Thoughts of a fly on the bar wall

It is 50 years since I started visiting bars, since then I have sat in more bars, in more places than I want to remember. I have worked behind, cooked in, served in, and managed pubs. I have conversed and argued with painters, Pakis (Ladies and Gentleman from Pakistan if you must), parasites, Parisians, parliamentarians, peers of the realm , perverts, players, pleaders, plebs, plumbers, Poles, poofters, prime ministers and prostitutes. I have written and broadcast about far cities, elegant restaurants, bordellos and mismanaged disasters.
I have heard absolute rubbish, absurd claims, downright duplicity as well as much good sense and enormous doses of reality.
Put it all these conversations together with my last few years thinking, reading and writing about the way we live, about our governance, our mistakes and our future and you get to this blog.

Sam Worthington

Monday, 12 October 2015

Moral authority

During the medieval period of European history there were two powers which combined together to impose their rule. They were the monarch and the pope – the monarch provided the enforcement and the pope provided the moral power to justify that enforcement. Kings and queens were said to rule by divine right – their word was the law. The Popes supported that right and imposed their own will by controlling the church and it was from the church that books and other written tracts emanated – in modern terms the church controlled the media. The monasteries were the place that books were copied – by hand.
The reformation was the period when alternative religions rose to challenge the Church of Rome – but once they took over they demanded, and partnered with the monarchs to control the people through their churches. During the rule of Oliver Cromwell, in the UK, his puritanical ways were in direct contrast to the Roman Church but just as demanding, and just as capable of burning heretics (at the stake) as those who came before. The hundred and fifty years from Henry VIII to William and Mary were marked by constant switching of religious fervour from Rome to Protestant to Puritan and back again. It was important to be on the right side at the right time because the moral authority went with the church and challenging that authority was as dangerous as challenging the law itself.
There are still countries today where there is a good old fashioned stich up of power between the moral authority of the church (religion) and the rulers – one of the most obvious is Saudi Arabia. But there are several others including Pakistan, where the government partners with Islam, and to a lesser extent Thailand where the monarch is ably supported by the Buddhist church. Buddhism maybe seen as a religion of peace but that religion is not afraid of using power to ferment trouble against non-Buddhist – just look at Myanmar(Burma). And those in charge do little about it as moral power tends to trump legal power.
The power of the Church is obvious in the Philippines. The recent visit of the Pope saw the president kotowing to him, and millions on the streets. There is a tacit agreement between Church and the politicians to keep off each other’s turf. The attempted introduction of birth control is a classic issue where the government has tiptoed despite the evident problems of large families in deep poverty. The obvious corruption of the body politic is ignored by the Church as long as the politicians support the sanctity of the bishops
Rulers need a moral authority. The communists trumpeted equality as their moral justification – it may have been a myth but no more so than the parables of the world’s religions, Today in western countries religious services are still very much part of formal proceedings – swearing on the bible, services of thanksgiving and coronations. However at grassroots level formal religion has faded into irrelevance.
But there has to be a moral authority. And the real danger for Europe is, as mass migration brings in the Muslims hoards, that that authority may fall to Islam by default. If Islam is the only religion with any real dedicated following then Islam will become the de facto moral authority.
However in much of the west there is a new moral authority - it is called political correctness. PC is as virulent as the Holly Roman church when somebody challenges a core principal. PC has not yet started burning people at the stake but it is doing the modern equivalent – it burns people at the court of public opinion. From a government point of view PC is a wonderful moral crutch. The government-itself can decide what is PC and what is not. On those grounds alone PC is far more dangerous than a pope – at least medieval popes had to somehow justify their pronouncements – even if there is always something somewhere in the scriptures to justify a ruling. In addition religious leaders – despite all their faults – are seldom on their own.  While it can be argued that the ultimate religious leaders – Jesus of Nazareth and Mohammad – started it all with their rules and their rules alone, their instructions have since been taken over by a committee.
Religions - because of their moral authority – have been responsible for most of the major wars in the last 1,000 years or so. It seems unavoidable that there is a clash brewing between the two up and coming moral authorities. Islam has broken out of its heartland of the Levant and is attempting to enforce it moral authority on the power of the other growing moral authority – political correctness. The irony of the political correctness is that – in its current form – it believes that words and high deeds will deter warriors with deadly weapons. PC is strong on morality but weak on real fighting. Islam has no such qualms.
As us humans appear to need a moral authority to live by it might be better to pick one that is not so dogmatic – in which case I would be tempted to suggest anything but Islam or Political Correctness.
Religions need to stand up and be counted. They need to assert their moral authority, or they will go the way of Apollo, Bacchus, Thor et al. Unfortunately a moral authority needs to be strident – it needs to demand and get; or severely punish those who challenge it. If it does not it becomes benign. 

Sunday, 10 May 2015

Wealth creation must be seen to benefit all.

A pervading theme of politics is fairness. As a result trying to justify the accumulation of wealth when others are struggling to survive is very difficult.
All the left of centre UK parties, in the recent elections, were talking about more taxes – on wealthy individuals and companies. They completely ignored the realities of UK borrowing and talked about the end of austerity – and the UK has had the barest minimum of austerity when compared many other European countries. There was talk of a more progressive system – a new word for socialist – that would spend money that they could only get by more taxes on wealth and, if that did not happen, they would borrow. For a politician Jam today is always a better offer than lots of jam tomorrow.
This political agenda is driven by the many tales of massive wealth in a few hands: coupled with managers, bankers and directors getting obscenely high wages and bonuses. Capitalism may still be making nations rich; but it is failing to deliver that wealth evenly across the workforce. This has been compounded by globalisation and digitalisation that has created corporate behemoths that dominate financially.
Inevitable there is talk of a third way - somewhere between collectivism, with state ownership of all business, and a pure free market system, where private investment for profit provides everything. Part of the job of government is to see that infrastructure and services are in place. And many of these essential services, transport links, electricity, water etc., are provided by private enterprise and regulated by the government. Of course as soon as they make a profit the left start whinging that it is too much – but they only look at the profit and never the investment, or even more appropriately the return on investment.
Going back in time manufactures, in particular, often provided charitable services – they would regard such services as incentives to employees; but essentially they did not need to provide them. I am thinking in particularly of social housing and alms houses for the elderly. Sports facilities were often provided as part of major industrial complexes and, in the days before state provided free medicine, medical facilities were popular. Businesses could offset such amenities as a business costs, so tax reduced or, in some cases, negated the majority of the cost.
However the tax rules have changed and governments prefer to be in charge of their own services so such contributions, to local communities, have been effectively discouraged. Those who provide them are accused of locking employees in, by making it more complex to move jobs as moving on will mean finding new housing. Some of the facilities have been treated as a benefit in kind – and thus taxable for the employee.
If the voters are going to appreciate, and understand, why wealth is good– they have to see the benefit of that wealth.
Encouraging companies, and even high wealth individuals, to invest in projects that benefit the community can be simple done by allowing suitable tax breaks – subject to the investment being transferred to public, or charitable, ownership. There are many areas that investment is needed – social housing, schools, and clinics all spring to mind. Take the example of a group trying set up a new free school – they need a new building, or an old one renovated, so instead of traditional fund raising, begging and borrowing money from various government departments, they find a local company, or individual, who will invest in the project and get the money back via tax credits. In return the investor gets to nominate the name of the project as well as being seen as a responsible corporate tax payer.
Such a system would require careful monitoring but initial it should be allowed on almost any scheme that is seen as good for the community in general – in time governments may want to alter the regulation so as to direct funds where they are most needed.
On the charge that this is simple taking money from tax revenues to scatter it ad lib around the nation there is the counter that, providing this system is transparent and free of petty regulation, it will allow rapid development of needed facilities – companies can make decisions on spending considerable faster than governments. Another point is that, this way, the funds do not go through the government machinery – that has always been an issue of mine – why should the government take in money to only churn it around before giving the funds back to the people they have taken them from!

If the voters are going to understand the importance of wealth creation they need to see its benefits. Paying millions in tax is unseen – building 200 social housing units is not. Tax levels and actual amounts paid will always be divisive but if people can see the real benefits of wealth they are more likely to support wealth creation.

Sunday, 19 April 2015

Has the west become ungovernable?

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.”
Alexis de Tocqueville

That quote by Alexis de Tocqueville comes from a book he wrote in 1835. In Another quote he talks about democracy lasting for 200 years before it will fail because of economic excesses.
The head of the Reserve Bank of India, Raghuram Rajan, has pointed out that the developed economies (IMF etc.) keep lecturing the developing world on what to do: demanding reduced levels of debt, structural reforms and sound monetary policies. They then do exactly the opposite themselves.
The current UK election demonstrates the problems – the UK has run a budget deficit since 2001 – through all the good years of the early noughties it still ran a deficit. This peaked with the financial crash of 2008/9
It is eventually forecast to be corrected in 2019. But that assumes the current policies stay in place. Net interest payments on borrowing have moved from 22 billion in 2001 to a forecast 57 Billion in 2019.  And those high payments will stay in place for decades as the deficit created will take a long time to pay down. But still the major left wing parties are all saying the deficit reduction is too harsh – traditionalists would say not fast enough..
But there is another dimension – the world security situation is anything but secure – see this article. There is Russia banging a drum in Eastern Europe and the lunatics loose in the Levant, then if you look further afield there is an emerging China bullying in the Far East, and, by no means least to the UK, is sabre rattling Argentina over the Falklands. Against that back ground one would have thought defence would have at least featured in the UK election; but all the main parties have ignored the subject, or in some cases suggesting there needs to be greater, than the already significant,  cuts – and no party – except UKIP – will commit to the minimum recommended NATO spend of 2% of GDP. On the other hand Interest payments are forecast to be 2.7% of GDP in 2019.
But it is not just the UK – most European countries are running a budget deficit with reductions in their defence budgets.
The reason the USA and UK avoided the worst impact of the financial crises was because they implemented “quantative easing” – or it could be called under hand money printing. In the Euro zone - where money creation is verboten – the economies have gone into melt down creating mass unemployment and allowing nationalists political parties to threaten to take over. Part of the problem is these countries have been shoe horned into the Euro – and they did not fit so they are being compelled to fit by a tough austerity regime. Sitting on the outside it seems inconceivable, that sooner or later, the Euro system is going to break asunder and at least one country, if not several, are going to leave it. The main problem for many European countries is that they urgently need structural reforms of their labour markets. But the one thing the rising nationalist parties will not support is changes to labour laws. The National Front in France is talking about nationalising failing companies so they can stay in business.
Globalisation and digitalisation have dramatically changed much of the way business is done, it has changed management practises, it has enhanced global trade and opened up communications and the knowledge base – anybody with a computer can find out information that was once hard to come by. In addition the traditional middle management class has been done away with by centralised digital management – there is no real intermediary between top management – often earning obscene salaries - and the basic entry level worker.
For workers laid off in Europe it is relatively easy to find out about the workers who have replaced them – their working conditions and their wages. So it becomes particularly galling when workers lose jobs to people on the other side of the World who are earning a few dollars a day whilst working in overcrowded, and often unsafe, factories.
There is a real danger that growing nationalism will drive governments to protective positions that see them drop out of the free trade regime. Of course that is likely to work both ways impoverishing all involved as tit for tat trade sanctions hit. What is worse that may well increase insecurity as emerging nations, with growing military might, look for issues to distract from their unemployment problems created by a breakdown in globalisation.
Needless to say the economically conservative say the issues are very simple. Balance the budget, free up labour markets, encourage international trade, offer tax breaks to inward investors encourage entrepreneurs and wealth creators.
Those on the left will say increase tax on companies, increase tax on wealthy individuals, protect jobs by making it hard to fire people and that Keynes was right: investment in infrastructure – even if means more borrowing – is good.
For the voters: jam today is more important than promises of a golden upland in 10 years. Envy – of the rich – is always an easier sentiment to stir than common sense. The abject failure of the great socialist experiment – the USSR – is a part of history and who studies history these day? As to the threats to the country’s defence – where is Ukraine? And China is the other side of the world. Let the Arabs solve their own problems!
As long as we have democracy it looks as if sensible responsible government will not garner the votes required to win an election. No wonder the European Union has done its best to isolate itself from the will of its peoples. Politics is supposed to be the art of the possible – but what if good governance is no longer possible? We may end up looking with envy at a one party system that is economically literate: but will inevitable be nationalistic. There have been few of those in history and they mostly ended in disaster. Maybe Alexis de Tocqueville is right – democracy can only last 200 years.