Two Eds Aren't Better Than One

Miliband slow hand claps Balls

I had a strong feeling of déjà vu this morning as I read an article in The Times based on the Labour leader's and his Chancellor's briefings against each other. Miliband's lot say Balls is domineering, secretive and untrustworthy while Balls' lot say Miliband is weak and lacks vision or any strategic direction. It's a shame they can't be as insightful about the state they left the economy in, but you can't expect too much.

This all comes after John Rentoul's article in The Independent that pointed out that George Osborne's position is secure and the real issue is with tensions between the two Eds and their lack of any credible alternative to the government's economic plans. The New Statesman publishes an article by Dan Hodges that confirms Labour's plans to avoid making any difficult policy decisions until after the next general election. They hope the Tories will render themselves unelectable allowing Labour to continue their vacuous opportunistic opposition which runs less risk of them losing union or party support.

Meanwhile, the Tory Chancellor gets some rare supportive commentary via Matthew Parris in The Times. While admitting George Osborne is getting increased criticism from all sides, each side undermines the other. From the Right, comes intellectually potent but politically suicidal pressure to cut harder and faster; from the Left comes intellectually bankrupt and mealy-mouthed pressure to cut a little less and a little slower.

It's good to see some focus on the alternatives (or in the Left's case lack of) to Osborne's plans. I don't suppose it will last. But the light being shed on the decaying relationship between Miliband and Balls shows that nothing has changed since the Blair/Brown years.

 

Posted with Blogsy

Banking: Better Not More Regulation

The recent Libor scandal has given politicians another reason to focus attention on the failing in the banking industry and away from their own glaring inadequacies.

The danger is that the dividends that banker bashing pays in the ballot box will lead to greater and more complex banking regulations. But surely that is what we need? Well, no. What we need is better (also less and simpler) regulation and real punishment for those who to transgress the rules. Those who thought it was a great wheeze to fiddle the interbank lending rate should have been in no doubt before they started that a) it was illegal and b) it was punishable by a stiff prison sentence. In reality, even if a bent trader knew what he was doing was wrong he never really felt like anything would be done about it.

It's worth a listen to Niall Ferguson's Reith Lecture, part 2 - The Darwinian Economy. He makes the above point very powerfully. We need better, simpler regulation and genuine punishment for those who transgress...

http://www.bbc.co.uk/radio/player/b01jmxqp

Inaccuracies, Damn Inaccuracies and Statistics

The Independent reports that official figures on economic growth may be wrong. According to Goldman Sachs the UK's economy is growing at between 1% and 2%, not, as the official stats claim, shrinking. It's not just the UK's stats that are called into question. The Euro area is doing better than official figures suggest, while the US isn't doing quite as well as claimed.

This shouldn't come as a surprise. Official figures always seem to be wrong. But it's growth predictions that are renowned for their almost comical inaccuracy. This new measure suggests actual growth figures are inaccurate for at least two to three years after the period they represent.

If this new measure is accurate, what is not comical is the damage being done to confidence in the British economy by the current talk of recession, that potentially could become a self fulfilling prophecy. For the government, news of recession has been leapt upon by opponents and the media keen to lay into them for a number of, mostly self serving, reasons. The figures came as a surprise as many were expecting a slight upturn. They may yet be revised upwards, but the damage is done in people's minds. Consumers and investors will become more cautious in spending their money leading to a higher likelyhood of a further downturn.

Politically, also, there are potential consequences. There are few respectable dissenting voices on the governments attempts to bring public spending under control. But those, less than respectable voices, that do dissent are getting louder and a lot more airtime and column inches as they shriek "I told you so!"; that cutting government spending inevitably leads to recession. In fact, spending is still increasing, but the likes of Ed Balls are never ones to let mere facts get in the way of their pseudo-Keynesian logic. And the more notice people take of Balls et al, the more pressure the government will feel to abandon the course they've taken, as arguably too cautious as it is. And that certainly would guarantee this country's continued decline for decades to come.

Of course, if the new measure is accurate, Osborne should find himself in a strong position come 2015, general election year. That is, if the coalition can survive the perception of failure in the meantime.