The Bewilderness

Is Sarkozy a French Heath?

Protests within democracies are unlikely to topple a government in a revolutionary upheaval. Modern states are usually too strong for such an occurrence, but, as the Edward Heath administration showed, the issue settles on a question of governability. If protestors make life difficult, they are more likely to obtain a reversal at the ballot box. The incumbent is rendered unpopular and a more pliable alternative gains power. This is the reasoning behind the French protestors blackmailing the body politic.

France faces a crisis of governability. The reform on which this protest is based may be a slender reed, but the organised powers are looking for an excuse to act. It could be pension reform, tuition fees or any other modification to the client state. For the French, it just turned out to be raising the pensionable age.

The communist trade unions are strongest in the energy and transport sectors. They are determined to continue the disruption and capitalise upon the unpopularity of the President. Already, after the law is signed this week, new protests are planned for early November.

With this wave of strikes and violence, will the unions and affiliated bodies be able to maintain the level of disruption? As the economic damage increases, this becomes a trial of strength between unions and government. A "who runs the country" moment. It is not certain that an incumbent government will win such a struggle.

For the United Kingdom, industrial unrest ushered in five years of weak socialism. However, the two party system sheltered our parliamentary democracy from the extremes. France is more vulnerable to populist movements and extremism at elections. If these disruptions cause enough eceonomic damage, will we see a major upset? Worse than the Mitterand mirage of 1980?

As democracy has spread, we clearly see that revolution is ushered in through the ballot box.

Debt remains our greatest enemy

Liam Halligan of the Telegraph skewers the spindoctors of the Coalition and makes the valid point, indeed the only point that counts. Osborne's sub-Brownian descent to trickery and farce does not hide the disaster in the public finances. They are still not under control. 

Under the current programme, an inadequate program to cut public finances is wedded to an inflationary stimulus: two pincer movements destroying living standards. Whilst some may share a sigh of relief that the lunatic "deficit deniers" of Labour (and Obama) are no longer in power, this does not excuse the unwillingness of the Tories to go far enough.

England will suffer because the best our political system has to offer is just not good enough.

France: an exception that could prove a rule

France has always had a tradition of riotous assembly. Why should now be any different? Yet, of all the countries afflicted by the crisis, the old rooster proves to be the exception.

The stable and wealthy countries of the Germanic tradition have proved vulnerable to the rise of populist and xenophobic parties. When in power, they prove to be a varied breed, limited by minority status or coalition, but taking their countries on a conservative journey. The real nasties tend to lurk in the Balkans (Jobbik in Hungary or Vadim Tudor in Romania).

France faces a different crisis. The populist rally on the far right has been accumulating votes for the last thirty years, in an echo of Poujadism. And its counterweight is the left, heirs of '68, and the last working alliance between clerisy and worker in Europe. France faces a crisis of governability.

“We have a prime minister who thinks he is Churchill but who is only Thatcher,” said Harlem Désir, the Socialists’ deputy leader. “He is trying to make us think he is carrying out great reforms to save our economy but in fact he is smashing our social model.”

An insult for Thatcher, given that the French government is ill-prepared to deal with the upsurge in student unrest and ongoing strikes. The left is certainly better prepared to fight reforms of their feather beds in France, but succesful example can light the touchpaper elsewhere: populist parties are not the only way to mobilise hatred at the ongoing immiserisation of sections of the populace.

France could prove, yet again,a catalyst for Europe.

Faux-sterity: an illusion of public spending cuts

A short note on the risks of austerity. It may not work if you are in a common currency area (pissing off your local electorate as all of their sacrifice is set at nought). It may not work as the global economy self-destructs in an orgy of monetary depreciation and protectionism (note to Labour: a second global crisis is a get-out free card for the Coalition. I can imagine the idiotic spinoffery of these clowns: the $ would not have imploded if we had maintained public expenditure in the UK. Let's call Labour Golgafrinchams until they return to sanity). 

It may not work as the politicians do not have the courage to see it through (reference heirs of Ted Heath).

It may not work because time runs out and your debt becomes toxic. (USA: this is your fate under Obama)

Ironically, if your time runs out, all you have left is austerity.

What we see is a tragicomedy: a mythology of choice before all possibilities narrow down to that unavoidable haircut. That is why sovereign debt is going for a snip....

Toffler's black swans

It is the fortieth anniversary of the publication of Future Shock, Alvin Toffler's tome heralding the age of change. Now, he has issued a press release giving us his next "40 for 40". Yet, reading the article in USA Today, one finds Toffler's predictions underwhelming. Most are merely a continuation of the trends that he spotted back in the 1970s and that have continued to impact our societies today.

Privacy has been eroding for decades. It will continue to erode. Social networks provide greater opportunities for networking. And so on.

Mass production will be replaced by on-demand, custom manufacturing.

Invasion of privacy will spread — the result of cheaper, smaller and widely available surveillance devices. Data may be collected faster than it can be analyzed, resulting in "cyberdust."...Social networks will gain influence.

These trends are not hard to spot. However, we can ask whether globalisation or social networking will be recognisable in a decade. For what irks with Toffler's predictions is their lack of imagination, their inability to conjure the breathtaking disruptions that could occur. To paint the future now, one must be willing to abandon the linear and the trend line.

Toffler's '40 for 40' no longer shock. We know that the changes out there will..Toffler's black swans.

Getting closer to the age of miracles

The usual hype accompanies the interesting study on the 'elixir of life', a combinations of amino acids that have reduced oxidative stress in mice and extended their lifespan. The supplements of enthusiasts have already been altered. The caveat is whether this effect will extend to the larger mammals.

And in other news, the first permanent artificial heart has been implanted in a dying Italian child.

Bar accidents, we are getting closer to the age of miracles.

Putting a Manx on the Moon without subsidy

Who would have thought that one of the centres for the new space industry was the Isle of Man. An unprepossessing island in the Irish Sea, outside the boundaries of Europe and one of the few well-regulated, low-tax jurisdictions remaining on the planet. Why would anyone ever want to site business there?

Art Dula, chief executive officer of Excalibur Almaz Limited, the Isle of Man based space tourism company focused on returning to the moon, said: "The Isle of Man is the leading venue for the world's growing commercial space industry.

"Regulatory and insurance support from the Isle of Man Government for orbital space tourism has been a great help to our business."

The Manx nation has now been rated as the fifth most likely to land a man on the Moon, ahead of those dynamic innovators, the European Union.

As Jim Bennett has noted before, European co-operation remains a crock for harnessing entrepreneurial activities within Newspace:

Mr Bennett, president of Wyoming Aerospace LLC, added: "You don't need astronauts to have a successful space programme. The New Space environment now offers British entrepreneurs, financiers and scientists to take a seat at the main table on their own terms."

He added: "Britain has networks of close ties, experiences and mutual trust not just in one direction but in three: Europe, the USA and the Commonwealth.

"It should seek to maintain its existing productive ties with Europe, exploit the ease of business between the US and Britain to develop New Space entrepreneurship, and enhance its co-operation with the often-underestimated capabilities of Canada, Australia, and India."

Pointless in attracting the attention of the UK space agency.Or the subsidy junkies currently masquerading at the forefront of the UK 'commercial' private sector space industry:

Certainly, it’s easy to imagine a conservative-minded bank getting cold feet over the risk of investing in so much unproven technology and a novel business plan. [Sir Martin]Sweeting argues that the funding he received got the company ‘over the hump’ and into a state where it could exploit a growing market.

It is also possible to imagine a UK space agency pouring vast amounts of taxpayer money down a black hole.

Less labour may mean more work

One of the key planks of Gordon Brown's clientelage strategy was stuffing the mouths of the middle class with their own gold. A perverse short-term strategy that defied economic gravity and ensured the long-term bankruptcy of the state. That plank is about to be knocked away, not!

In order to fund the universal credit system proposed by Iain Duncan Smith, some universal benefits may be tightened, when they should be abolished. The luncy of helping everyone whilst helping the poor will be continued. Just to make his poverty of ambition plain:

Seeking to soothe voters' fears over the coming spending cuts, Cameron stressed his plans would not take government spending back to the levels of the 1980s, but to a level last seen in 2006. He said: "Let's put these savings in perspective. Many businesses have had to make far greater reductions than us in one year."

A good plan would be if you wished to take state expenditure back to the 1880s. Prior to the expansion of the state, we had less law and more liberty.

Still, from a policy perspective, a single credit system eases some of the inefficiencies and confusion of Labour's legacy:

Duncan Smith said there is "something fundamentally wrong" with a system that pays 5 million people not to work while immigrants come in to do jobs those on benefit reject: "You're just replacing one group of unwilling workers with another group of willing workers. That doesn't make a lot of sense."

But will your reforms remove dependency? Hardly.....

Defence ducked

Was the leak of Liam Fox's letter a mere contrivance? Strange that the public receives muddied waters on expenditure cuts with benefits and defence the two zones of conflict. Did the papers report rearguard actions from civil service Taliban setting off improvided explosive leaks (IELs) to save their budgets, and not coincidentally, their positions.

Yet, when David Cameron spins that he is now in the driving seat on defence, we sit up and await his decisiveness. Renewal of Trident, perhaps? Two new aircraft carriers confirmed? No, the "wide ranging" interview of strong decisions fades away very rapidly:

disclosed that more Chinook helicopters would be made available for British troops in Afghanistan.

he pledged that Britain’s Armed Forces would be given “everything that they need” to fight the Taliban.

This is what Brown used to say. Are we facing a convergence in rhetoric? One government starved the armed forces out of neglect,the other by necessity. All both can fall back on is tired mantras about troop protection. 

The real issues on defence, strategic thought and withdrawal from Afghanistan remain unresolved.

Coming to the crossroads

What will be the price of a further bail-out for Ireland? The end of their autonomy and tax crucifixion. Today, we have heard a number of voices from the European Union opine that Ireland will have to become a "normal" tax country if it wants further monies from other members of Euroland.

The eurozone has become a trap for peripheral countries. They are crushed by debt, unable to compete against the core, saddled with austerity and facing long-term stagnation.

The external view divides Euroland between the core and the periphery. Current policies will not allow the periphery to compensate for it slack of competitiveness and the result is a debt deflation trap. Ireland is clear evidence of this.

Enter the insidious powers who will use the crisis to further particular goals. The Commission and the core countries have promoted tax harmonisation and minimal rates to neuter fiscal competition. Ireland may find that it has to drink a poisoned chalice: sacrifice the competitive elements required to crawl out of its hole in return for remedial action on its finances.

The European Commissioner for Economic and Monetary Affairs, Olli Rehn, has said that 'it is a fact of life' that Ireland will no longer be a low tax economy over the next ten years 'after what has happen

But he 'didn't rule out any option' since we know that 'Ireland in the coming decade will not be a low tax country, but it will rather become a normal tax country in the European context.'

Given the exposure of British banks to Irish debt and the damaging roll-over fo a liberal ally, should we not entertain the possibility of drawing the Republic back into the sterling area, or recommend dollarisation. Both options appear to be more palatable than the political crucifixion embarked upon by the Eurofanatics in power, who prefer the impoverishment of their people to losing face on a shared currency. The madness of Europe persists, extends and deepens.