The New Era of Coalition and Consensus

I’m relieved. It seems the Lib Dems thought better of their flirtation with Labour (see my acerbic comments on that yesterday) and have come to an historic agreement in coalition with the Conservatives. It is clearly the most sensible thing to do, and I applaud it. Both sides are to be congratulated on their willingness to compromise and their understanding that the much-vaunted National Interest will best be served this way – as I’m sure it will.

I shall be interested to see the detail – for the “devil will be in it”, as usual. But the discovery of common ground between the two sides must have been a revelation, and the fact that all the Lib Dem MPs and peers voted for the coalition is a testimony in itself. The opportunity had to b e taken, not only in the National Interest but in their own. Experience of government, at ministerial rank, is a prize to be treasured, and very good for the Lib Dem CV in five years’ time!

I'm fast becoming a David Cameron fan. On Friday afternoon he outlined in his speech the broad outlines of the coalition he was offering the Lib Dems. And lo and behold, when we come to the policies they have agreed on, they are very similar. This is a man of great promise, I feel. He can broadbrush an outcome, and deliver it. He has steel underlying the charm, the command of his party, and last night we saw his ability to deliver with humility a simple, note-free little homily on the steps of Downing Street. Now for the real challenges of government...

The Pursuit of Folly...

Well! Just when it seemed the obvious thing to do for the Lib Dems to take up David Cameron’s offer to join a formal or informal coalition with the Conservatives, thereby at a stroke creating a government with a working majority, the support of more than 50% of the electorate, and the chance to prevent the markets going into meltdown and our losing our AAA financial rating – the Lib Dem senior MPs pull the rug from under Nick Clegg and try to act like little Labour acolytes. What a shambles! What a wasted opportunity! As I write this, I’m still hoping that Clegg & Co. will see the error of their ways in time and make the right decision, but I think even if they do their much-vaunted integrity is in the dust. To have secret talks with Labour, resulting in Brown’s last-ditch resignation as a prerequisite for any further negotiation, at the same time as they negotiated apparently upfront with the Conservatives, seems underhand in the extreme. The country (and I) will not forgive them lightly. I think it will be the last time I vote Lib Dem, even for the sake of my good local MP. Activists and MPs in the LD party may feel more comfortable with the Left, but the 23% of the electorate who voted for them may well feel very differently.

And in any case, it’s madness. The numbers don’t add up, for a start. Labour have 258 seats and the LDs 57. Added together this comes to 315, only nine more than the Conservatives have on their own, and 11 less than an absolute majority, never mind a working one. This would inevitably mean instability and the inability of government to get through the House any measures except those on which everyone agrees. This sounds nice, but in practice it would mean no hard decisions, no unpopular cuts to bring the deficit under control, no new beginnings, just a hand-to-mouth existence with the primary function of keeping Labour in power.

Why should that latter function be so attractive to the Lib Dems, I wonder? If it’s just about PR, then it isn’t worth it. The voting system isn’t perfect as it is – everyone including the Conservatives agree about that – but PR won’t necessarily make it perfect. Has PR become such a Holy Grail to the LibDems that they must achieve it at all costs? Or are there enough of the Old Guard former SD types in the background of the party for whom an alliance with the Conservatives would be anathema?

In any case, if all the LibDems want to be is part of an anti-Tory coalition of some kind, then PR will do nothing for them. Above anything else, what PR would deliver is a permanently hung parliament. If this is the best the LDs can do when they do get such an opportunity, many people will be confirmed in their suspicions that a two-party system is the best way to go. I have a horrid feeling that instead of being the Beginning of Better Things, an LD choice to support a discredited Labour government which will fail within months may mean the Beginning of the End. And that would be a pity. For there are some good ideas in their manifesto, some of which might have been put into effect in a Lib-Con coalition, especially as Cameron seemed willing to compromise, and with a third of his party new to parliament, he might have been able to deliver on those compromises. There is a phenomenon known as ‘the pursuit of folly’, where leaders continue to pursue policies that are plainly leading them nowhere. It has been seen throughout history, as Barbara Tuchman’s excellent book of that name narrates. Perhaps this is one more instance.

Election time really is here now - it's today!

It's been a fascinating election campaign - dull till the first TV debate, then electrifying for a couple of weeks, but dying down for interest in the final week, which is a bit sad. It was good to hear the Lib Dems air their policies properly, and have them investigated and tested thoroughly by other parties and the pundits, too. Mostly they stood up quite well, I thought, considering the fact that the party has only local council experience of actually running anything. Nick Clegg's experience as an MEP seems to have stood him in good stead, though, and he was beautifully relaxed in that first debate - no wonder people warmed to him. He did seem different. Perhaps later in the campaign he didn't seem quite so different, and that would explain the falling-off in the Lib Dems' share of the vote in the Polls.

But today is the day, and who knows what will happen? That's the fun this time - no one really knows. Will the electorate turn off again and not bother? Will they believe the scare stories from both left and right and scuttle for the safety of old allegiances? Will they spoil their ballot papers in protest at the fact that their votes won't translate into seats? Or will they decide on a real change and vote Lib Dem in large numbers - it's possible though not probable, and would certainly rewrite the political landscape radically, not least because a large Lib Dem vote would not translate into a proportional number of seats and the inequities of our current constituency boundaries combined with the First-Past-the-Post system of voting would be very apparent. It will probably be fairly apparent anyway, since there seems more than a possibility that the Conservatives might win the popular vote without winning most seats in the House. Will that change their minds on proportional representation of some kind, I wonder? I've been surprised that they've stuck to the old system so faithfully when it works against them. Perhaps they really are ideologically conservative after all....

Poor old Labour look dead in the water, and Gordon Brown ploughs on, playing bravely like the orchestra on the Titanic, not understanding that he is a large part of their problem - perhaps the most unpopular prime minister since the War, at least so early in his tenure. It so easily could have been different. A better relationship with Tony Blair, recognizing that his strength was as second in command rather than leader, might have saved them both. Though perhaps TB would have had to take a different line on Iraq, too. It was really that piece of dishonesty, chicanery and subservience to a foreign power (the US, I mean) that sank him. No one will ever forget it, I think, whatever the Inquiry says. However, you can't discount the reds, who have proved remarkably resilient in the wake of the failure and discrediting of international socialism in Russia and Eastern Europe. They reinvented themselves in the 1990s. It remains to be seen whether they can do it again in the 2010s.

We have a sitting Lib Dem locally, and while I respect what David Cameron and the Conservatives are trying to do, and like the idea of the Big Society (and a much smaller State), I don't think our local MP has deserved anything but my support. He has been honest and hard-working for the constituency, and had no scandals of any kind attached to him. So I think it would be ungrateful to desert him. Good luck, Dan Rogerson! You shall have my vote.

I must remember to cast it, too - there was one election when I very nearly forgot....

Election time is here!

I re-read my February blog, and I don't have much to add to those thoughts, except to say that it has turned out really interesting since we had the first Prime Ministerial debates. I wouldn't like to see Clegg as Prime Minister, I must admit, though I think Vince Cable would make a good chancellor - better than George Osborne, who is a clever man but I'm not sure has the necessary bottle if things get tough (Cameron undoubtedly has - there is real steel beneath that smooth exterior, as we saw on the matter of Conservative expenses last year, and before that when he was campaigning to be leader of the Tories). A hung parliament is a gamble, as the Conservatives rightly point out, but it isn't surprising that the electorate want real change, something radically different - ironically just what the Conservative campaign posters offer us, but I suspect they didn't quite have in mind what has turned out to suit the public mood!

I don't think anyone except the truly committed activists knows what will be best for our country in the next few years, and perhaps the hung parliament option is something we have to try. If it doesn't work, a few months will have been lost and we will have to have a new election (which may of course bankrupt all the parties...). But it's an experiment worth making, if it's what the electorate choose. Maybe the time has come for us to find out what coalition is really about. It has worked at times of national emergency before, and there is going to be a national emergency quite soon, I think - whoever wins, and even if no one wins outright. We could do with making use of the best of the talent from all parties. And we might get proportional representation, which would at least be fairer. Does it make sense to have a breakdown where the Tories on 32% would get around 250 seats, while the Lib Dems on 31% would only get 110? And the Labour Party, on 28%, would get even more than the Tories. Surely that can't be right.

Here's to a Hung Parliament

I find it's nearly a year since I posted a blog, which is extraordinary. This one will be short, but if anyone is reading - which I doubt - I would like to say that I still hold by what I said last year on the subject of the recession. It may look as though we are coming out of it, but I don't think we are - and the level of public debt is going to pull us back down again. "Double dip" may be an understatement. I think we'll be lucky if the country avoids bankruptcy on the Icelandic model, never mind the Greek one. We shall all have to tighten our belts before this is over.

So which political party is telling us the truth? Both Conservatives and Labour are hinting at the pain to come, in their different ways and with slightly different emphasis. But no one is really owning up to the swingeing cuts, tax rises, and general economic doom that is actually going to have to come if we are to avoid the bankruptcy I spoke of above. Do they think that people can't cope with reality? Add that to the public distrust of politicians in the wake of the expenses scandal and many years of shifty dishonesty over the Iraq war and other policies, and I wonder who exactly will vote in the May election. Will the parties tighten up their act when the electioneering proper begins, or will we continue to see this failure to tell us the truth? All in all, perhaps we shall be better with a hung parliament, a government of national unity. Never since the Second World War have we needed one so much. And of course there is the bonus of the Lib Dems' Vince Cable - the one man who might be able to carry our trust as Chancellor.

Roll on, May. At the very least it will be interesting.

Optimism and Denial

I read in the news this morning that nearly half the UK population are optimistic about their personal finances. Yet the experts predict nothing but gloom for the next year or two, and all the evidence (for once) seems to be on the experts' side.

Why is this, I ask myself. Why this unwarranted optimism - if unwarranted it is? And the only answer I can think of is denial. Everyone agrees that the recession is bad, and likely to get worse. But until it strikes us personally, in the form of a credit squeeze or unemployment or a falling-off in sales or client requests, we don't want to believe that it's going to be as bad as the experts tell us. Because that would mean engaging with the possibility that we too will be affected. For some, of course, that's fair enough. If you work in a business that isn't directly affected by the downturn, or in a job that's always struggling to find enough people qualified and experienced enough to do it, personal optimism is justified. And while interest rates are low, many people will continue to spend (that was part of the idea, wasn't it, Bank of England?), and to feel safe - their mortgage payments and their credit card bills are smaller, and so they can pay for what they need.

But wait a moment! Aren't those with debts, whether mortgages or credit card owings, the ones who for a while felt so panic-stricken and under threat when the Credit Crunch bit? And aren't at least some of them the people who lied about their income to get a bigger mortgage, and spent money they had no hope of repaying? All they have as economic actors is a willingness to spend. I suspect that in the short term this may be useful, and stave off the looming recession - which is of course exactly what the government want. But in the long term we need those who have prudently saved their money for a "rainy day", and who are now being penalised by those same low interest rates, many of them older people who depend on income from investments to raise their pension to a reasonable level. Banks need these savers, to provide the capital with which to lend - they can't rely on government bailout for ever. And unfreezing lending is important, if only to prevent more viable businesses going under simply because they have done what the taxation system and the zeitgeist encouraged them to do, and become over-leveraged for their everyday financial needs. If banks don't pay higher interest rates on savings accounts, the savers will go elsewhere, and the banks will be reliant on inter-bank loans (currently non-operational) and government help (soon to be unaffordable in terms of public debt). And the savers themselves may give up saving and start spending on their credit cards (for their credit rating will be high). But can a recovery be based entirely on credit? Isn't that what we did before, with such spectacular failure? Doesn't this recovery need to be based more securely, on real money, real savings that represent stored wealth? All of us are going to be paying for the current mess via taxation for many years to come. Once the existing savers have spent their capital because it isn't worth saving it, hard-pressed younger people will have to take their place. And the more public debt is created by bailouts, the longer the economy will take to recover, and the longer it will be before savings levels recover, too. Or have I missed something somewhere?

In any case, if I were a bank I think I'd be more willing to lend to other banks and to individual customers and businesses if the interest rates were high. Then I might get a return on my money. As it is lending is just giving money away, really. Banks have had their fingers burned doing that with all the invested money that came their way from the booming Chinese and Indian economies where saving surpluses is the norm. If we are to go back to more traditional banking and more transparent accounting, surely we need to start with a sensible set of interest rates and encouraging saving. Anything else risks a continual cycle of consumer-led spend followed by painful economic contraction. Which is what I fear we are in for, unless government policies change soon. The pain is unavoidable, and stimulating consumer spending is only putting off the evil hour.

I'm usually an optimist, or at least an optimistic realist. But not this time. Sorry, folks, but this one is going to be bad. You ain't seen nothing yet.

Where your treasure is....

There was a photograph in The Times this week of a man buying a strongbox, and the caption invited you to wonder whether this was where you should put your money in these days of financial meltdown. It set me thinking about the wisdom of that unique thinker who once reminded his listeners that it was better not to store up riches, because storehouses (or strongboxes) could be burgled, and material goods were liable to rust and decay.“Invest in the eternal,” he told them. “Because where your treasure is, that’s where your heart will be.” Like most of his comments, that is not only, perhaps not even primarily, a religious formula, but an analysis of how things work for human beings. It’s been very striking these last two or three weeks to see the fear, despair and outright panic of people whose chief security was based on their investments. It was clear that the world of global finance was where their treasure and therefore their heart was; they had no “eternal treasure” to fall back on.
Some people are putting their money into bricks and mortar on the basis that in the end the housing market will revive – which is probably true, unless the whole global economic system collapses, in which case nothing can be certain: for anything that is valued in terms of its status as a commodity, as opposed to its utility, for example, as a place to dwell, is subject to the winds of economic chance when so much depends on confidence. In the end, if people do not have confidence in currency, or currencies fall sharply, money will lose its value too and people may even resort to barter as they did in the Weimar Republic in the days before Adolf Hitler took control of Germany, and as they are doing in present-day Zimbabwe. All this might happen, though I think on balance it probably won’t. But it shows up how impoverished in any non-material sense our globalised liberal existence is, and what shallow foundations it has in the eternal.
The capitalist way of thinking (based on early Protestant work ethics) trains us to store up riches in the form of luxury goods or other high-value items (e.g. antiques or paintings if you live in the West, cattle if you live in Africa), or invest in financial institutions or manufacturing or service industries on the basis of a good return in dividends or interest. That is how the global economy works, and has worked for many centuries. But of course it depends on trust, and when trust is lacking it won’t work. Financial institutions won’t lend, even when the business is a viable one; valuable investments can become worthless overnight if the stock market takes a nose-dive. Oddly enough, the same is true of the eternal treasure: Jesus’s advice was not to hold on to money but to give it away to those who were in need, and in doing so buy into the eternal values, or as he put it, “you will have treasure in heaven”. But this is also a matter of trust – that the eternal treasure is secure and “real” and will sustain us; that there will be people to help us in our turn; that “what goes around comes around”. To live simply and generously deals in non-material riches, and brings non-material rewards. But as Jesus also reminded us (a bit later in the same part of Matthew 6), you cannot serve two masters; you cannot love both God and money.
I know who I’d put my money on. But perhaps that could be better phrased....