the direct the result of their failed policies.

Hero or zero?

Ed painted a picture where David Cameron and the government were of the opinion that "fairness is a luxury you can't afford in tough times", while Labour would instead be "fighting for fairness", "fighting for justice", and "taking on vested interests." This was Labour as Superhero, dressed in tight red spandex, fighting for you, me and everyone - that is, as long as we fit into his particular concept of fairness.

Granted, there are few successes that the Coalition can boast about, the notable exceptions being Michael Gove's work in delivering choice and freedom to the education system, and George Osborne's sweet talking of the credit rating agencies into letting the UK keep it's AAA status - as a result of which his government is able to borrow with historically low interest rates. The latter in particular is a nothing less than a coup, considering that, in reality, he's spending and borrowing more than the Labour government did before him (although had Labour's Alistair Darling, or, heavens forbid, Ed Balls become Chancellor, the profligacy would most likely have been far worse).

But the Tories in particular, for all their failings - of which there are many - have actually come to love Ed as a result of his inability to convert the unpopularity of the Coalition's cuts into more Labour voters. Some Tories have even said that he's the "gift that keeps on giving", and that the most important thing for the Tories next election campaign is that Ed remains the Labour leader. Labour's woes under his leadership have also not been helped by the seemingly unending barrage of embarrassments from within the party, with a few own goals thrown in for good measure.

How will Ed save the UK?

Policy-wise there was little meat on Labour's policy bones. Ed said that he wanted to begin by "patching up the unfairness of the old economy" by taxing bankers' bonuses and using the proceeds to help those out of work. Noble idea, but it doesn't take into account how banks have already begun switching their remuneration policies from big bonuses to salary increases and other benefits in order to sidestep such money raising measures from HMRC.

His government would also undertake a review of "corporate short termism." As an example of this modern malaise he gave us the Quarterly Review, but he then failed to elucidate what the problem was - should they be annual, then? Or should companies only make Five Year Plans? - nor did he provide any clues as to how this "problem" would be solved.

He then advocated a policy whereby seekers of council housing would be bumped up the list if they were actively engaged in helping their communities. This is fair enough, but what exactly constituted "helping the community" was left to the imagination.

There were, however, some good ideas as well: Labour would set new rules to promote long term and fair wealth creation by looking at plans for a British investment bank to help small business grow - better that than ever more QE. They would also legislate so that government procurement contracts would only go to companies that provide apprenticeships, thus safeguarding jobs for the next generation. And a Labour government would make sure that energy companies give all pensioners over 75 the cheapest tariff - and if you don't, he said, we'll legislate to make sure it happens.

Ed went to great lengths to emphasise that if his party were in government, he would make choices that favour the hard working majority, over those - by implication skiving wasters - who earn enough to pay the 50p tax rate, which, he said, should stay in place.

But a good example his distinctive brand of what we could paradoxically call "Targeted Fairness" was that everyone in the country must pay for improvements on train lines in remote areas, rather than those who actually use the service and will therefore benefit from the upgrade. So Ed's is a fairness that espouses the rights of a "1%" over the "99%", in that the few would profit on the backs of the many.

So, that's how he'll create fairness. Where the money will come from is a mystery as he didn't say, other than the aforementioned bonus tax.

It wasn't us, guv, honest

But what made for truly interesting listening came from Ed The Historical Revisionist. According to him, the crisis that got the UK into its current state of high unemployment and near zero growth came from abroad, like an overwhelming global storm which even the UK was unable withstand. In stark contrast, however, he placed all the responsibility for the UK's continued economic hardship squarely on the shoulders of the Coalition government. A textbook case of what cognitive psychologists would call Actor Observer Bias - and the rest of us would call bull###t.

But Ed still managed to keep a straight face when he promised that Labour would not shirk away from "using the power of the government", and that Labour wouldn't cut the deficit as fast the Coalition, but would do so in a more balanced way - which translates roughly into "I would just borrow more than they are borrowing."

Hardly surprising, that. After all, he was part of the government that presided over a decade long splurge in public spending - one of the main reasons for the economy's current ills and uncompetitive state - paid by a) borrowing, b) the sale of gold reserves at the bottom of the market, c) using up the North Sea oil reserves, d) increases in tax revenue from the real estate bubble and e) the rise of the financial sector, both of which were the direct result of Labour policy decisions. (See the graph below from this excellent overview of the New Labour economy.)

Ed also accused the current government of having failed by their own standards because they promised to eliminate the deficit over this parliament (but not the debt, mind you, as that wouldn't even be touched). It wasn't to be, however, and, as the Chancellor admitted in his Autumn Statement, the government would have to borrow an extra 111 billion. And according to Ed's speech the figure now stood at 158 billion. (The Coalition's spin on why they needed to borrow more than first thought was that they just hadn't realised earlier how bad a state the economy was actually in. Well, it's of little use complaining now, Georgie Boy: you screwed up your figures or were naive when forecasting, or both, so your bad and your responsibility, simple as that.)

And while admitting that there has been an ongoing economic crisis, in Ed's world it's a crisis of the free market, where our governments apparently played no role. What an incredibly lazy analysis this is considering the sovereign debt crisis that is crippling Western governments and which has even lead to the overthrow of two European governments (so far).

Less honest reflection in favour of more cowardly deflection

But at least he knows how to dodge questions from the press and how to deflect blame - thus proving his credentials as a politician. According to Ed, "its the result of the [current] government not being able to get rid of the deficit over this parliament that we will inherit one." Well, putting aside his admirable optimism, what a porky-pie that was! After all, the government that counted Ed Miliband as a Cabinet Minister was the one that overspent and overextended the country's credit card, without putting anything aside for a rainy day (like a real Keynesian would have done), while making the economy less competitive and less effective even when the going was good!

Also, when asked about the note "there's no money left", and why has he only now, 18 months later, come to the realisation that, actually, there really is no money left, Ed parroted the same line again, that "Remember what this government said? They said we are going to clear the deficit over this parliament - now what's happened is that they've failed. They've lost the argument, and now we're going to have to win it. We will clear the deficit in our next government." Words are cheap, Mr Miliband - but why should we trust the party that racked up the underlying debt in the first place?

Another questioner asked that, while you say you will take on the energy companies, as Energy Secretary in the previous government, why did you not do so then? Ed's reply left the whole question unanswered: "we clearly didn't do enough. We didn't do enough. But I'm not here to defend everything the last Labour government did. We weren't strong enough taking on vested interests, but it's part of the recognition about how the world has changed that we now need to take action." Oh, OK, then. Times have changed - so no need to take any responsibility over the "last government" in which you happened to hold office.

One thing Ed got right, though, was that Labour are much closer to where the people are. This is no doubt true, but it's mostly so because they set in place a client welfare state and presided over a huge increase of people on the public payroll - the price of which is a deformed economy, the deficit and the huge mountain of debt underneath it, which we and our children will be paying off for a long, long time to come.

But that's no longer Labour's fault, apparently, because they're offering a "New Reality", based on not taking responsibility and planning to do the same thing again, only this time with a new outfit, and expecting different results.

Election debates à la Finland's channel Nelonen

The Finnish presidential election takes place next week and, as an expat, I need to catch up on politics in dear old Pohjola. Luckily, though, I just got a bit of help from my good friend, Joe, who sent me this video of Timo Soini (True Finns) and Pekka Haavisto (Greens). It's from a series called "Alone at last!", and each episode shows two presidential candidates going head to head in a debate on defence, employment, the Euro, foreign policy, etc. The format is simple yet ingenious: a 35 minute informal discussion without a moderator, with no breaks or any other outside interference.

I'd never seen an "election debate" like this before – and it sure was refreshing. It could hardly be more different from the extravagant set pieces seen in American presidential races, where such is the intensity of the limelight that candidates resort to making $10,000 bets on policy issues. There was no spectacle in Nelonen's debate, no lights, fireworks nor music. Just two candidates talking like normal people, albeit ones with highly formed opinions on current affairs.

This novel format was also a lot more interesting than the largely artificial debates that took place for the UK's general election, where none of the candidates really said much of substance for fear of upsetting some portion of the electorate. Britons were simply offered platitudes and play-doh politics with the same things being said, regurgitated, refashioned and repeated with a slightly different twist, over and over again, ad nauseaum.

Perhaps the best thing about Nelonen's "face-off" format is the way it takes away from the politicians the comfort of breaks, when the cameras are on their adversary, for example, during which to regroup their thoughts. A constant conversation with a single interlocutor also forces them to keep up with the game without recourse to notes. While they've no doubt prepared and been given some kind of framework for discussion and topics they are expected to cover, a lesser politician could easily find themselves in trouble having to perform, discuss, debate, argue, retort, provide evidence and, simply, be cool, natural and approachable for over 30 minutes without any respite.

It's a bit like the difference between rugby and the NFL. The former is a drawn out affair that flows on its own momentum, providing few chances for the team to revise battle lines or change tactics once play has begun. The latter, by contrast, requires action in bursts, with the game stopping every few seconds, giving both sides the opportunity to redraw formations and revise strategies at every possible turn.

Now, which would you say provides a better approximation of real life and the real world: a constant flux, like rugby, or dispersed events with precise intervals, like American football? Well, I would argue that both life and politics are in a constant state of movement and change. Anyone wanting to succeed in either best keep up with the blooming buzzing confusion or be prepared to suffer the consequences.

Anyway, watching this debate, I soon realised that I'd never before seen politicians behaving in this way: like normal people discussing stuff mano a mano and debating policies over a cup of java. It was in stark contrast to how we are used to seeing our elected leaders: in the spotlight at press conferences, being interviewed, giving speeches, or electioneering on the campaign trail – all of which are situations that we the public don't have much experience of.

Indeed, as a result of its familiarity, the mundane set up made it far easier to gauge these two candidates, and not just their politics but also their personality and character: are they easily flustered or do they come across as arrogant? Are they able to provide facts and figures to support their arguments? Do they stay on topic or do they try to weasel their way out of questions? Do they resort to ad hominem attacks? In short, do they stay cool under sustained fire from their opponent and do they know their stuff?

As long as the participants don't conspire to agree their conversation in advance – but as they represent different parties and are all after the same position, it wouldn't make much sense for them to do so – dare I say this new format might even be better for democracy. 

Firstly, it forces our decision makers to actually engage their competitors one-on-one and, as we see in this video, to their surprise, the pair find themselves agreeing on more than they previously thought. Second, as it's an organic discussion, there is less chance of others influencing the proceedings, whether it were the Party, the network airing the debate, or lobbyist who may be able to sway the process of picking questions and/or the audience. Finally, and perhaps most importantly, it sheds our elite of at least some of their trappings of power (stage, lectern, spotlights, audience, prewritten speeches, etc.), and shows them for what they – and we all – are, just normal blokes and lasses.

So, good on you Nelonen – and other channels take note.

***

I certainly won't be voting for Timo Soini, so repulsive are many of his views and so short-sighted are the majority of his policies. That said, one has to give the man credit for his uncanny ability to create easily digestible nuggets of political propaganda that will surely appeal to a whole lot of Finns. Mr Soini is remarkable in his ability to encapsulate complex issues into commonsensical soundbytes, but they are, however, nearly always factually incorrect or incomplete, and often morally reprehensible. As a result, watching this video makes me even more nervous that he might win, but I trust the majority of us will see through him and the shallow worldview that he and his close minded ilk represent.

Pekka Haavisto comes off well in the video. His grasp and experience of foreign policy shines through strongly. He may yet become a surprisingly strong contender. 

... but needs must I continue catching up on the other candidates, starting with the conversation between Sari Essaya v Eva Biaudet from the same series. And here's Sauli Niinistö v Paavo Väyrynen. And here's Arhinmäki v Lipponen.