Wednesday, 29 July 2015

Calais situation shouldn't be a surprise; it's a symptom

There has been no attempt by the government to tackle the on going migration crisis we are witnessing on our screens on a nightly basis. Meetings are held, pitifully small amounts of money are proffered with embarrassing amounts of pride, unpleasant fences grow higher and the situation continues without being disturbed.

The current chaos in Calais is a symptom of the British government, and its European counterparts, failing to cooperate and formulate a coherent policy to deal with the world's greatest migrant crisis since the Second World War.

We are not witnessing clamouring masses desperate to access the UK - or, in more significant numbers, Germany and Sweden - because of our generous benefits system, the promise of a house, or jobs, or vague security; the primary reason behind this mass movement of people is war.

And European governments hope we just won't notice.

For vast numbers of these migrants are refugees fleeing violence in Syria, Libya, Sudan, Somalia; Theresa May may talk of returning people to their home countries, but to those mentioned above we simply can't. The British government are trying to avoid their international responsibilities and ignore the refugee situation; taking responsibility, it seems, is too much of political cost.

There is no legal means for these refugees to access any possible host country in Europe currently. Trying to storm the Eurotunnel is little of a challenge when compared with the horrors so many have endured.

Greece, Spain and Italy are bearing the greatest burden. And is it any surprise that France might be dealing with the situation in Calais so ineptly in the vague hope that the British government might share some of the burden.

And it's not as though several British governments do not bear some responsibility for the anarchy we are currently seeing in the Middle East and North Africa.

I'm aware I am sounding like a stuck record; I've said the same before about the government's shameful, pathetic, cowardly, inept and short-term politicking on this issue  This abject derogation of duty, however, makes me continually furious so it can't be said enough.

We should all be ashamed by their actions.

Thursday, 9 July 2015

Osborne apes Brown at his barnstorming best

For the best part of ten years, while he was at the Treasury, Gordon Brown dominated the House of Commons and every year he blunderbussed his Budget at an expectant nation.

Growth figures were bombastically rattled through, his hubristic ‘end of boom and bust’ slogan was wheeled out to the delight of his Labour backbenchers, rabbits were theatrically pulled from top hats, elephant traps were carefully laid and the Leader of the Opposition was invariably left on a tricky wicket, clutching a bat broken by the opposing team’s vice-captain.

And the youthful George Osborne clearly watched these performances with a mixture of horror and awe; he may not have agreed with Brown’s policies, but he clearly enjoyed the performance as the former member for Kirkcaldy provides Osborne with his template.

Osborne has been a lucky chancellor. During the coalition government, the economy came mightily close to a double and triple dip recession and growth was painfully stagnant. He missed his own deficit targets time and time again and few but the wealthiest could actually feel the benefits of whatever growth there was.

But, he held his nerve and has been rewarded. The economy is growing at a healthy rate, jobs are being created – albeit too many at too low a wage – and yesterday (July 8) he was able to deliver the first Conservative-only budget since Kenneth Clarke rose up on his hind quarters in November 1996.

Osborne has moved on since his disastrous pasty tax Budget and this was his cleverest yet. While there were the predictable crowd pleasers like the inheritance tax changes, reduction of the benefits cap, defence spending pledges and promising a surplus by 2019/2020, he made quite a bold pitch for the political centre ground.

Osborne’s Living Wage, while not actually at the level of the living wage, was a spectacular rabbit to pluck from the hat; such a whopper it was almost a hare. For those on the minimum wage, aged 25 or over, it means their pay will jump by 70p an hour – to a not insignificant £7.20 – from April and would reach £9-an-hour by 2020. Before the General Election, Labour only pledged that the minimum wage would rise to £8 over the course of this parliament; no wonder George Osborne was being cheered to the rafters by his backbenchers.

Increasing the tax free personal allowance, promising a rise in NHS spending and abolishing non-dom status for people born in Britain to parents domiciled here, could also have come from any party.

Such was the nature of his bravura performance, one would be forgiven for thinking all was fine and dandy with the economy. The clouds over China and the chaos engulfing Greece seemed a long way away and the still fragile nature of the economy could almost be forgotten. Just weeks ago, one Tory MP told me he feared the economy had already reached the crest of the wave now and worried about the next few years, especially considering the country’s enormous debt. But today, these concerns were put to one side.

Yes, while giving with one hand, Osborne was taking with another, like every chancellor before him. Those relying on tax credits will feel the pinch particularly, especially those under 25 years-old; now is not a good time to be young. But again, Labour will struggle to fight against tax credit changes and will not reverse them if and when they get the opportunity.

Unlike Gordon Brown, Osborne is not a Son of the Manse; he isn’t naturally infused with the oratorical skills and moral authority of a church minister. But, with his stature enhanced by the illustrious nature of his office, few are able to command the House of Commons as he does.

Harriet Harman responded for Labour; famously acknowledged as the hardest job of the year for the Leader of the Opposition. She did her best, but one thing she did get absolutely spot on was her acknowledgement that this Budget was as much about Osborne’s ambition to succeed David Cameron as it was the economy. And it is impossible to conceive Boris Johnson delivering as wily and assured package as George Osborne did today. Once again, the likely successor to our current prime minister is his next door neighbour.

Monday, 6 July 2015

Greece versus the prevailing economic hegemony

For ten minutes, over fresh drop scones and orange juice, I almost managed to train my two-year-old daughter to say ‘the Greek vote is counter to the prevailing economic hegemony’. What a great party trick that would be.

Trouble is, she struggled to pronounce ‘economic hegemony’ with any great fluency so it’s a game to be saved for another day.

In Greece, meanwhile, Alexis Tsipras’ left-wing administration has been dealt a remarkable democratic boost following yesterday’s referendum, but it remains to be seen whether this will ultimately help to deal with the ‘prevailing economic hegemony’ with which it is battling. And such is the parlous state of the country’s banks, it has very little time to find a deal.

Yes, there are democratic deficiencies in the whole referendum process; as Peter Kellner of YouGov observes. For such a vote to have true democratic accountability  it needs, he argues to follow these principles:

It is clear the Syriza government in Greece breached many of these; but such was the scale of the victory, Tsipras and his administration have received a huge mandate for their confrontational stance against the Eurozone. As of today (July 6) five parties have rallied behind the prime minister's position, including opposition parties, forming an impressive domestic coalition. Those querying the legality of the vote, such as European Commission vice-president Valdis Dombrovskis, will only play into Syriza's hands further, allowing them to portray Greece as the conspired against victim of the piece.

In truth, Greece finds itself in its current wretched state as a combination of its own long-term, systemic, failings and the complicity and ineptitude of the European Union. Why, for example, was Greece admitted to the Eurozone club back in 2001? Who would have guessed that drenching a country, famous for governmental corruption and woeful levels of tax receipt, with cheap credit would end so disastrously?

In the Financial Times, in December 2000, Tony Barber explained how Greece's admission was more to do with 'political symbolism than economic consequences' and that Greece would:

'serve as a beacon for central and eastern European countries, which hope they will not have to wait long after joining their European Union before they, too, can abandon their national currencies for the euro'.

Efforts to delay Greece's entry on the basis that the country 'did not meet the criteria for low inflation and budgetary discipline in a sustainable way' were swatted aside.

The Greek government's lack of 'budgetary discipline' is legendary. The Economist wrote in a 2012 article that tax evasion was routinely shrugged off by officials as 'a national sport' and it cited a recent study which found that up to €30million of tax revenue went missing annually. As recently as 2010, a study using satellite photographs to count the number of swimming pools in Athens - a measure tax inspectors use to indicate wealth - found that instead of there being 324 as officially declared, there were, in fact, 16,974. Covering pools up with nets still remains a favoured tactic to evade such monitoring. 

In 2012, a list was published of 4,151 Greek celebrities who, collectively, owed the Greek state £12.4billion in unpaid taxes.

And only in recent years has the absurdly generous pensions system been reformed, which once counted jobs such as hairdressing as a hazardous occupation and enabled a barber to retire at the age of just 50. These reforms still have far to go, however.

In the early years of Greece's membership of the Euro, its economy boomed but in every year since 2001, it registered budget deficits of over three per cent, reaching a peak of almost 16% in 2010. In the same period, debt as a percentage of GDP, has risen from 108% in 2001 to almost 180% now. When George Papaconstantinou became finance minister in 2009, he was forced to disclose the budget deficit was almost double the estimates given by the previous right-wing administration; Papandreou's socialist government was thus nobbled from the start.

As the crisis has reached a climax, I've heard comparisons between Greece and the experiences of coping with debt by Iceland and Ireland, but these latter two are blessed with comparatively functional political systems; any such comparisons are, therefore, rendered invalid.

Since their entrance to the euro club, therefore, the dysfunctional country has piled debt upon debt; its credit rating has been shot to pieces; it has received loans and bailouts from the IMF and the EU; and yet growth - the only means by which Greece might escape this mess - has stubbornly refused to accelerate. There have been flickers in the last few years, but nothing more vigorous.

Meanwhile, in June 2013, the IMF admitted they hadn't foreseen how much damage the austerity programme would wreak upon Greece and only last week a report - which the Eurozone tried to block from publication - acknowledged Greece's public finances had no chance of recovery without significant debt relief. 

Grim though it may be for the people of Germany to concede, until the eurozone recognises this reality, Greece will remain in turmoil and will not recover.

Fundamentally, what we are witnessing is a clash between democratic power and harsh economic realities. There is no doubt Tsipras has reinforced his position domestically - and could inspire other left wing movements such as Spain's Podemos - but with a lack of a deal this will fade. The Greek Prime Minster's pledge that a new agreement with the EU would be signed within 48 hours of the referendum seems absurdly optimistic. At the same time, the Eurozone may wish not to acknowledge the power of the people, but ultimately knows it must do to an extent to avoid the very real possibility of Greece plunging into disorder. 

And yet, the Eurozone holds the strongest cards. If the banks have no money, the people of Greece will be unable to buy food, medicine and other essential supplies. Even leaving the eurozone doesn't necessarily prevent this from happening as a new currency would take time to organise. The prevailing economic hegemony, no matter how ugly and discredited, ultimately has the power to drown this nation's democratic voice and set a very worrying precedent indeed.