Category: Politics

Clarkson on Mandelson … and more!

“Get me a rope before Mandelson wipes us all out”

Whether you live in the UK or not is an issue, because it might well affect somewhat your reaction to a recent diatribe which is characteristic of a journalist who is well known in the UK, but probably not outside. (That sentence was too long; I was trying to emulate his style!)

Jeremy Clarkson

That journalist is Jeremy Clarkson, who is known as an arrogant, irresponsible motoring journalist.

Over the years, he has done only a moderately good job of using that persona to hide his intelligence, his common sense, his sentimentality and, even, his wit!

Fortunately, for the rest of us, his failures to hide them completely have been known to result in some valuable contributions; whether this is one of them, you will have to judge for yourself.

If you are live in the UK, or are from the UK and living elsewhere, you will probably “get” his recently written article in the Times Online.  Here’s a flavour of the article:

He [Peter Mandelson] announced last week that middle-class children will simply not be allowed into the country’s top universities even if they have 4,000 A-levels, because all the places will be taken by Albanians and guillemots and whatever other stupid bandwagon the conniving idiot has leapt onto in the meantime.

I hate Peter Mandelson. I hate his fondness for extremely pale blue jeans and I hate that preposterous moustache he used to sport in the days when he didn’t bother trying to cover up his left-wing fanaticism. I hate the way he quite literally lords it over us even though he’s resigned in disgrace twice, and now holds an important decision-making job for which he was not elected. Mostly, though, I hate him because his one-man war on the bright and the witty and the successful means that half my friends now seem to be taking leave of their senses.

My guess is that you will either sympathise with it, or not; there is unlikely to be any middle position!

If you have no UK connections, then the whole thing might appear to be complete nonsense. In that case, you might be interested, at least, to know that more and more people in the UK feel like this!

My hand is up, “include me in”, as they say! … and my guess is that Chris Snuggs, of this blog, has both hands up!

Read it here!

By John Lewis

[P.S. more of Clarkson’s superb writing here.  P.P.S. Mandelson background for non Brits. Ed.]

Save the planet – eat a carrot!

Another political masterpiece!

British Health Minister Andy Burnham is urging us to give up meat; this will apparently help to save the planet.

Andy Burnham! (Seriously)

Now, it is very noble of the Minister to try to help save the planet. However, his efforts do raise some questions.

  • The thing is, if it is essential to stop eating meat then shouldn’t the government put its money where its mouth is and DO something about it? Such as tax it? (usually the first instinct!) Or do they only do things that are electorally favourable? (this is a rhetorical question, by the way – feel free not to answer it …)
  • Or is this perhaps a long process of “educating the electorate”? Well, there are plenty who leave school hardly literate already, so he’s being a bit optimistic, isn’t he? And why start with poor, little Britain? There are tens if not hundreds of millions of our American buddies to convince ….

And at the same time as we are being sermonised about our meat-eating the the USA is edging towards the opening-up to oil-exploration of previously off-limit areas.

In our quaint British lingo this is known as “not singing from the same song-sheet”.  And as for oil, I wish they would make up their minds once and for all; either we have to reduce its use or we don’t.

At the moment, all they seem to be doing is organising conferences (at vast carbon footprint) where they promise to reduce emissions. This is schizophrenia, isn’t it?

Re the British sermon, one wonders whether the noble minister is himself a vegetarian, and of course whether he is among the vast government contingent attending the international climate conference. And does he drive the car 50 metres to the baker’s on Sunday mornings?

Personally, I’d be prepared to give up meat if: A) I were convinced it would do any good and B) I thought that the great and good (and rich) would make a similar sacrifice.

These are two VERY big “ifs” ………

Must go – got some burgers in the pan …..

By Chris Snuggs

Why the Anger over U.S. Executive Compensation?

Pay and the Free Market

It came up again in conversation today:  someone was offended and upset over the level of compensation of some senior executives in the U.S. economy.   I have to admit I just do not understand the anger. And I have a fundamental lack of respect for the arguments that have been served up thus far in support of the position.

I have tried to resist drawing the conclusion that the anger is born of envy, but I am very close to throwing in the towel on that one.  Why should we begrudge anyone who earns a healthy salary, especially in an economy that provides each of us the opportunity to aspire to the same?

Even if there were reasonable ways around the practical issues and costs associated with legislative caps on salaries — how to set them, who sets them, using what measures, what value judgements — it simply makes no sense.  It is the antithesis of a competitive market economy where individuals have the incentive to learn, grow, work hard, and succeed.  It ignores the role played by capitalism in creating a strong and vibrant private economy that provides endless opportunities for all who want to put in the hours and the effort to succeed.

U.S. corporate governance rules provide the framework for determining the compensation for senior executives, and it works remarkably well.  Each shareholder, or owner of the company, gets one vote on material issues such as reorganization. The Board of Directors is responsible for hiring and firing senior management on behalf of the shareholders.  If the shareholders do not like the decisions of the board, including those that set the level and form of compensation for senior management, they have at least two, very effective choices. They can either sell their shares in the company or they can vote to replace the board members.  The board can take several steps if, after negotiating the compensation package for senior management, the executive fails to perform. The board can withhold the bonus, renegotiate the terms of the contract, or fire the executive.  Then the long, mostly objective arm of the competitive labor market will determine the market-clearing value for the skills and experience of the recently fired executive.

One thing I’ve never quite understood is why the market doesn’t seem to exact more punishment on senior executives who run their companies into the ground.  Maybe there is an old boys network that looks out for ex-executives; maybe my observations are biased; maybe I notice only those cases where failed executives rise again.  But it’s an empirical question, in any case; we can gather data on the issue and study it objectively.

Regardless of the conclusions of such an analysis, however, decisions about executive compensation must remain in the labor market where your ability to produce economic value still reigns supreme over your ability to curry votes and political favor.

By Sherry Jarrell

Consequences and probabilities

How Peter L Bernstein’s work helps us make the safest decision with regard to global warming.

Probably like me you hadn’t heard of Peter Bernstein. He was instrumental in understanding risk and that alone makes him worth knowing about.  Here’s the entry from Wikipedia:

Peter Lewyn Bernstein (January 22, 1919 – June 5, 2009) was a financial historian, economist and educator whose development and refinement of the efficient market theory made him one of the country’s [USA] best known authorities in popularizing and presenting investment economics to the general public.

Watch the YouTube video before reading on:

You could not have missed a fundamental message in the interview – if the consequence of something is critically harmful then don’t take ANY risks. Bernstein’s book on risk is Against the Gods.

Continue reading “Consequences and probabilities” →

Government Spending and jobs! Uh? What jobs?

Government spending isn’t what it is made out to be.

The headlines are full of claims about the number of jobs created or saved by the stimulus package, the impact of the Cash for Clunkers program on U.S. output and, the latest, the reduction in the deficit from the proposed U.S. health care reform legislation.

What total rubbish!

Government spending is just that — SPENDING.  It does not, can not, never has, and never will CREATE any output, economic wealth, or job.  The only way — and I mean the ONLY way — that profits or wealth or a new job is created is through a business.  Businesses are the only entity that can hire labor and capital and combine them in such a way as to create a product or a service that society may decide is worth more than it costs.

And that spread between the cost of production and what society is willing to pay is economic value; it is the generation of profits that then enables the taxes that the government collects to spend on the goods and services it thinks America ought to consume.

Private industry is the job creator.  Not the government.   And this is not wishful thinking, or a political point of view, or a theoretical model.  It is an unmitigated, irrefutable fact.

By Sherry Jarrell

Economics and Semantics

Governments borrow – why?

This post is a plea for help from someone clever …. what I would like to understand concerns “the borrowing requirement”. All my adult life I have listened year after year to the British Chancellor’s presentation of his budget and each time there is reference to “the borrowing requirement”.

What I would like to know is WHY there is a borrowing “requirement” in the first place. Exactly WHY do governments spend more than they “earn”? And more to the point, why do – and can – they keep doing this year after year, decade after decade? Layman that I am, it seems to me that continually borrowing, living beyond one’s means, spending more than one receives is BOUND to lead to problems in the long run. Is it simply that in most western democracies the “long run” is not foremost in the minds of our leaders? Or does this continual borrowing not matter?

I was interested in the last French presidential election to see that  centrist candidate François Bayrou proposed making it illegal for the government to spend more than it received. I found this courageous and innovative. Naturally,

Bayrou

he came nowhere in the election! Silly chap! He should have promised to spend, spend, spend like the rest of them! Then he may have had a chance.

No, we are paying vast amounts of interest every year merely to service our debt. The basic questions are: Why can and do states do this? Is it necessary and is it wise? And if the answer to the last two questions is “No”, then why do we let them get away with it?

It seems to me that the “borrowing requirement” is simply a fairly crude means that governments use to bribe us with our own money. Please correct me if I am wrong!

By Chris Snuggs

Straight Talking and Realpolitik

“To say nothing, especially when speaking, is half the art of diplomacy.” Quote by Will Durant.

During his China visit Obama said that “the US accepted that Tibet was part of China, but went on to push for the early resumption of talks between China and the Dalai Lama.”

This is the usual fatuous “appeal” issued by Western worthies to the Chinese Communist Dictatorship to act honourably towards people it dislikes. As ever, it is a waste of breath, but a diplomatic ritual that has to be endured.

Obama knows it is pointless, the Chinese pretend to listen but also know it is pointless as nothing will change. We all know – or should – that it is pointless. Why then do they do it? You can’t call it self-delusion since nobody is deluded. Frankly, I am not sure what to call it.

Of course, the Chinese claim to Tibet varies from ludicrous through spurious to extremely questionable at best …..

… and Taiwan is a free and independent state, and more to the point democratic. It is a disgrace that free, democratic countries have never recognized it.

The truth (that’s what we want, isn’t it?) is that the CCP is a murderous and illegitimate dictatorship, never having submitted itself to a vote. This may of course be very wise on their part, but it isn’t honest, is it?

In the way of dictatorships, it is quite prepared to massacre its own citizens to protect its power, as happened in the seemingly long-forgotten Tiananmen Square. It is a pity that the free world seems compelled to overlook all this in grovelling to China. We have to deal with them, but issuing fatuous appeals, come on ….

I wonder what the parents of those killed by the CCP thought as doves of freedom were released over Beijing during the last Olympic Games?

By Chris Snuggs

[Footnote from the Editor. This is a hard-hitting Post about the reality of relations between the USA and China. It is a reminder of the truth about such relationships. Readers may want to view this to understand also the reality of trade with China. Some of the images are deeply disturbing.]

Update on the “British Solution”

The Credit Crisis in Britain

Following yesterday’s Post on this Blog about Goldman Sachs, here’s Britain in action.

Ministers yesterday (17th November) launched a £50 billion ($84 billion) bailout of Britain’s crippled banks – and warned there could be worse to come. State-controlled lenders Royal Bank of Scotland and Lloyds Banking Group will receive fresh injections of taxpayers’ money totalling £39 billion ($65.5 billion).

RBS – which has now received the biggest state rescue anywhere in the world – was also handed £11 billion ($18.5 billion) in tax breaks to help keep it afloat.

Source: The Daily Mail

Thanks for the Greed. Are the directors responsible still in place? Are the Great and Good who removed controls and oversaw the decade of binge-spending and easy credit still in place?

Britain's Global Giant!

Oh, I remember now. The very same person in Britain who was Chancellor throughout the 90s and is now Prime Minister is – according to John Prescott (former Labour Deputy-Leader and the person whose office sign was changed at a cost of £700 ($1,200)  when his job name was rebadged weeks before he left it anyway)  – a “Global Giant” who saved the world.

Oh, and let’s not forget, this is the same person who said that: “Britain is better placed than other countries in Europe to weather the crisis …..etc blah, blah, blah …”

The reality (which is in fairly short supply among Global Giants) is different:

Within hours of the Chancellor’s announcement, the European Commission issued a stark warning about the frayed state of Britain’s national finances, warning of an ‘extraordinary deterioration’ because of the cost of City rescues.

It estimates public debt will double as a share of the economy between 2007 and 2011, reaching 88 per cent of gross domestic product – the biggest rise of any leading EU economy.

The latest £50billion bank bailout is roughly equivalent to the annual schools budget and far exceeds the annual defence budget of £35billion. The new moves bring the total of public money lavished on Britain’s financial rescue to £1.2trillion – almost £20,000 for every man, woman and child living in the country.

… and the £ has sunk drastically against the euro ….

Still, let’s have a bit of positive spin …. the National Debt isn’t quite (yet) what is was just after WWII. A great achievement. Well done  Gordon Brown …. but you can do it …. just one more little push.

We could do with fewer spin-ridden “Global Giants” and more people with vision, courage and competence.

And rather than “saving the world” it might be nicer if Gordon Brown started with saving Britain.

By Chris Snuggs

Goldman Sachs – doing God’s work!

A fascinating and revealing interview in the Sunday Times.

This article in the British Sunday Times was published on November 8th and I’m sure many will have read it.  But for those that didn’t it really is worth settling down to a reasonably long read.  For you will learn that Goldman Sachs:

It’s the site of the best cash-making machine that global capitalism has ever produced, and, some say, a political force more powerful than governments. The people who work behind the brass-trim glass doors make more money than some countries do. They are the rainmakers’ rainmakers, the biggest swinging dicks in the financial jungle. Their assets total $1 trillion, their annual revenues run into the tens of billions, and their profits are in the billions, which they distribute liberally among themselves. Average pay this recessionary year for the 30,000 staff is expected to be a record $700,000. Top earners will get tens of millions, several hundred thousand times more than a cleaner at the firm. When they have finished getting “filthy rich by 40”, as the company saying goes, these alpha dogs don’t put their feet up. They parachute into some of the most senior political posts in the US and beyond, prompting accusations that they “rule the world”. Number 85 Broad Street is the home of Goldman Sachs.

The world’s most successful investment bank likes to hide behind the tidal wave of money that it generates and sends crashing over Manhattan, the City of London and most of the world’s other financial capitals. But now the dark knights of banking are being forced, blinking, into the cold light of day. The public, politicians and the press blame bankers’ reckless trading for the credit crunch and, as the most successful bank still standing, Goldman is their prime target. Here, politicians and commentators compete to denounce Goldman in ever more robust terms — “robber barons”, “economic vandals”, “vulture capitalists”. Vince Cable, the Lib Dem Treasury spokesman, contrasts the bank’s recent record results — profits of $3.2 billion in the last quarter alone — and its planned bumper bonus payments with what has happened to ordinary people’s jobs and incomes in 2009.

and later on in conversation with the Chairman and CEO, Lloyd Blankfein:

“Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.”

So, it’s business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker “doing God’s work”

Indeed!

By Paul Handover

WOMD

Mass Destruction?

No, it’s not weapons – I just wanted to get your attention; it’s “Words”. Last week two words of enormous significance crept into the news, and the first of them was the word “fair“.

This is a very interesting and potentially devastating word, but I wonder if the Minister was wise in letting it out of the box? Has he read the story of Pandora?

The word was used in connection with a report by British Schools Adjudicator Ian Craig, who had been asked by the British Labour government to look into the procedures and practice of admissions to secondary schools in Britain.

It seems that many parents, desperate to get their child into a good school, are devising ways to get round the strict allocation procedures put in place to ensure “fairness”. As has been brilliantly explained by Judith Woods in “The Telegraph” these desperate tricks include “using grandparents’ addresses on admissions forms for sought-after schools, renting homes in the catchment area, feigning marriage break-up and then reporting that one parent has moved nearer the school, and swapping houses with friends.”

According to Mr Craig – and the government – this is “cheating” and not “fair”, and the former is asking for local authorities to “use all means open to them to deter parents from cheating the admissions system. This includes removing places from the guilty and pursuing them through the courts, possibly using the Perjury Act.”

My interest here is not so much in the minutiae of the details of this current spat but the concept of “fairness” in society, which strikes me as pretty fundamentally complex.

It is of course a fairly modern concept, not one that much preoccupied Genghis Khan or even the Victorians, who were much happier with the principles outlined in this verse of the hymn “All things bright and beautiful”.

The rich man in his castle,
The poor man at his gate,
God made them, high or lowly,
And order’d their estate.

Interestingly, the concept is also one that is not often explicitly discussed by governments. I wonder if this is because the power and moneyed elite know that they might be on a sticky wicket in any discussion of “fairness”?

As ever, one cannot hope to find the answers until one has clearly posed the questions. So here goes:

Minister, as you have introduced into evidence the concept of fairness and labelled those trying to get round the school admission regulations as “cheats”, could you possibly answer these questions?

  • Is it fair that many families – desperate to provide a good education for their children – cannot afford to move to an area where there are good schools but are stuck through their limited means in an educational ghetto?
  • Is it fair that people can play the religion card and send their kids to a high-quality “faith” school outside of their catchment area, Tony Blair, former British PM, being the best recent example.
  • Is it fair that a substantial minority of parents don’t have to bother about finding a good state school at all since they can go private? (And shockingly, according once more to  Judith Woods: “the advantage of being educated at an independent school is greater in Britain than in almost any other country.”)
  • Is it fair that many of the same substantial minority own multiple dwellings while hundreds of thousands of ordinary families do not own their own home and have to pay rent to someone, a system that seems to me to be a direct descendent of the feudal system where you slaved all day in return for the right to live on some Lord’s property? (Speaking of which – much as I love the Queen – is it fair that the small Royal Family owns vast, multiple dwellings that could house thousands of homeless people?)
  • Is it fair that poor person A should die of some horrible disease or disability while person B of limited means can pay for special treatment and survive?

And of course, the ultimate question: Is it fair that I wasn’t born with the voice of Elvis Presley and the brain of Albert Einstein?

Yes indeed; the concept of “fairness” goes far. Once you introduce it as a premise, then where do you stop? And either you base your government on “fairness” or you don’t. You can’t have your cake and eat it, can you?

I look forward in coming days to hearing more from Ministers – and indeed from readers – on the concept of “fairness”. One thing is sure to me, in a world of rapidly-increasing problems and people we risk hearing the word a lot more often as we struggle to find solutions which are “fair”.  Of course, that assumes we think things should be “fair”.

Looking around, my conclusion is that we pretend to think it’s important but only if it doesn’t affect us too much personally.

Oh, the second Word of Mass Destruction? You’ll have to wait till next time …..

By Chris Snuggs