As soon as the money supply was checked house prices had to fall
and there had to be a recession. If property prices collapse
so will the UK banking sector.


3. The role of politicians

Most people like to believe that because they live in a democracy that there is a political opposition and that they will put forward new and different policies. Commentators often bemoan the fact that there are few new initiatives from either the Conservatives or the Liberal Democrats. When the question of Socialism versus Capitalism was a clear cut argument then it was possible for parties to adopt different positions. Today the electorate and all the major parties have become so heavily wedded to the notion of universal cradle to grave welfare provision that all the political parties have now adopted very similar Socialist policies. If everyone is dependent upon the State to a greater or lesser extent then no one is going to argue against it.

The role of a modern politician is to persuade people that everything will just go on getting better, without disruption to their lives and with no effort on their part. As a general rule politicians do not lie. They just say what the majority of the population want to hear. All politicians know that they will never get elected if they tell the electorate that things will get worse. No opposition politician will make strong statements pointing out structural difficulties or impending disaster because one day they hope to be in power and so they will do nothing that might frighten the electorate. Opposition politicians are also frightened that if they question the policies of the Government that they will be asked what they would do that is different and usually they are devoid of ideas. If there was an obvious solution to a problem is it likely that it would not already have been thought of and implemented?

If the Government announces a new policy to address a particular concern and providing that it sounds like it might just work then people are reassured. That is why politicians always talk about compromise. What they mean is that they have found a form of words that will make as many people as possible feel reassured about the future, and which will not threaten anyone's interests. This often means that policies are totally ambiguous. In all the areas where the public have concerns policies are churned out ad nauseam. Let's re-organise the police, the schools and the Health Service. Do any of these new policies make any difference? No and they never will. They are not intended to work. They are just policies. If there were any simple solutions to major problems then every country would have adopted them by now and they would never change. There would certainly not be a change in direction every couple of years.

In the 1950s Pilkington perfected the technique for manufacturing float glass. This was done by pouring molten glass onto a bed of molten zinc and then pulling the finished sheet of glass off the end of a long tank in one long continuous strip. To safeguard their interests Pilkington took on a team of patent writers. However they also established a second team to break the patents that were prepared by the first team. After a couple of years they had prepared some of the best patents that have ever been lodged in history. If it wanted to the British Government could do the same. One group of specialists could write policies and another group could break them. The only trouble would be that the politicians would have little to announce. To democratic government's the truth and reality are no more than an inconvenience.

There are a number of problems that are effectively unsolvable if only because of the reality of the democratic process. Global warming could be stopped but it would mean the Western Nations reverting to a lifestyle reminiscent of the 1930s. This is politically unacceptable so the consequences of global warming are unavoidable. In countries like China the demand of the rural poor for a higher standard of living is also unstoppable so again global warming can never be halted. It may be slowed by as much as a decade but the outcome will be the same.

Most Government policies are mutually exclusive. The way that politicians think is clearly demonstrated by the 'Fight against Crime' and 'The War on Drugs' that every Government has policies to overcome. Unfortunately they are opposite ends of the same seesaw. Most of the crime that most normal people will ever encounter are connected with drugs and the need to fund the habit. The official figures show that drug related crime makes up half of the crime in the UK. However as far as the average person is concerned the figure is closer to 80%. Make drugs scarce and the price will rise. As a result an addict has to steal more. If the Government wants to bring down the level of crime all it has to do is to make drugs cheap. If the Government wants to reduce the use of drugs then all it has to do is to stamp on the supply mechanism. This would have the inevitable effect of making drugs more expensive. As a result the level of crime would have to rise as addicts need to fund their habit. It is a case of which outcome do you want. It is impossible to have both. In the same vein it is only necessary to talk to any psychiatrist about the value of drug rehabilitation programmes. There is no doubt that they do work. About 20% of the people who go on them do benefit but then most of them relapse. Ultimately less than 1% of those who attend a rehabilitation course never use drugs again but that is not what the electorate wants to hear. But politicians have to tell the population that they can solve every problem and can never tell the electorate that a problem is un-solvable.

It is often said that governments only think as far as the next election. On an individual basis Ministers only think as far as the next press release or the next speech. If they slip just once they will be replaced. No action will be taken if it might attract criticism. It is not worth any senior politician putting their neck out and certainly there is nothing to be gained from being truthful about the long term reality of any situation. The guiding principle for any Minister is to reassure the public that all will be well and never even hint that disaster is just around the corner. After all the individual concerned is unlikely to be in that post when the magnitude of a problem manifests itself.

This is why the British Government never stood up to the Public Employee trade unions about their age of retirement and their level of pension entitlement. Why bother when they will not be around when the consequences of not taking action becomes apparent. If the Government had forced through major changes in the entitlements of Civil Servants there would have been strikes. This would have reflected badly on the Government and made people question their competence. As it is, Civil Servants never retire as far as the general public are concerned because there is no pension fund for public servants. They get paid for out of general taxation if they are working or are not working. This dispensation that the Government has granted itself not to make pension provisions for its own workforce is a way of transferring what should be a current account cost on to a future generation. This liability in itself will be enough to collapse the British economy in thirty year's time as a decision will then have to be made between paying the pensions of public servants, or the basic state pension to the general population, or dispensing with some other major area of public expenditure that is currently seen as a right or a necessity by the electorate. Again this is a subject that no politician or Government will dare to address until it is too late to do anything about it.

Everyone who lives in a western democracy likes to believe that the media is free and independent. However every newspaper editor also knows that he has to go along with what most people want to hear. Even if there is a perfectly reasoned argument against a Government policy why say anything. The Northern Rock episode shows how the media are always willing to reassure people that all is well and that there is no cause for concern. Ten years ago the Western media reassured the British public that the Chinese were a bunch of communist peasants that posed no threat to them. Anyone who visited China in the 1990s saw a society gearing up to be an industrial power house and a quick analysis would have revealed what the future held for Europe. That was not what the general public in Britain wanted to hear so the old myths were perpetuated until very recently. Even now the media seek to patronise China whenever possible largely because of their system of Government. Ultimately for Europe it will be the Chinese who have the last laugh.

Published: August 2008