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The ECB won’t save the day, but Germany might

November 14, 2011 1 comment

As things stand in the Eurozone the European Central Bank (ECB) is incapable of providing the much needed status of Lender of Last Resort. It is prohibited from printing money by the Maastricht Treaty, but it is able to buy government bonds as part of its function to maintain price stability. As had been experienced last week when there was a run on Italian and Spanish bonds, the ECB bought bonds to force the price down, and thus stable (for a short period of time).

As has been pointed out by Paul Krugman, the crisis that is currently striking the Eurozone is a result of an imbalance of payments. Germany, thus, needs to spend. It’s very rarely that I praise George Osborne, but he has said:

“If you think of currency unions, here in the United Kingdom or in the United States, we do transfer money around the country in order to try and get greater equality in the economy. I’m afraid that needs to happen in the euro, because we are not there yet and the instability is having a huge effect.”

This is crucial for the survival of the Euro. A monetary union requires a fluid movement of capital across the union. So far, the Euro has been a disappoint. A monetary union without the necessary sacrifices to make it work. I believe it has only worked through a series of fortunate circumstances, such as a prolonged period of growth. 2008/9 was the the first time the Eurozone had experienced a recession in its 10 plus year history. Now that a sovereign debt crisis has struck the southern economies of Greece, Italy and company – which was created by the cheap and easy credit of the noughties – it is the first time where the Euro has been tested to its limits. Its limits have proven to be woefully weak.

But progress is being made, on the political stage. On Monday, at a Christian Democrat Union (CDU) Conference, Merkel was reported to have pressed for an economic and political union in the Eurozone. @EPPTweet tweeted earlier: RT @SMuresan#Merkel at #CDUpt11: “We have to complete monetary and economic union and pave the way for political union in #Europe” #epp

This is a step in the right direction, but there also remains a stumbling block – the German constitution. We shall see what happens, but progress is being made and the faults of the Euro are, apparently, in the process of being corrected.

 

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The Budget, Spending Review and Fairness

October 25, 2010 Leave a comment

It was once said that ‘Beauty is in the eye of the beholder’. The same could be said for fairness. What one calls ‘fair’, another calls ‘unfair’. With the June Budget and October Spending Review, many have called them unfair. The government, on the other hand, calls them fair.

The government, in trying to reduce the deficit, has cut spending, increased taxes for every section of society. On this basis it is fair. However, seeing as the deficit was caused because of the recession, and the recession was caused by the deregulation of the financial sector, ultimately, it is unfair that everyone is effected by the changes in fiscal policy. To be completely fair it should be the financial sector and policy makers that should pay the shortfall and eliminate the deficit.

However, to do so would be unwise as they will look to the other sections of society and say “why aren’t they involved? We gave them credit, it’s not our fault they can’t repay it.” And thus it escalates until you are left with a large proportion of society feeling slighted, bitter and, those that can, an exodus of talent and wealth.

However, the main problem with the June Budget and Comprehensive Spending Review is that the poorest 10% are the second worst off, in relation to the policy decisions, behind the richest 10%.

In terms of income lost, the bottom 10% loses 1.6%. The richest 10% loses 2.2%. The main problem with this is that the bottom 10% cannot afford to lose 0.1% of their income let alone 1.6%. This section is either in poverty, or near to poverty. The richest 10%, arguably, can afford to lose 2.2% of their income. The poor rely more on public services than the rich, altering the percentages of how the cuts effect the actual income of these groups. This is unfair.

However, if the rich were negatively effected too much by the policy decisions then there would be an exodus, a loss of tax revenues and more demand on the next richest 10% to pick up the shortfall left by the top richest 10%.

Whilst we agree with the principle that every person must play their part to reduce the deficit, we also believe it is unfair to place the burden on the polar extremities of the wealth spectrum. Whilst we believe the poorest 10% should not be let off, we believe their contribution to be too much. The burden should fall in relation to the ability to pay, much in the same way that credit is granted. We believe this to be fair.

However, fairness is in the eye of the beholder.

Generation of the damned

October 7, 2010 Leave a comment

The Coalition’s recent announcement of cuts to the Benefit system, coupled with perceived cuts to the public sector and welfare state in the October Spending Review has damned an entire generation to relative poverty and poor prospects.

It is a well known principle that investment in the welfare state and education can enable individuals to remove themselves from the poverty cycle. As has been discussed in a previous post: you are only as rich as your poorest citizen. The cuts seek to trap our poorest citizens in the poverty cycle without any means to remove themselves.

The Conservatives, especially Cameron, hark on about Broken Britain. Britain is not broken, but it soon will be. It is also well known that anti-social behaviour and general social ills are created and fuelled by poverty, bear in mind that there are always exceptions to the rule. So to ‘fix’ broken Britain what is needed is investment in education, as the great liberator, and welfare to work schemes as well as maintaining the welfare and universal benefit system – means testing might be a better option than an arbitrary reduction.

The ‘Free’ schools are another name for Grammar Schools but free from state control and therefore able to select pupils thus further damning children from poor areas. I, separate from Oldfield-Pike, advocate a fully comprehensive education system so that there is not two-tiers within the education system.

The perceived result of the Browne Review, set to announce tuition fees to £10,000, coupled with the governments reduction in funding for Higher Education will inhibit the majority from applying to go to University and will reduce the calibre of the institutions for those that do. Now, more than ever, do we, as a country, need to push for greater investment in education or we risk falling behind the rest of the world in teaching and research.

The Coalition government wants to get people into work and off the benefit system but the way they are approaching it can only spell disaster. The welfare to work programmes have been scrapped which means relying on the voluntary sector to provide the programmes through the ‘Big Society’, but, because public spending is being cut across the board, there is not any money for charities etc. to provide for these welfare to work schemes thus trapping them in the poverty cycle with their children and their children’s children ad infinitum.

Unequal opportunities: How do we redress the balance?

September 25, 2010 Leave a comment

Last Monday, as part of its ‘Schools’ season, BBC2 screened a documentary by ‘Today’ presenter John Humphrys which aimed to answer one simple question with a complex approach. That question, quite bluntly, was just why do ‘rich, thick kids do better than poor, clever children’? This isn’t merely another example of ‘dumbing down’ the language of politics, indeed these labels are those of the Conservative Minister for Education himself, Michael Gove, in a statement to the Commons Select Committee in July.

Despite decades of huge levels of spending on education, we have just as high a level of striking inequality between the poor and the rich than at any other time in the last fifty years. So, where are we going wrong?

The programme centred around Humphrys’ experiences meeting key figures in the Education system.  One of these inspirational interviewees was Amanda Phillips, head teacher of a Tower Hamlets primary school, one of the most socially-deprived areas in England. She revealed something that strikes a chord amongst many of us involved at the grass roots of early years education; her teachers go on preliminary home visits to three-year-olds who have never set foot on grass, been taken to the zoo or visited a museum. Part of her philosophy which is rapidly improving the effectiveness of her school is that she made the brave decision to spend a large chunk of her budget on introducing what she terms ‘middle-class experiences’ into the lives of her pupils. This is a relatively radical but hugely impressive idea, and one with which I and most teachers I know would concur. The children of poorer parents (who are more than likely to be growing up in one of the four in ten UK households without anyone bringing in a wage) are at a huge disadvantage before they even start their formal education, a disadvantage which is virtually impossible to overcome without early intervention. There are many parents who are drawn into financial hardship through no fault of their own, and for them there is not necessarily a link between income and ambition. Lots of them will wish nothing but success upon their children, and they will do their utmost to provide as many learning experiences as they can. For some poorer children, whose parents make the lifestyle choice to live on benefits, where is the incentive to work hard and achieve when they have no role model? Our responsibility is to these children, to show them that there is a far greater future ahead than the experience they have so far, that the life of the adults they know is not the one they need to live themselves. Many of these children don’t know what a nursery rhyme is, are never taken to play in the park, even to know what the sea looks like. The standard government response from whichever party is in power at the time is to insist that public spending on education is higher than before. The colossal point they’re missing is that all the money in the world won’t reverse the problem. Yes,  financial hardship is a huge problem we need to overcome, but the real cost to their children is not a lack of means, but the poverty of aspiration.

Very often, school populations will be comprised of children who live together in the same immediate area. If these schools happen to be in an area of high deprivation, a large proportion of these children will never know anything but a life of struggle and lack of opportunities. The disadvantage they have is that unless their parents fight for a place in a good state school they become stuck in the cycle of generations of families who don’t work, and have no desire to. This is when income and wealth really come into play. The luxury afforded to the children of the middle classes is choice, the choice to opt out of the state system and give their children an education which is paid for from their own pocket. No-one can deny the opportunity being offered to these pupils – small class sizes, a vast array of educationally-enriching trips and experiences, being taught alongside the children of equally highly aspirational parents. It sounds like a Utopia. Some of the children attending schools such as Mossbourne, the country’s most successful public school, just don’t have the incentive to take full advantage of attending these schools, whilst there are brighter, poorer children who would take full advantage of such an opportunity. Scholarships are rarely a solution. They generally comprise less than a handful of the places available and only  well-informed parents have a chance of getting their children one of the treasured few. How many families really have the luxury of spending up to 25,000 per year, per child for a public school education? Of course these establishments have an important place in our system and a valid contribution to make, but the benefits of an education within them should not be allowed to supersede the achievements of a poorer child who has had to struggle far more to achieve anything like the same results. It should never be the case that a CV listing one of these schools is a lifetime guarantee of advantage. We have to prize achievement based on personal merit above anything attained through the financial assurance of others. Surely what we really need to do is bring the experiences of the richer children attending public school (enlightening school trips, focused, responsive teaching and smaller pupil to teacher ratio) to the vast majority who will never be lucky enough to receive a place.

As teachers, we have a fundamental responsibility to ensure that poorer children are given the best possible start in life. Experience shows us that the children of the middle classes will always achieve in one way or another. Even if their talents are not academic, they are likely to  attend extra- curricular clubs and activities where they are given the chance to develop self-esteem and a sense of worth. The pupils who really need our teaching, care and support are those born to parents who either can’t, won’t or don’t share our ambition for their children. Of course, this is not to say in any way this is a problem attributed to all poorer parents. There are many who through no fault of their own can’t work or have been  made redundant, and still want things for their children that they have never had themselves. Still, experience in classrooms shows that it is very often pupils born to more financially-secure parents who are the ones who have those essential ‘middle-class experiences’ such as bedtime stories,  eating meals together around a table,  learn to count to 5 before they even step foot in nursery.

Another potential solution to help reduce the gap in achievement is the grammar school. This is a controversial subject, and has rather fallen under the radar in recent times as all three main parties have chosen to distance themselves from grammar schools. Whilst in power, Labour banned the building of new ones and in 2007 the Tories announced the withdrawal of their support for them. The official line of the DCSF was ‘we don’t support academic selection’. Rather worrying when we consider that a survey by the National Grammar School Association revealed that 76% of adults support the building of new grammar schools at a time when just 164 schools out of a total of 3, 361 in England are selective. The truth is, life is entirely based on selection. We are doing children no favours bringing them up in a world free of competition. In shielding them from any form of disappointment, we are merely storing up problems for the future. In my view, grammar schools should be at the very heart of the battle to redress the balance of educational inequality. They bring together children, regardless of the income of their parents, where the only thing that counts is their ability. By attending grammar schools, the children who may fall through the cracks of a standard secondary education are afforded the opportunity to break the glass ceiling and achieve success. It also ensures that money can’t buy achievement, as will, sadly, always be the case with fee-paying, independent schools. I would much rather live in a country where the children we educate have had to work hard for their success than had their parents pay for it. We shouldn’t prevent the top 20% from entering selective education because by default the other 80% can’t attend. For the children who don’t make it to grammar school, we have a different responsibility. Formal, academic education may not be the best route for them, so why aren’t we working on alternatives that really do allow these children to succeed. Instead of spending upwards of £25 million on each new academy, why not invest that money in training schemes, apprenticeships and practical skills from the age of 11? There doesn’t have to be a one size fits all approach to education. We have to understand that the needs of poorer and richer children are not the same.

So, in the midst of conference season, it seems the Coalition’s plan is to forge ahead with more academies, at least for this political term. The effectiveness of these institutions is another debate for another time, but we shouldn’t forget that at the heart of the academy plan is devolved power. There will be no unity of thinking or ethos between schools in the community as to how to reduce inequalities, yet surely the only way we can reduce the inequality is to work together on a collaborative basis, to ensure that we meet the needs of all our pupils, irrespective of the community into which they are (un)lucky enough to be born. 

It is an uncomfortable, unfortunate truth that very often financial means go hand in hand with ambition. We need to do everything in our power to show all children how important it is to have a goal and to work hard to achieve it. For those children who come to depend on school as a sanctuary and safety net, we have a duty to raise achievement, regardless of all other factors. What we have to ensure is that our guiding principle going forward is that no matter where children come from, it is where they are going that is by far the more important belief.  We’re unlikely to ever secure an even distribution of wealth in society, but with time and shared commitment, equality of aspiration is something we can achieve.

Strategic Defence Review

September 15, 2010 Leave a comment

In a world of increasing instability and uncertainty, it is crucial that our Armed Forces develop, adapt and are given the brief to cope with the new, perceived, international environment. However, the defence of the British Isles has, for a long time, no longer been the sole remit of the Ministry of Defence (MoD). The purpose of the Strategic Defence Review is to reassess Britain’s commitments at home and internationally. The Government recently released the Green Paper in the lead up to the review next year. It lays out, briefly, the current commitments, likely future commitments and where the government stands on particular defence issues.

The green paper is 54 pages of loveliness and facts, however there is little reliance upon statistics. Spilt into five chapters, there are others though largely supplementary to the main body, The first two chapters put the review into context. The remaining three chapters deal with the various aspects of the review being: Adaptability and Influence; Partnership and; People, Equipment and Structures.

CONTEXT: Uncertainty and Affordability

The context in which the next Strategic Defence Review will take place will see a development in a number of major trends, including a shift in the balance of power from the Atlantic to the Asia-Pacific region. These trends will produce more potential threats, threats to Britain’s national security. Many of these threats will be transnational and harder to predict in a world characterised by uncertainty. However, the world, from a Realist perspective and to an extent Liberal perspective, has always been full of uncertainty and anarchy. This is why Britain has to trust the constants, such as NATO, EU and US.

There are currently over 12 million British citizens that live overseas and other commitments, particularly through NATO, to contribute to the defence of others. This means that the defence of Britain can no longer be internalized and a struggle for the MoD on its own. This is where greater cooperation between the government departments come into the equation. Other commitments also include peacekeeping with the UN and the green paper extols the virtues of Britain in leading the way in peacekeeping operations, the beginning being the anti-slavery campaigns. However, in the midst of these commitments is the threat of instability, in particular from rogue states.

“A state which is allowed to pursue its interests by changing borders by force or flouting international agreements such as the nuclear Non-Proliferation Treaty is likely to contribute to wider instability and weaken the international system.”

For the cynical among you, this could indicate Iran or North Korea. However, because of the increasing globalised nature of events and systems domestic security cannot be separated from international security, the two are explicitly linked. This further means that, without a doubt, there needs to be greater cooperation between the various government departments, in particular: MoD, FCO, DfID and the Home Office.

And then, over the page, we are greeted with a long list of potential threats to British security. These threats consist of; TERRORISM; HOSTILE STATES; FRAGILE AND FAILING STATES; INTERNATIONAL CRIME; NATURAL DISASTERS. Within the doom and gloom is a positive trend:

“Political freedoms have spread. No Soviet-style global rival to Western liberal democracy has yet emerged.”

This is very good news as democracies, in the Liberal strand of International Relations, do not attack each other. Again cynics might point out that the way Western liberal democracies go about creating other Western liberal democracies is through the medium of war e.g. Iraq. But if you want peace, prepare for war.

Luckily for us, NATO is also going through a review of its own, the review of its Strategic Concept, which is basically making sure that NATO remains an effective force. This also means that the SDR has to tie in with it, as Britain is a stakeholder in NATO.

Due to the recent financial crisis there are pressures on departments to cut budgets. The core defence budget has grown 10% since the 1998 defence review, but it is still less than in 1992-93. There are also unseen costs, not in the core budget such as the counter-terrorism budget, maintenance of the independent nuclear deterrent and subsidies for the defence industry. These unseen costs are also coupled with an increase in the costs of resources such as fuel. Research into a technological edge over the enemy is also producing a strain on the defence budget, as well as a rise in wages and pensions.

“Historically, rising unit costs have been offset by increases in capability and changes in the nature of the threat which have led us to reduce numbers of both personnel and platforms. But there are limits to how far capability improvements or efficiency can compensate for numbers.”

Like all matters, it is finding the careful balance between efficiency, quantities and costs. It is trying to find that point on the curve which produces optimum efficiency not just theoretically but, more importantly, practically.

CONTEXT: Complexity and the Use of Force

Joint operations, between the three services and other international players, have become the norm. Support functions such as logistics and communications has meant that the sum is greater than the parts. Operations are becoming increasingly more complex as they become more interrelated.

The expeditionary capabilities of the Armed Forces have demonstrated their value to current operations. The expeditionary force, as part of the Allied Rapid Reaction Corps – headed by a British Lieutenat-General, has been able to deploy and sustain forces from theatres such as Sierra Leone to Afghanistan.

Parallel, and central, to the review is an independent paper – The Future Character of Conflict. The full report can be found here. The paper looks at the perceived threats and conflict situations up to 2029. To briefly summarise the paper, future operations will involve:

1-Contested – access and freedom of manoeuvre will have to be fought for
2-Congested – drawn into urban areas and lower airspace. Effectively close quarters and FIBUA (Fighting in Built-Up Areas)
3-Cluttered – increasingly difficult to discriminate between the enemy, civilian population, friendly forces and non-state actors such as NGOs
4-Connected – key lines of communication will be increasingly vulnerable to attack and disruption
5-Constrained – legal and social changes will place limits on actions.

Along with these five areas characterising Britain’s future operations, there is also the changing nature of the enemy.

“Our adversaries will avoid engagement on our terms. They will adapt rapidly to exploit our vulnerabilities, for example fighting in built-up areas or concealing themselves amongst civilians. They may extend the conflict to areas where we are less prepared or protected.”

The relatively good news is, is that British forces are already experiencing this type of conflict in Afghanistan. That’s the good news, the bad news is that they are adapting much quicker to exploit our vulnerabilities than we are in protecting our vulnerable points. Whilst we are engaged in operations overseas there must be an increased multi-agent effort in restructuring and rebuilding in conflict zones. This effort will extend and compliment the ‘Hearts and Minds’ counter-insurgency strategy.

Expectation at home, in Britain, will also play a major role in shaping military actions and commitments. Their support will depend on the government being able to explain that operational objectives are in the UK’s interest and the approach is feasible and proportionate, especially in human lives. The backlash to Iraq and growing hostility to Afghanistan is proving that the British public does not like being treated like children when it comes to entering into conflicts. Britain needs to justify the reasons for entering into conflict so as to justify the loss of lives, in terms of the public’s interests, British lives.

With regards to strategic communications, the use of new media will become more important as the need to introduce transparency into the operational capability becomes more important. However,

“There will be occasions when the need for operational security will override the case for openness. But we must guard against that being routinely used to avoid transparency.”

With the spread and development of communication technology the views of individuals, as opposed to governments, will become more important to influence as these individual voices will increasingly affect our security.

The green paper also stresses the importance of technology, but there is the problem of; how do you utilise the correct technologies? Another problem is how do you defend against developments in technology that could expose and attack Britain’s vulnerable points? An increasingly viable threat is cyber warfare, already experienced by the attack on Google and other non-state actors. Do you bring private companies on board? They have more experience in defending against unwanted intrusions into a security network, but their interests are usually different from those of the nation state in that, by nature, they are mercantilist in their approach.

Investment in the sciences might be able to remedy and alleviate fears about vulnerabilities in our security. Civil investment is R&D is much larger than defence spending and most of this research could also be used in a military context. At this point I would also advise consideration about combining defence R&D budgets with European allies as the combined total would most likely rival US and China, plus wonderful projects are born out of it, like the Eurofighter.

Another problem is that by striving for the technological edge over the enemy could quickly become redundant as the ‘simple’ technology of IEDs are already beating the ‘advanced’ technologies of ISAF.

Adaptability and Influence

One way to increase the adaptability of defence is to hold regular defence reviews, this will ensure that strategic policy reflects changes in the international arena as opposed to lagging behind. Restructuring the top levels in the military and civil service could also, potentially, make the Armed Forces more responsive. Creating a multi-skilled service(wo)man would also increase the adaptability of the UK Forces, many of them are already operating outside of their primary roles.

Prioritising investment in multi-capability, multi-utility technologies, such as helicopters, will benefit the military in its operational capabilities. Developing closer links between regular and reserve forces will ensure access to a wider skills base and personnel pool. Using mature technologies would reduce the risk and cost involved through R&D and could, potentially, foster stronger links between Britain and other countries, such as Germany, as mature technologies will invariably come from foreign countries.

Improving the ratio between deployed personnel and equipment with overall numbers means that greater flexibility in deployment patterns can be introduced, which in turn will increase operational effect. Greater cooperation across Whitehall will also produce a more adaptable defence system.

With adaptability must come influence, in order to protect our interests at home and abroad. One of these influences is deterrence. The most notable and, perhaps, controversial is the independent nuclear deterrent. The government is committed to nuclear disarmament but;

“we have to begin the process of renewal of the Trident submarine system because not to do so would effectively commit us now to unilateral disarmament as future date regardless of the threats pertaining at the time.”

In other words, we do not want to get caught with our pants down, therefore we must, this time, maintain the nuclear deterrent for the foreseeable future. Alongside the practice of deterrence is the practice of reassurance, which is providing allies with military support when threatened. Another useful tool of influence is the provision of economic sanctions, as well as traditional diplomacy.

Partnership

Partnership refers to international and domestic partnership and NATO remains the corner stone of our security. However the EU is becoming more important as;

“a robust EU role in crisis management will strengthen NATO. Playing a leading role at the heart of Europe will strengthen our relationship with the US.”

This view is nothing new, as it was an opinion propagated by Tony Blair during his first term as Prime Minister. There is also scope to increasing British involvement in the UN whether through civilian or military operations. There is also scope to incorporate the African Union and the Association of Southeast Asian Nations into the policing capabilities. This is because European hegemony no longer exists and as a way to increase international stability by recognising the influence of the emerging powers.

As mentioned before greater cooperation across Whitehall will increase operational effectiveness but also improve Britain’s national security. One of the best examples of cross-department cooperation is the CONTEST counter-terrorism strategy. The full report can be found here and the brief summary leaflet here.

People, Equipment and Structures

The most important part of this chapter is the focus on equipment, as the supply and maintenance of equipment has been brought into question during the Iraq Inquiry. The MoD has established a Strategy for Acquisition Reform, which will

“help us create an affordable long-term equipment programme, make better decisions about what we buy, ensure it delivers the right performance to time and cost and enhance our ability to adapt to change.”

In light of the other issues raised, in particular international partnership, this brings into question the usefulness of the British defence industry, seeing as a vital piece of equipment, the SA80, is made by Heckler & Koch the well known German arms manufacturers. The paper does not deny the outsourcing of defence equipment, but

“there are cases where specific industrial capability must be located in the UK for operational reasons.”

For example the development and maintenance of the Royal Navy. However the government would not want to get rid of the arms base in the UK as it is not in Britain’s interests to do so. Some £20bn is spent per annum in the defence industry which means that Britain’s decisions have a significant and long-term impact on the UK’s industrial base and therefore on the livelihood of many British citizens. The counter argument can be found here

.

Conclusion
Britain is in a pickle without the support it has from its international partners. Closer cooperation between the MoD and other government departments will increase operational effectiveness as will greater cooperation between Britain and her allies.

One thing that has not been raised in the green paper, but most likely will be in the Strategic Defence Review, is the operational effectiveness of the RAF. I know that the Army and the Royal Navy are pressing for its dissolution. The RAF was born out of the amalgamation of the Army Air Corps and Fleet Air Arm after the First World War. Yet the Army and Navy still maintain their wings. As conflicts, since the end of the Second World War has increasingly relied upon expeditionary forces and deterrence. Now the threat of the Soviet Union has gone and Europe is unified Britain’s airspace is safe. The RAF’s role is redundant. What the RAF does is also done by the Navy and Army. In a world of increasing efficiency, especially in savings, cross-over in roles does not make sense. Do not be surprised if the RAF is dissolved during the next Strategic Defence Review.

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