Here they are, the G20, a merry grouping of the world’s most powerful leaders, photographed in the wasteland of London’s depressing docks area. How did they do?

The dismal surroundings must have affected their collective judgement.

I’ve been writing here about protectionism for months, while others have dutifully mouthed the mantra: “free trade is good, protectionism is bad”.

Let’s start with some common sense: nothing is as good or as bad as it seems. Applied to the above: some free trade is good, some protectionism is bad. The reverse polarities are also true.

Walk down a street of terraced houses. Although they give the impression of a single, continuous building, they are in fact a series of individual ecosystems.

Each household has its own income, makes its own choices, decides its own way of life within the law, and is governed by its own head. The block is not a single organism in the way ants or bees live. Each property is a self-governing entity whose inhabitants may not even know most of their neighbours.

Generally, humans don’t behave like bacteria or, except at football matches, like flocks of starlings. The best of them are, above all, individuals. The best people like to be in charge of their own affairs and households.

Modern politicians, still suffering from WW2 hangovers, believe they have the right to behave like pushy neighbours and interfere in everyone else’s affairs. They don’t. It would be a better world if other people’s boundaries were respected by everyone else.

The G20 failed because it was fighting 20th-century battles. Some of those principles are worth learning, but many are out of date.

The great problem we face now is the growing divide between exporting, surplus States — China, Germany, Japan — and importing, debtor countries — the US, UK, and many of the rest.

The surpluses and deficits were very large even when the world’s economies were booming, but in a slump, they appear insurmountable.

Countries like China and Germany know they will never get their full value back. The debtor countries will simply inflate their economies — the real reason behind quantitative easing — and/or, like Britain, devalue their exchange rates to improve their international competitiveness and export themselves out of trouble. Import substitution will also push this along at the expense of the surplus exporters.

The effects of this sleight of hand dodge will be to increase tensions in the world, especially between surplus countries that lose out, and debtor States that clawback their deficits by retreating from the moral high ground. Bystander countries will draw the obvious conclusions and the world “trust index” will slump, creating ominous conditions for a new century than may turn out not very different from the last.

Back to the terraced houses, and we can see that many inhabitants are trying to improve their lot by “beggaring their neighbours”. The ecosystem where each household runs itself has collapsed in a welter of indebtedness between families, with some seeking to write off debts unfairly, and the most prudent suffering the most. Some kind of local civil war is inevitable.

The solution, clearly, is to return to individual household responsibility, not to increase the socialization of the terrace and cross indebtedness between houses.

Point One: The “progessive internationalist” approach to the world has broken down. Governments gave us this crisis, the G20 is offering more global governance.

While some countries have vast surpluses, most of it invested in dollar assets or euro bonds, their perceived prudence has now become their undoing.

Point Two: The recent high peaks of international trade were ransacking the world of resources at an unsustainable rate. Whether you believe in man-made global warming, or not, or partly, the rate at which the Earth itself was being consumed to provide shiploads of whimsical products for world consumption, has become the road to hell.

Point Three: The surplus countries created mountains of debt in the deficit countries, way beyond their annual incomes (GDP). This was clearly unsustainable. Sooner or later the bubble had to burst. It did.

The G20 has not solved the enormous problem of how to tackle the aftermath. Creating a “central bank for the world” — a beefed up IMF — with its own “global currency”, will prove as crass as previous decisions by this non-Sovereign body. The G20 has also voted for a ballooning increase in international indebtedness, with unaccountable bureaucrats overruling individual democratic nations.

It has forgotten the important lesson of the 20th century: the “great and the good” on their pinnacles of vanity don’t make better choices than the “small and the mean” at ground level.

The lesson of the early 21st century is that Nation States, which balance their books and their trade accounts, both surpluses and deficits, are vital to a stable and war-free world. Only nations can be approximations of single “organisms” … the world can’t, especially at the current level of individual human development and the great disparities between them.

The surplus nations have the biggest lessons to learn, since they will be at the receiving end of the slump. China kept its currency too cheap too long, hollowing out much of the West’s manufacturing industry. It is now reaping the whirlwind.

Germany over-specialized in sophisticated metal-bashing and is suffering a grievous loss of income as the willingness of others to buy collapses.

For us at the debtor end of the spectrum, our mistakes were general, across government, corporates and individuals. We signed up freely to a psychological contagion, promising endless wealth, and got ourselves deep in debt as a result. British authorities are allowing the exchange rate to fall and pushing up inflation by “unconventional means” so that our debts are reduced. It may well come back to bite us, but so far so murky.

The heart of the problem is not being tackled at all, except through vacuous soundbites.

The verdict on the G20 then, with its irrelevant headline decisions on tax havens, more debt, and the vapourware trillion dollar infusion “to save the world” is negative. It will do no such thing.

It will probably make it worse.

John Evans

Recent Related Stories
Sensible protectionism is not a sin
The world needs Up-To-A-Pointism
Globalization destroys necessary bulkheads

Yesterday, Wednesday the 25th of March, was a fascinating day in British politics.

1. Harriet Harman finally went down in flames as a potential replacement for Gordon Brown as leader of the Labour party, ably assisted by an in-form William Hague, who seems to have regained his appetite for the battle.

2. Gordon Brown’s mediocre, very pro-EU, speech to the European parliament on Tuesday, was brilliantly shot down by Daniel Hannan, the ablest Tory not in the Shadow Cabinet. The intervention is now a hit on YouTube.

3. The disgraceful treatment of naughty-boy banker Fred Goodwin, allied to the walking-dead half-life of the banking system, woke many up to what I have thought for months, that we’ve missed a golden opportunity to save them.

Let’s deal with each in turn:

At PMQs, the two deputies stood in for the leaders as Gordon Brown engineered another self-congratulatory photoshoot for himself in New York — a June election is looking very possible right now.

William Hague, cool and in total command of the House, repeatedly put Harman on the spot by asking her the simplest of unanswerable questions: “Do you agree with the Governor of the Bank of England that we can’t afford another fiscal stimulus?”

There are endless nuances and potential pitfalls all around this topic, so a Yes or No was never on the cards. Harriet, true to form, blustered and bored her way through a tangle of irrelevant statistics and half-formed ideas, leaving an impression of being comprehensively out of her depth.

Ministers on either side of her, Jacqui Smith and Douglas Alexander, watched appalled, though gamely nodded their heads as fatuity followed fatuity. It was wretched for Labour backbenchers as Tories shouted “More!” each time she spoke.

Hapless Harman is emblematic of the state of the whole party. Directionless, deserted by its leader playing his own game, and totally demoralized. There’s no way back from this.

The second incident, Brown’s tedious speech to the EU parliament was brilliantly dissected by another exceptionally able Conservative, Daniel Hannan — why isn’t this man on the front bench at Westminster instead of languishing in solitary over the water?

Hannan’s fusilade of oratorical denunciation and controlled anger, hit the spot so perfectly, the clip has become a must-see on YouTube. Watch it here.

His quip that Brown is like a “Brezhnev era apparatchik” reflects what Syntagma has been saying for months.

The third occurrence was the attack on the Edinburgh home of Fred the Shred, a former buddy of fairweather Brown, who was scapegoated by him in the recent collapse of both men’s policies.

Since government ministers and civil servants have no idea how to run banks, and the well-meaning figures drafted in to do that simply don’t have the experience to turn them round in the timeframe specified: i.e. yesterday, the only real avenue of escape has been bricked up.

The obvious solution at the outset was to summon the bankers to a top level dressing down in Downing Street and present them with an ultimatum:

“You have two options: go to prison for a very long time, or sort out the mess yourselves, whatever it takes. Fail and we will destroy you, succeed and you can retire gracefully. There is no other alternative.”

Very Francis Urquhart, I know, but needs must.

We could now be looking at a very different banking system had that step been taken.

We live in interesting, if frugal, times.

Update: If you would like to comment on Gordon Brown’s tacky plan to butcher the British Constitution by changing the Act of Settlement for electoral advantage, go to our sister site Royal Anecdotes

John Evans

Recent Related Stories
The schools of Leonid Brezhnev and of Mephistopheles
David Cameron makes a novice of Gordon Brown
Snake Oil Brown slips up

The runaway inconsistencies of the Labour government’s handling of the economic crisis in Britain are truly terrifying.

Last week, they began printing money to buy back debt they themselves have issued, a process I described as like a snake eating its own tail.

Technically, this is considered a triumph of good judgement in the circumstances. Logically, it’s voodoo without a witch doctor.

Now, having added Lloyds HBoS to its list of (virtually) wholly owned banks, they are offering hugely expensive insurance policies against these bank’s toxic assets. As John Redwood writes in his blog today: “I asked what was the point of taxpayers ‘insuring themselves’ in RBS and Lloyds.”

The contradictions involved in eating one’s tail and insuring oneself against loss with one’s own resources are derangement-inducing. We could all go mad just thinking about them.

We’re told that economics is a funny business. Things are not always what they seem. The bad guys are often the goodies in disguise, and the reverse is also true. If you’re not a member of the Initiati, you must take it on trust. You have to see it in the round.

But when the snake gets to its stomach, what then? And if taxpayers have to pay out on dodgy loans — as much as £50 billion, some say — does that money go round in circles and end up back in taxpayers’ pockets?

Like hell it does! It will more than likely find its way into the bonus packages of jubilant bankers, or back in the Treasury where they will find some excuse for spending it on social programmes that fritter it away. That’s suspiciously handy with major elections in the offing.

This is high deception and makes a mockery of the idea that “our government” is actually on our side.

Many have also noted that these trillion pound operations have been undertaken without proper Parliamentary approval or scrutiny. Perfunctory best describes their response to curious MPs, like John Redwood.

In the handling of this crisis, as in other areas, they have become the enemy within.

John Evans

Recent Related Stories
Watch out for the mashed potato machine
Batty Brown bats against Britain
Printing money as a lucrative business
The State of the Union

I’m not a practising economist, but I did read an economics course at university, along with psychology. Because of it, I’m probably slightly better equipped to understand what’s going on now than the average Jo(e).

The word “slightly” is important here because it means just what it says.

The difference between books on standard economics and what goes on at the windows in Central Banks is enormous, especially as the “windows” aren’t windows at all.

When you also take into account modern investment banks — what we used to call merchant banks when we British were British and not Americans — the difference becomes profounder still.

The business of moving money around has become so arcane and global that hardly anyone understands it now, not even bankers, and especially not politicians. This means we can either attempt to follow the bizarre mathematical models of Harvard MBAs and, if tales are to be believed, rocket scientists from NASA, or we fall back on practical psychology to make sense of it. That’s what I do.

This leads directly both to my successes in forecasting and my failures. Looking back I detect, from a low base of hands-on experience, that I’ve done about as well as the average expert commentator, and occasionally much better — Anatole Kaletsky leaps to mind.

How much will you pay for my method? Here it is free of charge:

Do not trust Gordon Brown to get anything right from the medium short-term going forward.

That is my Golden Rule. It produces tier upon tier of successful forecasting.

Distrust any proposal that would lower the democratic input into policy.

It’s not that democratic decisionmaking is necessarily superior to any other, just that non-democratic forces are often catastrophically wrong, and usually pernicious in their effects.

The more global they are, the less competent they become. This accords with the principles of Superdemocracy.

Beware those who persistently use the word “global”.

These strange beings fantasise themselves as rulers of the world. I’m convinced Gordon Brown dreams of those old Soviet posters of Lenin being carried into Moscow beneath a huge red flag. Archetypes of the Great Leader are never to be trusted or encouraged.

Does anyone know if Brown has Photoshop on his computer?

Stick with minimum, obvious solutions in economics.

Confronting someone in a car accident, with blood pouring from an artery, you wouldn’t offer them an iron tablet. Neither would you send for an aromatherapist, however fashionable. The poor chap needs the medical equivalent of Joe the Plumber to deal with a major overflow problem. Monetarists are financial plumbers, the emergency services.

Keynesians, and others who prefer not to bear any label, are the naturopaths of economics. They should only enter the arena to deal with delicate matters like balancing supply and demand and use deficit financing sparingly over a cycle. A scented candle here, a relaxing massage there.

Used sensitively, as they should, these arms of political economy can be made to produce a “cocktail of measures”, as Kenneth Clarke described it from the stage of the Ken and Eddie Show — an entertainment that is, alas, no longer with us.

Treat anything emanating from Brussels as you would a red-hot brick.

This is built on decades of experience and is not disputed by anyone who can see further than the end of their street. Unfortunately, that does not include most politicians.

Services run by the public sector cost twice as much in the end as private provision.

The old saying that a pound in your pocket loses half its value when it lands in the government’s bank account, probably underestimates the losses in Labour’s public sector. Many of these costs are disguised as something else, or appear off balance sheet.

View all opinions from international regulatory bodies as suspect.

This is the Holy Grail for us Democratic Minimalists. International and supranational sherpas are rootless individuals holding no philosophy other than seizing the agendas of national and local democratic forces, whom they regard as village idiots. Always stick with the idiots — at least you can understand them, and whip them when they’re wrong.

So there you have it. My methodology. If in future I get anything wrong, you will at least know I have the best of intentions and no ambitions to rule the world.

Are you listening, Gordon?

John Evans

Recent Related Stories
Is socialism the new quid on the block?
Public failure and Superdemocracy
A real-time slump is not like the history books
The world needs Up-To-A-Pointism

Hold the front page! The printing presses are rolling and will not stop any time soon.

The Age of Quantitative Easing has begun in Britain, and true to our swashbuckling past, it’s the real thing.

Fiddlesticks to purchasing assets by issuing gilt-edged bonds that add to public borrowing. That’s only for wimps.

The United Kingdom of Great Britain and Northern Ireland is made of sterner stuff. Money will be printed — i.e. conjured from rarified air — to buy up government debt from the private sector. It’s the full Monty of central bank testosterone-fuelled, do-or-die, Charge of the Light Brigade assaults on reality. Lord Cardigan would be proud.

It’s also a bit like a snake eating its own tail. Sooner or later it will reach its stomach and face a great dilemma.

The idea is that virtually cost-free money can be created to buy bonds and commercial paper, thus increasing the money supply at a stroke. Too good to be true? It’s the people in charge that spook me.

An increased money supply will get people spending again and banks lending. That’s the theory. Like all great intellectual ideas, especially those that have never been tried before, the notion has to be fitted to the circumstances. Financial engineers don’t have a very good record at this kind of thing.

Why, for example, will people buy houses when they are falling at nearly 20 percent a year? Why, also, will they start purchasing big ticket items when price fluidity on the downside is proceeding at a cracking pace? Tell me why banks should lend to businesses that have few customers for their goods and services and are shedding staff by the busload?

The endgame is said to be the sucking back of all that money once the green shoots of recovery begin to appear. But what if it’s a dead cat bounce? Will they then reverse the process? It will look more like one of those old Charlie Drake comedies when the industrial mashed potato machine goes wrong.

In theory, sailing an aircraft carrier full of money into British waters and spraying it onshore in a mighty torrent, then hoovering it all up again when things get better, is a feasible proposition. But only if your name is Heath-Robinson.

The idea that cost-free cash is neutral to all indicators except broad money (M4), takes more suspension of disbelief than a Whitehall Farce. Remember, it’s the public sector that is charged with reversing the process. Can we trust Gordon Brown to loosen his grip on “money for free”?

Nothing that has happened over the past 12 years gives us any reassurance that they won’t become addicted to this neat magician’s trick. I can even imagine Gordon Brown musing, “Why didn’t I think of this before?”

The problem is inflation, of course. Slip on a stray banana skin and hit the button a little too hard and we’re back in the 1970s era of 35 percent hyperinflation. Experience teaches us that bananas are a peculiar feature of this administration, and not only at the Foreign Office.

There are too many variables in the equation for my liking. Too many things that can go wrong. Too few sterling characters who can be counted on to do the right thing by the country. Too many charlatans and snake oil salesmen. It’s a nightmare of dodgy open positions and foggy imponderables.

I just don’t trust a Labour government to carry out this exercise with skill and panache. It has awful echoes of the shadow banking operations that got us into this mess in the first place.

But an even worse fate could befall us. Faced with a Canadian-style meltdown at the next General Election, Gordon Brown could become a Dr Strangelove creature intent on destroying the system which he knows will never be his by popular mandate. That will show those Sassenach Tories!

You heard it here first before anyone else thought of it.

John Evans

Recent Related Stories
Printing money as a lucrative business
The State of the Union
A real-time slump is not like the history books
Is socialism the new quid on the block?

Gordon Brown’s new back-to-the-future idea is to introduce “old fashioned banking” again to the High Street. After all, banks lend out other people’s money, so should be careful where they put it.

He will “ban” 100 percent mortgages, make borrowers save up their deposits, and force them to meet “old fashioned” bank managers, who will get to know them like GPs did in the days of Doctor Finlay’s Casebook. Ahh, the past is so reassuring, isn’t it?

But Chancellors of the Exchequer also spend and allocate other people’s money. Shouldn’t they be tightening up their rules of tax and spend in the vast public sector? And shouldn’t State benefits be handed out sparingly to those who truly need them? Isn’t it also imperative that no-one should be given a public job unless they are urgently needed on the front line and well qualified for the task?

Brown didn’t begin to address that problem. Bankers will be sent for re-education by Captain Mainwaring characters, but the good old “public realm” will just carry on as before, squandering other people’s money.

Isn’t this just another sneaky way of blaming the banks rather than himself?

Labour MP, Chris Mullin, in a new book* writes: “The trail leads back to Gordon — but if it all goes wrong he’ll be nowhere to be seen.”

* A View From The Foothills

Do you ever have “There is a God!” moments? I had one last week.

I was walking down a narrow pavement alongside a completely empty road, when the tinkling of a bicycle bell assailed my ears from behind. One of those aggressive two-wheel types was attempting to force me to stand aside on a pedestrian walkway.

I won’t go into how irritating these people are, fury is not a pleasant subject to write about. However, whatever allows these oiks to ride along pavements should be repealed by the next Conservative Government.

Naturally, I ignored him — it’s always a he. He rang the bell again. I sauntered on. Again he tried, before snorting and turning onto the road. As he passed he gave me a backward glance of total exasperation.

My returned stare must have unsettled him. He wobbled, desperately corrected his trajectory, hit the curb, and fell off.

I walked past with a beatific smile of satisfaction.

There is a God!

Like everyone else I’ve been trying to make sense of the causes of this world depression. I’ve pieced together bits that have appeared here over the past few months in the hope they make a coherent and plausible case for what went wrong.

In the beginning
1. In 1977, President Carter pushed through an Act forcing banks to give mortgages to sub-prime borrowers.
2. In 1999, President Clinton signed off the repeal of the Glass-Steagall Act, which separated commercial banks from investment banking.
3. Clinton also encouraged the securitization of morgage debts into Collateralized Debt Obligations by Bears Stearns. Astonishingly, they were given Triple A investment status by the involvement of government-backed Freddie Mac. Thus, potentially toxic assets were bundled up and sold off to the world’s banking system.

Note: these are both Presidents of the left.

Reinforcing causes
Fed Chairman, Alan Greenspan kept interest rates too low for too long because he believed “downturns will happen and can be cleaned up afterwards”. Meanwhile, just enjoy the white-knuckle ride.

In the benign conditions created by Greenspan and his student Gordon “No more boom and bust” Brown, high leverage (debt) was seen as a one-way bet for financiers and private-equity outfits, some of dubious provenance.

A system of shadow banking was set up outside the regulatory framework which passed debt around between different institutions, hedge funds and capital markets, creating more money than the original debt. The normal effect of a burgeoning money supply is inflation, which eventually squeezes out any asset bubbles that form along the way.

However China simultaneously introduced a massive deflationary element into the mix. Trillions of dollars of very cheap goods poured out of the country to soak up the growing money mountains of the developed world.

The deflationary effect masked the inflation embedded in the Western economic boom, allowing it to last much longer than normal and storing up more problems as time passed.

On the ground, it seemed as if the good times would go on forever. A classic psychological contagion set in among politicians, financial markets and the ordinary public. No-one could lose was the signal, everyone was a winner, even the poorest with no income, no job and no assets.

The Endgame
When sub-prime borrowers in America started defaulting on their loans, as they were bound to at some point, bankers found it impossible to trace the indebtedness through the system because of the sliced and diced nature of the securities that now concealed them.

These assets were effectively worthless as they could not be valued. The whole planet was suddenly stripped of value. There were no hooks left to store capital and savings, except gold and flighty commodity markets. Meltdown time had arrived.

The growing realization that banks all over the world held these poisonous assets, effectively closed down the inter-bank lending markets. Banks no longer trusted any other not to fail and default on their loans. The Credit Crunch was born.

The rule of Up-To-A-Pointism suggests: “If something works, it only works up to a point. Thereafter it yields diminishing returns, followed by negative consequences. Government intervention is like that, as are free markets. Both have a limited bandwidth within which they operate well.”

Let us hope that the new financial system that emerges takes note of this simple rule.

Prediction
The world will now skate helter-skelter in the opposite direction. The pendulum of opinion will overshoot the mark and overregulate financial markets, thus breaching the Up-To-A-Pointism rule.

Something akin to a 1970s situation will be created as legislators try to close off all exits. The result will be a stifling, sealed commercial environment with few incentives for innovation and hard work.

It will take another “liberalization” package of measures a few decades down the line to set off another period of prosperity, leading to another bust.

Plus ca change …

I’ve just watched the seventh of eight episodes of Channel 4’s patchy series, Christianity. It was presented by Professor Colin Blakemore of Oxford University, a colleague of Richard Dawkins — author of The God Delusion — and a fellow believer in the new religion of Scientism.

So far, only three of the programmes have stood out: Howard Jacobson’s, Michael Portillo’s, and Rageh Omaar’s thoughtfully fair view of the relationship between the West’s religion and Islam.

As an Idealist in philosophical terms, I’ve not got a lot in common with Blakemore’s viewpoint, however, he put his case engagingly and intelligently.

One highlight for me was the comparison of a cathedral with the Large Hadron Collider at CERN on the Swiss/French border. This chilling aggregation of metal, electric wiring and brutalist architecture seemed straight out of the Nazi manual of “How To Subdue Human Values By Gigantism and Intimidation”.

Next up: Cherie Blair. What are we to make of that?

Quote of the Week

This is rather a good description of New Labour philosophy:

“The idiot who praises, with enthusiastic tone,
All centuries but this, and every country but his own.
W. S. Gilbert, The Mikado

John Evans

Recent Related Stories
DIARY: Tax evasion, Derivatives, Oborne, Randall, Great Depression 2.0, Political awards, O’Rourke
DIARY: Darwin, Hitchens, Obama, polls, Steyn
DIARY: Today, 24-hour news, 10 rascals, depression, swans
DIARY: Shadow banks, BlackBerries, Flanders, Jackson, liberal fascism
DIARY: Darling, Obama, Parris, Portillo, Devon
DIARY: Kaletsky, Klaus, greens, hedge funds, Sunday papers

As a person without any debts, and four bank accounts coloured black, I awoke yesterday morning to find the country’s National Debt at £2 trillion ($3tr) and more. That represents more than £60,000 ($86,000) and rising per household. It dwarfs Britain’s annual national income of £1.4 trillion, and doesn’t include other off-balance-sheet liabilities.

Since I am a genuine citizen of the United Kingdom, I am liable for that sum, and probably more from people who can’t or won’t pay, and from more recent arrivistes who decide to desert the heavily listing vessel.

I won’t get an invoice in the post: “For gross mismangement of the economy by Gordon Brown”. That would be too candid and straightforward.

Instead, I’ll find almost every public and private bill will rise, while any receipts will fall and services diminish. Prices in the shops will also start to balloon in a year or two and will remain high for decades to come.

Thus, this debt-free individual, who earns his own living, with savings in the bank and other less liquid assets, will suffer the consequences of others’ malpractice through substantial impoverishment.

Almost everyone in the country will be on a similar path, except those with institutional parachutes to comfort, like politicians, top bankers, and the upper reaches of the Civil Service who caused the problem at source. In modern Britain the buck only stops when it nestles in the pockets of the guilty.

The principal culprit, as almost everyone now realizes despite his increasingly-pathetic attempts at shovelling it off onto others, is Gordon Brown, the man who ran the Treasury with an iron fist from 1997 to 2008 and has been British Prime Minister since then.

In France, within almost living memory, he would have faced the guillotine. In Britain, more likely disgraced and forced into a humbling exile. Even now, he can be impeached by a much-abused nation. Why is this not being discussed?

The other big number this week is 219. Not so significant, you might imagine until you add “billion” on the end. £219 billion ($311bn) is Brown’s yearly overspending in real terms, i.e. above inflation. (From Bankrupt Britain by City fund manager, Malcolm Offord.)

It’s not good economics, but multiply that figure by 10 and you get a rough approximation of the new National Debt.

The pity of it is, the money was wasted. Almost no improvements are discernible in public services over the period while most have gone downhill, the result of politburo-style management and misuse of public funds at every level, much of it from incompetence, the rest from jobs-for-the-tribe. Snouts in the trough doesn’t begin to cover it.

Once again a Labour Government will leave office having wrecked the country.

* In 1929 we had the British version of the Great Depression to look forward to.
* In the late 1940s it was by restricting markets from operating at all while Germany and Japan freed up their workforces and built the foundations for their current strength.
* In the 1970s, Britain was placed at the mercy of the IMF, followed by the Winter of Discontent.
* This time, the nation has been hollowed out, its vital wealth-creating engine crushed. A decade of its earnings simply squandered on a whimsical mountain of public services that struggle to operate on any level.

It didn’t help that this time Labour was given three Parliaments to wreak its usual havoc. How did that happen? By guile, neglecting the truth, cooking the books, making false claims about almost everything … and getting away with it thanks to friends in the media who complacently turned blind eyes to the accumulating shambles.

Will Brown be impeached, do you suppose?

Do elephants ski?

John Evans

Recent Related Stories
Get ready to be clunked, Gordon
Hard times or better times?
Is socialism the new quid on the block?
A real-time slump is not like the history books

Boris Johnson, Mayor of London, is an affable cove, argumentative in a jolly sort of way, but with a hidden seriousness often overlooked.

He is frequently right in his assertions, occasionally he goes badly wrong.

He’s at it again, arguing for an old-fashioned version of free trade in the face of a worldwide downturn and a rush to shore up national economies and infrastructures long neglected by obsessions with global solutions.

Bring back the status quo ante, cries Boris, in the teeth of a gale of rage against the tattered remnants of the ancien regime.

His article in this morning’s Daily Telegraph promotes the classical case for free trade: specialization (a result of what’s called “comparative advantage”) and an acceptance of a dependency on others for a wide range of the necessities of life.

The UK, for example, has specialized in financial services in the City of London and elsewhere, while allowing a massive dependency on the rest of the world for manufactured goods and agriculture.

Hold on, wasn’t Britain once the “workshop of the world”? Didn’t we produce some of the greatest agricultural produce on the face of the earth? Weren’t these skills central in pulling us through two world wars in the 20th century?

Explain then why they were sacrificed to the make-believe world of finance, which absorbed many our best graduates, turning them into barrow-boy traders, or designers of financial gambling instruments that inflated the entire planet with unpayable debt?

Is that what Boris means by free trade?

And here’s another conundrum: why have British politicians, especially Brown and Blair, deceived the public into signing away national control over critical aspects of life and commerce to the most unresponsive and cack-handed organization ever conceived in the world’s long history? I refer, of course, to the elephantine European Union.

Is that free trade, Boris? If it is, there’s a large majority in this country that would prefer not to have anything to do with it.

The fact is, free trade, like all freedoms, has to be designed around the grain of human nature, not the mental machinations of policy wonks. It starts with the individual, not a bureaucratic oligarchy.

Does anyone believe the crackpot system we have had across the world, and in Europe, for the past decade has covered itself in glory? Most of it was built up during the “hunkering down together” period after World War II, when legislators were terrified of further wars.

Ninety percent of that system has proved itself redundant and ready to be scrapped. “Free trade” has become synonymous with maintaining this failed superstructure.

The next British Government, which may at some stage include Boris Johnson, should heed public rage at the restrictions of the hated European settlement. A loose trade association is all Britain will require in the century ahead.

And what about democracy, Mr Mayor? How is it that each treaty we sign, each organization we join, hands power on a plate to international bureaucrats at the expense of the very people in whose name this sacrifice is made? The rootless sherpas of world politics and trade have no knowledge of local needs or cultural preferences. Peter Mandelson is a perfect example.

The most dangerous pressure cooker for politicians of all stripes is a build up of anger and frustration by large numbers of people who believe their voices are not being heard. That’s how revolutions start. We should have long outgrown that primitive tendency.

Free trade is easily done if you have something worth selling and the other chap has something worth buying. The big bloc approach masks the necessity to develop products and services that are useful to others.

There is also a vital requirement to have a balanced economy that is not brought down by the collapse of a single sector. Cuba’s reliance on one crop, sugar, is a classic example. Britain’s lop-sided specialism in financial services and house swapping will be viewed in the same light in future.

David Cameron will be at his strongest when he first comes into power. He should use that power to ease the UK out of the EU and into an Associate position on its perimeter. He will not be forgiven if he fudges that essential step.

John Evans

Recent Related Stories
Sensible protectionism is not a sin
Globalization destroys necessary bulkheads
The world needs Up-To-A-Pointism
Let’s be frank Frankia is not for the English

The word “protectionism” is on almost everyone’s lips these days. It’s viewed as a bogey word, depicting the worst that could happen.

The fact is, it’s as inevitable as cold weather in winter. In some senses it’s also necessary.

When danger advances, creatures retract to safety. Think of crabs, snails, hedgehogs, wood lice … humans. The flight to safety, as financiers call it, is as natural as autumn rain. It will happen. It is already.

Globalization is fine in the good times. No-one turns away a good deal when there’s no risk, even if it arrives from a far-off country. When we perceive high risk to be involved, we withdraw to what, and whom, we know, in our own communities.

We can’t buck human psychology. We shouldn’t try. Only socialists do that. It wastes precious energy and resources.

The time has come to rebuild our home infrastructure and rethink the way we are governed. Anyone who believes that is not necessary should consider the mechanics of how we operate a variety of our affairs now: The State of the Union.

Latterday protectionism is happening over trade — think U.S. car subsidies — and also in financial markets. Foreign banks have all but pulled out of Britain, leaving massive holes in our ability to borrow commercially and domestically. That is a major part of the problem we face.

Did anyone in the UK with a Post Office savings account know their money was held by the Bank of Ireland? They do now!

We may be lucky that the situation is “only” as rotten as in 1931, especially as 1933 was when the really bad things began — like Major (later General) Patton leading a sabre charge of the U.S. Cavalry against 25,000 starving war veterans in Washington DC. That sort of thing couldn’t occur now, could it? Don’t count on it.

The fact is we’re set on a trajectory that will bring us close to a 1933 scenario. Let’s do ourselves a favour and accept that. We can then set about putting our individual houses in order by retracting to what matters here and now. When the time arrives, we will be prepared for the economic winter to come.

Bleating on about “global solutions” that are never solutions, even in the good times, but merely sticking plaster pretences to save face, is about as counter-productive as it gets.

This is not pessimism, it’s an acceptance of human psychology and having the guts to face up to it. If the worst catches us by surprise, we have only ourselves to blame.

Britain as a nation has always faced the tempests bravely, with fortitude, stoicism and humour. Our leaders need to start preparing the country for a prolonged period of acute discomfort. When we know the worst, the best in us will emerge.

The good news is that when we hit rock bottom, the only option is to rebound.

But will we have rebuilt our public domain by then, so that we can be first onto those bright sunlit uplands?

John Evans

Recent Related Stories
The State of the Union
Hard times or better times?
Globalization destroys necessary bulkheads
Is socialism the new quid on the block?
Public failure and Superdemocracy
The world needs Up-To-A-Pointism