Tuesday 28 July 2009

Steyn flu

With the Republican party in disarray, the right-wing media have enthusiastically taken up the task of opposing President Obama at every turn. None is more eloquent than Mark Steyn who, although he lives in New Hampshire, is surely The Most Right-wing Canadian in the World. Steyn's big issue of the moment is health care reform, which he sees as the death knell of all that's good about America.

His latest polemic on the subject is well worth reading, but only because Steyn is such a good writer. The content is a lot less commendable, a farrago of exaggeration and misrepresentation. Steyn is spectacularly (and maybe deliberately) missing the point of Obama's reforms. He notes that life expectancies are very similar not only in the US and "socialized" Europe, but even in countries such as Bosnia/Herzegovina. His take on this fact is that there would be no real health benefit for the US in moving toward a more European health care model. But surely the real question is this: if Bosnia achieves a life expectancy of 78 years while spending a small percentage of its small GDP on health care, what good does it do the US to spend 16% of its much higher GDP to achieve the exact same outcome?

The Obama health care package is partly about "fairness", which Steyn is certainly entitled to deride if he chooses. But if you read Obama's own words, it's much more about reducing America's enormous overspending on health care and freeing up resources for more productive uses. Considering the glaring need to restructure vast swathes of the US economy in the wake of the credit crunch, you'd think even the most died-in-the-wool Republican would see the virtue of that.

Saturday 25 July 2009

Vine flu

The latest issue of Private Eye pokes fun at a reporter who apparently tried to compile a story on swine flu by using Twitter -- "send me a tweet if you've had it, tell me what it's like", that kind of thing. No such problems for another journalist. Sarah Vine, "beauty editor" of the Times, solved the problem by going out and catching the disease herself.

Needless to say, it's been good for a lot of copy. At the start of last week, the Times gave two whole pages to Sarah bemoaning how ill she'd been, how the Tamiflu made her throw up, and how unbearable the whole experience would have been if she hadn't had a child minder. In fairness, she does seem to have been quite ill, though I can't help thinking that any man daring to go into print with such a self-pitying litany of woe would have faced a barrage of scorn about "man flu" and men's general inferiority when it comes to tolerating illness.

On Friday Sarah's back. She's getting better but now her husband, Michael Gove, is ailing, so Sarah decides to try the new emergency phone line -- which she finds seriously wanting. She compares the questioning she receives to a "survey" and slags off the operator for stumbling over terms like "Relenza" and cystic fibrosis. It's condescending almost to the point of being downright offensive. Sarah also recounts the story of a hypochondriac friend who calls the emergency line and, through strategic lying -- porkies about swine flu -- manages to get a dose of Tamiflu that she almost certainly doesn't need.

Sarah is mortified at having to deal with amateurs, thinks "at a minimum" that the emergency line should be staffed by nurses. Precisely where the NHS is supposed to find enough nurses to take this on isn't readily apparent. In any case, I'd have thought the NHS has better uses for its trained professionals than to have them talking on the phone to mendacious hypochondriac friends of Sarah Vine, or to Sarah herself, for that matter.

Wednesday 15 July 2009

The grey greedies

The government has finally unveiled three options for reforming the way care for the elderly is financed in England. Each of the proposals attempts to address the perceived unfairness of the present system, under which those with financial assets above a relatively modest level (currently about £22,000) are expected to pay for their own car, while those with less money get government help. It's unlikely that there will be any changes made before the general election.

As I've written here before, I've had personal experience of how the present system works in the last couple of years. When my aunt had to go into care, a quick tally of her assets revealed that she had less than the threshold level, so her care was almost fully paid for by the state. In my mother's case, her assets were above the threshold, so she had to pay for her own care. In both cases the care was excellent.

I didn't and still don't find the principle here objectionable, although the £22,000 figure seems rather arbitrary and possibly open to abuse. Many years ago a neighbour of my mother's was looking for help with care costs and was found to be just over whatever limit applied in those days. The social worker advised him to splash out on a round-the-world cruise and apply again when he got back. (He indignantly declined to do so).

But a lot of people do seem to object in principle. One lady quoted in the press this week thought her father should get free care because "he spent 34 years in the RAF", which I would have thought was relevant only if he was (a) conscripted and (b) unpaid. (Still, 34 years?? Even Biggles didn't manage that). Mostly, though, the objections centre on the need for the elderly to sell their homes to pay for care costs. The RAF gent's daughter, herself in her 60s, came right out and said it: when the time comes that she needs care, she wants the taxpayer to fork out for it, so that she can pass her home on to her daughter!

There is no basic human right to pass the family home onto your descendants while asking other people, who may well be worse off than you, to pay your bills. If you insist on that, you're not just asking the state to pay for your care: you're asking it to buy your house from you and give it to your heirs. Many people who end up in care homes spend a decade or more living there: are their family homes to be allowed to sit empty for all that time so that the heirs can claim them when their loved one finally passes on? If that's the case, given the aging population and rising life expectancies, we could have a large proportion of the country's housing stock sitting idle before too long. Then, I'd guess, there will be pressure to allow the putative heirs to move in even before the death of their relative. Ah, the British obsession with home ownership!

A couple of decades ago, New Zealand ran into severe budget problems and was forced into radical spending cuts. The biggest objections came from the cosily entitled elderly, but the Government was in such dire straits that it had no choice but to face them down. They became stigmatised as the "grey greedies". The care issue is likely to be only one among many where the grey greedies try to throw their weight about in the UK in the next few years. This particular greybeard won't be joining them.

Monday 13 July 2009

Regulating the City of London

The UK government's plans for regulatory reform in the financial sector seem to have impressed nobody. Both of the main opposition parties favour returning the prime responsibility for regulation to the Bank of England, but the government wants to persist with the so-called "tripartite" system. In fact, you could say it wants to make it even more complicated, with a co-ordinating body to be set up to ensure that the Treasury, Bank of England and FSA work together.

I'm agnostic about the tripartite system and doubt whether the hiving-off of the FSA had much to do with the recent crisis. There's no reason that a free-standing bank regulator can't work perfectly well. For example, Canada's big banks have been almost unscathed by the global credit crisis, and they're regulated by a single-purpose body (The Office of the Superintendent of Financial Institutions, or OSFI) rather than by the Bank of Canada.

If simplicity was the key to successful financial regulation, as the opponents of the tripartite system seem to believe, Canadian markets would be in a state of perpetual chaos. As well as the Bank of Canada and OSFI, each of the ten Provinces has traditionally maintained its own securities commission. But it all seems to work, at least well enough to avoid most crises and to deal promptly and effectively with those that do occur.

The biggest event in Canadian banking in the last fifty years was something that didn't happen. In 1998 four of the big five banks announced plans to merge: Royal Bank with Bank of Montreal and Toronto Dominion with CIBC. Both pairings argued that they were too small to compete internationally, an argument that was rather undermined by the fact that at the time, each bank was using big chunks of its existing capital to finance repurchases of its own stock. The Government had no advance warning of the plans, but kept the banks waiting for almost nine months before announcing its decision: the mergers were not in the public interest and would not be allowed to proceed.

You can agree or disagree with that decision (and at least up until the start of the credit crunch, senior bankers would still moan about it regularly) but it clearly showed the determination of the government to maintain a high degree of national influence over a key sector of the economy. It's impossible to imagine any UK government for the last two decades or more taking a similar step. Politicians and regulators alike have appeared to be in thrall to the City of London, regularly extolling (and even trying to take credit for) its undoubted success as one of the UK's few world-class sectors.

There was some tough rhetoric about cracking down on the perceived excesses of the banks and hedgies and all the rest in the early days of the credit crunch. However, I don't see much evidence of follow-through in the government's proposals. Politicians are still in awe of the big money types and fret about driving away the perceived wealth and jobs that the City brings, despite the explosion in the other side of the ledger in the past two years: the tens of thousands of jobs shed by the banks themselves, the destruction of jobs throughout the economy as a result of the drying-up of credit, and of course the potentially huge cost of bank bailouts to the public purse.

Most of the activities in the City have very little to do with the UK economy, but there's no denying that the jobs and wealth they bring are very welcome. Before the credit crunch, the City had grown too big for the UK economy, but when the crunch came, this meant that the whole edifice was too big to fail. There's very little sense in a financial regulatory system that puts the domestic banking system at risk when investment banks overstretch themselves internationally. The Canadian government, by luck or good judgment, kept its domestic banks out of trouble by refusing mergers that would have allowed them to go head to head with the big international banks. Right now, the UK government needs to take a comparably bold step by separating bread-and-butter day-to-day banking from investment finance. By all means have a regulatory regime that encourages financiers to set up shop here, but don't do so in such a way as to put domestic financial stability at risk.

Tuesday 7 July 2009

Lessons from Canada, revisited

Back on May 6 I wrote about a piece about the Institute for Government. This august body was extolling Canada's fiscal success in the 1990s as an example of what should be done in the UK. I felt that the Institute was giving Canada far too much credit for curbing public spending, when in fact most of the improvement came from higher revenues and falling debt service costs.

To my surprise, this "let's copy Canada" thing has continued to bubble along. In The Times today I read that the Conservatives are working hard to understand how Canada cut spending by 20% without destroying the economy. I can save the Conservatives the trouble and expense: Canada did no such thing.

As I wrote back in May, the impressive turnaround in Canada's fiscal performance had almost nothing to do with programme spending restraint and everything to do with revenues and debt service. This time I have the facts to prove it, courtesy of the Finance Canada website. I've focused on the period 1991-2001, which encompasses the end of Canada's era of fiscal extravagance, the correction period in mid-decade and the effective declaration of victory in 2001, when the Government announced a 5-year tax cutting programme. These are the highlights:

Total federal (central) government spending: rose from C$ 154 bn in 1991 to a peak of C$ 170bn in 1996; fell by 7.3% in the next two years to reach C$ 174 bn in 1198, then began to rise again. By 2001 it was 14% higher than in 1991.

Programme spending: rose from C$ 109 bn in 1991 to $123 bn in 1995; fell by 9.7% in the next two years to reach C$ 111 bn in 1997, then began to rise again. By 2001 it was 20% higher than in 1991. (Note, that's higher, not lower!)

Transfers to other governments: rose from C$ 23 bn in 1991 to a peak of C$ 27 bn in 1994, then fell by a total of 23.9% in the next four years, reaching a low of C$ 21 bn in 1998. They then rose to C$ 25 bn in 2001, or 8% above its 1991 level.

Debt service: rose from C$ 45 bn in 1991 to a peak of C$ 49 bn in 1996, then began to fall. By 2001 it was 3% lower than in 1991.

These numbers are a bit confusing, so let's pause for a second. There was certainly a slowdown in total spending in the mid-1990s, but it lasted only two years. What's more, the Government can't take a whole lot of credit for it. The dollar value of the fall in total spending from 1996 to 1998 was C$ 12.4 bn; of this, C$ 6.3 bn, or more than half, was accounted for by debt servicing costs, for which much thanks Alan Greenspan. Almost all of the rest (C$ 5.6 bn) was accounted for by reduced transfers to other governments -- provinces and municipalities. In effect the federal Government sought to alleviate its own problems by starving the provinces of cash. It's hard to see much of an example for the UK here. In any case, by the end of the decade all the major spending categories, even transfers to Provinces, were above their 1991 levels. Only debt service costs had actually declined in dollar terms (and continued to do so at the start of the current decade).

What about revenues? Well, these were largely stagnant at the start of the 1990s, because the North American economies were in recession. After that they took off, thanks to economic growth and tax measures. From 1991 to 2001, tax revenues rose by a total of 62%. If you want to know how Canada eliminated its chronic fiscal deficits and moved into reasonably sustainable surplus by the start of the current decade (though it's back in deficit now), you need to look no further than this.

I'm at a loss to know how the story about spending cuts has got such traction, but I note that a Canadian delegation, led by a former Cabinet Minister, Marcel Masse, has been peddling the story in recent weeks. Judging by today's Times story, Masse is claiming the credit for it. Ask any Canadian, though, and they'll tell you that the credit goes to Finance Minister Paul Martin, with assists from the Fed and the Bank of Canada. If the Tories are really listening to this stuff, they're getting the wrong story from the wrong guy.

Saturday 4 July 2009

Two manky hookers and a racist dwarf

That's a quote from last year's excellent hitman comedy, "In Bruges". However, what with Max Mosley's well-publicised sexual antics, and now Bernie Ecclestone's encomiums for Hitler, maybe it should be the new slogan for Formula 1.

Thursday 2 July 2009

Jack and the Jesuits

Sad to say, I remember the Great Train Robbery of 1963 very well. I first heard about it while on a hiking trip in Northumberland. My mother had one of them new-fangled transistor radios, and we listened to the BBC news while brewing tea with the brown water of the North Tyne. (Those were the days, eh?) The perps were caught fairly quickly and sentenced to stretches of up to 30 years in jail.

I also remember one of the Jesuits who were teaching me at the time bringing up those sentences as part of a religious instruction class. The much-feared Father MacPhillips was known as Waffles because of his chuntering style of speech -- if you're a Radio 2 listener, think a posher Ken Bruce. Waffles took great pains to express the view that the extraordinarily long sentences were savage, and disproportionate to the crime. (No-one was killed and only one railwayman injured in the robbery). You don't often hear Jesuits calling for greater leniency, so this episode has stuck with me.

Only one of the robbers is still in prison: Ronnie Biggs. You can, of course, argue that's his own fault. Ronnie broke out of stir near the beginning of his sentence and moved to Rio de Janeiro, where he became a bit of a celeb and sired a few children. However, he tired of Rio and began to miss London (as you do), so he returned to the UK of his own volition in 2001 and was promptly locked up again. He has remained in prison ever since, despite serious health problems and his advancing years: he's now 79.

Ronnie had a parole hearing recently, and the parole board recommended his immediate release. Usually the Home Secretary signs off on the board's recommendations without question, but on this occasion Jack Straw has countermanded the decision, and Ronnie has to stay inside. Straw notes that Biggs has never adequately expressed regret for the robbery (which the parole board accepts, though Biggs's family disagrees); more bizarrely, he fears that Ronnie, who cannot speak or walk properly, may offend again. Ronnie, Jack "the Hat" McVitie and Mad Frankie Fraser knocking over a bingo hall: there's an image to conjure with. (To cut Jack a tiny bit of slack, maybe he's read about a spate of bank robberies by old-age pensioners in Germany).

I don't know if cracking down on geriatric recidivists is Jack Straw's contribution to Labour's pre-election repositioning. Judging by some of the comments on the web, there are a lot of people prepared to take a "do the crime, do the time" stance, even in the case of a dying man, so he may be onto something. For those of us of even a slightly more liberal disposition, though, the notion of Jack Straw being more zealous than the Jesuits is hard to stomach.

Wednesday 1 July 2009

7/7: lies and videotape

There was an odd -- and oddly-timed -- documentary on the July 2005 London bombings on BBC 2 last night. (You can see it on BBC iPlayer -- it's part of a series called The Conspiracy Files). Like the 9/11 attacks in the US, those bombings have unleashed an unsavoury mob of crackpot conspiracy theorists, determined to prove that the official stories of those tragic days are an elaborate cover-up.

The centrepiece of the 7/7 conspiracy theories is a documentary (I use the term very loosely) called "Ripple effects", produced and distributed on DVD by a man calling himself Muad Dib. Mr Dib, the BBC revealed, is a white bearded and pale-skinned Yorkshireman whose Mum knew him as John Hill. While masquerading as Muad Dib (a name he apparently took from a comic book), Hill also appears to believe that he is Jesus Christ. He lives in a remote village in Ireland and is currently facing extradition to the UK to face charges of fomenting hatred.

Also featured was a tweedy gent who had spent altogether too much time looking at train timetables and CCTV footage. He had managed to find one error in the Government's original story: the train the bombers were originally supposed to have taken from Luton to London was actually cancelled that day. However, this was scarcely germane to the unfolding events, and as soon as the error was uncovered (back in 2006) the Government promptly apologised. Only at the end of the programme did the BBC reveal that this charming man's main avocation is as a holocaust denier.

The basis premise of Hill and his tweedy sidekick is that the four young Muslims who carried out the attacks were duped by the Government in order to cover up an "official" terrorist attack, carried out either by MI5 or Mossad. Dib et al have no cogent explanation for why either of these would have wanted to kill innocent Tube passengers, but I suppose that's not the point. The BBC show painstakingly destroyed all of the supposed evidence advanced by Dib (the cancelled train; supposed advance warnings of the attack to the Israeli embassy; conflicting eyewitness accounts of the actual explosions; the presence of a van marked "controlled demolition" next to the bus that was attacked on Tavistock Square; and so on). By no means least, two of the bombers had left behind suicide videos, which might be thought to remove any lingering doubts.

It was all perfectly convincing, if you needed to be convinced, but it somehow left an uneasy feeling. The BBC has discovered that the "Ripple effect" documentary is widely believed among some Muslims in the UK, particularly those attending the main mosque in Birmingham. On the anniversary of the bombings this coming week, the mosque will be showing Muad Dib's DVD and holding a discussion session. However, this revelation, together with the timing of the show, had the effect of making the documentary look uncomfortably like Government propaganda, a clumsy (and surely unsuccessful) attempt to pre-empt the meeting at the mosque.

At one point in the documentary, the BBC listened in on a discussion of "Ripple effect" among some members of the Birmingham mosque. Most of them agreed that it presented a much more plausible picture than the official account of events. Now why would this be? Well, one of the discussants from the mosque made it perfectly clear. In the eyes of some Muslims, the Government had form. It had lied at every stage of the buildup to the Iraq war, so it might well be lying now.

Sadly, I don't think "The Conspiracy Files" will have done much to correct this impression, especially since right now, the same Government seems to be lying about almost everything. Is it better to allow "Muad Dib"'s evil nonsense to collapse under the weight of its own contradictions, or should the Government actively combat it, which risks giving it far more publicity than it deserves? It's a tough call, but fortunately it's hard to foresee the extremely creepy Mr Hill making much of an impression on the majority of Muslims.