Tuesday, September 29, 2009

Gordon Brown's conference speech was all about undoing previous Labour policies.

And I promise no compulsory identity cards under Labour, even thought it was this government that initially proposed them. We will intorduce free personal care for the elderly even though we have opposed it for the last decade despite a Royal Commission recommendation. And comrades, we will challenge the bankrupt ideology of the free market, put morals back in the market and end the reckless risk-taking of bankers, even though this government has been an ardent advocate of neo-liberalism and was responsible for the "light touch" regulation of the City of London.

My values are free eductaion, even though it was this government that introduced university tuition fees. We will put the post office at the heart of a new network of communitt banking, even though this government wanted to privatise the Royal Mail. And we will introduce a fiscal responsibility act even though we have presided over the biggest increase in public borrowing since world war two. We will abolish hereditary peers, despite dithering over it for the last thirteen years and we will finally have the referendum on PR which we were promised Paddy Ashdown in 1997......

And so it went on. If there were prizes for political hypocrisy, Gordon Brown's conference speech in Brighton would win hands down. An astonishing catalogue of policy announcements almost all of which were designed to counter previous Labour policies. It's incredible. Gordon is fighting against himself. Who was it that brought in identity cards? Who has been the biggest cheer-leader for the financial sector? Who has opposed free personal care, free higher education, a national investment bank.

And then there was the fight against the single mothers and the causes of single mothers. Labour has been insisting that, contrary to Tory claims, society isn't "broken". So here comes Gordon to fix it with special state homes for single mums, "familiy interventions squads" and all manner of draconian and almost certainly unowrkable policies to control irresponsible behaviour. As if ASBOs weren't lesson enough, he is going to legislate against being young.

As for cuts - there aren't going to be any, it seems, because all Gordon Brown talked about were spending promises. He said that the choice was between Tory cuts and Labour's "continued investment in front line services". The Tories were cutting, he said, because "they like it". He will just spend spend spend, on free care for under two year olds, for better cancer treatment,for social care, more apprenticeships better education. In the crisis, Brown said, the Tories "showed their hand and showed they had no heart" Brown clearly thinks most of us have no brains.

After all, he has promised a Fiscal Responsibility Act which will cut the deficit in four years. We are heading for 12% public borrowing next year, when the Maastricht rules say governmnets should borrow only 3% of GDP. So, how is he going to cut public borrowing and boost public spending at the same time? He doesn't know, hasn't a clue. The prime minister condemns the financial services economy that he has created over the last thirteen years, but he hasn't a clue how to change it now, or what to change it into. British manufacturing has been sold abroad and we can't all cut each other's hair.

Markets do indeed need morals, but so do politicians. Gordon Brown said that politicians who don't behave properly should be subject to recall by their constituents. Absolutely - it's time for the compulsory recall of Gordon Brown.

Monday, September 28, 2009

Gordon Brown pulls it off

Perhaps a small new war might save Gordon’s bacon. The refusal by the foreign secretary, David Miliband, to rule out military action against Iran for developing a second uranium enrichment plant, suggests that Britain is not going to complain too loudly if Israel bombs it, as they did the Osirak plant in Iraq in 1981. There is nothing like heightened international tension to bolster a political leader.

On the other hand, we already have a rather nasty small war going on in Afghanistan and that isn’t doing Gordon a lot of good. When the history of this longest Labour administration in history is finally written, its penchant for launching futile wars will be considered one of its principle failings. Anyway, Brown doesn’t make it as a war leader in the Thatcher or Blair model because he doesn’t do emotion and the troops don’t like him. So there is no get out of jail free card. The government is going down, as the Labour cabinet minister, Peter Hain, to a “devastating defeat”, Labour’s worst since 1935. Roll over Gordon and tell the party the news.

However, this doesn’t mean there won’t be a modest rally this week in Gordon Brown’s fortunes against the trend. Everyone is so focussed on the PM’s failings - is he going blind? is he on antidepressants? - that a semi-reasonable conference speech like the one he delivered last year with the help of Sarah would give give us something positive to write about for a few days. After all, there is no alternative leader at this Labour conference - Miliband et al having ruled themselves out - so there is no real story, other than Gordon not doing quite as badly as everyone expects. “Brown still there, shock!”

The Chancellor, Alistair Darling’s remarks about Labour having “lost the will to live” sounded suspiciously like a Mandelsonian exercise in pre-conference spin. Lowering expectations on the eve of conference is always a sound policy. It means that the journalists hermetically sealed into the Brighton Conference Centre can be more easily persuaded that things are going well when the conference goes through without a hitch, as it almost certainly will. Mind you, Mandy’s hints that he might accept a role in public life under the Tories - perhaps as a diplomat - might be lowering expectations just a little too far. There’s nothing worse for a prime minister’s authority than the sense that everyone around him is looking for another job.

But here’s the story we’ll be sold this week. We’ll be told that the Cameron Conservatives are untried, and have a huge electoral mountain to climb. That they need an unprecedented swing; that Cameron is a media creation with no policies; that people are still suspicious of the Tories on cuts; and that he economy is doing much better than expected. All true, in their way. We will be invited to draw a comparison with the Tory prime minister, John Major, in 1992 who won in a recession despite sounding like a speak-your-weight machine and leading a Conservative party deeply divided over Europe. If he can do it, so can Gordon.

Well, maybe. The intriguing thing about all the negatives directed at Cameron - media creation etc - is that they weere all applied to Tony Blair in 1997. Labour then had an ‘impossible task’ and an inexperienced leader, but somehow won a landslide majority. It was the depth of unpopularity of the government that killed it. What is interesting this week in Brighton is that no one is talking about opinion polls. There is a very good reason. They are so predictably dire for Gordon Brown that people hardly bother to read them any more. As UK Polling Report, put it: “it’s getting to the point where asking questions about how the public sees Gordon Brown feels like kicking an ailing puppy”.

Except, curiously, in the News of the World, which bought the pre-conference spin and cliamed that its latest BPIX opinion poll suggested Brown was ‘in with a chance’. Really?. The poll had Labour 14 points behind, enough for a 100 seat Tory majority. Twice as many polled thought Cameron would make a better PM than Brown, including 25% of Labour voters. This is not so much clutching at straws as hoisting an elephant on a thread.

The economic crisis - or rather Gordon Brown’s response to it - should have been the defining episode that cemented a bond with the people. But it hasn’t worked. Brown may have been receiving international praise at the G20 summit for promoting the fiscal stimulus that prevented a second Great Depression, but on the streets of Britain things are different. Unemployment is rising and business investment is down; banks are coining it in but, according to one paper at the weekend, people are selling their kidneys to get out of debt.
It may be the most irksome cliché in modern politics, but it IS still the economy, stupid.

Brown’s latest wheeze has been to promise a Fiscal Responsibility Act requiring that the government to balance the books within four years This has taken New Labour’s passion for pointless legislation onto a new level. Introducing a law to make the government do what it is supposed to do anyway is not only a condemnation of the governments record, but an admission that it has lost control. There is already a law that requires governments to behave with fiscal prudence: it is called the Maastricht Treaty, though no one seems to bother about it now. Under EU rules, all member states are supposed to limit borrowing to no more than 3% of GDP. Britain is headed for a deficit of 12% next year, which just shows how pointless fiscal legislation is. If the government was serious, it would be paying down debt already, like the rest of us.

The British people have made their decision. They want no more of this hypocritical administration that passes laws on illegal immigration and then excuses ministers when they break them; that presided over the greatest ever increase in debt and yet claims to be ‘prudent’; that starts wars it can’s finish laying down soldiers lives for no reason; that promised a more equal society and then turned it into a bankers paradise. I’m what you might call a ‘natural’ Labour supporter, in many ways, and even I’ve given up on them. Gordon is so over, not even a third world war could save him.

Sunday, September 27, 2009

Labour conference is a funeral of social democracy.

  This Labour conference looks less like a pre-election rally than a funeral. There will be very little politics as MPs and ministers prepare themselves for opposition and activists pick over the carcass of what was once the greatest social democratic party in the world. Sorry to sound morbid, but there is  really is precious little to show for the last thirteen years - the longest period in office by any Labour government in history. Let’s look at the balance sheet. 

Britain is more unequal than a hundred years ago. The economy has been handed to a banking kleptocracy which has been awarded immense sums of public money to help them rebuild their financial doomsday machine. The country suffers from a chronic and wholly unnecessary housing shortage.  Britain has been pitched into two disastrous wars which have cost billions, ruined the country’s image abroad and killed large numbers British servicemen.  

Saturday, September 26, 2009

How housing madness destroyed democracy

   It’s often said that a man’s price is just a few pounds short of his mortgage -  though in Westminster that should now be his second mortgage.  And women MPs, like Hazel Blears,  have been just as bad as the men.   It’s widely accepted now that the cleansing of the Augean stables in Westminster will require a constitutional convention and radical reform.  But there is something else that is needing reform: the housing market in Britain. 

   Our national obsession with property corrupted parliament by turning half the House of Commons into property speculators.  MPs have been fiddling and flipping their second homes to gain, in some cases, hundreds of thousands of pounds from properties wholly or largely funded by the state. As a result, some estimate that half of all the MPs will be forced take early retirement, be deselected or be voted out by outraged constituents.   They should erect a monument to Kirsty Allsop outside the Commons as a grim reminder of what happens when people become addicted to the drug of property.

  And a copy should go to the city of London too.  Housing madness helped to destroy the banking system.  Bankers who believed property prices could only ever go up created an inverted pyramid of debt on the slender basis of dodgy mortgages in American and British inner cities. The losses and write downs from  the mortgage-related securities fiasco has so far reached some $4 trillion world wide, according to the IMF.    In Britain around £1trillion has disappeared from the asset base of the middle classes who had been maintaining their living standards for the last decade by borrowing against the nominal value of their homes.

    The housing boom begat the debt bubble, which begat the construction boom.  The mania for property diverted investment from productive activity into real estate on a colossal scale.  From Riga to Dublin, European cities are surrounded by thousands of acres of unfinished developments, many of which faee being demolished for safety reasons because there’s no money to complete them.   The housing boom has inflicted the devastation of a small war on the national finances of countries from the sun belt to the Baltic. Vast sums of public money are being wasted buying toxic mortgage bonds from insolvent banks.  

   Amid this devastation,  ruined political careers in Westminster may seem the least of our problems, but the scandal of MPs second homes is important because it was both a symptom and a cause of the crisis.   Politicians became infected with housing madness under New Labour and started plundering the public finances to buy and develop second and sometimes third and fourth homes.  So it’s hardly surprising that MPs didn’t ask very pressing questions about the housing and credit bubbles. After all, their constituents were making a packet too.  Between 1997 and 2001, house prices in Britain nearly doubled under Labour.  Between 2001 and 2005 they went again by nearly as much.  It was as if the government had handed every homeowner in Britain a hundred thousand pounds.  No wonder Labour won tthree elections.

MPs felt entitled to get their own snouts in the trough.  But how, you ask, could MPs justify making these gains to their consciences?   The reason is that, like many of us, MPs stopped seeing housing wealth as real money.  People often talk of their house ‘earning’more than they do, but they quickly follow this up with an assertion that it’s not real  because ‘you always need a house’.  But for first time buyers it is very real money indeed.  Just try to get a mortgage for a flat in Glasgow or Edinburgh right now, and if you don’t have a substantial depoit and an ability to cope with debt worth five or six times average earnings, you’d be lucky to get a two bedroom flat. 

   Moreover, there is a generation of well heeled baby boomers who will be retiring in the next few years who will be living very comfortably on this unreal money as they downsize their houses and cash in on thirty years of housing inflation.  Homes don’t generate wealth; they merely transfer it.  In this case, from young people starting out, to older people retiring. Now a new generation is now coming along who can’t afford homes at all even after the property price crash. Young families, still paying student loans, are being seduced with low interest rates take on colossal mortgages that will be a burden for their entire lives.   

  Politicians talk about the housing boom rather as if it was an act of nature; something out of political control. But it has always been underwritten by the state.  From mortgage interest tax relief, brought in by Margaret Thatcher to the tax breaks given to buy to let investors, the state has actively encouraged house price inflation. Housing is the only asset on which no one  pays capital gains tax. Inheritance taxes are being abolished by both Labour and the Tories in order to allow people to hand on up to a million pounds in tax free gains from housing.  You can’t do that with any other asset like shares or savings. 

   Governments gave huge incentives to people to buy council houses and then barred local authorities from using the proceeds to build new social housing. This created a national housing shortage that pushed prices higher and higher.  Even now, councils like Dundee and Edinburgh are using public money, not to build houses, bur to finance 100% mortgages to private home buyers even though the Financial Services Authority is trying to ban them.   Someone needs to call a halt to this misuse of public funds  It is not the job of local authorities to subsidise private mortgages.

      More widely, tax breaks on residential housing must be ended, buy to let curbed, and property treated like any other asset.  Firm guidelines should be laid down by the FSA on income multiples to end 125% suicide mortgages, self-certificated “liar loans and all forms of sub prime.   Above all, there needs to be a commitment to build enough homes for people live -   “to nest in rather than invest in” as politicians used to say before the great corruption.   Hopefully the next generation of politicians will see sense.  After all, unlike the present lot, they are going to have to buy and equip homes at their own expense, just like the rest of us.   

Friday, September 25, 2009

Waymarking in the Scottish hills. The time has come.

When you write opinionated commentary for a living you have to expect to make enemies. It goes with the job. You can�t be nice about people all the time, especially politicians. Even when you�re nice about them they take offence.
When you write opinionated commentary for a living you have to expect to make enemies. It goes with the job. You can't be nice about people all the time, especially politicians. Even when you're nice about them they take offence. However, I suspect I will lose more friends from this column than from any I have written - except, perhaps barring when I said that some of Burns' poetry is sentimental doggerel. Some icons really aren't worth being clastic about.
No, the reason this column will attract such ire is that I am about to tread on very dangerous territory indeed: Scotland's wild land. I have long believed that our unique refusal to introduce waymarking and a proper system of highland pathways is an anachronism. Now I am beginning to think it is more than that: it is pig-headed, conceited, environmentally damaging and, given the numbers going onto the hill, increasingly dangerous. Thousands of people come to Scotland from all over the world at this time of year to experience Scotland's mountains and are bemused and shocked to discover that there is no proper system of waymarking. It is time to end this silliness and start giving people the odd direction or two.

Monday, September 21, 2009

green shoot index turns red

The green shoot index went through the roof last week as economists forecast a v-shaped, trampoline recovery. They based their findings on figures from the OECD that suggested the economies of developed nations - excluding America and Britain - were showing signs of life. Or rather that they were showing signs of dying a little more slowly than had previously been forecast. Seasonally adjusted, this meant that the pushing-up-the-daisies index was in negative territory for the first time since a little while ago.

Or to put it in more statistically meaningful terms, the green shoots were growing backwards at a slower rate than they had been only last month. The world rejoiced at the news. Stock markets leapt and politicians turned to their expense accounts in relief. The mortgage lenders announced that the housing slump had been a sampling error and that house prices had actually been rising, credibility-adjusted, all along. The largest leap in unemployment in Britain for nearly thirty years was dismissed as a lagging indicator that could be discounted on the upside.

But the trampoline recovery was to be short lived. By mid week the killjoy Bank of England warned that the v-shape leap would likely be followed by a head-down slump as the economy bounced off the trampoline altogether and landed in the flower beds. In Britain the debt overhang, and the under-hang of bankers on lampposts, meant that there would not be sufficient finance for a v-shaped bounce to become a self-sustaining orbital high. The British financial services sector has given up on the real economy in order to focus on its core function, which is to deliver bonuses for bankers.

The Bank’s governor Mervyn King, warned that Britain could face the worst slump since the depression, or it might not. He unveiled a new fan shaped recovery graph which showed that, seasonally adjusted, the economy could grow a lot in the medium term or it could shrink a lot in the medium term, but that either way it would be bad for the brown-trouser index.

Shareholders rushed for the exit as the footsie stumbled over itself and fell headlong onto the downside. The Baltic Dry shipping index was soaked by renewed sentiment. Confidence in bank stocks rose on a counterintuitive anti-bear bull rally as hedge funds liquidated short positions in a profit-taking pause for breath.

Green shoots ended the week on a low high when Ladbrokes, the betting agency, announced that punters had got lucky in March. Bookie profits had been left standing when Mon Mome won the grand national on 100/1. Alistair Darling said that he intended to scrap the treasury in future and start putting the public finances on a Dundee Shuffle at Aintree since that was more reliable indicator than a statistically meaningful sample of economic forecasters.

Sunday, September 20, 2009

What about cutting the financial sector as well as the public sector

  If I were a conspiracy theorist, I’d be saying that it had all been planned.  The banks knew the crisis was coming last year and that they couldn’t trade dodgy mortgage securities and lend forty times their core capital without coming a cropper.  So, they held a gun to the government’s head:  take  our toxic assets or we blow the economy up.  The government obliged with a £1.3 trillion pound bail out.

    But things weren’t going well at the turn of the year, with public anger at Sir Fred Goodwin’s pension creating pressure for real reform. So they took MPs out one by one and shot them - or rather exposed their expenses fiddles to the Daily Telegraph, which amounted to the same thing.  That drew a line under the campaign for banking reform, as public anger against Sir Fred and City  plutocrats turned to public anger against flipping MPs and their duck houses. 

   But there was still the problem of how to hide the massive cost of getting the government to take on the bad    debts of the banks.  So they dusted down a few myths from the 1970s that every middle aged newspaper reader would understand: profligate public spending. The bloated state.

Saturday, September 19, 2009

Why has Edinburgh not suffered from the banking crisis?

Edinburgh may be one of the epicentres of the greatest financial crisis in modern history, but you’d be hard pressed to tell. You might have expected a city flat on its back, with dazed ex-bankers wandering around the aisles at Lidl and TK Maxx. You might think that the council would be pushing through emergency cutbacks and bracing itself for a collapse in property taxes. But if you’re looking for austerity, it isn’t here.

There is no shortage of new cars on Edinburgh’s roads, even before the government’s scrappage scheme has started. House prices have taken a knock, but only by about 10% - and the market remains pretty healthy by comparison with London. Seriously expensive flats are still being built in developments like the Quartermile on the site of the old Royal Infirmary of Edinburgh. A half billion pound tram system is being laid between Edinburgh airport and projected luxury developments at Granton.

This doesn’t seem to make a lot of sense. Edinburgh’s banks - RBS and HBOS - may have collapsed into insolvency and been bailed out by the state, but Edinburgh hasn't turned into Reykjavik or Dublin. Why not? Well, the answer is that while Edinburgh was big on banking, it has been bigger, much bigger on public spending It’s not bankers who are keeping he wine bars buzzing in the New Town, but civil servants, council officials, teachers and NGOs.

Thursday, September 17, 2009

Review: "The Constant Economy - how to create a stable society" by Zac Goldsmith.

“Vote blue to go green”, or so David Cameron advised after his photo-opportunity in the Arctic two years ago. Bur can we really believe that the party of big business, of private enterprise and of deregulation has suddenly become the party of the environment? Could you really see a Tory administration introducing carbon taxes, restricting car use, curbing cheap holiday flights, introducing combined heat and power schemes, backing anti-supermarket campaigns? Zac Goldsmith can.

Wednesday, September 16, 2009

Free higher education is worth fighting for.

September, and summer finally comes to Scotland just in time to fool students coming here for the new academic year. One of my jobs as Rector of Edinburgh University is to warn them and welcome them - all seven thousand of them from 130 countries. At times like this you realise that Scotland’s real business nowadays isn’t finance or manufacturing but higher education. Since the Scottish banks blew themselves up last year, universities are the only thing we still do now that is still genuinely regarded as world class.

So, I tell the students how Edinburgh is one of the world’s leading research universities attracting record funding. I tell them about the Scottish Enlightenment, Smith and Hume, Burke and Hare, Dolly the Sheep, and, with some trepidation, about the Scottish egalitarian tradition in education, which goes back to the Reformation, and which made Scotland the best educated country in Europe. With some trepidation because I’m only too aware that these international students, or rather their parents, are paying up to £15,000 a year in tuition fees to come here. No egalitarian education for them. Edinburgh is by no means alone in relying increasingly on international students to help pay the rent.

But you have to bite the bullet: if free higher education is right you have to argue the case for it, especially among those who don’t benefit. I explain that the Scottish Parliament voted to abolish up front university tuition fees in 2001 after very wide consultation and on the advice of the Cubie Report, and that the present SNP government abolished the graduate endowment as a manifesto pledge. There’s no free lunch. The Scottish government makes up the difference out of general tax revenue. However, there is - or has - been a consensus in Scotland that higher education should be free and that this is in line with the Scottish egalitarian tradition, the democratic intellect. We don’t want university entrance to be based on ability to pay.

Or at least, we didn’t. Because I can’t help being aware that the consensus is under greater strain than at any time in the last decade. It is increasingly difficult to find people in Scottish universities who will vigorously defend free higher education. Last week Lord Sutherland, the former principal of Edinburgh University called for fees to be reintroduced to prevent Scottish institutions losing ground to English universities. I was dismayed to discover, at the Universities UK conference in Edinburgh University last week, that the Scottish system is regarded by many in the university establishment, north and south of the border, as a dangerous anachronism which could lead to Scottish universities becoming second class establishments handing out devalued degrees. I’m not quite sure what they base this on since Edinburgh is as well funded as any university in the world.

Most Scottish University Vice Chancellors avoid talking about fees because they don’t want to get political, but privately a number of the newer ones are saying that the return of tuition fees is inevitable. Once the £3,000 a year cap is lifted on the fees English universities can charge - which everyone sees as inevitable whichever party wins the next general election - Scottish universities will be in deep trouble. Right now the Scottish government makes up for tuition fees on a per capita basis by paying Scottish universities the equivalent of the fees that Scottish students would have paid But once English universities start paying variable fees, the argument goes, Scotland will be in a bind. If some English elite universities are charging 30,000 or 40,000 a year, how will the Scottish government be able to match the funding when public spending is being cut?

Now, of course, no one wants to see Scottish universities plunged into penury. But what annoys me about this line of argument is that it isn’t a reasoned case against the universal principle in higher education but simply a capitulation to the privatisation of it. This crisis is coming precisely because elite English universities are about do to what critics of tuition fees always said they would do: which is charge ever higher fees based on their market value. The lifting of the cap on tuition fees will simply turn English universities like Oxbridge, and UCL into the equivalents Eton and Westminster. University entrance will be based on ability to pay. There will be some scholarships for the poor, of course, to justify their charitable tax status, but make no mistake: variable tuition fees is the end of universal higher education. Is that really what we want?

Scotland is being forced down a road in never chose to travel and I hope it will resist. If the day ever comes when Edinburgh University is charging Scottish or even English students £30,000 a year in fees I will not be in the Rector’s chair because it will have become just another bastion of privilege. An intellectual finishing school for the wealthy - and if that is the politics of envy, so be it. And yes, I do know that Edinburgh is a pretty middle class establishment right now, and that not enough students from poor backgrounds go into university in Scotland. But the situation will be a hundred times worse if Scottish universities start charging what the market will bear. Look at Edinburgh’s private schools - also charities - and they only charge fees of £9,000 a year. Do we want universities to be the same? That’s what we are looking at if we go down this road.

Yes, the present system is clumsy. English students and international students pay tuition fees; Scottish and EU students don’t, which doesn’t seem to make sense, but is a reality of EU law. Perhaps some kind of graduate tax, based on ability to pay, is the sensible way to ensure that those who benefit from higher education pay their share of the cost. I wouldn’t necessarily argue with that, but that is not what is on the table. Scottish universities have a gun held at their heads and they are rapidly losing their will to challenge the new elitism.

They need to rediscover their self-confidence. After addressing the international students and parents I spoke to many of them over coffee in the Playfair Library. Not one complained about paying fees, and everyone who voiced an opinion said they wished that they had free higher education back home. This argument can be won. But it will require some of that celebrated democratic intellect we talk about to make the case.

Monday, September 14, 2009

The lost art of megaphone politics

Pass the megaphone Alex, we’re all anti-capitalists now. Scotland's First Minister, Alex Salmond, was taken to task last week by commentators and businesspeople for joining demonstrations against job losses at Diageo’s Johnnie Walker plant in Kilmarnock. Lord Mandelson, First Secretary, has laid into the Phoenix Four who bought MG Rover for the price of a petrol cap and made off with £40 million. It’s raised the whole question of whether it’s right and proper for senior politicians to clash openly with business. Charges of hypocrisy and grandstanding abound. Do they really care or are they just after cheap populist votes?

It was undignified, we were told last week, for Alex Salmond to be behaving like Arthur Scargill or Jimmy Reid. Criticising one of Scotland’s largest firms for putting profit before social responsibility. The head of CBI Scotland, Iain McMillan, condemned Salmond’s behaviour for putting future investment at risk. Though the people of Kilmarnock rather liked the idea of a politician rolling his sleeves up for once and actually getting down to street level.

At First Minister’s Question Time Salmond made no apologies for his megaphone diplomacy. "I am proud of my attendance at that rally”, he barked at the Labour benches. “I'm proud of the workers and council and unions and all parties who attended that rally, I thought it was a formidable and inspiring demonstration of people anxious to defend their right to work and their communities”. Labour really hate it when Salmond outflanks them on the left and they looked sick as the proverbial parrot as he all but accused their leader Iain Gray of siding with the class enemy.

But while we all enjoyed the knock about, there is a question about the FM’s credibility here as a born again class warrior since he has been so conspicuously committed in recent years to private enterprise, low taxation and deregulation. Diageo bosses dismissed the proposals made by the Scottish government task force on Kilmarnock as politically motivated, economically illiterate and likely to jeopardise 4,000 other jobs in the drinks giant. They understood the market a lot better than politicians, claimed Diageo bosses, and Salmond should leave commercial decisions to the people who have to live with the consequences and answer to their shareholders.

Critics said that Salmond was only ‘grandstanding’ and hunting for votes in an SNP target seat, but that's what politicians do. Listen indeed to Lord Mandelson, the business secretary, laying into the “Phoenix Four” shysters who took the money from the MG Rover rescue and ran. Mandelson reached for the megaphone to make clear to Labour voters in the Midlands, where Rover used to support 50,000 jobs, that he was on their side and felt their pain. He rather theatrically threatened the directors with legal action if they dared to set up in business again in Britain. It would have been churlish to point out that it was a Labour Trade and Industry Secretary, Stephen Byers, who handed MG Rover to the Phoenix Fraudsters.

MG Rover’s fate was a vivid illustration of what has happened to British capitalism during the Labour decade when the economy turned from making things to manipulating debt. The Phoenix Four used complex financial engineering - setting up new companies with obscure relationships to offshore tax havens - which allowed them to gain from shifting debt and assets around the monopoly board. But they didn’t break any laws. Indeed, by the degraded standards of modern business practice, they should probably be commended for their ingenuity. Modern turbo capitalism doesn’t have much time for sweaty men in overalls making things, whether it’s cars or whisky.

There was something richly ironic in Peter Mandelson attacking businessmen for indulging in dodgy deals. He had to resign twice from the cabinet over his complex relations with wealthy individuals. The first time was over a housing loan from the Labour minister, Geoffrey Robinson and the second was after allegations that he had helped an Indian businessman to get a British passport. Lord Mandelson now lives in a £2.2 million pound house overlooking Regents Park purchased entirely legitimately through legal earnings. He has been spending a quality time with Russian oligarchs like Oleg Derispaski on his yacht in Corfu.

No one could accuse Alex Salmond of enriching himself or supping with oligarchs. Though he did rather become a cheerleader for Scotland’s banks, especially RBS, before it was revealed as the world’s worst bank. Perhaps, indeed, that experience made him rethink his uncritical endorsement of private enterprise. For in the end he is right. Firms do have a social responsibility, just like everyone else, and it doesn’t do any harm for them to be reminded of that every now and again, with or without the megaphone.

Friday, September 11, 2009

Google bigger than Gutenberg?

“Don't be evil” is the rather gothic mission statement of the search engine company Google, which is planning to digitise all the world's books. Set up a decade ago by American digital pioneers, Larry Page and Sergey Brin, Google has set itself the modest task of organising all the world's knowledge. Everything. The lot. You don't have to be paranoid to find this idea more than a little scary.

Mind you, it's such an extraordinary concept that it's hard to believe that they're serious. But they aren't laughing. Google wants to be bigger than Gutenberg, and the world has four weeks to decide whether it should get its way. That's when the biggest legal suit in publishing history will finally be resolved in a New York court room overGoogle's proposal for a Books Rights Registry which will allow it to carry on copying. The likelihood is that Google will win.

Universities across the world are bracing themselves for what could either become a new republic of knowledge – a project as old as the Enlightenment itself – or a monopolist dystopia in which one private company controls a digital portal to all of society's wisdom. It could be a giant leap forward in human understanding, or a step towards an intellectual dark age in which knowledge itself becomes privatised. This is not just an issue for the publishing world, or even the literary and academic communities. Google's project could be a defining moment in western civilisation with profound implications for business, media, government. In fact, almost everyone who reads a book needs to know what is happeneing and to take a view on it. Are you with Google or against them?

Google has already helped undermine the business model of newspapers by repackaging their content on the web. The print media failed dismally to anticpate the impact of new technology and didn't defend its intellectual property with any vigour – a mistake that Rupert Murdoch of News International says he intends to rectify. But the collapse of countless regional and national newspapers is a fundamental problem for democracy since a free and well-resourced press is essential if politicians are to be held to account. There's little doubt that putting Google in charge of the world's knowledge could lead to greater unforseen disasters.

The books project began as a kind of brainstorming session in the bowels of Google four years ago. When Google started copying millions of books in US libraries, authors naturally thought Brin and Page had found some clever way of getting round copyright laws. And it is certainly the case that Google was incredibly naive when it launched its scanning project without checking where it stood on intellectual property. Google thought it was doing authors a favour since it was making millions of out of print books accessible again online. The writers and publishers didn't see it that way, and Google has now offered to give authors 70% of any revenues after digitisation But many are still unhappy and are refusing to give Google authority even to scan books that are out of print.

But what they don't understand is that Google was NOT trying to steal a march on publishers or violate intellectual property rights. I don't even think that crossed their minds Brin and Page were hoping to achieve something much more ambitious: they want all this data to be available, not for sale, but for search. That's where Google makes its money, through highly targeted and lucrative advertising, and through applications like psychological consumer research. Google is a friendly spy; it wants to know everything about you, from where you live to how you dream.

However, after some paranoid soul searching, I have surprised myself by coming down on the side of Google. This is because collectivising all the world's information could lead to an intellectual revolution, breaking down barriers to scholarship and research. Imagine: every book that has ever been printed could be available on any computer screen, smart-phone or e-reader. Scientists, doctors, historians, politicians and of course journalists would have the intellectual resources of the entire world at the click of a mouse. Every dusty class room in sub-Saharan Africa would have instant access to the sum total of human knowledge. It could be a quantum leap in the battle against ignorance, and would transform education. No more learning of facts, only how to use them. No more spending endless hourse in dusty libraries looking for sources and references. A brain as big as the world.

Yes I'm only too aware of the risk that this could turn into an Orwellian Big Brother. Governments, regulators and the law simply are not equipped to meet the challenge posed by Google's knowledge grab. I don't believe that Brin and Page have sinister intentions, but truth is, no one least of all Google really knows what the digital knowledge project could lead to. All we know is that we're getting there fast. Out of the 32 million books in the world's libraries, Google has already scanned 10 million and if they win on October 7th, they will have completed the task within a decade.

Of course, a lot of human knowledge isn't in books, but the Googlers are onto that too. An estimated one million Google-controlled computers are currently searching billions of web pages every second. Google bought Youtube to gain access to billions more bytes of video. Through Google mail, their algorithms can rifle through hundreds of millions of emails, and they can process the contents of computer clouds created by personal users of their software. Google Earth is photographing all our streets so that this knowledge can be organised geographically. This really is a project for world domination - only without an evil genius. At least for now.

Universities across the world have opened their doors to Google and many academics believe that digitisation of all the world's knowledge would be a great achivement, making a reality of the ideal of a democracy of knowledge, where everyone has free access to the collective wisdom of human civilisation. Put this way, it is a wonderful idea. But it is absolutely imperative that Google is subject to democratic control. If we hand it the key to knowledge it must let us know what it is doing with it. It must be utterly transparent and accountable. We know so little about this organisation that is taking over the world. It's time for the people to search the search engine.

Thursday, September 10, 2009

Is this the end for Scottish Nationalism?

So is that the end of the nationalist dream? Have hopes of an independent Scotland crashed to the ground, like Pan Am 103, following he fiasco over the release of Al Megrahi? Well, nationalism has seen better days. Megrahi’s triumphant return to Libya outraged many Scots and, for the first time, a credibility gulf has opened up between Alex Salmond and the Scottish voters, many of whom refuse to believe that economic motives did not play a part in the Lockerbie bomber’s compassionate release.

The Scottish government suffered a humiliating defeat in the Scottish parliament on Megrahi last week, and it didn’t stop there. The SNP’s third legislative programme, featuring that referendum on independence, has been greeted by howls of derision. In the midst of a financial crisis and with the government accused of double dealing over oil and compassion, what point is there in publishing a referendum bill that will almost certainly not be passed by parliament and, even if it were, would likely return a decisive rejection of independence. Has Alex finally lost it?

The Diageo affair has been another awkward moment for the Nationalists. The Scottish government has managed to appear opportunist, even as ministers tried to defend jobs in Kilmarnock. The drinks company contemptuously rejected their plan to save the plant, as economically illiterate. The sub-text was that the SNP were playing for votes in a target seat by attempting to demonise one of Scotland's most important and successful firms. The SNP has been very successful in its double strategy of being the government and the opposition in one party, but there are limits - a government has to accept that it is there to govern not campaign. And as the novelty of nationalism wears off, the voters are beginning to regard the SNP as just like any government: deeply fallible and morally unreliable.

This is clearly a defining moment for Scotland’s first ever nationalist government. From here on Alex Salmond either consolidates his position as a national leader, or things fall apart and the government collapses into one of those ignominious troughs that the SNP experiences every decade or so. The odds against that happening, but the danger is very real, and is apparent on the faces of the party leaders. Alex Salmond has been going non stop for the last three years and he should remember that exhaustion is a greater enemy for a radical administration than any opposition party.

However, it’s worth recalling just how popular this administration had been until the Lockerbie issue broke. Alex Salmond’s personal popularity has remained unnaturally high over the last two and a half years of government, despite the banking collapse, local income tax and more broken promises than Amy Winehouse made in rehab. In June, an ICM poll asked how good or bad a job the UK party leaders were doing. Salmond was rated plus 34, Gordon Brown, plus 4 and David Cameron minus 15 - and this poll wasn’t commissioned by the SNP but by the BBC. In the only poll that mattered in June, the European elections, the SNP surged ahead of Labour and delivered 29% to Labour’s 21% - a 7.5% swing to the SNP. .

Mind you that was against the background of the expenses scandal in Westminster, which didn’t engulf the SNP, and followed a period of six months in which Labour had been in the lead in voting intentions for Westminster. Following the Lockerbie row, it seems most unlikely that Alex Salmond will gain his 20 seats and hold the balance of power in Westminster. But the SNP can’t be written off yet. The SNP have published opinion polls suggesting that more people are coming round to their side on Megrahi, thanks to the support of Nelson Mandela and the Scottish churches.

No one came out of the Megrahi affair smelling of roses, but at least the SNP managed to prevent Gordon Brown escaping the ordure. The Prime Minister’s refusal to comment on the repatriation of Megrahi left him looking ridiculous, especially after it emerged that his own ministers had been telling the Libyans that they didn’t want the Lockerbie bomber to die in jail. Labour are now insisting that the SNP administration was under pressure from the Arab oil state of Qatar to release Megrahi in exchange for investment in Scotland. This may or may not be true, but the UK government was clearly in the same game over oil projects in Libya. A sceptical public, many of whom believe that we haven’t been told the whole story about Lockerbie, have been left doubting the integrity of either Brown or Salmond on this. But at least this has prevented the SNP being landed with all the blame.

Lockerbie aside, the next couple of years were never going to be easy for the SNP. The policy on restricting alcohol sales has been unravelling and there is still no clear funding mechanism for the new Forth road bridge as public spending is axed. Unemployment will be growing fast in Scotland even as the financial crisis abates. Labour will be quick to blame the Scottish government for being unprepared at the same time as arguing that the case for independence has been ruined by the credit crunch and the UK bail out that saved the Scottish banks. Moreover, the Calman Commission has unexpectedly produced a rather compelling case for a form of federalism. Though Calman’s tax-splitting mechanism is defective, his arguments for a transfer of fiscal responsibility to Holyrood have been almost universally accepted. The SNP however, is not making the mistake of disowning Calman as it disowned the Scottish Constitutional Convention in 1988. Indeed, Salmond is making clear that there should be a third ‘Calman’ question in the referendum on independence - if the opposition parties can come up with one.

The likelihood is that the opposition parties will unite to defeat the referendum bill in parliament in order to show, as they did over local income tax and Megrahi, that the Scottish government is faltering. However, the collapse of the bill needn’t be a crisis for the SNP. Everyone assumes that Alex Salmond really wants a referendum in November 2011, but tactically the failure of the bill might suit the SNP rather well. Remember, the SNP only gained power in Holyrood by factoring out independence, and promising to govern within the constitutional terms of devolution. The referendum gave Scottish voters confidence that a vote for the SNP wasn’t an immediate vote for the break up of Britain. If the referendum bill is rejected by the Scottish parliament, as expected, it can provide the top line for the 2011 manifesto, and will again allow the Scottish voters to vote SNP without registering a direct vote for separation.

Will the SNP win in 2011? Yes. I think they probably will. With a Conservative government in Westminster pushing through deep public spending cuts, the SNP will be in a strong position to go into the 2011 election campaign defending Scottish jobs and services, especially if Labour is in disarray following a serious electoral defeat. In two years time, Lockerbie will be a distant memory, and most people will remember Gordon Brown’s evasion as much as Kenny MacAskill’s questionable compassion. The election is likely to be all about jobs and cuts. It will be up to the SNP to persuade worried voters that they, and they alone, can stand up for Scotland.

Monday, September 07, 2009

Britain backs bankers bonuses.

We will fight them on the bonuses, we will fight them on the share options, we shall never surrender. The British and American governments are standing four square against France and Germany who want to cap banker's remuneration. How dare this continental anti-capitalist axis meddle with our bonus system! Bankers must be allowed to pay themselves whatever they can get away with or the entire system will collapse.

Really, this is beyond satire. What happened to all those promises to end the risk culture in the City, to ensure that failure is not rewarded and that greed should no longer dominate economic life? At yesterday's G20 summit of finance ministers, a Labour chancellor joined with Barack Obama's people to block a modest proposal on bonus reform from conservative governments in Germany and France. Yes, that's right. The supposedly right wing governments of Nicolas Sarkozy and Angela Merkel are proposing curbs on bankers pay that our Labour government and the great liberal Obama are trying to block.

How can Barack Obama be supporting this? Only last January he said that bonuses were "shameful" and had to be curbed. He was elected by millions of Americans who were disgusted with the greed and irresponsibility of Wall Street titans like Dick Fuld of now-defunct Lehman Brothers who paid themselves colossal salaries while destroying not only thier own companies the jobs of millions of Americans.

The French Finance Minister, Christine Legarde, claims that bonuses were a major cause of the financial crisis and that it is necessary to limit remuneration if history isn't to repeat itself. She is absolutely right, and is only echoing what the Financial Services Authority has been saying and what the prime minister, Gordon Brown, promised in April. It is obscene for banks like RBS to be paying themselves multimillion bonuses when they have been rescued by hundreds of billions of tax-payer's money. Yet, as BBC's Newsnight revealed, RBS has been handing £2m win-or-lose bonuses to new staff. It's chief, Stephen Hester is paying himself £9.7 million. All the banks are paying colossal bonuses again as they coin it in from government subsidies.
It's fine for high rolling hedge funds to award themselves huge salaries – when they cock up they go out of business. It is moral and economical madness for largely state owned retail banks, who are only in existence because of public funds, to be playing the same game.

Alistair Darling's argument that it is not worth trying to cap bonuses because bankers will get round them is a cop out, like saying there is no point in levying income tax because people will evade it. So is the argument that we may lost the 'brightest and the best' in the City of London because they will move to countries where bonuses are still paid. Not if there is concerted international action they won't – yet it is precisely such action that the British and American governments are trying to block.
Anyway, banking is not a difficult activity, when you are borrowing from the Bank of England at practically zero interest rates and then loaning it out at 12%. Anyone can make money doing that, especially if the taxpayer has taken on the burden of all your bad debts. If they want to go to the Cayman Islands, let them – they've done enough damage already.

Every serious commentator on the financial crisis ,from the FSA chairman, Lord Turner, to the Financial Times columnist, Martin Wolf, agrees that the paying of excessive short term bonuses encouraged excessive risk taking in the City.
When bankers are engaging in deals that could make them independently wealthy within a couple of years they are hardly going to be bothered about the long term health of the financial institution they are working for, let alone the wider economy. They take the money and run. Like Sir Fred Goodwin - who destroyed his bank, handed the losses to the government and then walked away with a pension pot of £13m..

But where is the outrage? It seems only yesterday that the Sun was attacking “scumbag millionaires”. The Treasury Select Committee has called for an end to the bonus culture. ~Even George Osborne, the shadow secretary, called last month for an end to bonuses in state subsidised banks. Every opinion poll on the subject has shown that the voters are disgusted by the bonus culture. This has nothing to do with the politics of envy let alone Marxism. What the bankers are doing has nothing whatever to do with private enterprise. If the free market had been allowed to function all of them would be out of a job.

Thursday, September 03, 2009

House price monster on the loose again?

Rejoice, rejoice - house prices are rising once again. The market has recovered, confidence, has returned, and there is light at the end of the property tunnel – or so we're told by the economic cheerleaders who believe house price inflation is wonderful. It isn't. The rise in house prices is extremely bad news – not just for the millions who are locked out of home ownership, but for the economy as a whole.

It's incredibly how short peoples' memories are. We were supposed to have learned a grim lesson last year – that we couldn't continue to live beyond our means, taking on debts we couldn't afford. Housing is for nesting not investing, we were told,. Everyone accepted that the UK economy had been deformed by the relentless rise in house prices which underpinned the credit bubble that finally burst in 2007.

The collapse started in the sub-prime property market in the United States, but the same phenomenon existed here also. Bradford and Bingley, Northern Rock and HBOS collapsed because they had lent too much on the basis of inflated property values. Those 125% mortgages, buy to let schemes, micro-loft developments in city centres all pushed property values to excessive multiples of earnings, creating an unstable pyramid of debt.

But now it seems to be happening all over again. It almost defies reason. In the middle of the worst recession since the 1940s, and with unemployment climbing towards 3 million, house prices have just registered their biggest increase in five years. In Edinburgh, which is leading the 'recovery' in Scotland August house prices are 6% up on last year. The average cost of a home in the capital – which means a two bedroom flat – is back to nearly £220,000 in a City where average earnings are only around £23,000. House prices at nearly ten times earnings are economic insanity.

How can this be? History tells us that house prices fall when credit is tight, the economy is in recession and unemployment is rising. All the economic forecasters were saying that house prices would continue to fall this year by about 10%. To get down to historic multiples of earnings, UK prices should have another 20% to drop. Yet here we are with house price rising faster than they were at the very top of the market two years ago. Natiowide has even announced the return of the 125% mortgage

What seems to be happening is this. First of all, the collapse of the value of the pound meant that UK property prices for foreign buyers dropped, not by 20% but by nearer 40%. This made big houses in London look cheap to foreign investors. Also, the City of London has been paying itself mega salaries again. This has ignited a mini boom in houses worth over one million pounds, sales of whhich rose by 234% in August.

The freeze on stamp duty hasn't done a great deal to help first time buyers, but the cuts in interest rates have been an enormous boost to the relatively well off. Anyone owning a large home with a large mortgage has been handed a windfall worth hundreds of pounds a month. This has encouraged a number of people to trade up while prices were down. There's also been a bounce in the sales of flats to cash buyers as people look to find areas to invest in, now that cash is earning practically nothing if left on deposit. The bank of mum and dad has been helping younger families pay their deposits.

The banks are not repossessing homes in the way they did in previous recessions and are allowing people in arrears to defer paying their mounting debt. The final factor is the chronic housing shortage. We're building fewer homes than ever, and the number of housing starts in Scotland fell this year by 26%. Scarcity means people bid up the prices of the homes that are available. This doesn't of course mean that the housing market has recovered to normal volumes. Far from it. Fewer than half as many houses were sold in August compared with two years ago. This is because first time buyers are still locked out of the market if they can't raise the 25% deposit demanded by the banks which are actually tightening credit right now.

But where is the Bank of England? Surely, if another bubble is brewing, it should be raising interest rates. Where is the FSA?The government has repeatedly said that it wants avoid any return to the property based credit bubble . But the governor of the Bank, Mervyn King, is holding rates at their lowest level in 300 years and continuing to print money through quantitative easing. This cash has to go somewhere, and since there is no incentive to save, a lot of it is finding its way into property.

But if this is allowed to go on, then we are simply preparing the ground for the next bubble and the next bust. We desperately need to create a savings culture in this country, not another round of mega debt – which is what high house prices inevitably lead to. The government appears to believe that a return to house price inflation will please the voters, but a large number of them are young families who can't afford to buy a house. The average age of the first time buyer is approaching 40.

The government also hopes the high streets will start booming again as people borrow against the rising values of their homes, just as they did in the years until 2007. But housing wealth is an illusion, borne of scarcity. It distorts the economy by diverting investment into speculation instead of into making things and adding value. Worse, high house prices actually depress consumer demand because families are forced to spend their disposable income on rent and mortgages rather than on goods in the shops.

It is desperately worrying that no one seems to be pointing this out. The silence from the politicians and regulators has been deafening. The media coverage is uniformly inflationary, celebrating high house prices when we should be demanding that the regulators do something to prevent another bubble mentality forming. We need a crash building programme, more social housing for rent, a curb on tax incentives to buy-to-let, a reversal of the cut in capital gains tax, restrictions on earnings multiples. The beast must not be let loose again.

Get out of Afghanistan. Now.

Everything is wrong about this dumb war : we don’t know what we are fighting for, we have no exit strategy, our troops lack essential equipment. and the British people are increasingly unwilling to accept casualties. No British politician has been capable of explaining coherently what victory in Afghanistan would actually look like even if it could be achieved. This is a failed state governed by shifting coalitions of Pashtuns, Baluchis, Tajiks, Hazares and Uzbeks - tribes who are united only in their eagerness to see foreign soldiers removed from Afghan soil. The most useful contribution Britain could make toward nation building would be to get out of there as quickly as possible.

More than 200 British soldiers have died in Afghanistan - more than in the entire Iraq war. Thousands of British soldiers have suffered terrible injuries and ruined lives, not to mention tens of thousands of Afghan casualties. And this in an operation in Helmand province which, the former defence secretary John Reid, said in 2006 he expected woult be over “without a shot being fired”. The parents of dead and injured servicemen and women would be justified in taking out a class action against the British government for failing in its duty of care. The British army, exhausted from its involvement in Iraq was sent to one of the most dangerous places on the planet, without proper air support, to feed the vanity of a UK political elite desperate to show that Britain still counts on the world stage. All they have demonstrated is that Britain does not matter any more. What remained of British military and diplomatic prestige has been lost in the dust of Helmand province.

Afghanistan has been a text book demonstration of how to not to win hearts and minds. We built schools and then bombed them to rubble. We spoke peace to the villagers and then killed them with drones, the worst kind of impersonal violence. We promised prosperity and then plunged the country into economic chaos. We promised good government and have ended up supporting a regime in Kabul which has become a by-word for corruption and cronyism. We talked of liberating women, but we have bankrolled a misogynistic leader who supports marital rape.

The idea that a few British soldiers could halt the poppy industry, the country’s main cash crop, was ludicrous. Almost as absurd as the suggestion that in some way British soldiers were preventing terrorism on British streets. This was Gordon Brown’s “chain of terror”, stretching as he put it from “the mountains of Afghanistan to the high streets of Britain”. Yet everyone knows that the terrorists involved in 7/7 bombings in London came from Britain and were trained in Pakistan.

Eight years ago, there may have been a justification for the ‘hot pursuit’ of al Qaeda terrorists, who planned and trained for the 9/11 plane bombings in training camps in Afghanistan. This was essentially a policing action, and recognised as such by the local people. Having destroyed those camps, we should have offered Kabul aid and support and left the country to find its own way. We were the liberators then. Now, our incompetent occupation of the country has thrust the Arab al Qaeda and the Pashtun Taleban - by no means natural bedfellows - into each others arms.

We wilfully ignored the lesson of the Iraq war that, however benign our intentions, the fact of our military occupation strengthens the very terrorism it is supposed to defeat. We scuttled out of Basra after handing the Iraq city over to Shia warlords. We scuttled into Afghanistan on pretence that we were on a peacekeeping mission. The Taleban and the Afghan mujihadeen were under no such illusions and reacted to what they regard as a foreign invader.

Trying to occupy the country with an inadequate force was plain stupid. This country has been fighting invaders successfully for 2,000 years. It defeated the British Empire 150 years ago and it defeated the Soviet Empire in the 1980s. How could we have been so naive as to believe we could occupy this country with a handful of soldiers and a few land rovers? The Afghans will never submit to foreign military domination, yet our military leaders say we are going to be in their country for thirty years. They are mad.

The Taleban are an odious sect who oppress women, reject enlightenment values and abhor democracy. They use 13 year old boys to deliver suicide bombs. But the reality is that they, or their confederates, are in control in 90% of Afghanistan and are not going to go away. You can’t fight them with gender awareness classes and election scrutineers. The British government recognised as much last month when David Miliband, the home secretary, proposed that we should start talking to the Taleban.

The fruit of our involvement is an opium trade that has burgeoned along with terrorism and corruption. Only in the area of democracy has there been any kind of progress, as millions of Afghan citizens made clear when they defied the Taleban and made the effort to vote. It was both inspiring and slightly chilling to see Afghan women dressed in burkas, like dusty ghosts, lining up to exercise their votes. Some may have been voting their tribal slate or as instructed by their menfolk. But at least they have demonstrated that there is nothing Afghanistan gene pool that makes them immune to democracy.

It is not enough to plead that our intentions were honourable - that we did not enter for economic or strategic gain but to try to build a modern democratic society. But you can’t bomb a country into the twenty first century and you can’t impose democracy from above. It can only come from the people themselves. Well, we should quit when we are ahead. Our job is now done. Let’s get out before we kill any more people with out kindness.