Friday, 23 August 2013

The financial crisis wasn't caused by government overspending

At the 2009 Conservative Party conference David Cameron said, "why is our economy broken? Not just because Labour wrongly thought they'd abolished boom and bust. But because government got too big, spent too much and doubled the national debt."

This remains the dominant narrative of the coalition government, it is also largely accepted by the Labour Party, and few in the media question it. The case for austerity measures and cuts in public services is based on several assumptions: that the level of British government debt is unprecedentedly high, that our debt repayments are unsustainable, and that cutting public spending will get us out of the crisis.

But is there are any statistical basis for austerity? In a powerful presentation in 2011, Dr Saville Kushner showed that our debt is not only manageable, but in fact lower than it has been for much of the 20th century. In 2011, British government debt was 64.6% of GDP, compared with 72% in Germany, 95% in the USA and 200% in Japan. During the Second World War, British government debt peaked at 250% of GDP, and only fell below 100% in the mid 1960s. In this time, the British economy was growing, the welfare state and the NHS were founded and large scale infrastructural projects were underway. Our debt is not abnormally high compared to other countries, nor compared to our historical record, and debt is not the evil it is made out to be.

National debt is not like personal debt - it is never paid off, and it is not an impediment to the economy. Dr Kushner compares national debt to a house - a mortgage can be paid off, but the new buyer will take out a new one. No government is striving to eradicate national debt. The EU Maastricht Treaty stipulates that government debt shouldn't exceed 60% of GDP. In other words, our debt is only just above the threshhold - hardly a "debt crisis."

Kushner goes on to debunk the myth that our debt repayments are too high. In 2011, the cost of servicing our national debt was £120 million per day. That sounds like a horrifying figure until you put it in perspective. In 1981, we were paying the equivalent of £174 million per day. As a proportion of our GDP, the cost of our debt is lower than under the Thatcher government. Most of our debt is low interest and long term - we have 13 years to pay it back.

In their report entitled "A brighter future for the British economy," Michael Burke, George Irvin and John Weeks argue that at the last election, the Conservative Party "launched a propaganda campaign to convince the public that it was the irresponsible fiscal policy of the outgoing Labour government that was the true culprit." They argue that in reality, the recession was caused by the private sector and long term structural issues in the economy. As they put it, "the cause of the surge in public borrowing is the refusal of private companies to borrow for investment."

Now, in the words of MP Jon Trickett, "right-wing politicians and academics want two contradictory things at the same time: rapid deep cuts and expanding demand to achieve private sector growth." This simply cannot work. In a paper entitled "The £100 billion gamble," George Irvin, Howard Reed and Zoe Gannon argue that "trimming the proverbial fat is virtually impossible when you are faced with public services that are already lean and under-resourced." For years we have been fed the idea that we can solve our economic problems by cutting waste. But the logic doesn't work. As Burke, Irvin and Weeks say, "falling demand results in falling output, which in turn results in falling private employment. To reverse this process it is necessary to replace the falling private demand with public sector demand. But the Tory-led government wants the opposite."

Government cuts damage the economy by reducing demand. Axing jobs and laying off staff creates unemployment and a slump in demand. Cutting benefits only hurts the most vulnerable and will not solve our economic problems. Cuts actually make the economy less competitive as they lead to the deterioration of infrastructure and the skills the workforce can offer. Rather than introducing a new round of cuts, we should endeavour to expand government revenue and stimulate demand. This can be achieved by government borrowing, and targeted investment into the economy.

Once the myths surrounding our debt and its causes have been exposed, all sorts of things become possible.
The two papers I have mentioned above propose a wide range of options. Why not increase our national debt to 80% or even 100% as the USA has done, in order to invest in infrastructure? We could embark on a large scale housing programme and build a high speed rail network, which would create thousands of jobs, increase the government's tax intake thereby reducing the deficit. We could introduce a land tax and a financial transactions tax to boost government revenue, which would enable us to pay the higher costs in pensions and care for the elderly which we will soon have to face.

The financial crisis was not caused by government overspending and cuts will not get us out of it. The real crisis that Britain faces is the lack of imagination and ideas among both the coalition government and the opposition. All manner of reforms and alternatives are feasible if we challenge the myths surrounding the economy.

Thursday, 22 August 2013

A tale of two embassies

Guess which embassy in Berlin is the only one to have closed a public road in front of it? Despite the turmoil in the Middle East and in the wake of the multiple US embassy closures, you can still walk right past the Syrian, Egyptian, Israeli and American embassies. The embassy with the highest level of security in Berlin is the British.

British Embassy, Berlin
The move to close Wilhelmstrasse, the road leading past the British embassy, came in November 2003, after an attack on the British consulate in Istanbul left 32 dead. The British ambassador to Germany at the time, Sir Peter Torry, claimed "the level of threat is now so high that we have to take the risk of a car bomb extremely seriously." Initially the road was completely closed off with 27 blocks of concrete. Since then the concrete has been replaced with bollards and a permanent presence of security guards so that pedestrians and cyclists can get through, but no cars.

The British embassy has a very central location, just around the corner from the Brandenburg Gate. Wilhelmstrasse is a wide road, and used to be a main axis route for traffic, and its closure understandably rankles the locals - a survey showed 90% of Berliners think the road should be reopened. The German embassy in London is on Belgrave Square - imagine the reaction if the German government insisted that the road outside be blocked off.

Even if there had been a terrorist attack in Berlin, permanently closing a major road would be an extreme response. But the road closure was a reaction to an attack in Istanbul. Presumably the reasoning for raising the level of security in Berlin rather than anywhere else was due to the large Turkish diaspora in Germany. Leaving aside the problematic assumption that the Turkish population in Berlin constituted a real threat, you would think that once everything had gone back to normal in Istanbul, Wilhelmstrasse could be reopened. After all, the road outside the British consulate in Istanbul is open to cars! It just goes to show that since 9/11, so-called "security threats" can so easily be manipulated to justify the most absurd decisions and policies, and there is often no logical consistency. The recent closure of 22 US embassies was just the latest example.

Nordic Embassies, Berlin
The most paranoid embassy in Berlin is the British. At the other end of the spectrum are the Nordic embassies. Norway, Sweden, Denmark, Finland and Iceland have sensibly decided to club together in one building, and it operates as an open house. One of the headings on their website is "canteen." Monday to Friday between 11am and 3pm, the canteen is open to the public, and offers a three course meal for under 10 Euros. You can see the menu online and you can plan your visit accordingly - today you have the choice of beef roulade, prawn skewers or stuffed mushrooms. At the canteen's long tables you might well find yourself sitting next to diplomats and ambassadors. You might think that this would only be possible with strict security checks. But there are no security scanners, no requirement to leave bags outside, and not even a basic ID check at the entrance.

Of course, the Nordic countries haven't become embroiled in wars in Afghanistan and Iraq. Perhaps Britain is at a greater risk of terrorism than the Scandinavian countries - there has been no equivalent of 7/7 in Stockholm. Except that last year Norway suffered its worst atrocity in decades when Anders Breivik killed 77 on a shooting spree. And across the road from the nordic embassies is the Syrian embassy, arguably a potential target for extremist opponents of Assad's regime. Isn't there a potential risk of a car bomb targeting the Syrian embassy?

The British embassy in Berlin faces no greater threat than the nordic embassies and there is no legitimate justification for maintaining the closure of Wilhelmstrasse. Terrorist attacks are incredibly rare - as Dan Gardner points out in his book Risk, the death toll due to international terrorism in the whole of Western Europe between 1968 and 2007 was 1233. To put this in context, in 2012 1754 people died in road accidents in Britain alone.

The risk of a terrorist attack is incredibly low, but it does exist - the question is how we react. As Phyllis Bennis put it in an article on Aljazeera, 9/11 needn't have changed the world - it was 9/12 that did. Closing Wilhelmstrasse simply gives Britain a bad international reputation. Every day, the thousands of people who walk past are given the impression of a country which is paralysed by fear as the union jack flies above above the bollards and police patrols. The nordic embassies demonstrate a much healthier response which Britain would do well to learn from.

Wednesday, 21 August 2013

David Goodhart is far more dangerous than Nick Griffin

On 1 July David Goodhart, director of the think-tank Demos, and Guardian columnist Zoe Williams locked horns in a debate on immigration. You can watch a five minute excerpt of it here. Goodhart, who has also written a book entitled "The British Dream: successes and failures of post-war immigration" presented the 'respectable' face of the anti-immigration lobby. Zoe Williams challenged some of his arguments but let him off the hook in many ways. While Nick Griffin and British National Party are known for their demonisation of all things non-British, they remain a marginal fringe group and have never had an MP elected. But the views of David Goodhart are far more widespread and are therefore far more dangerous if they are left unchallenged.

Goodhart opens by stating that he takes issue with what he calls "the standard liberal account of immigration." The reality he claims, is that high levels of immigration have a negative influence on income and unemployment, and that in terms of education and employment, lots of people from minorities are doing better than the white population.

Zoe Williams retorts that the mainstream account of immigration both in the media and the political elite is far from liberal. On the contrary, we are constantly fed the myth that immigrants are to blame for the housing crisis and put a terrible strain on welfare and the NHS. According to statistics from the Department of Work and Pensions, only 5% of non-British EU citizens are on benefits compared with an average of 13% for Britons. A recent report by the National Institute of Economic and Social Research stated "we find no association between migrant and inflows and claimant unemployment." And figures from the Organisation of Economic Cooperation and Development show that immigration creates a net gain for the British economy.

The recent Home Office anti-immigration stunt to scare immigrants with mobile billboards proclaiming "In the UK illegally? Go home or face arrest" reveal the true nature of the contemporary outlook on immigration. In the prime ministerial debates before the last election, all three candidates did their best to plug their anti-immigration credentials. The widespread anti-immigration sentiment is by no means confined to the Murdoch press - a quick glance at the comments beneath the video of the debate shows that plenty of "Guardianistas" are persuaded by Goodhart's argument.

Goodhart goes on to claim that "there are legitimate complaints about rapid social change." He maintains that nobody complains about moderate levels of immigration, but that it is perfectly reasonable to oppose the "large-scale" immigration we have today. Granted, the video is an excerpt but at no point does Williams challenge Goodhart to provide any statistics. According to research done by Fullfact net migration to Britain in 2012 was 153 000. In other words, immigration led to 0.3% increase in the population. Of course, immigration unevenly spread, but to talk of "large-scale immigration" is absurd.

The true level of net migration, which is in fact falling, shows up Goodhart's argument for what it is: scare-mongering based on no statistical evidence. Are we really supposed to believe that a 0.3% increase in the population is capable of paralysing our public services? Britain's housing shortage, infrastructural failings and budget deficit are caused by the financial crisis, a lack of investment and directionless government policies. The effects of immigration are negligible. Goodhart's economic argument against immigration has no statistical grounding whatsoever.

Which brings us to Goodhart's social argument. Net immigration figures conceal the fact that a total of approximately 500 000 immigrants come to Britain each year, and Goodhart believes that this is irrevocably changing British society. He refers to data from the 2011 census to back up his case. Apparently it showed that 620 000 white people had moved out of London, a rate three times higher than in the 2001 census. Goodhart calls it a "flight of familiarity" - white people moving out in droves because they no longer recognise their neighbourhoods.

There are several problems with this argument. First of all, he makes no mention of where the 620 000 people moved to. 347 000 people emigrated from the UK in 2012, most of them leaving for Australia, the USA, France and Spain. Once again offering no evidence, Goodhart simply assumes that people moving out of London did so due to the pace of social change. This may be a factor, but so are house prices, and emigrants heading to Australia or France clearly aren't too scared of social change. Secondly, it is ludicrous to blame social change entirely on immigration. Social change has equally been driven by urbanisation, globalisation, technology and the internet. Goodhart panders to the myth that without immigrants, the good old traditional way of life would be alive and well. Finally, Goodhart takes it for granted that rapid social change is a bad thing. But social change has also been a driver of female emancipation, workers' rights and the movement against racism, and one could make the argument that its pace hasn't been fast enough.

David Goodhart is certainly no racist and he portrays his case as a thoroughly reasonable one. This is what makes his ideas so much more appealing than those of the British National Party. But his argument is baseless and contributes to the widespread scapegoating of immigrants in Britain today. The likes of Goodhart have a much stronger influence on public opinion and government policy than Nick Griffin. Zoe Williams made some good points but she didn't win the debate. It is high time that the case against immigration is attacked with the facts.

Friday, 16 August 2013

Egypt: it's time the West got on the right side of history

We will never know how many Egyptian civilians were killed in the massacres on Wednesday. According to the Guardian there were 638 casualties, while an article in the Asia Times claims the death toll was more than 1000. While there has been a public outcry in many countries, the Obama administration has still not recognised the ousting of Mohamed Morsi as a coup, and there has been no United Nations condemnation of the brutal military crackdown on the protesters. Western governments are fearful of isolating the Egyptian military and national security interests are at stake. But a muted response in the face of such atrocities only further erodes our moral credibility and reveals our double standards, fuelling anti-Western sentiment.

Mohamed Morsi was the first leader in the history of Egypt to be democratically elected, winning 52% of the vote in 2012 after protests had brought down Hosni Mubarak's military regime. What happened on 3 July was clearly a military coup: the Egyptian military under Abdel Fattah al-Sisi ousted Morsi's Muslim Brotherhood, placing Morsi under house arrest, suspending the constitution and declaring a state of emergency.

A democratically elected government was overthrown by the military, voted for by no one. But US Secretary of State John Kerry claimed that the miltary was "restoring democracy", and the Obama administration continues to carefully avoid the word "coup" in reference to the events in Egypt. Kerry said that millions of Egyptians supported the ousting of the Muslim Brotherhood, and the New Statesman reported that 15 million people had signed a petition calling for Morsi's resignation. But protesting against the government is not the same as clamouring for a military take over. The idea that the coup was the beginning of a democratic transition is absurd.

In response to Wednesday's violence Obama said "while Mohamed Morsi was elected president in a democratic election, his government was not inclusive and did not respect the views of all Egyptians." He went on to say "we don't take sides with any particular party or political figure." But by refusing to refer to 3 July as a coup, by definition he is legitimising the military takeover. And his criticism of Morsi is ludicrous - no government in the history of the world, democratically elected or not, has ever respected the views or retained the support of its entire population. Millions protested against Morsi's government, but now the entire population has been disenfranchised, and the democratic process has been abandoned. 

In his capacity as Middle East peace envoy Tony Blair has defended the coup, on the grounds that the Egyptian people faced a choice between "intervention and chaos." But the coup brought us to where we are today: hundreds dead, no promise of elections and potentially a slide towards civil war. Meanwhile, the massacres on Wednesday haven't stopped the US from continuing to pay $1.3 billion in military aid to the Egyptian generals. Martin Indyk, Washington's peace envoy to the Middle East argues that the US should work with the military regime in order to maintain its political leverage and national security interests. But what use is this leverage if it can't prevent massacres of civilians?

The failure to recognise the ousting of the Muslim Brotherhood as a coup and the muted response to the killings on Wednesday make a mockery of Western claims to support democracy and human rights. For decades Western governments supported the likes of Mubarak, Assad and Ben Ali, giving them political, military and financial support until the Arab Spring swept these dictators from power. In our response to the coup in Egypt, once again we have come out on the side of the oppressors. This will only worsen our already dismal image and reputation across the Arab world, something which certainly isn't in our national security interests. 

While the protests in Cairo's Tahrir's square were still raging in February 2011, Obama claimed "history will end up recording that at every juncture in the situation in Egypt, that we were on the right side of history." The reality is the exact opposite. The Egyptian people have demonstrated that they are ready for democracy and at some point in the future, their wishes will have to be granted. Obama will be remembered as a president who shamefully chose to side with the military against the Egyptian people. 

Thursday, 8 August 2013

East Germany and the value of free speech

Berlin is famous for its architecture, museums and exhibitions. The Holocaust memorial and the section of the Wall at the East Side Gallery have become some of the top sights. Less well known is a former prison in the suburb of Hohenschoenhausen, which was used by the Stasi until 1989. It is now a museum with a unique aspect to it: the tour guides are all former inmates, giving the experience a very personal and moving connection to the events of the recent past. While it is horrifying to discover what went on here, and to hear about it from someone who was imprisoned by the East German regime, there is also a heart-warming side to the experience: the lengths that people were prepared to go to in order to live in a free country.

The prison was opened by the Russians after the Second World War. Germany was divided after 1945, with the former Russian zone becoming East Germany or the German Democratic Republic (GDR). The iron curtain went up, and the GDR was established as a Soviet satellite state, with the communist party in power. At this stage, the prison was effectively run by the Russian secret police, the NKVD, and conditions were appalling. People were arrested, tortured, executed and never seen again.

This changed in 1955 when the East German secret police, the Stasi, took control of the prison. While history books in the West often lump the Stasi and NKVD together, the comparison is in fact unjustified. The Stasi was a terrible, repressive organisation, but its methods were far more psychological than the brute force of the NKVD. As our guide explained to us, the Stasi undertook all sorts of procedures in a vain attempt to acquire legitimacy. Of course it was a sham, but it distinguished them from the NKVD. Some prisoners were executed under the Stasi but far fewer, and only after a farcical trial, not unannounced in the middle of the night as before.

Our guide was arrested in August 1989, only a few months before the Berlin Wall came down. He had been active in organising demonstrations; the Stasi had been on his trail for several years, but he had been careful not to work in flagrant breach of the law. It might have been enough for the NKVD to eliminate him, but the Stasi stuck to their protocol. Finally, he was caught bringing anti-government posters and materials back from Czechoslovakia, and put in jail.

The prison guards didn't beat him up - their tone was civil. He was asked whether he would he like to take a prison uniform, or would he prefer to keep his own clothes? Naturally he opted to keep his own. The prison official said he was happy to accept the prisoner's wishes, but wanted to point out that due to security reasons, his own clothes could not be washed. Given that he could be in prison for a while, did he want to change his mind? Of course he did. So he had been given a choice, and had freely decided to take the prison uniform.

This was the sort of psychological manipulation that the Stasi used to break the spirit of its prisoners, and to instill fear among the entire population. They understood that releasing prisoners after a time could work to their advantage, and could more effectively quell public dissent than arbitrary executions.

Of course, one of the prime concerns of the Stasi was to stop people escaping to the West. East Germans could apply for permission to access the areas bordering the Wall, or to visit West Germany. If permission was granted, the Stasi wanted to make sure they would come back. One strategy was to find out if they were selling their fridge, a likely sign that they didn't intend to return. The Stasi's huge network of informants would pose as ordinary members of the public looking to buy fridges.

East Germany was the richest country in the communist block, and had the highest living standards. Provided they kept their heads down and didn't speak out against the government, East Germans had access to free education and health care, very low unemployment, and holidays on Lake Balaton in Hungary. Life expectancy by 1989 was three years below that of West Germany, they couldn't buy Western products, travel to the West or access the Western media, but they knew the Stasi wouldn't arbitrarily round them up.

Given these circumstances it is extraordinary and encouraging that so many were willing to risk their lives to escape. In total, about four million East Germans left for the West, most of them before the Berlin Wall went up in 1961. Even after this, hundreds of thousands abandoned East Germany, some using official permits, some escaping through third countries, and some by being ransomed by West Germany. Others dug tunnels, built their own contraptions to fly over the Wall, swam across lakes and rives, used maps of the sewers or risked a run across the minefields. 136 were killed in their bid for freedom, and many were arrested for trying or for assisting others.

It is a fantastic testament to human determination and endurance. The East German escapees were not fleeing certain death. They were prepared to risk everything for the freedom of speech. It was this unbreakable spirit that brought down the Berlin Wall and the East German government in 1989, and the Soviet Union shortly after.

Wednesday, 7 August 2013

Gibraltar: a mutually beneficial stand-off

The stand-off over Gibraltar has been portrayed in much of the press as a battle between the needlessly aggressive Spanish government and the reasonable and principled British government. In reality, the skirmish over the Rock is a godsend for two unpopular and directionless prime ministers.

The Germans have a wonderful word for 'the silly season'. When Parliament is in summer recess, many journalists are away on holiday, and the newspapers fill up with non-stories, it's "Sauregurkenzeit" - pickled gherkin time. It seems like it's been pickled gherkin time for Cameron's coalition government for a while now. With one u-turn after another, policies are announced and scrapped without much conviction. Cameron's recent statements announcing a tougher stance on online pornography were clearly an attempt to reclaim the moral highground and to appear concerned about children and families, rather than a real intention to do anything.

Meanwhile Spain is still reeling under the austerity measures brought in by the unpopular government of Mariano Rajoy with a lot of pressure from the European Union. The unemployment rate is 26.3% and much higher among the youth, and there have been major demonstrations and protests across the country. So it must have been a relief for both Cameron and Rajoy when Gibraltarian boats began dropping blocks of concrete into the sea, ostensibly to improve the catch of its fishermen.

Spanish foreign minister Jose Garcia Margallo condemned the act as endangering the livelihoods of Spanish fishermen, and seized the opportunity to threaten punitive measures including closing Spanish airspace to planes bound for Gibraltar, and bringing in a €50 fee for cars crossing the border into Spain. No matter that Spain still clings on to its enclaves Melilla and Ceuta - at last, a chance to do something decisive and popular!

Gibraltar's chief minister Fabian Picardo retaliated magnificently, also recognising the potential to make political capital out of the incident. He said that "hell would freeze over" before the artifical reef was removed. He went on to claim that Margallo's comments were "reminiscent of North Korea," and that "we've seen it before during Franco's time in the 1960s."

Picardo came under fire from Ed Milliband in 2011 over Gibraltar's role as a tax haven that damages the British economy. Gibraltar has a flat rate 10% corporations tax, and companies can incorporate themselves in Gibraltar in less than a week. Offshore bank accounts for businesses and individuals can be opened easily, and Gibraltar provides them with banking secrecy, refusing to provide the names of company owners and rejecting any information exchange treaty. This system allows the super-rich and transnational corporations to avoid paying tax in the UK and other countries, and to pass the government bill to the taxpayer. Here was a chance for Picardo to bury that story, and to present himself as the gallant defender of the 30 000 Gibraltarians under attack from belligerent Spain.

The Gibraltar crisis has been a gift to the British government too. Foreign secretary William Hague vowed he would stand "shoulder to shoulder" with the citizens of Gibraltar. According to a statement from the foreign office, "the Prime Minister has made clear that the UK government will meet its constitutional commitments to the people of Gibraltar and will not compromise on sovereignty." David Cameron stepped into the breach, speaking with Mariano Rajoy today and urging him to deescalate the situation. The British government continues to blindly follow the Americans in the so-called war on terror, with several thousand troops still bogged down in a senseless war in Afghanistan, and no courage to speak out against the use of drones. At home austerity measures haven't brought the promised economic recovery and the coalition government is limping pathetically towards the next election.

The flare up over Gibraltar will almost certainly blow over within days. The escalation of the situation, dramatic statements and moral posturing are symptomatic of governments desperately seeking legitimacy through an international stand-off, in an attempt to deflect attention away from their policies at home. It'll soon be back to pickled gherkin time but for a short while, Cameron, Margallo and Picardo can portray themselves as leaders of principle.

Tuesday, 6 August 2013

It's time to put Policy back into Politics

The striking thing about contemporary British politics is the uniformity of the Labour, Conservative and Liberal Democrat Parties, and the lack of debate in the Houses of Parliament. The coalition government is clearly running out of steam - three years after taking office, it's difficult to point to anything that has been achieved. Yet from foreign policy and health to the economy and education, Labour has been an almost mute opposition party. The next election is likely to be fought on the same policy-lite basis as the one before, with plenty of meaningless slogans and little substance. It is therefore refreshing to see real policy proposals being made in the campaigns for Germany's federal election on 22 September 2013. Labour would do well to look at the Left Party for some ideas.

Germany is certainly no panacea, and in many ways it suffers from the same political problems as the UK. The two biggest parties, the Christian Democrats and Social Democrats, have converged more and more, and political apathy is widespread. Election posters and placards have gone up all over Berlin in recent weeks, and most of the slogans aren't particularly inspiring. The liberal FPD claim they want "more courage, more market and more freedom." Empty slogans like bring the campaign mantras of the last British election to mind: "Vote for change. Vote Conservative." "The real alternative."

But the Left Party's placards are different. "For taxes on millionaires." "Abolish two-tier health care." "€1050 minimum pension." The placards stand out by virtue of their substance - the novelty of a coherent policy stings you in the eye. Here at last is a party which stands for something, and which has the courage to make real commitments against which it can be judged.

More than that, the Left Party addresses issues which affect millions of people across Germany today. The sight of elderly people rummaging through rubbish bins in search of bottles, which they bring back to supermarkets in return for 10 or 20 cents, has become commonplace in Berlin. Regressive taxation and an expanding wealth gap are major problems - as they are in the UK. While American healthcare is often lambasted in Europe, Germany's is rarely talked about. Health insurance from one of several state providers is both mandatory and costly, and is proportionately far more expensive for the worst off. Those who can afford it can opt for private health insurance, literally allowing them to jump the queue in the waiting room, in the two-tier system which the Left Party seeks to reform.

The Left Party emerged out of the remnants of the East German communist party; many still associate them with the Stasi and will therefore never vote for them. At the last election they secured 11% of the vote, but they refused to enter a coalition government with the Social Democrats. It's always easier to make great commitments if you're unlikely to enter government any time soon. Nevertheless, they are an important voice in the German political scene, and the British Labour Party ought to take a leaf out of their book.

Labour claims to be in favour of saving the NHS, but it's difficult to take them seriously when the coalition government is in fact continuing many of the policies which were introduced under Blair and Brown. It was Labour which pioneered city academies, expanded private finance initiatives and introduced tuition fees. Britain suffers from a chronic housing shortage, unemployment and a dire lack of investment in infrastructure. Yet Labour offers no alternative to Osborne's austerity measures, seems to have no policies of its own to combat unemployment, and shies away from criticising the coalition government's failures. What would Labour do differently if it won the next election? It's hard to know. Ed Milliband claims to stand for "fairness" without defining what precisely would be done more fairly under Labour.

If it wants to win the next election, Labour needs to produce some concrete policies on the economy, housing, health and foreign affairs. The example of Germany's Left Party shows what this could look like. It's time to put policy back into politics.

US embassy closures: Since when is Bangladesh in the Middle East?

19 US embassies may be closed until the end of August due to an alleged heightened security threat. Apparently, intercepted communications between head of Al Qaeda Ayman Zawahiri and an Al Qaeada affiliate in Yemen reveal a real risk to US security. Much of the coverage of the US embassy closures has focused on the NSA scandal. The timing is certainly very convenient for those seeking a justification for the NSA's surveillance programmes. But there is a far simpler reason to be suspicious about the latest terrorist alert: the location of the embassies in question.

It is startling how little attention seems to be paid to this key question. The Guardian headline runs "White House warns some US embassies could remain closed for another month" and the sub-headline "Obama administration downplays connection between current scare and ongoing debate over NSA surveillance in the US". Interesting stuff, but nowhere in the article does it say which embassies are closed. 

The BBC reports that US embassies across the Middle East and North Africa are closed, and provides us with a list of places. It includes diplomatic posts in Riyadh, Cairo, Doha, Dhaka, Bujumbura, Antananarivo and Port Louis. Since when were Burundi, a tiny country in sub-Saharan Africa, and Mauritius, an island in the Indian Ocean, in North Africa? And is Bangladesh really in the Middle East? Qatar is a good friend of the US and a loyal ally in the so-called war on terror - is the embassy in Doha really under threat? 

The list of embassy closures speaks volumes about the incoherence of US foreign policy and gives us good reason to be highly suspicious about the alleged security threat. The state department claims to be particularly concerned about an attack in the Middle East or North Africa. So why is Washington reopening its outposts in Iraq, Afghanistan and Algeria, while closing embassies in Burundi, Rwanda and Madagascar? Are we really supposed to believe that the security risk is higher in Bujumbura than in Kabul or Baghdad? 

The other striking thing about the coverage of the embassy closures is that few mention the attack on the US embassy in Libya last year, in which the US ambassador was killed. In the aftermath of the attack in Benghazi in September 2012, the response of the Obama administration was merely to order an increase in security. The Republicans berated Obama for his weak reaction. But is the security threat today really greater than it was back then? Why is practically nobody comparing Washington's response to the current threat with its response in Libya last year?

Some have already used the heightened security threat to justify the NSA surveillance programmes. George W. Bush's popularity increased after every terror alert - perhaps the Obama administration is hoping for a similar boost. There are many reasons to doubt the substance behind the alleged security risk. But we should also demand answers to the obvious questions. 

Monday, 5 August 2013

What can we learn from China?

In his recent TED talk entitled “A tale of two political systems”, Eric Li delivers a devastating challenge to the way we see China today. He claims that China’s political system is poorly understood, that claims of corruption and bad governance are overblown, and that the Western belief in the superiority of democracy should at least be questioned. While some of Li’s arguments are flawed, as pointed out in economist Yasheng Huang’s hard-hitting critique, the talk is well worth a watch and shows that we can also learn an important lesson from China.

Li grew up in Shanghai and was brought up being told that all countries develop in one linear trajectory towards communism. China, he was told, was involved in a fight between good and evil, striving towards a world in which all would live under the panacea of communism. Li went on to study at the University of Berkeley in California, where he was told a different story: all countries develop in a linear trajectory towards capitalism and democracy. The free market will get us there, but first we need to engage in a fight between good and evil. Li doesn’t labour the point – he doesn’t need to. The similarities between the arguments used in China and the West to justify their respective systems, the identical inability to conceive of any alternative and the lazy appeals to “good” and “evil” are too often ignored. It is a lesson we would do well to learn.  

Li goes on tackle the widespread idea that the Chinese government is “operationally rigid, politically closed and morally illegitimate”. He argues that in reality, it is based on “adaptability, meritocracy and legitimacy”. He points out that since the revolution in 1949, China has experienced possibly a greater range of policies than any other country in the world. Land collectivisation, the Great Leap Forward, the Cultural Revolution, privatisation and market capitalism. To quote Li, the party “self-corrects” – it isn’t incapable of adaptability as is often claimed in the West. He cites the introduction of term limits and a mandatory retirement after Mao as examples.  

This argument is vigorously refuted by Yasheng Huang. How can the abandonment of the disastrous Great Leap Forward, in which an estimated 30 million people died, be referred to as a “self-correction”? Li’s case sounds convincing at first, but by his logic, Stalin’s purges, deliberate starvation of the Ukraine and  policy lurches could also be deemed “self-corrections”.

Next, Li introduces the rarely talked about Communist Party Organisation Department, the structure through which party members have to progress to make it to the top. This structure is made up of three components: the civil service, state owned enterprises and social organisations. The entry level has a workforce of 900 000, who have to work their way up an increasingly competitive ladder. As a member rises through the ranks there are fewer jobs at each level, down to just 300 in the central committee and 25 in the highest ruling body, the Politburo. It takes between 20 and 30 years to make it to the top, by which time a candidate will have managed provinces with a population in the tens of millions, or companies with a turnover of hundreds of millions of dollars. Of course some abuse their power and some use their contacts to gain promotions. But out of the Politburo’s 25 current members, only 5 come from privileged backgrounds.

As Li says, “George W. Bush or Barack Obama wouldn’t make a small county manager in China.” Li talks so passionately that there is sometimes a danger of forgetting that China is still a dictatorship without freedom of speech or the press. But at the same time, shouldn’t Britain be concerned by its lack of social mobility and demand more from its leaders? After all, the last Labour leadership election was fought between two Oxbridge educated brothers, and many of our cabinet ministers have no expertise in the departments they supposedly run. Instead of labelling the Chinese government “totalitarian” and insisting that our form of governance is the best, we ought to attempt to better understand China and recognise our own failings too.

 Li is perhaps on shakier ground on the subject of corruption. He claims that corruption is not the product of a one-party system. Transparency International ranks China in 80th place out of 174 countries on its corruption index, which as Li points out, puts it ahead of many countries which are electoral democracies including Greece, India and Argentina. The major flaw in this argument, as Yasheng Huang points out, is that these countries have not been electoral democracies for a particularly long time. Established democracies have much less corruption, and in many countries corruption is an effect of recent dictatorship – Indonesia and the Philippines are prime examples. The introduction of democracy doesn’t automatically abolish corruption. But Li’s logic doesn’t stand up to scrutiny.

However, Li delivers a powerful conclusion. “Meta-narratives that make universal claims failed us in the 20th century and are failing us in the 21st. The West should seek political reform at home, not try to export electoral systems. China’s one party system will not replace electoral democracy – nor does it seek to. China recognises the necessity of different systems. We should stop telling our kids there is one panacea towards which we must all evolve.”

This is perhaps Li’s strongest argument. With the War on Terror, the identification of an “axis of evil”, the labelling of countries as “with us or against us” and our military interventions in Afghanistan and Iraq, it is the West and not China which continues to pursue a meta-narrative.