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Nationalise banks now!

Back from my extended blogging xmas break (just in case anyone checked recently).

I have said for a number of weeks that HMG should free up the UK credit markets by making its implicit guarantee to ensure the solvency of the UK banking system explicit by nationalising it outright. I won't attempt to present a coherent and forceful argument based on my half-completed graduate diploma in economics - so i suggest you read this article by the Maverecon Willem Buiter, who presents a compelling and just-about accessible case.

The thing that frustrates me on this is that so much of the opposition to nationalisation has been built on the fact that all modern UK politicians are ideologically allergic to the concept, rather than a pragmatic analysis of the necessary steps to get cash flowing. Everyone in this debate has lacked a big idea to get the banks lending to each-other and the broader economy, so it would seem that seizing control of the banks temporarily is the only option left if we are to limit in any significant way the credit-crunch fallout.

California looks like it could rectify the tyrany of the homophobic majority; we should all learn a lesson on the shortcomings of direct democracy

The Californian Attorney General has come out urging a repeal of proposition 8 banning same sex marriage that was passed by  a 52% majority during the federal elections in November.  He has come to the conclusion that the proposition violates the state's constitution, which under article 1 guarantees individual liberty including the right to marry.  

This case shows how incredibly dangerous referenda can be given the lack of information at the disposal of voters, variability in turn-out, a lack of  consideration of the full calculus and utility of policy across the full breadth of government, and the majority's (or even worse vocal and active minority's) propensity to disregard the rights of minorities.

In our country the recent referendum in Manchester that saw the congestion charge proposal emphatically rejected showed how policies that require some at first difficult behaviour change but will result in positive long-term results (in this case upholding the public's rights to clean, particulate free city centres) can be blocked by a vocal, energised minority. 

There is a reason that western democracies (barring the Swiss) are representative rather than direct.  Imagine if every government revenue raising proposal was put to a vote, what state would the government finances be in. 

Climate change policy is similarly unsuited to public decision making; witness the nimby caused delays to wind farm planning applications. If a government thinks a policy or measure is in our long-term interest it should implement it, if we think on balance it has got the majority of these decisions wrong we can vote it out at the next election.

Greek riots, the start of something big?

I think the riots in Greece could be hugely significant.  They may represent something of a tipping point. As is Italy, Greece is a country plagued with corruption (lying to get in to the Euro for example, and repeated fraud of the Common Agricultural Policy), a sclerotic innefficient economy, rubbish governmental insitutions, and a reasonably well educated well travelled and frustrated younger generation.

The EU has been very complacent about these internal contradications across the"Union built of democracies".. now I think the trouble stored up could explode.

We need to wake up to reality to ensure that Copenhagen is not Doha MK II

Just wrote the below, not sure what I'm going to do with it.  Probably needs a redraft and then I may use it at work if i can,. but feel free to give me your thoughts.

The globe is faced with great change and profound challenges.  Dealing with the challenges, such as climate change, needs us to wake up to the changes that have irrevocably changed the global political landscape.

Failure to recognise the realities of a new emerging global settlement was behind the collapse in July this year of the interminable Doha Round of world trade talks.   It is vital that a lesson is learnt from these talks and the new reality of the global balance of power is priced into our approach to the global climate change talks, currently sitting in Poznan, Poland but which will truly only get going in the new year and culminate in Copenhagen in December 2009.

As in the climate change talks, the Doha Round saw the EU play the role of the good global citizen, coming in with what was, given the shackles applied by the French, a generous offer on agricultural market access.  Also like in the climate change negotiations the US came to the party late, though it was more for reasons of a President seeking to notch a success on a legacy dominated by failure, rather than any policy stance built conviction.  Also like the climate change talks India and China (along with Brazil) were central to achieving a positive outcome.  However, while ostensibly cognisant of this reality, the developed country alliance arrogantly assumed that when push came to shove that the emerging powers would play ball as they had in the previous set of WTO talks concluded in 1992 -  the Uruguay Round where strides were made in opening up markets in industrial goods and services where developed countries were strong, while agricultural markets where they were relatively weak were left closed by tariffs and distorted by subsidies.

Having visited the WTO in the months running up to the July Ministerial the course of the negotiations was eminently predictable.  The Indian ambassador told us that the talks were “political”; the Indians couldn’t be seen to get a worse result than that gained by the US. Similarly, we were reminded by the Chinese ambassador that as their economy was set to grow at over 10% for the foreseeable future they didn’t need a deal and that they wouldn’t be dictated to by the US political timetable.  In the end, against a backdrop of looming Indian elections (to be held by April 2009) and a poor US offer to limit their agricultural subsidies, the talks collapsed - ostensibly, because India failed to gain concessions to protect its farmers.

The truth was that the US and EU wanted and needed a deal more than the Indians and Chinese. The Indians, finding themselves in a position where the concessions were theirs to give were holding out for bigger rewards. 

The trade and climate change negotiations are seen not as a change in tariff levels or caps on emissions levels, but as a chance to over-turn five centuries of Western pre-eminence, banish memories of subordination during colonial years, and move beyond underwhelming years like those of the Hindu rate of economic growth in India.  And of course aligned with this dynamic in the context of the climate change negotiations is a sense of injustice felt because some are asking them to put the brakes on as their industrial revolution is in full flow when we could pollute with gay abandon during ours.

Of course the truth is that the Chinese and Indians fully understand that they will be damaged severely by climate change through Himalayan glacial melt, sea-level rise, floods in some regions and droughts in others, and are beginning to address their own emissions.  They also know that these policies will need to be supported by concerted global action to have an impact. This will not however prevent them from exploiting the West’s position as demandeur, to coin a trade negotiationism, to secure themselves a place at the centre of global power brokerage.

In order for climate-change negotiations to succeed the broader political realities must be addressed. So along with a comprehensive financial and capacity building package for India, China and developing countries more broadly, there must be a package of measures which say; “you’ve arrived, the world’s changed and you’re now at the top-table”.  We could start by reinventing the G8 by creating a body which doesn’t have a number as large as 20 or a plus in the title, and how about placing India and Brazil on the UN Security Council, and heaven forbid locating a major international institution in an emerging country.

The returns on this more inclusive approach will not just come in the form of lines in a sub-section of a treaty but will also set up an essential relationship to exchange expertise and to buy and sell the low-carbon innovations of the future – who do you think is going to be best placed to mass-produce wind turbine blades and photovoltaic panels? Or indeed, who is producing the lions share of the world’s science and technology graduates?

The West needs to realise that the post world war II settlement is now irrelevant and has been for some time.  We need to move on and for the sake of our planet the faster the better.

Are SWFs ready to pounce? perhaps we should get ready

Plenty more gloom in today regarding the economy. Woolies and MFI have folded (David Mitchell in Sunday's Observer had it about right I'd say), the US Fed have found silly billions to bail out Citigroup, but the article that caught my eye concerned sovereign wealth funds and was in today's Times:

Speaking at the Dubai International Financial Centre conference yesterday, Mr al-Ansari (CEO of the Dubai Investment Corp) said that falling stock prices in the West could provide some Gulf countries with an opportunity to develop their own economies. Investing in technology and manufacturing companies would allow these states to encourage operations to be moved to the Gulf, which would provide jobs for the region's rapidly growing population. “To become the largest shareholders in the ten largest companies in the world would cost about $50 billion at present and that's actually not a lot of money,” he said. “Imagine the power and influence this region would have if we were the shareholders in the ten, twenty, thirty largest companies in the world.”

Our government has long touted the UK's credentials as being "open for business" as far as foreign investors are concerned. We have scoffed at those protectionist Yanks who have their CIFIUS committee that can vetoe foreign investment as it did when Dubai Ports were set to assume control of US ports.   

The UK Enterprise Act of 2002 allows government to intervene where there is a threat to the national public interest posed by a foreign acquisition of a UK entity, so far these powers have been used incredibly sparingly, and indeed while powerful, they are themselves checked by the EC Merger Regulation (article 21 if I remember rightly) which is itself subject to broader EU jurisprudence surrounding free movement of capital.  Now, if a middle eastern, or Chinese government for the matter was to mount a hostile takeover of GSK, AstraZeneca, Rolls-Royce, or any other of our major "value-added" companies, what would we do?  What could we do? would the reputational damage to the UK as an investment environment outweigh the downside of all that IP being ripped out?  It's bloody hard to quantify, but someone ought to start thinking about it.

Yes we can! But through party politics?

Two nights, two very different meetings. I think that one may represent the past and the other the future, and this poses political parties, especially the Labour Party a difficult challenge.

Last night was my Constituency Labour Party General Council (or CLP GC to those of you into that type of thing). We had a speaker from the Labour party National Executive Committee (the "NEC") who referred to a desire within the party hierarchy to build a Barack Obamaesque party campaign for "change"-  an energised movement based on small donations and mass participation.  However, a glance around the room and the general nature of the conversation through the rest of the evening didn't make that possibility seem imminent or particularly likely.  If you add to that our guest's elucidation of the byzantine structures of the Labour Party, and the rather uninspiring make-up of both front benches in the House of Commons, and one is rather likely to conclude that "no we can't".

Tonight, I was invited to a networking event for social entrepreneurs at the Aldridge Foundation. What the Aldridge Foundation are doing in their academy schools which have an entrepreneurship specialism and through broader mentoring and social entrepreneurship is impressive, but there were also other very impressive "change makers" in the room.  Notably Mark Johnson, a reformed convict that now searches out those most excluded from society such as prisoners and young people not in education and empowers them through mentoring and dialogue - Mark also writes for the Guardian and as you'll see from his website he has written a best-selling memoir.  Other highlights included a for profit leadership training provider, Future Foundations, that is running summer schools for potential future leaders from excluded sections of society, and a programme, Action Reaction seeking to broaden the aspirational horizons of young people around London.  Oh, and I should also mention Bio Group, doing some great stuff on the sustainable energy front.

This seemed to be a bunch of individuals thinking "yes we can" and acting accordingly.  As someone who dabbles with charidy work from time to time, I can actually say this could have potentially been a life altering event - yes life altering.  What was on the face of it a relatively dry and pretty sparsely attended "networking event" actually for me proved to be a great lesson in what those of us who give a shit can do if we put our minds to it.  

For the political amongst us this poses a very tricky question. At my party meeting on Wednesday the five young people in the room, including me, were there, yes because they care, but also because they have political ambitions. The truth is that other young people who want to make a difference seek to do it in other, more direct ways. 

How to deal with this.  One answer could be that it is no longer good enough to go around handing out leaflets telling people what you stand for, or what you are going to do, rather you the local party could undertake local projects be they social or environmental to make a difference and in doing so conveying a clearer message and recruiting more of those that just give a shit as opposed to seeking political office and who do not want to sit through interminable meetings approving minutes/accounts.  Another could be that social entrepreneurs, ngos and campaign groups are the future, perhaps we have to settle for a looser affiliation of all these groups to a new type of left wing politics, with a less constrained, insider favouring political party system, aided by a system of primary elections for candidates and more open and interactive debate.

However, while party politics will doubtless constantly try and reinvent itself over the next decade, social entrepreneurs will continue to play an ever more transformative role in our communities.  After tonight, I'm convinced.