Very different Presidents

US voters choose their President on the first Tuesday after the first Monday in November. This means that different Presidents can share the anniversary of their election. It was on November 4th, 1952, that Dwight D Eisenhower was elected. Ronald Reagan was elected on the same day in 1980, and Barack Obama on November 4th, 2008. The three Presidents faced different circumstances and challenges, and were very different in their style and their achievements.

Eisenhower is remembered mostly for foreign policy, for ending the Korean War and confronting Soviet expansionism, but he did successfully push through the Interstate Highway System. He gained the support of right-wing Republicans for it by claiming it was essential for security, needed to evacuate cities in the event of nuclear war, and to provide possible runways for military aircraft.

He authorized reconnaissance flights over Soviet territory to assess the military threat they posed. He knew from these that they had the ability to launch a satellite into orbit with a year, but was concerned to keep space for civilian purposes, and refused to allow von Braun's army team to beat them to it, as they could have done. The Soviets had no such reluctance, and used a military rocket to do it first. Only after the humiliating public failure of the civilian Vanguard rocket did he give von Braun the go-ahead.

Eisenhower's foreign policy was to contain any further Soviet expansion in Europe, the Middle East, and Southeast Asia, and to make it clear that the Cold War would turn hot if they attempted armed aggression. The 'Eisenhower Doctrine' held that the US would be "prepared to use armed force to counter aggression from any country controlled by international communism."

Reagan faced the challenges of a weak economy and an assertive Soviet Union. He revitalized the US economy with a series of tax cuts that stimulated investment, yet drew in more revenue than the previous higher rates had yielded. The 'misery index' of high inflation and high unemployment under President Carter was reversed as inflation went down and employment increased.

His military build-up, including his endorsement of the Strategic Defence Initiative, confronted Soviet military power, and his rhetoric spoke of a stiffened American resolve. His talk of "Tear down this wall," and his description of the "evil empire" made clear his determination to oppose unyieldingly everything that Communism entailed. History records that he succeeded, and that within a year of his leaving office, the wall came down and the evil empire crumbled.

Barack Obama, another November 4th President, was elected on that day in 2008. His record is mixed, with the economy dominated by the Financial Crisis of 2008 and its aftermath, and by foreign policy dealing with the fight against international terrorism, and the ongoing struggles in Iraq and Afghanistan. Entering office with a pledge to end partisanship and work in a spirit of co-operation with his political opponents, Obama presided over a period of intense polarization, with an America bitterly divided, as it still is. The healthcare reform he saw as his greatest achievement still provokes hostility as well as support, with his Democrat successors struggling to extend it and their Republican opponents seeking to replace it.

Obama's achievements include the fact that he was the first African American President, providing a role model to young African Americans. He also took a successful gamble by sending Special Forces in to kill Osama Bin Laden, an accomplishment that Jeremy Corbyn called "a tragedy." While it may be too early to settle on a verdict on Obama's presidency, it seems unlikely that he will be remembered as successful as Presidents Eisenhower and Reagan.

This doesn't surprise us in the slightest

It would surprise us immensely if the incentives had worked the other way:

While boys have long trailed behind girls in their reading aptitude, the gender gap is closing at last because they prefer reading on a screen to reading the pages of a book.

Since the Pisa education rankings in maths, science and literacy began nearly 20 years ago, girls have done better than boys at reading in every country in which the exams have been held.

Next month, however, the rankings, based on tests taken by teenagers in 80 countries, are expected to show how boys are finally catching up, according to Andreas Schleicher, the man known as “Mr Pisa” because he set up the rankings.

“Boys are doing better in the digital world. Books put off boys. But reading online changes that. There is greater digital learning by boys. They do not like books [as much] as screens,” he said.

We’d perhaps differ on the reason why but the effect we think is obvious. The existence of social media, all that stuff available on screens, makes literacy more valuable. Humans do more of things which are more valuable - therefore literacy rises as the value of being literate does.

As one of us explained it some time ago:

Economics works – social media makes basic literacy more valuable so more people will have it.

How could it be any other way?

When Chile chose a Marxist leader

On November 3rd, 1970, Salvador Allende was inaugurated as President of Chile. A Marxist activist at university, Allende ran with the support of the Communist and Socialist parties, with the Christian Democrats split into two factions. In a three-way race, Allende gained 36.3 percent of the vote. Because no candidate had reached 50 percent, the decision was left to Congress, who would normally choose the one with the highest popular vote. This time, however, there was suspicion of his intentions, and Congress only confirmed him after he had agreed to 10 constitutional amendments to limit any abuse of power.

Allende immediately began his socialist programme, but keeping initially to the constitutional limits, and respecting democratic institutions, the rule of law and civil liberties. He seized without compensation the US copper companies that operated in Chile. This angered the United States, and undermined any confidence in Chile that foreign investors might have had.

Under Allende's rule the government nationalized significant industries in the mining and manufacturing sectors, and took over large agricultural estates to turn them into peasant co-operatives. Land grabs continued throughout his rule, many by unauthorized gangs of his supporters. The government put huge wage increases into effect, while passing laws to freeze prices. The government's purchase of basic industries from private hands had created a fiscal deficit which Allende met in the time-honoured way of printing extra money with nothing to back it.

Although Allende remains a hero to the Left, who have rewritten history to hail him as a success, as they did earlier with Stalin and later with Chavez and Maduro, the facts are that after two years of his rule, production had stagnated, exports had gone down, private investment had nose-dived, and financial reserves were exhausted. The economy was bowed under by rising inflation and shortages, especially of food. There was a wave of strikes and civil protest. Although he had established friendly relations with China and Cuba, credit from the US and Western Europe had stopped. Allende-supporting street thugs alienated the middle classes by expropriating their farms and attacking their businesses. There was concern that Chile has heading toward becoming a typical Communist state with a barely functioning economy and deceasing respect for civil liberties and democratic institutions.

This all came to an end in September 1973 when Allende was overthrown in a military coup staged by General Augusto Pinochet, claiming he was acting to save the country from ruin. Allende killed himself in the Presidential palace, using the AK47 that Fidel Castro had given him. Although there were allegations that he had been murdered, an independent autopsy on his exhumed body in 2011 confirmed that it had been suicide.

Pinochet's rule was controversial. Under his term of over 15 years, Chile prospered and became the richest country in Latin America. The ailing state industries were privatized, the currency stabilized, and a private pension savings scheme was established to give most Chileans a good retirement pension from a fund that was their personal property. Since the pension funds bought the shares in the privatized state industries on behalf of their members, within a few years most of Chile was owned by most of its people, making it the least unequal country in the continent.

But economic success came at the price of political repression. Estimates suggest that perhaps 3,000 opponents of the government were illegally killed over those 15 years. This figure is well below the deaths that took place under the Argentinian junta, or under other Latin American dictatorships over a similar period, but it drew widespread condemnation. Pinochet held a referendum in 1990 to decide whether he should have more years in power. It was an honest referendum; we know that because he lost it and withdrew from office, restoring democracy.

Salvador Allende enjoyed popular support, as do many who dole out free goodies without the means to fund them. There is an almost universal tendency for people to want free stuff that somehow others will pay for. It always ruins the economy, but people continue to fall for it. It is one of the drawbacks of democracy that it encourages such behaviour.

Contrary to protestations climate change is at least partially solved

We know very well, because Extinction Rebellion and St Greta keep telling us so, that the perils of climate change mean that the entire society must be overturned. For, despite our having had decades of warning we’ve not done anything yet.

This is, as the phrase goes, being economical with the truth:

Low-carbon power generated more than half of all electricity in the UK for the first time this summer in a major milestone as Britain seeks to become greener, new figures show.

The share of energy generated from wind, solar, hydroelectric and nuclear sources grew to 51pc of total output between June and August, while fossil fuels fell to 48.5pc.

Fossil fuel use hit a record low in the UK over the three-month period, as the country attempts to switch to cleaner energy and rid itself of a reliance on oil, gas and coal by 2050.

The predictions of sea rising terror come from models in which we don’t develop non-fossil fuel sources of power. Indeed, we not only use ever more fossil fuels we use ever more coal within that mix. Which isn’t, as we can all note, what is actually happening. Here in the UK at least we’re on the cusp of entirely ceasing to use thermal coal. As above, half our energy is coming from non-emitting sources.

Note what we’re not discussing here - whether climate change itself is a real problem or not. Whether electric cars are the solution, all of that sort of detail. Instead, we are simply pointing to this reality.

We have been told that we must develop non-fossil energy sources in order to beat climate change. We have done so. Therefore we are at least partially beating climate change. The protestations that we have done nothing, that all remains to be done, are simply wrong therefore, aren’t they?

In the technical jargon of these things the assumption used to describe the coming terror is that we’re on Representative Concentration Pathway 8.5. We are insistent that we’re doing much better than that. As a matter of opinion we’d argue that we’re on RCP 2.6 already - the one where climate change is a just a minor annoyance for a few decades. We’re open to a more scientific analysis which estimates whether we’re really on 2.6, or perhaps RCP 4.0 and so on. But the one thing we really do know, and all should agree upon, is that we’re not on RCP 8.5. Thus we should stop planning the world as if we are.

The difficult question becomes how do we convince the mob gluing itself to tube trains of this?

George Bernard Shaw, the gradual revolutionary

George Bernard Shaw, who always preferred to be known as Bernard Shaw, died on November 2nd, 1950, at the age of 94. He had achieved fame in two fields, as a writer and as a political activist. A left-winger who had flirted with Marxism, Shaw joined the Fabian Society in 1884 and embraced their policy of gradualism.

After a Trafalgar Square rally was broken up by police violence, Shaw decided never to challenge police power, but to pursue a policy of what Sidney Web  called 'permeation,' the infiltration of socialist ideas and people into existing political parties.

Shaw edited the 1889 publication of Fabian Essays in Socialism, writing two of them himself. In one of them he wrote that, "the necessity for cautious and gradual change must be obvious to everyone." And in the new version he wrote of the Fabian handbook, he wrote that "socialism can be brought about in a perfectly constitutional manner by democratic institutions."

He became an investor and co-founder of the new weekly magazine pioneered by Sidney and Beatrice Webb in 1913. It was called The New Statesman, and still publishes today. Most of Shaw's articles for it were contributed anonymously.

His acceptance of Fabian gradualism faded somewhat in the 1920s, and he began to favour more robust approaches to change. He was fascinated by Mussolini, and spoke favourably of him, as he then did of Stalin. He visited Stalin and described him as "a Georgian gentleman with no malice in him." When the Nazi Party came to power in Germany in January 1933, Shaw described Hitler as "a very remarkable man, a very able man."

He also endorsed some controversial policies such as eugenics, and opposed vaccination, including that against smallpox. He described vaccination as  "a peculiarly filthy piece of witchcraft." He was quite eccentric in his writing, too, refusing to accept modern spelling, and eschewing apostrophes in words such as don't and can't. In his will he left most of his assets to a body that was to reform the English alphabet into one featuring 40 letters, but the will was poorly drafted and subsequently voided.

It is unlikely that socialism can be brought in gradually, as the Fabians wanted, for the very good reason that it doesn't work. In democratic societies that introduce socialist measures, their failure will probably lead to the electoral defeat of the party that introduces them, and their subsequent reversal by a succeeding government. The socialist measures brought in by the Atlee government returned in 1945 condemned Britain to a downhill slope of low growth, an appalling strike record, loss-making state industries that performed poorly, and punitive tax rates that discouraged investment. These were all such obvious failures that the Thatcher governments were able to reverse them all and win re-election by doing so.

The no less catastrophic failures of socialism in other countries provide more evidence of the fact that it doesn't work. Socialism might be difficult to install gradually, but it can be imposed by swift and brutal repression. Even then it doesn't work. This means that Shaw spent a large part of his political activism in pursuit of a lost cause, and could explain his admiration for the dictators who dispensed with democracy to impose fascism, communist socialism and national socialism, all of which turned out to be disastrous.

The limits to Modern Monetary Theory

As we all know Modern Monetary Theory insists that a government which prints its own money can simply never run out of money. Thus it is always possible to finance ever more government spending.

The rest of us have the occasional problem with that idea but we are stilled by the thought that, well, the people who make money never can run out of it, can they?

There was that time in Zimbabwe of course, where the last print run of $100 trillion dollar bills weren’t worth enough to pay for the ink to print the next one. But surely that’s an exception, right?

There is also an £18million black hole in the accounts after the company revealed in May that the Venezuelan central bank has been struggling to pay its bills.

De La Rue was hired by Venezuela to print bank notes. And the people who received the printed bank notes don’t have enough money to pay the bill for them. It would appear that we have a second testing to failure of this central contention of Modern Monetary Theory.

Perhaps we should revert to the more sensible Marxist - tendence groucho - economics and point out that even if we’ve an idiot proof system like MMT we need to find a moron to properly test it. For a central political point is that inevitably one or more of them will get elected somewhere.

When Conservatism found its voice

On November 1st, 1790, Edmund Burke published his “Reflections on the Revolution in France,” and articulated, what many regard as for the first time, the essence of Conservative philosophy. Despite general optimism in Britain and the US that the French Revolution would usher in an age of liberty and sweep away the privileges and petty powers of an oppressive aristocracy and an autocratic church, Burke predicted that the revolution would end in blood and chaos because it was founded on abstract ideas that ignored the subtleties and complexities of human nature and human societies.

Burke stressed the importance of practicalities, of things that had survived the test of time and had been proved to work. The abstract and metaphysical reasoning was inadequate because it was not grounded in reality. He wrote:

"What is the use of discussing a man's abstract right to food or to medicine? The question is upon the method of procuring and administering them. In this deliberation, I shall always advise to call in the aid of the farmer and the physician, rather than the professor."

Burke took on headlong the assertion by Thomas Hobbes that Human society might be explicable on a deductive system like that of Euclid’s geometry. No, said Burke. Society is impenetrably complex and detailed, and defies reduction into simple principles. It is more akin to an organism, developing like a living entity, adapting and changing not according to some rational analysis, but more by reliance on the values transmitted by tradition

He argued that constitutional reform should be gradual, drawing on what had been inherited from the past and had proven its worth by the survival of societies that embraced practical values such as property rights and traditional practices. His case was that the imposition of theoretical abstractions such as the rights of man was too easily subverted and used to justify tyranny. The French might talk of asserting values that were rationally calculated, but it was the inherited rights, embodied and restated in England in Magna Carta and the Declaration of Right, that provided a secure base of continuity and acceptance that conveyed value in practice.

Burke’s reputation was greatly enhanced when the French Revolution degenerated into the repression and bloody savagery that he had predicted. He thus became hailed as the founding father of modern Conservatism. This is not the conservative character trait that Lord Cecil described as “a disposition averse from change,” but the political tradition (spelled with a capital ‘C’) that does not seek to conserve an outcome, but a process. It does not oppose change, but wants it to be organic and spontaneous, rather than imposed according to some plan. It is a tradition that has endured for more than the two centuries since Edmund Burke first gave it its voice.

The extinction of poverty in London

There is no poverty in London today. At least, there’s no poverty in London using one of the two definitions being used here:

Poverty is no longer quite so prevalent as in Booth’s day: Booth concluded that 35% of Londoners lived in poverty at the end of the 19th century, and the Trust for London’s latest figures indicate that 27% do so today. But compare that with a national average of 21% and it’s clear there is a problem.

Booth’s definition of poverty was 10 to 20 shillings a week for a family of four or five. Take the top end of that and upgrade for inflation (of goods and services, not the price of labour) and we get perhaps £100 a week. For four people. £25 each, or £3.50 per person per day.

There is no one, not one single person, living in London today on that sum. Therefore there is no poverty in London. Not unless we change the definition of course.

Booth’s was the value of everything. Rent, clothing, health care, food, saving for the pension no one would survive to collect. Today’s definition is living in a household earning less than 60% of median income, suitably adjusted for household size. Which is how we can have killed poverty stone dead and yet still be measuring its existence.

Of course, we did have to change that definition. After all, how can careers - and political parties - be built upon the idea of fighting poverty if the thing being fought no longer exists?

When Martin Luther changed the world

On October 31st, 1517, Martin Luther issued his ninety-five theses. The story is that he defiantly nailed them to the door of Wittenberg Castle church. He was objecting to many of the practices of the Roman Catholic Church of his day, and especially the selling of indulgences. The Church made a great deal of money from selling forgiveness to sinners, and objected strongly to Luther’s assault on a major source of its income.

He was not the first to criticize the Church’s practices, including the selling of benefices. Erasmus had earlier voiced criticism, and while he personally remained loyal to the Church, it was said that “Erasmus laid the egg that Luther hatched,” leading to the Reformation.

Luther refused to recant when ordered to by Pope Leo X in 1520 and by the Holy Roman Emperor Charles V at the Diet of Worms in 1521. He was excommunicated by the pope and condemned as an outlaw by the Holy Roman Emperor. This was hardly surprising, given that he taught that the Bible, not the Church, is the only source of knowledge of God. This undermined the authority of the priesthood because it allowed every person to communicate directly with God, rather than through the intercession of the priesthood. Luther went further by translating the Bible into German to make it accessible to lay people. He made use of Gutenberg’s printing press to have it circulated widely.

To read the Bible, people had to be literate, so in the countries and counties that embraced Protestantism literacy spread. German counties tended to follow the religion of their prince, and there is evidence that the protestant ones enjoyed wider literacy.

Intriguingly, it has been suggested that literacy aids industrialization by enabling workers to follow written instructions. It was in the protestant countries and German counties that the early industrial Revolution took hold. If one overlays two maps, one of which shows where Protestantism took hold, and the other where industrialization developed, there is considerable overlap. Indeed, Max Weber and R H Tawney published books that tried to trace the connection that linked Protestantism to industrial development. The literacy needed by protestants to access the Bible directly might have played a significant role, in addition to the sociological and psychological factors they explored.

Following on the heels of the Reformation came the Enlightenment, liberating the minds of men and women from magic and superstition. On All Hallows’ Eve 502 years ago, Luther lit a fire whose flames still flicker today. He changed the world.

Wealth inequality is grossly overstated

We are continually told that wealth inequality is of horrendous scale and something we must do something about. This claim fails on two counts.

The first is a point we make much of around here, that we use the wrong measure of the wealth distribution. We measure market inequality, rather than the only important type, that which exists after all the things we do about inequality in general. We must, if we are to gain any useful information, measure after the effects of taxes, benefits, state provided services and so on, not before. For, obviously enough, such redistribution greatly changes the wealth distribution.

But it’s also wrong for another measurement reason. We don’t even count, at all, the major form of wealth today, human capital. From the ONS:

The value of the UK’s real full human capital stock, or the human capital of the employed and the unemployed, was £21.4 trillion in 2018.

This human capital was much more equally distributed than the financial capital - or household wealth - that so much fuss is made over. And that household wealth is some £12 trillion too.

Two thirds of the country’s capital isn’t even being counted, that two thirds being much more equally distributed than the one third that people whine about so bitterly.

Shouldn’t we start at the beginning again and actually measure wealth correctly before we try to decide what, if anything, we’re going to do about who has it?