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Whilst this might look like it is confirming what we guessed it is frightening confirmation. The issue now is whether Putin simply thought Trump would be such a buffoon in power that he only needed to get him elected to discredit democracy and the global power of the US or whether Trump or any of his supporters colluded in any way whatsoever. The first is bad the second is treason.

A Radical Political Manifesto for 2017

If you have not read the Labour manifesto I commend it to you. It is about tax and spend, just like all the other manifesto’s. That is what governments do, they collect taxes and pay for vital services such as defence, health and education, oh and filling the holes in the road. In relation to tax and spend the Labour manifesto differs from the Tory one in this respect only, that it is better costed!

The Labour manifesto is radical in that it has made the “hard choice” to raise taxes, what is more, it has made the “hard choice” about who is going to pay those higher taxes. Normally when you hear a government minister talking about “hard choices” you think someone is about to get a kicking. Often it is a group of citizens or workers distinguished by their weakness. But not always. The past decade has seen governments of all persuasions talking about the sacrifices that are needed by the majority in order to “balance the book”, “deal with the deficit”, “live within our means” and a range of other cliches raised to the status of policy. Certainly, the hard choices of the Cameron administration were very much about that.

The Labour manifesto addresses all the issues you might expect but critically in relation to care, education, health and industrial strategy it does not talk about how they will be improved by greater efficiency, more competition, delivering more with less or even moving the deck chairs in some complex restructuring exercise. There are some elements of this but bottom line is they say they need more money. And despite the automatic response of the government to any criticisms of its actions, that “Record amounts are being spent on [insert service of your choice]” the reality of most people’s experience is things are getting worse. Services are deteriorating. The “record amount” going into the National Health service is so effective the government does not want the figures for Health Trust deficit’s to be published before the election.

So the Labour Party manifesto is a radical document, it marks a real shift in thinking. It is not constrained by a mindless mantra that nationalisation is necessarily bad because experience seems to show that privatisation is certainly not necessarily good. What is more the risk of nationalised industries gong wrong and thus costing the tax payer a whole pile of cash is not such a powerful criticism when we discover that if private industries, say finance, go wrong they cost the taxpayer a whole pile of cash and more.

Having said all this I suspect in time the Tory manifesto will come to be seen as the most radical of all the current manifesto’s. For the past thirty to forty years there has been a growing consensus structured around a neoliberal economic model of the world which has been about lower taxes, a smaller state and weaker trade unions. The rationale for this is that such actions will lead to improved productivity and greater economic growth. The rising tide of wealth this will create will lift all boats.

Unfortunately, so many boats seem to be stuck in the mud of increasing debt, insecure employment, deteriorating services and, oh, ever more pot holes in the road. A growing sense of frustration with the mantra of jam tomorrow and ever increasing inequality today has permeated the political mantle. The pressure building in the electoral tectonics is palpable and making itself felt in what has become labelled as a popular revolt.

This popular discontent across the whole of the West cannot be dismissed as the irrational response of the “basket of deplorables”. Firstly, there is a growing academic literature raising concerns about inequality and the negative impact it is having on the economy. Whilst some of this is from academics with radical or left wing leanings, it is not all. There are voices from the right who are concerned that the market is rigged and the “invisible hand” is cuffed to the interests of the very wealthy.

To her credit it seems as if Mrs May senses all this and sees something needs to be done and the solution may not be “the market”. The manifesto talks about governing from the mainstream, and states, “We must reject the ideological templates of the socialist left and libertarian right and instead embrace the mainstream view that recognises the good that government can do.” (my emphasis)

The manifesto contains a number of straws which suggest the wind is changing. There is of course a huge difference between rhetoric and reality. The rhetoric could be dismissed as a cynical attempt to attract traditional Labour voters with empty promises. After all this is the government that has promised to get immigration down to tens of thousands, eliminate the deficit and indeed reduce the national debt. It was also Mr May who made very strong comments about workers representation on boards which is being diluted as we speak.

What’s more, excitement at some more progressive comments by the leader of the Tory Party needs to be set against the reality of a  lot of very powerful people whose interests will be directly damaged by a rejection of the neoliberal orthodoxy. They are not going to be persuaded because we have a politician who sees there are genuine issues in relation to inequality and opportunity and they will fight to maintain the common sense view of the world that suits, very well, their personal interests.

The common sense view of the world which has evolved over the past thirty years sees the market as an impersonal and efficient allocator of investment, goods and wealth. A view of the world which sees people as rational utility maximisers who have perfect knowledge of the market, and exchange goods, services and labour freely. The reality of most people’s lives is not like this. The twenty first century market bares no comparison to that of the eighteenth, nineteenth or indeed most of the twentieth century. Putting that aside, the bowdlerised version of this model, which is at the core of the libertarian neoliberal view, is even further from the reality.

The Conservative manifesto seems to recognise this. It is a breach in the orthodoxy. It is a chink in the armour that has defended an increasingly indefensible world view. Whatever the outcome of the election the framework of political common sense is starting to change. At the moment it is about opening up areas of debate that have been closed for decades. It will take time for this to crystalise into clearer manifesto’s of change and change itself. However, better there is an increasingly conscious and rational debate about the way in which opportunity and wealth is managed and ditributed in our societies than the alternative.

For the avoidance of doubt, whilst I think the Tory manifesto may prove to be the most radical of the 2017 election I will be voting Labour. The radicalism of the Tory manifesto lies in its implicit recognition that some of what Jeremy Corbyn says about wealth and power is true.

Strong and Stable Leadership

Clearly the Conservative Party’s target in the election is not policy but personality. They believe, with real justification that Jeremy Corbyn is a weakness for the Labour Party. Whether that is the product of a Tory press, internal treachery by Blarites or inherent failings in the man is beside the point there is a popular perception that he is not a good leader.

By contrast they portray Mrs May as a strong and stable leader, indeed very much as they portrayed David Cameron as a strong and stable leader. It is certainly true they look and sound the part. They always have mastery of their brief, they handle the media well, they sound authoritative and convincing.

If one steps back a bit however, and look at what they achieve, not what they say, things look rather different. David Cameron was clear about leading the country into bombing Syria, but did not manage to actually do it. He was clear about wanting to preserve the Union but came within a hair’s beadth of breaking it up. Worst of all he professed a commitment to Europe leading us into a ballot which took us out.

Mrs May lead from behind on the issue of Europe, claiming to be in favour but not so in favour as to alienate irrevocably the Brexit camp within her party. Whilst at the Home Office she led the Prison system to the point of collapse and has left the police demoralised and fractious.

She has always provided strong and stable leadership in relation to immigration.  When she says she is going to reduce the numbed to tens of thousands she sounds authoritative she sounds as if she is going to do it. The problem is reality does not conform to her strong and stable rhetoric.

On taking up her position she provided strong and clear leadership about the folly of an early election. Stability was what was needed. It is claimed, with some justification in my view that she has tried to lead the party in a new direction. Again her rhetoric is good and she genuinely seems to understand some of the issues that an increasingly weakly regulated free market create. Her attempts at real change however are struggling. What sounded like genuinely radical proposals on workers representation on board’s has been watered down dramatically in the green paper.

The strong and stable reason for not having an election seem to have evaporated in the heat of perceived electoral opportunity. So the fixed term parliaments set in law by her predecessor, no doubt to ensure strong and stable government, has been cast aside.

There is no doubt that recent Tory leaders have looked and sounded like strong and stable leaders, the issue is what have they delivered and where they have taken us. It does make one wonder if someone who does not look like a strong and stable leader might actually deliver more.

The Rachel Maddow Show on msnbc – Latest News & Video

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I have no idea what the Rachel Maddow show reported prior to the advent of the Trump presidency but since his election, this highly respected show in the US has been devoted to nothing else. It is a testament to the incredible news machine Donald Trump has proved to be that they fill an  hour every weekday night from 9.00pm wholly focused on his Whitehouse.

If we take this past week. On Monday the Washington Post claims Trump revealed classified information to the Russian Foreign Secretary, Sergei Lavrov, in the Oval office.

On Tuesday the National Security Advisor HR McMasters desperately tried to limit the damage claiming the conversation had been “wholly appropriate”. His carefully worded rebuttal then undermined, in a way which is becoming quite familiar, by the President saying he had the “absolute right” to share information with the Russians.

Still on Tuesday, as this story is running, the New York Times reports about an alleged memo written by James Comey, Sacked head of the FBI about a meeting at which President Trump is claimed to have said “I hope you can see your way clear to letting this go,” referring to the investigation in to Mike Flynn, Trump’s first National Security Advisor, who was sacked purportedly for lying to the Vice President.

On Wednesday the Acting Attorney General, (Acting because his boss the Attorney General has had to recuse himself from all matters Trump and Russia because of a potential conflict of interest), appoints Robert Mueller as Special Prosecutor to take over the Justice Department’s Russia investigation. Shades of Archibald Cox, Special Prosecutor of the Watergate scandal. Whilst this is going on Vladimir Putin bizarrely offers to “help” the President by providing a transcript of his meeting with Lavrov.

These are only the headline stories. In parallel there are now a series of formal legal investigations into Mike Flynn and former Trump Campaign Chairman Paul Manafort about their long standing business and other connections with Russia.

For someone who professes to hate the media so much President Trump is proving to be a golden goose that can be relied on to lay an egg every day. Some have suggested his current trip out of the country, firstly to Saudi Arabia, will provide a period of respite and a chance for the White House to get onto the front foot. That is the triumph of hope over experience.

Sinclair Lewis’s book, It Can’t Happen Here, is about the election of a rogue populist president in the 1930’s who adopts increasingly authoritarian measures creating a totalitarian, fascist state. At the moment we have a frightening, fictional tragedy being echoed as a sadly, real farce which is making the US a global joke. If the Republicans do not wake up soon that farce may become a tragedy.

 

 

Trump says he thought about Russian probe when firing FBI chief

President Donald Trump conceded for the first time that he had been thinking about the Federal Bureau of Investigation’s probe into Russian interference in last year’s election when he fired its chief James Comey.Mr Trump’s comments run counter to the White House’s original account of why he decided to dismiss Mr Comey this week and are likely to fuel claims that he took the decision to stop the Russia probe.

Source: Trump says he thought about Russian probe when firing FBI chief

 

Usually when one is faced with a difficult decision, like sacking someone, there is a significant period of consideration. One weighs up the arguments for and against and in relation to such a serious issue you might think to sleep on it before making your final decision.

President Trump does this but, as Eric Morcambe might have said, not necessarily in the right order. First sack him, then set out your reasons, then sleep on it, and then set out a different set of reasons.

It has always been clear President Trumps attention span is short. It is now also clear that a good nights sleep clears the slate clean and we start each day afresh.

New members of staff always have a honeymoon period. For junior members of staff it is to allow them to get used to their new role, find their feet, build their confidence. With more senior leadership roles the honeymoon period is not about these things. It is about recognising the very reason they have been put in the post is to make changes and they have to be given license to bring these changes about in their own way. You thus have to avoid rushing to judgement if they are doing things you think seem strange.

There is also a natural assumption that if someone has achieved high office they must be capable. Whether via executive selection or public election those that secure very senior posts have an aura of competence projected on to them by all those around them. This aura is strongly reinforced by the patronage, and ability to “terminate”, that goes with top jobs.

With President Trump all these forces are operating on steroids. People around the world are trying their best to knit a comprehensible strategy to his actions.

Some, probably genuinely, think his high office must mean there is something coherent at the centre of what he does. That his pronouncements are opaque to lesser mortals but are cleverly taking forward a well thought through agenda that will become clear in the fullness of time. The number of these is probably reducing every day.

There will be those whose jobs depend on the man. They will apply their, often considerable, intellect to “explain” what the rational thread is to his erratic, and, on the face of it, contradictory tweets. Hats off, they have got one hell of a job. One suspects however, as more and more of the twists and turns of the Trump mind become public, this task will drive them mad.

There are probably many who recognise President Trump is not the sharpest knife in the draw. That much of what he says is irrelevant. He may genuinely believe what he says when he says it, but tomorrow is a whole new day. They cling however to some hope that he is not as bad as his actions would suggest. That when push comes to shove he will do the right thing or rather not do anything really, really stupid. He couldn’t could he? After all he is the President of the United States.

There are also those who think that he just needs to be given a chance. That he needs more time to find his feet. He is adjusting from the dynamic, deal focused world of the private sector to the log jam, pork barrel world of politics and bureaucracy.

Given the position he holds one would like to believe that one of these views is correct, that in the fullness of time his mercurial pronouncements will reveal themselves as part of a sophisticated programme which is going to change the whole of the political system for good. This genuinely is the triumph of hope over experience.

Mr Trump crashed through his first 100 days like a learner driver with no control of the clutch. The Whitehouse has lurched from crisis to crisis, from scandal to scandal so quickly it has devalued the currency of both.

The man is a serious threat to the stability of the United States and consequently to the world. He should be seen as such. Those that ally themselves with him, do so at their peril. The wheels will come off this wagon and it might be soon. God knows what kind of a mess will result.

 

 

 

Dark Money

Dark Money by Jane Mayer covers a period from the early 1970’s to the run up to the Trump election. It documents in meticulous detail the amount of money spent over the period by super rich Americans, not just to secure the election of politicians  supportive of their radical libertarian views but more insidiously to shift the terms of political debate to the right.

DMThe process begins in the late 1960’s early 70’s when a number of very wealthy Americans began to fear the US was about to succumb to socialism. It may seem unbelievable now but looking back it was a time of radical foment, the rights of black Americans were being fought for, a nascent women’s rights movement was emerging, young people’s opposition to the Vietnam war resulted in 4 students being shot and killed in a protest at Kent State University.

Whilst all this protest were real worries to many on the right there were other issues about the role of the state that were of perhaps of more profound concern. The Democratic President Lyndon Baines Johnson had initiated a War on Poverty. Worse however was a proposal by Republican President Richard Milhous Nixon to create a modest basic income, an idea about which there is currently renewed interest.

In 1970 the Family Assistance Plan passed through Congress with a healthy majority but was lost in the Senate to Democratic opposition that it was not radical enough. At the time it was said “This bill represents the most extensive, expensive and expansive welfare legislation ever handled.” Not only was their bipartisan support for this proposed legislation, but it was supported by 90% of the press and popular in the country.

For some, all of this represented an unwarranted intervention by the state in the operation of the market economy. An intervention that would expand the role of the state, require increased taxation and thus impact directly on the fortunes of the very wealthy. Some decided it was time time to act.

Ms Mayer’s book focuses primarily on the brothers Charles and David Koch. The brothers engaged in active politics in the 1970’s providing financial support to the Libertarian Party. In 1980 David Koch ran as the running mate to the party’s Presidential candidate, Ed Clark who was challenging Ronald Reagan, from the right. They got 1% of the vote. From this point on the Koch’s receded from public view and over the next three decades according to Ms Mayer gave well in excess of $100m “…to dozens of seemingly independent organisations aimed at advancing their radical ideas.”

The book charts how the brothers “weaponised philanthropy”, maximising the tax benefits of establishing charitable trusts, thus avoiding inheritance tax, and then using the money from the trusts to support a series of educational and social welfare groups to promote their libertarian viewpoint. Over the years a variety of think tanks were established or supported all with the aim of ensuring that conservative ideas were made respectable.

Over time the thinking evolved and there was a recognition that in order to change opinions the elite educational institutions of the US had to be “penetrated”. This led to the “beach head” theory which was about establishing conservative beach heads at “…the most influential schools in order to gain maximum leverage.” By 2015 the Charles Koch Foundation was “subsidising pro-business, anti-regulatory and anti-tax programmes in 307 different institutions of higher education in America.” Interestingly the book reports a comment about the Golden Rule of philanthropic giving – those with the gold, rule. This was taken to a higher level when a donation of $965,000 to West Virginia University by the Charles Koch foundation came with strings. The foundation was to have a say over the professors it funded, fundamentally undermining academic independence.

The Koch’s were not alone in this enterprise but they did, and continue, to play a major co-ordinating role such that at one point the sprawling breadth of their influence in right wing political promotion was described as Kochtopussy. Ms Mayer’s book makes clear that this was not the outcome of a series of more or less random individual initiatives. Rather it was an evolving, but very conscious, political strategy to move the political goal posts. It responded to a very clear cri de coeur set out in a memo by Lewis Powell in the late 1970’s urging American capitalists to wage “guerrilla warfare” against those he saw as trying to insidiously undermine them. Ms Mayer claims his call to arms inspired some of the super rich, “to weaponise their philanthropic giving in order to fight a multi-front war of influence over American political thought.”

You may wonder whether these people were driven by a bizarre but genuine belief in radical libertarianism, where the state, taxes and regulation were perceived as demeaning constraints on the freedom of the individual. In truth their idealism was always tempered by a strong regard for their personal advantage. When congress was considering the Troubled Assets Relief Progamme (TARP) the Koch’s and their radical caucus were opposed to the massive package of  state support. This changed however when the stock market started to tank. Suddenly their wealth was at risk and opposition to the TARP was dropped.

Another fascinating insight into the motivation of the Koch brothers comes from a post mortem conducted into the right’s failure to prevent a second Obama term at one of their annual seminars. Arthur Brooks, President of the American Enterprise Institute funded generously by the Koch brothers, made the point that if the 1% want to win control of America, “… they needed to rebrand themselves as champions of the other 99%”. This theme was built on in 2014 in a paper that Richard Fink, Charles Koch’s “grand strategist”, gave to a meeting of one of their annual seminars of the libertarian super rich. The paper was entitled “The Long Term Strategy: Engaging the Middle Third”. In a perfectly candid way Fink asked the question, “We want to decrease regulations. Why?” he then answered his own question, “It’s because we can make more profit, okay?.”

One third of the electorate who were perceived as solidly on the side of the libertarians, another third never would be. This mean the battleground was about gaining the trust of the middle third. To do this it would be necessary to convince the them that libertarian intent was virtuous. “We’ve got to convince these people we mean well and that we are good people.”

Following a Supreme Court decision in 2010 known as Citizens United it was found that corporations had the same rights to freedom of speech as individuals. This overturned a century of restrictions banning corporations and unions from spending all they wanted on the election of candidates. This opened the floodgates to political spending to support congressmen and senators and the Koch Brothers took maximum advantage building a real power base which was in but not of the Republican Party.

In 2014 the Koch network invested $100m into House and Senate races for the GOP plus almost twice as much into other kinds of activism. The result was they won full control of both. Their aim was to spend $889m in the 2016 presidential race. Whilst they could not legislate for the Trump wildcard the first attempt to replace Obamacare was such a shambles because of the intransigence of the right wing caucus within the Republican Party largely made up of Koch supported Congressmen and Senators who thought the Trump proposal was too generous!

Dark Money is a sobering work which casts an unflinching light on the very private world of the super rich in America and specifically on the brothers David and Charles Koch estimated to be worth $41.6bn each. It raises all kinds of issue about the role of multi-billionaires in undermining democracy in America and reinforcing a process which is concentrating ever more power and wealth in the hands of a smaller and smaller group of super rich plutocrats.

The influence of the Koch brothers, and many others of the same ilk, is not confined to the States however. They have played a part in shifting the terms of political debate across the whole of the developed world, dragging the centre of politics so far to the right that people like Richard Nixon look like lefty softies. If one thinks about how a proposal to increase taxes on the rich in Britain today would be greeted it is a testament to how far the super rich have captured common sense and shaped it to their benefit.

This is a book that should be read widely. It’s scale will probably prevent this which is a real shame. It is a tremendous summary of a long and sustained process of the exercise of soft power through the expenditure of vast amounts of private money. If the process is not stopped it will ultimately undermine democracy.

Dark Money. Jane Mayer. Scribe Publications 2016

 

 

 

Taxing Growth

Mrs May has reserved her position on the triple lock, responding to questions by saying with some pride how the Tory’s are the party of low tax as if this were axiomatically good. I am with Oliver Wendell Holmes Jnr on taxes, they are what we pay for a civilised society. Taxes are used to defend the country from external aggression, prevent and punish crime, maintain its transport infrastructure, educate its people and care for them in times of need whether caused by ill health or economic necessity. These are all good things and worth paying for. At the moment all of these services are subject to major challenge following almost a decade of Austerity and cuts to their budgets.

The government is constantly making “difficult choices” which involve cutting services to the bulk of the population. We need to do this, we are told, as the national debt means we simply cannot afford the services we once had. It is a very brave politician that suggests we might increase taxes to ease the problem of funding our public services, as Jeremy Corbyn has done. Even if it is proposed that those with the broadest shoulders might take the largest share of any increase. We are warned such a naive move would kill enterprise. Those who earn vast amounts of money would stop working so hard if they were taxed at too high a rate. This would undermine growth, GDP would go down and everyone would be worse off.

At first glance this might seem to all make sense. By not overtaxing the rich we get a more dynamic economy providing more jobs. Some even suggest that by doing this you will actually generate more tax receipts because a bigger and more productive economy means more jobs and more taxes. This is what supply side economics was all about. This last step in the argument might be thought to be manifestly  untrue as you would think we would not have the problem that we have in paying for the services of a civilised society if it were, given that we have indeed been lowering tax rates for the past half century or more.

However, if we consider the first part of the argument, that it is counter productive to tax the rich. Is it true? There seems to be growing evidence that low taxes and high growth are not very well correlated.

 

Graph 1

Graph 1 looks at evidence from the United States of America. It compares the GDP growth rate since 1947 with the highest income tax rates in the same years. It is a bit of a shock to look back at tax rates in the 1950’s. For more than a decade from 1951 the top rate of income tax was 91% or more. Through the 1970’s the rate had declined to 70% but in the 1980’s it fell from 70% to a low of 28% and then never got above 40% even after the crash of 2007/08.

Was this huge reduction in tax rate accompanied by an increase in the rate of GDP growth as the better rewarded entrepreneurs worked all the hours they could to increase their wealth even more? Seemingly not. In fact the growth rate roughly speaking halved as the tax rate more than halved.

Over the past half century the taxes on the very rich have reduced significantly. What is more the effective rate has probably reduced even more as ever more sophisticated means of avoiding taxes have been adopted by individuals and corporations. It may seem self evident that if you collect less tax it will be more difficult to fund the services of a modern state. There are of course a lot of very wealthy individuals who have a vested interest in making the majority of the electorate think that lower taxes will benefit everybody despite the growing evidence to the contrary.

Whether Mr Corbyn has what it takes to be a leader he is raising some interesting questions. They deserve to be taken seriously.