Britannia Radio

Today's reflections on the state of our nation are gloomy to say the 
least.  But a consensus seems to be deverloping that nothing in any 
of the 'solutions' is working, least of all in the latest cut in bank 
rate or the (by now universally scorned ) VAT rate cut.

Even Sarkozy thinks Britain - =Brown - has got it wrong though he 
sarcastically adds that we can't help industry because we haven't any 
industry left to help!  This appears to have enraged Brown but he did 
ask for it [though WE will get the blame!] by claiming to have saved 
the world.
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TELEGRAPH     7.2.09
1. (Letter) Near-zero interest rates won't refloat the economy
Dr Eamonn Butler,   Director, Adam Smith Institute

We shouldn't bank on lower interest rates getting us out of the 
credit crunch.

They may encourage consumers to borrow and spend more, and make it 
cheaper for businesses to expand. But there are more savers than 
borrowers in Britain, and they have seen the income from their 
savings cut by four-fifths. Savers aren't rushing out to spend - 
indeed, they are cutting back.

Secondly, lower interest rates drive down the pound. The Government 
needs to borrow huge sums to fund its bank bail-outs, but with money 
so scarce at home, much of that will have to come from abroad. A weak 
pound makes that borrowing hugely expensive.

Thirdly, interest rates at 1 per cent dent confidence, as people fear 
that the Government is running out of weapons to combat recession. A 
decade of near-zero interest rates in Japan has not solved their 
banking crisis.

The British economy might be refloated by lower taxes and cuts in 
business regulation, but not by lower interest rates.
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2.British workers realise that Brown can't deliver the goods
His promises on jobs were hollow and the PM has much less power than 
he pretends, argues Charles Moore.

By Charles Moore

One British job which really is reserved for a British worker is that 
of Prime Minister. No Treaty of Rome founding document about the free 
movement of labour and no EU Posted Workers Directive can get anyone 
but a British (or, for peculiar historical reasons, an Irish) citizen 
into No 10 Downing Street.

You could prove that a foreigner - some sensible Dutchman or Dane, 
perhaps - could do the job just as well as, or, indeed, far better 
than Gordon Brown. But the law says no. Only a British (or Irish) 
citizen can sit in the House of Commons and hence, in practice, be 
prime minister.

This is significant. It says that the person put in charge of a 
nation must be part of that nation. If he (or she) were not part of 
it, is the implication, he might not be loyal to it. The assumption 
is that the prime minister must put the needs of the British people 
before those of everyone else. That is what we expect of him, whether 
or not we, personally, voted for him.

In good times, most people can see that putting British needs first 
does not mean taking it out on foreigners. We sell them our goods and 
services; they sell us theirs. Our people go there; their people come 
here. There is a rough equality. Exchange brings more benefits than 
isolation.

But, as this column keeps saying, the depr-, sorry, recession means 
that Everything Is Different Now. When people feel threatened, their 
natural desire is to look after themselves and those close to them. 
They feel the need for protection.

Hence protectionism. No decent person actively desires to "beggar my 
neighbour", but it is obvious that, offered a choice between, say, 
high unemployment here and the same in Germany, the average British 
citizen will wish it on the Germans.

The arguments for free trade demonstrate that this is a false choice. 
In general, more German jobs mean more British jobs, and vice versa. 
Wealth is not a cake of finite size, but a yeast, so the more 
bakeries the better. But what is happening now is that people - such 
as the angry workers in Lindsey, Sellafield, Grangemouth etc this 
week - no longer believe it.

You can see why. What spin doctors call the "optics" are so bad. The 
loudest calls against protectionism came from the World Economic 
Forum at Davos. And who was at Davos? The politicians, economists, 
investment bankers and central bankers who got us into this mess. 
Almost by definition, everyone at Davos has a job, and a well-paid 
one at that. And when some of them looked as if, through their own 
credit-boom folly, they might lose their jobs, their friends clubbed 
together with taxpayers' money to rescue them.

If I were competing with Portuguese and Italians to get scarce work 
at a British oil refinery, and were told by Lord Mandelson of 
Hartlepool and Foy (who will receive a six-figure pension from the 
European Commission) that I was "xenophobic", I think I would invite 
him to return to the Continent which he loves so much, using strictly 
Anglo-Saxon words.

I might also use the well-known British phrase, "It's all right for 
some." That expression of resentment is unattractive, but the current 
crisis does raise the question, "Who's this all for?" It feels as if 
the benefits accrue to the men at Davos, and the bill goes to the men 
at Lindsey.

For free marketeers, this is a tragedy. One of the greatest insights 
of Adam Smith is that the narrow interests of business are quite 
different from those of citizens in general. People of the same trade 
"conspire against the public" to increase their prices, says Smith. 
The freer the market, the easier that conspiracy is foiled.

But globalisation which, at its best, is a free-market enterprise, 
now feels like a conspiracy by the rich and powerful. Its crisis 
makes the poorer and weaker feel terribly exposed. There seem to be 
no choices left for them. They can't save, and they can't borrow; in 
growing numbers, they cannot work. The political system is not within 
their grasp. What are they supposed to do?

I recently read a book of interviews with economists, of all 
political views, who had grown up during the Great Depression in the 
United States. How had the Depression shaped their thinking? The most 
chilling quotation was the answer to the question: "What do you think 
was effective in ending the Great Depression?" Several replied, "The 
War".

In other words, even in Roosevelt's free and enterprising America, it 
was only the convulsion of the entire world in bloodshed and the 
production required for this, which restored prosperity.

If that is true, it helps to explain why Hitler and Mussolini seemed 
like saviours to millions of people, not all of whom were extreme or 
nasty. And it also helps to explain why fascists and communists were 
able to portray the democracies as weak. War began to seem like a 
solution, which shows how massive was the problem.

The worst thing, politically, about the present situation is that it 
makes democracies seem weak all over again. What most annoys people 
about Gordon Brown promising to produce "British jobs for British 
workers" is that he can't.  [What he is doing is ensuring "British 
dole for British workers"

"No politician," said the Labour-supporting New Statesman primly this 
week, "should ever promise something that he knows is illegal under 
EU law."

Perhaps, but if this means that he can promise very little at all, 
you do begin to wonder what is the point of him, and of the system 
which underpins him.
Is there any way of restoring the basic link, on which parliamentary 
democracy depends, between the interests of the voters and the 
actions of the people they vote for?

In the case of Mr Brown's government, the answer is, probably not. 
The guilty men have gone electorally unpunished for too long. It is 
too late for them to be forgiven.

But an answer does surely lie in the political paradox that, for 
people to believe in international order and global free trade, they 
have also to believe in their identity as a nation. In this crisis, 
we may yet live to thank the EU for holding the line against 
protectionism, but only if our own politicians can, as it were, 
repatriate the benefits.

One way of doing that would be to reassert the coherence of British 
society by controlling immigration much more strictly. Since 1997, 
our average net immigration has more than tripled, to about 200,000 a 
year. The Government plans that it should continue at this rate, 
which means two million more people in the next 10 years. Nothing 
like this has happened before in our history.

The strain and expense in terms of social services, health services, 
language difficulties, crime, terrorism and schools have made people 
feel that the economic benefits are illusions and the social costs 
too high.
In a recession, fewer people will come here anyway, so it is an 
opportune moment to change the rules and narrow the flow of non-EU 
entrants, who make up the great majority of our immigrants. If we 
feel more secure about who we are, we shall look outward with much 
less fear.
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3. The pound isn't safe with the Bank
By Simon Heffer

The Bank of England's Monetary Policy Committee clearly has combat 
fatigue, and would do well to be replaced by fresh minds. The latest 
Bank Rate cut was not merely irrelevant to what is wrong with our 
economy; it was also highly damaging.

There is no encouragement to save. Millions of pensioners are having 
their thrift severely punished. The collapse of their purchasing 
power will contract the economy further. The incentive for 
institutions to lend is now effectively removed. In two or three 
years, inflation will be rampant - not that that is a fashionable 
consideration.

This gambit having failed, and with the Government refusing to fund a 
proper fiscal stimulus by cutting wasteful public spending, the only 
option left will be to print money. I trust that will not be done 
lightly. If we are lucky, the outcome will be a return to the 1970s.

  If we are unlucky, our economy will do a Zimbabwe.