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Index
New
participatory democracy
Taming
the Corporations
My
Welsh socialism
My New
Socialist Settlement
Globalise
the left!
Bevan
re-visited
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330
15 July 2002
 My love affair with Ireland goes back to 1967. And it was
political. At Whitsun weekend, on our first wedding anniversary, Elizabeth and I jetted off from
London to visit Ireland for the first time, and spend our wedding
anniversary in southwest Ireland. We were two well-heeled young
professionals, teacher and lawyer, and on top of the world. We flew in to Cork on Whit Friday
afternoon and hired a car.
We were immersed immediately in a
very poor agricultural society, in the countryside beyond Cork. The
shock was profound. The next day, at Allihies at the tip of the Beara peninsula, the truth sank in. If
such contrasts of wealth existed, as between London and Allihies, places
that were within minutes of each other by air, the explanation could
only be political. The geography was the same, the weather was
the same, there was a common language, the history was shared, the
European culture recognisably the same. The explanation could
only be political, man made.
If this differential was man made, then the poverty
of India was also man made. Impulsively, I decided to go to
India to solve the problem. For months, on my return from Ireland, I studied the
Indian economy, and particular the promotion of small firms within that
economy, which was already the focus of much economic research.
Those books are still on my shelves. My friends were sceptical.
"What have you got to say about business
initiatives? You don't know the first thing about business!"
That truth gradually sunk in. I did not understand enough about
the business world to be a tutor. I would have to find out.
So I started applying
for business positions, while keeping my practice at the Bar going as best
I could. We had no children at that time, and Elizabeth was earning,
so I had some room for manoeuvre. I soon realised that the position
of Company Lawyer was by convention a lowly one, and would not take
me where I wanted to go. But in the course of the job search, I came
to realise that the key shortage in business was not of specialists, but
of generalists. And so I answered a Bovis Homes advertisement in the
FT saying Wanted: Trainee Managing Directors
- and although it took me three interviews to persuade Bovis
that I was serious about leaving the Bar, they took me on - it was my best
move ever.
And it all started when I fell in love with Ireland,
on Whit Friday afternoon, in 1967.
Have you ever changed the direction of your life
on a whim?
Drop me a line >
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331
15 July 2002
Drugs Law Reform
Persuading the Majority
We are practical, reasonable people, in the drugs-reform lobby. Take
a look at the detailed list of 500 public supporters, set out at the
Angel Declaration - the List itself makes interesting reading.
We recognise Labour's electoral difficulties, having to handle the difficult issue of
drugs legalisation, in a complex international game of pass-the-parcel.
But the present compromise sows the seeds of untold confusion and injustice.
I predict that within twelve months the
demand for further action will be irresistible, politically. My suggestion
is that, with 2003 well advanced, the Government, recognising the
inconsistencies of partial relaxation, should appoint a major Commission of
Inquiry (or perhaps even an old-fashioned Royal Commission) to research
the entire criminal network of drug supply, the advantages of finding
alternative systemic solutions, and to explore the diplomatic implications of
any changes in UK law.
The Commission should be given three years
to report, thus deferring further action until after 2006, well past the next
General Election. That would take the issue out of current politics, while
enabling sensible investigation and debate to continue. The change could
even be presented as a matter of having "listened to the LibDems"...
New legislation could then be introduced in Autumn 2007, early enough to be well
clear of the next Election-but-one.
What do
you think of that strategy? I would certainly settle for legalisation in
2009 - what about you?
Drop me a line >
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332 15
July 2002
Murky
Merck
Nigel Lawson, with his most dismissive curling lip,
designated City correspondents as teenage scribblers, do you remember?
I was reminded of that, when the financial Press this week famously failed
to explain what had been going on with the fiddling of the Merck accounts - see
The Guardian.
Merck stood accused of booking £8.1bn income "which it had never
received", although the income figure was countered by a matching
£8.1bn item for expenses, and so the profit-figure remained unchanged, and
was accurate as reported.
What was wrong with that?
Answer came there none. The £8.1bn related to a form of
prescription charge levied by pharmacists on their customers, when
dispensing Merck products. It seems that the pharmacists simply
rolled that up into the product-price, and kept it for themselves.
It represented their margin, or a contribution to their margin. That
"income" was never paid-over to Merck at all, yet the great corporation
included it in their reported overall "income" figure, and deducted the
same sum as an operational expense. What was their motive?
Answer came there none, from the teenage scribblers.
Let me tell you.
Merck did it, because it diverted attention from the size of their
profit-margin. By inflating their gross income figure, they
minimised the percentage figure which
would be perceived as representing their profit-margin.
They did not dishonestly mis-state their actual profit (at least, not
on this evidence) but they created a smoke-screen, so that readers of
their Accounts would believe that they were earning less profit
from their operations, in percentage terms, than they actually were.
After all, drugs profits are not popular. Far better to use a little
spin, and persuade the public that you are really down on your
uppers after all. You will probably not fool the professional
analysts of the City or Wall Street, but the general public, and
politicians, and teenage scribblers - well, they are a different kettle of
fish...
Clever, huh? It's a very common device...
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333
15 July 2002
Does the Government
still
recognise socialism? Memories of socialism
are becoming very hazy, in the public mind. I doubt if anyone
under-40 could give you a working definition. Yet all around us,
socialist public service solutions are pressing themselves upon Governments of
every hue, of every political persuasion.
For company law, the need is for a principled socialist
drive to amend the statutory ground-rules of modern capitalism. On universal old age
pensions, it is now quite clear that private provision is a busted flush
and that only a socialist solution will do. The
world's private-sector insurance systems are bankrupt, and are relying on
national governments to keep them afloat, by way of socialist
intervention. In the Meeja, Governments have to intervene to prevent
the capitalist hi-jacking of great international sporting events - that's
socialist intervention. Governments, through the application of
human rights laws, are also having to override the greed of the
pharmaceutical companies, to enable AIDS and other critical medication to
be provided on reasonable commercial terms. That is
socialism in
practice. So why are we so coy about it? And why
does Labour not trumpet these perceptions from the rooftops?
Do you know why?
If so, will you let us have your theory?
Will you drop me a line?
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334
15 July 2002
Structures
and Systems
I am a “systems”
man. And that conditions most of my political prescriptions. Let me
give a few examples…
Is the problem with “Pensions”?
I argue for a radical change of system, so that nobody is
required to rely on open-market investment for a decent old age
pension. I say the community
should accept full responsibility for guaranteeing to every citizen, as a
matter of entitlement, an Old Age Pension equivalent to 30% of average
pre-tax earnings. No reliance whatever should be placed upon employers:
the employment relationship is too fragile and transient as a matter of
system to be relied upon in this vital matter of long-term public
confidence. Nor should any citizen be forced to worry about the
fluctuations of stock-and-shares, in contemplating old age and the risks
of impoverishment in old age. It would be a matter of political judgment
how best to fund that State commitment, but I would anticipate a mixture
of pay-as-you-go tax-funding and capital-investment funding, with the State
bearing the risk of market failure. In my simple public service system,
there would be no means-testing, but the state pension would be subject to
income tax. Employers and individuals would of course be entirely free
to make supplementary arrangements, as ordinary open-market transactions.
-
NB We are never told
what the cost of such a pensions system would be, assuming different
sample retirement ages (65, or 67, or even 70). I have tried to
obtain such an analysis privately, from the leading actuaries Bacon and
Woodrow (now differently names, I believe) - but their quoted fee
was £55,000 - without VAT. They assured me that, within the pensions
industry, the calculation had never been done... How can a
sane political judgment be made, if the mathematics have never
been done?
Is the problem company manipulation and
fraud?
Certain systemic faults leave companies wide-open to exploitation by their
management, and those systemic faults should be corrected. Subject to
limited exceptions, company transactions should all be open to public
scrutiny (as increasingly the case with government dealings), and
new checks-and-balances should allow shareholders to intervene in the
day-to-day management of a company. The formation of new companies should
be subject to regulatory approval. Holding companies should not be
entitled to claim limited liability, in relation to their own trading
subsidiaries. And their property rights should be statutorily
modified, so as to require them to act reasonably, reducing the scope for arbitrary
and unreasonable corporate
behaviour. These changes of system, which would have to be
negotiated internationally, would transform the corporate sector, and
reestablish public confidence in its operations.
Is
the UK Labour Government excessively autocratic?
The systemic problem is that too much power is concentrated in the
UK Executive, both by virtue of the Royal Prerogative and now the
massive Labour Commons majority. That is a glaring fault of system.
Devolution must be
further promoted. The Greater London Authority arrangements are a
tragic failure, and the Government’s proposed Regional Assemblies are even worse,
designed and destined to be entirely powerless. We must seek the
systematic dispersal of governmental power, promoting real power-sharing
the Regional
Assemblies and a reformed local government, and reducing the scope of the
Royal Prerogative (e.g. to require Parliamentary approval for acts of
war). Many other political issues (urban decay, local
law-and-order problems, voter apathy) reflect popular dissatisfaction
with this systemic failure to
disperse governmental power.
In the 1939/49 period
the UK experienced the most massive centralisation of power, first through
war and then by way of deliberate political change. We never did get to
dismantle the centralised apparatus of the wartime State, and indeed
Labour consolidated it, nationalising public services, town-planning, and
transport. Nowhere in Europe or the Americas is local government
so marginalised as in the monolithic UK state.
Do we have a drugs problem? Yes,
we do, but…
Our system of drugs regulation, introduced at the behest of the
Americans in 1920, is fundamentally flawed. We will never solve our many
problems by relying on prohibition. We must make a simple systemic
shift away from criminalisation, and rebuild new systems of management and
treatment. My personal campaign is again for a basic change of system -
see the Angel Declaration.
Do people fear
unemployment?
Yes, but the key fear for
most people is of loss-of-income, rather than unemployment itself. We need
an entirely new system of Adjustment Pay, which would guarantee to
every employee six months security of income following job-loss whatever
the cause of termination (other than serious personal misconduct).
Wages would simply continue for six months, without any obligation to
work, thus creating a secure period of job-search – for further details of
my suggested new system, click through – Adjustment Pay would replace the
present Redundancy Payments system, and would significantly reduce the scale of
unfair dismissal litigation. It would be a much better system.
Is there a
political choice, as between means-testing and flat-rate benefit?
If there is, choose flat-rate systems. Always avoid means-testing, if humanly possible
(it is not always possible…). Means-testing does not generate public
confidence, partly because of the need to undergo individual bureaucratic
assessment, and partly because such systems are wide open to political
change, thus undermining confidence rather than building it up.
I could go on, though
I hope that is enough to make my point. But beware - I have lots of other
little systems up my sleeve…
See
Downing Street adopts systems analysis
What do you think of this approach to political action?
Drop me a line >
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335
15
July 2002
Gordon
Brown is clever...
His high intelligence, and his intellectual subtlety,
represent real political assets. And he has chosen to give a massive boost
to public spending, at just the right point in the economic cycle. Full
marks to Gordon...
I remain, however, unconvinced. Our problems, in
health and education, do not relate principally to lack of resources. The
real malaise, in both sectors, is one of philosophy, of policy.
-
The NHS is crippled by a preoccupation with ill-health, the
restrictive dominance of the medical profession, and a consequential
preoccupation with gigantism in hospital provision - see
January '02 View.
-
In education, the problem is a lack of official respect for
the teachers, a preoccupation with early selection, over-centralisation of the
National Curriculum, and a failure to develop local schools as bona fide
institutions of each local community.
These are crippling systemic failures, of long
standing. Labour shares the blame with the Tories. Gordon Brown's
centralised drive, to pour more financial wine into flawed old bottles, will not
work. Indeed, his new teams of Government Inspectors could worsen
the situation.
In Wales, we shall fare differently. In health, our
problems are worse than in England, and we are sadly more subservient to the
medical profession. In education, we shall fare better than in England -
simply because our Minister for Education is Jane Davidson, and not Estelle
Morris.
In Wales, we have our own devolved Government, and we are learning to make
constructive use of our devolved powers, having elected our own Assembly
Members, who make up the Welsh Assembly Government. By
contrast, Londoners have recently been assigned Stephen Twigg as Minister
for London Schools, a Junior in Estelle Morris' department. Why
should Londoners not elect their own London Assembly Minister - as we do?
Do you favour further provincial devolution?
Drop me a line >
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336
15 July 2002
Political Mythology
- Globalisation is a myth.
- Business is a myth.
- Even Capitalism is a myth.
I do not believe that any significant meaning can be assigned to any of
these words.
Globalisation
is a dangerous vacuity, which seems to have been generated in the course
of political debate - for the convenience of political opponents.
International trade in goods is of course flourishing, as consumers
seek variety and diversity. International tourism is of course
flourishing, as living standards rise and curiosity drives us all on.
International migration is of course accelerating, as enterprising
individuals refuse to accept the lottery of their birth.
These processes should not be seen as problematical in themselves.
Globalisation itself is either neutral or positively desirable. The
problems arise with the growing reach of
both
public
and
private agencies, in seeking to manage those processes. Both states
and trading corporations are developing integrative management systems
which pose new problems. The statist World Trade Organisation, the
International Monetary Fund, and the new General Agreement on Trade in
Services (GATS) are all problematical, and those problems must be
politically addressed. But that is not to oppose "globalisation" -
whatever that means.
Business is a vacuity of a
different kind. It is used more by its supporters than its
opponents. Did you read about the Japanese visit by the pompous ass
Digby Jones, "Director-General" of the Confederation of British Industry?
- "Business has got to have its Sunday suit on at the
moment", he intoned, "and clearly America is failing in that job - in
the areas of corporate governance, steel and agriculture, America is
found wanting. Japan has got an enormous role to play in this, and
she needs more confidence in being a global player. This is not a
fight Britain can win on its own. I am calling on Japan to become
an ally..."
Who is this guy? What "business" is he
referring to? His members? The big corporations, who pay no
more than lip-service to organisations like the CBI? It cannot be
the overwhelming majority of the small firms throughout the world, who
make up the majority of the trading sector. Business is a dangerous
and misleading term.
But the worst vacuity of all is Capitalism.
My reading suggests that the term was generated by political opponents,
who wanted a clearly-labelled sparring partner, a windmill at which to
tilt. It is unlikely to have
been Marx himself, who simply called his book Das Kapital, and
declared "I am not a Marxist"... Indeed, up to WW1 it was
common to see the term "capitalist" used with legal precision to
describe the specific business of providing capital for trading ventures.
The political generalisations seem to have taken off between the Wars, in
the 1920s and 1930s.
The Left does itself no favours by seeking to articulate a generalised
opposition to "Capitalism" - the very vacuity of the term infects
the remedies themselves. There is no
system called capitalism. Political use of the term
merely dignifies and exaggeraties the coherence and importance the
ramshackle thicket of trading processes, honest and
dishonest, which penetrate every level of every society, from market stall
to High Street bank.
I promise never to use the term. If you catch me me out, let me
know
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