Brexit Can Be Stopped, No Deal Brexit is Unlikely, So Take the Certain Choice

Eurosceptic MPs have had a lot of thinking to do over the weekend. Do they hold their nose and vote for May’s less-than-perfect deal, or do they roll the dice again and run the risk of losing Brexit altogether? Some Brexiteers believe if they just sit tight Britain will automatically leave the EU next week. ERG supremo Chris Howarth – a hero of the long fight for Brexit – argues that it’s a “certainty” that so long as the ERG MPs hold their nerve that the UK is “leaving the EU on 29th March without a permanent backstop.” Guido would love that to be true, it is however a triumph of optimism over reality. Before MPs make their mind up, they need to face up to the political reality of where we are…

Let’s look at Howarth’s arguments in turn, because they are at the heart of the divide among Brexiteer allies:

  • There isn’t enough time to stop us leaving on 29th March.
  • The Commons won’t back a second referendum
  • The PM’s deal will never pass
  • The PM won’t want to seek a long extension if her deal is rejected a third time

Howarth argues these are certainties, Guido disputes that:-

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“Ending Austerity” & Building Council Homes

Since the Tories came into government the national debt has risen by over 70%. By any measure that is hardly evidence of the savage austerity of left-wing rhetoric.  Britain is still running a deficit, in 2018/19, taxpayers will fund interest payments of some £53 billion. A billion-a-week to service the national debt, you can put that on the side of three red buses.

Spreadsheet Phil is getting nearer to finally closing the deficit that George Osborne promised to close by 2015. This should not be taken by spending ministers as a signal to up spending, the national debt still has to be serviced and it would be prudent to start paying down the debt. Likewise giving councils carte blanche to borrow to finance an extended council house building programme will add to the debt burden. If that is what Theresa May is signalling in her conference speech it is bad politics for the Tories.

In Asia it is not uncommon for the state to build low cost housing for sale at below market rates. If councils were encouraged to build and sell properties they would not end up on the state’s balance sheet. It would spread capital ownership more widely by allowing people to own their own homes. It is good politics because property-owning democracies don’t tend to elect socialist governments…

By all means encourage councils to actively build new developments on their land. Scrapping the government cap on how much they can borrow to fund new developments should not however be a licence to build another generation of council estates – the petri dish for municipal socialism. The government should insist that the low cost homes should be offered on construction to qualified buyers who would have to be owner occupiers.  When Phil Hammond announces the budget at the end of the month it would be good if the removal of the cap was coupled with a new “right to buy” that granted local residents the right buy any new council homes built. Councils would be obligated to offer new build homes for sale without the high profit margins often commanded by private sector developers. Politically it is a winner and the Treasury would be happy that long-term it would pay down the government debt used to fund the construction.

The Economist: Celebrates 175 Years – with Steve Bannon

The Economist is celebrating it’s 175th year of publication with a paen to liberalism in the form of an essay. It is a bit of navel gazing combined with dollops of self-justification. Editor Zanny Minton Beddoes admits in her essay that The Economist has become the in-house journal of the liberal elite, what Steve Bannon calls “the party of Davos”. No institution is immune to intellectual fashions, the newspaper has in Guido’s lifetime championed Keynesianism, then neo-liberalism, and now the ‘Washington Consensus’. It has of late become overly preoccupied with climate change and whatever else concerns the faddish Davos crowd. The irony of The Economist, which was founded in 1843 to champion free trade, free markets and limited government, being on the wrong side of the argument on Brexit, in thrall to the EU and the thousands of tariffs that protectionist bloc enforces, is striking. Never mind the ambitions of those in Brussels for a pan-European super-state rigidly regulated from the Black Sea to the Atlantic.

On immigration Zanny admits for liberals “it is not too wide of the mark to caricature their views on migration as more influenced by the ease of employing a cleaner than by a fear of losing out.” Not a single democracy has escaped pain from uncontrolled mass migration, no politician can ignore the votes of those who have to compete with newcomers, the so-called “deplorables” in America and working-class Brexit voters in Britain. Almost all Western democracies have tired of fast migration. On this Zanny recognises reluctantly that “in the short run, liberals risk undermining the cause of free movement if they push beyond the bounds of pragmatism.” She proposes reform of the rules for refugees, despite accepting that in reality most immigration is driven by economics.

How adrift the current editor of The Economist is from the founding principles can be seen with her support for Universal Basic Income – putting everyone on the dole, disincentivising work. She cites a modest proposal for America to introduce a “UBI of $10,000 a year” which she admits “would require a tax take of at least 33% of GDP”, to be paid for by more disincentivising wealth taxes. So much for limited government.

One could go on, Steve Bannon did at their recent shindig. Judge for yourself how Zanny fared:

Happy birthday to The Economist…

The Exiling of InfoWars from Social Media

Guido is instinctively uncomfortable with censorship, even of liars. In the marketplace of ideas, good ideas should best bad ideas in free debate. That is the theory. So the exiling of Alex Jones from Facebook, Apple’s iTunes, YouTube, Vimeo, LinkedIn, Pinterest, Flickr, Spotify, Stitcher, TuneIn and MailChimp seems to be shutting down open debate. Twitter have now put Alex Jones in a half-way house where he is unable to tweet. That cuts off Alex Jones from most of his audience.

He’s not completely exiled from public discourse, the InfoWars apps are available to download, his website is running. His freedom of speech has not been taken away, Big Tech has just exiled him from their huge social media audiences. They are it seems to Guido making an example of him because he is the highest profile “fake news” outlet associated with Trump. The tech titans are of course completely within their rights to purge InfoWars from their platforms.

Jones says “Mass censorship of conservatives and libertarians is exploding. You’ve already seen this with the demonetization and ultimate purge of Infowars and other alternative media outlets by mega-corporations working in tangent to stifle competition.” He is right in that it really does seem that it is right-of-centre voices that are being purged disproportionately, the left argues that is because the right are disproportionately “haters”. The alt-right does revel in being provocatively confrontational. Milo being kicked off Twitter was an early sign of this reaction.

If the social media platforms are going to start discriminating about what content they will host and distribute they will become like the US TV networks, seen as partisan and thus subject to partisan heckling. The left are hard-wired to “no platform” people, banning voices they don’t like, the right are not so temperamentally inclined. This means there is a continuous lobbying from the left to silence people they don’t like; the ceaseless effort to get advertiser boycotts of the popular press, to get Nigel Farage off LBC, Owen Jones’ shrill screeching about Andrew Neil (nothing to do with his humiliation at Brillo’s hands). Does all this matter much to voters? Only at the margins, those who want Alex Jones will still be able to get Alex Jones. It increases the self-filtering effect on public discourse. As our information sources become ever more filtered we live in our own increasingly polarised social media echo chambers, that is not good for democracy.

“Dangerously Left-Wing” Hayek Hatchet Job

Angela Eagle and Imran Ahmed’s new book The New Serfdom“, a 400-page hatchet job on the great liberal thinker Friedrich Hayek, is being lauded with praise in Labour circles, most effusively from Nick Cohen. Guido must come to Hayek’s defence in the face of their rewriting of history.

The New Serfdom is a reminder that, even as the relatively moderate challenger to Corbyn, Eagle is still a liberty-hating socialist who opposes free markets and fundamentally values the state over the freedom of the individual. Even Ed Miliband’s office warned that Ahmed was “dangerously left-wing” when he became a Shadow Cabinet adviser. Their book condemns the “veneration of markets”, the “infiltration of marketisation” into the public sector, capitalism’s promotion of competition, the “toxic culture” of admiring those who succeed, and calls for a Labour government to create an “empowered state… pursuing a reinvigorated democratic socialism”. It wants to sweep back Thatcher’s trade union reforms, regulate the food and drink industry to the hilt and put taxes through the roof. It offers a depressing view of Britain today, talking the country down as “divided and resentful”, dismisses capitalist liberal democracy as a “con”, calls Hayek a “liar” with “extreme views” who inspired Thatcher and her “successor” Trump, and claims Brexit is evidence of “the extreme right on the march”. According to the respected academic Chris Hanretty, Eagle’s Wallasley seat voted 53% to Leave…

The history of the last century comprehensively proved correct Hayek’s central assertion that socialism morphs into totalitarianism. He was proved right when the Keynesian post-war consensus collapsed and Thatcher used his ideas – “this is what we believe” – to turn the economy around. The New Serfdom is an unashamedly socialist critique of the last forty years of British political life, and so is as dangerous and wrong as you would expect. The key question for Eagle and Ahmed: if they truly believe in their socialist vision for Britain, why did they try to stop Corbyn becoming Prime Minister?

Brexit and The Economist’s Lack of Intelligence Unit

It is now pretty much established consensus that humbled pollsters are having great difficulty calling votes. The pundits – particularly those at the FT and The Economist – are still ever so keen to sound authoritative on Brexit when it is their house editorial line, rather than the objective study of all factors, that is so clearly what determines their analyses. The Economist has a research and analysis division which claims to be a world leader in global business intelligence – the grandly named Economist Intelligence Unit or the “EIU”. As well as offering subscribers research updates it also does consultancy for corporations who want to know what is going on in the world. The EIU says “our knowledge of economics, politics and socio-demographics is second to none. If you need to see into the future, we can help.” Using “bespoke modelling and scenario analysis” the EIU “can provide country, industry or market scenarios based on expert judgement, modelling” so, “if you need to understand how a country or industry will respond to an event… we can model that too.”  Corporations pay good money for the research and expect it to be reality-based rather than just journalists’ wishful thinking…

Guido has got hold of the EIU report for Britain dated June 28, 2016, five days after the referendum result. On politics it forecast:

  • Our baseline forecast is that Boris Johnson—the former mayor of London and one of the leaders of the “leave” campaign—will succeed David Cameron as the Conservative Party leader and prime minister… Theresa May won.
  • This process will commence with the triggering of Article 50 of the EU treaties to begin the exit process; we expect this to happen by the end of 2016. It was triggered in March 2017.
  • The Labour Party is mired in an acrimonious leadership crisis. We expect that the party’s hard-left leader, Jeremy Corbyn, will be ousted, and/or that there will be a formal split. Jezza’s not going anywhere. Labour isn’t splitting.
  • They also predict a second referendum will lead to a “jump in support for UKIP.” That remains to be seen.

On the economy EIU forecast:

  • They expected a contraction of 1% in 2017 (compared with 1.8% growth previously) as a slump in domestic demand pulls the economy into recession. UK GDP is on course to grow 1.9% in 2017. No contraction. No recession.
  • They forecast the number of those in work to fall by hundreds of thousands. More people are in work than ever…
  • They gloomily forecast a rapid deterioration in the fiscal position, falling tax revenues, increasing unemployment. None of which happened…
  • They predicted the US Federal Reserve would have to hold interest rates. The Fed raised rates.
  • The EIU predicted anxiety-driven declines in world stock markets, “When an event promises to strip 6% of GDP from the fifth-biggest economy in the world, it is harder for the rest of the global economy to grow as quickly.” Brexit “will ensure that the global economy continues to underperform its potential for at least another two years”World stock markets have rallied strongly post-Brexit.

The EIU predicted that by next year unemployment will rise by 380,000 and GDP will fall by 6% compared to the pre-June 23 baseline. The authors of these EIU reports are what the brilliant Nassim Nicholas Taleb calls “IYIs”, “Intellectual Yet Idiot” academic no-skin-in-the-game policymaking “clerks” and journalist-insiders. That class of paternalistic semi-intellectual experts with some Ivy League, Oxford-Cambridge education who enjoy telling us what to do. Academico-bureaucrats who are self-described members of the “intelligentsia” who can’t find a coconut on Coconut Island. A year after the Brexit vote the Economist Intelligence Unit has proven that it doesn’t know the right end of a stick.

Corbynistas Attempting to Preempt Co-op Plan

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In yesterday’s Sunday Times, Tim Shipman revealed that some nameless Labour moderates might use their sister Co-operative Party to form a new opposition. While plans for the immediate future include establishing a factional grouping, Shippers has uncovered a scheme to get Labour moderates to sign up MPs to the Co-operative Party itself, which has a pact to work with Labour in Parliament and elections. “Double-hatted” MPs can then apply to Bercow to have themselves recognised as the official opposition in the event of mass deselections from Labour, which will grant them a healthy chunk of short money. Guido is too modest to point out where the idea was previously mooted

The advantage of Labour MPs flagging themselves as Co-op MPs is that it is a non-split, split. 24 MPs are already Labour/Co-op MPs. The parties do not stand against each other under the terms of an agreement going back to 1927. The Co-operative Party is a legally separate entity from the Labour Party, and is already registered as a political party with the Electoral Commission, thus Bercow will be able to designate them as the official opposition with very little legal difficulties. This Guido understands is only one plan being considered – Tom Watson would be reluctant to go along with it – however he will under no circumstances allow the SNP to become the official opposition.

Ideologically the ideas of the cooperative movement; egalitarianism and mutualism with co-operative commercial enterprises will be agreeable to most of the Progress-faction MPs. It has always struck Guido that Labour taking the state socialist route rather than the non-state co-operative route was, in retrospect, a fundamental mistake that put the Labour Party on the wrong side of history at the end of the twentieth century. A less statist, redistributive party that favoured social market and non-state solutions might be the future…

Corbynista’s have of course mobilised quickly, with Momentum groups on Facebook awash with calls to join the Co-op and “avoid its infiltration by the coup plotters!” Carry on comrades..

The “Pitiless Empiricism” of Elections

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Guido has said this before and he will say it again: if the Tories lose this election a large part of the blame belongs to the former Downing Street pollster Andrew Cooper, who claimed that UKIP were a “flash in the pan”. Here is the evidence in hard data form from YouGov; 5 percentage points of the 2010 Tory vote has gone to UKIP, in exchange for 3 percentage points of the LibDem vote. Pollsters and statisticians can argue about what might have been, the data suggests that the Cameroon positioning which claimed the Conservatives could win from the centre has cost at least 2 percentage points. The number of former LibDems wooed is fewer than the number of former Tories spurned and now voting UKIP.

Cooper’s “peak UKIP” theory does not appear to have been anything more than a theory. This YouGov data, based on re-interviewing 31,210 voters polled in 2010, shows Cooper’s hunch that UKIP were a “flash in the pan” which would fade away and return to the blue column was just a hunch, motivated by an ideological preference for centrist modernisation rather than any campaigning logic. Cooper was once lionised by the metropolitan commentariat – in 2011 Matthew D’Ancona claimed that his “great gift to the Conservative Party has not been liberal ideology, but a pitiless empiricism”. A real judgement based on pitiless empiricism is about to be delivered by the voters. Guido suspects that Cooper’s years as Downing Street’s Director of Strategy will be seen as wasted years when the modernisers’ distaste for conservative instincts was over indulged at the expense of a strategy to both secure the base and gain new voters. An arrogant and recklessly rushed modernisation has fatally split the right-of-centre vote.

Relative Values: Lies, Damn Lies and Statistics

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The spat between George Osborne and Fraser Nelson over whether or not the deficit has been halved is very much a Westminster bubble affair of little consequence to anyone outside SW1. Interested voters who even understand the difference between the deficit and the debt know that the government’s target to balance the budget in 2015 has been missed by £100 billion or so. As Jonathan Portes over at the Keynesian redoubt of the National Institute of Economic and Social Research gleefully points out, George Osborne has succeeded in implementing the Darling plan, which his own Financial Secretary to the Treasury condemned, for being endorsed only by The Guardian. The Chancellor deserves a degree of Fraser’s ridicule for only managing to execute the very Plan B that Osborne himself once ridiculed as ruinous.

The Tories are arguing, whilst simultaneously carrying the goalposts, that they have managed to halve the deficit in relative terms, relative to GDP. Professional economists seem to think that is a fair method of measuring the deficit. So how are they doing, in relative terms, on other key indicators?

The national debt relative to GDP is up, from 78.4% under Gordon Brown in 2010 to 90.6% last year. It is still rising, which is in the government’s own self-defined terms a big economic failure.

The Tories like to boast that employment is higher now than ever before, as indeed it was every year under the last Labour government, because the population grows. The unemployment rate is relative to the population. That is down impressively from 8% to 6% thanks to IDS, better still the youth unemployment and long term unemployment rates are also down. A trump card in the economic argument.

Per capita GDP was, as Danny Blanchflower and Ed Balls kept pointing out sombrely with smirks on their faces, falling. We were getting, on average, poorer. According to World Bank figures, the answer to Reagan’s famous question for voters “Are you better off than you were four years ago?” is a “yes”, just about. After inflation voters are on average 1.8% better off now than they were in 2010.*

Quantitative Easing on a scary scale has rigged other economic indicators like inflation and interest rates whilst pumping up asset prices. Great if you already owned financial assets or prime London property…

It seems a long-time since The Spectator was eulogising George Osborne as “the true Tory leader“, the enmity towards the Treasury from the Speccie is near constant nowadays. Guido notes that in a Tory leadership election it is almost certain that the magazine will back Boris, a former editor, against Osborne…

*Although for higher income earners – the income bracket usually well disposed towards voting Conservative – Osborne’s Guardianista pleasing fetishising of the Gini coefficient will mean they are probably worse off. Only a genius political strategist like Osborne would bash his core vote hardest.

Balls Speech Positions Himself

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In the 2010 Labour leadership campaign Ed Balls positioned himself on the tough-love Brownite left and Ed Miliband outflanked via the in-the-comfort zone soft-left. Today Ed Balls in his speech to the London Business School distanced himself from the Labour leader’s anti-business positions and sounded almost Blairite at times. All these things are nuanced, this sounded like a positioning speech for the post-election, post-Miliband Labour Party. We shall see…

Speech highlights:

  • Balls, despite saying “the third way did not deliver”, explicitly identifies himself with the Clinton-Blair agenda

    “I do not believe that the progressives were wrong in their central belief that a path could be taken between free-market economics and protectionism and isolationism.”

  • Attending Bilderberg Conferences has paid off, Balls explicitly accepts the success of neo-liberal globalisation

    “… this is my starting point: over the last twenty years, the global economy has fundamentally changed – and changed for the better. As communism collapsed and countries have liberalised their economies, there have been significant reductions in poverty and increases in living standards across Asia, South America, Eastern Europe and now Africa.”

  • Straining credibility the former deficit denier now promises spending cuts and a balanced budget

    “I have made a binding fiscal commitment that a Labour government will balance the books and deliver a surplus on the current budget and falling national debt as soon as possible in the next Parliament. It will require tough decisions to cut public spending and social security spending, as well as a fairer tax system.”

The rest of the speech dwells on traditional Labour solutions, more training and education, a mea culpa over (the lack of) EU immigration transitional controls in government, plus some sleight of hand over corporation tax.  To back up the new endlessly repeated Balls “pro-business, just not business as usual” soundbite he also advanced the idea of an industrial policy incentivising long term investment, this time with tax breaks for long term equity investors. Can’t wait to see how the Owen Jones left welcomes the idea of more expensive corporate welfare for stock market investors…

SKETCH: Professor Krugman, Where’s the Shark?

Paul Krugman, the Nobel-prize-winning economist is in Oxford until mid-June as the Sanjaya Lall Visiting Professor in Development and Business.

The liberal Princeton/NY Times professor just delivered his inaugural lecture asking the question (the almost-rhetorical question) Do We Face Secular Stagnation?

It follows on from his books The Age of Diminished Expectation, the Return of Depression Economics and articles like Is Capitalism Too Productive? The Myth of Asia’s Miracle and – suggested title – What Are You Laughing At, Can’t You See the State We’re In?

His proposition is that the glory days are behind us, that each recession has been harder to get out of than the last, that we will have extended periods of low-to-no growth, and that under-employment will create “dreary lives” for large numbers of people – because politicians will not listen to him and his $300bn job-creation schemes.

If Labour can get him onto a stage with Ed Miliband, the election will be in the bag. For the Tories.

He talked about the impulses to “austerity” saying that it’s as though governments want to engineer a gratuitous recession in order to have a pre-election year boom, “like the Government has done here” (cosy laughter from the full-to-overflow hall).

Small, bearded, charming, Prof Krugman looks like the oceanographer in Jaws. Remember, that clever fellow, expert in his field, ran up and down the beach warning the pleasure-seekers there was a giant shark out there waiting to devour them.

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Foodbanks, Christianity and Socialism

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Today is Holy Thursday, when the Queen traditionally offers alms known as Maundy money to deserving senior citizens. Scholars say “Maundy” comes from Jesus; “Mandatum novum do vobis ut diligatis invicem sicut dilexi vos”, “A new commandment I give unto you, That ye love one another; as I have loved you”. Monarchs by tradition also washed the feet of the poor as Jesus washed the feet of his disciples. Jesus also said that You will always have the poor with you and can help them whenever you want.” Which brings Guido to foodbanks and socialism.

Socialists believe in the perfectibility of man, a doctrine going back to Rousseau, that people are capable of achieving perfection on earth through social means, without the grace of God. Unlike Jesus they don’t believe that the poor will always necessarily be with us. Foodbanks are mostly run by charities, many Christian inspired. The genuine anger from the left at the expansion of foodbanks is matched only by their incomprehension that some think their growth is a good thing and a sign that Christianity survives in an increasingly secular Britain. Christian help for the poor is an imperative given to them by their faith… 

If like many socialists you believe society can be perfected, foodbanks are a sign of society’s failure. If like most Christians you believe the poor will always be with us, then foodbanks are the successful application of the teachings of Jesus. Guido doesn’t believe in socialism or the perfectibility of man, so sees the expansion of foodbanks as a good thing for the poor. Politically Labour are trying to capitalise on foodbanks, whereas in America Obama rolls up his sleeves and has photo ops helping out at foodbanks. It seems to Guido that Labour either should come out and say openly that they want to see higher welfare transfer payments to the poor or do some real community organising and help out at foodbanks rather than just moan about them. Happy Easter…

Osborne to IMF: I Told You So Third Year of Expansionary Fiscal Contraction

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Chancellor Zero is no more. Growth is back, even the neo-Keynesians at the FT and the wonks at the IMF can’t deny that the UK expanded faster than the rest of the G7 last year and will probably do the same this year. George Osborne is in Washington today to gloat that

“despite warnings from some that our determined pursuit of our economic plan made that impossible. All of this demonstrates that fiscal consolidation and economic recovery go together, and undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth. Indeed that is precisely the wrong prescription for our economies…”

Ed Balls got it wrong is the core message. Labour will point to per capita GDP which is still 10% lower than it was in 2007 – that will be a second term objective for the Chancellor. Balls will less convincingly say George has missed his deficit target, less convincing because Labour would have missed it by more and opposed almost every measure needed to reduce the deficit. The neo-Keynesian argument that higher unemployment would increase the welfare bill and thus the deficit has been proven to be wrong. Unemployment is down from what it was under Gordon Brown, with the warnings from the likes of David Blanchflower of 4 to 5 million unemployed having turned out to be political hyperbole that has fatally damaged his career as a sage. That “expansionary fiscal contraction” that left-wing wonks and economists said would never come is entering a third year…

Leading left-wing wonk and wannabe Labour MP Will Straw argued in 2011 that Britain’s economy faced the risk of a Japanese-style “lost decade” and that “expansionary fiscal contraction” was a “voodoo theory”, and even that there was no such thing as an expansionary fiscal contraction. In 2011 Guido argued the point at length with Will on the BBC’s Daily Politics:


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Having failed at the time to get an on-air apology from Will for his role in Gordon Brown’s Treasury, three years later he must now accept that he was wrong about a lost decade and wrong that there was no such thing as an expansionary fiscal contraction. Over to you Will – as growth is expected to hit 3% you have a second chance to offer an apology…

Pardon Snowden, He Blew Whistle on NSA Crimes

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Ed Snowden has been demonised by some on the right as a traitor. Those on the right don’t as a rule put their trust in governments and Snowden is a patriotic, freedom loving libertarian, not a Russian or Chinese dupe, as some conservatives seem to believe. (He even donated $250 to Ron Paul’s election campaign.) His motivation was ideological and principled – it has cost him his personal freedom and his career. People who Guido would normally expect to side with the cause of liberty have focused on the medium not the message – because it was Alan Rusbridger’s Guardian that broke the story they have got their backs up. Whatever right-minded people think of the Guardian, it was disgraceful to hear Rusbridger’s patriotism questioned by a Select Committee over him publishing the Snowden story.

Ed Snowden was as the New York Times argued yesterday clearly justified in believing that the only way to blow the whistle on the blanket intelligence-gathering was to “expose it to the public and let the resulting furor do the work“, revealing what his bosses covered-up and lied to Congress about. Beyond the mass collection of phone and internet data Snowden revealed:

  • The NSA (aided and abetted by GCHQ) broke the law, and exceeded their authority, thousands of times per year.
  • The NSA (aided and abetted by GCHQ) broke into the communications links of Microsoft, Google, Yahoo, Facebook and other internet giants, allowing it to spy on hundreds of millions of user accounts. Many of those companies are now, thankfully, scrambling to install systems that the NSA cannot yet penetrate.
  • The NSA systematically undermined the basic encryption systems of the internet, making it impossible to know if sensitive banking or medical data is truly private, damaging businesses that depended on this trust. Ironically this opened back doors that could also be used by hostile intelligence agencies.
  • His leaks revealed that James Clapper Jr., the director of national intelligence, lied to Congress when testifying in March.
  • The Foreign Intelligence Surveillance Court rebuked the N.S.A. for repeatedly providing misleading information about its surveillance practices, according to a ruling made public because of the Snowden documents. One of the practices violated the Constitution, according to the chief judge of the court.
  • A federal judge ruled earlier this month that the phone-records-collection programme probably violates the Fourth Amendment of the US Constitution. He called the programme “almost Orwellian” and said there was no evidence that it stopped any imminent act of terror.

When someone reveals that government officials have routinely and deliberately broken the law, that person should not face life in prison at the hands of the same government. Rick Ledgett, who leads the NSA’s task force on the Snowden leaks, told CBS News that he would consider amnesty if Snowden halted any additional leaks. President Obama should do just that, bring Snowden home. He is a hero.

Hat-tip: New York Times

Data Shows Cost-of-Living Crisis About to End

The consensus of broadsheet pundits is that Ed has, with his cost-of-living crisis line that prices are rising faster than wages, nimbly and cleverly switched from a losing argument on the economy to a winning “retail offer”. Guido thinks this successfully plays into the British national psyche; grumbling about both the weather and the cost of things rising. However as the economy rises unemployment falls and earnings will caeteris paribus begin to outstrip inflation as sure as the sun rises. The ONS data shows this is about to happen…

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Guido is beginning to worry that Miliband, like his former mentor Gordon Brown, hasn’t really got a strategy. The whole “too far, too fast” thing was bound to end in tears unless there was a permanent recession. As it happened the predictions by Ed Balls of a triple-dip turned out to be über-pessimistic, statisticians say there wasn’t even a double-dip. The only recession the UK suffered originated under Gordon Brown.

The energy cost argument still generates headlines, however international comparisons show that UK energy costs are middle of the league table for Europe – though US fracking and shale gas means their energy costs are way below ours. Fracking however is opposed by Ed Miliband.

What then? Having lost the argument on debt and the economy, followed – food banks notwithstanding – by the cost-of-living crisis evaporating, Labour will have to change tack again. Labour can’t fight on economic competence, because so contaminated is Ed Balls that he even loses to George Osborne. Labour are blamed for the economic mess and are suspected by the voters of still being untrustworthy on dealing with the deficit and debts. They would be unwise to fight on leadership; “weak and weird” Ed versus “posh and out of touch” Dave is not a great prospect for Labour.

Guido’s guess is they will try to have it both ways, partially accept the coalition’s spending envelope and pretend they can tax their way to prosperity. A policy Miliband’s socialist frère Hollande has now abandoned. All the chatter (spun by his adviser Stewart Wood) about Ed’s plans for “big changes in our economy” – a strategy based on East Coast academic theories from Harvard professors on new “Varieties of Capitalism” – will have Lynton Crosby crying with laughter into his (Australian) Chardonnay. Doesn’t mean Miliband isn’t going to try it…

UPDATE: The FT has surveyed economists and they mostly think households will start to feel better off – this is after consumer confidence surged 20% in 2013. Well spotted economists…

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Flaws in the Ed Balls "Cost of Living Crisis" Attack Line

Labour’s developing retail offer to the voters centres on the cost of living, in essence they will ask the voters on election day “Are you better off now than you were 5 years ago?” Which is why this week – with good economic news abounding – Labour’s twitterati were ignoring jobs and growth and instead chorusing in North Korean style synchronised tweeting this infographic:

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The infographic shows that real wages have fallen behind inflation. A factually correct statistic.

Guido fails to understand why the government parties are not  aggressively countering the Ed Balls cost-of-living crisis attack line with the truth that the average mortgage is £1,000 cheaper because of lower interest rates. Mortgage affordability is clearly illustrated by the fact that, according to data released yesterday by the Council of Mortgage Lenders, mortgage arrears are dramatically lower now compared to where they were when Ed Balls was last in government:

cml-arears

Throw in the income tax threshold hike (£493), the savings from holding down council taxes (£210) and you have already countered the Balls attack in cash terms – and some – at £1,703. Meaning that in terms of disposable income the “average working person” is better off. So why is this point not being made by Tory and LibDem attack dogs more forcefully?

If in the Autumn Statement the Chancellor rolls back some green taxes, brings back the 10p income tax rate or raises the tax threshold again, in terms of disposable income the voters will be even more better off in 2015 than they were in 2010. To the question “Are you better off now than you were 5 years ago?” the answer has to be “yes”. If it isn’t, the Coalition parties will deserve to lose in 2015.

What Owen Jones and Len McCluskey Don't Tell You:Unite Don't Represent Majority of their Members Politically

Unite’s leaked May 2013 internal political report to the union’s powerful Executive Council written by the union’s political director emphasises that Unite’s priority is to get a majority of its membership in marginal constituencies to vote Labour. Unite’s own research (see page 5) reveals that only a minority of around 37.5% of the membership vote Labour. A figure in line with national polling…

unite-represent

So when Owen Jones and Len McCluskey claim that Unite represents a political voice for “millions” of its members, it is not completely true. Unite gives political support to the Labour Party whereas most Unite members – according to Unite’s own research – don’t support the Labour Party. McCluskey and his media-friendly paid lobbyist Owen Jones are a small left-wing clique who have got control of the union because most members are apathetic. As evidenced by the fact McCluskey won Unite’s leadership having received only 144,570 votes yet claims to have a “two million strong” union. That if true would make Red Len supported by a mere 7.3% of his members.

owenx480In reality most people join a union to obtain organised represention for themselves in the workplace and primarily in order to have someone to negotiate on bread and butter issues like pay and conditions. They vote on national issues. They certainly don’t join the union to bring about the Marxist wet-dreams of Owen Jones…

Does this Government Care About Middle Class Families?

Guido knew that the structure of marginal tax rates following a decade of Brown’s insidiously stealthy taxation and redistribution was malformed. How malformed was only driven home after reading a note from the Centre for Policy Studies. It is obscene how this government has punitively taxed the middle classes…

marginal-tax-rates

The CPS use a simple not atypical example of a married man with two children, who has no savings or investment income, and no student loans. Factoring in allowances and changes to child benefit, his marginal rates will be as above. A middle-class single income family with 2 children and the father earning £50,001 will have a marginal tax rate of 59.5%. You don’t have to be a fully paid-up member of the Taxpayers’ Alliance to think that is far too much.

Next year will be the thirtieth anniversary of Nigel Lawson’s 1984 Tax Reforms. George Osborne says he is Lawsonian, if the Chancellor wants a legacy and the gratitude of the electorate, simpler, flatter, fairer taxes would be the right thing to do. It might win back the middle classes at the ballot box as well…

Hacked Off's Blackmail Letter to Miliband

hughThe papers are reporting this morning that Ed Miliband, Nick Clegg and David Cameorn were on the verge of agreement until Hugh Grant’s Hacked Off campaign lobbied Labour aggressively. This is the draft press release brandished by Hacked Off to put the wind up Ed Miliband if he went ahead with the deal:

hacked-off-blackmail-letter-x480Click to Enlarge

hughThe language is ridiculous, Hugh Grant is a victim of his own making, calling on the Queen not to carry out her constitutional duty because he doesn’t want his picture in the papers any more is frankly comical. Hacked Off is a bunch of celebs who have been caught with their pants down hiding behind the genuine suffering of the McCanns and the Dowlers who were victims of real crimes which the police are already pursuing. Hacked Off won’t say who funds them, they are self-appointed and they are secretive with a sinister agenda to protect the rich and powerful from the prying eyes of the public.

Guido is opposed to all the proposals to control the press including the government’s misguided plan to enforce extra-territorial control of publications. We won’t be cooperating with any legislation that tries to control a foreign publication like this blog because it is, in the words of the Charter, “targeted primarily at an audience in the United Kingdom”. Imagine if the Soviets had tried to do the same to Radio Free Europe during the Cold War, or the Iranian regime demanded today to regulate the BBC’s Persian Service on the grounds that it is “targeted primarily at an audience in the Islamic Republic of Iran”.

Guido reminded Brian Leveson when he was giving his evidence that under the obligations of Article 19 of the UN Declaration of Human Rights as agreed by Britain in 1948

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

That is more important than preventing the paparazzi taking pictures of Hugh Grant on a bad hair day…

Ed's Zero Base

Labour have spent the last week fretting about economic credibility, the cause is the realisation that the economy has probably bottomed and growth is returning. In fact yesterday saw an upwards revision of previous GDP figures which effectively halved the supposed depth of recession.[…] Read the rest

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Boris as Hulk…

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