Liberal Vision

Chris Huhne goes, but is this the Rule of Law(s)?

So Chris Huhne (and ex-wife Vicky Pryce)  is to be charged with perverting the course of justice as a result of allegations that the former Environment Secretary Secretary of State for Energy and Climate Change allowed or persuaded his wife to accept speeding penalty points on his behalf in 2003.

Mr Huhne strenuously denies the charges (and one can’t help but wonder whether Ms. Pryce will be less keen to repeat her allegations now that she is being charged as well) but it has not saved him. He has been forced to resign from the Cabinet.

It’s an odd business, to say the least. Not the charges themselves – this matter needs to be investigated and, if there is a prima facie case, charges should be filed. What is odd is the fact that he has to resign now.

It is a fundamental principle of the rule of law that a person is innocent until proven guilty. In most walks of life, that would extend to whether one has to resign from one’s job as well. If one is accused of a crime, an employer might suspend a member of staff, to distance itself from the issue, but to sack a person (or expect them to resign) while they try to clear their name is usually considered to be unfair.

What is interesting is that different rules appear to apply to politicians – and to other public figures. On the one hand, there is no process for suspending a minister, or allowing them to step aside temporarily, while the matter is investigated. The minister must quit – end of. I suspect that this is a hangover from the origins of ministerial office, with the minister acknowledging their duty to protect the sovereign from embarrassment. It seems to be a bit harsh in the modern world. Chris Huhne, like anybody else, should have the opportunity to prove their innocence without penalty.

And if he’s guilty, he should be sacked, rather than being allowed to resign.

That being said, it has happened, and there is feverish speculation about who will replace him. Will Ed Davey come into the Cabinet? Will Norman Lamb replace Ed Davey as Employment Minister?

Both would be welcome moves, but people seem to be forgetting one obvious potential promotion. It is widely recognised that David Laws is ripe for a return to the front benches. Is this unfortunate event an opportunity to bring about the return of Laws?

The future’s bright…the future’s orange

A personal view of Conference 2011: I walked away from conference on Wednesday with that bloody annoying mobile phone company’s strap-line in my head. I certainly didn’t expect that when I headed out on Saturday. 

In fact to be frank, for the first couple of days of conference I confess that I thought it was more grey than orange. Dreary grey Brummie clouds hung menacingly over a huge ugly grey conference building that seemed packed to the rafters with earnest young men and women in grey suits. I have never seen so many corporates at a Lib Dem conference. Welcome to power and influence I suppose. Even the mood was pretty grey. I thought at first it was gloom and despair (or was that  just Vince’s speech!). But actually it was more steely than gloomy, more resolute than resigned. But you could almost feel the burden of power weighing heavily on the party’s shoulders.

So….a grey, dull conference. But dull is good. Dull means no reckless, immature muscle-flexing from conference played out for all the nation to witness. Dull means no leadership humiliations. No pictures of 2000 or so voting passes held up high. No hurried press calls to “explain” what the hell just happened. Dull is good.

It was father funny to see so many media types scratching their heads and tearing up their scripts. Lib Dem conference all serious and grown up. With conference refusing to play ball, there was just the the danger that some journalists might actually have to leave the comfort of the bar/media centre and go  do some proper journalism around the place. Perish the thought.

Actually conference was not as grey as it first looked. It was also very yellow. I was struck by the conference hall – didn’t it look very, very yellow compared to last year where we saw much more blue?  Doubtless this is all part of the “distinctiveness” strategy. And what about that fabulous dress Miriam turned out in on the last day?

It was also very very orange. Never have I met so many economic liberals in the bar, in the fringes, in the conference hall itself. I don’t know how many have always been there keeping a low profile and how many were new. Some were definitely new . They were university students, graduates, first jobbers, newbies to conference. They get liberalism; they are internationalists; they stand up for civil liberties; and yes they are orange bookers. They are definitively NOT Tories. Some were clearly old guard – some even had beards! They had long thought that liberalism had been neglected by the party. Too many years in opposition had allowed us to get flabby – promise spend on everyone and everything. That policy was being driven by a small highly organised minority that had over the years actually got out of kilter ith the mainstream of the party….

But every political party has it’s factions. Factions are good. They expose weak arguments , encourage the generation of ideas, test and often improve ideas. And you see this nowhere else like you see at conference. On line, behind the anonymity of the pc, people can be hideously rude. Vicious even. You only have to have read the comments on the Liberal Vision blog to see how much anger and bile we have been subjected to. At conference – and especially at this conference we saw the factions of the party talking to one another, laughing with each other, challenging each other, and agreeing with other. I know the media don’t like that – maybe some party members won’t like it either… but from the sharp end i saw it happen…

So the party has grown up. The conference was mature. The factions more engaged with one another. I guess when times are tough and the stakes get raised you pull together. I certainly hope so.

Sad to say however – I do not think that I can say the same for some of  the party’s leading lights. Yes I get the need for us to be distinctive. I understand the urge to show at every opportunity that we are not “Tory patsies” . But there is a fine line between being “distinctive” and being destructive. And that was a line several senior MPs crossed. I doubt it was intentional. I could be generous and say that they were simply playing to the gallery. I could be harsh and say they had one eye on the next leadership challenge. I certainly don’t buy the idea that this was co-ordinated. But the outcome was that for a while the conference descended into a cacophony of increasingly vitriolic anti-Tory rhetoric.  The Tories had “tainted us” and their political tactics were “evil”. (Farron). They were ”too city dominated”  and the Conservative Right were the “descendants of those who sent children up chimneys” (Cable) or Tea Party extremists “slavering” to cut taxes for the rich (Huhne).  I was particularly sad to see two of our senior Government ministers  leading this unseemly assault. What were they thinking?

It was a sign of the maturity of the conference that this did not go down as well as you might expect. Yes, conference had enjoyed the bloody spectacle at the time. But in the bar the talk was definitely NOT about how great this all was. Many of those you might expect to be relishing the Tory bashing were shaking their heads.  There was genuine concern.  ”It’s gone to far”…”I’ve got to work the the Tory councillors next week…. “ Why aren’t we giving Balls or Milliband a kicking?”… ”It looks so crap on TV” … “How can he go back into cabinet after saying that?”…. well you know its gone too far when Shirley Williams calls time on the Tory bashing.

So praise be that come Wednesday, Nick gave possibly his best speech at conference since becoming leader. Guns blazing. Fire in his belly and a gleam in his eye. His closing speech to conference was a masterclass in the right way to get across the party’s distinctiveness. Talk about what you have done, what you want to do and (most importantly) tell people why you are doing it. Some of our critics called the speech lean. I call it perfectly measured. It was a serious speech, but a passionate one. . Rarely have I seen the conference react so warmly to him.

There were two elements of his speech that were particularly revealing about where Nick is taking the party. And it is good news for all of us. Firstly I don’t recall having ever heard the word “liberal” used more in any speech at our conference. He talked of our “liberal spirit“  and  “liberal values” of  “a liberal nation” and a “liberal society” . I confess I gave a tiny cheer (in my head – not out loud of course) on each and every one  of the 19 times he used the word.

Secondly, he used the word “Labour” 13 times… And what he says tells us a lot…. 

“Another term of Labour would have been a disaster for our economy. So don’t for a moment let Labour get away with it. Don’t forget the chaos and fear of 2008. And never, ever trust Labour with our economy again”

Nick was on top form on Wednesday. He has put liberalism front and centre of our party and made Labour the focus of his scorn (ruling out any chance of a LibLab pact) and got a standing ovation in the process.  This does not surprise me. We should be concerned that David Cameron wants the liberal badge for himself. And we should never ever let him have it. It’s ours. So when our leader sends out a very clear signal that he will defend it come what may, we should applaud. We should also remember how much we hated the Labour party in power. The money they spent, the public sector ballooning out of all reasonable size, the pensions they stole, the chronically unfair education system they left us. Of course we should applaud when our leader says “never,ever trust Labour with our economy again”. Damn right.

The party walking out of conference on Wednesday had the hint of a spring in its step. I wouldn’t go  so far as to say that we were collectively skipping our way down to New Street Station. But we have got through a hideous year. We had a sober, grown up and uniting conference – with a clear shift back towards the centre ground – the best place for this party to be. The future is definitely looking a tiny bit brighter and a lot more orange….

The death of liberal Conservatism (c.2006-2011)?

They say that imitation is the sincerest form of flattery. I think it was around 2006 that David Cameron first referred to himself as a  ’liberal Conservative’. Three years later, he penned an article highlighting the commonality of purpose between Liberal Democrats and the Conservatives, especially on civil liberties.  And he’s repeated the ‘liberal Conservative’ line ever since.

For many the term was always an oxymoron but the English riots (Alex Salmond’s smugness was right in this instance) must go some way to mark the death of liberal Conservatism. Cameron appears to have reverted to type with his list of authoritarian populist measures to appease the wrath of the general public. It was my understanding that the coalition government were meant to undo the damage caused by our predecessors – with efforts such as The Protection of Freedom Bill – rather than seeking new ways to undermine them.

Liberal Democrats should be standing up for civil liberties not so much to differentiate ourselves from the Conservatives for the sake of differentiating but because we believe it is the right thing to do. So far the majority of discontent I’ve heard from Liberal Democrats relates to the withdrawal of benefits for looters. Why is there no similar energy exerted on civil liberties? By all means stand firm with our Conservative colleagues in condemning the violence, rejecting sociological bunkum that excuses those responsible and call for robust action against the wrongdoers. But if ever there was a need for Lib Dems to push for a coalition U-turn, this is the moment.

We need Liberal Democrats arguing vigorously for the retention and protection of civil liberties precisely because it cannot be left to the Conservatives; the only aspect of ‘liberal Conservatism’ David Cameron truly believes in is the latter.

Indeed, what kind of liberal, or “instinctive libertarian” to use the PM’s own words, would seek to introduce Mubarak-style interventions in social networks (surely an impossibility without infringing the rights of others to use such mediums)? What kind of liberal would seek to review powers of curfew which could inhibit the freedom of movement of law abiding citizens? And what kind of liberal would seek to grant the police power to use water cannons whose use in Stuttgart led to the horrific blinding of a 66 year old man protesting against – shock horror – a railway development?

The Prime Minister’s measures are as illiberal as they are ineffective and unnecessary – for instance, the police already have the power to remove facemasks and such like.

So, Mr Cameron: please refrain from a legislative flurry as the laws we have are just fine. Your only task must be to ensure that the police don’t just stand and observe criminality as was the case during the riots but actually enforce the law. You know, simple things like preventing ruffians nicking stuff.

It’s clear that some of the policy prescriptions offered by Cameron are evocative of the draconian gimmickry of the last Labour government. And with that the Prime Minister seems to have traded in his liberal Conservative credentials for the return of the title ‘Heir to Blair’.

Cloud cuckoo tax

On Sunday the Liberal Democrat Chief Secretary to the Treasury, Danny Alexander, echoed the Business Secretary, Vince Cable, that the 50p income tax rate, introduced by the previous Labour government, was unlikely to be scrapped anytime soon. Those saying otherwise, principally Conservatives, were living in “cloud cuckoo land”. The priority of the Coalition government is and remains to deliver tax cuts to low and middle income earners. The rate though could be reviewed in future.

In one sense, the political, Alexander and Cable are absolutely right, the politics of reducing tax on elites is generally poisonous, particularly so in the midst of a stagnant economy, particularly for the Liberal Democrats. To be achieved, politically, it would need to be part of a balanced package to generally reduce tax for everyone. Margaret Thatcher’s governments, for example, reduced all income tax bands, in steps, not just the top rates.

Economically I’m less convinced. The 50p tax rate like all high marginal taxes distorts incentives against work and growth. Highly mobile, highly able professionals, investors, and entrepreneurs can better choose where they work than others. They will be influenced, over time, by relative tax rates, alongside other factors. It is heroically naive to make good-will, inertia, and patriotism the basis of tax policy.

Further whatever the alleged benefits of high taxes in respect of fairness, supporting infrastructure and other public goods, most are benefits that do not make a lot of difference to those expected to foot the bill. There is little evidence that high tax rates raise more money.  

High income tax is an experiment the UK has tried before, concluding an economy that needed an International Monetary Fund bailout in 1976. The tax take, and share of the take, from high earners increased substantially after the top rates were reduced in 1979 and 1988.

The 50p rate, to some extent then, is a cloud cuckoo tax. It will be scrapped eventually. The question is when the political circumstances will be right.

Tories call on David Brent to save the UK economy

Politics makes strange bedfellows; coalitions especially. In the 1970s the Liberals made a pact with socialists despite socialism being the antithesis of liberalism; in 2010 the coalition finds us in bed with Conservatives despite the Tories opposing liberalism for centuries.

Coalitions therefore require us to remind the voters how we differ from the parties with which we are aligned in government. This week a new report from the Conservative-leaning think tank Civitas reminds us of one crucial difference: the Tories have always opposed free trade.

Reviving British Manufacturing: Why? What? How? appears to be a throw-back to a former time, when the Tories banned wheat imports to protect the interests of their landed backers. Between fawning praise for Margaret Thatcher (“No one doubts Mrs Thatcher’s commitment to a market economy, [Er... Yes they do - Ed] but she was no market fundamentalist and her pragmatic patriotism is often forgotten“) Civitas suggest that the UK should indulge in one of the most fundamental economic blind-alleys in the Handbook of Bad Government: protectionism.

The reason that Civitas cite for this bizarre and dangerous policy is the UK’s balance of trade deficit, which measures the net flow of payments for goods and services into/out of an economy. Civitas argues that “We already have a balance of payments problem… With the annual trade deficit in goods now at a new record of £97.2 billion… only radical Government action will prevent Britain’s permanent decline as an industrial society“.

In fact, they later admit that the real trade deficit is £46.2 billion, but that they are choosing to ignore the trade-surplus from services. This is an absurd confidence trick, which ignores the fact that the UK’s comparative advantage is in services (Yes, even financial services! – try to contain your disgust). This attempt to make us focus only on one part of the economy is risible: I suspect that if one ignored manufacturing and focussed solely on services one could argue that China is running a trade deficit; if so, the politburo do not appear too bothered.

Even accepting that there is a trade deficit, this does not matter. As Milton Friedman noted, £100 billion is only of use to foreigners because it enables them to buy £100 billion worth of British goods. The pounds themselves are useless to them: “they cannot eat them, wear them, or live in them. If they were willing simply to hold them, then the printing industry – printing [pounds] – would be a magnificent export industry… [that] would enable us all to have the good things in life provided nearly free by the” nations foolish enough to swap perfectly good goods and services for paper adorned with the Queen’s face.

In fact, many foreign nations seem quite prepared to do that, and worse: they then lend the money back to the UK. This has created twin problems: on the one hand, it enabled us to buy even more of the good things in life (such as the public services spending splurge from 2001 to 2010), but only by borrowing against our future and that of our children. Secondly, it kept our currency high and theirs low, thus making our exports less competitive and theirs more attractive, and so exacerbating the balance of trade problem.

The solution, one might therefore think, is to stop borrowing the money. If they can’t lend it to us, they will have to spend it in the UK, and so we will achieve equilibrium in our balance of trade (but with a weaker pound). However, if you are a Tory think tank, there is an alternative: protectionism.

“the Government should encourage an increase in manufacturing output by about £10 billion per year”, the report argues, (why not £11 billion? 12 billion? What’s so special about £10 billion?), but crucially, this should not be done through promoting exports (itself dodgy, but now is not the time), but by import substitution: “exporting is costly… in the short run … it will be much easier to focus on the home market and out-compete importers.”

Import substitution is economic madness: not even Labour recommends this sort of thing anymore. It completely ignores the Law of Comparative Advantage(aka. the Ricardian Law of Association) and indeed undermines the whole basis of trade, which is specialisation and the division of labour.

And what are the four industries that Civitas wants the UK to specialise in over the next few years? Where should we focus our efforts, expanding domestic supply by throwing up walls to prevent cheap foreign imports?

In a companion essay, Civitas cite four particular industries that might not strike the average reader as particularly promising: Paper; Glass; Steel and Motor Vehicles. Admittedly, we have some good companies operating in each of these industries, but the idea that Wernham–Hogg paper merchants will become engines of the British economy is hopelessly naive.

Add to this the suggestion that Britain should establish a “Ministry for Economic Growth, focused purely on reducing the trade deficit through increasing production” (where to begin with this one?) and a tacked-on side-swipe at the European Union and you have a classic piece of Tory wonkery.

In 1962 Milton Friedman argued that “It is not too much to say that the most serious short-run threat to economic freedom… is that we shall be led to adopt far-reaching economic controls in order to ‘solve’ balance of payments problems. Interferences in international trade can seem innocuous: they can get the support of people who are otherwise apprehensive of interference of government into economic affairs… yet there are few interferences which are capable of spreading so far and ultimately being so destructive of free enterprise.”