2011 Reprise

2011 seems a long time ago, but as a restart for my blog Ithought I’d briefly comment on my thoughts for that year to see how relevantthey proved to be.

The AV Vote seemed important at the time, and it was.Had AV been supported it would have led to a major change in UK electionpractices. Pleasingly, it was rejected by a substantial majority which shouldput an end to this sort of constitutional meddling for a good few years (Iwrite with the broad philosophy that change is best avoided if things aren’ttoo broken because the unintended consequences are usually much worse than theproblem being solved). However, the result has (as I thought) led to moretensions within the coalition Government because the to keep their supportersquiet the LibDems now have to appear to be getting more out of the arrangement.I think the differentiation between the parties would have happened in anyevent: because Government is harder than people think, frustrations develop;because the next election always gets nearer; because the initial euphoriawears off. But it has happened earlier than otherwise, which is a shame, and policieswill be impacted by posturing rather than practicality. An example is thatClegg and some colleagues are now pushing House of Lords reform. Yet the Houseof Lords is one of the few parts of Government that works well.

The slight reduction in the growth of public expenditure(aka The Cuts). Only history will tell us the outcome; it’s clear that someprogress has been made in reducing the growth in public expenditure but thereis a long way to go before we have a balanced economy.

The impact on the economy

I said the key would be confidence and it is this which hasbeen lacking. Although a significant number of jobs have been created by theprivate sector – almost as much as predicted – people and businesses lackconfidence. Some of this is because of the global economy, because of the europroblems and some because the news, and the message from many in Government, isdepressing. The Government has a difficult task: it has to be negative to keeppopular support for what it is doing but it can’t be so negative as to putpeople off; I think it had the balance wrong. This meant people and businesses didn’tspend or invest. All this coupled with a banking system that is not lending meant2011 saw very low growth.

But it could have been much worse. We have benefitted as acountry from very low interest rates, which have also stopped individuals withhigh borrowings from defaulting and creating further debt problems. The tripleAAA rating that we kept throughout the year has saved us from having to paymuch more for our borrowing leading to much greater public spending cuts and areally serious decline. We kept it because of the focus by the Government onpublic spending cuts to the extent that they convinced the world that theymeant it.

So the cuts are working although a lack of confidenceprevents growth.

The impact on social cohesion

I expressed concern over whether the apparently randomnature of the cuts would reduce the broad public support for them.

This didn’t seem to happen; the public still generallyunderstood the broad efforts of the Government. But there were damagingimpacts, in my view because the public has never accepted the cause of theeconomic crisis: it feels resentful because it is suffering because of others,particularly bankers. I think it is would be right to be resentful becauseothers have done better through the crisis, but it needs to look in the mirrorto find the cause. The general mood is to be ready to react with harshjudgement when things go wrong: the hype about press behaviour and the Murdochempire was a good example in 2011. And the riots showed how easily things cantip into the wrong direction. But although the country seemed tense it alsoseemed accepting of what was being done.

The Royal Wedding

I thought this would be a good news event which would boostthe economy; it was good news, and was brilliantly handled and probably helpedbring people together but sadly didn’t seem to help the economy. I describedthe forthcoming Olympics as a damp squib. That now seems churlish but I suspectit would be better for the economy had it been in Paris.

Bankers

I hoped that banker bashing would diminish – because of theimportance for our economy – and I was wrong. As in many other posts I tried toexplain why we need to understand the faults of banks if we are to put themright.

Freedom of information

I got the theme right: this was an important issue that ranthrough the year. My focus was on Wikileaks and the need for the privacy ofinformation to be respected, although not at the expense of freedom ofinformation.

The big stories were contradictory: the ability of thepowerful to use injunctions to prevent information being published. It appearedfor a time that a few members of the judiciary were determined to prevent pressfreedom, but eventually a combination of political pressure, Private Eye,apparently unconnected stories and pictures in the press and finally Twitterand blogs saw most of the injunctions fail to the chagrin of the odd footballerand actor.

However something much more worrying for freedom ofinformation then happened: a combination of such deep jealousy of the successof News International newspapers by a failing newspaper, the Guardian, that itpublished lies which subsequently had to be corrected and a bitterness byelements of Labour over the Sun’s change to support the Tories saw an outcryand the establishment of the Leveson enquiry into the operations of the pressand the relationships between the press the media and the police. As withbanks, the politicians found it convenient to throw some mud at someone else.Phone hacking is what the press should do: there job is to expose what peopledon’t want exposed and we should be grateful to them.

Again, it’s too soon to say what the outcome will be, but2011 was not good for a free society.

The Euro

I thought it would survive and it did. Bruised, and with anuncertain status in the future, but it’s still here.

The situation is not good for Britain in two regards: oureconomy suffers as our largest trading partner suffers and the problemsencourage some of the sillier members of the Tory party to destabilise theGovernment by trying to push for withdrawal from or renegotiation of theEuropean Union.

“AfPak”

As the west tires of Afghanistan, Pakistan continues to be apowder keg trusting no-one including itself. The instability in the Middle Eastis probably helpful: it shows that over time people can defeat military-sponsoreddictatorships – although at much cost and stability will take many years.resolved.

China

I said:

It faces three broad questions: how it controls the economywithout an excessive boom leading to bust (many think this is inevitable); howit balances a growing middle class and personal wealth with state control and alack of political freedom; and how it chooses to use its influence in worldpolitics – whether it continues to be largely impartial to world events orwhether it seeks to use its influence – and if the latter, how. We will all beimpacted by those questions.

We still are: little changed, for good or bad.