The Four Freedoms of liberalism

Tonight I just wanted to record some important words that I feel need spoken again. 

In January 1941 America's greatest president, Franklin Roosevelt, delivered his State of the Union address to Congress.  It was to be one of the great speeches and one of the most important expositions of political liberalism.  

It is known as The Four Freedoms Speech.

"...The basic things expected by our people of their political and economic systems are simple. They are:

Equality of opportunity for youth and for others.

Jobs for those who can work.

Security for those who need it.

The ending of special privilege for the few.

The preservation of civil liberties for all.

The enjoyment -- The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.

These are the simple, the basic things that must never be lost sight of in the turmoil and unbelievable complexity of our modern world. The inner and abiding strength of our economic and political systems is dependent upon the degree to which they fulfill these expectations.

Many subjects connected with our social economy call for immediate improvement. As examples:

We should bring more citizens under the coverage of old-age pensions and unemployment insurance.

We should widen the opportunities for adequate medical care.

We should plan a better system by which persons deserving or needing gainful employment may obtain it.

I have called for personal sacrifice, and I am assured of the willingness of almost all Americans to respond to that call. A part of the sacrifice means the payment of more money in taxes. In my budget message I will recommend that a greater portion of this great defense program be paid for from taxation than we are paying for today. No person should try, or be allowed to get rich out of the program, and the principle of tax payments in accordance with ability to pay should be constantly before our eyes to guide our legislation.

If the Congress maintains these principles the voters, putting patriotism ahead of pocketbooks, will give you their applause.

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression -- everywhere in the world.

The second is freedom of every person to worship God in his own way -- everywhere in the world.

The third is freedom from want, which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -- everywhere in the world.

The fourth is freedom from fear, which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor -- anywhere in the world.

That is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our own time and generation. That kind of world is the very antithesis of the so-called “new order” of tyranny which the dictators seek to create with the crash of a bomb.

To that new order we oppose the greater conception -- the moral order. A good society is able to face schemes of world domination and foreign revolutions alike without fear.

Since the beginning of our American history we have been engaged in change, in a perpetual, peaceful revolution, a revolution which goes on steadily, quietly, adjusting itself to changing conditions without the concentration camp or the quicklime in the ditch. The world order which we seek is the cooperation of free countries, working together in a friendly, civilized society.

This nation has placed its destiny in the hands and heads and hearts of its millions of free men and women, and its faith in freedom under the guidance of God. Freedom means the supremacy of human rights everywhere. Our support goes to those who struggle to gain those rights and keep them. Our strength is our unity of purpose.

To that high concept there can be no end save victory."

If you wish to read the speech in its entirety is is here.

Gun crime - what should be done?

This is Aaron Sorkin's comment on major gun crime in the US.

Taken from the West Wing episode 'In the Shadow of two gunmen (part 1)'.  CJ Cregg, the White House Press Secretary, addresses a press conference after the President and members of his party have been shot.
  

We're doomed - America is finished, Europe's a basket case and the Empire is dead

There has been plenty of chatter amongst the McTwitterati of late about Scotland’s relationship with Europe if we vote Yes in 2014.

The world is changing and the canvas of nations being painted in an age of crisis is very different to the past.  This changing canvas cannot be ignored if we are to consider where Scotland’s future place in the world might be.       

Today the BBC news website reports that Winston Churchill’s 1946 Zurich speech has been featured on The European Council’s YouTube channel.  There are, believe it or not, those who regard Churchill as one of the fathers of the EU.

Why?

It is because in Zurich, in the aftermath of the second World War he said, "We must build a kind of United States of Europe” to “turn our backs upon the horrors of the past" and "look to the future".

However, he also said six months before that in Fulton Missouri, "If the population of the English-speaking Commonwealth be added to that of the United States with all that such co-operation implies in the air, on the sea, all over the globe and in science and in industry, and in moral forces, there will be no quivering, precarious balance of power to offer its temptation to ambition or adventure." (This was his famous “Iron Curtain” speech.)

For Churchill believed that peace in the post war world and stability in the face of communism would be guaranteed by three things - the United States, a united Europe and the British Empire.  He was a great European but he was also an Imperialist (born in the 19th century) and an Atlanticist (he had an American mother).  He saw Britain as part of Europe but not of Europe.

Well, that was 1946 and this is now.

In the future, the USA is not going to be the world power it once was.

She must look to the Pacific and China in the east every bit as much as she must look to the Atlantic and Russia in the west.

The Empire is long since dead and the Commonwealth is not what it once was.  In fact the Commonwealth may not outlive the present Queen by much.  It certainly won’t exist in the same form as the last 40 or 50 years.

Europe has an uncertain future as the Euro currency union seems to have failed so spectacularly.

The world we are headed for will not be a world of fixed blocs, rather it will be a world of more transient treaties and alliances.  And these alliances may be with peoples we don’t necessarily have naturally close alignments with.  These will not always be homogeneous groupings.

Britain’s links with the east through our mercantile past and through some of our large companies (many of whom have strong links in the far east) will be very important.  Our trade with European markets will continue to be a cornerstone of our economy and trade and links with China will be vital both politically and economically.

While the United States will cease to be the world’s super power it will remain hugely important for many many years to come.  A close relationship with her will be a lynch-pin of stability but we must be realistic about the ‘special relationship’ as America has more diversified interests than Europe.

We also need to contain the middle-east and support peace where we can.  I say support and maintain because the middle east has been a powder keg for two millennia and I don’t see that changing anytime soon.  However, I sense that if there are to be dangers that threaten us or troubles that will spill over into wider conflict they will somehow emanate from this region.

This means I think there is still an important place for collective security.  True, NATO is an alliance founded in the Cold War but times move on and the landscape changes. 

Denmark, a successful comparable country that Scotland often looks to as a model of what we could be is interesting in this case.  Denmark sought neutrality for 200 years and to free herself from the armed camps of the empires of Europe.  But she was overrun by Germany in the 1940s and suffered under occupation. The war means many in Denmark regretted they were not part of something bigger.  Today many in Denmark feel collective security is very important to them and NATO remains popular.  This doesn’t mean they believe the Cold War is still with us but they value collective security against any enemies – whether they are known or are yet to be known in an uncertain future.

Today, Danish foreign policy is founded upon four pillars: the United Nations, NATO, the EU, and Nordic cooperation.  She is a pretty committed member of NATO – which isn’t true of all members – even though she is a small nation. Denmark is also a member of the Organisation for Security and Cooperation in Europe, the Organisation for Economic Cooperation and Development, the International Monetary Fund, the World Bank, and the World Trade Organisation.

She is a mercantile nation who believes in free trade, collective action and collective security.

This means I think there is an important place for collective security for Scotland in the future.  I think this should be as part of what we currently call NATO but that it will continue to move on to take a post Cold War form.

I think also in this uncertain world fragmentation does not help peace or prosperity.

A say in how the globe deals with the forces that affect us is important.

Top table

I have limited care for a permanent place on the UN security council, but a place at the top table with the G8 matters.  Being part of the UK which has such a place is therefore vital.

Consider this picture.  This is the G8 at Camp David earlier this year.  It is a small world and being part of the G8 is to have very personal input with the 7 other men and women who take the fundamental decisions that affect the entire world.  This is much more than mere tokenism, and while power can often be subverted by greater forces,  having a seat at the G8 is meaningful influence.

Free trade is vital to us if we are to have growth around the world once more and if we are to adapt to and make the most of the opportunities brought by the changing balance of economic power across the planet.

Preserving the UK and what is in effect an established and successful single market and currency union is also important.  The EU is uncertain, and our relationship with it is also uncertain.  I hope it survives with us as part of it because I think the EU has probably done more to ensure peace in Europe after the war than any other body.  However, Europe’s precise course is uncertain. 

And since the UK operates as a single market and a currency union and we are not envisaging changing that bit, it seems all the better to have some political say in it and some chance of influencing affairs.

But I believe this is best served by the UK following a system of government which allows for the expression of the different interests and identities within it and, at the same time, has the influence and strength which comes with the common purpose that I have been describing. This means a distribution of powers among the nations and regions of the UK, for joint action where we need it, and for significant democratic choice and opportunity where that best serves our interests.  This should be combined with the responsibility that comes from significant financial powers.  Whether you call this subsidiarity,  decentralisation or federal government it should, I hope, go some way towards reducing the alienation many feel in the political process and re-connecting political power to people and communities.

In the world of the 21^st century with its transient alliances and changing balances of power, being cut adrift as part of the fragmentation of nations will not serve Scottish foreign interests or trade well.  That way is best served by British unity, collective international interests and subsidiarity or decentralisation at home.

Nate Silver is a genius!

As a political junkie I have been closely following the US election these last few months.

A key part of my regular reading has been Nate Silver's Fivethirtyeight blog attached to the New York Times..

Nate Silver is a statistician and a geek, I'm sure his alter ego has a starring role on Big Bang Theory.  He made a bit of a name for him by building a statistical model for predicting baseball results. Following success with that he turned to politics and predicted the US election incredibly accurately in 2008.  I discovered him towards the end of that campaign.

Now lets be clear - Nate Silver is a genius. And so are the guys at Votamatic and a couple of other stats based poll analysis sights.  They got their predictions on what was going to happen in the US elections absolutely spot on.  (And that by the way is the point - he was giving statistical probability of given events happening based on the data and a multitude of factors coming together)

I can't believe how right Nate Silver was right about everything in this election.  Not only that but also how he described accurately the shape of the race at every stage and identified the underlying cause and effects.  And in his use of data he was able to show what was happening not just give a politically loaded narrative or a best guess gut feel.

I did wonder if there was some under counting of shy Republicans - if Romney was going to do a Bush and pull out the numbers on election day.  But the polling was scientific and their statistically significant samples called it right. It was a couple of the Republican polls who got it all wrong by trying to weight the electorate.  
Because not only did Silver describe the race at every turn perfectly but his understanding about different polls and how they work is first class.  This added another dimension.  And he explains everything, comprehensively and lucidly.

Quite frankly throughout the race if you wanted to really understand what was going on all you had to read was Nate Silver.

And he didn't do that awful thing American's do and say everything is a toss up or too close to call.  Silver told us what was happening and how probable each outcome was - state by state - day by day.

Using data dispassionately - and patiently waiting for the numbers to come through - Nate could explain how much difference each debate made, what effect the conventions had - even individual speeches and accounted for economic factors as well as noting any trend or momentum in an ever changing environment.

The accurate enlightenment of the body of work by Nate and his team was breath taking to behold.  Not to mention how it exposed douchebag in chief Karl Rove as being a bag of spin and partisan narrative.

Political punditry may never be the same again.

Data and evidence based commentary!

All hail King Nate!

9/11 - The streets of heaven are too crowded with angels tonight...

Tribute to 9/11.  Words by Aaron Sorkin as spoken by Martin Sheen playing President Josiah Bartlett (West Wing - '20 Hours in America').

"The streets of heaven are too crowded with angels tonight. They're our students, and our teachers, and our parents and our friends.  The streets of heaven are too crowded wth angels.  But every time we think we've measured our capacity to meet a challenge, we look up and we're reminded that that capacity may well be limitless.  This is a time for American heroes.  We will do what is hard.  We will achieve what is great.  This is a time for American heroes and we reach for the stars.  God bless their memory, God bless you and God bless the United States of America."                        

Pensions Killed Detroit! How can we stop it happening here?

At a time where public sector pensions have been at the heart of our national debate its worth thinking about what happened in the United States.  Why? Because expensive and outdated pension schemes have destroyed the auto manufacturing industry in Detroit and with it the city!

Detroit is a city built around the car manufacturing industry.  It used to be dominated by the big 3 auto companies – GM, Chrysler and Ford.  In recent years the industry and the city have collapsed.  In the 1950s 1.8 million people lived in Detroit.  Today it is less than 800,000.  There has been a 25% decline in population in the last 10 years alone.  At the root of this has been the decline and fall of the car manufacturers at the heart of the economy.

Why have the big 3 auto companies declined?  Well, they had been relying too much on SUV sales and not making enough small and hybrid cars and they have been dogged by poor quality.  However, the biggest single reason has been the massive cost of their employee benefits and pensions programme.

Between 1993 and 2007, GM poured $103 billion into funding their pensions and healthcare scheme.  Over the same period they could only afford to pay out $13 billion in dividends.  GM also had to work hard to play catch up as funding payments into the scheme fell behind.  At the start of the 2000s it had to pay an additional $20 billion to catch up payments and agreed to pay a further $30 billion to fund future healthcare liabilities.  Note I am talking billions here, not millions!

The point is the pensions and benefits schemes totally starved GM of investment and made a massive contribution to GM falling behind developments in the US car market.  Chrysler and Ford had similar stories.

Many other car companies based in southern or mid western states have been able to come in with far cheaper operating costs and beat the big 3 Detroit firms in competition.  Notably Nissan whose costs per worker in the US were more than 40% cheaper – largely because of the costs of the employee benefits package.

The Big 3 employee benefits package had been set up in 1950 in a deal arranged by the Union of Auto Workers UAW that became known as the Treaty of Detroit.  In a time of full employment and little competition the industry committed itself to open ended final salary arrangements with fixed guarantees.  As the workforce has grown and aged and as workers have lived longer these have become more and more expensive than ever envisaged and the companies have found themselves locked into open ended arrangements where they cannot control the costs.

Detroit and the car companies have been not alone in their pension schemes causing catastrophic loses. A huge pension liability created a budgetary nightmare for New Jersey and the city of Vallejo in California actually filed for bankruptcy because it couldn’t handle the costs of police department pensions.

Roger Lowenstein wrote about this further in his 2008 book “While America Aged:  How pension debts ruined General Motors, stopped the NYC subways, bankrupted San Diego and loom as the next financial crisis.”

Change is unavoidable in the UK

The UK faces similar issues.  Through the 50s and 60s – a time of effective full employment - there was a massive growth in Final Salary pension schemes.  The UK developed a parallel system of occupational pensions provision for those in the public sector and larger companies along with growing state provision.

13% of the population had been in occupational schemes before the war – mostly in the public sector.  By the end of the 1960s this figure was 53%.  However, in 1961 life expectancy for men was 68 years and just under 72 years for women.  In 1908, when the first state pensions were introduced they kicked in at 70, an age many failed to ever attain!  Today life expectancy in the UK is 77.9 for men and 82 for women - and growing every year.

Longevity – the fact that we are living longer is making pensions provision more and more expensive.  There are of course other factors like salary inflation but this factor alone is at the root of the problem.  After the war people were retiring at age 65 and expected to live on average about 5 years or so in retirement.  Today people, in pension schemes are retiring at 60 and can expect to live to 80 on average – 4 times longer than envisaged when the pension schemes were conceived.

Private sector Final Salary pension schemes in the UK are therefore dead!  They have been for the last 5 – 10 years.  While existing members are still in the schemes, they are all closed to new entrants.  Companies can no longer afford them and given that the benefits are fixed and guaranteed they are an open ended and growing commitment.  They are no longer commercially tenable and are a risk to the business.  That is why they are dead.

One pensions commentator, I think it was Tom McPhail, said last week that we will probably all have to spend a little less, save a little more and work a little longer to fund our retirements in future.  I think this is sound and reasonable advice and actually one of the most intelligent things I heard last week.

Final Salary pensions continue in the public sector – unfunded by investment and paid for by general taxation.   Yes, their projected costs are set to fall with CPI rather than RPI indexation and workers make a contribution.  But the projected fall in costs are because of these small reforms already in the pipeline.  They are still hugely expensive.

Pensions are in fact deferred pay.  Today, because of the current pensions position it often pays far more working for the public sector than for the private sector.  This means the wider population are being asked to fund pensions which are far more generous than anything available to them.  This means funding something akin to our entire defence spending budget.    And no economy is going to last for very long where it is more attractive to work for the public sector than for the private sector!

Ros Altmann, the Director General of Saga and something of an expert on UK pensions, argues that Final Salary pensions are actually fundamentally unfair as they disproportionately award high flyers being based on one year’s salary at the end of their career rather than taking into account, say, a lifetime of service and contributions.  It is right to reward high flyers when they are working – maybe not to continue to do so often for many years longer than they actually worked for their employer!

The true costs of final salary schemes are unsustainable to fund as the private sector has discovered.  Employers can’t underwrite unquantifiable, open-ended commitments for decades in the future.  Neither can the state or future tax payers – change is unavoidable.    

What to do?

It seems to me that the real issue here is that our occupational pension infra-structure – both private and public is broken.

The government is introducing auto enrolment so that everyone will have a modest occupational pension.  This will help a little with the many who are not in any pension scheme at all.

However, it is very modest provision.  In the second half of the 20^th century companies fulfilled a social welfare function providing generous pensions – using tax advantages to provide deferred salary in effect.

With jobs for life long gone and guaranteed final salary schemes for life long gone, companies don’t do social welfare anymore – nor can we really count on them to do so.  Unfortunately, many employers have been replacing old generous schemes with much less generous ‘money-purchase’ schemes with no guarantees and all the investment risk is with the employee.  The new auto enrolment provisions, while welcome for some, just accelerates this levelling down affect.

I’m told both the USA and Australia have been much more effective than the British at replacing old unsustainable pension schemes with new money purchase provision.

I think the public sector unions have a real opportunity here.  They need to be constructive.  Accept the old pensions are unsustainable and come up with some good alternatives.  If they are sustainable and something new that provides decent pensions takes its place, market forces in the labour market could lead the way to improvements in the private sector too.

We all need to save more and we all need something that is more sustainable!   

        

What's a Special Relationship anyway?

Barack Obama addresses the Houses of Parliament today in Westminster Hall. The chatter on the news programmes is once again all about the ‘special relationship’. Or has that now become the ‘essential relationship’?

This has always struck me as something of a British obsession and of rather less concern to the Americans.

The United States is a world power and has many important international relationships.

• China, as the new world power. 
• Russia, although waning, is still a world power (just) 
• Countries with enormous potential and resources like India and Brazil 

As a world power the United States needs to be at the fulcrum of geo politics which means:

• The growth and emergence of the east
• The dangerous instability and oil wealth of the middle east

Post cold-war Europe is less important, less at the centre of things and the balance of economic power is moving east. Also, the current American administration is supportive of supra-international bodies like the EU. Britain becomes important as part of Europe, allies but not the centre of America’s world.

In this regard the United Kingdom is just an important regional power in Europe and is not at the centre of it.

Yes, we have interests and a degree of influence around the world. However, I am not convinced we are much loved, nor, are we much hated either.

So why, post cold war, would the United States have a special relationship with the United Kingdom? We can only be one of several special relationships.

Then there is the personal element.

The UK – US special relationship has only really been there when a Prime Minister and President have been close. Think of Churchill and Roosevelt, think of Thatcher and Reagan, think of Blair and Bush (or Blair and Clinton for that matter). I’m not sure how special it was following the Bretton Woods Agreement and during the days of post war reconstruction!

Barrack Obama was brought up in Hawaii in the Pacific Ocean. He spent some time in Indonesia. His grandfather was imprisoned by the British in Kenya during the Mau Mau rebellion. He is not close to Britain.

He is an African American in a country where more and more of her people speak Spanish. Where more and more of it looks East to the Tiger economies and the People’s Republic of China. (actually they probably look West from where they sit on the globe). If his eyes are fixed anywhere else they are probably fixed on the tinder-box of the Middle East and the Islamic world.

The United Kingdom is a constant ally. Right, left or centre we are strongly of the same mindset. Our constitutional and philosophical influence on the United States is huge. Our music, film and popular culture still has some influence. We share the same language (just about).

We remain an important ally of the United States.

So let us not get too worked up about Obama removing Churchill’s bust from the oval office or being too nice to the French, he remains a friend.

Don’t forget that America is not necessarily the only show in town for us. China and the East are important to our companies and businesses too. In fact, I understand that along with many European companies the UK is in better nick than many parts of the American economy because our companies are investing in the east and can benefit from globalisation.

India has a growing influence and we have plenty of contacts there.

Europe is the corner of the globe we occupy and where most of our trade is done.

And, sometimes, America gets it wrong. Think of:

• Iraq
• Kyoto
• Soft peddling with Argentina

We will not always want to follow America’s lead!

The 20th century was the American century, but in the 21st her power is just beginning to decline. The United States will remain the predominant world power in my lifetime but this will not always be so.

She is an important ally, a close ally and that goes very, very deep. This is not going to change. But the United States of America is not a special ally and we shouldn’t be hung up about that.