As I Was Saying ...............

Written by Geoff Seeff on Thu 30th Oct 2008

Optimism

Now what was I saying about being optimistic? Of course the wonderful thing about economics is that if the pundit keeps on making the same prognostication, whether gloomy or sunny, for long enough, he or she will eventually be right. We all knew that the party was over and "contango day" was coming, but I guess what I, who is congenitally optimistic, and others failed to predict was the speed at which the financial structures on which the western world relied would collapse. I am not even going to attempt any sort of analysis of the events of the past eight weeks - enough has been written elsewhere on what exactly happened, who is to blame, what measures need to be applied, how long they will take to work, how far house prices will fall, and, not surprisingly, there is very little agreement. All I would say is this. Having worked and lived through the crises of the seventies, eighties and nineties, the first and last of which were precipitated by credit expansion all done by "mirrors", ie creating the illusion of wealth, a pattern emerges. Those responsible, whether entrepreneurs or fraudsters, senior banking officials and occasionally politicians (eg Nigel, now Lord Lawson, Norman, now Lord Lamont) get booted into some form of retirement whilst new blood is brought in to sweep the stables clean and inject new ideas. Corrective regulation is introduced and rules are followed for a while but sooner or later, about every 10 years, the next generation, frustrated at not earning the fabulous remuneration their predecessors are reputed to have "earned" and not knowing or forgetting about the mistakes that led to their demise, dream up a new wheeze for circumventing the system. It is all destined to happen again ……and again.

I suppose I am what you might call an optimistic cynic.

Stay of Execution

Gordon Brown's recovery in the polls following his decisions to shore up the exhausted capital of the UK's major banks and to spend, Keynesian like, his way out of the now acknowledged recession, reminds me of a story handed down to me by father - and, don't tell me, it comes to a pretty pass when we have to use our fathers' stories.

Once upon a time in medieval Arabia a man was festering in a dungeon awaiting beheading for some heinous offense such as glancing at the Emir's daughter as she passed by in her carriage. As the jailer brought him what was to be his final breakfast the man said to him "Jailer, I need to see the Emir, I have something very important to tell him". "You" replied the Jailer, "what could a little worm who is about to die possibly have to say that would be of the slightest interest to our most esteemed Emir, blessings be upon him." "Jailer" repeated the man, "I can assure you that my business with the Emir is a matter of utmost importance and urgency and, let me tell you, that if it becomes known after my death that I have not had the chance to speak to him because you did not pass on my request, it will be your head on the block next" This rattled the jailer so he consulted with the captain, the captain consulted with the Grand Vizier and together they agreed to arrange an audience with the Emir.

The man was led into the Emir's palace in chains and fetters but he managed to prostrate himself on the carpet in front of the throne and make his obeisance. "Oh wondrous one, Oh blessed one, Oh master ……." "Yes, yes" waved the Emir, "what is it that you want to tell me that is so important that it can't wait until after I have had you beheaded". "Well, oh great merciful one, I know that you love horses and I know that you have a favourite stallion. A gift has been bestowed on me by the great mystics of the desert which I want you to benefit from before I meet my maker. I am able to teach your stallion to talk. Think how wonderful it would be for you and how your subjects will admire you if you were able to converse with the horse and for you to impart your wisdom to it".

The Emir looked the Grand Vizier, who looked at the captain who looked at the jailer and they shrugged their shoulders back at each other. But the Emir was intrigued and said "I have never heard of a talking horse, and neither have my men, but tell me how you would go about it". Said the man "It will of course require much time, maybe a year, maybe two, and I would have to walk, ride and indeed live with the horse in the Palace stables". Again there were shrugs all round. Eventually the Grand Vizier whispered to the Emir that he thought it was complete nonsense but that, just in case there was something in it, perhaps they should give it a try for a year. "OK" decreed the Emir, "You've got a year and only a year. If the horse doesn't talk then, it will be off with your head".

With the shackles freed the man is being marched over to the Palace stables by the jailer. The jailer turns to the man and says "Ali, you certainly pulled a fast one there. In all my years I have never heard such drivel …..it's impossible for horses to talk and your sentence will surely be carried out". "Look jailer, you know and I know I can't teach a horse to talk. But in the meantime I have a got a year I didn't have yesterday ……….and maybe, just maybe, at the end of the year the wretched animal may say a word or two".

It's a nice story in its own right but I hope I didn't lose you along the way. You see Gordon Brown and his team are a bit like Ali - although their crimes are far less trivial. They are now making all sorts of promises and, in fairness, taking some action to stem the tide of recession - which it will probably do for a while. They are hoping that it will take them up until May 2010 which will enable them to persuade the electorate (Emir and entourage) that what they wish for they will provide. If that strategy succeeds whatever problems arise after that time and whatever unpleasantness they will have to impose in order to repay the borrowings required for these actions - increased taxes or reduced public spending - they won't worry too much about - "we've got five years we didn't have yesterday ….and maybe, just maybe, the economic situation will improve by itself. OK you can only go so far with analogies - but you catch my drift.

Job's Comforter

Iain Duncan Smith's contribution to the debate on the economic situation reminds me of American songwriter Yip Harburg's response to a question as to whether his composition "Buddy Can You Spare Me a Dime" was a social comment on the 1929 Great Crash. "Son" he said" before I wrote that song there was no crash……" IDS has come out with the illuminating observation that people have relationship problems as a result of their financial concerns. Wow - that is original!!. I would not be surprised to find that both sections of the Bible have some wise comment on the subject but certainly Shakespeare explored the consequences of unpaid debts (eg Merchant of Venice) and it is, of course, a central theme that runs through most of the novels of Charles Dickens.

I suppose we should be grateful to IDS for his research which identifies just how many people are affected - apparently 11 million or one in five of us (I assume the figure includes children and the elderly who will be caught up in the problems of the economically active) - although how scientifically that research has been conducted we are not told. But having frightened the life out of those who are either part of the 11 million or expect to have business with them as suppliers of goods and services, other than comment that the "Government should consider the social cost of broken homes", he does not advise on the implications or recommend what should be done Most unhelpful and a statement that may even serve to exacerbate the problem if the 11 million come to be regarded as an underclass.

Some might say that it is the role of the official opposition to oppose and to point out problems, not to provide solutions. If and when they have the responsibility they will come up with the answers. LibDems say that effective opposition should be the process of offering constructive criticism, so in this case we would want to see a raft of practical measures to help those in financial difficulties - more resources for Citizens Advice Bureaux and accredited counselling agencies, tax relief for childcare costs so that both parents can work if they can and want to - maybe even a significant reduction in standard tax rate or personal allowances for those in the lower income range.

By the way, whilst in no way dismissing the deleterious effect of unmanageable debt, I should say that not all broken homes are caused by lack of money. Any two adults sharing their lives are, at some time or another, bound to argue about how best to get it, what to do with it when they have got it or whether they were satisfied with the way it was spent

I cannot believe that the lovely Mrs Seeff (oh wondrous one, oh blessed one, oh mistress…..) is the only woman in the world to question her hard working husband on why the supermarket bill he has just returned home with has set an all time record. When the arguments persist, estrangement follows.

Of course relationship breakdowns occur for many reasons other than financial stress - the roots of the issues are often to be found in personality and cultural differences, medical conditions and sexual dysfunction. If you add those people affected for these reasons to the 11 million affected by financial worries, it is a ruddy miracle that half the population of the country is not employed as counsellors and the other half going to them as clients.

Lies, Damn Lies …………..

Broken homes are, sadly, both cause and effect of criminal activity. The vicious circle starts when dad (or mum, but most usually dad) is required to spend time at Her Majesty's pleasure, leaving junior to his own devices whilst mum scrapes a living in a part time low paid job. It continues when junior gets involved with a gang or decides to follow dad's calling. There has been something of a brouhaha over the past few weeks as it emerged that the Government has defined violent crime in such a way as to allow it to report that crime of that nature is falling significantly - essentially it says it is GBH only if a victim sustains an injury requiring medical treatment. In the meantime although the Police have been assiduously completing their statistics in accordance with the Government's criteria, they appear also to have kept supplementary records that suggest that, on a wider definition of violent crime that includes threats and "minor" assaults, it has increased significantly over the past four years.

I attended as a member of the audience a Radio 4 "Any Questions" session in my area a week or so ago and was able to pose the question "Lies, Damn Lies and Crime Statistics; who should we believe the Government, the Police or neither of them?" The answers from the panel picked up on the point that the public is entitled to be presented with statistics which are fair, accurate and on which they and those in the field can rely. Also that it is better that the Police get out on the beat rather than spend time cooking up figures and ticking boxes on forms. However, they only touched on how to combat violent crime if in fact the reality is that it is increasing - suggesting that the various measures deployed in recent years have been ineffective. As it just so happens, I was asked to respond and was able to make this point and offer my view that the creation of a community and environmental army might serve to inculcate a sense of responsibility to society in youngsters and act as a preventative measure. I have a idea that this would not find favour with the current government because it judges success only by what it can measure - number of incidents registered, number of crimes detected and number of convictions - and you cannot measure a crime that has not taken place.

In a rather similar vein I have always been struck by one particular key performance indicator used in healthcare - bed occupancy. Health Trusts like to see that occupancy figure close to 100% as a sign that the facilities are being utilised to their maximum capacity. Ironically, if bed occupancy were zero and doctors were standing around twiddling their thumbs waiting for a case, this might signify that the health service was so efficient that no one got ill and there were no accidents etc. Of course, it could also signify that all the medics in that hospital were a bunch of lazy slobs, who didn't recognise common ailments when they saw them …..and that there was a medical crisis about to explode in the community.

Could do Better in Maths

Talking of the National Health Service, statistics and costs, it was rather gratifying (for a LibDem!) to witness (via the newspapers) last week further opprobrium heaped upon the Tory Shadow Chancellor, George Osbourne, for his poor grasp of elementary arithmetic. It was revealed earlier in the month that he had made a serious political miscalculation during the summer when he had personally sought a substantial donation to the Tories from a shady Russian metals magnate - oh how tempting it is at this point to go off into a string of puns about the magnetic charm of men of mettle. That is just what we all need - Tory policies dictated to or influenced in any way by foreign businessmen! Now George seems to have miscalculated on a domestic matter. It is Tory policy (not dictated to or influenced by anyone other than themselves) to double the number of single rooms in NHS hospitals from 45,000 to 90,000 to provide for maternity and surgical cases - fair enough. At a standard NHS cost of £210,000 per room, the total funding required would be about £9.5 billion but George has allowed for just £1.5 billion, leaving a gaping £8 billion hole in his budget. Of course when the discrepancy was pointed out he blustered his way out of embarrassment by calling on the Government to explain its figures but I have heard that, as a precaution, he is taking lessons from an eminent equestrian elocutionist.

And there is another group of Tories who are also not so good at sums. I have in mind here the (and I must choose my words carefully as the laws of libel are as equally applicable to electronic communication as they are to print) misguided and inept bunch of individuals that currently comprise the Cabinet of Redbridge Borough Council. I will not bore you with the minutiae of the machinations over the borough's capital programme - if you really want to be bored you can research the archives of the local papers or indeed a goodly number of the stories on the CW&G website. However, suffice to say that, in order to appeal to voters who they believed wanted the lowest possible Council taxes (and, let's face it, who doesn't - until they think about what services they need for themselves and their families), members of the Cabinet and their equally incompetent predecessors have made no proper financial provision for the maintenance and the eventual replacement of much of the physical and social infrastructure in the borough including schools, leisure facilities such as swimming pools, and street lighting. With schools crumbling around pupils' ears and no capital funds available, some 18 months ago the Cabinet decided to sell "redundant" land and buildings - such as allotments, car parks and open parkland. The outcry, aided and abetted by LibDems across the borough, was immediate and indignant - "Hands off our community property!"

Somewhat cornered, the Cabinet next came up with the wheeze of consulting residents on their priorities for a capital programme and how to fund it - the so-called Big Conversation. Consultation with the public is always good and always to be commended - and indeed the form that the Conversation took, an interactive selection model accessed via the internet, was innovative and the first of its kind in the UK.

However, the spending options were constrained - many, such as renovation of schools have to be provided within the scope of the Council's statutory duties - and, whereas there are perfectly sound alternatives, the only funding options presented for selection all led inexorably to sales of land and buildings. Increasing Council tax or parking charges, the other options presented, would not yield the sums of the order required for a half sensible programme of works yet there are various forms of public private partnerships, options nor presented, that other authorities have deployed to good effect. Of the 5,000 self selecting respondents to the Conversation (out of about 160,000 eligible residents), a significant majority opted for the repair and rebuilding of schools to be funded by land sales. Now there's a surprise! It would have been quite something if they had all said "ignore the schools, let's have a pleasure garden".

The sad truth is that, whatever the preferences of the residents, a capital programme having any significant impact is unlikely to be delivered any time soon - at least if the Cabinet has to rely on sales of land and buildings. With the property market in decline, the aspirations of last year will not be the realisable values of this year. Further, many developers will not want to part with the full consideration on day one, perhaps looking to spread payment over the development period and/or share risks by making all or part of the agreed sum dependent on the financial outcome of development. Oh Dear! Apart from a direct cost of about £100,000, the Conversation has cost a year of inertia and another year of deterioration in facilities. There is less money available and the Cabinet will have the same value judgments to make about spending priorities and sources of funding. And I was worried about using the terms "misguided" and "inept"?

Tribute to a Man of Principle

The above paragraphs remind me that I should not sign off this month without a brief word or two on my good friend, John Beanse, former Chairman of the Chingford and Woodford Green party, Councillor for Hale End and Highams Park ward since 2006 and a parliamentary candidate for the constituency in 2001 and 2005. His obituary appears in full on the website and I will not repeat what I have said there. One of the qualities that endeared him to party activists, constituents for whom he worked tirelessly and to many of his political opponents, was his absolute refusal to engage in "negative campaigning" or publish "knocking copy". He did this out of strength and not weakness and he was to be admired for the adherence to the principle that an argument must be won on its own merits.

Of course I can admire his principles without necessarily adopting them in their entirety myself. I believe, as will have been evident, that if there are matters with which one disagrees one should say so directly, if at all possible putting up forceful but constructive counter arguments. There is, of course, no reason to be rude, crude or personal. It is not only right to expose and exploit the wrong thinking of opponents, because the process should stimulate better solutions all round, but cut and thrust is itself the very essence of politics. It is a process those living in free democracies must embrace and indeed enjoy.

Geoff Seeff October 2008