Back to Business - We need a bonfire of regulation

Friday 30th September: Greece’s newly elected government came to power as Greek voters rejected the status quo -  the unaccountable powers of the Troika, the EU, IMF and ECB, which have called the shots in Greek fiscal and economic policy since the crisis. Britain’s politics are of a different order, but Anthony Coombs, Chairman of S&U Plc, explains that people in this country are rebelling against the status quo -and with good reason.

Around twenty years ago, when I served as Parliamentary aide to David Mellor, then Chief Secretary to the Treasury, he frequently lambasted the Opposition by reminding the Commons that "Dogs bark, cats miaow and Labour puts up taxes". This was to happen increasingly from 2001, when Tony Blair surrendered domestic policy to Gordon Brown, and particularly from 2005 when Labour abandoned Conservative spending plans, the next decade proved how depressingly prescient Mellor had been.

Eurozone Recovery: Is QE Enough

Friday 23rd January: The euro is fundamentally flawed. Thursday's decision by the European Central Bank (ECB) to engage in quantitative easing is a further example of that. The scale of quantitative easing (QE) announced by the ECB may have been sizeable, but it is taking place years too late, and with four fifths of the government debt to be bought by national central banks it exposes further the problem at the core of the system, namely the economies within the euro are so different that one size does not fit all.

In many respects the ECB was damned if it did, and damned if it didn't. Since the financial crisis, monetary policy has become the shock absorber for Western economies. This is not just a European concern. I use three words beginning with 'u' to describe monetary policy in Western economies: unlimited, unclear and unknown. Unlimited in the sense that there almost appears to be no bound to what is now expected of central banks  as they push interest rates close to zero, and allow their balance sheets to expand through quantitative easing. Unclear, as it is still by no means certain what is the full impact, although as we can see from the US and UK, it is asset markets that are likely to benefit the most. Ironically, at Davos this week, inequality was an issue frequently raised and yet QE by boosting asset prices in many respects adds to this. Then there is the unknown longer-term impact of all of this. What impact will a prolonged period of low interest rates and of printing money have? Yet interest rates in the US, UK and Europe have to remain low for some time, to allow their economies to recover.

Degree Standard? A Devalued Currency

This week figures show that 20 per cent of students in British Universities get a first class degree. The figure was ten per cent a decade ago. Professor David Abulafia explains that in a system in which mechanical marking has replaced qualitative judgement, it's time for the 'First' to go.

The people who lived around Santa Barbara in California before the arrival of the Europeans, known as the Chumash, had what at first sight seems a curious custom. Every few years they gathered together the shells that they used as currency, and burned all their money, before starting the cycle again. This ensured, of course, that the shell currency did not become hopelessly devalued as more and more shells came into circulation.  Quantitative easing was not a long-term option. Anyhow, much the same has happened as more and more universities award more and more First-class degrees. It is as true in Cambridge as elsewhere. When I was an undergraduate twenty or so people would graduate with Firsts in history, and fewer still would be able to claim Double Firsts, having also secured a First at the end of their second year. Now the figure on graduation has reached sixty, but I don’t think the number of candidates has changed – around 200 per annum. At the other end, the 2:2 and Third have almost become marks of distinction, they are so rare.

It is true that Oxford and Cambridge no longer admit the sort of undergraduate whose distinction on the river is not matched by his distinction as a student of History (or whatever subject). To satisfy national standards, marking schemes are now numerical, and those subtle inflated marks that indicated strange combinations of, say, wild inaccuracy with flashes of brilliance (gamma-alpha, or at any rate beta-query-query-alpha) have vanished. This now means that assigning students to their class is a much more mechanical, quantitative, exercise, than it used to be. Gone are the often lengthy, agonized, qualitative discussions of whether someone with beta-alpha-stroke-alpha-beta with an arrow going up should have his mark converted into alpha-beta-stroke-beta-alpha, which might be the key to a First.  I recall an occasion when the person responsible for that very mark insisted in his strong Irish brogue ‘beta-alpha-stroke-alpha-beta with an arrow going up it is, and beta-alpha-stroke-alpha-beta with an arrow going up it shall remain’. That note of discipline coming from a historian of sweet temperament and great generosity was a surprise, but it was a clear nolle prosequi, and it left the candidate with a 2:1.       

No Easy Solution?

Friday 9th January: Western jihadis are motivated by anger and deep social hatreds, says Professor Robert Tombs* in his response to the murder of  French cartoonists in Paris. The remedy is difficult and long: education, integration, employment and more equal opportunity.

The grotesque disproportion between the act of publishing mocking cartoons and the retribution of brutal and cold-blooded murder is shocking, but not surprising. The magazine Charlie Hebdo – a venerable product of the 1960s – and its equally venerable cartoonists Cabu and Wolinski had long practised provocation and offense against all established institutions and conventional values, and it had made them household names. They refused to make an exception for Islam: as they mocked the Pope, Abraham or the Virgin Mary, so they would mock Mohammed.  It made them the target of death threats and bomb attacks.  Both old men, they finally paid with their lives.  I did not always like their work, but I admire their courage in the face of repeated threats of violence, and, retrospectively, uphold their right to freedom of expression. ‘Je suis Charlie’ is today an expression of decency.

Public Spending: Whom Should we Believe?

Friday 19th December: As the debate over 1930s spending ratios looks set to dominate the New Year’s political debate, Dr Sheila Lawlor introduces Politeia’s new analysis by the distinguished economist, David B. Smith, of the substance behind the spin.

As the year draws to a close, the economy continues to hog the headlines, and it’s likely to do so until the 2015 general election. Fresh battle lines have been drawn over the main parties’ spending plans. Labour, if returned to power, now promises to cut the deficit every year of the next parliament. The Conservatives, at least since the Chancellor’s autumn statement in early December, have been ‘accused’ of cutting more than is necessary for ‘ideological’ reasons. Britain, it is alleged, will be returned to the hair shirt levels of the 1930s. The line, perpetrated by the media, is evocative of dole queues, cloth caps and a country scarred by unemployment.

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