The anti-social union

So Scotland, which way shall we go?  Straight ahead carrying on much as we are now, or off one way to independence or another to constitutional change but within the UK?  Its been argued that this is the political choice, but whatever happens a social union exists amongst the people of these islands and that will not change.  I wanted to write my thoughts on the idea of social union and how I believe Independence is in fact a process of separation that would change everything - including our ideas of social union.

Scottish nationalists will often argue that they are not separatists, rather they believe in Scotland having political independence with social ties remaining intact within a British social union.  I have heard this while comparing being Scandinavian with being from the British Isles.

This is a clever conceit and one that deserves serious consideration.  It is all the more clever because it is impossible to prove or disprove.  In that sense I need to go with my gut here.  However, I think it is important to test and challenge this argument because it is an all too easy one to make and ultimately, I believe, a false proposition.

The reason I think it is a false proposition is this.  If Scotland were to separate from the United Kingdom there is no Britain anymore and everything changes.  Yes we have a shared language, yes we have shared geography and yes we have a largely shared culture.  But it would be rather like a divorced couple.  The old family has gone, the old household is no more.  They no longer share the same life.  Sure there are ties, shared memories, shared children, shared friends even, but they are no longer married and they live separate lives.  If Scotland becomes independent, Britain will have ceased to be and very quickly no one in the south will be that interested anymore - it is no longer their business and we are no longer theirs. 

To suggest that life after independence is just the same except for eliminating the possibility of a Tory government is disingenuous and wrong.

Michael Ignatieff, the commentator and ex Canadian politician, drawing on Quebec and the Canadian experience, has pointed out that everything will change whatever the result.  Alex Salmond says we will have the Queen, the Pound and the BBC; Unionists say nothing will change because the nationalists will lose. Ignatieff thinks both are wrong.  A lot will change and will change quickly.  Pointing to the Quebec experience, Ignatieff says that the rest of Canada no longer have much to say to each other and that is without the step of full independence.

No, we should be in no doubt, if we become independent there will not be a continuing sort of quasi country existing in the form of a social union without the political union.  Britain will have ceased to be.

In fact the idea of a social union (with political autonomy) describes what we have with devolution and what we can have all the more with some form of developed devolution - not with independence.  Call it what you will - Devo Max/Plus, Home Rule or Federalism - developing devolution is the far more likely outcome of the Independence Referendum.  So, I believe we should be concentrating more discussion on that, what form it takes, how it fits within a wider UK settlement and how we get there. 

Given there is far more that binds us than separates us - culturally, linguistically and geographically; and given our separate identity within a United Kingdom of regions and nations, a significantly devolved Scotland within a United Kingdom remains, as it has always done, by far the most natural settlement.  That is how you preserve a social union.  Independence is the anti-social union.   

We come to bury Thatcher not to praise her...

I write on this, Margaret Thatcher's funeral day.

"Friends, Romans, countrymen, lend me your ears.

I come to bury Caesar, not to praise him.

The evil that men do lives after them;

The good is oft interrèd with their bones..."

Julius Caesar  Act 3, Scene 2

So begins Mark Anthony's funeral oration for Julius Caesar.

Tony Benn tells the story that he met Mrs Thatcher at the funeral of Eric Heffer, the veteran left wing MP.  Heffer was a socialist and collectivist and one whose viewpoint Mrs Thatcher strongly opposed.  But, nevertheless, she had come to pay her respects to a political opponent and fellow parliamentarian. 

It is right that political colleagues should gather with family and friends for her funeral.  She was a Prime Minister of our nation and the first woman to hold this office.  Along with The Edwardian Liberals of 1906 and the post war Labour government of 1945, she led one of the three most important administrations in the 20th century. She was a servant of Britain and it is right to honour her in death.  This does not mean I agreed with her.  I fought against her.  Opposition to her politicised me in many ways.  I do not believe I was wrong then and I do not support what she did now.  But it is right to honour her in death.

An economics lecture I attended in the summer of 1984 pretty much nailed an accurate and fair assessment of her administration in my opinion.  It remains remarkably sound in its analysis, even today.  Given by a lecturer whose sympathies were left of centre it was nonetheless a non partisan academic giving a reasoned, objective and evidence based assessment.  He was speaking a year into her second term. The miner's strike was underway, the worst of the recession was behind her, council house sales had been a success and she was just beginning the privatisation sell offs.

He painted a picture of an administration that did a number of things that probably had to be done and that had an idealistic agenda to change the post war consensus to make Britain more fit for economic realities. He showed how, on both counts, Mrs Thatcher was a qualified success.

She came to power in 1979 at the end of a decade where the trades unions seemed incredibly undemocratic and a number of union Barons wielded an inappropriately large amount of power.  This power seemed to be more about applying restrictions that held the economy back or about wielding political power, rather than fighting for workers' rights.  It was also the end of a decade that was extremely hard economically.  We had faced two recessions, rampant inflation and high taxes.

Mrs Thatcher changed this.  High inflation became a thing of the past, taxes were lowered and the unions were tamed.  The number of days lost to strike action reduced dramatically and politically motivated disputes seemed a thing of the past.

However, the great question is how much of this would have happened anyway?

Economic growth during the 1980s was only a little better than its post war average.  Thatcher in fact ditched monetarism (trying to control inflation by controlling the money supply) after a few years as they kept over shooting their targets.  However, there is no doubt that inflation was tamed.  I suggest strongly that we did not need Thatcherism to tame both high inflation and taxation - they would have happened anyway, one way or another.

I think what Mrs Thatcher delivered was an end to the 'Bustkellite' post war political consensus and the idea that there is no such thing as a free lunch - governments may be full of good intentions but services have to be paid for and you cannot pay for anything unless the country is making money from goods and services.

As Stephanie Flanders put it on the BBC, Thatcher made us all powerful as consumers which is actually quite liberating.  Before the powerful were the CBI and Unions.  The coverage of elections in 1979 and 1983 - especially the 79 one are full of interviews with some extremely boring, self important and breathtakingly un-self aware union leaders.  The CBI types were no less of a self-parody.  The framing of politics as unions v bosses was sterile and neither side represented the British people particularly well.  

Mrs Thatcher also wanted to turn us into a property owning, share owning democracy.

She succeeded in making us property owners with most of us owning our own homes after Thatcher.  The Conservative policy of selling off council houses at a discount was enormously popular and empowering for people.  On the negative side the social housing stock was not replenished and we do not have enough of this right up to the present time.

I am not so sure she succeeded in turning us into a share owning democracy.  Many of us owned shares by the end of the 1980s, whereas before this was a preserve of the elite.  However, few people owned anything other than privatisation sell-off shares.

However, in subsequent years more have come to own shares indirectly through personal pension plans, PEPs and then ISA plans, but this has been a qualified success. 

She also lowered tax - especially on the wealthy and companies - and replaced some of this with higher VAT.  Now some of this needed to happen to balance the tax rates and stop them being unnecessarily punitive.  Paradoxically this probably led to an increased tax take and helped business develop.  However, she was a believer in supply side economics and guilty of seeing low tax as an incentive (to the wealthy) and benefits (for the poor) as a disincentive.  Hmmmmmm - no doubt there is a valid point in there but it always felt to me that the wealthy and powerful wrote that one!

The casino economy

The lecture I heard in 1984 pointed out we were creating more of a casino economy than a strong sustainable one.  Subsequent writers have pointed out the same.  I have to say I believe this is a key weakness of Mrs Thatcher's legacy.

"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done."

John Maynard Keynes, "The General Theory of Employment, Interest and Money

Herein lies the criticism.  Monetarism - although it played a part in reducing very high inflation - ultimately failed as it accelerated the decline of manufactured industry and the increase in unemployment.  She created unemployment blackspots which remain blackspots to this day.  She created a drift of jobs to the south and an economy based on service jobs.  The collapse of rust belt industries meant a loss of engineering skills which we could have done with more of in order to create sustainable jobs.

That's not to say she was wrong to liberalise the economy in order to let it adapt.  These policies had many successes.  And, as my lecturer pointed out in the summer of 1984 - still early in the miners’ strike - there would be only one working coal mine left in Scotland by the end of the 1980s.  He was right! 

Similarly, she deregulated financial services.  Big Bang, the Financial Services Act 1986, and liberalising the functions and capabilities of Banks, Building Societies, Insurers and Friendly Societies produced a boom in financial services.  This helped to inject more capital to oil the wheels of the economy.   This contributed to the huge success of Edinburgh and places like Leeds as financial centres - not just London.

Now, the global financial crisis of 2008 cannot be her fault, nor the subsequent prolonged period of chronic low growth we now find ourselves in.  But she sowed the seeds. 

Her economic approach produced no German economic miracle of mostly sustainable, high production, high technology jobs with longevity for the 21^st century.  At times she seemed a little callous running a laissez faire approach to liberalisation and economic natural selection letting rotting fruits wither on the vine.  None of this is easy of course.  They say that if you have a tomato plant spilling all over the place, rather than try to water and feed all of it with finite resources, you are best watering the strong bits thoroughly at the expense of the less viable parts.  That way the whole plant will thrive and the largest and best quality crop will be produced.  Nevertheless, in letting heavy industry die and in accelerating the decline of manufacturing through the mistakes her governments made in the early 1980s, we lost a lot of engineering skills.

There was not enough mix in the economy.  By and large the economic blackspots of the 1980s are still economic blackspots.  We rely too heavily on the service sector, too heavily on financial services and too heavily on the South-East.

Keynes wrote about economic bubbles and too much speculation.  The housing booms created too much economic activity based on remortgage debt.  The approach to shares was rather more about investment returns from a killing on the market, rather than capital investment in productivity.  It was too much about consumption and not enough about investment and reconstruction of our rust belts.

The global financial crisis and subsequent lost decade have been caused by bursting bubbles – first a property one and then a credit one.  Throw in reckless banking policies and a shadow banking system based on speculation - that our ratings agencies and regulators were not equal to - and bang, the economy has faltered on an epoch creating scale!

It is of course complicated to get right.  I am probably still a Keynesian at heart  but you cannot simply spend your way out of a recession – Callaghan recognised this at the end of the 70s.  Mrs Thatcher’s policies of stimulating growth, and of freeing markets and consumerism were important and needed.  But, I think she was altogether too dogmatic – a warrior on a mission.

Thatcherism

So what of Thatcherism itself?  Thatcher’s greatness we are told comes in part because she had her very own ism.  What other Prime Minister can boast that?

  

Nigel Lawson described Thatcherism as “Free markets, financial discipline, firm control over public expenditure, tax-cuts, nationalism, Victorian self-help, privatisation and a dash of populism.”

In truth I don’t think Thatcherism was so great - in fact, if you break it down, it was rather quirky and odd .  It was a curious mixture of the radical and the conservative; of the authoritarian and the liberal.

In many ways I think it was actually the death throes of a generation forged by the second world war.

I well remember her ostentatiously putting a tissue over the rather funky one world design, which had replaced the Union Jack on the tail of a model British Airways jet.  She was a character of contrasts, a politician who delivered for the country and one who also did great harm.

She stood up to excessive and undemocratic union power and to other vested interests.  And let it not be forgotten she stood up to fascist neo-colonialism from an ugly Argentinian regime in the South Atlantic.  But she was also enormously divisive.  At home at times she went to war with her own people – the enemy within.  This was not the greatness of a British Lincoln say, who defeated the divisions that needed defeated then held a hand out to rebuild.   

Yes, I see Thatcher as a qualified success.  She is now owned by the Historians, as someone said today, and they will see the good and the bad in her legacy.

I think by 1979 the writing was already on the wall - for excessive and undemocratic union power - for politically motivated strikes - for high inflation.  However, Thatcher must take credit for her determination, bravery and leadership.  Her single minded nature and clarity of thought made sure things that were often challenging were in fact achieved 

But, I think she also brought unnecessary division - the enemy within and a seeming lack of empathy for those not with her - a warrior who seemed to see things in black and white.

And let us not forget that much of her power came because Labour imploded and was unelectable in this period and the opposition was split between the centre-left Alliance and a confused Labour party.

Personally, I would rather have seen the Alliance break through in 1983 or Thatcher fall during the Westland crisis in 1986.  I think Thatcher had made her contribution by then and we would have been better served to consolidate and build in an altogether more constructive way by the toughness and tenderness of the Liberal and SDP alliance.