In Defense of Free Markets

Last week there was the Labour party conference and their leaders speech. Jeremy Corbyn spoke about his policies of re-nationalising the railways and capping rents. These are sensible pragmatic policies in my view, which are also popular. The government response was Theresa May stating that free markets are the best way to deliver economic growth, and that she should return to winning arguments for free markets as she thought that her party had already won this argument.

This is an example of what I despise about party politics. The meaningless soundbite triumphing over the deeper truths. It has been argued that this is due to people receiving news via a 144 character tweet or a headline. So, that people don’t read deeper to uncover what is more accurately going on.

I agree with Theresa May on the first point that free markets are the best way of delivering economic growth. However she then muddies this statements that distort the truth. The Tories never won the argument for free markets, instead they created a political bubble for a market fundamentalism, where simply injecting elements of free markets into unfree markets will produce economic growth. This doesn’t work, you either have free markets or unfree ones. Regulating markets to make them more free is a good thing, but arbitrary market elements can make markets less free, which is what Tory governments have implemented. Which is why the UK housing and  railway markets are not free and in crisis.

So what is a free market? There are many definitions and it is a much abused phrase as it means different things to different people. My definition is that a free market is one where there is an interplay between producers and consumers, competition between providers, where forces pushing price up and down achieve balance, where supply and demand achieve a sustainable balance. A free market isn’t influenced by external actors.

For example, baker shops. A baker shop provides a service, making bread and cakes and delivers a profit for the owners of the business sufficient that they are better off continuing to run the business rather than seek easier money elsewhere. The bakers shop has costs: maintenance of the premises, maintenance of equipment, staff costs and ingredient costs. So must work out the price by adding to the cost of making a loaf of bread a sufficient margin to sustain the business. There will be other baker shops they compete. If costs rise too much people either buy less bakery products or make their own bread. If price is too low, then the bakery will go out of business. Thus forces on price achieve a balance. The rival bakeries will differentiate to maintain market share, either by being the cheapest or producing a higher quality product. Such a system allows for innovation, for example investment in new technology enabling costs to be lowered and thus we have economic growth. In this simple free market, every aspect of the market is free to influence the market. There are open dialogues between producers and consumers

This can be contrasted with an unfree markets, the semi-privatised UK railway network. On the Uk rail network , private companies bid to run selected services on the network. So a company will run the train services between A & B. The company has little control over the track, it has limited choice in what train carriages it can use. It has to charge government regulated fares, but is allowed to sell it’s own tickets too which of course have to be lower than the regulated fares. It has no competition as no other company is running a service between A&B. Technically it is competing against alternative forms of transport, such as motor cars, buses and aeroplanes, however the price differential between these forms of transport is massive. The railway company would have to alter fares by large factors to increase or decrease demand. Essentially there is no free market mechanisms in this fairly unfree market. Interaction between provider and consumer is quite limited.

Hence the argument for nationalisation of the railways is that private providers simply take profits away for no benefit to the market. A state railway could run the service more cheaply as it doesn’t have to make a profit.

What bugs me about the market fundamentalist position is that it’s too theory pure and lacks understanding of the real world. In the real world businesses are not interested in promoting or maintaining free markets. Real world businesses are concerned with providing a service and maximising profits, which is fine. Businesses may exploit rules or market position to prevent action of free market forces, particularly monopolies, so there is a role for the state to regulate markets to make them more free.

Railways and indeed housing are key industries as they provide infrastructure to the wider economy. They enable labour to move around the UK and in doing so enable other markets to be more free. For example a business isn’t restricted in it’s activities by the inflated costs of rail travel or housing. Such key industries can be free markets, but they are not close to being so anytime soon. Hence state intervention such as nationalisation or price capping, can help ease some of the problems and free up the wider economy.

We all want to live in an ideal world and that ideal world would consist largely of free markets. However there needs to be more  understanding that the world is not ideal. It would be better to move in the direction of the ideal rather than exacerbate existing problems in unfree markets. The ideal of free markets should not be tarnished by increasing use of the phrase ‘free markets’ to describe unfree markets. This is a problem because politicians use phrases such as ‘ we support free markets’ when it isn’t clear that they are talking about free markets and use the phrase merely to imply that the other lot are against free markets. This phenomena has reached the state where you hear politicians say ‘we want to make things better’ implying that the other lot wish to make them worse. Basically I think we all deserve  our politicians to act more like  grown-ups, rather than a class whom besmirch the ideal of free markets.

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Time for Wales!

Yesterday when the Scottish first minister announced that Scotland would be holding a second referendum on independence for Scotland, there was this irrepressible thought of why doesn’t Wales grasp the mettle and go for independence too. What exactly are we waiting for?

For me the argument is simple:

Decisions that affect the people of Wales should be made in Wales by the people of Wales.

This does raise a couple of questions: Why Wales and why now?

Often the advocate of self-government for Wales faces two reductive arguments: Why not each postcode and why not the UK. Basically I believe that there is an optimum size for a country. Too small and the community misses out on the advantages and efficiencies of scale, too large and a single common set of rules starts to leave some areas with don’t work well for that community. So, the ubiquitous ‘Area the size of Wales’ is I feel somewhere near the right compromise and in any case a coherent sense of being a country,  enough commonality in culture to work and it happens to be my home.

Now, Wales is one of the poorest countries in Northern Europe. The important question is to ask why this is. There is nothing better or worse about the people who live in Wales than anywhere else. To believe the reverse is somewhat perverse and suggests some people are somehow better than others.

To understand why people are making this argument you need to understand a merest smidgen of history and economics.

Wales rail

Take a look at the above rail map of Wales. Two thing that stands out is that there is no North-South mainline, well no North-South line at all in fact. Then you can appreciate that the railways were built to remove resources out of Wales, notably coal and steel out of South Wales to head east. The story of this coal is the modern history of Wales, lots of wealth created but only a small percentage of that invested back into Wales. Wales has never benefitted from the structural funding to provide the basis of a modern nation.

Instead and in consequence of this is that today Wales languishes near the bottom of the economic league table, seen by some as a burden to be propped up by hand-outs, which are never sufficient to truly build the Welsh economy or indeed other impoverished areas of the UK. Wales is left neglected and distracted by the machinations of the UK, such as Brexit, ever slipping further and further behind. The UK has had more than enough of a chance to do what was required for Wales to be prosperous. Not doing so was not out of any sense of malice, it’s just how politics and economics works. Surely now is the time to say we should do something about it. With independence Wales can build a better more prosperous economy for itself. Why do we in Wales always seem to sit back and wait for things to improve amd suggest the challenges to being a normal country are somehow too insurmountable for the people who put a red dragon on our flag? I don’t believe things will improve unless we all start working to improve Wales.

Arguing for Welsh independence is simply wanting the area you live or call home to improve. I think people from all over the world share this view, localism makes sense. This sentiment is not about hating anyone or blaming anyone. Wales’ neglect was never intentional, it simply happened in consequence of decisions taken elsewhere. Hence it would be better to make decisions in Wales! The question isn’t whether Wales should be an independent country but rather why isn’t an independent country.v It’s about positivity, not about why we can’t do something, but exploring how we can.

I’m Welsh and I hold a particular affection for all of  the British Isles. It’s not about separation from or abandoning England. The Republic of Ireland is already a separate state, but does not feel like a foreign country to those of us who grew up in Wales, it’s a mere ferry ride away. Wales wants England to thrive and when the time comes that all of Britain is ready for mutually beneficial cooperation as equals, Wales would be ready to take part in that. It’s not as if Scotland and England would suddenly become alien countries. The argument for Wales is simply to build a better country for the people of Wales, because no-one is going to do that for us and there is no reason why we can’t do it ourselves. But we really really need to start talking about it and not getting distracted by irrelevant arguments.

Black Sheep and Corbyn

I have written about how I believe that right wing people, conservatives, and left wing people, socialists, think differently. There is scientific evidence backing this theory both genetically and from psychological profiling. I have then argued that society in general should reflect that, economies should be more efficient if they cater for the diversity of people, so people can find their niches to survive and thrive. Yet, the political media  very rarely mention this and thus an impression is created that one ideology is simply better than the other, which I have long argued simply isn’t true. I mean if you accept this theory it becomes absurd to introduce competition or commercial strategies to public institutions like the health service, the railways or the BBC, or expect commercial organisations to fulfil social requirements. ‘Balance in everything’ should perhaps be a universal motto.

The media ignore this is the frenzy of Jeremy Corbyn, being retained as leader of the Labour party today. The left need a political leader  who is left wing. Corbyn became leader simply through being the right person at the right time. It is the weakness of the Labour party that no-one else with a broader appeal is currently available. so, the infighting and a leadership election was a complete waste of time, especially at a time, when an objective assessment of what to do about Brexit is required.

Of course social demographics plays a part, but it is perhaps worth re-considering traditional voting patterns. There used to be much more of families voting the same way and perhaps there is a genetic component to this. So many families will produce the odd person of the opposite persuasion. I grew up in a largely conservative family, however considering genetics, my grandfather, who passed away before I was born was a socialist, so I assumed I had inherited his ‘socialist genes’ rather than been an outlier. Such ‘black sheep’ often chastised for ‘rebelling’ against the family serve such an important role. The black sheep are in a position to argue for balance, to point out that the established way of doing things doesn’t work for everyone, only those who fit in with those traditions.

Broadly, socialists tend to be attracted to public service co-operative roles, whilst conservatives tend to be attracted to market trading competitive roles. I heard a right wing commentator talking about the importance of competition in schools. Yes, competition is important for children, the conservatives benefit from it and it teaches the socialists an understanding of the role of competition. so, it is equally important for children to do cooperative tasks because this benefits the socialist children and teaches the conservative children about the role of cooperation. The point is that neither is better than the other and it si wrong to have one without the other, it’s like the Yin-Yang symbol. Working in public service is as important as working at innovation and producing new products in competitive markets.

I heard on the radio today someone say that ‘Britain will never elect a true socialist’, which begs the question ‘why not?’Britain needs a socialist, a black sheep, to restore some balance to our economy. It is possible that the genetic pool of the British is predominantly right wing, after all the modern British, genetically are a mix of original settlers (which we know little about), Celts, Anglo-Saxons, Normans and Vikings. Added to that mix is the diversity of immigration predominantly from specific regions: Africa, the Caribbean Islands, the Indian sub-continent, Poland etc. Essentially a product of the British Empire period and European wars. This is interesting as the genetic mix still varies across Britain, the phenomena of large numbers moving vast distances is only a few generations old, and not long enough to have truly mixed the genes.

Contrast this to France, with a different history and a different Empire (so a distinctly different group of Africans), has tended to be more socialist than Britain. However it is a very interesting question whether the different gene pools do generate different mixes of left or right wing people, or do populations tend to balance out this diversity.

It’s a pertinent question as the party political landscape appears to no longer reflects the diversity of opinion and people. We no longer live in a world where politicians justify their policies in practical terms. Instead arguments centre around ideology, that one ideology is simply better. It’s like saying that blue eyed people are somehow better than brown eyed people, or that dark skinned people are better than light skinned people, it’s nonsense. Yet we live in a world where respect and tolerance of diversity appears to be in decline and there is a rise in tribalism again. Whichever pigeon hole you slot into, your historic identity, seems to have become more important, when there is perhaps little use in creating needless division. Diverse people have generally got on fine, even the black sheep in the family are usually accepted as full members of the family.

Just listen to the rhetoric of Donald Trump and other right wing leaders, look at the deeply saddening scenes in Syria, the Tory regime in Britain. There is a need for Corbyn, because people like Corbyn have been sidelined for too long. I don’t agree with everything Corbyn says, I don’t have to, I just accept the need for someone like him to drag us back to the centre ground, to create a level playing field, where whomever we are, whatever your social or indeed genetic background is, that there is the opportunity for you to find a role to contribute to the economy and society, whilst accepting that other people are different. a world where we can maximise value so we have the resources to deal with disasters and other problems.

Two months on, we are still asking “What is Brexit?”

When the newly appointed UK Prime Minister first appeared she stated that ‘Brexit means Brexit’ which begs the question: What then is Brexit?

The word was conceived to mean an exit of Britain (the UK really, but Ukxit didn’t catch on) from the European Union (EU). However it’s more complicated than that as the government have been busy running around  trying to talk to everyone and seem to be trying to find a way of remaining in the European Single Market outside of the EU proper, to have a trading relationship without a commitment to political integration. Really the governments seems to want to establish a new EEA (European Economic Area) treaty, with some restrictions on free movement and some decrease in European regulations. Essentially this is what the Tories have always wanted, a genuine two speed Europe. However, this may be difficult to achieve, at least before 2020 (when the UK has to have a general election and a new government) because getting the institutions of the EU and the other member states of the EEA will be difficult. The EU has enough problems at the moment and appears happy to let things bumble on, which really the UK seems fairly happy to do as well with no clear answer in sight, suggesting that Brexit may not happen, because the politics is difficult, the economic risks of a bad deal are perhaps a lot greater than the economic costs of doing nothing. Yet the vote happened, so ‘Brexit’ has come to mean the referendum itself, seemingly without wider implications.

A simple spectra of views of the UK in the EU can be imagined, with the hardcore Euro-sceptics, the UKIPers, the Brexitiers, at one end advocating the UK completely withdrawing from the EU and at the other end the Europhiles, the EU integrationists, with the vast majority of people somewhere in between. So with such a simple spectra asking the question ‘EU leave or not?’ was essentially, ‘Do you agree with the Brexitiers?’. The answer, by 52-48 was yes and the Brexitiers won the vote. However it would be wrong to suggest that a majority of the electorate do agree with the Brexitier position.

Wrong, because no simple spectra for views on the EU exists. Like most things really it’s more complicated, imagine the spectra spread around into a circle, or even a sphere, to consist of multiple  spectra, based on such concepts as democracy, economics, immigration and identity. As such, especially in referenda, where often a different question is answered to the actual one put. This is not to suggest that referenda are always a bad thing. The electorate has not been asked for it’s views on the EU (the last vote was 1975), so a question more like ‘Do you thing the UK should have a closer relationship or a looser relationship with the EU?’, would perhaps give a more representative result, I speculate than no-one would be surprised by a 75%+ vote for ‘less EU’ and I would not have been troubled by my choice at all.  Though such a vote would again not produce by itself a clear UK EU strategy, but it would be more indicative of what people actually want.

It’s not a simple spectra as the Brexitier camp is itself very divided. One group are the hardcore market fundamentalists (more capital), wanting lower regulations, lower productivity, lower tax and low wages. opposed to the Social Democrats (more democracy, more labour), wanting higher regulations, higher wages, higher taxes and higher productivity. Either system could work, but a complete withdrawal from the EU, would lead to a fight between these Brexit groups, where no compromise was possible that wouldn’t lead to a much weaker economy than exists now and for these systems to work there would need to be a majority consensus for them to actually work. In any case our FPTP electoral system, favouring two major left-right aligned blocs, would fail to allow such a fundamental shift in the economy either way, because international trade and relations are important in the inter-dependent world the UK exists in, doing things substantially differently to the rest of the world would be challenging. Well, the UK could be truly isolationist, but this would entail lots of things like everyone becoming vegan, giving up personal transport and completely changing our lifestyles, although off-grid lifestyle choices are growing in popularity.

However, the Brexit wasn’t really about the EU at all, I have argued that it was simple a protest vote against the political establishment. The establishment and democracy has failed in the UK. A two party system works, when the parties in control are regularly swapped to maintain a balance and elected representatives are free to ignore party dictats (the whipped vote). A balance should be created that prevents leading towards extreme ideologies, that don’t work very well for the majority.

Essentially we can view economies as interactions between three hostile powers, Labour, Capital and the State. So traditionally, the Conservative party advocate more Capital, while the Labour party advocate more power for Labour, but both parties want the State (themselves when they are in power) to work in different ways.

The problem is that the balance of power broke down in the mid 1980s. In the 1970s, Labour and the Trade Unions were too powerful, choking the UK economy. Democracy triumphed in 1979, when the Conservatives won and set about reducing Labour and increasing Capital. However by around 1985, they had gone to far in supporting capital, but the Tories won the 1987 election? and again in 1992??, Democracy had failed, or at least the Labour party had failed. In a two party system, both parties need to be strong for democracy to work. The UK now really does need a strong Socialist, just to bring some balance back, but the Labour party are currently split over this. Well sadly Labour didn’t have many Socialists left in the parliamentary party to choose from, which is the problem they are making a fuss about at the moment.

Globalisation has compounded this problem, rather than been a panacea of free and fair trade. Market fundamentalist governments appear across the globe, trade agreements lock in the power of Capital at the expense of the State. We are now in a world where correction is harder and harder to achieve. Harder in a world where the advocates of capital control the main stream media, denying the wider electorate the chance to be informed and thus able to vote for balance, political debate is now framed solely by the effect on capital. We live in a world of no real economic growth as the drivers of the economy, the working and middle class, and the state itself are heavily in debt to capital, there is no money to fund growth, to support new innovative enterprise. Capital has no means of giving money to Labour or the State because that is not it’s job, it’s the job of Labour and the State to do that!

Essentially, everyone has the idea that something is very wrong with the world economy, but this opposition to the market fundamentalist establishment (the neo-liberals) is divided. In the US, Trump is a phenomena, riding this tide of discontent, in spite of him being a really offensive individual and a class A idiot, it’s like the people are screaming ‘Any change at all, we can’t carry on like this’, as the UK did with Brexit.

So, how does all relate the the EU? The EU itself is perceived both as a strong armer for Capital, and as a strong armer for  regulation (but at an EU (inter-state) and not state level). It’s perceived as being unable to do anything well for 28 diverse states. So objections to it are valid whether you are a market fundamentalist or not.

So, a hard Brexit won’t work, but neither will an EEA fudge. It seems that the best strategy is simply remain in the EU, but veto pretty much everything, including trade deals such as CETA and TTIP, effectively having an EEA trade treaty, by the back door. However aren’t trade treaties perhaps the problem, as they reduce the power of the State and Labour and give to Capital? What we need is social democracy back, that can tame capital (and tame Labour and the State when needs be), rather than anything that increases the power of capital.

Perhaps the issue is mobility. States don’t move very much, if at all in modern times. People (Labour) can move, but is restricted and usually involved making a commitment to living, working and contributing to life in a new country. Capital is fairly unrestricted in it’s mobility, hence it can exploit States and Labour, by moving away from when times get harder. So, perhaps the next step forward to achieving economic balance is to restrict movement of capital. Capital will then have to make the same commitments to states, to it’s workforce as others in the trinity. Capital will then have to  invest long-term, it’s monetary gains will then largely remain in a state and contribute back to local Labour. The question is whether to do this at an EU level, a UK level or a devolved level. Again I would argue for devolving this power, to restrict inward investment that it not committed to a a community, so it becomes part of that community. The Uk has been poor at ensuring a one-nation where prosperous regions give a helping hand to less prosperous areas to bring them up to speed. As the market demands change and technology develops, capital can switch industry, but remain geographically fixed to a locality. Is this what Brexit is, taking back control of capital to local communities, giving control to democracy, rather than centralised states or corporations.Is this how humanity will tackle growing inequality and the threats of climate change?

 

 

 

Being Positive about the EU referendum

There has been much complaint about this woeful UK European Union referendum, the level of debate from the two ‘official’ campaigns has been very negative and most people seem very fed up of the whole thing after only a three weeks, with another three weeks to go. Most, if not all, UK votes, always seem about choosing between the lesser of two evils.  I shall attempt to take up the challenge of making a positive argument.

Being positive about this decision is not easy, there is no clear, precise argument for either of the two alternatives offered. On the one hand you have the undemocratic EU, which has ignored the will of the people of the EU, left the economies of entire countries in tatters, especially Greece, failed to deal effectively with the migrant crisis from war-zones and is negotiating protectionist damaging trade deals, such as CETA and TTIP. On the other hand is the UK, which is also undemocratic (albeit less so than the EU), ignored the will of it’s own people, failed to effectively deal with immigration and keen on establishing protectionist trade deals. It does seem to be about choosing the least worse option yet again.

There are attempts to frame the argument as about: Democracy, which doesn’t  clearly support either option, Free trade, again this isn’t clear which option would increase free-trade in general. The economy, here it is unclear about whether the UK would be better off or not, it is not possible to predict the future or how the political class will proceed. So it is quite understandable how frustrated people are about this.

So, to positivity, perhaps we have to consider hope. We all want (hopefully) the UK and Europe to be better places to live, work and play. So the question then becomes , which option offers us the best hope of progress? Which option can lead to more democracy, more accountability, freer and fairer trade, more prosperity, a better world for our children to live in?

Really no single person can achieve anything, so it seems that working with the bigger population, the European Union, seems to offer a better hope, which is why I am on the Bremain side.

However, whatever the outcome of the vote on the 23rd of June, that is not the end of this process, it is only the beginning. After the votes are counted we must all work to deliver on those hopes. Put pressure on any politician that lays claim to any meaning about the result, that a vote either way is not an endorsement of anything future or past EU policy, or indeed UK policy. To step up the pressure for democratic reform, to maintain pressure for genuine free and fairer trade, to create a world where people do not blame visitors for their own problems and the problems of their democracy, but instead work together to solve those problems.

With this hope and determination, we can create a better Britian, a better Europe and a better world. stay positive!

Devolution

It is probable that I write more about politics on this blog than I would perhaps like. Part of the reason I’d rather not is that I assume people have spent a lot of time thinking about politics and that the arguments for positions are well known and at least understood, even if not agreed with. For example ‘Question Time’, where politicians avoid answering questions from the audience and other panellists often stand out by actually expressing their opinions. What sometimes seems clear is members of the public not really understanding the issue and quite often it seems that politicians don’t understand either. In the case of politicians there is a least the suspicion that they do understand but hide this for some reason, yet in the case of members of the public it is likely that such misunderstanding is genuine.

I wrote a while ago about why Plaid Cymru, seem to struggle to make electoral progress in the face of an under-performing Labour administration in the Welsh government and probably the worst government in history at the UK level. Plaid Cymru are saddled with the impression that they are nationalists and are only for speakers of Welsh, neither of which is really the case. Furthermore, in the light of the forthcoming UK European Union (EU) membership referendum, the issue of why people can be in favour of withdrawal from one union, the UK, yet be in favour of continued membership of another, the EU. Superficially, there is a point, it seems contradictory, but it isn’t at all.

I am surprised by this misunderstanding, perhaps a lot of people don’t understand what the argument for devolution is about. This lack of understanding is not  merely Unionist political spin. In any case isn’t wishing to leave one union, the EU, yet be in favour of retaining another, the UK, also superficially inconsistent. Perhaps there is a similarity in logic, in principle, but the two positions are far part practically and ideologically
Personally I am in favour of independence for Wales as things stand, but would not describe myself as a nationalist. The argument for devolution is all about democracy

Devolutionists believe that political power should belong with the people, that power is granted to central bodies from local communities with consent  (and can be withdrawn if necessary) and gain mutual benefits and efficiencies of working at larger scales and that decisions should be made as locally as practicable.

The argument is that the Welsh economy could do better if freed from the restraints of a UK government that favours the financial sector (which is very small in Wales) and supports the economy of South East England, to the detriment of everybody else. Wales is now one of the, if not the poorest, region in Northern Europe. Wales used to be one of the wealthier regions, this wealth was generated from the coal and steel industries, though arguably much of the actual wealth went to London, rather than staying in Wales.

Modern economies are cyclical, with periods of growth and recession. The role of government is perhaps to attempt to manage this, by sustaining growth by not allowing the economy to expand too quickly and then acting to boost the economy to minimise the effects of recession. In larger states, such as the UK, a problem is that the economy is divided into regions with different local economies. In the UK there is a divide between the South East of England and everywhere else. So, what has happened is that when the South East is growing too quickly, interest rates were raised to control this expansion. The problem with this is that the rest of the UK, is only just entering into a growth phase and this expansion is prevented by UK fiscal policy. This would not be so much of a problem if the state, the UK acted to mitigate the imbalances, but this isn’t really done and the media often suggest it is the rest of the UK’s fault that it is relatively poor, rather than simply admit it’s part of how large states work.

In Wales, we remember the Miners dispute of the early 1980s. The argument for closing the mines wasn’t terrible. The mines were basically just about paying their way and not making a profit as the international price of coal fell. so the idea that closing them, so the workers could then do something more productive made sense. However, infrastructure was not put in place of the mines, opportunities for enterprise were not provided. So, what happened instead of communities breaking even, the communities of the South Wales valleys lived off unemployment benefits from central (UK) government. So in reality, closing the mines cost the UK money, and made living in the valleys more depressing than when there was high employment. Arguably there was also an agenda about attacking the power of the trade union movement, so it didn’t really matter about the valleys, the end justified the means, it allowed South East England to prosper, but of course it does matter, especially if you live in Wales!

Part of the issue is the problem of centralisation. Centralising things can confer benefits and great efficiencies however centralising creates executive elites which creates problems for the majority not in the elite. Imagine a political union as much like a club, I’ll use the example a sailing club.

People can join a sailing club by paying an annual membership fee. In return members receive benefits, such as use of club boats, training, social events and opportunities to enter competitions. The point of being a member is that it is much cheaper to be a member rather than do it all by yourself, which would be more expensive. So, like any club an executive committee is elected to run the club, which regularly meet together to organise the running of the club. Generally, the committee will be the more committed sailors, people who make the most use of club facilities, do more sailing and generally get more out of  their membership fee, than a more casual member. This can become a problem if the committee or elite start running the club for their own benefit, because the ordinary member will remain a member even if it is only slightly better to be a member than paying for everything themselves. They may even consider leaving the club in such circumstances, but refrain because of the high costs of buying their own boat. However if anyone is overly greedy, they would be likely to find themselves voted out of office at the next Annual General Meeting (AGM).

If it is imagined that this sailing club is compared to an international political union, many parallels become apparent. As I argued above, the UK does have an executive elite that serves it’s own interests rather than the good of the membership/citizenry generally and an electoral system that makes it difficult to boot out the elitists. So, with the case of say Welsh independence from the UK, there would be huge costs of separation for Wales: new systems such as  new tax systems, new laws and a new judicial system, new systems for businesses and individuals and costs due to economic uncertainty from the wider international community. However, where membership of a union is more costly than independence, in the long term, the country would be better off governing themselves. Of course Wales would not exist in isolation, it would then wish to cooperate for mutual benefits with the wider international community, but would at least do it on it’s own terms and have the political infrastructure to withdraw from any agreement that didn’t have a net benefit. Having the means to leave relatively easily, encourages the union to look after all it’s members.

So, my ideal would be for a maximum amount of devolution, self-determination, the political systems for independence to remain in place and a functional representative democracy. Then international agreements can be entered into and left when there is a benefit for doing so. It is still possible this way to enter into wide ranging agreements where there is a net cost in some areas and benefits in other areas. Cooperation can use the existing political infrastructure, provided it is not removed.

Perhaps a difficulty with long terms unions, such as the UK or the EU, is there is a tendency to lose local systems to central authorities, for example the European Central Bank for Eurozone (EZ) countries and it seems that such arrangements are difficult to leave. I would argue that the ability to leave is central for such cooperation to work.

In the proverbial nutshell, membership of international agreements should be based on a rational assessment of the benefits and costs for the economy as a whole, as long as there is a net benefit of membership, you join to stay a member.

My arguments for Welsh independence, stem simply because I am Welsh. I would be just as in favour of a new federal state formed of say, Wales, South West England, Northern England, Scotland and possibly Ireland, the similarities in the economies would enable a strong beneficial union. The argument for devolution is universal.

So, to answer the question of why you can argue for more independence from the UK, whilst arguing for continuing membership of the EU. The simple answer is that there is a net benefit from EU membership, but not from  UK membership

A longer answer is that the UK keeps (mysteriously) electing Conservative governments, whose policies don’t help Wales or it’s economy, they actually make it gradually worse. Wales exists in a political union where the electorate are governed by political parties that don’t command a majority in Wales. So, independence would free Wales to run it’s own economy , have a more representative government and improve it’s GDP.
So, why do devolutionists want to remain in the EU? Because the EU is a slow cumbersome organisation, that doesn’t change things rapidly in reaction to current media trends. When it does make a policy is more general as it has to work across most of the EU, so tends to have a less negative effect on the Welsh economy than a UK decision, the bias towards some regions found in the UK is less at an EU level.
Whilst devolutionists want democracy and local power, they are also internationalists who believe in cooperation for mutual benefit, to work together with neighbours and partners for mutual benefits, rather than be dictated to by centralised governments we have no influence over. The EU does lack democratic accountability, this is it’s main failing, but hopefully this can be rectified, although this may take some time, it needs to be the priority. The oil of common systems and regulations is generally beneficial and to some extent buffers the desire of individual governments to remove benefits for ordinary members to serve their own elites.

So really, I seek an independent Wales in a heavily reformed, more democratic EU and a close relationship with rUK, working together for mutual advantage, with common systems where there is a net benefit to ordinary people or the wider economy. Basically the idea is establish democratic control first, then cooperate, rather than just grumble about the problems of a centralised dictatorial elite.
I have written quite a long answer, but I hope you would agree at least that there is an argument for leaving the UK, but remaining in the EU, though you may disagree and see the balance of benefits and costs differently for each possible union.
If the UK was a fully federal, level playing field, I would not be arguing to leave the UK as then the benefit of being a member of bigger state would be mutually advantageous. If the EU becomes even more dictatorial I would advocate leaving that too. It all about the balance of power, whether the advantages outweigh the benefits, and they constantly change.
The whole EU remain/leave referendum is not a simple question at all and does bring the  question of devolution and democracy to prominence.

Ethically Sourced Meat

I was a vegetarian for 15 years because of concerns over animal welfare and my inability to ethically source meat as a teenager. Having lost an argument over dairy products (I was being inconsistent), I decided to take up ethically sourcing meat and dairy products and became mostly vegetarian. I often explain my position to people and often people find my position appealing, they then ask ‘Is it easy?’ to which the answer is sadly ‘no’. Ethically sourced meat is basically meat from animals that have been reared in a traditional manner, where animals can express natural behaviours, generally grazing outside during the warmer months.

Ethically sourcing meat isn’t easy for two reasons. Firstly there is a lack of a clear labelling system. In the UK food labeling is a bewildering array of labels and standards, whether publically regulated (state level) or independently regulated (where you have to trust the labeling body). The second issue is a lack of direct connection between the consumer and the farmer, it is difficult as an individual consumer to monitor welfare levels at each farm, hence the need for labeling). Basically it all comes down to trusting the source

So, my solution has been to take a precautionary principle, sources of meat are investigated and then personally approved. Then the products have to pass a more important second test, this is a visual test of the meat itself, as free range meat looks and tastes differently to intensively produced meat. This second test involves identifying the quality of the meat by the presence of marbling (deposits of fat in the muscle which is indicative of an active life) and colour (active muscles are generally a darker hue), these qualities are then confirmed by the taste test.

My system is actually fairly inefficient, as I have to invest time and effort when sourcing meat products. Indeed, occasionally i consider going vegan for a simpler life! Really a proper labeling system would be more efficient, instead of every individual consumer conducting investigations, a single body can do the job for everyone, which would be much more economically efficient.

The system sometimes fails due to geography. In rural areas it works fairly easily, as relationships are built up with suppliers such as local butchers and other independent stores, who can state where and how the meat was reared and it is possible to check up on claims, so trust is established. In urban areas it gets a lot more complicated, as any followers i may have are aware, I was living recently in an urban area of Southern England, which had no local butcher shops and only supermarkets were available within convenient shopping distance for a weekly shop. what happened was that my meat consumption dropped to barely one meat containing meal a week. The issue was that the supermarkets only had a very limited range of ethically sourced meat and generally charged a very high premium for it. I could have ordered meat online, but being available for delivery of  a refrigerated product was overly burdensome.

What it is is that the British public do tend to want ethically sourced meat, but are constrained from doing so, by the post-industrial way our society is organised. Since free-range eggs have been labelled and regulated  consumption has increased from 2% to over 50%, the demand is there. Economic efficiencies of scale enable urban living and diversity of industry, yet with meat the industry has developed without popular consent for welfare standards and to have industrial efficiency in meat production and distribution requires labelling. Sadly the state, the UK and EU governments have failed to develop a comprehensive food labelling system that the consumer can trust. This lack of economies of scale hits farmers, where farmers do produce a high welfare, sustainable and tasty product, as individual small businesses, it is very difficult to get their produce to the the market for higher quality produce. Local farmers to me, sell on their high quality product in the same way as producers of low quality produce, because once the animals are sold at market, the high quality status is lost into the vast pool of meat that goes off for export to England and beyond.

Another question to address is will a comprehensive labeling system ever come about? There is a desire from politicians in both the Welsh, UK and EU government to implement a system. However, there are hurdles in place caused by international trade laws and there is potential under the proposed TTIP trade treaty for this process to become more difficult. Far from promoting free trade, these international laws stifle free trade by blocking regulatory systems, as states cannot breach these laws by implementing ‘non-tariff barriers’, by which having a local labeling system is difficult as it favours local businesses over foreign ones who can’t readily buy into the labeling system. Potentially TTIP will require a common labeling system to cover all of the EU and all of North America, it may take a very long time, if ever to reach a consensual agreement.

So, potentially, this leaves the consumer to regulate themselves, develop individual relationships with producers. This seems to be a failure of laissez-faire capitalism, where once economies of scale were thought to come from increased international trade, these economies are actually prevented by the system itself as consumers increasingly resort to local level solutions, rather than industrial solutions. It seems that no longer can individuals trust their local state democratic apparatus to regulate markets and thus free up there time to be more economically productive, there is no longer perhaps a ‘once size fits all’ approach, everyone has to do everything themselves, it does increasingly feel like it!

The Great British Housing Crisis

There has recently been much media coverage of the British ‘housing crisis’, as if people had only just noticed, the crisis arguably began in the early 1980s and has continued ever since.

The situation prior to the crisis, what perhaps was considered normal, was for homes to cost 3 times the full time workers salary. People could take out mortgages over 25 years and pay around 20% of their incomes servicing there mortgage and still have money to save or invest. There was also a rental sector, with relatively secure tenancies and rents were reasonable. Then there was social/council housing, for those unable or unwilling to enter the private housing market. There were the experimental housing estates of the 1950s and 1960s, which many tenants moved from as they were poorly maintained  and the councils housed difficult tenants in them, all of which led to estates becoming ‘sink estates; areas of high crime.

The Thatcher government introduced the policy of ‘right to buy’ (though the Labour party had tried to introduce the policy in the 1950s), whereby council tenants had the right to buy their homes at a substantial discount on the market price (up to 50%). The idea of owning your home rather than renting now became appealing to a wider section of the population. In my view, the policy in itself is a good one, however what the government failed to do was replace the houses that were sold with new build social housing, this really is what caused the housing crisis. There remained spare capacity in property available in deprived areas of towns and cities, slowly this spare capacity disappeared without replacement.

The fall in the numbers of social houses was exacerbated with the perennial failure of private house building to keep up with demand. Demand was rising as the number of households increased and to a lesser extent population growth. The rise in the number of households was caused by social changes. Social changes, such as the rise in the divorce rate meant the traditional family home became two homes and young adults living independently for longer periods before marriage.

Demand for housing exceeded supply, causing rapid house price inflation, an inflation that far exceeded economic growth (wages, GDP, inflation) and was not a reflection of the underlying health of the British economy, although many on the right claimed it was. This has continued for 35 years. The people of Britain have adapted to these changes, absorbing the effects of the crisis. There has been a general trend of a decrease in the space or the square footage, taken up by individuals. New builds are smaller and smaller, existing housing has had rooms divided into smaller ones to pack more people in, all at the cost of individuals living efficiency. People have moved into the empty homes in the deprived areas and moved to live further and further away from their place of work. More importantly the amount of peoples income spent on housing has increased, from around 20% to up to 50% of income. Really, I think it’s quite crazy to spend half you’re income just to put a roof over your head, when it doesn’t take half an individuals life work to build a house.

Why are the British prepared to spend so much money on housing? The housing crisis has been growing for a long time. Younger people have felt a desperation to own there own home as relative cost increased further, rather than waste their money paying the profits of a landlord or a financial institution, especially when in the long term, over a lifetime, buying over renting still saves a lot of money.

I noted in the news yesterday that the average England and Wales monthly rent is £816, The average house price is £178000. The mortgage repayments, over a standard 25 year mortgage for this average house is £858. Basically, the cost of paying rent and a mortgage are essentially the same. So, it is always advantageous to buy instead of rent. The percentage of people in the 25-35 age group, when traditionally people buy a family home is falling, What frustrates young people is to get a mortgage a 10% deposit is required, this is frustrating to achieve, when they are renting at £800 a month and need to save for a deposit on top of this, knowing that when they do get a mortgage there monthly outgoings then fall. It’s a catch-22 as they longer they take to raise this deposit the amount required increases as house prices and rents continue to rise, All this in an economy where wages are stagnant.

This barrier to buying, doesn’t apply to the asset rich, who can find a deposit. The phenomena of ‘buy to let’ landlords became common. You simply paid the deposit and over 25 years the mortgage was paid off by the tenants renting the house and suddenly you have a valuable asset to sell. so, a whole industry of private landlords who made a lot of money out of very little work and no contribution to the productive economy. Because the expansion of this practice itself led to house price inflation, both encouraged it and hit the productive workers who lived in these homes.

The failure of private construction companies to supply the market with new build homes is a contributory factor. Friends of mine who live and work in continental Europe encounter locals who are find it strange that the British tend to live in old damp housing, rather than move to new builds. The answer is that new build housing is of lower quality than old housing and situated on estates that lack local pubs and shops and transport connections, they are relatively isolated. and as such command a lower market price than old housing. The majority of new build housing is constructed by a cartel of large developers, who build to minimum build quality standards, the houses are small and designed to a minimum specification of living needs, so they have limited appeal, generally those who can only afford new build. Much of this housing suffers from poor sound insulation and lack the ability to deliver real living needs. So, the traditional Victorian terrace house is superior as a place to live even if it costs a lot more to heat in the winter, really the UK should build new terrace housing in the same medium density style but with modern insulation methods.

A consequence of this hyper inflationary market has been social segregation, only those on high wages can afford to live near the places of work that pay high wages and have access to good social facilities. London and the south east of England has particularly borne the brunt of this hyper-inflation. There has been a scramble for people of my generation to enter the housing market before it’s too late, itself contributing to the inflation.

Another major social change has been work tenure. The older generation generally had ‘jobs for life’ where people could work for the same firm all their lives, taking on senior roles as their skills and experience increased. This is no longer the model, nowadays workers is contracted to a handful of years, so people move around the UK and the rest of the world to work. This has led to the idea that when buying a home to have it near by a range of potential businesses and customers, so a job can change but the home needn’t change. The resulting pressure on the transport infrastructure of increasing long distance commuting meant that homes near good transport hubs increased, distance from place of work no longer matters, it’s the time spent traveling that is important.

People are afraid to move, even when this will increase their living standards. This is partly due to the cost of £5000+ simply to sell your home and buy another elsewhere. An unwillingness to move to an area where property prices may drop relative to other areas, partly due to fear of not being able to move back home is house prices change. A consequence of this is that people living in and around London don’t want to risk moving away for a great work/business opportunity as they fear not being able to move back to home to their friends and family. This has encouraged the phenomenon utilised by several of my friends of buying a home in London or elsewhere, renting it out and using the rental income to pay to rent somewhere else, giving them flexibility in where they live in exchange for the awkwardness of being a landlord and renting at the same time.

All this social change has led to the political establishment appearing to finally realisie that housing is now the UK economies biggest problem, affecting productivity and recruitment. If you are a firm based in London you are well situated for producing products for a large local market and international connections are easy to set up and maintain. The cost of these advantages has largely been absorbed by the workforce, keen to hold a well paying job. however productivity is low as workers spend hours every day on cramped trains or stuck in traffic jams, this makes them tired and stressed and hence less productive. It is difficult to recruit staff as highly skilled people, who don’t already live in the South East are unable to afford to move to the area, unless wages rise. Such wages have risen, which further exacerbates the problem, the crisis is now being discussed because firms can no longer afford the staffing costs, especially in the sluggish post-2008 world economy. the workers and financial institutions have decreasing disposable incomes and no savings to invest in innovation.

Outside the global financial industry and the South East of England, these problems caused by the housing crisis are also manifest. The social division of areas has caused people to flee to areas with cheaper housing costs. This drove up housing costs in other industrial hubs, creating tensions with the local population, again pushing wages up to fund the increasing costs costs of housing for workers. The effect of this that a new business may have a great product and skilled staff, but cannot sell the product cheaply because wages are so high. The British have absorbed rising housing costs by cutting their disposable incomes to the hilt. Many firms now manufacture their goods or use cheaper labour in call centres countries like India to manage their sales and customer service because they can’t do it locally, because of the housing crisis. Essentially it is hard to develop a business in the UK in a globalised world, because the costs of living is too high. The British people have suffered and made the best of the housing crisis, but it has reached the point where it severely impacts the British economy generally.

The UK’s failure in tackling the housing crisis is simply bad economically. Capitalism works through supply and demand, open financial transactions and a free market. The problem is that housing is not part of a free market in the UK and never has been. Economies work well by having good levels of liquidity: Basically I buy goods from company A, they buy goods from company B, company B buys goods from company C, I work for company C so some of .the money comes back to me. However when each company pays wages to it’s staff and half of that money disappears to financial institutions/ asset rich landlords in housing costs. The problem is that the money made by the financial institutions doesn’t go back into the economy, it is spent on acquiring assets, including housing, further reducing liquidity. The asset bubble has finally hit the financial institutions, they no longer invest in economic growth as there is no liquidity to grow the businesses, instead they buy assets, this bubble will surely burst sometime soon as the British have borrowed to the hilt to to maintain living standards in the hope that things will get better. In a cold country, people have an innate fear of homelessness.

So, what is the solution?

1/ Build more housing. Firstly the government builds more social housing. Any money paid by the tenants over maintenance costs allows the tenant to buy a portion of the home every month, this money can then be invested in more social housing. Secondly change the planing system, allow qualified town planners to zone land and make planning applications quick and easy and ensure developments are properly planned, with green space, space for local business to develop and for social facilities, such as shops and schools, i.e make new estates places where people can live, build communities, rather than have to travel somewhere else to take part in social events. Thus zoning will be based on community needs rather than the lowest bidder.

2/ Discourage use of housing as an asset business. Homes are places for people to live and not as a resource to be exploited. A way to do this is to tax purchase of 2nd properties at say 20% of the market price, to help fund social house building and then a land value tax on the property. This will give people buying a home to live in an advantage over the asset rich.

3/ Change the laws for homes, give people the right to a home. If someone suffers becoming unemployed and defaults on their mortgage, the state should buy  the property at the purchase price or the current market value (whichever is lower) and allow the occupants to live in the property, it becomes social housing, so when the occupants regain employment they continue buying the home, of the government.

4/ Improve the building regulations, make homes more energy sustainable and sound insulated. Set minimum space standards per person.

5/ Encourage social mobility, eliminate stamp duty and streamline the conveyancing process, enabling people to move home without incurring a penalty. This will aid people moving closer to their workplace and retired people away from transport and employment hubs

6/ Deal with negative equity, provide assistance for those who were unlucky to take on a mortgage towards the end of the housing crisis. But no support for those with an excessive square for to occupants ratio (to discourage speculation)

7/ Implement these solutions cleverly, maintain the market by managing a reduction in house prices at around 2-3% of market price year on year until a house costs 3x average wage. A sudden house price crash would be more damaging.

Of course, the housing crisis won’t be solved until the asset rich establishment realise that the whole economy will crash, rather than maintain a grip on political power to maintain the ever increasing cost of housing.

The Perils of Sociobiology

The study of community ecology and animal behaviour is a fascinating pursuit because there are myriad ways in which populations sustain themselves and adapt. It is also fascinating to apply this knowledge to the behaviour of humans. However there is the risk of false correlations, as human society is in many ways a different beast, for example describing behaviour as ‘natural’.

The question of how humans society appears similar and how it differs from the society of other primates or pack animals is interesting. Organisms that live in groups benefit from cooperation in various ways. In evolutionary terms there are mechanisms which serve to promote such behaviour, indeed behavourial traits become part of the evolutionary process. Perhaps the key difference with modern humans is that we no longer live in closely related groups, human society is now global, resources are moved around the globe via international trade.  How individuals share resources is no longer a simple transaction, for example very rarely does someone give a sack of grain in exchange for a computer program)

Whilst humans can be described as a single community, there are sub-divisions, some genetic (race) others behavioural (communities of people who think in a certain way, such as religious groups). However the distinctions are increasingly blurred. The process of evolution perhaps only occurs in interaction between behaviours.

In any cooperative action for mutual benefit there is the ‘free-rider’ problem. Any rule based exchange system can be manipulated for the gain of an individual or group of individuals within the community. In evolutionary terms, this is useful as this may result in innovative behaviours to solve problems, indeed many natural societies tolerate a certain degree of such behaviour. There are also mechanisms for controlling anti-cooperative behaviour, so these behaviours come with a cost. For example the free-rider is shunned, excluded from social benefits. In natural systems such deviant behavoiur is tolerated as the deviant is a family member and there specialised behaviour ultimately contributes to the sustainability of the group.

In a globalised human society, the free-rider will often be something outside of a communities control, an agent on the other side of the world for example. As such any social control mechanisms of anti-social behaviour are curtailed. In a glabalised market, for a consumer to detect free riders and negative market forces upon them is also difficult.

Furthermore the post-industrial economy has made transactions so complicated, that the ability to control, to reign in free-riders is curtailed. Modern capitalisms concern is maximising profit for the individual or corporation, often without making an equal contribution to the needs of the community. Essentially whole industries of free-riders have been created. It is the proponents of the free-riding mentality (a behavioural trait) that are in positions of power and control in society, whether as governments or large corporations. There is little social control of the free-riders anymore, the ‘free-riders’ are in power. The individual lacks influence, often having no choice but to work for a free-rider to be able to obtain food and shelter and often work harder than they would if they were to build their own shelter and grow their own food.

Humanity has created some useful devices for facilitating mutual cooperative behaviour in society, such as religion, nationality and democracy. However the power and influence of these agents has been in decline in the Western world. what is the consequence of this? Is humanity ceasing to be social animals or a global society, as individuals shun familial or local groupings to join wider global groups that are antagonistic to their familial and local groups?

The Tragedy of David Cameron

This week was the Conservative party conference and their leader, David Cameron’s speech. Initially I was disgusted and appalled, then today on re-reading his speech, I had this uncanny sympathy for David Cameron, I felt sorry for him, he just seemed such a tragic figure.

I should be old enough not to shocked by anything politicians say or do anymore. For Cameron to take the words of his opponent, Jeremy Corbyn, out of context and blatantly lie about his views and make accusations based on these lies, was simply disgraceful. Corbyn said that it was a tragedy that Osama bin Laden wasn’t brought to trial, Cameron spun this to say that Corbyn was a supporter of Osama bin Laden. I fully expect the media and the commentariat to misrepresent people and facts, that is the nature of modern politics, however, Cameron is someone who is a political leader of the UK, whose actions affect the reputation of the UK abroad. I am embarrassed for Britain by his ‘leadership’.

The remainder of Cameron’s speech that could have been made by any politician of the left or centre too. I understand that political parties can simply use rhetoric to appeal to the centre ground or swing voters, whilst voters should look to the politicians actions, the implemented policies, which usually tell a different story, this is why political speeches are interesting.

The thought occurred, that Cameron may actually believe his own rhetoric. He may really believe in holding the union of the United Kingdom together, to create a level playing field for people and businesses, for peace and prosperity in the world, for family, for community; these values are shared by proponents of the majority of political and religious creeds. The tragedy is that Cameron has failed to notice that the policies his government enact and those of the political right have been damaging the British economy over my lifetime.

It is concievable that that Cameron has not understood the incompatibility between his rhetoric and his policies. Cameron is a man whose life has been surrounded by people of his political persuasion and such groupings mutually enforce each others beliefs, tell each other that what they think is ok, that it is reasonable. So it is possible that Cameron really believes that Corbyn is a threat to the British society, without seeing that he himself is just as much of a threat. This explains how extremists become deluded by their groups ideas, rather than a wider picture. That such delusions occur in society, whether it’s members of a political ideology, a religious sect is the real tragedy to be guarded against. This is why i believe it’s important to keep exposing yourself to people who think differently to oneself, to avoid this tragedy.

To me, it is so ‘obvious’ that the ideas of the right are wrong. Simply examine the state of the UK housing crisis, is is good that an ever higher and higher proportions of peoples incomes be spent on housing, all this wealth ends up in the hands of the bankers and the very wealthy elite. The right wing consensus these days is that laissez-faire capitalism, the interests of big bunsiness/ corporations are the only aspect of the economy to be promoted and supported. I don’t understand how people can believe in this with a truly open mind. The entirety of the economy has value and should be supported if a healthy prosperous economy is achieved.All areas, including big business, small business, labour, education, science, health, transport, the arts, housing, all have parts to play in a healthy economy and no one sector can provide for all the others. If this plurality does not occur all the power and wealth ends up in the hands of an asset rich few, no-one invests in growing the economy or improving society, merely that one sector, in this case corporatism, continues to to raise the financial value of it’s assets to the detriment of the wider society.

As in any good tragedy, the protagonists suffers by damaging the very thing they love. The case of David Cameron seems to be a true tragedy.