Ensuring a sustainable economic recovery

Are we really out of the mess we got ourselves into six years ago? Can it be true that we are the fastest growing economy in the developed world? It would seem so, according to the statistics. But how are we achieving this? It is certainly not coming from the manufacturing sector, an area which Mrs Thatcher as well as her successors neglected in favour of the keep-your-hands-clean service economy. It’s coming from two quarters. First is an increase in investment from business.

At the height of the recession, when there was no money for anything, medium and large businesses were sitting on £75 billion of liquidity – twice the defence budget – which in the right climate they were ready to release. That climate, which is principally one of confidence, has finally come. The second factor which was depressing the whole of the economy was a moribund housing market. When houses start moving again it has a tremendous knock-on effect right across the board. Tired old carpets are thrown out; new kitchens and bathrooms installed; more stylish furniture acquired; dodgy roofs repaired; gardens landscaped and solar panels ordered; double glazing resumed; painting and decorating starts; the DIY stores hum; the list goes on and on.

But important as houses are, we mustn’t obsess about them. There are other things – like the ones which would earn us shed loads of foreign exchange, i.e. manufactured items. We were once so good at manufacturing and can be again. But if there is one area where there is huge room for improvement it is productivity: it is our Achilles’ heel. Why we are so sluggish here beats me. If we can get this up this summer of rejoicing – weather-wise and economy-wise – may open the sluice gates and propel us into a new era of prosperity.

That high risk policy of quantitative easing – essentially printing money – appears to have worked for us, but it didn’t work for the Japanese. They left it too late to begin and as a result entered what has been called the ‘lost decade’ of the nineties. In fact it has been more like two lost decades. They’ve never recovered their old elan. Our own emergency package to survive the financial crisis was more deftly handled, first by Mervyn King (though he was somewhat late dropping interests rates) and then by Mark Carney, both governors of the Bank of England. Perhaps our success has been part due to the City of London’s historic financial expertise

But alongside this, and despite their other cataclysmic failings, we must give credit to Gordon Brown and his chancellor, Alastair Darling. Once they realised the enormity of the crisis – on the Monday following that dire weekend when it struck and the ATMs would have dried up – they moved quickly and decisively to recapitalise the banks. As Wellington said after Waterloo: ‘It was the closest run thing you ever saw in your life’.

Brown’s successor in Downing Street was on a steep learning curve after his chancellor’s earlier silly mantra of ‘sharing the proceeds of growth’, and when he eventually wised up the results were there for all to see. But interest rates cannot stay as they are – it is so unjust to the prudent saver who for years has been bailing out the feckless spender. They must rise, and soon. When it comes it must be small and incremental, like a quarter of a per cent every couple of months; a policy of slowly, slowly catchy monkey, so to speak. This will help cool the overheating housing market.

We don’t have to worry too much about irresponsible lending as in the past, leading wholesale repossessions, because the criteria today to get a loan and the deposit required has been massively tightened. Some complain that the hoops you have to jump through are as many as to adopt a child.

But two things, above all, are needed to sustain the recovery: first, a massive house-building programme to meet the demand that years of unrestricted immigration have imposed. This, too, will cool house price inflation and re-balancing our economy by boosting manufacturing; and second, markets should then be found for those goods beyond the still Doldrums-plagued Euro area. The obvious target ought to be that vast zone of good will to us, the former empire.

We have introduced a virus into the body politic of China

A state-sponsored collective amnesia has blanketed the Chinese people.

A state-sponsored collective amnesia has blanketed the Chinese people.

In this world of falsehoods, duplicitous behaviour and double dealing the one thing we must all strive for above all others is truth. My wife grew up in a world heavy with the former and very little of the latter – the Soviet Union. The worst of it was that those negatives were state-sponsored, with a challenger facing the prospect of a bullet in the back of the head, the Gulag or in the later years after Stalin’s death being assigned to the madhouse, there to be medicated with mind-bending drugs which effectively turned them into a zombie.

The thinking was that if you couldn’t see the benefits of Communism you must, indeed, be mad. In true Kafkaesque, they even named the regime’s leading newspaper ‘Pravda’, which in Russian means truth. Yet for all the suffocating and malign effects of government policy, people did know much of the truth. Today’s N. Korea is an out-on-its-own, bizarre exception. Nothing in all human experience quite compares with what they do there. However, in order to get a decent job and stay out of trouble with the Soviet version, the bulk of the people chose to play the system and not challenge it. Only in the anonymity of the kitchen did they dare to speak their true thoughts.

Thankfully that system has been consigned to the dustbin of history and my wife’s once occupied people, the Lithuanians, can breathe the sweet air of Liberty – guaranteed, I’m proud to say, by our own RAF (among others) jets which daily sweep their skies. We in Europe congratulated ourselves that our own steadfastness – mightily reinforced, I have to say, by Uncle Sam – has seen off the dead hand of tyranny in our own continent. Only the single, anomalous state of Belarus remains to remind us of the awfulness of the system which prevailed for so long.

But far away, across the other side of the world, an eastern version staggers on. Full of absurd contradictions, it has loosened the economic purse-strings to such an extent that to pretend it reflects the thoughts of Marx and Engels is to put us back once more into the realms of Kafka. However, in terms of the suppression of liberties it is still very much in the mould of the old masters. I refer, of course, to Communist China.

This year marks the twenty-fifth anniversary of the student uprising in Tiananmen Square in which, after much prevarication, the regime shot and crushed beneath tank tracks hundreds, perhaps over a thousand young people. All mention of that terrible atrocity has throughout this quarter century been forbidden in the Chinese media. A state-sponsored collective amnesia has blanketed the Chinese people. It is a non-event to be airbrushed from memory – except that it hasn’t, at least in a normally tranquil and prosperous part of the Middle Kingdom, which is what China liked to call itself when it considered it was the centre of the world. That corner of mainland China – where 100,000 people took to the streets in remembrance of the students – is Hong Kong. To the fury of the regime, the people there took no notice of Beijing’s ban on gatherings.

Who does the regime blame for that blatant act of defiance? Why, of course, we the British. Nearly two centuries ago we took over a little fishing village in a remote backwater and turned it into one of the great mega cities of the world. We gave it good governance and introduced the rule of law. It became a magnet for Chinese to flock to for a better life as well as jobs and prosperity. We taught them not to accept unfairness and now they turn these attitudes against their new masters in Beijing.

It may have been possible a quarter century ago before the age of social media, instant news and mobiles with millions of cameras to commit atrocities and get away with it, but not now. You may gun down a thousand people but can you gun down a hundred thousand? It is my belief that we have introduced a virus into the body politic of China, which in the fullness of time will sweep out of Hong Kong and infect the whole of China. If that is the case then we shall have done something of which we can be really proud.

Incivility in the 21st century

 

A strange thing happened to me the other day, but on reflection perhaps not so strange. I went to say hi to the chairman of my old tennis club as I was travelling close by his house. We were never close but for ten years we were both active participants and would talk between matches . That was twenty five years ago. About five years back he dropped into my shop, not to buy anything but to renew acquaintances, or so I thought. Now I believe it more out of curiosity than anything.

Expecting a civilised reception I was kept on his doorstep just long enough for him to make a factitious remark and for him to say that his wife, Joan, who was also a club member, was doing something on the computer. Here was one old man of long-time acquaintance, reaching out to another old man, only to be given the brush off. Why I say this bleak reception was not so strange is that it speaks perhaps of our inability to relate to each other as we should.

The old club chairman was always given to the patronising put-down, so I was not unduly perturbed that he remained the old unreformed Dave. But, just the same, it got me thinking about the level of incivility that our country so often exhibits in this the 21st century. Once upon a time, each of us knew the names of our close neighbours – surname as well as Christian. As for those mutual visits for ‘cuppas’, they went out of the window eons ago. We really did make an effort to be friends. Gossip used to be rife in those days, most of it harmless stuff but the fact is that it helped to grease the wheels. In truth, people were genuinely interested in their neighbours. It is hard to imagine that so many of these awful present day cases of child abuse as well as neglect would have passed unnoticed.

So what is it that makes us so distant and seemingly uninterested in those about us? I suspect it has a lot to do with the independence which rising prosperity has given us. It is both a blessing and a curse. The fact is we don’t need each other as once we did, or at least we imagine we don’t. It is interesting to note that the poorer a society is, the closer people are with each other. It is as though adversity brings them together. People of a certain age will often tell you how great the camaraderie was in the years of war and how everybody was everybody else’s friend. Even social class distinctions came close to vanishing. All at that time stood in mortal peril – at least in the cities – and shortages of everything were acute. Even in the years following, when there were only the shortages to deal with, people still went to each other’s help where they could.

But gradually the consumer society took over. In the old days, acquisitiveness was virtually non-existent and ‘keeping up with the Joneses’ unheard of. Today, the green eyed monster looms over every neighbourhood and further divides people. My wife, who endured many more years of deprivation (under Communism) than we did in the West, tells me that one of the saving graces – and there were not many – of the old USSR was that right to the end people helped one another. They knew their problems and provided that most essential of palliatives: a shoulder to cry on.

If possessions and acquisitiveness is part of the problem – perhaps the major part – it is hard to see things getting better any time soon. It is a fact that the larger the city, the lonelier you can feel. In that case more is very much less. Perhaps we in Plymouth should take comfort from the fact that we are not too big and blessed with a great mix of attractions both natural and manmade. For my own part, I have never regretted picking Plymouth from 25 other cities in 1967 to set up my health club. All of the cities I shortlisted had populations over 200,000 and, at that time, had no health club. I felt certain that that sort of number would guarantee me a good living and so it proved. You should have seen some of those other grim industrial abodes that were on that list. I’m so glad I gave them a miss!

Finally, a grateful thanks to the kind and civic-minded person who, following my most recent column in The Plymouth Herald gave us back those lamented flowers in Ridgeway’s five tubs.

Must the axe fall on our flowers?

flowersOur five large council plant tubs on Plympton Ridgeway have remained undressed as late as 1st July. A few weeks ago they came and cleared the weeds and sprinkled pellets preparatory to their usual floral display, but bare earth remains and the season grows late. I rang the parks manager querying the lateness. “Ah,” says he, “it’s the cuts. It isn’t just Plympton, it’s all the suburbs.” I came away saddened, before anger took over.

Here we are, the fastest growing economy in the Western world, now at the end of a long recession during which we have kept up our spirits as well as the flowers which brighten our lives. But Joe Council comes along and says he must make cuts. I could have part understood it had he said this five years ago, when we knew we were going to have to tighten our belt. But now?

He will make the usual excuses. We’ve heard it all before. It will go something like this: He has spent these five years trimming in every direction until all that is left are the the flowers. What nonsense. Every one of us could identify areas in which there is disgraceful waste as well as inefficiency. I give you one tiny example. Each evening a man and his equally expensive van goes round the Hoe area locking up toilets. Doubtless they do this in other areas of the city too. Why don’t they slip a few bob to one of the householders living close by to do the job? That way the toilets could stay open longer. It is farcical that in the city’s prime tourist area they close at such a ridiculously early hour.

Is it not possible – with a bye-law or something – to make householders responsible for cutting the grass verges fronting their properties? In Germany they are fined if they do not clear the snow from the pavement fronting theirs. Think of the money this would save. I well remember, just a few years ago when they came along and concreted over a lovely flower bed that fronted where cars parked at West Hoe. Stupidly they had built a wall just high enough to block out the driver’s view of our splendid Plymouth Sound, but at least they compensated somewhat with a beautiful display of begonias. Then in the name of cuts they took even that away. Now you sit there staring at a wall (why they spent precious money building it in the first place is beyond me) when just beyond that wall is one of the most spectacular views in the world. First prize to the dunderhead who thought that one up.

I remember also what I wrote of at the time as ‘civic vandalism‘, when they demolished the Hoe diving boards which our kids for generations had such fun on – and safely on the whole, I might add. Our city fathers had spent a lot of money on that facility for youngsters. All they had to do was maintain them, but they couldn’t even be bothered to do that. What would those fathers have thought of their successors’ treatment of their legacy? No, the headsman’s axe was the easier option. Always, always it’s the soft, ill-thought-through option. So, how now do the kids have their fun – for they will, and indeed must have ways of getting rid of their youthful exuberance. They move a few yards up the road and go in for the highly dangerous ‘tombstoning’. As if to complete their killjoy vandalism, the department responsible then went on to concrete over a couple of pools which also the kids had fun in. As well as the kids letting off steam the promenading public also had the pleasure of watching the younger generation enjoying themselves and remembering their own childhood.

Better Together should appeal to the heart as well as the head

I watched a very interesting documentary recently on Scotland’s greatest victory over the English at Bannockburn. The English were unlucky having the hopeless Edward II conducting the battle. Had it been his father, the mighty and illustrious Edward I – the ‘Hammer of the Scots’ – things might have turned out very differently, despite us having our equally illustrious Robert the Bruce. It would have been an interesting contest. Alex Salmond might have hoped that his newly enfranchised sixteen-year-olds might have felt a bit of angst and voted his way in the coming referendum but my gut feeling, as a Scot, tells me that he is going to be disappointed in what Scots generally will decide to do. Untangling a marriage which has last 300 years will prove unbelievably difficult, not to say expensive. And for what? The 53m English with their City of London could probably bear the cost, but could the 6m Scots?

What saddens me is that all the arguments which have been bandied back and forth have been on nuts and bolts issues. But what about the appeal to the heart? We have bled together across a thousand battlefields, blood brothers in the ruest sense of the world; we have built together an empire greater than all others which went before; our scientists and engineers have fashioned the world in which we live with their Industrial Revolution and our poets and writers have thrilled it with a language which is set to be the lingua franca of all mankind. Are we to walk away from all this?

It seems to me that it is low and base motives which are the drivers for Scottish independence, though Alex Salmond likes, with his weasel words, to dress it up as otherwise. But Prime Minister Salmond sounds good, doesn’t it… ? And soon it would be President, once the dust has settled. That would sound even better. And let’s not forget all the baubles he would be handing down to his minions from the Palace of Holyrood House. God would be in His heaven and smarmy Alex would end up making ever more implausible excuses to his people as the years went by for the rotten outcome of it all and the likely penury he had plunged them into. Meantime the English, with their rejuvenated economy, their break with welfarism, their highly educated kids and their fracking bonanza would be heading off into the sunset, but sad nonetheless.

Have the years in Downing Street addled the PM’s brain?

I am glad the government has banned that sinister-looking council vehicle going round with a camera on the top. We all had deep misgivings about Google trundling round photographing everything in sight, but at least that wasn’t a means of filching money out of our ever more depleted pockets and there were many clear positives to the whole operation.

Ours is the most spied on country in the whole world and, to our shame, that includes N. Korea. What is it about those in authority over us that they treat us as they do? Is it that they don’t trust us? They’ll have plausible answers of course – they always do. Not the least of them is that catch-all one of ‘combating terrorism’. But we combated IRA terrorism for thirty years without compromising our essential liberties.

We have to be very careful about going down the path of the surveillance state. The powers-that-be, including the town halls, seem to relish lording it over us – watching our every move, socially engineering us, politically correcting us, and nannying us with a patronising ‘you know it’s all for your own good… don’t get yourself worked up’ sort of attitude. The fact is we are right not to trust them; all the time they are taking liberties with our liberties.

The Cameron government promised more openness. ‘Transparency’ was the word. And all the while the Court of Protection – another Blairite invention – continues on its merry way (except that it isn’t at all merry). Terrible injustices are daily taking place behind closed doors with social workers being treated as if they are expert witnesses and who, in too many cases, are themselves operating behind closed minds. Even the President of the Family Court has expressed his extreme disquiet and called for less secrecy, but still the injustices go on.

David Cameron has called for Magna Carta to be taught to every kid. Is this the same David Cameron who wanted recently, for the very first time in English jurisprudence, to hold a trial so secret that even the very fact that there was to be a trial at all was not to be disclosed? Magna Carta, indeed. Who can forget that cringe-making, toe-curling interview with America’s most famous interviewer, David Letterman, in which the British PM didn’t know what Carta stood for. Eton educated, was he? With a first-class honours degree from Oxford thrown in for good measure? Something went badly wrong there. Even little old me, educated in the Foundling Hospital and at work at fifteen, knew that. Perhaps it is the years in Downing Street that have addled his brain. That hothouse of intrigue and backstabbing must take its toll.

But don’t think me ungracious to our Dave. For all his many deficiencies, he has turned the economy round and we must give him credit for that mighty achievement. There is also a real chance that our kids will stop sliding down the international education league tables and begin the climb northwards. Then there’s that pernicious client state of welfarism that Gordon Brown positively pushed which is being dismantled and a sensible one – such as the Welfare State’s founder, William Beveridge, wanted – being reinstated (but still in a far more generous form than ever he envisaged). So each of these important areas which will determine our nation’s future we must give the present incumbent of Down Street credit for.

Putin is a bully but not a fool

A great opportunity was thrown away by the West when Putin first came to power.

A great opportunity was thrown away by the West when Putin first came to power.

What are we to make of developments in Eastern Europe? It is one thing to have a squabbling clutch of Balkan countries at each others’ throats, as we saw in the breakup of the former Yugoslavia, but quite another to have the Russian bear stomping around with what looks like a very sore head. Europe, historically, never expected anything sensible coming out of the powder keg of the Balkans. After all – at its worst – it gave us the First World War, but since then Europe has never had to worry too much about that region disturbing the peace of the continent as a whole – only its own.

The chief reason for its instability were those many hundreds of years that it lay under the yoke of the Turkish sultan who did his best to turn as many of them as he could into Muslims. So in that corner of Europe you have not just a religious divide, such as we still have between Protestants and Catholics in Northern Ireland, or Sunni and Shia in Syria, but a divide of Faiths itself: Islam and Christianity.

But none of this exists where the bear is concerned. He belongs to the Christian community of the West. His trouble is that, unlike us, he has not yet come to terms with the loss of empire. It is, after all, only twenty years since the Soviet republics – there were thirteen of them – gained their independence. Russia still believes, deep down, that those countries rightfully should belong to it or at the very least should be under its sway.

Putin, the Russian leader, knows that the warm water ports of the three Baltic republics will never be his again; they are too close to the West and with long historical ties to it. But, more to the point, they now enjoy the protection of NATO – the best life insurance policy they could have taken out. Even now NATO planes, including our own, are sweeping Baltic skies daily. The message there is ‘thus far and no further’.

A great opportunity was thrown away when Putin first came to power. He wanted desperately to gain acceptance from the West, but foolishly his overtures were spurned. Even as late as his second presidency he offered to open up his vast country into a free trade area which would extend from Lisbon in the extreme west to Vladivostok in the far east. Instead of looking seriously at this, what did the West do? It pooh, poohed the notion and even provocatively poked the bear by offering deals to Russia’s former vassal states, Moldova, Armenia and Georgia – the latter two far from Europe’s heartland.

Undoubtedly, down the ages, Russia has been Europe’s perennial headache – and I’m not just talking about the seventy years of the Communist era. For almost all of its history it has been a delinquent state and now resembles something of a corrupt gangster state. But it needn’t have been this way. An understanding tutelage by the West after the failed experiment of Communism would almost certainly have worked wonders.

When Russia lost the Crimean war in the middle of the 19th century and the Russo/Japanese war in 1905 it came to a full appreciation of how backward it was, politically and economically. It set about changing this at a fast and furious pace and, by the outbreak, a hundred years ago, of the First World War, it had very largely succeeded. Only the curtailing of the Tzar’s autocratic powers remained.

It was the foolish mobilisation by Tzar Nicholas II of his army – much like what Putin is doing today on Ukraine’s border – which brought the whole process of modernisation to a halt. It gave Germany the excuse she sought to smash her militarily before she became too powerful for even the Prussian-led German army to defeat easily. But for the Tzar’s crazy action in plunging Russia into WWI and losing it there would never have been a Bolshevik revolution and no wasted seventy years pursuing the fantasy of a workers’ paradise under Communism.

The Duma – Russia’s parliament – would have long since clipped the Tzar’s powers and turned him into a constitutional monarch, much like our own. She would by now have genuine democratic institutions and, probably, with all her vast natural resources, be the world’s leading economic power instead of running an economy smaller than Italy’s.

Putin, although a bully, is not a fool. He is in fact an intelligent man. He knows that in the long-term his 145 million people cannot hope to get the better of the European Union’s 485 million. He also knows that his armed forces are miniscule compared to NATO’s.

It must be made plain to him that the postwar borders of Europe are sacrosanct and if he insists on challenging them there will be consequences – damaging and unpleasant ones. Chancellor Merkel of Germany is the one best placed to talk turkey to him. He learned fluent German during his years as a KGB operative (a colonel) in East Germany.

Then, when he quietens down, she must tell him that his gifted people – great in the sciences, literature, sport and music – will not be spurned and belittled anymore but will be embraced by the West and led into the comity of nations, so completing the mission which Peter the Great began all those years ago.

Better the devil you know

Aleppo, Syria’s largest city and commercial hub, has become a key battleground in the country’s protracted civil war as bombings continue day and night.

Bombings continue in Aleppo, Syria’s largest city and commercial hub, which has become a key battleground in the country’s protracted civil war.

It begins to look as if the dreadful Assad may yet go on to win the Syrian civil war. Why is this? The quagmire which is Syria is about as complicated as ever it gets in politics and religion, and with the latter playing the dominant part I will not attempt to explain – even if I were up to it – all the competing factors at work in that benighted area. Suffice it to say that it was and is a devil’s brew which we were wise not to get drawn into, even though our prime minister was up for it. Parliament said no and that was the end of it.

It was this vote, I believe, which saved an always-cagey Obama from being swept into the affair and commencing air strikes. Incautiously (if he never meant what he said) he spoke of ‘Red Lines’. Luckily the Commons vote caused Congress to take stock. It values its British ally’s diplomatic cover around the world as it demonstrates that it is not a bully acting alone in the world; there are two of us. This cover it considers more important than its military contribution, welcome as that nevertheless is. They are not anxious to stand alone nowadays and feel much more comfortable when their old mate is there to take its share (if needs be) of the flak. Although France indicated that it would join them – perhaps anxious to lay President George W. Bush’s “Surrender Monkeys” insult from the Iraq war to rest – it was not the same as having reliable old Blighty. You could at least go into a huddle with him and talk to him in your own lingo.

Would that intervention have changed things on the ground and stopped Assad gaining the upper hand as he has now? I believe not. So long as Hezbollah – the bain of Israel – was willing to throw its considerable military weight behind Assad and as long as Iran kept training its operatives and providing them with hardware and the Russians replacing Assad’s equipment losses there was never going to be an easy or quick solution. And even if the West – assuming it had begun bombing – then proceeded to up the ante to the point where Assad could take no more, what then?

Were we going to allow a fragmented, at-each-other’s-throats band of brothers with no clear agenda of what to do with their newly liberated country take control? I think not. Especially when their ranks had been hugely swollen by fanatical Jihadists, many of them affiliated to Al Qaeda.

All of this now brings us to the most cynical piece of realpolitik since America armed Saddam Hussein to help him stave off defeat by Iran during the Iraq-Iran war during the early ’80s. Have you noticed that government pronouncements, and even media reporting on the Syrian civil war, have gone strangely quiet compared with what it was – and this despite the horrendous losses now put at over 150,000 dead?

It is my belief that, so worried is the West as to who would take over in the event of the fall of Assad, it has decided that the ‘man of blood’ who gassed hundreds of his own people is now preferable to those who would take over and plunge Syria – the cockpit of the Arab world – into even an even greater mess than that which the former London dentist, Assad, has plunged it into.

The nightmare which the West’s security forces face in a pivotal land – one which hates and shares a common border with Israel – is a country that becomes a hotbed of fanatical Jihadists with perhaps Al Qaeda taking the lead. Because of these terrible concerns I fear we are now willing – even preferring – Assad to consolidate his recent considerable gains and go on to win the civil war.

It seems almost inconceivable that a man we have so recently labeled a war criminal and threatened to send to the International Criminal Court at The Haguemay now be let off the hook. ‘Better the devil you know’ now seems to go the thinking. An ordered Syria – even one soaked in innocent blood – is now held to be a better solution than one defying a solution.

So get ready, all of us! Assad may yet triumph against a divided opposition and a befuddled, humiliated West may feel its only course is to settle down to a business as usual arrangement. Given the passage of time, and bearing in mind his own and his wife’s former London connections, the Syrian despot might even be asked, like the executed Romanian dictator, to pay a state visit to London and sup with her Maj.

So here, in a nutshell, is the world we are compelled to live in: a complicated, compromised, infinitely bewildering world in which there are few easy answers nor many quick fixes and certainly no ethical foreign policy such as the late, naïve foreign secretary, Robin Cook, thought he could operate.

China’s debt-fueled turbo growth will end in tears

The old ‘Yellow Peril’ with its racist undertones and vision of the ‘Golden Horde’ sweeping towards Europe may have been a thing of the past, but a new one is taking it place. This one is a debt crisis which threatens to take China down.

China's hypocrisy in abandoning Marxist economics to gain the fruits of the super-abundant capitalist table is breathtaking.

China’s hypocrisy in abandoning Marxist economics to gain the fruits of the super-abundant capitalist table is breathtaking.

We have all marveled at the economic miracle which has taken place in formerly backward China during the last thirty years. It is now the world’s second largest economy, and if its double-digit growth continues for one more decade it will overtake the mighty United States. But a very big if hangs over that prospect.

The phenomenal growth that China has enjoyed in recent years has been based on debt – astonishing and unsustainable debt. To make matters worse, it is mired in corruption on an equally gargantuan scale.

One of the prices we in the West have had to pay for China’s breakneck progress is to see many of our traditional industries relocate to the low-wage, low-overheads Far East. The flood of cheap consumer goods helped the West keep inflation down – at the price of seeing its own unemployment rise.

Yet all was apparently well until the banking crisis struck in 2008 and the West stopped buying – at least in the quantities it had. China faced ruin. It had two options: it could either invest heavily in infrastructure and property (it had millions to house who had flooded into the cities) or it could turn its people into a consumerist society modeled on the West and sell to itself – God knows there are enough of them. It chose overwhelmingly the first.

Unfortunately no one knows how to get the Chinese to spend on themselves. It may be this is because there is no safety net of a welfare state to sustain people either in old age or in sickness, so they have to do it themselves and save a much higher proportion of their earnings to make good this shortcoming. They decided not to put their savings under their beds but to invest it in property and to a lesser extent in factories. Unfortunately this launched a runaway property boom. Stupidly this was at the higher end of property market so that the average apartment came out at £300k – 70 times what the average factory worker earned. Consequently, while there are scores of millions in the cities desperately wanting to get out of sub-standard and crowded accommodation, they cannot afford to buy. A similar glut of unwanted factory units has taken place.

This was at the time the Chinese government had ordered its state run banks to open their wallets wide and lend. And, boy, did they obey orders. The result is a debt crisis of unimaginable proportions and one which is set to grow exponentially. The Communist government is at a loss to know what to do about it and still maintain power in a one party state.

It has long been thought an anomaly that a Marxist state can stay communist while operating a capitalist system. The reason the Chinese have so far pulled it off is they have markedly raised the standard of living in the cities – though they have neglected the countryside.  This has bought the party time in a country which elevates stability above everything and avoided people taking to the streets demanding more political freedoms. The hypocrisy of the party in abandoning Marxist economics to gain the fruits of the super-abundant capitalist table is breathtaking. China’s volte-face has allowed the party to stay in power while the USSR collapsed. It has delivered materially where the Soviets did not. But the capitalist system which Beijing let rip has none of the constraints and rule of law which developed over centuries in the West.

The ‘entrepreneurs’ which it put in place to run its factories and the like did not earn their spurs through the fierce blast of competition; they were placemen and apparatchiks who had no experience of business. They set about lining their pockets with shady deals and kickbacks which would cause Marx to turn in his grave. And because the system is run by the party faithful right across the country, from the very top all the way down to the lowest jobsworth, there is no chance of reforming it.

The party bosses in Beijing are waking up not just to the enormity of the task ahead of them to address this but to their debt crisis. They are telling their factory managers that the centre can longer subsidise their inefficiencies. They are going to have to lay off tens of millions who will be forced to return to their poverty-stricken countryside homes, many of which have been forcibly taken over by the state for land development. It is a recipe for insurrection.

Already the West is seeing many of the jobs which went to the Far East being repatriated because the economics have changed: Chinese workers have demanded, and got, big pay increases as well as better working conditions. All this costs money and the result is that the Chinese competitive edge is being eroded year by year.

When the West’s financial crisis struck in 2008, we were all enormously relieved that the world economy, chiefly driven by China, kept on growing, albeit it at a smaller pace. Now China must hope that the West’s efforts to restore order in its own financial house will be completed in time to alleviate its own coming time of distress. One pundit opined the Chinese are where we were in 2005-6, so there’s not much time. However, we must never forget that China remains a totalitarian state.

In seeking to restore its finances it has none of the experience and sophisticated tools at its disposal which Wall Street and the City have. If things go wrong, it is liable to lash out in frustration and seek a foreign adventure to rally the people and take their minds off their troubles at home. Galtieri did it over the Falkland Islands and China may well do it over those oil rich islands in the South China Sea.

A city close to my heart

Although Plymouth has been my home – by choice – now for forty-seven years, there is and will always be another city close to my heart. It is that great throbbing metropolis of London.

I was born there on Grays Inn Road which, on a quiet Sunday, may still be within sound of Bow Bells. If so, that would make me a true Cockney – a born, though not bred, one. Unfortunately the not-bred part renders me incapable of fathoming most of those strange yet endearing Cockney terms.

When I was born in May 1939, London stood on the edge of a cataclysm which would test its metal as much as the plague, the great fire or that earlier fire when Boudicca’s enraged followers torched the Roman city in AD 60. Luckily, when the bombers came, I was safely ensconced forty miles north in the lovely little Essex market town of Saffron Walden. From that area would be assembled the mighty armada of bombers which make good on Churchill’s promise to repay the Luftwaffe with interest tenfold.

When I returned to the city as a sixteen-year-old in 1955 to find a job, it was a sad place. It was not long since its skies had been darkened by Hitler’s bombers. My job was to take news photographs to the art editors of all the leading periodicals and newspapers of the day to see if they were interested in featuring them. The agency was based in Fleet Street. When I stepped out on my rounds I could see the massive structure of St. Paul’s cathedral 500 yards away on the top of Ludgate Hill. To the right and left as you walked up that famous hill was a wasteland of bombed out buildings. Feral cats and other creatures had made the ruins their home. All over Central London, which was my stomping ground, were similar sad sights. I could never quite understand how, amidst such destruction, Wren’s masterpiece had survived. (Later I learned that, apart from an element of luck – which some might prefer to regard as divine intervention – this was because orders had gone out from on high (not that high) that, whatever happened elsewhere, the great cathedral must be saved. The firefighters, therefore, made it their business to prioritise it.)

When I was born, London was the largest city in the world which, perhaps, befitted the world’s largest empire ever. Though today thirty one other cities have overtaken it in numbers, it is still Europe’s largest if you exclude Moscow, which is a Johnny-come-lately having ballooned since the fall of Communism. Before this it was only half London’s size and you needed a permit to go and live there.

When I took up my job, a pall of gloom hung over the city. It was only a decade before that the doodlebugs and V2 rockets had come visiting. We talk of austerity today, but those times knew the real thing: a biting hard period of real deprivation which makes today’s talk sound something of a joke. There was simply not the money to give people a decent life, never mind make good all that bomb damage.

It was a dirty city, too. Those building which had survived were encrusted with a thick, black layer of industrial grime. And the grime was still coming down. Once, I had to get off a bus in Harrow and take my turn to walk in front with a torch to help the driver to avoid mounting the kerb. The smog was so thick you could barely see your feet from a standing position. It was actually quite scary. The dear old Thames, which today is alive with every kind of fish and aquatic creature, was then a dead river.

Unlike Berlin and so many other shattered cities of Europe, London, despite everything, still had a pulse – even a beating heart. But it was weak and its population shrank as so many of its citizens migrated to the leafy suburbs and the new garden cities erected close by. And while all this was going on, the great empire, whose imperial will had reached out from the city across the world, was being disbanded. Truly, it seemed, London’s glory days were over. It would have been a brave pundit who would say it would ever rise again to its former pre-eminence.

Yet hey, that is exactly what has happened. Few would say it was exaggerating to call it the coolest city on the planet. In 2012, with the Olympics, it had the chance to showcase itself like never before in its history. And what a success it made of it. Athletes and visitors alike were stunned at how well that most challenging and complex of events was managed and how beautiful the city had become. Even the sun made a brief appearance, as though to bless our endeavours.  London may not exercise hard power to the extent it once did, but it projects soft power by the shedload.

When I treat myself to a visit, as I like to do every three months or so, I look around and marvel at the transformation that has taken place since I trod it walkways as a youth. As its skyline grows ever more interesting, it remains the financial centre of the world, beating New York, Hong Kong and Singapore to the spot. And its many great parks and myriad little squares have grown even more beautiful. Racial bigotry has all but gone, with no more signs to be seen in landlords’ windows saying ‘No Dogs, Irish or Blacks’. Couples of mixed race walk hand in hand and its streets echo to the sound of dozens of languages. Street cafes are everywhere and British cuisine has been turned on its head. It is now right up there with the best. The city has a multiplicity of world-class chefs.

It is at last a truly cosmopolitan place. Not only is the shopping the best to be had anywhere in the world, but, glory be, London now hosts its best fashion houses. Now there’s a surprise for all of us. Perhaps that all began long ago in a non-descript place called Carnaby Street.

So there we have it, my second favourite city. One which, along with our hopefully-reviving economy, we can all celebrate.

Follow

Get every new post delivered to your Inbox.

Join 3,363 other followers

%d bloggers like this: