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tygerland is moving, due to the emergence of the blog-friendly web browser ‘flock’ I have decided to transfer to a compatible blog service.  You can continue your affinity with tygerland at

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tyger

29.10.05 17:19, comment

An arguement for the managed market-economy - Ordoliberalism.

24.10.05 09:00, comment

New Labour or Neo-Labour?

It’s party conference time, and as is customary the debates have begun about the internal mechanisms of each of the parties.  The Liberal Democrats have questioned the leadership and direction of Charles Kennedy’s tenure.  The Conservatives are not just discussing their leadership race but have also discussed how they are going to discuss their leadership.  No wonder they call this the silly season.

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The most important debate without doubt, is the ongoing one within the Labour Party, or more accurately within the New Labour Party?  Labour having secured its third consecutive term of governance is looking to cement control and pave the way for a smooth succession once Tony Blair abdicates. 

 

There are however, as Neal Lawson outlined in the pages of The Guardian, more ideological decisions that cannot be ignored.  The festering divisions within the Labour Party will over the course of this government be squared.  No longer can the Socialists and Blairites be reconciled; no longer can the ideological schism be papered over in the spirit of ‘unity’.  Labour must decide who it is, where it wants to be, and more importantly how it plans to get there.

 

As Lawson argues:

New Labour has refused to create a progressive electorate in the image of left values. Ten years on it still panders to the Daily Mail and Rupert Murdoch. Enlightened neo-liberalism is as good as it gets for neo-Labour. Now is never a good time for them to be progressive because they never want to be. Every measured word Brown now utters is not to win the leadership (that's in the bag), but the next election. Briefing to the right in the Sunday papers and talking left to the Labour conference on Monday is a worrying sign that the Labour tent will never be strong enough to resist the political winds.

When we assess a political dynasty we look to irreversible reforms that will shape the future.  What long-term legacy can New Labour point to?  Thatcherism fundamentally changed British Politics.  Thatcher began the dissolution of council housing with the Housing Act of 1980 (Right to Buy), which meant that more working class people were buying their own homes.  Home ownership created a society where individuals have assets, which ultimately contributed to our high-debt society; families are now increasingly subjective to market conditions as they now have a stake in the economy.

 

In practice ‘Right to Buy’ created a generation of Economic Conservatives.

 

Gordon Brown, the likely successor to Blair, is undoubtedly an advocate of Thatcher’s ownership society.  Speaking from a central London nursery in April of this year Brown explained the ideological foundations of his Child Trust Fund initiative:

But the new frontier for children is about more than income and a wider range of services; it is about insisting that in future not just some but all people have assets too.

With an initial investment of £250 per child and £500 for poorer children the child trust fund will ensure in time that at 18 every single teenager and not just the richest will have their own fund to invest as they choose in their future.

 

This rather perverse brew of government provided capital to be invested into the market is endemic of Blair’s take on Third Way politics, which looks to marry social provision and fiscal conservatism.  The ffice:smarttags" />Third Way is the consensus politics of management not philosophical leadership; this leaves New Labour without a utopian dream.  While Ordoliberalism is the most effective economic model in providing economic growth while maintaining or improving social stability, it lacks a clear tendency to indoctrinate the electorate. 

 

This inability to create a generation fuelled by ideology is why ultimately the Clinton era (another Third Way administration) failed the Democrats, when Clinton’s two terms were up the electorate had little ideological reason to remain with Al Gore.  When the great communicator Blair steps down why should the country rally to Brown’s cause?  In management politics – devoid of ideals – it’s not parties that win elections, but Leaders.  The dour Scot may well find himself up against a charismatic leader such as Ken Clarke; whom will the voters warm to?  There is no doubt that without an ideological belief in their government voters are more likely to be whimsical during elections. 

 

Either New Labour must define itself – inevitably shedding obdurate socialists – or shift decidedly back to the left.

 

 

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The major problem with the Social Market Economy is that it’s invariably Socialists, who see the centrist compromise as a clear path to electoral success, who adopt it.  When Tony Blair bewitched Labour with the chance of success, they sold out their commitment to collectivism for a taste of power.  Those Socialists remain in the party, frustrated by the lack of progress in addressing the inequalities of the Thatcher government, their dissent growing louder at every annual conference. 

 

This contract was a two-way compromise; Blair had to ensure that the left of the party was placated; after all he needed the Labour Party as much as they needed him. 

 

The Third Way followers needed a vehicle to gain power, and the post-Kinnock Labour Party – having been devastated by the death of new leader John Smith – was rudderless and had failed to deliver an election win for two decades.  The marriage of mutual necessity was consummated in 1997 when the first of New Labours landslides promised a brighter future for Britain to the chorus of D:Reams Things Can Only Get Better.

 

As the years of sound economic growth, and slow progress in reconciling the inequalities left by the neo-liberal excesses of the eighties passed, the realities of government began to toll.  Old Labour backbenchers began to question the pace of reform and the lack of delivery in remedying the vast disparities in wealth.  They revolted against market led initiatives in the NHS and state infrastructure, which they saw as selling-out.  Blair’s huge majority looked more and more precarious with every contentious parliamentary vote, he was losing the heart of the Party.

 

When Blair aligned himself with Bush’s Republican Party, in the hope of maintaining the Special Relationship that he had fostered during the Clinton era, Blair lost many of the modernisers that had supported his reforms.  In spite of deep misgivings within his party Blair also followed Bush into Iraq, further marginalising not just MP’s, but grass-roots Labour supporters.  Membership since 1997 has slumped to 200,000 (from a peak in 1951 of a million); the financial implications of this demise in support, and the migration of funds from the trade unions, have meant the revenue needed to support a C21th political party is simply not in place.  New Labour has increasingly had to cosy up to corporate donors for sustenance, which has further marginalised support.

 

 

The debate within the Fabian Society – the intellectual power behind the democratic Labour movement - is one of dismay: -

 

"If that decline were to continue unabated, the last party member would be turning out the lights by around 2010."

 

[…]

 

Fabian General Secretary Sunder Katwala and Research Director Richard Brooks blamed a "mutual distrust" between party leaders and activists.

 

 

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So in which direction should the Labour Party take?  Should they return to their historical position as the home of British Socialism, or continue the path of centrist modernisation? 

 

The problem with this third-term Blair government is that it has been bitten by reality and the grand promises of 1997 are destined to be unfulfilled.  Two decades of Conservative rule had left the public services horrendously under-funded, with a culture of obstinacy.  Even with a Labour government in power the public sectors were never going to welcome the business world concept of performance measurement, intrinsic to the ‘accountable’ politics of the Third Way.  The adage “what gets measured, gets done” did not placate the heavily unionised teachers who felt their profession undermined by league tables.  Blairism was starting to grate with the unions.

 

Tangibility is vitally important in instigating change.  Changes – however incremental – must be monitored to ensure goals are reached.  Modern business techniques are built on the concept of measure, report, review, and react; this enables change to be implemented via an adaptable organic process.  This proven technique comes unstuck in the world of politics, as its greatest asset becomes its great liability.  The problem with targets (the foundation of performance management) is that they can be missed.

 

Politics is characterised by grandiose promises and the subsequent avoidance of accountability.  When performance is measured in tangible terms, the public and more perilously the media can hold politicians accountable.  When you promise to eradicate poverty and improve literacy you can’t hide when your own statistics point to failure.  If only Labour had suffered a more competent opposition they could have been ridiculed and discredited on their record of delivery.

 

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So where does this leave New Labour?  Should they sate the hunger of their leftist backbenchers and return to their roots, if they do they must relinquish the centre ground, allowing other parties political oxygen.  Liberal urbanites will undoubtedly flock to the Liberal Democrats, unable to accept the social excesses of a traditional Labour government, yet equally turned off by the party of Thatcher.  Those who remain, those whose priorities begin and end with mortgages, children, and holidays in the sun, will return to the Conservatives.

 

Labour must rediscover the Third Way ideology that propelled them to power in 1997.  It must dislocate itself from the discredited Blair, whose war in Iraq has damaged both the party and our international reputation.  While Blairism should be embraced, Blair himself should be put out to pasture.  Blair’s time is gone; Labour must make a clean break.

 

There is no doubt that Brown is surrounding himself with talented individuals. Ed Balls and Ed Milliband look set for key roles. Blair has surrounded himself with compliant apparatchiks, and has become disconnected from reality.  Brown must engage with the public, he must reconnect.  If he does not reconnect he will lose the next election.

 

Of course by severing its socialist links the party will suffer a further decline in membership, and some of the more determinedly leftwing MP’s may leave.  But this is the difficult choice ahead, and one that cannot be avoided any longer.  It must move forward not back, it must be a party for the twenty-first century not the twentieth.

 

Furthermore the Third Way acolytes must find their Utopia, and define who they are.  Merely occupying the centre will not be enough; they must claim it for good. Only a future where the benefits of the market are enjoyed, but its inevitable inequalities are addressed, can be a real progressive future.  Ordoliberalism is the only choice for developed western democracies, and if Labour does not remain the Third Way party of Britain then another party will adopt it and sail to power.  A Brown government needs bright, energetic, and adaptable ministers who can achieve targets and deliver change.  No more spin and excuses, Labour needs to start delivering or the electorate will give up on the Third Way for good, returning to the economic instability of the diametrically opposed ideologies of market fundamentalism and socialism. 

 

So while the other political parties are having a dialogue with themselves, New Labour must have a dialogue with the British People and define the Ordoliberal Utopia of market-led efficiency and social responsibility, a Utopia of respect, tolerance, modernity, and progress.

 

Can you see the future?

3.10.05 22:16, comment

Rising prices at the pumps....

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An increase at the pumps is a sure way to get the attention of the public, we all love our cars, and we resent any reduction of our right to drive where we want, when we want.  The recent international developments have driven up the price of oil to record levels and the threat of protest is causing the government to sweat.

 

Today Gordon Brown addresses the TUC conference in the hope of placating industry, and will call for OPEC members to increase production.  One wonders how much more capacity the oil producing countries are capable of; China’s daily consumption has risen from 2 million to 6 million barrels a day (representing nearly a third of the increase in energy consumption in the past 5 years).

 

The obvious Conservative response will be that the treasury should reduce fuel taxation but this response would queer the price mechanism, and the natural equilibrium that could solve the energy crisis and leave the UK more competitive.

 

It is widely anticipated that demand will outstrip supply over the next year or two leading to an increasing oil price and a likely global economic slowdown.  In the September Outlook Report from the EIA (Energy Information Administration - the US governments official energy bureau) it predicts that global demand will reach 86m barrels-per-day, equal to predicted global capacity.  With growth and usage climbing it’s hard to see any easing on energy prices for the foreseeable future.

 

The new globalised world is indeed leading to rising consumption in emerging economies (i.e. China and India), and we should not preclude others from enjoying the standard of living we in the west have enjoyed for decades, but infinite demand cannot be satisfied by finite supply and rising tensions between nations may lead to conflict.  There is an argument that economic interdependence will prevent any squabbles becoming violent, but with rising military spending in China and the emergence of a Central Asian alliance (including Russia, China, and the former Soviet Republics) the threat of confrontation is increasing.

 

Free-Market thinkers will argue that increased demand will lead to improved efficiency and new resource exploration, but we know that oil is finite and exploration has been unable to maintain pace with the rapidly growing economies of Asia.  Stability in Iraq may well lead to some progress on the supply-side but all these solutions represent short-run measures against the long-term problem of increasing consumption. 

 

The argument that increasing fuel consumption will lead to greater efficiency is key to Britain’s future in a world of reducing energy supplies.  One of the major problems with oil exploration is that the remaining supply is increasingly difficult to get out of the ground.  The law of thermodynamics dictates that when the energy expended in sourcing oil becomes greater than the energy received, the process becomes redundant.  As using oil reduces the natural pressure within the subterranean reserves (which causes the oil to naturally gush to the surface) the oil becomes increasingly costly to acquire.

 

We can assume therefore that the economies that are the most energy efficient will thrive in the coming decades.  The economies most vulnerable will be the US – as the world’s largest user of oil – and China whose economy is geared for resource hungry manufacturing.  In the US, industry is becoming more efficient (natural in a developed economy), but any gains are wiped out by rising domestic consumption (increased proclivity for air-conditioning and the rise of the SUV automobile).

 

In the US the record trade deficit will only widen as oil prices rise sending more capital to some of the most despotic regimes in the world, and leaving the US increasingly insolvent.  Trans-global terrorism is also directly linked to the oil industry via the need for a complaint Middle East, oil revenue props up undemocratic governments in the Arab world leading to a disenfranchised and angry population who turn to Islamic Fundamentalism and violence in their frustration. 

 

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Necessity is the mother of invention, why therefore should we reduce fuel taxation?  We need to ensure the price mechanism does its job and drives innovation and reduced consumption.  To reduce taxes we would corrupt the natural market forces that would lead to alternative solutions.

 

Last year the UK became a net-importer of oil following its peak production in 1999, this economic adjustment represents a reversal of capital flow, which hurts our own trade-balance.  This outflow of capital needs to be addressed, as the money moving out of the economy will only increase as the North Sea reserves diminish further.  We need to ensure there is ample necessity to drive our economy to innovate, by reducing fuel taxation we would hinder the long-run efficiency of our economy for a short-run gain.

 

Globalisation has up until this point been very beneficial for the UK.  We have become increasingly prosperous over the past decade and employment has been healthy.  While many British manufacturers have gone out of business we have been effective in attracting foreign companies such as the hyper-efficient Japanese carmakers.  To maintain this position we need to ensure we involve and react to emerging pressures that will shape the new world order; the major pressure will indeed be energy supply.

 

If anyone is any doubt as to the critical nature of the oil supply they should note that BP estimates that Iran – OPEC’s second largest producer of oil – will be a net-importer of fuel by 2024.  These frightening statistics should be enough to persuade politicians of the need to diversify our energy supply or face rapid economic decline.

 

So when the self-serving fuel protestors begin their blockade of Britain’s refineries, remember the difficult choices we face and the real cost of our dependence on oil. 

13.9.05 16:51, comment