15/02/2011

Why Cameron should really fear inflation

As inflation continues its progressive march, now reaching 4%, David Cameron should fear it beyond the normal economic arguments.

The baby boomer generation (full disclosure that just about includes me) lived through the high inflation of the 70s and 80s and remembers it as a very unpleasant experience. In the 70s it was accompanied by, and in part driven by, excessive wage claims backed up by strikes which disrupted everyone's lives. I remember as a young apprentice soldier having an inflation adjustment in my monthly meagre pay packet which on the surface seemed quite nice, but that was more than offset by the almost daily increases in the price of blanco.

In the 80s it was also accompanied by strikes and restructuring the economy. Some of the strikes were violent and very few who lived through that era will not be scarred in some way by the scenes of the miners and police in pitched battles.

So without getting in to a cause vs correlation argument inflation is associated with civil disruption and civil disobedience but more pertinently for us baby boomers is what it did to savings. We are all well aware that those who suffered most in that period were pensioners and others trying to get by on a fixed income and this is Cameron's problem, baby boomers are now starting to retire and looking at living on a fixed and reduced income. It may only be the first few now but in 4 years it will be peaking.

Of course what these baby boomers will forget, or at least pretend to forget, is how much they benefited from inflation at the time. That same inflation eroded their mortgage debt very quickly and gave them the perception of wealth through house ownership but that won't be forefront of their minds as they consider what inflation is doing to their savings. Self interest, especially when they read stories like this:

The NHS is failing to treat elderly patients in England with care, dignity and respect, an official report says.

The Health Service Ombudsman came to the conclusion after carrying out an in-depth review of 10 cases.

The ombudsman, which deals with serious complaints against the NHS, said the patients - aged over 65 - suffered unnecessary pain, neglect and distress.

will be the order of the day.

Its also well known that older people are more likely to vote  and this is where Dave's problems will lie come the next general election in 4 years time. If he doesn't kill inflation there will be a backlash by the grey vote that could see the Tories and LibDems thrashed out of sight. It won't matter that Labour's policies would have probably caused more inflation and higher debt, the incumbent quite rightly gets the kicking.

But at the same time if he doesn't tackle the deficit and debt continues to increase there won't be any money to provide the services that these baby boomers will also be demanding.

So here's his conundrum - the simplest way of reducing the deficit and debt burden is inflation. It would also avoid, or at least reduce, those nasty cuts that we are starting to endure (how will we ever live without a library?) and which will only get worse. As Ken Clarke warned the middle classes don't really understand what is about to hit them.

So damned if if does and damned if he doesn't, but my betting is that he fears the backlash in 4 years time more than the current political storm.


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12/02/2011

Now we find out how well the US has trained the Egyptian army

I don't mean as a fighting force, but as a servants of the people. All serviceman in a democracy are educated in the doctrine of civilian control of the armed forces. It is one of the first things that you learn and as you progress through the ranks it is stressed more and more.

It is also something that is stressed whenever training overseas armed forces personnel, either in their own country or at our various military schools and colleges in the the UK but especially at Sandhurst. Those bonds that are formed in training last a lifetime and it is a great form of soft power.

We have heard complaints during the uprising that the US gives $billions to Egypt with most of it going to the Army. SO now is the time to find out of those links will pay dividends. We have heard that senior US military are talikng to senior Egyptian officers so it looks like the soft power could be working.

That the Egyptian military hasn't been the instrument of oppression also bodes well. They do seem to have been a disciplined bunch and by refusing to side with Mubarak and his thugs have earned the trust of the people, lets just hope they maintain it.

The real danger is that having tasted power the Generals decide that they enjoy it and don't step aside or if they do remain a constant threat like the have in Turkey by appointing themselves as guardians of the constitution.
 

11/02/2011

Public sector unions are far too power

I see that vested interests of the public sector unions and senior doctors are starting to flex their muscles muscles  over the proposed Tony Blair Tory NHS reforms. Labour has even managed that wonderful thing in politics of completely disowning the past and are now vehemently opposed to the very policies that they proposed when in Government as Dizzy points out:
Some may also remember that just a few months ago I asked a genuine questions for lefties about what was more important to them. That NHS services be free at the point of use universally for everyone, or the structure that delivers the service.

At the time, most of them said the former, not the latter was more important. However, the reaction that is brewing to the continued implementation and extension of Labour policies by the Coalition is, naturally, based more on the latter.

Yes children, that's right! We are now through the wonderful looking glass where the Opposition denounce policies based entirely on their own policies of the last decade because it's Tories implementing them.

Is it anyone wonder so many people think politics is a load of bollocks when thes sort of intellectually vacuous and fluid position changes are so prevalent any sane person can see them?
Of course this will al be dressed up as protecting the public and patients. We will no doubt hear dire threats about the end of our NHS and other hyperbole by those who really are no more than vested interests looking after their own, which in most cases is what they are paid to do. Sadly, they have far too much power and may well get their way.

Don't believe me? Think that is just anti-union libertarian scaremongering? Well......

I should first say that I don't have a problem with unions, not only because of free association, but I am sure that some employers, including the public sector, find it easier to deal with a group of workers doing the same task through a single entity. I am also aware that unions provide good professional insurance and public protection for their members. My wife was a member of a teachers union for those very reasons.  But that doesn't give them the right use threats and strikes to derail Government policy.

There was very good briefing on public sector unions in Economist recently which is well worth the read. I can't link to the main article as it is behind a pay wall but the leader is available. But that is only the start. From the briefing we learn much about the public sector's aversion to reform:
Public-sector unions enjoy advantages that their private-sector rivals only dream of. As providers of vital monopoly services, they can close down entire cities. And as powerful political machines, they can help to pick the people who sit on the other side of the bargaining table [Ed Miliband].
...
Left-leaning economists reply that public-sector workers are, on average, better educated. Whatever the merits of this argument, three things seem clear. Unions have suppressed wage differentials in the public sector. They have extracted excellent benefits for their members. And they have protected underperforming workers from being sacked.
...
The unions’ influence extends to the size and nature of the public sector. Private-sector unions have learned to exercise self-restraint when it comes to pushing for more manpower: they realise that more workers may reduce the wages of their members and that a higher wage bill may drive their employers out of business. But public-sector unions are relentless in demanding more resources and more personnel, which conveniently translate into more members and more dues.
...
Their most dramatic success has been in Britain. When Britain’s union-backed New Labour government came to power in 1997, public spending accounted for almost 40% of GDP. When it left power in 2010 public spending was nearly 50% of GDP (partly, to be fair, as a result of recession), and 1m workers had been added to the public-sector payrolls.
...
It would be a mistake to write off the public-sector unions. They are masters of diverting attention from strategic to tactical questions.
As some readers may know the erstwhile leader of LPUK got in to a spot of bother when he lost his temper over this very subject. The post is now off-line and so is the original article that John Gummer wrote so I can't link to either of them. However I do have some of the original quotes, from John Gummer who was talking about an encounter he had:
I've been thinking about an exchange I had in Manchester. Britain's second largest teaching union, the NUSWT, promoted itself at the three Party Conferences. Their stand was uncompromising. The posters contained no hint of renewal or improvement; no recognition of the huge increase in attainment that the nation demands. Simply a series of statements opposing even this Government's relatively feeble attempts at reform. Above them all the keynote claim 'PUTTING TEACHERS FIRST'.

I approached the imposing woman behind the counter. "Shouldn't that read 'putting children first' I ventured. "Certainly not! We're a Trade Union and I'm its General Secretary."
That got The Devil going but for me it that wasn't a surprise as I've always taken the view that unions are their to represent their members and nobody else. I learned this from my father who grew up in the slums of Bradford and worked in the mills as a young man. He was always scathing of unions both for their selfishness and also for their incompetence. Anyway, I digress, more from John Gummer's encounter:
"But haven't you noticed that on the commercial stalls around you businesses are saying that they put the customer first?" Mrs Chris Keates [the union rep] drew herself up to her full height. "I won't take lessons from the private sector with their bonus culture," she expostulated
So how to curb their power and get some control back in our hands, those that pay for and use the services? I suppose we can give the coalition some grudging approval for trying:

Education vouchers are a good start in curbing the power of the teaching unions. I would go further and allow profits to be made but if we can get the money following children then the best schools will flourish and the teaching unions will lose power as pupils gravitate to the schools where the militant unions have less control.

There is nothing like personal contact for ensuring that our money is spent in our best interests and not the vested interests of  the healthy lobby. If I can sit with my GP and choose a hospital or consultant I am going to be choosing the one that cures me and gets me home without killing me first. It will be harder for poor hospitals to hide behind the fact they we have little choice when it comes to failing patients and giving them MRSA.

OK, so that's the simple view and reams of paper will be filled analysing those two subjects alone, but if they are to succeed they will curb the power of the vested interests and we will all be better off and much as I would like them to go further, I would prefer that these small steps were successful first, for the price of failure doesn't bear thinking about.


05/02/2011

Muslim Brotherhood and The Tea Party

There was a simple, but predictable, question on Question Time of Thursday: Should the Egyptian people be allowed to vote in to Government the Muslim Brotherhood? The answer should have been simple but instead the panellists went off into lala land trying to defend their own prejudices.

The answer should have been: of course they should if that's what the Egyptian people want.

And this is where the Tea Party comes in. Their anal insistence on the Constitution has been the butt of many jibes form the left, but it is that insistence that stops organisations like the Muslim Brotherhood, Hitler, Stalin and even the Tea Party, being elected and then changing the rules to ensure permanent Government, which we commonly call dictatorship.