First the bankers, next the tax evaders

I joined "The other taxpayers alliance" on Facebook recently - a useful opposition force to that motley collection of very rich people in the Taxpayers Alliance who dont want to pay any tax.
They directed me to a meeting at the TUC congress house which I went to on Thursday. It was organised by Compass, the left of centre pressure group within the Labour party who are supporting John Cruddas, MP for Dagenham and their main hope for rescuing the party from it's dead end neoliberal trajectory.
This was a significant meeting as Angela Eagle - a cabinet minister was there, mostly to listen although she did give a brief speech at the beginning.
The message of the meeting was clear, it is time to close in on the tax evaders and the tax avoiders. Although the number of rich people is small as a proportion of the population, they withhold far more of their capital than do those at the other end, the so-called "benefit scroungers".
The opinion poll evidence was clear, public opinion is now wanting the loopholes to be closed. The next budget is on Tuesday. Compass may well be pushing on an opening door.
I hope the Liberal Democrats take the opportunity to pre-empt them on this, this weekend. Vince Cable and Nick Clegg often refer to this injustice in their speeches - it is perfectly consistent with what they have said all along, unlike Labour who only now are thinking about it, and the Tories who have long been financed by tax evaders and dodgers for services rendered. At the meeting our attention was drawn to the activities of Micheal Ashcroft, one of the major Tory donors and still involved with banks in Belize and the Tory party.
I was impressed with the meeting for it's caution. The right wing position (supported by "New Labour" under the influence of Rupert Murdoch) of attacking benefits scroungers still wins votes for Labour/Tory and that was recognised - although not agreed with. A crude "attack the rich" position was not supported by the meeting, with the possible exception of a certain Richard Murphy, who urged us not to be timid.
Richard Murphy is the man who set up the Tax Justice Network (TJN). He is a passionate, colourful individual who knows a lot about his subject, but also has his foibles. The main one being his supersized ego. It is no surprise that he started this group - it is hard to imagine he would be able to join someone else's. It is hard to imagine the TJN can represent anything other than what Richard Murphy thinks at any particular time. Most of what he said fitted in well with what the audience wanted to hear, but he did acheive the remarkable feat of actually being heckled at a meeting organised and attended by people who expected to agree with him.
Well that is an aside for now.
The left have some grounds to be optimistic that public opinion will now support greater redistribution of wealth. Our main challenge is that that in itself will not prevent the rise of the far right, who may also seek to cash in on this, and who are likely to benefit most from the failures of neoliberal economic policy and for other reasons such as the threat of terrorism.

Maybe we will have nuclear disarmanent after all

The Liberal Democrats made a big mistake when they decided a while back not to take advantage of the new world order and adopt a policy of decomissioning our nuclear weapons. It was Ming Campbell, still fighting the internal battles of the 1980s (when the disarmers in the Liberal party had the upper hand) who insisted on the policy that we now have.
The SNP took full advantage in Scotland and showed beyond doubt that nuclear disarmanent is actually a vote winner, especially since we don't need the weapons.
But we can hope that although the opportunity was missed, maybe it does not matter so much anymore. The economic pressure on Russia, the US and the UK to disarm is so great, they might as well agree to "multilaterally disarm" at the earliest opportunity. With Obama now talking about disarmanent, we should bring forward the talks and agree as soon as possible.
Another military adventure we cannot afford is the war in Afghanistan. Obama said all along that he was going to intervene further in this conflict. He continues to propose this policy whilst wracking up even more debt in order to finance it, debt that neither the US or UK can afford.
Whilst wishing Obama well, the EU still has a responsibility to be a candid friend and tell the US to settle with the Taliban and get out of Afghanistan before it becomes another Iraq.
The US/UK cannot come to terms with their loss of power in the world, the harder they try to find it the more they diminish it even more. And the expense is great human tradegy.

Vince Cable lays into Libertarians

Early on in this Parliament I viewed the utterings of Vince cable with some alarm. He was then proposing that the Lib Dems support a "flat tax", which appeared to be very regressive, and he proposed ridding the party of it's very popular policy of taxing the rich at 50%.
The party very quickly dropped the flat tax idea (as did the Tories) when the German Christian Democrats nearly snatched defeat from the jaws of victory in their general election, having proposed such a policy. However Vince succeeded in changing the 50% policy. At the time he argued that the new replacement policy was even more progressive - more revenue would be generated from Green taxes and these really would be progressive. On the other hand, Ming Campbell suggested another reason; he wanted the policy to "reward ambition" - the same logic you would expect from a Thatcherite.
So Vince Cable was identified with the right of the party, but listening to his speeches I was not so sure. He was coming up with many progessive ideas on taxation, and in my mind I repositioned him as "hard to categorise".
This of course was confirmed when he supported the nationalisation of Northern Rock as an emergency measure. I wonder if other LD MPs like David Laws and Jeremy Browne would have proposed such a policy? Yet the party was united on this, apart from a few fringe bloggers.
Recently Vince has somehow found time to write a book, and this of course gives an excellent opportunity to find out what he thinks, albeit in less than 160 pages.
I have read the book and would heartedly recommend it. I agree with most of it. Because it is short there are obvious gaps - the chapter on Malthus is rather short and inconclusive which is a shame as I for one think it ought to be the most important part.
However there is no doubt what he thinks about extreme Libertarians;
"(quote from Herbert Spencer) 'The ultimate result of shielding man from the efects of his folly is to people the world with fools' . This approach was influencial in the years of the Great Crash, and it helped inform the advice given to president Hoover by his treasury secretary, Andrew Mellon: to do nothing. '[Panic] will purge the rottenness out of the system ... People will work harder and live a more moral life ... enterprising people will pick up the wrecks from less competent people.' Since Hoover and Mellon emerged as the fools who precipitated the Great Depression, their abstemiousness become seriously unfashionable", page 46, The Storm.

The economic crises we face today has resulted from the policy mistakes of those who believed in the philosophy of "setting business free". The business lobby is a formidably powerful lobby and has persuaded even nominally socialist politicians to buy into this philosophy. We are where we are today because of the failure of "light touch" regulation. However even if you persuade the politicians the policy still has to work, and instead it has failed, big time. The backlash is now well under way, and libertarians will be one of the foremost causalities.

Nick Clegg still in a tangle over tax

I went to the one day Lib Dem conference today at the LSE. It was an excellent forum, but once again the issue of taxation was raised and the answers were not forthcoming.
Nick Clegg spoke about "tough choices" - a favourite phrase of Tony Blair from years gone by.
Steve Richards, who chaired the next event has heard it all before. He reckoned that it was a complete myth that the Liberal Democrats will find £20Billion public expenditure cuts (albeit cuts that will be reallocated to expenditure elsewhere, plus tax cuts if anything is left over), and he warned about politicians who talk about tough choices and then not say what they are.
Of course student tuition fees - which the LDs plan to scrap but the leadership intend otherwise - is an example of the kind of cuts we will have to make.
Danny Alexander had to respond to that, but instead of talking about hard choices, he downplayed the prospects, saying that a lot of the cuts had already been accounted for (scrapping ID cards for example), and that 3% of overall spending is not very much.
Well come on then, are there tough choices or aren't there?
The question I wanted to ask was a) how much of the £20Billion cuts has already been accounted for and what are they, and where of the remaining £xBillion are the rest of the cuts going to come from? Students tuition? NHS? Scrapping and not replacing Trident? Afghanistan troop withdrawal?
Will we get a say in these cuts, or will they appear rabbit from a hat just before the next general election?
These tax cuts are the remnents of the ideas proposed by parts of the Orange book, an emblem of free-market economics of the kind that we do not need just right now.
However the marketisation of public services has fallen short. Private companies cannot be trusted anymore than the public sector. I am sure that the original idea of tax cuts was related to streamlining public services, but how it has turned out the Liberal Democrats are simply resorting to cutting budgets. This is what Danny Finkelstein calls "Punk Tax Cuts". Cuts not made possible by public services being run more "efficiently", but by simply being cut.
Of course I have my own suggestions; scrap Trident and don't replace it, and withdraw from Afghanistan (as well as Iraq), but I am sure I will not be taken up.
The issue of student tuition fees has not gone away. Despite a change in policy having been rejected on the Federal Policy Committee (FPC) by a massive 14-5, it looks like the matter will be discussed in our Harrogate conference coming up soon. The FPC vote indicates that the party is not ready to make these tough choices, although I would submit that without seeking to change our policy on Trident and Afghanistan, then the same is true of the leadership as well.
All the more absurd that we passed this policy on taxation in Bournemouth in the first place.

Nick Clegg calls for an end to supplying arms to Israel

The fastest ever Facebook group I ever set up can be found here;
http://www.facebook.com/group.php?gid=3950994014#/group.php?gid=54403996833
I am delighted at the overwhelming response from fellow Liberal Democrats to joining this group. Even more impressive when you consider that both the Labour and Tory parties would not dare suggest we stop selling arms to Israel.
Yet this is a matter of regret rather than triumph. The USA has made Israel the most powerful country militarily in the Middle East. In comparison to the Palestinians, most Israelis live comfortably. They have no reason to seriously negotiate with the Palestinians, they have the power to impose their own preferred solution on the conflict and they have the miliary force to do it.
Barack Obama is unlikely to change that. Even if he were so inclined - and there is no evidence that he is - his Democrat party will not allow it.
So what are we to do? There are some things we can do. As Nick points out, stop selling arms to them. Maybe stop trading with them altogether.
On the other hand if we are too confrontational, would we be able to play a diplomatic role as the Norweigans did some time ago?
It is a devil of a problem, and the US has made it almost impossible.

Problems pile up for Obama

It is worth pointing out that Barack Obama won the presidential election by only 5%. As far as US elections are concerned, that is supposed to be a big margin, but lets bear in mind that despite the monumental failure of US foreign policy in the Middle East, and notably Iraq, the Republicans were actually inching ahead until the US economy took a sharp downturn. It is hard to imagine a more incompetent president than GW Bush, yet the Democrats won by just 5%.
In terms of the demographics it was women, and a late swing from Latinos that built up the Democrat vote. And best of all, it was young voters, indicating a shift similar to that which supported New Labour in 1997 and forced the Tories to painfully reinvent itself as a nice "liberal" party.
However there is not a harder time to imagine taking power than now. The economic problems have been long debated. Obama is less likely to be constrained by the free market dogma that got us into this mess. He may not pull it off in terms of resetting the economy - it may not be possible for one thing, but he is more likely to get it right.
Foreign policy is just as troublesome. His gung ho utterances on Pakistan and Palestine during the campaign did not read well, and continue not to do so.
The best we can hope is that that was just a ploy. Maybe the rhetoric in public is meant to impress the right people, but behind the scenes real progress is being made. I suspect this will be wishful thinking.
But why the rhetoric in the first place? Until recently we were living in a unipolar world, with the US far and away the most powerful nation on earth. And now? The case can still be made that this is the case. Militarily it is still the case, the US spends an extraordinary amount and no one can keep up with them. How was this possible? The narrative of the Republican party about the need for US power in the world, conflating the interests of the world with that of the US, and reinforced by the "Shock Jocks" radio talk show hosts who loved attacking "weak" liberals all contrived to win public support for this.
Failure in Iraq has presented the Democrats an opportunity to attack this illusion. Unfortunately many of them bought into this illusion in the first place and it does not look impressive to "flip-flop" in public. And it is not an easy shift to make. To admit that the US is a declining power is not a positive message, and does not fit in well with the need to be patriotic.
Yet it is clear now that it is not enough to be strong militarily and weak politically, which is what the US is now. It remains easier to pretend that the US can still throw its weight; by siding with Isreal whatever it does, by threatening Pakistan and by "surging" in Afghanistan. The problem Obama faces is that the US does not have the power by force to control these countries, and yet the need to find political solutions remains paramount.

The problem with New Labour is that they do not regulate enough

Schardenfraud is a nasty trait, and yet it was hard to avoid enjoying the experience when Sarah Palin got caught out in a high profile interview recently.
The question she was asked was about specific actions that John McCain took to tighten regulations to prevent irresponsibility in the financial markets. The only way she could have answered the question is to not answer and quickly move on to another point and make the interviewer ask questions on that instead. No doubt some politicians can do it, and it is one thing to have the skill to do it, but the fact remains that the question is unanswered.
The reality is that the economic orthodoxy built up since the 1980s is one based on free market ideology, of which deregulation was a fundamental component.
First it was the political right that believed in it, then powerful forces on what was previously the left, and in the UK it is Liberals who have joined the concensus. Indeed many now argue that Liberalism is now defined by this free market ideology.
Now of course this ideology faces a major challenge. It seems so obvious now. Economic growth has been strong because of the bubble in the housing market. Housing in itself does not generate wealth, so it was bound to be unsustainable.
So now we are in a downturn, which we are assured by free market ideologues will not last long.
However if we have learnt the lessons from the housing bubble and we decide to regulate the market to stop this from happening again, then where is growth going to come from in the future?
Vince Cable is absolutely right to point out that he had been warning about debt for years. Some of his colleagues appeared not to take heed however. At a fringe meeting at Lib Dem conference Jeremy Browne argued, incredibly, that as he believes in markets then he was sceptical about nationalising any banks, even in the emergencies that we have today. He also said that although he bought a house with a very expensive mortgage, he was not worried about a slump in the housing market.
However it is not just debt, it is lack of regulation that causes debt. What has Vince said about that prior to 2008? If someone interviewed me and asked me this question, I for one would have a Sarah Palin moment.
What I do recall is a fringe meeting a couple of years ago at a Lib Dem conference where Ed Davey told us how he was going to deregulate further in the financial markets. He seemed very proud of this policy at the time. Personally I was horrified.
Of course I am sure it is possible to look back at the archives and find in the small print suggestions that might imply greater regulation. Given that Vince correctly identified the level of debt as a major flaw of New labour's economic record, I am sure Vince had a good set of policies to deal with it.
However greater regulation was never the headline solution as it has suddenly become, and the free market ideology had been encouraged within the Liberal Democrats, gaining a momentum where there is now a significant fundamentalist fringe within the party.
That fringe simply has no answers to the economic problems we are facing today. No one knows what the solution is to the economic downturn we are now heading into, but even George Bush is being forced to accept that "more of the same" free market ideology is the last thing we need to turn things round.
However Keynes once warned;
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The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.
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That is the problem the Liberal Democrats now face. Can they adjust their thinking quickly enough to account for the new realities?
These 2 links are the best articles I have read so far on the crises we now face;

http://www.guardian.co.uk/commentisfree/2008/sep/28/usforeignpolicy.useconomicgrowth

http://www.guardian.co.uk/commentisfree/2008/sep/30/marketturmoil.wallstreet