Let's try again: It's 'No' for positive reasons

In these final few days of the Scottish referendum, there is still hope that a slow, tawdry, over-confident 'No' campaign can finally see the wood for the trees and make a coherent argument. But it'll have to move fast. It has been hopeless in making the case for union and tolerably useless at opposing the 'Yessers' in their own terms. Partly this is the result of a comprehensive failure to understand the terms of political rhetoric in Scottish politics. Scottish politics is, whatever Mr Salmond may say about 'progressive vision', very much rooted in the collectivist mindset of the early 20th century (no complaint about that from me, a liberal) in which it is possible to feel a victim in the morning and a hero in the afternoon - a victim of distant, self-interested government remote from oneself (because it happens to 'do something I don't like') and a hero of collective struggle and a bright (probably socialist) vision of the future (because life is bound to be better because people like me rather than 'them' are in charge) after that. That rhetoric is solid, immutable and wrong, but it is the rhetoric of more than just the far left in Scotland. What the 'No' camp needs to do is to espouse a vision - a genuinely positive vision - for the FUTURE of the union. Political unions across the world can and do evolve, discovering things that don't work gloriously well (like fiscal federalism in Canada) and things that do. The 'No' guys have to show - actually show - that the emotion of the Yes rhetoric can be turned off course not by denial (which won't work, and will play to the victim theme) but by positive statements about where union might take us (which won't). Like the possibility that in a complex economy such as the UK, regions can work together to maximise the benefit of belonging to the Uk in the same way they currently benefit from working together with other regions of the EU. Like the possibility of a union in which the planned further devolution of powers is not some grudging token gesture, but a constructive way of enhancing regionally distinct voices - a northeast that desperately wants investment on terms not dictated by London bankers, and a southeast that is not, inevitably, seen as a concreted-over hole in which ever more bodies jostle and fight for space. Like the intention to create a regionally differentiated, but inclusive, economic policy in which the choices of Wales are echoed and balanced with the intentions and aspirations of the northwest. All of that would be easy enough, but there is a more profound problem here: 'No' can't offer the CERTAINTY of such an inspiring vision since, frankly, the parties who support 'No' are implacable enemies in the run up to what will be a fiercely contested 2015 election. Heads will have to be banged together - and that takes more leadership than we see in the main parties at Westminster. But, 'No' camp, you must TRY!

What the 'No' campaign needs to say, and say now..

I haven't blogged here for a long time. Liberalism being eroded by the Orange Bookers within the Libdems, a contagion of 'shootings in the foot' by the Liberal Democrat party (the handling of the Rennard case, for instance, makes the blood boil) and the failure of the liberal case to be heard on the broad left explains that. But there is a reason for blogging today about a very liberal issue, the issue of the Union and the threat to it from the Yes campaign for Scottish independence. For while liberals should, and do, cherish local democracy they oppose politics on the cheap, placing the destiny of a nation on a wing and a prayer, and threats and cajoling others to get your own way. The Yes campaign in the Scottish independence referendum have been allowed to get away with all this, and more, by a quite frankly hopeless 'Better Together' campaign. 'Better Together' has been fronted by a good, credible and serious politician in Alistair Darling, but it has been managed ineptly and produced little of the case for the union that ought to be offered to the people of Scotland. The case for No has rested on quite accurate statements about the paucity of truth in the Yes case - that Scotland can't be independent without control over its currency, that jobs and welfare are a risk from withdrawal, that Yes would have Scots bet the future of their nation on the likelihood of oil reserves somehow being eked out beyond 2030 and the oil price remaining high - but the response of Salmond and his co-nationalists to that case wins attention every time. 'It's all threats', they say, 'wicked threats by wicked people down south who would deny you your future'. That's because Better Together has accepted that the 'victims when it suits us' rhetoric of the SNP is unchallengeable. The 'Yessers' say that 'Project Fear' is the enemy - and in Scottish political culture the idea of 'outsiders' "telling us what to do" is supposedly unassailable. Better Together needs to start a new campaign, now. Call it Project Reality. Project Reality is that rUk WILL treat and independent Scotland as the easiest target for a trade offensive. It'll take Scottish jobs and capital not because the demon evil people in London are out to wreck independence, but because we'd be mad not to do so. Scotland would be easy pickings. Project Reality is that no-one in rUk intends allowing Scottish banks and Scottish government deficit spending to determine by one iota the level of rUk money supply or interest rates; we'll set our rates, and Scotland (using the £) will have to like it or lump it, and again we'll do so because it is in our interests and not because of some malign dislike of Scots. The key point here is that the motivation will not be malice; it will be inevitable because of defection from the Union. You go, you become a competitor. But Better Together has to make a REAL case for Union too. That political unions can take many forms, and that ours has evolved to date from where it was in 1707 and can do so again in future. That political union (in Europe, Africa, Asia) is a growing trend for a reason - it works. That our differences are small: the rhetoric of nationalisms divide us, and that crushes rather than liberates. That our Union is not perfect, and that (and the SNP has this absolutely right) our political system requires fundamental reform, but that this is a better starting point than 'wing and a prayer' Salmond promises and hopes. Moreover Better Together needs to tackle head on a problem at the heart of this cross-party campaign. It needs to recognise that the Union IS dominated by southeast England, to the disadvantage of all of us. Decisions are all too often 'southeast/London favouring'. Crossrail, all £15 billion of it, will benefit Scotland not one bit, and that is wrong. Equally though it will, while whisking rich bankers from Berkshire to Canary Wharf a whole 6 minutes quicker, benefit the people of Cornwall, Wiltshire, Brecon and Antrim to an equal degree, i.e. zero. It's part of a political mindset that views 'rebalencing' the regions as being about 'spreading the benefit of the southeast a little more widely' rather than investing where investment is best made for our union as a whole. That is wrong, and the Better Together team need to acknowledge it. Better Together, you need in these closing weeks to make a better case, and make it quickly. The people of the whole of the UK, and particularly the people of Scotland, deserve it.

Coalition? No thanks.

My party enter a coalition with the Tories? Surely not. In twelve months time, before the agony of a series of long and punishing strikes, before the accelerating unemployment hits a peak, and before the devasting verdict of the currency markets on the pound, the PM (David Cameron) will call an election. The Labour party - still deeply divided after a humiliating election defeat and wholesale defections after the 'election' of David Miliband as leader - will be bereft of money, fight and ideas. The Lib Dems will be short of cash, implicated in the decimation (if not the outright destruction) of public services and jaded from trying to spread a small team across Whitehall departments. Cameron will call an election (without PR) on Edward Heath grounds ('Who runs Britain') and wins. We'll be fewer in numbers, have less resources and marginalised at the end of it - and forever association with the most severe contraction in the public sector and the most draconian hike in taxation in living memory.

Nick, offer a fixed term (one year) supply and confidence arrangement. In exchange for that we want, in this order, a bill passed for fixed term parliaments immediately, a bill passed for the reform of the House of Lords to a fully elected chamber by 2012, a series of measures to 'clean up politics' to be jointly sponsored in the House. In addition, and after that, we want a commission on PR to establish the methodology for PR from the next - now fixed date - election; this is not an enquiry into the merits of PR, but a commission to establish how it will work and implement it. Nothing less will do.

A republic at any price?

Seen the Republic website? It's a strange campaign, working to "support a republican constitution in place of the monarchy". But what kind of republic?

It seems that for the folk at Republic anything will do. They say that after a successful campaign to replace the monarch with an elected head of state they will "facilitate a debate on the best model for a future republic" - but only AFTER?

The problem with Republic - and the reason that even as quintessential Roundhead I can't support their campaign - is that they seem to want to end the monarchy at any cost. Even at the cost of a unchecked Presidency that allows dictatorship to grow in its midst? Even if the reserved Presidential emergency powers allow immediate and unconditional suspension of the constitution? Even at the cost of forced coalitions to avoid Presidential intervention?

We need a grown up political dialogue in this country which isn't about not liking the Civil List, Prince Andrew's views on helicopter usage or Prince Charles' views on architecture as a reason for preferring a republic, but a solid case for a TYPE of republic that suits us. Not a borrowed form (whether American or European) but one that is made for the UK. Surely that is not beyond us?

The hard life of an MP....

It must be a very onerous job being an MP. The House of Commons sits at odd hours still, rises for recess and reassembles with the tides and seasons, and the processes and procedures for daily business are still bafflingly arcane.

Hang on, though. If MPs wanted to do so, they could change all of that. For example, the House will sit for a mere 128 days in the 2008/09 session and, on most days of the four day attending week, begins its work at 2pm. How about (radical idea this) the House sitting for 220 days, from 0900 to 1600, abandoning the fripperies (prayers, Westminster Hall debates, even adjournment debates), allowing MPs to return to their constituency homes if within 2 hours commute of London? Huge numbers of MPs wouldn't need the much vaunted 'second home', they'd get the chance for a closer and more detailed scrutiny of the executive and legislation, and moreover Parliament would actually be sitting for more hours than it does currently.

In all of the recent discussion of expenses and parliamentary reform I had hoped to see some recognition of this simple fact: that our MPs could make their life easier, and raise our respect for them, simply by changing the arcane hours of sitting of the House. The rest of it (expenses reform, House of Lords reform to a fully elected chamber, deselections and primaries...) can wait. Let's insist on a more rational pattern of work for those we elect, and pay for, in Parliament first so we SEE them working when we are working too.

The liberal prescription

How do you get out of a recession? Well, first - as Keynes taught us all if we had the wit to notice - you can't expect to do more than stimulate recovery, possibly at the cost of inflation. The liberal prescription for a recession ought to be, modestly, along the same lines. Whilst Gordon 'Batman' Brown claims he is saving the planet, liberals should be saving our sanity and hope by making it clear that old fashioned deep recessions like this (not the stagflation of the 1980s) are not easily remedied by fiscal or monetary policy alone - that governments can stimulate but can't cure, even if confidence in the financial system were miraculously restored. Liberals know that recessions require a mix of policies, to protect the most vulnerable on the one hand from the effects and to stimulate a macroeconomic response on the other. In this recession, a truly liberal response is to claim less, hope more. We don't only have to fear fear itself, we have to fear the mad machine politics of the Tories and Labour for whom the prescription is driven more by polls than by reason.

VAT and, er, reflation...?

Mr Darling and his Treasury madarins ought to win a Nobel prize in economics, for (unbeknown to the rest of the economists practising and writing today) they seem to have come to the remarkable conclusion that one can reflate an economy by means of reducing VAT by a modest 2%. Yes, the VAT the we all discount as a part of the purchase price of goods and many services. The VAT that we pay at a fixed rate on most purchases, whether they be capital or non-capital goods. The VAT we expect to have no chance of escaping unless we are villainous. The VAT many of us, if we are businesses, reclaim just as we pay in on purchases. So what will the great plan achieve?

Well, think about Christmas shopping for a moment. Last year a report here suggested that the average spend on Christmas presents was £570. If VAT at 17.5% was incorporated in the price of all of the goods bought as presents - unlikely, since at least that selection of jams for Aunt Mabel and little Timmy's new sweater will be zero-rated, as will much else in the £570 - a reduction to 15% would 'save' you £14.25. That's a Kung Fu Panda DVD and a box of chocolates at Tesco. For all of the effort to reflate the economy by the extraordinary measure of VAT reductions, even at the peak of our annual spending the best we can expect is the equivalent of a couple of hours of animated comedy and a handful of caramels and orange cremes.

Now don't get me wrong. It may be worth it - after all, at least Tesco will benefit. But there is no evidence here of targeted thinking in relation to VAT reduction of the type the economy needs and the government seems to believe it is providing. What about a bigger reduction for capital purchases? What about even extending zero-rating for charitable purchases to a more extensive range of capital items? What about extending the idea of reducedVAT on some services that are provided in the main by small firms?

Come on, Darling, think....

Keynes is back!

It seems to be an age ago that we could mention the name of John Maynard Keynes without howls of derision. Now, though, Keynes - a liberal intelligence of the highest order - appears to be back in fashion. If you don't believe me, have a look at the New Stateman for this week in which, with extraordinary zeal, the likes of Noreena Hertz claim him for their own.

Now, I don't know about you but as one of those for whom the bankruptcy of monetarism, then supply-side economics, then neo-liberal market economics and (that famous phase) 'post-neoclassical endogenous growth theory' came and went as so much froth and fluff, I am glad that the old boy is due for a serious examination again. But it should be a serious and sensitive rehabilitation - not a 'hero-fest' for socialists.

Let's be clear. Keynesianism (or the moderated neo-Keynesianism of the late eighties) isn't for softies. It is for real, thoughtful and purposeful liberals. Socialists beware. There are no easy rules for state management of recessions, and intervention is not - genuinely not - the simple prescription anywhere in Keynes. Keynes was, and remains, a difficult - sometimes even an unpalatable - thinker and that great trinity of works (The Treatise, the General Theory and How to Pay for the War) evolves an approach to economic analysis that is subtle and powerful.

What he did not offer was the sort of simple panaceas that Labour politicians seem to want and socialist commentators insistently believe are at least palliative in effect (never enough for them of course, but a means of mollifying the voters that usually eject Labour when recessions strike).


What he did offer was a thoroughgoing analysis of how, by concerted action allied to confident and assertive government leadership in the face of business apathy and loss of confidence, an economy like our own could be coaxed back to health.

Keynes knew that his prescription would allow capitalist economies to retain their liberal freedoms, but that other (similar but by no means identical) prescriptions - from the authoritarian left and right - were available. In the General Theory he wrote:

"The authoritarian state systems of to-day seem to solve the problem of unemployment at the expense of efficiency and of freedom. It is certain that the world will not much longer tolerate the unemployment which, apart from brief intervals of excitement, is associated - and, in my opinion, inevitably associated - with present-day capitalistic individualism. But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom."

Keynes saved liberals the fate of sinking with the classical system that demanded constraints on the demand side of the economy in a recession, but more than that he outlined an economic liberalism that is still relevant today.

Oh, and if Mervyn King happens to read this, he also said - as Mervyn will know - "a decline in the rate of interest will be a great aid to recovery and, probably, a necessary condition of it". Go to it, Mervyn!

News coverage and recessions

The BBC is at it again. Cataclysmic economic disaster is just around the corner, the soup kitchens will be open this weekend and sales of Down and Out in London and Paris are set to skyrocket...

News broadcasters are insensitive - or, more worryingly, hypersensitive and very, very aware -to the power they exercise over the fate of the economy during recessionary episodes. Research seems to suggest that news plays an important effect in actually shaping our economic behaviour - and it is an effect more pronounced in periods of recession than in periods of prosperity or boom. Two studies worth reading are this one by Goidel and Langley from 1995 and this one by Wu et al. Both analyse the impact of news during the recessions of the 1990s. Both conclude that the reporting of 'bad' economic news has an effect, and that it can exacerbate behaviour, which must include 'dis-saving' (as Keynesians used to call it) and putting off purchases.

What does this mean for the BBC? Well, it must mean that this great public service institution is currently doing all of us a tremendous disservice. It is actually stoking the recession gleefully. Interviews during news bulletins today have included 'vox pops' insisting that a largely bemused public shares stories of 'how the downturn has affected them this lunchtime'. Not only is this editorially silly, it is potentially damaging.

Yes, the economy is faltering. Jobs will be lost. Businesses will go to the wall. But this is a cyclical phenomenon we have lived with for centuries. That, of course, is the BBC's argument - they proclaim that they are holding a mirror up to nature, not shaping it.

My point is that, with evidence showing so strongly the very real effect of news coverage in exacerbating the recession, should they take the risk?

Or are ratings worth that much to the BBC?

Lembit for Party President?!?

Like thousands of others, I have received an email from Lembit Opik soliciting my vote for the position of President of the Liberal Democrats. I have to say almost the first line put me off voting for him: "I have always believed the Party President is the ideal job for me", he writes, as if that is a recommendation. Hmmmm. Modesty? Evidence of fitness? Strategy? No, just vote for me to make me happy. Encouraging, isn't it?