CSR and economic confusion

Economics is an imperfect science. It never fails to amaze me how clueless everyone is when it comes to understanding the economy and even worse when it comes to trying to manage it.

I bring this up, because at the moment, some sort of understanding of economies would be useful.

James Heckman, a Nobel winning economist, was recently asked how best to tackle the downturn. He said: “I wish I knew more and I wish our profession did. Macro economics is not a science, it’s a patchwork of theorems and bad data. There is little serious work on the subject, which seems dominated by beliefs.”

Reassuring isn’t it?

The Conservatives this week announced £81bn worth of cuts over the next five years through the comprehensive spending review. They claim the cuts are ‘unavoidable and are the only way to reduce the deficit albeit at the price of 500,000 people losing their jobs in the public sector.

Labour on the other hand say purely taking money out of the economy risks a double dip recession. More welfare money will be spent on supporting the unemployed whilst less tax will be paid into the system. According to postman Alan Johnson, about £41bn of cuts in combination with targeted public sector investment and increased taxes is a far safer route out of recession.

Both are just economic chancers in reality, betting on one ideology over the other. Neither knows the answer and that is no disrespect to them, because no one ever has. And if no one has ever known the answer, what chance does a layman like me have?

I look to the newspapers for guidance, but they don’t offer much help either. Take Sunday’s Observer for example.

Will Hutton said: “Never before has a country with such a large economy, carrying so much private debt, taken the experience of near financial collapse to squeeze its budget with such severity and speed…

…

“The gamble did not have to be taken. The scale of spending cuts were not ‘unavoidable’. The country was not on the brink of bankruptcy. The stock of national debt built up over the decades lies in the middle of the international average as a proportion of GDP. Indeed, the national debt has been proportionally higher for 200 of the last 250 years.”

Well someone tell DC quickly. He is making a grave mistake.

But then a page later my fears are put to rest by Andrew Rawnsley, who concludes the cuts are not as severe as expected.

“The great squeeze will reduce public spending from its current level of 48% of GDP to about 41% by 2014-15. That is above, not below the postwar average for Britain. It is fairly typical of a European welfare state. Spending will fall to about the same proportion of GSP as in 2007-08 when Ed Miliband was a senior aide at the Treasury to Gordon Brown. In cash terms, at the end of the four years, the government will be spending 6% more than it does now. In real terms, the coalition will be spending more than when New Labour came to power in 1997.”

Well in that case I'm not so worried.

Who do you trust, rather than, what do you believe seems to be the most relevant question at the moment. And until the impact of the cuts start to be felt, this will be the dividing line in British politics.

#Leadersdebate – a new experience for all

Picture the scene; three friends, Texas BBQ pizza, cans of beer, plenty of banter and ... a lively political debate on the TV.

It felt more like the FA cup final than the general election. And that can only be a good thing for bringing people back to politics. Not even the 7 million pre agreed rules could ruin what turned out to be a lively yet insightful debate with a surprise runaway winner.

Sorry, add one more thing to this winning equation – Twitter. I was glued to it, probably more than the actual debate. In 90 minutes I had tweeted close to twenty times.

But the real attraction was in what everyone else was saying. I watched the public pour scorn on their political adversaries through the #leadersdebate hashtag whilst the Conservative and Labour feeds competed for points online.

My two favourite tweeters were John Prescott and Alistair Campbell. They were giving a blow by blow account of how they saw the debate panning out:

@johnprescott Tonight you're seeing the real Gordon I know. Funny, intelligent and a man of real substance #leadersdebate

@johnprescott Substance beats style EVERY time. Solid win for Gordon. Just doing post-match analysis with John Denham! #leadersdebate

@campbellclaret Post-match review of #leadersdebate - Clegg wins on style, Brown substance, Cameron shallowness

@campbellclaret Cameron now has the look of a man about to see a team that will tell him he did well, and he'll know they're just trying to cheer him up

I, of course, agreed with every word. In my eyes it was John, Alistair and I taking it to the people last night! It was an interactive election debate like never before and I am proud to say that I played my part!

@andrewwebster25 "What matters is what comes out" - exactly David #leadersdebate

How did they perform?

Nobody landed a knock-out blow or will forever rue a horrible gaff, and I don’t think the format of three people plays to that. But it did bring out their personalities and positions better than any individual interview could.

Clegg positioned himself as the ‘alternative’ with policies placed so high on the moral high ground that they seemed a little hard to envision. It wasn’t surprising he did so well. He was concise, passionate and effectively positioned himself away from the mucky business of governing. “The more they attack each other, the more they sound the same,” he said.

Cameron’s clever sound bites and sincere apologies for the behaviour of politicians, on the other hand, just weren’t as effective when flanked by the other two leaders. His references to NI just seemed arbitrary as he tried to bring it in to every debate. That is old news now and a card he should have held in reserve. When Brown pushed him for answers he didn’t seem to have any. “This isn’t question time, David, it’s answer time,” Brown said.

And although Brown was still a bit prickly and often got tongue tied, I thought he brought his A game to Manchester last night. He was funny, getting the only laugh and applause of the night for a quip thanking Cameron for putting him on the Tory campaign posters. As numerous tweets pointed out he also had ‘substance’ talking about commitments on spending and promising a referendum on electoral reform. Still he wasn’t quite smooth or articulate enough to turn these clever quips and concrete points into viral hits.

Scores on the doors

AsI watched the Twitter commerntary and live ITV poll I thought Brown had Cameron. All the live polling had Cameron last and there was a definite anti-Cameron sentiment amongst the tweeting public. I felt so confident of Brown’s ascendency, that when the conservatives tweeted: "@conservatives ITV's tracker of how people feel about what the leaders are saying plummeted when Brown spoke about defence #LeadersDebate"

I immediately replied:

"@Andrewwebster25 @Conservatives I wouldn't be directing people to the ITV tracker if I were you, not flattering"

But it appears @conservatives got the last laugh. As soon as the debate finished I was shocked to see all of the polls point to a Clegg victory with Cameron in second and Brown brining up the rear. Were these people watching the same debate I was? This spells bad news for the Prime Minister.

The evening was summed in the closing exchanges though. Gordon spoke about improving education, policing and the NHS and paying down the deficit through difficult decisions such as the rise in NI, whereas Cameron filled it with the usual meaningless sound bites: “choose hope and not fear...” "We're in this together.." etc etc. With everything he says I think the public would be wise to ask themselves, ‘What does that even mean?’

So what happens next?

Well Clegg will retain his popularity as someone above the petty bickering, but still completely unelectable. Cameron will attack more and become more aggressive. Despite the polls, he will know that it wasn’t a good night for him. And Brown should feel confident from his performance and continue to ask questions the Tories aren’t prepared to answer.

Will this change the outcome? Well voter turnout will definitely be higher as a result of these debates and there might be some fluctuations. But from the polls this morning it seems even a winning performance by Brown on prime time TV can’t convince the electorate that he is the right man for the job.

Hung Parliament - extending the realm of possibility

Forty-four percent of the electorate want a hung parliament, according to a poll by the ICM/Guardian this week, which is far higher than support for an outright majority for either Labour or the Conservatives.

The resurgence of Labour is heartening. As it gets closer to crunch time people who have never voted Conservative before seem to be saying to themselves, “I’m not a fan of Gordon Brown, but voting Tory - that’s a bit strong isn’t it?”

As opposed to 1997, when people were excited by the prospect of change, this election is being fought between the unpopularity of the current government and the only possible alternative. That was until about a week ago when the prospect of a hung parliament came to light. A hung parliament is exciting because it offers an additional alternative that the public hadn’t seriously considered before.
And it is the media who have made this alternative a real possibility. In reality the polls haven’t tightened enough to cause the Tories serious concern and their lead is increasing once more. But the press have jumped on the idea of a hung parliament, seeing it as a new angle to a story that everyone thought had already been written as “Cameron marches into Downing Street”

Whilst the press see it as obtainable, so will the voters which makes it a much more realistic possibility. In reality, it would probably be a disaster. The British electoral system is designed to create strong government who can make big decisions. A hung parliament would end in paralysis and probably another election. But still, I am far more excited about seeing that pan out as opposed to an easy Tory victory. Let’s hope the story hasn’t already been written and the press continue to push outcomes other than a Cameron led majority.

Cameron - Getting ready to govern

David Cameron made a major U-turn this week after the Czech Prime Minister signed up to the Lisbon Treaty. He found himself in the position of having promised a referendum on a treaty that had already been ratified by the whole of Europe. This referendum is no longer happening.

The fact that Cameron made that promise in the first place is a sign that the Conservatives are still divided over Europe. Surely he would have known that such a promise was unrealistic and was only made as a way of uniting the Euro-sceptic majority of the Conservative party behind him.

Now that Cameron is preparing his party to govern he has to adopt a more realistic approach as opposed to a political points scoring one. This could be sticky for him.

He must realise that Britain’s future relies on a positive relationship with Europe whilst the Conservatives future might rely on a coherent European policy. At the moment the two seem mutually contradictory and there is no doubt that this is an own goal for the Conservatives.

This episode suggests that although the Conservatives seem united on the outside, a few more cracks could well emerge in the lead up to the election as the party gets ready to govern.

With Blair comes Campbell?

Alistair Campbell popped up in the Financial Times today with a letter in which he criticised George Osbourne for being more interested in short term political tactics than long term economic policy.

In the letter Campbell says:

“His initiative on curbing bankers’ bonuses, which fell apart on minimal scrutiny, is but the latest to draw fire from City and business leaders. It was attacked not for being tough, but because it was not thought through.

He suffered a similar credibility hit a few weeks ago when brandishing documents he claimed to have been leaked, which in truth had been published at the time of the last Budget. The media mini-frenzy was a short-term tactical gain at the expense of strategic credibility. Likewise the constantly changing figures on savings from his welfare reform proposals do little to enhance his standing.

All these mistakes reveal a trend, which will become a problem during the heat of a campaign, when his party’s positions on the handling of the economic crisis may come under greater scrutiny than they did at the time.”

Although it seems obvious, what Campbell has done here is identify a recurring weakness in one of the top Tory politicians based on solid examples. It is this sort of rational, well thought out argument that the Labour party could do with in the lead up to the election, and this is seemingly not going unnoticed.

The website, PoliticsHome today ran a survey within political circles on whether Brown would be well advised to bring Campbell formally back into the government for the election. And the answer was yes.

The site said: “Overall, fifty nine per cent of the Phi100 - a politically balanced panel comprising MPs and peers, party strategists, media commentators and executives, think tank directors and academics – think that Brown should bring Campbell back into the fold. “

In truth, this probably wouldn’t be a good idea as with Campbell comes a lot of baggage that might make him an easy target for the Tories. But it is clear that, like Blair, Campbell has the potential to play a significant but informal role as the election draws closer.

Blair right for EU president

Today David Miliband wrote in the Times that Britain is a big player in Europe because our role “magnifies the power of our ideas, which strengthens our clout in Washington, Beijing and Moscow.”

Miliband is right in the sense that the world is changing fast and for Britain to have influence in it, she needs to rely on more than a colonial heritage. Foreign policy debate should focus on how Britain can maintain this influence, rather than living in the past with Britain seen as a major independent player.

This is why Tony Blair becoming president of the EU is an opportunity for Britain. The great powers of the future are the USA, China and even Russia and India in the longer term. If Britain is to continue to have influence on the world stage then it will be largely through Europe and a strong European leader, respected globally and with the power to work with and influence other global decision makers.

In his Times piece, Miliband writes that four factors now underpin Britain’s influence on a world stage:

“Britain is a leading contributor of people and money in tackling the great challenges of the world…

British ideas give us influence…

Our values set a high standard…

Britain is at the heart of a unique web of international networks.”


Rejection of the Lisbon Treaty is based on an outdated argument that Britain can still punch her weight independently because of the power she has held in the past. It is time that we got with the times, accepted that our foreign policy future lies largely with Europe and our role in other international organisations and started making the most of our leadership through the European machinery. Tony Blair as EU president would be a good start.

BBC right on BNP’s inclusion on Question Time

For the past week I have watched in disbelief at the outrage politicians and parts of the general public have show at the BBC’s decision to invite Nick Griffin onto Question Time.

As much as the majority of rational minded people might hate it, the British National Party are now a legitimate part of British democracy after winning two European Parliament seats and clocking up a million votes.

What comes with this place in British democracy is space on the political agenda such as party political broadcasts, televised interviews and sporadic appearances on Question Time as a minor party.

By silencing them because we disagree with their abhorrent views undermines our democracy. The question for our democracy over the past week shouldn’t have been

‘Should the BNP be allowed on Question Time?,’ but,

‘How have we got to a state of affairs that means the BNP are on Question Time?’

The fear factor
Mainstream politicians are scared of the answer to this question – this is why Peter Hain was so against their involvement and Jack Straw couldn’t answer directly if it was Labour’s immigration policy that had led to increased support of the BNP.

Mainstream society is afraid of approaching the question of why people would support this implicitly racist party and afraid that if the BNP are heard, more people will turn to their way of thinking.

But based on the performance of Nick Griffin on Question Time, I have faith in the power of the argument that their policies are politically and ethically wrong. The way to beat them is not by cutting off their oxygen of publicity, but giving them the oxygen that they are entitled to until they eventually beat themselves.

Exposed
A story in the Observer today was headlined, ‘BNP supporters attack Griffin over poor Question Time performance.’ In it Lee Barnes, the BNP’s legal officer is quoted as criticising Griffin’s performance. The story said:

“He (Lee Barnes) accused his party’s leader of “failing to press the attack” on the “ethnic middle class” for “taking up the best jobs while still playing the bogus race card for every opportunity.””

This demonstrates the core problem for Nick Griffin – he is trying to describe far right policies in moderate terms. Any sort of analysis will undo this in a way that is not satisfactory to the far right or to people attracted away from mainstream politics by Griffin’s more moderate rhetoric.

He simply can not maintain that Britain should go back to a 99% white population at the same time as saying second and third generation immigrants can stay in the country if they contribute to society.

Underneath the slogans and soundbites is a world of contradiction, and once exposed through means such as Question Time the BNP’s stay in mainstream politics will be short. We should believe in the power of our democracy and the values that underpin this country regardless of the difficulties they currently face.