by David Steven | Dec 9, 2011 | Economics and development, Europe and Central Asia, Global system, UK
What a day. Five observations:
- My initial reaction this morning: On a sinking Titanic, the UK is lobbying to avoid further damage to the iceberg. If David Cameron was motivated mostly by his wish to suck up to the City (and to his backbenchers), then he deserves all that fate can throw at him. He has transformed eventual British exit from the EU from Eurosceptic fantasy to the new conventional wisdom in just 12 hours. Quite a feat.
- But maybe… his government has decided that the euro is now doomed and has made a rational decision to swim as far from the vortex as possible. Many believe that a disorderly break up of the single currency has become more likely than not. That would probably cost the UK 10% of GDP and make British default a near certainty. But if that’s what’s going to happen, then we better knuckle down to being as resilient to the shock as possible.
- The British veto makes euro failure more, not less, likely. In theory, agreement between a core group is easier than having all 27 countries in the room, but the legal complications of conjuring a new set of institutions from thin air are daunting. Also, expect the core to shrink as the summit’s aspirations are chewed up by domestic politics. Each defection will provide a potential trigger for wider breakdown – probably when a group of the strong decide all hope is lost, and make a collective rush to the lifeboats. By being the first to desert the ship, Cameron has made it much easier for other European leaders to follow.
- Contingency planning must now go much deeper. Behind the scenes, governments are playing out failure scenarios, and most big businesses have some kind of post-euro plan in place. Much of the thinking is still pretty rudimentary, however. The eurozone countries can’t risk letting markets see them flinch and have to put a brave face on their prospects, but the UK no longer needs to have such scruples. What exactly would we do if the euro goes down? What would be thrown overboard? What, and who, would be saved? How can the government organise effective collective action as the catastrophe hits?
- Nick Clegg is dead, politically. That was already true, but I can’t imagine even Miriam González Durántez now plans to support her husband at the next election. Paradoxically, accepting his terminal status could give Clegg new freedom of action. Instead of continuing to play the role of coalition gimp, he should offer leadership to those keen to explore what comes after the storm. Politicians with proper jobs – Cameron, Osborne, even Cable – are going to be overwhelmed by events throughout this parliament, even in the best case where Europe struggles back onto its feet. Clegg, though, has an opportunity to focus energy on the longer term. He’ll still lead the Lib Dems to electoral Armageddon, but catalysing a vision for renewal might make posterity a little kinder to the poor man.
by Alex Evans | Dec 9, 2011 | Influence and networks, UK
Some wag was on Twitter earlier this week, observing that if, during the 1980s, the media used to refer to Sinn Fein as “the political wing of the IRA”, then these days we should be referring to Britain’s coalition government as the political wing of the financial services industry.
Sounds like a cheap shot? Then have a look at yesterday’s FT, which has a full page analysis article (£ – or free blog post here) documenting an interesting fact about where the Conservative party gets its funding from:
“In the past decade, a dramatic shift has occurred. Super-rich hedge fund managers have become the biggest single interest group to bankroll the UK’s current main party.”
Wondering what effect this has on policy? Here’s Tim Montgomerie, editor of ConservativeHome.com and the Tory world’s blogger-in-chief:
“The City’s influence is that top Tories spend a lot of time in the company of people to whom the City matters. If the party was reliant on northern industrialists, it would be a different party.”
Or try this observation from “one of the 10 biggest hedge fund donors”:
“There probably aren’t many votes in cutting the 50p top rate of tax – but among those that give significant amounts to the party, it’s a big issue, and that’s probably why it’s a big issue for the party too.”
by Claire Melamed | Dec 8, 2011 | Off topic
So I try to be very professional and only blog about numbers and Big Global Issues and the like. But, you know, I do have a life too and sometimes it intrudes. Like yesterday. For most of the day I was at home being quite delighted at the coincidence of two unlikely sources – the President of the USA and the OECD – bewailing rises in inequality. In case you hadn’t heard, the OECD wants to tax the rich and redistribute to the poor, and the President thinks that inequality ‘hurts us all’ and ‘distorts democracy’. Just a normal day at the office for us seekers after truth and light.
Then off I went in my Mummy guise to an exhibition in my daughter’s class at school, where each child had chosen a family member and written about their lives. We’re talking an ordinary state primary school in a pretty affluent part of North London, where the parents include journalists, a tv exec, bankers, a chef, a social worker and a dustman. Most of the children had written about their grandparents or great-grandparents, and I was AMAZED, really astonished, to be reminded of the different stories that had brought everyone to that place.
Children wrote about their grandparents who left school at 12 and went to work, or about relations who were post-war refugees in Europe and came here with absolutely nothing, or people who grew up in houses with no electricity or running water. These are children who now live in nice houses, assume they’ll go to university and get good jobs, and many of whose parents now run things. My own story is about a combination of migration and education: my grandfather was born in a village in Eastern Europe, and saved his family from extermination by the Nazis by migrating to South Africa. My father then travelled to the UK to study, and here I am.
People like me get to do the kind of great jobs and live the lovely lives we do thanks to pretty impressive social mobility. No one I know lives the same lives as their grandparents. Ours are better in every way – we have more education, more money, more health care, better jobs, better everything.
What the OECD report and the Obama speech reminded me was that the opportunities that opened up in recent generations are closing down as inequality rises. We are the lucky ones who have benefited from the good education, new jobs and the possiblity of migration open to our parents and grandparents. But the door is being closed behind us. Surely we owe it to the memories of our own families to do everything we can to keep it open for those who follow?
[Ahem. Thanks for indulging me. Back to normal service with facts and stuff shortly.]
by Richard Gowan | Dec 7, 2011 | Conflict and security, Middle East and North Africa, Off topic, UK
What do you look for in good political commentary?
I’m in favor of a mix of moral clarity and realistic judgment, topped off with an incisive turn of phrase that sticks in the memory. So I find it hard to top this observation on the recent attack on the UK embassy in Iran, culled from today’s Financial Times:
“I do not like Britain and I know it is evil, but a savage attack on their embassy not only makes us look uncivilised but means we have to pay for its consequences, which will be more sanctions and maybe a war,” says Saeed, a 42-year-old government employee.
100% crystal clear analysis. Love it.
by Claire Melamed | Dec 7, 2011 | Economics and development, Global system
Pardon the existential angst, but as I’m about to spend the next few years of my life obsessing about what comes after the MDGs, and as the same question is finally aired in the UN’s General Assembly, I’m having a moment of – not quite doubt but certainly wondering – what exactly would a new agreement on development after 2015 be for?
There is, to say the least a certain fuzziness about this question among those (like me, let’s be honest here) who are regularly to be found airing our views on the subject. It seems to me there are three possible, not necessarily mutually exclusive, reasons to have a new agreement on development post-2015. Each implies a different pathway from a global agreement to changes in actual people’s real lives – which is after all the whole point of the exercise..
Firstly, there’s the resources track. For many people the main benefit of the current set of MDGs has been the impetus they provided for increases in aid budgets among traditional donors, with the promises made at the 2005 G8 in Gleneagles probably the high point. The causality is simple: MDGs provide the objectives, the achievement of which can then be costed, the aid provided, the objectives reached. Bingo. So would a new agreement be all about mobilising resources for development? Maybe for some – the contribution made by China on behalf of the G77 to the General Assembly discussions last week was at least in part about aid, and also talked about trade and technology transfer, other examples of how a new agreement could be used to give developing countries something from the OECD that they don’t already have.
It’s easy to see why that might seem like the most important thing, given the current fears about declining aid budgets among traditional donors. But a post-2015 agreement that was all about aid wouldn’t chime very well with current thinking about what’s important for development, within low income as much as high income countries. (more…)
