As the New Year dawns the latest evidence on living standards is ominous for the Government facing election in little more than 4 months time (a March election can be discounted). The best official indicator is real personal disposable income (RPDI), but those figures will not be available for some months yet. Meanwhile the independent think tank Oxford Economics has produced estimates for gross domestic product per person which on a 12-year time series, adjusted for inflation, still accurately measures the change in sense of economic well-being. Between 1997-2001 GDP per head grew 12.6%, a healthy 3% a year. During 2001-05 it dropped slightly to 8.3%, still 2% a year. During 2005-09 however it has turned negative, a fall of 1.3%. People on average therefore (though not the filthy rich, as Mandelson would put it), are worse off than 4 years ago. GDP per person was some £23,000 in 2005, but it is now estimated to be only some £22,700, and by next year even after some anticipated economic recovery it will still be only some £22,775, a drop of about £225 on average (inflation adjusted) compared to 2005. That is not good news.
One of the great unmentionables is that the macroeconomic foundations of Thatcherite monetarism and New Labour neo-liberalism are being comprehensively trashed. The UK national accounts data just published reveals just how massively public investment is boosting demand in the face of very weak spending by the private sector. That’s not what was supposed to drive the economy. Ever since Nigel Lawson’s 1984 Mais lecture enunciated that the role of macro-economic policy was the control of inflation, not the promotion of growth and employment, while the role of micro-economic policy was to lay the foundations for private sector investment and profitability, not the restraint of prices as in the incomes policy era, the use of public policy to manage aggregate demand has gone out of the window. In line with their mentor Friedman’s Quantity Theory of Money, the Thatcherites would be expected to follow this dogma. Rather less so Gordon Brown, yet he embraced the Thatcherite macroeconomic doctrines almost whole. Now he must be eating his words.
There will be strong temptations among Iran’s enemies as the regime steadily breaks down to intervene to hasten the end and to secure an outcome favourable to the West. They should be resisted at all costs. Nothing would shore up the tottering regime more effectively than credible allegations that the upheavals were being orchestrated by forces outside the country. Already there are claims by the government that the Mujahideen Khalq are involved and that members have been arrested, who will no doubt be accused of acting as proxies for foreign powers. Today spokesmen for the regime have taunted that Britain will be ‘hit across the mouth’ if it doesn’t cease its provocations. We should firmly repudiate all such bluster which will certainly intensify overthe coming weeks and months, but not engage in tit-for-tats that simply exacerbate the tension. In many Iranian eyes Britain is second only to the Great Satan after its substantial part in deposing the democratically elected Mossadeq in 1953, supporting the Shah as a Western puppet for two decades of increasingly repressive rule, and now leading the call for sanctions to stop the regime’s uranium enrichment programme. Nothing could be more counter-productive than for Britain to rise to the Iranian bait.
Drowned out by all the kerfuffle over the chaos caused to flight plans across the world, the motive for the abortive attack on Northwest Airlines flight 253 by Umar Farouk Abdulmutallab has received little attention. The issues over tighter airport security, the detection of the colourless crystals of PETN (pentaerythritol trinitrate), the US procedures for moving suspects from a general watchlist of half a million people to a no-fly status, and the failure of the US authorities to react even when alerted by his father to his son’s extremist behaviour are all understandably being pursued in depth. But the most important question remains why the privileged son of a wealthy banker who is one of Nigeria’s most respected businessmen should want to kill 278 people along with himself. It is not enough to write it off as crazed indoctrination by Al Qaeda madmen. While what he sought to do is absolutely horrendous, he himself made clear he was driven by seething anger over the occupation and killings in Afghanistan, and while that continues, there will certainly be no let-up in attacks such as this one, especially against planes.
As 2010 hoves into view, the likely result of the election is already becoming a good deal clearer. For many months the polls have continued to flip-flop around a Tory lead of 6-17% depending on the poll methodology, the inbuilt biases of certain polls and the impact of the most recent events. Most polls show the lead at over 10%, and an average Tory lead at this time averaging around 10-12% seems plausible. Now the regular Rallings-Thrasher survey monitoring local by-election results month by month – likely if averaged across the whole country and over a long period of time to offer a more accurate register of electoral opinion – confirms this background and suggests how it may now be beginning to change. Whilst the Tory local byelection tally has averaged around 38% through the first half of 2009 and Labour around 24%, plus the Lib Dems vote showing wider fluctuations around 28%, the second half of 2009 has revealed one significant change. Whilst the Tory and Lib Dem tallies have remained the same, the Labour tally has risen steadily each month to reach 28% now. There are three reasons then which point strongly towards a hung Parliament.
The House of Commons public administration select committee has just called for a High Pay Commission as a solution to the outrage of runaway pay at the top. It would certainly help, but it’s no solution. That’s partly because the recommendation applies only to the public sector when the really outrageous excesses apply in the private sector. But it’s also because the proposed Commission has no ultimate sanctions. It would monitor pay trends and set reasonable top pay guidelines, naming and shaming those guilty of egregious breaches. Clearly a paper tiger is not enough. And above all this idea won’t offer an adequate solution because it doesn’t get to the real heart of the problem which lies in the asymmetric framework by which pay is determined across the classes. Pay at the bottom is fixed by benefit levels and the national minimum wage. For manual work it is settled largely by collective bargaining, for white collar workers mainly by individual pay contracts whose generosity rises sharply at the higher levels, and for the elite virtually self-awarded through private discussion with hand-picked mutually serving remuneration committees.
Today’s news that OFT is dropping its case in the courts against the banks over their extortionate overdraft charges is a further shot in the locker for the untouchables. The banks are getting away with it yet again even though the Supreme Court, the banks having already lost twice in the lower courts, did not disagree that the charges were excessive, but merely ruled that the banks were not liable under that part of the regulations. Obviously the next step should be to continue to pursue the banks, which make a third of their profits from their unreasonably high charges on overdrafts, by taking the case against them under what the Supreme Court has decreed is the relevant and correct sections of the regulations. Pathetically feebly, the OFT has now thrown in the towel and is passing the buck to the banks themselves to make changes voluntarily, which is a sick joke, or to Government to legislate, which given their partiality and over-protectiveness towards the banks is inconceivable. But what is really bad about this latest decision is that it further reinforces the reality that the banks are now out of control.
As 2010 beckons it’s clear that the Obama/Brown last best option for turning around Afghanistan (from the Western point of view) is already falling apart. The announcement of Karzai’s new Cabinet just published exposes just how unlikely the plan’s conditions for success are to be realised. The single most important one is stamping down hard on the deeply embedded corruption. Karzai’s attempt to reinvent his government in response to very strong anti-corruption demands from the US does make a concession in that direction – he has dropped two ministers linked to corruption allegations. But that’s as far as it goes. For the last 7 years he has packed his government with warlords and regional and ethnic power brokers. Even now some of the new faces being brought in have been denounced as ‘puppets’ of the warlords. He has still included the notorious warlord Ismail Khan, and excluded all members of the opposition. Moreover Karzai has also robustly defended the mayor of Kabul who has been sent to prison for corruption, saying he was unjustly convicted. Even with the intense pressure exerted on Karzai by the US for a total clean-up, it’s already clear that he’ll never deliver it.
However depressing the Copenhagen summit has turned out to be, it’s not the end, it’s not even the beginning of the end. The atmospheric climate does not wait upon politicians or international agreements. It is a raw elemental force that will exert its power in climate turmoil of increased intensification and frequency without let-up unless and until its causes are mitigated and reversed. There are two possible outcomes. Either the destruction and pain that this remorseless process will eventually impose on human civilisation will in the end enforce global action on the necessary scale and magnitude to arrest it, or a high proportion of the 9bn human race by 2050 (which the eminent British climate scientist, James Lovelock, believes could be as high as 90%) will not survive because of the massive loss of croplands, the decimation of other species, poisoned air and water supplies, and the ravages of disease and war. The real issue now, as it has always been, is how far nations and their leaders have to suffer the latter before they will seriously embrace the radical transformation of human society that will deliver the former.
The ignominious debacle at the Copenhagen summit, so soon on the heels of the global bailing-out of the banks, sends an unforgettable message about who rules the world, in whose interests they act, and how utterly indifferent they are to the powerless. Global leaders have contributed, in grants or loans or guaranteed, at least $3-4 trillions to save the banks from the consequences of their own folly, yet this morning could only commit to $30bn (just 1% as much) to protect developing countries from climactic catastrophe which the latter did not cause but the global leaders largely did. High-flown talk about saving the planet was exposed for the hypocrisy it was as all the requirements to save the planet – emission cuts targets, mechanisms of enforceability, verification, transparency – evaporated into thin air. In the end the conference was shown to be a charade of 2 years of earnest preparation, 2 weeks of non-stop negotiation, and 1 day of reality when the US did a private deal with the big developing country leaders as though the rest of the world didn’t matter. And that’s the rub – in the eyes of the US and China, they (we) don’t.
If there is a deal in Copenhagen, which almost certainly won’t be until tomorrow, that’s not half of it. All the big countries seem committed to a political deal of sorts, but then the obvious question is whether it will be sufficient to save the world from the worst impacts of extreme climate turmoil. On that the signs are worrying. The leaked UN analysis of the progress of the talks suggests that the cuts offered so far would still lead, pace the claims of the main participants, to global temperatures rising by an average of 3C above pre-industrial levels, and the Stern economic review of climate change for the UK Government indicates the effects of this would be drastic. Nearly 200 million more people would suffer severa coastal flooding, nearly 600 million more would risk hunger, and a staggering half of all species would face extinction – a scything through biological ecosystems which will eventually undermine survival prospects for the human race itself. Why this is so dangerous is that even keeping the temperature rise down to 2C would still radically reduce crop yields worldwide both through increased flooding and intensified droughts, and would still only give species, including homo sapiens, a 50:50 chance of avoiding devastating climate catastrophe.
Today’s decision to make the issuing of arrest warrants of suspected war criminals subject to the approval of the Attorney General is a constitutional, legal and political outrage. It is a constitutional violation of the fundamental doctrine of the separation of powers since the Attorney General is not an independent Law Officer, but a Cabinet member with a high political profile (as shown by the recent interference in the SFO prosecution of BAE for corruption) and a political figure subject to Prime Ministerial pressure (as was seen in the ‘persuasion’ of the former Attorny General, Peter Goldsmith, to change his mind about the legality of the Iraq war). It is a legal outrage because decisions to take proceedings against those alleged to have committed very grave offences under the Geneva Conventions Act of 1957 should be exclusively a matter for the courts. It is a political outrage that the UK Government has shown itself more concerned to protect Israeli leaders against the application of universal jurisdiction in any country in respect of genocide, torture and war crimes rather than to uphold the international rule of law against those who have perpetrated such heinous crimes, in this case the killing of 1,400 defenceless civilians in the Gaza bloodletting. And the eagerness of Gordon Brown and David Miliband to apologise to the Israelis and to change British law at their behest is cringing to behold.
‘Four minutes to midnight’, ‘possible we will not get an agreement’, ‘uphill struggle’, ’3 days to shape the future of humanity’ – all good copy for the media to keep the tension high. But actually par for the course at this stage in international climate change negotiations, as repeated conferences over the last 10 years that I’ve attended regularly show. The demandeurs – in this case the developing countries who want £100bn or more per year from the rich countries to tide them over adaptation to climate change, plus bigger emission cuts (at least 30%) by the developed world – keep their cards close to their chest right up to the last moment (almost certainly the 24 hours after the last scheduled day) in order to maximize their gains. But this time there are complications. The US, the world’s biggest polluter, can’t commit to a copper-bottomed emissions cut offer until the details are ratified by a vote on their Climate Change Bill still stuck in the Senate till at least January-February. The G77 (the developing countries led by China) won’t commit to cuts till the US dies first. Nor will they agree to a date when they themselves start cutting emissions if it inhibits their growth. An then there’s fraught disagreement about whether to stick to a legally binding Kyoto Protocol format or a looser series of voluntary agreements.
The expected BA cabin crew strike, prompted by unilateral cuts in crew members, is a classic example of an impasse brought about by over-confident macho management. The airline says it is losing £1.6m a day in the present difficult economic circumstances and expects to lose 1bn in the next 2 years. Operating with fewer cabin crew members is intended to be part of a cost-cutting drive to save £140m. However, by imposing these staffing changes from last month unilaterally, BA has provoked a strike which will cost the airline some £200m on top of already expected operating losses. It has also done so at the most sensitive time of the year when BA usually carries about 65,000 passengers a day over the Christmas season, thus sparking the suspicion that it has forced these cuts on staff at a time when management believed tthat public reaction might make it very difficult for the union to launch strike action. By refusing to roll back the changes, the pugnacious chief executive, Willie Walsh, is taking a huge risk for the airline, not just in the potential costs of the strike, but even more in extensive loss of customers to other airlines in the medium term.
The security services have once again triumphed – over Parliament, the legal system, principles of justice, and protection of the public. The report last week confirming that the Government would persist with the prohibition of the use of telephone intercepts in court will allow some criminals to walk free, some innocent defendants to be convicted, and the UK legal system to be denied a right to get at the truth by a convention that exists nowhere else in the world. This is madness. Putting a bug in a mobile phone can produce evidence that can be allowed in an English court, but if the evidence was obtained through an intercept that took place remotely, it can’t be used. This may well mean that evidence which alone could secure convictions for murder, drug dealing or sex offences, or which might give decisive support to the defence case preventing an unjust conviction, cannot be made available. How can such an absurd anomaly persist?