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Don’t Conflate Brexit with Party Politics.

Summary: Brexit is not a party political issue. The increasing pressures on Labour to come out against Brexit must be resisted. Labour must get into power. A second referendum, becoming increasingly likely with Nigel Farage supporting it, is the only way it could be reversed if our democracy is going to retain any element of respect. All Labour need to do is to say they will bide by the outcome of whatever referendum result stands. They need to concentrate on gaining power not by risking their fragile majority. They have the policies and an energetic and enthusiastic party base. Even if Brexit does come to pass, one managed by Labour would be so much better for the country as a whole.

Brexit is not a party political issue. That may seem a strange thing to say. Yes, referendum was a consequence of political machinations at that time and, yes, the Brexit negotiations are being handled, albeit badly, by politicians. The conventional political party lines were crossed by very many voters because the political parties provided little helpful guidance. The vote to Leave was not driven by one party or another.

The campaign before the referendum was deeply flawed but the result was one arrived at democratically. Let there be no doubt that the only way respect for democracy can be maintained is if a second referendum is held, hopefully with much more detail of what the Deal might be. No political party could possibly reverse Brexit if they came to power without the support of a second referendum. It would be seen as a further example of the power of the establishment to try to reverse Brexit without it.

Labour are being advised by many to come out against Brexit. For many months, Labour has consistently avoided stating what their view of Brexit actually is. However the most important thing that Labour has to achieve is to become the next government with a reasonable majority. Nothing, including Brexit, should be allowed to distract from that goal. So far Labour have managed sitting on the fence. As soon as they declare one way or the other significant numbers of voters would leave the Party and no doubt others would join.

The demographics of Remain or Leave voters are complicated and transcend conventional party political lines. It is difficult to see what benefit there might be for Labour in declaring one way or the other for Brexit. A second referendum is becoming increasingly likely particularly as Nigel Farage has come out today in support of such a referendum. He is convinced that the majority for Leave would increase. In a sense any second referendum, no matter what the result, would be progress as it might give a bigger majority for one side or the other. That would perhaps clear up the ambiguities for a considerable period.

The Brexit battles will continue but there is no particular need for these arguments to affect Labour’s policies. Indeed there are relatively few of their policies that would be dramatically affected by Leaving or Remaining, apart from the economic impacts of leaving which would be pretty serious. Those in favour of Remaining should organise themselves as best they can independent of party loyalties and let the parties get on with politics and running the country.

At present, the Tories are so preoccupied with every aspect of Brexit that they have little energy left over to run the country. The current shambles with the NHS, social care, education, defence, you name it, is all because the Tories have run out of new ideas and, because of Brexit, do not want to upset anyone. This is exactly the environment that Labour should be capitalising on now. Labour have strong policies which are in many cases well worked out. These really should appeal to those living in areas that voted strongly for Leave. Nothing should be done to risk losing these potential voters. Labour have to manage an important communications program to reach the communities most affected by austerity. But don’t talk about Brexit!

All that Labour need to do as far as Brexit is concerned is to make it clear that they wish to support the democratic will of the people. If their democratic will is found to have changed after a second referendum, well that’s fine. And if it hasn’t changed we just have to live with it sadly. Those like me who want to Remain must make the case clearly and in a way that reaches those who had voted to Leave but we must not conflate Brexit arguments with Labour party policy, nor should we pretend that Labour strongly support one side or the other. If we do then Labour will simply lose votes. Opinion polls do not suggest a very strong lead for Labour. We must not become complacent and take risks. Only one thing matters. Getting Labour into power. Brexit can sort itself out.

Owen Jones in his recent piece for the Guardian (see: https://www.theguardian.com/commentisfree/2018/jan/03/stop-brexit-campaign-vote-leave-populist) has made the matter unnecessarily complicated by failing to separate Brexit from day-to-day party politics. That is why the strongly anti-Brexit Lib Dems have garnered almost no additional support by their policy. He is right, however, that a Labour-managed Brexit would be preferable to one being run by the hard right of the Tory party. That can only be done if Labour win power. Nothing else will do.

Labour Must Rethink Its Brexit Strategy.

Summary: Labour’s policy on Brexit is far too poorly defined. We don’t need to come out for or against Brexit nor for or against a second referendum. The shambles of the Tory Brexit negotiations will continue and probably get worse. Decisions by Labour about its approach can be left until later in the year. Tony Blair has produced an interesting commentary suggesting that Labour should be much more proactive in its relationship with Brexit. Just because he is so unpopular with the left we must not ignore everything he says. What he says makes a lot of sense. Shoot the messenger if you must but read the message first.

In the 1930s and 40s there was a lot of excellent scientific evidence that smoking was a major cause of lung cancer. It was ignored and dismissed by tobacco companies and politicians because that research had been done in Nazi Germany. The research was repeated and came to the same conclusions. The 10 year delay in taking action caused millions of deaths worldwide. My own mother, advised to smoke for her nerves when pregnant with me, died early with lung disease. Nobody liked the messenger then so the message was ignored. We mustn’t make the same mistake again.

Tony Blair has produced a lengthy piece about Labour’s strategy surrounding Brexit (see: https://institute.global/news/brexit-what-we-now-know , and summarised on LabourList at: https://labourlist.org/2018/01/tony-blair-this-is-our-last-chance-brexit-and-the-fate-of-britain-will-be-decided-in-2018/ ). Like many on the left I’m pretty allergic to him and his ghastly legacy. Another case of a disliked messenger yet that is no reason not to listen carefully to what he says. In fact many of his views make a lot of sense, and it should be considered seriously and without prejudice. There is no doubt that Labour policy on Brexit is at best ambiguous. The Tory government is making a complete hash of the Brexit negotiations. Labour really do not need to mouth the foolish “cake and eat it” phraseology beloved of the Tories. We can’t be outside the single market while being in “a single market” as John McDonnell seems to believe. We need to restructure Labour’s approach to maximise its effect on the electorate. If Labour hope to become a government it must learn to develop strategies and articulate them.

I think Tony Blair is wrong that Labour should become anti-Brexit wholeheartedly, nor should they declare themselves for or against another referendum. By maintaining that aspect of their ambiguity they are protected from attack from both Leavers and Remainers. The Tories can be left to continue tearing themselves to pieces. But Labour must not continue doing and saying nothing about it. It dominates a great deal of what is going on in the UK today. We mustn’t take the “don’t talk about the war” approach indefinitely with Brexit.

What Labour must do is to focus on what is happening in the Brexit negotiations and making it clear just how badly these are being managed and just how unrealistic Brexiteer ambitions actually are. There is a lot of evidence that those who voted to Leave were socially conservative and that conservatism was more important than their concerns about the economy. The emphasis of the Labour criticism of the Tories must be to point out just how badly wrong the Brexit process is going. The deals being discussed will not be in any way socially conservative. They will be revolutionary in a way that will also be deeply damaging, in the worst possible way. Labour has to explain just what the Tory approach will do to the country and to those already damaged so much by Tory policies.

Tony Blair is right that Labour must make certain that Brexit is understood to be a pure Tory Brexit. Tory interests will be looked after (big business, finance, the City and the wealthy). The left behind will continue to be left behind only now more so. The economic uncertainties will force bigger and more widespread cuts than we have seen so far. Every aspect of our social fabric will be further damaged. At a time of crisis in the NHS, the social services and many other aspects of what matters to so many of us has to be deeply damaging. The Tories must be blamed for that unambiguously.

We cannot be sure of a chance for a general election during 2018. Again Tony Blair is right about that. The most likely scenario is that the Brexit Deal produced by the Tory government will be patchy, contain many uncertainties and attempts to postpone detailed negotiation until the transition period. After the exit date in March 2019 we will indeed be out of the EU and many of the options we might otherwise have may be closed off. Labour must ensure that a vote on the Deal takes place during 2018. Only then should Labour make it clear that if public opinion has turned against Brexit then another referendum should be held and the Brexit process paused if not terminated.

A Tsunami is Coming This Way!

Summary: With unemployment in the UK so low it is easy to ignore some radical changes that are likely to make the employment of humans much less attractive in the not-too-distant future. British productivity will grow mainly by investment in advanced machines. Important developments in robotics and artificial intelligence will drive this forward at increasing speed. Some countries are already planning to normalise much shorter working weeks. A broad interest in Universal Basic Income will make part-time working more attractive. That would help to create a fairer society to improve the work-life balance for those today shackled to a system requiring long working hours, low pay and with little prospect of advancement. These changes are already happening. We cannot ignore them or imagine for a moment we will be insulated from them in the UK.

It may seem strange when UK unemployment is at a 42 year low to be concerned about the near future prospects for jobs. Our low unemployment rate disguises the fact that there is a lot of slack in the labour market with people employed part-time or on jobs that are highly repetitive and boring. The economy is growing very slowly indeed. The rise in Bank of England interest rates might make you think the corner has been turned but it’s still not looking good at all

Once the present Brexit/Tory shambles is sorted out we can expect significant increases in investment in the economy partly by government but particularly by business. Labour are keen to invest in infrastructure development. The worryingly low level of productivity in the UK will be boosted by investment in new machines and assembly and manufacturing techniques. In other countries this has gone ahead quite strongly while the UK lags. By starting late we will be investing in more advanced machines than other countries. Yet investment doesn’t imply massive increases in employment. Nissan are investing £100 million in their facility in Sunderland but will only increase jobs by just over 100. That’s all the jobs you get these days for £100 million investment

Car production lines are highly automated largely staffed by robots who work tirelessly, uncomplainingly, 24/7, don’t need bathroom or lunch breaks or an HR Department to keep them happy. Outside vast production lines robots are becoming increasingly entrenched. Their capabilities are improving daily. Have a look at this movie from Boston Dynamics (see here: https://www.youtube.com/watch?v=-7xvqQeoA8c ). Robots are under development in the UK that will repair potholes in roads (big market there clearly). Autonomous aircraft and ships and vehicles are under active development worldwide for military use (see: http://outsidethebubble.net/2017/04/10/defence-in-the-21st-century/ ). The rate of improvement in robot capability is dramatic. Tasks which were thought impossible a few years ago are now managed routinely.

The one area where humans have a distinct advantage is where skills are important and have to be learned with training taking months or years to complete. Think here of drivers, pilots and even surgeons. Humans need to be trained to carry out skilled tasks. The training principally involves the learner being helped to absorb the experience of others who are already skilled. Artificial intelligence (AI) is able to use the human experience to process datasets of all sorts that are too extensive for the intellect of individual humans. However recent progress in self training systems has been most impressive.

Google achieved a major milestone in October 2017 at their facility in central London. For some years they had been training computer systems to play the ancient Chinese game of Go, widely believed to be more difficult to master than chess. These trained systems had achieved very high levels of performance. However, the extraordinary new achievement, explained in a Nature paper (https://www.nature.com/articles/nature24270.pdf ) was to use a specialist computer system to teach itself Go without any external training. It was simply given the rules of the game and told to get on with it.

It started by simply playing Go against itself. It played a very large number of games, around 30 million, but by the end of that time had reached a level of expertise at Go that no human has ever achieved. Playing against the previous version of the machine which had already beaten all human players, it won 100-0.

Human players don’t ever play 30 million games but they do learn from many others who have honed their skills by building on the experience of yet more individuals. That is how we humans can learn very quickly. Yet the idea for the first time that a machine can be told what is needed and can train itself to achieve that goal so quickly has enormous implications for most other kinds of mechanical and intellectual challenges. The consequence must be that the number of jobs available for humans will decline and probably decline rather rapidly.

Another interesting announcement this week was that there are moves within Germany to make the standard working week only 28 hours long. At present, Germans work much shorter weeks than we do in the UK (it averaged 32.3 hours in the UK while in Germany they averaged 26.4 hours in 2014). At the same time, German workers have some of the highest levels of GDP per person in the world. 28.8 hour weeks were actually agreed within Volkswagen as far back as 1993 in negotiation with unions concerned that the reduction in demand for cars would lead to a massive redundancy in the main VW facility of over 30,000 jobs.

What is happening now is that German workers want a fair share of the benefits of Germany’s growing economy. They want to improve their work-life balance as well as achieving better hourly pay. They anticipate that the national demand for hours worked will continue declining and want the hours available to be shared as equitably as possible. They do not suggest stopping people working longer weeks but they want to ensure that someone working 28 hours per week will have a good standard of living.

The reducing demand for worked hours will mean that more and more people will be working at best part-time. The economics of this for employers becomes complicated and many countries are considering introducing a Universal Basic Income (UBI). Trials have already been carried out in Finland with great success and are about to start in part of Canada.

In Finland one region with 2000 unemployed individuals were given £500 per month with no strings attached. They didn’t have to pass any test or give any undertaking on how it might be spent. The results, however, were remarkable. Individuals receiving the UBI payments felt that the implicit security of this basic income gave them more confidence to take on additional, part-time jobs that might of themselves not give a big enough income. They also felt emboldened to try setting up their own small businesses that would never be profitable enough in the short-term to live on but with their lives being underpinned by UBI they felt it was something worth trying.

A scheme such as UBI at the right level could eliminate unemployment benefit, basic state pension, child benefit and many other payments already made to individuals. In fact, in a way, such payments are made to all of us already.

We have a tax-free allowance on our income, a way of supporting people on low income. A full UBI implementation would provide the same level of payment to everyone irrespective of their income. It would be added to that income and taxed accordingly but for the poor no tax would be payable until they had a decent income from other sources.

It is inconceivable that a Tory government would ever willingly give money to the poor with no strings attached. However Labour have been much more receptive to the idea and shadow chancellor, John McDonnell, has called UBI “an idea whose time may well have come” (see here: https://www.newstatesman.com/politics/economy/2017/07/could-labour-implement-universal-basic-income ).

The conclusion that we must face up to is that we shouldn’t expect the British full employment averaging 32 hours per week will continue for long. Robots and Systems which can teach themselves the skills that most of us have will increasingly make the employment of humans relatively unattractive. We must position ourselves to implement a revolution in employment before the tsunami overtakes us. We will all be surprised and shocked just how quickly it is upon us.

You Need to Balance Your Own Budget but the Government Doesn’t and Shouldn’t.

Summary: The Tory obsession with reducing the deficit with a programme of accelerating austerity is causing increasing harm to the great majority of working people in the UK. By refusing to borrow to invest in infrastructure and housing they continue to demonstrate they simply don’t understand basic economics. Much of the Brexit Leave campaign blamed immigration for depressing wages and standards of living. In reality it was a deliberate strategy of a Tory government wanting to transfer wealth from the poor to those already wealthy. Increasingly people accept that immigration is critical in providing workers for so many of the jobs that just need to be done. That message must be projected to the electorate if Labour are ever to regain the support of the poor working class. It is austerity and not immigration that is at the root of our problems.

The Institute for Fiscal Studies projects the number of children living in poverty will soar to around 5.2 million in the next five years because of the Tory austerity programme. All the progress made over the last 20 years in reducing childhood poverty will be reversed. The government and in particular Philip Hammond, the Chancellor of the Exchequer, continues to insist that we must balance our national income and expenditure. Only in that way, they say, can we get rid of the deficit. Sadly this seriously misunderstands economics and where money comes from.

We all know that if you or I want to buy anything, from a loaf of bread to a new car, we need first to have enough money to be able to afford it. When you run out of money you can buy nothing. That’s pretty well all you need to know about home economics. You cannot print money yourself and so you have to earn it one way or another. It may be from a pension, a salary, even income from an investment but if you don’t have some income you can’t have any expenditure.

When we look at the economy of a nation-state such as the UK things are very different. To understand this start with a £10 note. Signed by the Chief Cashier of the Bank of England it says “I promise to pay the bearer on demand the sum of £10”. If you go to the Bank of England and ask for your £10 you will simply be given a replacement £10 note. There’s nothing else. Many years ago there was a lot of gold in the basement of the Bank of England but that has long since gone.

So where did this £10 note come from? Well basically it was printed by the Bank of England. And who said they could do that? They simply decided themselves that that was a good thing to do. In this way the amount of money in circulation in the UK has increased over the years, currently over £43 billion and rising.

The Bank of England can print pretty well what it thinks fit. After the financial crash in 2008 they started printing money on a very large scale. Over the last 10 years the total is in the region of £500 billion. Virtually all that money effectively went to banks to improve their balance sheets. There are limits to what the Bank of England can print. If they printed so much that our overseas trading partners began to feel that the pound was not as valuable as it should be they would treat the pound accordingly. So printing too much doesn’t work but apparently printing £50 billion a year for the banks is fine.

The total value of goods and services produced in the UK, the Gross Domestic Product (GDP) is about £2 trillion per annum. The amount owed by the government is currently in the region of £1.6 trillion total or 90% of annual GDP. Other countries have much higher levels of debt (the US at 105%, Japan at 240%, 100% in France and hundred and 35% in Italy). In the UK the GDP generates approximately £720 billion in taxation. Government expenditure, however, is around £50 billion more than that per annum. This £50 billion leads to an increase in the deficit, the difference between income and expenditure. Compared with GDP this is very small indeed.

Why should this be a worry? Well it doesn’t need to be at all. At present a significant amount of the government expenditure is treated as essentially wasted in the sense of producing nothing of value to the nation whereas in fact a great deal of it is invested in a variety of assets with a long lifetime and a considerable value to the nation. Money used to build houses which will last hundred years is not in any way wasted. Building hospitals, schools, bridges, roads, railways etc produces assets that improve the value of the country, and its ability to grow and thrive (something it is clearly not doing now). Assuming that all such money spent on infrastructure simply adds to the deficit is fundamentally wrong.

The view that the deficit has to be reduced is therefore preposterous. Few other countries have a fully balanced budget. The battle to reduce the deficit is directly responsible for the austerity that has worsened the lot of the great majority of the less well-off members of our society. The Tories say we must continue pushing to reduce the deficit and this is likely to lead the Chancellor to continue with austerity in his November budget.

In practice austerity cuts the real standards of living of relatively poor people in the UK while allowing the wealthier to get even richer. Most people are worse off than they were 10 years ago. Unfortunately the Tories flatly refuse to contemplate increasing the tax take on the better off having shelved Labour’s proposal to increase the top tax rate to 50%. That is something that Labour would reinstate as well as rebalancing corporation tax and making a number of changes to make our economic system fairer, particularly with the taxation of multinationals.

Labour will also borrow money (essentially asking the Bank of England to print money) so that it can invest in a major programme of infrastructure development and in order to regenerate the housing stock in the country. Labour must increasingly emphasise that austerity is a Tory policy which hurts the great majority to the benefit of the wealthy. It allows the real decline in living standards to be blamed on immigrants and benefit scroungers whereas it all should be blamed on Tory austerity in support of the rich.

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