The rise of the new populism

Yes, yes, I know I've been silent, but it's been the start of teaching period and the new semester, so I've been busy.

To be honest, so much is happening that it's a problem holding myself back from writing. There's no need to chain myself to the keyboard, that's for sure.

What's most interesting about the past week or so is the rise of a new type of economic populism. The rich? They're a problem. Financiers with titles, such as the notorious and now-ex 'Sir' Fred Goodwin? Strip of them their baubles. High earners? Make sure they don't earn multiples of fifty or sixty more than their cleaners. Tax evasion? Close it down. Make everyone pay the same income tax rate.

Everything we're seeing - Royal Bank of Scotland bosses being forced to pass up massive bonuses; Newt Gingrich's insurgency against Mitt Romney's taxes and high living; President Obama's State of the Union Address, praying in aid the so-called 'Buffett rule' under which executives shouldn't pay less tax than their secretaries; Francois Hollande (above) and his 'war' on the financial sector as the French Socialists' candidate for President this spring, and his proposed Financial Transactions Tax... All of it says that we are now in an age of economic populism and discontent with our economic elites.

It has to be said that this is hardly a surprise, given that those elites have led us to the brink of a financial abyss that Greece and others (or everyone) might yet fall into. But it's an interesting counterpoint to the politics of attacking the poor and blaming welfare recipients for our problems - citizens who, whatever their strengths or flaws, had absolutely nothing to do with taking the world's money and ladling it into a blast furnace.

It reminds me and others of the days of President Theodore Roosevelt's 'new populism' - hardly socialist or radical, but muscular, aggressive, progressive, alert to vested interests and drawing on deep roots nurtured by ideas of what is fair, what is moral, and what is right. What will it mean in politics? It should be a gift for the Left, and indeed President Obama's ratings are steadily (if gently) rising, and Hollande is likely to become French President this year. Ed Miliband looks less secure, despite his many tactical victories, from phone-hacking to RBS. Why? Er, he doesn't look 'Prime Ministerial'. Voters thought the same of Neil Kinnock in the 1980s and early 1990s, whatever his many qualities, and look what happened to him.

NB: It's been another record month for 'Public Policy and the Past', with traffic to the site doubling on its level in October and November. Do keep reading - I appreciate it!

And the biggest winner in South Carolina is...

Newt Gingrich's stunning victory in the South Carolina Repbulican Primary (above) is an important moment in this year's race to the White House. Had he lost, Mitt Romney, the party establishment's favourite, would have been a shoe-in. Now, it's wide open again.

Of course, Mr Romney will probably still be the candidate in the end. He has oodles of cash. He has staying power. He appeals to independents. But he's lagging in Florida, and he knows it, as two new polls today suggest. Lose there, and he'll have won only one state out of four - his own adopted home state of New Hampshire. He's not even doing that well nationally. For a man whose main appeal is electoral appeal, he doesn't seem to speak to many voters.

In the meantime, the Republicans will continue to give off the distinct aroma of a party that cares more about purity than electability, that's engaged in a complex debate about populism and the very nature of capitalism itself, and that will be busy slinging mud at itself for the next couple of months at least.

It all keeps open the intriguing possibility - still only that - of an open convention, in which Gingrich and Romney fight it out all the way into the summer and the decision's made when delegates gather in Tampa, Florida during August. This was what happened in 1976, when delegates pledged to Ronald Reagan famously crossed the line and voted for then-President Ford. It could happen again.

So the happiest man about South Carolina? It's a certain Mr B. Obama, Washington.

Recent books for pleasure (redux)

Okay, okay, so I've not been that good at keeping you up to date about my 'leisure reading'. It's important to do this, I find, when you read books for work every day. If you don't then read for pleasure, the words all kind of merge together on the page. Something different but allied is always best, to keep you awake but away from tomes about governance, national identity, 'Britishness' and complexity (not necessarily in that order)!

Anyway, so this is what I've read with profit this last quarter:

Simon Winchester, Atlantic: A Vast Ocean of a Million Stories (2010) (and above). This was great. I've not always enjoyed Winchester's work before, finding the combination of a micro-study with macro-reflections tiring to read. But this is excellent - personal, reflective, vigorous and varied in its story telling. A bit of an unexpected treat.

Ryszard Kapuscinski, Travels with Herodotus (2007). This is lovely too, full of vignettes about the post-war world by the greatest of all travel writers. I found the Herodotus trope a bit contrived and I lost the thread sometimes, but you know what? I think that was my fault.

Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (2007). There are some great stories here - counter-intuitive examples about how we don't think unlikely things can happen. Almost impossible things go on, of course, all the time. But how do we spot them? Taleb isn't as clear about this, but I suppose that would be the real trick.

Kate Atkinson, Started Early, Took My Dog (2010). This is more like it. I loved this, like I loved all the other 'Jackson Brodie' novels. Now there was less Brodie in this one, and more retired-policewoman-and-enigmatic-non-talking-girl. It was still a lovely piece of story telling that managed to be warm and sinister at the same time. Quite a feat.

Howard Jacobson, The Finkler Question (2010). Elderly North London Jewish guys ruminate about life, love, politics and betrayal. I think I missed some of the references, and I got the distinct impression that this book wasn't aimed at me, but it was still elegiac, moving and clever.

Michael Moorcock, The Coming of the Terraphiles (2010). A bit of a guilty pleasure this one, and a present. But Doctor Who? Cricket? Inter-galactic pirates? Aristocratic inter-stellar tourists? Lovely. A bit of crazy New SF comes to Doctor Who - better on the ideas front than the writing, but you can't have everything.

Alwyn Turner, The Man Who Invented the Daleks: The Strange Worlds of Terry Nation (2011). Also excellent, though better for context than in getting inside Nation's head... not only Doctor Who, but The Avengers, Survivors and Blake's Seven covered, and none the worse for it. Now turning my mind to 'A History of the Future in Twentieth Century' Britain, Nation's professional (though not personal) pessimism about that future will be a key strand.

So there we have it - some work themes interspaced with some fun. Ideal.

The amazing disappearing money trick

So it's clear that it's going to be a tough year. There might well be a recession here in the UK. There will probably be slow growth indeed in the Eurozone and across the world economy. It's going to hurt.

Why? Because all of the money swilling around the system is gurgling down a great big black hole.

You'll remember that central banks have been pouring money into the banking system to boost liquidity and lending. You'll remember, much further back, that most governments tried to react to the first stage of this crisis - during 2007-09 - by boosting their own spending. So there's a lot of cash sloshing around the system.

You may well be forgiven for asking: where has all the money gone? Well, take a look at the graph above for starters (copyright, The Financial Times). It's the amount of cash that European banks have been leaving with the European Central Bank overnight, and it's been rising to record levels over recent weeks. It's fallen back a little in the last day or two, but the numbers are still astronomical: over 450bn Euros every night.

Why are they doing that? Because they daren't lend to each other, in case one of them falls and a cascade of failures begins. That means they daren't lend to you, either - or any other small businessmen or citizen.

Put this together with the non-convertibility of the Chinese currency, the Renminbi, and you have the two great big black holes of our financial currency, taking in cash but emitting very little indeed. Basically, the Chinese sell a great big slice of the world's manufactured goods, absorb the world's Euros, Dollars and Pounds, and refuse to give them back. It's an imbalance caused by the fact that no-one can trade in their currency, apart from a tiny window the UK wants to make money from in Hong Kong. It helps to explain the size of the Chinese sovereign wealth fund. It's a bit like General de Gaulle's trick as President of France in the 1960s, when he basically took all the American defence dollars in Europe and sat on them, weakening the US and strengthening his own hand. Expect to see many more Congressional calls for action - to little avail.

Want to know where all the money's gone? Welcome to the amazing disappearing money trick.

Scotland: Quebec or Norway?

Preparing for the coming semester's teaching, and consulting with colleagues on texts to use with the students, we came across the following by R.H. Bruce Lockhart, spy, banker, politician and Scottish nationalist:

It is the most obvious of truisms that the life of a people depends on their own will-power to maintain an independent national culture. Indeed, history affords almost as many instances of small nations being absorbed by voluntary apathy as coerced by brute force, and even where superior physical might have prevailed a strong national will has sometimes survived centuries of oppression to force its way to freedom. Ireland and Norway are illuminating examples. Neither country, particularly Eire, provides an exact parallel with Scotland, but Norway’s progress since independence has fired the imagination of many Scots.

It's a bracing example for us that most of our contemporary debate about Scottish independence is not new - indeed, that there is little that's all that novel in our public discourses. The fabled Scottish Nationalist 'arc of prosperity', a Celtic and Nordic zone of stability stretching from Iceland to Sweden via Ireland, has for many decades constituted an alternative northern alliance to replace England on the country's southern flank. Many Nationalists, and many Scots who wouldn't necessarily call themselves Nationalists, look to Scandinavia for inspiration.

That's why the insolvency and debt crises of many of these countries hasn't damaged Alec Salmond, Scotland's First Minister and the arc's most recent advocate, as much as many have thought it would. Scotland's ancient ties with Norway, for instance - cultural and historical as much as economic - are being revived, for instance. Not everything is about economics. Most of the arc of prosperity is still wealthier than the UK, by the way - though rich economies have their own sclerotic institutional problems. All that's a bit irrelevant to this debate, which is about image and perception rather than reality of course, but that's another story.

Norwegian independence, starting in 1905 with the country's break for freedom from Sweden, is a much happier exemplar than one of the alternatives - Canada's French-speaking province of Quebec, where the separatists ruled for more than two decades, lost an independence referendum (very narrowly), forced the rest of Canada to amend its constitution, and then lost credibility in a series of squabbles before getting hammered last year at the polls.

So will Scotland turn out to be like Quebec, or like Norway? On that question much of the next decade's political history hangs.

Disability Living Allowance: consider the facts

Today's case of bad history and bad government is the 'reform' of Disability Living Allowance.

You'll have seen on the news that the Government has already been retreating on this one, running away from extending the initial qualifying period from three months to six, and backtracking from taking it away from people in residential care. The political toxicity of benefits reform is engraved on the hearts of all Conservatives, after the Major government tried it and found wheelchair-bound protestors handcuffing themselves to railings outside Number 10. Now they're back in the same position. Plus ca change.

That's not to say, of course, that the legislation should remain set in stone forever. Numbers have indeed risen very sharply, and it's hard to argue with at least some regular checks to make sure that people are still receiving the right benefit.

But consider the history. DLA has its roots in the 1970s, when campaigners began to argue that disabled people had the right to move around - and be helped to do so. That they had the right to live as good and as mobile a life as anybody else. And that the 'patchwork quilt' of (theoretically unavailable but often quietly paid for) local authority and National Assistance help with scooters, taxi rides and the like was just inequitable, inefficient and unfair. Mobility and Attendance Allowances were brought in - the genesis of today's DLA.

The more recent story behind the rise in numbers claiming the benefit is even more enlightening. Think that a big increase in claimants means more people are coming in from other benefits? Defrauding the system? Taking advantage? Well, first consider the criteria for claiming the benefit - at its higher rate, 'people who are virtually unable to walk'. Hmm, well they wouldn't be near the top of my own cuts list in any time of austerity, but there you are. More seriously, three hard and concrete reasons are given for the rise by people who actually know about and research this question:

(a) the rising numbers of people in their 50s and 60s ('demographic bulge') who are getting more infirm and increasing the strain on DLA;
(b) more diagnosis of children with learning difficulties who can claim the Allowance; and...
(c) the general lower tolerance for illness and non-mobility in our society which means that the disabled are insisting on standing up for their rights and claiming.

Sound more convincing than blaming 'scroungers'? You betcha.

Then there's the question of objective need. There is some evidence of a rise in actual disability among the population of working age during the 1990s, an effect we can now see feeding through into the numbers of people claiming DLA. As you can see from this academic text on the subject, even at the time of DLA's introduction, there were estimated to be 6.5m disabled people in the population. Three million people claiming it does not, a priori, appear therefore to be a very high number.

You know what I think? Ignore the more lurid headlines on the subject. Both the history and the administration of DLA show that we're going to need more of it in the future - not less.

'The Iron Lady': pity or politics?

So I went to see 'The Iron Lady', about Mrs Thatcher's rise to power and later life (above). Enormously enjoyable it was, too.

Now, I'm no fan of The Lady's policies - as any regular reader of this blog will know. There were some good elements, for instance the privatisation of service industries that ought never to have been so frail as to have been taken under the state's wing in the first place (British Airways or British Telecom spring to mind). But in general it was a harsh and strident age of division and of futile attempts to 'cure' inflation with medicine that killed the patient - Britain's manufacturing industry.

And there's no way that I hanker after Mrs Thatcher's peculiar brand of 'strong' leadership. Give me the hesitancy and the halting, limited vistas of a Cameron, a Clegg or a Miliband any day. It's far less frightening.

But. But. But.

As Mark Kermode has pointed out, this is not a biopic - it's a life seen in flashback, as remembered by a frail old lady with dementia. As such, and as a writer who's had a close member of my own family succumb to the disease, it is a stunning and emotional evocation of a standing fact that's going to confront us every single day for the next few decades as the population ages.

As such, it's an excellent and a moving portrayal of a cruel disease - not only notable for Streep's extraordinary and jaw-dropping turn as Mrs T herself, but also for the uncanny way in which (for instance) Anthony Stewart Head captures Geoffrey Howe.

Critics who look at this film askance for its dodgy politics and its dodgy history are missing the point. Now, reader, I'm the first one to tut when the history's wrong. It's my livelihood, my bread and butter, my every thought (during working hours). And this one runs together the oil crisis of 1973 with Labour's battles with the trade unions during the Winter of Discontent in 1978-79 (witness the scene where bins are piled up outside the Cabinet Office). It paints Conservative Ministers of the 1980s as a bunch of weak, lily-livered ciphers who tried to hold The Lady back. Heseltine? Howe? Hurd? These Ministers would be Secretaries of State today and in any other period. They were hardly shrinking violets.

But those reviewers who've taken a purely political look at this - pro, too, but mainly con - have got it wrong. They lack the wider vision, the broader sympathy, the sense of the human that the film captures.

As Peter Ustinov once put it, they need to add a dash of pity.

The 'curry house crisis' and British immigration policy

One of the worst elements of the Government's crude and completely unrealistic targets for non-EU immigration (to reduce it to below 100,000 a year by the end of this Parliament) is the effect this has on key parts of our economy.

Universities, of course, squeezed just at the moment when foreign students might be making up for the stagnation or fall in the numbers of home students put off by very high fees.

But also the food industry - a key part of British culture, as well as of its economic success. Want to know one of the key reasons why the British tourist industry is so successful? Yes, it's the different types of food one can get here - including the 'Indian' curries cosmopolitan French shoppers recently scrambled for at the re-opened Paris M&S.

The problem? New visa rules mean that only the top five per cent of all Asian chefs can now come to Britain to work. That's made it very, very difficult to get good staff - for Indian restaurants in particular. It's given rise to howls of pain and rage from across the industry.

Clearly it's important to train our own chefs, from across Britain's racially diverse culture. Many Further Education colleges have been trying to step into the breach - a gap of long-standing that's frustrated employers since the early years of this decade.

But will a more self-sustaining sector be achieved by a less skilful and less successful sector that starts from a lower base and is less productive to start off with? And can training pick up the slack caused by such a rapidly-imposed and arbitrary limit on skilled migration?

I don't think so.

OK, so Britain's universities earn a lot...

Well, if we didn't know already (and I've been arguing this for years), it's clear given new(ish) figures that Britain's universities are one of the country's key export sectors.

Leave aside improvements in productivity due to 'upsklling'. Leave aside the impact on creative industries or tourism (not inconsiderable). Leave aside even the increased earnings of graduates. Just have a look at Britain's trade accounts.

Universities earned about £8.3bn abroad for the UK last year - a figure that Universities UK (admittedly the sector's pressure group) thinks might about double by 2025.

Where does that put Britain's universities? Well, using 2009/10 figures for physical trade (the last really easily available and reliable, and since which university earnings haven't risen all that quickly) that makes universities the equivalent of the country's sixth biggest export earner - just below engines, but just above aerospace.

This doesn't match the perhaps £35bn that the City of London brought into the country in 2010 - but it is above 'professional services' (accountancy, insurance, legal advice and so on). And it is a hefty individual slice of the £500m or so that we export overall.

They're earnings, though, that come with a paradox: that the more nakedly one tries to exploit them, and the more desperately UK state and society try to rack up the gains, the cash might dry up. Witness the University of Wales foreign accreditation fiasco. Desperate to earn money? Partnering up with dodgy foreign colleges might not be the best way, as a number of Higher Education Institutions have found to their cost.

The lesson? Universities are important, just in terms of crude overseas earnings. But try to rush change, claw in the cash or run after a quick buck, and you'll pay with reputational damage later. Just ask the London School of Economics (above).

After Iowa - what are the odds on the President's re-election now?

So it'll probably be 'Mitt Romney for President' (above). He'll face some weeks of continued slog. He'll have to fight a more consolidated and perhaps desperate hard-right conservative field if some of his more extermist opponents drop out. But after his squeakingly tight victory in yesterday's Iowa Caucus, and in all probability his walkover in the forthcoming New Hampshire contest, he's probably going to get over the line.

Not that this will necessarily carry him all the way to the big prize. Many grassroots conservatives can't stand him, and the Republicans are (for now) more divided than ever. Romney will face a fight if he wants to break away from the pack.

The economy does now also seem to be picking up - albeit gradually. This - along with Obama's constant attacks on 'do nothing' Congressional Republicans - appear to be helping. His approval ratings have been gradually moving back northwards, and he is at less than minus one per cent (approval minus disapproval) to about five percent, depending on who you choose to believe.

It's very difficult to unseat an elected American President. It's only happened twice via election since the Second World War - when President Carter was ousted in 1980, and when President George Bush Senior was defeated by Bill Clinton in 1992. The present incumbent of the White House doesn't quite feel like one of those one-term leaders.

Put it all together, and it's no wonder that betting markets have President Obama at about 51-52% to be re-elected. Punters overwhelmingly think he'll do it if asked a straight yes/ no question. I'd put the likelihood of an Obama re-election a shade higher than 51% (at perhaps 55%, up from where we were just a few weeks ago) and, all in all, it's Democrats who'll be smiling a bit more convincingly this morning than Republicans.

What does it mean for the rest of us? Unless the Democrats can re-capture the House of Representatives, and it's unlikely, another four years with virtually no progress, no legislation and not too much leadership in Washington.

So we're on our own. But you already knew that, right?

Want to understand public debt? Look westwards

Sometimes you have to look at someone else - or how they see you - to perceive your own true situation.

Never is this truer than in the case of UK public debt. I've been banging on for years about the low levels of our debt stocks when seen in historical perspective. The fact that someone will always buy the debt - especially given the unattractive nature of other investments. The danger of cutting too much because we're spooked by a load of big-seeming numbers.
But the really big beasts of the economic jungle from across the Atlantic - such as Paul Krugman - of course say it better. Americans usually do.

The US has a much worse debt-to-GDP ratio than we in Britain do. But yet consider Krugman's case for ignoring that situation - at least in terms of government spending. It's pretty compelling. Americans owe most of that money to themselves (above). They are extremely unlikely to default. Even modest tax rises would dig them out of the bottom of the hole they've been digging. And overall, modern governments' capacity to raise money - including that of the UK state - is now much more advanced than when our debts were higher.

Well, I never. Or - I told you so.

So public debt isn't something to be laying awake at night about after all. Unless you want people to believe that public services have to be slashed to ribbons, that is. Or if you're Greek or Italian - states which really do have critical and stability-menacing debt positions.

Happy New Year! Nice to start on a positive note for once...