Ethnic Conflicts (review)

Tatu Vanhanen

ISBN 978-0-9573913-1-4Ulster Institute for Public ResearchUK £23 hard cover, £18 paperback

By Robert Henderson

This is not a book designed for easy bedtime reading. It is an academic’s work  written first and foremost for academics with a fair amount of statistics in it.   Having said that, if a prospective reader managed to get to grips with, say, The Bell Curve they should be able to absorb the important messages of Prof Vanhanen’s book and understand how he arrives at them.   It is worth making the effort because  he deals with the most fundamental sociological aspect of being human: how do we manage the challenges produced by heterogeneous societies?

The Profesor’s   first  aim was  to measure the relationship  between the ethnic heterogeneity of a society and ethnic conflict..  There are  considerable difficulties in doing this not least  because what may be thought of as ethnic conflict by one person may be seem  by another as conflict based on something else such as class.  For example, an ethnic group which is black and poor and rebels against the better off  in society who are white (a not uncommon state in Latin America) could be represented as being either ethnically motivated or class motivated.

 There is also the  general problem of what constitutes ethnicity.  Prof Vanhanen’s  definition is  very broad and includes racial type, nation, tribe,  language and  religion. While these are undoubtedly all distinctions which cause people to exhibit what might be loosely called tribal behaviour, its breadth  does raise the question of whether   racial type, nation, tribe,  language and  religion are really comparable in terms of how people respond to those inside and outside the group .  For example, it may be that where the ethnic division is one of religion between those of the same racial type and general culture representative government will mitigate ethnic tensions,  while if the division is racial,  representative government may do nothing to stop discord.

There is a further  cause for confusion in that more than one of Prof Vanhanen’s  ethnic  criteria is frequently shared by an ethnic group or even more confusingly by two conflicting ethnic groups.  Muslims are  a good example. In theory there is meant to be no distinctions made between Muslims on the grounds of sectarian allegiance, racial type, tribe  or  nationality. In the real world  there are marked divisions within  the theology  of Islam and tribal and national allegiances which often override the supposed unity of Muslims.  The danger with the very broad definition the Professor uses  is that the process of defining  reduces the world to so many different ethnicities that it becomes difficult to distinguish between ethnic conflict and  non-ethnic violence which he ascribes to the  “endless struggle for permanently scarce resources”.

Having made those qualifications, of which Prof Vanhanen is  well  aware, the project does not utterly founder on them. It is a mistake to imagine that nothing valuable can be gleaned from using  criteria  which have a fuzziness about them.   That is especially so if the sample is large enough because a large sample in social science projects digests anomalies.  As there are few societies now which do not have some basis for significant ethnic conflict the professor is able to cast his net very widely amongst 176 countries, around nine tenths of those currently existing.

But the Professor  wants not only to test whether ethnic heterogeneity  is correlated with ethnic conflict;  he also wishes to see if  ethnic nepotism  is a driver of ethnic conflict: “My argument is that ethnic cleavages divide the population into groups  that are, to some extent,  genetically different.”  (p7).  The concept of ethnic nepotism which  is based on the idea that it is an extension of family nepotism, that those belong to the same ethnic group favour those within  the group  over outsiders. (It is important to bear in mind that  Prof Vanhanen does not claim that ethnic nepotism is the cause of all group based   conflict, merely that it explains why  conflict in many societies is so often based on ethnic divisions).

To test this hypothesis   Prof Vanhanen  devised his own scales of ethnic heterogeneity and ethnic conflict and compares them with non-ethnic measures devised by others  such as the Human Development Index and The Index of Democratisation”.  He found only weak correlations between the non-ethnic measures but  a strong correlation between ethnic heterogeneity and ethnic conflict (p214). In other words his research suggests that  the greater the ethnic diversity in a society the greater the ethnic strife, although there are significant variations between the various traits which he includes in his definition of ethnicity.

I have something of a problem with the concept of ethnic nepotism in the context of  Prof Vanhanen’s definition of ethnicity because it includes non-genetic differences such as language and  religion.  It is true that those who are racially similar will be genetically closer than those who are racially different.  It is also true that those who form a large tribe or a nation in the cultural sense will in practice be genetically closer than those outside the group.   The possession of a particular language  by a group  is also a strong pointer  to close genetic  links unless there is some obvious difference such as race or the language spoken not as a native would speak it.   Religion is more problematic because  that is something that can be  simply acquired. If a man says he is a Catholic or Muslim it does not  necessarily say anything about his genetic connection with other Catholics or Muslims. Nonetheless,  if the Catholic or Muslim comes from the same country or even supranational  area, there is a decent chance that he will have a closer  genetic  relationship with other Catholics and Muslims from the area than would be expected purely from chance.

The difficulty is that although a significant genetic linkage will commonly exist because of the way human beings live in groups,  whether that is a small band or a modern nation,  it does not automatically follow that the genetic similarity is what causes the ethnic nepotism. It could be that the simple fact of growing  up with people creates a tribal feeling rather than genetic closeness.  Moreover, what are we to make of the “imagined community” of any group where the numbers are too great to allow personal knowledge of all those in the group?  I do not doubt that differences of religion, nation, tribe, language  and  race do act as triggers for the separation of groups in competing entities, but  with the exception of race I cannot see that  genetic  influence is proven to be other than accidental.  Where there are divisions in a society based on clear racial lines that is a different matter because there is self-evidently a genetic cause for the preference for one class of person in a society over another class of person.

The book ignores what I would describe as the most basic ethnic conflict, that is,  the behaviour of individuals to disadvantage someone of a different ethnicity without there being any deliberate group decision or action. A good example is the grossly disproportionate number of  black rapes and murders of whites in the USA.   That situation is clearly driven by racial feelings with blacks either harbouring a general resentment of whites or simply seeing whites as outside their group and thus not of consequence. However, the latter explanation does not hold much water because blacks do not attack Asians  with the same frequency.

Are there remedies for ethnic strife? Prof Vanhanen suggests four: biological mixing, institutional reforms, democratic compromises and partition.  Of these only partition even in theory offers a complete  solution to ethnic strife with the prospect of a completely ethnically homogeneous society or at least one in which the minorities are so small as to barely matter.  The problem with partition is that it is probably never possible to simply divide a territory because mixed populations are generally not neatly parcelled up in convenient parts  of the territory.

By institutional reforms he means most particularly the legal and democratic structures which ostensibly protect the interests of each ethnic group and by democratic compromises the satisfying of each ethnic group’s  aspirations to at least a point where violence is avoided.  The Professor finds   some evidence that democratic institutions  can reduce  the amount of ethnic violence, although he allows that “the willingness of competing ethnic groups to solve their interest conflicts by democratic compromises and power-sharing is limited” (p227).

The fourth of his remedies – biological mixing – is the one I have the most difficulty with.  He  claims (p222)  that  biological mixing would reduce ethnic violence  because it would “undermine the  basis and importance of ethnic nepotism”.     He further  observes “ My argument is that the relatively low level of ethnic violence in most Latin American countries is causally related to the fact that racially mixed people constitute a significant part of the population in these countries”. (P221).

I think most people would be surprised  at his judgement that there is a “relatively low level of ethnic violence in Latin American countries”.  I am very dubious indeed about the idea that many of the conflicts which arise in the region are often not ethnic in origin using the Professor’s own definitions. To take just one example:  amongst those with black ancestry, whether that is wholly black or black mixed with other races especially the white, there is in Latin America and Caribbean a customary  hierarchy of  colour with the lightest  skin signifying   standing at the top of the social status ladder and the darkest at the bottom.  Look at Brazil as an example. This country  is beloved by white liberals as a prime example of  a colour-blind country.  The reality is that the reins of power and privilege are still held overwhelmingly by whites. The great Brazilian footballer Pele complained publicly about this some years ago.

The likely outcome of biological mixing on any scale would be for those of mixed parentage to find their natural group amongst those from who most resemble themselves.  This is actually what happens in practice. In Britain the children of one black and one white parent almost invariably represent themselves as black.  It would at best simply change the balance of races within a society and at worst add to ethnic conflict with  those of mixed parentage added to the groups competing within the same territory.

Professor Vanhanen’s overall conclusion is a gloomy one: “The central message of this study is that ethnic conflict and violence, empowered by ethnic nepotism and the inevitable struggle for scarce resources, will not disappear from the world. It is more probable that the incidence of ethnic violence will increase in the more and more crowded world” (p230).

The moral of this book is beautifully simple: ethnically/racially heterogeneous societies are a recipe for discord and violence.   That should give the propagandists of mass immigration pause for thought.

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Published orignially in the Quarterly Review http://www.quarterly-review.org/?p=1610

NB The Quarterly Review is now an online journal only. RH

Margaret Thatcher and the cult of personality

Robert Henderson

Two Cults

Margaret Thatcher was the subject of a cult of personality. This was not the result of calculated  propaganda, but simply the creation of her extraordinary personality. Because the cult of personality developed not in a totalitarian state but a country where public opposition was possible, there were two cults of personality attached to her in a relationship which mimicked the matter/antimatter duality. These were the Thatcherite religious believers fulfilling the role of matter and the Thatcher-hating Left  acting as the antimatter.

Both the matter and the antimatter Thatcher cults were  potent.  The religious believers  bowed down before the great god MARKET (and Thatcher was his prophet) and, when things  went wrong,  did what all religious believers do until they lose their faith, denied reality by simply pretending something had not happened or by giving a calamity some  absurd spin to ”prove” the god had not failed.

For the Thatcher-hating Left she was the personification of the Devil and consequently credited with all manner of evil,  but, as is the way with personifications of the Devil, never portrayed as anything but powerful, a being possessed of a political juju (doubtless ensconced in her handbag) which could wreak any degree of havoc  with all that the Left held dear is if she so chose.   Like all those who believe in evil spirits the Thatcher-hating Left ascribed every act of ill fortune to her.

The attitude of both bands of cult followers was essentially superstitious, attributing powers to the woman which she did not, and often could not,  have.  The religious Thatcherites imagined she could  speak the spells which would miraculously convert Britain from a  country making silly old fashioned things such as steel, ships and cars and mining coal to a country stuffed to the gunnels with entrepreneurs creating new non-unionised service industries; the Left saw her as a witch practising black magic to contaminate and transmogrify the world they knew.

Because the Thatcherite religious believers  and her leftist haters  could not and still cannot see past the woman’s   gigantic political personality,  they made and continue to make the same mistake, namely, seeing the two cult figures as the reality while ignoring  her actual policies and their outcomes.

The reality of Thatcher

The reality of Thatcher is that objectively she achieved little if any of her wishes. It is a bitter irony for the woman (and Thatcherites generally)  that her policies were of a nature which  undermined the  ends  she espoused.  Perhaps the prime example is Thatcher’s  avowed wish to see a strong and wealthy Britain  whilst creating through her  commitment to laissez faire economics the very circumstances that would weaken the country. Under her economic regimen and its lingering aftermath ever since Britain  has become ever less self-sufficient in strategically important economic activity such as the production of  food and energy  and vast swathes of British business were  either bought up by foreigners or ceased to operate from Britain because of offshoring and the absence of government action to protect our own economy.   She simply did not understand that you could not have laissez  faire in both the domestic and international economic sphere and have a strong nation state.   Had Thatcher  known any economic history she would have realised that, but even without such knowledge  common prudence should have told her that a country which is dependent on others for necessary goods and services is a weak country.  Moreover, one of her claimed tutelary heroes Adam Smith readily understood there are things which are either strategically important such as armaments or social goods which are  never going to be supplied universally by private enterprise such as roads.  Thatcher never gave any indication of realising that Smith was not the unrelenting free marketer of her imagination.

Thatcher’s  failures in making policy to  achieve her ends were legion. She  destroyed much of British heavy industry in the belief that those made unemployed would rapidly be re-employed in private sector jobs. The new jobs did not materialise and she was reduced to presiding over massive and long lasting unemployment  which she funded with North Sea oil and gas tax revenue and the receipts from privatisation, whilst fiddling the unemployment figures shamelessly. She sold off state owned  services  (which belonged to the community as a whole not to the government)  in the belief that service would  be improved . It was  not. Instead vital services such as the railways and the provision of energy and water became ever more expensive whilst providing poorer service and less employment. She introduced so-called private business methods into the NHS and higher education in the belief that they would become more efficient. The result was massive increases in  bureaucracy and an ever climbing  cost of  both the  NHS and higher education and a substitution of the pursuit of  money for the public service ethos because money was attached to individual patients and students. She introduced the Community Charge or “Poll Tax” in the belief that it would be fairer than the old domestic rates. The result was widespread unfairness because it took no account of an individual’s means  and  provoked the nearest thing to a national movement dedicated to the non-payment of taxes known in modern times.  She raged against  EU interference in British affairs but signed up Britain to the Single European Act (SEA)  in the belief that it would create a genuine single market within the EEC.  It  did not create such a market and merely presented the EEC with an open goal for ever more audacious sovereignty grabs.  A supposed opponent of further mass immigration, her signing of the SEA also opened the door to free movement within the EU, a situation worsened by her strategy of dramatically widening the EEC.  She signed Britain up to the  She embraced “Care in the Community” for the mentally ill or disabled on the grounds that it was more humane than keeping  such people in long-stay institutions. The result was thousands of people left to largely fend for themselves in the outside world who were quite incapable of doing so. She sold off great swathes of social housing (which belonged to the community as a whole not to government) to tenants in the belief that this would result in a “property owning democracy” whilst more or less ending the building of new  social housing.  The eventual result was the growing housing emergency we have today. She instigated the disastrous “light touch”  regulation of the financial services  industry by abolishing credit controls and  failing to meaningfully regulate the  industry meaningfully after “Big Bang”  in 1986  which  effectively de-regulated the London Stock Exchange to bring in a brave new world of free trading (http://www.telegraph.co.uk/finance/financialcrisis/8850654/Was-the-Big-Bang-good-for-the-City-of-London-and-Britain.html)  with the dire results with which we are now living.

Even in the few areas where she was ultimately successful such as the Falkland’s War she was at best negligent in ignoring warnings from the Foreign Office of a growing threat to the Falklands  in the months leading up to the invasion and even after the expeditionary force had been dispatched  she agreed to a US organised plan which would have not offered the Islanders either self determination of or any meaningful security (http://www.telegraph.co.uk/news/politics/margaret-thatcher/10008116/Margaret-Thatcher-how-she-took-on-the-men-and-won.html).

There were also acts of omission and collusion with policies with which she supposedly fundamentally  disagreed.  Most importantly, Thatcher failed utterly to carry her strong views against further mass immigration into her period in office. Not only that but, as already mentioned,  she made things much worse on that front by signing up to the Single European Act. She agreed to the institutionalisation of political correctness in public life, especially in the Civil Service, schools and universities. In addition, she allowed the “progressive” educational establishment to destroy a first rate  school examination system  by swopping the certificate of Secondary Education (CSE) and O(rdinary) Levels  for the dangerous absurdity of the General Certificate of Education (GCSE), an exam   supposedly for all 16 year olds but which was in reality two exams masquerading as one.  Despite the fact that Tory support rested heavily on the countryside  she allowed the de-regulation of rural bus services to occur  which reduced them so  severely that to live in countryside meant owning and driving a vehicle or at least having access to someone who did.  To make matter worse, this was done in tandem with a wilful neglect of the then nationalised railways.

The protests after her death were unsurprising

Just based on her economic disasters the uproar surrounding her death is unsurprising.  In the space of a few years she raised the unemployment  pay claimant count from 1.4 million when she took office in 1979 to 3.2 million by 1986 (http://www.economicshelp.org/macroeconomics/unemployment/measuring_unemployment.html) That bald figure is startling enough but the reality  is ten times worse. She  must have known her policies would result in mass unemployment,  at least in the short term, when she removed the financial support of taxpayers from nationalised industries or sold them off in the belief that private business would be able to do the job more efficiently with  much smaller workforces.   Further, as these industries were concentrated in areas where they were by far the dominant employer she should  have realised that structural unemployment would be created  in many parts of the country.  To imagine, as she did, that new jobs would rapidly sprout in the areas showed  a  shocking lack of understanding of economic history which has no example of such a thing happening on the scale required in 1980s Britain.

What is certain is the fact that she had no doubt about the destructive possibilities of laissez faire economics, viz:

“Adam Smith’s ‘invisible hand’ is not above sudden, disturbing, movements. Since its inception, capitalism has known slumps and recessions, bubble and froth; no one has yet dis-invented the business cycle, and probably no one will; and what Schumpeter famously called the ‘gales of creative destruction’ still roar mightily from time to time. To lament these things is ultimately to lament the bracing blast of freedom itself.” — Margaret Thatcher, Statecraft P. 462

A politician of conviction?

The idea that merely having convictions is praiseworthy is a rum one. Hitler, Stalin and Mao had convictions. But even  if the  quality of a person’s convictions is ignored, this is one of the most mystifying of myths attached to Thatcher.  The reality was she frequently changed her position on the most important issues she faced or adopted methods which went against her avowed policies when she had created a mess, most notably with the massive rise in unemployment resulting from her slash and burn approach to the British economy which greatly  increased the benefits bill for many years and left people unemployed for years, in many cases for decades.

The most significant publicly  admitted changes of policy  were on immigration, the Europe and global warming.  Before the 1979 election she had spoken of the need to control immigration  because the country was in danger of being “swamped”:

‘If we went on as we are then by the end of the century there would be four million people of the new Commonwealth or Pakistan here. Now, that is an awful lot and I think it means that people are really rather afraid that this country might be rather swamped by people with a different culture.’

She went on to say, ‘The British character has done so much for democracy, for law and done so much throughout the world that if there is any fear that it might be swamped people are going to react and be rather hostile to those coming in.’

 ‘If you want good race relations, you have got to allay peoples’ fears on numbers. […] We do have to hold out the clear prospect of an end to immigration…’ (http://www.runnymedetrust.org/histories/race-equality/59/margaret-thatcher-claims-britons-fear-being-swamped.html)

Once in office she did nothing despite still feeling strongly about the subject in private  (http://www.telegraph.co.uk/news/politics/margaret-thatcher/6906503/Margaret-Thatcher-complained-about-Asian-immigration-to-Britain.html).

On Europe she went through the following metamorphosis:

–          1975 she campaigned and voted for Britain to remain within the European Economic Community (EEC – the EU was only formed  by  the Maastricht Treaty in 1993).

–          By 1980 she was convinced that the EEC was not  acting in Britain interests.

–          By 1986 she had  signed the Single European Act giving the EEC immense powers to interfere  with Britain’s sovereignty.

–          In the late 1980s she adopted the policy of enlarging the EEC which meant that a vast new swathe of workers from poor countries would be allowed free movement within the  EEC.  The effects of this also allowed the federalists to press for things such as Qualified Majority Voting on the grounds that the EEC/EU had become too unwieldy to operate under the original  rules and to generally press forward with the creation of a United States of Europe.

–          In 1990  she took the UK into the Exchange Rate Mechanism (ERM)  despite being opposed to a single currency to which the ERM was a stepping stone with the pound effectively shadowing the Deutschmark.

The idea that Thatcher only realised what the EEC was after taking office in 1979 is simple nonsense. Thatcher’s speech to the  Conservative Group for Europe at the start of the Wilson referendum on the EEC clearly shows her viewing the EEC as far more than a  simple free trading area, viz:

That vision of Europe took a leap into reality on the 1st of January 1972 when, [ Edward Heath] Mr. Chairman, due to your endeavours, enthusiasm and dedication Britain joined the European Community.

 * The Community gives us peace and security in a free society, a peace and security denied to the past two generations.

 * The Community gives us access to secure sources of food supplies. This is vital to us, a country which has to import half of what we need.

* The Community does more trade and gives more aid than any group in the world.

* The Community gives us the opportunity to represent the Commonwealth in Europe. The Commonwealth want us to stay in and has said so. The Community wants us.

 Conservatives must give a clear lead and play a vigorous part in the campaign to keep Britain in Europe to honour the treaties which you, sir, signed in Britain’s name.

 We must do this, even though we dislike referenda. We must support the [ Harold Wilson] Prime Minister in this, even though we fight the Government on other issues.

 We must play our full part in ensuring that Conservative supporters say “Yes to Europe”. (http://www.margaretthatcher.org/document/102675).

In any case, the Treaty of Rome left no room to believe it was merely a free trade organisation.  No one could read that and be in any doubt  that the intention was to create a United State of Europe. Thatcher, the supposed obsessive  who was a stickler  mastering a subject,   should have read it before the referendum.

As for global warming, she started the ball rolling whilst in office and then reversed her position in her autobiography published in 2003. Here she is speaking to the  UN general assembly, in November 1989:

“What we are now doing to the world … is new in the experience of the Earth. It is mankind and his activities that are changing the environment of our planet in damaging and dangerous ways. The result is that change in future is likely to be more fundamental and more widespread than anything we have known hitherto. Change to the sea around us, change to the atmosphere above, leading in turn to change in the world’s climate, which could alter the way we live in the most fundamental way of all.

“The environmental challenge that confronts the whole world demands an equivalent response from the whole world. Every country will be affected and no one can opt out. Those countries who are industrialised must contribute more to help those who are not.” (http://www.guardian.co.uk/environment/blog/2013/apr/09/margaret-thatcher-green-hero)

By  the time she had published her political work Statecraft in 2003 she was thinking along these lines:

“The doomsters’ favourite subject today is climate change. This has a number of attractions for them. First, the science is extremely obscure so they cannot easily be proved wrong. Second, we all have ideas about the weather: traditionally, the English on first acquaintance talk of little else.

“Third, since clearly no plan to alter climate could be considered on anything but a global scale, it provides a marvellous excuse for worldwide, supra-national socialism. All this suggests a degree of calculation. Yet perhaps that is to miss half the point. Rather, as it was said of Hamlet that there was method in his madness, so one feels that in the case of some of the gloomier alarmists there is a large amount of madness in their method.” (http://www.masterresource.org/2013/04/thatcher-alarmist-to-skeptic/).

There were other issues where her public position was at odds with her actions, for example, the troubles in Northern Ireland and the rule of law. Thatcher claimed that there would never be a surrender to  IRA terrorism.  Yet after she narrowly escaped death in the Brighton Grand Hotel bombing in 1984 (12 October)  the Anglo-Irish agreement was signed little over a year later in November 1985 giving the Republic of Ireland government  a say in what happened in Northern Ireland and committing the British Government to accepting the principle of a united Ireland if a majority were in favour. (http://news.bbc.co.uk/onthisday/hi/dates/stories/november/15/newsid_2539000/2539849.stm). There was no obvious reason for such a change of heart beyond the fear generated in Thatcher by the bombing of the Grand Hotel.

As for the rule of law, far from respecting it as she claimed, she laid the basis for the ever increasing authoritarianism of the British state by permitting the police to act unlawfully during the miners’ strike by stopping miners and their supporters from travelling across the country and turning a blind eye to any police excesses as they clashed with the miners and their supporters.

A politician of conviction? Only if you define  someone as such who runs from one position to another while vigorously embracing each  successive position regardless of its  contradiction of a previous  advocated policy or set of ideas.

Nor was she someone who would take responsibility for her actions. When she found her policies were a disaster she either claimed she had been badly advised or cheated (for example, the Single Market, global warming) or attempted to ignore the mess she had created  (for example, enduring mass employment and ) by misrepresenting it, or in the case of unemployment, using North Sea oil  tax revenues,  the privatisation receipts and blatant manipulation of the unemployment statistics to paper over the unemployment cracks.

Why did Thatcher get things so horribly wrong? 

Why did Thatcher get things so horribly wrong?  Her behaviour  strongly suggested that she was seriously lacking  psychological and sociological insight. This meant she constantly made horrendous mistakes such as trusting the EU over the single market and imagining in truly infantile fashion that millions of jobs shed from heavy industry and coal mining would be rapidly replaced by “modern” jobs in the service and light industry sectors.  Her record in choosing people to support or employ was also dismal.

Far from being a free thinker her cast of mind  made her the ready captive of an ideology:

“…as Leader of the Opposition MT once cut short a presentation by a leftish member of the Conservative Research Department by fetching out a copy of The Constitution of Liberty from her bag and slamming it down on the table, declaring “this is what we believe”. (http://www.margaretthatcher.org/archive/Hayek.asp).

It is dangerous to trust anyone who is  susceptible to ideological capture for the simple reason that all ideologies, whether sacred or profane, are inadequate descriptions of and guides to reality.    This means that ideologues constantly have to try to fit reality within the ideology rather than having  reality driving their choices.  Those which include economics are particularly dangerous because their reach is so vast.

Ideologies are the prime example of Richard Dawkins’ memes, mental viruses which capture the individual and direct their thought and behaviour.  Those who are captured by them by them give up their mental autonomy.  That speaks either of a character trait such as that of requiring a source of authority for choices or a  weakness of intellect which seeks ideological  algorithms  developed by others to answer political  questions because the person’s capacity to answer the questions by rational pragmatic examination based on their own knowledge and intelligence  is inadequate.

How good was  Thatcher’s mind? She  is frequently  represented by her adherents as ferociously intelligent.  This view  will not stand up to examination.  She read chemistry at Oxford but only achieved a second class honours degree (http://womenshistory.about.com/od/thatchermargaret/a/Margaret-Thatcher.htm).  Oxford at the time did not divide the second class degree into  upper and lower second classes  and had a fourth class honours division instead.  The old Oxford second  is generally taken to be the rough equivalent of an upper second.  That raises questions over her intellect.  Chemistry at degree level in the 1940s had not become heavily mathematized  as it now is.  Diligence would get a student a long way. This   quality Thatcher  reputedly  had in spades. If she did, the fact that she only took a second suggests that she was not very intellectually gifted. That is particularly the case when it is remembered that she went up to Oxford during wartime when competition for places was severely reduced because so many of the potential male students went into the forces rather than to university. A beta plus mind at best.

What people probably mistook for intelligence was her avid seeking and retention of data. But it is one thing to learn facts or arguments parrot fashion, quite another to mould them into a coherent intellectual whole.  Based on her frequent renunciation of previous positions, it is reasonable to assume that she simply did not have the intellectual wherewithal to put the data she took on board to any useful purpose. She certainly never  gave no indication that she ever saw the bigger picture.

There were also the question of her how fitted she was by experience to fill the role she played, that of the hard-core economic libertarian forever seeking ways of making people take responsibility for their lives both socially and in their work.  When I look at the present Tory front bench I have a similar feeling to that  which I experience when thinking of the Nazi leadership.  The Nazis had a rather noticeable lack of Aryan types amongst them: the present Tory front bench is remarkably short on people who have been entrepreneurs or indeed of people who have any great  experience of work outside the narrow confines of politics.

Margaret Thatcher was a forerunner  in this respect. She graduated from Oxford in 1947.  For the next four years she worked for various private companies as a research chemist. At the age of 26 she married a millionaire. He funded Thatcher’s career change from chemist to barrister. She took the bar exams in 1953 and practised (specialising in taxation) until 1961, the last two years of the period occurring after she was elected to the Commons in 1959.  After that it was all politics.

Thatcher’s experience of the real world of work is at best four years as a research chemist and eight years as a barrister.  However,  being married to a millionaire at the age of 26 rather dulls the idea of her living a normal working life.  The truth is she made her way not as a self-made woman but by the traditional route  for female advancement of marrying a rich man.

There was no need for Thatcherism

The really angering thing about Thatcher’s time in No 10 is that she could have done what she was elected to do, tame the unions, without engaging in the deliberate wholesale destruction and alienation of much of Britain’s heavy and extractive industry and the placing in private hands of the public utilities, especially those of gas, electricity and water.   This was because Thatcher had the great good fortune to arrive as Prime Minister just as North Sea oil and gas was coming on-stream in large quantities.  Those revenues alone would have provided any government with a very large safety net to finance temporary difficulties caused by serious confrontations with the larger trade unions.   She also enjoyed  the very large receipts from the big privatisations such as gas, electricity and BT.  No British government has ever had such a sustained revenue windfall as hers.

There was absolutely no economic need to destroy so much of British industry or place much of the state-owned  organisations  into private hands.  Continental countries such as Germany and Italy retained their shipbuilding; France,  Germany and Italy retained a native mass production car industry.  Germany still has a substantial coal mining industry. Privatisation proceeded at very different speeds throughout Europe.  That no other large industrialised  country followed Thatcherite policies  with anything like the speed or fervour of Britain  yet  survived and frequently out competed Britain economically  demonstrates that Thatcher’s policies were not a necessity but simply an ideological choice.

Her government could have spent the 1980s taming the unions sufficiently to prevent the excesses of the 1970s.  It is true that the very high level of unemployment  of the 1980s was an aid to this, but it was probably not the main rod which largely broke the Trade Unions’ back.  Home ownership had been rising steadily throughout the twentieth century and by the time Thatcher came to power in 1979 not far short of 60%. The highest it reached even after Right To Buy was only 69% – the idea that it was Thatcher who made it possible for the working man and woman to own their homes for the first time is another myth about her(http://www.telegraph.co.uk/finance/personalfinance/houseprices/10005586/Home-ownership-falls-for-first-time-in-a-century.html).  .

The fact that so many people were owner occupiers with mortgages  meant that they were much less willing than they had been to strike at the drop of a hat because they feared losing their home.  Even those who were not owner occupiers had much more to lose in terms of general comfort, security and prospects of greater opportunity for their children than had been the case before, say, 1939.  To take just one example, children from poor families had a greater opportunity than ever to enter  higher education. This growing reluctance to come  out whenever the union called for  strike  was why the National Union of Miners’ leader Arthur Scargill was not willing to hold a ballot of all  his members before calling a strike. He feared such a ballot would be lost.

The combination of this increasing  reluctance to strike amongst union members together with the legal restrictions on unions such as no secondary picketing and severe penalties for strikes called with a formal ballot would have been enough to end the anarchy which prevailed in the 1970s.

Apart from the social and economic upheaval of the Thatcher years, she can also be blamed for a continuation of the damage she caused both in the long term structural unemployment but also in the fact that she subverted  the Labour Party so that it adopted most of what was damaging from the Thatcher period, most particularly in the adoption of her devotion to laissez faire economics and in Labour’s all too ready acceptance of the EU  elite’s desire for comprehensive political and economic union.

The 1980s could have been so very different.  The revenue from North Sea Oil could have been put into a sovereign wealth fund which  by now would be worth hundreds of billions.  If  the Single European Act had not been signed the movement towards a  federal EU would have been halted in its tracks  (national vetoes applied to this area of decision making  at the time). If Thatcher had not argued for an ever wider EEC the poorer nations from the East would not have joined and the immigration threat they carry would not exist.  Indeed,   Britain could have left the EU entirely because the Tory Eurosceptics could have allied with Labour under Michael Foot or even Neal Kinnock. New social housing could have been built with the proceeds of Right to Buy thus obviating to a large degree the shortage of housing now.  If the nationalised industries had been sustained there would have been no serious structural unemployment.  Had proper attention been paid to the strategic importance of  essential economic areas such a food and energy self-sufficiency we should not be so dangerously reliant on foreigners for such things today.  Most importantly, if  that had been the general thrust of politics in the 1980s it is doubtful in the extreme that Blair and NuLabour would ever have arisen.

The tragedy of Margaret Thatcher is that she had a sense of patriotism and probably genuinely thought she was doing the best for her country at the time she implemented or advocated policies (her honesty when policies went wrong was  another matter).  The problem was that her judgement  and understanding was all too often hideously wrong or defective. She so often provided comforting rhetoric, especially on Europe and immigration,  but she never delivered the goods. The fact that she was such an overpowering political figure made things worse because it meant she could steamroller her cabinet on most issues at most times. It is difficult to think of another politician  in the past three centuries who wrought so much damage on Britain.

How governments created the present welfare mess

Robert Henderson

The current attempt by the British Coalition Government to radically alter the welfare state by severely restricting benefits is an exercise in gross  hypocrisy.  Why? Because the  increasingly shrill and uncouth portrayal of those in receipt of benefits as scroungers by Tories’ (and some on the left like Labour MP Frank Field) overlooks one very inconvenient fact: it is the actions of governments of all political hues over the past 35 years which created  the  welfare mess  we have today.    Between them these governments have produced a situation where millions of Britons  cannot either get a job at all  or can only obtain a  job which does not  pay enough to support them and their families  even meagrely.  This has produced the truly mad situation where substantial  benefits are out of necessity  paid to  not only the unemployed but to millions who are  in work, mainly  through tax credits and  housing benefit, because the wages on offer are too  low to allow someone to live an independent life.

Mass unemployment

How did this dire situation come about? Let us begin with the shrinkage of jobs.  Sustained large-scale unemployment did not begin with Thatcher in 1979 but she greatly increased it.  Unemployment was officially 1.4 million in 1979 and rose to over three million  (even by the dole claimant count) by the mid-1980s ( http://econ.economicshelp.org/2007/03/uk-economy-under-mrs-thatcher-1979-1984.html ).

Shocking as the 1979 figure of 1.4 million was at the time, it was primarily  the consequence of the  oil price quadrupling after in 1973, something over which the Labour governments  from 1974-79 had no control over because  North Sea oil was not yet flowing in commercial quantities.   Conversely, the remarkably rapid rise of unemployment in the 1980s was caused by the wilful economic vandalism of the Thatcher government which publicity celebrated (yes, I did say celebrated) destroying much of the UK’s heavy and extractive industries.

Privatisation

Privatisation   was the platform which placed large swathes of the public services into private hands,  including the strategically important providers of  gas, electricity, telecommunications, railways and water.  This alone removed several million well paid and secure jobs from the UK.  It also created areas with structural unemployment. Many of those made redundant in such areas never again obtained anything other than a low paid job or, worse, never obtained a new job.

The early big privatisations , such as those of gas and telecommunications,   were unashamed; other privatisations  proceeded piecemeal through the contracting out of public services to  private business.  Later  from the 1990s onwards came the Private Public Partnership and Private Finance Initiative which involved either joint financing between government and private business or private business providing the money for a project up-front with the taxpayer repaying the debt on generally extortionate terms  over periods of time as long as thirty years. As well as reducing employment and service standards  built up massive amounts of public debt whilst keeping most of it from being added to the official National Debt.  Bizarrely, the supposedly Labour governments headed by Blair and Brown  were  even more enthusiastic than the Thatcher and Major governments about using private contractors for public works. The effect of all these various forms of privatisation was to reduce manpower and conditions of work radically.

Outsourcing

Privatisation was followed and after the 1980s accompanied by outsourcing. The Thatcher  years broke the back of mainstream political resistance to laissez faire in both the domestic and foreign markets.  British companies exported jobs to the Third World incontinently squeezing the available jobs further both in terms of numbers and pay and conditions. This trait was propelled to a significant degree by the willingness of British governments of any political colour to allow British companies to be purchased by foreign countries. These had even less reason to retain jobs in Britain than British owned businesses.

The European Union

When the Single European Act  (SEA) was signed in 1986 the UK effectively  lost control of its borders and  its commerce and industry because the SEA required member states to allow the free movement of “goods, persons, services and capital”. (http://europa.eu/legislation_summaries/institutional_affairs/treaties/treaties_singleact_en.htm).  Later treaties whittled away the UK’s sovereignty a good deal further.

The signing up the SEA  fitted the laissez faire economics of the Thatcher government in one sense – a single market within the EU – but  not in another because it restricted UK trade with the rest of the world.  The Thatcherites also found the remnants of state economic control in the EU  such as the Common Agricultural Policy  unpalatable. As time passed they also had a growing concern about  the growing extent of EU  ambitions to remove sovereignty.

For all these reasons the Thatcher government developed a policy of enlarging the EU.  This policy was eventually adopted by all British governments up to  this day – David Cameron is  even now pushing for  Turkey’s admission  (http://www.bbc.co.uk/blogs/seealso/2010/07/daily_view_camerons_turkey.html).  The policy of enlargement was to have  profound consequences for immigration as  the EU expanded as workers from poor EU states, especially the new entrants from the old Soviet Bloc such as Poland flooded to the UK from 2004 onwards ( http://www.guardian.co.uk/uk/2010/jan/17/eastern-european-uk-migrants).

Immigration

On top of all this came immigration from outside the EU.  This really took off from the advent of Blair as Prime Minister  in 1997.  The combined net immigration from both the EU and the rest of the world (RoW) was  50,000  in the year before Blair took office . This rose to 250,000 in 2010, the year Labour lost power  (http://www.telegraph.co.uk/news/uknews/immigration/9713954/Interactive-graphic-how-UK-migration-has-changed-1964-2011.html).   The British population has officially  increased by a net 3 million from immigration  since 1997 (http://www.migrationwatchuk.org/).   How far these figures are accurate is debatable, but they certainly do not overstate the numbers which rest on the 2010 UK census.  It is probable that they substantially understate it as illegal immigrants  will not appear in a census for obvious reasons and foreigners generally may be cautious about registering for a census because they come from countries where the state is not trusted in any way.

Massive immigration  produced severe competition for jobs, most of them low-skill or unskilled, but also for skilled workers especially in the building trade.  The immigrants not only took jobs from native Britons but did so by accepting much lower wages.  The huge influx of immigrants also had the adverse effect of helping to raise housing costs, both for buying and renting.

Housing: the poison in the UK economy

House prices were inflated by the failure of all governments to continue to build enough new social housing from the mid-eighties onwards,by the introduction of Right-to-Buy (RTB)  which greatly reduced the existing stock of social housing by giving tenants the opportunity to buy the properties they rented at huge discounts and the lunatic absence of controls over the  provision of mortgages,  which at the height of their absurdity were being offered at 125% of the value of a property.   Come the crash of 2008 no deposit mortgages vanished and lenders began to demand deposits of 20-30%. The result was property prices too high for most first time buyers because they could not raise the deposit  and a general weakening of the housing market  as those with mortgages found that they could not re-mortgage on affordable terms when short term deals came to an end or obtain mortgages for a new property.  The freezing of the property market  meant that more and more needed to rent. Most could not find social housing and  were left at the mercy of  private landlords  who relentlessly raised rents to unaffordable levels for large sections of  even the employed.

To understand exactly how inflated property have become  compare the prices today with what they were in 1955.  Then the average residential property price was around £2,000. Uprated for inflation the average price of properties today would be around £40,000.  It is housing costs which are  the primary poison in the British economy. If there was sufficient housing to both rent and buy at the sort of  prices to wages ratio  which existed even  20 years ago, much of the general problem of rising benefit costs would not exist.

The manipulation of the UK’s unemployment statistics

Today the official unemployment figure for those drawing unemployment  benefit (the claimant count) is 1.54 million, which is the nearest to the way the 1979 figure is calculated. The 2013  Independent Labour Organisation measure of those seeking work has unemployment at 2.52 million. (http://www.hrmguide.co.uk/jobmarket/unemployment.htm) However,  the contrast between  the 1979  unemployment figure  (1.4 million) and the one now  is a false one because the figures are not really comparable.   This is because there has been a massaging of the unemployment figures, many  more pupils staying on a at school after the age of sixteen and a dramatic rise in those going into higher education.

Thatcher began the government’s  habit of fudging the employment figures by cynically shifting people from the unemployment registers to long-term sick benefit. By 2011 2.6 million were claiming such benefit. (http://statistics.dwp.gov.uk/asd/index.php?page=statistical_summaries).  In 1979 around 600,000 were doing so (http://www.guardian.co.uk/society/2011/jan/19/lax-benefit-rules-not-responsible-more-disability).

To this distortion was added the constant changing of the rules for eligibility for claiming benefits, the definition of who was unemployed and the exclusion from the unemployment claimant figures of those engaged in government training schemes receiving what was to all intents and purposes unemployment benefit .  To put the cherry on the massaging of the statistics those in training were counted as employed in the total workforce  statistics. This suppressed the unemployment figure as expressed as a percentage of the total workforce.  There were also issues with students. Between November 1986 to September 1990 they could claim some unemployment benefits in the summer vacation. They were excluded from the unemployment count.  ((http://www.radstats.org.uk/no072/article4.htm).

These changes to and exclusions  from the unemployment statistics had considerable repercussions. The Bank of  England wrote in 1991 “…although unemployment is falling because there are more jobs, it is also true that much of the decline in the claimant count which has occurred since mid-1986 has been due to a shift in the unemployment/employment relationship resulting from changes in the Government’s range of Special Employment Measures – especially the introduction of more rigorous availability for work tests and the rapid growth of the Restart programme (quoted in SSAC, 1991, p. 59). Ibid.

On top of all this came the vast increases in the numbers in post-16  education. The 1980s saw the beginning of the governmental drive to have much larger numbers of  schoolchildren staying at school  until they were eighteen . By 2011 they had almost doubled from the rate of those staying at school after the age of  sixteen  from what it was in in 1980  (see p10 www.parliament.uk/briefing-papers/sn04252.pdf).  From 2015 all those under the age of 18  will, in theory at least, have to be either in education or training – http://www.sec-ed.co.uk/news/warning-over-raising-of-school-leaving-age-to-18).

The expansion of  higher education   was even more dramatic. In 1980 only 13% of young Britons went to  into higher education (page F152 – http://users.ecs.soton.ac.uk/nmg/1468-0297.00102.pdf).  More than forty per cent of British school-leavers are now going on to start degree courses.  (The last Labour government had a target of 50% of school-leavers entering higher education  and in 2010/11 47% of those between the ages of 17-30 were in higher education  –http://www.timeshighereducation.co.uk/419496.article)

The false classification of people as long-term sick rather than unemployed, the rise in children saying on at school and the increase in students taking degrees means the official statistics  considerably understate  the true level of unemployment.    The wrongful classification speaks for itself,  while the extended schooling and increased university participation is important because it  delayed the point at which millions entered the employment market.

Exactly how distorting these interferences with the unemployment statistics are compared with those before 1980 is debatable, but its effects must be very substantial.  Those between the age of 16-64 deemed economically inactive  were 9.04 million according to the  official figures issued in October  2012  (http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/october-2012/statistical-bulletin.html.  This  gives an indication of the huge numbers who should really be listed as  unemployed.  Even if  the schoolchildren above the age of 16, the students and the sick and disabled were discounted, there would be several million left. Add that to the official unemployment rate of around 2.5 million and the true unemployment rate could be in the region of 5 million or even more.

But the picture is even bleaker than that because  large numbers of those now counted as employed are on short time. Many of those and the full time employed are on short contracts and have no security of employment.

Working tax credits

All of this – the destruction and export of jobs,  mass immigration,  and the government driven housing market  –  produced a  Britain which had become both a low-wage economy and an extremely expensive place to live. Many people in full time employment  could not afford to live on their pay.  As rents soared housing benefit was increasingly taken up by even those who ordinarily would not have been thought of as being at the bottom of the income pile. Eye-watering amounts of housing benefit  were paid for those with large families (http://www.telegraph.co.uk/news/politics/5663014/Family-claims-147000-a-year-in-housing-benefit-for-seven-bedroom-home.html) ,  especially to those  in London where by 2013 families  in private rented accommodation were paying 59% of their household income according to the housing charity Shelter (http://www.bbc.co.uk/news/uk-england-london-20943576).

In April 2003, the Blair government tacitly acknowledged that wages for many were simply inadequate  to support life by introducing working tax credits. (http://www.hmrc.gov.uk/taxcredits/start/who-qualifies/workingtaxcredit/work.htm).  This had several pernicious effects. It acted as a subsidy for employers which allowed them to offer ever lower wages secure in the knowledge that the taxpayer would subsidize business by making up their inadequate wages with working tax credits.  The regulations for working tax credits also allowed people to claim them when they were working part-time.  This provided an incentive for employees to work the minimum hours,  which were as little as 16 hours for a single parent. The employer also had an incentive to employ a number of part-timers rather than full time employees because the wages of the part timers could be kept below the level  at which national insurance had to be paid .  It thus became cheaper to employ two or three part-timers rather than one full timer.

The effects of working tax credits were made worse by the Blair and Brown governments ideologically driven desire to have every woman of working age out at work. This resulted in childcare tax credits (http://www.hmrc.gov.uk/calcs/ccin.htm#1) whereby mothers were paid to leave their children in the hands of other women while they went out to work.

The benefits situation  needs fixing but the way the Coalition is going about it is unreasonable. They are not starting from where we are now and taking regard of the effects of their changes in policy on people who are already encased in the circumstances of high unemployment, low paid and often insecure jobs and ever rising rents. Instead they are using the blunt instrument of cutting benefit suddenly and seriously disrupting the lives of millions.

Housing is the main bugbear.  it makes no sense to say housing benefit will be capped if this makes continued residency in an area impossible because of rental costs way beyond their means or the £26,000 cap on benefits. The policy may well drive many people in employment out of the area in which they not only live but work causing them to become unemployed.  Even if people are unemployed forcing them to move any real  distance will have effects on those with children at school and take away the informal support mechanisms of family and friends.

Similarly, the attempt to move those in social housing out of their properties if they are deemed to be too large for those now resident there (the “bedroom tax”)  is absurd unless there is smaller social housing accommodation they can move into. If this forces social housing tenants to move a long way from where they live they will suffer the same problems that those who move because they cannot afford private rented accommodation.  If social housing tenants have to rent from private landlords that will cost more than the social housing. Such tenants on housing benefit would be more expensive for the taxpayer to support.

What should be done?

What should be done? The answer is to change the general circumstances which cause the welfare bill to be so high. This can be done by creating an economy  in which any  full time wage will at least support a person and ideally will maintain a family. This can be done by adopting these policies although Britain would need to leave the EU or get the EU to agree to change the rules governing free movement of labour, goods, capital and  services to impose  many of them):

1. Cease all further mass immigration.

2. Address the housing shortage by introducing rent controls and much stronger legal backing for secure tenure  in  private rental properties, engaging in a massive programme of social house building, restricting all future social house tenancies to those born British citizens, abolishing  Right-to-Buy, banning  buy-to-let mortgages,  banning  foreigners from buying residential properties and giving private builders an incentive to build by taxing the land they hold until they build.

3.  Place a tax on employers for every foreign worker already here they employ to discourage their employment.

4. . Remove benefits from all foreigners to encourage those already here to return home.

These policies would have short term and longer term effects. For example, rent controls  and strong tenure conditions could  be brought in very rapidly giving tenants in private property both an assurance that they could continue in their rented  property for a long time with a rent that did not suddenly rise beyond their means. Building large numbers of new properties would take several years to gain momentum but there should be a considerable increase in the housing stock within five years.

Policies such as stopping further mass immigration and  incentives  for foreign labour already here  to leave like placing a tax on  employers if they employ foreigners and removing all benefits from foreigners should tighten the labour market . This will raise wages and make employers use labour more efficiently.

A tighter labour market will produce higher wages which added to much cheaper housing will lessen the need for people to draw benefits whilst in work and the cost of housing benefit generally should reduce substantially.  That will draw most of the poison from the benefit debate.

Even as things stand, the current hysteria about benefits is unjustified in its own terms. Most of the public say that it is right that the old and the ill or disabled are looked after by state action. That is very interesting because most of the benefit bill is spent on the old, the sick, the disabled and, this is the real  tragedy, on those in employment who simply cannot live on their wages.  (http://www.guardian.co.uk/news/datablog/2013/jan/08/uk-benefit-welfare-spending#zoomed-picture). The British elite are very successfully pursuing a policy of divide and rule by setting the less well-off members of society at each other’s throats. It is both highly distasteful and unjustified. The real culprits for the mess we have now are all the politicians who have produced the situation we have now and their all too compliant media supporters, especially over the past 25 years.

Housing: to the haves shall be given….

Robert Henderson

The central plank of the 2013  UK Budget  – boosting house building and sales activity –  was both morally disgraceful and criminally reckless. The Government proposes to underwrite mortgages to the tune of 20%  of the value for both first time buyers and those with properties who are trying to move up the housing ladder and from 1st April 2013, even more recklessly,  to provide loans of 20%  of the value of  new build properties up to the  value of £600,000  for three years from April 2014.   The loans will be interest free for five years after which  an annual fee of 1.75% will be levied on the government loan, with the fee rising  annually by the retail prices index (RPI) inflation plus  1%. The loan can be paid off at any time up to and including the time when it is sold. ( http://www.hm-treasury.gov.uk/10012.htm ). The amount taxpayers will risk on the underwritten mortgages is  estimated  to be  £12bn  with the full value of the mortgages underwritten  totalling  £130bn,  while £3.5bn of taxpayers’ money will be committed to the loans.

This policy is morally disgraceful because it is yet again favouring the haves over the have-nots . It is  made doubly offensive because  it is being done at a time when the Coalition Government’s attitude towards those in social housing  is increasingly shrill  with a constant portrayal of those in social housing as being parasites on the taxpayer because they do not pay the market rent for their properties while owner occupiers  pay their way.

The reality is rather different. Social housing tenants have long received far less subsidy than owner occupiers who have been granted  massive benefits by governments since at least 1969 when Roy Jenkins introduced Mortgage Interest Relief At Source (MIRAS).  MIRAS lasted until 2000 when it was ended by Gordon Brown.  In addition to MIRAS   owner occupiers receive  or have received these benefits:

1. Right-to-Buy (RTB). The gains from RTB both from a considerably reduced purchase price (way below the market value)  and the huge rise in property values in the period 1980 to 2008.  The rules to qualify were tightened and the discounts offered were gradually reduced in the period,  but have been boosted again by the Coalition Government which announced a discount of up to £100,000 in the Budget (http://www.standard.co.uk/news/politics/budget-2013-100000-off-righttobuy-a-london-home-8540690.html).

2. Private residence tax relief. No capital gains tax is paid on a property used as a private residence when it is sold.

3. No inheritance tax (IT)  is paid on a private property when it is inherited by a spouse who is resident in this country. Regardless of who are the beneficiaries, no IT is paid on a property if it forms part of an estate worth less than the inheritance tax exemption limit (£325,000 in 2012-13). No IT is paid on a private property if the private property has been gifted to someone else more than 7 years before the death of the person making the gift.

4.  Housing benefit for the interest paid on a mortgage.  This could be received by  someone unemployed or employed,  but with an income so low they qualified for housing benefit.

5. A surprisingly large number of taxpayer funded schemes  providing substantial grants, especially for energy saving improvements (http://www.freegive.co.uk/grants.htm).

6. The lax credit policies  from the mid-1980s onwards which allowed mortgage providers to grossly inflate property  prices before the 2008 crash by granting no deposit mortgages and even mortgages up to 125% of the purchase price.  In addition, “light touch” regulation of the banks and their ilk greatly increased the money supply which also inflated  property prices. Finally,  prices were inflated further by  the permitting of  massive  immigration during  the years of the Blair  and Brown Governments which added some three million to the UK population.

7.  Since the crash of 2008 successive British governments have offered massive  direct and indirect aid to those with mortgages. The direct aid has been  such things as mortgage  payment  holidays (http://www.guardian.co.uk/politics/2008/dec/04/brown-mortgage-interest-break-repossessions),  and indirect protection, for example,  keeping Bank Rate at microscopically low levels.

Whilst all this has been going on social housing has become ever scarcer as several million social housing properties have been sold off under RTB (http://www.politics.co.uk/reference/right-to-buy) and the provision of new social housing since the mid-1980s has been meagre in the extreme.

Criminal recklessness

Morally obnoxious as the policy may be, the fact that it is criminally reckless is even more worrying.  The almost certain short term effect of this taxpayer funded largesse is that house prices will rise because there will be more money chasing scarce housing.  This will make purchase even with the helping taxpayer hand more and more difficult, especially for first time buyers who will be tempted to pay over the odds because the terms look so easy and the participating mortgage lenders will be willing to lend more in the secure knowledge that the taxpayer will either cover a substantial minority of them mortgage or provide a buffer against future negative equity because of the  significant amount of equity resented by the taxpayer funded loan.  Suppose a house is purchased for £500,000. The purchaser pays a 5% deposit and the taxpayer makes this up to a  25% deposit with a 20% equity loan to the purchaser.  This leaves the private mortgage provider to find  £375,000. Provided the property can be sold for  £375,000 the mortgage provider will lose nothing.  If it is sold for just £375,000,   25% of the original purchase price (the total deposit) will be lost. The taxpayer would lose £100,000.

The intentions of the Government – to boost house building, enable first time buyers to get on the housing ladder and loosen up the property market generally – are likely to be undermined further because  it appears Britons buying second homes and foreigners will be able to access the taxpayer funded privileges (http://www.telegraph.co.uk/news/politics/9947031/Wealthy-homeowners-could-use-state-backed-loans-to-buy-second-homes.html and http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9952998/Foreigners-can-qualify-for-state-subsidised-mortgages.html)

The danger in the longer term is that the housing market will tank as the Irish and Spanish ones have done  and property  prices halve.  This is a significant  possibility,  because  apart from the general economic turmoil in the EU,  UK interest rates will have to rise substantially sooner or later  and this alone will suppress the market dramatically as very large numbers cannot meet their mortgage payments.   If  property prices do collapse it  will leave the taxpayer taking a severe  financial hit. Osborne is effectively betting the national farm on a recovery in the housing market.

What housing policy should the Government be pursuing?

I suggest this:

1. Use  the money they have earmarked for the underwriting of risk and the 15% deposits in new build properties up £600,000 to engage on a massive social housing building programme.

2. Put a tax on land held by property developers with planning permission while they refuse to build on the land as per the planning permission.

3. Ban Buy-to-let mortgages.

4. Introduce rent controls on private landlords. If rents were frozen for a number of years this should not impact too seriously on most private landlords, the majority of whom will either own their properties or have small mortgages on them . Even those with large mortgages should be able to survive in the low interest environment which looks as though it will continue to several years at least.  If they can pay the mortgage now they should be able to keep in paying it until interest rates rise significantly. By that time

All of those policies could be done whilst we remain within the EU. If we left the EU it would be possible to:

5. Deny all social housing to foreigners.

6. Ban foreigners from purchasing residential property.

7. Put an end to further mass immigration.

These policies will greatly increase the supply of housing in the medium term if not sooner . If even 1-4 were implemented  this would do a great deal to bring the cost of housing to a level where  those on the average wage could  afford to rent in most areas and

Governments bear the responsibility

For thirty years or more British Governments have been almost entirely responsible for the truly dismaying rise in the cost of property  both to buy and to rent  through a failure to ensure enough housing both private and social was built, by removing rent controls,  ending credit controls on mortgages,  failing to control mortgage  lending generally  and, most dramatically, by allowing mass immigration to add between three and four million people to the population in the past 15 years.

To understand exactly how inflated housing costs have become compare property prices today with what they were in 1955.  Then the average residential property price was around £2,000. Uprated for inflation the average price of properties today would be around £40,000.  (https://livinginamadhouse.wordpress.com/2010/10/24/the-vicious-poison-in-the-british-economy-is-the-outlandish-cost-of-housing/). Makes you think.  If that was the case now,  even those on half  of the average national wage (half of the present average  wage  would be about £13,000 ) would be able to purchase a property of some sort.

The EU IN/OUT referendum: strategy and tactics for those who want to leave the EU

Robert Henderson

The general strategy

A) How to leave

Article 50 of the Lisbon Treaty states

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49. (http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-6-final-provisions/137-article-50.html).

The OUT camp must make it clear that  it would be both damaging and unnecessary for the UK to abide by this Treaty requirement. It  would allow the EU to inflict considerable damage on the UK both during the period prior to formally  leaving and afterwards if  the price of leaving with the EU’s agreement was  for  UK to sign up to various obligations, for example, to continue paying a large annual sum to the EU for ten years . It would also give  the Europhile UK political elite  ample opportunity to keep the UK attached to the EU in the manner that Norway and Switzerland are attached. More of them later.

There is also the danger that the stay-in camp could use Article 50 to argue that whether the British people want to be in or out, the cost of leaving would be too heavy because of this treaty requirement.

The Gordian knot of Article 50 can be cut  simply by passing an Act of Parliament repealing all the treaties that refer to the EU from the Treaty of Rome onwards. No major UK party could  object to this because all three have, at one time or another,  declared that Parliament remains supreme and can repudiate anything the EU does if it so chooses.

If the stay-in camp argue that would be illegal because of the  treaty obligation, the OUT camp should simply emphasise  (1) that international law is no law because there is never any means of enforcing it within its jurisdiction is a state rejects it and (2) that treaties which do not allow for contracting parties to simply withdraw are profoundly undemocratic because they bind future governments.

The OUT camp should press the major political parties to commit themselves to ignoring Article 50. If a party refuses that can be used against them because it will make them look suspicious. Before the vote

B) The parties’ plans of action if there is a vote to leave

It is important that all the parties likely to have seats in the Commons after the next election are publicly and relentlessly pressed to give at least a broad outline of what action they would adopt in the event of a vote to leave.  Left with a free hand there is a serious danger that whatever British  government is  in charge after a vote to leave would attempt to bind the UK back into the EU by stealth by signing the UK up to agreements such as those the EU has with Norway and Switzerland which mean that they have to (1) pay a fee to the EU annually, (2) adopt the social legislation which comes from the EU and (3) most importantly agree to the four “freedoms” of the EU – the free movement of goods, services, capital and  labour throughout not merely the EU  but the wider European Economic Area (EEA).

It is probable that the Westminster parties will all resist this, but that would present them with two problems. First, a refusal to do so would make them seem untrustworthy; second, if one party laid out their position but the others did not, that would potentially give the party which did say what it would do a considerable advantage over the others which did not.  If no party puts its plans before the public before the referendum, there should be demands  from those who want the UK to leave the EU that  any new treaties with the EU must be put to a referendum and, if they are rejected, the UK will simply trade with the EU under the WTO rules.

C) Repudiate re-negotiation before the referendum

Supporting the negotiation of a new relationship between the UK and the EU before a referendum is mistaken because it would seem to many to be giving tacit approval for renegotiation and legitimise the possibility of the UK remaining within the EU.  It is also rash  because  the likelihood  of the EU giving nothing is probably very small.  Indeed, they might well  give something which is substantial,  because the UK leaving the EU would be a very great blow to the organisation. The UK is the country with the second largest population within the EU with , depending on how it is measured,  the second or third largest   economy  and the country which pays the second largest contribution to the EU budget.   For the EU to lose the UK would not only be a blow in itself, it would also create a very strong precedent for every other EU state, especially the largest ones.  If  the UK left and prospered the temptation would be for other EU states to leave.

But even if negotiation  produced  nothing of substance as Harold Wilson’s “renegotiation” did in 1975, it would be a mistake to imagine that it would not influence the referendum result. The electorate is divided between the resolute come outs, the resolute stay-ins and the wavering middle.  A claim by the stay-in campaigners that something had been conceded by the EU, however  insignificant,  would provide the waverers with an excuse to vote to stay in because they could convince themselves they were voting for change.

It would be also be a mistake to see the EU offering  nothing  at all as a gift for the OUT camp. This is  because the waverers might simply see that as evidence that the EU was too powerful to oppose and shift their votes to staying in.

Those who want the UK to leave should unambiguously put the case for no renegotiation.  Dismiss anything Cameron (or any other PM) brings back from the EU by way of altered terms as being irrelevant because the EU has a long record of  agreeing things with  the UK and then finding ways of sabotaging what was agreed. In addition, a future British government  may agree to alter any terms offered at the time of the referendum.  The classic example of this changing of agreed terms happening in the past is Tony Blair’s  giving up of a substantial amount of the Thatcher rebate in return for a promised reform of the Common Agricultural Policy (CAP), a promise which was never met.  That episode produced my all-time favourite amongst Blair’s penchant for lying. Two days before he went to the EU meeting at which he  gave away a  substantial part of the rebate he declared during Prime Minister’s Questions  that  the rebate  was “non-negotiable – period”

It is difficult to envisage any British prime minister not trying to  negotiate with the EU before a referendum, but it might just  happen if whoever is in power when the referendum is announced were to be told privately by the  major EU players that nothing will be given and the prime minister of the day concludes it would be best to pretend that a decision had been made not to negotiate rather than risk the humiliation of getting nothing, perhaps not even a pretence of negotiation before nothing is given.  Why would the EU do this? They might calculate that it would be a gamble worth taking to send a British PM away  with nothing  whilst hoping the referendum vote would be to stay in because then the power of the UK to resist further integration would be shot.

If the EU offer nothing, the OUT camp should welcome the fact and stress to the public that if the referendum is to stay-in the EU could force any federalist measure through because not only would any British government be much weakened in its opposition to more federalism, the UK political class as a whole would more than willing to go along with it because of their ideological commitment to the EU.

D) After the vote

Ideally the government which deals with the EU after a vote to leave will have committed themselves to a plan of action before the referendum vote.  However, as described above,  it is quite possible that this will not happen because  the UK’s overwhelmingly Europhile political class will try to re-entangle the UK with the EU. To prevent them doing so there should be a concerted campaign after the vote to ensure that the  British public understands what is being done on their behalf with a demand for a further referendum to agree any  new treaty.

The terms of the debate

It is essential that the Europhiles are not allowed to make the debate revolve around economics.   If they do it will effectively stifle meaningful debate. As anyone who has ever tried to present economic ideas to an audience of the general public will know it is a soul-destroying experience.  Take the question of how much of UK trade is with the EU. The debate will begin with the stay-in camp saying something like 45% of UK trade is with the EU. Those wanting to leave the EU will respond by saying it is probably less than 40% because of the Rotterdam/Antwerp effect . They will then be forced to explain what the Rotterdam/Amsterdam, effect is. That is the point where the general public’s concentration is lost and the debate ends up proving nothing to most of the audience.

But  although nothing is proved to the general audience by detailed economic argument ,  the audience will remember  certain phrases which have considerable  traction.  In amongst the serious debating on the issue of trade there will be phrases such as three million jobs in Britain rely on the EU and dire threats about how the EU will simply not buy British goods and services any more.  This is nonsense but fear is not a rational thing and many of those who vote will enter the voting chamber with fear of losing their jobs  in their heads regardless of what the OUT camp says if the debate is predominantly about economics.  Shift the debate away from economics and the fear inducing phrases will be heard less often.  If the BIG LIE is not repeated often enough its potency fades.

National Sovereignty

How should those wanting to leave the EU shift the focus of debate? They should put the matter which is really at the core of the UK’s  relationship with the EU  – national sovereignty – at the front of the  OUT camp’s referendum campaign.   Campaign under a slogan such as Are we to be masters in our own house?

Making national sovereignty the primary campaigning issue has the great advantage of  it being something that anyone can understand because it is both a simple concept and speaks directly to the natural tribal instincts of  human beings.   Being a simple concept readily  and naturally understood,   it is a far more potent debating tool than arguments attempting to refute the economic  arguments  beloved of the stay-in camp.  The fact that the natural tribal instincts have been suppressed for so long in the UK will increase its potency because most people will feel a sense of release when it begins to be catered for in public debate.

The appeal to national sovereignty has a further advantage. Those who support the EU are unused to debating on that ground.  That is because uncritical support for the EU has long been the position of both the British mainstream political class as a class and of the mass media.  That has meant that the contrary voice – that which wishes Britain to be independent – has been largely unheard in public debate for thirty years or more. Where it has been heard the response of the pro-EU majority has not been rational argument but abuse ranging from patronising dismissal of a wish for sovereignty as an outmoded nationalism to accusations that national sovereignty amounts to xenophobia or even racism.   These tactics – of excluding those who want to leave the EU from public debate and abuse substituted for argument – will no longer be available to the  pro EU lobby.

Immigration

The most threatening and energising subject relating to the EU for the general public is immigration. The public are right to identify this as the most important aspect of our membership of the EU because immigration touches every important part of British life: jobs, housing, education, welfare, healthcare, transport, free expression  and crime besides radically changing the  nature of parts of  the UK which now have large populations of immigrants and their descendants.

The public rhetoric of mainstream politicians and the media is changing fast as they begin to realise both what an electoral liability a de facto open door immigration policy is  as the effects of mass immigration become ever more glaring.  The argument is shifting from the economic to the cultural.  For example, here is the Daily Telegraph in a leader of  25 March:

“The fact is that, for many in Britain (especially those outside the middle classes), it is not just a matter of jobs being taken or public services being stretched, but of changes in the very character of communities. Those changes may not necessarily be for the worse: as the Prime Minister says, Britain’s culture has long been enriched by the contributions of new arrivals. But as long as ministers treat immigration as a matter of profit and loss, rather than the cause of often wrenching social change, they will never be able fully to address the grievances it causes.” (http://www.telegraph.co.uk/comment/telegraph-view/9952717/Immigration-and-the-limits-of-the-possible.html)

This new frankness in public debate means that the OUT camp can use the immigration argument freely provided they keep the language within the confines of formal politeness. The subject will naturally dovetail with the emphasis on national sovereignty because the most important aspect of sovereignty is the ability to control the borders of the territory of a state.  Judged by their increasing willingness to talk publicly about immigration, it is probable that the mainstream UK parties will be content to go along with  ever more frank discussion about  immigration.

The economic argument must be kept simple

It will not be possible to avoid  economic arguments entirely. The OUT camp should concentrate on repeating these two facts:

–          The disadvantageous balance of payments deficit the UK has with the EU

–          The amount the UK pays to the EU

Those are the most solid  economic figures relating to the EU.   There is some fuzziness around the edges of the balance of payments deficit because of the question of where all the imports end up (whether in the EU or outside the EU through re-exporting) ,  while the  amount the EU  receives  is solid but it has to be broken down into the money which returns to the UK and the amount retained by Brussels.  Nonetheless these are the most certain  figures and the least susceptible to obfuscation by the stay-in side.

The best way of presenting the money paid to the EU is simply to say that outside the EU we can decide  how all of it is spent in this country and to illustrate what the money saved by not paying it to the EU would pay for.

It will also be necessary to address the question of protectionist measures the EU might take against the UK if the  vote was to leave.  It is improbable that the EU would place heavy protectionist barriers on UK exports because:

1.   The massive balance of payment deficit between the UK and the rest of the EU which is massively in the EU’s favour.

2.  Although the rest of the EU dwarfs the UK economy, much UK trade with the EU is heavily concentrated in certain regions of the EU.  The effect of protectionist barriers would  bear very heavily on these places.

3. There are strategically and economically important joint projects of which the UK is a major part,  for example, Airbus, the Joint-Strike Fighter.

4. the Republic of Ireland would be a massive bargaining chip for  the UK to play.  If the UK left and the EU rump attempted to impose sanctions against Britain this would cripple the RoI because so much of their trade is with the UK  The EU would be forced to massively subsidise the RoI  if protectionist barriers against the UK were imposed.  The EU could not exempt the RoI from the sanctions because that  would leave the EU open to British exports being funnelled through the RoI.

5. The EU would be bound by the World Trade Organisation’s restrictions on protectionist measures.

The economic  issues which are not worth pursuing in detail because they are too diffuse  and uncertain , are those relating to how much the EU costs Britain in terms of  EU-inspired legislation. It may well be that these load billions a year of extra costs  onto the UK  but they are not certain  or easily evaluated costs, not least because we cannot in the nature of things know what burdens an independent UK would impose off its own bat.   Getting into detailed  discussions about such things will simply play into the hands of  the stay-in camp because it will eat up the time and space available to those promoting the OUT cause.

Other Issues

Apart from the economic issues the stay-in camp will use these reasons for staying in:

–          That the EU  has prevented war in Western Europe since 1945.  This can be simply refuted by pointing out that the EU was not formed until  twelve years after WW2; that until 1973 the EU consisted of only six countries, three of them small,  and  of only nine countries until the 1980s. Consequently it would be reasonable to look for other reasons for  the lack of war. The two causes of   the peace in Western Europe have been the NATO alliance and the invention of nuclear weapons which make the price of war extraordinarily high.

–          That nation states such as the UK are too small to carry any real diplomatic weight in modern world.   That begs the question of whether it is an advantageous thing to carry such weight – it can get a country into disastrous foreign entanglements such as Iraq and Afghanistan – but even assuming it is advantageous , many much smaller countries than the UK survive very nicely, making their own bilateral agreements with other states large and small.   It is also worth remembering that the UK has such levers as a permanent seat on the UN Security  Council (which allows the UK to veto any proposed  move by the UN) and considerable influence in institutions such as the IMF and World Bank.

Robert Henderson

1 April 2013