Oi! Where are you going with my country?

Tony Blair recently stated in his memoirs that:

'I was never a passionate devolutionist. It is a dangerous game to play. You can never be sure where nationalist sentiment ends and separatist sentiment begins'

Very true Tony.  Unfortunately his party still pressed ahead with the devolution agenda. Certainly to my mind the creation of the Welsh Assembly, and all that goes with it, has furthered separatist sentiment. This has happened to the extent that I have noticed a change in public attitudes and the frequency that one encounters radical views within the short time that the Assembly has been in place.

The front line of this feeling is of course lead by Plaid Cymru, who quite amazingly, are actually in coalition and currently 'running' Wales. This comparatively tiny party shout a lot louder than their number would suggest.

Recently I learned that they have invited a politician from the Flemish Nationalist Party to speak at their annual conference. One should wonder what, if anything, ties Wales and Flanders together. Looking at the Flemish Nationalist Party's policies you can begin to see their motivation.

1) Preferential choice in schooling for families with one Dutch speaking parent.
2) Libraries to stock at least 75% Flemish books.
3) Blood donation drives to be conducted among people who are mono-lingually Dutch.

Plaid Cymru has been pushing the Welsh language agenda throughout. My view has always been quite simple. Language is a method of communication; it is a 'currency' if you like, for information exchange. Efficient exchange occurs within single currency areas, and therefore having multiple currencies in use is always inefficient.

In economics the argument can be made for separate currencies for a multitude of reasons which do not apply to language, and if I digressed would take this metaphor too far. The promotion of Welsh language in Wales is not designed to improve efficiency, which could be argued about teaching other foreign languages to children, it is designed to appease a cultural desire. This is why it should not be mandatory, or an issue for government.

As far as I know, 20% of the population of Wales can speak Welsh, most of which I would imagine are young and can only speak Welsh because it was made compulsory in schools a few years ago. I am also lead to believe that of those completing the most recent census, only 2.5% chose the Welsh option, and the numbers who select Welsh at cash-points are even lower. Where is the demand for Welsh that this party thinks it is satisfying?

Lastly, Plaid has recently issued some new ideas it is considering putting into its new manifesto.

- making Wales a trilingual nation within a generation, with children learning a third language.
- introducing a national car-free day from 2012.
- making electric car charging stations compulsory in every new public building from 2016.
- creating more community gardens for food security.
- launching a new Welsh diet and nutrition drive based on the creation of local food systems across Wales.

What strikes me about these, apart from the fact that most of them are a bit wacky, is that they all seem to appeal to small groups of fanatics. Having found some support banging the Welsh language drum, they have now found that appeasing the 'greens', the 'eat locals', and so on, can improve their party base. I found the trilingual policy particularly humorous as with only 20% of the population speaking Welsh I would say it is a bit ambitious to claim that we are even a bilingual nation!

So the question I have is, where are this party, who are currently in office, with their wacky ideas, fanatical support, and lack of demand from the public, going with my country!??!?

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Two wrongs don't make a right

Following a slightly heated debate in my office, I discovered another objection to cutting child benefit for HRT payers. The objection is that there are wealthier people, already unfairly benefiting, and to a greater extent in this country, and that tackling this problem before tackling these greater injustices, is 'unfair'.

I can't argue with the sentiment.  Ideally, inequalities should be tackled in order of their size. However, that doesn't mean that inequalities should not be tackled at all until more damaging unfairness has been dealt with. As I have said previously, incremental improvements are improvements nonetheless.

I can't help feeling that this argument is also underpinned by the now common sense of entitlement many people seem to feel. In some cases it boils down to 'If he's got his hand in the till then why shouldn't I?'. This sentiment is understandable, but quite ugly. It has an 'every man for himself' quality which is surprising given that some of the loudest objections are coming from so called socialists. Needless to say some of the Right have also raised objections which seem to contradict their so called desire for a reduced State.

Camilla Cavendish, writing in The Times, has summed this up well saying "The moral outrage from the richest 15 per cent on this issue has been the ugly face of this (Conservative) conference. We are all loss-averse. But the deficit plan will get nowhere if the pain is not shared. Those who are using concern about non-working mothers to conceal their dismay at their own financial loss have jacked their moral high-ground up so high that it should give the rest of us vertigo".

Where do the roots of our new found feelings of entitlement come from? Camilla also goes on to articulate a possible cause for feelings of outrage which makes a lot of sense to me. She writes that as a voter she is bribable, as we all are, and suggests that the rise of 'middle-class benefits' may have lead to a change. "The very strong reaction to these losses is a striking manifestation of just how successfully we were bribed; how addicted to State largess we have become."  "Gordon Brown's complex system of tax credits was an explicit attempt to expand middle-class welfare" - the ultimate conclusion of which would have been a web in which nearly every single one of us was caught, and corrupted".

Thankfully, and despite the considerable media scorn, the government look like standing firm. Polling has shown that the vast majority of the public support the policy concept even if, as even the Treasury admits, there was no easy way to be completely even-handed between dual and single-earning households.

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Remember remember . . .

For those interested in the so called 'bonfire' of the QUANGO's, the government has today published a list of NDPB's (Non Departmental Public Body's). The list also sets out what may happen to many of them. I found it quite interesting just to realise how many of these organisations even exist.

If your interested in the list, you can find it here.

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"We're entitled to life, liberty, the pursuit of happiness. . .oh, and child benefit!"

If anyone hasn't already noticed, a debate is raging over how to cut back government expenditure. Of course cutting out the, now infamous, "peace-pods" is painless (or at least I would hope so!). The scale of cut backs required, however, is inevitably going to mean cutting other items which some people will think are important.

Recently the debate has focused on the coalition government's plan to cut child benefit payments to Higher Rate Tax payers. For the most part I have ignored the arguments against the cut because in large part they focus on the inequalities it creates for people on the margins of where HRT kicks in. The inequality which is quoted already exists in the tax system, in as much a couple earning just under the threshold each, do not pay HRT, whereas a couple with one person just above the threshold will.

The removal of a benefit paid to people above the threshold exacerbates this inequality, which is claimed to be 'unfair'. However, this inequality is caused by the income tax system, and whilst the change does exacerbate the problem, the debate is not about reforming income tax. In fact by removing the benefit another inequality is avoided, being the inequality of low-income earners subsidising the raising of children by high-income earners, as is currently the case.

Therefore, ignoring this argument should leave us with an acceptable policy (in that most people would agree that high income earners should not need state support to raise their children). However, I have noticed another argument quoted which signifies another point of view I find very worrying. That is the feeling of entitlement for state support.

A government front bencher no less, was quoted in The Times as saying, "I sacrifice so much and now George 'millionaire' Osborne takes away the only thing the State gives our family back". That a MP, and a government member at that, can think this way astounds me. Ignoring the long list of government services every member of society receives in return for their taxes, the idea that we are all entitled to money back from the State cannot be correct. As an MP this individual will already earn in excess of £65k p.a. and yet they feel that although they are in the top 15% of income earners in the country, they are somehow entitled to a State benefit.

Starting with a blank sheet of paper, on a mission to design the 'fairest' tax and benefit system, I would have thought a good place to start would be to establish the definition of 'poor'. As poverty is relative, we could say that the lowest earning 25% of society can, for our purposes, be classed as 'poor'. Developing that point on we could reasonably say that anyone earning more than the lowest 25% of society should not need, or be entitled to, any State benefits. Whilst I may have plucked the 25% figure out of the air, and in reality this might be subject to immense debate, I would have thought that everyone earning in the top 15% of society could easily be eliminated from receiving benefits, without much argument.

The Governments proposals at least tackle this problem. That they exacerbate another inequality, which already exists for those at the margins, should not cause such strong feelings. Legislation is changed in increments and any improvement should be welcomed. If it raises other issues in the process they should be tabled for debate at a later date. Otherwise progress cannot be made.

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Econ 101

I have been thinking for a while about whether everyone should be taught economics at school. The more the merrier I'm sure most would say but teachers' time is, of course, limited. Economics therefore has to be more beneficial than other subjects in order for it to make it into the busy curriculum.

I am going to leave exactly which subjects are less 'worthy' to others who know about such things, and instead focus on the benefits of economic knowledge. I am no expert on the subject but I have studied it, and often find myself enjoying a particular vantage point denied to those who haven't.

The boys behind Freakanomics have clearly demonstrated that an economically-trained mind can help explain most of life's peculiarities, or at least those concerning humans. The fact that their books are bestsellers leads me only to conclude that many economically-untrained minds find their results interesting as well.

Of course there are many benefits to greater economic knowledge for the individual, not least a better understanding of the world. My thoughts, however, have centred around the effects of wider economic knowledge on society as a whole which seem to be overlooked. That is to say that I haven't heard of them, and despite my looking.

In a democracy every voter has a responsibility to understand what they are voting for. This may be a lot to ask for, but incremental improvements are improvements nonetheless. In the past voters have chosen their representatives on the back of an ideology, leaving policy details for their representatives to decide. More and more these days, however, political debate is focused around policy detail, with the public being asked to decide between details, albeit important ones, by exercising their right to vote.

Take the recent election for example: all major parties went into the election with the pledge to reduce the deficit. Therefore the choice for voters was only how to reduce the deficit? This is not to say that this kind of scrutiny from the public is a bad thing. It is clearly more desirable to have an interested populace. The level of 'fine tuning' debated highlights how much agreement already exists, which is to be celebrated. But it does raise the question that if the voters are choosing the policy details, do they understand the problem well enough?

The Times recently featured the results of a Times Populus poll. Respondents were asked to indicate how much responsibility for the budget deficit resided with a variety of groups. They were asked to mark each out of ten, with ten meaning that they bear complete responsibility. A sample of the results are detailed below.

The banks - 65 per cent scored them between 8 and 10.
Gordan Brown & Alistair Darling - 42 per cent scored them between 8 and 10.
George Osborne & David Cameron - 21 per cent scored them between 8 and 10.
"Those who took out mortgages and debt they couldn't afford" - 40 per cent scored them between 8 and 10.

This should clearly be worrying. That 21 per cent of the respondents thought that the Tories were responsible for the deficit when they were in opposition, I find incredible. Since the crisis broke we have had significant media coverage, albeit much of it rhetoric, and an election to educate the public on the economic situation. Whilst I don't expect an average answer to include commentary on the exchange rate and its affect on the Balance of Payments, I would expect virtually all able adults to know at least who wasn't in power at the time.

The last result I have quoted there is also fascinating: 40 per cent of the respondents thought that those who took out debt they could not afford were largely responsible for the government deficit. This amazes me. I can see the logic in a train of thought that goes, people who can't repay loans, make banks fail, and cause governments to bail them out, but I can't believe 40 per cent of people think that this is what actually happened!

Firstly, and this I admit might be a bit of information the average man may have missed, is that the quoted figures for the 'deficit', and certainly what our votes were supposed to tackle, exclude the costs of bailing out the banks. Having said that, it was recently widely reported that the taxpayer can expect to make a decent profit on the bail outs. So I wonder why these people think we have to cut back because of a profit-making deal?

Of course they may be smarter than I give them credit for. They may actually be referring to sub-prime borrowers in the USA which certainly did trigger and significantly exacerbate the crisis. However the actions of these borrowers were not co-ordinated and, much like the classic floating table trick at a Seance where individuals lift a table without knowing that they are, attributing blame or cause to these individuals seems wrong. If I may stick with the metaphor, the question 'who caused the table to float?' may be more accurately answered, 'the magician overseeing the trick did'.

The truth I believe is fairly simple, the government of the day matched its spending to the size of the economy. I am leaving out ideological issues regarding the size of the state for a second. The size of the economy was found to be inflated, or enlarged by a 'bubble'. Whilst blame could be laid at some people's doors for bursting the bubble, the false size of the economy was as true before the crisis as it has been proven to be now that it has burst. The real economy has been found to be smaller than previously thought, and the government has to cut back its size to suit.

'Who caused the bubble?' is a different question and one where the possible answers are far too numerous to cover here. Suffice to say that whether you think it was bankers' greed, Thatcher's easing of credit regulations, globalisation, leaving the gold standard or a myriad of other touted reasons, recessions have occurred throughout economic history and although they are all different, it is widely accepted that they are a characteristic of human nature.

How and when the government's spending is to be reduced is a matter for debate, and for voters. The implications therefore of significant ignorance on this issue should be obvious. Huge decisions will be made on the back of the election results which are founded in ignorance. Debate is raging over public sector job losses 'caused' by bankers excesses and our 'debt-fuelled' society. Reducing your costs when your income falls is so obvious to me, that I can't believe people are arguing against job losses because the deficit was 'not our fault'. No one ever said it was!

Would wider economic education have averted this crisis? I think not. Would wider economic knowledge make the discussion and process easier? I think almost certainly. Would it also produce more appropriate policies to remedy the situation? I think it must, and that is the greatest shame here. Our ignorance as voters is misguiding our representatives from taking the right actions and restoring economic well being for all of us.

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