A Scary Prediction for the Next Epoch, Post Credit Crunch

When the dust settles after this crisis there will be a profound shift in the relative power between East and West, to a situation that more closely represents the underlying reality. Western people are unlikely to take kindly to this, however. I would not rule out similar strife to what we had in the thirties. The disillusionment with the political class threatening democracy itself just as it did eighty years ago, leading to a large scale war in 10-20 years' time.

My bet for the spark that lights this tinderbox is Italy, its demographic collapse with the highest debt per worker is totally unsustainable.

Russia will soon be free to push further back into its former satellite states as NATO will be too weak to do anything about it and pre-occupied with keeping Western governments in place. She too will eventually weaken, however, as her oil money runs out and her population also collapses to the extent that the Muslim world pushes its boundaries northwards in a series of vicious wars. China, meanwhile, will continue quietly to build an empire in all but name in Africa.

Credit Crunch Canards No. 1

The credit crisis is spreading to the 'real economy'

If a dial in the dashboard of your car indicates that your engine is overheating and then later steam starts coming out of the bonnet, you don't say that the problem started in the dashboard. Similarly, if the accounting and banking centres of the country starts to show extreme stress, you would be unwise to look there for the root of the problem.

IMHO the primary cause of the current crisis is the collapse of Western competitiveness. Our indebtedness is a symptom of this problem as we have used both sovereign and personal debt to mask the fact that our lifestyles were no longer within our means.

Only once we have thrown off the health and safety, 30 hour week, consumerist culture will we truly have turned the corner. Until that day the true position will just keep getting worse, whatever the stock market says.

Bankers should be admired (if not thanked) for doing such an amazing job covering up this unsustainable position for so long. Sure, they were well paid, but it wasn't easy inventing all that money from nowhere or getting the eventual certainty of default to be seen as a small risk. The real villains, as ever, are governments who conspired with the bankers against the people, whilst (of course) benefitting greatly themselves. The current round of nationalisations is just politicians' latest wheeze to delay the day of reckoning just a bit longer.

Credit Crunch Canard

"This is a crisis that started in the finance industry and is now spreading to the high street." Words to this effect, e.g. "Wall Street to Main Street" in U.S. parlance, are everywhere in the media.

They are repeated so often in our media that one could be forgiven for believing them.

In fact, the opposite is true. Fundamentally, this crisis is about the collapse of Western competitiveness. Just 40 years ago the G7 accounted for 80% of world GDP. It could justifiably speak for the whole world. Today it is just 40%, not even a majority. This is the true root of our present crisis.

Despite the decline in our relative wealth and power, we have carried on behaving as if we still ruled the world (if not militarily then at least economically). When we could no longer afford the luxuries we were used to, instead of doing without or working harder, we simply borrowed. Even if we didn't borrow ourselves, we elected legislators to borrow on our behalf.

Clearly, this was never going to be sustainable. Also, no politician was going to get elected if he simply promised to get people's children to pay for their debts. So a way of camouflaging the debt had to be found.

Banks, at the behest of our governments, have therefore done an excellent job of covering up the decline of the West relative to the East, and even to the Middle East. Miles of red tape and a hugely bloated state for years seemed to make no different to living standards in Europe and the U.S. It seemed perhaps that socialism was right: in defiance of the belief of old-fashioned people, perhaps all these regulations and taxes really did help growth. Perhaps the 30 hour week in France just didn't go far enough.

To understand that we haven't even come to the end of the beginning of this crisis, one needs to ask what questions were important in previous crises that aren't even being mentioned today? What dead moose is in the room, which until it is faced up to the problem can't even begin to be addressed? Well, it turns out there isn't just one dead moose but a whole family:

1. Western productivity.
   
2. The balance of payments.
   
3. Sterling.
   
4. Pensions.
   
5. Demographics.
   

Only when our body politic faces up to the crisis in every one of these points, will we know we are past the initial stage of denial.

 

Open Source Government

When was is that the government became the enemy of the people?

Take the Department of Transport, for example.

As somebody who drives over a thousand miles a week on average, I'm regularly infuriated by the government's lunatic driving policies. I don't want to die any more than the next person but at the same time I simply don't believe some of their claims.

Remember the M4 bus lane and the 40 mph speed limit that was introduced at the same time? The government's best boffins insisted that this would, counter-intuitively, increase average speeds. Why then, a few years later was the speed quietly increased back to 50 and then 60? Clearly the boffins were wrong.

Remember some newspapers attempts to get data on accidents supporting speed camera positions? Incredibly, some police forces, went to extreme lengths to oppose the Freedom of Information requests?

Remember the Jeremy Clarkson interview with the then transport secretary, Mr Ladyman? Clarkson asked for evidence and ineffectually argued over statistics. Ladyman insisted that they had the evidence but that they hadn't published it yet because they were still working on it. Working on it? Is that the same as 'cooking the books'?

Why on earth would our government, servant of the people, want to hide information from us? Two years later, they're still 'working on it'? Could it be that the evidence doesn't support their policy position and they're busy massaging the raw data to support their own prejudices? Worse still, as a tax payer, I'm paying to have myself deceived.

If the government had published their information as soon as they recorded it, hundreds of people would have quickly (and for free) done the difficult statistics to establish reasonable conclusions from it. More importantly, because this would have been done in a spirit of openness and honesty, the conclusions would have had more respect and people would be more likely to obey speed limits that are worthwhile.

Sir Humprey would argue that making Civil Service advice public would change the nature of that advice and open up Civil Servants to attack with no right of reply. But that is exactly the point. We don't want them plotting behind closed doors. It worries us and makes us hostile even when they do the right thing. Moreover, Civil Servants need to up their game. They shouldn't be associated with politically controversial, partisan politics in private any more than in public. That is a role of universities, think tanks and lobby groups. Instead the servants of the people should be able to advise ministers on policy ideas, not lead on them.

Far from representing a demotion for Sir Humprey, it would require a much higher calibre of official, with the intellectual rigour to separate his own prejudices from the argument and to be able to serve either Labour or Conservatives equally well. What would diminish is politicians and bureaucrats' power to impose their own ideas based on partial evidence. If they wanted to build a new dual carriageway in the West Country they would have to win the argument for it. It might be the right thing to do but if it is then why does it have to be built by stealth, building by-passes bigger than they need to be and then later joining them all up at greater expense? Who knows, if they treated the people of the West Country like adults, perhaps they might find more agreement than they expected?

Instead of making everything secret by default and forcing the people to fight to have it released, a new government should make everything open by default. Only specific exceptions (e.g. national defence) would be allowed. Any scandal to emerge would be drowned by the sheer volume from every corner of government. It would be a cathartic experience. This would not be just in the negative sense, as in the disinfectant of sunlight, but also in the release of more information and energy. With Open Government, we could all be involved in decisions that affect us, rather than a select few, saving the government money and making decisions faster. Government would be on our side, facilitating our decisions, rather than against us.