More Lords, just what this country needs

The Times reports:

David Cameron and Nick Clegg will create more than 100 peers to ensure that controversial legislation gets through Parliament.

The coalition government has agreed to reshape the House of Lords, which is currently dominated by Labour, to be “reflective of the vote” at the general election. That saw the Tories and the Liberal Democrats together get 59 per cent.

None of Labour’s 211 existing peers can be removed, so the coalition must appoint dozens of its own to rebalance the upper chamber. Lib Dem estimates suggest that the number of Tory peers would need to rise from 186 to 263 and Lib Dem peers from 72 to 167.

The first wave is expected soon, to enable additional ministerial appointments to take place, with further announcements within the parliament.

Alan Travis at The Guardian has picked up on this too. The most interesting bit of his coverage is the historical note:

David Lloyd George may have threatened to create 250 new peers after the Lords blocked the 1909 People's budget but it did not prove necessary in the end. Mind you, as a result of Lloyd George's reforms, the Cameron-Clegg coalition cannot now find their most controversial measures – the tax rises and budget cuts needed to deal with the deficit – challenged by the House of Lords.

No doubt we'll see plenty of informed comment on this issue over the coming days, but here are my initial thoughts:

• this move is even more cynical than the proposed 55% rule;
• however, Labour are in no position to criticise the new coalition for playing fast and loose with the constitution;
• a truly proportionally elected upper house might be a good idea;
• an upper house that reflects the portion of the votes earned by the major parties at the last general election is something quite different;
• it is hard to conceive of a worse system for assembling an upper house than allowing politicians to appoint their cronies;
• a system that allows them to appoint as many cronies as they like seems especially daft;
  
• even hereditary peers are preferable to sycophants on sinecure;
• representatives of the church should have no place in the House of Lords;
  
• thanks to The Parliament Act, our upper house has been impotent for a long time now, capable only of slowing legislation down;
• a better system might be to force a referendum on any issue where the Parliament Act would otherwise be invoked;
• such a reform might make it difficult to reshape our country on libertarian lines;
  
• we already have over 700 peers, which seems like far too many;
• on the other hand, I expect their total salaries and expenses represent a negligible portion of national expenditure;
• considering the supremacy of the House of Commons, and the inability of a government to bind its successor, it is not at all clear to me why "none of Labour’s 211 existing peers can be removed";
• my opinions on this issue are woefully uninformed;
• so will be the opinions expressed in the mainstream media, and they will have an agenda;
  
• "more than 100" is an interesting way of saying 172 [ (263-186)+(167-72) ];
  
• any feature of our political system can be changed by the people if they get angry enough (just ask the French);
• revolution in my lifetime looks increasingly likely
  

Halligan: will the History Boys show courage?

Like me, Liam Halligan is impatient for realism and resolve from our new coalition government:

the coalition agreement, while it makes clear the new government wants to cut borrowing earlier and more aggressively than Labour had proposed, says nothing of any real substance. Some £6bn will be taken from planned spending on "non-frontline" public services this year, as the Conservatives wanted. But some of this, the agreement says, "can be used to support jobs" – meaning it could be spent again, rather than being used to cut the deficit.
...
The Tories' pre-coalition plans, such as they are, imply a tightening of 4.7pc of GDP by 2015-16 according to the Institute for Fiscal Studies. But even if these proposals end up halving the UK's huge annual deficit over the next five years, the overall stock of national debt still doubles from around £750bn to £1,500bn, resulting in ever-rising sums of taxpayers' money being wasted on interest payments. Coupled with that, of course, there's more than £1,000bn of additional liabilities parked off-balance sheet, related to public sector pensions and the grotesque private finance initiative.

We don't need an emergency budget to tell us how desperate our situation is. As Halligan rightly notes, "spending reductions of £6bn amount to rounding errors". He reckons the public can handle the truth: "the British people are not fantasists – but that's how our politicians treat us". I don't have a huge amount of faith in the wisdom of the masses, but you don't need a degree in economics to see that we've been living beyond our means, and that this cannot continue (indeed, a degree in economics seems to be one of the best blindfolds to economic reality).

Those at the top of this "historic coalition" need to stop playing political parlour games and display the courage and determination to take tough, decisive action. The five-year agreement is hopefully a precursor to this. Much rests on the shoulders of the Business Secretary, Vince Cable, and Chief Secretary to the Treasury, David Laws – two of the Lib Dems now in the Cabinet. Both men of genuine integrity and intellect, I'm pleased they're in government. The reality is, though, that the party they represent is still spouting Keynesian tosh.

During the election campaign, Brown used one line more than any other. "We need to maintain government support, or we will threaten the recovery," our then Prime Minister endlessly repeated. Yet "keeping the money in", as the Labour campaign crib sheet instructed, simply amounts to taking on even more state debt – at a time when extra borrowing could tip the UK's finances over the edge, sparking a sovereign default.

Such an outcome is far from impossible. It's where we're heading unless we take radical steps. The result would be spiralling interest rates and a fully-blown economic collapse – an outcome involving not only higher economy-wide borrowing costs for a decade and huge loss of national prestige, but also a great deal of human misery and dangers of serious social unrest.

As terrible as it sounds, sovereign default might be a better option than the alternatives (though if we're going that route, we should do it immediately). Attempts to inflate away the debt through renewed money-printing would be even more disastrous. Increases in overt taxation would be more honest, but equally dangerous and immoral.

Instead, if David Cameron is serious about revitalising the private sector, we need an immediate reduction in overall taxation, coupled with an immediate and dramatic reduction in public spending. Simply scaling back to the 'austerity' of 2002 would save hundreds of billions of pounds, and even accounting for increases in welfare costs, it would be enough to take us from deficit to surplus, allowing us to finally begin repaying the debt.



Accounting for inflation (the ultimate stealth tax), we still see hundreds of billions of pounds worth of potential savings, simply by rolling back the clock:



This should be a no-brainer, but the cuts will require courage, and Halligan fears that this may be lacking:

For all the back-slapping and "chemistry" between our two new leaders, neither have any professional experience beyond politics. A few years in public relations is the sum total of their time outside the world of soft-budget constraints. That's why, despite my support and high hopes for this coalition, I fear this Con-Lib alliance won't break free from habits of old. I sincerely hope that I'm proved wrong.

Should Lib Dem voters feel betrayed?

Yesterday I watched the 13 May episode of Question Time, featuring Michael Heseltine, Charles Falconer, Simon Hughes, Melanie Phillips, and Mehdi Hasan. Even in this company, Hasan stood out as a vile.

Much discussion focused on the question of whether Liberal Democrat voters should feel betrayed. It's a bizarre idea, since their party has long supported proportional representation, which — for better or for worse — would make coalition governments commonplace. And with coalition governments, compromise is inevitable — even more so than usual, manifesto commitments will be broken.

I imagine the 'betrayed' Lib Dem voters fall into three categories:

1. those who hoped for a coalition with Labour
2. those who hoped to remain in principled opposition
3. those who thought the Lib Dems could win a majority

I doubt there were very many in the third category. I have no sympathy for those in the first. As for those who would prefer to remain independent, I think they should reflect on quite what a good deal they've got. For the first time in decades, they will be able to influence major areas of government policy. It is an opportunity they would be foolish to pass up.

According to today's report from the BBC, it seems that the assembled party activists have recognised this:

Lib Dem activists have "overwhelmingly" backed leader Nick Clegg's coalition deal with the Conservatives.
...
The new deputy prime minister is reported to have received a standing ovation from Lib Dem activists at Birmingham's NEC. Party sources said no more than a dozen of the 2,000 delegates opposed the deal in a show of hands.

David Cameron the Liberal Conservative

David Cameron, in an interview with Andrew Marr this morning:

We do believe between us that there needs to be more freedom in our society, and the state has got too big and too bossy ... I've always described myself as a liberal conservative, liberal because I believe in freedom and human rights, but conservative — I'm sceptical of great schemes to remake the world.

'Liberal' is one of those words that has been terribly abused over the last few decades, and like 'progressive', it now has some very bad connotations. We must wait and see by his actions how David Cameron interprets these terms.

The talk of 'human rights', however, is not promising. I'd like to see a clear statement from David Cameron that 'negative rights' are the only legitimate ones, but I'm not sure he really believes this, and I certainly don't expect him to openly declare it.

Again, we must wait and judge him by his actions.

Bye bye DCSF

The work of the Lib-Con coalition so far has been mixed, but at least they've had the sense to ditch the creepy "Department for Children, Schools and Families" and rebrand it back to "Department for Education".

If you visit http://www.dcsf.gov.uk/ you'll be redirected to http://www.education.gov.uk/


As the BBC reports:

Out goes the rainbow logo and touchy-feely graphics; in comes a sober blue colour scheme and a stern warning to the casual web browser: "All statutory guidance and legislation linked to from this site continues to reflect the current legal position unless indicated otherwise, but may not reflect Government policy."

Now if only they'd do something about the "Department of Energy and Climate Change"

Seems unlikely with Huhne at the helm.

When should life mean life?

From the BBC:

Mr Justice Keith, sitting in London, gave Hardy a whole life order, meaning he will die in jail.
...
"This is one of those exceptionally rare cases in which life should mean life."

Oh dear.

NY Times: The Twilight of the Welfare State?

The New York Times has an interesting discussion piece:

The debt crisis in Greece may have been temporarily eased by the European Union’s infusion of aid, but many analysts think that Europe’s debt problems and America’s are just beginning. Several analysts have noted that the welfare states in Greece, Spain and Portugal were greatly expanded in the 1990’s, leading to an extraordinary rise in the standards of living in those countries but also unsustainable spending. David Leonhardt of The Times and Robert Samuelson of The Washington Post this week compared the welfare state obligations in Europe to the entitlement burden in the United States.

How much should Americans fear the national debt as an aging population demands more services? What’s to be learned from the Greek experience, if anything?

As usual for their "Room for Debate" pieces, they have input from a number of economists with varying perspectives, so we're treated to some dangerous Socialist-Keynesian nonsense from James K. Galbraith:

the national debt is not a “burden.” By accounting, public debt is private wealth. Relabel that debt clock the “savings clock” –- penny for penny the numbers would be the same.

But this is counterbalanced by some useful insights from Jeffrey Miron:

The debt crisis initiated by Greece’s near default has subsided for the moment because of a trillion dollar bailout package from the European Union and the International Monetary Fund.

This is only a temporary respite, however; debt crises will recur soon, in more virulent fashion, and they will affect not just Greece and the other less economically robust countries of Europe but the United States, the rest of Europe, and high-income countries like Japan.

The fundamental problems are the interactions between demographics, technological progress in medicine, and entitlement programs.

The demographic “problem” is that life expectancy is increasing in rich countries while birth rates are low. So the fraction of the population receiving retirement benefits and subsidized health care is growing relative to the fraction that is paying taxes to support these benefits.

The technological “problem” is that medical innovation continues apace, but new medicines, devices, and procedures are expensive. So if policy provides state-of-the-art care to everyone at taxpayer expense, government health expenditure will grow without bound.

The retirement and health policies in rich countries are thus not sustainable over the long term, making debt crises inevitable.

Tax increases will not fix things, moreover, because they will mainly generate evasion and retard economic growth. Only major cutbacks in entitlements can avoid fiscal collapse.