Thursday, 31 March 2011

The cuts...

Okay I'm lacking imagination, I probably shouldn't write when this tired, but I feel like I haven't been writing enough lately!

I was disappointed watching tonight's 10'O'Clock Live with their discussion on the cuts.  This should be something that can be debated well, yet their choice of guests left a lot to be desired.  Firstly someone from the Times who was there to defend the speed of government cuts backs, an activist who (although had perfectly good intentions) didn't fully grasp the economics of her argument and as a result said perfectly plausible statements that were just plain wrong and an economist who was also anti cuts - but also seemed to be a bit on the anti debt side of the fence (i.e. that it doesn't really exist).  The latter had an annoying method of speaking ridiculously slowly as if to make her points sound profound rather than stupid.  My apologies for not providing the names, I didn't have any way to make notes during the programme and Google is being very unhelpful!

The main criticisms I had with the points raised were mainly with the activist.  At one stage she said that the economy contracted in the last quarter in 2010 (true) but then went on to blame the raise in VAT for that.  This is completely bogus as the VAT rise came into effect on 4 January, if anything this should have stimulated demand in December as people wanted to buy when it was marginally cheaper.  The contraction was probably due to the previous Government's stimulus package wearing off, a rise in international food prices, weak export markets, the downturn in the housing market and general rising inflation - to name but a few.  

I shouldn't be too critical as economics isn't her field, though she did come across quite a bit like the classic protester who thinks things are mutually exclusive, just because cuts are being made those supporting them don't care about people who rely on social care.  Nobody gets in to politics to make people worse off, but for every decision there will be winners and losers.  The whole tax system works by robbing Peter to pay Paul - the only difference is that the main alternative being suggested is to rob Peter & Paul's children so that they don't have to suffer now.

I read an excellent post in The Spector Blog which highlights how even at the end of this Parliament, having eliminated the structural deficit in the countries budget, we will still be in a financial mess.  I don't want to be in a country where we are spending more on financing our debt than on education - I shall borrow a few graphs from the previously mentioned blog:

That will just be our interest payments, that's roughly £1,000 per person per year the Government has to pay just to keep our debt at the same level.  

 The mountain of debt we will be sitting on (not including the debt from the banks) will, in real terms, be 3 times higher than it was in 2001 (when the Labour Government deviated from the Tories previous spending plans).  As you can see after that date Labour did borrow more, despite the fact we were experiencing an economic boom - hence creating a structural deficit.

There was one question I think that was asked, or at least a point made, that we don't really need to ever pay it back.  This is simply not true as letting it spiral out of control would undermine our whole currency system.  A detailed explanation of our "Fiat" money system can be found on The Very Fluffy Millennium Dome Elephant's blog - it's a bit long winded and, like me, often goes off on tangents but does give a very understandable overview of the subject, which the author is great at doing in general.  The most crucial point though is that our system is based on the perception that our money can be traded - money is effectively debt and represents the value of goods or services that we are owed for our own production of goods or services, a barter process.  Those to whom the Government is indebted need to believe that they can exchange their indebtedness for something of tangible value (in actual fact they settle for interest payments) but should they believe they can't get it back they will want something more, they want something in return for their input.  

There has been a lot of talk that the Government is pedalling a myth with regards the deficit, it is not.  In 2010 we had a larger deficit to GDP ratio than any other OECD country, that includes Ireland, Iceland, Greece, Portugal and Spain.  Saying that - even if everyone else was digging themselves into a ditch of debt does that mean we should continue to too?  My preference is no!

I think my original point when I started this mamouth essay or rambling (if you made it to here you really need to question whether there are better things you could be looking at on the internet), was that I would much rather have had a panel in their debate that included a government spokes person, a well respected macro economist and someone from the opposition - to put their ideas forward on what could be done differently.

On a side note - Charlie Brooker did an excellent AV bit on tonight's show, pointing out just how ludicrously stupid the No2AV campaign is.

Wednesday, 23 March 2011

When will Nick wake up?

Seriously, how has Clegg not realised the nobody likes the term "Alarm Clock Britain"!  I am yet to hear anyone say anything positive about the term yet he is persisting.  Lib Dems ignoring it trying to make it die whilst opponents are using it at any chance to ridicule him.  He's actually talking about the sector of society that are massively effected by everything that is going on and needs the government's help, yet any serious point he makes is undermined by the use of this stupid term.  Nick is a much better politician when he is engaging with people and speaking with them directly than when he is trying to go for useless soundbites.  

As for the budget itself there isn't an awful lot to talk about.  Mr Osbourne promised a revenue neutral budget and he seems to have delivered this.  I suppose the devil is in the detail but here are some good points I noticed (if they go as intended):
  • Further movement in the personal allowance from 2012 bringing the total to £8,015.
  • Council tax frozen all up the country (already knew Bath had been).
  • Levy on "Non-Doms" who have been in the country for 12 years to rise to £50,000.
  • Private jets paying passenger duty - I really wonder how much this will raise though.
  • Extra investment in apprenticeships and technical colleges.
  • The potential merger of Income Tax and NI (long overdue).
  • The Green Investment Bank additional funds.
  • Cutting the fuel duty by 1p.  (His headline grabbing attempt - but did it go far enough?).
 Some less good things:
  • Additional corporation tax cut.  I get that we need to be competitive but is this the right thing to be reducing?  Firms don't necessarily look at this when making their decisions (unless a finance person is involved) instead they tend to look at gross margins.  If they really wanted to help smaller firms I would have cut employers NI as this reduces the cost of employing people and could therefore even encourage additional staffing.  (If a company is employing 120 people, then a 1% cut would save them enough to employ another person should they wish).
  • The current meddling with employment law which is taking the power away from the employee and hence removing job security.
  • Too easy on the banks.
  • Nothing really to help curb inflation - more the opposite.
 They were just the things I noticed and jotted down when listening to it.  Overall it had a slight Gordon Brown feeling about it - particularly when he was talking about "enterprise zones" - also as some commentators pointed out the effective raid on the oil companies is similar to what Gordon did with the utility companies.  Finishing off mentioning Gordon is probably appropriate as "alarm clock Britain" reminds me of the sort of things that would happen with Brown where it was obvious that his advisers were asking him to do things that were just idiotic.

Monday, 21 March 2011

AV criticisms - a response

A couple of arguments I have heard against the Alternative Vote system (AV) this week that I want to respond to.

Firstly - you wouldn't want to go to the Olympics and see the following 100m result:

Usain Bolt: 9.69seconds
Tyson Gay: 9.72seconds
Asafa Powell: 9.76seconds

Only for Asafa to be awarded the gold, Usain the bronze and the silver to go to someone who finished in 10.1seconds.  No of course you wouldn't - and you also wouldn't want the gold medal to go to someone who was leading after 60m!  In an AV election the finishing line is once you have secured the support of 50% of your constituency, the person first past this line is the winner and awarded the gold and certainly not someone who was quickest in round 1 or first out of the blocks!

Secondly a point which I do actually agree with as a negative possibilities regarding AV, that is not everyone's preferences take equal weight.  Take the following simple example:

Three parties, two extreme parties and one in the middle that has slightly more in common with one side than the other.
Round 1: Left 40%, Centre: 25%, Right 35%
Centre is eliminated and their second preferences are distributed to Right giving the final result:
Left: 40%, Right: 60%.  Right is elected.

However, the Left supporters hate the Right, so their second preferences would have been to the Centre, the same feeling is the case for the supporters of the Right.  In actual fact this leads to the following preferences:

Right vs Left - 60:40 - Right is preferred to Left
Centre vs Left - 60:40 - Centre is preferred to Left
Centre vs Right - 65:35 - Centre is preferred to Right.

Therefore despite the fact the Centre candidate is preferred by more people to the Right candidate, because they are eliminated earlier the Right candidate is still elected.  

The key thing I see about this argument however is that it is an argument against AV - not a reason why First Past The Post should still remain, after all it still produced a situation that more people were happy about.  Fewer people were totally enthusiastic about the result (as they would have been under FPTP) but also fewer people were angry about the result as they see the new result as in a straight choice between new and old this is preferable.  

It could be argued that the run off system (and not taking count of full preferences) is a way of weighting in favour of the first preference votes, however irrespective of this I think that the No2AV camp should focus more on why they believe FPTP is better (which neither of the above points demonstrate), rather than what is wrong with AV.  I am yet to hear one argument from them that illustrates how FPTP is better.

Tax - does it have to be taxing?

There was another interesting piece in the Lib Dem voice last Friday regarding tax reforms, in particular the potential combination of National Insurance and Income Tax.  I know this has been mentioned for quite some time but until I saw that blog I wasn't aware it was so far up the agenda.  

As someone who worked in tax for a few years (and now no longer relies on it's complexity for my living) I have to say that in general this is a welcome reform.  The actual contributions basis of social security has long been irrelevant whilst it will prevent the income tax rise by another name by adjusting the NI levels set by the government.  In fact at a time when we are rightly pleased by the lifting of people out of Income Tax by raising the threshold and saving every other basic rate payer £200 on their income tax bill, National Insurance has been increased by 1% - and is effective from lower earnings levels.  This will also highlight the true difference between the contributions of the relatively well off in comparison with those who are not.  A worker earning £20k a year will be paying a marginal tax rate of 31% (32% in the next tax year) compared with someone earning £50k who will be paying a marginal rate of 41% (42%) - much lower than the headline difference of 20% to 40%.

The main problem with introducing this would be that there are a few differences to when NI is charged compared with Income Tax.

For a start, National Insurance isn't payable by persons who have reached the state pension age - the theory being that they should have already contributed enough to their retirement and health costs.  

National Insurance is also only paid on earned income - whilst Income Tax is in effect on savings and pension incomes.

Different rates of National Insurance are present - it has for a long time been a benefit to be self employed due to the 3% tax saving you make due to a lower rate of National Insurance at the basic rate.

These problems can be addressed by applying different tax rates to different types of income - it may also be welcome to be increasing taxes certain unearned income.  Opponents will portray this as a tax rise (people will see 20% leaping to 32%) but in reality by implementing this and following the current plans for the personal allowance it will actually be a small tax cut for those paying at the basic rate.  If George Osbourne does introduce this and takes account all of the complications then I will actually have some words of praise for him rather than just indifference.

Sunday, 20 March 2011

The Nuclear Question

The tragic events in Japan over the last 10 days has once again raised the issue of nuclear power and how this fits into our energy generation in the UK and whether we should be moving away from this method.  Chris Huhne has recently been discussing the prospect of nuclear power not playing as much of a role as we anticipated, particularly as it will be harder to finance them.

Mark Cole wrote an excellent blog last week on his position and I wonder to what extent he is right about it being a generational thing as I am also too young to remember Chernobyl and unlike many in my party have always been open to nuclear power.  My position is despite growing up with The Simpsons where Homer is their safety inspector - leading it to be anything but safe.

It's not a questions of being a supporter, more a case of looking at it practically, we need energy, any growing economy since the industrial revolution has needed to increase it's energy production in order to enable the growth.  At the same time renewable energy is not reliable - looking out of my window the sun is covered by cloud and the trees aren't moving - not exactly ideal conditions for energy conversion!  In addition to this fossil fuels obviously need to be phased out as they are neither renewable or environmentally friendly and we want to move as close to self sufficiency in this area as possible.  As I have said before I have every faith in mankind's ability to innovate but looking at things at the moment I don't think it would be feasible for nuclear energy to not be part of our portfolio.

The obvious caveat is that they need to be safe.  There is the potential for devastating disasters where nuclear reactions are involved, these risks need to be minimised.  The main point here is we are not Japan.  Our location isn't nearly as risky as theirs.  The amount of tectonic activity around their region is much greater than ours as they lie on the "Pacific Ring of Fire" whilst we haven't really seen anything to the same extent (apart from maybe the 1607 tsunami).  I know they need to be near a source of water in order to enable the cooling, but it makes me wonder if it wouldn't be better to have them slightly further away from the coast.

Wednesday, 16 March 2011

Tim Farron's Conference Speech

For anyone who hasn't seen it here is Tim Farron's excellent speech from last weekend's Lib Dem Spring Conference:

 In my opinion he is doing an excellent job, he is the voice we need at the moment.  I am supporting the coalition, however everything isn't perfect and Tim is doing a good job of speaking out when there's something that we shouldn't  be agreeing with.  My particular favourite quote was:

 "If you listen to some, then apparently because I am in coalition with the conservatives, or ‘in bed with the Tories’ then I must be a Tory. Are they mad? Look, for flips sake, I share a bed with my wife, it doesn't make me a woman."

But on a more serious point the highlighting of:
"Labour’s enduring legacy, far worse even than Iraq, is their decision in 1997 to deregulate the banks, to out-Thatcher Mrs Thatcher. To idolise the markets, to make greed a virtue, to stoke up a fake boom. Then they left office and changed their tune. Labour spent 13 years in power behaving like Tories and now 10 months in opposition behaving like trots. And they deserve to be derided and ridiculed for both."
This is really true.  Obviously the vast majority were praising this move whilst it was stoking up the boom years (remembering that the prudent Mr Brown had made the bust impossible) yet Vince was warning against a crash for a long time.  Labour weren't the sole creators of our recession, but they helped make it this extreme.  It was the decisions they made that allowed our banks to hold us to ransom, is was Gordon's "prudent" budgets that racked up spending beyond what we were taking in (in already inflated tax revenues) that made the current deficit and the debt mountain this extreme.  Yet now they have no answer, I can understand this, there's no need for them to have politically, but in reality I think they are just clueless to what they'd actually do so instead they just criticize the coalition's every move in order to paint them as the bad guy, make no mistake if Labour were in power now things would also be getting cut, but they would be getting cut for longer (or they'd give up half way through leaving future generations with an even bigger problem to face) at the same time they wouldn't have done some of the things we've implemented in 10 months in office (that they had 13 years to do).  

I for one hope Tim Farron gets as much air time as possible over the coming weeks as it is people like him who make the Liberal Democrats a much easier sell.

Monday, 14 March 2011

...Cigarettes and Alcohol...

I haven't been blogging a lot this month, a combination of being busy at work/studying and the feeling out of the loop as all the main political action is relating to the Spring Conference season.  So far I have not exactly been the most supportive member (having only joined the party last year) however I am trying to improve, this week I will be going on my first leaflet round and I have been invited canvassing for the May elections which I hope to get involved in.

However one thing I do want to talk about is in relation to the recent change in legislation which means cigarettes will have to be sold in unbranded packages kept under the counter and the same time the recent discussions where a number of health groups refused to sign the Government's alcohol strategy.  There is an excellent post on the latter by Free Radical which I pretty much agree with.  All these measures (the hiding supply and minimum pricing) don't get to the reasons why people drink and smoke.  It is a firm belief of mine that anyone who wishes to drink, smoke or even do drugs should be allowed to do so, the duties on which should be used for:
  • Meeting the increased health costs.
  • Education.
  • Rehabilitation where it is required.
Rather than just being lumped into the "tax" pool as normal government income.

In the main there are a lot of responsible drinkers and I believe that many drugs can also be used responsibly but at the end of the day it should be the person's choice.  The government's role should be in giving real education to the risks that each activity poses and helping any who become dependent.  

I think Free Radical makes an excellent point:  

...where students do choose to go out less often some will actually drink even more heavily when they do - hoping to have one really good night instead of two merely good ones.

This will be worse for the person's health overall than moderate drinking a few nights.  Price pressures influence the poorest the most and are therefore regressive - I know from my own student days I always found the money for a night out.  Restricting the sale of cigarettes is likely to hit the smaller shops harder than big supermarkets and wont stop those people who already smoke.  This wont be a case of out of sight out of mind, I have watched many people try and give up smoking and it is never out of mind!

The previous Labour Government tried to micromanage our lives, I really hope the Coalition wont fall into this trap.

Thursday, 10 March 2011

A look at the banking sector/Stephen Williams proposals

There has been some talk in recent days of what the Government should do with it's stake in the banks.  One suggestion by Stephen Williams (Liberal Democrat MP) is that the Government should give the shares to the people and allow them to sell them.  The caveat would be that they couldn't be sold below the price the Government paid (the floor price) and when the shares are sold the Government receives their initial investment.  This therefore allows the general population to make money from the sale of the banks, either profit on disposal or by dividends.  There are some very persuasive arguments for this, as outlined by Mark Pack in the Lib Dem Voice and Richard Morris in his View From Ham Common and it is really good that the debate has been started.

When doing this the major implications that will have to be considered are:
  • What will put the most money back into the Treasury's pocket - whatever the Government receives can be used to reduce it's level of debt, this will lead to reduced interest payments and as such a reduction in the deficit.  
  • Ensuring a situation where the banks can never again hold the country to ransom, decoupling any risk from the "casino" side of the industry with the deposits side.
  • Providing maximum benefit for the economy - a market system needs a strong banking sector, providing liquidity at competitive rates.
  • Is it fair.
I know two of those sound like things that can be done without ownership of two banks, however I feel that we will be in the best position to make reforms whilst still  own 83% of RBS and can therefore directly influence them and 43% of Lloyd's (as such we should be able to influence them).  What is key is that the Government cannot remain a major shareholder in large firms in an industry where it also acts as regulator.

So the first question is will these proposals give more money to the Treasury?  I think the answer is quite possibly.  The Government owns a large number of shares, if it were to try and sell all of them at once the only possible way to do it would be at a discount, reducing the amount of money it recovers.  However the share giveaway scheme will definitely delay the Government receiving the funds (not great when it is still saddled with a huge amount of debt) as the tax payer will then decide when they wish to sell the shares.  They could potentially decide never to sell them, enjoying the small annual dividend payments that should ensue.  There is an arguement that the Government would benefit from the tax on the dividends, however the opportunity cost is the whole dividend the Government could have received.  As long as the "floor price" is set above what the Government paid then it should make a profit, however this totally ignores the time value of money and the cost of the debt growing as a result of not paying it off.  Proper analysis on this would need to be done.

The next most pertinent question in my opinion is, is it fair?  By distributing equally to every tax payer I feel that it would be.  Those who are already earning more will get taxed more on any dividends (and if they already have large capital gains will get taxed on their gains).  

This distribution however is likely to result in the shares ultimately ending up in the same hands as they were previously and the banks being run in the same way.

So overall I find myself leaning tentitively towards being in favour of these proposals but wanting it to be looked at further and still hoping to hear alternative ideas.  Whilst this is being discussed though if I were in government I would be pressing for the following change in RBS and Lloyd's - a change in their corporate structure.

Currently both companies, like most UK companies operate with a single board of directors.  On this board should sit a CEO, likely to be an executive director, and a Chairman, who should be a non-executive director.  The board should then be made up of an even mix of executives (those fully employed) and non-executives (those who are only paid from attending board meetings and should be there as effectively the moral concious of the board).  This would fit with the model of good corporate governance in the UK.  However, I would like to see a two tier board put in place as favoured in Europe.  This would have one board full of executives who are charged with running the business and a second "Supervisory Board" which are made up of other stakeholders in the business.  Usually the Supervisory Board would include people elected by shareholders and representitives of other stakeholders - such as employee representitives (and in other organisations) their bankers.  I think this would result in overall lowered remuniration for the highest paid executives (which would appease the public) and promote stability in the industry.

Monday, 7 March 2011

Nick Cleggs Hit & Miss speeches...

Nick Clegg is still good at making speeches, whatever people say I still think that he does come across as someone who is genuinely passionate about the issues which he is discussing.  Unfortunately for many people now they don't see this as being sincere after the tuition fees debacle, which is a shame, especially since I am sure that free tuition was not his preferred system in the first place and a pay after you graduate system is probably the fairest for society in general (even if the amounts are extreme).  This post isn't about tuition fees however, I could talk about them for a long time, instead I want to highlight two recent speeches in particular though, one excellent and one, well decent in the main but not 100% great.

Firstly, there is his excellent speech on multiculturalism.  Unfortunately this speech is about a month too late after the atrocious one David Cameron gave in Munich.  Nick though tackles the issue absolutely perfectly, highlighting extremism on both ends of the spectrum and emphasising this by name checking the EDL and BNP.

"Bigots are bigots, whatever the colour of their skin. Criminals are criminals, whatever their political beliefs. Terrorists are terrorists, whatever their religion."

He promotes multiculturalism, not as building walls as David Cameron likes to paint it, but as learning from each others cultures and promoting communication between the cultures.  This was much welcomed, though I wish a senior Lib Dem had spoken out about this issue before now.  It even got some praise in Labour circles.

The second however was a speech in Wales at the party's Welsh conference.  Obviously he is going to talk up the Government's record when speaking, I have no problem with this, in fact I encourage it.  However the speech was littered with negatives about Labour, yet the only negative Tory comment related to Thatcher.  There is a coalition in charge in Wales at the moment, however it is between Labour and Plaid Cymru and in the coming months the party will be battling all of our rivals for seats in the Welsh Assembly, by playing too nice to the Tories we will sound like we are just Tories who never do well in Wales.  Who knows what that election might bring, potentially the posibility to enter a coalition with Labour or Plaid - however keeping the Coalition line will quite possibly see us decimated.

The even more worrying part of his speech though was the following "joke":

"And of course we’ve even had a Liberal Democrat celebrity flying the Welsh flag in the depths of the Australian jungle!
Now that’s one forestry disaster we’re not responsible for!"

People may argue that Lembit has made himself into a figure of fun and that as a result he deserves to be the butt of jokes.  However he is a fierce Lib Dem, and (whether to our detriment or not) a supporter of the coalition, he is doing what he thinks is best to promote the party cause, as he always has done.  With all the media trying to gun the Lib Dems down the party shouldn't be turning on itself.   We saw 13 years of infighting with Labour in power, everyone wants to point the fingure at cracks in the coalition, Nick shouldn't be giving them such easy ammunition, it only makes the party look bad.

Friday, 4 March 2011

Keep doing what we're doing...

A couple of bad results in the past two days, one in the world of politics, one in the world of sport.  Firstly England cricket team's dismal defeat by Ireland on Wednesday - at one point in the game I saw odds of 100-1 (apparently they were up to 200-1 at some point) on an Irish victory, I was tempted to put a fiver on it but thought even England couldn't throw that away.  Secondly there was the by-election result in Barnsley where the Lib Dems ended up in a disappointing sixth place.

The message on both of these fronts is the same, stay calm and keep doing what we're doing.

The mitigating factor in the cricket was the outstanding innings by Kevin O'Brien.  He came to the crease with the score on 106-4 and saw it fall to 111-5, up until that point it had been a very professional performance by England.  He had the freedom of knowing that there was no pressure on him, Ireland were expected to lose and they were in a losing position, which meant he could just play his shots.  It really was a remarkable innings.  England will learn from this, although their confidence will have taken a bit of a kicking they will be able to analyse the mistakes that they made (not good enough "death" bowling, i.e. yorkers and surprise balls) and improve them going forward.  They don't suddenly become a bad team over night, many of them were in the side that won the Ashes not yet 2 months ago.  That said they are almost certainly not good enough to win the world cup and there needs to be some changes in personnel to get the right balance and level of freshness (some appear weary) but on the whole they were beaten by a wonderful innings.

With regards the Liberal Democrats, our policies haven't suddenly become bad policies overnight.  As the excellent Caron points out in her musings we don't have a strong base there and weren't expecting to do well.  It is right in the middle of a strong Labour area so as the cuts start to become apparent there was always going to be a backlash.  If Labour were in power now there would have been a backlash against them too.  In addition we hardly seemed to be campaigning, I know for Oldham I was getting messages asking me to help ever day, I can't think of one I received for here.  

This doesn't mean that we are doing the wrong thing.  I still feel that our only chances now for the next general election are to keep going, we have to prove that being in Government we can make people's lives better.  At the moment the steps we are having to take to sort out the Nations' finances are starting to bite, but they are necessary, our good initiatives are yet to really take effect.  What we really need as a party is to be able to make people think at the end of 5 years "yes the Liberal Democrats did make a difference".  We wont achieve this with any knee jerk reactions on a disappointing but predictable by election result.

Thursday, 3 March 2011

New Politics?

Nick Clegg has been talking for a long time about "new politics", creating pluralism where politicians work together rather than bickering for tribal purposes.  This is a positive message and one that goes down well with voters, however it isn't going to happen, not without radical changes that wont be forthcoming.

Yesterday over on the Lib Dem Voice there was a review/summary of Deputy PMQ's.   I haven't seen it but by all accounts Nick Clegg was taking flack from all sides, this goes with the almost constant ridicule in the press, mainly due to non-stories such as the 3pm close of his box and pretending not to know he was in charge.  I was expecting this, but what really forced home the issues for me was the comment by Val:

" gut feeling about Nick Clegg is that he is actually a guy with a conscience that probably meant well when he started out and that may be why he looks so tired and in fact on his way to being ill. He perhaps is not thick skinned and ruthless enough to get in the Westminster cesspit where most politicians and journalists operate.
I fear for our country, as anyone with any good intentions will be destroyed by the media simply for the fun of it. It is getting worse. They twist and spin everything anyone does or says. We have a very destructive media that should be holding the politicians to account and opening up intelligent debate but it seems hellbent on spiteful gossip and destroying people. Sadly we have many politicians of the same ilk but I suspect Nick Clegg isn’t one of them.
Why ever would you encourage your children to go into Politics?"

In answer to her rhetorical question at the end, should I ever have children I would not encourage them to go into Politics.  It is a thankless task as even someone with the best intentions as soon as they get into a position where they can start really making a difference they become a figure of fun.

Val is spot on with what our media should be doing - promoting transparency, preventing corruption and encouraging an open debate, however I feel she is misguided in saying that Nick gets portrayed the way he does for fun, they do it because it is in their interests to do it.  As bad as it is good stories don't see newspapers, they don't keep people tuning in to rolling 24 hour news, what does that are scandals and stories where they can obtain a negative human element.  It could also be argued that the media benefits from the two party system especially with most paper's links to parties, non of whom are linked to the Lib Dems, and as such it is in the best interests of their party to have a smaller opposition.

From a Labour perspective it is obviously in their best interests not to partake in the call for pluralism.  This is why they are being opportunistic in opposing every measure that the government puts forward rather than coming to the table and saying we like this idea but think it would be better if you did x/y/z - even if this is good for the country it doesn't please those floating voters who are just unhappy with all the cuts (even if Labour would have done exactly the same in power).  It is also definitely in their best interests to crush the Liberal Democrats as many left leaning members of the party fit much more comfortably on their side of the fence than the Tories as will many voters.  

In any case, even if the numbers had worked, I don't feel that a coalition with Labour could have worked out.  They struggled to get on with each other when having a governing majority with their constant rumours of infighting and lack of compromise mainly due to their internal power struggle.  I would wager there has been much greater arguments regarding policy in this government but to my mind they have been much more professional about it (although at times less speed more haste might have been advisable).  I don't feel that Labour would have been able to cope with the need for compromise in the same way.  I hope they prove me wrong over the coming four years as if the economy improves and as such our vote doesn't capitulate as expected we may find ourselves with another hung parliament and I don't think anyone in our party should want us to be tied into perpetually siding with the Conservatives which is all that would happen unless Labour can show themselves to be capable of a different kind of politics.

Nick Clegg is trying to listen, he is trying to do what he thinks is right and as he only has 57 MPs to bargain with when discussing policy I feel he is doing rather well to bring forward things that are obviously important to him as well as mainly to the party.  However no matter how well he does this wont get portrayed  well and the figure of fun image that is getting associated with him will be difficult to remove, to do this he'll have to stop appearing as a victim which is almost impossible when being ganged up on from all sides.

Tuesday, 1 March 2011

House price conundrum

The weekend debate over on the Lib Dem Voice this week was on house prices - should we want them to go up or to come down?  I am unsure whether or not I can look at this objectively, as it is in my best interests that they fall.  I am a mid 20s professional with no realistic hope of being on the property ladder any time soon.  That said one of the main reasons for this is the area where I have chosen to live.  I can't imagine house prices around the Bath area falling no matter how much national downward pressure is applied.

Thinking in general however I still can't see past price stability being preferable so in real terms prices are declining.  I feel personally is that a major problem in this country has been the reliance on debt where often property has been used as collateral to fund an unsustainable standard of living.  At the same time it is too hard for others to get their first foot on the property ladder, this helps to maintain the inequality in society.

The key ratio is house prices to earnings, the graph illustrates how over the last 10 years this increased ridiculously and even the crash of 2008 didn't bring this down to it's previous level.  In the current economic climate pay for the majority of people is remaining constant or even decreasing so any increase in house prices would push them further out of reach for a lot of people.

The problem is there will always be demand for housing and in an unequal society such as ours even when the majority of people cannot afford the prices there is always likely to be someone willing to pay the price, whether they see it as an investment or a way to obtain additional income.  The only way I can see this changing is if policies are put in place to increase the supply of housing (more supply - lower equilibrium price) or to put restrictions on home ownership where people do not reside in the property, this however would penalise renters.

There is also the problem that if house prices fall then people could find themselves in negative equity, this can have disastrous effects on families and as such could not be desirable.  

No matter what happens there is always winners and losers.  Falling prices can have disastrous effects on people's lives where as rising prices helps to form a clique of home owning elite.  That's why stability where over the long run the ratio falls back down towards the more sustainable 3-3.5x earnings is what I would find more desirable.  However I can't see this happening.