Public sector strikes: Unaffordable and unfair



Hands off my wages

And so the world keeps turning. An estimated two million public sector workers have gone on strike and the nation has kept ticking along.

The false argument about public sector pensions is put rather well by this which is going round on Facebook

To continue reading click here

The late, occasionally great, Ken Russell



The 1960s ‘Harry Palmer’ spy films starring Michael Caine were intended as the antithesis of James Bond. They were downbeat, gritty, and realistic. The first in the series, ‘The Ipcress File’ (1965), opened with Palmer fumbling for his horn rimmed specs and sleepily making coffee. Then Ken Russell, who died yesterday aged 84, was hired to direct the third instalment, ‘Billion Dollar Brain’ (1967).

Perhaps the producers were attracted by Russell’s intellectual cache and documentary film background. He made his name with a string of films he produced in the 1960s for ‘Monitor’, the BBC’s arts show. In themes he would return to in his films Russell’s finest television work focused on artists. His documentary on Edward Elgar (1962) was more than a simple biography with some musical clips. By setting up shots and scenes and using Elgar’s symphonies almost as incidental music Russell placed the composer squarely in his time and setting. It was as much an evocation of the high noon of Imperial Britain as a documentary about Elgar.

To continue reading click here

Versus: Death of the Author



The late Roland Barthes

Holly Steell: The Death of the Author by Roland Barthes was published in 1967, and in this controversial essay he criticises the tradition of interpreting text through the author’s history, personal views and actions.

Barthes argues that the text is not the sole product of the author, but rather it is the sum of society – every sentence is the quotation of a previous work and the author merely the channel it is expressed through; they are the “Scriptor”, not the creator.

To continue reading click here

What's holding the British economy back? Debt, debt, and more debt



Maxed out

Last week the coalition government was hit with a combination punch of bad economic news. On the same day unemployment was upand the Bank of England’s growth forecasts were down.

Labour were quick to point the finger. Shadow Chancellor Ed Balls said “The British economic recovery was choked off well before the instability in the last few months in the eurozone...The government is cutting too far and too fast and it’s pushing borrowing and unemployment up at the same time”

To continue reading click here

Maggie, Maggie, Maggie!



Four more years

According to an old joke a dancefloor will have to built over Margaret Thatcher's grave to accomodate the vast number of people who plan to dance on it.

Perhaps not. I've looked before at how such a hated and unpopular leader, for so we are often told she was, could have won every general election she fought.

This weekend saw further evidence that hatred of Thatcher id neither so widespread nor so deep as those who really do hate her would have you believe. A YouGov poll for The Sunday Times placed her firmly at the top of a list of post war British prime ministers with a whopping 27%, more even than Winston Churchill. The sainted Clement Atlee, architect of the welfare state, overseer of the NHS, and nationaliser of industries, limped home with just 5% of the vote behind Tony Blair and, mysteriously, Harold Wilson.

This is not to say that some people do not hate Margaret Thatcher ver much but they are not so numerous as they would have you think. They may need that dancefloor, albeit a smaller one than they expect, and the DJ might be playing 'Dancing With Myself'.

Cameron faces a fight on two fronts against Germany's Merkel



Watch out for those Prussians on the left!

It has become a terrible cliché to discuss Anglo-German relations using World War Two metaphors. But as David Cameron advanced on Berlin for a showdown with Angela Merkel on Friday other military antecedents sprung to mind.

Cameron is fighting Merkel on two fronts. First, he is attempting to resist the tax on financial transactions which the European Union wants to introduce. And so he should. The tax, which is supposed to fund future Eurozone bailouts, will get an estimated 80 percent of its take from the City of London.

To continue reading click here

Monetarism: what it is and what it isn't



On last week’s Question Time two people in the audience angrily condemned the “monetarist” policies apparently being pursued by the British and German governments. I groaned. It seems that the only people who use the phrases ‘monetarist’ or ‘monetarism’ anymore are people who haven’t got a clue what they mean.

Monetarism was at its height around thirty years ago. With double digit inflation in Britain, the United States and elsewhere and the failure of Keynesian policies to deal with it (indeed, they were the cause of it) the search was on for a set of policies which would. As the chaos grew in the late 1970s many fixed on monetarism as the answer. It went where few economic theories had gone before; debated in Parliament, the front pages of national newspapers and TV current affairs shows. Rarely has a reasonably technically involved economic concept achieved such widespread discussion among non-economists.

Though it had roots deep in the history of economic thought monetarism was popularized in the 1970s by Milton Friedman, a Nobel Prize winning economist from Chicago University. Friedman was on a roll at the time. In the 1950s he had argued for floating exchange rates and in the 1970s these had come about. In 1968 he had predicted the breakdown of the Phillips Curve relationship between unemployment and inflation and, again, in the 1970s this had come about.

His theory was really very simple and was based around one of the oldest and one of the very few useful equations in economics, the equation of exchange

MV = PT

Here M stands for the amount of money in an economy and V stands for velocity of circulation, how many times in a given period a unit of currency is spent. Thus, if M was, say, £50 and V was 3 then MV would equal £150 which would be the total amount of spending in that economy in that given period.

P stands for the price level, a statistical aggregate of prices in the economy like the inflation figure reported monthly in newspapers. T stands for the real value of aggregate transactions in the economy in a given period. If that sounds like a slippery concept don’t worry, Freidman swapped it for y, or income in the economy in a given period to give a refined equation

MV = Py

So far we have a truism, an equation which is true by its very definition. It simply says that spending (MV) will equal income (Py) in the economy in the given period which, when you think about it, is obvious.

Freidman took the truism and made it into a theory by holding V and y constant. V would depend on people’s habits which would change little over the short and medium term. Y was fixed by the economy’s capacity; given a set amount of capital and labour in the economy in a given period production could not be expanded in the short and medium term.

The conclusion that followed utterly logically from this was that increases in P, the very inflation which was plaguing economies, must have been caused by increases in M. Indeed, in his mammoth 1963 book ‘A Monetary History of the United States 1867 – 1960’ (written with Anna J Schwartz) Freidman claimed to have conclusive empirical proof of this theory.

The policy prescription that followed was equally utterly logical; if you wanted to lower and control inflation you had to lower and control increases in the money supply. Freidman argued that the aim should be for price stability, that the money supply should grow at a fixed, pre announced rate which would be calculated to match the trend growth rate of the economy.

That, and nothing else, was monetarism. Its supporters might have argued for and its practitioners might have enacted a raft of other policies such as lower taxes, lower public spending and privatization which could crudely be labeled ‘right wing’ but these were not part of monetarism which was a narrow theory of monetary management. It would have been perfectly possible for a left wing government to have raised taxes, raised spending and nationalized and still committed itself to monetarism.

And plainly not Britain, Germany, nor anyone else today is even following anything which could be called a monetarist economic policy. Monetarism prescribed control of the money supply to control inflation; it said nothing about interest rates which it left to the market. By contrast Britain and the German controlled European Central Bank follow the monetary management method which replaced monetarism when it fell out of favour towards the end of the 1980s. Nowadays the control of interest rates is the chosen tool in the fight against inflation. It is the money supply, central to monetarism, which is left to the market.

This isn’t necessarily to praise monetarism or even to bury it. It is simply to wash off of it some of the mud thrown at other ideas.

From Miliband and Balls to Osborne: riding our luck in the bond market



Only the second most dangerous type of Bond there is

String theory posits the possibility of multiple universes exiting at the same time and in the same space. Economically we saw a little of that last week.

In London a few thousand students and professional protestors marched against the government’s plans to make them pay more towards their education.

To continue reading click here

Protesting is soooooooooooooo last year



Put an X in any of the many empty spaces where you think a protestor was and send your coupon to...

Late last year some students, many of whom turned out to be rather plummy middle class kids, decided it would be larks to smash up bits of London to register their annoyance at having to pay for a service they were using.

Today saw students take to London's streets again. But, perhaps because the news that universities are cutting tuition fees to compete on costs suggests the coalition's policy is working as they said, only 2,500 are estimated to have turned out. Rather embarrassingly for the revolutionaries this dismally small gathering, nearly 2,000 fewer than saw Yeovil vs Walsall in the Third Division a couple of weeks ago, was outnumbered by the Police.

That's the thing about fashions, whether for leg warmers or protests. They're fickle.

More regulation is not a good thing



Courtesy of the Financial Times

A common interpretation of the credit crunch and ensuing global turmoil is that it was all down to unregulated or under-regulated financial institutions and markets. As a result, one of the most commonly advanced solutions is for more and/or better regulation. Indeed, this call is about as close as we get to a firm demand from the presently fashionable ‘occupy’ protests.

There are many things wrong with this view. First, the underlying causes of the recent boom and bust could be found, as so often, in monetary disturbances. In comparison to the damage wrought by a deluge of credit, any regulatory deficiencies are just hundreds and thousands atop a cake that was always going to turn out pretty sour.

To continue reading click here

The European Union would have Pericles turning in his grave



Lo, all their pomp and circumstance...

“We have a form of government not fetched by imitation from the laws of our neighbouring states - nay, we are rather a pattern to others, than they to us - which, because in the administration it hath respect not to a few but to the multitude, is called a democracy”

Pericles spoke those words in 430 BC, at the end of the first year of the Peloponnesian War. In his famous funeral oration he commemorated the men of Athens who had died defending their democracy from the military dictatorship of Sparta, and reaffirmed what they had died for.

To continue reading click here

Clerically clueless - The Church and the protestors



It is difficult to understand quite what protestors expected to happen when they tried to ‘occupy’ the London Stock Exchange a couple of weeks ago. Firstly, it’s a pretty well used building already so is in little need of further ‘occupation’. Secondly, it’s a privately owned building. Even Britain’s supine Police force was unlikely to allow a well advertised act of breaking and entering to take place.

So the protest was rather silly from the off. But as they kicked their heels outside the stock exchange the protestors knew enough to know that they would get a warm welcome from the Church of England, an institution which has become rather silly itself.

To continue reading click here