Thursday, 26 February 2009

Lord Ahmed- Why Labour’s search for ‘forced’ minority representation is shown to be flawed by the peer.

This week Lord Ahmed was imprisoned for dangerous driving. Though his imprisonment may have been caused by his pushing buttons on his mobile-phone; he has in the past committed far graver offences against Parliament. Recently, he, inadvertently or not, attempted to create a possible mass public order offence, by stating that the presence of a Dutch MP would be met by something akin to muslim riots. Benjamin D’Israeli once set a bench-mark for decency in politics when he said: ‘I equally decry the appeal to the passions of the many of the prejudices of the few’. Lord Ahmed has a lot to learn on that front, for he was doing quite the opposite. Perhaps, he felt that his own position was unsafe unless he was out slaying the myriad phantoms of discontent in his head. Through his visceral and ill-reflective manner of debate, he encouraged feelings of disenchantment amongst a few of the muslim community, rather than sought to reduce their fears and search for national and community solidarity. Instead of encouraging muslim vigilance and toleration when Geert Wilders MP was invited he was far too quickly and thoughtlessly up in arms ‘crying havoc'. He thus lost an opportunity to show those of us that are non-muslims and are sceptical about peaceful co-existence with Islamic communities that they are wrong, and that their fears are unfounded. His response was thus lacking in sound judgment and deliberation, questioning as to how much the Government had pondered a possible ‘band-wagon approach’ problem on appointment. His approach was particularly questionable as he himself had allowed a book-launch by a supposed anti-semite, Israel Shamir, in the Lord’s. This picking and choosing of speakers palatability belies a want of understanding of the importance of freedom of speech and intimates an agenda. It also indicates that this is perhaps not a man necessarily to be trusted with his self-appointed representation of British muslims.

There is also a graver and more worrying political issue here. Lord Ahmed became the Lord’s first Muslim Life Peer in 1998, a part of Blair’s search for minority representation in politics. This is a product of recent postive discrimination drives in political appointments, demonstrating the flaws in this unfair approach. Unfair, as it not only pushes out other candidates on the basis of background, but also deleterious as the better candidate is often marginalised. This positive discrimination approach can thus weaken the institution of appointment, as persons are chosen on representation as opposed to calibre. This problem is acute in other areas of appointment, including employment, which suffers from the malaise of interference by so called anti-discrimination laws. It may not be as clear a problem in political appointment to the Lords, which has much more to do with the current shambolic system of appointment to the upper chamber based on party whim. Positive discrimination encourages and re-inforces differences through unfair selection (a non-muslim, non-ethnic minority is thus not picked)that different racial and religious communities need their own representative factions in politics. This undermines the spirit of a singular national identity. Thus forced categorised representation enforces an existing divide that at present feasibly separates communities. We should, of course, be endeavouring to do the opposite. Simply put a policy that seeks a fair representation of ethnic and other minorities can also be harmful to community cohesion. Further, there is at present, perhaps, too much a drive for fair representation, that may leave such appointment processes open to abuse. Not all of our politics are such that we feel only comfortable if there are those from our own superficial ethnic sub-divisions in charge. Some of us, would rather choose someone more able from another back-ground, race or gender in positions of influence if it is in the best-interests of our country. In this spirit, the better of us may even prefer to elect those whom we do not like and those that also dislike us. A similar unfairness exists in the promotion of women over men, though unlike racial, ethic or relgious promotion it does not necessarily come with the same cost of community cohesion.

APG Pandya.

(The Birkenhead Society. The Birkenhead Society does not accept legal responsibility for the factual content or accuracy of its blog or website).

Friday, 13 February 2009

'Golliwog'- All those that are offended please apologise

Over the last two weeks the story of Carol Thatcher's comment has been drizzled over the press like some overdone and excessively ascerbic vinegrette that often, inadvertently, floods one's caesar salad due to the chef's recklessness. Though foul tasting it might seem to some of us, at least to others, in taste, it may be rather quite different. The point being that offence is very much a matter of personal sensitivity and emotional sensibility, as opposed to something that one can have a fixed judgment on, say like rape. Further proscribing those that express themsleves in the way they wish to is an attack on liberty, as the freedom of choice of expression is very much a part of a human's personal autonomy, and thus dignity. To excoriate people for the intolerance of others, would create a nation in which relations between people were based on of mistrust of one another, if not fear. A nation that censures those who wish to express themsleves using a golliwog against political correctness, rather than an attack on race, is a mark of an intolerant nation.

Personally, I laughed. I told my uncle (who, like myself, has a rather dark complexion) that she was specifically referring to him. As a chair of a free-speech society my intuition was, of course, surprisingly rather different. But who would honestly not be embarresed by being offended by such a comment- it would be child like, surely? We Brits, we take it on the chin. Reading the papers day after day, I was looking for a list of apologies for those who were willing to own up to their childish reaction of 'I am offended'. But none was forthcoming.

The immaturity was put forward by those I expected. Some of the coloured lot of our society for starters (who seem to be suffering from some bout of self-induceable post-colonial race complex) and some left-leaning, quasi-liberal apologists. The rants of the former went along the following lines: That their forefathers had been slaves or governed by force or some other irrelevant and illogical gibberish, thus 'How could she?' 'Are you a slave?'I thought- then grinned, realising that, of course, another more subtle slavery was at work. This was the limit of a human mind that could only digest what it was not senstive to. What I would term 'obtuse perception'. It should become a psychiatric's diagnosis. 'I cannot accept this idea, or thought or speech as it makes me uncomfortable'- a fortiori, I am a child. Please treat me as one; censor all that affects me. And if that is the truth' well- who cares?' I'd rather not know than be offended. Of course, I am making a leap here, that between a statement or a piece of speech and an opinion. But are they so disparate? Does one not follow from the other? And if so, is to censor one not to censor the other? Since when has the nation of ideas and enlightenment become the nation of visceral censorship? We are, dangerously, heading that way. The decision of the Home Secretary to ban Geert Wilder, yesterday, is another example of this. We ban to stop people from being offended. We thus treat them like children, and the state then moves into that dangerous corridor when it can control ideas and opinion by approval or disapprobation. We need to treat both of these instances with more care and think deeply about the implications of this approach. Once we move into the realm of offence and violence, we move away from discussion and Parliamentary democracy and into the breakdown of the rule of law. In this only might is right, by virtue of offence, and those that are liberal and mature in their outlook with more reflective views get pushed on the way-side. With the loss of ideas becomes the loss of thought that can be valuable to our nation as a whole. For this reason we should preserve our hard fought freedom of speech with absolute rigidity-it is the catalyst that makes Parliamentary democracy (Government by choice and election) function. I would thus urge for those who are offended to grow up and apologise, as there is something more at stake here than their selfish, visceral sensitivities.

APG PANDYA
(Copyright Birkenhead Society).

Wednesday, 10 December 2008

Baby P- Time for complete judicial supervision?

Five years ago I was assisting a senior member of the judiciary of the Court of Appeal during a seminal case of infant/child abuse before our courts, termed Re S Re W (see weblink). That case concerned the possibility of an implied power to courts to force children into care where there was a risk of abuse. This power would come from the right to life in the European Convention of Human Rights. The powers for judges to interpret laws according to the European Convention are derived from s.3 of the Human Rights Act. Thus the Children's Act and other related legislation could be interpretated to incorporate a principle of protecting the right of life for the child. The House of Lords rejected this approach on the grounds of judicial law-making, and taking the powers under the Human Rights Act to interpret statutes too far. However, the gap in judicial supervision of chidren and infants who suffer abuse was left unremedied by the Parliamentary process.

Prior to becoming a High Court judge, the judge had chaired a public inquiry on child abuse in 1989. The inquiry concerned the death of Tyra Henry who had died whilst under the care of Lambeth Council in 1988. Tyra had suffered physical asssault at the hands of her father. There was a distinct and continuous pattern of abuse that care-workers had become aware of. Everytime her parents met she would be beaten by her father. Though the social services and relevant care workers were aware of the relationship between her mother's meetings with her father and the violence, nothing was done. Eventually, she was killed by a physical assault by her father. There was no legal avenue available then, as there is not one now, for the doctors and care workers to refer such cases to a court for consideration. This would allow the court to prevent, insuch cases, the child from being present when the father would see the mother, by placing the child into emergency care. If a Court could have been seised by reference of the social workers or doctors and the judge had the power to grant an exclusionary order backed up by an imprisonable offence to contain the father, then such an abuse would have been prevented. Currently judges in the family courts have no power to order parents from seeing their own children or hear a reference by doctors or social workers as to the risk to a child. If any reform to prevent the Baby P scenario occuring again is made, such powers ought to be given to judges in those reforms. The reforms must include powers of reference to doctors and social workers who see the child.

There are several cases of previous child abuse that come to mind where such a proposal would be effective. Victoria Climbie's case resulted in several reforms brought in to the existing information network to do with recognising child abuse, but no real effective provisions as to how that information would be used. The public outrage at her death led to a public inquiry which produced major changes in child protection policies in the United Kingdom, including the formation of the Every Child Matters programme; the introduction of the Children Act 2004; the creation of the ContactPoint project, a planned government database that will hold information on all children in England and Wales; and the creation of the Office of the Children's Commissioner chaired by the Children's Commissioner. These were reforms, but they were reforms relating to information collection on the status of the welfare of children but none of these bodies has the power to step in and protect the child abused by an adult to the point where its very life is at risk. The EveryChildMatters programme is concerned with the general upbringing of the child, such as sports and other leisure activities and does not specifically cater for child abuse. Suprisingly, if not shockingly the Children's Act 2004 did not remedy the problem of compelling authorities to force children at high risk, those, for example, with visible marks that can be medically attributed to abuse, into care to protect their lives and for their general psychological well-being. This shocking omission led to the dithering concerning Baby P. Afterall social services will go around in circles if they cannot activiely get the law on their side to compel action. The real fault lies with the Labour Government for its ineffective and superficial response via the post Climbie measures.


The proposal of change here would allow doctors to be able to report such faults to an independent abuse or child officer to the family court. Such an officer needs to be set-up by legislation that in turn can be used by the judge to hold an investigation of his own motion. A radical step would be a list of short-term care homes or a list of families that are willing to take in the child until the court deems the risk of abuse is less, or the child is not a 'high risk' case. These will be social services approved, and then checked by the court for appropriateness prior to granting the order.

The UK has one of the most atrocious records for child abuse according to the United Nations Convention on the Rights of a Child, in the world. Those that oppose such an interventionist approach often couch it in terms of an unnecessary intrusion into family life. But what family life? Can a child or infant in such a position of continously suffering violence really be said to have a family life? Or is the closer reality that the level of neglect is such that the Government has failed completely to protect the most vulnerable? We need to grow up on this issue and realise that such a proposal is not as drastic as it seems. It does not mean that parents who smack their children will loose them for a short-period. The power compelled by the court would be in extreme circumstances where there is a real and significant risk to the life of the child, and nothing short will suffice. Courts make decisions on life and death cases at present, and thus have the competence to do so. A recent example was a granting of an order to let hospitals operate on siamese twins, where one baby would no doubt lose its life but barring the intervention both would. This would be within our history of protecting children, we were one of the first countries in the world that outlawed child labour. Where life and suffering of the weak and innocent are concerned, and where those weak and innocent are children such a proposal should be pursued. It is not extreme but one that puts children who suffer from such appalling cowardly conduct out of harm. No civilised state should stand idly by and let the status-quo continue.

APG Pandya

(Copyright Birkenhead Society)

http://www.publications.parliament.uk/pa/ld200102/ldjudgmt/jd020314/inres-1.htm

www.telegraph.co.uk/news/newstopics/politics/labour/3126855/UN-to-criticise-Labours-record-on-child-rights.html&t=UN%20to%20criticise%20Labour%27s%20record%20on%20child%20rights%20&b=The%20United%20Nations%20is%20expected%20to%20criticise%20Labour%27s%20record%20on%20child%20rights%20in%20a%20key%20report.%20&m=News&s=compact

http://www.nspcc.org.uk/Inform/policyandpublicaffairs/Wales/briefings/UNCRCBriefing2008_wdf61519.pdf

Thursday, 27 November 2008

Sharia law- On the road to madness?

Interesting to see the piece on Stephen Hockman QC's views on Sharia law (as below, though it was the Birkenhead Society and not Islam4UK that organised the debate). Currently Sharia law is applied by lay tribunals for certain commercial and family disputes. Contrary to Stephen Hockmann QC's view that full sharia law needs to be brought in to prevent alienation of Moslems, there is a strong case to be made that its inclusion would have exactly the opposite effect. Its inclusion would lead to further fragmentation of the law and, in turn, a lack of social cohesion. This is because we would be enforcing and exacerbating the differences between communities by creating different laws for different people. This would further unedify the idea of nationhood and the importance of having a singular identity which is currently provided by having one law of the land.

A singular system of law protects a singular system of values, despite differences in view as to what some of those values might be. In a our democracy once one value is chosen through the political process it is the value we all adhere by. A simple example of this would be the making certain forms of fox-hunting illegal. Different systems of law would make enforcing the disparate systems extremely difficult, and would undermine the great values associated with traditional British democracy. It would also undermine the working of the Parliamentary process, that has a monopoly over the law where rule-making is done through debate and discussion. It would allow other
law-making processes to take place, and taken to the extreme, permit an oppressive law-making regime to function freely in a separate community or a separate part of the country.

The importance of having a singular law to govern people of differing races, cultures, and religions is vital to the functioning of any society, such as Britain, that values pluralism, the freedom of ideas and toleration. It is also important in providing social cohesion where there are peoples from varying backgrounds and culture, and to promote extra-ordinary values of the great intrinsic British culture and heritage. Further, only through a singular rule of law that is not arbitrary in its form, content or application can fair system of Government operate. This is particularly important where there is, as in Britain, different peoples from different backgrounds. The rule of a singular law provides the vital cohesion needed for a variety of people to work and function together. To bring about different rules to different parts of the populous is to fragment both state and society. It would leave open the possibility of apartheid, on the basis of ideas and culture. In turn this would encourage isolationism towards national interest and the lack of cohesiveness would unedify interest in the function of our nation state.

The alienation of the Moslem community from the mainstream of our society that a Sharia law would bring about would also increase further the chances of younger members of the Moslem community being radicalised. It would leave fundamental Islam unchecked as it would be left to be self-judged within a distinct system of values. The end result, due to enforced differences between community groups may lead to distrust, fear and loathing. The notion of one nation may quickly fade away.

Hockmann also conveniently forgets what radical forms of Islam stand for. Alienation and abuse of women are rife amongst some countries that follow Islamic law. These proposals would leave open the risk of marginalising progressive and moderate Moslems who wish to practice their religion through our secular state. It would leave to rot Moslem women who have been campaigning for reform in their own community and through the world through the platform provided by British liberalism. If radical elements of Islam are to be dealt with, then giving a carte blanche to unlimited application of the Sharia is certainly not the way forward.


On the other-side of the spectrum there is a need to evaluate whether the rise of political support for other extreme groups such as the BNP is linked to the institutional quasi-liberalism that Hockmann represents. Quasi-liberalism is being liberal for the sake of liberal and forgetting the responsibility of making a value-judgment. The rise of the far right is another form of fragmentation that undermines the cohesive of the nation state. It may bring plurality, but at the cost of undermining that which the plurality of ideas is supposed to serve- the nation state. This is by giving further unneeded assistance to extremism. Quasi-liberalism of this type is not Gladstonian liberalism. It is a form of gratuitous sentiment that has no regard to the large historical processes that gave rise to the nation state, and alienates its people by forgetting or disregarding their history and culture. Thus quasi-liberalism of leading figures such as Hockmann fuels extremism, such as that found in the BNP, by undermining the British identity.

Britain is an extra-ordinary country with a unique and powerful history. It needs to remain one nation in order to promote its political ideals of free-speech, toleration and democracy to the world. The unedification of disparate legal systems does not have to be brought in to undermine this. Mr Hockmann QC needs to sit down and re-think the implications of his suggestions on such a difficult and complex issue.

(For Hockman QC’s views: http://www.telegraph.co.uk/news/newstopics/politics/lawandorder/3523672/Sharia-law-should-be-introduced-into-legal-system-says-leading-barrister.html)
APG Pandya ©

Wednesday, 19 November 2008

QUESTIONING A JUDGE’S RIGHT TO PUBLIC DEFENCE:

It is worth noting, see link below, that Lord Pannick last week in the House of Lords proposed that judges should be able to speak out against criticism given to them by politicians. I respectfully disagree as there are inherent dangers with respect to this. This would open the back door for judicial intervention into politics. This would be unconstitutional as it would permit unelected officials to have a say in matters of politics and public policy. This politicisation of the judicial role also undermine the independence of the judiciary.

The comment in question was made with respect to Paul Dacre’s criticisms of Sir David Eady, judge of the High Court of England and Wales. Sir David Eady has interpreted British libel law to ban a book, namely Rachel Enhrenfeld’s ‘Funding Evil’. This is a powerful act that inveighs against our inherent right of free-speech in Britain that has taken several centuries to develop. One has to look no further back than ear-cropping of those who wrote against Elizabeth I, to understand what a struggle it was to establish freedom of speech in this country.

It is no doubt very likely that an activity of judges will be of interest to public and political opinion. However, for judges to have to defend their judgments from public opinion would undermine the integrity and independence of the legal system. I very much hope that the power of the judge in making libel law is thoroughly questioned by politicians and the media, and that judges are aware of the heavy criticism that follows. Libel law in its most draconian form can be used to excoriate and supress genuine opinion, where it is not factual - and this has the danger of concomitantly suppressing the freedom of speech. Paul Dacre was right to scrutinise Sir David Eady, and appropriately there can be no recourse for the judge. It is for Parliament to put right any inappropriate wondering of the judge as it sees fit, and not for the judge to defend him or herself.

http://www.telegraph.co.uk/news/newstopics/lawreports/joshuarozenberg/3480379/Privacy-judge-only-doing-his-duty-says-peer.html

http://business.timesonline.co.uk/tol/business/law/article3756954.ece

For Lord Pannick's views: http://www.publications.parliament.uk/pa/ld200708/ldhansrd/text/81118-
> 0016.htm

APG Pandya

Wednesday, 5 November 2008

Be wary of the President who wants 'peace'.

Now, finally, Islamic fundamentalism has the President of its choice. Obama believes in peace and that's such a great thing isn't it? Suspicions and raised eyebrows should start there. Obama campaigned on removing US troops from Iraq, content in leaving the Iraqi people; with a half-finished, half-baked job; at the hands of militants. The threat of Islamic terrorism is as great now as ever, yet Obama the pacifist, will defeat them all with a sigh of peace. He thinks the fanatics will suddenly decide to stop waging the war because he wishes to remove and reduce US presence in both theatres. He is too naïve to realise that they do not hate for the sake of hating but for the destruction of the liberal West, that the US was just as much a risk from them the day before 9/11 as the day after. He doesn't quite grasp the geopolitics of territorial presence and influence. If the West is going to fight Islamic fascism, then a territorial foothold in the Middle East and Afghanistan has to be maintained for security and protection. The possibility to influence a move towards modern democratic governments in other states in the Middle East should not be lost. The Iranians are no doubt amused, that the voice of peace may finally give their nuclear programme the implicit consent it needs to carry on, whilst they live in a dictatorial regime that curtails fundamental freedoms with state sponsored censorship and does little to protect the rights of women. I still remember Obama’s keenness, early in the election, of wanting to get into bed with Ahmejinedad. This instinctive palm-greasing is a dangerous sign. It is the mark of a man who is willing to be a philanderer with integrity in order to gain on a desire to be liked. The possibility of Obama using US influence to change the world for the better, such as a voice for freedom, remains extremely dubious.

The election itself was a disgrace. I have never seen human beings pander in such a vile way to the lowest common denominator of race in an electoral process. Voting for someone because they are black, is as vile as voting for them because they are white, or pink or brown. If one looks beyond the man’s complexion there is very little in Obama’s empty rhetoric- How exactly is going to change the gulf between the rich and the poor that was made obvious by the faces suffering from Hurricane Katrina? He has never outlined any clear method of doing so, the electorate falling for nothing more than flamboyant vacuosity. McCain ran a terrible campaign, by god it was awful. Whilst going on about his war wounds, he never bothered to explain in full why they made him a better candidate. He had no clear game plan for a recession and did not seem wary of it. But then neither did Obama. What exactly is the President’s plan barring an increase of taxes? And is that even the right solution? When people are asked why they voted for him, it’s because of ‘change’. It is difficult to find a more empty and shallow proposition wanting of consideration than that. What and how are not questioned, spoken of, or asked about, hence their delivery becomes near impossible to assess. I am glad to have an ‘African-American’ one said. As if one was trying to bury an old hatchet in some way, it is childish and unedifying to formulate one’s opinions in this way. I would have been embarrassed. Does the choice of Obama for the reason of race mark the dawn of a new era, or reaffirm the existence of an age old apartheid? Obama's victory is a telling sign that many Americans could not see beyond the race issue, and failed to distinguish McCain, a radical in the Republican camp, from the President that was Bush. But the Republicans had fought a war and won, and only the most complacent of Americans have forgotten how important that was to corroborating US Security post 9/11. Once Obama pursues his campaign of peace fully, it is the Islamic fundamentalists that would have been the real victors of last night. They know that peace and toothlessness are one and the same.

APG Pandya.

Saturday, 11 October 2008

In the middle of a global financial heart attack...

In the middle of a global financial heart attack,
where is our Dr. House? By Douglas Bulloch.

The plot will be familiar. An unusual presentation of otherwise routine symptoms perks the interest of your favourite fictional genius doctor. Preliminary investigations are followed by treatments that seem to clear up the initial problem, but then the patient collapses and her organs start to fail one after the other. Dr. House then breaks every medical rule in the book in a desperate race against time when, after a suitable interval, he is touched by genius and identifies the original cause, either curing the patient with a couple of aspirin, or reconciling them with their inevitable death.

As with HBO medical drama, so with the global financial crisis. Right now we are in the organ failure stage, and desperately trying to treat the symptoms, but the diagnostic discussions are angry, vengeful and completely unresolved. Politicians around the world are agreeing with every proffered solution for the sake of unity, yet masking their ignorance behind an escalating range of worthless metaphors. Now is not the time to debate the origins of the crisis, they say, but the time to solve it. This position is exactly wrong. The cure depends upon identifying the cause, and until we recognise the cause of this problem, we are doomed to exacerbate it.

The first range of explanations that need to be dispensed with are those of a moral dimension. These cross the political divide. Those on the left blame greedy bankers, and those on the right, feckless borrowers. Neither has any bearing on the problem we are faced with today. Bankers have always been greedy, and heartless, stingy, even cruel. But it is because of these characteristics that they are trusted to look after other people’s hard earned money, not in spite of them. On the other hand, fecklessness is nothing new. Give a ne’er do well money, and he’ll fritter it away without thought for tomorrow. The problem has less to do with the phenomenon of the new super-rich class of banker, nor the sub-prime mortgage defaulter who never had the ability to repay. Both are the unknowing beneficiaries or victims of an excess of money.

Nor is the problem one of regulation or direct political interference. It is true that the Clinton administration pressured banks into offering loans to people of a dubious credit history and limited means. But as long as this was understood and underwritten as a scheme for the redistribution of wealth, there needn’t have been any problem. It may have failed, it may indeed have been expensive, but it is no more the cause of economic meltdown than Enron, the Dotcom bust, or the Iraq War. The toxic debt they produced was at least potentially quantifiable, whereas the ongoing collapse in the value of all property and global equities is not. Furthermore, lack of regulation may be an easy soundbite, but it is rarely accompanied by any estimation of exactly what regulations would prevent a ten-year asset boom followed by its sudden collapse. And it takes no notice of the fact that we have a brand new regulatory institution in London, empowered in accordance with all the latest thinking on financial regulation.

The problem is macro-economic, and if Dr. House were having his moment of realisation he would see that we have been here before, many times. What is more, the cause of the current problem would have been addressed – if not understood – by that most famous of literary simpletons, Chauncey Gardiner. In the film of Jerzy Kosinski‘s short story ‘Being There’, Peter Sellers plays Chance the Gardener, a man who was taken in as a child and brought up in the household of a wealthy man. He never learnt to read or write, only ever worked in the garden, and watched television obsessively, continually changing the channel to receive a stream of fragmentary slogans, songs, and pictures. He was, in short, without personality, an empty vessel devoid of all meaningful content, and after the death of his benefactor was thrown out into an entirely unfamiliar world, which he had only seen in pieces through his television screen. Everyone he met inferred enormous meaning into his gnomic comments, such that he ended up on television advising the President of the United States on economic policy. Drawing on the only knowledge he had, he said that in a garden, first there is spring, then summer, autumn and winter. Then after winter there is spring again. This was interpreted as a comment on the business cycle, and offered by the President as reassurance to a nation in the depths of an unspecified economic crisis.

Only later was it discovered that Chauncey Gardiner was a complete simpleton, but by then he had been elected to head up a major corporation. None of this is to suggest that what we need is a simpleton in charge of the World’s largest economy, however, the roots of this problem are indeed simple, even if the effects are extraordinarily complex.

The underlying problem stems from attempts to control or contain the business cycle. Growth, if it is real growth has to go in phases. There must be periods of consolidation in which costs are trimmed processes rationalised and strategies re-examined. If legislators attempt to delay a downturn they do two things. First of all, they sustain firms that have grown accustomed to inefficient business practices, and by doing so, weaken the whole economy. Secondly, they exacerbate the consequences of the eventual downturn.

The particular manner in which the current business downturn was deferred until now was particularly pernicious. We now know that keeping interest rates low in order promote growth fuelled a credit boom that drove up the price of assets and equities. If this had happened in one isolated economy, then this would have fed through to inflation fairly quickly, as rising property prices inevitably feed through to a rise in living costs, and impact on production and distribution costs. But in a context of rapid globalisation, consumer prices were further held down by the lowering of average labour costs through the transfer of manufacturing capacity to Asia.

The past ten or so years have seen the mature phase of this process play out before our eyes. 1997 saw the deliberate lowering of interest rates in the face of the Asian currency crisis, for which Alan Greenspan was hailed as a genius. This strategy was repeated on numerous occasions and global growth kept moving forward, investment flows accelerated on the back of cheap debt, trade imbalances ballooned, property prices kept on going upwards.

Now we face the prospect of unsustainable levels of debt secured against hugely overvalued assets – similar to the problems faced by Latin America economies in the 1980s – and as the assets fall in value, so increasing amounts of debt becomes bad debt; the sub-prime category was merely the lowest hanging fruit. Greedy bankers played their role in all of this, as did feckless borrowers, but the underlying problem was the artificial lowering of the price of credit by the US Federal Reserve – and by extension many other central banks – in an ingenious reinvention of Keynesian economics. Debt is after all just another kind of printed money. Bad debt especially so.

One way to avoid this would have been to have truly independent Central Banks which set their own measure of what constitutes inflation, including property prices. To his credit Mervyn King has been warning about unsustainable levels of both debt and property prices for years, although he had no power to act against them. Another suggestion would be to measure GDP by netting off accumulated debt, thus debt fuelled growth would be excluded from economic indicators, and Gordon Brown’s ‘end to Tory boom and bust’ would have been exposed as a sham from day one.

Keynes famously remarked that, in the long run, we are all dead. However, the philosophical truth of this remark should be measured against its economic meaning. The ‘long run’ in economics indicates an abstract point in the future, in which all assumptions concerning what is fixed are held to become variable. What he meant when he said this was rhetorically the same as the politicians currently urging action before considering the cause of the current problems; in other words, we are faced with problems that we need to solve, the ‘long run’ consequences are the problems others will have to solve tomorrow. The trouble is tomorrow always comes, and as a rule of thumb, the economic ‘long run’ looks to be about ten years, not so ‘long’ after all.

The current efforts to provide liquidity to the banks are understandable, and probably necessary, but the deferment of any analysis of the origins of this problem will lead to outcomes economists would describe as ‘sub-optimal’ – in English, catastrophic. Of the many things that need to be understood and acted upon, almost all of them have been known about for years, including these simple, if unpalatable truths: Milton Friedman’s Nobel Prize was well deserved. The business cycle is our friend. Retail Price Inflation (RPI) is not the same thing as real inflation. Central Banks cannot control real inflation by measuring only parts of it. Economics is quite simple really. Simple problems can be solved by a simpleton. And beware of anything you don’t understand.

When Dr. House sees symptoms that he does not understand, he investigates, even beyond the point of death, in order to find their cause. In our race to treat the symptoms of this global financial crisis, we must not forget the cause. Government ownership of the banks, liquidity injections, and reductions in interests rates may count as life support for the time being, but in the ‘long run’ we need to let the banks get back to banking – rather than laundering deliberate debt inflation – rehabilitate the business cycle, and learn to live within our means.

© Douglas Bulloch
Researcher, International Relations Department, London School of Economics.