The Need for a New Glasnost and Perestroika

"Glasnost" : Truth, Frankness

"If the Russian word 'Perestroika' has easily entered the international lexicon, it is due to more than just interest in what is going on in the Soviet Union. Now the whole world needs restructuring; that is, progressive development, a fundamental change".

Gorbachev, Mikhail Sergeyevich

Precisely what transpired between one of Russia's wealthiest oligarchs, the former European Trade Commissioner, and the UK Conservative Shadow Chancellor is today the matter of much media speculation, but this blog has more important matters to address.

For some time, Russian Prime Minister (and former President) Putin and current President Medvedev have re-iterated that : "There are no ideological differences between us" (ie Russia and the West). Meanwhile, Mr Putin describes himself - a former KGB officer and supporter of the Soviet Union - as a "Conservative", whilst Mr Medvedev, a wealthy oligarch, describes himself as a "Liberal".

Does this mean that the Russian Prime Minister would identify himself (ideologically that is) with so-called Worcestershire Conservatives ? There are certainly some Soviet-style bureaucrats amongst the West Midlands regional and local authorities, and other other public bodies, who, I feel, would welcome the kind of strong leadership favoured by Mr Putin.

As for the Russian President's "Liberalism", is this in reality little more than a culture of "Loads of Money". The UK Liberal-Democrats, I seem to remember, secured one of the largest donations to a British political party shortly before the last General Election, only to find that the donor was a crook who subsequently fled the country rather than face a prison sentence.

Under the circumstances, whilst I abhor much of what New Labour represents, neither the Conservatives or the Liberal Democrats hold much promise for me just now. What this country (ie Britain) needs is some real "Glasnost" and "Perestroika", and so I'm going to explore these concepts in a wider ideological context with the help of some "friends" @

http://janetrocco.wordpress.com/ (See Tails of 2 Nations)

However, I would like to leave readers of this post to ponder the following quote from Geoffrey Hosking's excellent book "Russia and the Russians" (Penquin 2002). Professor Hosking's notes (pg 580-1) the rise of "informed political movements" in the Soviet Union of the mid-1980s :

"These early initiatives focused on matters of "motherhood and apple pie" : no one could argue that historic buildings, the environment, and nuclear power were issues of legitimate public concern"...

Present day UK national and local governments please take note !

"Time to Banish the God of Growth"

Following the Miliband "Clone" Ed's announcement yesterday* (see below) - in his new role as UK Secretary of State for Energy and Climate Change - I've decided to quote in full the following Editorial from this week's New Scientist magazine, from which this post also takes its title :

"IMAGINE an industry that runs out of raw materials. Companies go bust, workers are laid off, families suffer and associated organisations are thrown into turmoil. Eventually governments are forced to take drastic action. Welcome to global banking, brought to its knees by the interruption of its lifeblood - the flow of cash.

In this case we seem to have been fortunate. In the nick of time, governments released reserves that should with luck get cash circulating again. But what if they hadn't been there? There are no reserves of fish, tropical hardwoods, fresh water or metals such as indium, so what are we going to do when supplies of these vital materials dry up? We live on a planet with finite resources - that's no surprise to anyone - so why do we have an economic system in which all that matters is growth (see "Why our economy is killing the planet and what we can do about it")? More growth means using more resources.

When the human population was counted in millions and resources were sparse, people could simply move to pastures new. But with 9 billion people expected around 2050, moving on is not an option. As politicians reconstruct the global economy, they should take heed. If we are to leave any kind of planet to our children we need an economic system that lets us live within our means."

* New UK targets have been set for green house gas emissions.

False Dawns before The Rise of the Real Economy

Around this time last year, I suggested at a meeting about the West Midlands Regional Spatial Strategy Phase 2 Revisions that local authorities in Worcestershire would not recognise real sustainability (ie environmental) if this was a bus about to knock them over. So with the present New Labour Government, and the real economy : I cannot think of any minister (least of all the "prime") who would recognise this in a similar situation.

Unfortunately, I feel pretty much the same about the Conservatives and Liberal Democrats. With regard for the latter, although Vince Cable has been amongst the most reliable commentators on the current financial crisis, as the former chief economist of oil company Shell, I'm still not convinced even he fully grasps the real economy. Meanwhile, the Conservative leadership has floundered somewhat in recent weeks, and, as for Mayor of London Boris Johnson, I would suggest that he has about as much grasp of the real economy at the present time as his predecessor, Ken Livingstone.

So in this rather unpropitious context, I've decided to raise some key issues concerning the real economy, in the hope that these will help others recognise both false dawns and the "real thing". I'm going to do this with reference to :

1. The global financial system/economy
2. UK property market
3. Construction industry
4. Small and medium-sized business
5. The public sectors

Firstly, the global financial system is, I would argue, still far from adjusted to the real economy. Thus we should not put over-much weight on day-to-day adjustments in world stock markets. We should also be skeptical of government propaganda - I'm afraid that's precisely what it is ! - concerning the robustness of our own economy relative to that of other countries. For - surprising although it may seem - the United States economy is, with the exception some sectors such as real estate, better regulated than our own, and the economies of many European nations better placed to withstand a major international recession.

With regard to the UK, residential property values, in particular, are over-priced relative to the real economy, notably actual household incomes. Thus in Worcester, for instance, I anticipate that the value of small apartments could still fall by 30-40%. However, there are likely to be more dramatic declines in the values of such property elsewhere, including Birmingham. This is because one of the "urban myths" perpetuated by the present Government is that there is a burgeoning "class" of upwardly mobile young professional single people and couples, when, in fact, the growth in employment has been in low paid work of the kind more likely to generate households of multiple occupation. Therefore, until such time as there is an honest recognition of the real labour market in Britain, we cannot properly tackle real housing issues, and notably the need for the "re-construction" of the social rented sector.

Moving on to the construction industry - one of the UK's most important sectors - costs here have escalated unsustainably in recent years. Historically, the increasing costs of construction have been a key contributor to the end of the boom cycle in countries such as the UK and United States, and I, would argue, this will increasingly be the case elsewhere in the world. The Mayor of London should not, therefore, call upon national government to "Spend, Spend, Spend" on large-scale construction projects until such time as their costs are adjusted downwards.

Much has been made in recent days of the financial needs of small and medium-sized businesses, not least because these now employ, collectively, more people than large companies. It is unfortunate, therefore, that much of the "growth" amongst such businesses since New Labour came to power has been funded through the same credit boom - or, more accurately, binge - as much consumer spending. As with mortgage lending, it is highly questionable in my view, whether business lending can or should return to the levels of 2007 and earlier, and I think those UK banks who have just been bailed out by the Government will agree with me !

Finally, I would like to look at the public sector, particularly central and local government, health, education and the emergency services, but also the so-called cultural sectors. The point has been made that there are now more people employed in the collective public sectors of the UK than in Hungary before the collapse of communism; and the National Health Service is, I think, the second largest employer in the world after the Chinese army ! It is not surprising, therefore, that the public sector is more important to the economy of many parts of Britain than the private. As with the construction sector - of which it is one of the main clients ! - the cost of Britain's public sector has rocketed in recent years, and the current spending trajectory, including pensions, is, I would suggest, one of the least sustainable areas of the British economy, even for those authorities who do not had their finances "frozen" in Icelandic banks !

So how do I propose to tackle the above issues : in my Blog for the time being, is the answer. However, if someone wants to pay me fair fee, I'd be happy to advise them !

In the meantime, some may feel that in this and my previous posts I've been unfair to our Prime Minister and his Government, or "Brave Captain Brown" and his "Crew". Not so, I say ! It was, after all, former Deputy Prime Minister John Prescott, who compared Gordon Brown to the captain of the Titanic, or as the Chief Leader Writer for The Telegraph put it on 5 August :
"As befits a former ship's steward, John Prescott has a penchant for the nautical metaphor. It's proving a dangerous addiction. His blogpost in which he compared Gordon Brown to the captain of the Titanic was designed to be helpful. I'd hate to see Prezza trying to be unhelpful."
Alternatively, perhaps Mr Prescott, was, on this occasion, simply being honest, and, unwittingly, providing us with an augury of the impact of the real economy, after the false dawns of recovery.

De-constructing Gordon "Captain" Brown's Rhetoric

One the things that particularly riles me about the New Labour Project is the language deployed by its proponents, and I want to focus on Gordon Brown-Speak today. (see also :
http://limits-2-growth.blogspot.com - Decontructing the New Labour Project).

Two of Brown's preferred metaphors (for himself !) are "The Good Father" (of the New Labour Family) and, most recently, "The Ship's Captain" (based, apparently, on a favourite short story by Joseph Conrad) who is steering the British economy through "turbulent times".

With regard to "The Father" metaphor, it is the aphorism "Success has many fathers, but failure is an orphan" which particularly sums up New Labour's record in office for me. Here is a Government which has called every passing economic success its own, and denied any role in these when they turned out to have a serious downside.

Let's take for instance, the current "favoured" policy of governments buying shares in banks. Now as far as I can make out "The Father" of this approach is United States private investor Warren Buffett (with his recent purchase of shares in Goldman Sachs), and not Gordon Brown.

As it happens, Mr Buffett likes to play his Ukulele, and I'm going to strongly recommend that our Prime Minister takes up this instrument for it brings me nicely on to his other preferred metaphor : "The Ship's Captain".

The only successful British sea-faring prime minister in modern times has to, my knowledge, been the Conservative Sir Edward Heath, who skippered his yacht crew into victory on the world class racing circuit, but, wasn't, by his own admission, much good in the galley. The help of former ship's steward, and later Deputy Prime Minister, John Prescott might been useful here !

Returning to Gordon Brown, I'm reminded of the sea-shanty in which "Captain Brown" (yes, really !) played his Ukulele as the ship went down", perhaps after hitting a large iceberg. Here are a couple of verses from "Nancy Lee" :

"I sing you a tale of the Nancy Lee
A ship that got shipwrecked at sea
The bravest man was Captain Brown
Who played his ukulele as the ship went down....

....All the crew were in despair
Some rushed here and others rushed there
But the Captain sat in the captain's chair
And he played the ukulele as the ship went down."

Incidentally, folks who like a good old sea shanty might be interested in "Why I've lately been bound for Botany Bay" at http://the-green-man-project.blogspot.com/

The Tip of Brown's Iceberg.... is Already Melting

Yesterday, BBC Radio 4's "In Business" Programme hosted a special debate on the present world financial crisis. Various eminent professionals took part, but the main discussion was between a leading financier and a well-known economist, with the boss of a major firm of consulting engineers promoting a rather optimistic view of his business in Britain. He looked forward to a large amount of government-generated construction projects. Meanwhile the economist confirmed that there was still a lot of "free" capital in the world, but most of it is in Russia and China. The financier, however, offered a rather bleak outlook for most people.

On reflection, a composite "future" emerged from this discussion, which sounded rather like life in the former Soviet Union, with bureaucrats and technocrats doing rather well for themselves and the rest of society not faring too well at all. Iceland, I note, has already found "a new friend", to quote their prime minister, in Russia. However, if modern Chinese state capitalism is your preferred "business model", I would point you in the direction of George Walden's book, "China : A Wolf in the World ? "; and again remind readers of The Twilight of the God's (see below) wherein the Wolf Skoll eats the sun, recalling Walden's account of air pollution in Beijing.

A New Icelandic Saga - The Twilight of the Banks ?

In the Old Icelandic Sagas, it is the Twilight of the Gods, and the end of the world, which is prophesied, possibly based on a dim collective memory of pre-historic climate change.

The New Icelandic Saga appears to herald the Twilight of the Banks, bringing immediate freezing of the collective finances, including those of British local authorities.

However, given that the collective psyche of local government sometimes seems very dim indeed, the "big freeze" might just be a timely reality cheque.

Complex feuds are central to the Old Icelandic Sagas. In the New Icelandic Saga, this probably means a major legal action against the Icelandic authorities.

Incidentally, Transport for London is amongst the Icelandic investors, which, on a positive note, might mean the end of a certain Thames Gateway Bridge "Saga", for the time being anyway.

The Underworld of European Finance

Now we've all had sight of this, I think we can understand why Gordon Brown has recalled Peter "Mephistopheles" from the nether regions (see below) !

Incidentally, in updating myself on the career of Tina Brown, I find she has recently set up The Daily Beast @ http://www.thedailybeast.com

On Caligula's appointment of his horse as Consul & Peter Mandelson's return to Government

In a 2005 New Statesman book review, Sir Peregrine Worsthorne referred to former New Yorker editor Tina Brown's appointment of an "old friend" to edit "The Talk of the Town" as "only a little less outrageous than Caligula's appointment of his horse as consul". Interestingly, the same edition of the New Statesman notes, in "Trouble in the Ranks", that :

"By the time Margaret Thatcher finished with the Conservative Party, the aristocrats had been banished by free-market zealots who made it unelectable. Peregrine Worsthorne laments the demise of the old-style Tories, who at least served to restrain corporate greed."

The comparison to Caligula's horseresurfaced last weekend, this time with reference to the appointment of Peter (now Lord) Mandelson as Business Secretary by Prime Minister Gordon Brown.

However, from my perspective, Caligula's appointment of his horse as consul was probably one of the Roman's more sensible decisions, and so it may be with Gordon Brown's appointment of Peter Mandelson as Business Secretary.

If this appointment has upset Ed Balls (and his wife, Treasury Secretary Yvette Coooper, no doubt); and, for that matter, the Conservative Party, then, as far as I'm concerned, so much the better.

With regard to the Conservatives, I have to say that their Leader David Cameron shrunk in my estimation when, in his closing speech to the party conference, he tied the fortunes of " David Cameron's Conservatives" firmly to the legacy of Thatcherism.

Returning to Peter Mandelson, I would nevertheless suggest that readers consult the Postscipt to my E-Pantomime, Carry on Communities, where the "Lord" appears in the guise of Mephistopheles, and a post of around the same time entitled "Know the Difference between Objectivity and Aspiration" which I have re-produced at : http://janetmackinnon.wordpress.com/

Enter "The Dogfather" of British Politics ?

Those of us who would like to see changes at the top of the British Establishment welcome the prospect of one less Blair, namely London Metropolitan police chief Sir Ian Blair. London Mayor Boris Johnson has described any plot to oust Sir Ian as "Barking", a response which has caused me some reflection.

Now Ken Livingstone's manual of government, as Leader of the Greater London Council, was The Godfather and, indeed, the plot of this book has been the inspiration for contemporary thinking on the darker arts of management.

Not having read The Godfather myself, or managed to stay awake through the film, I was nevertheless entertained recently to find a local canine consultant advertising himself as "The Dogfather". With his reference to "Barking", a canine management style sounds more up the street of Boris Johnson.

Proud to be viewed across 5 Continents !

Yes, it's official : according to Google Analytics, this blog is now viewed across the 5 Continents, and I have genuinely gone global ! A Big Thank You to all my readers out there.

Back To The Basics Of Economy....Again

The debate about Main Street vs Wall Street : whether the proposed United States Government bail-out of the latter is in the best interest of the former is an important one. However, the key issue is not so much whether the Wall Street bail-out is essential for Main Street USA, but whether it is in the best interests of the global economy, by which I mean the banking systems and, consequently, government finances of other major economies, such as our own. Here, the answer is, almost certainly, yes. This high level of co-dependency is the downside (and, yes, it is a downside !) of the most recent wave of globalisation, and, to a very real extent, we are all in this economic boat together.

This is not to say that there is no "real economy" out there in the real world, of which Main Street is a part, which could not survive a major international banking failure. There may well be. However, the consequences of such a failure, not just for private sector corporations but also for public finances would generally be regarded as unacceptable.

My greatest concern is whether the lessons of the current financial crisis will be fully learned, particularly in this country. Our economy has become more and more dependent on a smaller and smaller number of sectors, namely, banking and financial services, property and construction, and retail/distribution. These are especially vulnerable to present problems. We need to develop a more broadly based economy again. This will require action at every level of government : national, regional and local. A good place to start might be London, and I can recommend Mayor Boris Johnson some good reading : The Greater London Council's London Industrial Strategy, published shortly before its abolition by the Thatcher Government in 1986.

See also : http://witchofworcester.wordpress.com & http://janetmackinnon.wordpress.com