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The Civil Servants are the Professionals, not the Politicians

Iain Dale gives a good explanation here as to why the expenses issue needs to be addressed now. But, who could possibly think otherwise? He is surely right that 'the overwhelming majority of MPs put the hours in and when Parliament isn't sitting, they are to be found doing constituency work," but, this is not really the main point.

The reason why greater swathes of the public appear to be less willing to give them any respect is because they increasingly see themselves as belonging to a 'profession', a tag which Iain also gives them. Technically this might be so, but conceptually politics in a democratic state is not a profession. This implies exclusivity and a requirement for expertise. Of course they need to be capable people, but what they really need is judgement and integrity, characteristics possessed by many ordinary people.

MPs are there to represent us, the people, who afford them the privilege of legislating and governing on our behalf. The professionals are the Civil Servants. They are the ones who implement policy, they are the ones expected to provide the professional expertise required in government. This separation of functions was once sacrosanct, but it has been grievously weakened by the professional pretensions of our MPs who are too busy seeking validation of their worth to govern properly.

It is this conceited, vain and misguided attitude that needs addressing. Do this and the other bits will follow.

The Real Culprits

Politicians will always tend to do two things when faced with things going wrong: Firstly, they will plead innocence and pretend that there was nothing they could have done about it. And secondly, they will do all they can to create a narrative that pins the blame on others, preferably their own traditional enemies. This is why Gordon Brown is pathologically incapable of admitting any error. It is also why he continues to pretend that the Americans caused the problem, in cahoots with rabid free marketeers in this country, allied to the bankers.

It is, therefore, refreshing to read this briefing paper from the Adam Smith Institute, that attempts to look at the problem afresh. The real culprits are, it argues: 1. loose monetary policy; 2. hubristic social engineering in housing policy; 3. the failure of the Basel protocols on core capital; 4. banks that were 'too big to fail; and 5. the effects of oligopoly on auditors and ratings agencies.

PM lashed by Daniel Hannan MEP

I've been away for a while, but this blast from Daniel Hannan MEP has cheered me up no end. If only the rest of his Party were so forthright, I could be entirely happy in supporting them. But as they are not, I am not. Thanks to Iain Dale for bringing this to our attention.

Final salary pensions on the way out?

Although much has been going on recently, there has been little I wanted to comment on; until now.  Whilst not a particularly interesting subject, it is one of great significance: pensions.

 

The Financial Times reports today that an incoming Conservative Government will phase out public sector final salary pension schemes.  This is great news.  Whilst the private sector have been ditching them as fast as Gordon Brown ditched his Golden Rules, the public sector has been sailing on as if nothing is wrong.

 

In short, the final salary schemes are an unsustainable burden on the British economy and hold future generations hostage to the greed of the present.  The Treasury estimates the liability to the tax payer to be at £650bn.  It cannot be right for our children and grandchildren to be forced to meet this liability in the future.  A system more emblematic of modern profligacy, greed and conceit is hard to find.

money supply, balanced budgets, reduced debt and living within our means

Suli Shah, on CentreRight, has an interesting plea to save the economy by bold action. As I mentioned in the comments, it has the right tone but I am not so sure about the policy suggestions. I think it fails to recognise that, as Charles Moore says, "everything is different now," and that we need to change the system rather than save it as it is. Here is why:

1. He wants to reduce "the base rate to zero." - This is an option, but it does not address the underlying problem of bad debt that remains in the system. Interest rates at zero might encourage more lending, but inevitably it will perpetuate the lending of money to people and companies that should not be borrowing - this is the problem not the solution; we need to purge the system of bad loans and that takes pain. I would even advocate a self regulating interest rate tempered only by a stable money supply; how do you know that zero is the right cost to put on money? You do not and neither does anyone else. A zero interest rate will also encourage more borrowing from idiot consumers who will merely get themselves into more debt storing up greater problems in the future. We need level heads and stout hearts, not knee-jerk panic and perpetuation of the underlying weaknesses of our system. It will hurt, but if you stick your hands in the fire, expect to get burnt.

2. He also wants to send every tax payer a tax refund cheque and to double the tax free allowance? - Fine, but who pays for it? If he wants to do this by funding it through compensating reductions in other government spending then great; we should be doing that anyway. But if it is funded through more borrowing then we merely perpetuate the problem of reckless levels of debt. Debt, used in the right way for capital investment is useful but the way we use it today to hide balance of payments deficits and let people have things they cannot afford is obscene.

3. He also argues that "Labour did not cause the largest global economic crisis in living memory." - Yes they did, but in concert with other governments (who took a lead from the UK and US) running loose monetary policies and ignoring errors in the banking system. This vicious cocktail of expanding money supply and rogue banking practices was catastrophic. The inflationary bubble it caused, most keenly observed in the property markets, burst all over us and it was Labour that was on the end of the pump. If the public doesn't understand this then they need telling again and again and again until they do. Anything else is to capitulate to the bludgeoning Labour narrative that shifts the blame onto anyone and anything other than itself.

4. Finally he talks of telling "the hard truths," and how we are "going to limit the damage and eventually recover." - Quite right, but what does this mean? The hard truth is that we have been living beyond our means and a recession is inevitable, even necessary if we are to get it through our thick heads that if we want something we must pay for it from real wealth, not the fictitious wealth we call debt. And we can only limit the damage by not doing stupid things like vastly increasing government debt and reckless lending.

He is absolutely right in that "we are fighting for the very survival of our economy as we know it," but I do not want to preserve this deluded, fantasy economy. Indeed, the events of the last year are the reality telling us that it cannot be saved; as Charles Moore said: "everything is different now." We do need to take action, but not to save the economy as it is, rather to change it. All we need is a stable money supply, balanced budget, reduced debt and the humility to live within our means, and everything else will take care of itself.

God save the Queen and preserve Britain from stupid people.

Pupil premiums in education will perpetuate educational failures

Policy Exchange is all the rage in Westminster at the moment, "for mainlining eye catching new policies to the Conservative shadow cabinet", apparently. One of their latest proposals is the pupil premium where schools are rewarded with extra funding if they take pupils from poor backgrounds. This fits the current social narrative where the imperative of every government - that wishes to bask in the approving sunshine of the leftist-establishment - is to cancel out the advantages of a prosperous, stable and responsible home-life in the pursuit of equality. And allocating a disproportionate amount of money to those perceived as disadvantaged is the way to do it, apparently.

Of course, there are many pupils that have a poorer - culturally as well as financially - upbringing and so are less likely to do well at school. Indeed, how is a child meant to do homework properly if their home is a war zone of bile, profanity and neglect. But, the logic that takes this to mean that more money will solve their problems misses the point; more money at school will not affect their home life. The problem is that leftists see every social ailment as one of money. Give anyone more money and everything will be OK. No room for ethos, culture or morality.

One of the reasons for this premium is apparently to give schools an incentive to attract children from poorer backgrounds and thus prevent middle class enclaves and lower class ghettoes from developing. This makes perfect sense if you view the world through a prism of leftist thinking, but what it actually does is distort the way schools and parents interact to provide education for children. Ultimately it prevents the party with the greatest vested interest in good schools - parents - from influencing the education system for the better, thus making it harder for all schools to improve.

As harsh as this may sound, the real effect of this policy is to reward failure and penalise success. If we take failure to mean poverty and social neglect, and success to mean prosperity and social responsibility, then we have the opposite system we should be seeking.

Critics will undoubtedly denounce this viewpoint as anathema to civilised society , but the reality is that this view, in a Darwinian sense, promotes and strengthens that civilised society. If schools are penalised for educating pupils from wealthy households, these households learn a salutary lesson in the futility of responsibility and success - or the more likely lesson is that if they want their children educated well, they need to go private. Conversely, the lesson poorer households learn is that it does not matter what they do because the state will always compensate them.

The pupil premium is a false prophet in the pursuit of educational improvement. In the long run it will make all schools worse. The solution is to allow schools and parents to determine where children are taught in a constructively competitive environment where funding is solely determined by the number of pupils they teach, irrespective of how poor their home life is. To perpetuate the politicisation of education by leftist social ideologues is simply to perpetuate the failings already present in the state education system.

Morale is not just about welfare

It is often difficult to work out exactly what a politician means when his words are parcelled up and inserted, piecemeal, into newspaper articles to make a specific and discrete point. John Hutton, as the new Defence Secretary, will no doubt come under scrutiny in the following weeks and months, but one thing in his favour is his interest in Military History. Of course, this does not make him infallible, but at least it means he has thought about military activities more than most of his recent predecessors.

The issue of an EU Army is an old one and certainly needs a great deal of scrutiny, but his words about morale reveal an important distinction that needs to be made on the nature of morale. It is becoming more and more common to believe that satisfying material needs in the form of healthcare, compensation, pay, welfare and other similar things is the route to high morale. In a sense they are right, but only partially.

Military thinking understand morale as being the product of the moral and physical components of fighting power. Taking the latter component, the physical, it is recognised that decent equipment, good pay, first class healthcare and more contribute to high morale. But, when people contrast poor welfare with high morale, they become confused. Surely if welfare is not as well provided for as possible then morale should be commensurably poor?

Not so, morale is also dependent on the moral component which is the bit that gets the man to fight in contrast to merely giving him the means to fight. Through excellent leadership, motivation and management, soldiers believe they can be successful on the battlefield. In turn this induces high morale. So when we contrast high morale with poor physical provision, we should understand that the British soldier, although reliant on the physical component, derives his determination to fight not just from his equipment but from his courage and motivation.

Business failures are not always bad, except when its recession

Over the last couple of years we have come to believe that normal laws of economics no longer apply. We began to believe that boom and bust really had ended, that growing public and private debt was not a problem, that monetary expansion merely offered benign growth, and that property prices - and stock markets for that matter - only went up. It became a sort of disease and the most serious case was none other than Gordon Brown, our Chancellor of the Exchequer and now Prime Minister.

But, we succumbed to his contagion willingly because, like the siren, he played the enchanting music we wanted to hear. And that he could play the all powerful human architect fitted our anthropic experience. This role is one he always wanted, craved. If he could provide endless prosperity and perhaps end poverty, then his slightly unhinged lifelong ambition to be Prime Minister would be amply justified.

Another reality of economic and business life we forgot was the understanding that business failure is an essential and cleansing action of the market. Not only that, but it can be a good in itself. Without the failure of some businesses, resources cannot be freed up to be allocated where they can be better employed. It is this constant reallocation of resources that enables progress.

This can, of course, go too far. When the economy goes into recession, more and more businesses go bust and because of the nature of recession, resources are not reallocated elsewhere. And this is a major problem of the credit crunch. As banks cease giving loans to businesses they believe are less viable than others, the money is not lent out to others. This is the imperative of recapitalisation. The banks have lost money on bad loans so it is not there for them to finance other businesses.

Business failure, up to a point, is an essential precursor to advancement. It is how the market works, but when other, usually government induced, errors are made, these failures come too thick and fast. Exacerbating this reduction of economic activity is the accompanying contraction of banking investment in new and expanding companies. Under such conditions, the economy ceases to regenerate itself, rather contracting to fit a more pessimistic age. This is where we are today. We cannot reverse this trend, all we can do is not make it worse than it need be.

Brown should be careful of blaming the US too much

Further to my last post on the economic situation, it appears that Gordon Brown really does believe his own rhetoric. "This is a global financial recession", he says on the BBC, "and we are fighting it every way we know how", he continues. "We know this is global", he reasserts. Gordon, please. You are the Prime Minister of a supposedly advanced democratic country and you insist on treating us like idiots. Why?

His contempt for us on this issue is only surpassed by his contempt for members of the Armed Forces. Do they risk their lives so people like him can have a free hand in vandalising our country? Does he ever give them his "undivided attention", and does he know that the Army is not only breaking its harmony guidelines for tour intervals of no less than 24 months, but is also undermanned by over 3,000 soldiers?

Still, that is another story, so back to Brownian economics. In the interview, he later demonstrated a classic Brownian technique: the answering of a question with a work-shopped response to a completely different question: you were a bit off the mark in claiming to have ended boom and bust were you not, Mr Brown?. The naive might have thought a comment on the nature of boom and bust was the logical next step, but, if so, they had clearly not seen Brown in action before.

So, Brown's default response was no surprise: "It's a global financial recession." Wasn't this exactly what he said earlier? And, what exactly does this have to do with boom and bust in Britain? To give him the benefit of the doubt, I suppose he could have been saying that the bust was not his fault, rather the fault of global forces no-one can control, but most commentators know that busts and recession can be internally or externally induced. They are still a bust and they still result in unemployment.

As if to emphasise the point, he went on to say that "everybody knows it started out of America, we are having to deal with the fall out." Do they? We do know that the US sub-prime toxicity has seeped across its border, only a fool would argue otherwise, but does Brown really expect us to believe we had no hand in it, too? I suppose we never gave out 125% mortgages, loans to people that were a credit risk (self certification mortgages). I suppose we did not expand the money supply, induce a lower than optimum interest rate, or fail to supervise our banking system so they did not become exposed to the American toxicity.

However, I suppose he is right in one respect: it is global now. And, in this, Brown seeks refuge, cowering amongst the rubble of US mistakes, unable to take any responsibility for his part. But, if he goes on blaming the Americans in such a blatant way he should not be surprised if a reckoning comes his way once the next President is installed in office. Given a show down, I know who my money is on.