Benefits make people poorer, not richer

In time of recession, the compassionate calls are never far away that entreat us to alleviate the suffering of the poor – this is a noble position to take. The only problem, however, is that the initiatives that come with these calls too often come from an ideological place that does more harm than good.

Take the Recession Recovery Package proposed by the lobby group, End Child Poverty.  In the true spirit of its members (Barnado’s, NSPCC, Save the Children and others) they approach the problem from a genuine desire to help the poorest children in society whether their families are in work or unemployed.

But it is their approach that is the problem, not the underlying sentiment.  Their headline measure is to add around £4 billion to the benefits and tax credit system. It is tempting to agree with them – who likes to appear heartless – when they say ‘it’s the quickest, most cost-effective way to support families and children,’ however, it might be quick, but it is in fact counterproductive.  What the hell, you say.  We have already lavished billions on the banks, so why not a little for the poor?  A persuasive argument to some, but one poor policy is not a reason to adopt another poor policy.

So, what is wrong with this policy?

Raising benefits has a perverse impact on the labour market: it raises the cost of labour because employers have to offer more money to attract people on benefits into work.  And when the cost of labour goes up, less people end up in employment.  How does that help the poor?

Benefits need to be paid by someone, usually the taxpayer.  Higher taxes for the taxpayer means less is spent in the shops, which ends up in the lay-off of workers.  It also means that the costs to companies are raised which leaves less to pay their employees.

And when higher government spending is not paid by the taxpayer, it is paid by government debt.  And the more debt we require, the higher its cost.  Who pays for this?  Yes, you guessed it, the taxpayer who then has less to pump into the economy.  But higher government debt also reduces the willingness of capital investors to put their money into British companies, preferring more profitable or safer investments elsewhere.  And you guessed it, that creates unemployment.

Allied to this is the idea that a minimum wage helps people – a policy that comes from the same ideological stable block as higher tax credits and benefits.  Sure, it helps those that have a job, but it certainly does not help those that cannot get a job because they have been priced out of the labour market.

There probably is, as they claim, a correlation between poverty and worse outcomes in life, but this is not an argument for reducing poverty by increasing tax credits and benefits. It is an argument for reducing poverty. And this is where the different approaches diverge.

Welfare dependency – which this policy further entrenches – creates poverty, it holds families and therefore children in workless households, and ends up creating a serf-like class of people who are dependent on the state for their livelihoods.  This is not heartless right-wing gloating, it is a plea to common sense.  It is a scandal that even at the height of the boom before the credit crunch well over a million people were still unemployed.  Left wing economic policies that treat the symptoms rather than the causes of poverty always fail.

To argue against raising benefits and tax credits is a near impossible thing to do in this country, because to do so is to immediately invite the charge of ‘heartless beast,’ but to argue for it is to reside in a feel-good place while making the matter worse.

What the poor need are jobs, and once they have jobs they need a tight labour market. The creation of jobs gets people off the floor, and a tight labour market increases the value of their labour, hence their wages. This and this alone is the only way to make all people richer, an economic truth that the left seem not to understand.

Jonny Wilkinson getting beasted – semper fi

This is what the EU is all about:

Article 23 of the Charter of Fundamental Rights of the European Union runs as follows:

Equality between men and women

Equality between men and women must be ensured in all areas, including employment, work and pay.

The principle of equality shall not prevent the maintenance or adoption of measures providing for specific advantages in favour of the under-represented sex.

We might ask the question, what does ‘equality’ mean and what comprises ‘all areas’ but we would be wasting our time.  The purpose of such imprecise terms is to be exactly that: imprecise.  This allows the courts and the political bureaucrats to preside over as much decision making as they can on the flimsiest of pretence.

But so incoherent is the principle of equality that they need a get out clause to demonstrate that it is not really equality they wish to champion, but their view of how society should be ordered.  Men and women, therefore, have an equal opportunity to apply for a job, but if women are under-represented (how is that defined exactly) they are more equal than men.  What if some jobs are more suited to men, or women for that matter?  We will then have created a system that discriminates in favour of the person less suited to a job merely because their numbers are fewer.

This is what we are committed to by being a member of the EU, and this is what the British people have never been asked their opinion on.  Don’t you just love our non-democracy.

Cameron is playing a high risk game over the EU

In one flourish at the lectern, David Cameron may have just ensured that the next Conservative government will only last one term.  If he fails to achieve what he set out in his 4th November 2009 EU speech, then Conservatives opposed to British membership of the EU will cause divisions similar to those that so dogged John Major’s government until 1997.  If the electorate hate anything, it is a bickering, squabbling party that wants to form a government.

The primary aim of this new post-Lisbon policy is not so much to repatriate powers – although Cameron certainly wishes this – but to ensure a policy that moves in the direction he wants without appearing shrill or extremist.  This means that his approach – to repatriate powers through negotiation from within the EU rather than from without – sets political expediency above principle.  He did all he could to sound determined and decisive in his speech, but he will be reliant on the other countries playing ball.

And here is the problem. Cameron’s confidence is laudable – ‘I said we would leave the federalist group in the European Parliament and we did,’ – but he seems to ignore history. Not once has the ‘project’ been seriously stalled, not once has its drive to ‘ever closer union’ been reversed.  Denmark rejected Maastricht by referendum but was forced to think again; the French and the Dutch rejected the EU Constitution but were forced into a ‘period of reflection’; and the Irish rejected Lisbon, only to find that they had to vote again to give the correct answer

If he succeeds in all he sets out to achieve, then all credit to him, and he will have earned our admiration, but if he fails, then he will break the Conservative Party. It is by no means certain that the more strident eurosceptic members of the Party will accept this policy, but if they do give him the benefit of the doubt, it will surely be for the last time.

Let us not forget that it was the Conservative Party that took us in to the EC in 1973 and signed Maastricht in 1992. The Conservatives that remember, and a more strident younger generation that believe their predecessors failed in their duty to protect British independence and democracy, would be forgiven for thinking that enough was enough.

Cameron has set out a bold strategy: he has angered europhiles who do not want any renegotiation, he has defied the sceptics in his own party who want to leave the EU altogether and deal with it as an independent country, and he has done little to appease those who wanted a vote by referendum, and thought they had been promised one.  If he gets it right, all credit to him, but if he gets it wrong, then he will be cast out as a charlatan and a failure.  Only time will tell.

Charles Moore says it better

Watching the first episode of The Making of Modern Britain by Andrew Marr, almost the first thing that struck me was how simple-minded and misleading it was.  Anyone who did not previously know any of the history of the first few years of the 20th Century would have been left with their BBC and intelligentsia-fed bias confirmed.

Apparently the narrative of those years was simply one of good against evil, with the main protagonists played by poor, proto-Labourites as the goodies, and rich, forces of conservatism as the baddies.

I wanted to write about the program in detail but gave up almost at once out of sheer, bludgeoned fatigue, induced by yet more propaganda and prejudice masquerading as objective history.  I am thankful, therefore, that Charles Moore has done my job for me – to a far superior standard, I might add.

Afternote:

Iain Martin of the Wall Street Journal wades in with his own piece.

Our AfPak strategy needs tightening up

Rory Stewart, the rising star of international relations and Conservative candidate for the parliamentary constituency of Penrith and the Border, brings our attention to this, one of Barrack Obama’s goals:

I want the American people to understand that we have a clear and focused goal: to disrupt, dismantle and defeat al-Qaida in Pakistan and Afghanistan, and to prevent their return to either country in the future. That’s the goal that must be achieved.

Like most mission statements it seems plausible, purposeful, right and achievable.  Its pithy clarity and determination fills us with confidence, that they know what they are doing and they have a clear and well thought out strategy.  But, on closer inspection, it does not quite stand up to scrutiny.

First of all, what does he mean by disrupt, dismantle and defeat?

British doctrine sees disruption as activity that ‘degrades specific parts of an opponent’s capability, both moral a physical.’ This, one presumes is why the coalition has troops permanently in Afghanistan and why the coalition is trying to create an Afghan army that will number something in the region of 450,000 (over four times the size of the British Army).  But why is it necessary to be deployed in the way we are if we merely want to disrupt and degrade specific parts of their capability?  A10 bunker busters and helicopter borne special forces raids could quite easily degrade al-Qaida training camps, and do so without being permanently based in these countries.

And what exactly is to be dismantled? Training camps? Or something else? If so, what? If he wants to dismantle them the military way, all he needs is a few bombs released from the air, well above effective SAM range. But perhaps he is thinking along the lines of the British CONTEST (Counter Terrorism Strategy) where people are deterred from wanting to join the camps in the first place. I do hope not because this is almost certainly unachievable, and certainly unachievable at the hands of Westerners.

The term defeat is merely a more comprehensive and permanent form of disruption to the extent that an enemy is no longer able to maintain a tangible threat, or is prevented from achieving his objective. In Afghanistan, this can be achieved by disruption raids and convincing the Taliban or whatever regime is in power that they are better off without al-Qaida. This is not as difficult as some would have us believe.  The Taliban and al-Qaida are not the same organisations, and there is no strategic link between the two in terms of mounting terrorist attacks in the West – yet.

But why should we believe that disrupting, dismantling or defeating al-Qaida in Pakistan or Afghanistan is going to achieve our ultimate goal of making our streets safe from the Islamists? We should not. We are already aware that camps can move and are spreading to other dysfunctional states, so are we to believe that once Afghanistan and Pakistan have been purged of terrorists we will wage war on their next haven like some grotesque form terrorist billiards?

We also know that al-Qaida does not even need camps any more. With our ludicrously lax immigration rules they can quite easily plan in a West London bed sit and train in a US flight school; they can build morale on adventure training weekends, much like the Territorial Army, and coordinate their attacks on the internet and with mobile phones; they can procure fertilizer like any other farmer and pack it in a truck like any other delivery man?

What is most disturbing is the idea that we can ‘prevent their return to either country in the future.’ This is nonsensical. Many of the Islamists are Pakistani nationals and ex-patriots. They are not foreigners come to train in another country because it is safe.  They have freedom of movement because either they live there or they have kinship ties. We can no more prevent Pakistanis from being in their own country than we can prevent any other nationality from being in their own country. And if they can travel to Western countries unhindered, we afford them all the opportunity they need to attack us.  In these circumstances there is little that operations in Afghanistan and Pakistan will actually do to prevent further attempts at terrorism.

Barrack Obama’s goal, like most pithy and defined goals, has the appearance of something confident and relevant, but in reality it is little more than a confusing collection of buzzwords.  This is not to say that there is no logic to it at all and that it has some merits, it does.  But it is mostly incoherent, it is not as achievable as some would have us believe, and the bits that are relevant – degrading terrorist activities – can be achieved in other ways.

Afghanistan needs local more than national government

The decision of Dr Abdullah to withdraw from the second round of the Afghan presidential elections has turned the situation from the sinister to the farcical.  At first we had plain old-fashioned corruption.  We could understand that, in a way.  But now we have a one horse race, with its sole runner, President Hamid Karzai, tainted by the previous corrupt election.

Dr Abdullah has withdrawn because he believes the conditions required for a free and fair election have not been met, particularly because those responsible for the first round of voting have not been replaced by new, untainted people.

This presents two major difficulties for the coalition. First, the prospect of soldiers risking their lives to guard voting stations where the vote is meaningless will do little to galvanise domestic support for our deployment. Second, it surely puts back the political process on which depends our own withdrawal. Only when there is a legitimate national government, so the argument goes, can we be confident that there will be a coordinated force to continue the fight against the Islamists.

It is thought that there will be no further round of voting which solves the first problem – although the lives of those lost in the previous void election are not forgotten – but it does little to solve the second. Unless, that is, another runner comes forward, but that seems most unlikely.

This development, although unwelcome from just about every conceivable position, does however reveal something extremely important about Afghanistan and its understanding of government.  Afghanistan has never really had a modern national government that appears legitimate to the whole population. National and centralised government has been resisted throughout the history of the region. The British could not do it, the Soviets could not do it, and now it appears that the coalition is having a tough time of it, too.

It seems that the Afghans are just not taken with the idea of being governed remotely by a group of people they do not know. Afghanistan is a country of local Pashtun and other tribes, of local elders running things in their patch, of jirgas where local elders come together and mediate disputes by consensus. What use have they for a national government that has little idea of local custom?

But our governments find it difficult to see this, so fixated are they on the centralising tendencies of national government, including the USA. There is, of course, a logical reason for wanting to see a strong national government.  It is thought that this is the only way the Taliban will be controlled and the terrorists prevented from regaining their freedom to plan and train for attacks on the West.

But there is another reason: conceit. We, especially in modern Britain, have a tradition of centralised governments doing what they want irrespective of the desires of the people and it seems that we want to bring this to other countries, too. Our government imposes Lisbon on us against our will and it imposes mass immigration on us against our will.

Our governments have become pathological centralisers (devolution is not quite what it seems). It should, therefore, be no surprise that they wish to focus everything on creating a centralised government on another country even though it has a tradition of weak national and strong local government.  And it is arguable that our objectives are better met by building on the local level.

It is at the local level that we should be concentrating. Not to impose state edict to local communities, but to revitalise and acknowledge the local jirga as the basis of government. It might not appear quite as democratic as we would like, it might not achieve the centrally controlled state we seem to want, but it would be in keeping with Afghan traditions and above all it would have greater legitimacy in the eyes of the people than the model we wish them to have.

Nimrod Report highlights real failings in Defence

Charles Haddon-Cave QC has delivered a crushing indictment of the MOD in his report on the loss of an RAF Nimrod on 2 September 2006 while on operations in Afghanistan. Although he says BAE Systems and QinetiQ are also to blame, it is the MOD and the government that is ultimately responsible for all military matters. One particular aspect is critical in understanding what went wrong:

The MOD suffered a sustained period of deep organisational trauma between 1998 and 2006, beginning with the 1998 Strategic Defence Review. Financial pressures and cuts drove a cascade of multifarious organisational changes which led to a dilution of the airworthiness regime and culture within the MOD and distraction from vital safety and airworthiness issues as the top priority.

At last, someone has highlighted the root problem in the MOD and the Services at large: that constant activity has and continues to cause deep trauma to the organisation when it should be concentrating on operational matters. The report goes on to say:

There was a shift in culture and priorities in the MOD towards ‘business’ and financial targets, at the expense of functional values such as safety and airworthiness. The Defence Logistics Organisation, in particular, came under huge pressure. Its primary focus became delivering ‘change’ and the ‘change programme’ and achieving the (so-called) ‘Strategic Goal’ of a 20% reduction in output costs in five years and other financial savings.

There we have it. Demands for savings forced an institutional shift in priority away from providing the right military capability to delivering military savings.  Making savings is what all reviews and reorganisations are ultimately about, and by God they will make them.  Service is not a business, it is a duty and a critical national requirement.

And that these changes were to take place ‘against a backdrop of dramatically increased operational demands as a result of the conflicts in Afghanistan and Iraq (not to mention Fire Brigade strikes), shows how poorly the Armed Forces have been led over the last decade.

Of course, military people themselves must not abrogate their responsibilities – and they will not – but leadership begins and ends at the top, with the grand strategy and the willingness to resource the capabilities needed to meet that strategy.

“Islam is a Revolutionary Ideology”

Abul A’la Mawdudi (1903-79), a leading Islamist writer in the Indian sub continent:

The truth is that Islam is a revolutionary ideology which seeks to alter the social order of the entire world and rebuild it in conformity with its own tenets and ideals…Islam wishes to do away with all states and governments which are opposed to the ideology and programme of Islam. The purpose of Islam is to set up a state on the basis of this ideology and programme…regardless of the rule of which nation is undermined in the process of the establishment of an ideological Islamic state. Islam requires the earth – not just a portion, but the entire planet. (Chapter 1 Jihad in Islam – translated by Khurshid Ahmed, published by UK Islamic Mission 1997).

Is this a risk we are prepared to take?  Obviously it is.

Government induced inflation cause the problem, not just bankers

A short piece from the Adam Smith Institute reveals the primary cause of the financial meltdown and the subsequent recession:

The bankers have paid themselves far too much, no question. But politicians should be explaining why, not just joining in the bear-baiting. They can’t, of course, because they are complicit. When the Fed and the Bank of England were flooding the world with cash right up to 2007, business was never so good. Not surprisingly, everything you did succeeded, there was so much money around. So the banks paid silly bonuses in order to motivate people to do deals. When the music stopped, a lot of those deals turned out to be unsustainable, but the banks had been acting perfectly rationally, going after the money that the politicians were printing.

In short, the problem was cause by too much money, an expansion of the money supply, which Milton Friedman identified as the root cause of inflation.

The politicians will never admit this because they created the monetary expansion (debasing a currency, in old language) themselves. They did it, particularly Gordon Brown, by holding interest rates too low (via a bogus measure of CPI that ignored house price inflation), and by allowing the banks to create credit which in turn creates inflationary money.

Gordon Brown even has the nerve to tell us that the financial problems were not cause by ‘inflation.’ What utter nonsense. What on earth is a massive increase in the price of property if not inflation.

But at its root, inflation is not just an increase in price, but an increase in the money supply which devalues the currency. If I need to spend £200k to buy a flat one year, but need to spend £250k to buy the same flat two years later, what is that if not inflation and the devaluation of the pound in my pocket?

The real tragedy, however, is that a consensus is developing around blaming the bankers for the crisis and subsequent recession. That they were major players is beyond doubt, but as the ASI notes, they were mere players in the game with rules and conditions set by the politicians.

The only way to avoid this sort of thing happening again is to learn the right lessons, we are not. The conditions are set.