Tuesday, 10 August 2010

Crackpot Krugman

Paul Krugman is a respected American intellectual and economist.  He won the Nobel Prize for economics in 2008 for his work on international trade theory.  However, President Obama was awarded the Nobel Peace Prize last year despite committing 30,000 more troops to the warzones in Afghanistan.  Anyway, Krugman is a very distinguished economist, and he has a column in the New York Times, in which he prognosticates about the future of the American economy.  Krugman is a charlatan.  Johann Hari enjoys quoting Krugman to justify his economic and social views i.e ''Paul Krugman says fiscal stimulus is very effective, therefore it must be true.''  This is akin to saying ''Hitler despised Jews, therefore Jews are inherently inferior to our people.'' 

Krugman's latest column is a piece about the lights going out because of fiscal contraction.  Krugman believes that because the State is 'awash with cash' because it can borrow at very low interest rates, it shouldn't be cutting spending.  To Krugman, the State is good and the market is bad.  Nothing can come between Krugman and his adoration of the State.  What he fails to realise is that the State is there because of the economic activity of the private sector.  Without a viable private sector, the State couldn't exist.  He is a Keynesian in extremis.  However, as all Keynesians do, he conveniently omits 50% of Keynesian economic theory.  Keynes stated that in boom time, austerity is good.  The government should keep public spending low, taxes high, and it should have a budget surplus.  When Krugman sings the praises of American and British fiscal stimulus, he dosen't tell us that both countries had enormous budget deficits and high public spending.  This is the opposite of what Keynes said should be done. 

Krugman bemoans 'anti-government' rhetoric, which has 'convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can't do anything right.'  That is because it is true.  The public sector is inefficient because it is not subject to the market pressures of the private sector economy.  A company in the private sector has to justify its existence everyday if it wishes to continue.  They are very efficient.  When Margaret Thatcher privatised the state owned industries, they went from being very inefficient cash hoovers to some of the most efficient and productive companies in Europe.  The public sector is guaranteed a permanent income, and therefore dosen't feel any obligation to maximise efficiency.  It is also heavily Unionised, and the bosses of these Unions are Luddite militants who believe efficiency is a dirty word to be avoided at all costs.  Any spending cuts must inevitably hit the nebulous 'front-line.'  If the government reduces expenditure by 2%, the Unions will say that teachers, nurses and police-officers will be sacked and burned for fuel.  It is this hyperbole that has poisoned the political debate in Britain, because the Labour Party expresses faux outrage at every necessary spending cut.  If the debate was a little more intellectual, the public would be ready to accept the need for fiscal retrenchment.  It was disheartening to see the Labour Party accuse the Tories of monstrosity and callousness when they announced they would cut £6 billion from spending if they won the election.  The Labour Party utilises people like Krugman and Stiglitz to justify their economic vandalism.  They pretend that no dissenting opinion exists within the economics profession, when there are many sound economists who propose very different solutions, such as Greg Mankiw, Friedman, Hayek, Alessina, Lilico, Evans-Pritchard etc.  Krugman is a fraud and the more people know the better.

Saturday, 7 August 2010

Were New Labour that successful?

It strikes me as odd that the media narrative still implies Tony Blair and New Labour were the most brilliant election winners in political history.  The simple fact is they weren't.  1997 was a stunning victory, and they did achieve a healthy share of the vote for a three party political system (44.4%).  However, like most things with New Labour, the superficially nice exterior hides a dreadful interior.  I will examine each election in some depth to explain why I believe New Labour were abysmal election winners.


The landslide victory of 1997 was astonishing on many fronts.  Labour achieved the largest swing towards them since 1945, measuring 10%.  They won the largest number of seats in their history.  They had achieved their largest ever majority.  And they had routed the Conservative Party in Scotland, Wales and the North of England.  In 1997, the Tories went from being a national party to the party of rural England.  Labour achieved a 44.4% vote to the Tories' 32%.  However, it was achieved on the lowest turnout since democracy came to Britain.  It fell from 77.7% to 71.2%.  The Tories lost 5 million voters, and only 2 million of those went to Labour.  The Liberal Democrat vote fell.  In 1979, the Conservative vote increased by 3 million.  The Labour vote in 1997 increased by 2 million.  However, it would be churlish to deny it was an incredible night for New Labour, and the country was indeed rejoicing at the arrival of a new government and the destruction of the old one.  This was the high watermark of New Labour, and the warning signs were already there.


The 2001 general election was dubbed the 'quiet landslide.'  Very few seats changed hands.  The Tory vote declined by 1.4 million, although their share of the vote increased by a pathetic 1%.  The Labour vote dropped by 2.8 million, and there share dropped by 2.5%.  In one election, Labour had returned to the 1987 election in terms of its electoral support.  Turnout collapsed to its lowest since 1918, equalling 59% of the electorate.  Labour won 42% of the vote compared to 33% for the Conservative Party.  But my Lord the turnout!  This was the first election where more people didn't vote than voted for the winning party!  The non vote won a landslide!  Labour won 25% of the total electorate, whereas 41% didn't vote at all.  This parliament had virtually no mandate to do what it did.  In the words of Michael Foot, 'a seraglio of eunuchs.' 


This was the lowest point in British democratic history, and a prime example of how Labour had butchered the boundaries of the constituencies to ensure it may rule in perpetuity.  It achieved 36.2% of the vote to the 33.3% of the Tories, a difference of 2.9%.  This gave them a majority of 66.  On another very low turnout of 36%, the Labour Party had the parliamentary power to do what it wanted on the basis of only 20% of the eligible electorate.  Was this the great election winning machine in operation?  It must have been a very secretive machine.  The Labour Party achieved majority power on the lowest vote share for a political party in British history.  It was a lower vote share than Callaghan achieved in 1979, and only just above the vote share achieved by Kinnock in 1992.  New Labour polled 9.5 million votes, lower than the 9.6 million polled by Major in 1997. 

Was this a great election record?  To achieve power on a pathetic number of votes for two elections?  I'd like to hear a New Labour drone explain otherwise, but I doubt they could do it. 

Thursday, 5 August 2010

Wedgy Benn

It appears that even at the grand old age of eighty five, Anthony Wedgewood Benn cannot bear to go five minutes without hearing the sound of his own voice.  He is organising a 'coalition against the cuts.'  It appears coalitions are very popular these days.  Disraeli once said 'Britain dosen't do coalitions.'  As with so many things, Dizzy was completely wrong.  Mr Benn is renowned as a great democrat and a great parliamentarian who reveres that hallowed and sacred institution.  That didn't stop him from trying to infilitrate Parliamentary Labour Party's during the 1980's, when he proved to be a thorn in the side of the much more honourable Michael Foot, and the much more devious Neil Kinnock.  I do not understand where his reputation comes from, but it appears age makes a person much more respectable.  It was always thus.  So, this 'democrat' should respect the rules of democracy.  All of the parties in the General Election promised cuts.  Not one party was honest about the level of cuts I concede, but all accepted the necessity of cuts.  The combined total of the three main parties was 88%.  Therefore, 88% of voters chose parties that accepted spending cuts.  Those who didn't want cuts could have chosen the Green Party (whose vote actually fell), the Socialist Workers Party or any other collection of deluded lefties who believe in punishing success. 

The combined vote share of the Conservatives and the Liberal Democrats at the moment is 55%.  The Labour Party is on 36%, translating into a 19% lead for the Coalition.  The Liberal Democrats have lost support which appears to have moved to Labour, but even so, over half the country support the Coalition, which is committed to immediate spending cuts.  Is Benn really wanting to defy the will of the people.  Is Benn implicitly admitting to being a fascist, unwilling to accept the public will?  Socialism and its smiling friend social democracy implicitly assume the public is far too stupid to spend its own money how it wants, and therefore must do it for them.  They just dress it up in the language of social justice, a term as nebulous as the Big Society. 

Now, there is no case for delaying cuts.  All the statistical evidence suggests that fiscal contractions are successful when spending cuts take most of the hit.  It is a sad reflection on society when people like Benn claim that cutting spending would endanger standards of living.  Is this what the Welfare State was created to do?  No.  It was created as a safety net if people fell off the ladder.  It wasn't meant to be a spider's web, trapping people into a life of perpetual serfdom.  Benn and his comrades should be ashamed of themselves.  Scotland is a case in point of what happens to a country when socialism strangles it.  Scotland was one of the homes of the Enlightment, particuarly in political philosophy and economics.  Adam Smith and David Hume revolutionised the subject, encouraging free trade and free markets.  Scotland was known for its self reliance and social conservatism.  It is now a cesspit, reliant on the English taxpayer to survive. 

I present some statistical evidence that debunks the Keynesian case.  In 1933, the fiscal deficit in America stood at 4.5%.  During the first 4 years of the New Deal, it averaged 5.1%.  Is a 0.6% difference between the deficits of Hoover and Roosevelt the difference between depression and recovery?  I doubt it.  For those who believe it so, consider this.  In 1945, the deficit was 21.5%.  In 1947, there was a surplus of 1.9%, a swing in basis points of 2,320.  If a swing of 60 basis points was a catalyts for economic change, surely 2,320 would be even more so?  No.  Post war America had an 8 month recession compared to the decade long depression.  Unemployment in the Depression never fell below 14%, whereas it peaked at 3.9% post war.  If reducing a deficit was really that bad, surely America would have experienced a second Great Depression?  In 1920, President Harding cut government spending by 1/3, cut taxes, and cut the federal government by 50%.  This was in response to a depression.  According to the Keynesians, this should have deepened it.  The American economist Benjamin Anderson describes it as thus

''we took our losses, we re-adjusted our financial structure, we endured a depression, and in August 1921 we started up again.  The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise.  It was not based on government policy designed to make business good.''

It is not sustainable to have a public sector that eats up 52% of 'national income'.  That crowds out private sector investment which is needed to give our economy a much needed boost.  Tax cuts are also desirable to stimulate demand.  Tony Benn took a degree in Philosophy, Politics and Economics at Oxford.  He should return to the textbooks and leave the Marxist economics books in the dustbin where they belong.

Wednesday, 4 August 2010

Unelected House of Lords

As all conservatives should, I support an unelected House of Lords.  There is absolutely no need for an elected second chamber in this country.  I will explain why in a short article.

Supporters of an elected second chamber point out that the United States has two elected chambers, the House of Representatives, and the Senate.  This is true, but they also have an elected head of state, who is the President.  Our head of state is unelected (a virtue in itself, because it can be a role that unites the country around one figurehead rather than a partisan figure with 35% support).  There is a clear division of responsibility in Congress and in Parliament.  The House of Lords is not a legislative chamber.  It is a revising chamber.  The Senate can propose legislation which can be passed into law.  That power is vested in the House of Commons in Britain. 

I would of course take the power away from political parties to appoint peers.  That task should be performed by an independent body, and party strength should be based on vote shares rather than constituency numbers.  There should also be an extension of the crossbench peerage.  Expertise defines the House of Lords.  How many revising chambers around the world can boast former military generals, Nobel scientists, former foreign secretaries, home secretaries and Chancellors?  There are charity workers, ex teachers and nurses, doctors and scientists.  There are many renowned economists e.g. Lord Desai, Lord Eatwell, Lord Skidelsky etc.  There are many prominent businessmen such as Lord Sugar and Lord Digby Jones.  Harold MacMillan once said ''we have not overthrown the divine right of Kings to be replaced by the divine right of experts.''  He was right, however, because the Lords is not a legislative chamber, we will not be ruled by the divine right of experts. 

I also believe that the hereditary peers should be reintroduced.  It was a pointless and vindictive act to remove these old men from the chamber.  Public service and noblesse oblige run through the veins of these men, and has done for centuries.  They don't get paid, and as I've said before, they don't propose legislation but amend it.  The Salisbury convention is a sensible rule devised by the Marquess of Salisbury after the 1945 general election, which enabled the Labour Party to pass its manifesto legislation through the House of Lords.  Roger Scruton once wrote that the hereditary peerage is much more democratic than the life peerage because it is completely random.  Lloyd George once quipped that the House of Lords was composed of ''five hundred men chosen at random from the ranks of the unemployed.''  He hilariously had a point.  They are chosen at random, an accident of birth.  Political appointees tend to be toadies.  Conservatives believe that human nature is fallible.  I am forever referring to Roger Scruton as he is probably the most intelligent man alive in Britain today.  He wrote a book called the Uses of Pessimism.  We are conservatives because we are pessimistic.  Human nature is not infallible, and therefore we should bow and pay lip service to the wisdom of established institutions and practices.  The House of Lords was a perfect example of that.  Despite the inbuilt Conservative majority, it was as rebellious with Margaret Thatcher as it was with any Labour government.  Perhaps that's why the elected politicians despised it so much.  It was proudly independent.  It remains a paradox of modern politics that it is the unelected chamber that protects us from the authoritarian legislation that emanates from the Commons these days, as ministers bow to the pressure of Murdoch and Dacre. 

Tuesday, 3 August 2010

Nonsense about the deficit

The way Labour politicians are prognosticating about the effects of public expenditure cuts would lead one to believe the Conservative/Liberal coalition is adopting the policy of Jonathan Swift and his Modest Proposal i.e. eating children to solve the problem of hunger.  In cash terms, public spending is going to be higher in 2015 than it is in 2010.  No government has cut spending since the Attlee government.  It has been slowed, and has risen beneath the rate of inflation however.  As Tim Congdon recently stated in his excellent MarketPlace column for StandPoint magazine;

''In 1977, public sector capital expenditure cuts were the most drastic since the war, yet the economy recovered in 1978. In 1981, the Thatcher government raised taxes by three per cent of national income and was roundly condemned by 364 economists in a letter to The Times, on the grounds that the fiscal contraction would deepen an alleged "depression". Instead, aggregate demand started to grow within months of the Budget, and the next eight years saw large increases in output and employment. After a bad recession in the early 1990s, the Major government combined tax increases and spending cuts from 1992 to 1996, and again the economy enjoyed above-trend growth.''

And, as this article explains, the evidence for the success of deficit financed government expenditure is as flimsy as the evidence for anthropogenic global warming.  Here is an extract of the article by Robert Murphy

''As we've seen above, Romer's account relies on an implausibly large sensitivity of the economy to deficits; going from a deficit of 4.5% of GDP to one of 5.1%, meant the difference between disaster and impressive recovery.  Yet even if Romer could come up with a fancy model to yield that result, she would then face the opposite problem: government spending and the deficit absolutely collapsed at the end of World War II, and yet the economy adjusted fairly quickly. Specifically, in FY 1945 the deficit was 21.5 percent of GDP. Yet two years later, the budget surplus was 1.7 percent of GDP!''


The Labour representative on Newsnight tonight namechecked several prominent Keyneisan economists e.g. Stiglitz, Krugman and Blanchflower.  Fair enough.  However, getting consensus amongst economists is a notoriously difficult task, as there is so much politics involved.  Krugman is just an economically literate hack on a morally corrupt newspaper.  I can name dozens of economists who have produced lots of evidence that destroys the postulates of Keynesian economics e.g. Friedman, Hayek, Rothbard, Bob Murphy, Frank Shostak, Jeffrey Tucker, Andrew Lilico, Ambrose Evans Pritchard etc. 

Keynesian economics fails the Karl Popper test of falsifiability.  All economics experience cycles.  If the economy witnesses a cyclical upturn, the Keynesians will pounce on it as evidence of their Gnostic greatness.  If a recovery fails to occur, the Keynesians will exclaim that not enough fiscal stimulus was put in place.  This is why Keynesian economics has not died yet, despite the vast swathes of evidence to disprove its basic hypotheses.  However, those on the Left have never let facts get in the way of mindless bigotry and anti-intellectualism.

Coleridge + Wordsworth

Samuel Taylor Coleridge, who wrote 'Lyrical Ballads' with William Wordsworth in 1798, is one of my favourite poets.  Indeed, the finest poem in that beautiful tome is 'Rime of the Ancient Mariner' which of course gives its name to the author of this blog.  Wordsworth wrote 'England' in 1802, and it is one of the finest in the language.  It should be taught to every pupil in every English school until they have memorised it.  Of course this won't happen.  The left liberal establishment has decided English students have no right to discover their excellent literary heritage, except for a few lines of Chaucer and Shakespeare.  Mr Michael Gove, the massively overrated education secretary, should put the poetry of Wordsworth in the English curriculum.  I have never understood why Mr Gove is considered a Tory star.  He is intelligent no doubt.  But he and Cameron have betrayed one of the most fundamental conservative principles of betterment through self help of the Samuel Smiles variety.  Grammar schools used to be a guarantor of social mobility.  They gave poor children a private school style education, which is a fundamentally conservative thing, as Peter Hitchens explains in his excellent book 'The Abolition of Britain.'  His 'free schools' programme is a needless waste of time and money.  He could simply allow the extension of the grammar schools.  Socialists and other hypocrite liberals who disagree with the system can simply send their children to a bog standard comprehensive.  They won't however.  They'll emulate Polly Toynbee and send them private. 

Anyone, to get back to the point, Coleridge and Wordsworth are the greatest of the Romantic poets.  Both were conservatives, despite Wordsworths' earlier radicalism.  Both were patriotic Englishmen who wrote beautifully about the landscape of our dear country.  One of my favourite poems is 'A Sunset' by Coleridge, first published in 1805.  It is a simple poem, but immensely powerful.  Before I print out the poem, I say to readers that I will be writing often about poetry.  Anyone interested in politics must become interested in poetry.  The noble battle of political ideas and ideals are best expressed by poetic language, echoing the prose of Shelley, Browning, Keats etc.  Wilfred Owen expressed the futility of the First World War better than anybody with his hauntingly despondent poetry.  Historians can only do so much until the poets take their ideas to a higher plane. 

The Sunset

By Samuel Taylor Coleridge

Upon the mountain's edge with light touch resting,

There a brief while the globe of splendour sits
And seems a creature of the earth, but soon,
More changeful than the Moon,
To wane fantastic his great orb submits,
Or cone or mow of fire: till sinking slowly
Even to a star at length he lessons wholly.

Abrupt, as Spirits vanish, he is sunk!
A soul-like breeze possesses all the wood.
The boughs, the sprays have stood
As motionless as stands the ancient trunk!
But every leaf through all the forest flutters,
And deep the cavern of the mountain mutters.

Electoral reform

My opinions are constantly changing on electoral reform.  When parties achieve complete power on a 35.2% vote share, as Labour did in 2005, and only 22% of the total electorate, one wonders whether Britain should abandon First Past the Post.  In 1997, New Labour polled 13.5 million votes, an increase of two million on their 1992 result.  They achieved a vote share of 44.4%, which I think is rather impressive in a three party system.  However, it was achieved on a turnout of 71%, which, as Nick Cohen often repeated, was the lowest since democracy came to Britain.  In 1992, the Conservatives polled 14 million votes, the highest ever polled by a political party.  They held a 7% lead over Labour, and it gave them a majority of just 21.  Labour had a majority of 179 despite polling half a million fewer votes than Major had in 1992.  Unless the Liberal Democrats start achieving 1950's style election results, I believe FPTP is a rubbish system.  Labour then achieved a 41% vote share on a turnout of 59%, and this gave them a majority of 168.  Is this fair?  Although I am a huge Thatcher fan, her vote shares were rather unimpressive when compared with her 1950's Conservative counterparts.  Although her vote shares in England were always excellent (46-48%), in 1983, she polled 43.5% of the votes and 43.3% in 1987.  Alec Douglas Home lost an election with 43.9% of the vote in 1964, and in 1951, despite 'winning' the election in seat numbers, we lost in votes on 48% share.  Labour lost on a 46.4% share in 1955 and a 43.8% share in 1959.  Vernon Bogdanor, who with Lord William Norton of Louth, is the foremost expert on the British constitution and politics, has correctly wrote that First Past the Post works wonderfully in two party systems.  The Liberals are polling 23-24% of the vote. 

So what is to be done?  I don't believe in proportional representation for the House of Commons.  I don't believe it fair that the party with the lowest share of the vote of the main three can call the shots.  It's like asking the loser of a 100m sprint to decide the winner of the race.  I do not support the alternative vote system.  The loathsome Caroline Lucas hailed her election in Brighton Pavilion as the start of a Green revolution.  She was elected with a paltry 31.3% of the vote on a 70% turnout, allowing her to claim the support of just 21% of her total electorate.  If we introduce compulsory voting through the internet, MP's can attain solid majorities through genuine and support.  It isn't right that no MP has the support of an absolute majority of their constituents.  In the 1960's, 1/3 of all MP's enjoyed absolute majorities.  Only three MP's have above 40% support and none has 50%.  I am not a fan of the Electoral Reform Society, as it is a front group for student lefties who enjoy the sound of their own voices too much, but they have a point when they say politicians are elected with pathetic mandates.  The alternative vote does not give absolute majorities because of second and third preferences.  In a constituency like Richmond Park (Zac Goldsmith-Conservative), which is a Tory-Lib/Dem marginal, the Labour voter is allowed to have more than one vote.  This is patently unfair to the Conservative voter. 

I support the equalisation of constituencies.  Comrades Straw and Harman are being thoroughly disingenuous when they claim this is gerrymandering.  The Labour needs a lead of just 3% to attain a majority.  The Tories need a 10% lead to attain a majority of 1.  A 10% lead would give the Labour Party a landslide because the cities are massively overrepresented, and Labour's support is concentrated in invariably poverty ridden cities, where the electorate will vote Labour in perpetuity.  We should have 500 MP's.  We have one of the largest lower houses in the developed world.  There are 435 members of the House of Representatives in America, we have 650 in our House of Commons, despite our distinctly smaller population.  Jack Straw has put forward a counter argument, suggesting that we have a relatively weak local political tradition.  Fine, then strengthen it.  As Douglas Carswell has stated, politics is becoming more local and more niche.  Local politics will endear itself to the local electorate.  The House of Lords should remain unelected, as I will explain in a later post, but its composition should reflect national vote shares instead of party strength in constituency numbers.  This will ensure the proper scrutinty of legislation.  Despite my misgivings about First Past the Post, I will vote to retain it during the referendum.  I believe my proposals could strengthen our dying democracy.  As Winston Churchill once said...''democracy is the worst form of government except for all others that have been tried.''